State passes budget; some savings speculative
By Jim Hagerty
ROCKFORD – Although Gov. Bruce Rauner’s signing of the new state budget provided considerable media buzz because it included $400 million in savings from a new pension buyout plan, some say the savings may not be actual when the fervor settles.
Rauner signed the budget Monday, a swift move that followed the 793-day-long impasse that saw Democrats and Republicans locked in a political scrum.
This year’s budget claims to sharply address the state’s unfunded pension debt, now at $130 billion, with buyouts. However, according to experts, because the state is significantly curtailed constitutionally, the buyouts are voluntary. That means the $400 million included in this year’s spending plan is just a speculation. One expert is even calling taxpayers to be leery about how the plan might unfold.
“So, it’s actually wise for taxpayers to be suspicious,” Steve Malanga, a fellow at the Manhattan Institute, told the Associated Press.
Malanga said not only might the savings not reach $400 million, it is not uncommon for similar plans to cost more than projected.
For people hired by the state before Jan. 1, 2011, Illinois is looking at issuing bonds for about $1 billion over three years to fund the payments. Those no longer employed by Illinois will have the option of taking 60 percent of their vested dollars. They’d be offered a cost-of-living increase of 1.5 percent. That is lower than the current 3 percent increase. But, some say it is a fair trade for the early buyout. If enough workers bite, it could come with more than $380 million in savings during the next budget cycle.
The first plan would provide a buyout estimated at 60 percent of the present value of their vested pension. The state estimates it will get enough state employees accepting the buyout to save $41 million in the fiscal year that starts July 1.
The second plan is estimated to save Illinois $382 million in the coming budget year. It would give retirees an option to have their cost-of-living increases calculated at 1.5 percent rather than the current 3 percent, compounded annually, in exchange for an accelerated benefit payment.
If the state doesn’t realize the savings in the plan, other cuts and more debt would likely occur.
Despite the speculation, area lawmakers on both side of the aisle praised the budget, noting that schools and provisions for the Rockford airport are also vital parts of the plan.
“It’s great to see Republicans and Democrats working together to pass a bipartisan, balanced budget,” Democrat Sen. Steve Stadelman said. “This is how state government should operate.”
Stadelman noted that school districts are set to receive an additional $350 million. That is good news for the Rockford and Harlem districts. Both are considered needier districts that qualify for more subsidies this year.
“This year’s budget furthers our commitment to fixing the broken school funding formula,” he said. “Rockford-area schools are a clear winner under this plan.”
Republican Sen. Dave Syverson praised the governor after Monday’s signing, calling the process a “big deal for a state that has been passing out of balance budgets for decades.”
“We were able to obtain record levels of school funding and Medicaid dollars headed to our area,” Syverson said. “This budget, while not perfect, will provide stability to vital services while slowing the growth of government expenses.”
A supplemental spending bill for Fiscal Year 2018 will also fund agency operations, including $405 million for the Department of Corrections, Syverson said. It also includes $63 million for AFSCME back pay. R.