Illinois Senate Pres.: $100 Billion Unfunded Pension Liability Not 'Crisis'
In a Sunday morning interview with WGN Radio, Illinois’ Senate President John Cullerton said the state’s staggering $100 billion unfunded pension liability is not a “crisis.”
“People really misunderstand the nature of this whole problem; quite frankly, I don’t think you can use the word 'crisis' at the state level,” Cullerton said.
Cullerton described necessary reforms to state-funded pension obligations as a “tough, complicated issue because you are taking something away from somebody, and that’s not an easy thing to do.” However, when it comes to lightening the burden on Illinois taxpayers, and what the state takes away from them to fund state pensions, Cullerton is not so sympathetic.
“Its not that the pension system is bankrupt,” he added. “It’s not that we owe a hundred billion dollars to somebody right now. Its just that folks don’t want to put as much money in to pensions right now, or they want to spend it on something else, or they’d rather have their taxes lowered.”
Although the state’s personal income tax rate is scheduled to fall from five percent to 3.75 percent, and the corporate rate is supposed to drop to 5.25 percent from seven percent in 2015 after a temporary increase was put in place in 2011, Cullerton estimated the loss of revenue at about $5.38 billion and suggested the rate decrease should only be one quarter of one percent:
These pension [proposals] we've talked about will save annually anywhere from $750 million to $1.5 billion. So you're still going to have real huge cuts that we'll have to make if we don't raise that income tax higher than what they're scheduled to go down to.
But the pension reform then is about tax reduction--not about the solvency of the pension fund or about diverting money to spend more money for education.
Despite the state’s unfunded liabilities, Cullerton insisted, “We have a balanced budget in Illinois. We are not spending more money than we are taking in.”
The American Legislative Exchange Council’s Rich States Poor States ranks Illinois at 48 out of 50 states for economic outlook and 47 out of 50 in economic performance.