Question of the day
Wednesday, May 5, 2021 - Posted by Rich Miller
* Press release…
Morrison Pushes for Real Pension Reform
SPRINGFIELD—Today, State Representative Tom Morrison (R-Palatine) joined Wirepoints President Ted Dabrowski and fellow lawmakers at a press conference in the state capitol to discuss new research on Illinois’ pension crisis.
The recently disclosed Wirepoints’ research sheds new light on the effect the pension crisis has on local municipalities. Specifically, over a hundred of Illinois’ largest cities have received an “F” grade for their local pension funds, compared to 2003 in which only seven cities got an “F” grade.
For Rep. Morrison, who serves on the House Personnel and Pensions Committee, this serious issue cannot be ignored.
“We’ve all heard about the 5 statewide pension systems that are in crisis, but this research looks at the pension crisis happening in our home communities,” said Morrison. “Our cities are struggling, property taxes and fees are rising, and the added unfunded mandates placed on them is making matters worse—the research proves that.”
The legislature has not yet taken up impactful pension reform matters this spring, despite the growing liabilities at the state and local level.
At their press conference today, Dabrowski discussed the rising costs for Illinois’ 650 local pension funds—which has a direct effect on city budgets, taxpayer wallets, and the retirement security of hundreds of thousands of police, firefighter and municipal workers and retirees.
The key findings of Wirepoints’ report include the following:
* Workers’ retirement security has declined in an alarming number of Illinois cities. In 2003, just 21 of 175 cities analyzed had less than 60 cents on hand for every dollar they needed to fund future benefits of their city workers. By 2019, 99 of the 175 cities were below 60 percent funded. A 60 percent funding level is often seen as a point of no return from which pension funds can’t recover.
* City taxpayers have increasingly paid more to pensions over the past 16 years, yet the pension shortfalls are far larger today. Pension contributions of the 175 cities have nearly quadrupled to $960 million in 2019 from $250 million in 2003, yet local pension shortfalls still tripled to $11.8 billion, up from $3.4 billion in 2003.
* Pension costs as a share of city budgets have doubled, crowding out spending on core government services. City pension contributions as a share of general budgets have doubled to 17 percent in 2019 from 8 percent in 2003.
* Some local pension funds have turned upside down – they now have more retirees drawing benefits than active workers contributing. In 2003, only 15 cities had more pensioners drawing benefits than active workers making contributions into the fund. In 2019, that number rose to 112 cities.
“We have ignored this problem for far too long,” continued Rep. Morrison. “Today’s research should be a stark wakeup call; ignoring this massive, growing problem won’t make it go away, it will only make it more difficult to dig us out of this hole.”
In my suburban Cook County district, property taxes remain a top concern. Additionally, the hidden cost is that property values are not appreciating as they should. This is a huge weight on the state and its residents, and why we must have pension reform now.”
While there was a group of Republican lawmakers present at today’s press conference, not one Democrat was in attendance, leading Dabrowski to call for their support.
I followed up and asked what his actual reforms were…
For starters, he would support a constitutional amendment. He also supports allowing municipal bankruptcy.
* The Question: Should the state allow municipalities to declare bankruptcy without state permission? Make sure to explain your answer. Thanks.
- Demoralized - Wednesday, May 5, 21 @ 2:23 pm:
Absolutely not. The only reason they are for that is that they want to stiff people on their pensions. That has been the goal of these people since the beginning. Conservatives seem to have turned into a group who does not favor taking care of your obligations.
- Cluster - Wednesday, May 5, 21 @ 2:25 pm:
Lazy and irresponsible thinking by Rep. Morrison.
- Oswego Willy - Wednesday, May 5, 21 @ 2:31 pm:
=== For starters, he would support a constitutional amendment. He also supports allowing municipal bankruptcy.===
Two problems… Illinois as a state can’t declare bankruptcy, but making it easy for munis is denying what is already owed…
… and he can change that pesky constitution all he wants, what’s owed is owed, unanimously decided, ILSC
To the question;
“Should the state allow municipalities to declare bankruptcy without state permission?”
No.
Why?
Like Rauner and the foolishly ignorant at Wirepoints fail(ed) to grasp, you can’t say you are looking for solutions when your solutions are to stiff workers on a whim because of poor fiscal management and refusing to do what what needed.
Those who never build anything, enjoy the option of destroying everything.. with no consequences.
Voted no. Accountability is not flippant bankruptcy.
- RNUG - Wednesday, May 5, 21 @ 2:34 pm:
I would say No.
My reasoning is the same as to why State’s are not allowed to declare bankruptcy: cities have the power to tax residents and control their budgets.
I will admit that most cities (or in a lot of cases, counties or townships) in Illinois are a bit limited in their ability to tax since they can not impose an income tax, and they have to follow State rules on some other taxes. But they do mostly have the ability to implement sales taxes and property taxes. Plus all kinds of user fees can be imposed.
- The Ford Lawyer - Wednesday, May 5, 21 @ 2:36 pm:
Municipalities are allowed to file for reorganization under Chapter 9 of the United States Bankruptcy Code, which specifically requires that the municipality be authorized by its state to file for protection under that Chapter. That said, the way you asked your question is a bit confusing. If the state passes a law allowing its municipalities to file under Chapter 9, then it would seem to be, by definition, giving them permission to file. I guess if we are asking if the state should pass such a statute and not make each municipality seek individual permission (which is the status of the current state law), then I would support that. The pros and cons, and the general fairness of a specific municipal bankruptcy can and should be litigated in bankruptcy court.
- Norseman - Wednesday, May 5, 21 @ 2:37 pm:
No. See OW. I couldn’t have said it better.
- Bummer - Wednesday, May 5, 21 @ 2:40 pm:
Cities towns and municipalities are Allowed to declare bankruptcy under federal law. Therefore bankruptcy is allowed in Illinois. Federal law trumps state law
- RNUG - Wednesday, May 5, 21 @ 2:42 pm:
This actually should lead to a discussion on the purpose and authority of non-home rule cities, villages, townships, etc., how they came into being, the differences between incorporated and unincorporated, and how their taxing and bonding authorities are exercised.
The Legislature’s efforts should be directed to review and possible restructuring the purposes and authorities of all these entities. That would be more likely to achieve some success that wasting time on trying to negate existing pension commitments.
- TominChicago - Wednesday, May 5, 21 @ 2:44 pm:
One of his concerns is pension security and his solution is a constitutional amendment that would allow cuts to state pensions and municipal bankruptcies to allow municipalities to erase their pension obligations? Hell of a plan there, Butch.
- Annonin' - Wednesday, May 5, 21 @ 2:45 pm:
When Morrison say he supports the constitutional amendment he mean the Wirepoint Wackjob idea that one makes a lot of pensiono debt go away with a simple amendment slashing benefits. They might also elect mayors and city councils that dont hand out fat pay hikes and take pension deposits away from their uncle’s bank
- RNUG - Wednesday, May 5, 21 @ 2:47 pm:
== Therefore bankruptcy is allowed in Illinois. Federal law trumps state law ==
As -The Ford Lawyer- points out, it is a bit more nuanced than that. Cities have to have State level permission to do so, and in Illinois that permission must be individually granted by the Legislature … effectively making it highly unlikely.
- Blake - Wednesday, May 5, 21 @ 2:49 pm:
Yes. Municipalities & other local governments are not sovereign and therefore should be allowed bankruptcy relief. Longer answer likely agrees with The Ford Lawyer.
- DuPage - Wednesday, May 5, 21 @ 2:50 pm:
No municipal bankruptcies. That would drive up the interest rates on municipal bonds, way up. What to do about pension costs? Pay them.
- Grandson of Man - Wednesday, May 5, 21 @ 2:50 pm:
Do not support the state allowing municipal bankruptcies. Corporations and the richest got massive tax cuts because of Republicans, and we’re going to open the door for them to slash retired government workers on a grand scale? They unanimously would not tax the richest more in Illinois and they want to cut the middle class? Don’t think so.
- Lucky Pierre - Wednesday, May 5, 21 @ 2:52 pm:
When the Federal money dries up something will have to happen because JB and the Democrats have been very busy sweetening pension benefits to plans that are 18% funded
Gov. J.B. Pritzker signed a measure Monday to boost the annual cost-of-living increase added to their checks, ignoring warnings from Mayor Lori Lightfoot that it would blow a hole in the city’s precariously balanced budget.
Lightfoot took to Twitter to urge Pritzker to veto the bill, saying it “would worsen our unfunded pension liability and place an unnecessary financial burden on Chicago residents who can least afford it. We need to ensure a stable financial future for our city and all our residents. This bill does the opposite.”
Lightfoot’s last-minute plea Monday came after she sent a letter to aldermen Thursday asking them to press the governor to veto the bill, saying it would add between $18 million and $30 million to the city’s annual bill to fund firefighters’ pensions.
The firefighters’ pension fund has the worst funded ratio of the city’s four pension funds at just 18.4%, according to city data.
https://news.wttw.com/2021/04/05/pritzker-signs-bill-boosting-chicago-firefighters-pensions-ignoring-lightfoot-s
- The Ford Lawyer - Wednesday, May 5, 21 @ 2:54 pm:
Here’s another idea that needs to be talked about, and that’s a federal municipal pension fund bailout. It’s been done with various union and failing corporate pensions. You prevent the whole fund from collapsing so that the retirees get a pension, but the price of admission is major reforms. The discussion needs to be had.
- cermak_rd - Wednesday, May 5, 21 @ 3:15 pm:
I see nothing wrong with the law now. Let the leg vote on it. But I don’t think cheating firefighters out of their pensions is a good look for anyone. If there is a problem with underfunding of pensions, then existing spending should be redirected to put more into the pensions. And yes, this will bite. For a few years we will wind up spending more on that than we will on the young. But that’s the cost for having kicked the can down the road.
- Demoralized - Wednesday, May 5, 21 @ 3:23 pm:
==JB and the Democrats have been very busy sweetening pension benefits==
The biggest “sweetner” came under Jim Thompson you dolt.
- muon - Wednesday, May 5, 21 @ 3:25 pm:
Except for police, fire, and Chicago most municipal workers are covered by IMRF. As of the end of 2020 IMRF is over 94% funded. Those municipal employees are at no risk of losing their pensions. The question should be: why aren’t we using IMRF instead of all the local pension funds for police and fire?
- don the legend - Wednesday, May 5, 21 @ 3:27 pm:
Legislators and city councils need to pay the pension obligations by taking the advice of the famous bank robber Willie Sutton but change it up just a bit by substituting “banks” with “millionaires and billionaires”.
- RIJ - Wednesday, May 5, 21 @ 3:29 pm:
No. We have pension reform. Just ask anyone hired after 2011.
- JS Mill - Wednesday, May 5, 21 @ 3:30 pm:
So the answer to intentional underfunding (bad behavior) is to wipe away the pensions of people who worked hard and earned them?
Sounds criminal to me. Will the GQP be asking for a criminal inquiry on this one as well?
At the same time- at the federal level- SSI benefits continue to increase. Something LP conveniently left out in his rant.
= The discussion needs to be had.=
It has, many times. Please keep up.
For example- Tier 2.
I am a hard no.
- RIJ - Wednesday, May 5, 21 @ 3:30 pm:
Ugh. Sorry, missing state and muni. :/
- RIJ - Wednesday, May 5, 21 @ 3:31 pm:
Mixing. (Rolling eyes)
- Chiman - Wednesday, May 5, 21 @ 3:31 pm:
The workers have done nothing wrong. They deserve their pensions. The culpable actors are the politicians who approved unaffordable pension benefits, and in exchange received extremely generous contributions from the unions seeking the pension changes. I can’t really blame the unions because it is their job to get the best deal they can for the workers. And they bought off the politicians in order to do that.
- don the legend - Wednesday, May 5, 21 @ 3:38 pm:
muon: IMRF employers are statutorily required to make their pension contribution every year.
- Morty - Wednesday, May 5, 21 @ 3:41 pm:
“new research”, same scam
- City Zen - Wednesday, May 5, 21 @ 3:44 pm:
Allowing municipalities to declare bankruptcy is not the same as municipalities declaring bankruptcy. It’s merely one bargaining chip for the side that doesn’t have many chips to begin with.
Yes, allow bankruptcies, especially for communities that are still dealing with the impact of white flight.
- illinifan - Wednesday, May 5, 21 @ 3:52 pm:
> This decrease of employees has helped to contribute to the funding crisis, as the part of the plan was to pay for current retirees through contributions made by employees. The very government entities that did not fund, and did not hire, did not budget and tax correctly, are now saying oops, we can’t pay what was promised. Sorry they need to address the structural issues that created this mess instead of being given a pass by filing bankruptcy
- Jocko - Wednesday, May 5, 21 @ 3:56 pm:
==but the price of admission is major reforms.==
To quote Inigo Montoya “You keep using that word. I do not think it means what you think it means.” Ever notice how Republicans never bring up ‘municipal bond reform’?
- d. p. gumby - Wednesday, May 5, 21 @ 3:59 pm:
Ridiculous. The T**** solution. For years the R/corporate answer has been to stiff the workers and this just continues the trend. Absent the courage to raise taxes, this is just another dodge.
- Tired Teacher - Wednesday, May 5, 21 @ 4:04 pm:
I wish I could say it as well as O.W. did. Please , read his post and then, read it again.
- Candy Dogood - Wednesday, May 5, 21 @ 4:18 pm:
This man receives a salary from the People of Illinois in order to be a part of the legislative process and while pretending to be proposing pension reform the only solutions he is prepared to introduce is pension reform by means of not paying the pensions and enacting a constitutional amendment in order to not pay people the pensions that they are owed.
This isn’t a creative approach. This isn’t a reform being touted, this is a man whose salary is a waste of Illinois taxpayer dollars parading pretending that he has a pension reform package when he doesn’t. This is a man who is expecting news coverage without analysis. This is a man who is expecting credit for trying to address the pension issue when he isn’t addressing it at all.
He’s not acting like a legislator, law maker, or innovator. His approach to governing is like a 19th century approach to a horse with a broken leg and worse yet, Representative Morris only knows how to diagnose broken legs so everything is a broken leg and everything calls for the same treatment.
We should start thinking of individual members of the Illinois GOP House and Senate caucuses as what they are, a tremendous waste of an opportunity to meaningfully contribute to our state and civil society.
- Anyone Remember - Wednesday, May 5, 21 @ 4:18 pm:
No. Outside of Cook County this would gut pensions for fire fighters and law enforcement. Apparently Rep. Morrison is sanguine about 67 year old fire fighters and law enforcement officers responding to fires / gunshots … /s
- Oswego Willy - Wednesday, May 5, 21 @ 4:25 pm:
- Norseman - , - Tired Teacher -
Thanks. Appreciate it.
- Lucky Pierre -
Your beef is with Lightfoot alone
Lightfoot and her crew/staff bungle things like that all the time.
- City Zen - Wednesday, May 5, 21 @ 4:26 pm:
==JB and the Democrats have been very busy sweetening pension benefits==
True. Rather than re-write the legislation that forced school districts to pony up for 6% pension spikes, JB re-instated the status-quo completely. Prior to the Chicago COLA bump, JB also enhanced Tier 2 pension benefits for safety personnel across the entire state. And if not JB, the next governor (or one after) will be forced to enhance Tier 2 benefits across the board.
The enhancements keep coming. Always have, always will.
- The Magnificent Purple Walnut - Wednesday, May 5, 21 @ 4:38 pm:
It’s “pension reform” when it’s not your pension.
- TheInvisibleMan - Wednesday, May 5, 21 @ 5:00 pm:
No.
I’m all in favor of anything that helps bring about actual real consequences to the parade of poor decision making.
A failure to allow consequences leads to more poor decision making, and eventually the poor decisions are going to cause catastrophic consequences in a way which makes pensions look like a speck of dust on the windshield.
Why does society generally need to be treated like a child. Can we maybe address that elephant in the room next.
- Former Downstater - Wednesday, May 5, 21 @ 5:09 pm:
What Demoralized said.
- Enviro - Wednesday, May 5, 21 @ 5:16 pm:
No.
I oppose city bankruptcy or reductions to the pensions promised to our city workers.
That would be so dishonest and unfair to workers.
- Pot calling kettle - Wednesday, May 5, 21 @ 5:25 pm:
No.
Well put by many above. The one point that needs to be added is this: The workers took those jobs, in part, because of the pensions they were promised. Who will take those jobs in the future if promised compensation is denied? We see the effects on teacher recruitment already.
- 62468 - Wednesday, May 5, 21 @ 5:31 pm:
No on bankruptcy.
Employer contributions are the problem with Article 3 and 4 pensions and always have been. Legislators should make employer contributions mandatory for 3 and 4s just like IMRF. Very few municipalities did anything to get to 90 percent funded by 2040. And IML wants reward them by moving the goal posts further down the road…
- Actual Red - Wednesday, May 5, 21 @ 5:37 pm:
I think it makes sense to maintain the control on municipal bankruptcies.
Cities are generally not like business that can sell off their assets and cease to exist if they get too in the red. Most places are not going to disincorporate entirely. Bankruptcy can work for a city if its financial problems stem from some particular bad investment that it can get rid of, which of course does not apply to pensions, and is pretty rare.
Most cities that run out of money have a structural problem - the residents don’t have enough money to tax, or the city doesn’t have the authority to use the kind of taxes it would need to get money from its residents - which bankruptcy won’t fix. So all you get in that case is a fire sale of assets that won’t fix the structural problem, and will probably make it worse.
I think if the state wants to let cities go bankrupt at will it would also need to greatly increase their options as far as ways to raise revenue. Until then, better to limit municipal bankruptcy to special cases.
- JS Mill - Wednesday, May 5, 21 @ 6:08 pm:
@cz- with regard to the 6% pay raise limitation (not as you inaccurately cal a “spike”) there were no limitations on pay increases until Blago pushed through a limit of 6%. So going back to allowing a 6% increase is not an enhancement. In most other industries a 6% pay raise is pretty nominal these days. I guess you just don’t value education.
- Really. - Wednesday, May 5, 21 @ 6:11 pm:
Sure they should. While the pensions are owed, and the state employees and teachers did nothing wrong, it will get extremely ugly when these funds run out of money. We just need 8 or 9 years to retirement so we can get out of Illinois before things get really bad. And i won’t feel sorry for anyone when that happens because they keep contributing to and electing those that stole from them.
- Oswego Willy - Wednesday, May 5, 21 @ 6:17 pm:
=== it will get extremely ugly when these funds run out of money.===
Narrator: no pension payments to pensioners have been missed
===We just need 8 or 9 years to retirement so we can get out of Illinois before things get really bad.===
That’s a long time. If you leave now, no worries.
===And i won’t feel sorry for anyone when that happens because they keep contributing to and electing those that stole from them===
Your sympathy, or lacking is noted and ignored.
- A - Wednesday, May 5, 21 @ 8:25 pm:
Not sure why pension reform is the correct term
The only thing reformers want to do is cut pensions or the benefits to retirees/future retirees.
Pension reform should be called appropriately, pension slashing.
- Nitemayor - Wednesday, May 5, 21 @ 8:32 pm:
Municipalities have a police and fire pension board that oversees the pensions and report to the city council/village board. They have kicked the can down the road for over 30 years. If you look at most municipal financial statements, they are still underfunding the pension funds, despite the recent increased contributions. 80 to 90 percent of the total municipal property tax levy is now going to fire and police pensions. Our already high property taxes are only going to get higher since the state cannot pick up the load. If you allow bankruptcy, what happens to the first responders who were promised a good pension for their dedication?
- Friendly Bob Adams - Wednesday, May 5, 21 @ 8:37 pm:
They are fooling no one here. “Reform” means cancelling existing obligations to retirees like me.
The R party keeps trying to come up with different ways to make it sound like a new idea, but it’s just stiffing people who paid into the system.
- east central - Wednesday, May 5, 21 @ 8:44 pm:
Might someone clarify this please? If IMRF has a mandated funding requirement such that it is nearly fully funded, is the proposal to short the local Police and Fire Firefighters pensions via bankruptcy? If so, is this a banner that the sponsors want to carry?
- Anyone Remember - Thursday, May 6, 21 @ 5:22 am:
===They have kicked the can down the road for over 30 years.===
Uh, where I live, 20 years ago the police / fire pensions were as well funded as IMRF. Then the General Assembly, with no Pension Impact Notes, enhanced police / fire pension benefits, leaving local governments to pick up the bill. Not exactly kicking the can down the road.
- TheInvisibleMan - Thursday, May 6, 21 @ 8:00 am:
– Not exactly kicking the can down the road. –
Meaning they only kicked the can down the road for 20 years instead of 30.
For reference, the fire department I live in has a 115% funded pension.
Choices were made. By everyone. Locally.
- Brick - Thursday, May 6, 21 @ 8:05 am:
No. The false narrative is that only worker pensions will be cut in bankruptcy. Bondholders will also take a loss. Borrowing costs for all Illinois municipalities will go up to cover the increased default risk.
- Bank Rapture - Thursday, May 6, 21 @ 2:39 pm:
Nobody “declares” bankruptcy. You petition the bankruptcy court to declare you bankrupt. Except for a possible handul of cases (Dolton?), the judge would tell a city to raise its taxes and pay its (pension) expenses. Not a solution.