Government leaders’ failure to address the skyrocketing costs of public employee pensions in Illinois and Chicago remind me of the famous line of the character “Wimpy” from the “Popeye” cartoon: “I’ll gladly pay you Tuesday for a hamburger today.”
Budgets are about priorities, and unfortunately, Gov. J.B. Pritzker and Illinois leaders are not being completely honest with Illinoisans. Sadly, Illinois politicians have lacked the courage and leadership to effectively fix the $140 billion — and growing — pension crisis. Pritzker, state Senate President Don Harmon and House Speaker Emanuel “Chris” Welch are content with kicking the can down the road and using budgetary gimmicks to suggest Illinois has a balanced budget.
According to David Greising, president of the Better Government Association, in a column for the Tribune, “Pension costs, including interest on the debt, are eating up 25% of the state budget and growing.”
The Taxpayer Pension Alliance — a group made up of Ted Dabrowski from Wirepoints, Josh Bandoch from the Illinois Policy Institute, Dennis LaComb of the Technology & Manufacturing Association and Ed Bachrach, who founded the Center for Pension Integrity — recently sent a letter to Mayor Brandon Johnson sounding the alarm on the city of Chicago’s unfunded pension liability, which is more than $52 billion. I fear the task force Johnson formed to make recommendations for addressing the city’s long-running pension crisis is more window dressing than solution-driven. Ignoring the pension crisis will cause great harm to workers and future generations.
According to the pension-focused Equable Institute’s “The State of Pensions 2023 Report,” several Illinois pension plans rank in the bottom 10 by funding ratio. Our elected leaders should be ashamed. Contrast that with some of the best funded pension plans: Michigan Public Schools Pension Plus 2 ranks No. 1 and has a funded ratio at 179.9%. The Utah firefighters pension is funded at 109.9%.
The very workers to whom politicians have made generous promises run the risk of not having their pension obligations paid at the current rate of funding. The funding ratios should be 100%. City pensions are funded at about 25%, even though 80% of city property taxes go toward funding pensions. A recession or economic downturn could negatively affect city and state budgets as it relates to pension obligations. Illinois pension law requires a 90% funding ratio by 2045. Greising suggests in a Tribune column that the state contribution to pensions by 2045 will be approximately $18.2 billion.
As a business owner, I understand this staggering debt will cause state and local governments to make difficult choices regarding providing tax relief for citizens, public safety, homelessness, education, economic development, mental health and other important priorities. Analysis from the Illinois Policy Institute shows that pension debt increased by $2.6 billion between fiscal years 2022 and 2023. Researchers attribute the growth primarily to “larger than expected salary increases” for state employees, according to the institute. The current trajectory is unsustainable and could bankrupt our state and city. Pritzker and Illinois leaders must realize taxpayers do not have infinite resources.
Pritzker has pledged an additional $182 million to care for migrants while Cook County Board President Toni Preckwinkle is pledging $70 million. Our senior citizens, veterans, caregivers, the unhoused and other vulnerable citizens could use additional assistance. Harmon told the Tribune last month that “we’re going to have to provide funding for crises that have existed in our communities for generations.” I hope he will keep his word.
According to a 2024 analysis of recent census data by news station WBEZ-FM 91.5, “Cook County has more areas with extreme unemployment than any other U.S. county.” The report suggests “staggering unemployment rates — ranging from 20% to nearly 48% — remain throughout Chicago’s South and West sides and in parts of the south suburbs.”
Our leaders should focus on driving unemployment down for citizens living in communities with high unemployment. This will increase tax revenue and likely reduce crime in Cook County. Johnson and his hand-picked school board have backed a plan to remove police officers from schools. This is a bad idea in an environment where violence against children remains high.
The following are suggestions to stabilize Illinois’ fiscal house:
• Pritzker, Johnson and Preckwinkle should propose a plan that reins in overly generous benefits. Consider moving Illinois to a 401(k) pension model.
• Pritzker, Johnson and Preckwinkle must be transparent with citizens and educate them about promises made to workers today and the long-term costs once they retire.
• Pritzker and Johnson must hold the line on taxes and fees. In fact, they should reverse the tax on groceries and pharmaceuticals and cut property taxes.
• Pritzker, Johnson and Preckwinkle must reverse the sanctuary policy at the state, county and city levels. The diversion of taxpayer resources to subsidize migrants deprives residents of desperately needed resources.
• Pritzker should enact an executive order banning political contributions from unions doing business with or working for the state.
Here’s a novel idea. Instead of being like “Wimpy,” Illinois leaders should adhere to pay-as-you-go principles. I’ll gladly take a hamburger today for which I will pay today.
I write this commentary to make those comfortable with underfunding pensions uncomfortable.
Willie Wilson is a business owner, philanthropist and former mayoral candidate.
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