patrick.net

marcus says

Any switch to 401K plans would be phased in for new employees with the intent to honor the pensions of people well in to their careers,, or already retired.

There is no digging out of this abyss unless existing employees already in the system accept some reform too. The damage is simply too large and too great to think it can be fixed by only adjusting pensions for new employees.

Basically existing employees and retirees keep everything they have already "earned" in their pension to date - but pension formulas will need to be adjusted going forward - especially for existing employees. Otherwise, you risk losing it all and watching more and more cities crumble and declare bankruptcy with the inability to pay CALPERS and the employees risk losing a huge chunk of their pensions like Loyalton and LA Works.

HappyGilmore says

The main goal is this proposal is to change how revenue is collected. Reduce property tax, increase state tax. Make the state income tax graduated.

More than likely it's a tax increase disguised as a property tax reduction.

lostand confused says

Democratic governor candidate J.B. Pritzker said Tuesday he would seek to temporarily raise Illinois’ flat income tax rate

Did he say "temporary" ROFL.

zzyzzx says

More than likely it's a tax increase disguised as a property tax reductio

Yeah well , they won't reduce. They will just find another way to tack on taxes-for the children they will claim.
They just raised taxes by 32% and almost all went to pensions-now want to raise more.

Strategist says

lostand confused says

Democratic governor candidate J.B. Pritzker said Tuesday he would seek to temporarily raise Illinois’ flat income tax rate

Did he say "temporary" ROFL.

Any temporary tax raise needs to have the time-line codified into the new tax law and seek prison time for politicians if extended without proper re-vote and grace period in between. Otherwise temporary = forever in 100% of cases. Politicians always lie.

The flat income tax increase sounds like it will hit the lower income family harder than the rich.

It will always be the same scenario from the day that History has started. The rich will squeeze the lower income family.
Why there was a slavery in the first place? If there is no slavery, it must be replaced with something. It is the American way.

lostand confused says

They just raised taxes by 32% and almost all went to pensions-now want to raise more.

I don't want it to be the case, but taxes are going to go up, and it's going to be whole lot more then 32% (from today's rate) before it's all said and done. The pension debt isn't even close to sustainable without 10% income taxes on pretty much anyone making $50k or more. Even that might not be enough with the slow but steady exodus of residents.

The reality is retired workers collecting their pensions have ZERO concern regarding state income tax (this includes private 401k retirees). They don't pay any income tax on their pensions and retirement payouts. So the required constitutional amendment to fix things is theoretically impossible based on the votes needed to get it done since a good chunk of people are retired, but also those that aren't, don't want their future pensions fucked with. The supreme court here ain't doing nothing with it comes to pension cut backs or reductions. We've literally locked ourselves in a bank safe, with no way out, and it's filling with water.

I've said it in other threads here, IL will need to be bailed out at some point. It's a when conversation, not if.

Nobody says

The flat income tax increase sounds like it will hit the lower income family harder than the rich.

The article describes the details-it won't. The headline of this thread doesn't really describe the proposal at all. Anyone would be advised to read the proposal and decide themselves.

Goran_K says

A local economy is fine when the state can’t afford to pay its short and long term liabilities without borrowing money or increasing taxes?

That screams insolvency. Not “fine”.

US Economy screams insolvency too then. Thanks Trump.

HappyGilmore says

The main goal is this proposal is to change how revenue is collected. Reduce property tax, increase state tax. Make the state income tax graduated.

... quietly drop "reduce property tax" part of the bargain.

Hoouse Bill 3522, filed by state Rep. Robert Martwick, D-Chicago, would tax incomes between $0 and $7,500 at 4 percent. For income between $7,500 and $15,000, the rate would be 5.84 percent. For income between $15,000 and $225,000, the rate would be 6.27 percent. And for income over $225,000, the rate would be 7.65 percent.

https://www.illinoispolicy.org/how-much-would-the-progressive-tax-cost-your-family/

Dem congress man already introduced this in Congress. basically anybody making 7,500 a year and over is looking at tax hike. Enough with these bums.
It won't pass without constitutional amendment-but this is what the IL gov is probably looking for-gov candidate.

marcus says

But the state pension systems are blown up by the short changing of contributions on the state side

.

They are blown up by the luxurious pension benefits.

marcus says

I guess it could be argued, if the money is paid up front (higher salaries for cops and teachers), and then have them use 401ks, it would prevent the govt from underfunding the compensation expenditures.

I missed this the first time around. Why would the pay need to be higher? As far as IL goes, most districts (specifically Chicago) cover a good chunk of the pension payment that the teacher SHOULD have covered from the beginning like any other private sector person would have to. Pay stays the same and teachers fund their own god damn retirement for once.

Did a quick bit of Google research.

Illinois has $2.3 billion in debt, and a population of 12.8 million people. That's close to $16,000 per person.

At the federal level, the US debt is $19.9 trillion and about 325 million people. That's around $60,000 per person.

So everyone in Illinois, from babies to seniors, has $76,0000 of debt taken out on their behalf by Fed and State government.

HowdyThere says

Did a quick bit of Google research.

Illinois has $2.3 billion in debt, and a population of 12.8 million people. That's close to $16,000 per person.

At the federal level, the US debt is $19.9 trillion and about 325 million people. That's around $60,000 per person.

So everyone in Illinois, from babies to seniors, has $76,0000 of debt taken out on their behalf by Fed and State government.

And I can absolutely guarantee that those people just like the rest of us are not getting our moneys worth.

I think governments should not be allowed to borrow money at all, ever. And I count future liabilities such as pension payments as borrowing.

They should fund the current year out of the current tax income, and if they want to fund a large project, they should save up for it first.

HowdyThere says

Illinois has $2.3 billion in debt, and a population of 12.8 million people. That's close to $16,000 per person.

Fuck! And we don't even have any aircraft carriers, jets and the like! $16k per person vs. $60k per person. Think about that. Just one state.

Patrick says

They should fund the current year out of the current tax income, and if they want to fund a large project, they should save up for it first.

The tricky part is how to budget when one doesn't* know for sure how much tax is going to be collected. Governments are notoriously bad for being overly optimistic. Given that economies tend to grow over time, I thought the best method wold be to limit budgets to actual receipts from, say, 3 years previous. That way governments would tend to run surpluses most of the time. Some of the retained earnings would get used up during downturns or used for large projects.

Thoughts?

* had to change to 'one doesn't' from 'U don't' due to the new filter.

WookieMan says

HowdyThere says

Illinois has $2.3 billion in debt, and a population of 12.8 million people. That's close to $16,000 per person.

Fuck! And we don't even have any aircraft carriers, jets and the like! $16k per person vs. $60k per person. Think about that. Just one state.

Well then there is the additional 200 + billion in state and local retirement benefits.
https://www.illinoispolicy.org/reports/203-billion-and-counting-total-debt-for-state-and-local-retirement-benefits-in-illinois/

HowdyThere says

That way governments would tend to run surpluses most of the time. Some of the retained earnings would get used up during downturns or used for large projects.

The logic is sound in my opinion. Problem is getting government to run a surplus. Government and surplus in the same sentence is like a Nazi and a Jew having a beer in 1939. Not happening.

If they get money, they got plenty of friends to give it to.

He’s right, government has no incentive to save... spending other people’s money with no accountability is frivolous. And in one party CA, they don’t have to worry about competition.

WookieMan says

HowdyThere says

That way governments would tend to run surpluses most of the time. Some of the retained earnings would get used up during downturns or used for large projects.

The logic is sound in my opinion. Problem is getting government to run a surplus. Government and surplus in the same sentence is like a Nazi and a Jew having a beer in 1939. Not happening.

Apparently there are a bunch of state debt clocks that have per capita numbers. A few random choices, with some rounding:

New York is close to $18K
Wisconsin is a mere $7.7K
Colorado $10.6K
California, a surprisingly low $10.8K
Texas $10.4K
Virginia $7.8K
Michigan $7.8K

I checked Illinois as well, to see how my back-of-the-napkin calculation compared, and the clock said $11.6K. Not sure why there's such a difference.

Figured I better check Federal as well in case there was a similar discrepancy, but it shows at $64K. My calc was 2017 numbers I believe, while the debt clock is supposed to be real time, so no big surprising difference.

I'm from Ontario Canada, where one source says it's $21.5K per person in Provincial debt. Fortunately it's in Canadian dollars so not as bad as it seems /snark.

Canadian Fed debt is only $17.6 per person, which sounds like a real bargain.

socal2 says

Basically existing employees and retirees keep everything they have already "earned" in their pension to date

That's unfair, becasue the pension funds are in place of social security, the employees and the state all pay in. You don't know how much of a royal fucking over you are suggesting they take.

Are you going to do that for social security too ?

socal2 says

There is no digging out of this abyss unless existing employees already in the system accept some reform too.

THat's easy for you to say. Yeah, haha, lets fuck over the government employees. Many stayed in those jobs for decades, knowing they could make more elsewhere, in part becasue of the pension they were promised. Why should I care ? I don't have a pension !"

Yes you do. It's called social security !

The cost of these "extravagant" pensions is only the difference between what is paid for them (or was supposed to be), and what is paid for social security. I consider that difference part of the compensation. Worth perhaps 10K per year for me. Maybe. Yes I've done the arithmetic.

One difference is the government is two of the payers in, rather than one for social security. SOcial security is funded by you, your employer and the federal government. Where as a governemt workers pension is funds by the employee, the the employer, and the state. In this case the employer is the government, so you guys feel like its you.

WookieMan says

HowdyThere says

Illinois has $2.3 billion in debt, and a population of 12.8 million people. That's close to $16,000 per person.

Fuck! And we don't even have any aircraft carriers, jets and the like! $16k per person vs. $60k per person. Think about that. Just one state.

Unlike the federal government, the states cannot print their own money.
Thank God.

socal2 says

Those "reforms" from Moonbeam are hardly making a dent into California's pension liabilities.

So far. But the changes to the teachers pension are substantial. And they will work. THe teachers and their employers are paying a lot more into the funds. Give it time.

marcus says

That's unfair, becasue the pension funds are in place of social security,

No they're not. Never have been. Pensions generally pay out more then SS by a long shot. Non-pension W-2 employees pay into SS, but to have a living wage at retirement age, likely have to put in another 10% of income during their working years into a 401K if they ACTUALLY want to retire around the same time as public sector workers. There's not much of an argument around this.

Pension benefits are MASSIVELY unrealistic in most places. IL it's a complete shit show.

HowdyThere says

The tricky part is how to budget when one doesn't* know for sure how much tax is going to be collected. Governments are notoriously bad for being overly optimistic. Given that economies tend to grow over time, I thought the best method wold be to limit budgets to actual receipts from, say, 3 years previous. That way governments would tend to run surpluses most of the time. Some of the retained earnings would get used up during downturns or used for large projects.

Thoughts?

Sure. The solution is just don't pay your pension obligations when the taxes revenues are less than you anticipated. Problem solved right ?

WookieMan says

No they're not. Never have been. Pensions generally pay out more then SS by a long shot.

I didn't deny this. Maybe I should have said these employees, their employers and the state all three pay into those pensions instead of them, their employer and the fed paying into social security.

PEople are talking about lowering govt workers pensions from what's promised, but it's what they have instead of social security.

LEt's reduce your social security you receive in retirement, as a solution to the fed meeting those unfunded obligations. Sound good to you ?

WookieMan says

Pension benefits are MASSIVELY unrealistic in most places

Again, the real cost and the real value is the net difference between what it costs to fund these benefits and what it costs to fund social security. This is substantially offset by lower wages in many cases, compared to what they would otherwise need to be paid, to attract the same quality of people.

I'm all for better prevention of pension spiking, and perhaps putting caps on pensions, or perhaps a sliding scale, such as say more complicated formulas based on one multiplier for the first say 80K of income and a sliding lower multiplier for income above that (for calculating pension income)

Basically existing employees and retirees keep everything they have already "earned" in their pension to date - but pension formulas will need to be adjusted going forward - especially for existing employees.

Uhh many state legislatures have tried to iron out the details of this statement to no avail. Where do you draw the line? Who gets "ponzied"? I'm not going to type out actuarial tables but if I retire in 2030 with 30 years service and start collecting in 2038 who or what is paying me? In your world no pool of payors (active contributors) exist at this point, correct? Oh, and there are thousands of me.

marcus says

Sure. The solution is just don't pay your pension obligations when the taxes revenues are less than you anticipated. Problem solved right ?

Wrong. You or U ignored the last meaning of the last sentence.

HowdyThere says

Some of the retained earnings would get used up during downturns or used for large projects.

marcus says

PEople are talking about lowering govt workers pensions from what's promised, but it's what they have instead of social security.

LEt's reduce your social security you receive in retirement, as a solution to the fed meeting those obligations. Sound good to you ?

In IL at least, government workers pension aren't being touched. While it's the easiest pickings for reducing the debt, it ain't happening here. My Mom is a retired teacher so I have a bias against reducing benefits, but it's ultimately the best solution here that will never happen.

I'm 30ish. My SS benefits will almost for certain be reduced. That's why I max out my 401K. IL pensions won't be touched, EVER. If SS is so glorious, get on board, join the private sector.

The problem is, my sister in law is a teacher. 6 years younger. Based on IL law, her pension is now locked in based on her amount of time working. If she works the minimum amount of years she'll likely walk with about $60k a year in pension (conservatively). Even with SS accounted for, private sector workers would have to put in at least $10k/yr MINIMUM into a 401K to hit that amount. That $10k is in addition to the SS they paid into and the employer paid. There's not a teacher putting in $12k/yr or so out of their pocket into the pension fund.

The SS argument by pensioners is one of the worst arguments I've ever heard. Work in the private sector and you'd understand. I've seen the pay stubs and have multiple family members in the public sector and understand what it's about.

marcus says

First, just an observation. Even with the attractiveness of a defined benefit pension, there's plenty of room for improvement in the quality of the pool of people applying to go into education and law enforcement. After all, a pension is just something with monetary value. It's part of compensation. But it doesn't work if the government doesn't pay into it as they should. I guess it could be argued, if the money is paid up front (higher salaries for cops and teachers), and then have them use 401ks, it would prevent the govt from underfunding the compensation expenditures. I guess they still might be able to postpone their part of payments in to the 401ks. Would they then pay in to social security too, instead of the pensions ? Wouldn't they have to ?

The pensions of government employees are so ridiculously high, changing it to higher salaries and letting them have 401K's won't even come close to what they get now.
With 401K's you won't be able to retire at 55 with 100% of your highest earnings for life.
The government pensions are nothing but a ripoff that burdens the hard working middle class. Disgraceful at best.

marcus says

Booger says

They are blown up by the luxurious pension benefits.

It's not like you read or understood my comment.

He read it, understood it, and accurately stated what they were, even though he failed to mention ripoff.

marcus says

PEople are talking about lowering govt workers pensions from what's promised, but it's what they have instead of social security.

LEt's reduce your social security you receive in retirement,

Hmmm... In many cases, when a person retires with a pension, they can take the complete pension as a lump sum, instead of a monthly payout. Plus there's a death benefit to the heirs if that person dies.

Can that be done with social security when retired, will they pay out a lump sum? Does a heir get the full amount paid into SS if the person dies?

No pension should be no higher than the median household income. By 55-65, your house should be paid for, your kids grown, etc.

$60k/year for a retiree is plenty. I feel like all government pensions ought to be capped at the national median household income. And to reach that cap you need at least 35 years of service.

The household income is a gift, it should actually be median individual income.

marcus says

PEople are talking about lowering govt workers pensions from what's promised, but it's what they have instead of social security.

LEt's reduce your social security you receive in retirement, as a solution to the fed meeting those unfunded obligations. Sound good to you ?

How about making your pensions same as our social security? Sound fair to you? I doubt it.

marcus says

LEt's reduce your social security you receive in retirement, as a solution to the fed meeting those unfunded obligations. Sound good to you ?

We are already essentially losing retirement money by paying higher and higher taxes for less and less government services. For instance, my wealthy school district doesn't even offer bus services, so I have to take turns with my wife schlepping our kids to school. This takes time away from my work and leisure time.

Look - everyone is going to have to take a bite of this shit sandwich. Taxpayers will pay higher taxes. Taxpayers will get reduced services. Bond holders are getting pennies on the dollar.

Don't see how it is fair to totally inoculate government workers from any pain. Even if you lost 10-20% of your pension value or raised the retirement rate, it is still going to be far more generous than about 80% of the US workers who rely on their 401K's and Social Security for retirement.

Sniper says

Can that be done with social security when retired, will they pay out a lump sum? Does a heir get the full amount paid into SS if the person dies?

That's just it. THE first argument I hear from every public sector worker getting a pension is the SS argument. My own mom makes the argument with me, but I think I've gotten her in line. If SS is sooooooo glorious, why did you decide to teach and get a pension if it's such a rough route? Private schools pay the same as public, just without the pension, but you get awesome SS. You should teach at a private school then since SS is so A mazing! Right?

CPS (Chicago Public Schools) teachers pay 2% of their salary towards their pension. People need to think about this. A 25 year teacher making $100k (this is what they make in CPS) is paying $2k out of pocket towards their pension. There's not a sane person on patnet or on this planet that can tell me that's sustainable. That teacher retires and gets $60k/yr sitting on their ass. Even at the max amount of $2k they only paid $50k into the pension fund.

And yes, the total is 9% of their pay. The other remaining 7% is covered by your local tax payer (me). Either way, do the math at $100k salary for 25 years. 9% per year. That's $225k put into the system. No teacher is averaging that amount of salary over a career. How the fuck can $60k/yr retirements be sustainable? Someone needs to answer that question when only $225k was put in over 25 years, most of it being on the regular tax payers dime.

Again, IL is fucked.