Public Sector Lunacy: Pensions

Here we go again. (HT 50States.com)



In recent weeks, there has been growing sentiment against public sector employees with bloated salaries and gold plated benefits. This post will fan those flames. From ChampionNews.Net:

"How is it possible in this time of want, where the Illinois Department of Human Services is cutting $90 million from services for poor children and the needy elderly, we still feel obligated to take taxpayer dollars and fund public pensions at 200% of a public employee's salary?

We have this false idea that all corruption involves illegal actions. As we know the public pension system in Illinois was constructed in a legal framework of unlikely premises and assumptions that basically had no chance of long-term success. Instead, career politicians used it to reward long-term campaign contributors.

In effect the pension system is a form of money laundering, whereby those who give money to politicians get their investment back many times over in salaries and benefits. That is how $45 million in political contributions by Illinois teachers K-University resulted in a $45 billion TRS pension deficit, 1,000 times the contributions received.

State employees who work a normal 45-year career will retire on more income than when they worked.

State employees are a group we haven't talked much about but on the whole they have the best pension deal in the state. A state employee who works from age 21 to age 66 (like most of us do in the private sector) will retire on take-home pay 20% or greater than when he worked.

That's because he gets 75% of his pay plus Social Security. So if he was making $80,000 and retired after 45 years he would get $60, 000 state pension and about $24,000 in Social Security or $84,000/yr. Additionally upon retirement he does not pay Social Security (7.65%) or pension contribution (4%) or state income tax (3%). Therefore his take-home pay goes from $68,000 to $84,000. Yes his retirement take-home exceeds his working salary.

Notice that by paying only 4% into the state pension he gets $5,000/mo retirement income while paying 6.2% into Social Security he gets $2,000/mo. He pays less and gets more thanks to the generosity of the Illinois taxpayer.

How many private sector employees do you know who will be retiring on more than they made when they worked? Not many I would bet."

Now here's what Gov. Quinn should do, but won't because he's a big government Chicago Democrat:

"The next governor should campaign on the theme "Hit the reset button on pensions."

Let's take all public retirement benefits back to where they were in 1970 when the p1ensions were guaranteed. Get rid of early retirements, get rid of free health care and let's start over from that point.

How could the public employees complain? That is what was guaranteed, so that's what you will get. All the upgrades and increases folded into the plans in exchange for political contributions since then will be reversed.

In February this year (2010) there were two non-binding referendums on funding public pensions.

Here is the exact question asked: "Shall the Illinois General Assembly and the Governor take immediate steps to implement meaningful pension reform which will relieve the unsustainable burden on local taxpayers?"

By overwhelming margins of 87% and 91% voters approved implementing "meaningful pension reform." In November at least 12 more communities will vote on this exact issue. I predict that the outcome will result, once again, in overwhelming approval of "meaningful pension reform."

That should prove beyond a doubt that comprehensive pension reform is supported by a large majority of Illinois taxpayers and any successful politician is going to be out front in implementing this most important of reforms."

If Illinois is to get out of this mess, the public sector must be held in check. That includes tax and spend Chicago Democrats in Springfield.

Background Reading:

ChampionNews.Net: Pension Insanity: $75,000 Salary Turns Into $155,000 Pension for One Kindergarten Teacher

Illinois: Land Of Larceny

How I long for the land of Lincoln and Reagan. (HT 50States.com)



As we've entered a new year, Illinois continues to move in the wrong direction thanks to Springfield. From The Northwest Herald:

"Land of Lincoln? Land of Larceny.

Democrat Gov. Pat Quinn of Chicago, House Speaker Mike Madigan of Chicago, and Senate Majority Leader John Cullerton of Chicago – see a theme? – shut Republicans out of discussions and then complained that no Republicans supported their monstrosity. They showed contempt toward their Republican colleagues and the millions of citizens they represent.

The governors of Indiana and Wisconsin appeared on Illinois radio stations soon after the vote and crowed about their states’ controls on spending and taxes – and welcomed businesses to move to their states, which many no doubt will.

Our so-called representatives said they had to lift another $7 billion from our wallets to fix Illinois’ $15 billion budget deficit, which has been years in the making. Yet in doing so they promised to spend $1 billion more on “education” over the next four years, demonstrating they don’t represent “us” so much as narrow constituencies that send Democrats campaign cash and votes.

Meanwhile, Wisconsin’s new governor, Scott Walker, has called government employees “haves” and private-sector workers “have-nots” and wants to take health insurance and pensions out of collective bargaining and rework the remainder of contracts with government workers. He also supports business tax cuts.

Because of our lawmakers’ disrespect for the state Constitution and the laws they enact – a disrespect that until Wednesday was bipartisan – Illinois has the nation’s worst unfunded pension liability, conservatively estimated at more than $80 billion. We also have the worst credit rating among the 50 states, and the worst budget deficit as a percentage of total spending.

Tax hikes almost always fail to generate the expected revenue, because people do what they can – including moving to other states – to avoid them.

Even if by some near-miracle Illinois sees the promised take from the tax hikes, the core problems remain. We’ll still have a multibillion-dollar deficit, climbing Medicaid costs, soaring employee pension and health insurance costs, rising debt loads, etc.

If tax hikes worked, there’d be no budget crisis: Illinois has repeatedly raised taxes, fines and fees. Tax hikes haven’t worked because lawmakers spend whatever money comes in and more.

In 1990, Illinois had 21 congressional districts. That’s about to fall to 18 because Illinois has lost population relative to other states.

The 2010 Census showed states with no income tax or other low taxes have enjoyed the strongest growth in jobs and population. Those states are gaining congressional seats at our expense.

Illinois ranks 48th among states in net population growth, job growth, and economic performance, according to the American Legislative Exchange Council. Expect Illinois soon to rank last in all those categories."

I will have to check if the recall option is available. We have to reverse course.

Background Reading:

Northwest Herald: Today’s Illinois more like ‘Land of Larceny’

The State Of Illinois Give The Wrong Group Preferential Treatment

A sad state gets much sadder.





There are time when I get really frosty about my state government as well as the Chicago Democrat machine. This is one of those times. From BigGovernment.com:

"Over 35 counties in Illinois missed the deadline to mail military ballots to our soldiers defending America. But in Chicago, county election officials have taken special steps to ensure that no inmates at the Cook County Jail are unable to cast a ballot.

The Chicago Board of Elections hand delivers ballots to the jail. They don’t even wait for the inmates to apply – they bring the applications with the ballots! Over 2,600 inmates have cast ballots so far – strikingly similiar to the 2,600 soldiers who will likely not recieve a ballot for the Nov 2 election.

Disgraceful does not begin to describe the Illinois Election system."

So let me get this straight: You can't mail ballots to our troops who are fighting to defend our freedom, but you can hand deliver ballots to prison inmates who shouldn't be voting in the first place!! My gut instincts tell me this is being done because the military votes mostly Republican, and the prison inmates vote mostly Democrat. Do you now understand why every last Democrat, especially if they're from Chicago, needs to be voted out of office?? They cannot convince me that they support the troops if they're not supporting their right to vote.

Background Reading:

BigGovernment.com: Illinois Soldiers Wait for Ballots. Prisoners Get Hand Delivery

The Sad State Of Illinois

The flag of the Land of Lincoln & Reagan.



From The NY Slimes:

"For the last few years, California stood more or less unchallenged as a symbol of the fiscal collapse of states during the recession. Now Illinois has shouldered to the fore, as its dysfunctional political class refuses to pay the state’s bills and refuses to take the painful steps — cuts and tax increases — to close a deficit of at least $12 billion, equal to nearly half the state’s budget.

Then there is the spectacularly mismanaged pension system, which is at least 50 percent underfunded and, analysts warn, could push Illinois into insolvency if the economy fails to pick up.

States cannot go bankrupt, technically, but signs of fiscal crackup are easy to see. Legislators left the capital this month without deciding how to pay 26 percent of the state budget. The governor proposes to borrow $3.5 billion to cover a year’s worth of pension payments, a step that would cost about $1 billion in interest. And every major rating agency has downgraded the state; Illinois now pays millions of dollars more to insure its debt than any other state in the nation.

“Their pension is the most underfunded in the nation,” said Karen S. Krop, a senior director at Fitch Ratings. “They have not made significant cuts or raised revenues. There’s no state out there like this. They can’t grow their way out of this.”

Few budget analysts are surprised to see Illinois, with a limping economy and broken political culture, edge close to the abyss. Two of the last six governors have served jail terms, and a third is on trial.

“We are a fiscal poster child for what not to do,” said Ralph Martire of the Center for Tax and Budget Accountability, a liberal-leaning policy group in Illinois. “We make California look as if it’s run by penurious accountants who sit in rooms trying to put together an honest budget all day.”

The biggest reason for the financial mess? In a word: Unions. When you sell out to big labor, this is the result. Paying public sector union salaries and benefits packages is pushing the state to the brink. I lay this squarely at the feet of Illinois Democrats. They've been running the show for the last few years, resulting in the state being run into the ground. Conservatives need to take this state back, and follow the path of Chris Christie in New Jersey. Standing up to the unions is the fastest way to get the state's checkbook back in order.

NY Times: Illinois Stops Paying Its Bills, but Can’t Stop Digging Hole