No Budget Relief Without Budget Reform

By on July 21, 2015   /   Illinois, Items of Interest, Latest, Pension Reform, Taxpayer Alert  

View as PDF Chicago—Taxpayers United of America (TUA) today released the results of its analysis of the State of Illinois’ General Funds, Special State Funds, Revolving Funds, and the Highway Funds appropriations, outlining the scope of the ongoing budget crisis and the failure of the Illinois General Assembly to enact serious spending cuts.
“The taxpayers of Illinois are finally beginning to reap the rottenness sown by their elected representatives in Springfield,” said TUA operations director, Jared Labell.
Gov. Rauner (R) proposed a budget in February that cut spending by more than $5 billion and balanced the state’s budget for the first time since 2001. In May, however, the Illinois Supreme Court rejected the government pension reforms in SB 1, necessitating further cuts from the proposed budget. Since then, the Illinois General Assembly has continually submitted unbalanced budget proposals for the fiscal year during the regular session and has proposed one-month unbalanced budgets during the continuous summer session.
“Taxpayers need only look to the current budget battle to gauge how unserious the General Assembly is when it comes to dealing with Illinois’ finances. Legislators have neglected their responsibilities for far too long and the public is becoming more aware of their political posturing as the budget negotiations continue.”
“If the Illinois General Assembly does not reform its spending habits and work with the Rauner Administration to pass a balanced budget, Illinoisans will continue to see their economic health rapidly deteriorate,” said Labell. “Taxpayers are now keenly aware of the fact that while the politicians in Springfield shriek about the sky falling whenever spending cuts are mentioned, these same bureaucrats continually defer to special interests and fake taxpayer advocacy groups when justifying higher taxes and their next proposed spending increase.”
Gov. Rauner’s proposed fiscal year 2016 budget keeps billions of dollars in appropriation recommendations constant with last year’s actual appropriations, neither increasing nor decreasing proposed spending for these programs.
Comparing fiscal year 2015’s actual appropriations with fiscal year 2016’s proposed appropriations, spending for nearly 1,300 programs remains unchanged, totaling more than $15 billion.
“More than $15 billion in untouched spending for fiscal years 2015 and 2016 means that there are billions of opportunities to thoroughly evaluate these appropriations and make substantive cuts to reach a balanced budget,” said Labell.
The proposed 2016 budget contains the following fund appropriations, which remain constant with the actual fiscal year 2015 spending levels:

  • Highway Funds: fifty-three appropriations, totaling $257,341,421
  • General Funds: one hundred one appropriations, totaling $2,247,278,766

“If members of the Illinois General Assembly are legitimately concerned with the well-being of their neighbors, they will recognize that Illinois cannot continue down this same path and that reforms must be implemented immediately.” said Labell.
“Cutting just 10% from these unchanged appropriations would save taxpayers more than $1.5 billion. If members of the Illinois General Assembly believe that across the board cutbacks are too drastic, then they need to do their jobs, comb through the budget, evaluate the necessity of each expenditure and determine if each dollar spent is essential. Failure to do this will result in more budget cuts down the road, as Illinoisans are now seeing for themselves as current tax revenue is used to pay for past services rendered.”
“Article XIII Section 5 of the Illinois Constitution protects government employees above all Illinois taxpayers, further broadening Illinois’ already entrenched political class. Every taxpayer should remember that while government employees are shielded from having their pensions reformed, there is no protection for taxpayers. Government pensions might be legally protected from diminishment, but every service your tax dollars pay for is not, and these are the services that the politicians will cut first.”
“Speaker Madigan (D) has repeatedly said that Gov. Rauner’s budget proposals and agenda are ‘extreme,’ but I would argue that the Illinois General Assembly is operating in the extreme, as the legislature has presided over Illinois for more than a decade without a balanced budget; accrued billions of dollars’ worth of unpaid bills; accumulated more than $111 billion in government pension debt; and in the meantime, these politicians have earned Illinois the lowest credit rating among the fifty states.”
“So who is really the extremist – the guy who just arrived to try to put out the fire or the guy who has been dousing the house in gasoline for decades while playing with matches?”

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No Budget Relief Without Spending Reform

By on July 20, 2015   /   Illinois, Items of Interest, Latest, Pension Reform, Taxpayer Alert  

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.”

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No Budget Relief Without Pension Reform

By on July 15, 2015   /   Illinois, Latest, News Releases, Pension Reform, Taxpayer Alert  

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).

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