Gov. J.B. Pritzker speaks before signing the 2024 fiscal year budget on June 7, 2023, in Chicago., he laid out a muscular plan to fix an Illinois pension system that was the weakest of any U.S. state.
So it often goes in Illinois: Well-intended efforts to fix the state’s pension problems somehow run aground. Even so, Pritzker and others in state government have not given up. And civic groups are stepping into the breach, introducing ideas that could lead to a permanent fix for a pension problem that has dogged the state for more than a generation.
At the same time, the state’s operating costs are on the rise. Illinois’ $50.4 billion budget this year is up 26% from Pritzker’s first budget, passed in 2019.A state law obligates Illinois to increase pension contributions by stairstep amounts each year — climbing from $6.9 billion in 2015 to $18.2 billion in 2045. And even after all that, the system still would be only 90% funded that year — below the 100% that actuaries recommend..
But here’s the catch: The money for those lump-sum payments would come from raising income taxes: adding a .5% surcharge to what individuals pay and hiking taxes on companies, too, with a .7% surcharge. The tax surcharge would be segregated by law, into what the group calls a “lockbox,” and could be spent only on pensions.
“Even if the governor opposes the idea, they should be commended for bringing it to the table,” Manar said. Pritzker is waiting to see if the group can earn support from lawmakers, unions and other stakeholders, Manar said.