Editorial: Avoiding pension payment holiday should be top priority for surplus

  • Lawmakers at the Illinois Capitol in Springfield learned last week that the state collected $1.5 billion more from taxpayers last month than had been expected.

    Lawmakers at the Illinois Capitol in Springfield learned last week that the state collected $1.5 billion more from taxpayers last month than had been expected. Daily Herald File Photo

The Daily Herald Editorial Board
Updated 5/14/2019 11:02 AM
NOTE: This story has been corrected to identify David Harris, director of the Illinois Department of Revenue, as the author of a letter to lawmakers describing the unexpected tax collections.

David Harris, director of the Illinois Department of Revenue, told lawmakers in a letter last week that state government collected 38 percent more from taxpayers in April than it did a year ago. We shudder a little to think about what Gov. J.B. Pritzker might have proposed if he had known before his February budget address that Illinois would collect $4 billion from taxpayers in April, instead of the $2.5 billion or so that was expected.

But with the tax windfall in hand now, the state has a perfect opportunity to focus on the much-troubled control side of Pritzker's budget rather than the robust spending side. And the chief target of that attention must be the governor's ill-advised proposal to take a so-called "holiday" from making required pension payments. The surplus announced last week will more than cover the $800 million Pritzker was planning to get by avoiding the pension payments, and that must be the first priority for its use.

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Republicans used the announcement of the surplus to declare along with House Minority Leader Jim Durkin that it rendered all of the governor's revenue proposals -- an array of new taxes on top of a shift in income tax policy from a flat fee to a graduated scale -- unnecessary. We understand where they are coming from. But we also know that the surplus is a one-time bonus and, whatever one thinks of the merits or shortcomings of increased taxes, it doesn't do more for the systemic problems with Illinois budgeting than to delay imposition of reforms.

One of those chief systemic problems, of course, is the ominous and increasingly ignored $133 billion-and-counting public pension crisis, which has its very roots in payment holidays from the 1990s. Knowing where we stand today on pensions and why, it is just short of unconscionable to suggest renewing that strategy to plug a shortfall in the current budget.

The governor, who Harris said leans toward using the surplus to avoid the pension holiday, had hoped the move to a graduated income tax and other revenues would be such a boon that they would allow the state to quickly (well, over the course of a seven-year extension of the pension payback ramp) make up for the holiday. To that line of thinking, we offer just two simple points of reminder: "hope" and "$133 billion."

Lawmakers in the 1990s also hoped that mystical future revenues would appear to cover the additional spending they wanted to incur. What did that hope in fact lead to? Yes, the aforementioned $133 billion-plus that the state owes its employee pension funds.

We have seen the result of pinning the future financial health of the state on "hope." Surely, we must have learned better than to bring that fiscal strategy back into play. The $1.5 billion tax surplus eliminates any need to succumb to that temptation and leaves hundreds of millions for another systemic issue facing the state -- its $650 million backlog of late bill payments.

Moreover, it permits the government to demonstrate that it takes its pension promises and its financial obligations seriously. That's important enough just to bond ratings agencies. It's even more important to the people of the state, who need and are owed some convincing that the state is responsible and reliable enough to trust with adopting those ongoing reforms to the system that will still confront us in future budget years.

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