Playing hot potato with pension problems hardly qualifies as a solution.
The people of Illinois are, no doubt, sick and tired of hearing about the financial problems surrounding public pension systems in Illinois.
Too bad — they ain't seen nothing yet.
Here's one reason why.
New Chicago Mayor Lori Lightfoot recently gave an inspiring speech announcing her intention to come up with solutions to Chicago's underfunded pensions. They have $9.5 billion in assets and $42 billion in obligations, creating a $32 billion hole produced by overpromising benefits and underpaying mandated contributions.
The mayor didn't mention any of her ideas of how to solve the problem then. But she later revealed what she has in mind — Lightfoot is pitching a state takeover of city pension funds.
Crain's Chicago Business columnist Greg Hinz characterized Lightfoot's impending proposal as "a big, big ask."
No kidding. The state already is on its financial knees, one of the reasons being its $136 billion pension underfunding problem as of June 30. The last thing it needs is to take on the unmet obligations of Chicago.
Lightfoot's proposal raises a host of issues, the biggest being how the state would deal with adding another roughly $30 billion in pension debt.
Here's another — if Gov. J.B. Pritzker and the Legislature are going to take on Chicago's pension obligations, are they going to do the same for Champaign, Urbana, Danville and every other public pension fund in Illinois?
News reports indicate that Lightfoot would be willing to forego some state revenues in exchange for the state taking on the city's pension woes. She also is willing to support state taxation of retirees' income in excess of $100,000 to generate revenue to go to the pensions as well as extending the sales tax to selected services.
One of the chief benefits to Lightfoot, aside from dumping a huge problem on the state, is that she'd be able to spare Chicago taxpayers a planned $1 billion property tax hike for the city's pensions.
Chicago is absolutely the dominant political force in the state. Most statewide officials, including Pritzker, come from the city. The General Assembly is led by two Chicagoans, House Speaker Michael Madigan and Senate President John Cullerton.
But it's hard to imagine why legislators who already are at loose ends trying to deal with the state's pension crisis would want to add to their problems.
They are, as a group, clearly not geniuses. But how dumb would they have to be to agree to Lightfoot's request?
Perhaps that's why state political leaders either professed ignorance about the plan, were non-committal or threw cold water on it.
Cullerton's office said he has not "had an opportunity to review" Lightfoot's proposal, while Republican Senate Leader Bill Brady said "taxing retirement income will just drive taxpayers out of Illinois."
House Republican Leader Jim Durkin, a close friend of Lightfoot, said he looks "forward to working with her in an effort to find a solution that benefits all Illinoisans."
However unrealistic Lightfoot's proposal may be, it is helpful in one disturbing respect.
It reveals just how difficult the city and state's pension underfunding problems are.
Her public comments to the contrary, it seems clear Lightfoot has neither the desire nor the stomach to deal with her municipality's pension woes.
At the same time, Pritzker has no real appetite to address the state's pension problems. After all, it was just a few months ago that Pritzker proposed skipping $800 million-plus in required pension payments for the 2019-20 budget, a position he wisely reversed after the state received an unaniticipated boost in April tax revenues.
Given those realities, serious trouble looms, the only question being when circumstances go from really, really bad to even worse.
– The (Champaign) News-Gazette