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.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:
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.
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.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:
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.
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.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:
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.
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 … .”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.
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.