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Not satisfied with the damage they already had inflicted on taxpayers with tax hike after tax hike, Illinois lawmakers delivered one final haymaker in the closing moments of the 2019 legislative session.
After doubling the state’s gas tax, increasing vehicle registration fees, and upping taxes on cigarettes, alcohol and other products and services this “historic” General Assembly, majority Democrats snuck language into the budget implementation bill that repeals a one-year-old law capping end-of-career pension spiking.
It was one last kick to the gut in a session that ended with a flourish of new expenses for Illinoisans.
The state’s five public pension systems are underfunded by at least $135 billion – much more by some estimates. Illinois taxpayers will be on the hook for that astronomical sum, if the pensions don’t go belly up first.
Despite that, Illinois lawmakers decided it was a good idea to allow local schools and public universities to give teachers who are close to their retirement requirements pay bumps of up to 6 percent a year for four consecutive years without having to pay for the increased pension costs of those raises. No, not 6 percent over the final four years, but 6 percent four consecutive years ahead of their retirement.
A teacher who enters this pre-retirement period earning $100,000 a year, exits the four-year spiking machine with a final salary of $126,247 – an overall increase in excess of 26 percent.
Those additional costs will be placed on the backs of state taxpayers, as are the latest round of tax increases and the aforementioned $135 billion pension debt.
What else is new?
The practice of pension spiking has been abused by school districts across the state for decades.
Because pension payments in part are calculated based on retiring workers’ end-of-career salaries, large pay increases in their final years on the job also inflate what they will receive in retirement.
While teachers salaries are mostly paid by local taxpayers through property taxes, their pensions are paid by the state, meaning state taxpayers foot this bill. Because school districts didn’t bear those pension costs, they often gave retiring teachers double digit salary increases. At the local level, there was no direct consequence for this unparalleled generosity.
But with the pension crisis growing, state lawmakers in 2005 capped end-of-career pension spiking at 6 percent annually. School districts could give raises higher than that, but they would have to pay those additional costs directly to the pension funds.
Last year, the legislature lowered that cap to 3 percent.
Teachers’ unions pounced, and Democratic lawmakers who rely on union campaign contributions caved. So the cap is back to 6 percent, and the burden for state taxpayers grows even more.
Illinois has been in dire need of pension reform for decades. Instead, taxpayers this year get anti-reform.
Thank you, General Assembly.
By most any account, Illinois’ 2019 legislative session was the worst ever for taxpayers.
That’s saying something, when every year in memory has been a bad one.