The legislative leaders and governor are meeting today, January 5, 2013.
A HEARING IS SCHEDULED ON PENSION BILL SB 1673
Monday, January 7, 2013, 10a.m., Room 115, Capitol Building Springfield, IL
HOUSE PERSONNEL AND PENSIONS COMMITTEE:
Chairperson Elaine Nekritz
Vice-Chairperson Daniel Burke
Republican Spokesperson Raymond Poe
CALL YOUR LEGISLATORS!
Legislative Solutions instead of “Pension Reform” or the Breaking of
a Contract
·
The current “Pension
Ramp” does not work for the
five public pension systems. The “Ramp” entails larger payments today
as a result of the 1995 funding law – Public Act 88-0593 – to pay the pensions
systems what the state owes. The pension
debt needs to be amortized for a longer frame of time (a flat payment)
“just like a home loan that is amortized.” Though the initial payment will be
greater in the beginning, over the long term it will become a reduced cost and
a smaller percentage of the overall Illinois budget as it is paid off
throughout the years;
·
Raise revenue to pay the
state’s debts. With a constitutional
amendment, “given an appropriately designed graduated-rate structure,
Illinois could cut the overall state income tax burden for 94 percent of all
taxpayers—on average providing a tax cut to every taxpayer with less than
$150,000 in base income annually, raise at least $2.4 billion more in revenue,
and keep the effective individual income tax rate for millionaires well below
five percent… Illinois taxpayers with the bottom 94 percent of base income
collectively would receive an annual tax cut of $1.06 billion… [T]he combined
effect of this policy would be a stimulus to the economy from tax cuts and
additional state spending (assuming that the additional revenue is used to fund
current public services that would otherwise not be funded) that would create
at least 36,000 private sector jobs in communities across Illinois…” (Executive
Director Ralph Martire, Center for Tax and Budget Accountability, CTBA);
·
“The State shall provide for an efficient system of high quality
public educational institutions and services… The State has the primary
responsibility for financing the system of public education (Article X, Section
1 Constitution of the State of Illinois). There
needs to be a required annual payment from the state to the pension systems;
·
Tax
services. Broaden the sales tax base to include selected
consumer services. Illinois is one of five states with sales taxes on fewer
than 20 services (The Center on Budget and Policy Priorities)
·
Eliminate the tax
loophole for “Tax Increment Financing Districts”;
·
Eliminate “Edge Tax
Credits” and other tax loopholes for large corporations in Illinois;
·
Increase
taxation on the wealthy: Illinois is in the top
10 of regressive state tax systems where the wealthiest taxpayers do not pay as
much of their incomes in taxes as the poorest and middle-income wage earners
(The Institute on Taxation and Economic Policy);
·
Implement a more timely system
of payments
(cash management practices are greatly affected by budgetary practices in
relation to deferred liabilities which place additional pressures particularly
in the first and second quarters of the year to pay those expenses; timing of
tax payments also affects the state's cash flow and should be adjusted
accordingly);
· Madigan will bring this back in another bill!
Shifting
the state’s “normal costs” for the public pension
systems to school districts will have negative consequences. “Property tax bases
would not be sufficient to absorb any shift in the employer normal cost for
teacher pensions… School districts are demographically and financially varied,
and it would be difficult to impose a uniform normal cost shift on them…
Illinois ranks last in terms of state spending on K-12 education, and school
districts are already relying heavily on local property taxes… While shifting
the state’s normal cost obligations onto school districts may provide some
relief to the state’s budget, it will not mitigate these financial obligations
and will instead push them onto school districts that, on average, already
derive the majority of their revenue from local sources” (CTBA). The state should continue to pay the
normal costs for the five "public pensions."
·
Examine and improve the
efficiency of the state’s government. This includes establishing term limits
for Illinois legislators.
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