Berkowitz w/Rep. Skillicorn on solving the State's pension mess by giving gov employees a haircut: Cable & Web

Jeff Berkowitz: Well, the number that Ted Dabrowski, President of Wirepoints.com, states is that over the last 30 years, state pension benefits have gone up [8 fold] more than state household incomes.

Jeff Berkowitz: ...Do you want to give the cities and villages in Illinois the power to file for bankruptcy?

Rep. Skillicorn: ….Yes, it would be a much more orderly and refined situation [than is currently the case in some situations where the city is insolvent]    

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Tonight’s City of Chicago edition of Public Affairs features State Rep. Allen Skillicorn (R-Dundee) discussing with show host Jeff Berkowitz how State and Local government pension benefits have increased at a much faster pace than IL household incomes. The show airs throughout the City of Chicago at 8:30 pm and midnight on Cable ch. 21 [CAN TV].

Berkowitz and Skillicorn discuss the use of municipal and State bankruptcy to solve the runaway government pension benefit problem. They also discuss the gubernatorial contest between Gov. Rauner and Democratic Party challenger JB Pritzker.

You can also watch the show w Rep. Skillicorn 24/7 by clicking here.   

The show also airs tonight and Wednesday night in Highland Park and Deerfield at 8:30 pm on Cable Ch. 19

A partial transcript of the show, taped on June 21, 2018, is included, below:

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Jeff Berkowitz: Is there a problem with State employee pensions?

State Rep. Allen Skillicorn [R-Dundee]:Of course there is. State employee pension costs are already a quarter of our budget and increasing… It is going up every single year and it is already to the point where it is pushing out other services. Right now, it is about 8 billion dollars from the State. It is going to be close to 9 billion dollars next year and then over 10 billion.

Jeff Berkowitz: so it is about a quarter of the Fiscal Year 2018 budget. You passed that test. And, the other major budget drivers of the budget are what?

Rep. Skillicorn: Well, the big four drivers are Medicaid, pensions, state government salaries and k-12 education.

Berkowitz: Well, Medicaid, that is probably another 22 to 25%? For education, counting everything, K-12…

Rep. Skillicorn: Well, just k-12, it is another quarter of the budget….Those four drivers are 80 to 90 %

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Why it is a big deal having to pay 9 billion dollars a year to pensions?

Rep. Skillicorn: Well that is 9 billion dollars a year that doesn’t go to current services. 9 billion dollars that doesn’t go to roads, etc.

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Jeff Berkowitz: Well, the number that Ted Dabrowski, President of Wirepoints.com, states is that over the last 30 years, state pension benefits have gone up  [8 fold] more than state household incomes.

Jeff Berkowitz: Can the Governor do anything to reduce state employee pension benefits?

Rep. Skillicorn: currently, as the courts have ruled, no.

Berkowitz: If he holds the salary down, that does lower future pension benefits. .. but let’s go back to the cities and villages in IL, what could you do to empower the cities and villages to deal with these high pension benefit costs?

Rep. Skillicorn: Mayors across the state always ask for help in getting rid of some of these unfunded mandates. Some of them are prevailing wage and some of them are collective bargaining reform.

Berkowitz: Think big. You have all these pension benefits that have already accrued and are coming due now [and The IL Supreme Court has ruled that accrued pension benefits cannot be diminished under the Illinois Constitution. And if you are a private company and if you are insolvent, if your liabilities exceeds your assets; if your expenses year by year exceed your revenue, how do we describe that company?

Rep. Skillicorn: That company would be insolvent and would want to file bankruptcy.

Berkowitz: Right, are there a lot of cities and villages in Illinois that are in that situation?

Rep. Skillicorn: We are already having cities that have the State Comptroller intercept the [delivery of state tax revenue to the city or village]—I think of Harvey and East St. Louis. Intercept means that if the City or village doesn’t make the full pension contribution to the pension fund, intercept means that pension board can ask the Comptroller to intercept sales tax money that would usually go back to the village to instead go to the pension fund. [and thus those funds are not available for the city to pay for current services]

Berkowitz: What else could the state legislature do to give more flexibility to these cities and villages in IL that find themselves insolvent?

Rep. Skillicorn: In the rare example, certain situations, municipal bankruptcy is fine.

Berkowitz: The cities and villages don’t have the power to do that.

Rep: Skillicorn: But, the Illinois legislature [can] change the law to allow cities and villages to file for bankruptcy and I filed legislation to allow cities and villages [including Chicago] in Illinois to file for bankruptcy.

Jeff Berkowitz: Some say, approximately half the States have given their cities and villages the right to file for bankruptcy. So, municipal bankruptcy is not wild speculation. It is actually already happening [across half the country]. ..Do you want to give the cities and villages in Illinois the power to file for bankruptcy?

Rep. Skillicorn: ….Yes, because if a Judge could oversee a municipal bankruptcy, a judge would order them to take certain steps, they would actually go after some creditors, etc. it would be a much more orderly and refined situation [than is currently the case in some situations where the city is insolvent]

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