Illinois is facing a profound pension debt crisis, and a new report from the Commission on Government Forecasting Accountability shows that on average, each household in the state is responsible for about $27,000 in unfunded liabilities.
That amount of pension debt represents a $4,000 per household increase from last year.
While pension outlays make up more than 25 percent of the state's annual expenditures, the report showed that the state is not getting a handle on its debt. Illinois’ pension debt increased to $130 billion in 2016, which is up significantly from a year ago. It grew 17 percent from 2015.
On top of the pension burden, Illinois taxpayers pay the highest property taxes in the nation. The state also is saddled with higher unemployment than neighboring states and a slow economic recovery.
The Illinois Policy Institute recently released a statement on the pension crisis.
“Now more than ever, this shows that the state’s pension math doesn’t work,” Ted Dabrowski, vice president of policy at the Illinois Policy Institute, said. “It doesn’t work for struggling taxpayers who are forced to pay more and more into the pension funds. It doesn’t work for the poor and disadvantaged who are seeing core services cut. And it doesn’t work for state workers whose retirements are at risk."
Dabrowski offered ways to take action now to correct the increasing debt crisis.
“Lawmakers have no excuse to continue ignoring Illinois’ crippling pension crisis," Dabrowski said. "They can immediately implement reforms that don’t require changes to the Illinois Constitution, including putting all new government workers on 401(k)-style plans and providing optional self-managed accounts to existing workers.”
The Illinois Policy Institute said Illinois taxpayers are stuck with $1 billion in extra contributions to the pension systems in 2018. This will result in greater cuts to core state services. The group said that if there continues to be no reform in the pension systems, then these costs will continue to increase.
Fitch Ratings has said the state pension plans are the worst in the country. For every dollar needed today to pay out benefits in the state's five pension funds, there is only 38 cents on hand.