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

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.

From the Illinois Opportunity Project:

The City of Harvey cannot afford to pay its bills and their employees so they were forced to cut 40 public employees from the police and fire departments.  The city has an unemployment rate over 20%, effective property tax rates are over 5%, despite home values declining at an alarming 80% over the last 10 years.

Harvey families, homeowners, workers, and business owners have paid out nearly $25 million in pension benefits to 42 retired firefighters who have only contributed a collective $1.14 million to their retirement fund.

The math to solvency doesn't work.

Declining revenue plus ballooning pension costs equals pain for Harvey's citizens.

Who is standing up for the families in Harvey?  Is it Democratic Mayor Kellogg who has been under investigation multiple times for insider deals and fraud?  Democratic Cook County Commissioner Toni Preckwinkle who supported Democratic Cook County Property Assessor Joe Berrios who was exposed for his corruption in assessing property values to benefit the rich and punish the poor?  The Democratic majority in Springfield that has been propping up Ponzi schemes for years unchallenged and being held to no standards?

The situation in Harvey is not unique and is an ominous case study for the path that the state and other communities are moving towards.  Overall, nearly two-thirds of Illinois' 651 pension funds got less than their required contribution from their cities in 2016.

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 it will happen. 

The Illinois Opportunity Project has long been an advocate for reforming the pension system and shifting state-funded pensions to a 401k style system.  Politicians have proven time and time again that they are unable to manage the funds and have succumbed to pressures from public sector unions to overpromise benefits, thus enabling an unsustainable system at the state and local levels at the expense of hard working taxpayers. ...

State lawmakers have no other choice but to enact legislation to allow local units of government to file for bankruptcy.  The state must loosen its reigns [sic] over local governments and allow them to reform their finances, otherwise everyone suffers and Illinois will continue to lead the nation in outbound residents seeking to escape a confiscatory government.

What Democrats in the state have yet to realize is that eventually, they will run out of other people's money to spend.  There is already talk about a federal bailout of the state's pension plans that would almost certainly cost hundreds of billions of dollars.  Will the American people be willing to pony up and save the state of Illinois from its own greedy, incompetent politicians?

https://www.americanthinker.com/blog/2018/04/harvey_il_pension_crisis_canary_in_the_coal_mine.html