Senate Week in Review: Jan. 7 – 11, 2013
Friday, January 11, 2013
The January “lame-duck” session ended, leaving most major issues pending for 98th General Assembly lawmakers to take up during the spring session, according to State Senator Dale Righter.
State fiscal problems persist as year two of the Democrats’ tax increase comes to a close
Righter said that freshman and veteran lawmakers alike face tremendous challenges in 2013, noting that as the second year of the Democrats’ 67 percent income tax increase concludes on January 11, the state’s economic obstacles remain daunting.
Two years ago, Gov. Pat Quinn, House Speaker Michael Madigan and Senate President John Cullerton took advantage of a lame-duck session, and in the waning hours of the 96th General Assembly pushed through the largest tax hike in state history. Democrats advocated for the hike, promising the tax increase would be a “temporary” fix to pay off the state’s billion dollar bill backlog and was necessary in order to resolve Illinois’ fiscal problems,
Senator Righter and his Senate Republican colleagues voted against the hike, making arguments that now seem prophetic when taking into account the Democrats’ “temporary” tax increase has not made a dent in the state’s unfunded pension liabilities, nor have the revenues been used to pay down the backlog of obligations owed to Medicaid providers or state vendors.
In fact, two years later state spending continues to outpace available revenues and the backlog of bills remains in the billions. Comptroller Judy Baar Topinka recently told a House Executive Committee that the state’s current bill backlog tops $9 billion, while testifying against legislation to borrow an additional $4 billion. Ironically, the proposed borrowing would have been intended to pay down the same bills Democrats said would be eliminated through tax increase revenues.
Illinois continues to lag the nation in pension funding
And while Illinois has become accustomed to lackluster showings in national rankings over the last decade, some may find it ironic that as the state ends its second year of the “problem-solving” income tax increase, a new report in Crain’s Chicago Business shows Illinois continues to rank dead-last in pension funding.
Most recently, Fitch Ratings joined Moody's Investors Services in downgrading Illinois' credit outlook to negative from stable, citing “pension funding pressures” as a primary cause for concern. However, Illinois has long been home to the worst-funded pension reform system in the country, with more than $94 billion in unfunded liabilities.
This week’s Crain’s reported that, “According to the U.S. Census Bureau's latest Annual Survey of Public Pensions in fiscal 2011….the Land of Lincoln has a 50.9 percent funded ratio — worst among the 50 states.”
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