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* Moody’s…
Moody’s has released its adjusted net pension liabilities (ANPL) for U.S. states for Fiscal Year 2018 (states report their pending funding positions with a one-year lag, so this year includes the strong market performance of FY 2017). Total state ANPL was $1.56 trillion in FY18, a 3.6% drop from FY17. The median state ANPL for FY18 was $12.2 billion, which represents 91.5% of state revenues.
The five states with the highest ANPL were Illinois ($240.8 billion/505.1% of revenue), Kentucky ($45.9 billion/308.7% of revenue), Connecticut ($62.1 billion/285.8% of revenue), New Jersey ($113.8 billion/274.9% of revenue), and Maryland ($59.3 billion/236.5% of revenue). The five states with the lowest ANPL were North Carolina ($9.4 billion/31.4% of revenue), Tennessee ($6.4 billion/32.3% of revenue), North Dakota ($1.8 billion/32.6% of revenue), New York ($39.2 billion/40.2% of revenue), and Iowa ($4.8 billion/43% of revenue).
* Greg Hinz…
Moody’s uses a lower discount rate than others who monitor state debt, which tends to increase the size of Illinois’ hole. Ergo, according to the bond-rating firm, Illinois’ adjusted net pension liability as of June 30, 2018, stood at a cool $240.8 billion.
That’s more than any other state, with California coming in second—its population is more than three times ours—at $230.8 billion and Texas coming in third at $132.8 billion.
Difficult as it is to fathom, Illinois’ figure actually was a little worse this time a year ago, topping $250 billion in unfunded liabilities. But according to Moody’s, the whole reason for the decline was the market, which was really hot but lately has been pretty flat. With Illinois putting in only about two-thirds of what we need to hold even—Moody’s so-called “tread water” line—the hole probably already has resumed growing, it says.
And it will continue to grow because that’s the Edgar pension ramp. The state will gradually work its way up to “tread water” status and then beyond. Candidate and Governor-elect Pritzker pledged to put money into the system up front to get ahead of the ramp, but Gov. Pritzker has stopped talking about that idea.
By the way, Moody’s says the state’s Adjusted Net Pension Liability per capita in Illinois is $18,896. The national median is $2,903 per capita. Mean is $4,883.
posted by Rich Miller
Tuesday, Sep 17, 19 @ 2:50 pm
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Comment by Former State Worker Tuesday, Sep 17, 19 @ 2:56 pm
===And it will continue to grow because that’s the Edgar pension ramp. The state will gradually work its way up to “tread water” status and then beyond.===
The Edgar Ramp is a tough thing to own looking st the numbers and trying to follow the ramp until that “tread water” level.
If the GA and Governor would like to revisit a “ramping” thingy or formulate a better paying, no one is stopping anyone.
It’s not going to be good news, paying on the ramp, for a long time.
Comment by Oswego Willy Tuesday, Sep 17, 19 @ 2:59 pm
The ‘Tread Water” level is admittedly better than year-over-year increases until the end of time, but the initial bumps to get there are huge. Imagine the bank telling you that “Yeah, your mortgage is going to go up by 50% in the next few years, but after that, good news! It will stay at that level for the remainder of your term”. A lot of people would walk away from the property, as happened in 2008.
Comment by Stuntman Bob's Brother Tuesday, Sep 17, 19 @ 3:07 pm
There are only 4 options to taming the pension monster.
Comment by Downstate Tuesday, Sep 17, 19 @ 3:09 pm
Thank you Comptroller Mendoza. Your Fiscal Leadership and Steady Hand led us to first place.
Comment by Comptroller Fan Tuesday, Sep 17, 19 @ 3:13 pm
Downstate -
Beth ydyn nhw? (Google it).
Comment by Anyone Remember Tuesday, Sep 17, 19 @ 3:14 pm
===Your Fiscal Leadership and Steady Hand led us to first place.===
It’s called… the Edgar Ramp, lol
Comment by Oswego Willy Tuesday, Sep 17, 19 @ 3:16 pm
Not addressed is the downstate police and fire pensions $180B, or Chicago’s pension debt $90B. how much is that debt worth if using more realistic rates of return?
the net pension liability per capita is approaching half the value of a 3 bedroom house in Lincoln Illinois.
this is what happens when you enforce one constitutional provision and ignore another. no way this debt is paid out
Comment by Merica Tuesday, Sep 17, 19 @ 3:18 pm
OW
Let’s not blame anyone in the legislative branch the last 25 years.
Comment by Steve Tuesday, Sep 17, 19 @ 3:18 pm
Terrible thing the state did to public workers. Only thing they could do that is worse for those taxpaying public workers is to punish them once again by decreasing their benefits, which some advocate for. Double down on the pain for serving the public!
Lest someone say, so what can we do? Pay the bills as they come due from now on. As the Supreme Court said, this problem was a creation of the state legislature and remedies do exist while sustaining the Constitutional rights of pension holders.
Comment by Ano Tuesday, Sep 17, 19 @ 3:19 pm
===Let’s not blame anyone in the legislative branch the last 25 years.===
Speaker Daniels, President Phillip?
- Steve -… you’re not good at this. Honest.
Comment by Oswego Willy Tuesday, Sep 17, 19 @ 3:20 pm
Our best solution is high inflation. A few years of 8% inflation will partially tame the dreaded 3% annual increase.
I thought the Trump deficits would trigger inflation. The downward pressure on prices is greater than I expected.
Comment by Last Bull Moose Tuesday, Sep 17, 19 @ 3:21 pm
First state in the union to be bailed out by the feds?
Comment by Pick a Name Tuesday, Sep 17, 19 @ 3:25 pm
also, when comparing to California, population is good, and
productivity - California’s GDP is $3 trillion, Illinois is $800B with Chicago and the metro area making up > $700B of that.
land value - The average house in California is worth almost $500k while in Illinois the average house value is less than $180k.
Comment by Merica Tuesday, Sep 17, 19 @ 3:25 pm
One potential solution other than changing the constitution is tech disruption: are there any studies out there as to how many government jobs in Illinois could be automated but aren’t because unions fight to keep those jobs manned? I’m not talking here about people currently working, I’m asking if the state could do better job reducing the payroll (and future retirement beneficiaries) but for union pushback. Maybe the answer is no but I’d like to hear that from a neutral source.
Comment by lake county democrat Tuesday, Sep 17, 19 @ 3:28 pm
OW
The names you mentioned were there. I never would deny that. It’s just their time in leadership wasn’t as large as some who’s contributions were much larger.
Comment by Steve Tuesday, Sep 17, 19 @ 3:31 pm
=One potential solution other than changing the constitution is tech disruption: are there any studies out there as to how many government jobs in Illinois could be automated but aren’t because unions fight to keep those jobs manned? I’m not talking here about people currently working, I’m asking if the state could do better job reducing the payroll (and future retirement beneficiaries) but for union pushback. Maybe the answer is no but I’d like to hear that from a neutral source.=
This would actually make things worse with respects to the pension crisis. State workers are paying in to the pension fund. If you eliminate them then less money is going in unless you are advocating diverting potential payroll savings into the pension fund which really wouldn’t happen without a constitutional requirement.
Tier 2 is what saved the state quite a bit in the future. The problem is paying off Tier 1 obligations. It’s going to be a rough 25+ years.
Comment by Former State Worker Tuesday, Sep 17, 19 @ 3:32 pm
lcd: You do know that Illinois has fewer state employees than other states, per capita? And that caseloads at DCFS and other agencies are far higher than they should be? We’re already understaffed.
Comment by DIstant watcher Tuesday, Sep 17, 19 @ 3:32 pm
I dunno…driver’s license kiosks?
Comment by Six Degrees of Separation Tuesday, Sep 17, 19 @ 3:33 pm
===If the GA and Governor would like to revisit a “ramping” thingy or formulate a better paying, no one is stopping anyone.===
It’s almost as if the ramp was designed to let politicians avoid raising taxes to pay for pensions in the 1990s and the lack of interest in passing legislation to change the funding ramp to start making larger payments now continues because politicians want to avoid raising taxes paying for pensions — especially since those pensions were delivered decades ago to a ever shrinking cohort of Illinoisans, many of whom will never have to pay the tab for services they received at our collective expense.
Comment by Candy Dogood Tuesday, Sep 17, 19 @ 3:35 pm
Unfortunately, once the pension can was kicked, it was game on. Nobody is ever going to bend over and pick up the can. JB already has talked of kicking it further. That can is like a live grenade. Nobody wants to hold it.
Comment by SSL Tuesday, Sep 17, 19 @ 3:42 pm
==tech disruption==
What - you mean, like Uber but for DCFS cases workers?
Comment by Name Withheld Tuesday, Sep 17, 19 @ 3:42 pm
===The names you mentioned were there. I never would deny that. It’s just their time in leadership wasn’t as large as some who’s contributions were much larger===
lol
How long was Pate and Lee in Leadership.
No, no, I’ll wait.
Comment by Oswego Willy Tuesday, Sep 17, 19 @ 3:43 pm
==if the state could do better job reducing the payroll==
Illinois already has one of the lowest rate of state employees per capita. There are lots of human-needed, judgment jobs in state government - corrections officers, DCFS case workers, benefits coordinators for DHS and HFS. We’re not making spatulas; most state government jobs are related to people and their needs, which means the shape and facets of their needs is myriad.
You could probably increase efficiency and eliminate some positions through things like online forms (rather than paper, etc), but you’d have to spend lots of staff/consultant hours to upgrade the systems, train folks, etc. Overall, I wouldn’t think it’d be enough to seriously move the needle, esp. as you’re not likely to be closing out Tier I positions.
The problem, unfortunately, is that very few electeds over the last 40 years have wanted to pay what was truly owed on the promises they made. And here we are.
Comment by lakeside Tuesday, Sep 17, 19 @ 3:45 pm
We should stop making debt service payments, let the madness ensue and then start over.
Comment by Matt P Tuesday, Sep 17, 19 @ 3:46 pm
===First state in the union to be bailed out by the feds?===
Think it was Arkansas, around the depression(?)
The ILSC has made it quite clear; there’s no need for a bailout, pay what is owed.
Comment by Oswego Willy Tuesday, Sep 17, 19 @ 3:47 pm
OW is a net negative to the comment section. Too many replies.
It’s not all about you.
Comment by Matt P Tuesday, Sep 17, 19 @ 3:47 pm
===We should stop making debt service payments, let the madness ensue and then start over.===
You think this is a net positive comment?
Hmm.
Comment by Oswego Willy Tuesday, Sep 17, 19 @ 3:48 pm
Six Degrees of Separation -
How do kiosks conform with REA ID?
Comment by Anyone Remember Tuesday, Sep 17, 19 @ 3:50 pm
===We should stop making debt service payments===
Stop drinking so early in the day.
Comment by Rich Miller Tuesday, Sep 17, 19 @ 3:50 pm
===The ILSC has made it quite clear; there’s no need for a bailout, pay what is owed.===
You mean a state with roughly an $800,000,000,000 economy can find a way to pay ~120,000,000,000 in debt?
Amazing!
Comment by Candy Dogood Tuesday, Sep 17, 19 @ 3:51 pm
==let the madness ensue and then start over==
“There are those who love regretting. There are those who like extremes. There are those who thrive on chaos and despair.” — The Balladeer, “Assassins” - Stephen Sondheim, 1990
Comment by Name Withheld Tuesday, Sep 17, 19 @ 3:51 pm
===You mean a state… ===
… utilizing the Edgar Ramp so far, even as painful as that is…
Gotta plan, is it constitutional?
Comment by Oswego Willy Tuesday, Sep 17, 19 @ 3:53 pm
OW
It’s sad that Mike Madigan’s historic leadership and years of service are being forgotten.
Comment by Steve Tuesday, Sep 17, 19 @ 3:53 pm
===It’s sad that Mike Madigan…===
Read McKinney, Vock, and Rich Miller.
If they forgot Madigan in their work, you aren’t paying attention.
They don’t call it the Madigan Ramp, do they?
Governors own, even ramps.
Comment by Oswego Willy Tuesday, Sep 17, 19 @ 3:56 pm
==A few years of 8% inflation will partially tame the dreaded 3% annual increase.==
That doesn’t quite help us individually, now does it?
Under the “fair” tax proposal, 8% inflation would effectively knock the $250,000 bracket down to $230,000 in just one year.
Comment by City Zen Tuesday, Sep 17, 19 @ 4:00 pm
During the first years of a mortgage, you wonder how you’ll ever pay off that debt, which could be 300% of your income or more. But you keep paying the monthly bill, and over time, the number gets smaller.
There’s a reason that mortgages offer a 30-year repayment option. That’s basically what the ramp is, a fifty year mortgage.
“But homeowners end up with equity when their mortgages are paid off and the state will have nothing at the end,” critics say. Ah, but the state will continue to function and provide services and be home to an economy and millions of people who live and work here. That’s not nothing.
500% of revenue is high, obviously, but we’re slowly making progress.
Comment by 47th Ward Tuesday, Sep 17, 19 @ 4:01 pm
- City Zen -
Still worried about that 3%, lol
It’s everything after the $250K that is taxed higher, but you already know that.
Comment by Oswego Willy Tuesday, Sep 17, 19 @ 4:01 pm
Wow, for someone reminding others to “pay attention”, it seems OW has not been paying all that much attention to the fact that although the Edgar ramp was not realistic from the get go, there is one consistent chief architect of the Illinois fiscal mess which includes, shorting, skipping and borrowing pension payments…how can you possibly not include Madigan in the discussion regarding responsibility for this mess?
Comment by Elliott Ness Tuesday, Sep 17, 19 @ 4:04 pm
===OW is a net negative to the comment section. Too many replies.
It’s not all about you.===
To many reply’s can be a net negative when someone is hell bent on pushing certain talking points for their agenda. I’m fairly confident OW has never been accused of that. Heck I am not even certain I could establish a particular OW agenda. HE/SHE states facts on a range of topics. Some posts I agree with, some I don’t. That’s kinda the purpose of a blog.
Comment by Nagidam Tuesday, Sep 17, 19 @ 4:05 pm
And to think that the 7.5% rate of return is attainable now that guaranteed income levels are soon to go negative is a pipe dream. Maybe the state should invest in all the pot startup IPOs
Comment by Blue Dog Dem Tuesday, Sep 17, 19 @ 4:06 pm
- Nagidam -
Appreciate that. Sincerely. Thanks.
OW
Comment by Oswego Willy Tuesday, Sep 17, 19 @ 4:09 pm
These stats don’t actually convey the full extent of the problem because they don’t consider the local pension funds - a huge piece of the problem because of Illinois’ home rule construct and its dependence on property taxes.
This is a huge differentiator from other states and double underscores the fact that Illinois has a meteor heading its way.
The people on this shouting “ILSC says you must pay” really don’t grasp the full extent of the problem and the lack of solutions.
Let’s just kneecap the next 4 generations of Illinoisans.
Comment by JP Altgeld Tuesday, Sep 17, 19 @ 4:12 pm
===How do kiosks conform with REA ID?===
Artificial Intelligence will likely be scanning our retinas to ensure we are who we say we are someday. Short of that, a machine could scan all our IDs and verify they are legit before a license is issued. The technology might not be mature or cost effective yet. Just like a lot of things, some state jobs may be automatable, but it may be a year, 10 years or a generation before practical.
Comment by Anonymous Tuesday, Sep 17, 19 @ 4:20 pm
It’s everything after the $250K that is taxed higher, but you already know that.
$250K in 2020 dollars. Yes, I knew that. It’s quite relevant…for 2020.
The value of the dollar changes every year. But you already know that.
Comment by City Zen Tuesday, Sep 17, 19 @ 4:20 pm
It would have been much easier for the Chicago fireman to debate the culpability of Mrs. O’Leary’s cow rather than put out the flames. Thankfully they chose the latter.
Frankly, this crisis (for both Chicago and Illinois) is just as big. The 4 options are limiting and painful. But the fire has to be put out.
Comment by Downstate Tuesday, Sep 17, 19 @ 4:21 pm
Anon 4:20 is me.
Comment by Six Degrees of Separation Tuesday, Sep 17, 19 @ 4:22 pm
I guess the question is if things are so bad and everyone historically benefitted from Illinois’ low income tax rates- where is the fairness of dumping this obligation on the back of only 3 percent of the population. Why not raise rates on the top 50 percent and actually raise the amount of money the State really needs. Pritzker’s proposed plan doesn’t move the needle enough to deal with the structural deficit. Maybe once the fair tax passes the legislature will actually do what is needed
Comment by Sue Tuesday, Sep 17, 19 @ 4:24 pm
- City Zen -
Protecting the 3% looks good on ya.
That’s whom you’re “worried” about.
To the Post,
===And it will continue to grow because that’s the Edgar pension ramp. The state will gradually work its way up to “tread water” status and then beyond.===
This *is* what Illinois is doing about the liability. Read - 47th Ward -‘s comment to grasp it further.
It’s not going to be great news for a while. Blaming the pensioners who made *their* payments isn’t going to help.
I am NOT a pensioner. I’m not getting a pension, I’m not living on a public pension, I’m not getting any sort of pension, period.
But, I understand the Edgar Ramp, today, is doing the work that until another real, constitutional answer appears, that’s the ball game.
Comment by Oswego Willy Tuesday, Sep 17, 19 @ 4:27 pm
@Sue
LOL if you think the rates arent going up on the top 50% eventually. Just give it a couple years. The GA gets to make that call and they certainly will.
Comment by Talleyrand Tuesday, Sep 17, 19 @ 4:27 pm
===if you think the rates arent going up on the top 50% eventually. Just give it a couple years. The GA gets to make that call and they certainly will.===
Show me your 60/71 and 30/36 and governor willing to sign that first, thanks.
Comment by Oswego Willy Tuesday, Sep 17, 19 @ 4:29 pm
47th Ward is right. If the legislature had paid the bill every year, as IMRF did (because they’re not allowed to legally divert payment), the pension funds would be at 98% like IMRF. Cheating doesn’t get the job done.
Comment by Ano Tuesday, Sep 17, 19 @ 4:31 pm
@OW
Won’t go to that level overnight but some sort of slow creep towards that line (perhaps with sunset provisions like a few years ago) will assuredly happen.
It’s really either that or bankruptcy for local units, not a lot of options.
Comment by Talleyrand Tuesday, Sep 17, 19 @ 4:37 pm
==Why not raise rates on the top 50 percent and actually raise the amount of money the State really needs==
You wouldn’t need to go that far, raising them on the top ten percent, at a higher rate (maybe 9 or 10%), with all excess going to retire the pension debt, would clear things up in short order compared to the current ramp. Once the pension debt is under control, the excess could be allocated to education, which would effectively provide property tax relief. Bad-tasting medicine for sure, but it would cure what ails Illinois.
Comment by Stuntman Bob's Brother Tuesday, Sep 17, 19 @ 4:39 pm
===Just give it a couple years===
Oh, stop. A couple of years?
Comment by Rich Miller Tuesday, Sep 17, 19 @ 4:45 pm
Seems like our decision to sell our home and rent was better than I realized.
Comment by Cronish Tuesday, Sep 17, 19 @ 4:48 pm
I am proposing a graduated income tax based on your age. Keep rates low so young people will come back and tax the older people the most since they allowed this to happen by their votes and lack of accountability and the fact they got all the benefits of poor policy planning at a discounted rate.
Comment by Shemp Tuesday, Sep 17, 19 @ 4:48 pm
===Won’t go to that level overnight but some sort of slow creep towards that line===
This is concerned trolling.
You don’t know. You don’t. You think you know, but now you’re backpedaling.
“Won’t go to that level overnight but some sort of slow creep towards that line”
Maybe in 2023, fine years from now.
That said, it you told me in 2009 a guy named Rauner was gonna make the state go two years, a whole GA without a budget, i wouldn’t believe that too.
You don’t know.
Comment by Oswego Willy Tuesday, Sep 17, 19 @ 4:48 pm
It’s such an incredible hole Illinois has dug itself into. Other high-tax states manage to be so much more functional while offering just as many if not more and better services.
Comment by brickle Tuesday, Sep 17, 19 @ 4:49 pm
@OW
2023 seems the most likely time, I agree with you there. I am not trolling anything, just being realistic.
Comment by Talleyrand Tuesday, Sep 17, 19 @ 4:59 pm
===2023 seems the most likely time, I agree with you there. ===
That’s just the time.
Still gotta find 60/71 and 30/36… what if there’s a new governor… they gonna raise the rate in the first year of a term?
Yikes.
We don’t agree. That’s the earliest, that’s all I see.
===I am not trolling anything, just being realistic.===
Hmm…
===up on the top 50% eventually.===… ===Won’t go to that level overnight but some sort of slow creep towards that line (perhaps with sunset provisions like a few years ago) will assuredly happen.===
Concerned.
Trolling.
Comment by Oswego Willy Tuesday, Sep 17, 19 @ 5:03 pm
@OW
My only trolling is for the large swath of young Illinoisans that will want to be here and for Chicago as it tries to grow. If we keep burdening the state and city, we make that impossible. I worry for this great place becoming a shadow of what it was and what it could be.
Comment by Talleyrand Tuesday, Sep 17, 19 @ 5:05 pm
===My only trolling is for the large swath of young Illinoisans===
Thanks, Tom Joad.
“I’ll be in the way guys yell when they’re mad. I’ll be in the way kids laugh when they’re hungry and they know supper’s ready, and when the people are eatin’ the stuff they raise and livin’ in the houses they build, I’ll be there, too.”
Comment by Rich Miller Tuesday, Sep 17, 19 @ 5:10 pm
=== If we keep burdening the state and city, we make that impossible.===
lol, what does this even mean? We’re paying on the pensions. We’re discussing the state rating and the paying on it. You might be over your head here on what you’re trying to convey.
===I worry for this great place becoming a shadow of what it was and what it could be.===
… and yet, Chicago is the top place for foreign investing. Dunno if this all makes your concern worse, but, ok.
Comment by Oswego Willy Tuesday, Sep 17, 19 @ 5:12 pm
OW
The foreign investing hasn’t helped stop population decline.
https://www.theatlantic.com/ideas/archive/2019/09/americas-three-biggest-metros-shrinking/597544/
Comment by Steve Tuesday, Sep 17, 19 @ 5:36 pm
===The foreign investing hasn’t helped stop population decline.===
“Blame Madigan”
LOL
Comment by Oswego Willy Tuesday, Sep 17, 19 @ 5:41 pm
One potential solution
It is only a problem if one continues to subject oneself to the taxes imposed by IL. Many have migrated to other states, and I am quite sure reports like this will accelerate that trend.
Comment by Donnie Elgin Tuesday, Sep 17, 19 @ 5:47 pm
lake county democrat -
You used to post as Nonplussed?
https://capitolfax.com/2014/03/24/todays-number-20100/
Comment by Anyone Remember Tuesday, Sep 17, 19 @ 5:47 pm
== ==First state in the union to be bailed out by the feds?===
Think it was Arkansas, around the depression(?) ==
Actually, the Feds never did directly bail out a State. What did happen was Arkansas, in the depths of the Depression, did stop paying on some issued bonds. Skipping s lot of details, as part of Federal aid to all the states during the Depression, got a bit of extra money. And then the federal spending on WW II bailed all the states out.
Comment by RNUG Tuesday, Sep 17, 19 @ 6:05 pm
What is our highway construction unfunded liabilities.
How much will we spend over the next 30 years of highway construction
How much will we spend over the next 30 years in k through 12.
We don’t think of those costs like that so let’s stop thinking about pensions like that 240 billion is us spending 8 a year and we didn’t come close to that in pension costs in 2017
Why should the state stick 240 billion into an investment pool for Wall Street to play with
Comment by Publius Tuesday, Sep 17, 19 @ 7:55 pm
I would say our great state ought to be embarrassed, but I don’t think anyone really cares.
Comment by A State Employee Guy Tuesday, Sep 17, 19 @ 8:18 pm
And their figure is well their figure. The one from the Feds and State is 130 billion.
Comment by Not a Billionaire Tuesday, Sep 17, 19 @ 9:12 pm
Publius, I hope a good portion of the pension funds are invested in Wall Street.
Comment by Cronish Tuesday, Sep 17, 19 @ 9:43 pm
I am curious. Does anyone think that higher taxes are exogenous to economic productivity? I would think that some point they clearly are not, especially in light of all of the competition for tax dollars - see Altgeld’s post above - which describes the immense nature of the problem. Connecticut and New Jersey have the same kind of problem, and it would be helpful for Illinois to have them reach insolvency first. They share a lot in common - similar debt ratios - although Illinois wins that competition, and like population and GDP loss - and a similar political culture. Note that the pension debt overwhelms the bond debt in Illinois by a very large measure, so while Wall Street will be impacted by insolvency, the pensioners represent a huge class of unsecured liability, so even if Wall Street gets 20 percent on the dollar (not likely because the political class has borrowed on miserable terms giving Wall Street liens on assets or proceeds), the pensioners are incredibly vulnerable. By the way, absolutely no tears for Wall Street - in a low interest rate environment they know darn well the risks they are taking to obtain a high yield off the backs of Illinois taxpayers. And as a final note, does anyone have confidence that progressive tax increases will go towards drawing down the pension liability? With the last two tax increases, admittedly not of a progressive nature, pension liability increased. Do we really trust the State to treat money well and pay down the debt? A hard thing to do because unlike highway expenditures and so on payments on the debt go towards services already performed, so there is no present value add in return other than in preserving the principle of promises being kept.
Comment by Rogermortimer Tuesday, Sep 17, 19 @ 11:08 pm
The pension “crisis” is dying day by day, as time and mortality inexorably claim the Baby Boomers. What are we doing about tax incentive reform, and retooling tax / fiscal policy for the 21st Century? Any insights, Crain’s commentators?
Comment by Ares Tuesday, Sep 17, 19 @ 11:11 pm
decades of democrats and republicans using money needed for the pension for general revenue based projects as a way to avoid raising state taxes. Taxpayers and businesses alike who all derived the benefits and now many are whining as the bill comes due.
Comment by truthteller Wednesday, Sep 18, 19 @ 6:28 am
excellent point -publius-
Comment by NoGifts Wednesday, Sep 18, 19 @ 8:02 am
Taxing upper incomes more and re-amortizing pension debt should be two very key approaches to reducing the problem. We already reformed pensions and have to stop going after middle class workers for cuts while the wealthiest are taxed at the same state income rate as everyone else and have the lowest SALT burden.
Comment by Grandson of Man Wednesday, Sep 18, 19 @ 8:03 am
How many payments were skipped over the years ?or partial payments made. What about the Rod arbitrage failure, these are big contributors to the debt. Paying off money borrowed that we the peeps got no benefit from. Can kicking is the “Once great state of…. biggest political sport. Better pass an exit tax soon.
Comment by NorthsideNoMore Wednesday, Sep 18, 19 @ 8:15 am
You do gotta love Texas, governed by purported small government conservatives since the Spanish-American war, coming in 3rd place for pension liability.
Comment by PJ Wednesday, Sep 18, 19 @ 8:29 am
===let the madness ensue and then start over===
I’m pretty sure a default on the Illinois GO bonds would just result in a court challenge where a judge orders the legislature to raise the tax levies.
Comment by Candy Dogood Wednesday, Sep 18, 19 @ 8:34 am
I would love to see a judge enforce that “order”.
Comment by Cornish Wednesday, Sep 18, 19 @ 8:44 am
===enforce===
No judge need to worry. The contract clause provision makes clear as well; pay what is owed.
Comment by Oswego Willy Wednesday, Sep 18, 19 @ 8:53 am
Matt P and Cornish,
GO Bonds are continuously appropriated. A percentage of the annual DS due is transferred monthly. The courts wouldn’t have to work too hard to mandate the State pay those bond payments.
If the state even thought about changing that language, the state’s credit rating would instantly drop. The State would not borrow at investment grade levels in the near future, so kiss the current capital plan and future plans goodbye.
Comment by Downers Delight Wednesday, Sep 18, 19 @ 11:41 am