Illinois Gov. J.B. Pritzker's inaugural budget dreams that the state is taking the first steps towards fiscal solvency.
In fact, Pritzker's budget is a wide-awake nightmare, one that hallucinates that continuing the freakish policies that plummeted Illinois into its current financial crisis will save the state. And not make anything worse.
Elizabeth Bauer, writing in Forbes, correctly calls Pritzker's vision a "pyramid scheme." She observed:
The evidence continues to mount: Illinois's new elected officials and their advisors simply don't believe that it matters that public pensions are pre-funded.... Through their actions -- and indeed their words -- they are showing that they think of public pensions as pyramid schemes, in which new participants pay the retirees' pensions. And while that's true of Social Security, it's a terrible and terribly harmful approach for state-employee pensions. [Emphasis in the original.]
Bauer, an actuarial, is targeting the habitual practice of "kicking the can down the road," a threadbare cliche, but one that actually describes the practice of putting of until...whenever...the necessary reforms to replenish local and state employee pension funds that are short some, oh, $140 billion (some say $200 billion).
In essence, Pritzker wants to extend the schedule for replenishing the funds from a required level of 90 percent funded in 2045 to 90 percent to 90 percent in 2052. Pritzker says the step would reduced the required state contributions to the funds an undocumented $878 million in the 2020 budget. Mind you, it's not a savings; it's like drawing out your payments on your credit cards, which ends up costing you more.
Take note: Interest on the state's debt to fed the monster created by decades of mismanagement and willful blindness already chews up roughly 20 percent of the state's budget, meaning less for health care, infrastructure and other essential state services.
And mind you, Illinois state and local governments spend more than any other state on pensions, nearly double the national average. S&P Global Ratings, a Wall Street ratings agency, also targets how pensions are crippling the budget. It said in response to Pritzker's budget that the $1.3 billion in new revenue from sketchy sources "precariously balances the current budget, but punts measures to address fiscal progress to future years." Look out for a down-grading of Illinois' credit rating, already the worst in America.
Pritzker says his long-term plan includes an amendment down the road that would allow a progressive state income tax, replacing the current constitutionally required flat tax. But he says nothing about a constitutional amendment that would modify the current fiscal straight-jacket that prohibits any diminution of pensions.
It's an absolutely necessity if Illinois is ever return to financial stability. I've previously proposed a grand bargain to give both sides something: Two amendments, one modifying the pension stranglehold and a second allowing a progressive income tax. What the heck, while we're at it, how about a third one that would reform the ultra-partisan legislative redistricting now crippling the state with one-party governance.