OVER 100% OF DANVILLE MUNICIPAL PROPERTY TAXES CONSUMED BY PENSIONS

Link: https://www.illinoispolicy.org/over-100-of-danville-municipal-property-taxes-consumed-by-pensions/

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The average Danville household owns nearly $40,000 in state and local pension debt.

Illinois’ worst-in-the-nation pension debt has become a well-known problem. Over $144 billion in pension debt for the five statewide retirement systems breaks down to nearly $30,000 in debt for each household, which must be paid with further tax hikes or further cuts to core government services.

Less well known is the nearly $75 billion of pension debt held by local governments in Illinois, which is the primary reason for Illinois’ second-highest in the nation property taxes. Combined with the state’s pension debt, politicians who mismanaged the pension system dug a $219 billion hole.

In Danville, the average household owns nearly $40,000 in state and local pension debt, with over $10,000 of that debt stemming from local systems for police, firefighters and municipal workers. To pay off that pension debt, a Danville household would have to give up 110% of an entire year’s  $36,172 median annual income.

Author(s): Adam Schuster, Perry Zhao

Publication Date: 20 Sept 2021

Publication Site: Illinois Policy Institute

PRITZKER PRESSURES BIDEN FOR TAX CHANGE WORTH $2.5 MILLION A YEAR TO GOVERNOR

Link: https://www.illinoispolicy.org/pritzker-pressures-biden-for-tax-change-worth-2-5-million-a-year-to-governor/

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Of course, no one can know the true extent to which Pritzker has been able to reduce his tax bills through loopholes and carve-outs over the years, because he refuses to release his full tax returns. In recent years it has been revealed Pritzker went to great lengths to avoid paying taxes, removing toilets from his Gold Coast mansion to skimp on his property tax bill by $331,000 and establishing shell corporations in the Bahamas in a likely attempt to avoid U.S. income taxes. The toilet ploy earned him a federal investigation.

The letter, which pushes for tax reforms that would almost exclusively benefit the wealthy, comes less than six months after Pritzker’s progressive income tax amendment was rejected by voters and is a significant departure from his previous stance on taxation.  In the letter, Pritzker claims the cap hurts middle-class taxpayers and is “untenable” during these dire economic times. Because the data is clear on who directly benefits from the SALT deduction, one can only assume the governor is implying higher taxes on the wealthy also hurt Americans with lower incomes.

That is precisely the argument opponents of the “fair tax” made after the governor first unveiled his tax-the-rich scheme in 2019.

Author(s): Orphe Divounguy, Bryce Hill

Publication Date: 23 April 2021

Publication Site: Illinois Policy Institute

MADIGAN BEGINS COLLECTING $7,093-A-MONTH PUBLIC PENSION

Link: https://www.illinoispolicy.org/madigan-begins-collecting-7093-a-month-public-pension/

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Ousted Illinois House Speaker Michael Madigan collected his first public pension check March 24 for $7,093, or $85,117 a year, but he won’t have to worry about it becoming a fixed income.

A year from July Madigan’s state pension shoots up to $148,955 thanks to a pension sweetener no longer available to state lawmakers. That 75% bump results from a provision that once allowed lawmakers to “bank” 3% cost-of-living increases while still working for each year of service after 20 years or age 55, whichever comes first. Madigan “banked” 25 years of increases, according to the General Assembly Retirement System.

Because Madigan, 78, retired after Jan. 1, he will receive the benefits boost starting July 1, 2022. The sweetener will also allow former Senate President John Cullerton to retire with a pension that will spike to $128,000 just a couple of years into retirement. The perk was discontinued for lawmakers elected after 2002.

Author(s): Brad Weisenstein

Publication Date: 6 April 2021

Publication Site: Illinois Policy Institute

ILLINOIS IS ONE OF FEW STATES WITH ‘DEATH TAX.’ BILL WOULD DOUBLE IT.

Link: https://www.illinoispolicy.org/illinois-is-one-of-few-states-with-death-tax-bill-would-double-it/

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Many states have moved away from taxing assets after people die because of the harm to family businesses and farms, but a new proposal before state lawmakers would double Illinois’ estate tax.

House Bill 3920 would hike the existing state tax on estates of over $4 million to 9.95% from 4.95%. Unlike neighboring Wisconsin, Michigan, Indiana and Missouri, Illinois is one of just a dozen states that still have an estate or inheritance tax. Tax Foundation analyst Katherine Loughead noted, “The top marginal estate tax rate under this proposal would become the highest in the country at 21%.”

While the bill’s sponsors intend the extra revenues to be used to support Illinoisans with disabilities, hiking the estate tax would squeeze family farmers, reduce the accumulation of productive assets, encourage spendthrift behavior, fuel tax avoidance and evasion, and drive wealth to other states.

Author(s): Justin Carlson

Publication Date: 16 March 2021

Publication Site: Illinois Policy Institute

Did IL state lawmakers unconstitutionally borrow billions of dollars? IL Supreme Court to decide

Link: https://cookcountyrecord.com/stories/580283019-did-il-state-lawmakers-unconstitutionally-borrow-billions-of-dollars-il-supreme-court-to-decide

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Tillman, of suburban Golf, centered his claims on Article IX Section 9(b) of the Illinois state constitution. Tillman argued that provision of the state constitution limits the state’s ability to borrow money.

The complaint particularly focuses on text requiring lawmakers to identify “specific purposes” for debt when issuing new long-term bonds. Tillman argues that “specific purposes” clause should be read to forbid state lawmakers from borrowing money to finance deficits or “plug holes” in the state’s budget, such as the shortfall faced by the state when funding pension obligations.

Tillman has argued lawmakers in both 2003 and 2017 failed to identify “specific purposes” when it issued bonds, and then unconstitutionally assigned to the state comptroller the power to decide how the borrowed money was spent.

Author(s): Jonathan Bilyk

Publication Date: 19 March 2021

Publication Site: Cook County Record

MOODY’S REPORT: ILLINOIS PENSION DEBT REACHES RECORD-HIGH $317 BILLION

Link: https://www.illinoispolicy.org/moodys-report-illinois-pension-debt-reaches-record-high-317-billion/

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Because the state systemically underestimates its pension debt, it also underestimates the taxpayer contributions necessary to keep the debt from growing each year. During the past decade, officially-reported growth in pension debt outpaced the state’s initial projections by $24 billion. Growth in annual taxpayer contributions exceeded state estimates by about 15% per year on average, causing taxpayers to contribute $7.6 billion more than projected during the decade. Still, that extra money has not slowed a mushrooming pension debt. The state’s regular upward revisions demonstrate Moody’s method, which is more in line with private sector standards, is more accurate.

Because employee contributions to the pension funds and benefits paid out are both fixed by state law, taxpayers must make up for any shortfall caused when investment returns miss rosy targets. For example, the largest of Illinois’ five state pension systems, the Teachers’ Retirement System, reported a 0.52% return on investment in fiscal year 2020, which included the first four months of the COVID-19 pandemic. That was far short of the TRS’s 7% return target and helped grow the debt.

Author(s): Adam Schuster

Publication Date: 5 March 2021

Publication Site: Illinois Policy Institute

HIDDEN PENSION ‘TAX’ COSTS EACH ILLINOISAN MORE THAN $1,400 PER YEAR

Link: https://www.illinoispolicy.org/hidden-pension-tax-costs-each-illinoisan-more-than-1400-per-year/

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Despite the record increase in pension expenditures in the past several decades, Illinois’ pension system remains the nation’s worst by multiple measures. According to Moody’s Investors Service, Illinois’ pension debt was equal to 500% of the state’s revenues in fiscal year 2018 and almost 30% of the entire state economy, both the highest rates in the nation. At the same time, Illinois’ credit rating has been in precipitous decline and now sits at the lowest credit rating in the nation.

As pension debt continues to increase, so do required pension contributions. Pension contributions now consume 26.5% of the state’s general funds budget, up from less than 4% during the years 1990 through 1997.

Author(s): Orphe Divounguy, Bryce Hill

Publication Date: 2 March 2021

Publication Site: Illinois Policy Institute

ILLINOIS HOUSE SPEAKER UNWILLING TO TAKE VOTERS’ ‘NO’ ON ‘FAIR TAX’ FOR AN ANSWER

Link: https://www.illinoispolicy.org/illinois-house-speaker-unwilling-to-take-voters-no-on-fair-tax-for-an-answer/

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Pension costs are already eating away at Illinois government services. The ballooning costs caused a nearly one-third cut since 2000 in core services such as child protection, state police, mental health and college money for low-income students.

Pension contributions accounted for less than 4% of Illinois’ general funds budget from 1990 through 1997 but have grown to consume 28.5% of the budget. Still, the pension debt has mushroomed to $144.4 billion by the state’s estimates, which more realistically was at an all-time high of $261 billion at the end of fiscal year 2020 according to Moody’s Investors Service calculations using more realistic assumptions. In any case, public pension debt is eating a larger chunk of Illinois’ gross domestic product than anywhere else.

Author(s): Adam Schuster

Publication Date: 25 February 2021

Publication Site: Illinois Policy Institute

WEAK ACCOUNTING STANDARDS ENABLE ILLINOIS BUDGET DEFICITS

Link: https://www.illinoispolicy.org/weak-accounting-standards-enable-illinois-budget-deficits/

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Bad accounting has helped Illinois politicians avoid balancing the budget for 20 years, despite a constitutional requirement to pass a balanced budget each year. Government accounting standards that fail to offer transparency and accuracy in financial reporting have also contributed to the state’s $260 billion pension crisis, the primary reason Illinois has the lowest credit rating any state has ever received.

The Governmental Accounting Standards Board has proposed changes it calls “improvements” to the accounting standards for governments. However, watchdog groups such as Truth in Accounting have criticized the proposed changes and urged the adoption of more stringent standards that would require governments to balance their budgets the way most businesses are required to do. Illinois has grown accustomed to using lax accounting methods to hide its budget deficits, racking up debt year after year. The state’s taxpayers would benefit from tougher standards that impose fiscal discipline.

Author(s): Justin Carlson

Publication Date: 19 February 2021

Publication Site: Illinois Policy Institute

ILLINOIS’ POOREST HIT HARDEST BY COVID-19 JOB LOSS, MANY STILL UNEMPLOYED

Link: https://www.illinoispolicy.org/illinois-poorest-hit-hardest-by-covid-19-job-loss-many-still-unemployed/

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Illinois households earning less than $40,000 were four-times as likely to lose their jobs from February-April 2020 and nearly 11 times as likely to still be out of work compared to those earning $75,000 or more.

As Illinois tries to rebuild after the worst year for jobs in state history, low-income Illinoisans find themselves even farther behind than others. Job losses suffered during COVID-19 and state-mandated mitigation protocols disproportionately fell on these families.

Author(s): Vincent Caruso

Publication Date: 19 February 2021

Publication Site: Illinois Policy Institute

WEAK ACCOUNTING STANDARDS ENABLE ILLINOIS BUDGET DEFICITS

Link: https://www.illinoispolicy.org/weak-accounting-standards-enable-illinois-budget-deficits/

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Bad accounting has helped Illinois politicians avoid balancing the budget for 20 years, despite a constitutional requirement to pass a balanced budget each year. Government accounting standards that fail to offer transparency and accuracy in financial reporting have also contributed to the state’s $260 billion pension crisis, the primary reason Illinois has the lowest credit rating any state has ever received.

The Governmental Accounting Standards Board has proposed changes it calls “improvements” to the accounting standards for governments. However, watchdog groups such as Truth in Accounting have criticized the proposed changes and urged the adoption of more stringent standards that would require governments to balance their budgets the way most businesses are required to do. Illinois has grown accustomed to using lax accounting methods to hide its budget deficits, racking up debt year after year. The state’s taxpayers would benefit from tougher standards that impose fiscal discipline.

Author(s): Justin Carlson

Publication Date: 19 February 2021

Publication Site: Illinois Policy Institute

MADIGAN WILL RETIRE WITH $2.9 MILLION PUBLIC PENSION AFTER CONTRIBUTING JUST $350,000

Link: https://www.illinoispolicy.org/madigan-will-retire-with-2-9-million-public-pension-after-contributing-just-350000/

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Because of a pension sweetener for politicians that Madigan helped create, the former speaker’s pension will spike more than $66,000 the year after his first full year of retirement, then grow 3% each year thereafter.

Former Illinois House Speaker Michael J. Madigan will start receiving $7,100 in monthly pension benefits starting in March, but just more than a year later his benefits jump 78% to $12,600 per month.

The next year will bring him $66,000 extra thanks to a special pension sweetener available only to politicians, which the former speaker helped pass. It was eliminated for lawmakers elected after 2002.

Author(s): Adam Schuster

Publication Date: 19 February 2021

Publication Site: Illinois Policy Institute