Home > Blog > Budget > Nothing to See Here: Lawmakers Banked on (likely) Unconstitutional Pension Cuts, Averted Eyes to Coming Revenue Disaster

Nothing to See Here: Lawmakers Banked on (likely) Unconstitutional Pension Cuts, Averted Eyes to Coming Revenue Disaster

By passing a 2013 pension law that cut benefits for public workers and then refusing to act this spring to maintain current revenue levels, lawmakers put all the state’s eggs in a fragile basket. Now, after a Sangamon County Circuit Court judge ruled Friday that the 2013 law violates the State Constitution, the “savings” that lawmakers had banked on appear likely to vanish.

Though the State Supreme Court will almost certainly have the final word, most observers expect that the Court will affirm the Circuit Court’s ruling. If that happens, the counted-on $1.1 billion reduction in pension contributions for fiscal year 2016 will evaporate, along with lawmakers’ flimsy excuse not to maintain current income tax rates.

Pension 'Savings' LIkely to Disappear

Even if the banked-on $1.1 billion in savings were found constitutional, Illinois would still face a budget shortfall of about $3.6 billion in FY 2016 due to the roughly $5.4 billion loss of income tax revenue, according to Fiscal Policy Center estimates. If the law is struck down and the “savings” disappear, the budget hole would be about $4.7 billion.

The cuts needed to close the $3.6 billion hole are about 25 percent to most state programs. For a $4.7 billion hole, lawmakers would have to cut most programs by one-third to balance the budget.

There is simply no conceivable way that Illinois can meet its obligations and fund priorities like public schools, public safety, and most other services Illinoisans rely on every day if lawmakers allow state revenue to plunge as scheduled on New Year’s Day.

Cuts of that magnitude would devastate critical services such as afterschool programs and K-12 education, and would cut huge holes in our safety net, such as efforts to prevent struggling families from becoming homeless.

As highlighted in the FPC’s new series “A Stronger Illinois,” such cuts would imperil Illinois’ future, undermining the very foundations of our state’s prosperity. Rather than put Illinoisans through more disruptive and counterproductive cuts, lawmakers should take the responsible path and provide the resources our state needs. That means maintaining current levels of revenue into the New Year and beyond.

For more on the inevitable deep cuts if revenue collapses, read the Fiscal Policy Center’s detailed estimates.

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