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* Carol Marin last week asked Ralph Martire, executive director of the Center for Tax and Budget Accountability, whether the governor’s proposed restructuring of the pension ramp is “just another pension holiday”…
Well, yeah. An incomplete on the pensions. Look, he didn’t publish enough material for us to weigh in on those pensions and either support or not support what he did.
One major concern we have is they reamortized, changed the ramp, the payment schedule, but they didn’t point out what the new payment plan looks like, so I don’t see what that new ramp is and we want the state to go to a level dollar, so it doesn’t always have this increasing payment obligation. That’s what strains the fiscal resources. We don’t want to see a new ramp with new high payments down the road.
Remember, the governor wants to extend the ramp by seven years. But he has yet to say how much money the state will “save” during those seven years and how much more it will cost taxpayers in the long term. Until we know that, we will have no idea if his other pension proposals (asset transfer, permanent buy-out, $200 million per year from graduated tax, $2 billion pension bond) are enough to close the gap.
posted by Rich Miller
Monday, Feb 25, 19 @ 12:07 pm
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He’s not wrong…but what are you supposed to do when the viable/legal options all stink (from all sides regardless of party affiliation and philosophy)?
Comment by J IL Monday, Feb 25, 19 @ 12:16 pm
wait….what?
You mean to tell me
Martire wasn’t in the loop?
I thought Martire was on the transition team.
I thought Martire was guiding this.
Are you kidding me?
Holy Moose crap
Who’s at the helm of this?
This is profoundly disturbing.
Seriously, who’s at the helm of this?
Comment by Honeybear Monday, Feb 25, 19 @ 12:19 pm
Dan Hynes
Comment by Anon Monday, Feb 25, 19 @ 12:22 pm
“Pension Restructuring” does not equal “Pension Holiday”. Companies and families restructure debt all the time when necessary to manage cash flow. Ralph is right, we don’t want to see another balloon payment plan nor do we want to see making partial payments or skipping payments entirely on whatever plan is in place. THAT’S a “pension holiday”.
Comment by Hawkeye Monday, Feb 25, 19 @ 12:23 pm
This smells of Raunerite.
Are the left over Raunerites guiding this?
Is this what OW was talking about last week?
Raunerites guiding the pension ramp proposal?
or is this
Madigan/Cullerton?
Seriously who is the driver of this?
Comment by Honeybear Monday, Feb 25, 19 @ 12:24 pm
The pensions are a nightmare. The truth is that the state cannot rebuild the agencies and pay for pensions. As a state we do have to make tough choices, and the only legal choice is to pay the pension bill. Pritzker, whether you support it or not, is doing what previous governors have done. At least he isnt trying to flat out deny that it exists, like Brucie did. We pay for the sins of our fathers. All the while pension income is untaxed.
Comment by Anonymous Monday, Feb 25, 19 @ 12:24 pm
“he didn’t publish enough material for us to weigh in on those pensions and either support or not support what he did.”
Um, weren’t you appointed to the Budget and Innovation Committee? Doesn’t Hynes chair that committee?
If you’re in the dark, we’re in trouble.
Comment by City Zen Monday, Feb 25, 19 @ 12:27 pm
HoneyBear, the transition report itself is pretty light on details. The Budget and Innovation report, which Ralph was supposedly on, has a paragraph about re-shaping the amortization curve which could pass for the ramp extension, quote “For instance, the state could create
a sustainable amortization schedule combined with other changes to improve the system which
could meet short term budget needs while improving the funded ratio in the long term.”
Comment by Perrid Monday, Feb 25, 19 @ 12:29 pm
I guess we now know why HZ is still working over at GOMB.
Comment by Legoland Monday, Feb 25, 19 @ 12:34 pm
Perhaps this is where the “asset transfer” part comes in. Leasing the Tollway or selling other assets can make a big downpayment on the pension debt, then it gets reamortized at a level that can be afforded (e.g., perhaps 8B/yr). An accountant can work backwards to see how much up front money is needed, then figure out what assets can be monetized in reality.
Comment by Simple Simon Monday, Feb 25, 19 @ 12:34 pm
If Martire wasn’t in on the plan, then I am even more concerned about it than I was before.
We don’t know the details on JB’s proposal, so we can’t say for sure. But a couple of years ago when I ran some tables for stretching out the ramp, about $10B of contribution reductions on the front end cost around $100B on the back end.
That’s $100B (nondiscounted) reasons the State should not be reducing payments.
JB or his planners must think someday will never come.
Comment by RNUG Monday, Feb 25, 19 @ 12:37 pm
I wish someone would put concrete in that can they keep
Kicking down the road. At least they’d take pain as well.
Comment by Anonymous Monday, Feb 25, 19 @ 12:42 pm
City Zen, that’s exactly what is freaking me out.
I’ve seen Martire’s lecture on pensions and how to pull us out of the dive 3 times.
It’s excellent.
I was comforted know that he was on the transition team.
Now true, Martires plan might never make it through the legislative process
but I thought until now that “science”
so to speak was guiding this.
Again, Martire might have been wrong
But he was excellent at explaining how we stop digging and get out of the hole.
Comment by Honeybear Monday, Feb 25, 19 @ 12:51 pm
=== “Pension Restructuring” does not equal “Pension Holiday”. ===
Pension restructuring is a euphemism. JB is not proposing a holiday, but I’d call it more like an afternoon off.
I’m not opposed to changing the repayment length or end date, but it must be part of a vetted plan that puts us on realistic path to a solution.
Comment by Norseman Monday, Feb 25, 19 @ 1:02 pm
The word “save” should never be used when discussing reamortizing to a later date. It’s intellectually dishonest and a disservice to the next generation. We need to be biting the bullet, not our kids.
Comment by Shemp Monday, Feb 25, 19 @ 1:10 pm
Anyone know when the last time the State pension plan was funded at a level of 100% or more?
IMO, 100% funding of a pension plan means a plan’s trust fund would have to have enough funding to pay every plan participant their benefits if they all retired on the same day plus enough to continue payments to current retirees.
Not saying our State plan’s current funding level shouldn’t be better and that we shouldn’t try to improve the funding level but in light of the current conditions at many State agencies I’m not sure we should drastically cut or freeze the funding of agencies & services to reach 100% funding as soon as possible.
Maybe, like many non-public pension plans funding levels are today (many in the 80-90% range), we should consider increased funding level goals in steps over a reasonable period of time.
Comment by nadia Monday, Feb 25, 19 @ 1:21 pm
Seems to me JB doesn’t like the problem now that it’s his. So he’s decided to punt.
If all those other taxes he hopes to collect on legalized marijuana and sports betting don’t materialize, he’s going to find the water can get real hot. And if the progressive income tax fails to get approved, he’s a one termer.
Everybody was talking about peace, love and understanding on inauguration day. Good memories.
Comment by SSL Monday, Feb 25, 19 @ 1:23 pm
==Seriously who is the driver of this?==
Governors own.
Comment by Responsa Monday, Feb 25, 19 @ 1:23 pm
===Governors own===
Yep.
Comment by Rich Miller Monday, Feb 25, 19 @ 1:28 pm
It would be interesting to compare the Pritzker plan to Ralph’s. Ralph’s plan had the pension systems having $66 billion less than the current plan in 2045 (70% funding vs 90%). Under the current plan, in 2038, (7 years before the end of the payment schedule), the funds would be 65% funded. If the same were true about Pritzker’s proposal, and we were 65% in 2045, that isn’t too far off from Ralph’s 70% target. But the devil is in the details which we don’t have at the moment.
Comment by My Button is Broke... Monday, Feb 25, 19 @ 1:31 pm
== Anyone know when the last time the State pension plan was funded at a level of 100% or more? ==
In part of the 1990’s the 5 state pension funds were (depending on the fund) from 90% to over 100% funded at one point; then the State took some pension holidays … and various financial meltdowns outside the State’s control happened. So now we are roughly back at the same percentage they were in 1968/1969 when that “crisis” resulted in the pension protection clause becoming part of the 1970 Constitution.
Comment by RNUG Monday, Feb 25, 19 @ 1:57 pm
No matter how long the ramp is at some point you still have to actually jump the Grand Canyon.
Comment by OneMan Monday, Feb 25, 19 @ 2:17 pm
In the Chicago Tonight clip, the guy from the civic federation is still proposing pension reform in an effort to reduce the unfunded liability. Still beating that drum. I don’t think Ralph seemed to think he and JB’s proposal were way off based on his statements. Based on the dire need for more revenue, I am surprised a raise in the flat tax with a sunset when the progressive tax becomes law was not proposed. I guess it is politically risky and would make passing the other new revenue streams less likely.
Comment by Just A Dude Monday, Feb 25, 19 @ 2:18 pm
The CTBA plan is unworkable. Increasing current pension payments up to $12b and having a 70% funding target by 2045 vs 90% under the current plan (a plan that the state is having issues funding as is). The minute the bond houses said Ralph’s good ole plan was a credit negative was the very minute that the administration kicked it to the curb.
Comment by Typical Monday, Feb 25, 19 @ 2:43 pm
== a raise in the flat tax with a sunset when the progressive tax becomes law … ==
Plan B
Comment by RNUG Monday, Feb 25, 19 @ 2:44 pm
Typical- is this speculation or do you know this is what actually happened?
Comment by Honeybear Monday, Feb 25, 19 @ 2:55 pm
The one thing that our elected officials will always hear is the drumbeat of the Bond House Vigilantes.
Comment by Typical Monday, Feb 25, 19 @ 3:17 pm
===the drumbeat of the Bond House Vigilantes===
Who don’t actually exist.
Comment by Rich Miller Monday, Feb 25, 19 @ 3:19 pm
How do tier 2 employees play into this mess. How long was it predicted before their altered pension contributions improved the pension funds.
Comment by Justdoingtime Monday, Feb 25, 19 @ 3:40 pm
Does anyone know if the concepts expressed in the Preamble to the Illinois Constitution carries as much weight as Art XIII, Sec. 5? Don’t answer. The question was rhetorical. But if we go forward and amend the State Constitution to allow for a progressive income tax, I suggest that the Preamble be eliminated as an additional housekeeping measure.
Comment by Cook County Commoner Monday, Feb 25, 19 @ 3:40 pm
I was surprised to hear about the pension holiday when announced and am now distressed to learn that Martire was not part of the team that put the plan together.
Comment by James Monday, Feb 25, 19 @ 3:46 pm
Who did put the pension holiday plan together?
Comment by Honeybear Monday, Feb 25, 19 @ 3:56 pm
The pension payment “ramp” will become flat and extended for seven years. The ramp was back loaded and unsustainable. I believe that Martire agrees with this idea.
Comment by Enviro Monday, Feb 25, 19 @ 4:01 pm
Upper management hasn’t hit the ground running. If they weren’t ready to go on a budget proposal, they should have requested a postponement.
Honeymoon’s over. Time to tighten up.
Comment by wordslinger Monday, Feb 25, 19 @ 4:26 pm
Who put the pension holiday plan together?
We all did. Unions did not object and taxpayers did not vote folks out of office. It was the easy way out for everyone. Employees in some cases got lower pension fund deductions instead of raises.
Now taxpayers have gotten hit pretty hard, but I think most folks don’t realize how workers got no or lower raises and a decline in working conditions.
Time to pay the piper.
Comment by Back to the Future Monday, Feb 25, 19 @ 4:35 pm
Countdown to the “reign of terror triangle” going to a quadrilateral with Martire in the 4th corner in 3..2..1…/s
Comment by Stuntman Bob's Brother Monday, Feb 25, 19 @ 5:42 pm
==How do tier 2 employees play into this mess.==
For the interim, the pension funds will continue to pretend Tier 2 pensions will lead to big savings in the future. Then, in 15 years or so, Tier 2 benefits will be enhanced to something slightly less than Tier 1, thereby negating pretty much all the projected savings. Then we’ll add another 7 years to the funding ramp.
Comment by City Zen Monday, Feb 25, 19 @ 10:12 pm