The state’s financial condition is still troubled, even if the new pension law stands up in court.
The pension adjustments will save billions, but the state still will be in the hole, says David Merriman of the Institute of Government and Public Affairs at the University of Illinois.
“Our estimates showed deficits in the absence of pension modification on the order of $6 billion or so. We’re re-running that analysis now with the new pension reform, but it’s likely to show continued deficits, even if the tax increase stays in place, of several billion dollars,” he said.
That income tax increase, enacted in 2011, expires at the end of next year, unless lawmakers vote to extend it. Merriman says the state still must exercise restraint on spending.
He also noted that the way the pension reforms are structured, lower-wage state workers are affected little or not at all, while higher-paid workers, such as veteran teachers, school administrators and university professors, will have a lot shaved off the annual escalator they had expected until now. Merriman says those people might work longer to boost their pensions, or they might leave for other states or for jobs in the private sector.