With Illinois’ 98th General Assembly now under way, the state’s pension funding crisis has only grown more urgent.
It is up to the public to add to that urgency by demanding solutions from legislators. Illinoisans are paying more in taxes and getting less for their money. It’s time that ended.
Illinois’ credit rating is dead last among the 50 states, according to bond rating agencies Moody’s and Standard & Poor’s, which lowered the state’s credit rating last week citing – what else? – the state’s failure to address the $96 billion in unfunded liability to its five public pension systems.
The downgrade means that it costs more for state government to borrow money, which means Illinois’ taxpayers get less for their tax dollar than residents of other states.
Illinois also owes about $9 billion in past-due bills that go back as far as September. Its largest creditor, the University of Illinois, is owed more than $430 million.
Many of those that are owed are nonprofit organizations who cannot afford to be de-facto lenders for our deadbeat state government. For the non-government creditors, the state also pays 1 percent interest for every month its payments are delayed. Yet another way Illinoisans’ tax dollars are being wasted.
But Illinois lawmakers thus far have chosen to let this situation continue to worsen rather than cut spending or address the pension crisis. It’s been less painful for them to let things continue to grow worse than to actually remedy this situation. That’s because the solution will require compromises that will be painful for all sides.
Taxpayers already have been socked with a 67 percent income-tax increase, revenue that has gone entirely toward funding the pension liability.
The staggering numbers, both in deficits and in pension payouts, make it clear that the state’s pensions no longer can be so generous.
Reducing, temporarily freezing, or eliminating cost-of-living increases, and increasing recipient contributions for health care and other benefits are viable options. Caps on pension payouts should be instituted, particularly for those who are pulling in more than six figures annually.
We also have opposed shifting the burden for funding teachers’ pensions to local school districts, but there might need to be compromise on this.
Other questions need to be considered for the long term, including ending the pension program and replacing it with a 401(k)-style plan, which most private-sector workers have today.
Our state also needs to spend less money, and that means it needs to cut programs, and not just in prisons. It might mean forsaking programs from which we benefit personally. It might mean forsaking programs that can be duplicated by the private sector.
Illinois can do so much better, and the public must demand that it does.
Nothing should be off the table, with the exception of the course we have taken the past few years: inaction.