Former Gov. Edgar is Part of the Pension Problem
So why should taxpayers listen to his solutions?
CHICAGO—As Illinois approaches its fifth month without a state budget, former Illinois Gov. Jim Edgar (R) has once again entered the political conversation, but his solutions are at the heart of the government pension crisis in Illinois, according to Jared Labell, director of operations for Taxpayers United of America (TUA) and research analyst for Taxpayer Education Foundation (TEF).
“Former Gov. Edgar would like to be held in high regard as an elder statesman of Illinois, but his legacy will be seen as putting a government boot on taxpayers’ throats for generations to come,” said Labell. “The problem for Edgar, and those in the media who like to tout his bona-fides, is that his actions as governor gravely imperiled the financial future of Illinois and its citizens, a fact which seems to be overlooked when journalists and politicians cite his opinions today.”
A recent report from Crain’s Chicago Business detailed the long, sordid history of government pensions in Illinois, focusing predominantly on their mishandling by the administrations of governors Thompson through Quinn, but Edgar’s actions were particularly inept, according to the report:
“But perhaps the most enduring culprit is the “Edgar ramp,” conceived in 1994 by Republican Gov. Jim Edgar as a 50-year program to stabilize the retirement systems.
Edgar set a goal of having the systems 90 percent funded by 2045. For the plan’s first 15 years, payment levels were set artificially low—effectively shorting the pension systems each year—and then ramped up significantly in later years. This allowed politicians to comply with the required payments at the start while hoping that future leaders would find billions of dollars down the road.
Now, with the systems still less than 43 percent funded, the state faces a crippling drain on its budget. In 1996, as the ramp required, only $614 million went to the pension systems. The amount due in the state’s 2016-17 budget year: a staggering $7.6 billion. That accounts for roughly 1 out of every 4 dollars in the state’s general fund, a trend that will continue for the next three decades.”
The perilous results of this legislation should be clear at present – yet Edgar stands by his actions, commenting in the Crain’s report, “I think ’94 was still the right thing to do. I think it was a step in the right direction. We began to deal with the problem. But we unfortunately got derailed in the 2000s.”
He was also responsible for signing SB3 into law during the 90th Illinois General Assembly, another piece of devastating pension-related legislation that has gone relatively unnoticed in comparison to the so-called, “Edgar ramp.” SB3 was sponsored by Gary Hannig (D-98, Lichfield) and Raymond Poe (R-99, Springfield) in the House, and Larry Bomke (R-50, Springfield) in the Senate, and was signed into law in May of 1998 by Edgar. This legislation allowed government teachers to retire at 55 with lavish, gold-plated annual pensions worth 75% of their salary at retirement, ballooning government pension costs for years to come.
TUA has battled with Edgar for decades, beginning with his two-terms as governor from 1991-1999 once he broke his pledge dozens of times to not raise taxes. Unfortunately for taxpayers, supporting tax increases is nothing new for Edgar, as he was the first Illinois governor to permanently raise the state personal and corporate income taxes during his tenure in Springfield. Edgar enthusiastically supported the disastrous 67% increase to the Illinois state personal and corporate income taxes four years ago, raising the individual rate from 3 percent to 5 percent and the corporate rate by nearly double, from 4.8 percent to 7 percent, plus the 2.5 percent business surcharge.
“Edgar’s repeated advocacy for income tax hikes is linked to his responsibility for the government pension mess we are experiencing in Illinois today. We see larger portions of taxpayers’ dollars funneled into the government coffers without coming close to addressing the crisis, underlining the unsustainability of the system,” said Labell. “Plus, Edgar has a vested interest in the pension system, considering his annual GARS pension is $151,778, not to mention what he collects for his time with the University of Illinois. Our most recent numbers show he has collected nearly $1.7 million to date from his government pension, of which he only contributed $164,657. We wish him a long and healthy life, but hope he will consider returning his estimated lifetime payout of nearly $4.8 million.”
“In his effort to be everything to everyone across the political spectrum, Edgar mostly curries favor with Illinois’ political bosses, bureaucrats, and government employee unions while trampling on the taxpayers of Illinois. Former Gov. Edgar should consider his intimate role in creating Illinois’ continuing government pension fiasco before offering advice on how to solve it, and journalists should be cognizant of his responsibility for the crisis before touting his opinions, as he has a multi-billion dollar history of being wrong,” concluded Labell.