The first of many pension dominoes falling State confiscates funds

Even if you have zero interest in Illinois, watch what happens there closely. I think this is going to have a profound effect on all of the US.
Illinois is just giving us a preview of what's to come.


The first dominoes are falling.

wirepoints.org...

On Tuesday, the East St. Louis’ firefighter pension fund demanded that Illinois Comptroller Susana Mendoza intercept more than $2.2 million of East St. Louis city revenues so they could be diverted to the pension fund.

The poverty rate in E St. Louis is over 40%. So the question is, where the heck are they going to get that money? Are they going to raise property taxes? If there was ever a case of squeezing blood from a turnip, this is it.

So what is going to happen? My guess is that there are going to be layoffs. Which is somewhat ironic. If you layoff people, they obviously can't pay for things like property taxes. Many of those laid off people then have to move for new jobs. That takes income out of that area.
Once those people are laid off, those services suffer. People no longer feel safe and wonder where their tax dollars are going. Some of those people move. This is just one disaster after another.

a reply to: JAGStorm

How well funded is your state?

taxfoundation.org...

Twenty states have pension plans that are less than two-thirds funded, and five states have pension plans that are less than 50 percent funded.

originally posted by: JAGStorm
Even if you have zero interest in Illinois, watch what happens there closely. I think this is going to have a profound effect on all of the US.
Illinois is just giving us a preview of what's to come.


The first dominoes are falling.

wirepoints.org...

On Tuesday, the East St. Louis’ firefighter pension fund demanded that Illinois Comptroller Susana Mendoza intercept more than $2.2 million of East St. Louis city revenues so they could be diverted to the pension fund.

The poverty rate in E St. Louis is over 40%. So the question is, where the heck are they going to get that money? Are they going to raise property taxes? If there was ever a case of squeezing blood from a turnip, this is it.

So what is going to happen? My guess is that there are going to be layoffs. Which is somewhat ironic. If you layoff people, they obviously can't pay for things like property taxes. Many of those laid off people then have to move for new jobs. That takes income out of that area.
Once those people are laid off, those services suffer. People no longer feel safe and wonder where their tax dollars are going. Some of those people move. This is just one disaster after another.

This has been coming since we sharpened the first stick into a spear..


We were always going to reach a point where we do not need as much human labor as we have people who need to be employed.

And businesses are ONLY FOCUSED on profit, so they won’t be paying for any employees they do not absolutely need..



The real problem is that we have all been raised to hate anyone who works less than we do with the power of 1,000 suns..


They don’t deserve to eat..


They don’t deserve shelter...


They for damn sure do not deserve any form of entertainment!!


So how does that work when period there are not enough jobs for everyone willing to work???


It will not work.

a reply to: JAGStorm

The simple fact is, the pension fund is going to get a haircut, regardless of whatever laws are theoretically in place to prevent that. Because no, it's insane to effectively shut down the city to divert revenue to that fund.

We, as a society, have known this problem was coming for many decades. Workers were promised pensions that everyone secretly knew couldn't be honored indefinitely. Now we're at the end of the road, and we cannot kick the can any farther.

originally posted by: AndyFromMichigan
a reply to: JAGStorm

The simple fact is, the pension fund is going to get a haircut, regardless of whatever laws are theoretically in place to prevent that. Because no, it's insane to effectively shut down the city to divert revenue to that fund.

We, as a society, have known this problem was coming for many decades. Workers were promised pensions that everyone secretly knew couldn't be honored indefinitely. Now we're at the end of the road, and we cannot kick the can any farther.

I'm waiting to see what happens in Illinois, no haircuts as of yet due to Illinois constitution..
It is not sustainable, and its about to get crazy. Right now it has really only touched the very poor communities, Harvey, E. St Louis.

You are right we saw this coming like a speed train. We were talking about this 10-15 years ago and people just scoffed. If I were a retired firefighter, village workers, or police person, I'd be real worried.

a reply to: JAGStorm

I will say that the state of Illinois will be the first state to try and file bankruptcy. They cannot fund or pay for the pensions coming up. they cannot even make payments to schools. SIUE has been given land around the school for payment. Its crazy....

originally posted by: Stealu1two
a reply to: JAGStorm

I will say that the state of Illinois will be the first state to try and file bankruptcy. They cannot fund or pay for the pensions coming up. they cannot even make payments to schools. SIUE has been given land around the school for payment. Its crazy....

That is exactly what I'm waiting to see. How will the rest of America deal with that..
Will there be
a. Huge sweeping pension reforms across the country
b. Screw Illinois and watch them implode?

a reply to: JAGStorm

My first question would be;

Since the city of East St. Louis had to be aware of the terms of the pension it negotiated with its firefighters, and funding requirements those terms entailed, and have known about those funding requirements likely for years, why is the city, now, so far in arrears?


The “dominoes” you refer to, the impact of under-funded pensions now falling on taxpayers to recompense, can, and I think rightly, should be, traced back to the public officials who have failed over the years to do their fiduciary duty with regard to the obligations they have negotiated with their public employee unions and the taxpayers the officials serve.

If you enter into a contract with another party, BOTH parties are expected to adhere to, and honor the term of the negotiated contract.

It is unfortunate that years of apparent fiscal mismanagement at the city leadership level has resulted placing this financial burden in the lap of taxpayers, but it the taxpayers who elected these fools to represent them in the first.

It should not fall on the pensioners to take any kind of cut in the pensions they receive; they worked the years required to what they are now claiming, they kept their end of the contract, it is now up to the city to keep its end of the bargain, in full compliance with the terms of the contract, however that has to be done.

You and I would be held to the same standard for any contract we negotiated with another party. That is how the law is written.

Are we to advocate for a “Separate” standard of law such that all are NOT equal under the law?

Choose wisely, as they say, or pay dearly.

There isn't any law allowing a state to file for bankruptcy. Congress will need to create one in the next few years. You can imagine what a clusterfork that's going to be.

originally posted by: Bhadhidar
a reply to: JAGStorm

The “dominoes” you refer to, the impact of under-funded pensions now failing on taxpayers to recompense, can, and I think rightly, should be, traced back to the public officials who have failed over the years to do their fiduciary duty with regard to the obligations they have negotiated with their public employee unions and the taxpayers the officials serve.

I agree with you here. However, those guys are all gone now. We have to be fair and recognize that anyone in office today inherited this mess from someone else. In any case, assigning blame isn't going to solve the problem. Like the OP said, you can't squeeze blood from a stone. The money simply isn't there, not at the local level, and for Illinois at least not at the state level either.

a reply to: Bhadhidar

If you enter into a contract with another party, BOTH parties are expected to adhere to, and honor the term of the negotiated contract.

That is the most ironic part, A lot of the people paying now had nothing to do with those agreements.

This is why I am happy with having a 403b (aka defined contribution plan) instead of a traditional pension (aka defined benefit plan) and we deal with this issue every time we are in negotiations (I am an officer in a very small union that represents JUST our hospital and all of us have to work there as nurses etc)

People want that traditional pension which in old times usually meant a pretty good retirement but those times have changed:

1) The institution is not loyal to the worker and thus the worker is not loyal to the institution.
1a) With a 403b/401k your retirement after you reach vesting (usually 3-5 years, our hospital is 1) is portable. Hence you do not have to cradle to grave to have retirement benefits. This coupled with people watching their parents being laid off, downsized, etc means people change jobs way more often than in the past.
2) Aside from having to put the money in, a company or state has to keep this money on the books whereas a defined contribution plan it gets moved out each fiscal year.
3) you have way more flexibility with defined contribution plan and once vested and if you leave you can roll it over into another tax deferred account and manage it yourself
4) They go bankrupt and either offer a reduced benefit or simply tell those dependent on them "peace out"

Pension plans are a relic of the past and will be by and large gone by 2075 or so IMHO

originally posted by: AndyFromMichigan

originally posted by: Bhadhidar
a reply to: JAGStorm

The “dominoes” you refer to, the impact of under-funded pensions now failing on taxpayers to recompense, can, and I think rightly, should be, traced back to the public officials who have failed over the years to do their fiduciary duty with regard to the obligations they have negotiated with their public employee unions and the taxpayers the officials serve.

I agree with you here. However, those guys are all gone now. We have to be fair and recognize that anyone in office today inherited this mess from someone else. In any case, assigning blame isn't going to solve the problem. Like the OP said, you can't squeeze blood from a stone. The money simply isn't there, not at the local level, and for Illinois at least not at the state level either.

Except that by running for, and accepting their election to said office, the current officials were, or should have been fully aware of the conditions under which they would be expected to serve.

Knowing nothing about the office for which you place yourself in the running for, unaware of its history, duties, responsibilities, and challenges, is a level of ignorance reserved for much higher offices only.

a reply to: FredT
Pensions are already largely gone in the private sector. Even in unionized companies, only the old-timers will have a pension plan. New hires will get a 401(k)
.

originally posted by: JAGStorm
a reply to: Bhadhidar

If you enter into a contract with another party, BOTH parties are expected to adhere to, and honor the term of the negotiated contract.

That is the most ironic part, A lot of the people paying now had nothing to do with those agreements.

Just as those currently threatened with a reduction in their promised pension amounts due to mismanagement and underfunding by city leaders over the past years, had nothing to do with the decisions made by those leaders which resulted in their pensions being underfunded now.

originally posted by: JAGStorm
Even if you have zero interest in Illinois, watch what happens there closely. I think this is going to have a profound effect on all of the US.
Illinois is just giving us a preview of what's to come.


The first dominoes are falling.

wirepoints.org...

On Tuesday, the East St. Louis’ firefighter pension fund demanded that Illinois Comptroller Susana Mendoza intercept more than $2.2 million of East St. Louis city revenues so they could be diverted to the pension fund.

The poverty rate in E St. Louis is over 40%. So the question is, where the heck are they going to get that money? Are they going to raise property taxes? If there was ever a case of squeezing blood from a turnip, this is it.

So what is going to happen? My guess is that there are going to be layoffs. Which is somewhat ironic. If you layoff people, they obviously can't pay for things like property taxes. Many of those laid off people then have to move for new jobs. That takes income out of that area.
Once those people are laid off, those services suffer. People no longer feel safe and wonder where their tax dollars are going. Some of those people move. This is just one disaster after another.

I would say that for E. STL a poverty rate of 40% is wishful thinking. There has been decades of political grafting going on in that city. It's amazing.

a reply to: JustJohnny


Oddly enough the businesses you say only focus on profits are not the ones that will be defaulting on these pension plans.

The pensions about to default are city and state pensions.
I think they should ask their union reps what's going to cover the shortfall.

a reply to: JAGStorm

I think it will be B. screw the state, unless.. there are other states that feel they need the same bailout. If that happens and the state is allowed to do this it will be a very very bad thing. As all the other states will do the same.

a reply to: Bhadhidar

I agree take a look at Cook County its only going to get worse the only reason ESTL is at the head of this is due to them being south of Springfield everything north of it get first dibs on all the state money.

a reply to: JAGStorm

People and businesses are fleeing this $hithole in record numbers. Combine failing pensions with our newly appointed 15 dph wage increase, Hellinois will be bankrupt in short time!