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De Omnibus Dubitandum - Lux Veritas

Sunday, April 22, 2018

Harvey, IL pension crisis 'canary in the coal mine'

By Rick Moran April 20, 2018

Harvey, Illinois is in the midst of a financial crisis that represents the tip of the iceberg for literally hundreds of small towns in Illinois. 

The city of 25,000 in the far northwest suburbs of Chicago is suffering from high unemployment (22%).  An astonishing 32% of the population lives below the poverty level.  This is a deadly mixture that has caused catastrophic shortfalls in revenue, leading to a crisis in funding pensions for the city's retired workers.

Since state law prohibits municipal bankruptcy, Harvey has been forced into a situation Illinois has never seen.  In February, the state began to garnish Harvey's revenue to fund its pension liabilities.  The city was forced to lay off 40 police and firemen – 25% of police employees and 40% of firefighters.  This, in a city already known for high levels of crime. 

The irony is that the state of Illinois's own pension crisis is even worse.  But fear is growing that unless a massive infusion of pension money is forthcoming from the state, dozens of towns will suffer a similar fate as Harvey.....................

At present, it is impossible to change the way public pensions are calculated in Illinois.  The state constitution forbids it.  These defined benefit plans are rigged in favor of union employees and are unreasonable and, as we are seeing, a threat to the livelihood and lives of millions of residents.

Governor Bruce Rauner tried to change the situation but was stymied by the state's liberal courts. But it's not a question of whether there will be changes to the public pension system in Illinois. The only question is when.
..........To Read More……


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