Budget Watchdog: Current Pension Debt Plan ‘Absolutely, Positively Unaffordable’
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CHICAGO (CBS) – The State of Illinois is has hit the troubling milestone of more than $100 billion in pension debt, but the head of a government watchdog group said that’s not the worst part of the news.
WBBM Newsradio Political Editor Craig Dellimore reports Ralph Martire, director of the Center for Tax and Budget Accountability, said people shouldn’t worry so much about the state’s $100 billion in unfunded pension liabilities, but about the plan the state has for paying off the debt.
He called the current plan for paying the state’s pension costs “absolutely, positively unaffordable.”
Martire said the current plan is too back-loaded, requiring significant increases in pension payments every year for the next 10 to 20 years, taking away state funding for basic services like education, health care, and public safety.
“It’s unattainable. The state will never make the payments according to schedule, because it’s impossible,” he said. “Literally, the debt service jumps by billions year to year to year; more than a billion dollars. And there’s no revenue system you could design that could keep up with that kind of growth.”
Lawmakers have been debating a number of pension reform proposals, voting on a flurry of pension-related bills in Springfield, but have yet to pass a comprehensive plan to address the skyrocketing pension bills.
The Illinois House has approved legislation to delay cost-of-living increases for state employees’ pensions. COLAs would apply only to the first $25,000 of an employee’s annual pension, meaning those with a pension higher than $25,000 would get a flat $750 increase each year.
Those changes could cut the pension debt by $19 billion, although the plan’s fate is unclear in the Illinois Senate.
Other legislation approved by the House would cap the salary on which benefits are based to the limit set for Social Security, currently about $113,000 a year. Another would delay workers’ retirement age incrementally, based on their current ages, to force younger workers to retire later to receive full benefits.
The Senate has approved separate legislation affecting only the Teachers’ Retirement System, offering retirees a choice between health care coverage after retirement, or COLAs for their pension benefits.
But Martire said lawmakers aren’t dealing with the basic problems in any of the current proposals in the General Assembly. He said cutting retiree benefits isn’t the solution.