SPRINGFIELD — A top House Democrat on Wednesday suggested a new plan to fix the state's massively indebted retirement system: make the temporary income tax hike permanent, have state workers and teachers chip in more toward their pension and raise the retirement age for full benefits to 67.
The proposal by Rep.
"We can't just be meandering along," Quinn said. He added that lawmakers must move quickly so the state's economy won't be "held hostage" by the current "pension cloud."
Lang said he unveiled the legislation to address the state's $96 billion pension debt now because proposed alternatives roll back benefits and fall short of being "constitutional and comprehensive." But Lang's proposal aims to fund retirement plans at 80 percent rather than 100 percent, the level Quinn and other reform proponents desire.
The governor said he met this week with allies of Senate President
The 67 percent hike in the personal income tax rate and a corporate tax increase were billed as temporary when
To soften the blow, Illinoisans could get an income tax rebate of potentially hundreds of millions of dollars, Lang said. The rebate would kick in if the entire $7 billion-plus netted each year from just the tax hike is more than what is needed to pay annual pension costs.
Taxpayers also could get back up to a billion dollars more a year once loans to cover prior pension expenses are paid off in 2020, Lang said.
Lang, a ranking member of House Speaker
Madigan, emerging from a closed-door meeting with House Democrats, had "no comment" about Lang's bill.
In Chicago, Senate Republican leader
Lang's plan would reset the current 50-year repayment clock for a system only about 40 percent funded. The current five-decade payback plan started 18 years ago and is set to expire in 2045, and few believe it will reach the 90 percent funding level targeted for legislators, judges, university employees, rank-and-file state workers and teachers.
Lang said overall savings are not yet calculated for his bill but $675 million would be saved each year by raising the retirement age to 67.
Tribune reporter Monique Garcia contributed from Chicago.