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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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I find it disingenuous when now Illinois Democratic elite cite the state constitution. For over 2 decades we have been told the promised but unfunded pension benefits and future medical costs cannot be reduced because of the constitution. Now Lisa Madigan weighs in with a constitutionally based lawsuit to prevent payment of state employee wages because of the lack of an appropriation by the legislature. I guess it is ok to authorize payment even though it is not funded or with state revenue. I guess it ok to make payments based upon court orders mandating payments for obligations even though… Read more »
State pension promises are “protected” by “continuing appropriations” which were added to the law several years ago when few people knew the significance of the provision. I think this was invented by bond lawyers who wanted to make sure that legislative inaction could not result in missed interest or principal payments. The only thing they overlooked is that when you pre-appropriate money that doesn’t show up in tax revenues, you end up preferring certain classes of creditors (bondholders and pensioners). These preferred creditors really have no basis to be treated better than other creditors except for the fact that legislators… Read more »
I can tell you from firsthand experience with them that virtually all those legislators don’t know what they are doing on those subjects. Bond folks are way ahead of the game and have duped even many supposedly smart legislators.
… and consultants, underwriters, rating agencies and bond counsel get paid at closing! And often celebrate post-closing at Manhattan restaurants, indirectly hosted by taxpayers of the issuer — who also pay for the air fare, hotel rooms and limos. Not unlike public pension trustees at education seminars in Hawaii. There oughtta be a law … (No offense to former bond lawyers intended! The bankruptcy lawyers will do just as well at day’s end.)