(The Center Square) – With myriad proposals to address Illinois’ unfunded pension liability, some are looking at a tax increase. Others want pensioners to pony up.
The Better Government Association hosted a pension roundtable in Chicago Tuesday to take up ideas to address Illinois’ $140 billion unfunded liability.
Among the issues discussed were how Tier II pensions, or benefit plans for public employees in Illinois hired after 2011, may need to be addressed because it may not comply with Social Security rules. State Rep. Stephanie Kifowit, D-Oswego, was part of the panel.
“Regardless of what plan comes out that’s agreed upon, that’s fiscally responsible for the state, No. 1, and equally respectful of the job that our employees do,” Kifowit said. “We need to acknowledge that it needs to be fixed.”
One suggestion is to increase the income tax to focus on increased pension payments. Illinois has a $140 billion unfunded pension liability taxpayers are on the hook for.
State Rep. Steven Reick, R-Woodstock, said if legislators ask the taxpayers to pay more, retired public employees must give something too, like an income tax on state retirement benefits.
“If you’re going to ask for something from the taxpayers of Illinois, you are also going to have to be a taxpayer of Illinois,” Reick said.
Retirement benefits are not taxed in Illinois.
Kifowit said Reick’s idea is not in the cards.
“To treat state employee pensioners differently than other seniors who have been retired to me is a bit discriminatory,” she said.
Reick said whatever happens, there must be substantive reforms.
“It’s the cost of living adjustment and the 3% compounding that’s driving the pension debt crazy, it’s not the pension itself,” Reick said.
The Illinois Constitution secures promised pensions for Tier I employees with 3% compounded annual increases and fully taxpayer subsidized health insurance for retirees.
It’s not expected anything substantive would happen until sometime in the new legislative session next year.
