Monday, April 16, 2018

You'd have to be nuts to. . .

move to Illinois. You would:
You’d be mistaken to think Harvey, Illinois has a unique pension crisis. It may be the first, and its problems may be the most severe, but the reality is the mess is everywhere, from East St. Louis to Rockford and from Quincy to Danville. A review of Illinois Department of Insurance pension data shows that Harvey could be just the start of a flood of garnishments across the state.

Harvey made the news last year when an Illinois court ordered the municipality to hike its property taxes to properly fund the Harvey firefighter pension fund, which is just 22 percent funded.
If you're not familiar with Illniois, Harvey is in the southern suburbs of Chicago and desperately poor, while the other cities mentioned are scattered throughout Illinois. There's more:
Now, the state has stepped in on behalf of Harvey’s police pension fund. The state comptroller has begun garnishing the city’s tax revenues to make up what the municipality failed to contribute. In response, the city has announced that 40 public safety employees will be laid off.

Under state law, pensions that don’t receive required funding may demand the Illinois Comptroller intercept their municipality’s tax revenues. More than 400 police and fire pension funds, or 63 percent of Illinois’ 651 total downstate public safety funds, received less funding than what was required from their cities in 2016 – the most recent year for which statewide data is available.
The linked article from Wirepoints goes into significant detail concerning the pension shortfalls that many cities in Illinois face. Of course, Illinois has gigantic pension problems at the state level as well:
Since the Illinois Supreme Court ruled in its May 2015 decision on Senate Bill 1 that pensions for current government workers can’t be modified, debate over pension reform has faded from view.

But ignoring the problem won’t make it go away. In 2015, Illinois’ state pension debt reached a record $111 billion. Government-worker pensions already consume one-fourth of the state’s budget. And every day Illinois goes without a solution to its pension crisis, the state’s pension debt grows by over $20 million.

The state’s pension crisis threatens to burden taxpayers with massive, ever-escalating taxes to bail out a system that is simply not sustainable.
I mention these things because Illinois isn't the only place where the wolf is at the door. In fact, you could look much closer to home:
Bloomberg Markets recently released a bombshell of a story on Minnesota’s public-pension system. “New Math Deals Minnesota’s Pensions the Biggest Hit in the U.S.” It reported that “Minnesota’s debt to its workers’ retirement system has soared by $33.4 billion, or $6,000 for every resident, courtesy of accounting rules. The jump caused the finances of Minnesota’s pensions to erode more than any other state’s last year … .”

Bloomberg has called attention to the fact that the financial stability of Minnesota pensions, relative to other states, has plummeted, and that even judged against its own standards, the system is in big trouble. The system admits to an $18 billion unfunded liability for state, local and school district employees. But the Bloomberg report puts our total unfunded liability at $108.9 billion. That’s more than $20,000 for every resident.
Do you have 20 large lying around? No? Me neither. Very few people are talking about these issues. It's long past time we did.

7 comments:

R.A. Crankbait said...

Clawbacks from the pensions of retired governors and state legislators.

Gino said...

why talk about the pension matter when we have a Stormy Daniels crisis?

W.B. Picklesworth said...

You only write about it, Mr. D, because you hate people. Hater.

For my part, I think the state of Illinois needs to find a legal, but compassionate way to meet these obligations. Perhaps a Tide Pod Challenge for retirees is the solution? Or maybe a mass march across Lake Michigan in July to protest President Trump?

R.A. Crankbait said...

Attention, refugees. "Sanctuary" is now going to cost you $1,000 a month. Thank you.

jerrye92002 said...

How about a tax on gun possession and bullets? Ought to net a hefty sum in Chicago alone.

Mr. D said...

How about a tax on gun possession and bullets? Ought to net a hefty sum in Chicago alone.

They'll probably do that one, Jerry. Might have already. The folks in Chicago who are using the guns aren't known for being taxpayers, however.

why talk about the pension matter when we have a Stormy Daniels crisis?

Good point!

Bike Bubba said...

Yikes. It would seem Minnesota's hole is, per capita, far worse than Illinois'. I also seem to remember a GOP State Auditor being given the bum's rush about ten years back after she made a habit of pointing out inadequately funded pensions. Was it Pat Awada?