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* My Crain’s Chicago Business column…
Chance the Rapper didn’t tell just Gov. Bruce Rauner to do his job the other day, when he wrote a $1 million check to fund cash-strapped Chicago Public Schools. He asked the same thing of journalists a few days earlier. “I want you all to do your jobs. Like, seriously, all your publications that you guys work for. . . .If you guys could give a comprehensive history on how we ended up here.”
I don’t have the space to write a comprehensive history, but Illinois’ troubles began over 100 years ago. A 1917 study concluded that state pension systems were essentially insolvent. Instead of fixing the problem, the government allowed it to fester.
More than 50 years later, delegates to the state’s constitutional convention were so alarmed that they borrowed a scare tactic from New York: Lock in promised pension benefits with an ironclad lifetime guarantee to force the state’s leaders to finally put a lid on costs and provide enough money to sustain the pension funds.
It didn’t work. Benefits kept being added, funding kept being shorted.
Meanwhile, our courts decided that another new constitutional provision declaring the state had the “primary responsibility” for funding education didn’t mean the state was actually required to provide over half of all funding. The state’s share plummeted while local property taxes rose, and rose, and rose, putting the squeeze on homeowners and businesses alike.
Around the same time, the big brains who ran the state decided to drastically narrow our revenue base by exempting retirement income, food and medicine from state taxation. They also refused to tax services when the service economy was kicking into high gear, while creating tons of tax exemptions for big businesses that were having trouble in a changing economy.
And just for good measure, they greatly increased long-term pension costs by giving retirees a 3 percent compounded annual cost-of-living raise. Albert Einstein may have never called compounded interest the most powerful force in the universe, but he would’ve been right if he had.
Click here to read the rest before commenting, please. Also, keep in mind that the point of all this is that the state has repeatedly narrowed its taxing base (or refused to expand it) while continually spending ever more money.
* Related…
* Illinois considers applying sales taxes to more services
posted by Rich Miller
Tuesday, Mar 14, 17 @ 8:20 am
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Previous Post: Huge power grab or major legal stretch?
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If you truly believe your last sentence, why in the harry do you have to be so prone to the bash the governor, every day, on nearly everything he does?….i.e. previous story. It’s your blog, do as you please. But to me, Rich, you seem to be taking sides in this conflict, and I have no idea why you would.
Comment by gstritzel Tuesday, Mar 14, 17 @ 8:30 am
Great article and summary, Rich!
Comment by A Non Tuesday, Mar 14, 17 @ 8:32 am
gstritzel, don’t be such a snowflake.
Comment by Rich Miller Tuesday, Mar 14, 17 @ 8:32 am
btw, I am one of those retirees who has plenty of skin in the game.
Comment by gstritzel Tuesday, Mar 14, 17 @ 8:38 am
Great article and history lesson.
Comment by SOIL M Tuesday, Mar 14, 17 @ 8:45 am
I think it’s an excellent article and summarizes how we got to where we are today.
Comment by Grandson of Man Tuesday, Mar 14, 17 @ 8:51 am
gstritzel, which of the Governor’s items on his wish list is going to solve any portion of this problem?
Rich goes to great lengths to shed light on the failings of everyone in Sfld, it just so happens that for the last two+ years that light has very deservedly been focused on the guy in the mansion.
Comment by Han's Solo Cup Tuesday, Mar 14, 17 @ 9:02 am
Rich, great work, great column. Perfect example what makes you so good at what you do; breaking it down & laying it out. Great stuff.
To the Post,
Will the Governor double-down, blaming the Speaker, the Attorney General, the Comptroller & the Courts? Never thought being hapless was a trait of IL Governor, and further, the reality is Rauner lashing out played into the Chance meme of “Do your job” due in part a budget solves all ills here.
Rich clarified for Chance “how we got here”. Rauner deciding to blame a conspiracy against him, even with the issues of the Speaker blocking things in “solidarity” with Labor since the both share Rauner as a foe.
Rauner made a tactical error that day in Decatur. Rauner continues to pay for that PowerPoint, figuratively and actually, by deciding to draw a line… and Madigan and Labor obliged.
Comment by Oswego Willy Tuesday, Mar 14, 17 @ 9:05 am
Why are so many of the elected representatives of this state resisting changing this broken system?
Could it be that they are putting their personal self interest as participants in this gravy train above the interests of the state?
Typical OW post, blaming the Governor for the pension mess.
Comment by Lucky Pierre Tuesday, Mar 14, 17 @ 9:10 am
Why is the blame for the pension mess on the Governor?
He has said Senator Cullerton’s bill proposal is fine by him. The Speaker admits the pensions are unsustainable but resisted all change. For that Rauner gets the blame?
Meanwhile House and Senate Democrats resist necessary reform that will alienate a key special interest group.
Comment by Lucky Pierre Tuesday, Mar 14, 17 @ 9:25 am
===He has said Senator Cullerton’s bill proposal is fine by him===
And yet he pulled SGOP votes off that very bill on February 28th.
Saying and doing are two different things.
Comment by Rich Miller Tuesday, Mar 14, 17 @ 9:31 am
===Could it be that they are putting their personal self interest as participants in this gravy train above the interests of the state===
Then Rauner pulling votes off the Grand Bargain should really irritate you.
Why doesn’t it?
===Typical OW post, blaming the Governor for the pension mess.===
Reading is fundamental… My comment…
===Rich clarified for Chance “how we got here”. Rauner deciding to blame a conspiracy against him, even with the issues of the Speaker blocking things in “solidarity” with Labor since the both share Rauner as a foe.===
That’s discussing the budget and the problems Rauner has “today” without a budget, dealing with the AG, Comptroller, and saying the Speaker is orchestrating it.
Can you not read, or…
Don’t be a victim to my comments when you lack the ability to read.
Comment by Oswego Willy Tuesday, Mar 14, 17 @ 9:57 am
Nice background Rich- puts things into perspective
Comment by Boone's is back Tuesday, Mar 14, 17 @ 10:08 am
Also, Lucky, I don’t really recall the Speaker ever saying flat out “no” on this pension proposal. He’s mostly stayed silent, realizing that there was no reason to speak up about it if it doesn’t have 30 votes in the Senate, where that legislation was always likely to start.
Also, not sure how passing the bill in 2013 is the same as resisting all change, but candidate Rauner did work to pull off GOP votes on that one.
Comment by Juice Tuesday, Mar 14, 17 @ 10:24 am
The Speaker blocking things is Rauner’s fault?
The Governor is not the only one with a problem OW nor does he have 100% of the blame as you argue.
It was a typical post from you, arguing for labor peace although you know the math makes that impossible.
Labor peace, i.e. kicking the pension mess down the road even in good economic times through the Edgar ramp is what got us here.
The victims are the next generation who have to dig us out of this mess if they can afford to live here. No one will tax the benificiaries through a retirement tax.
Comment by Lucky Pierre Tuesday, Mar 14, 17 @ 10:26 am
===The Speaker blocking things is Rauner’s fault?===
Rauner decided with #TaxHikeMike, the Decatur PowerPoint, the vetoing of an entire budget less K-12 funding, Ken Dunkin’s voting switch…
Rauner has masterfully made roadblocks until he gets the Turnaround Agenda. Rauner also owns those decisions too.
===It was a typical post from you, arguing for labor peace although you know the math makes that impossible.===
“Show your work”
Where is this math problem. Are you talking about the 3 phony, grossly unbalanced, status quo, budgets Rauner has proposed?
Let’s be clear about “today”…
From one former governor, Geo. Ryan;
===”The governor is the top guy. He is the leader. House Speaker Mike Madigan is not. The governor has to make things happen. If he doesn’t get everything he wants, he’s got to figure out how much he can get. To get something done. He’s got to take the wheel. He’s got to have a plan. It’s like everything in life.”===
Where we got here is critical to understand how we move forward.
Gov. Ryan explains, a governor leads, not hides or thinks a speaker is the leader.
Comment by Oswego Willy Tuesday, Mar 14, 17 @ 10:42 am
I continue to say
this problem would go away
if tax rates were set
to match what was spent.
#MakeActuariesGreatAgain
Comment by thechampaignlife Tuesday, Mar 14, 17 @ 11:00 am
The Speaker will “give” Rauner nothing.
Every inch of progress and reform for the state will have to be coerced.
Neither the Speaker nor the House Democrats have yet to acknowledge their failures have given us a Republican Governor and divided government for the first time in 12 years.
Nice quote from Governor Ryan, was Spiro Agnew unavailable?
Comment by Lucky Pierre Tuesday, Mar 14, 17 @ 11:01 am
===The Speaker will “give” Rauner nothing.===
The only truthful way this “works” is if Rauner had 60 votes in the House and Rauner…
… like Rauner did to Leader Radogno, mind you..,
… couldn’t get those 60 votes for any/all of Rauner wants.
Until you show 60 on the stairs, the Gov. Ryan quote is the reality.
Good try, lol
===Neither the Speaker nor the House Democrats have yet to acknowledge their failures have given us a Republican Governor and divided government for the first time in 12 years.===
Rauner needs 8 Democrats. Rauner can’t find 8 Democrats…
Oops, sorry. Rep. Drury IS Rauner’s. My bad.
Governors need 60 and 30. That’s on governors. Always been since 1971…
Would you also like a Jim Edgar quote explaining how being governor works? lol
Comment by Oswego Willy Tuesday, Mar 14, 17 @ 11:10 am
The compounded 3% has worked out well for current retirees and badly for the state in the interest rate environment of the past few years. My guess it was enacted with fresh memories of the 1970’s and inflation that might have been 7% or 11% or 14%, and that it was seen as limiting risk to the state and putting it on the pensioners. Pro tip: interest rates are starting up. This would be a phenomenally stupid time to offer a consideration of going from a fixed 3% to an actual COLA. Not that anyone has suggested that, but don’t.
Comment by Excessively Rabid Tuesday, Mar 14, 17 @ 11:36 am
MSNBC in print.
Comment by Gstritzel Tuesday, Mar 14, 17 @ 12:07 pm
Why can’t the Governor get 7 or 8 Democrats to vote for anything?
Could it be that no Democrat can cross the Speaker on anything at anytime?
“Clocks” Drury and Ken Dunkin are two good examples and for that you blame Rauner.
The Speaker has had years to make a second stab at pension reform which is the biggest driver of our budget deficit.
The Speaker has pledged to work “cooperatively and professionally with the Governor to solve the budget deficit”
Apparently that does not involve any changes to pensions.
Maybe he is waiting until 5 PM the last day of the session to inform everyone of his solution. Wouldn’t be the first time.
Comment by Lucky Pierre Tuesday, Mar 14, 17 @ 12:10 pm
- Gstritzel -
Don’t be a victim.
Either make a case or don’t. The Governor is a big kid, he can take it. If you can’t make a case, besides victimhood, you might want to rethink things
Comment by Oswego Willy Tuesday, Mar 14, 17 @ 12:11 pm
===Could it be that no Democrat can cross the Speaker on anything at anytime?===
“Could it be that no Raunerite can cross the Governor on anything at anytime?”
Also, your statement means there ARE at least 7-8 that agree with Rauner. Where are they?
Make any House Democrat speaker. You saying Rauner finds 7-8? Ok, show me.
===“Clocks” Drury and Ken Dunkin are two good examples and for that you blame Rauner.===
“IPI and Proft are two good examples and for that you blame Madigan. Ask Leader Radogno”
The rest of your drivel?
Tired points. Governors need to find their 60. Past governors know that, have said it, said it TO the current governor.
The Column Rich wrote is critical to understanding that these problems were not made in one day, one year, one term, one decade. Both parties, all leaders, General Assembly after General Assembly.
Governors lead. Chance was right. “Do your Job”, Governor Rauner.
Playing flim-flam, holding hostage and personally vetoing and hurting Chicago students is all on Governor Rauner. Rauner can show leadership any time, and leadership isn’t undercutting Leader Radogno and especially not vetoing and hurting Chicago students because a governor is emotional.
Comment by Oswego Willy Tuesday, Mar 14, 17 @ 12:20 pm
If history is a guide, we should consider the 1983 hike as a model. Thompson pushed for a permanent income tax hike but accepted a temporary hike paired with a permanent sales hike to take effect when the income tax hike expired. (Source: http://illinoisissues.uis.edu/archives/2011/06/ends.html)
Perhaps another temporary income tax hike paired with an expansion of the sales tax to services, timed to go into effect when the income tax rolls back, would be more palatable.
Comment by thechampaignlife Tuesday, Mar 14, 17 @ 12:44 pm
Perhaps you can explain why the Senate wants to try to solve our problems in a bipartisan manner but the House just stands around stomping their feet and blaming the Governor.
If the Senate which has a higher percentage of Democrats than the House can’t make a deal with the Speaker how do you expect the Governor to?
Comment by Lucky Pierre Tuesday, Mar 14, 17 @ 1:00 pm
===Perhaps you can explain why the Senate wants to try to solve our problems in a bipartisan manner but the House just stands around stomping their feet and blaming the Governor===
Rauner purposely and deliberately undercut Leader Radogno.
Bruce Rauner made clear; no deal. No deal at the cost of Leader Radogno’s own credibility.
You have no argument there.
===If the Senate which has a higher percentage of Democrats than the House can’t make a deal with the Speaker how do you expect the Governor to?===
Campaigns are hard, governing is difficult.
Had Rauner gotten a Senate deal, Rauner could blame Madigan if it fails in the House.
Why won’t Rauner let Leader Radogno make a deal?
Why aren’t you angry at Rauner for blowing up the Senste deal?
Comment by Oswego Willy Tuesday, Mar 14, 17 @ 1:07 pm
the deal is not dead yet, still a lot of innings to play at least in the Senate before they run into a brick wall
Comment by Lucky Pierre Tuesday, Mar 14, 17 @ 1:12 pm
- Lucky Pierre -
===the deal is not dead yet, still a lot of innings to play at least in the Senate before they run into a brick wall===
Noted: I notice you don’t deny, at ALL, Rauner blew up the Senate deal.
Your thoughts on that Senate deal?
===- Lucky Pierre - Thursday, Mar 2, 17 @ 5:00 pm
A permanent income tax increase coupled with a perm at property tax freeze with more state money for education would pass in a heartbeat
Governor Edgar and Dawn Clark Netsch both ran on this and I wish they passed it 20 years ago===
Needs 60 and in the case of the Senate, 30…
Can you point to the 30 in the Senate with your way to get a deal done?
Comment by Oswego Willy Tuesday, Mar 14, 17 @ 1:20 pm
Not yet but that is the framework for the deal with an unfreezing of the property taxes by referendum.
It seems the hold outs are afraid of democracy
Comment by Lucky Pierre Tuesday, Mar 14, 17 @ 1:45 pm
===It seems the hold outs are afraid of democracy===
You’re being WAY to hard on Rauner, the sole person blowing up the Senate deal.
Comment by Oswego Willy Tuesday, Mar 14, 17 @ 1:57 pm
And you are being way too easy on the Speaker, but that is normal for a “Republican”
Comment by Lucky Pierre Tuesday, Mar 14, 17 @ 1:59 pm
===And you are being way too easy on the Speaker, but that is normal for a “Republican”===
Rauner is a Raunerite. Ask Diana Rauner and her monies to destroy Democrats.
As to…
“And you are being way too easy on the Speaker…”
… take that up with Edgar and Ryan as well, as they both claim, as former governors, that a governor drives the bus.
Madigan also didn’t blow up the Senate deal, so there’s that, lol
Comment by Oswego Willy Tuesday, Mar 14, 17 @ 2:07 pm
A very concise and interesting article. Thank you.
Comment by Power House Prowler Tuesday, Mar 14, 17 @ 2:45 pm
Snowflake? Thought you disdained name calling.
Comment by Anonymous Tuesday, Mar 14, 17 @ 9:59 pm