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Pa. pension reform's importance: Avoiding Illinois fate

| Thursday, June 29, 2017, 11:00 p.m.
Illinois Comptroller Susana Mendoza responds to a reporter's question during an interview in her Chicago office about the state budget. As Illinois nears its third year without a state budget, Mendoza must prioritize what gets paid as new court orders mean her office must pay out more each month than Illinois receives in revenue. (AP Photo)

To better understand the importance of Pennsylvania finally addressing its public-pension crisis via legislation signed into law earlier this month, consider the situation in Illinois, which Fox News says is “years in the making, caused in large part by the state's poorly funded pension system.”

In Pennsylvania, unfunded pension liabilities total about $70 billion; in Illinois, $130 billion — almost double. Illinois hasn't passed a full budget for almost three years, getting by with “stopgap spending packages.” Its comptroller warns that every penny of monthly revenue will go toward court-ordered bill payments, leaving nothing for “discretionary spending.” Things are so bad in Illinois that when its current appropriation for its state lottery expires today, it won't have authority to pay prizes — so it “already is planning to halt Powerball and Mega Millions sales.” There's even talk of persuading Congress to allow Illinois to declare Chapter 9 bankruptcy.

Along with unfunded pension liabilities, politics bedevils Illinois finances. Its Republican governor has called a special session of its Democrat-controlled General Assembly, hoping to pass a budget incorporating property-tax relief, term limits, spending caps, government consolidation, other structural reforms — and pension reform.

Pennsylvania's pension-reform law is only a start, with more reforms needed to reverse ever-rising pension costs driving tax hikes in too many local school districts. But that start makes it much less likely that Pennsylvania will find itself in a financial hole as deep as the one Illinois occupies.

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