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Cullerton asked about Moody's statement that even if budget passes state still may be downgraded to junk bc backlog of bills is so high (1)
— Tony Arnold (@tonyjarnold) July 6, 2017
Cullerton says they'll have to negotiate cuts or revenue, but this budget already has a lot of cuts and there's not much more to cut
— Tony Arnold (@tonyjarnold) July 6, 2017
The only way I see this happening is if the Republican leaders finally start showing up to meetings with the Democrats and if the Democrats take the Moody’s threat seriously.
posted by Rich Miller
Thursday, Jul 6, 17 @ 9:56 am
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So…Rauner is correct that short term budget gimmicks aren’t enough?
Maybe we really do need structural reform to change the long term fiscal trajectory of the state?
Comment by Phil King Thursday, Jul 6, 17 @ 10:03 am
5 now and 6 plus soon. As they say it’s arithmetic. You can’t push future liabilities off forever
Comment by Sue Thursday, Jul 6, 17 @ 10:04 am
…Maybe we really do need structural reform to change the long term fiscal trajectory of the state? …
Enough already with ’structural reforms’. Either put a dollar value on ’structural reforms’ or drop it. Either prove their value without hostage taking or drop it. Either win the debate with measurable criteria or drop it.
Comment by don the legend Thursday, Jul 6, 17 @ 10:09 am
Dems: “Hey, we want to raise taxes even more and would like for you to work with us…what’s that? No, we still don’t want to do any kind of workers comp reform, property tax relief, or pension reform, the unions wouldn’t like that…hey, where are you going?”
Comment by so... Thursday, Jul 6, 17 @ 10:09 am
Maybe if the Speaker would allow the Leader’s meetings to actually accomplish negotiated compromise the attendance would be better.
Why is only the Governor and Senate President addressing the pension crisis? The Speaker is quiet as a mouse. Does he not see the Moody’s announcement as a serious threat? What about the Democratic candidates for Governor? Also quiet as a mouse about pensions.
The Speaker probably thinks the problem with Moody’s is that they are not reasonable and have a far right wing agenda.
Comment by Lucky Pierre Thursday, Jul 6, 17 @ 10:10 am
Darn it, if only we had passed term limits! /s
Comment by JohnnyPyleDriver Thursday, Jul 6, 17 @ 10:11 am
Cut college sports, that’s over $200 million. If only they could sell Soldier Field and Guaranteed Rate Field for much of anything. Sell all the Park District golf courses that aren’t making money. They haven’t even started to get creative yet and prioritize entertainment lower on the list.
Comment by Jeff Trigg Thursday, Jul 6, 17 @ 10:14 am
I’d say a permanent tax hike isn’t a “gimmick”. I’d call that a “structural” change. May not be the “structural” change Rauner wanted but it doesn’t get less gimmicky.
Comment by Anon Thursday, Jul 6, 17 @ 10:14 am
If the Governor vetoes SB1 (as threatened), more action will certainly be needed or schools won’t receive funding.
Comment by jade me not Thursday, Jul 6, 17 @ 10:15 am
The sates around us have made structural reforms and out pace us in percentage of job creation, income growth, gaining manufacturing jobs not losing them, and not losing their tax base to out migration at the rate Illinois is.
Comment by Arock Thursday, Jul 6, 17 @ 10:15 am
==Either put a dollar value on ’structural reforms’ or drop it.==
Assuming you’re talking about the “non-budget” reforms here (since pensions/procurement/etc all have dollar values). To which I say: show me a macroeconomic modeled prediction that has been close to accurate and this will be a valid demand.
If you don’t see how lower worker’s compensation costs helps grow jobs, you’re lost. Or how a property tax freeze prevents us from loosing businesses and residents (i.e. taxpayers.)
Now those things really just stop the bleeding. If you want true reform, you need to scale back the union contracts (at the state and local levels) so we can control spending. End special union handouts like the Prevailing Wage. Maybe a constitutional amendment so we can have some common sense pension reform.
But let’s at least stop the bleeding, not just pump more blood into the patient.
Comment by Phil King Thursday, Jul 6, 17 @ 10:16 am
Phil King - Much of what Moody’s seems to be looking at regarding its review and possible downgrade of Illinois stems from pension liability - which legislators on both sides tried to “fix” multiple times without success - and the giant, ever-growing mountain of unpaid bills which has skyrocketed since Gov. Rauner took office and this stalemate began. Saying that Rauner is correct in these circumstances, that we need all of these structural and ideological changes - i.e. term limits, right to work zones, etc - in order to properly balance our budget moving forward, is a bit like giving a pitcher a win in the after coming in with a 5-0 lead and giving it up before a comeback int he ninth.
Comment by Anonymoose Thursday, Jul 6, 17 @ 10:19 am
===Does he not see the Moody’s announcement as a serious threat?===
I know Rauner is worried…
===Rauner: We have to put the peoples’ concerns, what the people need and want ahead of all else. The people should come first in Illinois. Not Wall St., not special interests, not the political class, not the political insiders, not the politicians, not the folks who make money from the government===
Rauner isn’t too concerned about Wall Street.
Comment by Oswego Willy Thursday, Jul 6, 17 @ 10:20 am
“Or how a property tax freeze prevents us from loosing businesses and residents (i.e. taxpayers.)”
So you are saying you are willing to freeze property taxes and willing to raise income taxes to adequately fund schools at a state level or are we just talking about magic beans again?
Comment by Dee Lay Thursday, Jul 6, 17 @ 10:21 am
What part of this package is going to slow down the out-migration from this state?
Madigan is frustrated only because he can’t control Moody’s.
Comment by Downstate Thursday, Jul 6, 17 @ 10:22 am
I really don’t understand Moody’s. The point of a bond rating is to rate the chance of default on paying back the bonds. Throughout all of this the bonds of the State have been paid on time and in full. The bond holders get paid at the top of the waterfall. There is huge disconnect going on with the ratings. Sure the State is a fiscal mess but that is not what they are designed to rate.
Comment by Former Bartender Thursday, Jul 6, 17 @ 10:23 am
==willing to raise income taxes…to adequately fund schools==
Or how about we get rid of Prevailing Wage (so construction is cheaper), close townships, consolidate special districts (drainage, mosquito, etc), and change collective bargaining so the contracts don’t bankrupt taxpayers.
The property tax revenue we save should be more than enough to fund schools.
Comment by Phil King Thursday, Jul 6, 17 @ 10:25 am
==Why is only the Governor and Senate President addressing the pension crisis?==
Again I’ll say, two pension reform bills have passed.
== Does he not see the Moody’s announcement as a serious threat? ==
The Governor doesn’t so why should he?
Comment by Demoralized Thursday, Jul 6, 17 @ 10:26 am
“We still don’t want to do any kind of workers comp reform” What about these? HB1625(passed House); HB2525 (passed both Houses); HB2622 (passed both Houses); HB200 (passed House)? Maybe not the kind of reform you had in mind, or enough of the kind of reform you had in mind, but is some reform nonetheless and is the kind of reform that can get sufficient votes to pass.
Comment by The Real Just Me Thursday, Jul 6, 17 @ 10:27 am
Phil King at 10:25….
You are absolutely right.
Comment by Downstate Thursday, Jul 6, 17 @ 10:28 am
== No, we still don’t want to do any kind of workers comp reform, property tax relief, or pension reform, ==
Let’s take this item by item.
WC - there was some stuff on the table. A little progress is better than none, should have taken it, and then come back for more. I’ll note this doesn’t change State spending any … and it may not even create any more State revenue.
Property tax relief - freezing it doesn’t fix anything. The biggest component is school districts because the State doesn’t pay enough. If you up what the State pays, then you can get relief. But to up what the State pays, you have to have more State revenue (high taxes). Do you want higher State taxes in exchange for lower property taxes? Will you vote for that?
Pensions - you can’t erase the $130B (or $250B if you use Moody’s numbers). The courts have been clear; you have to pay it. If you want to pay less interest, then you need to pay it faster, which requires larger payments, which requires more State revenue (higher taxes). The State can (and did) change things for new hires. The most recent bills have some more changes, even some voluntary offers to switch between programs. But all that is just nibbling around the edges. You can’t get rid of the debt that way. And if you cost shift the teachers to the local districts, that frees up State money to go to funding but it will raise the local property taxes. Somebody has to pay it; the only question is if it will be Peter or Paul?
Comment by RNUG Thursday, Jul 6, 17 @ 10:28 am
==get rid of Prevailing Wage==
==change collective bargaining ==
Not going to happen so talking about it wastes everyone’s time
==consolidate special districts==
They passed a local government consolidation billl
Comment by Demoralized Thursday, Jul 6, 17 @ 10:28 am
look at reducing pension and health care contributions for administrators in schools. A property tax freeze would force some of the excesses to be reigned in.
The numbers are staggering
Comment by Lucky Pierre Thursday, Jul 6, 17 @ 10:29 am
How could lowering workers comp costs not reduce city and state budgets?
Rahm disagrees, the city pays through the nose for workers comp.
Comment by Lucky Pierre Thursday, Jul 6, 17 @ 10:32 am
–Cut college sports, that’s over $200 million.–
Nope, because tax dollars don’t pay for college athletic programs. Ticket revenue, media rights, donations, etc. do. UIUC gets about $50m in media revenue to fund its programs annually alone.
Comment by Ron Burgundy Thursday, Jul 6, 17 @ 10:36 am
What common sense pension reform. I thought we already had it. As RNUG reminds us from time to time, it’s Tier 2. The Tier 1 group is, sadly, finite, as we all are, and a constitutional amendment can’t wipe out prior debt anyway.
Reform is fine, and I’m for it, but it is misleading to encourage the belief that the state can ditch its pension debt somehow. Or that paying it off can somehow become magically less expensive.
Comment by Cassandra Thursday, Jul 6, 17 @ 10:37 am
@RNUG
==WC…I’ll note this doesn’t change State spending any==
Yes it does. The state and local governments both have to pay worker’s compensation.
==Property taxes…freezing it doesn’t fix anything.==
Yes it does. It provides 4 years of relief to taxpayers and businesses (remember Gov wanted permanent) and if wages and inflation go up, then a freeze is a cut.
Combine that with reform to cut the cost (like consolidation) and you lower the long term spending trend line of local governments. You freeze their revenue–forcing them to cut costs–while giving them new options to control costs.
==Property taxes…biggest component is school districts==
Biggest doesn’t mean only. There’s a lot of local government fat to cut without touching schools.
==you can’t erase the $130B…The courts have been clear==
The courts are ruling according to existing law. Legislatures have the power to change law.
Amend the Constitution, send the Court a message that their rulings are absurd and untenable and bankrupting the state.
Then reform pensions so that existing benefits are protected, but unearned future benefits can be modified. That means your COLA goes down and for current workers your payout might be less.
We promised to much. Taxpayers can’t afford it.
Comment by Phil King Thursday, Jul 6, 17 @ 10:38 am
Phil King
Structural reform, for Rauner, means policies aimed at upward redistribution/concentration of capital. He wants to lower wages for working people and public sector employees. If that’s the path illinois is going to take, let’s at least debate it and decide that in the legislature. Rauner, though, is trying to force that agenda on an electorate that, by and large, doesn’t want it.
I wish, though, Democrats would do a better job of presenting another version of structural change, one where we try to achieve growth by addressing the state’s revenue problems (regressive tax structure, poor school funding) and through investments in education and infrastructure and wise use of our prodigious fresh waters.
In other words, let’s model ourselves on Manhattan and Silicon Valley rather than try to be Kansas or Indiana. Why settle for so little?
Comment by hexagon Thursday, Jul 6, 17 @ 10:38 am
==WC - there was some stuff on the table. A little progress is better than none, should have taken it, and then come back for more. I’ll note this doesn’t change State spending any … and it may not even create any more State revenue.==
Please. There was practically nothing on the table. Codifying a court case and some nibbling around repetitive injuries. That won’t even move the needle. And those “reforms” would be used by the unions and trial lawyers as an excuse for why we don’t need to do anything else for the next couple of years while we “give the reforms time to work.”
Comment by so... Thursday, Jul 6, 17 @ 10:38 am
@Jeff Trigg:
You seem to be unaware of the fact that the State of Illinois does not operate your park district golf courses.
Comment by Anonymous Thursday, Jul 6, 17 @ 10:39 am
Perhaps if property taxes were frozen , School Boards might be forced to operate in a more responsible fashion and we wouldn’t see Tribune articles routinely reporting on irregularities and plainly dumb financial actions. It’s easy to spend money when all you need to do is issue your mandate to the local taxing authority who in turn raises the tax levy
Comment by RNUG Thursday, Jul 6, 17 @ 10:40 am
Phil King:
You can’t change the law or amend the Constitution to change benefits to current workers. It doesn’t work that way. Someday some of you are going to realize that the pensions have to be paid no matter how much you harrumph and stomp your feet about it. Instead of spending so much time trying to figure out how to stiff the pensioners that time would be better spent focusing on paying for it.
Comment by Demoralized Thursday, Jul 6, 17 @ 10:41 am
==Perhaps if property taxes were frozen , School Boards might be forced to operate in a more responsible fashion and we wouldn’t see Tribune articles routinely reporting on irregularities and plainly dumb financial actions. It’s easy to spend money when all you need to do is issue your mandate to the local taxing authority who in turn raises the tax levy==
Ding ding ding. We have a winner.
Comment by so... Thursday, Jul 6, 17 @ 10:41 am
== Legislatures have the power to change law. ==
State Legislators can’t change Federal Contract Law.
Comment by RNUG Thursday, Jul 6, 17 @ 10:44 am
==He wants to lower wages for working people and public sector employees.==
You know this isn’t true. Maybe that’s what you think the result would be, but it’s silly to act like his goal is to hurt the middle class and make the rich richer. Rauner and his supporters see business growth as the key to job and wage growth.
I’ll grant you that he wants to reduce overall compensation (benefits and wages) in the public sector. But then again, union employees in the public sector are underproductive and overcompensated because of their contracts. So that’s a good deal for taxpayers. It’s not like he’s seeking mass layoffs or slashing wages. He wants to freeze wages (public sector wages in Illinois have largely been frozen since 2008) and make health care benefits more closely match the private sector.
==State Legislators can’t change Federal Contract Law.==
Many states and most of the private sector have reformed their pensions in ways that don’t violate contracts and have survived challenge. The problem in Illinois is our STATE Constitution, which we can change.
No one is suggesting attacking existing benefits. But we need to control the growth, which is largely driven by an unsustainable COLA. Needs to be tied to inflation.
Comment by Phil King Thursday, Jul 6, 17 @ 10:48 am
== Yes it does. The state and local governments both have to pay worker’s compensation. ==
Can’t speak for local government, but the State doesn’t buy WC insurance, it self insures. And they fight claims big time. Or at least they used to. It won’t make a lot of difference to the State; they already under budget for WC claims just like they do for employee health insurance.
Comment by RNUG Thursday, Jul 6, 17 @ 10:48 am
Me @10:48
I meant PRIVATE sector wages have been frozen since 2008 while public sector wages have continued to grow over that time.
Comment by Phil King Thursday, Jul 6, 17 @ 10:49 am
== It provides 4 years of relief to taxpayers and businesses (remember Gov wanted permanent) and if wages and inflation go up, then a freeze is a cut. ==
You missed my point. Looking at it from the perspective of the State budget, a local property tax freeze has almost zero effect on State level debt or revenue. The exception is the property tax deduction on the State income tax, freezing the local tax means a touch less deduction on the IL-1040.
Comment by RNUG Thursday, Jul 6, 17 @ 10:52 am
==Can’t speak for local government, but the State doesn’t buy WC insurance, it self insures. And they fight claims big time. Or at least they used to. It won’t make a lot of difference to the State; they already under budget for WC claims just like they do for employee health insurance.==
And if the workers comp system becomes less expensive (causation standard, reduction in medical fees etc…) then the self-insured entities will benefit as well. Savings.
Comment by so... Thursday, Jul 6, 17 @ 10:52 am
==PRIVATE sector wages have been frozen since 2008==
I have zero friends in the private sector who have had their wages frozen for the past 10 years.
==public sector are underproductive and overcompensated==
And you believe that why? Underproductive? I’d like more explanation as to why you would say such a thing.
Comment by Demoralized Thursday, Jul 6, 17 @ 10:54 am
== Then reform pensions so that existing benefits are protected, but unearned future benefits can be modified. That means your COLA goes down and for current workers your payout might be less. ==
You must have missed my comments about contracts. The pensions have contract status, you can’t retroactively change that.
Comment by RNUG Thursday, Jul 6, 17 @ 10:54 am
== unsustainable COLA. Needs to be tied to inflation. ==
Why stop there ? Lets lower the interest we pay on Bonds ? Its the same concept you are advocating. And I would suggest we pay you .40 on the dollar for your State refund. Hey, this cheating people under the cover of the public of good is fun . I see why you like it so much..
Comment by Anotheretiree Thursday, Jul 6, 17 @ 10:56 am
Whoever posted at 10:40 using my name, get your own …
Comment by RNUG Thursday, Jul 6, 17 @ 10:58 am
Ooh it will be fun to watch you guys try to spin that one. Turns out a repeat of 2011-2015 doesn’t actually fix anything, because:
a) state is still spending beyond revenues
b) borrowing money for pension benefits at rates higher than the investment return of said pension benefits.
Also the concept of “not much more to cut” is preposterous in a context of a budget that 20% out of balance. When you’re out of money, you cut expenses.
Comment by Finance101 Thursday, Jul 6, 17 @ 10:59 am
Ron Burgandy - check your numbers again. UIUC is the ONLY public college in the state that supports its own athletic programs. Chicago State University basketball team supports itself with ticket sales and donations? Or Illinois Central College baseball? Not hardly, that’s a big myth that college sports pays for itself. ISU, EIU, WIU, NIU, SIU, SIU-Edwardsville, UIC, Chicago State, ALL are subsidized with taxes. And that’s just division 1.
Anonymous - you seem to be unaware that if park districts sell off their courses losing money, those taxpayers will have lower property taxes. Or instead of those property taxes going to golfers, maybe they’d go for something like local pensions instead.
Not even trying to be creative yet…
Comment by Jeff Trigg Thursday, Jul 6, 17 @ 11:01 am
== Many states and most of the private sector have reformed their pensions in ways that don’t violate contracts and have survived challenge. ==
And those pensions were considered grants, not contracts. Different legal standard.
Comment by RNUG Thursday, Jul 6, 17 @ 11:01 am
Contrary to what some believe or have been told, the WC reforms, passed or close to agreement, were not nibbling around the edges. They were scored by the rate making agency as saving employers tens of millions of dollars per year. One version offered by the Democrats actually saved over $100 million per year. The Republicans rejected that because they wanted to nibble a little more.
Comment by The Real Just Me Thursday, Jul 6, 17 @ 11:02 am
Illinois is doomed unless we get pension reform, propert tax reform, workers comp reform, streamline all units of government and run the government efficiently. The budget is just window dressing by John and Mike. As long as unions have all this power Illinois is doomed. Rauner is the only one who knows what it will take to solve the problem. Trouble is Mike and John are holding everything up.
Comment by Dandy Edward Thursday, Jul 6, 17 @ 11:03 am
Why not let public pension reform go to the voters?
Comment by Steve Thursday, Jul 6, 17 @ 11:08 am
===As long as unions have all this power Illinois is doomed.===
Collective bargaining, prevailing wage in the trades and private sector have no baring on state government budgets
The Pension Clause isn’t the problem, the problem is getting the payments that were missed and the ramp issues.
Those issues were/are government-centric issues.
Comment by Oswego Willy Thursday, Jul 6, 17 @ 11:09 am
==And you believe that why?==
Underproductive because they work a 37.5 hour week, with two 15 minute breaks, have excessive holiday and vacation time, and are impossible to discipline or terminate for substandard work.
Over compensated because through most of the pay range, (clerical workers, truck drivers, etc), they receive more than a similar position in the private sector.
If we didn’t have these restrictive union contracts, they would receive overtime only after 40 hours (without counting sick time or vacation time), would get fired for bad work, and would get raises only for good work.
Comment by Phil King Thursday, Jul 6, 17 @ 11:11 am
==When you’re out of money, you cut expenses. ==
Stop.
You’re looking at this like a sane person would. Normal people budget according to a simple logic:
A) “How much do I have to spend?”
B) “What do I want to spend that amount on?”
Springfield logic goes more like this:
A) “What do I want to spend on?”
B) “How much does that cost?”
C) “How much do I have?”
D) “How much do I need to take from taxpayers to close the gap?”
Comment by Phil King Thursday, Jul 6, 17 @ 11:16 am
== unsustainable COLA. Needs to be tied to inflation. ==
First off, it is an Automatic Annual Increase, not a Cost of Living Adjustment.
The State chose a fixed 3% AAI because they wanted an easily calculated amount they could budget to every year instead of an unknown variable that could hit them out of the blue each year. The average inflation for just about any 20 year period (and actually the entire time) the Feds have been tracking the CPI has averaged between 2.9% and 3.2%.
If you are old enough to remember, when the ASI was adopted, it wasn’t too long after a period of high inflation. 3% looked low then.
Now if the State wanted to change to a true compounding COLA, not some half baked one at set at half of CPI with a 3% cap like they did the Tier 2 AAI, I might consider an offer to switch from my AAI.
/rant on
But everything the State has dreamed up so far was with the intention of shorting the employee / retiree. As someone who made their payments into the pension system as required and also paid my taxes as required, I resent the State trying to take away what was agreed to. I don’t get to have a “do over” for the last 45 years, negotiate a higher salary, or get to decide to work elsewhere. So why should the State get to skip out on paying me my deferred compensation?
Comment by RNUG Thursday, Jul 6, 17 @ 11:18 am
@Phil King
E) Borrow money at astronomical yields to cover the deficit, because over promising to public sector is how I stay elected.
It’s kind of amusing to watch the mental gymnastics of the people at the trough, because God knows they can’t admit the money has run out.
Comment by Finance101 Thursday, Jul 6, 17 @ 11:21 am
Demoralized - your question wasn’t to me, but I’ve linked to articles about several studies saying most government jobs could be replaced by automation. ONe of these was from the U.K. but I suspect much would apply here. Heck, I’ve seen articles in the New York Times about farm jobs like picking crops and milking cows, in danger of tech disruption. When the federal government did sequestration of its budget there were all these doom and gloom predictions from democrats which did not come true (and later President Obama took credit for the sequestration default plan by boasting about how much he had cut the deficit).
Why not try it instead of socking the middle class with more taxes?
Comment by lake county democrat Thursday, Jul 6, 17 @ 11:24 am
== Why not let public pension reform go to the voters? ==
It did in 1970.
Back then Illinois apparently believed in honoring their commitments and paying their bills. Not only did they protect pensions, they also instituted an income tax.
Comment by RNUG Thursday, Jul 6, 17 @ 11:26 am
Phil:
All governments work like that for budgeting. It’s ridiculous to try and compare government budgeting to your household budget. Not remotely the same.
And I suppose you’re entitled to your opinion on public sector workers. I think you’re just another member of the anti-public employee crowd and a member of the “I don’t have it so neither should you” group.
Comment by Demoralized Thursday, Jul 6, 17 @ 11:26 am
” So why should the State get to skip out on paying me my deferred compensation?”
Because there isn’t money to pay for said deferred compensation?
One would argue that these benefits weren’t negotiated in good faith, but even that is secondary to the mathematical reality that there will not be enough money to pay for said benefits. Every and all arguments you may come up with are secondary to that reality.
Comment by Finance101 Thursday, Jul 6, 17 @ 11:26 am
How in the world can you say “most” government jobs could be automated? “Most” indicates more than half. I’d love to see that list of jobs you think can be automated.
You couldn’t cut your way out of our current situation. It simply is not possible.
Comment by Demoralized Thursday, Jul 6, 17 @ 11:28 am
==So why should the State get to skip out on paying me my deferred compensation? ==
Deferred compensation is money you save on your own, out of your salary. You paid for a only a tiny fraction of what your pension will cost the state over your life time. That’s not a sustainable model.
I feel for you that you were promised $50,000 annually for life, without having to save, and which increases by 3% each year…and now that might be somewhat slightly reduced. I feel for you that your $4,000 monthly check will only increase by a rate needed to keep up with cost of living, rather than to match the raises you received as a union employee.
But I also feel for the waitress who is raising two kids on $24,000 a year, who has to save for her own retirement, and who keeps seeing more and more of her wages taken to pay for a state government that spends a quarter of its annual revenue on pensions and can’t afford to pay her child care assistance.
You don’t have to LOSE anything to help her, other than future promises. No one is saying your check needs to go down.
A promise is a promise. But we promised too much.
Why should an entire generation of young workers be on the hook for the mistakes of our parents’ politicians? They promised too much without considering the future costs, to win elections.
Comment by Phil King Thursday, Jul 6, 17 @ 11:30 am
Finance:
The State is a going concern and always will be. It will always collect revenue. Those pension benefits are guaranteed by the Constitution so those, along with debt service, will always be paid. Which is why the focus should be on paying the debt rather than figuring out a way to get around paying it. Unless you figure that out then a lot of other things are going to get crowded out.
Comment by Demoralized Thursday, Jul 6, 17 @ 11:31 am
==just another member of the anti-public employee crowd==
Spoiler alert: public employee here.
Comment by Phil King Thursday, Jul 6, 17 @ 11:32 am
There’s a Procurement Reform bill (SB08) sitting on Rauner’s desk that he publicly stated would save the state $750.000.000, (his number not mine) He wants reforms, sign it.
Comment by Not done yet Thursday, Jul 6, 17 @ 11:34 am
lol. Got me. Never know the ending to a story do you? Said out of frustration.
And I disagree that the model was not sustainable. The state made it that way through poor decision making by not paying the bill from the beginning. And then they made it worse when they decided to do a graduated payment plan and not preparing for the increased payments.
Comment by Demoralized Thursday, Jul 6, 17 @ 11:37 am
RNUG, thanks for all your wise measured words on pension issues and the AAI (not a COLA).
On the pension, the debt cannot be erased. It is owed and as the ILSC said it has to be paid. The state borrowed by not paying into the plan for too many years. Even though the debt cannot be eradicated the amortization can be changed and the pain spread out over more years, reducing the amount that has to be paid from the state budget. This could be done as part of a general reform that could allow for the increased dollars to pay off outstanding debt in other areas. Once the debt is cleared, then take the “extra” dollars and tie it to a major change in education funding, increasing the state share (this would have to also be tied to property tax relief). If there is a desire for reform there is some opportunity here if a long range plan is clearly defined. I am tired of all this short term planning and budgeting.
Comment by illinifan Thursday, Jul 6, 17 @ 11:41 am
@Demoralized
Oh I don’t disagree, I would imagine most court would see retirees higher in the creditor stacks than people receiving state services. Unfortunately for Madigan, his myopia about the sustainability of his promises got the state where it is and the only real solution is either cut services (ie expenses) or work on a constitutional amendment to impair his previous promises. I have a sneaking suspicion the latter will happen, just because it would be very difficult for Democrats to cut enough expenses and raise revenue to pay for those promises and actually stay elected.
Margaret Thatcher’s quote about running out of other’s money applies here.
Comment by Finance101 Thursday, Jul 6, 17 @ 11:45 am
=Perhaps if property taxes were frozen , School Boards might be forced to operate in a more responsible fashion==
SB 1 removes almost all State restrictions. School districts will NOT be more responsible.
Comment by winners and losers Thursday, Jul 6, 17 @ 11:47 am
===Underproductive because…===
37.5 Hour work week. Only paid for 37.5 hours, too. So - you get what you pay for. Want 40 hours - pay for 40 hours.
15 minute breaks. Federal Labor law.
Excessive holiday and vacation - Industry standard vacation. Holiday’s I’ll give you that one.
Seen plenty of people fired from State jobs for a number of reasons. It’s not hard to terminate someone if you are willing to prove why they should be fired.
Some jobs are overpaid (clerical, etc). Many are underpaid. Professionals (Auditors, accountants, lawyers, engineers) all make well below the industry standard.
No one is getting raises in public sector even if they do a good job. How is that fair?
Comment by Dublin Thursday, Jul 6, 17 @ 11:58 am
hi folks, the state pre and post budget is sailing into a perfect storm of structurally increasing costs for non-current items (pensions) and decreasing population and therefore stagnant economic growth to pay for those costs due to the state becoming uncompetitive destination for residents and businesses.
RNUG will tell you that it is a 15-20 year problem that will be resolved when the Tier1 pensioners work their way through the system. Assuming he is right it will be a rough 15-20 years. His point of view may be too optimistic. I think it is. Tier2 was only introduced 7 year ago. Most employees are Tier1 and still have long careers and long lives. The assumed rate of return of 7.5% is too high and an inevitable economic recession will result in the state being forced to make more short term decisions. If the state is forced to pay bondholders, pensioners both there will be very little leftover for current services. taxes will be raised and budgets cut, again.
is it hopeless? no but for many residents moving is a good choice for their family’s future. it is tough to leave family and friends but the grass is greener.
what is the hope? massive changes to how the state works. unfortunately it looks like that will have to be the only choice available before it is taken.
Comment by Mike Royko Thursday, Jul 6, 17 @ 12:02 pm
-Phil King-size
Yes, deferred comp is the next of a savings program.
But pensions are also deferred compensation you take in lieu of extra pay while employed.
And I’ll note if I lose out, then my kids who I am helping lose out, and the State loses when they end up on welfare.
Comment by RNUG Thursday, Jul 6, 17 @ 12:02 pm
===You don’t have to LOSE anything to help her, other than future promises. No one is saying your check needs to go down.===
Yes. Yes I do. Thousands of dollars in deferred compensation (which is what the pension is).
You could say the same statement about your taxes going up. You don’t lose anything because it’s never in your pocket - it’s taken out before deposited in your bank.
Comment by Anonymous Thursday, Jul 6, 17 @ 12:15 pm
How do some get so confused (on purpose I’m sure) about deferred compensation. Just as you put a percentage of your earned income into a 401K and your company matches it, public employees put a percentage of their earned income into the pension fund and the employer adds.
Except the state didn’t add.
Can your company stiff you of their contribution?
I thought not.
Comment by Anonymous Thursday, Jul 6, 17 @ 12:18 pm
So, more taxes, no more cuts and no reforms? That sounds about right. Time to put the house on the market and leave for good.
Serious question. What are the pols going to do when all of the revenue generators leave? The southern states are looking very tempting right now to a whole lot of folks who can afford to leave.
Comment by TastyGrouper Thursday, Jul 6, 17 @ 12:41 pm
The State pays workers comp on every contract they sign. How much do you think the road construction companies pay for workers comp when they bid local and state jobs? The cost for workers comp is included in their bid as it is a cost of doing business. Places that are self insured usually carry stop loss protection and I would imagine with what work comp claims cost as an employer that Illinois either has the insurance for it or at least a stop loss policy.
Comment by Arock Thursday, Jul 6, 17 @ 12:50 pm
And by the way, an increased minimum wage also increases WC costs and unemployment insurance costs. The State of Illinois and local governments will save money from WC reform.
The fact is that the Madigan/Cullerton plan does NOT solve the problem. Now, they want more taxes but can’t take any more cuts. So, compromise is again dictated by them?
Enough. GOP should hold firm and get real reforms.
Comment by Anonymous Thursday, Jul 6, 17 @ 1:17 pm
Workers’ comp is a cost of doing business. For 99% of employers that cost is their insurance premium. Cut compensation to injured workers all you want; cut reimbursement to doctors all you want. Unless you actually and directly cut insurance premiums(crossing your fingers hoping that insurance companies do the right thing and cut premiums on their own through the magic of free market competition doesn’t count), you have not cut the cost of doing business for 99% of the employers by one cent.
Comment by The Real Just Me Thursday, Jul 6, 17 @ 1:22 pm
One would[could?] argue that these benefits weren’t negotiated in good faith,…..”
Can’t speak for the good faith part but several former pension policy makers, Governor Thompson, Speaker Madigan, former state Sen. Jeff Schoenberg, have admitted they didn’t understand the cost impact of the the benefits they helped create.
Comment by CapnCrunch Thursday, Jul 6, 17 @ 1:35 pm
==GOP should hold firm and get real reforms==
Junk status, universities closing, social service network completely collapsing. It’s all worth it right?
Comment by Demoralized Thursday, Jul 6, 17 @ 3:16 pm
Moodys is not wrong in their assessment because this tax increase is quick fix and is really not addressing the $250 billion dollar liability issue. Bond holders will get their rate of return and vulture capitalists will swoop in to lend billions at 5% or greater rates because there is steady cash flow for decades. Spend spend spend and tax days are all but done in Illinois…Now its going to be tax tax tax spend for a decade or two. Unless the Guvs Big predictions of corporate investments into Illinois some how come true in the next 5 years. almost time to pack up the family trickster and head anywhere but New Mexico they are worse off than here if that’s believable ?
Comment by the Cardinal Thursday, Jul 6, 17 @ 3:21 pm
@Dublin
==Some jobs are overpaid (clerical, etc). Many are underpaid. Professionals (Auditors, accountants, lawyers, engineers) all make well below the industry standard==
I totally agree with this. That’s why I said most positions are overpaid.
The union wage scale is artificially flat. Low skilled workers are over paid. High skill workers are underpaid. Unfortunately, low skilled work accounts for more of the jobs. So we’re overpaying more often than we’re underpaying, while at the same time not offering competitive wages to our most talented employees so they end up jumping to the private sector.
Comment by Phil King Thursday, Jul 6, 17 @ 3:25 pm
I nominate RNUG for sainthood. Always patiently and politely explains the same things over and over and over again …
Comment by X-prof Thursday, Jul 6, 17 @ 3:33 pm
second RNUG sainthood nomination.
Comment by Mike Royko Thursday, Jul 6, 17 @ 3:43 pm