Sunday, January 26, 2014

Now We Know That SB1 Is Not Enough To Cover The Crime

Prescience: Looking for Answers in Illinois

Had the real purpose of SB1 been to show how disconnected forced diminishment of workers’ compensation was to Illinois’s fiscal problems, it couldn’t have been more successful. 

A week-old report by the Fiscal Futures Project at the University of Illinois points out glaring contradictions to the lustrous predictions handed out by supporters in both houses and drafters like Rep. Elaine Nekritz (Northbrook) and Sen. Daniel Biss (Skokie). The report warns that not much if anything will be fiscally ameliorated by the passage of SB1, even if courts later allow its dubious constitutionality.

In December, Representative Nekritz promoted SB1’s savings of $187 billion over the next 30 years, including knocking off an estimated $21 billion of Illinois’ unfunded pension liabilities.  She indicated SB1 cold save the state as much as $1.9 billion by 2015.  Exceptional promises.  But her comments dispute the recent study by U of I’s Fiscal Projects Futures Project team of Dye, Hudspeth, and Merriman.    (

Senator Daniel Biss of Skokie was a bit more circumspect and politically shrewd in his choice of words to endorse SB1.  “SB1 saves a significant enough (my italics) amount of money to stabilize the state’s finances while protecting current retirees, those who rely on small pensions and those who have worked longest” (

In other words, if teaching were not the primary earners’ profession, your secondary income would be hurt less drastically like, well, let’s say any other hamburger flipper.  Those of you with two or more Masters, Doctorates, specialties, extra work and stipends – you need to rethink your commitments and efforts, Mister!

Senator Biss also lionized the inclusion of a commitment to move to a “responsible funding schedule.”  This was an historical first, according to the Senator.  Really?  Funding to eliminate your debt to the pensions?  Nope.

In disagreement, the Fiscal Futures Project sees the SB1 budgetary outcome differently, very differently.  The income savings hoped for and predicted by advocates Biss and Nekrtiz in December will not be likely to appear.  In fact, according to the report, there is likely to be a shortfall of $3 billion by year 2015, increasing to $15 billion by 2025. 

Adding salt to this economic wound is the project’s further prediction that significant deficits will occur even if the current increases in income tax rates continue past 2015, when they are scheduled to fade away.  How bad?  One billion dollars in 2014 and $5 billion by 2025.  (

How can this recent report be so at odds with the glowing promises of those who prepared the bill, those like Senator Biss and Representative Nekritz?

On July 3, 2013, delegates from the Center for Tax and Budget Accountability came before the Pension Conference Committee to provide oral testimony regarding the potentiality of “pension reform” and fiscal issues facing the State of Illinois.  Besides warning that SB1 would NOT accomplish the remedy to the state’s budgetary woes, the CTBA warned that other fiscally corrosive factors would continue to negate the General Assembly’s shortsighted attempts to correct a very long-standing problem.

They warned, “It is primarily this borrowing – and more specifically the amortization schedule passed into law in FY 1995 that delineates how it is to be repaid – that is straining state resources today.  Over 80% of the payment by the General Fund to  the pension(s) contribution is for debt service ( Pension Committee Testimony.pdf).

“The debt service therefore is the driver of the fiscal problems generated by the unfunded liability.  Because of the 1995 “Ramp-Up, the entire $1.08 billion in year-to-year increase in the state’s General Fund pension contribution called for in FY 2014 is caused by debt service (the Ramp), not the cost of benefits earned.”

SB1 was never about what workers earn or earned. 

As much as politicians like Senator Biss determine what workers are acceptable earners and which are not; as much as Representative Nekritz wants to play with numbers and overlook those who worked their entire lives giving the state of Illinois their professional commitment – it was always about what had been stolen to begin with.  About not keeping promises then…and now.  And so huge, so very immense was the amount diverted from those who were owed; the only thing to do was to identify them (the workers) as the problem.  To make them bear the pain and pay the state’s thievery. 

But now we know that even SB1 is not enough to cover the crime – even if the arrogant/Madigan-inspired law were to be upheld.  Now we are finding out that it is not the workers at all.  It was the theft, then the 1995 Ramp, and the continual structural revenue deficit in Illinois. 

Let’s start talking about fixing that.

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