Mt. Vernon Register-News

State News

February 22, 2013

Ill. pension proposal calls for permanent tax hike

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SPRINGFIELD (AP) — A two-year-old temporary Illinois income tax increase should become permanent to pay an increasing state portion of employee pension costs through 2019, a top House Democrat said Wednesday.

Deputy Majority Leader Lou Lang's proposal to shrink a $96 billion deficit in five state retirement systems also would increase the retirement age to 67 and increase employee contributions by 3 percentage points.

The Skokie Democrat called his entry into the yearslong struggle to find a pension solution an idea that would meet with a judge's constitutional approval, compared to others that tinker with post-retirement cost-of-living increases.

"This is a plan that's constitutional, that's fundable," Lang said at a state Capitol news conference.

Lang did not address the common claim that the state's annual obligation to long-term retiree programs — more than $7 billion in the budget year that begins in July — already eats up the 67 percent income-tax increase Gov. Pat Quinn pushed into law in 2011 to reduce the state budget deficit. The evidence is in the $9 billion in overdue bills Illinois owes for goods and services, which has barely budged in that time.

"Including the income tax increase as part of the solution, to me, is already being part of the solution," said Rep. Elaine Nekritz, a Northbrook Democrat who has been the focal point on a House solution. "It's actually how we're making the pension payments right now."

Lang said he had given House Speaker Michael Madigan an outline of the measure. Madigan spokesman Steve Brown later said Lang's legislation is among those the Chicago Democrat is considering in seeking a solution.

Plans by Nekritz, Democratic Senate President John Cullerton of Chicago, and Gov. Pat Quinn all have included other cost-saving measures, including increased worker contributions, less-generous benefits, and a shift of some teacher-pension costs to local school districts.

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