Tag: Illinois

Pritzker digs Chicago financial hole deeper by increasing city firefighter pensions – Wirepoints

Mary Pat Campbell
Pritzker digs Chicago financial hole deeper by increasing city firefighter pensions – Wirepoints

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Chicago households are on the hook for a combined $63,000 in Chicago-only debt, based on Moody’s calculations. It’s why the city and the school district have been junk rated for years.

Pritzker’s COLA increase runs against what most of Illinois’ political elite already know – COLA cuts are necessary and inevitable at all levels of government. As Greg Hinz said in his review of Wirepoints’ Pension Solutions, “…that juicy perk over time has amounted to megabillions that state government just doesn’t have.”

The COLA hike will cause more financial headaches for Chicago. Mayor Lori Lightfoot says the COLA increase will cost the city an additional $18 to $30 million a year in pension costs. In all, the perk will force taxpayers to pay an additional $850 million over time.

Author(s): Ted Dabrowski, John Klingner

Publication Date: 8 April 2021

Publication Site: Wirepoints

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

Mary Pat Campbell

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

Excerpt:

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 governor signs bill that increases Chicago’s pension liabilities

Mary Pat Campbell

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202104061236SM______BNDBUYER_00000178-a783-de03-a7ff-b7e7bf7e0001_110.1#new_tab

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Illinois Gov. J.B. Pritzker signed legislation that benefits retired Chicago firefighters, rejecting city warnings adding to its already burdensome pension tab could damage ratings and drive up taxes.

The added cost to bring cost-of-living adjustments for all firefighters in tier one up to a simple 3% annual increase despite their birth date amounts to $18 million to $30 million annually and up to $823 million in full by 2055 when the fund is slated to reach a 90% funded ratio.

Pending legislation to do the same for the police fund carries a steeper price tag of up to $90 million annually and $2.6 billion through 2055.

Author(s): Yvette Shields

Publication Date: 6 April 2021

Publication Site: Fidelity Fixed Income

Gov. Pritzker Signs Firefighter’s Pensions Reform Legislation Codifying Benefits

Mary Pat Campbell

Link: https://www.riverbender.com/articles/details/gov-pritzker-signs-firefighters-pensions-reform-legislation-codifying-benefits-49231.cfm

Excerpt:

HB 2451 addresses disparate pension benefits among Chicago firefighters. Currently, employees eligible for a pension in the Firemen’s Annuity and Benefit Fund of Chicago (FABF) who were born after January 1, 1966 are granted a 1.5 percent COLA. However, firefighters who may have started on the force the same day, may unfairly receive different benefits based on their dates of birth. The legislation addresses this discrepancy by adjusting the COLA for these firefighters from 1.5 percent to 3 percent.

The legislation eliminates the 30 percent cap on cumulative COLA adjustments. For employees eligible for a 1.5 percent COLA, they would have hit the cap at 20 years. The reforms made in this legislation provides firefighters the ability to plan for themselves and their families.

HB 2451 is effective immediately.

Publication Date: 5 April 2021

Publication Site: Riverbender

Voice of the people: Pension problem will have to be addressed at some point

Mary Pat Campbell

Link: https://www.daily-journal.com/opinion/voice-of-the-people-pension-problem-will-have-to-be-addressed-at-some-point/article_5fc77b16-8e44-11eb-a527-bf430c87768c.html

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I am not personally involved with the success or failure of these pension funds because I am not, nor do I have any family members enrolled, in either of the pensions.

The last report I saw (from 2019?) stated the City of Kankakee taxpayers’ annual funding of the pensions was at or close to $3 million. It would be nice if the “windfall” the city’s representatives receive would take some of the burden off the backs of the taxpayers of the city. Since it wasn’t included in the several ideas of the distribution of this “windfall,” I would hope that it could be. It would be wonderful to have this albatross removed from the necks of the city’s taxpayers.

If all pension providers would have been included in the Employee Retirement Income Security Act of 1974 (ERISA), this problem would probably not exist. However, US Congress in its usual passing of legislation exempted all governments (federal, state, county and local). The federal law sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans.

Author(s): David Cox

Publication Date: 27 March 2021

Publication Site: Daily Journal of Kankakee, Illinois

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

Mary Pat Campbell

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

Washington helped Illinois kick the can again, rating agencies affirm, so expect no fiscal reforms – Wirepoints

Mary Pat Campbell
Washington helped Illinois kick the can again, rating agencies affirm, so expect no fiscal reforms – Wirepoints

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The recently signed American Rescue Plan designated about $7.5 billion of new money directly for the state’s government. Tens of billions of more federal dollars indirectly help the Illinois budget by assisting higher education, K-12 schools and municipalities. Direct aid to people and businesses also kept tax revenue flowing at far higher rates than initially projected.

In fact, federal money from the American Rescue Plan alone dwarfs the revenue lost to the state because of COVID and the lockdowns by a stunning 1665%, according to a Tax Foundation estimate.

It should be noted, however, that federal cash has been showered on the entire nation, where it needs it and not. The State of Wisconsin, for example, is getting $3.2 billion in direct money from the American Rescue Plan even though the state has a budget surplus. We are still waiting for a comprehensive analysis of all recent federal aid to determine whether Illinois got more than its fair share. Surprisingly, nobody seems to have offered one yet that includes all units of government and private sector assistance.

Author(s): Mark Glennon

Publication Date: 17 March 2021

Publication Site: Wirepoints

Illinois progressives aim for nation’s highest estate tax to give more to people with disabilities

Mary Pat Campbell

Link: https://www.thecentersquare.com/illinois/illinois-progressives-aim-for-nation-s-highest-estate-tax-to-give-more-to-people-with/article_e6229414-8b53-11eb-8084-f7ac7b6876d2.html#new_tab

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The state would pay for the program by adding an additional 5% on Illinois’ estate tax from 4.95% to 9.95%. That would result in a top marginal rate of 21% on value over $4 million.

“The top marginal estate tax rate under this proposal would become the highest in the country at 21%,” Tax Foundation analyst Katherine Loughead said. 

Illinois is one of 12 states that tax the total value of an estate at the time of the owner’s death. Any estate value over $4 million would be subject to Illinois’ estate tax.

Author(s): Cole Lauterbach

Publication Date: 22 March 2021

Publication Site: The Center Square

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

Mary Pat Campbell

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

Excerpt:

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

Illinois struggles to pay its pensions, but these lawmakers signed up for them anyway

Mary Pat Campbell

Link: https://www.pantagraph.com/news/state-and-regional/govt-and-politics/illinois-struggles-to-pay-its-pensions-but-these-lawmakers-signed-up-for-them-anyway/article_c84f332b-0aa2-588a-b801-3fd98dc83773.html

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Pension reform is a favorite campaign refrain of candidates across party lines. But when it comes up signing up for their own state retirement benefits, few Illinois lawmakers say no.

Of the 177 legislators in the current Illinois General Assembly, 112 signed up for a pension through the optional state retirement system. It provides an average monthly benefit of $5,512 to retirees for life. Lawmakers are eligible to retire and take benefits at age 55 with eight years of service or at age 62 with four years.

Serving in the General Assembly came with a base salary of $69,464 in 2020 and is considered a nearly full-time job, according to the National Conference of State Legislatures, a nonpartisan legislative association. Others consider it part-time.

Author(s): KELSEY LANDIS, Belleville News-Democrat

Publication Date: 7 March 2021

Publication Site: Pantagraph

WalletHub, Tax Foundation confirm what Illinoisans already know: they’re overtaxed – Wirepoints

Mary Pat Campbell
WalletHub, Tax Foundation confirm what Illinoisans already know: they’re overtaxed – Wirepoints

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Two separate 50-state comparisons of state and local tax burdens released this week confirm Illinoisans pay some of the nation’s highest taxes. 

WalletHub, the personal finance company, calculated that Illinoisans pay the highest effective tax rates in the country. A more comprehensive study by the Tax Foundation, a non-partisan think-tank, says Illinoisans pay the nation’s 10th-highest tax burden.

Either way, their findings validate what Illinoisans instinctively know: they’re overtaxed.

Author(s): Ted Dabrowski and John Klingner

Publication Date: 12 March 2021

Publication Site: Wirepoints

Near-Junk Illinois Set to Sell Bonds With Stimulus as ‘Tailwind’

Mary Pat Campbell

Link: https://www.msn.com/en-us/money/markets/near-junk-illinois-set-to-sell-bonds-with-stimulus-as-e2-80-98tailwind-e2-80-99/

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Illinois plans to tap the municipal-bond market next week, just days after passage of President Joe Biden’s $1.9 trillion stimulus plan promises to help the lowest-rated state with some near-term financial stress.

The state is expected to sell $1.26 billion tax-exempt bonds on March 17. That follows S&P Global Ratings’s decision to pull Illinois back from the brink of a junk rating by lifting the outlook on the state’s BBB- rating to stable from negative on Tuesday, citing more federal aid and the start of an economic recovery. The proceeds from the sale will be for capital projects, accelerated pension payments and refunding.

Author(s): Shruti Date Singh

Publication Date: 10 March 2021

Publication Site: MSN (Bloomberg)