As the 98th General Assembly convened Jan. 9, the Senate Republican Caucus welcomed five new members, ready to take on the challenges that wait during the 2013 session.
Nothing underscores Illinois’ challenges more strongly than the second anniversary of the Democrats’ 67 percent income tax increase. Led by Gov. Pat Quinn, House Speaker Michael Madigan and Senate President John Cullerton, Democrat lawmakers pushed through the largest income tax hike in state history during the wee hours of Jan. 11, 2011. Senate Republicans voted against the hike.
Two years after the Democrats’ giant tax increase, Illinois’ finances remain in shambles, public employee pension reform remains in limbo, and the backlog of bills remains in the billions. Oberweis said that though Democrat leaders pushed the tax hike as a way to pay off old bills and resolve the state’s financial problems, insisting they would eventually roll back the increase, they have continued to spend as though the increase will be permanent. Taxpayers are paying more, with nothing positive to show for their forced contributions.
Comptroller Judy Baar Topinka recently told a House Executive Committee that the state’s current bill backlog tops $9 billion, as she testified against proposed legislation to borrow $4 billion to pay down those same bills Democrats said would be eliminated using tax increase revenues. And while Illinois has become accustomed to lackluster showings in national rankings over the last decade, some may find it ironic that as the state ends its second year of the “problem-solving” income tax increase, a new report in Crain’s Chicago Business shows Illinois continues to rank dead-last in pension funding.
Public employee pension reform continues to reign as the most critical issue facing the General Assembly, as lawmakers adjourned the 97th General Assembly without acting on a pension reform plan. Though Gov. Quinn spoke to a House Committee on Jan. 8, throwing his support behind a last-minute bill to set up a commission charged with designing and implementing a pension fix, the House of Representatives adjourned without considering Quinn’s proposal.
The Governor’s plan—widely thought to have been ruled unconstitutional if it had been approved—would have required the panel to issue a report outlining pension changes that would become law unless lawmakers took action to overturn the proposed changes. Action on the hot-button issue now carries over to the 98th General Assembly, who will take up work on the politically-charged pension reform efforts.
Illinois has long been home to the worst-funded pension reform system in the country, with more than $94 billion in unfunded liabilities. This week’s Crain’s reported that, “According to the U.S. Census Bureau’s latest Annual Survey of Public Pensions in fiscal 2011, Illinois had $89.29 billion in total cash and investments to cover $175.59 billion in obligations to current and future retirees. By that count, the Land of Lincoln has a 50.9 percent funded ratio — worst among the 50 states.”
The report went on to say that an 80 percent funding threshold is “generally viewed as being acceptable to support future pension costs” according to a 2007 Government Accountability Report. However, Crain’s also reported the American Academy of Actuaries takes a more stringent view that the 80 percent standard is “a myth,” and arguing that “pension plans should have a strategy in place to attain or maintain a funded status of 100 percent or greater over a reasonable period of time.”
Illinois’ 50 percent funding falls woefully short of either threshold, and though the state’s unfunded pension liabilities exceed $90 billion, many consider even those figures to be optimistic, placing the funding ratio lower and the total debt much higher. Poor fiscal management under Governors Rod Blagojevich and Pat Quinn has led to numerous downgrades to Illinois’ credit rating and credit outlook in recent years.
Most recently, Moody’s Investors Service downgraded Illinois’ credit outlook to negative from stable, citing “pension funding pressures” as a primary cause for concern. Illinois in 2012 already slipped to an A2 rating, worst among the states Moody’s rates.
A decision by Attorney General Lisa Madigan to ask for a federal court rehearing on a major gun rights could delay the quick adoption of right-to-carry legislation in Illinois. The appeal by the Attorney General could potentially set back efforts to construct concealed-carry legislation to meet a federal court directive.
On Jan. 8, the Attorney General sought an appeal to that decision asking for the full U.S. 7th Circuit Court of Appeals to review the decision and make a ruling. The smaller panel decided that state lawmakers had 180 days to pass a concealed-carry statute to enable gun owners to join citizens in 49 other states with similar laws.
The Attorney General’s appeal has had little effect in slowing efforts by pro-Second Amendment legislators to begin drafting new concealed-carry bills to meet the three-member panel’s 180-day deadline. Conversely, recent gun tragedies and the nation’s-highest homicide rate have prompted Chicago-area lawmakers to draft counter assault-weapons bans and other purchasing restrictions.
If lawmakers fail to meet the deadline, many of the state’s current statutes on firearms could be ruled null and void. Despite the rules on right-to-carry, Chicago Mayor Rahm Emmanuel has said he intends to push new restrictions on firearms in the city, after gun control measures died during the lame-duck legislative session. Traditionally, the Chicago Mayor’s plan has taken a very restrictive view on concealed-carry and firearm ownership.