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Big budget roundup

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* Let’s get to the budget stories, shall we?

The pension fund skim is actually a lot higher than the $2.8 billion listed in this story if you include Fiscal Year 2011…

Quinn wants to hike individual and corporate income taxes by more than $3.2 billion next year, with the individual rate rising from 3 percent to 4.5 percent and the business rate climbing from 4.8 percent to 7.2 percent.

Another $2.8 billion in new cash would come from reducing pension benefits for new state employees, then using that savings to cut what the state needs to pay into the pension systems this year and next.

We weren’t given a full list of these cuts, but we’ll know more by noon or so…

State spending would be shaved by $1.3 billion. State workers — other than those who work directly with patients or in public safety — would have to take four furlough days each, estimated to save $36 million. Health insurance costs for employees and retirees would rise by $200 million.

The Illinois Historic Preservation Agency would be folded into the Department of Natural Resources. Quinn also would not reopen about a dozen shuttered state historic sites, including the Dana-Thomas House in Springfield.

Comments

THis is good as people who need and utilize more basic state services actually contribute to the services which they use!

I hate tax holidays! Perhaps they should increase the gas tax or Metra/Pace rates for those same days?

Comment by Wumpus Wednesday, Mar 18, 09 @ 9:09 am
Let me get this straight. As a state employee, my income tax is going up 50%, my pension contribution is going up 2% points - a 50% increase, my medical insurance is going up, and Quinn wants me to take days off without pay - which further reduces my take home pay. This seems SO FAIR to me.

The pension funding is not my problem. I have been a state employee for almost 29 years. For all this time, my contribution to retirement has always been paid. My contribution was deducted automatically from my paycheck, I had no choice. For these same years, the state has neglected to put their required share into the retirement fund. Previous governors and previous and current legislators have used the retirement contributions a piggy bank for their own pet projects.

Comment by tanstaafl Wednesday, Mar 18, 09 @ 9:13 am
The recent COGFA report indicated that current funding levels for SURS was 34.1% and we are going to skip still more pension contributions? Someone in authority at the state is eventually going to have to recognize that we have to fund pensions.

Comment by One of the 35 Wednesday, Mar 18, 09 @ 9:16 am
tanstaafl- I am a state employee too. Yes, the situation is not ideal, but what else would you suggest? We have 11.5 billion dollar deficit. There has to be cuts, and we have to raise some taxes. I think Quinn is trying to do his best with a really horrible situation, especially considering he has literally had 6 weeks to deal with the mess Blago has been making for 6 years. I am glad that someone is finally being responsible.

Comment by Anon Wednesday, Mar 18, 09 @ 9:17 am
“Estimated savings by the new system: $162 million by 2045.”

I think thats a typo, I beleive it supposed to be 162 Billion.

Comment by Ghost Wednesday, Mar 18, 09 @ 9:19 am
Jerry Stermer, Quinn’s chief of staff, said the extraordinary budget scenario creates a once-in-a-lifetime opportunity to reform the state’s tax structure based on ability to pay. “So those who have more ability can pay more. Those who have less ability ought to be asked to pay much less. And this would bring that kind of fairness to our code.”

Someone please tell me how this is fair? This effort at “fairness” really sets up some bad incentives. It also takes a big bite out out of the backside of state employees. I hope that I am not forced to long for the days of Rod.

Comment by Slick Willy Wednesday, Mar 18, 09 @ 9:27 am
Will the legislators be required to pay more to their pension? Will the Legislature pension get funded at the same percentage as the SERS? (or NOT get funded as the SERS has been) Will the Legislature be required to take furlough days?

How about grounding the State Airplane for 1 month. That will save a bunch of cash. Make the people that are in Chicago that travel to Springfield on Monday and leave on Friday stay in Chicago for 2 months, that will save on travel cost.

CUT ALL CONTRACTS FOR CONSULTANTS. THat will save an insane amount of money.

Heres a novel idea. Raise Sales Tax 1% then not only will Everyone in Illinois get hit, but people visiting will also.

Health care is KILLING us. That is where the spending has increased. It is a trend in most states.

Comment by He Makes Ryan Look Like a Saint Wednesday, Mar 18, 09 @ 9:34 am
thanks rich for finally pointing out what most other media has not - the increase will negatively affect almost every working family in Illinois. A married couple who both work (which is by far the norm) and each make a paltry $30,000 will see thier taxes go up by over $400. This is a huge tax increase to the middle class - from the low end to the top end. Thanks, Gov. Enjoy the mansion while you can.

Comment by anon anew Wednesday, Mar 18, 09 @ 9:35 am
If there’s a new pension deal for new hires, how will it work if there’s no new hires? With all the budget-cutting, belt-tighening, etc. at State agencies, how many new hires will there be in the next few years to generate the $2.8 billion?

Comment by Sir Reel Wednesday, Mar 18, 09 @ 9:37 am
I’m curious whether any of these pension reforms, including higher insurance costs, will be applicable to judges, legislators or Constitional Officers. Commenters, please hold your sarcasm, I’m just interested in learning the facts and scope of the pension reforms being proposed.

Comment by Curious Wednesday, Mar 18, 09 @ 9:38 am
What is a “new employee” anyway? Anyone not vested with 8 years or whatever?

TANSTAAFL:
To your points - 4 furlough days essentially is an unpaid week per year. So 1/52, or 2 % of your salary disappears there. Next, your pension contribution goes up 2%. That may not exactly “disappear”, but you’ll notice it in your take-home pay. We’re now up to a total of 4% less in take home per year. Add in an additional 1.5% tax increase (ignoring fed tax break, which is more than swallowed, ignoring your specific exemptions, etc), we’re now up to 5.5% less take home pay per year.

I have no idea what medical is going up, let’s say 1% of your annual salary will additionally go to medical.

… So the way I see it, the “typical” state employee will see somewhere between 5% - 7% less take home pay per year than they were expecting.

Union employees with automatic increases will stay more stagnant, whereas those few state employees that are non-union will just plain be in reverse.

Comment by Mike Anon Wednesday, Mar 18, 09 @ 9:39 am
===How about grounding the State Airplane for 1 month. That will save a bunch of cash.===

Not really. You’re calling for symbolic sacrifice, which isn’t wrong. But it won’t balance the budget by any means. You could do a hundred of these symbolic things and it wouldn’t even make a dent. A thousand, even.

Comment by Rich Miller Wednesday, Mar 18, 09 @ 9:40 am
When the smoke clears at the conclusion of this legislative session it will be interesting to see how pension plan changes are adopted to apply to the GARS, nd what if any impact that will have on the makeup of the current and future chambers of the GA.

Something tells me that there will not be uniformity with respect to the “shared pain” with respect to GARS, and the Hanig switcheroo looks dubious under this microscope.

Comment by Quinn T. Sential Wednesday, Mar 18, 09 @ 9:42 am
Where in all of this do the people who caused this mess share the pain? I agree that something has to be done. But if state workers have to feel the pain to straighten it out then ALL state workers should do their part. How about every Legislator and constitutional officer giving up a percentage of their salary equal to the four days. They also should shoulder the same increases in health insurance and pension payments. Why do University employees get a pass? All of us work in areas where we need to be at our job all year. We have to deal with it so they should also. What about the state employees who already did the furlough days, they should not have to do more than four days total, do they get a pass? This is less painful than layoffs and I am willing to my part as long as EVERYONE does theirs also. The GA needs to get over themselves and man up and share the pain, after all THEY created this mess not the state employees.

The only good thing in all of this for state employees is that at least we will know that 2% more of our pension payments will be made because we will be making them. Why is the GA not being penalized for violating the law since the ’90’s. It was then, I believe that there was a law passed that mandated the GA make the pension payments. They have since just not appropriated the money for the pension payments to get around the law.

I would like Quinn to do one more thing before he makes these cuts. How about getting rid of all of the extra Blago buddies that are still on the payroll that have not been fired? How about two deputy directors at DNR that are still there. We didn’t have them before why do we need them now. there is $200,000.00+ in savings. How many furlough days would that save? And there are plenty more just like that. If he is serious about savings then lets go where the fat is instead of just taking a shot at state employees.

Comment by Irish Wednesday, Mar 18, 09 @ 9:43 am
They will have to ask AFSCME to reopen their contract to get these things done. They are highly unlikely to agree.

Comment by Reality is Wednesday, Mar 18, 09 @ 9:43 am
Wow $20 license renewal, how about $5? maybe $10?

As far a furlough days, can you spread it out to an hour off a week so that it won’t be so bad on the employee’s?
As far as insurance, etc. how do State workers cost compare to that of non State workers? Has their pensions etc been low compared to non State Employees?

How will the 10 day holiday be monitored? Is it all clothes and all schools supplies no matter who buys? What will the cost of the programming be for the tax break out?

Comment by Third Generation Chicago Native Wednesday, Mar 18, 09 @ 9:44 am
What I notice is the number of moving pieces in this budget and the lack of discussion (so far) on what if some of the big ones fall off the board.

Let’s start with pension givebacks and furlough days. AFSCME and any other affected state employee unions may not be able to prevent another raid on the pension fund via payment reductions. But I presume that furloughs (are they voluntary or involuntary?) and new pension rules for new hires will require negotiation. Have the unions signed on already? If not, can these negotiations be held and completed by the time the legislature and guv sign the final budget. Or will we be getting a hefty tax increase on the middle class (and make no mistake, this is a middle class tax increase) and lots of promises of reductions in state government expenses and in the pension plan-promises that, somehow, never matrerialize.
I believe in California, Arnie had to go to court to impose the furloughs. That takes time.

Ditto the raise in the corporate income tax and the plan not to distribute 10 percent of the increased income tax levies to municipalities. Many are already saying that won’t happen.

Corporations are going to support a hefty tax increase plus loophole closings without a fight?
Lots of legislators are beholden to those corporate campaign contributions, remember.

The school supply holiday is just plain silly.
Quinn and Stermer must be channeling the monarchs of yore. Throw out some coins to the masses with one hand while hitting them for huge sums with the other. We’re supposed to be too dumb to notice.

Comment by Cassandra Wednesday, Mar 18, 09 @ 9:45 am
Cassandra “But I presume that furloughs (are they voluntary or involuntary?) and new pension rules for new hires will require negotiation”.–

Yes, furloughs have to be bargained. You will remember back to 2001/2002 when Ryan wanted furloughs. Union wanted it to be volunteer, state demanded mandatory. Then state decided instead to go with temporary lay-offs and court battles followed. Check your back issues of newspapers for between Nov 2001 and May 2002. That was the year Ryan tossed out massive numbers of state employees.

Comment by Princess Wednesday, Mar 18, 09 @ 9:57 am
Rich–Agreed, but isn’t the Employee furloughs a symbolic sacrifice just to show the public that the State is making a sacrifice?

If it is good enough for the little people, cut the perks for the Execs, thus the Flights for the “big shots”.

Comment by He Makes Ryan Look Like a Saint Wednesday, Mar 18, 09 @ 9:58 am
Furloghs were attempted during the Thompson administration. As I recall, he wanted all employees to take 5 manditory furlough days. The union fought against this and won. The result was there were voluntary furlough days for those who wanted to take them.

Comment by tanstaafl Wednesday, Mar 18, 09 @ 10:03 am
tanstafl, I can’t remember which year that was, it was early 80’s, too lazy this morning to go look it up. Yeah, if I remember correctly my husband took like 3 days then.

Comment by Princess Wednesday, Mar 18, 09 @ 10:08 am
Hey folks - let’s not stumble over the minutiae just yet. The Governor’s plan is the first draft and his plan is the first target everyone will start shooting at. Hold your fire!

We need to see shared sacrifices and we need to see our public officers leading by example. The GA, the State Officers with their staffs, everyone should be taking a hit besides state employees.

For almost a decade, Illinois’ state employees have done more with fewer people than most any other state in the United States. While they should not be exempt from feeling the effects of this crisis, they will be feeling the effects anyway, as taxpayers will. The assumption for public discussion is based on a huge assumption that public employees should be doubly hit. Why?

State employees should either be taking a hit like any other taxpayer, or be exempt from the hits the Governor is proposing. Singling them out is simply not right. Illinois’ public servants did not get us into this mess - Illinois’ leaders got us into this mess. So, to see these same leaders exempt themselves from the same medicine they feel state workers should take - is biased, unfair and frankly elitist.

Shared sacrifices for all. The state budget should not be balanced so heavily on the backs of those who work for Illinoians.

Our state leaders need to do better.

Comment by VanillaMan Wednesday, Mar 18, 09 @ 10:11 am
Hike income tax, sales tax holiday, no gas tax…I could not have dreamt up a budget with worse distortionary effects. I thought we wanted to encourage capital and labor, and discourage inefficient energy use. Stupid me.

Comment by Greg Wednesday, Mar 18, 09 @ 10:20 am
If state employees are expected to sacrifice so should the general assembly. There pension plan should be changed so that they make the same sacrifices. Given the elected representatives role in this mess they should not continue to be rewarded with the perks they have given themselves. To often the public good has been left to our elected officials me first mentality.

Comment by JOHNNIE C Wednesday, Mar 18, 09 @ 10:25 am
Furlough days are a lot better than layoffs. And unless I’m missing something, no layoffs are proposed. Pretty amazing, considering.

Comment by wordslinger Wednesday, Mar 18, 09 @ 10:32 am
In the past, the furlough days were mandatory for the non-union staff.

Also, I would like to see the actual numbers on the proposed state employee health insurance increases. From the vague around $200M number in the SJ-R and assuming a total of 120,000 people it would be applied to (60K current, 60K retired assumption since I don’t know the actual numbers), $200M / 120K = $1,667 per employee / retiree or $139 a month (rounded to nearest dollar). Not exactly a small hit, especially to long time retirees under the State only pension system who may only be receiving $2,000 or less a month.

Comment by Retired Non-Union Guy Wednesday, Mar 18, 09 @ 10:40 am
Hasn’t the number of non-union staff dropped dramatically since AFSCME started representing public service administrators and others at tht leve who were previously non-union. While we weren’t looking, somebody in state government decided to expand the ranks of unionized state employees quite substantially, I believe.

Comment by Cassandra Wednesday, Mar 18, 09 @ 11:01 am
Cassandra, yes a lot of titles that were non-union as recently as 8 years ago are now union … even a bunch of what I would consider decision making titles are now unionized.

Comment by Retired Non-Union Guy Wednesday, Mar 18, 09 @ 11:05 am
RETIRED NON UNION GUY:

If your numbers are correct on the health care increases, there is no way that can be done without a fight.

Anyone left who is not in a union position at the state (Atty Gen. attys I believe for one) might as well assume now they will be completely dumped on.

Comment by Mike Anon Wednesday, Mar 18, 09 @ 11:08 am
While we weren’t looking, somebody in state government decided to expand the ranks of unionized state employees quite substantially, I believe.

That sounds mighty Republican. I would think the affected classes went through the legal process of asking to be represented, which is their legal right as employees, instead of being “decreed” from up above.

Comment by Six Degrees of Separation Wednesday, Mar 18, 09 @ 11:16 am
If they are looking for an influx of cash into the pension system many of us have discussed the idea of offering a plan where state employees can buy five years of credit in the pension system and stay instead of having to leave. We believe this would be very popular and a lot of employees would take the offer. This would put a chunk of cash into the system which is what is needed now. Many would buy the five years to become vested. This means that they are newer employees and probably would not retire for many years. They would not be drawing on the system for awhile so this plan would put money in that would not be needed for many years and it would all be funded by the employees.

Comment by Irish Wednesday, Mar 18, 09 @ 11:21 am
“thanks rich for finally pointing out what most other media has not - the increase will negatively affect almost every working family in Illinois. A married couple who both work (which is by far the norm) and each make a paltry $30,000 will see thier taxes go up by over $400. This is a huge tax increase to the middle class - from the low end to the top end.
“

Anon anew, that is incorrect.

That couple will see their taxes go up $30 - from $780 to $810.

Comment by George Wednesday, Mar 18, 09 @ 11:34 am
Lets break it down. If the departments can survive with furlough days and fewer holidays, it means only one thing. The departments are overstaffed! Cut the fat now.

Comment by Hickory Wednesday, Mar 18, 09 @ 11:49 am
Hickory- really ? are you serious? That line of thinking is beyond ridiculous. It is the same as if I were to say to you, “If you can stand a 2% increase in your taxes then you must be able to stand a 75% increase, so let’s do it.

Comment by Irish Wednesday, Mar 18, 09 @ 11:58 am
Six Degrees, you’re right on the recent organizing … it’s my understanding also that a lot of formerly non-union people asked to be in the union after seeing the unequal treatment in terms of raises, etc. by Blago’s administration.

However, I have the impression the GOP unionized most of the state employees many years ago. My memory may be faulty after all these years, but I thought it was Big Jim who ended up signing a legislative bill that “decreed” a good chunk of state employees become unionized sometime in the 1980’s.

Anyway, this union stuff is all slightly off topic. Back on topic.

The suggestion about buying 5 years into the pension system is an interesting one. Everyone I knew that could bought their military time even before the bill about 10 years ago that made it cheaper to do so. I suspect there would be a lot of takers on the proposal to buy 5 years for any reason … I’m assuming that would be at 8% and you could work out a couple of year payroll deduction payment plan like the military time purchase deal.

Might want to revise the military time purchase plan a bit also … as I remember it, only state employees who were Illinois residents prior to or immediately after service are eligible to buy military time. These days people tend to move a lot more than in the past. Change it to let anyone who had qualifying military time (regardless of their residence at the time of service) buy the one or two or whatever years. It wouldn’t be a lot of money but it might be a little bit more cash in the pension fund.

Comment by Retired Non-Union Guy Wednesday, Mar 18, 09 @ 12:11 pm
Although I hate the idea, I think we’re going to have to have some kind of income tax increase. However, that should be accompanied by an absolute freeze on new spending by the legislature. We should have no new programs, no new positions, no new benefits until the deficit is under control. With the Governor already proposing an increase in education spending, I don’t see how he’ll ever balance the budget, even with tax hikes, as long as the spending on big ticket items increases.

Comment by ChampaignDweller Wednesday, Mar 18, 09 @ 3:04 pm
Teachers in my school district do not pay any percent to the state for the pension. The school district pays the entire amount - district share and teacher share. Taxpayers fund the entire pension.

Comment by Good Benefit Wednesday, Mar 18, 09 @ 3:50 pm
How about reforming the sales tax to actually meet the realities of the 21st century and have it apply to services? Then you’d cut the rates in half, both statewide and local, you’d still be money ahead on revenue, and the wealthy who proportionally consume far more services would carry a greater share of the burden. And you would NOT have the CTA running back to Springfield every couple of years with their begging bowl because the revenue would keep pace with inflation. (Or if they did show up, the legislature would actually have a legitimate reason to show them the door rather than showing them the money).

Then you have spending questions. If you’re going to have any chance of local property tax relief, there has to be more state funding for classroom instruction in our education system. There need to be strings attached, however — for example we can’t continue with the current pattern of paying superintendents $200,000 to $400,000 a year as they approach retirement in order to game the retirement system, as that blows both school budgets and the state pension system.

Other than that, the reality is we’re now working out how to pay the bill for the last three governors. The management of this state since Jim Thompson left has been a shambles and even he had his flaws. Kudos to Pat Quinn for at least taking it on, but my word, this is a hornet’s nest.

Comment by Angry Chicagoan Wednesday, Mar 18, 09 @ 6:08 pm
George, look at the table again. A married couple, each making $30,000, makes $60,000 combined. According to the table, that couple will pay an extra $400/year - approximately.

I find it slightly amusing that the Federal tax credit I just got will now go towards the state’s income tax increase. Quinn just found a way to get more Federal stimulus $$$$$!

Comment by Anon in BB Wednesday, Mar 18, 09 @ 7:28 pm
The number of low level employees working for the State decreased about 20% as of December of 2002, when over 11,000 bought an early retirement. Almost none of them in my Department have been replaced, but there have been all kinds of new positions added by Blago, most of which are do nothing administrative positions at high salaries. They could easily be elminated and no one would suffer. I am an attorney who has been licensed over 30 years and dedicated myself to public service with the expectation that I would receive and pension and health care benefits to make up for the difference in pay as compared to the private sector. With 20 years at my current Department and multiple superior performance evaluations I still make less than a newly licensed attorney at a private firm. I have made my pension payments since I went back to State government 20 years ago and for close to seven years before that. I am close to retiring - hopefully about 3 1/2 years- and am now expected to pay more into the pension, more for health care than promised for the last 20 years in that I will have over 20 years in, close to 30, and that would entitle me to have my premium for the supplement to Medi-care paid. The amount of the premium would be no where close to the millions I have lost out on by not being in the private sector. When you talk about bloated government, consider this. DPR -Less than 10 investigators for M.D.s, D.O’s, D.C.’s and P.A.s, 5 attorneys to handle cases against doc’s licenses, one investigator to handle all collection agency and security, detective and alarm complaints for the entire state. Further, not all of the 5 attorneys handle the difficult negligence cases and they have no help for typing, photocopying or any other aspect of the cases - they must go everything for the cases, start to finish. In a private firm there would be multiple assistants for attorneys assigned far fewer cases than the DPR attorneys. Some may say that I chose to work for the government, which I did because I am a “child” of the 60’s and very idealistic. But I did so with certain benefits being offered. I’ve held up my end of the bargain and had the State, which has not made it’s share of the pension contributions has made Illinois’ fund one of the most underfated in the nation. It’s also one of the worst in the Nation. Now after 27 years of relying on the State’s promise I can no longer count on retiring at age 67. Further, consider that Illinois has the worst state employee citizen ratio in the country. If this seems rambling, it probably is. So fari this week I’ve put in a 13 1/2, a 12, and a 13 hour days to try to protect the public without extra compensation.

Comment by Fed up Wednesday, Mar 18, 09 @ 8:35 pm
Good Benefit

The school district in the town I live in pays the retirement contributions on behalf of the teacher. HOWEVER, the teachers negotiated this in their contract in lieu of pay raises for 3 consecutive years. So in effect, the teachers are paying their retirement contributions. Did your teachers negotiate this in their contract?

Comment by Get Real Wednesday, Mar 18, 09 @ 10:19 pm
Get Real and Good Benefit,
Keep in mind, in both cases those decisions were made by a locally elected school board, so local taxpayers have recourse.

Comment by Frank Booth Wednesday, Mar 18, 09 @ 10:52 pm
There is not much to worry about for those currently hired on retirement benefits. Even, if the IL Gov. pass a fee on our health benefits. Our contract says we get it for the agreement of the contract when they hired us. If you were hired b4 1997 and you have worked 7 years you pay no premium. If you were hired after 1997, you are in the 20 year pay a percent(4 working less than 20 years) of your insurance or 20 years and your insurance if free.

There was a federal court case on this…I think CAT tried to change health insurance benefits of retirees.

Federal judge said they can’t do that- they have to honor what was promises when the employee was hired.. So Illinois would get sued and only new hires would be affected. (FYI any new hires are those not already as of today working for the state.)

Comment by Not worried State employee Thursday, Mar 19, 09 @ 7:04 pm
SURS memebers already pay more percent in on retirement than SERS members. Everone should pay the same percent. The state should pay their share as well. I don’t recall if SURs members are paying 6.8 or 8 percent already. Other state employees are paying only 5 percent.

I don’t mind paying more for health insurance now, but I don’t want those benefits to be taxed. I don’t mind paying more taxes and wouldn’t mind taking a furrow day here or there.

I rather, take a few days without pay then see people laid off. I agree all of this should apply to our congress members as well.

Comment by Not worried State employee Thursday, Mar 19, 09 @ 7:13 pm