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Budget Thu Mar 25 2010

Illinois Democrats' Sudden Reform of the Pension System

Progress Illinois has a close look at the pension system reforms that Democrats quickly passed through both houses of the Assembly in the last twenty four hours:

In the blink of an eye yesterday, the General Assembly passed (by a wide margin) a historic overhaul of Illinois' public employee pension system. Facing the possibility that the state's bond rating might be downgraded next month when the state borrows about $1 billion to fund a portion of the capital construction plan, the Democratic leadership whipped into action, tossing together legislation that whizzed through the Statehouse in less than 12 hours.

It's important to remember that these cuts do not effect current employees; opening those contracts (the benefits are outlined here) would likely violate the state's constitution. The changes only apply to new hires in 13 of the state's systems. So let's review what the bill does and how much money the Pension Modernization Task Force estimates the changes will save between 2010 and 2045:

Follow the link for a thorough analysis by PI's Adam Doster.

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Please / March 25, 2010 3:49 PM

If it was that easy to pass, it is a worthless piece of reform. If there were any serious and structural reforms, it would have more opposition, given how state leadership is in the union pocket.

This is just window dressing - something to point to during an election year that is going to be unkind to democrats and incumbents...

Ramsin / March 25, 2010 5:55 PM

How are these people "sucking of the public teat"? You know they work for a living right, and provide a service the taxpayers demanded?

Funny / March 26, 2010 9:27 AM

If there were a thousand gov't workers running on big hamster wheels to generate electric power to the city, you could also say they "work for a living and provide a service the taxpayers demand"

A disinterested person would look at that and suggest a much better way of accomplishing the same task, without jeopardizing the public treasury.

Platitudes don't do much when real results are necessary.

Ramsin / March 26, 2010 9:35 AM

Wow, what a useful analogy to a cartoonish impossible situation.

State workers provide services that are useful, are demanded by the public, for decades. They deserve the pensions they worked under the assumption they would receive.

You, like most conservatives eager to destroy social spending, act like if you have a government job you are doing something redundant or inefficiently. Of course, there's no evidence of that. These state workers are construction workers, teachers, accountants, social workers. Illinois has among the lowest, if not the lowest, ratio of state workers to residents, meaning they are responsible for more work than their counterparts in other states.

Or, you could just parrot thirty-year old talking points and employ impossible, ridiculous metaphors.

Funny / March 26, 2010 11:11 AM

Ad hominem attack all you like.

"Illinois has among the lowest, if not the lowest, ratio of state workers to residents, meaning they are responsible for more work than their counterparts in other states." (As if there is some magic number that should be attained - judging by the finances, seems like less is more)

According to Pew, IL has less than 60% of their pension obligations funded. So with the lowest ratio of workers to taxpayers, they manage to fund the pensions so incompetently.

That is beyond pathetic, so our "leadership" tries to apply a band-aid on future obligations and does nothing for the current mess.

The pension recipients are not going to enjoy it much when those funds they are expecting are not available. Look at how Greece is reacting to the same scenario... riots, unrest, destroyed lives, etc.

You can enact real change or you apply band-aids and make the problem worse.

BTW, you made my day with the "no evidence that government is inefficient" - Hah! That's a straight up Baghdad Bob-esque line.

Ramsin / March 26, 2010 11:16 AM

I could also just say you are making things up without providing evidence. You compared state workers to people running a hamster wheel to power the city. It's a ridiculous, childish, unconsidered analogy that demonstrates you haven't thought more deeply about this than talking points. Saying my request that you show evidence is "Baghdad Bob-esque" is just a cheap dodge.

You still haven't addressed the fact that you are talking about state workers as though they are all lazy and inept, and redundant. I agree that the state government should have been funding the pensions they promised instead of borrowing from those funds because they were too terrified to create a just, progressive tax code. We don't disagree there.

Funny / March 26, 2010 12:36 PM

Yes, Ramsin. You're right. No depth of thought at all. No one who disagrees has credibility.

So when the state is forced to borrow in order to pay pension obligations, as lawfully required, the bond rating of the state will fall. This is not really a matter of if, its when. With that nice and shiny new lower bond rating, it will cost the state significantly more to finance its operations and obligations.

If you haven't noticed, we are at the low end of interest rates, and on a decision tree, the only way to go is up, unless there is some magical unicorn out there with negative interest rates (I heart Unicorns). A nice higher interst rate coupled with a nice lower bond rating will leave the state even further in the hole.

And guess what?

There will still be guys sitting around saying "we can't cut public services" and "these people work, and they demand the pensions they fought for".

And all the while, it becomes increasingly enticing for a money-starved government to start selling off its assets to the highest bidder (ring a bell?) and/or privatizing whole parts of the operation. There are certainly areas where the private sector is much more dynamic at responding to these types of currents.

Thats not the direction you want, nor do the people you represent, so you might as well commit to taking some medicine now rather than a toe tag later.

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