POLITICS

Illinois state budget: 1 in 5 dollars goes to pensions

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Politics,Beltway Confidential,Sean Higgins

Illinois Gov. Pat Quinn will propose a $35.6 billion budget for the state this year, a whopping $6 billion of which will go to covering pension obligations. This will come at the expense of schools and education, the Chicago Tribune reported yesterday:

The budget proposal the governor will present to state lawmakers Wednesday represents a 3-percent increase in spending over current levels but contains no tax or fee increases or sweeping new programs that might be salted within a typical election-year budget.

Instead, the growth in spending goes toward covering $6 billion in pension obligations, up from $5.1 billion this year. Next year’s pension tab amounts to 19 percent of all state spending compared to just 6 percent of the state’s spending pie six years ago.

In fact, while the Quinn administration forecasts $817 million in new revenues coming into state coffers during the budget year beginning July 1, all of that money and more — $929 million — will go toward paying for added pension costs.

“This budget is a direct result of the inaction on stabilizing pensions,” said Jack Lavin, Quinn’s chief of staff.

The education budget the governor will lay out will call for a roughly $500 million increase in spending, but little of that money will go toward the state’s classrooms.

Instead, with $842 million in added teacher pension costs, spending for actual day-to-day costs of running Illinois’ schools and universities will drop by $400 million. Only early-childhood funding and Monetary Assistance Program college for low-income college students will see funding safeguarded.

Hat Tip: Reason.

We can expect to see similar scenarios at states across the nation. Underfunded pensions are a major problem throughout the public and private sectors.

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