Mark Glennon [Wirepoints.com]: “IL is beyond broke…by technical legal standards, we are bankrupt.”
Glennon: “The reason we have not funded the pensions is that the taxpayers cannot afford them…the taxpayers have not been irresponsible.”
In our public sector pension system, certain politicians (mostly Democrats) get votes and campaign contributions, the employees get supra-competitive salaries and benefits and the taxpayers get the bill.
Tonight’s City of Chicago edition of Public Affairs features Mark Glennon, Founder and Executive Editor of Wirepoints.com– a research, commentary and news organization, focused primarily on IL state and local fiscal problems.
The program airs throughout Chicago at 8:30 pm and midnight on Cable Ch. 21 [CAN TV].
Mark Glennon debates and discusses with show host Jeff Berkowitz the fiscal condition of IL, which Glennon describes as “We are beyond broke…by technical legal standards, we are bankrupt.”
–Unsustainable, unaffordable and unfunded pension liabilities:
Glennon indicates that the primary fiscal problem of Chicago, Cook County, various cities and villages throughout IL and IL itself is the unfunded pension liabilities of those jurisdictions. As Glennon states, “It is an unsustainable position, it is worsening and the numbers are worse than is commonly reported.”
What makes Glennon and Wirepoints somewhat unique is that they argue that the reason “We have not funded the pensions is that they are unaffordable [to the taxpayers],” not that the taxpayers are irresponsible or unfair to government employees.
–Politicians’ bad deals with the public sector unions
Glennon argues that politicians have been irresponsible– in their decision to make bad compensation deals with government employees. Glennon argues the pension benefits “Have been too high,” and “Defined benefit pension plans (as opposed to defined contribution pension plans) are inherently bad.”
Glennon and Berkowitz discuss why the public sector pension system has evolved in the way it has: it is a system by which certain politicians (mostly Democrats) get votes and campaign contributions, the employees get supra-competitive salaries and benefits and the taxpayers get the bill.
Glennon says he is not anti-union, but he thinks in IL, “Public sector unions have far too much power– procuring these pension benefits through graft & mistake.”
Public sector pension benefits have increased three times faster than Illinois incomes for several decades, making them completely unaffordable, driving Chicago, other IL cities and IL state government itself – to the brink of bankruptcy.
— Average Chicago Household on the hook for 125K
The average Chicago household share of the unfunded pension liabilities (including Chicago, Cook County, CPS and IL taxes) is about $125,000, payable over the next 30 years. And, if taxpayers want to cut those pension payments, the IL Supreme Court has ruled that would be unconstitutional.
–Amend IL Constitution?
So, one approach would to be amend the IL Constitution to permit such cuts, which would require a statewide vote, approved by 60% of the voting population.
— Proposals to increase income tax rates
Another approach is to raise taxes by an amount sufficient to pay the coming implosion of pension payments needed to pay for pension benefits. But Gov. Elect Pritzker’s proposed progressive income tax (as extrapolated by Wirepoints) would raise tax rates too much to be politically feasible.
–Legalize and tax Marijuana, tax a Chicago casino & divert $ from TIFs
Yet another approach to deal with the pension mess is to legalize and tax marijuana, create a Chicago casino or divert money from TIFs.
But the tax revenue from marijuana or a Chicago Casino doesn’t come close to solving the problem. TIF diversion also is unlikely to yield sufficient money to solve the problem.
–Chicago, CPS and IL Bankruptcy
That leaves us with Chicago, CPS and/or IL bankruptcy to solve the pension mess, assuming the legislature empowers cities to file for bankruptcy with the federal courts, and the federal government would empower the states to do the same.
That kind of bankruptcy empowerment is supported by Glennon, and indeed, he indicates the mere threat of such a bankruptcy might precipitate a “voluntary agreement,” by stakeholders to reach an agreement by which everyone takes “A hair cut.”
–Mayoral Candidates’ pension mess solutions
Also touched on tonight is how Mayoral Candidates Preckwinkle, McCarthy, Vallas, Mendoza, Wilson, Bill Daley, Enyia, Chico, Brown and Lightfoot might [or might not] deal with the pension mess.
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