Posted on 09/24/2014 6:07:55 AM PDT by afraidfortherepublic
Wisconsin Gov. Scott Walker, a Republican, faces a difficult re-election in six weeks. Under normal circumstances, he would probably be coasting to victory. He just beat a recall attempt in 2012, Wisconsin's economy is improving, and he put in place reforms that have already saved the state $3 billion.
But of course, this is the issue. His now-famous union bargaining reforms of 2011 have incurred the wrath of America's big labor unions, which are now eager to defeat him.
But anyone who doubts the wisdom of Walker's reforms — and the self-interested short-sightedness of the public union bosses — need only look southward to neighboring Illinois.
Public sector unions' robust political influence in Illinois has brought the Prairie State to a tipping point. Not only have public employee retirement costs become unsustainable, but union interests have also helped ensure that even basic reforms are impossible. Their court challenges and election-year muscle are preventing the state's recent, feeble attempts at pension and benefit reforms, threatening to stick already-overtaxed Illinoisans with ever-larger bills.
This month, Moody's Investors Service reported that Illinois has the worst public employee pension shortfall of any state — and by quite a large margin. The three-year average of Illinois' adjusted net pension liabilities now amount to 258.4 percent of revenues — second-worst is Connecticut at only at 200 percent. Illinois pension funds are only 40 percent funded and face a staggering shortfall of $187 billion, based on Moody's realistic assumptions about investment returns.
Gov. Pat Quinn, D-Ill., and Democrats in the state legislature passed an enormous $7 billion-per-year tax increase in 2011 that was supposed to help keep up with pension contributions without further borrowing. This year, they passed a law allowing Chicago to raise its city telephone tax by 56 percent (yes, they have a city telephone tax) in order to keep up with current city pension obligations.
Incredibly (or maybe not), these tax increases are not making a dent in the long-term problem.
The worst part is that over time, both political parties in Illinois have become so inured to the power the unions wield that everyone has become complicit in defending not only too-generous pensions (about 6,000 retired educators now get six-figure annual pensions), but also the very worst abuses of the pension system. Last year, for example, Republicans objected to rules that would have blocked suburban and downstate school districts from “spiking” teacher pay — a common abuse of the system that is helping drain it.
In the long run, Illinois' large and growing liabilities threaten the state's future. Any investment in Illinois now comes with added risk. The stakeholders there now own a piece of the massive pension obligation that will eventually lead to far larger tax hikes.
That's what Walker saw in his state's future if he failed to act. Wisconsin has never looked like a better place to run to.
The Washington Examiner compares Wisconsin to Illinois — props to Gov. Walker.
FReep Mail me if you want on, or off, this Wisconsin interest ping list.
Illinois...they’re done...get the fork!
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