55 Comments - Crime Fighter - Monday, Aug 13, 12 @ 4:21 pm: What good is a “guarantee” from a group that can’t even be trusted to honor a contract? I know I’ve said it before, but why are we still exempting services from any tax? Are we that scared that the members of the Civic Federation and other GOP patrons may move to a state where their yacht cleaning will be taxed? - western illinois - Monday, Aug 13, 12 @ 4:21 pm: Some how SURS pays more than SERS for its COLA now so some sort of deal may be possible that passes constitutional muster. Sadly though Quinn is all about stunts not quiet negotaition so we will probably end up with nothing - Small Town Liberal - Monday, Aug 13, 12 @ 4:32 pm: It’s refreshing to see a fair offer to work together rather than the outrage we’ve been seeing. - Bill - Monday, Aug 13, 12 @ 4:33 pm: If they really want to get something constitutional done the framework is there. - wordslinger - Monday, Aug 13, 12 @ 4:34 pm: About the only way I can figure a workable guarantee is if you bond out the annual contribution. Under current rates, that’s not a bad idea. - Colossus - Monday, Aug 13, 12 @ 4:44 pm: Ah, Word, if only “bond” wasn’t a four letter word these days. - Wensicia - Monday, Aug 13, 12 @ 4:44 pm: “A guarantee that the state will pay its portion as required.” Sure. Unless a law is created to enforce this, it’s useless. - Yellow Dog Democrat - Monday, Aug 13, 12 @ 4:49 pm: @Wensicia, et al. - I believe the idea is to create a contractual guarantee not just for pension benefits, but pension payments. This would enable a pension system member to successfully to sue the state not just if benefits were reduced, but also if an actuarially required pension payment was not made. - Skirmisher - Monday, Aug 13, 12 @ 4:57 pm: I agree that this is a refreshing and reasonable proposal that could be a constitutional basis for reform and merits serious, adult discussion. Ain’t gonna happen, but it certainly should. - BFro - Monday, Aug 13, 12 @ 5:03 pm: I’m highly skeptical of this $900M a year generated by “closing loopholes”. Sounds to me like making IL even more unfriendly to business, which means losing jobs, which means less tax revenue. There is likely some loopholes that could be closed, but $900M seems like a fantasy. Besides, I thought the “true look at revenue” was what brought us the 67% tax increase. Guess this is another look at revenue. Who knew we were so undertaxed under Blago? - Anonymous - Monday, Aug 13, 12 @ 5:12 pm: This should also include changing the pension ramp law to reduce the target from 90% to a more doable 70 or 75%. - Small Town Liberal - Monday, Aug 13, 12 @ 5:15 pm: - This should also include changing the pension ramp law to reduce the target from 90% to a more doable 70 or 75%. - Tell the ratings agencies, they’re demanding 100%. - Judgment Day - Monday, Aug 13, 12 @ 5:16 pm: Nice try, but it’s unlikely to work. The State of Illinois would be nuts to make any type of agreement until they are in full compliance with GASB Statements 67 and 68. Link to the details: http://www.gasb.org/cs/ContentServer?site=GASB&c=GASBContent_C&pagename=GASB%2FGASBContent_C%2FGASBNewsPage&cid=1176160126951 GASB 67 goes into effect on 06.15.2013 GASB 68 goes into effect 06.15.2014 But (and there’s always a ‘but’), the bond markets want to see the actual projections with any new proposed bond issues, particularly bonds which are going to be pension/retiree related. Just one little section from the GASB press release: “The new standards will improve the way state and local governments report their pension liabilities and expenses, resulting in a more faithful representation of the full impact of these obligations,” said GASB Chairman Robert H. Attmore. “Among other improvements, net pension liabilities will be reported on the balance sheet, providing citizens and other users of these financial reports with a clearer picture of the size and nature of the financial obligations to current and former employees for past services rendered.” Once the State of Illinois is in full compliance with both GASB 67 and GASB 68, we will have a comprehensive picture as to what of pension obligations are, and what assumptions were established when creating such calculations. Don’t expect good news. - Yellow Dog Democrat - Monday, Aug 13, 12 @ 5:19 pm: Rich - The link appears broken. YDD PS: I doubt these points are any different from what unions have been saying all along, but today seems like a strange time to be offering a “framework” for pension reform. - geronimo - Monday, Aug 13, 12 @ 5:21 pm: No one can say that greedy union types are unwilling to bend. There you have it. Only puzzling thing is why our state refuses to adopt a graduated tax structure like the other 45? states. That, in addition to taxing services would work wonders for the state of our economy in Illinois. - Dan Bureaucrat - Monday, Aug 13, 12 @ 5:23 pm: It’s a good gesture, but it doesn’t get us too much further along. It hinges on what is meant by the “state portion” and what is meant by some members “paying more.” - Shemp - Monday, Aug 13, 12 @ 5:37 pm: It’s a step, but also increasing the formula for years of service/age is needed if I am not mistaken. The GA had no problem doing it to IMRF a couple sessions ago. - Yellow Dog Democrat - Monday, Aug 13, 12 @ 6:05 pm: @geronimo - The answer about graduated income taxes is pretty simple. 1) Not many voters pay attention to state finances until we are in a “crisis’; 2) Even with the heightened public attention, most voters can’t tell you what the top source of state revenue is or our top expense; 3) The graduated income tax requires a constitutional amendment and a solid public understanding of our state’s fiscal condition; the later doesn’t exist and the former means the tax won’t come in time to address the “crisis.” - Anonymice - Monday, Aug 13, 12 @ 6:08 pm: == Only puzzling thing is why our state refuses to adopt a graduated tax structure like the other 45? states.== Well, there is this puzzling thing called a constitution that says we can’t, and which takes a little effort to change. Regarding a contractual obligation to make deposits into the pension funds, there is this little problem we have with the law that says collective bargaining agreements of more than one year are “subject to appropriation,” which this administration believes allows it to get out of any part of a contract they want to, simply by not appropriating funds to pay for all of the contract. How do you contract with people like that? - wordslinger - Monday, Aug 13, 12 @ 6:23 pm: –But (and there’s always a ‘but’), the bond markets want to see the actual projections with any new proposed bond issues, particularly bonds which are going to be pension/retiree related.– The bond markets want new paper, period. The demand for paper from the United States is insatiable. That’s why bad old Illinois’ recent debt offerings have been oversubscribed by a factor of four or five. The world is pouring money into the United States looking for safe haven — T-bonds, munis and corporate bonds. They’re doing so even as inflation is eating up all the yields. The state would be crazy not to take advantage of this market. You’ll probably never see another in a generation. Corporate America is doing it. Texas Instruments is issuing debt for general corporate purposes, including stock buybacks. http://online.wsj.com/article/SB10000872396390444042704577584792371582220.html?KEYWORDS=corporate+bonds - AC - Monday, Aug 13, 12 @ 6:24 pm: This is a fair proposal, and one which will save more in the long run because it is constitutional. Given the track record of the legislature, there is no reason to believe they will put money aside awaiting for a court decision. Instead, they will be left shocked that their pension diminishing proposals are found unconstitutional, and will have already diverted pension funds to other priorities. Since much of the press, and especially the Tribune, referred to the tax increase as “67%” I hope they also refer to any increase in employee contributions using the same methodology. A move from 4% to 8% for state employees should have a “100% increase in employee contributions” headline. The ratings agencies can want 100%, but they are getting far less than that now. What the state needs is the kind of financial commitment to get the pensions funded at a much higher percentage, and if they do that the credit rating will improve. I also agree that this proposal is too reasonable, and too constitutional to gain much traction, but someone has to be the adult in the room. - Flan - Monday, Aug 13, 12 @ 6:25 pm: I’ll agree with other posters: why in the heck would the Union, or anyone, trust this administration? Guaranteed pension installments? Please. Maybe Quinn will have your back if you work for Caterpillar, but not if you work for him… - one day at a time - Monday, Aug 13, 12 @ 6:45 pm: link to presser is in this IEA Insider article: http://www.ieanea.org/featured/iea-insider-coalition-offers-framework-to-solve-pension-crisis/ - PublicServant - Monday, Aug 13, 12 @ 7:25 pm: It’s an excellent proposal. Now Rich can’t say “what’s your solution?” As he reluctantly feels that fiscal and political reality dictates that the only doable solution is to have state pensioners and current state employees shoulder the vast majority of the state’s failure to pay, over 4 decades, it’s portion of the pension costs. Word has it right regarding assuring the state’s payback via pension bonds. Not only is it the right time to bond out the state’s debt, it is the only way to guarentee the state’s payment. This problem, the state’s failure to pay it’s share, took 4 decades to get us into this mess. A reasonable solution will take a similar amount of time to resolve it. Don’t tell me a temporary income tax increase was the “all get a haircut” from the revenue side. State employees paid that increase too, and they didn’t get to participate in the payroll tax reductions available to the private sector employees. The proposed giveback by state employees isn’t limited to four years either. Let’s hear what the Trib, Sun-times, and other pundits (Rich) have to say about this proposal. Will they ignore it? Or will it get a fair hearing? - Emanuel Kant - Monday, Aug 13, 12 @ 7:28 pm: Utter nonsense designed to make unions look reasonable. How much will current workers pay in this proposal? How much toward the total unfounded liability will this cover? This is a laughable press release put out by arrogant union fat cats finally concerned the public is fed up with them. - LincolnLounger - Monday, Aug 13, 12 @ 7:39 pm: The real “nonsense”, Emanuel Kant, was governmental leaders signing those contracts. Once they did, the union “fat cats” have every right to expect the State to live up to its obligations. There are no “do overs” or “ghost men on 3rd”. The State is obligated to live up to those agreements, and I seem to recall Blago and Quinn embracing AFSCME in order to get those coveted endorsements. Time to pay the piper, expensive though he may be. - PublicServant - Monday, Aug 13, 12 @ 7:59 pm: @Emanual Kant === This is a laughable press release put out by arrogant union fat cats === As opposed to the numerous press releases put out by IPI, whose funders are allowed to remain anonymous, or the Civic Committee fatcats. It’s a framework, meant to foster cooperative and fair solutions to a problem. - RNUG - Monday, Aug 13, 12 @ 9:46 pm: It’s a good proposal. However, if it ever reaches the stage of actually being a bill, it needs a couple of tweaks. To put some teeth in it, there should be a clause that makes the State 100% responsible for all pernsions payments in a fiscal year (including the employee portion) if, in any fiscal year, they do not live up to their commitment to fund the pensions as required int he bill (no partial payments or future penson holidays). And if they go the IL Constitution Amendment route, there should be a clause voiding the entire deal if the State fails to enact and the voters fail to pass the changes. The GA’s feet need to be held to the fire until the entire deal is done and the penalty to the State has to be drastic to ensure that happens. Otherwise we’ll see more half deals like the last income tax increase where they never issued the bonds. - RNUG - Monday, Aug 13, 12 @ 9:49 pm: In other words, ‘Trust but verify’ - steve schnorf - Monday, Aug 13, 12 @ 9:49 pm: it’s a start, but unless the increase is quite large, it doesn’t generate anywhere near enough money-but, it is a start - wishbone - Monday, Aug 13, 12 @ 9:55 pm: Anyone who thinks there is a constitutional requirement that can force a legislature to appropriate money the state does not have (for pensions or anything else) is whistling past the graveyard. In the end if the money is not there, and there is no stomach for tax increases the pensioners will take a haircut. All this sturm und drang about pension reform is meaningless. - reformer - Monday, Aug 13, 12 @ 10:00 pm: we are one coalition can kiss my #$#. They don’t represent me. we should not have to pay for the politicians mistakes. the public elected them and everybody should pay to fix it. If it means higher taxes then so be it. making state workers pay for it would be like making the Enron peolple that lost money having to pay it back.!!!!!! - RNUG - Monday, Aug 13, 12 @ 10:01 pm: Or maybe the ‘mutual assured destruction’ should dissolve GARS if the pension payments are missed ? - Yellow Dog Democrat - Monday, Aug 13, 12 @ 10:13 pm: === Now Rich can’t say “what’s your solution?” === === Word has it right regarding assuring the state’s payback via pension bonds. === First, I don’t think anyone’s given more comprehensive coverage to the root causes of the pension shortfall than Rich. Although I do think that everyone in the media has more or less missed the point that while Illinois’ situation is worse, every state saw their pension funds collapse due to the Bush recession. Secondly, lawmakers are never, ever, EVER going to pass legislation bonding out our pension obligations as part of this deal. They couldn’t muster the political will to borrow $7 billion to pay our backlog of unpaid bills to nonprofits…you think they are going to borrow $80 billion to pay union pensions? Even if they WANTED to, the voters would revolt. Support for more borrowing is around 7 percent among Illinois voters. Next idea, please. - wordslinger - Monday, Aug 13, 12 @ 10:21 pm: YDD, no one suggested bonding out an $80 billion obligation. It was more exploring how you could guarantee the annual contribution. Presumably, making the full annual contribution every year through any means, combined with investment growth, would raise the systems’ funding percentages. - RNUG - Monday, Aug 13, 12 @ 10:33 pm: I hope the unions also have a bunch of slick ads in the can ready to run. Until the unions go on the offensive and educate the voters about the root causes of the pension shortage, Word is right and nothing much will happen. If there is one thing the unions have done wrong the last two or three years, its been to allow the Chicago Civic club and their captive media lapdogs to tell the ‘big lie’ about state employees and their pensions. - RNUG - Monday, Aug 13, 12 @ 10:37 pm: wishbone, The State has money. It’s all about their priorities, either honoring contracts or handing out welfare and pork. - Yellow Dog Democrat - Monday, Aug 13, 12 @ 10:52 pm: @RNUG - Educating voters about the root causes won’t help. The voters are the ones to blame. They elected the General Assembly cycle after cycle to expand education, health care, social services without raising taxes, which the GA dutifully did. Skipping pension payments was the viable alternative to a sound tax system. - Yellow Dog Democrat - Monday, Aug 13, 12 @ 10:54 pm: @RNUG - Check the budget. There’s not a lot of “welfare” or “pork” being “handed out” these days. If you happen to find $80 billion, let us know. YDD - Small Town Liberal - Monday, Aug 13, 12 @ 11:03 pm: reformer - The Enron people never got that money back, period. Maybe you should ask them if they would have taken ~85 cents on the dollar. - RNUG - Monday, Aug 13, 12 @ 11:43 pm: YDD, You don’t have to find $80B, all you have to find is enough to keep paying the normal pension cost plus the ramp-up. Some people would contend you can find that just in payments to illegals; I’m not sure I agree with that because I don’t have access to the data to figure it out. I could extrapolate sme of it from other numebrs, but that would just be an educated guess. And as a former manager, yes, there is a still a bunch of waste. I still saw it around the last time I stupidedly agreed to go back on contract for a special assignment about a year and a half ago … never again, they are screwed up beyond saving. It would take a dictator with an ego ten times the size of Blago to ever root the waste out. I’m going to go out on a limb here, but not very far, and predict the State isn’t that far away from meltdown on a lot of critical proceses and systems. They can’t seem to find the money to fix things properly and the bandaids are wearing through. As a state retiree, I’m just glad SRS is independent enough the coming fiascos most likely won’t hit them … although even a lot of their more experienced people have been bailing lately. And I’m glad I also know (what used to be) the backup plans for making payroll when the field hockey pucks hit the fan. Some days I wish I didn’t know this stuff … - Just Me - Monday, Aug 13, 12 @ 11:56 pm: How do you legislate that future General Assemblies make that payment? The Republicans wrote a law like that when they were in power, and Madigan just amends that law every year to add exceptions for that year. - Sueann - Tuesday, Aug 14, 12 @ 12:05 am: By loopholes do they mean things like Enterprise zones? - MyLife'sWorkForThis - Tuesday, Aug 14, 12 @ 6:45 am: As a state employee nearing retirement, I can say this is a decent idea. Most employees have never been opposed to paying more. Legally if municipal entities don’t pay the amounts they are supposed to pay IMRF they can just take the money. It’s too bad the state can’t be compelled to do so by such an option also. However, the General Assembly and our politicians have shown us repeatedly we can’t trust them to do what they should on any number of issues. - PublicServant - Tuesday, Aug 14, 12 @ 7:08 am: YDD, I never said Rich didn’t give adequate coverage to the pension issue. He does a great job of covering it. In my opinion, what I find less than fearless was his shift towards acceptance of the proposals being floated as a Fait accompli. I paraphrase, but the impression I got was “I feel for you, but you’re about to get steamrolled, and if you don’t have a solution that is acceptable to the powers-that-be, be quiet, and accept ‘reality’”. Rich is both a reporter and a commentator. If a position is just, as I believe the state employees position to be, you don’t give up on advocating for it, regardless of your position on the fiscal side. No one argues that a solution must be found, or that the state caused the problem (well most don’t argue this), but blaming the victim (state employees) is never fair. Yes, I know…’Life’s not fair, sometimes’, but there are those that continue to work towards fairness, and those who are content, even giddy, about identifying a ‘them’, in this case public employees, villifying them, and then working to place the entire ’solution’ to the issue on them. And don’t give me the tax increase argument. State employees paid that too, and it’s temporary. And going after retirees is completely reprehensible. They make an irrevocable decision to retire based on the conditions not only in place at the time of their retirement, but in most cases, that existed throughout their career, and then are faced with drastic cuts to reasonable deferred compensation represented by the pension. They made financial decisions based on those promises. Their families depend on the state keeping those promises, and they can’t just go out in this economic climate, and make up for the cuts by getting a job. You do understand how difficult it is for a person over 50 to find employment now don’t you? And that’s any employment at no where near what they were making before deciding to retire based on the pension facts on the ground at the time. Then there’s the argument used by Quinn and others that these cuts are necessary to preserve the pension-promise, albeit a severely watered down pension promise. “You should go along, because the alternative is you’ll get nothing…” That’s FUD pure and simple. The state used what should have been their pension payment for over 4 decades to provide services that benefitted all Illinois taxpayers either directly, or indirectly. Now, the reasonable, fair and legal way to distribute the burden of the state’s borrowing is to get all the state’s taxpayers to pay that borrowing back…over a time period that reflects acknowledgement of the amount of time it took us to get into this crisis. There are other proposals out there that could provide either the solution, or a good starting point for substantive, legal solutions. IGPA has a plan, as does Ralph Martire’s Center for Tax and Budget Accountability. Again, Word is correct, and provides a reasonable way to guarentee state payment through POBs that are never going to be cheaper than they are now. While the thoroughly discredited rating agencies, though unelected, threaten our credit rating, demand for state bonds and the rate of return offered by state onds has never been higher. - Rusty618 - Tuesday, Aug 14, 12 @ 7:35 am: This is nothing new. This idea of an employee paying more into the pension system has been discussed for over a year. But if this offer accepted, the “COLA choice” should be dropped. - Jade Rabbit - Tuesday, Aug 14, 12 @ 7:59 am: This is too vague. The fact that it comes up with less than a BILLION dollars to band-aid a system that is draining BILLIONS from the taxpayers is very telling. Why should working taxpayers “guarantee” a retirement system that is so far out of touch with reality that it’s been buried by corporations for over a decade. Where in 2012 do you find a company allowing workers to retire at the age or 55? Where in 2012 do you find a pension based on a percentage of an average over the last three years worked? Where in 2012 do you find full medical cost coverage for a retiree? Where in 2012 do you find COLA increases? Finally, where in 2012 do you find a “guarantee”? We Are One Illinois coalition of labor groups should start with: “We thank the state of Illinois for providing labor groups with collective bargaining and prevailing wages. In return, our seasonal labors will no longer drain the state of resources by annually going on unemployment.” How about that? - PublicServant - Tuesday, Aug 14, 12 @ 8:19 am: The answer to all your questions Jade, is Illinois. - unspun - Tuesday, Aug 14, 12 @ 8:30 am: As far as a conceptual “framework”, this sounds like a good starting point. If nothing else, it shows the unions’ willingness to concede (pay more) in order to continue to receive a benefit that they were already guaranteed. It also underscores that unions have consistently been at the table and ready to bargain, despite claims that they have been “obstructionist”. Examining and closing some of the unnecessary tax loopholes is a solid way to address some of the funding shortage. Will it solve the whole problem?…NO, but it should be part of the solution. Some tax “loopholes” provide tangible benefits that outweigh the cost, while others do not; get rid of those that don’t pay for themselves. - RNUG - Tuesday, Aug 14, 12 @ 8:32 am: Jade Rabbit, see Public Servants comments at 7:08 … - roadiepig - Tuesday, Aug 14, 12 @ 9:04 am: Wow Jade- all that anger is bad for your health. Your list of “wheres” contains all of the half-facts that the IPI and CCC love to spread, but don’t tell the whole story (no mention of the severe cuts in pension percentage for retiring before the age of 60 unless your age and years of service add up to 85 or more, full insurance premium paid but still pay deductibles and co-pays on medical care). COLA increases? Social Security has averaged a little over 3% over the past 30+ years. Oh, and your last one? Where in 2012 do you find a guarantee?” Its the State of Illinois Constitution, plus the U.S. Constitution in rules pertaining to contracts. Your last paragraph seems to be aimed at school teachers, so I I guessing you have a beef with them? - Tiffany Outlet - Wednesday, Aug 15, 12 @ 1:14 am: Must remember that we can learn is limited. Time is limited, and not just because life is short, due to higher staff numerous. We should strive to put all our time to do the most beneficial thing. - Ed Hammer - Wednesday, Aug 15, 12 @ 3:14 pm: I am behind We Are One Illinois, one hundred percent. The state’s elected official have played a shell game with workers pension contributions for decades. Wall Street continues to grow in profits , yet pension fund investments are having weak returns. It is time the immoral partnership between politicians and big business stops screwing the working man and pensioners. “In a very telling article by the director of a bipartisan fiscal policy think tank, he argues that cuts to pension benefits would do little or nothing to solve the state’s pension crisis. He points out that neither the pension benefits promised , nor the cost of paying those benefits is responsible for the unfunded liability pension systems . . . if retirement benefits and benefit increases were the only source of unfunded liability, the state’s retirement systems would be 94% funded, rather than the current 43.4 %.” Source: Retired State Employees Newsletter, The Reporter, Vol XXXV No. 7 July 2012 - Jade Rabbit - Thursday, Aug 16, 12 @ 8:28 am: @ Ed Hammer. The unions made their beds by becoming the largest voting Bloc in the state. Let them sleep in it. The same politicians that gave away the benefits in union contracts for decades of a sure vote are the same con-artists that played the shell game. I don’t see why non-union voting tax-payers should support any type of a guarantee. If the state can’t pay for a union contract with the high price of benefits, I’m in favor of the state hiring a non-union work force. All these problems would then be moot. - Burberry Outlet - Thursday, Aug 30, 12 @ 10:49 pm: Be yourself, don’t change for anyone. If they don’t like you at your worst, then they don’t deserve you at your best. Sorry, comments for this post are now closed.