Analysts, advocacy groups, newspaper editorial boards, and lawmakers from across the political spectrum threw cold water on Pritzker’s pension flip-flop
“During his budget address last week, J.B. Pritzker said he was a student of history. You would think someone who has studied Illinois’ past would know that pension holidays are a recipe for disaster. Repeating mistakes of the past won’t fix our state’s $135 billion unfunded pension liability. I urge Governor Pritzker to stop taking pages from the Blagovich playbook and stay true to his campaign promise of making our state’s full pension payments.” – Illinois Republican Party Chairman Tim Schneider
One aspect of Governor J.B. Pritzker’s pension plan is being called the “first major flip-flop” of Pritzker’s tenure. During his campaign for governor last year, then-candidate Pritzker told the Crain’s Chicago Business Editorial Board that lawmakers must increase, not decrease, annual contributions to our state’s pension systems. Now, Pritzker has proposed doing the exact opposite – reducing the state’s Fiscal Year 2020 contribution to the public pension systems by $878 million.
During the campaign, Pritzker also pledged to use new, unrealized tax revenues – from taxing legalized sports betting or retail marijuana sales – on increased payments to the pension systems. To add insult to injury, Pritzker’s recently proposed budget spends that theoretical tax revenue on other projects and spending plans.
Pritzker’s budget also increases the state’s contribution to the Public School Teachers’ Pension and Retirement Fund of Chicago by over $20 million, while decreasing the state’s contribution to the Teachers’ Retirement System (TRS) by over $200 million, something that did not go unnoticed by the Illinois Retired Teachers Association. TRS manages pensions for suburban and downstate public school teachers.
Analysts, advocacy groups, newspaper editorial boards, and lawmakers from across the political spectrum threw cold water on Pritzker’s pension flip-flop:
When asked if deferring pension payments without elaborating on a new payment schedule is the equivalent of a “pension holiday,” Ralph Martire of the left-wing Center for Tax And Budget Accountability said “well, yeah.”
The Illinois Retired Teachers Association blasted the “irresponsible” proposal, saying:
Members of the Illinois Retired Teachers Association (IRTA) are imploring Governor J.B. Pritzker to cease the decades-long practice of not fully funding the pension systems.
…During his budget address Wednesday, Governor Pritzker proposed allocating $4.237 billion into the Illinois Teachers’ Retirement System (TRS), a figure $576,000,000 too short of what is legally and ethically required to pay for the pension benefits of retired teachers and current teachers.
…It should be noted that this pension holiday is focused only on teachers outside of the City of Chicago. Pritzker did propose increasing the payments to the Chicago Teachers’ Pension Fund.
The Chicago Tribune Editorial Board published an editorial of takeaways from Pritzker’s budget address, saying it “[kicks] the pension can”:
Pritzker’s plan to address $134 billion in unfunded liabilities relies on notions calibrated to not offend public employees unions: shoring up the pension funds with additional money from tax revenues; the sale of unspecified state assets; borrowing up to $2 billion by selling pension bonds; stretching out the current payment schedule; and making permanent an employee buyout program. Taken together, it’s more can-kicking. The only way to save the pension funds, and protect taxpayers, is to amend the Illinois Constitution’s pension clause. No, Pritzker didn’t say anything about that.
The Daily Journal published an editorial on Pritzker’s plan to short the pension funds, writing:
…Facing pension payments of $7.1 billion this year, $8.2 billion next year and $9 billion by 2022, the J. B. Pritzker administration has a different pension funding plan.
The idea is to short the state payment $800 million per year. Then, take several of those $800 millions and roll them into a bond issue. Three years’ worth of payments, say $2.4 billion, become a much, much higher number when you pile 20 years of interest on them.
…Ironically, a version of this sleight of hand was performed under Gov. Rod Blagojevich. He skipped $10 billion worth of payments — borrowing the money instead. Taxpayers will be making those bond payments until 2033.
…The scheme is akin to taking your credit card payment and rolling it into your mortgage. You’ll feel better this month. Whether you will feel better in 10 years is unknown.
And Republican State Senator Jason Barickman said Pritzker’s pension plan is a “very risky gamble.”
Pritzker’s pension “plan” is more of the same, failed policies that got our state into the mess it’s currently in. Illinois taxpayers and retirees cannot afford to return to the pension holidays of the Blagojevich era.
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