Kirk Debt Report Spells Trouble for Local Governments
Senator says mounting federal debt could hurt northern suburbs.
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Towns, school districts and park boards have a higher cost of doing business because of Illinois’s deepening debt, according to the Report on Illinois Debt released Tuesday by Sen. Mark Kirk (R-Highland Park).
Kirk appeared with two members of his debt advisory panel, Ron Bernardi of Lake Forest and Henry Feinberg of Chicago, to ask state government to improve the situation during a news conference Tuesday, with the intention of making the business climate in Illinois as appealing as climates found in neighboring states like Indiana and Wisconsin.
“With the pantomime of governors of other states luring business away from Illinois, we have to do something to keep business here” Kirk said. “We are the fifth largest manufacturing state and have to take back the natural advantage we have over our neighboring states.”
The halo effect
An area of particular concern is what Kirk and Bernardi call the “halo” effect, where Illinois’s poor credit rating—last among the 50 states—forces the interest rates other governmental entities in the state pay when they issue bonds.
“We are all affected when the state pays its bills late,” Bernardi said. “Schools and towns have to pay a yield premium. When they pay more in interest they have less to invest.”
In many of the northern suburbs with AAA credit ratings, like Highland Park, Glenview and Lake Forest, the tumult over the federal government's failure to raise the debt ceiling in August negatively affected park and school districts' ability to borrow.
The potential threat of a downgrade of America’s debt rating from AAA, which happened as a result of the latest debate over the debt ceiling, was one of the reasons Rep. Robert Dold (R-Kenilworth)voted to increase the debt ceiling in August. Kirk supported it as well.
State problems mean local problems
Kirk acknowledged the northern suburbs face a potentially greater threat to their credit rating more because of federal action than state. He thinks it is one of the reasons Illinois must rein in its debt crisis.
“This is why Senator (Richard) Durbin (D-Springfield) and I have encouraged the Super Committee to cut the deficit by $4 trillion rather than $1.3 trillion,” Kirk said. “The federal government will not be able to bail out a spendthrift state like Illinois.”
The growing federal debt prompted state Sen. Susan Garrett (D-Lake Forest) to question why Kirk is publishing a report on debt in Illinois when the United States government has mounting a deficit issues of its own.
“We have a problem with pension funding and are focusing on it,” said Garrett, who represents Kirk in Springfield. “The bigger issue now is the deficit and the jobs bill. It’s an international issue. That’s where his attention should be.”
Kirk indicated he would vote against President Barack Obama’s American Jobs Act Tuesday night when he returns to Washington. Though he will not vote for the legislation, he supports some aspects of the proposed law and wants to pass those.
“If the first stimulus bill didn’t work, what will make the second stimulus bill work?” Kirk said. “Unemployment in Illinois is going up faster than in neighboring states, so we are not experiencing growth. The economic policy of the United States is not working.”
Pension liabilities
Kirk wants to disassemble the President’s economic package and pass the parts where there is agreement. “The payroll tax proposal is good,” Kirk said. “If we separate that part of the bill it would pass very easily.”
Kirk’s report was particularly critical of Illinois’ mounting pension liabilities. Garrett along with state Rep. Karen May (D-Highland Park) and state Rep. Elaine Nekritz (D-Northbrook) are already focused on dealing with pension reform. Nekritz is the vice chair of the House Pension Committee.
“We recognize the issue,” said May, who pointed out that 14 percent of the state budget is pension liability. She also indicated all pension obligations are being met. “We know there is more to do. [Kirk] should be concerned with what is going on in Washington.”
Nekritz knows pension reform must be addressed as a key component of the state’s budget.
“In order to continue to pass balanced budgets we know we have to address pensions," Nekritz said. "It’s a big part of the pie.”
Daniel Krudop
5:19 pm on Tuesday, October 11, 2011
“'We recognize the issue,' said May, who pointed out that 14 percent of the state budget is pension liability. She also indicated all pension obligations are being met."
Whew, all pension obligations are being met! What a relief. I thought the pension system was severely underfunded. It's good to here that it is currently fully funded.
William d Brown
6:35 pm on Tuesday, October 11, 2011
The Great Republican Race to the bottom, filters to the upper middle class. The Sheridan Rd Senator is complicit in supporting the attack. They will now use a few abuses by Management of the Pension funds to attack the workers. Instead of going after the abuse by the 1%. They will use this as an excuse to loot the funds for the 99%.
carl coulson
8:54 pm on Tuesday, October 11, 2011
All classes are affected by the abuse of the Illinois entitlement atmosphere. One only need look at their property tax bill, and recognize that annual increases in teacher, municipal and every other taxing body salary and pension plan reaching it's hand into our pockets to recognize the abuse is out of control. Not one person employed in the public sector has the benefits, vacation, pension privileges,salary increases, etc. that our "public sector workers enjoy. Illinois was the only mid west state to raise taxes while our neighbors to the East and North are rapidly luring business away from our state. If we don't get a handle on our out of control state and local government spending we will slide into a similar abyss that Detroit and Greece find themselves in.
Concerned Patriot
7:35 am on Wednesday, October 12, 2011
@ carl -"annual increases in teacher, municipal and every other taxing body salary and pension plan reaching it's hand into our pockets to recognize the abuse is out of control. Not one person employed in the public sector has the benefits, vacation, pension privileges,salary increases, etc. that our "public sector workers enjoy."
....Carl, I think that's because on average private sector folks are paid more than public sector folks.
Sure, Fox News etc. can find some examples of a bus driver who worked a ton of overtime or a teacher who's been working for decades who have what sound like "high" incomes.
For every public sector example like that I can show you a handful of gated community executive elitists who are making millions but paying a lower tax rate than you or I because our conservative-based tax code is so out of whack.
RB
7:54 pm on Tuesday, October 11, 2011
The double dipping and all the inflation of salaries near retirement to increase pensions is a large part of the problem. Illinois has an embarrassing pension system that must be totaling reformed. The nimrods in Springfield placed within our constitution that despite all the abuse, pensions basically can't be changed and no matter how unbalanced due to abuse....must be paid. The state does not pay nurses, home care providers, charities, and many companies....but these out of control pensions get paid.
The State should go back and look at pensions that were inflated by abuse and stop payment. That way, people who earned their pensions and paid into the system at fair levels won't get caught up in the negative attack on pensions in Illinois. The abuse is probably higher than 1%, but is far from being every pension earner.
george Martinez
10:30 pm on Tuesday, October 11, 2011
Pension fully funded. Show me the money!! Where is the proof? No one republican shared their "jobs" plan for this country. Its all wining and politics that the Illinois politicians are playing in order to avoid addressing the embarrassing pension atrocities that exists in our beloved state. Washington is important, as is Illinois. Illinois politicians avoid their accountability for the obvious. Enough with pointing to problems, offer solutions. How can anyone support the system when they don't represent the voice of the people properly. They work for the people, make them accountable on election day. Don't be a victim any longer.
GrossPoint
7:21 am on Wednesday, October 12, 2011
Garrett has been in Springfield for how long supporting a system which is bankrupting our State? Here's a quick trip to Wikipedia
2003: Voting for Gov. Rod Blagojevich's $10 billion borrowing plan (HB2660) 2005: Voting for the $2.3 Billion underfunding of the State's pension plans (SB27) 2007: Voting for 9.6% and 3.9% raises for members of the Illinois legislature (SB241 and HB3866) 2008: Voting for a 3.8% raise for members of the Illinois legislature (SB1102) 2008: Voting for Gov. Rod Blagojevich's $16 billion borrowing plan (SB788) 2010: Voting to increase Illinois legislative health care benefits by $11 million (HB3747)
Maybe Springfield and Illinois are in such a budget mess because we keep sending irresponsible people to Springfield to represent us.
Concerned Patriot
7:40 am on Wednesday, October 12, 2011
Mark "I Ran The Pentagon War Room" Kirk voted against President Obama's fully-funded American Jobs Act.
The non-partisan Congressional Budget Office gave the Jobs Act an excellent ranking and said it would REDUCE the deficit.
Teapublicans like Kirk love-love-love the CBO when it reports stuff they like. Not so much when it proves the Dems' point.
The Jobs Act would also cut taxes for the middle class. Can't have that now can we Cap'n Kirk?
PS - Turns out Kirk was a big fat liar (again) in this report. Oops.
"The Serial Exaggerator Strikes Again"
http://capitolfax.com/2011/10/11/the-serial-exaggerator-strikes-again/
And if Kirk the Liar's really this concerned about ILLINOIS government maybe he should've run for governor instead of senator.
GrossPoint
8:00 am on Wednesday, October 12, 2011
Speaking of Illinois' pension issues, you can look up the pension payments to all of Illinois public employees, including those who retire at age 49 to live off the public dole.
http://www.openthebooks.com/search/
#1 on the list for Public School employees: New Trier's Henry Bangser, pulling in $21,806.72 per month, while our property taxes soar once again.
Clark Kent
11:05 am on Wednesday, October 12, 2011
He there! Stop picking on Hank. He's got bills to pay (I guess). That's probably the reason he left high-taxed Illinois and went to Arizona...(AzCental.com "Bangser retired from the Illinois district in 2006, moving to a career helping districts pick superintendents. He is now CEO of Hazard, Young, Attea & Associates, hired to find Scottsdale's new chief." Pretty important stuff that nobody in Arizona knows how to do. http://www.hyasupersearches.com/
It's so interesting that "reporters" NEVER really examine the pension system of legislators and judges. Maybe they're too busy promoting the "issues" of their pet politicians. Others go for the jugular. http://dailyherald.com/article/20110129/discuss/701299991/
Clark Kent
10:50 am on Wednesday, October 12, 2011
“"We have a problem with pension funding and are focusing on it,' said Garrett, who represents Kirk in Springfield." She works FOR him or he LIVES in the distrtict she represents? Hope the writer doesn't edit medical texts.
Illinois pension problems were raised as an issue decades ago. ILLINOIS DIDN'T PUT IN THEIR REQUIRED CONTRIBUTIONS. Such an event was called a "holiday!" Holiday, mind you. They don't do their job and it's a HOLIDAY!! Whee!
What have Garrett, May and Nekritz DONE in all the wonderful years they spent in Springfield during these "holidays?" Make cakes and blintzs for energy-depleted legislators?
With all their experience, all they can do is organize more committees to discuss the problem. DO SOMETHING!
Article XIII of the Illinois Constitution, SECTION 5. PENSION AND RETIREMENT RIGHTS
Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an
enforceable contractual relationship, the benefits of which shall not be diminished or impaired.
So all the years these legislators have been in the legislature, what did THEY do to remind the State that it wasn't fulfiling its obligations? Zip! Nada! Just sat around waiting for orders from Madigan.
Daniel Krudop
12:25 pm on Wednesday, October 12, 2011
I think we should try to amend our Illinois Constitution to remove that language before the Democratic Party and their minions get their way and we have more than 50% of the people in Illinois employed by Public entities.