Governor Squeezy has called the General Assembly back into special session on Wednesday.
He says it’s about what he insists on calling pension reform.
Read John Dillon’s great letter I reprinted as the previous post.
John spells it out. There are two parts to the pension liability: Normal costs and the cost of the debt.
Normal costs are what TRS pays out to current retirees. In addition to being constitutionally guaranteed and contractually required, normal costs are entirely affordable. The burden on the citizens of the state is the cost of the debt the state owes because they haven’t paid what they owed.
John’s solution (and not just his): Refinance the debt. Reamortize it as many do when they refinance a mortgage, paying it back over a longer time at lower cost to the taxpayers. The Center for Tax and Budget Accountability has explained how this can be done.
However, that would mean less money for the banksters.
So, the General Assembly will gather on Wednesday in another show of ignorance and paralysis. Speaker Michael “Madman” Madigan has already made it clear that there will be no deals.
Paralysis has a good and a bad side to it. On the one hand it means the promise of an undiminished constitutionally protected pension remains in place. The bad news is that we are no closer to a revenue solution.
The IEA leadership has told its members that they expect nothing will be passed this week. They expect to happen what “Madman” Madigan has said would happen: He will amend SB2404 – the bill that came out of the discussions between the state’s public employee unions, members of We Are One, Senate President John Cullerton – so that it we look more like his SB1.
It is no secret that many of us were very unhappy with the We Are One/Cullerton SB2404. But as there now appears little chance of it, or anything, coming out of this session this week, maybe it is time to look ahead.
And it seems all about the Illinois governor’s race.
Pundits have speculated as to whether the Madman’s actions hurt or help Lisa’s chances.
Rich Miller seems to suggest it is hurting Lisa. Her poll numbers are down.
Rich thinks it is because the Madman appears to be obstructing a pension cutting bill.
But it is hard to imagine how success at passing legislation diminishing pensions and which would negatively impact nearly 800,000 families in Illinois would help Lisa.
This morning comes news that Bill Daley, gubernatorial candidate and the brother of a guy who is a recipient of one of the largest public pensions in the state (Hint: Former Chicago Mayor) will announce a three-part solution to the pension problem.
The former banker should provide some laughs with that.
Or at least three laughs.
The gubernatorial race has now taken over the pension issue.
If there was no interest in dealing with revenue before, there will be even less interest over the next 18 months.
Unless it is made an election issue.
Which brings me to the campaign to draft Ralph Martire for Governor.
Fred Klonsky 
Refinancing the debt is more $ for the bankers, not less. They are paid essentially on a transaction basis. Bringing a large debt issue to market is huge $ for them, plus they earn fees for managing the issue once in the market. Leaving an old issue on the books is less $.
Anonymous,
You are right and you are wrong. I used “the bankers” metaphorically. The reality is that the refinancing and reamortizing the debt would save the state and taxpayers money, meaning less would go out to bankers and investors.
From Glen Brown’s Blog:
“Given that the current repayment schedule is a complete legal fiction – a creature of statute that doesn’t have any actuarial basis – making this change is relatively easy. Simply re-amortizing $85 billion of the unfunded liability into flat, annual debt payments of around $6.9 billion each through 2057 does the trick. After inflation, this new, flat, annual payment structure creates a financial obligation for the state that decreases in real terms over time, in place of the dramatically increasing structure under current law. Moreover, because some principal would be front- rather than back-loaded, this re-amortization would cost taxpayers $35 billion less than current law” (Ralph Martire, Executive Director of the Center for Tax and Budget Accountability, updated January 16, 2013).
Rich Whitney Green Party 2006 & 2010: graduated state income tax, support schools equitably through state income tax instead of property tax, financial transaction tax, state bank ala North Dakota, support ALL unions & their pensions, get green industries into the state. We had a better choice before.
I want a bumper sticker and t shirt for gov Ralph
You now are Chair of the t-shirt and bumper sticker committee. After all, the Draft Ralph Martire for Governor is a people’s campaign. You’re a people? Right?