Berkowitz:...Generally acceptable actuarial accounting principles say you [should] be paying something like 13 $billion because your payment... doesn't even cover the interest; you would need another $4 billion to cover the principal and interest to start reducing that $200 billion hole in unfunded pensions. What do you say to those actuaries [about meeting GAAAP]?
Gov. Pritzker:... I would say, first of all, that we are paying the full payment that is required under the Ramp [Statutory requirement]... there are two things that we haven't addressed in significant fashion that I would like to go after: ...and one of them is pensions. Now I am not talking about lowering or taking away people's pensions...these are all things that we are going to be addressing together over the next several years.
Yesterday afternoon there was about a 40 minute celebration, of sorts, at the Thompson Center in the Chicago Loop, led by Governor Pritzker, Lt. Gov. Stratton and Dem. Party budget guru State Rep. Greg Harris, with about 80 legislators and other dignitaries there in tow to cheer (1) the signing of the now $40.3 billion FY2020 budget (up inexplicably $1.3 billion over the last month), the law placing the issue of whether IL should have a Progressive Income Tax on the November, 2020 ballot, and the law setting the IL income tax rates if the Progressive tax is passed into law in 2020 as well as the passage of the (2) Gaming and sports betting legislation, (3) the law legalizing use of marijuana recreationally and (4) the now $45 Billion Capital Fund budget (up inexplicably from $41.5 billion over the last week. [Watch Berkowitz and Terry Martin provide an overview of the six major pieces of legislation enacted during the last week and one that did not make it]
Although the event was purportedly focused on the bills being signed by the Governor, the speechifying went further to mention all the major legislation that passed out of the General Assembly last week, with the exception of the abortion legislation, which made IL the most permissive abortion rights state in the country, if not the world, but that legislation seemed to be ignored in yesterday's festivities.
The tone of yesterday's event was that Illinois Democrats had achieved almost everything they sought in Springfield, and that Gov. Pritzker had led his party into some sort of Promised Land or Nirvana.
Republicans seemed to be completely absent from this event in contrast to their well publicized and open participation by Leaders Durkin & Brady in the Budget and Capital Fund finalization of legislation during the last week of Session and Republican attendance of a post session Springfield press conference celebration run by the Dems.
The Republican Leaders have taken some quiet criticism from some of their rank and file, such as Reps. McSweeney (Cary) and Skillicorn (Dundee) and party activists for those actions of apparently accepting Speaker Madigan's and Senate President Cullerton's "table scraps" in exchange for Republican votes and cover on some of the Capital Fund tax increases, such as the doubling of the gas tax.
Trying perhaps to make a recovery, Leader Durkin made an unusual type of appearance when Fox 32 News political editor Mike Flannery read Durkin's blast email critical of the progressive income tax to Gov. Pritzker as sort of a question at the post celebration press conference yesterday.
Also, at that press conference, this reporter questioned the Governor as to whether his administration's failure to make a pension payment in accord with Generally Acceptable Actuarial Accounting principles ("GAAAP") essentially meant that the appropriate pension payment was not fully made [and the budget therefore was not balanced].
The Governor responded but somewhat dodged the thrust of the question. He said his budget met the statutory pension standard but he ignored the impact of his administration's failure to adhere to GAAAP with respect to its pension payment in FY2020. Perhaps that issue will be part of a larger future discussion. You can watch the entire event and presser here [presser is at 32:35 to 41:42] and the Berkowitz- Gov. Pritzker exchange is at 36:48 to 38:40
A transcript of yesterday's Berkowitz- Gov. Pritzker exchange is included, below.
Jeff Berkowitz: Governor, you said the [Fy2020] Budget is fully funded in terms of the pension payment, the $8.4 Billion-
Gov. Pritzker: $9.1 Billion
Berkowitz: Excuse me, is it $9.1?
Gov. Pritzker: Yup.
Berkowitz: But, as you know, generally acceptable actuarial accounting principles say you [should] be paying something like 13 $billion because your payment, like Rauner before, like Quinn before, doesn't even cover the interest, you would need another $4 billion to cover the principal and interest and start reducing that $200 billion hole in unfunded pensions. What do you say to those actuaries [about meeting GAAAP].
Gov. Pritzker: Well, what I would say, first of all, is that we are paying the full payment that is required under the Ramp that was put in place in 1995 [by the IL Legislature]
Berkowitz: The statutory requirement.
Gov. Pritzker:The statutory required payment and as you know, that ramp takes us to 2045 when we will be paying roughly $19 billion in that year if we don't do something between now and then to bend that cost curve. It is important to me that we address that. I said at my first press conference after the legislative session that there are two things that we haven't addressed in significant fashion that I would like to go after: one of them is property taxes and one of them is pensions. Now I am not talking about lowering or taking away people's pensions, that's not what I am talking about. I am talking about managing our pension system better- making sure we can actually pay people the pensions that are owed to them. And, as you know, there are a number of things we can do and I put forward a task force that is looking now and delivering to me recommendations about assets that we can transfer into the pension systems so that we can be better able to manage our net pension liability which we all want to reduce and there are other ideas that we put forward, so I think that these are all things that we are going to be addressing together over the next several years.
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