There are few things more politically uninteresting than the prospect of discussing a state’s problematic pension program. However, there are also few things more important. The state of Illinois is currently experiencing a $97 billion pension shortfall and the outcome of this problem will affect millions of people.
Illinois made a promise to its employees (financial compensation upon retirement) that it has failed to keep. The Illinois pension problem is considered the nation’s worst by many experts. What is the most off-putting about the pension situation is the that fact public education and other vital services are taking a hit. It’s unfair to the residents of Illinois. Fixing the pension program should be the state’s top priority.
Take the city of Detroit as an example. Everyone from Detroit City Council Members to the Mayor of Detroit knew that the city’s credit rating was plummeting. However, their inaction allowed the city to default on its loans and forced the city into bankruptcy. Although Detroit may sound like a far off dystopia that the State of Illinois could never revert to, anything is possible. If Illinois policy-makers fail to correct the pension problem, the future looks bleak for the Land of Lincoln.
Illinois is in a very vulnerable position, in fact it is the most vulnerable state, according to the Manhattan Institute of Policy Research. At approximately 24 percent funding, Illinois is by far the most underfunded state in the U.S. So, what’s the next step to solve the pension dilemma?
As is often the case, the answer isn’t clear. When the government is lacking money, the logical step is to raise taxes on its citizens. But, a raise in taxes just isn’t fair in this situation. A government can’t use the people’s money to fix its foolish mistakes. Increasing taxes cannot be a bailout for the policy makers who led Illinois into this position.
On the other hand, Illinois promised its employees money and it would be wrong not to follow through. Where should this money come from? I don’t think it can come from public education — Chicago public schools are abysmal and throughout the state public schools are struggling. The Illinois state constitution does not allow the pension benefits to be reduced, so it would appear that Illinois is between a metaphorical rock and a hard place.
If Illinois policy-makers don’t handle the pension shortfall immediately, there will be much larger issues facing Illinois residents in the years to come.