Editorial: Pension crisis is real, and won’t go away by cutting ‘inefficiency’
Editorials February 25, 2013 12:24AM
Gov. Pat Quinn
Updated: March 26, 2013 9:29AM
The results of a new poll say that we, the media, haven’t been doing our job.
A strong majority of people in Illinois, according to the poll by the Paul Simon Public Policy Institute, believe the state could solve its enormous financial problems simply by cutting “waste and inefficiency.”
This is not remotely true. It is wishful thinking. Illinois has fallen behind by a whopping $96 billion in funding its public employee pension systems, and nothing short of drastic measures will fix the problem. Cutting waste and inefficiency, though always good to do, won’t get us close.
Politicians on both sides of the aisle in Springfield know this, which is why nothing gets done — nobody wants to be the bad guy with the public employee unions or the taxpayers. Public finance experts know this, which is why Moody’s Investor Service downgraded the state’s bond rating last year — something has to give.
It has been the media’s job to get the message out to everybody else.
That $96 billion is almost three times the size of the state’s annual general revenue fund, $33 billion, meaning one way to wipe out the unfunded liability would be to shut down state government for three years. Universities, parks, prisons and the like would be crippled, even forced to close.
Obviously, that’s not going to happen. But if nothing is done to gain control of the state’s pension liability, it eventually will crowd out spending on everything else. A subgroup of the Civic Federation, in a reported released today, estimates the state’s unpaid bills could rise to $22 billion by the end of fiscal year 2018.
Or — and this is more likely — the pension system will go bankrupt, stranding current and future retirees.
As for waste and inefficiencies, nobody has found $96 billion worth of that, even stretched over decades. Gov. Pat Quinn, in fact, has cut state spending to 2008 levels. The number of state employees this fiscal year was slashed to 48,000 from 51,000, giving Illinois the lowest per capita number of state employees in the country.
Pension benefits must be reduced, and new revenues must be found.
That will be easier to do if everybody understands: The crisis is real.