Actuarial Outpost
 
Go Back   Actuarial Outpost > Actuarial Discussion Forum > Finance - Investments
FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions


Finance - Investments Sub-forum: Non-Actuarial Personal Finance/Investing

Reply
 
Thread Tools Search this Thread Display Modes
  #871  
Old 02-11-2019, 06:50 PM
twig93's Avatar
twig93 twig93 is offline
Member
SOA
 
Join Date: Jun 2003
Posts: 31,084
Default

Quote:
Originally Posted by whisper View Post
The IL Constitution is quite clear. Any such taxation scheme is diminishing or impairing the benefit.

A better avenue would be to try to declare this clause unconstitutional under the Federal Constitution.
Again, I wouldn't put it past lawmakers to attempt shenanigans to get around such restrictions. I'm not saying they'll be successful; I'm saying I wouldn't put it past them to try.

I mean a tax on a tax is clearly a tax increase, but that didn't stop the Oregon lawmakers from attempting it. And nothing I've seen to date makes me believe that Illinois is a utopia of reasonable lawmakers.
__________________
Originally Posted by Gandalf
The thing that is clearest is twig's advice
Reply With Quote
  #872  
Old 02-13-2019, 10:29 AM
campbell's Avatar
campbell campbell is offline
Mary Pat Campbell
SOA AAA
 
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 86,060
Blog Entries: 6
Default

https://wirepoints.org/rewriting-ill...his-own-words/

Quote:
Rewriting Illinois’ crisis: Deputy Gov. Hynes forgets his own words
Spoiler:
It’s usually good to follow the rule “don’t shoot the messenger.” This time, however, the messenger should catch a lot of grief.

The messenger in question is Deputy Gov. Dan Hynes and the boss he’s working for is Gov. J.B. Pritzker.

Hynes just authored a new report in preparation for Pritzker’s upcoming budget address. He says Rauner drove the state “into a ditch.” He blames Rauner for just about everything that’s wrong with Illinois, from unpaid bills to budget deficits to struggling social services. From the report, you would think Illinois’ troubles didn’t start until Rauner took office.

There’s one big problem, though. Hynes himself declared that Illinois was already in crisis a decade ago.

That was back during the Quinn administration when Hynes was Illinois Comptroller. “Obscene” is what he said about the state’s unpaid bill crisis. “Triage” and avoiding “outright disaster” is how he described the state budget. In fact, Hynes even accused Gov. Quinn of using the same Blagojevich “gimmicks that got us into the crisis we’re in right now.”

Some might try and dismiss Hynes’ previous language as the exaggerated talk of a politician. He was, after all, running in the Democratic primary against Quinn at the time.

That’s exactly our point. Hynes’s talk was political then and it’s political now. He’s not just a messenger. We cover this in detail in our latest piece: Illinois’ crisis: 20 facts Pritzker doesn’t want ordinary Illinoisans to know.

For the record, we agree that Rauner’s four years were a failure and that the Rauner/Madigan impasse made things worse for Illinoisans. We covered that here.

But Illinois was a dysfunctional, near-bankrupt mess before Rauner took office. Hynes wants you to forget that. He’s hoping to take advantage of Illinoisans’ dislike of the former governor to rewrite history for his boss’ benefit. If he’s successful, then Pritzker’s “solutions” – a collection of tax hikes, pension bonds and new spending – will become that much easier to push through.

Read some excerpts on how Hynes described Illinois’ crisis during his time as Comptroller:

From the New York Times in 2010 – Illinois Stops Paying Its Bills, but Can’t Stop Digging Hole

[Mr. Hynes] picks the papers off his desk and points to a figure in red: $5.01 billion. “This is what the state owes right now to schools, rehabilitation centers, child care, the state university — and it’s getting worse every single day,” he says in his downtown office. Mr. Hynes shakes his head. “This is not some esoteric budget issue; we are not paying bills for absolutely essential services,” he says. “That is obscene.”

*****

Mr. Hynes walked into his child’s elementary school recently and learned that kindergarten hours were being cut because of the state budget. “Everything is triage now,” he said. “We work to avoid outright disaster.”

*****

In past years, when nonprofits needed credit lines to see themselves through tough budget times, the comptroller issued letters assuring banks that vendors would be paid. Not anymore. “I don’t feel comfortable doing that,” he said, adding with a shrug, “I mean, who knows, right?”

From the Pantagraph in 2009 – Comptroller: State deficit could hit $9 billion

As Gov. Pat Quinn prepares his plan for Illinois’ money troubles, he could be staring down a state budget hole that could end up an unprecedented $9 billion deep.

That number could be double the deficit Illinois faced when former Gov. Rod Blagojevich took office in 2003, Illinois Comptroller Dan Hynes said Wednesday. “These are very disturbing figures,” Hynes said.

From Bloomberg in 2010 – Illinois Financial Health Grows Worse, Comptroller Hynes Says

Illinois’s deteriorating financial condition threatens to swallow up more than half its general- fund budget in the next fiscal year, Comptroller Dan Hynes said.

The financial picture drawn by Hynes in a report yesterday projects a fiscal 2012 deficit of $15 billion or more, while this year’s budget calls for $26 billion in spending. The state’s financial condition “continues to deteriorate,” Hynes said, citing a 36 percent surge in fiscal 2010 bills to be paid from current-year revenue.

Payments to vendors who do business with the state will continue to be delayed, beyond “the historic levels seen recently,” and may not be made until December, according to Hynes’s report. The state has unpaid bills dating back to March.

“This will lead to more providers facing financial hardship and further threaten both the level and quality of services provided to Illinois citizens,” Hynes said.

From the Daily Herald in 2009 – Hynes: State needs to cut back government to ’05 levels

If Illinois is going to balance its budget, leaders need to cut back state government to 2005 staffing levels…These were some steps for eliminating a potential $10.5 billion budget deficit State Comptroller Dan Hynes laid out Monday during a visit to the Rotary Club of Elgin.

From National Public Radio in 2010 – Illinois Governor Confronts Budget Woes

Schaper: And Msall says because Illinois’ politicians haven’t significantly raised revenue or cut spending in years, the state is now borrowing even more to pay operating expenses. By some measures, only California is in worse fiscal shape than Illinois. Illinois Comptroller Dan Hynes is the state official waiting for enough money to pay the state’s bills. He’s also a Democratic primary challenger to Governor Pat Quinn. Hynes charges that Quinn’s budget is eerily similar to those of his reckless predecessor Rod Blagojevich.

Mr. Dan Hynes (Comptroller, State of Illinois): These are the same types of gimmicks that got us into the crisis we’re in right now. And they’re just being repeated.


__________________
It's STUMP

LinkedIn Profile
Reply With Quote
  #873  
Old 02-13-2019, 10:56 PM
campbell's Avatar
campbell campbell is offline
Mary Pat Campbell
SOA AAA
 
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 86,060
Blog Entries: 6
Default

https://www.chicagotribune.com/news/...y.html#new_tab

Quote:
Budget watchdog says Illinois should tax retirement income and cap spending, but Pritzker unlikely to go along

Spoiler:
A second public policy organization is calling for Illinois to tax retirement income and expand the sales tax to some consumer services as part of a sweeping plan to fix the state’s fiscal woes.

The recommendations from nonpartisan budget watchdog Civic Federation come one week before new Gov. J.B. Pritzker is scheduled to present his first budget proposal to lawmakers. The Democratic governor backs legalizing and taxing recreational marijuana and sports gambling, as well as overhauling the state income tax system in two years. But he hasn’t endorsed taxing retirement income or gotten specific on taxing services.


In its annual “budget roadmap,” the Civic Federation’s Institute for Illinois’ Fiscal Sustainability says new taxes should only be considered as part of a multiyear plan that also limits state spending. It proposes limiting spending growth to 2.4 percent per year for five years.

The call to tax retirement income echoes a similar proposal last week from the Civic Committee of the Commercial Club of Chicago, which is made up of the city’s business elite. The Civic Federation has been pushing the idea for several years, though its recommendation hasn’t gained traction in Springfield.

The watchdog group’s report notes that Illinois is one of only three states that have an income tax but don’t tax any retirement income. All of Illinois’ neighbor states tax retirement income in some form.

Setting low expectations for his first budget, Gov. J.B. Pritzker report says Bruce Rauner drove Illinois 'into a financial ditch'
Civic Federation President Laurence Msall called the state’s policy “an outdated and expensive exemption” that shifts the tax burden from wealthy retirees to working people. By taxing all retirement income that is subject to the federal income tax, Illinois could bring in $2.5 billion during the budget year that begins July 1, according to the report. Last week, the Pritzker administration projected a $3.2 billion budget deficit for the next fiscal year in a report that set the stage for a low-expectations budget plan next week.

The report also recommends extending the state sales tax to 14 services that are taxed in Wisconsin but not Illinois, including cable and internet, parking and towing, and landscaping.

ADVERTISING

inRead invented by Teads
The Civic Federation cautions against counting money from legalized marijuana and sports betting taxes in Pritzker’s initial budget, noting that new industries take time to catch on and that revenue from such efforts often falls short of projections.

“In order to avoid building deficits into future budgets, the initial proceeds from sports gambling or cannabis should not be used to prop up Illinois’ budget until the state has a reliable accounting,” Msall said in a statement.

Among its recommendations to address the state’s chronically underfunded pension plans, the report says lawmakers should ask voters to approve an amendment to the Illinois Constitution that would allow the legislature “to make reasonable and moderate changes to the pension benefits of current employees and retirees.” The state constitution currently says benefits “shall not be diminished or impaired.”


__________________
It's STUMP

LinkedIn Profile
Reply With Quote
  #874  
Old 02-14-2019, 05:56 AM
campbell's Avatar
campbell campbell is offline
Mary Pat Campbell
SOA AAA
 
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 86,060
Blog Entries: 6
Default

https://www.reuters.com/article/illi...2001Q7#new_tab

Quote:
Budget and pensions top credit issues for Illinois' new governor -Moody's

Spoiler:
CHICAGO, Feb 5 (Reuters) - Illinois’ already low credit rating could be impaired if the state relies on one-time revenue measures or increases its large unpaid bill backlog to balance its upcoming budget, Moody’s Investors Service said on Tuesday.

The credit rating agency, which rates Illinois one step above junk at Baa3 with a stable outlook, also put weak demographic trends and escalating public pension payments on its list of the top credit issues facing the state’s new governor.

Democrat J.B. Pritzker, who took office last month and will unveil his fiscal 2020 budget on Feb. 20, has not released detailed plans for tackling Illinois’ structural budget deficit and a $133.5 billion unfunded pension liability.

Jordan Abudayyeh, Pritzker’s spokeswoman, said “Illinois will need years to dig out of the fiscal mess this administration inherited.”

Moody’s cited reports that Pritzker is considering increasing near-term pension payments, while rejecting moves to reduce retirement benefits for current workers.

“In general, any efforts to boost current contributions would be credit-positive for the state, while efforts to defer or reduce contributions for fiscal relief would revive questions about pension plan sustainability,” Moody’s said in a report.

The governor has also talked about “a fair tax system” that would replace Illinois’ flat personal income tax rate with graduated rates.

Because the change would require voter approval of a constitutional amendment, Moody’s said it will not be a factor in the state’s budget for the fiscal year that begins July 1. In the meantime, Pritzker has advocated for the sale and taxation of recreational marijuana and possibly expanded gambling.

“Increasing the state’s financial flexibility by creating new revenue streams or instituting a more flexible income tax regime should be credit positive, provided that new revenues help address the state’s pension liabilities and that any adverse economic impacts are minimal,” Moody’s said.

Meanwhile, business group the Civic Committee of the Commercial Club of Chicago released a blueprint on Tuesday aimed at eliminating Illinois’ chronic budget gap, as well as the state’s unpaid bill pile, estimated at $7.2 billion on Tuesday, and boosting pension funding by $2 billion a year. The group called for increasing state revenue by $6 billion annually mainly by hiking personal and corporate income tax rates and taxing retirement income and some services. The state would also save $2 billion annually through less-costly employee and retiree healthcare and operational improvements. (Reporting by Karen Pierog in Chicago Editing by Matthew Lewis)


__________________
It's STUMP

LinkedIn Profile
Reply With Quote
  #875  
Old 02-14-2019, 05:59 AM
campbell's Avatar
campbell campbell is offline
Mary Pat Campbell
SOA AAA
 
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 86,060
Blog Entries: 6
Default

https://www.restoreillinois.org
Quote:
RESTORE ILLINOIS: A FOUNDATION FOR GROWTH EXECUTIVE SUMMARY


Spoiler:
Illinois is a world-class place to live, work, and do business. The State’s economy is one of the largest in the world and represents a diverse mix of industries.
The City of Chicago, the economic engine of the Midwest, has been the top city in the United States for direct foreign investment for the last six years2 and was the top location for corporate relocations and expansions in 2017.3 The State’s workforce is skilled and well-educated, with approximately one-third of the State’s workforce holding at least a bachelor’s degree.4 In addition, Illinois’ central location and diversified transportation network have solidified the State as an essential transportation hub for the entire country.

Despite Illinois’ many competitive advantages, it faces significant challenges. The State’s fiscal uncertainty and instability hurt our economy and cause many families and businesses to leave Illinois and others not to come here. Illinois’ population has declined each year from 2014-2018, and population loss as a percentage of the State’s population for 2017-2018 was second highest in the nation behind West Virginia. These challenges have been abundantly covered by local, national, and global media and shape a negative narrative of Illinois.

Given this context, Civic Committee leadership has grown increasingly concerned about the deterioration of the State’s finances and its effect on the jobs climate. As a result, in 2015 Civic Committee leadership created a Tax Policy Task Force (“Task Force”) to analyze the State’s financial challenges and identify tax and budget policies to address them. The Task Force met with a variety of tax policy and state finance experts and developed a financial framework (“Framework”) for the State of Illinois that if implemented fully would put the State government back on the path to fiscal solvency and help restore confidence in the State’s fiscal future.

In 2017, the Task Force released Bringing Illinois Back: A Framework for our Future. This report addressed the key issues facing the State and included the Task Force’s Financial Framework, as well as several additional reforms to improve the jobs climate.

The State has made progress on many fronts, but there is still a long way to go to ensure stability and certainty in the State’s jobs climate going forward. In addition, having a new Governor and General Assembly presents an opportunity to pursue the bold action necessary to stabilize Illinois’ finances and lay a foundation for economic growth. As a result, the Task Force has produced an updated and expanded report, Restore Illinois: A Foundation for Growth, to evaluate the progress that has been made since 2017 and to identify actions that still need to be taken by State government to improve its financial standing and jobs climate.

The Task Force selected a five-year time frame for full implementation of our recommendations, reflecting our belief that swift and comprehensive action is required to improve Illinois’ fiscal health and combat the narrative that the State is a questionable choice to live, work, and do business

Although we recognize that not every recommendation may be adopted on the schedule we have prescribed, some policy prescriptions should be a higher priority, such as eliminating the structural budget deficit and increasing contributions to the State’s pension funds up front to stop the growth in the State’s pension debt faster than under the current schedule. The key is instituting a plan that will achieve our recommendations in a defined time frame rather than deferring action on critical issues to the future.

While this report focuses primarily on State finances, we recognize that the impact of solutions to the State’s problems will not occur in a vacuum and that Illinois taxpayers are already burdened by high taxes, particularly property taxes. Our recommendations focus on the areas in which the State has room to make changes without increasing its negative outlier status in order to mitigate the overall impact on the State’s jobs climate and Illinois taxpayers wherever possible.

This report represents a comprehensive set of recommendations that can be enacted immediately. These recommendations do not require constitutional amendments, which at the earliest would take several years to go into effect because it is critical that the State move forward with implementing fiscal reforms now to ensure Illinois is on a viable path to fiscal health and stability. If the State enacts these reforms, Illinois will have addressed its financial challenges and given people and businesses certainty about the State’s future, which is a critical element in promoting job growth in Illinois. Without a growing economy, the State will not be able to move forward to provide vital services to all Illinoisans and focus on other future growth initiatives.

Although there have been several policy changes enacted since we published Bringing Illinois Back, the legislature has not yet implemented many of the recommendations of the Framework. We continue to believe that the State should adopt the Financial Framework created by the Task Force and pursue policy solutions consistent with it. Part 1 of this report provides an overview of the components of the Financial Framework.

It is critical that the State move forward with implementing fiscal reforms now to ensure Illinois is on a viable path to fiscal health and stability.


https://static1.squarespace.com/stat...essRelease.pdf
Quote:
Illinois Business Leaders Present Fiscal Plan to Create a
Foundation for Economic Growth
Civic Committee Introduces New “2+2” Pension Funding Proposal
Spoiler:
(Feb. 5, 2019, Chicago, IL) – With political leadership alignment in Springfield, the Civic Committee of the
Commercial Club of Chicago says Illinois has a unique opportunity to address the state’s fiscal health and offers
solutions in a new comprehensive plan called “Restore Illinois: A Foundation for Growth.”
“Illinois needs to repair its fiscal condition which is the biggest impediment to the strong economic and job
growth our State needs,” said Jay Henderson, Chairman of the Civic Committee’s Tax Policy Task Force. “It is a
solvable problem and we have laid out a five-year framework that does it.”
“Restore Illinois” was developed by the Tax Policy Task Force of the Civic Committee, a nonpartisan organization
comprised of senior executives of the Chicago region’s leading businesses.
The reforms detailed in “Restore Illinois” recommend the State identify $8 billion a year in spending cuts and
increased revenues to address the State’s fiscal problems.
To provide for a sustainable future, the Civic Committee plan is grounded in the following goals:
• Eliminating the budget deficit (projected to reach $3.4 billion in 2021) and unpaid bills
(approximately $7.8 billion by the end of FY19);
• Tackling the State’s unfunded pension liabilities of roughly $130 billion; and
• Establishing a reserve fund of $4-5 billion.
“Resolving Illinois’ fiscal crisis and restoring confidence in our state is within reach,” said Scott Santi, Chairman of
the Commercial Club of Chicago. “It will require facing the reality of the situation, making tough decisions and
sacrifices, and then sticking to a plan.”
To address the State’s unfunded pension liabilities, the Civic Committee introduces a “2+2” pension funding plan
that will stop the growth in the State’s unfunded pension liabilities sooner and save billions compared to the
State’s current pension payment schedule. “2+2” proposes restructuring the pension contribution schedule so
that the State’s baseline contributions would grow at 2 percent a year, and the State would provide an additional
$2 billion in supplemental contributions until the plans are 90 percent funded. Then, the plan would amortize the
remaining unfunded liability over 10 years.
Projected benefits of the “2+2” Plan include:
• State pension plans reaching 93% funded by FY45;
• Total financial benefits of over $45 billion which come from:
o Total State contributions over time (FY20-FY65) of about $8.6 billion less in real dollars
than under the current status quo contribution schedule; and
o Eliminating the State’s unfunded pension liability, currently projected to be $37.7 billion
in FY65.
“Illinois’ fiscal problems are negatively impacting our economy and our ability to create a robust and competitive
jobs climate,” said Civic Committee Chairman Rick Waddell. “Economic and job growth needs the certainty that
will come only from a credible plan that solves the fiscal problem and is faithfully implemented over time.”
The report’s recommendations center on a financial Framework for the State with five key elements:
• Implement long-term financial planning and increase fiscal transparency;
• Eliminate the structural budget deficit and unpaid bills, implement a new funding plan to pay down
approximately $130 billion in unfunded liabilities of the State’s pension funds, and establish a reserve
fund;
• Review the entire State budget for expense reductions;
• Reform the tax system and raise revenues, as needed; and
• Establish goals and metrics to measure the State’s progress.
The Framework calls for State government to achieve an $8 billion annual target through $2 billion in expenditure
reductions and $6 billion in revenue increases for each of the years from FY2020-2024. Among the proposals are
recommendations to better align the State’s group health insurance plan with the private sector, reduce State
spending through operational improvements, and raise revenues through tax changes designed to minimize the
negative competitive impact on Illinois from higher taxes.
“Illinois possesses great assets, including a diversified economy, an educated workforce, outstanding educational
and research institutions, natural resources, and a great transportation infrastructure, but the uncertainty
surrounding the fiscal health of our State has held Illinois back for too long,” explained Kelly R. Welsh, President of
the Civic Committee. “We are confident that implementation of the Framework will build a foundation for growth
and job creation.”
The report also recommends additional reforms, noting that other aspects of Illinois’ jobs climate should be
improved by moving toward the successful policies and practices of most other states. Reform recommendations
focus on three key areas:
• Improving transparency and promoting coordination and consolidation among Illinois’ local units of
government;
• Monitoring the State’s new education funding formula (Senate Bill 1947) to ensure it is fair and equitable
for all students, and meeting the $350 million annual funding target; and
• Aligning Illinois workers’ compensation provisions with best practices from other states.
In developing “Restore Illinois,” the Civic Committee made recommendations based on the principle that aligning
the State with proven fiscal best practices and implementing reasonable, common-sense reforms will build a
foundation for long-term fiscal health and growth.

https://wirepoints.org/doa-the-civic...-and-shouldnt/
Quote:
DOA: The Civic Committee’s New Budget Proposal Will Get No Support – And Shouldn’t

Spoiler:
The latest comprehensive budget proposal for the State of Illinois is out. It’s from the Civic Committee of the Commercial Club of Chicago. Like the Civic Federation, the Civic Committee is comprised mostly of business-oriented members and has a proud history standing up for fiscal responsibility.


Logo for Civic Committee’s new initiative
But we are genuinely baffled by its new proposal. We see very little in it that would gain support of conservatives or liberals. Nor would it meet basic commitments of the Pritzker Administration, which are supported by most members of the General Assembly.

We’ll summarize the proposal, then provide our viewpoint.

Summary of Primary Elements of the Proposal:

Increase the personal income tax rate to from 4.95% to 5.95% (estimated revenue: $3.7 billion);
Tax retirement income; increase the 65 and over exemption to $15,000 (estimated revenue: $1.9 billion);
Increase the corporate income tax base rate from 7% to 8% (estimated revenue: $300 million);
Expand the sales tax base to include a set of consumer services (estimated revenue: $500 million);
Change state pension contribution ramp by putting more money in sooner.
Reform healthcare plans for current State employees (estimated savings: up to $500 million);
Implement a new retiree healthcare plan for new employees;
Reduce State spending through operational improvements (estimated savings: $1 billion);
Eliminate the Estate Tax (estimated revenue loss: $290 million)
Eliminate the Franchise Tax (estimated revenue loss: $205 million);
Our view:

˗ $6 billion in net new taxes. Having just completed a tax increase of over $5 billion and with Illinois’ total tax burden already among the highest in the nation, the exodus of taxpayers and employers would escalate rapidly under this plan, ultimately backfiring by shrinking the tax base. Moody’s most recent credit report highlights out-migration as one of the top three credit issues facing Illinois.

˗ Local fiscal issues ignored. Illinoisans will know the $6 billion of new taxes is just the start because the budget proposal ignores the fact that Illinois residents face the burden of multiple, overlapping tax jurisdictions, which are also broke. The Committee’s failure to demand statewide reforms mean tax hikes would also be the solution for every other local government in the state. Chicagoans, in particular, would be hard hit by several overlapping taxing districts. They are on the hook for local unfunded pension debts that are 1.35 times larger than their individual share of the state pension problem.

˗ New taxes to be painful. Each of the proposed new or expanded taxes would hit the poor and working class hardest – particularly expansion of the sales tax and expansion of the income tax to retirees. Corporate taxes, too, are ultimately born by people. Each of those, plus the broad increase in the state’s flat income tax, would run contrary to Governor Pritzker’s promise of tax cuts for all but the wealthy.

˗ No pension reform. Not a penny of pension reform is proposed, nor is a constitutional amendment to allow for reforms called for. That’s in contrast to what lawmakers and the Illinois Attorney General told the public and courts five years ago, when they said benefit cuts were essential.

˗ Operational savings won’t happen. The plan claims $1 billion in unspecified operational savings. That’s like perennial claims about savings from cutting “waste, fraud and abuse” as if that’s a line item in a budget. Such cuts don’t materialize. In fact, with public unions now in full control of Springfield, we should expect operational inefficiencies to worsen.

˗ No predicate of fiscal reforms and business-friendly reforms. We believe Illinoisans will reject plans that do not contain sweeping structural reforms that reduce the burdens on ordinary Illinoisans, employers and local governments. That includes ending unfunded mandates strangling municipalities, reducing workers’ compensation costs, easing collective bargaining restraints for all units of government and much more. The Committee’s plan doesn’t include any of these reforms.

˗ New revenue projections not dynamic. Revenue from the new taxes proposed do not appear to account for lost population and increased tax avoidance that results. We believe those results would be so severe that any tax increase will backfire in the long run by shrinking the tax base. Accordingly, the projected new revenue will not materialize in the long run.

˗ Pension numbers suspect; taxpayers kept on steep ramp up. The plan apparently supposes that an additional $2 billion of taxpayer contributions to pensions would put them above “tread water” level by around 2028. In other words, unfunded liabilities would continue to rise until then. We believe this needs further analysis. In any event, the plan would have taxpayer contributions roughly doubling by 2045, when they would begin to drop, supposedly.

˗ Healthcare for state retirees left on a pay-as-you-go basis. The state faces a staggering $73 billion of unfunded liabilities for state retiree healthcare. It must be reduced and amortized, but reduction will require a constitutional amendment that the proposal does not call for.

˗ No funding for Governor Pritzker’s promises. While we don’t think they were all feasible under any circumstances, Pritzker was elected with promises of a tax cut for most Illinoisans, universal health care, early childhood education, better funding for schools, local property tax relief and more. With none of that spending included in the Committee’s proposal, we believe the plan is not viable under this administration.


__________________
It's STUMP

LinkedIn Profile
Reply With Quote
  #876  
Old 02-14-2019, 06:05 AM
campbell's Avatar
campbell campbell is offline
Mary Pat Campbell
SOA AAA
 
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 86,060
Blog Entries: 6
Default

https://www.civicfed.org/iifs/FY2020IllinoisRoadmap

Quote:
State of Illinois FY2020 Budget Roadmap
AT A GLANCE
Prior to the release of the Governor’s annual budget recommendation, the Institute for Illinois’ Fiscal Sustainability at the Civic Federation releases an analysis of the State of Illinois’ fiscal condition. This report presents the Civic Federation’s multi-year plan to stabilize Illinois’ finances.


Spoiler:
EXECUTIVE SUMMARY
The State of Illinois FY2020 Roadmap describes the State of Illinois’ fiscal condition and presents the Civic Federation’s proposed five-year plan to stabilize the State’s finances. The report is published annually before the Governor’s budget address for consideration by the Governor and General Assembly during upcoming budget deliberations.[1]

More than ten years after the end of the Great Recession, the State of Illinois’ fiscal condition remains precarious. A chronic mismatch between revenues and expenditures persists despite a recent increase in income tax rates. The mountain of unpaid bills continues to grow even after the State borrowed billions of dollars to shrink the backlog.

The biggest challenge continues to be staggering public employee pension costs, which are difficult to reduce due to State constitutional protections as interpreted by the Illinois Supreme Court. At the end of FY2018, the five funds had $133.7 billion in unfunded liabilities; only about 40% of promised pension benefits were covered by pension assets.[2]

Illinois also faces a declining population and an urgent need to repair and improve its transportation infrastructure and state facilities. As a result of the State’s problems, Illinois carries the lowest General Obligation credit ratings of any State.

With the beginning of a new gubernatorial administration and many first-time lawmakers in Springfield, the Civic Federation urges Illinois leaders to enact fundamental changes that are long overdue. A revenue system that increasingly burdens a narrow base and does not reflect economic shifts must be updated. A State Constitution that locks in employee benefits based on unsustainable promises must be amended. Fragmented and duplicative units of government need to be consolidated. Illinois’s habit of hiding its long-term financial problems with budget gimmicks and illusory reforms must end.

The Civic Federation offers the following recommendations to begin stabilizing the State of Illinois’ financial position:
Issue 1: Spending Controls
The Civic Federation recommends that the State of Illinois limit net agency spending growth to 2.4% annually through at least FY2024 and pursue reasonable savings in State employee salary increases and health insurance costs.

Issue 2: Retirement Income Exclusion
The Civic Federation recommends that the State of Illinois broaden its income tax base by eliminating the tax exclusion for all federally taxable retirement income. This will enhance the State’s fiscal stability by providing access to a faster growing portion of the income tax base, generating FY2020 revenues of over $2.5 billion.

Issue 3: Sales Tax on Services
The Civic Federation recommends that the State of Illinois expand the sales tax base to include the fourteen services taxed by the State of Wisconsin.

Issue 4: Rainy Day Fund
After the backlog of bills is paid off, the State of Illinois should work toward building a rainy day fund equal to 10% of General Funds revenues to cushion the budget from the next economic downturn. Legislation must explicitly indicate when deposits will be made and in what amount and the circumstances under which withdrawals will be allowed.

Issue 5: Constitutional Amendment to Limit the Pension Protection Clause
The Illinois General Assembly should vote to place a constitutional amendment on the ballot no later than the 2020 general election that would limit the pension protection clause and allow reasonable, moderate changes to current employee and retiree benefits necessary to secure the financial sustainability of the State and local governments and the pension systems themselves.

Issue 6: Supplemental Pension Payments
In order to mitigate the underfunding of the State’s pension systems due to inadequate statutory payments, the Civic Federation recommends identifying revenues to make annual supplemental payments sufficient to reach 100% funding by FY2045.

Issue 7: Merger of the Chicago and State Teachers’ Pension Funds
The Civic Federation recommends that the Chicago Teachers’ Pension Fund be consolidated with the Teachers’ Retirement System and that the State assume responsibility for the unfunded liability of CTPF. The Federation also recommends that the Chicago Public Schools resume paying for the normal cost of Chicago teachers’ pensions and that responsibility for the normal cost of pensions for all teachers outside of Chicago be shifted from the State of Illinois to local school districts over three years.

Issue 8: Pension Investment Expense and Asset Allocation
The Civic Federation recommends that the Illinois General Assembly create a commission to review the investment operations of the State’s public pension funds, including investment expenses, asset allocation and investment approach, with the goal of improving fund performance and transparency.

Issue 9: Restructuring Illinois’ Public University System
The Civic Federation recommends that the Governor create a bipartisan commission to address the need to allocate resources more rationally among the State public universities. The commission should propose a new funding formula and consider the elimination of duplicative programs and the potential need to close or consolidate campuses. The Federation also recommends that the nine universities be governed by a single Board of Trustees to facilitate the establishment of statewide goals and rational allocation of State resources.

Issue 10: Prisons
The Civic Federation recommends that the Governor and General Assembly continue to implement reforms designed to lower Illinois’ prison population, not only to achieve widely acknowledged social benefits, but also with the goal of safely and legally generating meaningful cost reductions.

Issue 11: Interest Penalties on Overdue Bills
The Civic Federation recommends that the State reduce the late payment penalty in the Prompt Payment Act to a rate that reflects lower economy-wide rates of return, such as the five-year Treasury rate plus one percentage point. The General Assembly and Governor should also consider a reduction in the timely payment rate in the Insurance Code.

Issue 12: Consolidating and Streamlining Government Units in Illinois
In addition to recommending the merger of CTPF with TRS, the Civic Federation supports the following government consolidation initiatives:

Consolidate local pension funds;
Merge the offices of the Illinois Comptroller and Treasurer;
Authorize any township to be dissolved by referendum;
Consolidate property tax administration roles in Cook County; and
Dissolve the Illinois International Port District.
Issue 13: Comprehensive Capital Improvement Planning and Funding
The Civic Federation recommends that before State of Illinois embarks on a new capital plan, it should comprehensively assess and prioritize its needs for both transportation infrastructure and State facilities. In addition, the State should identify reliable, long-term funding sources. The road and transit portion of the plan should be initially funded by an increase in the motor fuel tax, which has not been raised since 1990. The State should further consider vehicle miles traveled and congestion taxes to ensure the long-term sustainability of transportation funding revenues. The State facilities portion of the plan will require other sources of funding, and these must be more reliable than those used for the FY2010 Illinois Jobs Now! capital plan.

Issue 14: Prudent Budget Practices
The Civic Federation believes it is important to warn against certain unwise budgetary practices that have been used in the past and imprudent steps that might be under consideration for the future, such as:

Relying on illusory savings, accounting gimmicks or one-time revenues;
Reducing the pension funding target;
Ending level principal debt repayment;
Implementing new revenue sources without proper consideration of their reliability and social impact; and
Ignoring the condition of local governments.
[1] Governor J.B. Pritzker is scheduled to present his budget proposal for FY2020 on February 20, 2019. The State of Illinois’ fiscal year begins on July 1 and ends on June 30.

[2] Illinois General Assembly, Commission on Government Forecast and Accountability, “Special Pension Briefing,” Monthly Briefing for the Month Ended: November 2018, p. 2., http://cgfa.ilga.gov/Upload/1118%20S...20BRIEFING.pdf (last accessed on February 12, 2019). This figure is based on the actuarial value of assets, which involves asset smoothing; based on the market value of assets, the unfunded liability was $133.5 billion.



https://www.civicfed.org/iifs/RELEAS...llinoisRoadmap

Quote:
Civic Federation Proposes Plan to Tackle Illinois' Severe Financial Challenges
In light of Springfield’s past bad practices, group also cautions against gimmicks, pitfalls


Spoiler:
(CHICAGO) – In a report released today, the Civic Federation’s Institute for Illinois’ Fiscal Sustainability has proposed a multi-year plan to address the State of Illinois’ financial challenges. The full report is available here.

The Federation presents a Roadmap each year for consideration by the Governor and General Assembly in advance of their budget negotiations. The Federation proposes two new sources of revenue as part of its FY2020 plan—only in the context of a multi-year plan that includes limits on spending. If new revenues are directed to new spending, progress toward fiscal sustainability is imperiled.

Recommendations for FY2020 and beyond include:

Limiting net agency spending, including reasonable savings in employee salary increases and health insurance costs;
Eliminating the tax exclusion on federally taxable retirement income;
Expanding the sales tax to some services;
Placing a constitutional amendment on the ballot to limit the pension protection clause;
Identifying revenues to make annual supplemental pension payments;
Consolidating and streamlining local government units, including pension funds;
Examining pension investment expenses and asset allocation;
Restructuring the public university system;
Implementing reforms designed to reduce the prison population and generate cost savings; and
Completing a comprehensive assessment of infrastructure needs before embarking on a capital plan.
“The enormity of Illinois’ financial challenges demands a solution of the same magnitude,” said Civic Federation President Laurence Msall. “While the Federation remains cautiously optimistic for the upcoming budget year, Springfield unfortunately has a long record of attraction to accounting gimmicks and shortsighted maneuvers. Accordingly, the Roadmap also outlines a number of steps the Governor and General Assembly should not take on the State’s quest for sounder financial footing.”

The Civic Federation does not take a position on the legalization of marijuana or sports gambling or on the enactment of a graduated income tax. However, as public discussion of these policy areas continues, lessons must be drawn from other states and from Illinois’ own past practices in order to navigate implementation pitfalls.

Predicting how much revenue will be generated in the first years of either legal cannabis sales or sports gambling will be difficult, and there are uncertainties about the length of time required to establish regulatory and taxation structures for each. Moreover, a portion of revenues should be used to pay for regulating these emerging industries and addressing social costs.

“In order to avoid building deficits into future budgets, the initial proceeds from sports gambling or cannabis should not be used to prop up Illinois’ budget until the State has a reliable accounting. Instead they should be designated for one-time expenses, such as paying down the multi-billion-dollar backlog of bills” said Msall.

Procedurally, the soonest a graduated income tax could be legalized is November 2020, meaning the State cannot count on any resulting revenues to address its near-term fiscal challenges. If the State pursues a graduated income tax structure, the Civic Federation advises that the top individual rate should be no more than three percentage points higher than the bottom rate. Such a restriction would help ensure that a graduated structure would bring in revenues needed to solve Illinois’ many fiscal challenges without overburdening any one group of taxpayers. However, eliminating the tax exemption on retirement income would immediately put Illinois’ income tax system more in line with surrounding states and would not require waiting for a constitutional amendment. Further, if the State eventually implements a graduated income tax structure, matching other states’ more limited exemptions on retirement income could allow for significantly lower rates for all tax brackets.

The Federation additionally cautions against the State’s past bad practices of: underfunding group health insurance; relying on asset sales to support operating expenses; counting on speculative pension savings; ending level principal debt repayment; and abdicating responsibility for financial assistance to local governments.


__________________
It's STUMP

LinkedIn Profile
Reply With Quote
  #877  
Old 02-14-2019, 06:06 AM
campbell's Avatar
campbell campbell is offline
Mary Pat Campbell
SOA AAA
 
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 86,060
Blog Entries: 6
Default

https://wirepoints.org/civic-fed-bud...payer-wallets/

Quote:
Civic Fed budget proposal: Another $3 billion from taxpayer wallets
Spoiler:
The Civic Federation is back with its annual budget plan for the state. Much like the Civic Committee’s recent proposal, the Civic Fed’s solution to the state’s problems is even more money from taxpayers.

Two years ago, the Civic Federation – a group of Chicago-based business and civic leaders – released a state budget plan laden with $9 billion in new, yearly taxes. They got part of what they wanted when the legislature hiked taxes by $5 billion in 2017. Now the Civic Fed is demanding the rest.

Rather than offering a reform-driven plan, the Civic Fed wants another $3 billion annually from Illinoisans’ wallets.

It’s yet another proposal that lays the groundwork for tax hikes in advance of Gov. Pritzker’s first budget address next week.

More money

The plan’s lynchpin for new revenues is taxing retirement income. The new tax will hit Illinois retirees with $2.5 billion to $3 billion in new taxes. The Civic Fed also wants the sales tax broadened to some services, which would hit up Illinoisans for another $200 million to $600 million a year over the next few years.

That’s about $3 billion in new taxes annually, what they call “Net New Revenue Changes,” on top of the $5 billion income tax hike of just two years ago.

The Civic Fed says the money is needed for fiscal stability, but the group ignores the simple fact that Illinoisans are over-taxed and that the state’s finances are becoming more unstable as more residents leave.

Illinoisans pay the nation’s highest property taxes and their overall state-local tax burden is already the 6th-highest in the nation. And Illinois has already lost 1.5 million residents to outmigration since 2000.

Adding retirement income taxes and sales taxes will only accelerate the exodus of workers and retirees and shrink Illinois’ tax base. Moody’s warned about that in its recent Illinois report.

Pension amendment

The Civic Federation’s plan also calls for an amendment to the state’s pension protection clause. Kudos to them for pushing for an amendment – something the Civic Committee refused to consider. Illinois can’t fix its budget problems without reducing its massive retirement debts. An amendment is the only way to do that, barring insolvency.

But any amendment should be worded as broadly as possible. It shouldn’t be worded so it’s only linked to a specific piece of legislation. Illinois has the worst pension crisis in the nation. It’s a multi-tiered problem for many residents. For example, Chicago households are on the hook for $140,000 in overlapping city, local, and state retirement debts. Illinois needs the ability to fix pension debts at the state, Chicago and municipal levels without having to pass a new amendment every time.

Restructuring higher education

The group’s plan also asks for reforms to higher education, including changed funding rules, eliminating duplicative programs across universities and potentially consolidating campuses.

That’s a good idea. But any proposal that doesn’t truly reduce the size of university administrations, cut executive-style salaries and lower student tuitions won’t fix the problems in higher education. Wirepoints found the number of administrators in higher education grew more than a quarter between 2005 and 2010 while student enrollment actually shrunk. That’s contributed to a near doubling in university tuitions in the last decade.

Bailing out Chicago teacher pensions

The Civic Fed also calls for the Chicago Teachers Pension Fund (CTPF) to merge with the state’s Teachers’ Retirement System. All state income taxpayers would be responsible for paying down the CTPF’s pension debt, now nearly $25 billion according to Moody’s. That arrangement amounts to a Chicago bailout.

It’s unfair and irresponsible to force taxpayers from Rockford to Danville to Belleville to shoulder Chicago’s mismanagement and corrupt finances.

More consolidation

The Civic Fed calls for the state Treasurer and Comptroller to be merged and for the dissolution of townships by referendum, among other useful consolidation ideas.

The plan also calls for downstate police and fire pension funds to consolidate. That has long had bipartisan support and makes sense, though important details need to be worked out. It’s a good idea if consolidation can improve administration and increase investment returns.

But it’s a bad idea if it morphs into a consolidation of downstate pension debts – so that responsible, well-funded cities are forced to bail out the pensions of irresponsible communities. That’s the wrong thing to do.

What’s entirely missing from the Civic Fed’s plan is any attempt to consolidate the local governments that consume nearly two-thirds of Illinoisans’ property taxes: school districts. Over one-third of Illinois school districts serve less than 600 students. And more than 40 percent of districts have just one or two schools. Consolidating those inefficient school districts would eliminate excess administrators and lead to lower property taxes in communities across the state.

Reforms, not revenues

A real Civic Fed plan for ordinary Illinoisans would be dominated by tough spending reforms, not billions in tax hikes. Illinoisans have already suffered the burden of ever-higher taxes for decades, with little to no reforms in exchange.

But you won’t see that type of plan from the Civic Fed.


__________________
It's STUMP

LinkedIn Profile
Reply With Quote
  #878  
Old 02-17-2019, 10:08 AM
campbell's Avatar
campbell campbell is offline
Mary Pat Campbell
SOA AAA
 
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 86,060
Blog Entries: 6
Default

https://www.chicagotribune.com/subur...217-story.html

Quote:
Village of Lynwood sued over $1.2 million in late insurance payments

Spoiler:
A municipal self-insurance association has filed suit against Lynwood, claiming the south suburb is more than $1 million behind on its annual risk management service fees.

The Illinois Municipal League Risk Management Association, a cooperative that provides insurance coverage to municipalities that pay into it, sued Lynwood over its failure to pay a judgment entered in August over two-plus years worth of overdue annual contributions.

ADVERTISING

inRead invented by Teads
The suit, filed Feb. 5 in Sangamon County Circuit Court, demands Lynwood “take necessary steps” to promptly pay the $1.18 million judgment, costs and interest, including, if necessary, tapping into any available village surplus or issuing general obligation bonds.

The IML Risk Management Association claims in the suit that it provided Lynwood risk management coverage and services from 2014 to 2016, as outlined in their contract, but that the village “failed and refused to pay” for them.

The association invoiced Lynwood for $501,160 in 2014, $521,347 in 2015 and $575,802 in 2016 for worker’s compensation, auto, portable equipment and property insurances, but only received a fraction of the money it was owed, according to the suit.

On Aug. 21, the court entered a judgment against Lynwood for the full amount of the delinquent contributions, but to date, the village has not paid it off, and in fact owes slightly more now due to accrued interest, the suit claims.

Carl Draper, an attorney for the village, said Lynwood had been making “substantial” payments of $10,000 to the association every month in an effort to pay off what it owes.

He said it was unlikely the village would be able to pay down its debts any faster even if the association’s lawsuit demands were met.

“The village has worked very hard with the (Risk Management Association) and it’s unfortunate that we’re in this posture, but the village is paying this debt off as quickly as it can,” Draper said.

Lynwood Mayor Eugene Williams did not immediately respond to a request for comment on the suit.


Here's a question: has any town in Illinois been allowed to file for federal bankruptcy?

If I remember correctly, Illinois requires approval by the legislature before any town can file.
__________________
It's STUMP

LinkedIn Profile
Reply With Quote
  #879  
Old 02-17-2019, 10:09 AM
campbell's Avatar
campbell campbell is offline
Mary Pat Campbell
SOA AAA
 
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 86,060
Blog Entries: 6
Default

https://www.chicagobusiness.com/opin...-leap-backward

Quote:
Digging out or shoveling in? Pritzker's great leap backward
By blaming everything on Rauner and the budget impasse, a new assessment by the Pritzker administration hides the reality that our problems are structural, systemic and old. Our government is broken.

Spoiler:
"The formulation of the problem is often more essential than its solution."

—Albert Einstein



The remedy must fit the malady. Reaching a shared understanding of the nature and scope of Illinois' fiscal crisis is the type of essential first step Einstein might have been thinking of. Unfortunately, Gov. J.B. Pritzker's administration recently chose to go backward with its first major statement on Illinois' budget, a report titled "Digging Out: The Rauner Wreckage Report."

The report's 11 pages are devoted almost entirely to blaming our problems on former Gov. Bruce Rauner and the 2015-17 budget impasse, which the report also pins on Rauner.

Really? Start by looking at what Pritzker's own party said before Rauner became governor.

ADVERTISING

The state's crisis was already severe enough to override the constitutional pension protection clause under the "police power" doctrine, something historically used in only extraordinary circumstances. Democratic Attorney General Lisa Madigan argued that position in 2014. Only benefit cuts, not tax increases, could work, she told the Illinois Supreme Court in defending SB 1, a law that would have cut some pension benefits.

She cited express legislative findings saying the same—findings made when Democrats held supermajorities in both houses of the General Assembly. "The fiscal problems facing the state and its retirement systems cannot be solved without making some changes to the structure of the retirement systems." (Emphasis added.)

Today, that's all off the table. No changes to pension benefits are needed, Pritzker says. And he won't consider a constitutional amendment to override the court's ruling invalidating SB 1.

Consider these additional facts about where we stood before Rauner took office:

Illinois' negative Total Primary Government Net Position—basically, its negative net worth—had dropped a staggering $106 billion from 2006 to 2015, reaching negative $121 billion.
The state's unfunded pension obligations tripled from $35 billion in 2003 to $105 billion the year before Rauner took over.
State budgets had never balanced since 2001, even under the state's phony budget accounting that ignores growing debt.
Rating agencies had issued 13 credit downgrades on the state since 2009. Illinois' credit rating was already the nation's worst.
Illinois' population loss, now five years running, had already begun.
The state's unpaid bill backlog was about $6.6 billion and had already begun ticking back up, despite the temporary tax increase then in place.
Social service providers were already reeling. Illinois ranked No. 1 in the country in the percentage of nonprofit groups facing payment delays, an Urban Institute survey found. "We are basically bankrolling the state. It's a ridiculous situation," said one provider. "It's just absolutely awful and there seems to be no end in sight."
None of this is to excuse Rauner. He was incompetent in many ways. The budget impasse indeed caused lasting damage to the state, and Rauner handled it horribly. Much of the Digging Out report is true—as far as it goes.

But it's grossly incomplete. By blaming everything on Rauner and the budget impasse, the report hides the reality that our problems are structural, systemic and old. Our model of government is fundamentally broken. We simply aren't generating the growth, employment and resulting tax base needed to meet the promises we have made and deliver the basic services Illinoisans expect. Rauner inherited that. Pritzker inherited that.

The 2015-17 budget impasse was resolved when Democrats got the solution they had demanded all along: a tax increase with no reforms.

That's where Pritzker appears headed again, and he also appears ready to borrow more to fund pensions.

It won't work.

Mark Glennon is founder of Wirepoints, an independent research and commentary organization.


__________________
It's STUMP

LinkedIn Profile
Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


All times are GMT -4. The time now is 11:20 AM.


Powered by vBulletin®
Copyright ©2000 - 2019, Jelsoft Enterprises Ltd.
*PLEASE NOTE: Posts are not checked for accuracy, and do not
represent the views of the Actuarial Outpost or its sponsors.
Page generated in 0.16044 seconds with 9 queries