Jan. 20, 2010
SPRINGFIELD, Ill. – An Illinois think tank believes they’ve found a solution to the state’s $83 billion deficit for pensions: Take away the “credit cards” from state lawmakers.
The Illinois Public Policy Institute’s plan rejects any additional taxes for Illinois residents but would freeze state spending for three years and also requires almost $18 billion in short term loans. The pension debt could be paid off by 2045, the institute said.
Institute CEO John Tillman said borrowing in the last 7 years could be compared to using one personal credit card to pay off another. The institute’s plan would end that rollover cycle and require loans to be paid off with any extra money once annual pension payments are made, he said.
Lawmakers are supposed to allocate funding for state pensions each year under a 1995 law, but payments have routinely been skipped or covered with loans.
Tillman credited Gov. Pat Quinn’s proposal to create a two-tier pension system that would put new state employees on a different and less expensive plan. But he said any tax increase, including Quinn’s suggestion to raise the state income tax, won’t cover the pension deficit.
The organization has presented the plan to all 4 legislative caucuses. Tillman said lawmakers expressed concern about the political effects that a spending cut could have but the group still hopes to have a sponsor present the bill during this year’s session. No specific lawmakers were named.
The plan requires both a state law and a constitutional amendment requiring pension payments to be made the state’s first funding priority. Tillman admitted successful passage of both would be “politically challenging” in a legislature controlled by Democrats, especially in an election year.