Public employee pensions are the biggest single reason that Illinois's credit rating has crashed to the lowest of any state in America. But will the new pension reform proposal be able to fix the problem?
The pension crisis has been blamed for higher taxes, cuts in funding for public schools and mental health, a long list of other problems. They've also gobbled up nearly every penny of that 67% income tax increase the General Assembly enacted three years ago.
Legislators are returning to Springfield Tuesday to try and do something about the crushing cost.
American Federation of State, County and Municipal Employees - AFSCME - Executive Director Henry Bayer and Greg Baise, president and CEO of the Illinois Manufacturer's Association, joined FOX 32 Political Editor Mike Flannery on Good Day Chicago Monday morning to debate "how" and "why" Illinois got to this point. What taxpayers and people looking for a job want to know about, is the "what."
As lawmakers head to the State Capitol, some employers say they fear that the $100 billion total unfunded pension liability will force future tax increases. Indeed, some in the General Assembly and public employee unions are already pushing hard for that.
A University of Illinois study found that the 2011 income tax increase was a factor in the state's dreadful job performance. We've had the worst unemployment in the Midwest for several years now.
On the conservative side, a chorus of critics complain that this proposal does not do enough to stop the budgetary bleeding. They fear it locks in the need for another round of huge tax increases that would kill jobs.
Public employee unions are also pressuring lawmakers to vote "no." They complain it takes too much away from future retirees.
Voices from the middle, like Baise, call the deal a good first step toward repairing Illinois's business climate and avoid more damage to the credit rating.