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CHICAGO—Former Illinois Governor James R. Thompson, who in 1983 and 1989 engineered raising Illinois’ state personal and corporate income tax rates by 20 percent, will receive a generous increase to his lavish, gold-plated state pension on July 1, 2016, while Illinois residents on Social Security government pensions will see negligible increases to their own benefits next year.
Thompson’s annual pension as of 2016 is $147,477. On July 1, his annual cost-of-living increase of 3% will boost his annual government pension by $4,424.
Compare those figures to Social Security recipients, whose cost-of-living increase of two-tenths of one percent for 2017 was just recently announced. For those receiving a Social Security pension of $1,000 a month, that cost-of-living increase amounts to only $24 annually, or nearly one-hundred eight-five times less than that of Thompson.
“It is obscene that tax-raiser Thompson is pulling in millions of dollars from the essentially bankrupt state pension fund, while retirees on Social Security pensions, whose earnings were taxed to prop-up his state pension fund, must get by with an increase of $2 or $3 a month in 2017,” said Jim Tobin, President of Taxpayers United of America (TUA).
Under Thompson, the state personal income tax was raised from 2.5% to 3%, and the state corporate income tax to 7.3%, including the 2.5% personal property replacement-tax surcharge.
“This is an example of how corrupt the Illinois government is and has always been,” said Tobin. “Thompson, who retired at age 55, and who has contributed only $84,996 to his pension plan, already has collected $2.5 million to date, and his estimated lifetime pension payout is $3.38 million. He should be ashamed, Social Security pensioners and taxpayers alike should demand immediate reform.”
To understand the tax burden Illinois taxpayers face due to unfunded government pension liabilities, see TUA’s 10th Annual Illinois State Pensions Report.
Jared Labell, Executive Director of Taxpayers United of America, was quoted on the recent release of 10th annual Illinois State Pensions Report by Chicago Tribune.
As the Arlington Heights Park District’s executive director retires this week, about $85,000 worth of unused sick and vacation days he had accumulated since his hiring in 2008 have led to a significant salary spike during his final years of service, according to public records obtained from the park district by the Arlington Heights Post.
Retiring executive director Steve Scholten, 62, whose last day on the job is this week, was paid $182,533 in 2014, with his salary rising $32,516 – almost 18 percent – to $215,049 in 2015, officials said.
Scholten also received a six percent raise on Jan. 1, just months after he had alerted the park district’s board of commissioners that he would be retiring on June 30, but officials said most of the recent salary increase can be attributed to the park district paying out on Scholten’s unused sick and vacation days.
As of December 2015, Scholten was paid out half of his vacation and sick time, which was included in his $215,049 wages, said Donna L. Wilson, the park district’s director of finance and personnel.
“Once an employee announces they are retiring, we start paying out right away, so there’s not such a huge hit at the end,” Wilson said.
Since his hiring in 2008, Scholten had accumulated unused vacation days adding up to about $57,000, and unused sick days adding up to about $28,000, Wilson said.
While belt-tightening measures by the park board in 2012 eliminated the policy of allowing employees to be paid for unused sick days for those hired after 2007, Wilson said Scholten had an exception in his contract that allowed him to be exempt from the new provision.
Officials said that the park district’s new executive director, Rick Hanetho, who previously served as executive director of the Northbrook Park District, will have a base salary of $185,000, plus a $625 monthly car allowance, but has no payout provision in his contract for any unused sick days.
Prior to 2012, the park district paid half of an employee’s accumulated sick days up to 90 days, or a maximum of 45 days, Wilson said.
Scholten will have received all of his unused sick leave pay by Thursday, Wilson said.
Scholten’s monthly pension, which will be administered by the Illinois Municipal Retirement Fund, or IMRF, will be roughly 75 percent of the average of his highest annual salary earned over four consecutive years, IMRF spokesman John Krupa said.
In Scholten’s case, since he was employed by several local park districts during his 40 years in parks and recreation prior to being hired in Arlington Heights, including Elk Grove, Medinah, Glen Ellyn and Bloomingdale, Krupa said in addition to Scholten’s employee contributions, the remainder of his pension will be paid by each of the municipalities where he worked.
“It’s shared, and each park district’s liability is proportional to the amount of service credit earned,” Krupa said.
Krupa said it’s neither illegal nor unusual for public employees to “accrue a lot of sick and vacation days, and have a lump sum payment near the end of their employment.”
Indeed, Krupa said IMRF pensions are not contributing to the state’s budget crisis, adding, “IMRF is the best-funded pension system … it’s 87 percent funded.”
“These pensions are not funded by the state of Illinois, and most employers levy a tax for their employees’ IMRF-managed pensions,” said Krupa, adding that while IMRF does administer pensions for retiring executives like Scholten, most of the retirees were earning modest salaries.
“These are blue collar public servants who are not making executive salaries,” Krupa said.
Nonetheless, officials with the Chicago-based nonprofit Taxpayers United of America warned that when public service administrators reap sharp upticks in their wages shortly before retirement, local taxpayers end up picking up the tab for what the organization refers to as “pension spiking.”
“For many retirees in the private sector, they are looking at getting only a Social Security pension of about $15,000 a year,” TUA’s executive director Jared Labell said. “That pales in comparison to these public pensions, especially when you’re facing retirement on a fixed income, and you might not be able to stay in your home, because you can’t afford to pay your property taxes any longer.”
This week, the TUA released the results of its 10th annual Illinois State Pensions Report, which analyzed the IMRF, as well as several other retirement systems, including the Teachers’ Retirement System (TRS) and State Employees’ Retirement System (SERS).
According to the TUA report, the top 400 Illinois pensioners of 2016 will collectively receive $91.5 million in pension payouts this year alone.
“When you look at these huge public pensions, and you look at how much the employee has contributed, the system is lopsided, and it’s left to the local taxpayers to pay the bills,” Labell said.
CHICAGO- For over 45 years since its founding, Taxpayers United of America (TUA), a Chicago-based tax watchdog group has successfully fought taxes at the local, state, and federal levels, while championing the interests of taxpayers.
Founded in 1976 by economist and activist Jim Tobin while still employed as a bank examiner at the Chicago branch of the Federal Reserve, Tobin was disgusted by what he saw from the inside and left the government sector to work on behalf of taxpayers. TUA has since gone on to become one of the largest taxpayer organizations in America.
“I’d love to continue this work for as long as possible,” said TUA founder and president, Jim Tobin. “Our work is critically important now more than ever, and it’s incredibly rewarding to work on behalf of taxpayers and lessen the tax burden foisted upon them by politicians and governments.”
Since TUA’s founding, the taxpayer watchdog group has made an impact on tax policy in Illinois and across America. In 1977, Tobin led the first successful property tax strike in modern Illinois history. In the past four decades, TUA has been victorious in defeating 441 local tax-increase referenda, stopping state income tax hikes, and defeating every attempt to enact a graduated state income tax in Illinois since 1992. TUA’s leadership and members were instrumental in repealing the Medicare Catastrophic Coverage Act of 1988, legislation that increased taxes on all senior citizens, which was the first time a major federal entitlement had ever been repealed.
All combined, TUA has saved local, state, and federal taxpayers more than $200 billion of their hard-earned money since 1976.
