From Ted Dabrowski at the Illinois Policy Institute:
There’s immense pressure on Illinois legislators to pass a pension bill.
With the state pension system nearing insolvency and credit agencies warning of further downgrades, the perceived wisdom is that any pension fix, no matter how small, is a “step forward” that must be passed.
But when it comes to pension reform in Illinois, that logic has driven the state into a fiscal death spiral.
Illinois’ history is full of pension fixes that were billed as steps forward but have proven to be disastrous for Illinois and its residents. House Speaker Mike Madigan’s latest proposal is just the next in a long line of disastrous pension maneuvers:
- In 1996, then-Gov. Jim Edgar’s famed pension ramp was meant to gradually eliminate the state’s $20 billion pension shortfall. But just eight years later, that shortfall had risen to $43 billion.
- Former Gov. Rod Blagojevich’s 2003 solution was to borrow $10 billion to help plug the pension hole. More debt did nothing to solve the problem, and by 2009 the shortfall had jumped to $78 billion.
- Gov. Pat Quinn copycatted Blagojevich by borrowing $3.5 billion in 2009 and another $3.7 billion in 2010. That, too, failed. By 2011, the shortfall had increased to $83 billion.
The state’s most recent failure was the 2011 tax hike. Illinois’ tax coffers have raked in nearly $20 billion in additional tax revenues since 2011 – much of it to fund pensions – and yet the pension shortfall will exceed $100 billion when fiscal year 2013 results are released.
Madigan has yet to release the full details of his latest deal, but caucus leaders have reportedly agreed to it. And though full details are still forthcoming, what’s already been leaked means Madigan’s plan will do nothing more than delay real reform and keep Illinois in a chronic state of crisis.