Letter: Pensions are no different from other debt in state
To the Editor:
On the Oct. 3 Opinions page, Scott Reeder of the Illinois Policy Institute perpetuates one of the common myths regarding the state’s fiscal crisis. Writing about the income tax hike, Reeder states, “Virtually all of the new revenues went toward employee pensions, which the governor didn’t even mention (in explaining the increase.)”
In reality, the state has countless bills but never enough money to pay all of them. It has become the mantra of groups such as the Civic Committee and the Civic Federation and newspapers – including the Chicago Tribune and the Shaw Media papers – that the problem is mostly the fault of state pensions.
How is it that payments to the pension systems are different from the state’s other bills? Did Treasurer Judy Baar Topinka really direct the new revenue from the income tax increase to the pension systems? Of course not. Of all the bills the state faces each year, none has been treated so cavalierly as the annual pension payment, which is required by law yet more often than not has been paid in part for decades.
By failing to pay the annual “bill” for the pension systems, the state has “borrowed” routinely from those systems to fund annual expenses, rather than honestly facing the need to raise the necessary revenues or cut programs. Now the total of this “borrowing” has grown very large, and suddenly it is the fault of the pension systems. Actually, their participants are the victims of this deliberate political scheme to live beyond the state’s means, and to allow the citizens of Illinois to believe they could have all the services and programs provided at a cost well below reality.
The “unfunded liabilities” of the five pension systems are nothing more than the sum of the promissory notes the state wrote to the pension systems over the years. Why are they being singled out among all of the state’s debts? The obligations were incurred, they just weren’t due for payment during the same year, which is the very nature of long-term programs such as pension plans.
Why are these debts different from the money owed to any other supplier of goods or services to the state or to its bond holders? It’s time to wake up and admit they are not different. Debt is debt, regardless of to whom it is owed.