MADISON COUNTY – As if the Chicago area's pension situation isn't dire enough, hundreds of public pension millionaires are living in Illinois' southwest section, a new report by Illinois Policy Institute says. These pensioners paid a fraction of their salaries towards what they are accumulating in retirement. State taxpayers' incomes and properties are being taxed more and more to keep up with the demands now growing exponentially.
Illinois Policy Institute's Brad Wiesenstein writes:
Southwest Illinois’ 492 six-figure pensioners have received $612.5 million in pension benefits combined. Meanwhile, those retirees contributed a combined $74.3 million to the pension systems – just 12 percent of their total retirement benefits. The rest of their benefits come from taxpayers and investment returns.
That might be a great deal for these retirees, but taxpayers can’t afford to shoulder the costs. Excessive pension benefits are simply unsustainable in a state carrying between $133.7 billion and $250 billion in unfunded pension debt. Pension and health care costs for government workers now eat 25 percent of the state’s general fund revenues. At the local level, the growth in pension costs is driving municipalities– such as Peoria and Harvey– to lay off municipal workers, including police and firefighters, and to hike property taxes.
In a state with nearly 7,000 units of local government, it should come as little surprise that there are 667 government pension systems in Illinois. Even the smaller pension systems subject taxpayers to tax hikes. In 2017, for example, the city of Belleville’s police and fire pension obligations drove the city to increase its property tax levy by $1.2 million.
He makes the following recommendations to at the very least begin to stop the bleeding:
Illinoisans’ tax burden will only increase as pension costs continue crowding funds out of municipal budgets. To deliver tax relief, and restore retirement security for government workers, state lawmakers must amend the Illinois Constitution to allow for the following reforms:
- Increase the retirement age for younger workers.
- Cap maximum pensionable salaries.
- Replace permanent compounding benefit increases with true cost-of-living adjustments, or COLAs.
- Implement periodic COLA holidays to allow inflation to catch up to past benefit increases.
- Enroll all newly hired employees into 401(k)-style retirement plans, similar to what’s available to state university employees, which would ensure government worker retirements are predictable and sustainable going forward.
More HERE.
