Flint offers grim look at the future of Illinois’ pension crisis
Illinois isn’t the only place where retiree health insurance costs are destroying state and local budgets. For the latest example of where the Land of Lincoln could be heading, look no further than Flint, Michigan. Unless the city of Flint enacts reform, retiree pension and health expenses will consume $0.32 of every $1 in Flint’s...
Illinois isn’t the only place where retiree health insurance costs are destroying state and local budgets. For the latest example of where the Land of Lincoln could be heading, look no further than Flint, Michigan.
Unless the city of Flint enacts reform, retiree pension and health expenses will consume $0.32 of every $1 in Flint’s general fund. Emergency Manager Darnell Earley recently announced: “If we have no ability to mitigate the cost of retiree health care, that’s going to make it very difficult for the city to remain financially stable over the next few years.”
These liabilities have wreaked havoc on Flint’s finances for years. In the past two years alone, the municipal workforce has been cut by 20 percent and employees have taken a 20 percent pay cut, according to Crain’s Detroit. Voters in Flint approved a five-year tax increase for public safety in 2012. But as Illinois has learned the hard way, sending more money to government does not spur reform, and does nothing to change the cost of government. Despite the new revenue, Flint did not reform retiree health insurance. The police force could now be cut by 36 officers and the fire department by 19 positions under the city’s two-year budget.
This is the second city in Michigan that can offer Illinois lessons on the importance of reform. We’ve written before about the lessons the Land of Lincoln should learn from Detroit. Like Flint, Illinois’ budget has been struggling to keep up with quickly increasing pension and health insurance costs.
Illinois has more than $56 billion in retiree health insurance debt, but has no money set aside to pay for this benefit.
Today, most retired state workers in Illinois pay almost nothing for generous health benefits that allow them to retire in their 50s with full health coverage, or that supplement Medicare coverage in their later retirement years. This benefit is almost unheard of in the private sector.
But reforming this benefit may prove difficult – a decision by the Illinois Supreme Court suggests that Illinois politicians may have their hands tied when it comes to reforming retiree health insurance benefits for government workers.
If state and local lawmakers are not allowed to reform government worker benefits, Illinois’ taxpayers, like those in Flint, will be forced to pay more for these generous benefits while seeing their services slashed.