U of I Economist Calles the Illinois Democrats Pension Borrowing Plan a Gimmick

This article underscores the need for real government pension reform in Illinois. The way to address the pension issues facing our state is to go back to a law the famed "Fab 5" freshmen legislators advocated back in the 1990's. The law, sponsored by then Illinois Senators Peter Fitzgerald and Steve Rauschenberger required the State to fully fund, on an annual basis, its pension liabilities. Governor Blagojevich and his allies suspended that law and declared "pension holidays" which allowed the state to skip payments. Now the liabilites are increasing and threaten to topple the system. We need a return to fiscal responsibility.


Economist contends pension Ill. debt plan merely 'gimmick'
5/30/2008

Kurt Erickson, Pantagraph

SPRINGFIELD — A University of Illinois economist says a pension borrowing plan pushed through the state Senate by Democrats Thursday is “nothing more than a book-keeping gimmick” that won’t solve the state’s long-term financial problems.

Jeffrey R. Brown, director of the U of I Center on Business and Public Policy, said the plan passes the burden of future pension debt to the next generation of taxpayers.

“It is a classic case of using smoke and mirrors to try to fool the public into thinking we have done something meaningful when we have not,” said Brown.

Democrats in the Senate want to borrow $16 billion to pay down the state’s pension debt. The move would free up about $500 million to help finance other parts of state government. It was approved in the Senate Thursday with no Republican support. It now heads to the House.

Brown, who has been nominated by President Bush to serve on the board of trustees for the nation’s Social Security and Medicare programs, says the move doesn’t lower the overall cost of state pensions.

The only way to address that is to raise taxes or reduce other government spending and direct that money to pay off pension debt, he said.

“Neither of these is attractive to politicians, particularly in an election year,” Brown said.

State Sen. Don Harmon, D-Oak Park, told senators that the move is financially solid.

“It’s a very conservative estimate,” Harmon said.