Illinois...a sad State of affairs

[macrockett]

www.chicagotribune.com/news/opinion/editorials/ct-edit-budget-20100305,0,5485584.story
chicagotribune.com
A speech for Quinn

11:29 PM CST, March 5, 2010

Gov. Pat Quinn on Wednesday will propose a State of Illinois budget for the fiscal year that begins July 1. Here's the candid address he should deliver:

•••

My fellow Illinoisans, I approach you with humility and brute-force honesty. You have trusted us to be stewards of your government and your tax dollars. But at one critical juncture after another, we've failed you. By admitting that failure, from a generation of Democrats and Republicans, maybe we can begin to earn some of your trust.

We know that our refusal to spend within our means — our inability to say No — has wrecked our credibility. There are 12.9 million of you, and at the end of this year, our budget shortfall will approach $13 billion. That's right, while you were working to build a future for your family and your community, we overspent the money you sent us by $1,000 for every man and woman, boy and girl. And we've made sure your burden will only increase. We have run up astonishing indebtedness that stands to crush your future, your grandchildren's future. Consider: Our unfunded pension obligations alone now average about $20,000 per household. And rising.

Just look at how far our state has fallen:

Maybe you think of Illinois as passably healthy, no worse off than other states. That used to be true. Today it is fiction. By one objective measure after another — our job creation stats, our long-range unemployment prospects, our bond ratings that top only destitute California's, our insolvency as we simply cannot pay our bills, our tax climate for employers, the unfunded obligations we've promised or borrowed — by each of these, Illinois now ranks worse than most states. I can blame recession for some of this, but not for our collapse relative to other states. There was only one recession, and it rampaged from coast to coast.

You know me. I'm an upbeat guy. I like to talk about our hard-working people and our beautiful state. Did you know I'm the only governor to be named Mr. Soybean by the Illinois Soybean Association?

Today, though, I need to be blunt: We've become one of the loser states we used to mock.

Last year we didn't reform how we do business. Instead, we prayed that a recovery would rescue us. Our prayers were answered. The answer was No.

A year ago I asked you for "fundamental tax reform." You knew I meant, "tax hikes." But just as recession savages Illinois' budget, it savages households across our state. This year, I won't ask you to sacrifice more for Springfield until you have seen Springfield sacrifice for you.

Democratic legislative leaders, public employee unions and lobbyists will fight this. They like our spending right where it is. This is the year, though, when I remind them that I owe them nothing. I owe only you, the people fate chose me to lead.

I will not continue to preside over the collapse of a state I love. This is the agenda I've set for the budget I'll sign:

• We will cancel our deficit in two years. We'll embrace cost-cutting and spending reforms from the Civic Federation, the Commercial Club of Chicago and all the others, and we'll ratchet back spending to 2007 levels. Impossible? We have millions of workers and employers who'd love to still be spending at 2007 levels. Many of them are living on much less than that.

• Like a lot of households, we won't put one dollar of new spending into anything. Last year the Illinois Policy Institute calculated that my budget proposed $980.5 million in new spending. This year, in every department, we'll cut or make do.

• We can't grow lasting jobs until we grow employers. I want companies to know Illinois is open for business. You're thinking of hiring here? We'll keep taxes stable.

• We're going to reinvent Illinois. We're going to sunset townships and more of our unequaled 7,000 local governments, many of them obsolete relics from the 19th century. No other state has done this streamlining. The Prairie State will be the Pathbreaker State.

• We'll live by the Law of Accumulation: "Little things add up." Voters read about legislative "scholarships" that shift tuition burdens to students who don't have clout. Voters read about generous superintendent salaries in small school districts that should have been combined decades ago. Voters read about paying the University of Illinois at Springfield chancellor his $273,500 salary for 14 months after he retires. C'mon.

• And we will do these things together. That stunt in the Senate last week, the effort to demonize a Republican call for less spending by claiming the world would end? Cheap shots cheapen all of us. They also let resentful Republicans off the hook when the tough decisions have to be made.

This is how we'll end a long era, The Great Pandering, with Springfield promising more than taxpayers can afford.

This isn't a political speech. But that's what's on every mind here. So:

If we do what needs to be done, maybe voters will oust the lot of us.

Or maybe they'll decide we deserve a chance to finish this bold recovery plan our state desperately needs. Thank you.

Copyright © 2010, Chicago Tribune

[macrockett]

March 06, 2010
Quinn wants to cut funding for cities, villages, pensions and state police

Posted by Monique Garcia at 5:00 p.m.

As Gov. Pat Quinn prepares to deliver his annual budget address on Wednesday, his office is warning that cities and towns will get less money from the state while some taxpayers will be asked to give more.
David Vaught, Quinn’s budget director, said today that municipalities across Illinois must “share the pain” by giving up a portion of income tax revenues the state typically shares. Instead of getting 10 percent, which amounts to about $1 billion a year, municipalities would receive 7 percent under Quinn’s plan. That's about a $300 million cut.

“You need to take a look and say OK, does everybody have skin in the game here?” Vaught said. “It just doesn’t make sense that the municipalities would get a pass.”

Quinn's plan is likely to be a non-starter with Chicago Mayor Richard Daley and many of his suburban counterparts because a cut in state funding would blow holes in local budgets.

Vaught also said taxpayers should "expect" Quinn to propose a tax increase again in his Wednesday speech, but he declined to offer specifics.

“He’s been very consistent about saying this is one of the things we have to do,” Vaught said. “What we see in the budget proposal this year is that it represents the reality and consequences of not doing it last year, because the hole is deeper and the problem is getting worse.”

Lawmakers in both parties are tepid at best when it comes to an income tax increase, especially in an election year.

Quinn has used the last several weeks to try to outline just how severe state’s money woes are, posting preliminary budget numbers online nearly two weeks ago that include $2 billion in cuts, though Republicans say that doesn’t go far enough when the state is facing a nearly $13 billion deficit.

The Illinois State Police is facing a $26 million cut, which would mean a reduction in patrols, Vaught said today.
“If you want to blame us for the cuts, fine, but blame doesn’t get you anywhere,” Vaught said. “Our job is to try to get this budget in balance, so we’re going to have to do it. What gets you somewhere is talking about the solution, so that’s what we say to the legislators, can we talk about a solution to this problem?”

Vaught also said the Quinn administration does not plan to make the full $4.1 billion employee pension payment this year because the governor is confident proposed reforms will pass the General Assembly that will ultimately save the state money. Instead, the state will pay $3.8 billion, $300 million less than required.

Posted at 05:00:00 PM in 2010 Illinois election, 2010 Illinois Governor's race, Governor, Legislature, Taxes

[macrockett]

So new gas tax possible in Naperville, State cutting Naperville budget, District 204 operating referendum coming soon Naperville, trillions in lost wealth due to real estate and the stock market values. Seems to me the taxpayers' tolerance will wear thin at some point.

But don't forget, they are affluent, with HH wealth of approximately 120+k.

[macrockett]

www.suntimes.com/news/metro/2088547,state-budget-schools-police-child-care-030710.article#

Ill. budget to hit schools, police, child care
Comments

March 7, 2010
ASSOCIATED PRESS

SPRINGFIELD, Ill. -- Gov. Pat Quinn's plan to fill the biggest deficit in Illinois history includes cuts so severe that 17,000 teachers could lose their jobs, thousands of poor families would get less help with child care and fewer state troopers would patrol the roads, a top Quinn aide said Saturday.
Such cuts will be necessary even if lawmakers agree to the governor's call for an income tax increase, said Quinn budget director David Vaught.

"This is the reality budget. This is what's really happening," Vaught said in an interview with The Associated Press.

Illinois faces a roughly $13 billion deficit in the upcoming budget year, he said. That's because the state's current budget is woefully out of balance, revenues are expected to drop and expenses keep climbing. Pension costs, for instance, will jump by about $1.7 billion, Vaught said.

On Wednesday, the Democratic governor will announce his proposal for filling the shortfall. Vaught would not discuss the size of the tax increase Quinn plans to seek, but he did outline the spending cuts -- about $2 billion.

General education spending would fall by about $1.4 billion, he said, an 11 percent decrease. The "foundation level" of state support for each child would fall from $6,119 now to about $5,600 next year.

Vaught estimated schools would have to lay off about 17,000 teachers.

Republicans have scoffed at Quinn's talk of education cuts, accusing him of trying to scare voters into supporting his tax proposal.

"I think the governor is playing a game. It's a sick game," House Minority Leader Tom Cross, R-Oswego, said last week.

Quinn also will propose $150 million in cuts to human services, Vaught said. That means, among other things, less money for local organizations that provide child-care services for the working poor.

Vaught estimated 6,000 children would be affected by the reduced hours and tighter eligibility standards likely to result from the cutbacks. Many of their parents would suffer an economic blow, he said.

"If you take away their child care, you're also taking away their job because they can't work," Vaught said.

Quinn, already accused by critics of endangering the public with early release of prison inmates, isn't sparing public safety from cuts. Vaught said the state police would lose about $32 million, meaning fewer troopers on the roads.

The governor will also propose reducing state support to local governments by about $300 million, Vaught said. That and the education cuts are likely to increase pressure for cities and school boards to raise property taxes.

Vaught argued that over the past year, Quinn has cut waste and made government more efficient. He said the number of state employees fell by 1,000 during 2009. Vaught didn't mention it, but the cash-strapped government dramatically slowed payments to schools and local organizations hired to provide state services.

Vaught said further cuts will go beyond efficiency and hit at core services.

The governor is generally trying to cut programs instead of eliminating them entirely, but there are exceptions, Vaught said. One example is halting all support for DuQuoin's World Trotting Derby, a major horse race.

Vaught emphasized that the long list of cuts wouldn't be necessary if lawmakers had raised taxes last year. "If they had acted, we wouldn't be seeing these kinds of cuts," he said.

In addition to the $2 billion in spending reductions, Quinn will propose borrowing billions of dollars to pay off long-overdue bills. Vaught said that would still leave a hole of about $5 billion to be filled by raising taxes or borrowing more money.

Republican legislative leaders object to raising taxes, and Democratic leaders show no enthusiasm for tackling such a touchy issue during an election year.

Copyright 2010 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

[macrockett]

www.suntimes.com/business/2087395,CST-NWS-wages07.article#

Has your paycheck taken a hit? You're not alone
COOK COUNTY | If you're not a teacher or in health care or 'professional services,' chances are your pay has shrunk in the last year -- but things are looking up
Comments

March 7, 2010
BY SANDRA GUY Staff Reporter

If it feels like your paycheck has been shrinking, you're not alone.

Last year, wages in Cook County shrank 1.2 percent from midyear 2008, according to the latest midyear figures from the U.S. Bureau of Labor Statistics.

Overall, 18 percent of Chicago area employers cut their workers' pay last year, according to a survey by the Management Association of Illinois.

But there are signs that things will be turning around. Chicago area companies' pay plans for 2010 show that businesses that froze wages last year are planning to start raising pay this year. And average hourly earnings nationwide have gone up 1.9 percent in the last 12 months, according to the government's monthly jobs report for February.

For now, though, most workers in the Chicago area -- union and non-union alike -- are still facing a pay squeeze. That includes involuntary -- and unpaid -- furloughs, higher health insurance premiums and frozen or reduced pension and 401(k) contributions.

Geraldine Kimerough is one of them.

"I didn't get a raise, and they increased the benefit deductions from my paycheck, so I'm making less," says Kimerough, 49, an information technology worker from Roselle. "I don't like to call it a pay cut because that makes me feel bad. It cuts into my fun money. I like to go on vacation to places that are hot -- Phoenix or Las Vegas. But I won't this year. What's the point if you have nothing to spend when you get there?"

Even those who work in professional services -- jobs that, on average, saw pay grow -- are under pressure.

"I got a raise and a bonus this year, but they were both half the size they normally are," says Natalie Zavis, 28, a Chicago accountant. "I'm not happy about it. But, compared to everybody else, it's good, so I can't complain. I'm thankful to be working."

Nonunion workers at some of the area's biggest employers -- Motorola, Sears and Navistar International -- saw their base pay frozen in 2009.

Unionized employees continue to work under contracts that call for pay increases. But they're facing delays in contract negotiations and increased pressure because of layoffs and their employers hiring more part-time workers, union spokesmen say.

Unemployment now stands at 9.7 percent nationally. In the Chicago area, it's even worse -- 11.1 percent.

Declines in pay and in wage growth reflect "the hidden cost of this recession," says Heidi Shierholz, a labor economist with the Economic Policy Institute, a Washington, D.C., think tank.

"People are hanging on to what they have, but they are feeling this recession in terms of reduced hours and reduced paychecks," says Shierholz.

And the future? Economists are projecting that unemployment will go no lower than 8 percent for the next two years before reaching 5.3 percent in 2014, according to the Congressional Budget Office.

For now, Shierholz says, there's nothing to push wages higher.

"Employers don't have to pay a wage premium to keep or to get good workers when unemployment is high," she says. "Wage growth will take this on the chin for years to come . . . . People at the middle level of income will really take the hit."

Where pay stands -- A sampling of Chicago-area employers

CHICAGO PUBLIC SCHOOLS

Last year, most employees at the Chicago Public Schools' central office had a pay freeze and also six unpaid furlough days -- which amounted to a 2.2 percent pay cut. This year, they face another pay freeze and three weeks of furloughs, which would reduce their pay by 5.7 percent. Teachers got a 4 percent raise under their contract. But top school officials have warned that the district can't afford the 4 percent raise this year. They want concessions from the Chicago Teachers Union, such as a pay freeze or furlough days. If the union doesn't agree, the district has the authority to increase class sizes and lay off teachers.

COOK COUNTY

On average, the county government's nonunion work force -- about 25 percent of the total of 24,000 employees -- gets 2 percent annual wage hikes, with "step" increases based on job title, experience and years of service. And 2009 was no different, said Joe Sova, who heads Cook County's human resources office. It's more difficult to track an average for unionized county workers, who are represented by four major unions and covered by about 50 collective-bargaining agreements. The Services Employees Union International has roughly 3,000 employees -- more than half of those working in health and hospitals and the rest scattered throughout the county government -- who have been working without a contract since Nov. 30, 2008. That means pay has been frozen for those workers, except for the step increases.

CITY OF CHICAGO

Nonunion city employees and civilian union city employees saw their wages reduced by a net 1.5 percent from 2008 to 2009. Their pay rose 3 percent in January 2009 -- the first increase for nonunion employees since January 2007. Most unionized non-police or fire employees have received annual increases for that same two-year period. But, through reduced workweeks and required unpaid days, most ended up with a 4.5 percent wage reduction in July 2009 -- with the exception of members of the American Federation of State, County and Municipal Employees and the Teamsters, who chose layoffs of their members over pay reductions. Because police and fire labor contracts have been under negotiation, and their unions having chosen not to participate in the furloughs, wages for those workers remained level from 2008 to 2009. Also, if the sworn unions are awarded pay increases through arbitration, the city will pay those increases retroactively. For 2010, nonunion and civilian union city employees will see, on average, a 9 percent reduction in wages resulting from a full year's worth of reduced workweeks, or furlough days and unpaid holidays. The 5,000 City of Chicago employees who are members of AFSCME got a negotiated 3 percent pay raise in 2009 and will receive a 3 percent raise this year. AFSCME members did not accept Mayor Daley's demand to take unpaid holidays and furlough days, but they did have to concede to the city's mandatory three unpaid shutdown days, which amounts to a 1.15 percent pay cut.

STATE OF ILLINOIS

AFSCME's 40,000 members who work for the state received a 2.75 percent pay raise for the 2009 budget year and another 2.5 percent raise this year. They have deferred another 0.5 percent raise slated to go into effect in July and are being encouraged to take voluntary, unpaid furlough days because of the state's budget crisis.

CTA

The CTA's unions have negotiated annual salary increases of 3.5 percent a year over the next two years. The CTA has asked unions to forgo this year's increase, as well as to accept other cuts, to help address a $95.7 million budget deficit. But the unions have refused, and, on Feb. 7, the CTA laid off 1,057 workers and cut bus service by 18 percent and L service by 9 percent. Nonunion CTA employees had no pay raises in 2009 and none this year. In 2009, upper management took three unpaid furlough days and three unpaid vacation days. This year, all nonunion employees will take from six to 12 furlough days, depending on their salary, plus six unpaid holidays. Employees who make more than $70,000 have to take the maximum of 16 unpaid days this year. Also, all CTA employees -- union and nonunion -- have seen the amount of their pension contributions increase from 3 percent three years ago to 6 percent in 2009 and to 8.35 percent this year.

NAVISTAR

Navistar -- a Warrenville-based truck manufacturer suffering through the worst truck market in 41 years -- froze base salaries for nonunion workers in 2009. No decision has been made on merit-pay increases for 2010, according to the company.

MOTOROLA

At Schaumburg-based Motorola, U.S.-based employees' base pay was frozen last year and this year. But workers still received promotions, equity grants and bonuses for superior performance and will again this year, the company said.

SEARS

Sears hunkered down in 2009 because of poor retail sales and the economic downturn, but the Hoffman Estates-based retailer said it will reinstate pay increases this year for employees deemed to be high-performing.

GRAINGER

Grainger, a facilities-maintenance supplier based in Lake Forest, plans to reinstate merit pay raises this year for eligible employees, after freezing them for executive and salaried employees in 2009.

INTEGRYS

Employees of Integrys Energy Group, the parent company of Peoples Gas, gave eligible nonunion employees a 3.2 percent base pay increase in 2009 and plans a 2 percent base-pay increase this year. But, because of the recession, the company is requiring those employees to take one week of unpaid furlough this year -- which amounts to no pay increase this year.

Contributing: Kim Janssen and Art Golab

[macrockett]

I stole this from refbasics from another link: naperville.wliinc2.com/government/pdf/local/100222-District-204-Financial-Sustainability_Post.pdf

It looks like the Naperville chamber is getting into the act of advocating pension reform.

[macrockett]

newsblogs.chicagotribune.com/clout_st/2010/03/chicago-taxpayers-on-hook-for-444-percent-more-in-government-pensions-than-a-decade-ago-report-says.html

March 08, 2010
Chicago taxpayers on hook for 444 percent more in government pensions than decade ago, report says
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Posted by Bob Secter at 12:01 a.m.

If the state’s chronic employee pension problems aren’t bad enough, a new report says that every Chicago resident is on the hook for 444 percent more in unfunded retirement pledges to public workers than a decade ago.

The watchdog Civic Federation said today that the funding deficit for the 10 largest Chicago-area public pension funds soared from $3.4 billion in 1998 to $18.5 billion in 2008, the last year for which figures are available.

The shortfall doesn’t mean that public worker retirees are in danger of getting shorted on pensions. On the contrary, promised benefits are guaranteed by the Illinois Constitution, so if the retirement pool runs dry someday, payment for vital services in the city, Cook County and other local bodies might have to take a back seat to bankrolling retirees.

“The status quo of benefit enhancements and insufficient pension contributions must not continue,” said Msall. “The only responsible option for our local governments is to work with the General Assembly to take action immediately to implement reforms.”

The funding problem is deepening even as state finances are tanking, in great measure due to huge debts owed to pension funds operated by the state for downstate and suburban teachers, government workers, judges and lawmakers. The bottom line is that it will be almost impossible in the current financial climate for lawmakers to ride to the rescue of local governments struggling to meet fiscally sound commitments to pension funding.

For decades, both local and state pension funds have failed to set aside enough money to cover long term obligations.

The local pension fund in the worst shape is the one covering Chicago firemen, which in 2008 possessed only 27 percent of the assets it needed to cover long term promises to retirees, the federation found. The common benchmark for deeming a pension fund financially sound is when it has enough assets on hand to cover 90 percent of projected long term retirement benefits it must pay out.

The retirement fund for Chicago policemen had just under 35 percent of the assets it needed to cover long term liabilities, the federation said. Slightly ahead was the Chicago municipal worker’s fund, with less than 45 percent of the assets it needed. The Cook County workers retirement fund had nearly 55 percent of what it needed, and the Chicago teachers pension fund had assets equal to 75 percent of what it needed.

Meanwhile, the retirement pot for CTA workers was funded in 2008 at 66 percent of what it needed, the federation found. But that was a marked improvement for a fund that only a few years before appeared headed for insolvency because of years of underfunding as well as investment losses. Reforms imposed by the legislature two years ago requiring CTA employees to carry a bigger share of the load for funding retirement and health care benefits helped the pension fund rebound.


Posted at 12:01:00 AM in Chicago City Council, Governor, Legislature

[macrockett]

newsblogs.chicagotribune.com/clout_st/2010/03/gov-pat-quinn-budget-speech-tax-increase.html

A copy of Doc's post to keep it with IL docs

March 10, 2010
Gov. Pat Quinn wants 33 percent tax hike for education
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Posted by Ray Long, Monique Garcia and Rick Pearson at 12:23 p.m.; last updated at 12:53 p.m.

Gov. Pat Quinn today called for a 33 percent increase in the state income tax rate to raise money for education and ease deep cuts he's proposed in his new budget plan.

In his short budget speech to the House and Senate, Quinn argued that an income tax "surcharge" would be enough to restore Illinois' education budget to current levels and allow the state to get caught up on some of the millions owed to public schools, community colleges and four-year universities.

Quinn wants to increase the personal income tax rate from 3 percent to 4 percent --- a 33 percent increase --- with the corporate tax rate rising from 4.8 percent to 5.8 percent. The tax hike would bring in $2.8 billion a year.
"I believe this 1 percent for education makes sense, and I think the people of Illinois will understand. We must invest in the future, even in these tough economic times," Quinn said. This is urgent. We don't have six months. We don't have six weeks. I challenge the General Assembly to take immediate action to enact the 1 percent for education initiative."

Last year, Quinn unsuccessfully tried to raise the personal income tax rate from 3 percent to 4.5 percent and provide some tax relief.

The political dynamics for a tax increase have grown only worse as the election-seeking Democratic governor confronts campaigning legislators who fear a voter backlash in the Nov. 2 general election.

The governor's caustic budget plan, first unveiled by top aides Tuesday, also relies on borrowing billions of dollars to stay afloat and pushing even more debt down the road. The administration's hope is to persuade leery lawmakers to instead raise taxes in an election year.

Quinn aides warned the plan would cost some 13,000 teachers and staff their jobs, cut off poor seniors from help in paying for costly prescriptions and shut down some health care programs for the indigent. But even after about $2 billion in cuts, the state would still be $11 billion in the hole.

Quinn took a shot at a plan offered by his Republican rival for governor, state Sen. Bill Brady, who has proposed 10 percent across the board cuts. Without naming Brady, Quinn said his GOP opponent was offering a plan both “heartless and naïve” that would take a “chainsaw” approach to funding for schools and social services.

Quinn’s plan to downsize his income-tax hike request and focus it on education funding represents a small-step, targeted approach to the state’s massive deficit. Such a plan could motivate the state’s powerful teachers’ unions and other education advocates during the current legislative session, pitting supporting schools against legislative fears of enacting an election-year tax increase.

At the same time, the education tax increase alone would do little toward resolving the state’s $13 billion budget deficit, leaving open the potential for further tax increase discussions between Quinn and legislative leaders following the Nov. 2 general election.

Quinn's gambit, to propose cuts in education and social services, represents the latest step in the increasing divergence between the state's very real deteriorating fiscal situation and the rhetoric of politicians who believe the public doesn't want or trust Springfield to get any more money from their wallets.

Similar cries about slashing services last year ended up being papered over by increased borrowing. Many lawmakers privately expect that fears among rank-and-file lawmakers about a voter revolt will lead to a repeat of last spring's session.

By proposing cuts of $1.3 billion in education, all but $94 million coming from grade and high schools, as well as taking about $300 million away from cities and villages, Quinn may be trying to set the stage for public anger over the potential of increased local property taxes — more hated than the state income tax — to take up the slack.

At the same time, with politicians traditionally proclaiming that education is their top priority, the likelihood of teachers being pink-slipped in the midst of campaign season would seem doubtful. Likewise, Chicago Mayor Richard Daley has already turned thumbs-down on Quinn's idea to share less state tax revenue with cities.

Though powerful Democratic House Speaker Michael Madigan of Chicago could control enough votes for a tax increase, he has insisted Republicans also must vote to share the pain over decades of mismanaged budgets and underfunded state pensions. Republicans, however, have little political incentive to back a tax increase and have contended the excesses were due to six years of budget gimmickry by disgraced former Gov. Rod Blagojevich and compounded by the Democrats' one-party rule of Springfield.

Overall, Quinn's budget proposal forecasts a $4.7 billion operating deficit for the budget year that begins July 1, on top of $6 billion of debt from the current budget. Quinn would borrow to cover the operating shortfall, which would need to be repaid later on top of the $6 billion in lingering debt.

At the same time, the state will face the loss of more than $1 billion in federal money that has been used to prevent cuts in education funding this year. Quinn's proposal counts on the federal government continuing to pay a higher reimbursement rate for health care for the poor. If that ends as scheduled next December, it would blow a more than $500 million hole in the budget.

In addition to the proposed education cuts, Quinn would cut half of the $140 million used to help poor seniors make up for the federal "doughnut hole" in their Medicare prescription coverage.

Stermer also said there was "an agreement in the works" within the legislature that would institute a two-tier pension plan with lesser benefits for future state workers. Such a plan, he said, would provide up to $300 million in savings in the budget proposal. While pushed by prominent politicians in both parties, a two-tier system has been fought by state labor unions.

Though it is likely that lawmakers would significantly revise Quinn's proposal, regardless of prospects for a tax increase until after the fall election, the governor's administration nodded to public sentiment to cut government before raising taxes.

At the same time, Quinn appeared to adopt proposals offered by two rivals for his job in the Feb. 2 primary. Echoing a call by Democratic Comptroller Dan Hynes, Quinn would review, renegotiate or dump many costly contracts that were signed under Blagojevich. He also proposed a tax cut for small businesses that create jobs, while his general election rival, Republican state Sen. Bill Brady of Bloomington, proposed a broader tax credit.

Posted at 12:23:00 AM in 2010 Illinois election, 2010 Illinois Governor's race, Governor, Legislature, Taxes

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[macrockett]

newsblogs.chicagotribune.com/clout_st/2010/03/quinn-budget-plan-counts-on-borrowing-cutting-and-raising-money.html

March 09, 2010
Quinn budget plan counts on borrowing, cutting -- and raising money
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Posted by Ray Long and Bob Secter at 5:22 p.m.; last updated at 6:32 p.m.

Pat-Quinn Gov. Pat Quinn's top aides said today that he will propose a budget balanced with spending cuts and borrowing because lawmakers have refused to raise taxes.

But the administration left open the door for Quinn to unveil an alternative proposal that would help close the budget gap by raising taxes.

For weeks, the governor has said Illinois residents should prepare for a tax increase of some sort in this year's budget proposal. But at a briefing for reporters late this afternoon, the Quinn administration continued to be mum on the details, less than 24 hours before the governor formally unveils his budget proposal to lawmakers and the public.

Jerry Stermer, the governor's chief of staff, said reluctant lawmakers have not wanted to discuss a tax increase.

“We’ve not had a signal from the General Assembly that they’re willing to come to the table,” Stermer said.

Lawmakers likewise have not been willing to change state law to reduce required spending in some areas of the budget, Stermer added.

“The governor will propose a budget that doesn’t have new revenue,” Stermer said.
Everything the governor proposes is in essence an opening bid in a political process where the stakes have been raised by the state's record $13 billion budget hole and the looming election that will decide who sits in the governor's office and which party controls the legislature.

Stermer said the budget plan is based on five "pillars" of recovery: creating jobs, cutting costs, strategic borrowing, continued federal assistance and an increase in state revenues. You can read Stermer's presentation by clicking here.

The governor would cut $1.3 billion from education spending and $70 million from a program that helps poor seniors buy medicine.
Even if lawmakers go along with Quinn's cuts, the state still would be $11 billion short next year, Quinn budget officials said.

That's where the options of a tax increase or borrowing come in.

Quinn aides said the administration will propose borrowing $4.7 billion and carrying over $6.3 billion of the state's debt.

A year ago, Quinn proposed a 50 percent increase in the income tax rate coupled with expanded tax relief for some middle-income earners.

Quinn later supported other tax hike ideas, including a 67 percent tax increase that passed the Illinois Senate but stalled in the House.

Quinn's team started dribbling out proposed budget cuts last month, including less money for education next year.

Today, Chris Koch, the state education superintendent, told a House panel he expects 13,000 school-related layoffs by next year.

Quinn's also budget contains a proposal for a $2,500 tax credit to small businesses for each full time job created the next year. The credit would apply to businesses with 50 or few employees. The administration estimates the state would give the credit on 20,000 new small business jobs.

Posted at 05:24:30 PM in 2010 Illinois election, 2010 Illinois Governor's race, Governor, Legislature

[macrockett]

Municipal employees. Time to start reviewing Vallejo, CA.

[macrockett]

www.chicagotribune.com/news/local/northnorthwest/ct-x-n-cop-pensions-20100310,0,7797778.story
chicagotribune.com
Pension payments strangle municipal budgets
Former short-term fixes now reaping the long-term results

By Jon Davis, Special to the Tribune

March 10, 2010
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Straining to balance municipal budgets ravaged by the recession, municipalities across the state are increasingly setting their eyes on a mutual target: mandatory police and fire pension payments.

Straining to balance municipal budgets ravaged by the recession, municipalities across the state are increasingly setting their eyes on a mutual target: mandatory police and fire pension payments.

Park Ridge, for example, will see its police and firefighter retirement fund obligations rise by about $1 million in the next two years — a situation Mayor David Schmidt said means city officials may be forced to choose between pension payments or payroll.

That prompted the Park Ridge City Council's recent decision to add its voice, but not its money, to the Pension Fairness for Illinois Communities Coalition — a newly formed group that plans to seek legislative relief from what it says is a pension system collapsing under its own weight and taking municipal budgets with it.

Some north suburban police and fire unions have agreed to concessions in pay and benefits in order to save jobs. But Schmidt asserts that many have "absolutely refused" the kind of compromises that are needed and that are endorsed by the Northwest Municipal Conference, which formed the coalition and represents nearly 40 suburbs.

"If the unions have done an about-face and are ready to come to the table, well, hallelujah," Schmidt said. "But I'll believe it when I see it. Because when the chips are down, they're nowhere to be found."

James McNamee, president of the Illinois Public Pension Fund Association and a former Barrington police officer, said the system is fair because firefighters and police don't pay into Social Security and actually get less health insurance coverage than their counterparts in neighboring states. The problem is the way the system is funded, he said.

State legislators in 1993 changed the annual funding method "at the behest of the Illinois Municipal League" from level payments to a rolling percentage of payroll, he said. That gave them a large, immediate contribution cut, but was also designed to increase payments over time, McNamee said.

"They knew this was going to happen. They agreed to it. The cities played their games with the actuaries, and now it's coming home to roost," he said.

But the pressure on municipal budgets is only expected to increase Wednesday when Gov. Pat Quinn unveils his annual budget proposal, which is expected to cut funding to cities and villages and pensions.

McNamee said the fix is returning to the level annual payment and adopting rolling amortization — meaning there would be no fixed date to reach full funding — because, unlike private sector companies that can go bankrupt or out of business, government is an ongoing concern.

The Pension Fairness for Illinois Communities Coalition's agenda includes:

•Creating a "modified" pension system that proponents claim will save $53.9 billion during the next 35 years.

•Aligning public safety employee pension contributions with the level of benefits received.

•Consolidating public safety pension funds into one statewide fund, like other municipal employee pension funds.

•Adopting a 30-year rolling amortization period for full funding of pensions.

•Requiring a legislative "super-majority" vote to increase benefits.

Mark Fowler, the Northwest Municipal Conference's executive director, said legislators have not promised action on pension reform, "but that doesn't dissuade us from moving forward. … It may take us a year or two to get some change implemented, but our towns are facing immediate crises."

Copyright © 2010, Chicago Tribune


pensionfairness.org/

Pension Fairness For Illinois Communities

Coalition of More than 200 Communities and Business Leaders Call For Statewide Public Safety Pension Reform

Illinois taxpayers and communities need urgent relief from rising public safety pension costs

SPRINGFIELD, IL. [March 3, 2010] – Members and supporters of the Pension Fairness for Illinois Communities coalition convened Wednesday at the State Capitol to formally announce the launch of the statewide coalition and to support two recently introduced public safety pension reform bills, House Bill 5297 and Senate Bill 2574. Legislative action is needed to control escalating municipal public safety pension costs, which are fixed by state government and have grown exponentially over the past decade. These pension costs threaten the financial viability of communities across the state.

An example of the unsustainable system is when public safety employees can retire as early as age 50 after 30 years of service, with a pension of 75 percent of their final pay rate despite only contributing one-third of the cost of their pension.

A recent study of Illinois police and fire pensions conducted by the Commission on Government Forecasting and Accountability (COGFA) showed that taxpayer funded public safety pension fund contributions have increased by at least 50 percent between 2004 and 2008 in all of the Illinois communities analyzed.

The Pension Fairness for Illinois Communities coalition, which represents more than 200 communities, was established as a statewide effort to develop a lasting solution to the pension crisis that protects Illinois taxpayers and communities, while ensuring sustainable retirement benefits for public safety employees.

“Illinois communities have reached a breaking point. Legislators need to act now to rein in skyrocketing public safety pension costs, which have put an unsustainable burden on nearly every community across the state,” said Mayor Tim Davlin of Springfield.

The Pension Fairness for Illinois Communities legislative platform proposes several steps that would enable communities to provide its public safety employees with secure and reliable retirements for the long-term, including a proposal to study the consolidation of public safety pension systems into one statewide fund to minimize operational costs and provide opportunities for improved investment returns. Another step calls for the enrollment of all new public safety personnel in a modified pension system, which could produce billions in savings over the coming decades. The Coalition also proposes recalibrating the contribution level so that taxpayers and public safety employees are contributing equally towards providing pensions. Right now, taxpayers are shouldering a much larger share of this burden.

“Legislators have the duty to address the state laws that have left many communities in financial crisis, forcing them to choose pension funding over the delivery of basic services. To recognize this crisis and ensure that our public safety employees have fair and sustainable pensions, the General Assembly needs to act now,” said Christopher Canning, President of the Village of Wilmette.

The Pension Fairness for Illinois Communities coalition will work closely with state Representative Karen May (D-58), state Senator Pam Althoff (R-32) and other supporters throughout the spring legislative session to incorporate elements of the coalition’s legislative platform into the recently introduced pension reform bills.

“In no way do the reforms we propose suggest that we don’t value our police and fire employees and the significant risks that their line of work entails. The reality is simply that we can no longer maintain the current system and the General Assembly must act now to protect our taxpayers and prevent Illinois communities from financial collapse,” said state Senator Pam Althoff.

“We value our public safety employees and the services they provide,” said state Representative Karen May. “As legislators, we must act now to develop a fair and sustainable public safety pension system in order to restore economic stability to communities across Illinois.”

Although local governments across Illinois have more than doubled their public safety pension contributions over the past 10 years, funding ratios have fallen as major investment losses resulted from the market downturn and as the state legislature passed a series of public safety pension benefit enhancements. These increases are unfunded mandates, meaning that local governments, and ultimately the taxpayers, are fully responsible for funding them.

“Property tax increases to help pay for public safety pensions are crippling the local businesses that form the economic backbone of our communities,” said Mark Denzler, Vice President and Chief Operating Officer of the Illinois Manufacturers’ Association. “When the local business community struggles, the entire community feels the impact, especially during these difficult economic times.”

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For more information, please visit: www.pensionfairness.org

The following Coalition members are committed to working with all stakeholders to implement fair and long-term changes that will ensure the sustainability of public safety pension funds without placing an overwhelming burden upon our taxpayers or leaving communities unable to provide basic services:

Barrington Area Council of Governments

DuPage Mayors and Managers Conference
Elk Grove Chamber of Commerce

Illinois City/County Management Association

Illinois Municipal League

Illinois Chamber of Commerce
Illinois Government Finance Officers Association

Illinois Manufacturers’ Association
Lake County Municipal League

McHenry County Council of Governments

Metro Counties of Illinois
Metropolitan Mayors Caucus

Metro West Council of Government

Northwest Municipal Association

Northwest Municipal Conference

Schaumburg Business Association
South Suburban Mayors and Managers Association

Southwest Conference of Mayors
Southwestern Illinois Council of Mayors

Will County Governmental League

Village of Barrington
Village of Buffalo Grove
Village of Cary

City of Crystal Lake
City of Evanston

Village of Fox River Grove

Village of Glencoe
Village of Hanover Park
City of Highland Park

City of Lake Forest
Village of Lincolnwood
Village of Lombard
Village of Mount Prospect
City of Naperville
Village of Niles

Village of Northfield
City of St. Charles

Village of Streamwood
Village of Third Lake
Village of Vernon Hills
Village of Willowbrook

Village of Winnetka
Village of Woodridge

[macrockett]

www.chicagotribune.com/news/opinion/ct-oped-0311-budget-20100310,0,2624796.story
chicagotribune.com

Don’t call this pension reform

By R. Eden Martin

9:09 PM CST, March 10, 2010

Suppose you were the doctor advising a family of overweight parents and children and you told them they had to stop eating rich food. Would you be satisfied with a promise that all future children born into the family would adhere to a healthy diet?

Or suppose you were the principal of a high school where the students didn't study and the grades were awful. Would you issue a call for next year's freshmen to work harder?

How about a rule that said nobody could smoke at work, except everybody who was already on the job?

That's the approach to pension reform that was recommended by Gov. Pat Quinn in his budget address Wednesday. That's what passes for pension reform in Springfield — by both parties.

Some state employees now retire as young as 55 after 30 years of service, receive a full pension of 75 to 80 percent of their career-ending wages and get automatic annual pension raises for life. In addition, the state pays 100 percent of the premium for Cadillac-style retiree health care. These benefits are far more generous than what's offered in the private sector and they are very costly to Illinois taxpayers.

The pension obligations have driven Illinois to the brink of fiscal collapse, squeezing out funding for public schools, state universities, health care providers, social service agencies and public transit. Unfunded state retirement benefits now amount to more than $130 billion and the annual cost to the state is $10 billion, according to estimates by the Civic Committee of the Commercial Club of Chicago.

(Additional billions in unfunded pension obligations are owed by the City of Chicago, Chicago Public Schools and municipalities throughout Illinois.) If these retirement programs aren't reformed and properly funded, they will run out of money, a tragedy for future retirees.

Yet the governor's new budget, and proposals circulating within both parties in the legislature, calls for making pension reforms applicable only to state employees who get hired in the future. Current employees — even those who just started — would continue to enjoy their generous accruals and free health care for decades to come.

The cost of these retirement benefits could be reduced by more than $3 billion under proposals made by the Civic Committee. The benefits already earned by retirees would be fully protected, as would the benefits already earned by current state employees. But future accruals would be reduced, an approach taken by virtually all private-sector employers.

It's a good thing our elected Illinois officials aren't making the rules for automobile safety. If they were, we'd be replacing faulty gas pedals, but only on cars made after April Fools' Day.

R. Eden Martin is president of the Civic Committee of the Commercial Club of Chicago.

Copyright © 2010, Chicago Tribune
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Now here is someone who gets it.

I will never understand how anyone could ever negotiate the pension law that is presently on the books as it is a transfer of wealth to every public union employee that far surpasses what is available to the rank and file employee, including middle management, in the private sector.

Current law needs to be permanently dismantled and replaced by a reasonable plan, as Ed Martin says. Anything less and we will be right back here again.

[macrockett]

I have to say, this subject has gone viral in the last couple of months and in on everyone's radar now. I mean all across the country. I can't keep up with all the media that is hitting now.

Hopefully we will have some politicians with some back bone for a change...but I am not betting on it.

[macrockett]

newsblogs.chicagotribune.com/clout_st/2010/03/daley-says-pension-fix-ideas-on-the-way.html

March 10, 2010
Daley says pension fix ideas on the way
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Posted by Hal Dardick at 2:40 p.m.

Mayor Richard Daley signaled today that controversial recommendations for reforming the city’s employee pension systems will be coming soon.

The announcement came more than two years after the mayor appointed a commission to of top financial managers to find ways to strengthen pension funds for the city, Park District, Chicago Housing Authority and City Colleges of Chicago.

“I expect these recommendations to come very shortly,” Daley said. “We all recognize that the status quo will not work. . . . It’s time to reform a system that isn’t working for our city’s budget, our city’s taxpayers or for some of our employees, for that matter.”

Daley went on to suggest the recommendations won’t be timid. “I hope it’s controversial,” he said. “It has to be. If it’s not controversial, then it’s not worth anything.”

Earlier this week, the Civic Federation, a non-partisan government budget watchdog group primarily funded by business interests, released a report indicating local unfunded government pension liabilities in Chicago have grown nearly five-fold in the past decade.

Inadequate pension funding long has been recognized as a growing problem threatening the solvency of local and state budgets in many parts of the country.

“I cannot overstate how important this is,” Daley said. “We need pension reform to protect Chicago taxpayers and their interests.

“Remember, people across the nation and in Chicago, they are angry at what they see as a system that puts government bureaucrats ahead of taxpayers. At this very same time, they are threatened with losing their jobs and pensions.”

Daley said he had yet to see the recommendations, but suggested one target of reforms would be “double dipping,” in which someone retires from a government job and gets hired for another government post while receiving a pension.

Posted at 02:54:10 PM in Mayor of Chicago

[macrockett]

www.usatoday.com/money/companies/management/2009-11-18-pensions_N.htm?csp=outbrain&obref=obnetwork

As pensions dried up, four firms paid top execs $49.5M
Updated 11/19/2009 4:45 PM

By Matt Kelley, USA TODAY
WASHINGTON — Top executives at four companies that jettisoned their employee pension plans received $49.5 million in retirement and severance benefits in the years before the companies filed for bankruptcy, while retirees saw their benefits cut by as much as two thirds, congressional investigators conclude in a report released Thursday.

The Government Accountability Office (GAO) reports that pensions at the companies, United Airlines, US Airways, Polaroid and Reliance Insurance, were underfunded by more than $11 billion when the companies turned them over to a government-backed insurance fund. The report says executives at those four companies and six others that abandoned their pension plans took in a total of $350 million in pay and perks in the years leading up to the bankruptcies.

"If the pension is getting deeper into trouble and the executives are getting richer, there's something wrong with that picture," said House Education and Labor Committee Chairman George Miller, D-Calif.

Miller requested the report as part of an examination of the troubles facing the Pension Benefit Guaranty Corp., the federal pension plan insurer. The PBGC, which insures pension plans covering 44 million people, warned this month that it has a deficit of nearly $22 billion.

Miller is sponsoring one of three proposals to let struggling companies take a break from their required pension contributions while the economy improves. He said he is considering how to craft a provision to "tie executive compensation to the status of the pension plan."

Other legislation Miller said he is considering is a plan to freeze executive compensation if a company's rank-and-file pension plan becomes significantly underfunded.

Restrictions on retirement pay could deter executives from joining a troubled company or encourage them to quit, said executive compensation expert Ira Kay of the Watson Wyatt consulting firm. "Retaining and motivating executives to run their companies as best as possible is the best outcome for all participants in a pension," Kay said.

The GAO examined compensation for executives at 10 of the largest companies that turned their pensions over to the government in the past decade. At United, for example, CEO Glenn Tilton and two other executives got $7.6 million in retirement benefits from 2002 through 2006, during which time the airline shed four pension plans covering 122,000 workers. A retired United pilot told the GAO he gets only a third of the pension he had expected. PBGC benefits are limited to $4,500 per month.

United spokeswoman Jean Medina said Tilton's $4.5 million retirement trust replaced benefits he lost by leaving Chevron and "had nothing to do with a United pension plan." The trust was approved by the company's board of directors and its bankruptcy creditors, she said.

Currently, the GAO says, the PBGC is a low-priority creditor and would be unlikely to get any money if a bankruptcy judge ordered executives to repay or forgo their retirement packages.

Deficit plagues pension insurer
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Welcome to the Private Sector!

Here is what happened to my wife's "pension."

She has been an employee at UAL since 1986. At retirement, she was scheduled to get a pension of $900 per month. Minumum of 30 years of employment.

That didn't work out, however. After the PBGC took over the plan, in bankruptcy, she now is scheduled to get about $300.00. If she lives 20 years in retirement her take will be $72000 (Nope, no cost of living increase either. Nope, no health care either.)

Thanks UAL. Thanks Congress. Thanks Senator Durbin. Thanks President Obama, who was our Senator at the time.

So I have little sympathy for the largess that exists for public union employees. You won't find it often in the private sector.

As for me, I have paid myself since I was 27. I wouldn't want it any other way.