AMENDMENT 1 WOULD GUARANTEE $2,100 PROPERTY TAX HIKE FOR TYPICAL ILLINOIS FAMILY

Link: https://www.illinoispolicy.org/amendment-1-would-guarantee-2100-property-tax-hike-for-typical-illinois-family/

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Amendment 1 would grant government unions unprecedented bargaining powers as a “fundamental right,” including the power to override voters and state lawmakers. Proponents are selling it as a constitutional ban on passing right-to-work laws – laws that protect employees’ rights to keep their jobs without having to pay fees to a union. Illinois is not among the 28 states that currently have right-to-work laws, so that aspect has little meaning.

The amendment does include three other provisions that together would severely weaken taxpayers’ voices in state government and make it easier for government union bosses to make unaffordable demands in collective bargaining contracts. First, virtually anyone would have a fundamental right to collective bargaining if they could be considered an employee in any context, including even prisoners. Second, bargaining would be expanded beyond just wages, hours and working conditions to include broad new subjects covering public policy decisions or how to run a businesses. Third, the amendment prevents lawmakers from ever limiting or scaling back on these rights in any way.

Even without these provisions, powerful government unions helped public sector wages grow 60% faster than the private sector in Illinois from 1998 to 2019.

Peer-reviewed research shows stronger government worker unions cause the cost of government to increase, with powerful unions putting even more upward pressure on benefits than on wages. Government worker retirement benefits, which flow mostly to government union workers, have left Illinois local governments with $75 billion in pension debt and are already the primary cause of rising property taxes. Government unions helped Illinois politicians build the state and local pension crisis by supporting both unaffordable benefits as well as irresponsible funding games that pushed costs into the future.

Nationwide data from 2010 to 2019 show a significant statistical association between the percentage of government workers who are members of a government worker union and each state’s average effective property tax rate.

Author(s): Adam Schuster

Publication Date: 15 Jun 2022

Publication Site: Illinois Policy Institute

TAXPAYER PENSION COSTS EXCEEDED ILLINOIS PROJECTIONS BY $13.7 BILLION SINCE 2013

Link: https://www.illinoispolicy.org/taxpayer-pension-costs-exceeded-illinois-projections-by-13-7-billion-since-2013/

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Unrealistic assumptions and missed investment returns have meant Illinois taxpayers paid $13.7 billion more for public pensions than state leaders projected five years earlier. Unless the estimates improve, taxpayers will pay an extra $21.3 billion during the next decade.

Illinois does a particularly poor job of figuring out how much money is needed to pay its public pensions: The past decade has seen the projections miss by 16%, which meant taxpayers needed to give $13.7 billion more than was estimated.

Author(s): Justin Carlson

Publication Date: 17 Jun 2022

Publication Site: Illinois Policy Institute

CHICAGO CASINO REVENUE DOESN’T ADDRESS 91% OF CITY PENSION DEBT

Link: https://www.illinoispolicy.org/chicago-casino-revenue-doesnt-address-91-of-city-pension-debt/

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The Chicago City Council approved a casino development in the River West neighborhood. The generated revenue will exclusively pay for pension debt, but only an estimated 9% of what the city needs.

The Chicago City Council approved a $1.7 billion casino in a 41-7 vote May 25. The River West development is being touted as a pension solution, but even the highest projections show only a drop in the bucket.

“This one casino project will pay for approximately 9% of our $2.3 billion pension contribution and reduce the likelihood that the city will need to raise property taxes in the future for pensions,” said Jennie Huang Bennet, chief financial officer for the city.

Author(s): Dylan Sharkey

Publication Date: 31 May 2022

Publication Site: Illinois Policy

CHICAGO PENSION DEBT DROVE CITY PROPERTY TAXES UP 164% BEFORE COVID-19

Link: https://www.illinoispolicy.org/chicago-pension-debt-drove-city-property-taxes-up-164-before-covid-19/

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Chicago residential property tax collections across all units of government in the city were up 164% from 2000 to 2019.

Property taxes paid by homeowners within the city grew nearly 30% faster than property taxes in suburban Cook County during those 20 years. Suburban residential property taxes grew 116% while total residential property tax collections county-wide grew 133%.

While some of Chicago’s increase was driven by new property or growth in existing property tax values, the average homeowner still saw an 85% increase in their bill from 2000 to 2019. Since the record-setting 2015 property tax hike to pay for pension debt, the average Chicago bill has risen 27%. Prior to that hike, property taxes were on a lower trend from 2011 to 2014.

Author(s): Adam Schuster

Publication Date: 28 Feb 2022

Publication Site: Illinois Policy

CHICAGO’S $43,100 DEBT PER TAXPAYER DRIVEN BY PENSION DEBT

Link:https://www.illinoispolicy.org/chicagos-43100-debt-per-taxpayer-driven-by-pension-debt/

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Chicago once again earned a failing grade from Truth in Accounting in their latest Financial State of the Citiesreport thanks to over $38 billion in debt – $43,100 for each taxpayer.

Every Chicagoan would have to send the city that amount just for Chicago to pay the bills it owes. Chicago has just $9.9 billion available to pay $48.6 billion in bills. The Windy City came in 74th out of 75 cities studied in the report, only besting New York City’s massive $204 billion debt with a per-taxpayer burden of $71,400.

The city’s financial failings stem from pension promises the city cannot afford to keep. “Chicago’s financial problems stem mostly from unfunded retirement obligations that have accumulated over the years. The city had set aside only 23 cents for every dollar of promised pension benefits and no money for promised retiree health care benefits,” the report notes.

Author(s):Justin Carlson

Publication Date: 8 Feb 2022

Publication Site: Illinois Policy Institute

ILLINOIS CAN SAVE $577M ON PENSIONS BY ADDING A DATE TO A LAW

Link:https://www.illinoispolicy.org/illinois-can-save-577m-on-pensions-by-adding-a-date-to-a-law/

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Essentially, all pension debt stems from Tier 1 benefits promised to state employees hired before 2011, like Crenshaw. Tier 2 employees hired after 2011 will likely pay more than their benefits will be worth to subsidize Tier 1 benefits.

Implementing optional Tier 3 plans is one of the solutions to Illinois’ woes set out in the Illinois Policy Institute’s Illinois Forward 2023. The General Assembly passed Tier 3 plans during the fiscal year 2018 budget process. A technical error left an implementation date out of the language, and it hasn’t been corrected since. Lawmakers could fix this oversight for fiscal year 2023, which begins July 1, 2022.

“A lot of times we’re not given the intricacies of how a Tier 3 or alternative pension plan could benefit us,” Crenshaw said.

Author(s): Dylan Sharkey

Publication Date: 3 Feb 2022

Publication Site: Illinois Policy Institute

ILLINOIS FORWARD 2023: ONLY PENSION, BUDGET REFORM CAN SAVE TAXPAYERS WHEN FEDERAL AID ENDS

Link:https://www.illinoispolicy.org/reports/illinois-forward-2023-only-pension-budget-reform-can-save-taxpayers-when-federal-aid-ends/

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Spending in the state budget actually has increased – significantly – under Gov. J.B. Pritzker relative to baseline expectations in the state budget. Even if lawmakers and the governor make no further increases to spending in the fiscal year 2023 budget, which is unlikely given that Pritzker has proposed spending increases in each February budget address of his term, then total spending during Pritzker’s first term will be up nearly $5 billion, or 3% higher than when he took office.

Author(s): Adam Schuster

Publication Date: accessed 2 Feb 2022

Publication Site: Illinois Policy Institute

TO FIX ILLINOIS’ PENSION CRISIS, FIRST CHANGE ITS CONSTITUTION

Link:https://www.illinoispolicy.org/to-fix-illinois-pension-crisis-first-change-its-constitution/

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Illinois allocates more of its budget to pensions than any other state, but pension spending has only skyrocketed. A constitutional amendment is the only way to reform the state’s unsustainable and underfunded pension systems.

Daley College Professor Mike Crenshaw is far from retirement, but he constantly worries whether the State Universities Retirement System will be solvent for him.

“I have 20 years until I can retire, and my biggest fear is that the money’s not going to be there,” Crenshaw said.

….

Because pension benefits are defined in the Illinois Constitution, only a constitutional amendment approved by voters could change pension structures. Amending the constitution would open the door to changing the compounding raises to simple inflationary adjustments – protecting the systems for retirees and ending the excessive drain on taxpayers.

Author(s): Dylan Sharkey

Publication Date: 18 Jan 2022

Publication Site: Illinois Policy Institute

ILLINOIS SPENT 6% MORE THAN IT TOOK IN FOR 15 YEARS, SO COVID-19 HIT IT HARDER

Link: https://www.illinoispolicy.org/illinois-spent-6-more-than-it-took-in-for-15-years-so-covid-19-hit-it-harder/

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From 2005-2019, Illinois revenues totaled just 94% of expenses. The state ran deficits in each of the 15 years prior to the COVID-19 pandemic. Only New Jersey overspent more.

Illinois was one of only eight states to see spending outpace its revenues from 2005-2019, leaving it fiscally ill-prepared to deal with the tumultuous COVID-19 pandemic, according to new data from The Pew Charitable Trusts.

Illinois ranked No. 2 for overspending.

According to the report, Illinois took in just 94.1% of the revenues it needed to cover its expenses from 2005-2019. That number was second worst in the nation, coming in just ahead of similarly troubled New Jersey.

Author(s): Justin Carlson

Publication Date: 12 Jan 2022

Publication Site: Illinois Policy Institute

5 THINGS WRONG WITH ILLINOIS HOLDING 30% OF U.S. PENSION BOND DEBT

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It is bad Illinois has the nation’s worst pension crisis, but state politicians have made it worse by using risky debt to delay the day of reckoning, and done so to the point that Illinois now owes 30% of the nation’s pension obligation bonds.

Pension obligation bonds are a form of debt used by state or local governments to fund their pension deficits. Illinois holds $21.6 billion of the nation’s $72 billion pension obligation bond debt.

The theory behind the bonds is that if a pension system can borrow money at a lower rate by selling bonds and earn a higher percentage from investing those funds, then it has realized a net gain using them. The issue is the gamble rarely works out that way, as the Government Finance Officers’ Association points out. Pension obligation bonds place taxpayer money at risk and often leave governments saddled with more debt rather than less. They often do not achieve a high enough return to justify their use.

Illinois’ five statewide retirement systems hold $144 billion in debt, according to official state reporting based on optimistic investment estimates. But Moody’s Investors Service says the true debt is $317 billion, which it calculates using more accurate methods common in the private sector.

Author(s): Adam Schuster, Aneesh Bafna

Publication Date: 10 Sept 2021

Publication Site: Illinois Policy Institute

ILLINOIS MISSES DEADLINE TO REPAY $4.2 BILLION FEDERAL UNEMPLOYMENT INSURANCE LOAN

Link: https://www.illinoispolicy.org/illinois-misses-deadline-to-repay-4-2-billion-federal-unemployment-insurance-loan/

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Illinois missed the September deadline to repay a $4.2 billion federal unemployment loan. Employers warn inaction by state lawmakers could ‘cripple’ businesses and the COVID-19 economic recovery.

Illinois state leaders missed the Sept. 6 deadline to repay a $4.2 billion federal loan to the state’s unemployment insurance fund, which leaves Illinois taxpayers on the hook to pay $60 million in annual interest on that loan.

The unemployment fund has been depleted during the COVID-19 economic downturn. Between the loan and failure of state leaders to replenish the fund, potentially by using federal COVID-19 bailout funds, the deficit stands at $5.8 billion.

Business leaders warn a failure to repay the debt would result in automatic tax hikes on Illinois’ employers starting at $500 million, further waylaying the state’s stagnant job recovery. There would also be automatic benefit cuts of the same amount. Employers could be subjected to further, discretionary tax hikes by the state legislature if those automatic solvency measures fail to fill the hole.

Author(s): Adam Schuster, Patrick Andriesen, Perry Zhao

Publication Date: 17 Sept 2021

Publication Site: Illinois Policy Institute

Report finds Illinois holds 30% of pension obligation bond debt in nation

Link: https://www.thecentersquare.com/illinois/report-finds-illinois-holds-30-of-pension-obligation-bond-debt-in-nation/article_0ab6d148-1716-11ec-b36b-1b03ea725eeb.html#new_tab

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A new report shows Illinois holds 30% of the nation’s pension obligation bond debt.

A pension obligation bond is a form of debt that some states use to make payments to state-run pension funds. A pension obligation bond gets paid out by a third party and the state then pays back that loan with interest. Financial experts often advise against the use of pension obligation bonds, said Adam Schuster of the Illinois Policy Institute.

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The interest on the pension obligation bonds continues to climb and is leaving Illinois in a worse spot than it was previously in. The state has borrowed a total of $17.2 billion since 2003, but repayment cost is now $31 billion. Pension obligation bonds can save taxpayers money if the interest rates on the bonds is lower than the rate of return on the pension investments. If the rate of return drops below the interest rate on the bonds, then taxpayers are on the hook for the difference. This is a strategy that Schuster said is the same as gambling with the state’s money.

Author(s): Andrew Hensel

Publication Date: 16 Sept 2021

Publication Site: The Center Square