By: Mark Glennon, Ted Dabrowski and John Klingner

Gov. J.B. Pritzker on Wednesday ducked a question from a reporter who asked if the governor’s new pension consolidation law would be as impactful as advertised. The new law, Pritzker said, was a “banner accomplishment in Illinois’ long history.” He said it also showed lawmakers’ “monumental willingness to prioritize responsible and sustainable fiscal management.” 

The reporter* specifically raised Wirepoints’ concern that the potential benefits of combining investments through consolidation are insignificant compared to Illinois’ total pension shortfalls. 

“As you may know, Wirepoints and other entities estimate…that this bill, while useful, at best addresses maybe 5 percent of Illinois’ [retirement] liabilities…how do you get at that bigger issue, that 95 percent?”’

Here’s how Pritzker sidestepped:

“Organizations like Wirepoints want to diminish what’s been accomplished here by saying we have so much more to do. The reality is that so little has been done in the past and this is a monumental accomplishment and it is evidence that we can tackle the most intractable problems of the state…I also want to call out that there are organizations in the state that just want to beat up on the state even though they live here and not recognize we all know there are challenges and that we are addressing them.”

Exchange begins at 23:40

Why Pritzker is wrong

Start with his earlier claim at the press conference that the bill will help “hundreds, hundreds of cities alleviate their spiraling property tax problems.” Consolidation’s annual benefits, according to the state’s own estimate, are $164 million to $500 million per year, though there’s no guarantee those savings will actually occur.

That means almost nothing to the ordinary Illinoisan’s property tax bill. The property tax collections in downstate and suburban Illinois total about $27 billion. The annual potential savings are just 0.6 percent to 1.8 percent of the total.

So if savings materialize and if the savings go towards property tax relief, then residents may just a very tiny reduction in their property tax bills.

Nor is the new bill bold. Consolidating local pension investment functions was just a common sense step, as a couple speakers at the press conference said. Six hundred and fifty separate investment functions never did make any sense, we wrote earlier. The toughest question could have been directed at the legislators gloating over the new law at the press conference: Why on earth didn’t they do this long ago?

Also, look at the new law more broadly and ask whether it’s a “monumental accomplishment.” As the graphic above shows, state and local unfunded liabilities for pensions and pensioner health insurance total $266 billion, but only about 5 percent of that is from the local pensions covered by the consolidation law.

There’s nothing about the consolidation plan that could be replicated for the other 95 percent of Illinois’ retirement shortfalls. 

Changing the narrative

While Pritzker admitted “we have so much more to do,” he’s also ruled out any chance to meaningfully address the crisis as a whole.

That’s because Pritzker has categorically refused to consider the one step that would allow for real pension reform and a meaningful reduction in unfunded liabilities – a constitutional amendment to the pension protection clause.

Pritzker’s response also reveals something else: He doesn’t like challenges to his effort to “change the narrative” on Illinois.

Changing the narrative is a central part of his strategy, according to his recent interview at the Economic Club in Chicago: “We spent years where the leader of the state and allies were spending hundreds of millions of dollars telling all of us how bad the state is.” 

Instead, he wants Illinoisans to believe “We are solving those problems…The narrative about Illinois is that we are a state on the rise…(W)e are turning the ship in the right direction and powering ourselves forward.” 

Pesky things like real numbers don’t fit that new narrative, so ad hominems against groups like Wirepoints will have to do.

Realism, not pessimism

The state’s accomplishments aren’t being “diminished” by Wirepoints and others who are calling for much-needed structural reforms, as Pritzker claims. We shouldn’t have to accept that a small, common-sense law is a “monumental achievement.” Nor should we be forced to deny that Illinois is a national outlier in almost every financial, economic and demographic fact we can think of (see Appendix).

We aren’t “beating up” on Illinois “even though” we live here. We are challenging Pritzker’s narrative because we live here.

We simply want honesty from lawmakers and remedies big enough to match the state’s deep maladies.

Read more about the consolidation bill and Illinois’ fiscal reality

*A special salute to Jeff Berkowitz, the only reporter at the press conference to challenge Pritzker’s numbers.

 

Appendix

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Danni Smith

pessimism is a feeling and isn’t that the dem mode-all about feelings and never about facts

Poor Taxpayer

Now Government is picking a dead carcus. They hate the honest hard working taxpayer and will prove it to you. ILLINOIS IS DEAD ON ARRIVAL. NO HOPE AT ALL. RUN FOR YOUR ECONOMIC LIFE. Anywhere is better than Illinois.

Poor Taxpayer

The best day of your life is the day you move out of Illinois.
There is no hope, DOA, a goner.
Let the cops, teachers and firemen pay all the pension taxes.
Do not be the last man to move.
The race is on to get out of this hell hole.
HIGH TAXES, LOW SERVICES AND some of the worst weather in the US.
You and your family deserve much better.

Joe B

Pull no punches either guys. Stick out in the crowd. It’s the only way to awaken the sheeple from their slumber.

s and p 500

How many times do I hear “if we spent money on education instead of defense” etc. etc. If you put it in context, the defense money isn’t that much. Let’s cut the defense budget in half–$350 billion would only pay off around a third of Calif. unfunded pension liabilities, with no money left for schools. Actually, govts. on all levels spend MORE on pensions than defense.

https://www.usgovernmentspending.com/

Danni Smith

ya know we could male it happen today!. Don’t pay your real estate tax. Let them repo your home, lol. All they can do is give them to the illegals in sanctuary Illinois and the welfare mommies with the many illegit kiddos. Then all those pensions will be paid by them, who no longer have to pay for water or electricity

mike Williams

Let’s call that Plan B.

Danni Smith

and just declared by lighthead, they don’t have to pay any fines or penalties for not getting their license stickers-so what do I get for paying on time, paying my water bill, paying my electric bill?? I get higher taxes and I get to give $50 to a newborn in 2020 for their college, which will be free anyway if we get bern, liz, who else?

Tom Paine's Ghost

Democrat politicians nationwide, and especially so in Illinois, are wholly and completely owned by public sector unions like AFSCME, SEIU, IFT and CTU. Decades of campaign “contributions”,no work jobs and boots-on-the-ground at election time have enslaved the Politicians at the expense of the taxpayers. Illinois Democrats will NEVER do anything to fix the financial mess and thus bite the hand of their public sector union overlords. Until the bond market realizes their mortal hazard and shuts of the government borrowing credit card nothing will happen. The day that government payroll checks bounce will be the greatest day for taxpayers in… Read more »

Susan

Problem is, “the bond market” is fund managers and broker dealers who get paid to place money. Unions pension funds generate oceans of money requiing placement.

You have not described anyone with any incentive to change anything.

TAXPAYERS have a big incentive to change status quo, but choose not to act.

Robert Fair

States cannot declare bankrupcy Only cities like Chicago

Tom OConnor

Aha…..Pay no attention to that man behind the curtain.
To the staff of Wirepoints…..Keep pulling on that curtain!

s and p 500

Absolutely–social media is going to be the undoing of unions and tax hikes. Prop EE failed in LAUSD, partly because of online attacks. Lori Lightfoot is a friend of unions but even she said she’s not bailing out CPS. That was priceless.

https://www.latimes.com/local/lanow/la-me-property-tax-lausd-explainer-20190605-story.html

Big Boy

I wonder what it’ll take for the bond markets to finally respond to the irrefutable math to stop feeding the bloated beast. What do you all say? A way they get around a bit of this is through collateralizing various sales or other taxes to make a more sturdy payment and secure the bond payments (less risk for bond holders). Still there has to be a tipping point. Will it be a 15% market down turn? 20%? It would be really funny if people who were expecting 100k + pension benefits got the social security top number instead, 45k currently… Read more »

Susan

Property taxpayers in Cook County may have a cause of action against Pritzker, Berrios, or the lower level Assessors who (decided for themselves? to) ignored Statutes and City Code in the case of Pritzkers toilets. 1. Vacant properties are required to register with City of Chicago and prominently post notices visible from the street. 2. 35 ILCS 200/9-180 requires that a form be filed within 90 days of “destruction of improvements “, otherwise, no assessment reduction. FOIA would reveal that presumably neither of these atandards were met, yet a 3- year retroactive Certificate of Error was granted by Chief Assessor Berrios.… Read more »

Mark Felt

I recall a time when financial geniuses grouped together a bunch of sub-standard mortgages into something called collateralized debt obligations. Apparently when you put a lot of bad mortgages together in a bundle, its suppose to make them into one giant good mortgage. We saw what that did to the real estate market and the economy 10 or so years back. It seems to me the state of Illinois is doing he same thing with these pensions…..and with Illinois record for sweetheart deals, what incompetent will they hire to run this bundle of pension investments?

Mike Williams

I’m available to run the pension fund and I can rise to the level of incompetent.

debtsor

Gov, if you’re reading this (and you very well might be), release all of the tax returns for your foreign trusts. Don’t be a hypocrite. Otherwise you’re no different than the other fat white trust fund baby billionaire who refuses to release his tax returns. Release all of your offshore trust taxes, and pay the IL state tax on that income too. Stop dodging Illinois tax laws. Let’s all see how wealthy you really are.

Freddy

JB said “So little has been done in the Past” What he meant was not being able to raise tax’s fast enough. True- little was done in the past addressing the real issues such as consolidation of the 7,000 taxing bodies/funding schools at the state level because money is “Diverted” to pensions not the classrooms. Schools and administration consolidation.Real property tax reforms not what they may dangle in front of us as an “Enticement” to get us to vote for the progressive tax. Creating unit school districts like Florida have. They have 65 districts comprising of 40K students each to… Read more »

Susan

From McHenry county:
Consolidated distrs into a CUSD just served to raise all teachers salaries to the lowest-highest salry+benefits packages.
Then, the few Admin jobs which were obviated by consolidation were made up rapidly by creation of new Admin jobs (additional assistant principals, or tech supervisors assisstants, or building and grounds administors , etcetera) which are often bestowed upon 55 year old “retirees” collecting full benefits…
(Including OPEBs which pay their FULL health insurance premiums rather than burdening them with 10% of premiums costs).

Fed up

So true take a look at VVSD 365 cusd in romeoville it is so top heavy with superintendents assistant superintendents principals assistants to the assistants and so on. It’s time they start paying there own way, I worked in the railroad industry for 40 years and payed for my own railroad retirement and health and welfare. This insanity has to stop now, but remember Illinois you voted for J.B.

Mike Williams

Let’s remember, the alternative to JB was Rauner, so basically you had to vote for a pretend budget or no budget. IllInois…don’t you just love it!!!

Freddy

Even if new positions are created by consolidating that would put them under Tier 2 and possibly Tier 3 hybrid plans which have different rules like no 3% compounding/paying more into pensions/working into their 60’s/higher out of pocket costs for health. That alone would help. New rules would have to be instituted like no double dipping. In Wi. there are still about 7,500 retirees grandfathered in so they can double dip.Those who are not must suspend their pensions before taking a similar position.Still legal in Illinois. In Winnebago county there are 11 districts each with legal teams/supers/assistant supers (Belvidere alone… Read more »

The Truth Hurts

New positions created by consolidation would not be tier 2 or tier 3 if the person hired was a tier 1 employee prior to consolidation. Once a tier 1 employee always a tier 1. Someone that was hired as a tier 1 employee could take years off from their profession and return as a tier 1 member.

Susan

It seems we must recognize that Illinois political industry hss no intention of maintaining the State ss an ongoing concern.
Their profits lie in their continued actions on the course which has proven so lucrative to them in the past.

MikeH

Jabba is triggered. Further proof that you guys are on the right track. Keep up the good work, and keep ’em sweating.

mqyl

“He said it also showed lawmakers’ monumental willingness to prioritize responsible and sustainable fiscal management.”

Reducing salaries, pensions, and health care benefits is responsible and sustainable fiscal management. Therefore, what he should’ve said was “… it also showed lawmakers’ monumental willingness to prioritize irresponsible and unsustainable fiscal management.”

At least he got the “monumental” part right.

Bob

My take away. Wirepoints is right on point and he will just try to diminish you and discredit you. You know when they call you by name you are a thorn in their side. It’s their way. Just like Second City Cop. They dont like the truth. Secondly, the salivating crony investment firms are gonna make a lot of money off those combined funds. The ones that were handled prudently and were well funded now join the ranks of the losers who have done a very poor job of it. Money for nothing.

nixit

JB said “Wirepoints”. Battle won.

NB-Chicago

Exactly, by merely acknowledging wp existence isn’t jb also acknowledging the real debt $#s and not the unusual fake cool-aid/ cash accounting bs $# pols & mainstream press continually regurgitate for the dullard voters. Wonder who was reporter asking question?,, yes, wp and others are slowly turning the tide by at the very least not letting the pols & apologist press hide behinde the fake math. Congrats wp!!!

NB-Chicago

Not that the cool-aid #s aren’t scarry enough

Gemini

Amen to that. It was really great to see that Wirepoints is having an impact on the outside world. Sometimes I worried that we were nothing more than a group of like-minded individuals who are blogging only to each other. Bravo both to the writers here, and the reporter who mentioned Wirepoints by name.