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BURR RIDGE —  Illinois’ largest public employee unions don’t want to raise just one tax to pay for the state’s sky-rocketing pension debt, they want to increase as many as they can.

By Benjamin Yount

BURR RIDGE —  Illinois’ largest public employee unions don’t want to raise just one tax to pay for the state’s sky-rocketing pension debt, they want to increase as many as they can.

A nearly three hour closed-door pension summit Monday hosted by the We are One Illinois Coalition focused almost exclusively on raising taxes as a way to pay for Illinois’ $130-billion pension debt and nearly $8-billion annual pension payment.

The coalition includes the American Federation of State, County and Municipal Employees, the Illinois Federation of Teachers, the Illinois Education Association and the state AFL-CIO.

“There was talk of a progressive income tax, talk of broadening of the sales tax, one person talked about taxing retirement income,” said House Republican Leader Tom Cross.

Cross was the only of the four legislative leaders to attend the summit. House Speaker Mike Madigan, the state’s top Democrat, dismissed the unions with a letter last week.

Gov. Pat Quinn did attend the meeting, but left without answering questions.

Mike Carrigan, the president of the Illinois AFL-CIO, said Quinn did not commit to a guarantee that unions would have a seat at the table for pension reform negotiations this year.

“Our group was appreciative that he came and the amount of time that he spent,” Carrigan said. “But we asked for an agreed process going forward and we didn’t get a clear answer on that.”

A union coalition used an “agreed process” a few years ago to hammer out landmark education reforms, but that appears unlikely for pension reform.

Cross said he did not hear anything, either from Quinn or the unions that he would be willing to ask his Republican caucus to vote for this spring.

But the talk of taxes has found a receptive audience among Democrats in the Illinois Senate.

State Sen. Mike Noland, D-Elgin, was the point man for the Democrats.

“Revenue, I would say, definitely has to be discussed,” Noland said.

Democrats in Springfield pushed through a “temporary” income tax on people and businesses in 2011, but that tax is set to expire on the first day of 2015. Noland said, the pension crisis may trump the need to let the “temporary” tax fade away.

“If we were to extend this, (people) would be paying the same,” Noland said. “If we were to say, look this is what this is ear-marked for … I think (people) would be open to it.”

Noland said the “temporary” tax would not be made permanent. Rather, he said, lawmakers would extend the tax for 15 to 30 years, or until Illinois paid off its $130 billion pension debt.

“Sometime you have to fight fire with fire, and these are large fires,” Noland said. “And the only way to put them out is with big ideas.”

Neither Carrigan nor anyone else from the unions wanted to talk about the specifics of which taxes they want to raise. But the We Are One Illinois Coalition has said for months that Illinois’ pension crisis is not a benefit problem, it is a revenue problem.

Carrigan said he’d rather wait and see what the next few weeks bring.

Illinois lawmakers have been warned by bond houses that they have until the end of the spring session to deliver pension reform, or face further credit downgrades.

Contact reporter Benjamin Yount at Ben@IllinoisWatchdog.org.

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16 Comments

  1. Big idea = more taxes?

    The Unions and their purchased politicians (D) are all on the same page once again, raise taxes on everyone else in as many ways as possible. Golly gee, I am so shocked and suprised that raising taxes has again "found a receptive audience among democrats" as their "big idea" pension problem solution. Pitiful, just plain pitiful.

  2. Many of us in America lost

    Many of us in America lost all of our investments in our 401k plans and retirement plans in now defunct companies. Why should these people be any different? The state is broke, just like the aforementioned companies. Welcome to the club, there were no taxpayers bailing us out. We lost our money we had put into the sytems, so should they.

    1. the difference is…

      that you got all your money upfront and had a choice about how to invest it.  Teachers (lumped into this pension debaucle) are required by law to invest into TRS (Teacher Retirement System) and are barred from  collecting social security upon retirement. 

      You gambled on pursuing a private sector job that was likely more lucrative and had the choice of how to invest your earnings. Other people took less of a gamble in public sector jobs in exchange for a modest amount of security in retirement. 

      That is why it is different.

      1. HUH?

        The reason it is different is that the private sector doesn't have union leaders that pay off politicians, which  in turn, keep giving back to the public sector unions.

        The best way to solve this problem is to make Illinois a right-to-work state.

        1. Strange behavior

          Isn't it funny how easily the unions manipulate their members into outrage when right to work is proposed, ie Wisconsin. Yet once right to work is enacted the union membership leaves in droves. Strange behavior. Unions and politicians are a corrupt partnership, great for Democratic pols and union leaders and administrators, and all those who get union contracts to skim, er, manage, that guaranteed-by-law cash flow. Not so great for working stiffs whether union members or general taxpayers. Time for change.

      2. You are indifferent

        You and other union members have let this charade continue for decades with no demands for change whatsoever. NONE!

        You and your union members have allowed politicians to make obviously empty, unfunded promises for decades, diverting money that should have gone to your pensions, in a sense stealing directly from you.

        You allowed "your" union representatives to never do anything more than spout meaningless lip service to protect your interest in that regard. "You" allowed the unions to "negotiate" these empty promises on your behalf for decades.

        "You" and "your" union allowed politicians to write those laws that mandate you to be in the union and pay into the cash skimming operation. This current situation is not suprising to anyone who has paid the least amount of attention to this Ponzi scheme over the last several decades.

        The union is "yours" and "you" are solely irresponsible for not demanding change within "your" union.

        Sorry, this mess lands in "your" lap because of "your" lack of oversight concerning how "your" union and their paid for politicians operated. To this very day there is no demand from union members for fundamental change allowing them out of the pension Ponzi into something different.

        Instead there is this Oh were just innocent victims, make the taxpayer pony up even more because we were indifferent.

        You were complacent and therefore complicit, behaved like sheep and deserve to get shorn.

  3. Wages have fallen

    Wages have fallen tremendously over the last twenty years which directly coincides with the % of unionized workers also falling.  Corporations are having all time record profits.  Wall street stock indexes are near an all time high.  Yet unemployment is still at an absurd 7 to 8% and you think unions are the problem?  Facts are facts and you don't have any. Unions didn't benefit from the State not funding their employees pensions.  All residents of Illinois did. State politicians only want to be re-elected and an income tax increase was considered a suicide move. Hence, the lame duck "temporary" hike.  Illinois has had for twenty years, and still has, a revenue problem.  Read Ralph Matire's lastest article concerning how Illinois doesn't create revenue in a way that reflects a 21st century economy.  Illinois gets revenue in a most regressive fashion.  A flat income tax isn't fair to those who cannot afford to pay it.  Because Illinois is dead last in funding of education from State funds, we have an over reliance on property taxes to fund education.  Again not fair to those who cannot aford to pay it.  Until voters wake up and demand the State reforms how it gets revenue, we are never getting out of this problem.  All this blather about pension reform takes the focus away from the real problem that hasn't changed ovewr the last twenty years, increase the sales tax base by taxing services.  This will allow a reduction in the State sales tax rate and still provide added revenue.  Raise the income tax to six percent permenantly but, make the allowances large enough not to cause an income tax increase on the lower income tax payers.  Use a portion of this new revenue to fund education at a level that gets us to the average State contribution as a percentage of all cost.  This additional education funding should in turn allow the School Districts to pay for their own employees pensions through a cost shift away from State responsibilty and provide property tax relief.  These solutions will help with the biggest portion of our States pension "crisis" and allow the State to pay its back log of unpaid bills.

    1. Taxes have risen

      Yeah, yeah, just another argument for wasting more money. It is so not a revenue problem and any argument that states we simply need to scheme and finagle ways to keep taking more of peoples money as our holy grail solution is unacceptable. This state, and much of govt. is wasteful and corrupt, simple fact of life. Funding education? Wasn't the lottery hailed, justified and implemented as a savior to raise money and fund education? Oh wait, they divert that money and redirect it away from it's stated purpose and nobody even notices or cares. Instead, new schemes are brewed to justify the taking of more. Govt. finance is a shell game full of waste and fraud and the answer isn't more schemes to raise more and more money. Also, how on earth do you figure that moving local school districts into funding their own employee pensions creates property tax relief? While there is an argument for moving pensions locally, local property tax relief being part of that argument is a complete canard to the point of clueless. Like the lottery, money will get shuffled, redirected and the shell game continued with more calls for more schemes for more tax revenue from every and any source possible. ie. taxing services, etc. etc. etc. Unions do benefit from all this nonsense, and not the workers, which is part of my point. It is a skimming operation of collusion between the union leaders and democrat politicians and it is a huge problem to each and every taxpayer. The fact that rank and file union members allowed "their" union to fester the way it has means the buck stops with them.

    2. Are unions and government people?

      Is that you Jan Schakowsky  or is it Daniel Biss?

      The statement – "Corporations are making record profits" – implies that all corporations are doing great and have been doing great during the Great Recession.

      Not true. Many corporations have gone bankrupt, merged and so on. But corporations like GE and Facebook have made record profits while AVOIDING paying taxes. These two corporations overwhelmingly donated to Democrat politicians. It's called corporate cronyism.

      Your solution is to raise more taxes. Are you happy that Cook County already has one of the highest sales taxes in the nation?

      When public employees retire at age 52 with a six figure salary and then earn 75 percent of the final salary each year for the rest of their lives with a guaranteed annual 3 percent raise and see these same folks again work full time in the same capacity, earning another six figure salary and eligible for another pension well then you can't deny the pension system is unsustainable. Add all the double dipping, spiking and other abuses in the pension system and you know why government pensions will become insolvent this decade no matter how much money is dumped into the system. Ask yourself why do 90 percent of all union campaign donations go to Democrat politicians. Corruption!!!

      During the past two decades, more people and businesses left Illinois than stayed and right now Illinois is losing more residences than gaining. Why? Because people are tired of paying rising state income taxes, city taxes (Evanston taxes increased 20 percent in the past four years), property taxes as property values fall, sales taxes, internet taxes, entertainment and hotel/motel taxes etc.   Illinois has the most government agencies in the nation and is now in the worst fiscal condition in America. 

      Did you know that most Americans work for small businesses? I guess you believe corporations are not people. So do you believe government  and unions are people?

  4. Unions aren’t the problem

    Another angry Republican spouting  nonsense,  Why do I have to pay for the pension of all teachers in Illinois?  Because of the staus quo.  Why are property taxes rising when property values have dropped?  Because school funding is mainly a local cost due to a problem with the State of Illinois stepping up an paying its fair share.  Just because you got used to paying only 3% of your income in State taxes for years and years doesn't mean it was the proper percentage necessary to fund the States responsibilties.  If you paid closer attention to what I wrote you might see I propose to lower the Illinois sales tax rate.  Illinois just didn't pay as it went..  The legislature basically "stole" pension contributions for State workers and University and local school district teachers and used those funds in lieu of the necessary, and long overdue, income tax increase.  5% percent is a LOW income tax rate!  Do some fact checking before you disagree with the many people who think that Illinois has a revenue problem.  If we didn't have a revenue problem the last twenty years then why didn't the legislature fund the pensions as necessary?  If we don't have a revenue problem. then why is Illinois LAST in funding education by State funds?  If we don't have a revenue problem then why does Illinois still have 9 billion in unpaid bills?  Unions keep workers from being taken advantage of by its employers.  Unions built the middle class in this country.  Unions allowed parents to be able to pay for college so that their children could prosper and become professionals instead of "workers".  Many people complaining about unions now wouldn't be where they are today without them because of what unions did for their parents.  

    1. Nonsense
      I am part of the teachers union.

      The unions are just as much a part of the problem, as are the legislators supported mainly by union dues, and people of this fair state who voted in the snake oil congressmen.

      Teachers were guaranteed a 9% compounded return on paycheck withholdings. If you hold private annuities and have a 9% guaranteed return, I’d like to know with whom, as this is far above and beyond the long term profits of the best investment firms, especially through times of economic contraction- and there is never a guarantee.

      Illinois does not have a revenue problem. As a teacher, I don’t blame the unions for wanting the best for their membership. Who doesn’t want to be paid well for a job done? However, we all must fact reality. The promises made were fools gold. Illinois, and teachers, would be best to re-negotiate contract promises. Considering we paid 60% more taxes over the past few years with little dent in the pension crisis, taxing more is not the answer.

      1. Teachers union member

        Even a memeber of the teachers union doesn't understand the issue. Missed and borrowed contributions to the Teachers, University and State employee pension funds are the main cause of the current deficit in those funds.

        The biggest and worst funded of course is the TRS (the teachers fund). An actuary decided on a 9% return many years ago and no one denies that it's a too high assumption.  However, anything that increases the States dollars to put into education will allow the shifting of pension costs back to where they belong.

        Local school districts have tax caps that only allow them to raise their levy only so much.  These caps protect local property owners from sudden, large property tax increases.  A gradual shift of pension costs can be incorporated into the school districts budget.  This savings will allow the State to pay more per student so local costs wouldn't go up for educating their students.

        Therefore, local property tax relief can be achieved.  Districts would also have skin in the game when negotiating with the teachers union for future contracts.  The State shouldn't be paying for local employees anyway (see the well-funded IMRF pension fund for municipal employees).

        Blaming the union for doing their job is ludicrous. Unions didn't "steal" contributions to the Teachers fund.  Unions didn't create the actuarial return on that fund. Unions didn't decide that the State should pay for teachers (local employees) pensions.  The State legislature did.

        The status quo will not work and these reforms, as well as sales taxing services, can make Illinois functional again.  Revenue increases are a necessary part of any real solution to the problem faced by our State. 

        1. Ignorance is not bliss
          The unions paid for the politicians, the politicans mis-managed the money and made faulty promises, the people voted in the politicans.

          The money is not there.

          To make a long story short, who should take the loss?

  5. Who should pay?

    You answered your own question.  Everyone in Illinois benefited for years from a small income tax rate of 3%.  Everyone in Illinois benefited by skipped pension payments to use the money elsewhere.  Therefore all Illinois taxpayers should shoulder the necessary correction in revenue.  

    A sales tax base increase will only increase taxes on those who use the newly taxed services.  An overdue permanent income tax rate increase should be offset by increasing the personal exemption as to not burden low income taxpayers who already pay to much of a percentage of their overall income in taxes.  

    Since retirees pension contribution income wasn't taxed while they were working, end the States' exemption on retirement income from income taxes.  This is a concession for current retirees that hasn't been talked enough about.

     

  6. Thank you Lou Lang

    Finally a bill that understands what the problem has been, and continues to be, a revenue problem. Hopefully Mike Madigan is on board with this because it will work! 

    The 17 year phase in of the cost shift back to the school districts and community colleges will allow them to budget accordingly.  Saves State the most money.  

    The permanent income tax is still low at 5% compared to other midwestern States.  

    Funding of the States contributions to the funds will now be required by law and the new 50 year plan to get to 80% (compared to the current 90% in 34 more years) funding is easily doable.

    Employees have to kick in an additional 3% of salary to the funds.  No pension benefit reduction necessary.

    Rebates of the income tax increase if any money is left over after paying the States pension contributions every year after current pension bonds (previously borrowed State contributions) are paid off.

    Increasing the retirement age is the only problem I see.  If for new employees there is no constitutional issue.

    Thank you Lou Lang for your work and understanding of the over all issue and creating this bill.

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