Should Illinois therefore Chicago. Get a federal bailout of Penion debt? Now that Puerto Rico did? (Naperville: rent, credit)

[Mathguy]

Originally Posted by MSchemist80

Of course they did they have pensions too. They can rule gravity is unconstitutional it won't stop things from falling. The state already is bankrupt.

So, say hello to higher taxes and cuts in other areas....or both. *shrug*.

By law they can't just stop paying so they'll have to come up with the money somehow.

[MSchemist80]

Originally Posted by Mathguy

So, say hello to higher taxes and cuts in other areas....or both. *shrug*.

By law they can't just stop paying so they'll have to come up with the money somehow.

Again the money does not exist and is not extractable. The figures are that hopeless. The only way things are still going now is that they are delaying paying things but that can't last forever. Sooner or later there will be no money, no one willing to loan them money, noone willing to work for the govt for IOU's that may be paid years from now if they are lucky and things will grind to a hault

[thunderstruck666]

Michigan has a clause that is the same as Illinois.
Michigan Legislature - Article IX § 24
Illinois Constitution - Article XIII
I'll quote from a book I'm reading about the Detroit bankruptcy.
"The constitution does not say you have a guaranteed right to a pension. It says it's an accrued financial benefit that's a contractual obligation. Bankruptcy is really the ability to abrogate a contractual right."
Contracts are subject to change or cancellation under Federal law, so if the city files for bankruptcy in Federal court, the pensions can be changed or cancelled out entirely.
Here's a really good report from Fiscal Futures Project, exploring various scenarios for addressing the state problem. Unfortunately, it requires everyone to work together, which ain't gonna happen. Therefore, we are screwed. Institute of Government & Public Affairs

[Antonio Montana]

Originally Posted by IrishIllini

I understand IL is in worse shape, but not by as much as you may think.

Are you serious?!?!?!?! Have you bothered how far in debt Illinois is in due to pensions? It is the worst in the nations!!!! Have you been paying attention to the ratings such as Moody's? What planet are you living on? Quit trying to spin and explain away the financial catastrophes that are Chicago and Illinois. It won't work. Both Chicago and Illinois are in a world of hurt right now and you know it.

[MSchemist80]

$111 billion in pension liabilities and I don't think that includes local. so ~$8500 per resident.

[Liledgy]

Originally Posted by IrishIllini

Stop making sense

I will say I can understand pensions for Police and Fire. These people literally put their lives on the line and perform jobs that are essential to maintaining our society. No one else should be receiving lavish pensions to do work that is no more strenuous than your average desk job.

My job (lineman) is much more dangerous than police and fire. As is ironworkers, loggers, etc. Thankfully, our industry like many others still get private pensions, no matter what mschemsist says.

[kettlepot]

San Diego faced a similar situation a decade ago because of a corrupt and unaffordable pension system. Firefighters spiked their pay with overtime during their last working year to goose the pension. A DROP program was implemented that allowed employees to purchase credit for years worked that assumed an unrealistically high rate of return on their purchased credits. Bankruptcy was seriously considered as a way to bust the pensions that had been extracted under unethical conditions. The city lost access to the bond market because its financial statements were unauditable.

In the end, the city resolved the situation by cutting and cutting and cutting. The pension system was closed to new employees and the city switched to a 401k system for them. Pay rates were frozen for several years. Certain payments to employees continuing under the existing pension scheme were excluded from pensionable pay. Streets went unpaved and trees untrimmed. Vacant positions were not replaced throughout the system and hours worked were cut back at libraries and recreation centers. For a time, one entire floor of City Hall ended vacant because of the reduction in employees. Every fee was reviewed to see if it was fully recovering the cost of the service provided. The pension also borrowed money at very low rates and invested it believing they could make more of a return than the money cost, and they succeeded.

Today, the city's financial situation is sound, though not necessarily robust. The decaying state of the city's public infrastructure is a long term problem, however, the pension is sound long term. Other than increases in fees, the city did not raise any taxes. However, to address the accumulating infrastructure problem, the sales tax may be increased, but that will be done only now that public confidence has been won back because the city addressed the systemic problems first.

[MSchemist80]

And California has what an 11% income tax, high sales tax, and at least they put a cap on property taxes. I and a lot of people in Illinois are not going to go for 10% income tax, 10% sales tax, and $10k average property taxes for the benefit of a privileged class of workers.

[Mathguy]

Originally Posted by MSchemist80

Again the money does not exist and is not extractable. The figures are that hopeless. The only way things are still going now is that they are delaying paying things but that can't last forever. Sooner or later there will be no money, no one willing to loan them money, noone willing to work for the govt for IOU's that may be paid years from now if they are lucky and things will grind to a hault

OK source your claim?

[Mathguy]

Originally Posted by MSchemist80

And California has what an 11% income tax, high sales tax, and at least they put a cap on property taxes. I and a lot of people in Illinois are not going to go for 10% income tax, 10% sales tax, and $10k average property taxes for the benefit of a privileged class of workers.

The cap on CA property often benefits rich, older property owners.

I've read numerous articles about how a elite property in San Fran was worth 60mil but paid 15k in property taxes....but that if sold the new owner would be paying >100k.