1970 Illinois Constitution

Martin Armstrong Warns Illinois ‘Taxpayers Are Absolutely Screwed And This Is Not A Place You Want To Own Property’

Speaking of Martin Armstrong, I was reading the economist’s blog early Wednesday morning when I came across the following in his April 4 post entitled “Illinois on the Brink of Bankruptcy”:

The pension crisis is brewing and the one state that appears to be heading toward a complete bankruptcy is Illinois. Clients should not own ANY debt from Illinois, be it city, municipal, or state. Just get out before the curtain falls. The Illinois Constitution plainly states that pension benefits, once granted, “shall not be diminished or impaired.” Thus, taxpayers are absolutely screwed and this is not a place you want to own property

(Editor’s note: Bold added for emphasis)

“Taxpayers are absolutely screwed and this is not a place you want to own property”

“Just get out before the curtain falls”

Regular readers of Survival And Prosperity know this has been a major concern of mine for a couple of years now. I blogged back on November 9, 2012:

Events that have unfolded at the local level on up for some time now have convinced me that my future lies outside of Chicago, Cook County, and Illinois. Which is a shame, because as I’ve mentioned before, my family has deep ties to the area. So much so a number of family members are familiar with the tale of one ancestor who fought courageously to save his tailor shop (at least the contents of it) from the approaching flames of the Great Chicago Fire back in 1871.

141 years later, another looming disaster looks to be in store for me and my loved ones if I don’t take action, and soon.

It’s bad enough Chicago, Cook County, and Illinois was already overrun by too many residents that live their lives in pursuit of the Ubi East Mea (“Where’s Mine?”) mentality and politicians who have been quick to pander to these individuals with “free” things in exchange for votes- long before last Tuesday’s election results revealed the rest of America is now marching down this same path.

But combine this with poor financial health, a bleak economic outlook, and growing attacks on the finances and freedoms of productive, law-abiding residents as politicians rob Peter to pay Paul in their attempt to remain in office- and you’ve got one hell of a mess coming to this area of the Midwest in the next few years.

Eventually, I predict the productive residents will split town (this happened before in Chicago in the late 60s-early 70s in some neighborhoods), there will be no more money for “freebies,” and the “Where’s Mine?” brigade will riot. Athens-style.

As I’ve been telling those close to me for some time now, “First you’ll see the strikes. Then the larger protests. Until finally, the riots.”

History shows you don’t want to be in the city when the riots break out.

And I don’t plan on being here in Chicago when the coming civil strife erupts either.

I split town several months after writing all that.

You can read Armstrong’s entire blog post on his company’s website here. Disturbing stuff for citizens of “Madiganistan.”

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information contained herein.)

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Wednesday, April 6th, 2016 Bankruptcy, Civil Strife, Crash Prophets, Crime, Debt Crisis, Entitlements, Europe, Fiscal Policy, Freedom, Government, Preparedness, Public Safety, Self-Defense, Taxes Comments Off on Martin Armstrong Warns Illinois ‘Taxpayers Are Absolutely Screwed And This Is Not A Place You Want To Own Property’

Tax Hikes Coming As Illinois Public Pension Crisis ‘Fix’ Shot Down By State Supreme Court?

This weekend Illinoisans heard about the Friday ruling by the Illinois Supreme Court on a law that was celebrated by many as a big step in resolving the state’s well-publicized public pension crisis. Rick Pearson and Kim Geiger reported on the Chicago Tribune website Friday:

The Illinois Supreme Court on Friday unanimously ruled unconstitutional a landmark state pension law that aimed to scale back government worker benefits to erase a massive $105 billion retirement system debt…

At issue was a December 2013 state law signed by then-Democratic Gov. Pat Quinn that stopped automatic, compounded yearly cost-of-living increases for retirees, extended retirement ages for current state workers and limited the amount of salary used to calculate pension benefits.

Employee unions sued, arguing that the state constitution holds that pension benefits amount to a contractual agreement and once they’re bestowed, they cannot be “diminished or impaired.” A circuit court judge in Springfield agreed with that assessment in November. State government appealed that decision to the Illinois Supreme Court, arguing that economic necessity forced curbing retirement benefits.

On Friday the justices rejected that argument, saying the law clearly violated what’s known as the pension protection clause in the 1970 Illinois Constitution…

(Editor’s note: Bold added for emphasis)

Can’t say I was too surprised to hear that ruling handed down.

As for the ramifications on Main Street? Pearson and Geiger added:

The ruling means Republican Gov. Bruce Rauner and the Democrat-controlled General Assembly will have to come up with a new solution after justices appeared to offer little in the way of wiggle room beyond paying what’s owed, which likely would require a tax increase. Coming up with a way to bridge a budget gap of more than $6 billion already was going to be difficult with little more than three weeks before a scheduled May 31 adjournment, and now the pension mess has been added to the mix.

Rauner, who argued during last year’s campaign that the law was unconstitutional and didn’t go far enough to reduce the pension debt, said the court ruling only reinforces his approach of getting voters to approve a constitutional amendment that “would allow the state to move forward on common-sense pension reforms.”

(Editor’s note: Bold added for emphasis)

“A constitutional amendment”

I’m not so sure how that would work out. Consider what Natasha Korecki reported over on the Chicago Sun-Times website Friday:

But it was unclear how such an amendment would help solve the crisis. It arguably could not bring savings because, according to the court ruling, a new law cannot retroactively affect those who are already in the system, said Charles N. Wheeler III, Director of the Public Affairs Reporting program at the University of Illinois at Springfield…

“Likely would require a tax increase”

I suspect- as Survival And Prosperity has been warning for some time now- that Illinoisans will soon be hit with significantly-higher taxes as a consequence of those $6 billion state budget and $105 public pension gaps. Korecki added:

An Illinois Supreme Court ruling that struck down a pension reform law on Friday could have just opened the door even wider to the prospect of deep cuts to services and new taxes for Illinois residents.

With only three weeks left until lawmakers have to pass a balanced budget, legislators now have even more political cover to raise taxes and cut spending following the high court’s decision that it was unconstitutional for the state to pare back promised pension benefits for state employees…

“This ensures that however we resolve this, the citizens of Illinois will be paying more for less service from the state of Illinois,” Kent Redfield, professor emeritus of the University of Illinois at Springfield, said of Friday’s ruling. “I think that’s an inevitable outcome from this.”

(Editor’s note: Bold added for emphasis)

“Less government services. Higher fees, fines, and taxes.”

Something I’ve kept warning about on this blog, with regular observers of Springfield now talking it about these days (if they weren’t already).

I wonder to what extent Illinoisans have prepared/are preparing for such a scenario? I’ll be talking more about this later.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Pearson, Rick and Geiger, Kim. “Illinois Supreme Court rules landmark pension law unconstitutional.” Chicago Tribune. 8 May 2015. (http://www.chicagotribune.com/news/local/politics/ct-illinois-pension-law-court-ruling-20150508-story.html#page=1). 11 May 2015.

Korecki, Natasha. “State Supreme Court pension ruling provides political cover to cut more, tax more.” Chicago Sun-Times. 8 May 2015. (http://chicago.suntimes.com/politics/7/71/590030/state-supreme-court-pension-ruling-provides-political-cover-cut-tax). 11 May 2015.

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Monday, May 11th, 2015 Debt Crisis, Deficits, Entitlements, Fiscal Policy, Government, Legal, Main Street, Political Parties, Taxes Comments Off on Tax Hikes Coming As Illinois Public Pension Crisis ‘Fix’ Shot Down By State Supreme Court?

Bill Introduced To Permit Illinois Municipalities To File For Bankruptcy

Since I started blogging about a U.S. financial crash back on Memorial Day Weekend 2007, I’ve believed one casualty will be municipal government. Particularly in Illinois. So imagine my non-surprise when I spotted an article on the Chicago Tribune website a couple of days ago about proposed legislation at the state level granting Illinois towns the authority to file for bankruptcy. Nick Swedberg of the Associated Press wrote on March 26:

Stressed by pension debt, other financial issues and the possibility losing a chunk of their state aid, some Illinois cities want the option to file for bankruptcy. They’ve found an ally in a Republican lawmaker, who’s proposed legislation to allow municipalities to follow in the footsteps of Detroit and other cities in restructuring debt and paying back creditors…

Rep. Ron Sandack is sponsoring legislation that would grant authority for communities to file for bankruptcy under Chapter 9 of the federal code. The Downers Grove Republican says it’s a “measure of last resort,” especially with Gov. Bruce Rauner’s proposal in next year’s budget to cut in half the local governments’ share of state income taxes by 50 percent.

“It’s just giving time and space to do things right,” he said…

Swedberg added later in the piece:

Municipal bankruptcies are rare, NCSL data shows. Of 37 local government filings since 2010, only 8 were cities, with the majority filed by utilities and special districts.

Detroit filed for the nation’s largest municipal bankruptcy in July 2013, looking to restructure $12 billion of debt…

It’s true. Municipal bankruptcies haven’t happened too often. But keep in mind what Eric Weiner wrote on the NPR website back on February 28, 2008:

For most of U.S. history, cities and towns were not eligible for bankruptcy protection. But during the Great Depression, more than 2,000 municipalities defaulted on their debt, and they pleaded with President Roosevelt for a federal bailout. “All they got was sympathy,” reported Time magazine in 1933. Instead, Roosevelt pushed through changes to the bankruptcy laws that allows towns and cities to file for bankruptcy. They even got their own section of the bankruptcy code: Chapter Nine…

(Editor’s note: Bold added for emphasis)

There’s also this from Robert Slavin on The Bond Buyer website back on January 14:

For the municipal bond industry, 2015 marks the midpoint in what may turn out to be the decade of the bankruptcy.

Four of the five largest municipal bankruptcy filings in United States history have been made in roughly the last three years, a trend analysts attribute to the aftereffects of the 2008 credit crisis and Great Recession, as well as changing attitudes about debt.

“The crash of 2008 and five years of stagnation preceded by years of escalating wages, pensions and Other Post-Employment Benefits set the stage for our recent Chapter 9 filings,” said Arent Fox partner David Dubrow.

Chapter 9 municipal bankruptcy was adopted in 1937 but had been rarely used, particularly by large governments. However, since November 2011 San Bernardino, Calif., Stockton, Calif., Jefferson County, Ala., and Detroit have filed four of the five largest bankruptcies as measured by total obligations.

(Editor’s note: Bold added for emphasis)

Could the specter of Meredith Whitney, the “Diva Of Doom,” be returning to take revenge on the municipal bond industry?

I’m not surprised Illinois municipalities would be interested in House Bill 298. From Patrick Rehkamp and Andrew Schroedter on the website of the Chicago-based Better Government Association back on December 6, 2014:

Reasons for filing vary but often include troubled public development projects, unanticipated hefty legal judgments against a taxpayer-backed entity, or massive pension and bond debt payments that leave a municipality cash-strapped and unable to cover operating costs of employee salaries, vendor payments and other expenses.

(Editor’s note: Bold added for emphasis)

The public pension crisis in Chicago and Illinois has been well-publicized for some time now. And while such entitlements are supposedly protected by a provision in the 1970 Illinois Constitution, the BGA noted in their piece:

In Illinois, public employee pensions are guaranteed by the state constitution. But in the Detroit and Stockton, California bankruptcy cases, federal judges have ruled that pension benefits can be adjusted, the same as other debts, despite a constitutional guarantee.

(Editor’s note: Bold added for emphasis)

You can track the progress of HB 298 on the Illinois General Assembly website here.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Swedberg, Nick. “Bill pushes for possible municipal bankruptcies in Illinois.” Associated Press. 29 Mar. 2015. (http://www.chicagotribune.com/news/sns-bc-il–closer-look-bankruptcy-20150329-story.html). 3 Apr. 2015.

Weiner, Eric. “What Happens When City Hall Goes Bankrupt?” NPR. 28 Feb. 2008. (http://www.npr.org/templates/story/story.php?storyId=60740288). 3 Apr. 2015.

Slavin, Robert. “Why So Many Big Bankruptcies?” The Bond Buyer. 14 Jan. 2015. (http://www.bondbuyer.com/news/markets-buy-side/why-so-many-big-bankruptcies-1069539-1.html). 3 Apr. 2015.

Rehkamp, Patrick and Schroedter, Andrew. “Next Up: Illinois Municipal Bankruptcy?” Better Government Association. 16 Dec. 2014. (http://www.bettergov.org/next_up_illinois_municipal_bankruptcy/). 4 Apr. 2015.

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Sunday, April 5th, 2015 Bankruptcy, Credit, Debt Crisis, Defaults, Depression, Entitlements, Government, Legal, Political Parties, Recession, Taxes Comments Off on Bill Introduced To Permit Illinois Municipalities To File For Bankruptcy

Fixed? Illinois Public Pension Gap Surpasses $111 Billion

“The Illinois General Assembly barely passed legislation yesterday that’s been touted to ‘fix’ the state’s $100 billion public pension crisis.

Illinois Governor Pat Quinn, who has promised to sign SB0001, declared in a press release Tuesday:

Since I took the oath of office, I’ve pushed relentlessly for a comprehensive pension reform solution that would erase a $100 billion liability and restore fiscal stability to Illinois.

Today, we have won. The people of Illinois have won.

Not so fast, big guy…”

Survival And Prosperity, December 4, 2013, post

I remember when Illinois Governor Pat Quinn signed off on Illinois Senate Bill 1 (or 0001, take your pick) on December 5 of last year, talk about the State’s monstrous public pension funding gap practically disappeared overnight. But yesterday, Benjamin VanMetre of the Illinois Policy Institute- “an independent research and education organization generating public policy solutions aimed at promoting personal freedom and prosperity in Illinois”- dredged up that nightmare for Illinoisans over at their website. That “$100 billion liability” that was supposed to be “erased.” It’s now more than $111 billion. VanMetre wrote:

Illinois’ unfunded pension liability grew to more than $111 billion this year, according to official estimates. That’s a $48 billion increase just since 2009.

That $111 billion pension shortfall means the state now has only 39 cents of every dollar it should have in the bank today to pay for future benefits. In the private sector, these funds would be deemed bankrupt…

Illinois Senate Bill 1, which was touted to reduce the State’s annual pension payment by more than $1 billion, is currently facing a legal challenge. VanMetre added:

But as we wait for a decision, Illinois’ pension debt continues to grow. The state’s pension payment for the current budget year totals $6.9 billion, and without reform, that pension payment will balloon to $7.6 billion for the 2016 budget year; an increase of $681 million…

(Editor’s note: Bold added for emphasis)

So what’s the likelihood of the courts shooting down this new public pension law? As I wrote in that December 4, 2013, post:

This legislation is almost certainly headed to court, as in the Illinois Supreme Court. As I noted on December 1, a provision of the 1970 Illinois Constitution defines public pension benefits as “an enforceable contractual relationship” that “shall not be diminished or impaired.”

And even if it passes constitutional muster, consider what I also added in that post:

As I blogged yesterday, the Wall Street Journal recently picked apart the legislative “fix,” and concluded not only was it “fake” but:

Even under the most optimistic forecasts, these nips and tucks would only slim the state’s pension liability down to $80 billion- which is where it was after Governor Quinn signed de minimis fixes in spring 2010 to get him past that year’s election…

“$80 billion.”

Stay tuned…

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

VanMetre, Benjamin. “Illinois’ Pension Debt Balloons To $111 Billion.” Illinois Policy Institute. 17 Nov. 2014. (http://www.illinoispolicy.org/illinois-pension-debt-still-ballooning/). 18 Nov. 2014.

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Tuesday, November 18th, 2014 Debt Crisis, Entitlements, Essential Reading, Government, Legal, Retirement Comments Off on Fixed? Illinois Public Pension Gap Surpasses $111 Billion

Chicago Public Pension Crisis Latest

Last Tuesday, I blogged about Chicago Mayor Rahm Emanuel’s attempt to address some of the City’s public pension woes via larger contributions by City employees and $50 million tax increases for five straight years- beginning next year and continuing through 2019- for Chicago property owners.

There’s been a lot of chatter regarding this proposal and other pension “reform” activity today. Karen Pierog reported on the Reuters website:

Legislation to ease funding shortfalls in two of Chicago’s four retirement systems is a modestly positive credit step but not a permanent fix, Moody’s Investors Service said on Monday

Moody’s said that if enacted into law, the measure would immediately reduce the unfunded liabilities in the two funds.

“However, we expect that the (liability) would then escalate for a number of years before declining. Accrued liabilities would exceed plan assets for years to come, and if annual investment returns fall short of the assumed 7.5 percent, the risk of plan insolvency may well reappear,” the credit rating agency said in a report…

After breezing through an Illinois House committee on April 2, the bill has stalled. Moody’s said that even if the bill makes it out of the legislature, Governor Pat Quinn must sign it. The law would then face potential challenges to its legality under the Illinois constitution, which prohibits the impairment of retirement benefits for public sector workers…

(Editor’s note: Bold added for emphasis)

So will the Illinois Governor and fellow Chicago Democrat sign off on Mayor Emanuel’s proposed legislation?

John Byrne and Monique Garcia reported on the Chicago Tribune website this afternoon:

Gov. Pat Quinn today came out against Mayor Rahm Emanuel’s plan to raise Chicago property taxes and cut retirement benefits as a way to shore up some of Chicago’s government worker pension systems.

The re-election seeking Democratic governor called the bill floating around Springfield “a sketch” that “kept changing by the hour” and blasted the property tax as a “lousy tax” because it is not based on the ability to pay…

“I don’t think that’s a good way to go,” Quinn said of hiking property taxes. “And I say it today and I’ll say it tomorrow, they’ve got to come up with a much better comprehensive approach to deal with this issue. But if they just think they are going to gouge property tax owners, no can do. We’re not going to go that way.”

(Editor’s note: Bold added for emphasis)

Now, as I pointed out in last week’s post about Chicago’s public pension crisis:

There’s still a state-required $600 million contribution due next year from the City to stabilize police and fire pension funds that this proposed property tax hike doesn’t address and has to be dealt with…

(Editor’s note: Bold added for emphasis)

Plus, I read the following this morning by Chacour Koop on the website of The State Journal-Register (Springfield):

After addressing Illinois’ own employee pension crisis, lawmakers now face an equally challenging task with the state’s cities, as mayors demand help with underfunded police and firefighter pensions before the growing cost “chokes” budgets and forces local tax increases.

The nine largest cities in Illinois after Chicago have a combined $1.5 billion in unfunded debt to public safety workers’ pension systems. Police and fire retirement funds for cities statewide have an average of just 55 percent of the money needed to meet current obligations to workers and retirees…

The problems — a history of underfunding, the expansion of job benefits and the prospect of crushing future payments — mirror those that Chicago Mayor Rahm Emanuel warned about when he asked the legislature for relief last week.

In 2016, state law requires cities to make required contribution increases — in some cases, more than an additional $1 million annually — so they’ll reach 90 percent funding by 2040. If they don’t, the state will begin doing it for them, diverting grant money now used by cities elsewhere directly into the pension funds…

(Editor’s note: Bold added for emphasis)

Just like the Illinois General Assembly- dominated by Democrats- barely passed legislation on December 3, 2013, that was touted as a “fix” for the state’s $100 billion public pension crisis (it isn’t), something tells me an accommodation may be reached with fellow Democrats running the City of Chicago so they don’t have to pay the full amount of the state-required $600 million contribution due next year to stabilize police and fire pension funds.

That goes for those large Illinois communities as well.

Watch all the back-patting go on should that “fix” materialize as well.

And the inevitable “blowback” down the road.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

UPDATE: From Fran Spielman over on the Chicago Sun-Times website early Tuesday morning:

Mayor Rahm Emanuel and House Speaker Michael Madigan Monday stripped out controversial language from city pension legislation that had authorized the City Council to impose a property-tax hike, putting the stalled measure back on the fast-track at the state Capitol.

Madigan, D-Chicago, filed an amendment to Senate Bill 1922 after the House adjourned Monday without taking any action on the stalled legislation. Sources now expect the legislation to be voted upon as early as Tuesday.

(Editor’s note: Bold added for emphasis)

Sources:

Pierog, Karen. “UPDATE 1-Proposed Chicago pension changes positive step but no fix -Moody’s.” Reuters. 7 Apr. 2014. (http://www.reuters.com/article/2014/04/07/usa-chicago-moodys-idUSL2N0MZ1AP20140407). 7 Apr. 2014.

Byrne, John and Garcia, Monique. “Quinn blasts Emanuel’s property tax hike for pensions.” Chicago Tribune. 7 Apr. 2014. (http://www.chicagotribune.com/news/politics/clout/chi-quinn-blasts-emanuels-property-tax-hike-for-pensions-20140407,0,5432729.story). 7 Apr. 2014.

Koop, Chacour. “Illinois’ next pension issue: Police, firefighter funds.” Associated Press. 6 Apr. 2014. (http://www.sj-r.com/article/20140406/NEWS/140409562/-1/json/?tag=1). 7 Apr. 2014.

Spielman, Fran. “Analysis: Rahm’s pension bill revisions solve—and create—problems.” Chicago Sun-Times. 8 Apr. 2014. (http://politics.suntimes.com/article/chicago/analysis-rahm%E2%80%99s-pension-bill-revisions-solve%E2%80%94and-create%E2%80%94problems/mon-04072014-728pm). 8 Apr. 2014.

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Monday, April 7th, 2014 Debt Crisis, Entitlements, Fiscal Policy, Government, Political Parties, Taxes Comments Off on Chicago Public Pension Crisis Latest

Thoughts On Illinois State Lawmakers Passing Public Pension ‘Fix’

The Illinois General Assembly barely passed legislation yesterday that’s been touted to “fix” the state’s $100 billion public pension crisis.

Illinois Governor Pat Quinn, who has promised to sign SB0001, declared in a press release Tuesday:

Since I took the oath of office, I’ve pushed relentlessly for a comprehensive pension reform solution that would erase a $100 billion liability and restore fiscal stability to Illinois.

Today, we have won. The people of Illinois have won.

Not so fast, big guy.

First off, as I blogged yesterday, the Wall Street Journal recently picked apart the legislative “fix,” and concluded not only was it “fake” but:

Even under the most optimistic forecasts, these nips and tucks would only slim the state’s pension liability down to $80 billion- which is where it was after Governor Quinn signed de minimis fixes in spring 2010 to get him past that year’s election…

Second, this legislation is almost certainly headed to court, as in the Illinois Supreme Court. As I noted on December 1, a provision of the 1970 Illinois Constitution defines public pension benefits as “an enforceable contractual relationship” that “shall not be diminished or impaired.”

Even the top-ranking Democrat in the Illinois Senate wonders if SB0001 can pass legal muster. Ray Long and Monique Garcia reported on the Chicago Tribune website this morning:

Senate President John Cullerton, whose earlier union-backed plan to curb pension spending was stymied by House Speaker Michael Madigan, said he remained concerned that the package passed by lawmakers violated a state constitutional ban on diminishing or impairing public pension benefits.

Cullerton, whose Senate Democrats had been viewed as closer to the unions than Madigan’s House majority, said he viewed it important to get something before the courts to decide whether the approach is legal.

“I think the bill has serious constitutional problems, I’ve made that clear from the start, but now it’s in front of the court and they can decide,” Cullerton said.

And decide they will, meaning this supposed “fix” for the state’s public pension crisis might eventually amount to nothing.

I thought Mark Brown of the Chicago Sun-Times summed it all up well. Brown wrote on the Sun-Times website yesterday afternoon from Springfield:

Oh, how I wish I could tell you that the long fight to fix Illinois’ grossly underfunded public pension plans was at an end with Tuesday’s historic votes by the state Legislature.

But that wouldn’t be true.

First, there will be a court challenge — or more likely challenges — brought by state workers, teachers and their retirees, along with the unions that represent them.

And before those cases can even work their way through the system, state lawmakers will have to decide in early 2014 how they are going to handle Chicago’s pension problems — beginning with those of city teachers.

Other local officials, including Cook County Board President Toni Preckwinkle are clamoring for pension relief as well, which will combine with Mayor Rahm Emanuel’s priorities to keep the issue on the front burner.

If the courts strike down the pension reform plan approved Tuesday on narrow votes by both chambers, or even if they rule out parts of it, we could be back here within a year or two to start over.

(Editor’s note: Italics added for emphasis)

What transpired Tuesday in the Illinois General Assembly might be a first step in “fixing” the state’s public pension crisis, but much more work and sacrifice will eventually be required to arrive at a real solution.

Question is, is the will even there among Illinoisans and their elected state officials to do this?

I kind of doubt it.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Garcia, Monique and Long, Ray. “Unions vow legal fight as lawmakers OK pension overhaul.” Chicago Tribune. 4 Dec. 2013. (http://www.chicagotribune.com/news/chi-illinois-pension-vote-20131203,0,5070497.story). 4 Dec. 2013.

Brown, Mike. “Brown: State’s financial problems far from over.” Chicago Sun-Times. 3 Dec. 2013. (http://www.suntimes.com/24156150-761/brown-states-financial-problems-far-from-over.html). 4 Dec. 2013.

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Wednesday, December 4th, 2013 Debt Crisis, Entitlements, Government, Legal, Political Parties Comments Off on Thoughts On Illinois State Lawmakers Passing Public Pension ‘Fix’

Illinois State Lawmakers To ‘Fix’ $100 Billion Public Pension Crisis Tuesday?

Tuesday looks to be an important day for the future of Illinois.

State lawmakers may vote on legislation to “fix” a well-publicized $100 billion public pension crisis. Rick Pearson and Bob Secter wrote on the Chicago Tribune website yesterday:

Illinois lawmakers return to Springfield on Tuesday to consider an agreement struck by legislative leaders that aims to fix the state’s massive government worker pension as Senate Democrats have become the focal point for intensive lobbying efforts…

The pension vote is shaping up to be one of the most important votes of lawmakers’ careers, with senators and representatives forced to decide which is better for their political self-interest: Backing up their powerful leaders or siding with the re-election might of public employee unions.

At stake is Illinois’ $100 billion pension shortfall that affects teachers outside Chicago, public university employees and state government workers. The worst-in-the-nation deficit is gobbling up tax money that otherwise could go to education and other programs, and has resulted in Illinois holding the lowest credit rating among the states. Illinois’ pension problem also is being blamed in part for the state’s struggling economy and high unemployment.

The agreement leaders reached the day before Thanksgiving aims at saving the state $160 billon over 30 years to get the pension systems fully funded, largely by limiting annual cost-of-living increases and raising the retirement age while also requiring the state to put its share of money into the system.

Not surprisingly, beneficiaries of the current setup aren’t too happy with these rapidly-unfolding developments. Francine Knowles reported on the Chicago Sun-Times website yesterday:

Details of the pension deal reached by four House and Senate leaders and headed for a vote this week have supporters and critics in full-court press mode.

Union leaders, who are blasting the agreement, say their members will bombard lawmakers Monday, urging them to kill the proposed bill that could ultimately slash $160 billion from the state’s future pension liabilities and improve Illinois’ damaged creditworthiness.

Opponents of the yet-to-be-seen legislation will argue that it’s unconstitutional, among other things. Pearson and Secter added:

Any final package approved by the legislature and governor faces an almost certain legal challenge. Critics will go into court armed with a provision of the 1970 Illinois Constitution that defines pension benefits as “an enforceable contractual relationship” that “shall not be diminished or impaired.”

I’m not sure what to make of all this yet, except that the present course the State is on concerning public sector pensions is unsustainable (costing taxpayers $5 million a day as I noted back on October 21) and that any legislation passed will probably end up being legally contested.

More Wednesday…

Sources:

Pearson, Rick and Secter, Bob. “Senate Democrats under the gun on proposed pension fix.” Chicago Tribune. 30 Nov. 2013. (http://www.chicagotribune.com/news/local/ct-illinois-pension-reform-met-1201-20131201,0,7850446.story). 1 Dec. 2013.

Knowles, Francine. “Pension deal faces pushback from unions; backers pursue votes.” Chicago Sun-Times. 30 Nov. 2013. (http://www.suntimes.com/24073242-761/pension-deal-faces-pushback-from-unions-backers-pursue-votes.html). 1 Dec. 2013.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Sunday, December 1st, 2013 Credit, Debt Crisis, Employment, Entitlements, Government, Legal Comments Off on Illinois State Lawmakers To ‘Fix’ $100 Billion Public Pension Crisis Tuesday?
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RSS Chris Hill’s Other Blog: Offshore Safe Deposit Boxes

  • List Of Offshore Private Vaults Updated
    The list of private, non-bank vaults outside the United States (offering safe deposit boxes/lockers at a minimum) located on this blog’s sister site- Offshore Private Vaults- has just been updated. Safe deposit facilities now open for business have been added under the following countries: -Hong Kong (Smart Secured Storage) -Liechtenstein (Liemeta AG, Triesen) -United Kingdom […]
  • Related Reading: The Telegraph Looks At Latest Security Technology In Bank, Private Vaults
    I’m back after several days spent on matters related to the research business (focus: specialized asset protection) I’m in the process of rolling out. Despite the “spring break,” I compiled a good deal of material to blog about in the near future. Getting back into the saddle then… “How to rob a bank” This headline […]
  • Next Degussa Numis Day To Take Place March 30, 31
    Rare numismatic coins often find their way into safe deposit boxes. And Degussa, a leading international player in the precious metals world which also offers safe deposit boxes (for customers) at branches in Germany, Singapore, Spain, and Switzerland, has posted information about the next Numis Day (first blogged about here) at their Geneva and Zurich […]
  • Related Reading: Switzerland, Canada, United Kingdom Top U.S. News & World Report’s 2017 ‘Best Countries’ Rankings
    Here’s an annual survey one might consider when selecting an offshore safe deposit box location. U.S. News & World Report just released its “Best Countries” rankings for 2017. Kevin Drew reported Tuesday morning on the American media company’s website: Switzerland is viewed as the No. 1 overall country, according to a survey of more than […]
  • Related Reading: London’s Sharps Pixley Spotlighted By The Spectator Magazine
    Monday evening I read an interesting article about London, England-based precious metals showroom/safe deposit box service Sharps Pixley (first blogged about here). Margareta Pagano wrote on the website of The Spectator (UK) this past weekend: When the going gets tough, the tough go shopping. And when the going is seriously tough- as it may be […]