-- Connecting the dots between our economy, government and business --
By Wirepoints' Mark Glennon.
Summary and audio linked here.
Chicago’s political leadership is floating a pension buyout program as evidence it is seriously addressing the city’s thirty-six-billion-dollar unfunded pension liability, but Mark Glennon, founder of the Illinois policy research organization Wirepoints, said that the proposal moves debt from one column to another rather than reducing it, and that the broader fiscal picture facing the city continues to deteriorate across every measurable dimension. Audio here.
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
Full interview and summary linked here.
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There is actually no reason to do anything. The Constitution says you cannot diminish the pension, it does not say you have to pay them. Let the well run dry, when the funds are out of money, they are out of money. You cannot collect what does not exist. Just default on the payments and simply carry on. Public sector employees deserve nothing. In fact even if there was way out of this I would not support it. They need to suffer. the courts can rule anyway they want, they have no way to compel obedience. Pay you bond obligations… Read more »
Unfortunately, that’s not correct. The IL Supreme Ct made clear a few years ago that pensioners can sue the sponsoring level of government if the pensions run dry. In addition, when the pension gets close to running dry, the courts may order funding into them. That’s what happened in Harvey last year — a special property tax levy ordered by the court just to fund a pension.
Mark,
Even so, Harvey is showing that an order to raise taxes to fund pensions simply will not work if a city is already on the brink. At some point taxes cannot be raised anymore and then the pensions die. In the end the pensions still collapse.
I am missing how they enforce there orders? As far as I can tell the courts have no police powers. They can order this or that but enforcement requires a co-conspirator in order to enforce it. How could the courts enforce a special property tax without the assistance of another agency? We have seen this play it in the past where Sheriff police refused to enforce court mandated property seizures and evictions.
There’s a process called “mandamus” where a court can order a public official to do something. However, use of mandamus may violate the principle of separation of powers of the legislative, executive and judicial branches. If the public official who is supposed to enforce the tax (i.e. by sending a bill and subsequently filing a tax lien if the bill isn’t paid), it could get sticky. In other situations, the public official ordered to do something simply resigns instead of carrying out the court order. (Think about when Nixon attempted to fire Archibald Cox.) At some point, however, taxpayers themselves… Read more »
And your solution to this crisis is???
Didn’t you know that higher taxes aren’t what are driving people of IL?
https://prairiestatewire.com/stories/511403201-public-employee-union-chief-higher-taxes-won-t-drive-people-from-illinois
Mark: Fantastic description of the WORST way they could attempt to ‘fix’ the almost unfixable problem. I posted a comment yesterday on the Chicago Fed’s page where their article/study was posted……..and apparently they refused to post it. I basically described the largest state plan, TRS, has $73B underfunding and all the ‘ees have Payroll of 10B……thus over 7 YEARS of Payroll is the unfunded. Just interest at 7.0% is $5B, which is 50% of Payroll………..add NC $1B and some principal on the Unf and the cash contrib must be ~80% of Payroll. It’s hopeless, and shouldn’t be attempted to raise… Read more »
fantastic writing-thank you mark! as poor folks get taxed out of there homes to pay for the pension mess does the dem machine ,even those professing to be progressives have anything to say while there looken out for there own skins? NO-just where’s mine!
Thank you for a dose of logic and rationality, after that nonsense from Chicago Fed yesterday. I really needed that. Rick C.
When unrealistic, idiotic things like this start getting brought up as solutions you know the end of the pensions is right around the corner. This will never happen with property taxes already out of control. I hope Greg Hinz enjoyed the shot at journalists such as himself near the end of your article. Great work Mark.