Despite heavy pressure from Governor Quinn, the Illinois state legislature refused to pass a pension reform bill before the lame duck session expired. If it stays on its current course, Illinois will likely exhaust its pensions assets in little more than a decade and have to revert to a pay-as-you-go system (because the benefits are constitutionally protected and must somehow be paid even if they are not pre-funded). Assuming a 6 percent discount rate, Illinois' pensions are on a path to consume 14.2 percent of state revenues (read: Squeezy the Python) over the coming years. If state legislators refuse to commit that high a contribution, which is required to continue to fund the pension system, and continue to contribute only around 6 percent of revenue as they currently do, three of the state's four funds assets will run down to effectively zero. Based on the current trajectory that will occur around 2024. At that point, when pay-go kicks in pension payments will spike to 20 percent of the state budget.
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Copyright © 2013 Manhattan Institute for Policy Research, Inc. All rights reserved.
52 Vanderbilt Avenue, New York, N.Y. 10017
phone (212) 599-7000 / fax (212) 599-3494
Democratic Hustler Politicians + Corrupt Greedy Unions = BANKRUPTCY BABY!