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* What do you think will eventually happen with the pension reform issue?
posted by Rich Miller
Wednesday, Aug 15, 12 @ 12:16 pm
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The G.A. will be forced to act when Wall Street downgrades Illinois to “junk” status.
Comment by Northsider Wednesday, Aug 15, 12 @ 12:17 pm
Nothing. They’ll find another way to kick the can down the road.
Comment by Cheryl Wednesday, Aug 15, 12 @ 12:25 pm
They will pass Necritz bill in January, 2013. Includes the 1/2% per year cost shift to schools and universities.
Comment by archimedes Wednesday, Aug 15, 12 @ 12:25 pm
(Re: Northsider) and then the courts will throw out most anything they are presently planning on doing for violating both the state and U.S. constitution.
This will force them to really tackle the issue in a thoughtful manner, getting input and compromises from all parties effected so the reform actually corrects the underfunding and passes legal scrutiny.
Not too optimistic on the last paragraph though…
Comment by roadiepig Wednesday, Aug 15, 12 @ 12:27 pm
Nothing will be done until after the election. Then they will pass the current bill, it will end up in court for years. the lawyers will all become rich, the law will be overturned and once again the state will be worse off than before.
Comment by Past the Rule of 85 Wednesday, Aug 15, 12 @ 12:27 pm
the Democratic majority had better pass something meaningful and significant … I’m a Quad City Democrat who will be watching.
Comment by NW Illinois Wednesday, Aug 15, 12 @ 12:28 pm
GA is not interested in the welfare of Illinois but only their own. Nothing will happen…which is normal ops for Springpatch
Comment by Zoble21 Wednesday, Aug 15, 12 @ 12:29 pm
Something totally unconstitutional and coercive will be passed, it will immediately be challenged in court, will take months if not a year to get a decision, will be decided the State must honor the Constitution/contracts in place, and the State will eventually HAVE to raise taxes. So the G.A. needs to quit wasting time, pass what you will, and let it go to court so it can be decided on.
Comment by Huggybunny Wednesday, Aug 15, 12 @ 12:29 pm
I now think nothing. Cross is following the national GOP marching orders to create chaos. Madigan says it all depends on Cross and Quinn so nothing Cross wants to keep having special sessions. Maybe they can statr thinking of something constitutional…like impeaching an annoying gov. They waited too lomg last time
Comment by western illinois Wednesday, Aug 15, 12 @ 12:38 pm
Just talked to a large charity here in Chicago. Their pension shortfall this year is $54M. It is killing them. The expected rate of return 8% actual is 2.5%. Until the Fed ends the ZIRP pensions may sink us all. Any steps by the State have to remove or reduce the rate of return penalty. As I see little mention of this by the leadership I don’t see it being on the table.
Comment by Anonymous Wednesday, Aug 15, 12 @ 12:41 pm
Nothing. And the “Cross is following the national GOP marching orders to chaos” is tin foil hat stuff.
Comment by Louis G. Atsaves Wednesday, Aug 15, 12 @ 12:46 pm
They will pass something stupid and the courts will overturn on constitutional grounds and two to three years from now we will still be talking about a bigger problem.
Comment by anon Wednesday, Aug 15, 12 @ 12:48 pm
Most likely scenario:
Just like with medical malpractice, we’ll pass something unconstitutional, declare victory, and then proponents will all act shocked and surprised in two years when it is overturned by the Supreme Court.
Everybody wins!
Except, of course, that according to Quinn’s numbers, our pension hole will have grown by $9.1 billion over the next twp years.
Comment by Yellow Dog Democrat Wednesday, Aug 15, 12 @ 12:48 pm
I believe it will all pass as the gov. wants it to. All the lawmakers are yes men so they can get there little quirks for there area and voters. Also great play by Gov. to try and use children and education in his favor. But you cut the pension on teachers and state employees nobody will want these jobs, is this not one of the major reasons these individuals take these jobs in the first place. Take that away and all the pluses for the jobs you may lose the quality and quantity of better teachers and state workers I believe. It like the old saying goes you get what you pay for. You start giving less pay and less benifits instead of getting what you may call as top of the class educators you will get the educators who are at the so called bottom of the class, so childrens educations and knowlegde will possible go down, as will the sat, act, scores hurting the school system and once again our children. So the Gov should not make a promise on education and such until he really thinks it through.
Comment by pickle Wednesday, Aug 15, 12 @ 12:53 pm
Nothing will happen until after the election.
Comment by Cassiopeia Wednesday, Aug 15, 12 @ 12:53 pm
We forgot to mention that if reforms do pass, then the Gov’s Office will do everything they can to realize the savings achieved from reforms and craft a budget based on those “savings” to expand programs. The Gov’s office will gin up the black caucus to support such expanded programs. Then when the Courts strike down the reform, we will be in worse shape than what we are currently experiencing.
Comment by dirt diver Wednesday, Aug 15, 12 @ 12:55 pm
Senate Democrats already passed a bill to reform the legislative and state worker’s pensions. The House should pass the Senate bill and adjourn.
Comment by redrum Wednesday, Aug 15, 12 @ 12:55 pm
@dirt diver -
Good point, but it won’t just be the Black Caucus. Lawmakers from both parties will find a way to spend the imaginary savings.
I’m actually surprised that no reporters have yet begun to ask legislators what their intentions are if an $80 billion pension savings plan is enacted?
Will we pay our backlog of bills? Raise education funding? Restore human services cuts? Roll back the tax increase?
It IS an important question.
Comment by Yellow Dog Democrat Wednesday, Aug 15, 12 @ 1:02 pm
Nothing of any meaningful fiscal consequence outside of bankruptcy for local government units.
The Illinois constitution’s pension protection language is among the strongest in the nation.
State and local government officials will pass almost meaningless (fiscally) reforms and applaud them as monumental. The bond rating agencies will ultimately lower ratings for debt issued by the state and local government units as pension and healthcare obligations balloon in the near future. Taxes will be increased.
The IL local government pension issue ($50 billion?) will depend in large part on litigation outcomes in local governemt bankruptcies. The issue will be if federal bankruptcy (Ch. 9 for local governments )trumps the state constitution pension protection clause. This issue is before the court presently in the Stockton, CA bankruptcy. If sanity prevails and the court rules, after appeals, that the the CA constitutional pension protection clause does not provide a preference over other unsecured creditors, then the IL local governments have a way out. Pensioners lose big.
The state is another story because it does not qualify for any sort of federal bankruptcy. This will be resolved by when the private sector citizenry have had enough of the increased taxation that is certainly coming. The Illinois courts will order the state to pay which will require more taxation. The GA will refuse to increase taxes so it can pay, but by that time it will have cut services to the bone, so there are no more savings there. So, a separation of powers issue will arise where the GA tells the IL Supreme Court to mind its own business. Pensioners again lose big.
The only viable solutions involve public employee union and government agreement on a solution or a federal government bailout. The unions and elected officials which awarded unsustainable pensions and other retirement benefit have painted themselves into a corner.
But look on the bright side. Nothing immediate and catastrophic will occur. It’s a slow motion train wreck. It’ll be like putting a frog in shallow cold water and then heating the water to boiling. The frog will stay there till it cooks. Just like most Illinois taxpayers will.
Comment by Cook County Commoner Wednesday, Aug 15, 12 @ 1:11 pm
Something must be conducted this sessio. The longer any action is prolonged places all Illinoians in a bad situation. Politics aside, let’s all work together to accomplish reform. It will be for the welface of our children and future generations. Also, freeze costs by eliminating step increases. cost of living increases should be the same as the consumer price index. In addition, it was noted the average state employee will earn $32,000 per year during retirement. Most in my age group are targeting $18,000 to $ 24,000 per year upon retirement, with zero guarantees.I and others in our complany have been without an increase in three (3) years, but I have been thankful, I am still working. Staff reductions are being conducted to reduce expenses. Some persons think no matter the performacne all should reap the same benefits. It is not fair to any union or non-union worker!!!!
Comment by Concerned Citizen Wednesday, Aug 15, 12 @ 1:12 pm
As far as IDOC goes they put there lives on the line every day. Dealing with some of the worst and not so bad inmates. I’ve had many of friends and aquaintances get beat by aggressive inmates and some that were not suppose to be aggressive. Also I know this to be true that at one facility they are so over crowded that they have over 200 inmates in the gym on bunk beds. The last I knew with a back ground check on any individual that you are aloowed to tour a facility. They have had college students tour Menard I know I was there. So I can not see why the media is not allowed to go to these facilities, unless the Gov. is hidding something. After all if the state emplyees can’t keep 3 or4 media from harm why do we believe they can keep a whole community safe. Think about it the media would be under direct supervision of the warden and I’m sure his top CO’s. Solet the media visit if there is nothing to hide. If they are over crowded as the state emplyees claim then are the inmates not in harms way along with staff? After all inmate deserve to be protected also, they have loving families that live in the state. A VERY LARGE POPULATION OF THE INMATES CME FROM CHICAGO AND SURROUNDING AREAS. So Lets keep staff and inmates save by doing away with overcrowding. I’m sure the loved ones of the inmates would appreciate it also.
Comment by pickle Wednesday, Aug 15, 12 @ 1:14 pm
Sorry about typos. Just pulled over to share an opinion.
Comment by Concerned Citizen Wednesday, Aug 15, 12 @ 1:14 pm
The house and senate will issue a formal apology to the state employee for stealing the State’s pension contribution for the last 30 years. Then double or triple the state employee’s contribution.
Comment by Rufus Wednesday, Aug 15, 12 @ 1:18 pm
Meh…this will all blow over soon enough.
If it were serious, we’d see national coverage about a sit-in in the state capitol protesting Quinn.
Until I see that, this is all just partisan posturing.
Comment by Ralph Wednesday, Aug 15, 12 @ 1:19 pm
@Cook County Commoner:
Frog boiling: Urban myth.
Since your entire scenario is based on a fundamental misunderstanding of amphibian behavior as a basis for human behavior…you probably either want to revise your predictions or conclude that frogs are smarter than Illinois taxpayers.
Comment by Yellow Dog Democrat Wednesday, Aug 15, 12 @ 1:27 pm
Dear Concerned Citizen - some of us in state government have gone 14 years out of the past 18 without a raise - I deeply regret saying yes when the state called and asked me to please help them out - 1.67% per year is not a great deal - state employees are 6th in the 6 state pension system
Comment by STP Wednesday, Aug 15, 12 @ 1:28 pm
2012-Pension reform passes, but without passing costs to the local school districts, as there aren’t enough votes to do that part.
2013-Illinois Supreme Court strikes down pension reform.
2014-With the problem even worse, the legislature finally is able to pass teacher pension costs to local school districts. And retiree medical is eliminated completely for all state pensioners.
2015 -Dozens of local school districts in rural areas and the south suburbs begin to declare bankrupcy, as they can’t afford the pension obligations, and retired teachers are left with a severely reduced pension. On the state level, a lot more squawking about constitutional amendments to pension law and to progressive income tax.
Comment by Robert Wednesday, Aug 15, 12 @ 1:37 pm
After the election the pension reform act will be passed to include teachers. Two years later it will be declared unconstitutional. State payments for failed legal costs will be huge, back payments to teachers and state workers will be huge. State will try to amend the costitution language on pensions, before becoming insolvent!
Comment by Billy Wednesday, Aug 15, 12 @ 1:51 pm
Negotiations will occur regarding a more comprehensive approach, but no final agreement will be reached. The leaders will commit to continuing the discussions over the next several months on all issues not coverd in the bill the Senate passed in the spring. They will also agree to ready a bill that will be presented in the fall veto session. As a show of good faith to the rating agencies that progress is being made, the House will pass the Senate bill. Everybody will then go home and talk on the campaign stump about how complex an issue pension reform is, so much so that it needs to be done in incremental steps.
Comment by GA Watcher Wednesday, Aug 15, 12 @ 1:53 pm
I understand COLA’s. Did you recive any step increases or change to higher pay level?
Comment by STP Wednesday, Aug 15, 12 @ 1:57 pm
@Billy -
One little hitch to your scenario:
Constitutional amendments are not retroactive…so even if the Pension Clause were amended, the state would still owe the money.
Comment by Yellow Dog Democrat Wednesday, Aug 15, 12 @ 2:06 pm
Reform will pass. Retirees will choose the COLA over health care thanks to our being able to purchase health care because of Obamacare, and no cost savings occur and the state will be back to trying to fill the hole.
Comment by illilnifan Wednesday, Aug 15, 12 @ 2:09 pm
I think they’ll continue pushing for local communities to fund pensions. There will be no true reform.
Comment by Wensicia Wednesday, Aug 15, 12 @ 2:13 pm
I hope they can all reach an agreement but I doubt anything will happen until after the elections.
I know this is an Illinois issue but I think the national elections will do a lot to drive this isssue. If Romney wins, an invigorated GOP in Illinois may take us down the road that Wisconsin took and severely clip organized labor’s negotiating rights.
If Obama wins the unions representing Illinois government employees will be forced to concede quite a bit but they won’t be as hobbled as the would under the GOP.
If the unions listen to the public sentiment they’ll accept that outcome until the economy improves and there’s not so much anger on the part of the public toward organized labor.
I think many state workers are willing to pay more, especially if there’s some guarantee that a pension and a job will be there in the end.
Comment by Scared for the future Wednesday, Aug 15, 12 @ 2:26 pm
Illinifan, First off great team! Second the state would not have this so called hole to fill in if they would have been putting there part into the pension plan to begin with. Have you not benn keeping up, they have not payed there share for 3 decades. Like I have already posted pay them there money and keep up your part of the pension already and STOP WASTING MY TAX MONEY IN COURT. It’s the lawmakers fault they have this debt not the Il. STATE WORKERS. If you also remember one individual has been in state GOV. since the 80’s not saying any names, but there has been several Gov. sent to prison for listening to him. Edgar was the states last good GOV. Maybe they should ask him for advise instead of the one that is trying to ruin I mean run everything even to Gov Pat Quinn. But if the gov does that(listen to Edgar) he’ll be the next off to jail. Just had an idea maybe the LAWMAKERS should give back there pensions. ATLEASE TILL THEY FILL IN THE HOLE THEY MADE. I FORGOT GOV. EXEMPT? THEM AND THE JUDGES. Now a question on that matter can that be considered bribery or pay off? JUst asking any comment on that anyone. Sorry for misspelling.
Comment by pickle Wednesday, Aug 15, 12 @ 2:32 pm
It doesn’t matter what is passed for the pension “reform”. Everyone who lives in this state, myself included, has enjoyed lots of freebies courtesy of the retirees money. It’s time to pay for all of these things. Due date has arrived. In addition to any type of legislation on the pensions, there will have to be a tax increase or restructuring if we all want the same services and provisions we’ve been getting (for some) free. There’s been alot of magical cash that has been provided over the years. The kitty has run out. Everyone will need to pay.
Comment by geronimo Wednesday, Aug 15, 12 @ 2:38 pm
In the long run over a period of years will be the following combination:
Teachers and university pension funding will move to the schools and universities
Retiree will be required to pay health insurance premiums
Pensions will become taxable income
The constitution will be amended to permit a graduated income tax in order to get more revenue from high income earners
In the short run it will be a mess as all parties will try hard to avoid.contributing to the solution but in the long run everybody will give a little because that is the Illinois way–make deals rather than fight to the death.
Comment by Jake Wednesday, Aug 15, 12 @ 2:40 pm
Nothing will be done until after the election which is good and a wake-up call for Unions. If unions can GOTV and keep the president, keep the Senate and take back the HousP then they will have rescusitated their clout. The showdown is between unions and the big money PACs. Recognize it, embrace it and energize or die trying.
Comment by Casual observer Wednesday, Aug 15, 12 @ 2:46 pm
Jake @ 2:40,
You left a line:
Even after all these changes, the State will still spend more than it takes in
Comment by RNUG Wednesday, Aug 15, 12 @ 3:06 pm
P.S. ATLEAST MIKE BOST STOOD UP AT THE CAPITAL where was the rest of them COWARDS. Fight for your state workers I want to feel SAFE. Don’t try and make Peace Officers a low paying and no benifit job I LOVE MY FAMILY AND NEIGHBORS. Cut Cost get more corruption outside the LAWMAKERS. I guess we are trying to be the number one CORRUPT state instead of second.
Comment by pickle Wednesday, Aug 15, 12 @ 3:09 pm
Casual observer,
Given where the pension mess is going right now, Quinn will wear the mantle for trying to cut the pensions. If that happens, I can’t see the rank and file union people getting out the votes for the Dems. They will either stay home or cross over to vote for anyone else. Either way, bad news for local Dems and might even affect the national vote …
Comment by RNUG Wednesday, Aug 15, 12 @ 3:15 pm
A few addendums:
3(a) Issuing pension bonds becomes problematic at best. Reason is that several high profile CA municipalities currently filing for bankruptcy and which have pre-existing pension bonds are now filing initial reorganization plans to suspend payments to bondholders, including to those who bought their pension obligation bonds (San Bernardino in 2005; Stockton in 2007).
3(b) Substantive property tax ‘reform’ legislation emerges to try and ‘burden shift’ the impact of higher local education district taxes from one category of property (usually seniors) to other categories of properties (non seniors).
4(a) Local tax districts of all types start a concerted push to allow for competitive outsourcing for all sorts of different services (Janitorial; food services; maintenance; administrative; even different types of teaching services for educational districts). That will turn into a war.
Comment by Judgment Day Wednesday, Aug 15, 12 @ 3:17 pm
RNUG,
I agree completely which is why I don’t think anything will happen before the election. This whole thing is interesting to watch. To me it boils down to this: Can Unions out-shout the Tea Party AND out-spend big-money PACs? If so, they can re-gain their clout nationally.
Comment by Casual observer Wednesday, Aug 15, 12 @ 3:21 pm
And I’ll add - If not they’re doomed.
Comment by Casual observer Wednesday, Aug 15, 12 @ 3:22 pm
Judgment Day,
You left out the fact at least one ‘grass roots’ organization is already doing email blast organizing to try to get support for a new property tax cap to be in place before the pensions get shifted to the school districts …
Comment by RNUG Wednesday, Aug 15, 12 @ 3:22 pm
The current law on heath care will be set on hold by class action. Everyone will then sit on their hands until the court case is over. Two years–nothing done.
Comment by Vitaman Wednesday, Aug 15, 12 @ 3:25 pm
Actually the Joliet Fireman healthcare appeal I think is due soon……………..
Comment by Vitaman Wednesday, Aug 15, 12 @ 3:29 pm
Casual Observer,
I’m coming at this from a different perspective. I’ve always been non-union, but my grandfather, father and uncle actually founded a Union Local. So I have rather unique viewpoint compared to most people.
Unions started dooming themselves years ago when they took their eye off workplace issues like safety, pay, benefits and solidarity for the workers when the union bosses started worrying about retaining power just like the politicans.
Comment by RNUG Wednesday, Aug 15, 12 @ 3:29 pm
Geronimo, GREAT POINT you atleast admit you got free perks on the backs of the hard working citizens actually STATE WORKERS BACKS. It’s amazing they all don’t have workers comp. claims. Every taking from them and not giving back. MY BACK WOULD HURT ALSO. I would like to add I don’t make much more then perfectly able bodies on welfare living on the backs of taxpayers. Better morals I guess. But I Can Also say I will not be a burden on the state or anyone else. GIVE THEM BACK THERE PENSION AND WAGES.(STATE WORKERS) Stop handing out freebies, I work to support my family NOT EVERYONE ELSES. That the problem in this state handing out freebies to the ones that don’t appreciate it or think the state is obligated to pay there bills instead of THE STATES BILLS AND OBLIGATION. Get up go to work(even at McDonlds or Hardees or where ever)Help the state get out of this bind and not be the PROBLEM. Cut Cost on financial aid and welfare (more bought vote I guess). SORRY FORGETTING ON MY SOAPBOX PEOPLE. Lets all help the GOV.
Comment by pickle Wednesday, Aug 15, 12 @ 3:32 pm
RNUG,
Not really required. There’s no statutory language existing which allows for a new fund / using an existing fund (such as Fund code 005; IMRF; see 40 ILCS 5/7-105, 5/7-171) to fund the TRS. The link is http://tax.illinois.gov/publications/LocalGovernment/PTAX-60.pdf
If they did it, there’s another ready made set of legal challenges regarding the deliberate misuse/misappropriation of local property tax revenues.
No County Clerk in their right mind would dare extend those taxes if they were clearly identified as such (going to fund TRS obligations). You do that, you just put your entire tax cycle at risk, and at the tender mercies of the court system.
Sure you want to go there?
Comment by Judgment Day Wednesday, Aug 15, 12 @ 3:34 pm
House will pass Senate bill w/ no Repub votes; during Lame Duck session a bill will pass shifting the teachers to the local districts and adding the SURS, but not the judges to the other law. All will be challenged in Court and by the time the Ill SC hears case, Health Care Act will be in force reducing health insurance expenses so that state can begin to pay down pension costs.
Comment by D.P. Gumby Wednesday, Aug 15, 12 @ 3:38 pm
=Unions started dooming themselves years ago when they took their eye off workplace issues like safety, pay, benefits and solidarity for the workers when the union bosses started worrying about retaining power just like the politicans.=
Agreed, and members didn’t complain about working conditions as long as raises came every year. AND union bosses only cared about raising membership by recruiting anyone regardless of title or job responsbility. This approach IMO weakened the unions as opposed to making them stronger. They should have concentrated more on cops, firefighters, teachers and the guys who build our roads and bridges. When Repubs talk about smaller government this is who they are talking about hurting not clerical positions.
Comment by Casual observer Wednesday, Aug 15, 12 @ 3:41 pm
My prediction is a somewhat reworked version of Jake’s list based on guesses as to what will actually pass constitutional / contract law muster:
— This year
All pensions will be taxed with a threshold deduction of between $15K and $30K allowed.
Premium free health insurance after 20 years will be retained but the dependent health insurance rate will be set sky high
— Next year
Teachers and university pension funding will start to move to the schools and universities with a ten year phase-in
— Couple of years out
Services will be taxed
— About four years from now
The constitution will be amended to permit a graduated income tax in order to get more revenue from high income earners
… and the State will still be broke, but at a much higher cash flow level …
Comment by RNUG Wednesday, Aug 15, 12 @ 3:43 pm
Soory For last post it was alittle out of line in see u alredy took it off THANKS
Comment by pickle Wednesday, Aug 15, 12 @ 3:51 pm
Pickle……every thinking person in this state knows they got goods and services courtesy of money stolen–oops—-borrowed from state pension plans. If they’d have had all this, there would have had to be tax hikes to pay for it all. But there weren’t, right? Whether people LIKE admitting they know that……..is a different story. It’s much easier for them to say that public employees should be the main folks to bear the burden of paying down the debt. And if they scapegoat all govt. workers, it keeps the attention OFF of what they got.
Comment by geronimo Wednesday, Aug 15, 12 @ 4:23 pm
Like others have said, this will be a replay of the Med Mal Reforms.
Sometime next year something will pass. It will be challenged in court. It will get thrown out.
In the meantime, the court will have ruled that going back on the promise of free health insurance after 20 years is also unconstitutional.
Then, there may be an effort to do something reasonable, but it is also likely that pension payments will have leveled off (remember we are in the middle of a steep climb right now)and the crisis will be seem insignificant as the cost of Obamacare starts to hit the states.
Comment by Been There, Done That Wednesday, Aug 15, 12 @ 4:45 pm
AMEN ON YOUR LAST POST GERONIMO
Comment by pickle Wednesday, Aug 15, 12 @ 4:52 pm
Nothing serious will happen until the credit window closes, until no one will buy the State’s paper. Then I think that the Federal Government will create a later-day counterpart of the Municipal Assistance Corporation (MAC) which bailed out New York City in the 1970s. But instead of a state bailing out a city, it will be the Feds bailing out states.
We may see a “State Assistance Corporation” (SAC), a federal agency, which will substitute Federal credit – such as it may be – for the State’s credit, issuing SAC-IL bonds to pay off Illinois’ defaulted obligations. SAC will likely also be backstopping other states, like California.
SAC, like MAC, will divert revenue streams from the State to SAC to pay the SAC bonds. Maybe a SAC surcharge on Illinois income taxes. SAC will dictate Illinois pension and revenue policies. “He who pays the piper calls the tune.”
Comment by Anon III Wednesday, Aug 15, 12 @ 4:58 pm
Nothing will happen unless the Dems accede to the Repub’s demands. Short of that the Repubs have no incentive to help the Dems. I want to see the credit rating agencies further downgrade Illinois so that the Dems are forced to do something truly meaningful.
Comment by Anon Wednesday, Aug 15, 12 @ 5:06 pm
hey pickle, CAPS are a no no on the blog, besides being ANNOYING in general…ACA will be the savior in this scenario…thank God for John Roberts…
Comment by anonymous45 Wednesday, Aug 15, 12 @ 5:06 pm
sorry anonymous45 will lay down on CAPS. just trying to get people to back our state workers. They deserve there pay and there pensions they keep us all safe will you back state workers they help keep you and your family safe also.
Comment by pickle Wednesday, Aug 15, 12 @ 5:14 pm
AnonIII, interesting concept.
Oh, the players on both sides will absolutely freak at this:
“SAC, like MAC, will divert revenue streams from the State to SAC to pay the SAC bonds. Maybe a SAC surcharge on Illinois income taxes. SAC will dictate Illinois pension and revenue policies. “He who pays the piper calls the tune.””
Just as an observation, that’s almost a guarantee that the existing PBGC (Pension Benefits Guarantee Corporation) policies are put into effect verbatim in anyplace something like an SAC becomes operational.
After all, how could you justify having a different set of more lucrative policies for government pensions vrs. non government pensions?
And requiring each state to self fund means that by definition there’s absolutely no program enhancement/growth for a substantial period of time (it’s nothing short of a fully functional fiscal straitjacket) - and that’s probably best case scenario.
And because it would be federal, you are probably going to get almost all the other states who aren’t in the same fiscal bind absolutely insisting that there are automatic, immediate self activating fiscal sequester provisions put in place which occur if a state’s quarterly budget/expenditure targets aren’t met.
IMO, everybody here in IL will fight this happening tooth and claw.
Probably because everybody will absolutely hate it, it’s likely to be the best answer to solving the problem.
Comment by Judgment Day Wednesday, Aug 15, 12 @ 5:28 pm
The five state funded systems will be converted to pay-as-you-go (much cheaper than the ramp) and the constitution won’t let them duck the actual benefit payments. The current balances will give us a few years to clear other things, and all will be well for the remainder of MJM’s tenure. Bond houses will be happy and at half a percent per year, the schools will have the load by the time the funds are dry. Magic.
Comment by countryboy Wednesday, Aug 15, 12 @ 5:46 pm
Countryboy:
Beware the Law of Unintended Consequences.
Just a thought. Something like that happens, you would probably see the bond markets taking a large scale dump of most educational tax district bonded indebtedness which had a maturity date of 4 years or longer from the enactment of such legislation. It would be just a matter of time.
Why would you want to hold that type of debt? Let’s say as a bondholder you get an extra 1.5% to 2.0 percent return annually over what you are getting now for 4-5 years, but if it’s a 15 year term, by year 4-5, you could also be looking at a 15%-20% reduction in the value of the bond, if not standing in line at federal bankruptcy court as a supposedly ’secured’ creditor.
IMO, you’ll most likely see money in those bonds flying (not running) to the sidelines. Might work for the State of IL, but everybody else at the local level takes it in the neck.
Comment by Judgment Day Wednesday, Aug 15, 12 @ 6:08 pm
Country boy,
a pay-as-you-go system is not cheaper than our current System, it will be much more expensive.
Comment by dirt diver Wednesday, Aug 15, 12 @ 6:45 pm
Please stop calling this “pension reform”. When a guy comes up to you on the street and steals your money, it’s not called “wallet reform”. The entire effort is nothing but theft from state workers. Breaking promises is not “reform”.
God help me, but I’m placing my faith in the state constitution and in our judiciary. The 1970 constitution says that my pension cannot be impaired or diminished. That section was put there to deal with jokers like Quinn, Madigan and Cross who want to make the workers pay for their mistakes.
Comment by DuPage Dave Wednesday, Aug 15, 12 @ 6:55 pm
There are things the courts can do and things that are simply beyond their ability to fix. The courts cannot, and will not step in to raise taxes or compel the state to spend money it does not have. Nor will the courts compel that all other programs be zeroed out to pay promised pensions. This is a political problem not a legal one, and it will require shared sacrifice from all recipients of state funds including pensioners. What won’t happen politically is a progressive income tax (though I favor one), or any other significant increase in revenues given the Republican stance on taxes. Since the current mix of funded programs reflect the combined will of the people in our democracy, I don’t see a significant revision in those priorities which leads me to repeat my conclusion that so infuriates some here. Across the board percentage cuts in all areas (including pensions) appears to be the only possible outcome. An unfair outcome? Hell yes, but the only one I see as meeting the realities of no major new revenues and the lack of political will to zero out any expensive program.
Comment by wishbone Wednesday, Aug 15, 12 @ 7:53 pm
Quinn wants the union to accpet that a majority of voters want pension reform. Well a majority of voters don’t benefit from programs for the poor, or corperate incentives, or things like affirmative action. These things are legislated because they (presumably) make society better. By Quinn’s logic we should open the whole budget for Illinoisians to individually decide what we do or don’t think should be paid for but, you won’t ever find politicain willing to do that. Governor keep your word and negotiate a fair and equitable solution to the problem the Legislature created or at least write me a check for the contributions you took out of my paycheck for the last 20 years plus interest. Do whats right.
Comment by anonymous Wednesday, Aug 15, 12 @ 8:07 pm
I fail to understand what is so hard about the pension reform and not taking away from what has already been earned. The state has already done this once without a huge hassle. Ask any new state employee about the tiered retirement system.
As far as the healthcare goes, simple:
20+ years of service = 100% paid
19 years of service = 95% paid
18 year of service = 90% paid
.
.
.
1 year of service = 5% paid
Comment by Dave Wednesday, Aug 15, 12 @ 8:31 pm
(continued)
>1 year of service = 0%
Make a 1/1/13 effective date and where your time in service lies is what you get. Nothing taken away from what you have earned.
Comment by Dave Wednesday, Aug 15, 12 @ 8:33 pm
Sorry make that
Comment by Dave Wednesday, Aug 15, 12 @ 8:35 pm
Wow. for some reason my posts are working. I will try spelling it out.
Make that “less than 1 year of service = 0%. Then the state gradually goes out of the retiree healthcare business and the employees have time to financially prepare for retirement and healthcare costs.
Comment by Dave Wednesday, Aug 15, 12 @ 8:37 pm
Nekritz bill will pass early January. It should be done right now, but too many people are still denying reality, or searching for an easier way out of this mess, (probably in vain).
Comment by walkinfool Wednesday, Aug 15, 12 @ 8:38 pm
Dave @ 8:38,
Key point - they made the ‘tier 2′ changes for new hires
Existing workers and retirees can’t have the changes applied retroactively. Go read existing case law on it. For a quick background, read Madiar’s report to Cullerton ‘is welching on pensions an option’ (76 pages) and also find the Jenner law office pension law guide book (about 88 pages).
As far as the health insurance goes, we’ll see what the courts end up saying, but if it comes down the same as pensions under contract law (rules on date of hiring plus enhancements), then see above re retroactively changing things.
Bottom line here is the State has already changed most of this for new hires … but that diesn’t save them any money on the massive debt they’ve already piled up by the emplopyer (State) not funding it every year when they should have. What the State is looking for is a magic bullet where they can avoid ever paying back all the diverted money.
Comment by RNUG Wednesday, Aug 15, 12 @ 9:11 pm
wishbone,
how do you plan to get around the existing precidents going all the way back to IFT vs State and even before?
Comment by RNUG Wednesday, Aug 15, 12 @ 9:13 pm
dirt diver @ 6:45 pm:
Actually, I believe this year (in round numbers), $1B is the ‘normal’ pension costs and $2B is the ramp-up payback of missing funds and interest.
The biggest problems of switching to ‘pay as you go’is (a) the Fed pensions people won’t like it, (b) the bond people won’t like it, (c) there will be basically one time savings that, if history is any record, will be used to start another ongoing / unfunded entitlement program and (d) after the frist year, there won’t be a ‘cushion / slush fund’ the GA can skip payments on if they come up short of money to pay for all the wants that FY.
Comment by RNUG Wednesday, Aug 15, 12 @ 9:18 pm
Rich, I am very pessimistic. Some significant changes need to be made. Some of them may well be, and in fact probably are, unconstitutional-but, they still need to be made. Tamping down the effect of the current 3% COLA is one of them. It is a huge driver of the unfunded liability.
The problem I see is that there is really no one with whom a deal can be made if some reasonable compromise could be decided on, because no on has the authority to bind the retirees and the (few) non-unionized employees. So, if something “reasonable is found, and AFSCME and the other unions say OK, we’ll go along, there are still going to be some very unhappy people out there, and nothing can stop them from going to court, and if the deal is unconstitutional it goes down.
Comment by steve schnorf Wednesday, Aug 15, 12 @ 9:47 pm
“wishbone, how do you plan to get around the existing precidents going all the way back to IFT vs State and even before?”
I don’t. I fully understand the strong legal case for protecting pensions while all other state programs go down the toilet. My point is (and obviously I could be wrong) is that because of the separation of powers the courts can’t (or won’t) completely take over the taxing and spending authorities of the legislative and executive branches, and nothing short of such a takeover would solve this horrendous problem. The court can issue rulings, but how do they enforce them? This issue is fundamentally different than simply ruling a law unconstitutional, and then relying on the legislature to remedy the problem, or having the ruling self execute. We can’t even agree to shut down a totally frivolous and unnecessary state fair to save a few bucks, and I can’t see the Supreme Court wanting to substitute its judgement as to which programs live or die. There would be a revolution if they tried. Proportional cuts (starting with that $620,000 U of I president’s salary) is the only way to go.
Comment by wishbone Wednesday, Aug 15, 12 @ 9:49 pm
RNUG,
Actually normal cost for the 5 state systems are slightly under $2B. A pay as you go system (pay benefits out each year) would have cost you over $6b in FY 13as compared with $5.2B under the status quo. pay as you go will be much more expensive.
Comment by dirt diver Wednesday, Aug 15, 12 @ 10:03 pm
RNUG,
there would be no 1 year savings produced from switching to a pay as you go system, unless your talking about a pay as you go system for new hires only. but if you are talking about current members there is no way a pay ad you go system will save money.
Comment by dirt diver Wednesday, Aug 15, 12 @ 10:10 pm
RUNG @9:11
“Existing workers and retirees can’t have the changes applied retroactively.”
I agree. The percentages I used are what they have earned. Is it the contention that it is a reduction in benefits to give and employee what they have earned to a certain date and then stop? In other words, is it considered a reduction in benefits if an employee doesn’t receive something they haven’t earned yet?
Comment by Dave Wednesday, Aug 15, 12 @ 10:14 pm
–The G.A. will be forced to act when Wall Street downgrades Illinois to “junk” status.-
Wall Street would love for Illinois bonds to be reduced to junk. It would be the best guaranteed return in the bond market.
The wise guys on Wall Street are already going for it. Read all about it.
http://online.wsj.com/article/SB10000872396390444900304577579512089498968.html
Comment by wordslinger Wednesday, Aug 15, 12 @ 10:26 pm
Dave @ 10:14
I’m not a lawyer but most the writing and cases I’ve looked at seem to say the rules in effect at hiring plus legislative enhancements are the rules you would retire under, as long as you met those rules on the day you retired. That seems to be the court rulings and majority school of thought. There is a minority school of thought, mostly just the Chicago Civic committee and their lawyers, who seem to think you can freeze it at whatever level it is when you change the rules … but they don’t seem to have the precedents the other school of thought has.
Comment by RNUG Wednesday, Aug 15, 12 @ 10:50 pm
On Friday at 9:30 a.m. in Room 114 of the
State Capitol, there is a hearing
scheduled on the 136 page Amendment #2
to Senate Bill 3168. Amendment #2 was just introduced yesterday, August 14. It appears to be the complete pension change bill. Sorry I haven’t had time to read it all yet, but it could pass before anyone knows about it!
Comment by Mama Wednesday, Aug 15, 12 @ 11:03 pm
Mama,
it only impacts SERS and GARS on the major benefit reform side
Comment by dirt diver Wednesday, Aug 15, 12 @ 11:08 pm
Rich,
I’m going to slightly hijack this thread to throw a thought out on the table.
I think most of us here agree the root cause of Illinois’ budget problem is entrenched / career politicians with too much control. It seems these politicos got there through using their campaign funds to, if you will, buy loyalty by helping get other members of their party elected using their campaign funds, which then leaves those members beholden to the leaders who helped elect them. In other words, how campaign funds are used are the root of the evil.
There doesn’t appear to be any appetite for public financing of campaigns. And there is the whole issue of free speech, etc. But something has to change if the actual voters are to ever retake the reins (or is that reigns?) of government back from the professional politicos.
I haven’t closely followed the various previous attempts at campaign funding reforms, but it seems there should be a solution that could both limit power and pass legal muster. I know money usually finds a way around any rules, but we have a lot of bright people here.
Anyway, has anyone tried to implement a law that campaign funds can only be used by the person they are donated to for only that election run / cycle. The funds could not be donated or transferred to another fund. They could not be converted to personal use. And any left over funds have to be either (a) proportionally returned to the donors or (b) given to a legitimate charity not associated with the person whose campaign it is. Some people will say it restricts the politico from supporting other politicos (limiting free speech), to which I would respond there is no limit on the politico using his own personal money to support another politico; the limit is just on using his campaign funds for a purpose not intended by the donor.
Note that I am only addressing the individual campaign funds. I’m not sure how you would deal with the general purpose PACs intended to influence things. Would it be legal to have a law they could not be controlled by anyone actually running for office? And I’m not sure how you would deal with some of the bundlers out there.
Aside from the problem of ever getting such a rule into law, am I just being naive / wearing rose colored glasses? Or is this an idea that might work?
Comment by RNUG Wednesday, Aug 15, 12 @ 11:20 pm
Just skimmed SB 3168 A2
The same COLA / Health Insurance Access choice. Seems to also be the same future raises are not raises language.
The big difference seems to be the effective date of the choice is moved out to between Jan 1 and May 31, 2014 with an actual effective date of July 1, 2014. I’m going to guess this date change was made so the choice is effective after a lot of the ACA rules take effect Jan 1, 2014 in order to address things like pre-existing conditions. And it was made so they don’t need a super-majority to pass the bill.
Comment by RNUG Wednesday, Aug 15, 12 @ 11:40 pm
Following up on RNUG’s comments:
If Illinois can decouple for federal depreciation schedules and impose its own tax schedule and the same for estate taxes, why can’t/shouldn’t Illinois decouple from the not-for-profit/charity section and tax campaign funds and PAC funds using advertising in Illinois as the nexus to claim jurisdiction?
Comment by eureka Wednesday, Aug 15, 12 @ 11:49 pm
Can the state declare bankruptcy and void all pension promises?
Comment by Anon Thursday, Aug 16, 12 @ 2:04 am
Anon @ 2:04
No
Comment by RNUG Thursday, Aug 16, 12 @ 8:24 am