Illinois’ pension liability lies at the heart of most of the state’s financial problems.
Pension spending consumes almost 20 percent of the state’s $36 billion budget, and the state pension systems’ unfunded liabilities are estimated at more than $200 billion.
Given the way this massive liability is suffocating the state financially, you might expect that it would be a central issue in the upcoming campaign for Illinois governor.
You’d be wrong. Of the five leading major-party candidates for governor, only one of them even devotes a section of his campaign website to pensions.
Republican Gov. Bruce Rauner’s campaign website goes heavy after his nemesis, Democratic Speaker Michael Madigan, but scarcely mentions pensions.
Republican challenger Rep. Jeanne Ives’ website goes heavy after Rauner. It doesn’t address pensions, either, which is odd considering Ives served on the Personnel & Pensions Committee in the state House.
The three leading candidates for the Democratic nomination have little to say on the topic, either. Candidate J.B. Pritzker doesn’t mention pensions on his campaign website.
Daniel Biss’ website pushes the idea that Illinois’ budget problems are because wealthy people don’t pay enough in taxes. He never mentions the state’s extravagant promise to provide pensions with a 3 percent annual increase and free health care to people who can retire in their 50s.
Chris Kennedy at least addresses the pension issue, but doesn’t say much beyond “we need to reassure current workers that the state will fully fund their pensions.”
With $200 billion in unfunded pension liability, it’s hard to see how Illinois can afford to make any guarantees.
Lawmakers already have whacked taxpayers with a 32 percent income tax increase, which is not going to solve Illinois’ problems. In fact, there is no practical amount of increased taxation on any group of people or businesses that will get Illinois pensions to full funding.
We would like the gubernatorial candidates to tell us, should more of the pension burden be shifted onto local governments? Should those governments be allowed to declare bankruptcy and then make changes to benefits?
Others have floated the idea of Illinois seeking a massive loan to pay the outstanding liability – which would cost us but not as dearly. Is this a good idea? Maybe pensioners can be incentivized to get out of the system with lump-sum cash payments. Good idea?
Should Illinois consider taxing retirement income? Should voters be asked about calling a constitutional convention where pensions and issues such as the state’s repeated budget failures, term limits and gerrymandering could be addressed?
If the answer to all of these questions is “no,” then what should Illinois do? The numbers say the status quo is not sustainable, and that people are leaving the state. If the pension systems collapse, it will be a disaster for thousands of retirees.
Illinois’ next governor will not have the luxury of hoping the pension problems simply will resolve themselves. The candidates must address this issue for voters.