You cannot address budgetary reform in Illinois without addressing pension reform. You cannot address high property taxes in Illinois without addressing pension reform. You cannot understand the push by the tax-and-spend crowd to tax retirement income without understanding the need for pension reform. You see, pension reform is the 800-pound gorilla of state government dysfunction.
Illinois has a Pension Protection Clause in our State Constitution. The courts have decided time and again that, once extended, pension and healthcare benefits may not be diminished. The deal can only be changed for those with whom it has not yet been made. I agree.
Derelict in their duties to properly fund pensions, however, more Illinois communities are becoming subject to pension intercepts, wherein the State intercepts other government payments to local governments to make the mandated pension payments those local governments are not making. In many Downstate communities, pension costs exceed the total amount of property taxes collected by cities, leaving all city services to be funded on other taxes and fees collected by cities. Wonder why you keep getting hit with “new” local taxes and fees? Look no further than local pension costs for the answer.
Where does the 800-pound gorilla sit? Anywhere it wants to. When a retiree exhausts the contributions they have made in the first 1-3 years of retirement with the remainder of the tab for the rest of their lives (and in some cases, their spouses lives) to be picked up by taxpayers, we have a very small room with a very large gorilla sitting in it.
This lack of pension reform crowds out other government functions, altruistic as our goals for other peoples’ monies may be. Consuming an ever-growing portion of both state and local government budgets, annuitants outnumber active employees in many city and village budgets in Illinois. Locked-in to a defined benefit system with COMPOUNDING annual cost of living benefit increases since the early 1980s the problem has festered and metastasized over nearly a generation now. It’s time for a better deal moving forward.
To be clear, none of this is the fault of police and firefighters, teachers and caseworkers, prison guards and professors. They paid into the system, even when their duly elected politicians made promises to them knowing full-well they couldn’t be kept. A pension is a promise. Rank and file retirees can take pride in having made their payments. The shame, however, accompanies the politicians who did not, as well as Union bosses who put long-term gain for them over common-sense accounting. It’s put us in a bad position.
Illinois citizens have a decision to make. Are we willing to accept continually higher taxes from all levels of state government to pay for pensions that are simply unaffordable, while still well-intentioned? Or is it time for a better deal for taxpayers moving forward.
I firmly reject the notion of taxing retirement income and, like most Illinoisans, I don’t want continually increasing taxes to pay for past promises over current needs. While we explore all legal options to chip away at the unfunded liability for current employees and annuitants (the best source of funding would be encouraging economic growth through widescale tax relief), we must concede that large-scale systemic pension reform must be undertaken in Illinois to move us into the future more securely. What that looks like should be the focus of our efforts in Springfield.
We must take on the 800-pound gorilla or find ourselves with no room left to breath as the gorilla grows while the walls close in around us.