Prairie State Wire

It is becoming increasingly clearer that Congress will not be forcing American taxpayers to bailout Illinois’ hemorrhaging public pension systems under cover of a COVID-19 rescue plan as many elected officials had hoped. With the defeat at the polls of the progressive income tax, economic policy analysts say the General Assembly and voters must amend the state Constitution's pension protection clause to allow for real reforms in the systems or the state faces certain bankruptcy.

“Pensions are Illinois’ biggest problem and they cannot be fixed without an amendment to the state constitution,” wrote Wirepoints founder Mark Glennon. “Our courts have made that clear. The only alternative route to reform is bankruptcy, and there is no appetite for that.”

Glennon states that it’s important to ensure that the amendment language put before the voters “isn’t booby-trapped or loaded with complications,” allowing the state courts to undermine the change.

Wirepoints Founder and Executive Editor Mark Glennon | Photo courtesy of Wirepoints

His suggestion: “Nothing in this Constitution, or in any law, shall be construed to limit the power of the General Assembly to reduce or change pension benefits or other benefits of membership in any public pension or public retirement system, whether now or in the future, accrued or yet to be earned.”

Glennon also says there is no need to wait the two years it normally takes to get a constitutional question on the ballot. The Legislature could act right away to adjust the state’s annual pension contribution to a reformed schedule.

“Bond rating agencies and Illinoisans considering flight would take significant comfort in that,” said Glennon.

A recent report by Adam Schuster of the Illinois Policy Institute (IPI) and published in the National Review  says that the state’s pension debt is the worst in the nation relative to the size of its economy.

“Moody’s Investors Service estimates unfunded liabilities in Illinois’ five state-managed pension systems at $230 billion for fiscal year 2019, equal to about 26% of gross domestic product,” Schuster wrote. “Moody’s also projects that the debt will grow to an all-time high of $261 billion for fiscal year 2020, owing to investment losses in markets riled by COVID-19.

“The pension crisis is the common factor in this perfect storm of interrelated fiscal and economic challenges," he wrote. "It’s the anchor pulling so many Illinoisans under water, leaving them paying growing shares of their income to fund government retirement benefits. It saddles them with the equivalent of a second mortgage and contributes to depressed home values and a weak economy."