SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
CapitolFax.com
To subscribe to Capitol Fax, click here.
Fun with numbers

Tuesday, Jan 21, 2014

* AP

Recent pension reform legislation has been hailed as historic and groundbreaking, but the $160 billion savings plan ultimately won’t make much of a dent in the state’s growing deficits, a report released Tuesday says.

While the changes to the state’s major public pension systems will eliminate their unfunded liability over the next 25 years, the state’s deficit will increase to $13 billion during that time, according to the University of Illinois’ Institute for Government and Public Affairs study.

Institute researchers had projected a $14 billion deficit - a $1 billion difference - if the state had not implemented pension reform.

“The deficit has gotten off the front burner,” Institute Director Chris Mooney said. “And the pension solution, while important, in terms of (its effect on) the budget, it’s a red herring.”

The study is here.

* The Institute is projecting a $1 billion deficit for this fiscal year that doesn’t actually exist. If that’s the case, then I really gotta wonder about the rest of their numbers.

And even using their possibly flawed numbers, the pension reform (if it survives the courts) will save Illinois on average about a billion dollars per year through 2025, using a “cash budget gap” formula. Annual savings are designed to go way up after that, however.

* Also, the Institute admits that a different projection formula, which accounts for the annual change in unfunded liability, is “arguably more meaningful.” Using that projection of the pension reform law’s impact, you get an average annual savings of $5.5 billion. That’s pretty darned substantial.

And using that “arguably more meaningful” formula, if both the tax hike and the pension reform law remain in place, the average annual budget gap over twelve years is about $800 million. That ain’t great, but it’s far more manageable than repeal of both laws, which gives us an average annual budget deficit of a whopping $10.5 billion. Using the cash budget gap formula, repeal of both the tax hike and pension reform laws would result in an average annual deficit of $8.2 billion.

* So, yeah, not all problems are solved, but they are a whole lot more manageable with a permanent tax hike and the new pension reform laws than without.

- Posted by Rich Miller        


19 Comments
  1. - langhorne - Tuesday, Jan 21, 14 @ 12:28 pm:

    tho i dont much like it, i hope the pension reform law, or most of it, is upheld. only because i dislike the cullerton approach even more.


  2. - wordslinger - Tuesday, Jan 21, 14 @ 12:44 pm:

    I don’t see how you can reasonably project deficits 25 years out.


  3. - Liberty - Tuesday, Jan 21, 14 @ 12:45 pm:

    So it won’t hurt the state so much when the court tosses. Shame on the Republicans for their disdain for contractual law. Shame on the Democrats for their betrayal of employees.


  4. - 47th Ward - Tuesday, Jan 21, 14 @ 12:47 pm:

    When you describe a competing or opposing viewpoint as “arguably more meaningful,” then it’s time for you to re-think your case and maybe start over.


  5. - AnonymousOne - Tuesday, Jan 21, 14 @ 1:00 pm:

    All those hurt by the pension law have known from the start that pension thumping is not about saving the state from financial ruin. It was a call for blood letting from the disdained teachers and public employees simply because many in the private sector have lost some of their benefits. The only way to get back on financial track that even vaguely involves the topic of public pensions is the Martire plan, the plan that no legislator would lend credence to. Just re-emphasizes why we’ve gotten into this mess in the first place. Incompetence and politicking.


  6. - Rob Roy - Tuesday, Jan 21, 14 @ 1:04 pm:

    First if the state had paid it’s portion all along there wouldn’t be a shortfall. And correct me if I am wrong but I think the number they throw out is if they had to pay it out all at once not over time. Will not stand up in court.


  7. - illinifan - Tuesday, Jan 21, 14 @ 1:10 pm:

    Pension reform was indeed a red herring, but can happen now is to say to the citizens of Illinois that the tax hike has to remain in place and justify it with saying reform was done but it was still not enough. The hope is to make the tax hike more palatable by saying the employees took a hit as well. If the pension reform is thrown out later, by then the tax hike or other tax reforms are permanent.


  8. - Andrew Szakmary - Tuesday, Jan 21, 14 @ 1:12 pm:

    I wish I could deputize myself, declare police powers, and unilaterally force banks who lent me money on my mortgage, credit cards and student loans to accept less than what I contractually owe them. My personal financial situation would improve quite dramatically! But I suppose only rich and powerful entities like the State of Illinois can do that.

    Is this what we have come to? In place of the rule of law, and equality before the law, we will simply substitute the old Hungarian proverb: Jupiter is allowed to do things that oxen are not.


  9. - Chi - Tuesday, Jan 21, 14 @ 1:12 pm:

    The numbers on how the tax hike effects the deficit is the biggest reason Rutherford is the only GOP candidate that is being reasonable. The others are flat out lying, taking us for fools.


  10. - anon - Tuesday, Jan 21, 14 @ 1:39 pm:

    “not all problems are solved, but they are a whole lot more manageable” Manageable for whom? Not for those who just had 30 to 50 % of their life savings stolen by pension “reform.”


  11. - JustMe_JMO - Tuesday, Jan 21, 14 @ 2:15 pm:

    A question vs comment.

    I wonder if any of our elected leaders have any thoughts on what will be required after the court makes it final ruling?

    Does the court have to rule on Public Act 098-0599 as a whole or can they rule on individual changes within it?

    “Beginning July 1, 2014, all Tier 1 employee contribution rates will decrease by 1%.”

    If upheld the state immediately starts losing pension revenue. If rejected the state has to recoup over payments from employees.


  12. - Anonymous - Tuesday, Jan 21, 14 @ 2:21 pm:

    === So, yeah, not all problems are solved, but they are a whole lot more manageable with a permanent tax hike and the new pension reform laws than without ===

    === I don’t see how you can reasonably project deficits 25 years out ===

    Frankly, I don’t see how you can reasonably project savings 25 years out. Not with the profligate spending ways of the state gov’t.


  13. - Jimbo - Tuesday, Jan 21, 14 @ 2:38 pm:

    I’ll keep my 1% and my pension thanks. Oh, I’m not allowed to unilaterally dictate terms? Glad we agree. :). Really, I’m happy with my benefits reduced or not, I’m just concerned further reductions will follow if this holds up in court.


  14. - AnonymousOne - Tuesday, Jan 21, 14 @ 2:40 pm:

    In anticipation of less income from the pension cut, we’ve had lots of fun helping to cut the incomes of various service providers we’ve subscribed to over the years. They seem indignant that we’re leaving them to preserve our income, thereby hurting theirs, but that’s a consequence of less spendable income by a significant portion of citizens in this state. More than public employees/pensioners are going to be impacted at a time when our state is struggling to get back on it’s feet financially. Oh well. What did they think would happen?


  15. - Chris - Tuesday, Jan 21, 14 @ 3:44 pm:

    “I’ll keep my 1% and my pension thanks.”

    I’ll take the cut to 3% income tax and let somebody else pay for it after I move to another state, thanks.

    It’s equally dumb with whatever variation.


  16. - Arthur Andersen - Tuesday, Jan 21, 14 @ 4:41 pm:

    Rich, I’ve read this thing three times and it flat don’t make sense. May be getting slow in old age or the learned professors have just missed the mark, starting with the issue that in Illinois we don’t usually talk about “an all funds budget deficit.”


  17. - RNUG - Tuesday, Jan 21, 14 @ 5:09 pm:

    JustMe_JMO - Tuesday, Jan 21, 14 @ 2:15 pm:

    The GA, in it’s wisdom or idiocy, made the pension bill mostly non-severable … if significant portions get ruled unconstitutional, it will almost all get tossed.


  18. - lost in the weeds - Tuesday, Jan 21, 14 @ 9:39 pm:

    http://www.wics.com/news/top-stories/stories/vid_15263.shtml

    This headline makes no sense. Pension cuts do nothing? If I take 160 billion in savings and divide by 30 years I get 5.3 billion dollars a year savings.

    Then the article says it will reduce the deficit somewhat.

    Then the article says the deficit will be 13 billion without explaining that it is projected annual deficit ( I am assuming).

    I guess I could read the report and see if it makes sense.

    I guess pension reform was supposed to get rid of the entire structural deficit of the budget not just the pension liabilities. Maybe the retirees can pay the state rather then get a pension so everyone else can have their taxes reduced.

    More math in the classroom is needed.

    gheeeesh.


  19. - HUH? - Wednesday, Jan 22, 14 @ 6:16 am:

    This law will “fix” the problem in 25 years?

    The last law (the payment ramp) gonna fix the problem in 40 years? We are 1/2 way thru the ramp and now we fix the fix?

    HUH?


Sorry, comments for this post are now closed.


* An image is worth a thousand, um, empty seats
* Then and now
* Budget cuts and some ways forward
* Ryan talks about the impasse
* Question of the day
* How to survive a crazy boss
* Grandstand rollout begins
* Both sides of the governor's involvement
* Cubs trophy coming to Springfield
* Another wave of bomb threats includes Chicago's Jewish Community Center
* It's just a bill
* Mendoza takes heat over used car purchase
* Getting to a "win" is important for some Dems
* Bustos won't run for governor
* Charlie Brown's football
* Yesterday's stories

Support CapitolFax.com
Visit our advertisers...

...............

...............

...............

...............

...............
<


Loading


* Proposed changes to senior care - WSIL-TV 3 Sou.....
* TURRI: No tax dollars fund workman's comp - MyW.....
* Too early to tell if Rauner's speech did harm -.....


* Juvenile charged in suburban Chicago middle school beating
* 20,000 Chicago students to see 'Hamilton,' study US history
* ACLU calls out clinic for limited contraceptive procedures
* 3-year sentence given Chicago developer in visa fraud case
* Drew Peterson transferred out of Illinois prison system
* Drew Peterson transferred out of Illinois prison system
* Principals told not to allow immigration agent in schools
* Former white supremacists help others leave hate groups
* Excerpts from recent editorials in newspapers in Illinois
* Austria approves US extradition for Ukrainian oligarch

* Municipal League opposed to permanent property tax freeze
* Illinois State University seeks public input on its future
* AFSCME strike authorization vote outcome to be revealed this week
* Cheri Bustos won't run for Illinois governor
* Illinois bill would rein in pro athletes' worker comp claims
* GOP criticizes Illinois comptroller for buying used $32K SUV
* Effort to privatize economic development questioned
* State budget impasse still hurting schools
* DHS moving into former Barney's Furniture store
* Madigan says House will consider sale of Thompson Center

* Tribune Media attracts activist investor
* Obamacare repeal could cost Cook $300 million a year
* Offices atop Macy's State Street flagship?
* Marcus Lemonis countersues Bow Truss, Phil Tadros in contract dispute
* Illinois execs bullish on 2017, not local economy


* Trump administration working on transgender bathroom guidelines
* Man charged with calling in bomb threat to Northbrook high school
* Police: Man shot dead on Far South Side
* Illinois keeps NCAA hopes (barely) alive, damages Northwestern’s
* Jonathan Toews’ five-point night leads Blackhawks to big win
* No apparent thaw for Cubs on Sosa after recent Sammy comments
* Illinois runs away with a 66-50 victory against visiting NU
* Hundreds rescued from California floodwaters in San Jose
* CHA picks firm for next phase of Cabrini-Green redevelopment
* Spring of Chicago fishing in winter: Midwest Fishing Report


* Jonathan Toews hat trick leads way in Blackhawks' 5-3 victory over Wild
* Illinois routs Northwestern 66-50 to sweep season series
* Trump administration poised to change transgender student bathroom guidelines
* 'Refugees Welcome' banner unfurled at Statue of Liberty
* 2 dead, at least 2 injured in Chicago shootings
* GOP members of Congress met with protests at town halls
* Tuesday's recap: Blackhawks 5, Wild 3
* Cubs send messages intended to prevent complacency and selfishness
* Trump administration seeks to prevent 'panic' over new immigration enforcement policies
* Federal judge blocks Texas from cutting Medicaid to Planned Parenthood over anti-abortion videos


» Memos Clarify Travel Ban Executive Order
» Principals Told Not To Allow Immigration Agent In Schools
» City Council To Vote On Emanuel's Pick For Top Lawyer
» CHA Approves Mixed-Use Development In Rogers Park
» Cities To Illinois: Put Our Money On Autopilot
» Former White Supremacists Help Others Leave Hate Groups
» Chicago Cop With Long Complaint History Heads Busy Police District
» Hundreds Protest Trump At Chicago 'Not My President' Rally
» Report: Chicago's African-American Men More Likely To Be Unemployed, Undereducated
» Citizenship Ceremony Held For 25 People At City Hall


* Municipal League opposed to permanent property tax freeze
* E.J. Dionne: The death of a hero
* Michael Gerson: America’s sacred fire must not be doused
* Esther J. Cepeda: Betsy DeVos may be the least of public education’s worries
* Their View: Editorial: Remembering Bob Michel
* Illinois State University seeks public input on its future
* Kathleen Parker: Meet Rick. Meet the football. Hike!
* AFSCME strike authorization vote outcome to be revealed this week
* Cheri Bustos won't run for Illinois governor
* Illinois bill would rein in pro athletes' worker comp claims


* Falcons stun regional's top seed
* Bunnies sharing the wealth
* McGee pleased with Illini's offense so far
* PBL gets revenge, knocks of defending champs
* Illini's grade vs. Northwestern: B
* Coleman-Lands sprains ankle in win
* Richey: That's a Big Ten winning streak
* Tate: Reason to high five
* Veterans, youth key Illini win
* PODCAST: Fasteners Etc. Postgame Show 02-21-17


* Rolling Meadows pulls away against Hoffman Estates
* Antioch bounces St. Viator as Borries reaches milestone
* Toews gets hat trick for Hawks in 5-3 win over Wild
* ICCP, Timothy win
* Motorcyclist killed in Glendale Heights crash identified

* Group upset with Trump wants Town Hall mee...
* Hultgren updates work on heroin, opioid ab...
* Hultgren guides STEM scholars through pres...
* Hultgren criticizes immigration ban, Roska...
* Voters Shame Cowardly Reps with Town Halls...
* Federal hiring freeze puts chill on Yorkvi...
* US Congressman tours new Aurora Specialty ...
* Group upset with Trump wants Town Hall mee...
* Hultgren updates work on heroin, opioid ab...
* GOP congressman appears to distance himsel...

* Towns in Knox, Fulton Counties get federal......

* Towns in Knox, Fulton Counties get federal......

* Is Trump truly determined to make peoples’ worst nightmares come true?
* Reactivated an old project...
* Rahm reportedly met with Jared Kushner and Jeff Sessions in D.C., and other Chicago news
* Louise Kiernan will head ProPublica in Chicago
* ¡Arriba, Abajo, Al Centro, Pa' Dentro! National Margarita Day Is Just Around The Corner
* This week’s Hitting Left with the Klonsky brothers. Exclusive interview with Yonatan Shipira. The journey of an Israeli helicopter pilot to peace activist and musician. And Chicago education activist and musician Matt Farmer.
* Supporters of birther army doctor Terry Lakin petition Trump for pardon
* Illinois’s only true meadery is riding the current wave of interest in the fermented honey beverage
* Resistance Sunday.
* Betsy and Randi.


* Stars and Legends to Perform at 2017 Illinois State Fair - First Round of Grandstand Headliners Announced for Springfield Fair
* Earthquake Education Kiosk Unveiled at University Mall in Carbondale - IEMA, Central U.S. Earthquake Consortium project will help southern Illinois residents reduce damage, injuries from earthquakes
* Governor Takes Bill Action
* 2017 Budget Address
* Illinois Department of Veterans’ Affairs Announcednew pilot program titled Tiny Boots

  
* Remix Singularity gives Android Continnum-like actionability
* Verizon chops Yahoo’s price by $350 million, still a $4.5 billion deal
* LG G6 design deserves a company spiel
* Latest update to Google Phone app might be the root of Bluetooth issues
* Apple Shares a Series of AirPods Ads on UK YouTube Channel
* The Average iPhone User in the U.S. Spent $40 on Apps in 2016
* Hanging out at Snap’s unremarkable IPO roadshow

* Giolito feels work from offseason paying off early in camp
* White Sox content with group of catchers entering 2017
* This is not a typo: Soto throws to Soto during BP
* This is not a typo: Soto throws to Soto during BP
* Garcia driven to reclaim outfield spot
* Garcia driven to reclaim outfield spot
* Bourjos enticed to White Sox by weather, opportunity


Main Menu
Home
Illinois
YouTube
Pundit rankings
Obama
Subscriber Content
Durbin
Burris
Blagojevich Trial
Advertising
Updated Posts
Polls

Archives
February 2017
January 2017
December 2016
November 2016
October 2016
September 2016
August 2016
July 2016
June 2016
May 2016
April 2016
March 2016
February 2016
January 2016
December 2015
November 2015
October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
August 2006
July 2006
June 2006
May 2006
April 2006
March 2006
February 2006
January 2006
December 2005
April 2005
March 2005
February 2005
January 2005
December 2004
November 2004
October 2004

Blog*Spot Archives
November 2005
October 2005
September 2005
August 2005
July 2005
June 2005
May 2005

Syndication

RSS Feed 2.0
Comments RSS 2.0
WordPress




Hosted by MCS SUBSCRIBE to Capitol Fax Advertise Here Mobile Version Contact Rich Miller