From the Illinois News Network:
Illinois lawmakers differ on how to ‘fix’ Tier II pensions
State Rep. Robert Martwick, D-Chicago, and state Rep. Steve Reick, R-Woodstock, talk about Tier II pensions.
State lawmakers are hearing concerns over Tier II pensions for public employees. One said a fix will likely cost taxpayers more. Another said the only answer is bankruptcy.
State Rep. Robert Martwick, D-Chicago, held a hearing in Springfield to get testimony from various pension boards for police, fire, local government employees and teachers.
The issues, he said, could lead the state’s Tier II pensions to be found by the federal government to be insufficient for retirees. He equated it to a “landmine.”
“If that happens, it could create an instant and massive debt to the state of Illinois,” Martwick said.
Martwick couldn’t say how much that debt would be, but whatever it is would be tacked on to the state’s $135 billion unfunded pension liability. That doesn’t include the increased cost of taxpayer subsidized public employee retiree health care that’s estimated in the tens of billions of dollars.
Lawmakers are considering what Martwick called possible “fixes” to alleviate concerns.
“We don’t know this for sure yet, but it would seem as though there is going to be a cost associated with this fix,” Martwick said. “The only question is, is this a cost we take on now, is this a cost we take on later? How much will it be in both instances and how do we do it?”
State Rep. Steven Reick, R-Woodstock, said he see only one fix.
“I don’t see anyway around this other than structured federal bankruptcy for the state pension plans,” Reick said. “I don’t want to do that. But I think that the need exists for the rest of the people of the state of Illinois to have a little bit of an end to this. We can’t go to 2045 and pay $20 billion into a pension plan and still be underfunded at that time.”
Reick said this issue isn’t only about state pensions, it’s about local police and fire pensions, too.
“All these pension plans are on the verge of collapse and there’s no unicorn out there,” he said. “Show me the tree where money grows and I’ll go ahead and go out and pick it, but it doesn’t.”
Rieck warned against raising taxes to cover the bill. He said: “Government has the power to tax and the power to tax is the power to destroy.”
More hearings on the issue are expected in the weeks ahead.