Illinois needs Governor Walker’s assistance regarding public employee benefits and collective bargaining and to help straighten out the fiscal mess like he did in Wisconsin.
Many teachers in the state don’t pay anything toward their pension but can retire in their mid-fifties with annuities equal to 50 – 60% of their final pay, plus a 3% compounded cost of living increase each year.
The (Illinois) state’s pension bill, which has quadrupled in five years, consumes all $7 billion of additional revenue from last year’s income and corporate tax hikes. Even so, the pension funds are projected to go bust in a decade.
The Chicago School district is $700M in the hole, but the teacher’s union still insists that its membership take a strike vote. The union wants more bargaining power “at the table” says the union president.
If the union continues to demand a 24% increases in pay for an extra hour of work, the “table” will be an autopsy gurney for the school district, the city of Chicago and the state.
The union also wants contract language to reduce class sizes, the old bargaining technique to increase dues paying members under the guise of we are “doing it for the kids.”
Bond rating agencies have threatened to lower the Illinois bond rating two notches if the state doesn’t do something about its pensions. The pensions are threatening the state’s entire fiscal structure.
Illinois has a $9 billion backlog of unpaid bills—and squeezing local budgets, thereby making municipal defaults more likely. Mr. Emanuel is warning that retirement costs could drive up Chicago’s property taxes by 150% over the next three years and increase class sizes to 55 students.
Governor Quinn and the General Assembly have tried to increase public employees contributions to their pensions, or raise the retirement age by a couple of years, but the unions are threatening a lawsuit if lawmakers approve any reforms to their benefits.
They argue that reducing pensions for current workers and retirees is illegal and the plan is coercive. But state and federal courts have ruled that lawmakers can tweak benefits if necessary to protect public welfare. Minnesota and Colorado have defended their pension reductions on those grounds.
The legislature did not pass pension reform or any reduction in spending. Their solutions are either increases in taxes and fees or shifting state expenditures to the school districts and the community colleges.
This is about where Walker entered the fray in Wisconsin, but the voters in that state provided him with a majority in both houses to allow passage of the collective bargaining restrictions, save millions of dollars for school districts around the state and to turn a state deficit into a surplus in less than two years.
With the corruption in Illinois, even Governor Walker may be challenged.
Lawmakers are way behind the voters on this one. By a three-to-one margin, voters favor reducing pension benefits over paying higher taxes.