64 Comments - Blue Dog Dem - Monday, Dec 9, 19 @ 2:07 pm: JB and the super majorities are now the sole owners. I expect them to get us out of this problem. - DIstant watcher - Monday, Dec 9, 19 @ 2:10 pm: BDD: vote for Fair Tax and see what they do. - Romeo - Monday, Dec 9, 19 @ 2:10 pm: Everything is fine, everything is fine, everything is fine. Remember that the only way these deficits mean anything is if you choose to stay here. A hop to Wisconsin or relocation to Indiana immediately absolves you as a taxpayer of this nightmare. - Rich Miller - Monday, Dec 9, 19 @ 2:12 pm: Romeo, don’t let the door hit you… - Blue Dog Dem - Monday, Dec 9, 19 @ 2:15 pm: Distant watcher. I have already seen what they can do Without voter approval. And when it comes to taxes and fees on the working poor and middle classes it ain’t pretty. - Oswego Willy - Monday, Dec 9, 19 @ 2:19 pm: When - RNUG -, and Rich Miller too, discuss the pitfalls of the Edgar Ramp in the short term measure of monies going in and the target of when the payments, and the number too, go down, a snapshot of a current fiscal year or time rarely finds the Edgar Ramp and following it a good comparison. The restructuring of any ramp, Edgar’s or another, can’t fully be predicated by ONLY expanding the time frame to get to a healthy place, there needs to be short term, medium term, and long term goal posts. We, as a state, need to give an impression of moving forward even if the ramp itself, in the immediate, seems to not do much about anything. It’s not fair, but… - yinn - Monday, Dec 9, 19 @ 2:31 pm: The problem with OPEB is, it’s only been about 10 years since the Government Accounting Standards Board put in the rule to report the liability in annual financial reports. In my municipality, we had the employer covering 87% of the premium costs, with pay-as-you-go funding and dependents benefiting from plans where no contractual obligation to do it existed. This got cleaned up a bit between the forced transparency and the Great Recession, and the Tier 2s do PEHPs instead, which are defined contribution plans. However, costs are continually hard to manage when you have a growing group of beneficiaries, yearly medical inflation consistently in double digits, and no funds put by to work for you. It’s quite a drag and probably will be for decades. - Grandson of Man - Monday, Dec 9, 19 @ 2:32 pm: Just like the pensions, we have to pay for retiree healthcare, which is also constitutionally protected. Workers did their part by paying their share, now the state has to do better. They followed the rules. The way forward needs to include more revenue from those who haven’t paid their fair share of state income tax for many years—at least since the state income tax began 50 years ago. The Fair Tax would be the centerpiece of our financial improvement. - Boone's is Back - Monday, Dec 9, 19 @ 2:39 pm: Meanwhile the former Illinois Investment Chairman is foreseeing a national bailout. Doubt that will happen any time soon under a Trump administration… http://altondailynews.com/news/details.cfm?clientid=17&id=295308#.Xe6wRuhKiUk - Donnie Elgin - Monday, Dec 9, 19 @ 2:49 pm: OPEB is flawed in terms of exposing clear easily understood financial data. One key flaw to OPEB estimates is implicit rate subsidy. Basically if you allow retirees to continue health insurance AT THEIR OWN COSTS as all IMRF employers must; there is an implicit increase to the health coverage. It is an almost theoretical cost - but GASB standard require each employee to hire an actuary every few years to calculate it. The implicit rate subsidy This practice creates an OPEB liability based on the theory that retirees have higher utilization of health care benefits than active employees. Unless the premium rate for retirees is set to fully recover their health costs, the premium for active employees is implicitly overstated to subsidize utilization by retirees. Similarly, unless the premium rate for retirees is set to fully recover their health costs, the premium for retirees is understated. This difference createsan implicit rate subsidy. - Donnie Elgin - Monday, Dec 9, 19 @ 2:51 pm: Meant employer - SSL - Monday, Dec 9, 19 @ 2:52 pm: What happens if the fair tax gets approved and doesn’t solve the pension and benefits problem? Is there then a “super extra fair tax”? Tell us Grandson, who else needs to pay more, and how much? Until JB and friends pass an exit tax, they have at least provided a solution. I know it irritates some, but you can’t blame people if they decide to see the rest of this great country. I recommend the southwest if you have a chance. Much better climate, and swell golf. - Oswego Willy - Monday, Dec 9, 19 @ 2:55 pm: - Donnie Elgin - This is “probably” why I went directly to the Edgar Ramp in this discussion to ALL monies, pension debt AND the OPEB number, as Illinois grapples with these post employment debts, so trying to wrap around our heads, the answer is to get to numbers that not only answer the fiscal numeric questions, but also allow an immediate feel, if you will, of responding to ALL deficits pertaining to these liabilities. - City Zen - Monday, Dec 9, 19 @ 2:55 pm: Government accounting classifying tens of billions in liabilities as “other”. ==Workers did their part by paying their share== Taxpayers (yes, everyone) did their part by paying their state income taxes. I, for one, have never missed an income tax payment and the state withholds more from my paycheck than needed. - Steve - Monday, Dec 9, 19 @ 3:01 pm: -What happens if the fair tax gets approved and doesn’t solve the pension and benefits problem?- There can always be a new definition of what a fair tax rate is over time. Progressive income taxation gives much more flexibility to tax the 6 figure crowd. - Oswego Willy - Monday, Dec 9, 19 @ 3:09 pm: === There can always be a new definition of what a fair tax rate is over time.=== * Passes (if it does, not a guarantee by any stretch) in 2020 * Implemented in 2021 - no raise. * Election, gubernatorial, in 2022 - no raise * Revisit of the rates would only begin… in 2023… with a March 2024 In the next FIVE years, the political capital needing to move the rates would be incredibly high, and the politics to that rate increase make even looking at it until 2023-2024 all but an impossibility. To these rates, specifically, OPEB and pensions, there needs to be a plan of attack (with the new rates) and then revisit it when the politics too allow. - Steve - Monday, Dec 9, 19 @ 3:18 pm: In a Blue state , who could object to voting for higher income tax rates on those who make over 150K a year? There are many Comrade Sanders supporters in Illinois. There are many Elizabeth Warren supporters in Illinois. Economic expansions don’t last forever. Illinois will need more revenue in a recession. It’s not totally unreasonable to assume a couple hundred basis point move in the 10 Year Note which will reek havoc on revenue outcomes. A reversion to the mean in interest rates is what many people are least expecting. - Oswego Willy - Monday, Dec 9, 19 @ 3:20 pm: === Comrade Sanders=== Goodbye, - Steve -. There’s a reason income taxes aren’t raised easily in Illinois, and the region(s) most effected by progressive rates are areas (like DuPage) where Dems would face serous backlash at the polls for votes moving the rate(s) You don’t get the political aspects. Fine. No reason to quibble with you. Thanks. - Steve - Monday, Dec 9, 19 @ 3:33 pm: -There’s a reason income taxes aren’t raised easily in Illinois- Because there is a flax tax… - Steve - Monday, Dec 9, 19 @ 3:34 pm: My bust “flat tax”. - Oswego Willy - Monday, Dec 9, 19 @ 3:40 pm: “OK, - Steve -“ To the post, === Pay-as-you-go Illinois currently is putting in just 11.1 percent of the total needed to meet annual costs and pay interest on deferred costs each year. And relative to paying those two and actually reducing the debt, it contributes just 7.5 percent of what would be needed to eventually reach full funding.=== This is where - RNUG - can put into perspective things, and while Tier 2 was implemented to address pensions, what is there to OPEB? (Softball lead-in to - RNUG -) - Perrid - Monday, Dec 9, 19 @ 3:44 pm: Yes Steve, because of the flat tax, meaning that everyone, including people who can’t afford it, would have to pay more if you went after those that could. IL has debts. IL can’t go bankrupt, and so far all attempts at otherwise dissolving those debts has failed, and is likely to fail. That means IL needs to devote more money to the debt. So either show your work on which hundreds of millions, or billions, of dollars you want to cut out of the annual budget, or admit that we need to raise taxes. If you want a flat tax hike, if you want everyone to pay more, then say that, instead of all this hand wringing about what rates the GA “might” impose in the future. It’s less than useless. - Anyone Remember - Monday, Dec 9, 19 @ 3:45 pm: GASB (and FASB) are run by people who have earned income solely from office jobs, have never engaged in hard physical labor a day in their life. Intellectually they are OK with 67 year old fire fighters who are still working as the NYSE has cratered, reducing their 401(k) to a 201(k). Congressman Gerry Connolly (D-VA, represents many federal workers) said to GASB representatives (paraphrasing): You’re the ones who have made it impossible to give anyone a benefit. - ike - Monday, Dec 9, 19 @ 3:55 pm: Steve - IL flat tax rate did go up recently. It was signed by Rauner. - Steve - Monday, Dec 9, 19 @ 3:59 pm: - Perrid - If there aren’t cuts, and taxes aren’t raised: public pensioners will not get their checks on time if the pension funds don’t have the money . No doubt public pensioners are do their money. There are many vendors in Illinois that don’t get paid on time. - Grandson of Man - Monday, Dec 9, 19 @ 4:02 pm: “It was signed by Rauner.” He didn’t sign it “directly.” He just quickly vetoed it so it could be quickly overridden. - Captain Obvious - Monday, Dec 9, 19 @ 4:03 pm: Why should only 3% pay more? This is everyone’s problem and is a direct result of the concept that elections matter. The people of this state, all of them, have consistently elected the representatives who got us where we are today, having to choose between pensions and programs. So the solutions should fall to everyone. If the answer is more taxes then everybody ought to pay more. The 3 % should not be penalized for a problem caused by the 100%. Note: I am not now, nor have ever been, a 3 percenter. - Oswego Willy - Monday, Dec 9, 19 @ 4:05 pm: ===taxes aren’t raised=== No matter how the progressive income tax vote goes, taxes are being raised. ===aren’t cuts=== Show your work. === There are many vendors in Illinois that don’t get paid on time.=== Comparing pensioners to vendors… yeah, that won’t be the consensus of ANY General Assembly or Governor. Again, your failure to understand the real politics is shining thru. - Steve - Monday, Dec 9, 19 @ 4:11 pm: -Comparing pensioners to vendors… yeah, that won’t be the consensus of ANY General Assembly or Governor.- When the money isn’t there , it’s not there. It’s not going to matter the “feelings” or “beliefs” of some state legislator at that point. The check is in the mail… - Oswego Willy - Monday, Dec 9, 19 @ 4:12 pm: - Steve - Good luck. - Anonymous - Monday, Dec 9, 19 @ 4:15 pm: by $7 billion. That increase alone is nearly what Illinois state government appropriates for K-12 education each year. illinois medicaid budget When compared with spending in 2000, those GRF and GRF-like Medicaid expenditures have grown by 141 percent – far more than the growth in tax revenues and spending on other core services. - OpentoDiscusssion - Monday, Dec 9, 19 @ 4:20 pm: “When compared with spending in 2000, those GRF and GRF-like Medicaid expenditures have grown by 141 percent – far more than the growth in tax revenues and spending on other core services.” Rarely ever gets mentioned. Why? - Last Bull Moose - Monday, Dec 9, 19 @ 4:28 pm: The Fair Tax allows the politicians to increase taxes on a minority while leaving the majority untouched. Over time the spread between lowest and highest rates will increase. And tax increases will not always just hit the top 3%. I will still vote for the Fair Tax. We have to get through today to get to tomorrow. And today we need revenue. - Grandson of Man - Monday, Dec 9, 19 @ 4:34 pm: The irresponsibility falls on so many of us who were around and governing/voting. We didn’t have the desire/will to tax upper incomes more all these years, so we left many billions of revenue dollars on the table. Now finally we have our best chance to fix this glaring problem. - SSL - Monday, Dec 9, 19 @ 4:45 pm: The fair tax would be much easier to support if it were truly a progressive tax. It is essentially a two tier tax. The tax goes up 275bps on income over $250,000. Then it goes up a whopping 25bps on income over $1,000,000. Doesn’t feel very progressive. Sorry JB, your “fair tax” is rated “mostly false”. - Striketoo - Monday, Dec 9, 19 @ 5:04 pm: A possible way out for Illinois? https://reason.org/commentary/rhode-island-supreme-court-upholds-pension-benefit-cuts-in-cranston/ - Oswego Willy - Monday, Dec 9, 19 @ 5:06 pm: - Striketoo - The ILSC, in a 9-0 vote couldn’t have been clearer. - RNUG - Monday, Dec 9, 19 @ 5:22 pm: == … I expect them to get us out of this problem. == -blue dog- unfortunately, I don’t expect them to solve it. I think the Governor and Legislature will go nuts spending the new revenue rather than devoting it all to the structural deficit and the overall debt. I base this on what happened when the income tax was first introduced in 1970. The GA set the rate high enough there was some excess revenue. But by FY75 the GA had spent the excess and then some … so they had to start shorting the Pension Funds payments. - Steve - Monday, Dec 9, 19 @ 5:25 pm: -The ILSC, in a 9-0 vote- 9? 7? or 6? - Oswego Willy - Monday, Dec 9, 19 @ 5:28 pm: It’s 7, typing too fast. Still… 7-0 That’s my bad. Apologies. - RNUG - Monday, Dec 9, 19 @ 5:31 pm: == When the money isn’t there , it’s not there. It’s not going to matter the “feelings” or “beliefs” of some state legislator at that point. The check is in the mail… == The courts have said the pension HAVE to be paid. If the money isn’t in the pension funds, it had to come out of GRF. Just like bonds get paid first. What will happen is current State services will be cut … and it could end up more drastic than what Rauner tried … - RNUG - Monday, Dec 9, 19 @ 5:33 pm: == A possible way out for Illinois? https://reason.org/commentary/rhode-island-supreme-court-upholds-pension-benefit-cuts-in-cranston/ == Rhode Island doesn’t have the constitutional and contractual level of pension protection that exists in Illinois. Apples and oranges - Oswego Willy - Monday, Dec 9, 19 @ 5:35 pm: - RNUG -, bringing the sanity. Thank you. - OpentoDiscusssion - Monday, Dec 9, 19 @ 5:41 pm: - RNUG - Monday, Dec 9, 19 @ 5:33 pm: == A possible way out for Illinois? https://reason.org/commentary/rhode-island-supreme-court-upholds-pension-benefit-cuts-in-cranston/ == Rhode Island doesn’t have the constitutional and contractual level of pension protection that exists in Illinois. Apples and oranges. RNUG is correct. First the RI decision was city, not state level. States can not default on their contracts- all other levels of government can. if the Illinois Constitution was changed then perhaps existing state employees might have their pensions altered. Do not see how this would apply to those all read retired as there would be not ‘contract’ to change. - RNUG - Monday, Dec 9, 19 @ 5:52 pm: == -The ILSC, in a 9-0 vote- 9? 7? or 6? == 7-0 and they were crystal clear on both the 20 year retiree health insurance and the SB-1 retiree benefit cuts. - City Zen - Monday, Dec 9, 19 @ 5:56 pm: ==The Fair Tax allows the politicians to increase taxes on a minority while leaving the majority untouched.== 70% of state tax returns filed are under $75,000. You don’t have to make much to be in the minority. - RNUG - Monday, Dec 9, 19 @ 6:10 pm: == if the Illinois Constitution was changed then perhaps existing state employees might have their pensions altered == Unlikely since the IL SC has consistently viewed the pension “contract” as being in effect from the day of first participation (generally either hiring or when actual employee status is achieved, which was after 6 month probation many years ago). The one thing the IL SC has consistently hinted at when not outright stating so is that the pension contract CAN be altered by mutual agreement between the State and the employee / retiree / pensioner. Note: this is an individual right and a union’s approval can not / does not substitute for individual agreement. As an example of what would be a valid and legal change would be for the State to offer to replace the 3% AAI with a CPI-U based COLA. That would probably be a fair offer but may not save much money. To date, the State has tried to offer something like a 1/2 CPI-U based COLA and wanted to cap it at 3% … a great deal for the State but not the employee / retiree which is why they got very few takers. - RNUG - Monday, Dec 9, 19 @ 6:13 pm: == States can not default on their contracts- all other levels of government can. == And in Illinois, a city can’t default either unless the city gets express permission from the Legislature. - Grandson of Man - Monday, Dec 9, 19 @ 6:14 pm: The Kanerva decision is where the ILSC guarantees retiree healthcare because of the pension protection clause. It’s ironclad, or toit (tight), as Austin Powers’ Goldmember would have said. The Fair Tax is very reasonable when compared to our neighbor states, who raise taxes on much lower incomes. Our tax hike wouldn’t kick in until $250,001/year. - Anyone Remember - Monday, Dec 9, 19 @ 6:17 pm: RNUG - “I base this on what happened when the income tax was first introduced in 1970. The GA set the rate high enough there was some excess revenue. But by FY75 the GA had spent the excess and then some … so they had to start shorting the Pension Funds payments.” Yes, however … . One, the economy. Nixon taking the country off the Gold Standard; price controls; OPEC I (October 1973); all did a number on the economy, resulting in something called “Stagflation.” Two, the shorting started during the Walker Administration. Rather than mention all the actions and snake oil (Lottery funding education) from that long ago era, instead consider what it produced: Pat Quinn, John Filan, David Vaught. - Last Bull Moose - Monday, Dec 9, 19 @ 6:23 pm: I think the Republicans blew their opportunity to limit spending. First, they could have supported a 1 % across the board tax increase with all the added revenue going to fund pensions (above the ramp requirements, not instead of it). This tax would expire when the pensions were 100% funded. Second, they could have a shift to a progressive tax with a fixed percentage point difference between the highest and lowest rates and brackets set as percentage of taxable income. For example The top 10 % could pay 2 percentage points over the base rate. Those between the he top 70% and the top 10% would pay 1% over the base rate. A general rate increase would still hit everybody. Instead of shaping the tax increase , the Republicans are trying to just say No. That did not work with drugs. I doubt it works here. - RNUG - Monday, Dec 9, 19 @ 6:24 pm: == Yes, however … . One, the economy. Nixon taking the country off the Gold Standard; price controls; OPEC I (October 1973); all did a number on the economy, == All also true. FWIW, I have a “No Gas” sign from that era as one of the signs on display in my garage. - RNUG - Monday, Dec 9, 19 @ 6:28 pm: == The Kanerva decision is where the ILSC guarantees retiree healthcare because of the pension protection clause. == I predicted that decision on Kanerva … but I was even shocked by how strongly the IL SC phrased the decision. - Anyone Remember - Monday, Dec 9, 19 @ 6:49 pm: RNUG - The Kanerva decision also applies to retired judges … /s - SSL - Monday, Dec 9, 19 @ 7:34 pm: You got that right Anyone. In a state where conflicts of interest are legendary in the world of public service, the Illinois Supreme Court gets their piece of pie as well. It’s funny how people don’t like to recognize that fact when admiring the Court’s great wisdom. - RNUG - Monday, Dec 9, 19 @ 7:43 pm: == It’s funny how people don’t like to recognize that fact when admiring the Court’s great wisdom == I used to know one now retired Justice. It’s hard to eliminate conflict and self-interest but I always thought he was fairly even-handed. - SSL - Monday, Dec 9, 19 @ 8:15 pm: I don’t disagree. There weren’t any options. The Illinois Supreme Court had to rule in this case. It doesn’t change the fact that they were ruling on their own compensation and benefits. It is something few ever recognize when pointing out the decision. - Oswego Willy - Monday, Dec 9, 19 @ 8:18 pm: === It doesn’t change the fact that they were ruling on their own compensation and benefits. It is something few ever recognize when pointing out the decision.== The only reason to point it out.. is if you think they are “corrupt” (Rauner kinda-sorta went there) and want to try to say the ILSC is not ruling on the law but their self interests. Is that what you are saying? - Andy S. - Monday, Dec 9, 19 @ 10:16 pm: I think the Kanerva decision may have impacted retired judges, but the other ISC decision a year later that struck down pension and AAI cuts did not directly impact judges because that legislation specifically exempted active and retired judges. So if the judges’ primary motivation was self-interest, one could argue that they would have upheld pension cuts for everyone but themselves because it would have put the state in a stronger financial position and increased the likelihood that their pensions would be fully paid. - RNUG - Monday, Dec 9, 19 @ 10:18 pm: == It doesn’t change the fact that they were ruling on their own compensation and benefits. == It’s been a couple of years since I last read their ruling, but memory says they did touch on that subject and acknowledge they had no way to avoid the appearance of a conflict of interest … but still had to rule on the issue. - SSL - Monday, Dec 9, 19 @ 10:40 pm: I do think if one is to repeatedly point out a ruling, it is relevant to acknowledge whether there is an obvious potential conflict of interest. When one rules on one’s own compensation, I believe it to be an obvious potential conflict of interest. It goes with the territory. - Oswego Willy - Monday, Dec 9, 19 @ 10:45 pm: === I do think if one is to repeatedly point out a ruling, it is relevant to acknowledge whether there is an obvious potential conflict of interest.=== Again. If you think they are corrupt, like Rauner, just say so. While - RNUG - cites that the jurists point out the alleged perceived conflict existing, making a point of it, you question their integrity. If you don’t question their integrity, then what’s your beef? - Pundent - Tuesday, Dec 10, 19 @ 9:01 am: =When one rules on one’s own compensation, I believe it to be an obvious potential conflict of interest.= And if the decision belies the law and the facts it may be noteworthy. But absent that it’s just an anecdotal observation bordering on nothing more than a drive by comment. - Courts - Tuesday, Dec 10, 19 @ 9:57 am: It is, without question, a conflict of interest. But there is no way around it. No other court to send it to. It is what it is. Sorry, comments for this post are now closed.