How To Solve The Illinois Pension Crisis and Lower Property Taxes

 In Illinois, Pension, Property Taxes, Taxes

The State of Illinois is desperately in need of pension reforms and property tax relief.

Illinois State Capitol

While Democratic legislators push for a new income tax hike and higher property taxes, Republican legislators and candidates like Tonia Khouri have signed an open letter opposing the progressive income tax, called for a change in Springfield’s toxic culture and proposed new ideas to solve the pension crisis.

State Representative Mark Batinick was in the news recently with an innovative proposal to address the state pension crisis and also lower property taxes.

Here is the original story as reported by The State Journal-Register:

Guest View: How to solve the Illinois pension crisis and dramatically lower property taxes

Arguably the two biggest issues facing the state of Illinois are its unfunded pensions and high property taxes.

Past misdeeds and underfunding have led to a massive unfunded pension liability. Annual required pension payments are increasing quickly.

Just a few years ago our annual payment was less than $6 billion. This year it is almost $9 billion and it is scheduled to reach $20 billion by 2045.

Every annual increase requires either a cut elsewhere in the budget, or a tax increase.

Pension Debt IllinoisIllinoisans pay some of the highest property taxes in the nation. This has been a driver of job and population loss. It is a regressive tax that disproportionally affects the poor, unemployed and elderly.

It also hurts small-business growth as they are required to pay the tax whether they are profitable or not.

Manufacturers are hit extra hard as they have a large real estate footprint. That footprint comes with a large property tax bill.

This piece will outline a long-term solution to address both issues.

The Center for Tax and Budget Accountability (CTBA) recently offered a solution on pensions. Its idea was to use the power of compound interest to help drive down massive pension costs in the future. Relatively small skips in pension payments, sometimes called “pension holidays,” in the past led to large long-term debt because of compound interest. Their idea was to reverse that mistake by increasing upfront payments in order to avoid more dramatic increases in the future.

Progressive Income TaxThe CTBA’s plan would level pension payments out over the next 25 years until we reach the required funded status. However, this plan would require the state to contribute additional funds over the next eight years. The initial additional investment by the state would be $2.4 billion, which would then slide downward to $320 million in the eighth year.

Over the course of eight years additional, and significant funds, would be invested into the pension plans. In total roughly $11 billion extra would be invested quickly.

The net effect of this would be that our annual pension payment would never rise above $12 billion. In fact, around the tenth year, our pension payments would actually start to decrease. One important note is that if our system was fully funding pensions in the past, our ongoing costs would only be $2 billion per year.


This story originally appeared in The State Journal-Register on July 21, 2018, and was written by Mark Batinick, R-Plainfield.


Tonia Khouri for State Representative 49th District


Illinois is Worth Fighting For (Video)

For more information: Read about Tonia Khouri, her experienceleadership, stand on the issues and her endorsements.

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