View as PDF Chicago—Taxpayers United of America (TUA) today released the results of its analysis of the proposed Illinois state budget and the current financial health of the state, as well as recommendations for policy changes to avoid future prolonged budget disputes.
“Illinois is in desperate financial trouble after years of unrestrained spending and lavish, gold-plated pension and health plans for government employees,” said Jim Tobin, President of Taxpayers United of America (TUA).
Illinois Governor Bruce Rauner (R) released his fiscal 2016 budget proposal on February 18. The budget calls for total general fund spending of $32.0 billion, a $2.7 billion reduction from the fiscal 2015 revised budget.
The proposed level of appropriations from all funds in fiscal 2016 is $61.8 billion, compared to $66.3 billion in fiscal 2015. The largest areas of total state spending are healthcare at 31.5 percent, education at 25.7 percent, and human services at 16.1 percent.
The largest areas of general fund spending are education at 42.9 percent, healthcare at 22.4 percent, and human services at 17.4 percent.
“The political class and some media outlets frame the budget crisis as an issue of revenue, but that’s just not the case. The problem with Illinois’ budget is the result of years of profligate spending by the General Assembly and a series of governors who encouraged it,” said Tobin. “Gov. Rauner is trying to reverse that trend, but it will require the General Assembly to rethink years of unwise spending habits.”
General fund revenues are projected to be $32.0 billion in fiscal 2016, a $2.1 billion, or 6.1 percent, decline from fiscal 2015. The budget proposal addressed ongoing budget deficits through minor pension reforms, nullified by the State Supreme Court in May, which would have saved the state $2 billion; reducing government employee health insurance costs; cutting overall spending while prioritizing core government services such as education; and budget reforms including ensuring that bills are paid, consensus forecasting, a priority based budget, and building up a rainy day fund, according to the National Association of State Budget Officers (NASBO).
As of March 2015, the state had $111 billion in pension debt and more than $6 billion in unpaid bills, according to the Illinois Policy Institute.
Illinois, already tagged with the lowest credit rating among U.S. states, is at risk of downgrades and higher borrowing costs after lawmakers’ fix for its $111 billion pension shortfall was struck down in court, says Crain’s Chicago Business.
Illinois, which is grappling with billions in unpaid bills, is graded four steps above junk by the three biggest rating companies.
“The taxpayers of Illinois continue to send their hard-earned dollars to Springfield, even as they witness the General Assembly squander their tax dollars year after year, while always demanding more,” said Tobin. “The Illinois General Assembly confiscated plenty of our tax dollars already, so the least the legislature could do is balance the budget with those tens of billions of dollars before strong-arming Illinoisans for more revenue.”
“An amendment to the state constitution is needed before government-pensions can be cut or retirees can be forced to pay more into their plans,” said Tobin. “But until a constitutional amendment is passed, there are a number of changes that can be made to correct Illinois’ spending problem.”
“Ending pensions for all new government hires will eventually eliminate unfunded government pensions. New government hires should plan for their own retirements by being placed in Social Security and 401(k)-style plans.”
“Furthermore, if each government employee were required to contribute an additional 10% toward his or her pension, Illinois taxpayers would save $150 billion over the next 35 years, or roughly $4.3 billion annually.”
“Finally, requiring Illinois government employees and retirees to pay for one half of their healthcare premiums would save even more – an estimated $230 billion over current projections,” said Tobin. “Without addressing these colossal spending habits, among others, Illinoisans can expect to see their economic well-being diminished while the constitutionally-protected government pensions continue unabated.”
View as PDF Chicago—Taxpayers United of America (TUA) today released the results of its analysis of the effects of the State of Illinois’ government employee pension systems on the state’s daunting budget crisis.
“How does the Illinois government pension system negatively impact Illinois’ budget crisis? Let me count the ways,” stated executive director of TUA, Rae Ann McNeilly.
“We actually start and finish our analysis with the same issue. The Illinois State Constitution creates a protected class of political residents through an amendment that forever places unfair financial burdens on the taxpayers of the state.”
“While taxpayers struggle to make their property tax payments, working well beyond retirement age, these government pensioners enjoy lavish, gold-plated retirements beginning on average at the age of 59.”
“But let’s talk about some of the numbers that render this system so burdensome to average taxpayers. According to our analysis, government employees pay only about 5.8%, on average, of their multi-million dollar estimated lifetime payout. Since 1998, government employee contributions to the state pension funds have increased by about 75% while taxpayer contributions have increased by a stunning 427% over the same period. Increasing government employee contributions to their own retirement fund by 10% would save taxpayers over $4.3 billion per year.”
“Secondly, the government employee pensions include a 3%, compounded annual cost of living adjustment. This excessive benefit doubles the annual pension paid out to retirees at least once over a natural lifetime. Elimination of this benefit alone would save taxpayers $250 million for the first year, increasing annually because interest would no longer be paid on increases.”
“The third and equally excessive benefit is the early age at which government pensioners are able to retire, some still in their 40s, although our research show full-time, life-long government pensioners have an average retirement age of about 59. Raising the retirement age to 67 in order to receive maximum benefits would be in line with the private sector taxpayers and the total pension liability would be reduced by 27% or $49 billion.”
“Within the pension benefits are the healthcare benefits that government employees and retirees pay little or nothing out of their own pockets. These healthcare benefits aren’t even included in the nearly $200 billion in unfunded liabilities. If employees and retirees contributed 50% to their own healthcare, as most private sector employees, it would ease the state’s budget by $3.6 billion a year.”
“Then we have the problem of expanding the pension system to include the highly paid judges and legislators, which creates an obvious conflict of interest as demonstrated by the recent challenge and ruling to the General Assembly’s half-hearted attempt at pension reform of SB1. Judges upheld the protected political class benefits, taxpayers be damned.”
“This brings us full-circle, although certainly not completely detailed, to where we actually have a Constitutional amendment that creates and protects an elite political class with absolutely no regard to the taxpayers who can and are even forced to lose their own homes to ensure to constant care and feeding of a corrupt and immoral government pension system.”
“While Governor Rauner certainly has made clear his intent to reform the government employee pension system, his latest 500 page proposal depends on the legal splitting of hairs that negotiations say, ‘we’ll give you this, if you sacrifice that’, likely can’t withstand legal challenges, especially those being deliberated by beneficiaries of the government pension cabal – the state’s judges.”
“The only option for adequate, permanent reform that eliminates unfunded liabilities and a protected political class under this corrupt system is to get a Constitutional amendment on the ballot that removes the immoral protection of government employee benefits above all others. But the General Assembly must also pass a bill that allows local Illinois governments the right to restructure their debt under bankruptcy protection.”
“To be successful in such an endeavor, media must first be honest about the reality of the mathematical impossibility of sustaining the system as it stands. Rank and file members and average government employees are worried about their own pensions and whether or not they will even get pennies on the dollar.”
“But when the ‘moderator’, Eddie Arruza of Chicago Tonight’s panel discussion on the subject clearly chooses a side in the issue, and the so called ‘non-partisan, non profit’ panelist, Ralph Martire, executive director for the Center for Tax and Budget Accountability counts himself and his organization as winners in the judges’ ruling against SB1, there is no objectivity, much less honesty in the bleakness of the outlook for today’s and tomorrow’s government pensioners getting even pennies on the dollars of the ‘promises’ made to them.”
“While biased media and talking heads share much of the responsibility in keeping people in the dark about the reality of the Illinois government pension crisis, it couldn’t be clearer who the engineers and power brokers are who have brought Illinois literally to the brink. Michael Madigan has controlled the Illinois General Assembly for 38 of his 40 years as a state representative. With the assistance of Senate President John Cullerton, they have literally sold the very soul of the state for their own gain and power. They have run roughshod over Illinois taxpayers for far too long. And with the help of a partisan media, they have yet to be held accountable.
“Just take a look at the stunning pensions these judges and legislators get. It is no wonder that they protect the government pension cabal without hesitation.”
“Arthur Berman retired from the General Assembly and rakes in a cool $228,960 annually! His estimated lifetime payout is about $3.7 million. His stake in that lavish payout? About 3%.”
“Judge Tobias Barry is currently getting $204,083 in annual pension payments. Fortunately he didn’t retire until 82 so his estimated lifetime payout is only a humble $2.3 million.
“There are now 12,154 Illinois government pensioners collecting more than $100,000 and 85,893 pensioners collecting more than $50,000 annually! Those are staggering numbers, considering the taxpayers who fund these pensions get an average Social Security pension of about $15,000 a year.”
“This is not a retirement system or a safety net for ‘the poor public servants’ who have given their lives to the community. This is theft. This is immoral and unethical theft of taxpayers’ hard-earned money to be given to the political elite in order to secure the power of the union thugs and the bureaucrats who benefit from their support, all guaranteed by a crony statute.”
*Lifetime estimated pension payout includes 3% compounded COLA and assumes life expectancy of 85 (IRS Form 590).
View as PDF Springfield—Taxpayers United of America (TUA) today released the results of its updated study of the top pensioners of Sangamon County government, Sangamon County government schools, Lincoln Land Community College, University of Illinois at Springfield, and Springfield municipal government. Also updated were the state pensions for retired judges (JRS), legislators (GARS), and state employees (SERS).
“Well over 1,000 of the Sangamon area government pensioners receive multi-million dollar lifetime pension payouts,” said Jared Labell, TUA operations director. “The pensioners’ average personal investment is only about 5.5% of the lifetime payouts, leaving taxpayers on the hook for funding the majority of the unsustainable government pension system.”
“While taxpayers struggle to make their property tax payments, working well beyond retirement age, these government pensioners enjoy gold-plated retirements beginning at the age of 58, on average. Pensioners collect millions of dollars from taxpayers well after their government employment has ended, and today we are seeing the results: current tax revenue is directed toward funding the behemoth pension system first and foremost, before other services and present needs.”
“Illinois has one critical budgetary problem: the government pension system. We need to stop overcomplicating things and simply solve that problem if we want to see Illinois flourish.”
“It is unconscionable that the state budget battle continues in the light of the dire economic situation Illinois faces,” continued Labell. “The battle over the budget wouldn’t exist if the power brokers didn’t ensure the perpetuation of the pension problem with an amendment to protect it from sane, necessary reform. This includes the legislators who create such laws and the judges who make any rulings on its legal challenges. Unless real reforms are made soon, the taxpayers of Illinois will merely be funding their own funerals.”
“Just take a look at the stunning pensions these judges and legislators get. It is no wonder that they protect the government pension cabal without hesitation.”
“Arthur Berman retired from the General Assembly and rakes in a cool $228,960 annually! His estimated lifetime payout is about $3.7 million. His stake in that excessive payout? About 3%.”
“Judge Tobias Barry is currently getting $204,083 in annual pension payments. Fortunately, he didn’t retire until 82, so his estimated lifetime payout is only a humble $2.3 million.
“There are now 12,154 Illinois government pensions of more than $100,000 and 85,893 totaling more than $50,000 each annually! Those are staggering numbers, considering that the taxpayers who fund these pensions get an average Social Security ‘pension’ of about $15,000 a year.”
“Retired from U of I Springfield, Aaron Shures enjoys an annual taxpayer funded pension of $115,332. Over a normal lifetime, he will get about $6.4 million in pension payments because he retired at the age of 51. His personal investment in his rich pension is about 3% or $193,624.”
“Ball Chatham CUSD5 retiree, Richard J. Voltz retired at 57 and his current annual pension is $167,685. He will collect about $5.6 million while he only contributed $206,988 of his own money. That’s a 3.7% investment in his own multi-million dollar retirement payout!”
Click to view pensions for:
- Springfield Municipal Government Retirees
- Sangamon County Government Retirees
- Springfield Police Retirees
- Springfield Fire Retirees
- Sangamon County Government School Retirees
- Lincoln Land Community College Retirees
- University of Illinois at Springfield Retirees
- State of Illinois Government Retirees (SERS)
- General Assembly Retirees (GARS)
- Illinois Judicial Retirees (JRS)
“Although we did not support or endorse SB 1 as any kind of pension reform, as it did more harm than good, the unanimous ruling of the Illinois Supreme Court clearly illustrates the limited options available to solve the pension crisis…and the answers are not tax increases,” said Labell.
“A constitutional amendment that is fair to taxpayers, as well as government employees, must be approved in 2016 to deal with Illinois’ insolvent government pension system. In the meantime, if the Illinois General Assembly increased individual government employee contributions to their own gold-plated pensions by 10 percentage points, it would save taxpayers about $150 billion over the next 35 years – about $4.3 billion a year – and save the State of Illinois from financial ruin. If all else fails, there is always the option of approving legislation allowing municipalities, government school districts, and other taxing districts in Illinois to begin the process of filing and restructuring under Chapter 9 bankruptcy.”
“For every day that the political class refuses to solve the government pension crisis, they are gambling with the future of Illinois, and doing so with your tax dollars.”
*Lifetime estimated pension payout includes 3% compounded COLA and assumes life expectancy of 85 (IRS Form 590).
