Rauner’s initial pension proposal helps him achieve his goal of a balanced budget without tax increases. But it will take a comprehensive, 401(k)-style reform plan to solve the pension crisis once and for all.
Illinois’ state-government compensation ratio – in other words, what state employees are paid relative to the state’s private-sector workers – is two-thirds higher than the national average.
Twenty years of flight have wreaked havoc on state and local budgets, causing an estimated $7.6 billion in tax-revenue losses annually. Any long-term fix to Illinois’ budget crisis must address the state’s out-migration crisis.
As the state faces its most pressing budget crisis ever, it is time to rethink how much of its income-tax revenue it can afford to pass back to local governments.