Let's go back to May 2005. Rod Blagojevich wasn't in a Colorado prison cell, he was still in his first term as Illinois’ Governor. 2005 was the top of the housing boom, so the economy was humming along and tax revenue was flowing in. The unemployment rate was 5.9%, not as good as the national average at that time, but significantly better than today's 9.2% rate.
We keep hearing IL's public sector unions blame the legislature for missing pension payments. While I agree that the State shares responsibility in the underfunding and promising over-generous benefits, that's not the entire picture.
Illinois has a May 31st deadline to pass fiscal bills, so they can be enacted January 1st of the next year. Governor Blagojevich, Speaker Madigan, and Senate President Jones had a plan to spend the annual pension payment on more social programs instead of investing the payment in the pension system. Today we call it a "pension holiday." The plan also included pension sweeteners and the infamous government-pensions-for-union-bosses scheme. It was passed by Democratic Party members in both the House and Senate on May 31st, 2005. Details can be found in Senate Bill 27.
Today if you listen to the public sector unions, they blame the state for this pension holiday. Unfortunately the truth is that the unions were aware of the pension holiday and fully supported the pension holiday. Let's look at the actually witness slips filed by four of the biggest public sector unions in Illinois.
SB 27 Proponents:
- Rich Frankenfeld, IEA (Pension double dipper with a Teachers Pension)
- Derek Blaida, CPS
- Steve Preckwinkle, IFT (Substitute taught for one day, now receives a TRS Pension)
- Laura Arterburn, IFT
- Michael McGann SEIU
- Kurt Anderson SEIU
Records confirm that SEIU (Service Employees International Union), IEA (Illinois Education Association), CPS (Chicago Public Schools), and IFT (Illinois Federation of Teachers) all supported the 2005 pension holiday in exchange for these sweeteners and payouts for union bosses. Also to be completely fair, the Retired State Employees Association opposed this holiday.
When we consider the compounded interest on the money not paid into the retirement system, unrealistic investment projections by the actuaries, the poor investment returns (CTPF investments actually LOST money in 2012), and the sweetened benefits it's easy to see how Illinois' pension debt has ballooned to over $100 Billion!
Now the public sector unions led by Ralph Martire and the Center for Tax and Budget Accountability want to hike taxes via a progressive tax scheme to pay off the pension debt.
Allen Skillicon write on his blog www.allenskillicorn.com.