The Civic Committee of the Commercial Club used the occasion to call on lawmakers to reform the state’s public worker retirement funding system and to raise taxes by $5 billion a year to help pay the bills, according to a report from Crain’s Chicago Business.
The study urges a series of changes, including moving new state workers from a defined benefit pension to a 401(k)-style program – already a common trend in the private sector.
Illinois , the group warned, “is headed toward a financial implosion” unless it takes action on pensions and faces the fact that it has not set aside anything to pay for their promised health insurance.
“It’s irresponsible not to address this problem,” said W. James Farrell, the former chairman and CEO of Illinois Tool Works, who headed the Civic Committee panel that issued Wednesday’s report, according to Crain’s. If nothing is done, the state’s competitive position and fiscal standing will be hurt, the group asserted.
The report echoed other earlier studies by concluding Illinois will owe about $46 billion more in pension payments in coming decades than it currently has set aside.
Where the report breaks new ground is in estimating the potential liability of paying promised health benefits to more than 100,000 retired state workers, downstate teachers and future retirees. Those costs now are funded out of the regular annual state budget, but the report warns that costs are exploding and concludes that the total unfunded liability to taxpayers is about $48 billion.
Such health benefits can and should be revised, the report says, with higher co-payments, tighter eligibility rules and other cost-cutting steps.