Is There a Solution for Illinois' Pension Crisis?
State Rep. Lou Lang (D-Skokie) has proposed that Illinois keep its current tax hike of 5 percent to fund all five pension sectors indefinitely.
In 2011, Illinois Gov. Pat Quinn increased state income tax from 3 percent to 5 percent. The increase was supposed to expire in 2014, but state Rep. Lou Lang (D-Skokie) wants to keep that tax hike indefinitely - it's his solution for repaying the $97 billion owed to all five pension sectors in Illinois, the State Journal-Register reported.
Under Lang's plan, state workers would be required to pay an additional 3 percentage points into their pensions and the minimum retirement age for full pension benefits would be 67-years-old, the Journal-Register stated.
However, there are other proposals, but Lang is calling them "unconstitutional" because they would change cost-of-living benefits for retirees.
"We need a pension plan that will not end up in the courts," Lang told the Journal-Register. "It's a plan that doesn't take anyone's benefits away."
In five years, Illinois' unpaid pension bills will reach $22 billion if no action is taken by lawmakers, Crain's Chicago Business reported. That would make the state the "worst-in-the-nation" regarding its pension predicament, the publication reported.
State Rep. Elaine Nexritz (D-Northbrook) has her own pension reform plan. The six-term-rep said she has some concerns over Lang's proposal, adding that income tax increases won't solve Illinois' pension crisis.
What do you think?
How should lawmakers solve the state's current pension fiasco? Quinn has stood behind Senate Bill 1, which would require the state - and all its pension systems - "to be 100 percent funded by 2043."
Post a comment below to share your thoughts.
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David
6:56 am on Tuesday, February 26, 2013
I would suggest starting by getting rid of both Mr Lang and Mrs Nexritz and Mr.Madigan. They have been in the so called public service sector long enough to have been part of making of the problem. Seems to me that public service is not a life time job as these and others have made it. Yes this is the way to bring in more state revenue raise taxes so people will not come or will flee the State of Illinois. I would like to suggest cutting State Reps salaries and pensions till the problem is fixed. They caused the problem let them fix it.
carrie
7:34 am on Tuesday, February 26, 2013
I agree!
Billy Bolt
6:57 am on Tuesday, February 26, 2013
32 states have higher individual income tax rates than Illinois' 5%. And most of those states have progressive tax rates with the top bracket much higher than Illinois' 5%.
Illinois should quit trying to figure out ways to skip paying the State's part of the pension bill. Skipping the employer's portion of the contractual relationships of pensions is what got Illinois in financial trouble in the first place. One way or another Illinois is going to have to pay its bills, and Rep. Lang is at least being realistic.
David
8:04 am on Tuesday, February 26, 2013
Yea Billy lets be realistic, who allowed the employer's to skip their portion? Oh and I love Mr. Lang's idea of more gambling for the state, there are not enough people betting their life's fortunes or their kids monies for food on a quick buck.
Joe Cardinal
8:56 am on Tuesday, February 26, 2013
David, We the taxpayers allowed the State of Illinois as employer to skip their portion of pension contributions because we were content with the 3% tax rate we had for 20 years.
We the taxpayers saved billions because the State as employer skipped or modified its annual pension contributions for so many years to keep that low 3% tax rate. We the taxpayers also saved billions because the State as employer didn't even have to make the employer's 6.2% Social Security contributions for 80% of the members of the five state pension systems - and the State didn't even move that money into the pension systems. . But now all of those skipped payments have come due.
Billy Bolt
7:25 am on Tuesday, February 26, 2013
And we are whining about a 5% individual income tax rate:
Iowa:
-- 0.36 percent on the first $1,428 of taxable income.
-- 0.72 percent on taxable income between $1,429 and $2,856.
-- 2.43 percent on taxable income between $2,857 and $5,712.
-- 4.50 percent on taxable income between $5,713 and $12,852.
-- 6.12 percent on taxable income between $12,853 and $21,420.
-- 6.48 percent on taxable income between $21,421 and $28,560.
-- 6.80 percent on taxable income between $28,561 and $42,840.
-- 7.92 percent on taxable income between $42,841 and $64,260.
-- 8.98 percent on taxable income of $64,261 and above.
Wisconsin:
-- 4.6 percent on the first $10,070 of taxable income.
-- 6.15 percent on taxable income between $10,071 and $20,130.
-- 6.5 percent on taxable income between $20,131 and $151,000.
-- 6.75 percent on taxable income between $151,001 and $221,660.
-- 7.75 percent on taxable income of $221,661 and above.
Richard Preston
7:26 am on Tuesday, February 26, 2013
The next opportunity I get to vote Mr.Lang out of office I will be the first one in line. The extra 2 1/2 percent Quinn took out of our paychecks a couple of years back hit my family pretty hard. I have been out of work for almost 3 years now and the extra money for the state came out of my wifes paycheck. Have to vote Mr. Lang out of office in his next election.
Richard Preston
7:29 am on Tuesday, February 26, 2013
Billy Bolt............is whining when government takes more and more cash out of our pockets, tells us its for 4 years and then, like the tollways, wants to keep it going? Do you have a job? I lost mine 3 years ago, my wifes income is our only income. We need the 2 1/2 percent Quinn took from us, or should I say stole from us. Government screwed up the pensions, why should my family have to make up for it? You say "Whining", maybe you are luckier then we are to have a good job. Tell you what, you pay your 2 1/2 percent and then take over paying my families 2 1/2 percent and I promise we won't "whine" anymore.
Frank
8:05 am on Tuesday, February 26, 2013
I know that teachers pay into the pension plan, but do Police, Firemen/women and other government works pay in to the plan? Also not so sue if Lang, Madigan etc...pay their fair share into the pension plan.
Joe Cardinal
8:59 am on Tuesday, February 26, 2013
For the five state pension systems, teachers contribute 9.4 percent to their pensions, state university employees pay 8 percent, judges pay 11 percent and legislators pay 11.5 percent. State employees pay 4 percent if they also contribute to the Social Security system and 8 percent if they do not.
County and city governments have separate retirement systems for their employees, usually IMRF. IMRF is in good shape because the employers didn't skip their contributions.
grandpa
9:19 am on Tuesday, February 26, 2013
Anybody else remember that the tax increase was "temporary"? Question; "How can you tell if an Illinois State political office holder is lying?" Answer; "Their lips are moving."
Wire Points
9:51 am on Tuesday, February 26, 2013
The numbers tell all: A progressive income tax would raise $2 - 2.5 Billion at the most according to supporters, which would barely dent the problem The last increase of 66% in the income tax rate brought in $10 Billion of additional revenue and the state now has record revenue, but did not help at all. All that additional revenue went to pensions and Medicaid, none to pay unpaid bills as was promised, yet the unfunded pension liability still grew by $14 Billion last year.
And forget all the comparisons to other states' tax rates. You have to look at the overall tax burden including sales and property taxes, which show that Illinois is now uncompetitive. The resulting exodus is already underway. A progressive tax will exacerbate the exodus, and may actually LOWER overall revenue.
Joe Cardinal
11:12 am on Tuesday, February 26, 2013
The independent Tax Foundation compares states' business climate by looking at individual, corporate, property, sales, and unemployment insurance tax rates each state has. Illinois came out with the 29th best business climate out of the 50 states. Not the best, but far from the worst.
http://taxfoundation.org/article/2013-state-business-tax-climate-index
John Wagner
12:04 pm on Tuesday, February 26, 2013
Get rid of Quinn, both Madigans.
Troy
2:52 pm on Tuesday, February 26, 2013
We need term limits for every elected office.
David
8:11 pm on Tuesday, February 26, 2013
So Joe Cardinal, the legislators of the state take no responsibility being that they are working full time on taxes and state budgets? I don't remember ever being asked if we should pay now or pay later. Sorry but as far as I can tell it is still their fault. If they are so incompetent not to know that this is what it would lead to ,well than its time for them to go.
Frank Goudy
11:07 pm on Tuesday, February 26, 2013
One could just as easily state that we need to keep the higher income tax to pay for the $14 billion welfare Medicaidprogram that is bound to grow by hundreds of thousands to added under ObamaCare.
No, instead, just blame the pensions.
shp
7:11 am on Wednesday, February 27, 2013
I agree with limited terms. How do we get that on the ballot? It makes sense and it will keep the checks and balances in place, hopefully. If Illinois was a business it would have been out of business a long time ago. Isn't the state audited periodically? Shamefull what has happened to the teacher pension fund! I hope this will be resolved. Lang should be out! Calling all candidates!
Barbarra Kenning
8:23 am on Wednesday, February 27, 2013
Lang has a fair suggestion.I have been fraying since 1976. At that time I earned $7700 tot eleven. Months. My second year's salary was $9900. Third $10400 and forth was $11200. We as teachers knew we would never be rich going into this profession however we have expected to receive a fair pension. The state like si many others looked at our contributions as free money that legislators could "borrow" from whenever Illinois needed a little infusion. It is unfair that those of us who have dedicated our lives to the children of Illinois be cheated and blamed as though we mismanaged funding.
LisaJoinPatch
8:39 am on Wednesday, February 27, 2013
Barbarra, I agree. Those of us who have gone into public service did so with the understanding that although salaries would be low, a lifetime pension was waiting for us at the end. Promises must be kept. Raising taxes can't do it as long as the money is being mismanaged and/or stolen.
LisaJoinPatch
8:36 am on Wednesday, February 27, 2013
Why is it that other states in our nation have much lower sales taxes, much lower property taxes, and much lower transportation costs? It has to be because of all the corruption in IL. Where has all our money gone? There is a reason we have two former governors serving time: Our politicians are corrupt. Independent auditors are what is needed to find out what has really happened to our money. Someone (or a group of "someones") have it! It does not matter how high our taxes are in IL. It will never be enough to fulfill our obligations because it is being mismanaged and/or stolen!
Brian Hickey
11:42 pm on Friday, April 12, 2013
Ohhhhh Louuuuuu,
My head hurts from all your brilliant ideas. I need some of that medical marijuana you keep wanting to legalize. If i was constantly high, Illinois corrupt politicians and their relentless taxation of it's citizens might hurt my brain a little less.
Brian Hickey
11:43 pm on Friday, April 12, 2013
If we dumped the Madigans does that mean Illinois would no longer carry the moniker Madighanistan?