Illinois House Democrat Lou Lang is proposing making the income tax
increase permanent to pay for state employee pensions. Lang says the
state would pay taxpayers back over time.
Lang said the state
would rebate taxpayers for any amount that's collected over the annual
pension payment from the 67 percent tax increase. The hike was scheduled
to expire at the end of 2014.
Once 2020 hits, the state would also pay back taxpayers another $1 billion per year from pension bonds scheduled to expire.
Lang's pension reform plan includes
- a 3 percent increase in employee contributions, phased in over six years.
- a later retirement age of 67.
- a shift in teacher pension costs from the state to colleges, universities, and school districts over 17 years.
have a responsibility to fix it, and we have a responsibility to have
shared sacrifice," Lang said. "If the people of Illinois want to
continue to have state employees, we're going to have to figure out a
system where we can have state employees."
Lang's plan requires
retired employees to shift to Medicare at age 65. The Chicago-area
Democrat would include a guarantee the state makes its pension payment.
That would happen through a 50-year increase in payments to bring the
state's five public pension systems to 80 percent funding.
We reached out to a number of people to find out what they think.
President John Cullerton said the negotiating table is large enough to
accommodate many of the ideas in this plan, but House Republican leader
Tom Cross does not like it.
The We Are One Illinois coalition of
unions is also reviewing Lang's proposal. Lang said the ramp-up of
payments over 50 years will accrue interest over time. He said the money
from the income tax increase will be dedicated to paying for pensions.