(The Center Square) – With Illinois households already saddled with the third-most pension debt in the country, a new Commission on Government Forecasting and Accountability report finds that the state’s mounting pension liabilities spiked by nearly $3 billion over a 12-month window.
Much of the rising cost COGFA attributed to the increase was because of “larger than expected salary increases” for state employees. Researchers added that unfunded costs for the five pension systems overseen by the state now stand at nearly their highest level in well over a decade.
State Rep. Martin McLaughlin, R-Barrington Hills, serves as a COGFA legislative member. He said he could see all the red ink coming.
“In my short three years in the state, we’ve gone from $39 billion to $51.5 billion in spending,” McLaughlin told The Center Square. “With that kind of accelerated spending, I don’t see the legislature aware of the problem or having a willingness to address this issue. They’ve kicked the can down the road so much I’m surprised they haven’t torn their ACL.”
McLaughlin added he’s long been sounding the alarm about lawmakers in Springfield underselling the state’s true pension debt and he’s convinced that Democratic leaders are now only using the inflationary salary increases as an opportunity to finally come clean about where liabilities really stand and where they’re headed.
“First of all, as it relates to the total liability, going back almost four years now, I stated that the liability was half of what the state was forecasting,” he added. “It doesn’t only have to do with the inflationary salary increases and the pensions that are calculated as a percentage of that they have been under forecasting.”
With the state having saved roughly 44 cents for every dollar of benefits now owed to retired state employees, McLaughlin said it’s easy to see why lawmakers have hidden from the issue as long as they have.
“The true numbers of our liability would have put us in a credit rating status that would have put us into junk when [former Illinois Gov. Bruce Rauner] was trying to correct that problem,” he added. “And if you remember, there was a time in the last two or three years when we were one step above junk status and credit agencies in the state at the time were forecasting $300 billion in liability instead of $124 billion. That would have put our debt at a level that investment companies could not hold it and Illinois would have gone into foreclosure or bankruptcy.”
With the latest debt increase representing an overall 1.8% jump to $142.3 billion, McLaughlin said he sees just one way forward when it comes to finally putting the state’s financial house in order.
“We need leadership that’s aware of the problem, unafraid to address it, to talk about it and to give the hard truth to the public so they can understand where we truly are so when they go to the voting booth they can make a decision about the path of this state,” he said. “Whether they want us to go into a recovery phase or they want us to continue to stay on a path to fiscal insolvency.”