"All I want is what I have coming to me. All I want is my fair share."
-- Sally Brown, after asking Santa for $10's and $20's in "A Charlie Brown Christmas"
The season is upon us, and we might not be able to get out from under it. The season to which we refer is the Illinois pension comeuppance season.
State lawmakers are unlikely to handle the problem in the fall veto session. They are making sounds like they will handle it next year, but in all likelihood they will come up with a partial solution and have trouble making the payments they are already legally obligated to make toward the state's five employee pension systems. Payments used 6 percent of the state's general fund in 2008, will consume 15 percent in 2013 ($6.7 billion) and are expected to devour 40 percent by 2020.
Wow. Even with that bite, the unfunded obligations have grown from $20 billion to $83 billion in just five years and continue to mushroom.
The situation was just labeled "unfixable" by the Civic Committee of the Commercial Club of Chicago. Despite that label, they laid out the problem and potential solutions in a recent report.
First, the blame:
* 44 percent of the unfunded pension debt came from state leaders putting in too little -- shame on them for blatant malfeasance.
* 22 percent came from the pension assets returning too little, in great part thanks to the Great Recession.
* 34 percent came from increased costs. Retirees are living longer, schools and others are bumping salaries at the ends of careers, politicians and others gave away more generous benefits thinking the fiscal party would never end.
Next, the committee's solutions:
* Replace the unsustainable current system with one that funds at least 90 percent of the pensions without crowding out critical public programs and without requiring unreasonable tax increases or borrowing.
* Require sacrifice from all regarding their fair share. New employees, current employees and retirees must share the pain. Benefits and contributions both need to be redefined.
* Make more conservative investments and realistic assumptions about retirees' longevity and future demands on the systems based on national standards.
The details will get ugly, whether they be shifting pension contributions to local school districts, increasing employee retirement ages and contributions, reducing the compounded cost-of-living adjustments, taxing the retirement benefits, etc. There will be bankruptcy threats, but does anyone really believe a public bailout wouldn't be forged? And you know we'll be the ones paying for any and all fixes, which we might deserve because we're not willing to hold that now veto-proof gang in Springfield accountable for getting us in this mess in the first place.
Wonder what the Missouri or Indiana real estate markets are like?
