A missing piece in the Illinois pension debate

Opinion: Columns

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Al Popowits

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According to media reports, state Senator Don Harmon recently spoke to a large gathering at the Business and Civic Council meeting at the Carleton Hotel in Oak Park. He was evidently very candid when he spoke of the state's "pension problem," which he referred to as "the elephant in the room." He also stated that "the state never missed a pension check for a retired teacher or state trooper." Media reports further stated that "Harmon offered a worthy tutorial to the assembled and made valid points." (Wednesday Journal, July 3)

Since the senator is very knowledgeable and articulate, I'm sure those persons present found his presentation edifying. However, for clarification purposes, I feel that the two statements attributed to Sen. Harmon require amplification.

First, at its core, the state has a serious "revenue problem." The state has an $8 billion hole in this year's "balanced budget." Unfortunately, this is not an anomaly. According to the State Comptroller Judy Baar Topinka, who spoke at a recent roundtable discussion, Illinois has experienced deficits every year for the past 20 years. Therefore, because of revenue shortages, the state has not only failed to make its constitutionally mandated pension contributions but has also failed to adequately support its schools and health services, and pay its vendors in a timely fashion.

Some of the reasons for these deficits are:

1) the state's flat income tax does not generate sufficient income to finance state services.

2) the state's sales tax is outmoded.

3) the state exempts too many forms of income from taxation.

4) the corporate community demands and receives huge tax breaks whenever it threatens to move out of state.

To say that the state has never missed a pension check for a retired teacher or state trooper may create the erroneous impression that the state is acting responsively even though it is facing a financial crisis. The truth is that every time the state declared a "pension holiday," it failed to make its contribution to the Teachers Retirement System (TRS). This forced TRS to sell assets in order to give retired teachers their pension checks. It was TRS and not the state legislature that acted responsively.

Where did TRS receive the money to make those payments? Partially from the contributions of working teachers, who currently contribute 9.5 percent from every paycheck; from individual schools that employ those teachers; and from the return on investments. Years of reckless behavior by state legislators has left TRS less than 50 percent funded. This means the fund holds less than $1 for every $2 it is obligated to pay to future teacher retirees.

I believe this information is necessary to help citizens understand the "pension problem."

Al Popowits is a River Forest resident and head of a civic organization called "River Forest Voice."

Reader Comments

9 Comments - Add Your Comment

Comment Policy

John Butch Murtagh from Oak Park, Illinois  

Posted: August 21st, 2013 10:49 PM

Is the State Capital a permanent part of the WJ Comments Front Page?

Pat Quinn goes to the Dark Side from Where is Harmon on this?  

Posted: August 5th, 2013 3:56 PM

http://progressillinois.com/posts/content/2013/08/05/unions-demand-answers-over-civic-committee-s-talks-downgrade-illinois-bond-

Teachers get pensions? from Quinn got his  

Posted: August 5th, 2013 3:54 PM

http://capitolfax.com/2013/08/05/the-stonewalling-continues/

muntz  

Posted: August 3rd, 2013 2:49 PM

Mr Popowits is a former teacher drawing a pension that deducts ZERO in IL taxes. So Al pays ZERO state taxes on what I'd guess is his primary source of income, yet feels it's necessary to raise taxes for everyone else? Perhaps THAT is the part of the tax code that truly needs changing.

OPRF Achievement   

Posted: August 3rd, 2013 7:33 AM

Pensions, how about Sec 8. @Illinois, agree with you about our legislators. Harmon, seems like a nice guy -- but we need more than nice guys and conversations like he had recently, we need real solutions. Sad to say, but think you are right. Just a few more years and Illinois will declare Bankruptcy. We all need to get ready now.

Illinois HELP  

Posted: August 2nd, 2013 9:49 AM

Spending Problem? Hey, you know as a consumer - when you outflow exceeds you inflow....you are sliding one day at a time into Bankruptcy. Illinois will go Bankrupt - like "Detroit and Stockton" just a matter of time. Where is Sen. Harmon....stop talking and offer some Solutions - stop being afraid of your made bosses Madigan and Cullterton.

OP Resident # 545 from Oak Park  

Posted: July 31st, 2013 12:39 PM

Mr. Popwits' premise is completely wrong. This state does not have a revenue (i.e. TAX RECEIPT) problem. Govt's don't generate revenue, they tax and there is plenty of taxes collected in this state. Illinois has a spending problem, & that is what needs to be addressed. Unfortunately it won't be addressed as long as public enemy # 1, Mike Madigan, remains in office & a free man. Tax rates need to be reduced, & the entire tax system needs to be simplified to focus on growth.

muntz  

Posted: July 24th, 2013 11:20 PM

It only takes the avg pensioner about 10 years to burn through their "earned" benefits (their contributions, state contributions, and investment income). While the state's gross mis-manangement has not helped, the pension system has long been a house of cards waiting to fall. The system only appeared to be better funded because there were far more contributors than retirees. That ratio has shifted drastically. More people withdrawing, living longer, higher salaries...these are your root causes.

Steve Daar  

Posted: July 24th, 2013 9:46 PM

tax model is totally outdated but it doesn't look like it's changing anytime soon....Illinois teachers need to do everything they can to protect themselves from financial harm. here is a resource to help them: http://teachersretirementhelp.com/illinois-teacher-retirement.html

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