CHICAGO (WBBM NEWSRADIO) — A week before Gov. J.B. Pritzker’s budget address, a the Commercial Club of Chicago’s (CCC) Civic Committee has unveiled a plan to improve the state’s credit rating and pay off more of its pension debt.
The plan: Raise income taxes on individuals and corporations for 10 years in order to pay down the debt.
“This is about raising revenues but putting in there, in the legislative language where it’s done, that the money has to go to pensions — and the revenue increase is time-limited,” said CCC President Derek Douglas. “It’s only 10 years.”
The committee said the state’s pension shortfall amounted to $139 billion at the end of the last fiscal year.
Member Jay Henderson said we’re alone at the bottom — in terms of having the country’s lowest credit rating at BBB+ and the lowest pension payment target of 90 percent.
“The actions in the plan should be designed to achieve a AA credit rating for the state in five years,” Henderson said. “Eighty percent of all of the states in the country today have a credit rating of AA or above.”
Under the proposal, Illinois would pay an additional $2.5 billion into its public pensions over 10 years. The CCC’s Civic Committee estimated that would mean saving $40 billion over 22 years.
Douglas said is optimistic about the Pritzker Administration making such moves after two recent upgrades following the repayment of billions in debt and putting money into the rainy day fund.
“We’ve seen activities coming out of the state that suggest they’re willing to make some of these investments to help with the long-term solution,” Douglas said.
The committee has been studying the problem for 15 years and called it crucial to the state’s future success.
Henderson said the measure wouldn’t only help the state save money, but it could also spur more corporate investment.
“Many members indicate that because there is such uncertainty regarding the future economics of Illinois, they’re unwilling and unable to make those types of investments,” Henderson said.
The full report can be found here.
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