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2017 Special & Regular Legislative Session 6/21/2017 - 7/6/2017


mauserme

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Michael Bloomberg said it best when ripping NYC's Chief Actuary for using such rosy expected returns for public pensions.

 

"The actuary is supposedly going to lower the assumed reinvestment rate from an absolutely hysterical, laughable 8 percent to a totally indefensible 7 or 7.5 percent.... If I can give you one piece of financial advice: If somebody offers you a guaranteed 7 percent on your money for the rest of your life, you take it and just make sure the guy’s name is not Madoff."

 

I agree with Bloomberg on a lot of things, guns NOT being one of those "things." That's why Rauner blew up when the TRS board wanted to lower the TRS's assumed rate of return from 8% to 7.5%, which still isn't even close to "realistic." There isn't a single asset on the face of the Earth that compounds at a rate of 7% (or 7.5%, which is the TRS assumed rate of return in 2014, down from 8% before that)...in perpetuity. Absolutely nothing that has ever existed or will ever exist. Even averaging out the good years and bad years, it doesn't come close. Any actuary who will sit there and tell you "7% is a realistic rate" is obviously grossly incompetent and should be terminated ex post haste.

Here's 11.52% over the last 67 years...

https://www.americanfunds.com/individual/investments/fund/amrmx

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They could take every cent from every man, woman, and child and it wouldn't be enough. They could seize the assets of residents, auction them off, and take 100% of every resident's income, and it still wouldn't be enough. NOTHING can fix this mess they've created so it's time to get out before they do decide to take ALL of your money. Charge you 1k for a FOID that's good for 365 days. Tack a 50% excise on alcohol, amusement parks, whatever. It won't make a difference because they cannot control themselves. Show them their revenue projections we're off by a mile by leaving the state so they lose your tax dollars. Personally, I'm not gonna be stuck without a chair when the music stops.

 

There's actually a truth in accounting or something site I can't remember it off hand that tracks this for every state I believe for Illinois every taxpayer would have to pony up around 50K.

If the called in the feds for the 50/100 pension rule (that DOES override the Illinois constitution) it would make a significant dent in this. All state pensions would be cut in half but require 100% funding. This is what happened to the united pilots pension.

 

found it... http://www.truthinaccounting.org/

 

http://www.statedatalab.org/state_data_and_comparisons/detail/illinois

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I still get disgusted by Madigan's adjournement speech. He truly tried to spread the blame by stating how it was truly a bipartisan budget. All while the cameras were on amd I'm sure most of the networks will edit out Republican opposition debate to reflect his agenda.

 

How his family can stand him is beyond me

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I've hated living in this state for a long time. It was inertia that kept me from pulling the pin and moving to IN. Now that IN has gone tax crazy as well, that's off the table.

 

I'm doing research about which states have a lower tax bit. It's not pretty, but quite a few are better than this heck hole. TN looks very promising. I like MO, but the tax bite is pretty steep, they even tax SS benefits which is a tax on a tax.

 

If it wasn't for my wife, I would have moved when I retired 3 years ago.

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I'm not looking to get out because it will be a lot cheaper, I want out because this state is beyond repair in my lifetime. Friends and family will probably still be here so not going to move further than border jump. IA has all of the outdoor activities I enjoy.

 

I'm probably stuck here though, just have to get my house on the market and see if it sells. If I can get my equity out of it it'll be a lot easier, but I don't think IL will become a hotspot for the housing market anytime soon.

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Ok, two things: first, 11% over 67 years is very different from 7% every year. Look at that fund's 5-year average: it's around 5%. That means that there were times in the last 5 years where it was under 5%...

 

Second, Bloomie did specify "guaranteed 7%." That's also a very different animal. Doesn't matter if a fund has returned 10% every year for the last hundred years; next year it could lose everything. Definitely not a guaranteed return...

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I'm doing research about which states have a lower tax bit. It's not pretty, but quite a few are better than this heck hole. TN looks very promising. I like MO, but the tax bite is pretty steep, they even tax SS benefits which is a tax on a tax.

 

Tax rates can be a little misleading, though with Illinois it is a constant toss of cold water to the face.

 

Some states have lower property tax rates (in the case of Illinois all of them) , or no state income tax rate, but higher sales tax rates, or they tax food or RX or pensions/SS or personal property. Sales tax rates may seem similar between states until you see what cities and counties do to jack them up under the table. http://www.tax-rates.org/taxtables/sales-tax-by-state

 

https://wallethub.com/edu/states-with-the-highest-and-lowest-property-taxes/11585/

Property Tax on an Illinois home worth about 180k should be around $4200. In Indiana it is $1500. In Missouri it is about $1800.In Iowa it is about $2600.

 

Vehicle renewal fees in collar states are typically about 1/4-1/2 what Illinois charges. http://www.ncsl.org/Portals/1/Documents/transportation/Motor_Vehicle_Registration_Fees_18014.pdf#page=14

 

Like property tax, the firearms permit fees in Illinois are near the top. Just about any other free state is much less and offers perks like lifetime permits. http://www.outdoorlife.com/blogs/gun-shots/2013/03/how-much-does-it-cost-own-firearm-state-state-breakdown

 

Missouri may continue to tax your boat or RV, but the gas is cheaper, the smokes are cheaper and they practically sell dynamite out of roadside tents all year long.

 

My personal preference is to look for states that tend to tax more based on consumables than the across the board for the good of the people taxation. Most of the red leaning states tax differently rather than higher depending on how you spend your money. But that is the main difference with Illinois; they hammer you regardless of your lifestyle or spending habits.

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Ok, two things: first, 11% over 67 years is very different from 7% every year. Look at that fund's 5-year average: it's around 5%. That means that there were times in the last 5 years where it was under 5%...

Second, Bloomie did specify "guaranteed 7%." That's also a very different animal. Doesn't matter if a fund has returned 10% every year for the last hundred years; next year it could lose everything. Definitely not a guaranteed return...

Yes sir. Infinite growth at 7% (or even the rosier 7.5 or 8%) is a farce, but by setting the assumed/expected return at 7%, they're guaranteeing the fund will return 7%. My response to someone telling me that they can make me 7% in perpetuity would be "Are you insane or a criminal?" One of the two, since only an incompetent investor would state that or a ponzi schemer.

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WATCH for big asset forfeiture upon assumption of guilt rather than proof.

Then they'd have to reverse the reversal of the burden of proof. Rauner just signed a civil asset forfeiture reform law to shift the burden of proof to the state. "Uhhh bad idea, oops, then we can't auction off your property because you had several hundred dollar bills on you so we believed you to be a drug dealer."

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WATCH for big asset forfeiture upon assumption of guilt rather than proof.

Then they'd have to reverse the reversal of the burden of proof. Rauner just signed a civil asset forfeiture reform law to shift the burden of proof to the state. "Uhhh bad idea, oops, then we can't auction off your property because you had several hundred dollar bills on you so we believed you to be a drug dealer."

 

One of the few good things to come out of this session, IMO...

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One of the few good things to come out of this session, IMO...

 

It's progress. I can't understand the legal reasoning behind it even being constitutional in cases where a judge or jury renders a verdict of "not guilty." Apparently that makes people like us somehow "radical" but whatever. I'm actually surprised they put it in law enforcement. Huge cash cow. Only the government can exploit the system to its advantage yet have the nerve to call it "Equitable Sharing."

 

Repeal the constitutional provision protecting public sector pensions. Prohibit funding anything but matching employee contributions. Abolish public sector unions. The cozy relationship between Illinois politicians and public sector unions is incestuous at best.

 

Yes, I have been howling from the rooftops about amending the Clause out of the constitution. It is truly the only viable solution to the current mess. Someone has lose. Right now it's the entire State. It would be a HUGE step if they could just diminish the pensions. Not even wipe them out. Localize and limit the pain. Ideally wipe the entire Clause from the Constitution but diminishment would probably achieve the same goal. Well, depending on how long it takes. Eventually the funds will run dry. It's inevitable.

 

Union busting is a long-term solution. I don't have a problem with unions so much as I have a problem with union leaders. There are, however, many braindead union members because some are totally out of touch with reality. Offer them 40 cents on the dollar now, or zilch in 10 years, they'll pick zilch in a decade (probably less). They live in a bubble. "I was promised this!" isn't a valid argument if the money simply does not exist. Pension contracts are not absolute. I digress. Right to work is the only practical solution to the corruption but the Machine won't permit that. Would have to get them up on criminal charges or something. Good luck with that.

 

I admire Walker for what he did in Wisconsin. Pension debt up the wazoo, unions running buck wild over taxpayers. They did what was necessary to save that state. I really wish that I hadn't left. The former Senate majority leader was indicted on counts of various federal offenses. Public corruption, mail fraud, you name it. That was when the Democrats' iron grip over the state began loosening. Apparently they believe in second chances as he has his law license reinstated. Practicing real estate under his daughter. Always knew he was crooked. After all, he only lived about a mile away from me so I heard all of the good stuff.

 

http://www.nbc15.com/home/headlines/1919957.html

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Yes, I have been howling from the rooftops about amending the Clause out of the constitution. It is truly the only viable solution to the current mess. Someone has lose. Right now it's the entire State. It would be a HUGE step if they could just diminish the pensions. Not even wipe them out. Localize and limit the pain. Ideally wipe the entire Clause from the Constitution but diminishment would probably achieve the same goal. Well, depending on how long it takes. Eventually the funds will run dry. It's inevitable.

 

Union busting is a long-term solution. I don't have a problem with unions so much as I have a problem with union leaders. There are, however, many braindead union members because some are totally out of touch with reality. Offer them 40 cents on the dollar now, or zilch in 10 years, they'll pick zilch in a decade (probably less). They live in a bubble. "I was promised this!" isn't a valid argument if the money simply does not exist. Pension contracts are not absolute. I digress. Right to work is the only practical solution to the corruption but the Machine won't permit that. Would have to get them up on criminal charges or something. Good luck with that.

 

I admire Walker for what he did in Wisconsin. Pension debt up the wazoo, unions running buck wild over taxpayers. They did what was necessary to save that state. I really wish that I hadn't left. The former Senate majority leader was indicted on counts of various federal offenses. Public corruption, mail fraud, you name it. That was when the Democrats' iron grip over the state began loosening. Apparently they believe in second chances as he has his law license reinstated. Practicing real estate under his daughter. Always knew he was crooked. After all, he only lived about a mile away from me so I heard all of the good stuff.

 

http://www.nbc15.com/home/headlines/1919957.html

You got to be joking.

 

This is all a problem because of state government not funding pension for years.

 

Many cases only 20% funded, they robbed the pension funds.

 

Iowa's IPERS pension fund is like 85%, only $5.6 billion of unfunded liability.

 

Compare that to Illinois pension funds.

 

Now you think pensioners should be screwed out of their benefits?

 

Most of these people worked for lower pay for decades knowing they would have a good pension in the end, only a few game the system and end up with ridiculous pensions.

 

Caps could be placed on pensions and contributions, 403b plans could be forced, but the same idiots that caused the mess won't fix the mess.

 

A friend of mine retired last year, died of cancer this year. All his contributions belong to the state now, he really never got to use his pension.

 

Pensions are give and take, and they work if they are funded.

 

The corrupt unrepresentatives serving for more then decade need to go away so the mess can be fixed.

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No, I'm not kidding, although I wish I were. To clarify, I'm advocating for diminishing future, unearned benefits. Not saying to current retirees "Oh, hey, by the way, your pension redemption is gonna be a little 75% less from now on." No, that's wrong, but they can't hire someone then assume the market will compound annual returns of 7% forever. Only a brain dead idiot would assume such. There are always winners and losers. Would you rather it be everyone in the state, including those pensioners, or just the pensioners? One of the two, take your pick. Alternatively, by not diminishing future benefits, it will be every single man, woman, and child in this state being bent over a barrel. Also, setting caps, changing the formula and the loopholes such as teachers being permitted to use two years worth of sick days for purposes of pension calculations, and/or moving everyone to defined contribution plans would be helpful, but diminishing or curtailing future unearned benefits, reforming the pension funds' formulas (total overhaul) are the two significant changes that could be made to put a huge dent in this mess.

 

This has been allowed to go on for far too long without drastic measures being needed to treat and cure the disease. The only pensioners who I wish to truly screw over are individuals like Burge. There is no clean way to solve this mess without someone, or a group of people in this case, being hurt. The funds will be insolvent sooner rather than later. I say reform the funds because they are the opposite of transparent. They use accounting gimmicks to hide or impair asset values to keep the funding deficit from looking as bad as it is. Present union members, with a full, unbiased and unapologetic assessment of the fund's holdings, all, of the risks involved (in plain English, not "the standard deviation of..."), and...treat it like an SEC mandated 10-K, or even quarterlies.

 

I'll ask this again. Would you rather have 40 or even 30 cents on the dollar or nothing at all? It WILL come to that. Personally, I'd rather have that 30/40% than...zero, but that's just me. This isn't speculation, it will happen.

 

The union members, many of whom either do not understand nor wish to understand how defined benefit plans work, or have been living in an echo chamber for decades, are just as culpable for this crisis as the State. Just like I'm responsible for my retirement fund. These unions have a fiduciary duty to their members, the fund managers have a fiduciary duty to pensioners, and so on. One which they have been abdicating for...as long as I can remember. At what point do these union members have to take SOME responsibility for this getting out of hand? After all, it was their unions who played a huge role in causing this. Take control of your own retirement. Trusting anyone, especially the government, to prudently manage your money, is irresponsible and...it's lazy. It's public information that TRS invests in hedge funds, real estate, derivatives. Nearly 40% of the TRS portfolio consists of these "alternative investments." Tell me with a straight face that is responsible investing. No, they're trying to make a quick buck but the risk is incredible. Your money is always your problem. Don't depend on some pud sitting in an office in Springfield to make decisions about your own money.

 

Even making pension plan participation optional would be a step in the right direction. Tell future retirees how bleak the picture is, the ones who choose to roll the dice shall reap what they sow. The ones who decide "Hmm, maybe my money would be best spent somewhere else." I can't throw up my arms and cry foul when my IRA and 401(k) accounts lose money. I'm not promised anything. No one is other than government pensioners, and those contracts are not absolute regardless of how much the ILSC will tell you it is. A federal judge would happily ignore than clause if it comes to either the state goes completely insolvent, no one gets paid, ever, or impair pensions and financially stabilize the state.

 

What is the difference between a private sector employee and a public sector employee? One is market-based and a total crapshoot in the end. The other, a guaranteed income stream regardless of market conditions. The only people guaranteed money for retirement are the ones whose salaries and retirements burden the taxpayers, while said taxpayers also have to save for their own retirement. Wanna talk about fairness? That isn't fair at all. I shouldn't have to pay exorbitant amounts for someone's pension, meanwhile contributing to my own and hoping the market doesn't go belly up.

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The Federal government has already moved towards a system like this. It use to be the Civil Service Retirement, but that was changed to FERS (Federal Employee Retirement System). Under FERS you receive less of a guaranteed monthly pension, but you get the option to contribute to a 401K with 5% matched and get to collect Social Security when you retire.

 

Still better than most private retirements, but they are at least starting to make a shift to reduce their overall liability. Illinois needs to look at changing the pension system for new employees to start digging us out of this hole.

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They have. That Tier II garbage. It's barely a step and it's grossly inadequate. The Tier II plan beneficiaries basically fund the Tier I retirees, they won't see a single penny of their own money. It was designed as a method of keeping current on pension redemptions, kick the can down the road, until the road ends and keep kicking it.

 

Look at what Chicago is doing. They're taking contributions from current employees and using them to pay redemptions for the same period. That's a Ponzi scheme. Bernie Madoff is in federal prison for doing the exact same thing.

 

We need to get away from this notion that retirement is a right. No, it's not even a benefit. Neither is health insurance. Nor is home ownership, a college education. That type of thinking is why we're in this mess in the first place. I don't see any of that in the federal constitution. The Declaration of Independence proclaims the right TO PURSUE happiness. Not the right TO HAPPINESS. I get tired of hearing this is a right, that is a right. No, the only rights we have are those delineated in the constitution. Everything else is a quasi, court-fabricated "entitlement."

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