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Thursday, December 20, 2018

Each Chicagoan Owes $140,000 To Bail Out Chicago Pensions

As of the 2017 City of Chicago Actuarial Report, each Chicagoan would have to pony up $140,000 to make pensions solvent.

WirePoints reports Chicago Mayor Rahm Emmanuel wants a Constitutional Amendment to address Illinois Pension Woes.

The mayor's plan cannot possibly work because Chicago is far too deep in pension debt to do anything but default.

Nonetheless there is some benefit in the idea for the simple reason it may force the legislature to think about things as they are, not as they want them to be.

Kudos to Rahm Emanuel for broaching the subject of a constitutional amendment for pensions and for using cost-of-living adjustments as an example of why the amendment is so necessary.

The possibility of an amendment in Illinois has experienced a revival of sorts since Arizona recently amended its constitution for a second time. Already, the Chicago Tribune, Crain’s and Mayoral candidate Bill Daley have supported an amendment in some form. And COLAs are finally being recognized as a key driver of Illinois’ pension crisis.

However, it would be a mistake – as some may be tempted to do – to think that an Illinois fix is as simple as COLA reforms via a narrow, Arizona-style constitutional amendment. Instead, Illinois needs an amendment that’s as broad as possible if it hopes to fix the pension crises playing out all over the state.

Collectively, Illinois governments owe more than $400 billion in pension debts alone, based on Moody’s most recent methodology.

Its a particular problem for Rahm Emanuel, as Chicagoans are the most swamped of all. Each city household is on the hook for $140,000 in overlapping state and local retirement debts.
Piecemeal Approach Cannot Work

WirePoints discusses changes in Arizona and accurately concludes piecemeal changes won't work for Illinois.

Here's a hint, they won't work for Arizona or any other state or municipality either. Ridiculous COLA adjustments are only a tiny piece of the problem.
More Substantial Fixes Needed

WirePoints concludes and I agree:

"Any Illinois amendment should repeal the protection clause and say expressly that the state may modify past and future pension benefits notwithstanding the state constitutional contract clause or anything else in the Illinois constitution that might conflict."

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5 comments:

  1. Claw it back from the billionaires fund managers who lost it.

    ReplyDelete
  2. I don't think it ends well.
    And to 8:03, learn a bit about the operation of public pensions before you espouse. Pension fund managers are not to blame, as they act under very strict guidelines and are constantly audited.
    It is the bureaucrats that over-promised public workers these over-inflated pensions based on underachieve tax revenues to fund their promises.

    ReplyDelete
  3. I thought obama fixed this ? He campaigned on it

    ReplyDelete
  4. Chicago let thugs and crime take over their city, no pity, Salisbury has done the same. If the people appointed/voted to the cities do a lousy job, if they have no clue as to how to manage $, their departments, and crime and let things fall to such a mess, get you heads out of your butts, and maybe take some suggestions from your President, I am sure he knows management even on the scale of Chicago.

    ReplyDelete
  5. 8:28 we're talking about Illinois the land of corruption and warrants an investigation.

    ReplyDelete

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