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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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All of this rhetoric ignores the root cause: politicians who failed to adequately fund the pensions they negotiated.
Too many ‘pension holidays’ and not enough contributions to fulfill the state’s legal obligation.
Ever wonder WHY the pension guarantee was codified in the IL constitution? One reason was to assure pensioners that municipalities wouldn’t renege on the deal, which they have by not funding properly.
Whichever entity pushed for inclusion in the constitution was prescient.
“Whichever entity pushed for inclusion in the constitution was prescient.”
That would have been the mob. They always get theirs.
The Republicans sponsored the legislation. It had bipartisan support. Was voted and approved by the voters. The mob controlled 60% of the voters? This was approved at a time when teachers, fire, and police were not hated by Republicans. The voters thought it to be unfair that someone could work their entire life only to have their pension take away right before they retired. Up until that point, the courts had looked at pensions as mere gratuities with zero contract rights. The people of Illinois decided to make this change. The debt is owed and it will be repaid. Time… Read more »
No problem. Public sector retirement benefits must be paid, regardless (its in the constitution!).
Simply raise property taxes (and of course some other taxes) and decrease Ill-Chicago (#1-2 in overall tax burden; #1-2 in political corruption; and #51, behind Puerto Rico in fiscal condition) home values by i.e. another 10% to rest of country. Fixed. (our homes are “collateral for seven figure public pensions”)
Who cares if Il-Chi home prices go down, cause perhaps that will result in greater equity? (unless of course if everyone with money, moves out of state?)
“Our homes are collateral”
Yes. That’s what happens when the state goes into debt. Perhaps the people of Illinois better start thinking about where they want to raise additional taxes to cover this shortfall. The people of Illinois are paying. They just need to decide how.
I believe I speak for the majority of Illinoisans in saying “a promise is not a promise, in the absence of honest dealing“…quid pro quo from Illinois-Chicago public unions to our “compromised” political class, has resulted in an abrogation of the fiduciary responsibilities of our political class….to non-union taxpayers.
I believe (hope) those non-union tax payers will become more active on the political front, as their property values and public service levels and quality of life, continue to collapse in Illinois.
I believe the statement summarizes the majority of the IL Supreme Court. “The General Assembly had available to it all the information it needed to estimate the long-term costs of those provisions, including the costs of annual annuity increases, and the provisions have operated as designed. The General Assembly understood that the provisions would be subject to the pension protection clause. In addition, the law was clear that the promised benefits would therefore have to be paid, and that the responsibility for providing the State’s share of the necessary funding fell squarely on the legislature’s shoulders.” The ILSC unanimously rejects… Read more »
I assume you are talking about legal “weight.” Financial weight is another matter when the pension funds run dry and the municipalities don’t even have money to retain their public employees. When a public employee’s pension stops, he or she will have a legal right to sue for one payment at a time. There is no “acceleration clause.” No pension fund left to pay union lawyers to sue. Collection lawyers usually charge 1/3 to 1/2 of a judgment if there is anything from which to collect. Perhaps they can repossess a lot of vacant houses that have large tax liens… Read more »
Perhaps you need to go back and read about past pension cases in Illinois. The courts have already stated that if the pension funds start to run too low they could step in and force the funding. No need to sue for each payment. The fact that you would even suggest a possibility shows how far you’re removed from reality on this issue. Even in PR, with pension funds completely bone dry, pensioners are still being paid after bankruptcy. They have absolutely zero money in their funds but yet they continue to cash those checks. Face it. Pensioners will continue… Read more »
WhAt HaPpEnS iF rOe Vs. WaDe Is OvErTuRnEd?
MuH PeNsIoN iS a ConStItUtIoNaL RiGhT!!!
SeE, RiGhT tHeRe?
My Pension, SeE?
Now do the one where the ILSC said that creating a fiscal crisis in order to pay pensions was not the intention of the clause. We’ll wait…
The ILSC talks about crisis. They don’t care about them. Not theirs or the pensioners problem. So if the state “creates” the crisis or it just happens is no matter for the court. The General Assembly may find itself in crisis, but it is a crisis which other public pension systems managed to avoid and, as reflected in the SEC order, it is a crisis for which the General Assembly itself is largely responsible. The clause exists because the people of Illinois knew that politicians would create a crisis and not pay on the debt. Also, it doesn’t make any… Read more »
You are takiing about the tip of an iceberg when you think of corrupt political dealings in IL. It likely has tentacles everywhere. What percentage of the contracts and appointments of that origin do not account for favoritism in one way or another? Then, how and why are allowed to continue for decade after decade with little to no reform? Because the politicians who have the power to make reforms choose not to do so.
They all patted themselves on the back after last year’s fantastic returns. Now they’ll quickly revert back to “it’s an average!”
Yes, but isn’t it true that the cumulative average over many years is what’s more important? Your snide remark seems to say otherwise. Some years will show great growth, some will be quite the opposite and presumably most years will show returns between those extremes. That’s the way the financial markets work.
Pinned between a rock and a hard place. COLA not keeping up with inflation and system assets declining. Time for another bond issue. Meanwhile, higher interest rates portend that the lump-sum buyouts will be reduced meaning that fewer will take them. These sorts of conditions contributed to the bankruptcies of GM and Chrysler. The virtually bankrupt PBGC has promised to pay benefits up to a capped amount. Meanwhile, Detroit is looking at a second bankruptcy because they didn’t reduce pensions enough during the first round. And Teamsters et al. are only getting their pensions due to a recent Biden bailout.… Read more »
So what else is new?
Simply that it’s getting worse every day. I’d love for it to get better because my IRA balance is dropping like a stone. However, I fear that investors are beginning to understand the troubles that Wirepoints has been persistently calling to our attention. There doesn’t seem to be any place to hide. I’d love to be able to do a short-sale of public employee pension expectations but I’m not sure there’d be a counter-party anywhere in Vegas. (I’d also like to do a short-sale of Vegas real estate or their fire insurance companies.) At least Chicago has water to drink… Read more »
The sad reality is we could be in for decades of stagflation as feds unwind $9 trillion in quantitative easing stimulus going back to 2009. Was decades of stagflation figured into the pension actuarial models when “the promises” where made? was decades of stagflation or anything figured into all the zillions of minor perks & changes made to all the crazy +600 pension plans?