Evanston residents gather to hear Pritzker’s budget plan, expressing concern over proposed pension liabilities


Evan Robinson-Johnson/Daily Senior Staffer

Ralph Martire, president and executive director of the Center for Budget and Tax Accountability, discusses Illinois’ budget and Pritzker’s Fair Income Tax. The town hall meeting took place Tuesday April 16 at Evanston Public Library.

Thea Showalter, Reporter

The Center for Tax and Budget Accountability and the office of Illinois Rep. Robyn Gabel (D-Evanston) hosted a town hall Tuesday night to give residents an overview of Gov. J.B. Pritzker’s proposed Fair Income Tax, discuss pensions and to address other budget-related issues.

Gabel, Illinois Rep. Jennifer Gong-Gershowitz (D-Evanston) and state Sen. Laura Fine (D-Evanston), attended the event at Evanston Public Library. The town hall centered on a presentation by Ralph M. Martire, executive director of the Center for Tax and Budget Accountability. Martire discussed issues that have arisen from Illinois’ projected spending compared to its past and predicted revenue.

“The state’s fiscal problems are really long term, substantial and complex and solving them won’t involve some magic silver bullet,” Martire said. “There are a number of different things that have to happen.”

Martire began by breaking down Illinois’ current budget — how the $38 billion in revenue, after subtracting out non-negotiable costs, is divided in the Illinois budget. After adding and subtracting proposed revenue and debts from the previous fiscal year, Martire argued that Illinois’ growing debt is evidence of a “structural deficit” that current budget cuts and tax raises cannot fix.

Martire said the structural deficit was hidden by the way Illinois has been drawing from pension money.

“The pension systems have been used like a credit card,” Martire said. “Illinois has, for generations, instead of putting into the pensions what they owe to cover the cost of benefits over the next 30 years, they write an I.O.U.”

According to Martire, the actual pension benefits themselves have not driven the deficit problem — pensions, as a long term obligations, have been underfunded so policymakers can meet the needs of short-term financial obligations, like the next year’s budget or more pressing programs.

Martire said Gov. Pritzker’s Fair tax plan, especially its graduated rate system where taxes are based off income levels, was “a very rational structure.” Since the plan cuts taxes for low- and middle- income taxpayers and will raise more revenue than the CTBA said was needed, Martire said the plan is “good tax policy.”

Some attendees, like Russell Kohnken, said they were surprised to learn how Illinois’ deficit issues were systemic.

“Perhaps the biggest thing that I wasn’t thinking about before was that although I knew we had borrowed against the pension fund, I guess I didn’t realize the scope of that and I didn’t think about how we were no longer earning the interest on the money that we borrowed,” Kohnken said. “That was aggravating the issue dramatically.”

Martire’s solution, however, to implement “pension obligation bonds,” was not met favorably by some attendees of the town hall meeting. Pension obligation bonds are issued by state and local governments to fund pension liabilities, with the cash raised through the bonds reinvested in other assets in the hope that the revenue raised outweighs the interest paid for borrowing.

Jim Young, an Evanston resident, said he thought pension obligation bonds were “risky” and like “throwing gasoline on a fire.”

“[Martire] also didn’t address anything on the cost side of the equation,” Young said, adding that he felt that Martire had misrepresented his political agenda.

Other Evanston residents, like Jim Grimes, said Martire’s presentation had value in the data and perspective it provided. He said if people were to invest in the pension system properly, it would earn money in the long term and if the state had invested fully in its pension program, there would be no problem today, Grimes added.

“[Ralph] brings a lot of good reliable data to problems that some people don’t want to hear, but it’s nice to have facts and figures,” Grimes said.

He added that if people were resistant to the idea of pension bonds, then taxes would have to be raised to ensure that constitutionally mandated pensions were paid out.

Representative Gabel said that she helped organize the event because of the current debate in the state legislature about how to reform Illinois tax structure.

“We wanted to first to educate the community about the issues and second have some discussion about where we need to go,” Gabel said.

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Twitter: @theashowalter

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