From the City Club of Chicago, Sen Heather Steans (D) joins Laurence Msall of the Civic Federation and Adam Schuster of the Illinois Policy Institute, as they cover the depth of the Illinois money pit known as publicly funded pensions.
What is clear from this discussion is that the state has failed to defuse the pension bomb, with every year the payments needed from state revenues to pay for pensions are draining the state’s ability to pay for education, police and emergency services, and the very functions of government that citizens expect a state to provide.
In 2002, pension costs were 5% of the State Budget. In FY 2020, pension payments will consume approximately 26% of the state pension, crowding out funds that would otherwise go to update needed services, or allow a reduction in property taxes.
And the problem with the state’s pensions are just the beginning. Chicago’s Fire and Police pensions are quickly draining and won’t continue to meet its obligations. Chicago Public Schools are virtually bankrupt.
To those who think that raising taxes are the answer, Laurence Msall notes, “There are no state taxpayers and a separate group of local taxpayers.” He notes the idea of continuing to raise taxes has a key flaw — taxpayers can and ARE moving to other states where high taxes are not consuming family budgets.
Is there an answer that can stop the pension debt bomb from destroying the state’s financial future? IS the only answer to amend the state’s constitution so that pension costs CAN be reduced going forward, and by stopping the automatic 3% pension increases that are compounding — literally — the vast unfunded pension liabilities the state faces.
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