If Gov. Pat Quinn really wants to vacuum up all the money he possibly can for the state, he needs to take more careful aim.
His huge income-tax hike falls on every wage-earner in Illinois, including many people who are struggling to make ends meet in a difficult economy. No matter, the governor and his fellow Democrats have set out to turn over the state’s citizens and businesses and shake, shake, shake. But from a lot of people, all they’re going to get is nickels and dimes.
The median household income in Illinois took a hit during the recession. The most recent census data pegged it at $53,966. Jobs are scarce, wages are depressed and the outlook is unsettled — especially if rising taxes send employers elsewhere and dampen economic recovery here.
There is a group that stands to benefit from the General Assembly’s tax deal. The state’s wealthiest public retirees. They get a great deal from the state. The legislature decided not to touch them.
Governor, that’s wrong.
Here’s one example.
The Teachers Retirement System of Illinois keeps track of how much it pays out in benefits. It divides its retirees into 17 categories based on the amount they collect.
Those in the fortunate group at the very top take in at least $8,000 a month—$96,000 a year. If any exclusive club has reason to celebrate the huge income-tax hike, this is it.
Five years ago, 860 retired educators collected that much from their state pensions. As of fiscal 2010, the number had more than tripled to nearly 3,000 retirees. Those ranks will grow in the years ahead as rising salaries translate into more lavish pension payouts. We’re just talking about educators here. There are many more retired public workers collecting from Illinois. The state, by the way, doesn’t tax pension income.
It’s a similar story for retiree health care. There are 84,100 people eligible for health coverage under the State Employees Group Insurance Program, mostly former state and public university workers. They paid less than $9.8 million in premiums but the state paid $282.6 million in retire health care costs, according to figures obtained from the state by state Sen. Jeff Schoenberg, D-Evanston. Most retirees pay absolutely nothing in health insurance premiums.
Their average household income? $77,900 a year.
The skyrocketing pension and health care costs for retired public employees are the No. 1 reason why Springfield has been unable to pay its bills for everything else. Even the whopper of a tax increase won’t be nearly enough to pay down all the state’s unfunded pension obligations.
The legislature last year curbed future pension costs for brand new employees, but didn’t touch the costs for the huge number of current and retired employees.
California has a similar problem with runaway pension costs. Some of its wealthiest public employees recently demonstrated how little they understand the plight of the taxpayers funding their retirements: Three dozen of the highest-paid administrators at the University of California vowed to sue the state seeking to accrue pension benefits on their salaries beyond a current $245,000-a-year limit.
The lawsuit provoked an angry reaction. Proposed legislation in Sacramento would cap pension payouts, barring publicly employed millionaires from piling up still more millions at the expense of those who can ill afford to pay for those benefits.
Are you listening, Gov. Quinn?
How can Illinois ask a family earning $53,966 a year to pay more in income taxes to secure free health care for a pensioner who takes in $77,900 a year?
Some lawmakers argue that pension benefits are protected by the Illinois Constitution. Some of the finest lawyers in the state make a sound argument that Illinois could curb the rapid growth of pension benefits for workers and not violate the constitution. But legislative leaders won’t even attempt that.
Free and low-premium health care benefits for retirees have no constitutional protection. Schoenberg is developing a bill to means-test those benefits, so retirees who can afford it would have to pay a fair share for their benefits.
The tax shakedown is complete. Quinn on Thursday signed the legislation that will sock workers with a 67 percent state income tax increase. A lot of struggling families will have to pay that hike.
Illinois is grabbing more money from working families while it protects the benefits of some people who are far better off. That’s unconscionable.
