When JB Pritzker made his budget address to the Illinois legislature I highlighted the part about state public employee pensions.
Reminder: Illinois is carrying a $134+ billion pension liability and state pensions that are only about 40% funded.
In his budget address Pritzker proposed a package of stuff that included a yearly three year pension underpayment of $800,000 a year, a pension obligation bond, handing over a portion of a revenue from some future progressive income tax to the pension systems and transferring some unnamed state assets to the pension systems.
There a problems with all of these proposals. For example, even if the legislature and the voters vote by a super majority to change the flat tax language of the Illinois constitution, it will likely be four years before we would see any revenue flowing from that.
Amanda Kass wrote a blog piece about the three-year pension holiday.
Amanda is the Associate Director of the Government Finance Research Center at UIC’s College of Urban Planning and Public Affairs.
According to Kass’ calculations the underpayment might be way bigger than Pritzker is saying.
It’s not $800,000. It is more likely $1.1 million a year for at least three years and maybe longer.
How is that $1.1 billion decrease accomplished? The details in the budget proposal are a bit thin (see pages 35-36 of the budget proposal), but they involve a number of pension related changes. The two main items are extending the repayment timeline past 2045 to 2052, and making an already existing pension acceleration program permanent.
I am not suggesting that the first months of the Pritzker administration hasn’t been a shift from Bruce Rauner’s overt hostility towards working people in the state.
But if you, like me, were hoping for a shift in addressing the pension unfunded liability, we are still headed in the wrong direction.
The core of Pritzker’s plan is reducing state payments and extending the ramp.
That is what got us in this mess in the first place.