One day after a House lawmaker proposed a pension reform plan that would rely on the indefinite extension of the Democrats’ 2011 income tax hike, State Sen. Kirk Dillard (R-Hinsdale) noted the Paul Simon Public Policy Institute released a poll revealing that the vast majority of Illinois voters oppose a permanent increase in the income tax.
Also during the week, attorneys met in court Feb. 20 for a hearing on four lawsuits challenging a recently approved state law eliminating free health insurance for some state retirees.
Bill Would Make Permanent 67 Percent Income Tax Increase
While the budget concerns have lawmakers pursuing solutions to the state’s fiscal woes, Sen. Dillard said a “pension reform” proposal introduced by Rep. Lou Lang (D-Skokie) is not the way to go.
The Representative recently proposed making the 67 percent tax increase permanent, with the additional tax revenues going toward pension payments. Lang’s bill would also require state workers to pay an additional 3 percentage points of their salaries toward their pensions, and increase the retirement age for public employees to 67 before they could receive full pension benefits.
Dillard pointed out that the income tax increase was sold by Democrats as a temporary way to pay off state bills, fix Illinois’ structural deficit, and generally right the state’s fiscal ship. He said that extending the tax would not only be a betrayal of the taxpayers’ trust, but emphasized the additional 2011 tax revenues have not been used as promised to pay down Illinois’ overwhelming debt.
“Raising more revenue in order to throw money at the issue isn’t going to address the systemic problems associated with the state’s retirement systems, and a recent poll taken by the Paul Simon Public Policy Institute shows that a majority of Illinois voters do not support an indefinite extension of the income tax increase,” said Dillard.
Poll: Public Largely Opposes Tax Increase Extension
Perhaps unsurprisingly, 63 percent of respondents to a recent Paul Simon Public Policy Institute poll oppose any proposal that would make the income tax increase permanent, as compared to the almost 29 percent who favored an extension of the tax hike. However, a significant majority of those polled did agree with one aspect of Rep. Lang’s proposal—almost 57 percent favored increasing the age at which public retirees can receive full pension benefits to 67.
Though public employee pension reform is considered by many to be the most pressing concern facing Illinois, the Paul Simon Public Policy Institute Poll indicates Illinois voters do not overwhelmingly support some of the reform proposals recently floated by lawmakers.
Though annual cost-of-living increases (COLA) for retirees contribute significantly to Illinois’ pension costs, 57 percent of voters polled indicated they oppose suspending retirees’ annual cost-of-living increases for six years. Voters are split 45-44 on a proposal that would apply COLA increases to the first $25,000 of retirees’ pensions. Similarly, 49 percent of respondents favor a proposal to increase the age from 65 to 67 at which time retirees can receive state-paid health care benefits, while an almost equal number of voters (48.6 percent) opposed that same proposal.
Lawsuits Over State Retiree Health Insurance Benefits
Retiree health care benefits were the focus of a recent court hearing in response to lawsuits challenging a 2012 state law requiring state retirees with 20-plus years of state service to pay premiums on their health insurance.
Previously, state retirees with 20 years or more of service received free health insurance benefits. Senate Bill 1313 repealed the state's health insurance subsidy of up to 100 percent and subsequently four lawsuits were filed challenging the constitutionality of the law. Those suits were consolidated into a single case in September 2012.
Dillard explained that Illinois’ pressing budget obligations and record debt has unfortunately created an situation where the state can no longer afford the high costs associated with these free health benefits. Attorneys have been given an additional three weeks to file paperwork before Judge Steven Nardulli renders his ruling on the case.
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