The Illinois pension legislation and the ruling in Detroit’s bankruptcy are extremely troubling. The governments in Michigan and Illinois have for many years willfully failed to fund the pensions promised by the state and local governments for which the states are ultimately responsible. As wealth and income shifted more and more into the hands of fewer and fewer taxpayers, the governments refused to make those taxpayers pay for the level of services government employees, including teachers, firefighters, highway road crews, prosecutors and police, and nurses and social workers were delivering. The failure to pay for the work the government demanded of its workers is the responsibility of the taxpayers. Now, without demanding fair payment for those services, Illinois and Michigan have decided to punish the only party that fulfilled its part of the bargain—the employees and retirees who showed up, worked hard, and did the jobs they were asked to do. This is wage theft on a huge scale, and votes by the legislature or a judge’s ruling don’t make it just or palatable.
The Associated Press reported an example of the harm the Illinois law will do, and the unfairness of it: “JoAnn Washington-Murry, who has spent almost 20 years as a child welfare specialist with the Illinois Department of Children and Family Services, said she may have to delay her retirement because of the cuts. The 60-year-old estimates she’ll receive about $30,000 less in pension benefits over the next 18 years under the new plan. She said she’s upset lawmakers allowed the problem to get this bad.”
Taking $30,000 from a woman who spent her career protecting children from abuse and neglect is the wrong answer to the problem Illinois’ public employers and the legislature created. Illinois should raise taxes on every business and every individual in the state, including property taxes and capital gains and dedicate them to paying off the unfunded pension liabilities, rather than sticking Ms. Washington-Murry and her fellow employees with the bill.