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Let’s not go through this again, please

Wednesday, Jan 15, 2020

* Another excerpt from Amanda Vinicky’s interview of Gov. JB Pritzker

Pritkzer’s original plan for this year’s budget included partially deferring the state’s pension payment, extending the deadline by which Illinois is set to reach 90% funding of its woefully underfunded pension systems, from 2045 to 2052.

After criticism from lawmakers on both sides of the aisle, and thanks to an infusion of unexpected tax money, that idea was dropped.

But it’s not off the table for the coming fiscal year, as long as it’s coupled with other changes such as transferring valuable state assets (the lottery, tollway or Thompson Center government office building are among the possibilities).

“We put out a number of things that we think you need to do, ways, tools, that you can use in order to help us manage our pensions in the state,” Pritzker said. “This component has to be done in conjunction with these other items. Because we’re trying very hard not to crowd out the important expenditures that need to be made.”

Pritzker and legislators are on the hook for finding $9.8 billion for the state’s pension systems in the next budget – a half-billion dollars more than the pension payment this fiscal year.

The only component of that “plan” that he was willing to flesh out last year was skimping on the state contributions. Pretty much everything else was super vague and iffy.

If he tries that same nonsense again, he’s gonna get the same push-back.

- Posted by Rich Miller        

  1. - muon - Wednesday, Jan 15, 20 @ 10:15 am:

    The lottery was originally pledged to education, so why not transfer that asset to TRS and adjust payments accordingly? It still goes to education, just teacher retirement instead of current operations. In the short term the money transferred may appear to be a wash, but the lottery as a long term asset has real value. It’s worth looking at how that long-term value in TRS might adjust state contributions over the next 25 years.

  2. - AD - Wednesday, Jan 15, 20 @ 10:22 am:

    Please don’t. As a finance guy, if you don’t put in enough money initially, pensions just doesn’t work out. I don’t care what kind of returns you get.

    And who knows what life expectancy will be in 30 years. The recent progress on Cancer survival rates could multiply exponentially by then and we could be looking at a much different actuarial picture on life expectancy. An increase of even 1 year on average would prove to be very expensive.

  3. - Bertrum Cates - Wednesday, Jan 15, 20 @ 10:22 am:

    This idea makes no sense whatsoever.

    Surely the Hynes and his crew can do better than this. Perhaps they should get creative and partake.

  4. - Lunchpail Patronage - Wednesday, Jan 15, 20 @ 10:22 am:

    Instead of borrowing money at 8 percent from the pension funds against their will, or 12 percent from vendors against their will, why not get a loan at 4 percent interest from the taxpayers with their consent?

    Add a checkbox to the personal tax returns that allow me to authorize the Illinois Department of Revenue to hold onto my tax refund until December 1, in exchange for 4 percent APR. I will gladly do it.

  5. - Pundent - Wednesday, Jan 15, 20 @ 10:28 am:

    =Add a checkbox to the personal tax returns that allow me to authorize the Illinois Department of Revenue to hold onto my tax refund until December 1, in exchange for 4 percent APR. I will gladly do it.=

    Most people are living paycheck to paycheck and see there tax refund as the annual “bonus.” Getting 4% doesn’t mean much if you’re counting on the money to pay down that big screen tv you bought at 21% interest. And for those that might see a 4% return as positive would they really have confidence in an IOU from the state? My guess is no.

  6. - muon - Wednesday, Jan 15, 20 @ 10:54 am:

    We are effectively paying interest on the unfunded liability at the assumed rate of return. For TRS that is 7%. Transferring an asset to the fund lowers the unfunded liability, and the effective interest that state pays due to underfunding. Of course one has to make a detailed calculation with respect to any asset transfer. But depending on the expected future value of the asset, it may be more advantageous to the state to have it serve a pension fund than as a source of general revenue.

  7. - Merica - Wednesday, Jan 15, 20 @ 11:06 am:

    I’d rewrite laws so that:

    all money from cannabis went to pensions
    all money from the increased road tax went to pensions
    all money from gambling went to pensions (and i’d increase the states share)
    all money from progressive income tax (to be enacted) went to pensions
    i’d make state property tax on farmland and put that money into pensions.

    once the state pension was 80% funded, i’d take half the money and distribute it for property tax relief and the other half to pre-k-8 education.

    but hey, why solve a problem when you can let it get worse

  8. - 61820 - Wednesday, Jan 15, 20 @ 11:06 am:

    There are a lot of people in the state who would bite the bullet and support a graduated income tax if they thought it would help solve the state’s financial problems. Continually signalling that he’s willing to short pensions is no way for JB to get these people on board.

  9. - Oswego Willy - Wednesday, Jan 15, 20 @ 11:16 am:

    It’s concerning that the administration seems confused to making a commitment to both a short term strategy that feeds into a long term plan, maybe even insulating the Edgar Ramp numbers and contributions.

    At this point, ignoring the property tax/education funding element shows an unwillingness to try to find out solutions beyond band aid talking point(s)

  10. - City Zen - Wednesday, Jan 15, 20 @ 11:26 am:

    ==or 12 percent from vendors against their will, why not get a loan at 4 percent interest from the taxpayers with their consent?==

    Why do vendors get 12% and I only get 4%?

    Race to the Bottom.

  11. - Rich Miller - Wednesday, Jan 15, 20 @ 11:26 am:

    ===I’d rewrite laws so that===

    You wouldn’t be reelected.

  12. - Ano - Wednesday, Jan 15, 20 @ 11:33 am:

    ==why solve a problem when you can let it get worse?==

    And blame people like teachers for the entirety of the problem too. Where would the fun be in that?

  13. - Lunchpail Patronage - Wednesday, Jan 15, 20 @ 12:00 pm:

    @Citizen Zen

    Vendors get 12% because the money is being “borrowed” from them involuntarily through unpaid bills, and the Interest rates under the Prompt Payment Act are intended to be punitive.

    If you are voluntarily loaning the state money, you are still getting a better ROI than you would in a money Market account, but a lower interest rate than Joey Knuckles charges.

    @Pundent - Thank goodness it’s voluntary, so you don’t have to check the box.

  14. - Blue Dog Dem - Wednesday, Jan 15, 20 @ 12:06 pm:

    My personal opinion. This is marketing 101 for his huge tax hike vote coming up. Dont know about were ya’ll live, but in my neck of the woods, school boards always threaten to cancel sports or band prior to a vote on raising property tax rates. Kinda similar.

  15. - RNUG - Wednesday, Jan 15, 20 @ 12:19 pm:

    == This is marketing 101 for his huge tax hike vote coming up. ==

    Yep. Politicians always threaten to cut the sacred cows, not the despised programs, in order to find up support for yet another tax increase

  16. - Just A Dude - Wednesday, Jan 15, 20 @ 12:54 pm:

    “Marketing 101″ As long as it works, we have long needed the additional evenue. If the progressive tax passes, then we need to dedicate a portion of that revenue and/or state assets to pension funding long term.

  17. - Anotherretiree - Wednesday, Jan 15, 20 @ 1:16 pm:

    ==AD== I believe life expectancies have dropped the last three years. What scares me is we are toying with skipping pension payments in a good economy. Another recession will happen someday…

  18. - Birds on the Bat - Wednesday, Jan 15, 20 @ 1:59 pm:

    Why all the concern? We have a balanced budget you know.

  19. - Lucky Pierre - Wednesday, Jan 15, 20 @ 3:11 pm:

    JB is already tipping his hand on the graduated income tax refusing to rule out raising taxes on those not in the top 3%

    His numbers don’t add up and voters will see through it

  20. - VerySmallRocks - Wednesday, Jan 15, 20 @ 4:09 pm:

    Time to pull the bandages off rapidly and get it done with.

  21. - SSL - Wednesday, Jan 15, 20 @ 5:02 pm:

    Didn’t JB break a leg the last time he tried to kick the pension can? Don’t do it JB. Please don’t do it.

  22. - 17% Solution - Thursday, Jan 16, 20 @ 6:33 am:

    “ And who knows what life expectancy will be in 30 years.“
    And yet the life expectancy has gone down three years in a row, including the years with better cancer treatment.

  23. - 17% Solution - Thursday, Jan 16, 20 @ 7:41 am:

    “Another recession will happen someday…”
    The low interest rate the pensions gain implies that the instruments they are invested in are low risk, not volatile and subject to recession, unlike stocks.

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