Mike Madigan and John Cullerton.
There is now broad acceptance of the fact – following the Illinois Supreme Court 6-1 ruling in Kanerva v. Weems – that the pension theft Senate Bill 1 will go down in flames.
Most of the discussion is now focused on what will be Plan B.
In an extraordinary piece of political puffery in yesterday’s Chicago Tribune, John McCarron paints a heroic picture of Senate President John Cullerton.
McCarron is a former employee for the Trib and now does freelance.
What makes Cullerton so great to McCarron?
Even though President Cullerton knew SB1 was unconstitutional, he voted for it anyway. And got the Senate Democratic Caucus to vote for it.
In Illinois, that is what is called a profile in courage.
If you recall, Cullerton had worked out a deal with the coalition of state public employee unions (We Are One), and came up with SB 2404.
SB 2404 cut pension benefits, but not as much as what Speaker Madigan wanted. Cullerton was gambling that the Court might agree to less a violation of the pension protection clause rather than a full frontal attack on it.
Kanerva suggests that Cullerton was wrong.
Then there was a stand-off, with the Senate voting for SB2404 and Madigan’s House voting for SB1. That was back in May.
By December, Democrats had mostly united around SB1 and a full frontal on the pension protection clause.
I opposed SB 2404 as well as SB1. So did the Illinois Retired Teachers Association (IRTA). So did a number of other pension activists and bloggers.
IRTA promised they would take either bill to court.
We argued that any compromise of the pension protection clause would open the door for further pension cuts later.
For this we were attacked by apologists for the union leadership as union-haters.
Let me be clear that nobody in the union leadership called us that. The campaign of attacks and name-calling – Facebook posts and monumentally long emails – came from a small group of their alleged defenders.
These apologists argued that it was far too dangerous to go to the court to defend the explicit language of the Illinois Constitution. Instead we should rely on cutting a back room deal with Illinois’ Democratic leaders.
Not even in Illinois would that be considered a smart strategy for the unions.
McCarron speculates now that the state’s union leaders – once the Supremes rule SB1 illegal – have no incentive to bargain another SB 2404.
I hope that is true.
But I’m not so sure.
We have been and can be our own worst enemies.
There is no doubt that the state’s political leadership – Democrat and Republican, Quinn or Rauner – would rather come up with another attempt at pension theft, or amend the state’s constitution, removing the pension protection clause.
This will fail.
At some point they must face the facts as we have consistently argued them.
It’s not a pension problem.
It’s a revenue problem.
Fred Klonsky 
I am sure you received the same conciliatory letter from Cinda Klincka (?sp?). To the effect that IEA has different priorities than IRTA and that IEA is ready to deal and, in fact, has a compromise with the legislative leaders. We are, as retirees, sold out again.
Jean Moran
Sent from my iPad
>
Never saw this letter, Jean, & I would guess that it should have been sent out to ALL IEA & IEA-R Chapter Presidents (ours being Fred, who who have, of course, forwarded it).
Am I missing something here? Thanks, Jean, for the heads-up.
The unions were too gullible when they agreed to SB2404. After they turned their back, they WERE STABBED in the back with glee, by the likes of “Nekritz-Biss & Associates, the pension theft experts”.
Nekritz was quoted as saying, “we will just go back to SB2404”. Is she kidding?
NO DEAL!, PERIOD!
End corporate welfare, begin a progressive tax system, tax buy and sell orders for stocks and bonds.Bring wealthy elite to the table. They may have to make a small adjustment to how much they invest every year. Oh Well.
Yes, Jack. And how about looking at Ralph Martire’s solid plan?
No…that makes too much sense–that’s in VERY short supply in Springfield.
PLAN B:
The current “Pension Ramp” does not work for the five public pension systems. The “Ramp” entails larger payments today as a result of the 1995 funding law – Public Act 88-0593 – to pay the pensions systems what the state owes. The pension debt needs to be amortized for a longer frame of time “just like a home loan that is amortized.” Though the initial payment will be greater in the beginning, over the long term it will become a reduced cost and a smaller percentage of the overall Illinois budget as it is paid off throughout the years (Executive Director Ralph Martire, Center for Tax and Budget Accountability).
“For over 40 years Illinois borrowed against what it owes the pension systems to pay for public services – like education… The reason Illinois borrowed from the pensions was to paper over the consequences of its poor tax policy, which is so flawed that after adjusting solely for inflation and population growth, the cost of maintaining services from one year to the next grows at a rate greater than state revenue. Rather than fix things by engaging the politically-difficult task of reforming tax policy, elected officials have consistently chosen the politically-expedient path of borrowing from pensions to pay for schools and, well, everything else” (Ralph Martire, Bad tax policy equals poor education funding).
“Decades of mismanagement and failure to match contributions are the predominant reasons that the state’s pension systems are suffering to the degree that they are today. Years of pension holidays, continually borrowing against the systems without a plan for repayment and a severe economic recession, which caused investments to plummet, further exacerbated the problem” (Senate President John Cullerton, Pension Promise Paradigms). Thus, there needs to be a required “actuarially-sound” annual payment from the state to the pension systems and not a constitutional challenge that breaks a contract with public employees, via so-called “pension reform.”
Raising appropriate revenue will pay the state’s debts, especially the unfunded liabilities that past General Assemblies had created. With a constitutional amendment, “given an appropriately designed graduated-rate structure, Illinois could cut the overall state income tax burden for 94 percent of all taxpayers—on average providing a tax cut to every taxpayer with less than $150,000 in base income annually, raise at least $2.4 billion more in revenue, and keep the effective individual income tax rate for millionaires well below five percent… Illinois taxpayers with the bottom 94 percent of base income collectively would receive an annual tax cut of $1.06 billion… [T]he combined effect of this policy would be a stimulus to the economy from tax cuts and additional state spending (assuming that the additional revenue is used to fund current public services that would otherwise not be funded) that would create at least 36,000 private sector jobs in communities across Illinois…” (Executive Director Ralph Martire, Center for Tax and Budget Accountability).
Taxing services; broadening the sales tax base to include selected consumer services will increase the state’s revenue. Illinois is one of five states with sales taxes on fewer than 20 services (The Center on Budget and Policy Priorities).
Eliminating the tax loophole for “Tax Increment Financing Districts” will provide additional revenue.
Eliminating “Edge Tax Credits” and other tax loopholes for large corporations in Illinois will free up further revenue.
Increasing taxation on the wealthy will produce surplus revenue. Illinois is in the top 10 of regressive state tax systems where the wealthiest taxpayers do not pay as much of their incomes in taxes as the poorest and middle-income wage earners (The Institute on Taxation and Economic Policy).
A Speculation Sales Tax for Illinois (Bill Barclay, Chicago Political Economy Group): $1 on contracts traded on Chicago derivative exchanges (Chicago Mercantile Exchange and Chicago Board Options Exchange) will supply even more revenue.
http://teacherpoetmusicianglenbrown.blogspot.com/search/label/fair%20taxation?updated-max=2013-02-22T03:36:00-08:00&max-results=20&start=13&by-date=false
November 20, 2011:
It is true that most state legislators lack the political backbone to address the causes of the budget problems but prefer scapegoating public employees and their pension systems instead. They are abetted by the Civic Committee of the Commercial Club of Chicago, the Civic Federation and the Chicago Tribune, to name just a few. Illinois legislators do not want to pay what is owed to the public pension systems even though past legislators, especially past governors, were the cause of the public pension systems’ lack of funding throughout the decades.
What is needed to solve the budget problems in Illinois is a better revenue base to pay the state’s self-induced debts. What is easier to do is to evade serious problem solving of the budget issue and to incriminate the state’s public employees.
The issue at hand is the state’s regressive tax rate that no one wants to confront. The public lacks awareness and understanding about the main causes of the state’s budget deficits. Legislators, the Civic Committee, et al. have capitalized on the public’s ignorance of the essential causes of the state’s financial debacle by calling for budget cuts and radical pension reform as the solutions. They are diversionary, scapegoating tactics that will bring intentional, financial harm to public employees and allow legislators to escape legal and ethical responsibility.
“At the core of the budget ‘crisis’ facing [Illinois] is [its] regressive state tax structure… that is, low-and-middle-income families pay a greater share of their income in taxes than the wealthy… [A regressive tax] disproportionately impacts low-income people because, unlike the wealthy, [low-income people] are forced to spend a majority of their income purchasing basic needs that are subject to sales taxes” (United for a Fair Economy).
Instead of reforming the state’s tax system, legislators (and their wealthy subsidizers) have focused on radical pension reform and severe budget cuts to services that the rest of us need. What do the wealthy and their puppet legislators propose? They propose sweeping, radical pension reform that will destroy the public employees’ defined-benefit pension plans, even though they know current unfunded liabilities will not be resolved by pension reform.
In addition, Illinois legislators propose budget cuts that will undermine healthcare for children, the elderly and low-income families; budget cuts that will prolong and increase the state’s unemployment; budget cuts in public safety and transportation; budget cuts in education; and budget cuts that will stifle economic recovery.
It is true that if the State of Illinois “does not [create] a contemporary tax system, one that is both sound and responsive to the needs of state, basic and necessary programs face the chopping block” (Center for Tax and Budget Accountability, CTBA).
Consider, for example, budget cuts in K through 12 and higher education: “Disparities in [the state’s] school funding and, therefore, quality of education, would be significantly reduced if the primary basis for school funding was on state revenues,” and that is why Illinois is “next to last in a ranking of states based on funds spent on education” (CTBA). As it is now, property taxes used as the main sources of revenue for school funding guarantee income inequalities among school districts throughout the State of Illinois.
Let’s be concerned about why the State of Illinois cannot obtain more revenue. Besides federal sources of income, the state uses only 11 sources of revenue: personal income tax (but note that Illinois was tied for the fourth lowest individual tax rate on households in the top income bracket), corporate income tax (note the recent extortionate tax breaks given to some Illinois corporations), sales tax (note that Illinois does not tax services like most other states for another significant source of revenue), corporate franchise tax and fees, public utility taxes, vehicle use tax, inheritance tax, insurance taxes and fees, cigarette taxes, liquor taxes and other miscellaneous (or rather unsubstantial) tax sources (Commission on Government Forecasting and Accountability, June 2011).
In regards to sales taxes, “a majority of states apply their sales tax to less than one-third of 168 potentially-taxable services… [States that do not tax services, such as Illinois], probably could increase [its] sales tax revenue by more than one-third if [it] taxed services purchased by households comprehensively” (the Center on Budget and Policy Priorities, July 2009).
Consider that a broader-based taxation system would provide a decrease in taxes for low-income and many middle-income families. Taxing services alone “would generate enough revenue to stabilize the General Revenue Fund and prevent structural deficits that lead to cuts in basic needs and social service programs” (CTBA). As long as our legislators play their political ping pong game with one another, it is impossible to obtain any just resolutions to the state’s perpetuated budget problems.
A case in point: reflect upon this potential financial windfall for corporations considered by legislators who are also ironically contemplating budget cuts and pension reform for the rest of us: “A package of tax breaks aimed at helping business and keeping a few high-profile companies from leaving Illinois could cost the government $850 million a year in its current form, raising the possibility that it will have to be scaled back to win approval from the Legislature. The package started as a move to lower the tax bill for two Chicago-based financial exchanges, CME Group Inc. and CBOE Holdings Inc., which are threatening to leave Illinois. Add a tax break for Sears to the mix, followed by tax incentives for businesses in general, and then measures to help poor families.
“Each new tax break means less money to run state government, requiring officials to get more money elsewhere or cut services… State government would have to absorb most of that loss, but 6 percent — or about $50 million — would hit the budgets of local governments across Illinois” (Associated Press, November 18, 2011).
So why can’t the State of Illinois provide a fair and sound tax system (Illinois is one of seven states with a regressive flat-rate tax), one that is “efficient with minimal impact on the economic decisions that taxpayers have to make” (CTBA), one that captures increased revenues in times of economic growth, one that maintains revenue collections during poor economic times, one that is simple and not liable to inconspicuous error, one that is transparent and builds trust with the state’s government officials (CTBA), and one that helps 99 percent of the state’s population?
The answer is most legislators in the State of Illinois prefer the easy way out of a difficult and challenging situation. Illinois legislators will not address the most important causes of the state’s budget deficits: the state’s flat-rate taxation and pension debt because of their own self-interests and the wealthy one percent that bankrolls them.
http://teacherpoetmusicianglenbrown.blogspot.com/search/label/fair%20taxation?updated-max=2013-02-22T03:36:00-08:00&max-results=20&start=13&by-date=false
Glen, how do we get this stuff out to the media outlets?
There also was an editorial in Friday’s Tribune from a staff writer saying how “wrong” the Supreme Court was in their pension ruling. Editorial stated that the court had interpreted the consitutional clause in the most liberal manner and should/could not have. Also stated that the law would NOT be struck down after it is pointed out to the court that retirees are not losing any pension benefits they were promised at the beginning of their careers, rather they are being “slowed”, and those receiving minimal benefits will continue to receive the 3% annual COLA.
Another Tribune employee, Kristin Mcquerrin, although she characterized Rahm recently as a personality disorder, stated on Chicago Tonight that Karen Lewis needs to tell the city where to get the money to fund the pensions. Hasn’t Karen given the City lots of places to raise revenue? Like taxing the Board of Trade transactions etc?
Also, we are all tired of having the possibility of having our income reduced discussed in such a casual way. If Illinois is experiencing such an emergency, shouldn’t everyone chip in? Why are the pensioneers the only ones who are being asked to pay more than their share to fund the schools? How would the Tribune employees like to give up some of their take home pay?
Because it is easier to beat down peons than wealthy elite.
The politicians, Democrat and Republican, had worked out stable coalitions.
By “coalitions” we should understand certain broad agreements as to how things should be divided, who gets what, who is left out in the cold (mostly us), who has to pay taxes, and who doesn’t. These coalitions were also in substantial agreement on the question of whether or not to allow opposition parties to field slates of reform candidates. There has always been a bipartisan consensus on this last question. Opposition parties would confuse voters. Only Democrats and Republicans should be allowed to run.
Now there is less to go around, and the coalitions are becoming less stable. There is a very real danger that fighting may break out, with factions splitting off, political bloodshed taking place.
The Chicago Schools have put in place a very clever plan to borrow two months revenue from PY 2016. This, together with funds looted from staff and teacher pension funds, should get them through PY 2015, setting up still more schools for privatization. There weredetails to be worked out, of course. The teacher’s pension money, had not yet been secured, put off till the Fall veto session, perhaps. But at least they knew where they were going and what they needed to do to get there.
Kanerva v Weems throws a monkey wrench into everyone’s plans.
Kanerva makes everyone accutely aware that there isn’t going to be enough to go around, even if the pension plans can be looted. Now it looks like retirees get to keep their money. Cullerton is trying to rally the troops, offering a new way to attack active employees.
Cullerton’s plan just as much unconstitutional as SB1, and Cullerton knows it. The important thing about Cullerton’s plan is that it represents an attempt to cement coalitions back in place.
Yes Klickna would not tell me that 2404 was dead if SB 1 was ruled unconstitutional. We will have to look “reasonable” to the public in the next phase. Bull! They went for the jugular and LOST! Screw them! Howard Wright Hinsdale 86 Retired
Sent from my Verizon Wireless 4G LTE DROID
Fred Klonsky wrote:
> a:hover { color: red; } a { text-decoration: none; color: #0088cc; } a.primaryactionlink:link, a.primaryactionlink:visited { background-color: #2585B2; color: #fff; } a.primaryactionlink:hover, a.primaryactionlink:active { background-color: #11729E !important; color: #fff !important; } /* @media only screen and (max-device-width: 480px) { .post { min-width: 700px !important; } } */ WordPress.com Fred Klonsky posted: ” Mike Madigan and John Cullerton. There is now broad acceptance of the fact – following the Illinois Supreme Court 6-1 ruling in Kanerva v. Weems – that the pension theft Senate Bill 1 will go down in flames. Most of the discussion is now focused”
Cullertons latest (gushed over by the media and the Springfield crowd)n is really insidious . We are just lucky comparing these guys to Barney Fife is an insult to Barney. I do think there is sort of a way they could get away with something like this But even if they get halfway there we might as well close down state government -the universities and heck all the rest of the schools
That is the real agenda here and I know the union members have it figured out , But do the financial enablers of the IL dems? I am just laughing at the stories I am seeing about the enthusiasm gap / Gallup found it easily. What do the dems do -well blame their base because they have done such a great job
Question. Is Ralph Martire willing to be a write-in candidate this Nov? If so, when should a grassroots push to get his name out with his opinions and policies be made to not only union membership but the public in general? Are we already too late or do we want to wait a month before mounting a blitzkrieg so there’s little burnout for membership? We darn near got Dillard edged in over Rauner in the primary after all by a concentrated effort. I’m truly curious as to others thoughts.
I can’t speak for Ralph. I’m not smart enough. But he has been asked and I have been told he has answered no.
I vote for Fred.
Prepare for continued attacks against public employees and unions in Illinois! I was running an errand last night, and was randomly tuning my car radio for some music.
I happened to hit a station that had a couple of guys celebrating Rauner being the next governor. They acted as if the election was over. They seemed almost delirious in their description of what Rauner will do. They stated that the “teachers unions are running Springfield”, and Rauner’s first accomplishment will be to “BREAK THE BACKS OF THE TEACHER’S UNIONS”. After that, they went to commercial, I reached my destination, and I tried to forget about that statement as being just a Tea-party type in a rant, and I hope that was all it was. That phrase “break the backs of the teachers unions” is kind of disturbing however, in several ways.
It indicates they will not be satisfied with just taking a “hard line” in negotiations, but will try to break the unions.
They will encourage Tea-party like take-overs and extreme demands against teachers, to force teachers strikes, similar to what is going on in Hinsdale. If they force many strikes, they will blame it on “greedy teachers” and get enough support to pass “no strike” and some kind of “right to work/no fair share” legislation.
Then if the state passes along pension costs of TRS to the local districts, the districts will cover the costs by reducing any raises for teachers. What could we do? Our negotiating committees would be in the ring handcuffed behind their backs. School boards, (like Hinsdale) would just proceed to beat the daylights out of us, more so then they already are.
Indirectly the 60 or more years of pension theft will be paid for out of teachers salaries. Of course, it will show the money being paid in by the school board, but the school board will get that money from lower wages and higher employee contributions to medical coverage.
All of us union members in Illinois, especially public sector, should keep this stuff in mind, and keep up the vigilance. The battles are not over yet.
Don’t listen to those blowhards on conservative radio talk shows.
You’re right, just a couple minutes was enough to give me nightmares.