Commentary By Scott Reeder Journalist in Residence
Illinois Policy Institute
Minimum Wage Hike?
Gov. Pat Quinn has vetoed so few bills this year that the general consensus is that lawmakers won’t have a lot to do when the legislative veto session comes around next month.
There is plenty of speculation about what idle lawmakers will do with their time.
One idea that consistently gets discussed is raising the state’s minimum wage.
Senate Bill 1565 sponsored by state Sen. Kimberly Lightford, D-Chicago, would raise the minimum wage to $10.55 per hour making the Land of Lincoln the state with the highest minimum wage.
Lightford said Tuesday that she met this week with proponents and opponents of the bill. She added she will decide next month whether to call measure for a vote.
“I think raising the minimum wage is a good idea because these people are working. They aren’t asking anybody for anything. They just want to work,” Lightford said.
The current Illinois minimum wage of $8.25 is the third-highest in the nation – just behind Washington and Oregon.
“In an area like the Quad-Cities, we have to be aware that just across the river in Iowa the minimum wage is $7.25. Raising it to $10.55 would put our businesses at a real disadvantage,” said Sen. Mike Jacobs, D-East Moline.
Jacobs said he doesn’t believe the votes are there to pass the bill.
But Lightford said the bill has significant support.
In fact, Gov. Pat Quinn has expressed support for raising the minimum wage.
“We are fully prepared for this bill to come up during veto session,” said Kim Clarke Maisch, Illinois director for National Federation of Independent Businesses. “Obviously small business owners are very much opposed to this. They are used to making do with less and if the minimum wage is increased they will simply hire fewer people.”
Sen. Kyle McCarter, R-Lebanon, called the bill a potential disaster for the state.
“Just because some people want to be compassionate is no reason to raise the minimum wage, because if you do, you are going put an enormous burden on the small businesses of this state,” he said. “With the 67 percent tax increase, with a legislature too cowardly to pass workers’ comp reform, with increased litigation and regulation the last thing you want to do is to put more burden on small businesses with a higher minimum wage.”
New Course for Thomson Money
Two years ago, Gov. Pat Quinn’s administration was talking about selling Thomson Correctional Center so that he could spend more money on capital projects. Change of plans – his administration now wants to use the money to pay bills.
This month, the Feds cut a check for $165 million to buy the empty Thomson penitentiary and make it part of the federal bureau of prisons.
State officials have been trying to sell the prison for several years.
Here is what Quinn’s Chief Operating Officer Jack Lavin told the Commission on Government Forecasting and Accountability in a 2010 written statement:
“We intend to ask the General Assembly to appropriate all of the proceeds from the sale of Thomson for capital projects.”
But priorities can change over time, so I double-checked Tuesday morning with the governor’s office on how the money would be spent.
Quinn’s press secretary Brooke Anderson was dismissive of the 2010 Lavin statement saying that was an “old” proposal and now the money will go toward paying the state’s backlog of unpaid bills.
Obama’s Estimated IL Pension Payout: $383,535
In the wake of Tuesday’s presidential debate, much attention is focused on President Barack Obama’s pension from his time as an Illinois state lawmaker.
While the amount in retirement dollars he would be scheduled receive from state is comparably modest compared to the pensions now afforded former U.S. presidents, it does show that Illinois officials have provided themselves with comfortable retirements with far better investment returns than they could receive if working in the private sector.
Obama’s service as an Illinois state senator is estimated to earn him a $15,270 starting annual pension upon retirement. His initial monthly benefit would be $1,272. To put this in perspective, an ordinary citizen would need $332,091 (for men) or $367,577 (for women) in cash at the same retirement age to yield the same annual income as Obama’s estimated state pension.
After accounting for a 3 percent annual compounded cost-of-living adjustment and life expectancies, Obama could be in line to receive a total pension payout during his lifetime of $383,535. Obama served as state lawmaker just shy of 8 years.
Members of the Illinois General Assembly Retirement System, or GARS, contribute 11.5 percent of salary to the pension system. The estimated total amount Obama would have contributed as an employee toward his pension was $55,076.*
“This is absolutely ridiculous. He could get a far greater return than someone in the private sector could ever expect to receive. And if he had worked as an ordinary state worker, he wouldn’t have been eligible for a dime in pension payments. Illinois lawmakers have done a good job of feathering their own nests – at the taxpayers’ expense,” said Kristina Rasmussen, executive vice president of the Illinois Policy Institute.
The starting pension and cash value estimates were calculated using the Illinois Policy Institute’s online pension calculator. Here are the assumptions this calculation is based upon:
A target retirement age of 62.
A full-year salary of $66,389.88 in 2003, his last full-year in the legislature.
A hire date of January 8, 1997 and a termination date of November 4, 2004.
If the president’s service to the state had been as a rank-and-file state worker, he wouldn’t receive a pension at all. They are required to have a minimum of eight years of service before they are eligible to receive anything.
But Illinois lawmakers created different rules for themselves. Only four years of service in the legislature is required for lawmakers to retire at age 62. And they can retire at age 55 if they have 8 years of service in the General Assembly.
This year Illinois taxpayers will contribute $14.15 million to the General Assembly retirement System. Under new accounting rules from Moody’s, the Illinois legislature’s pension system is only 13 percent funded.
In addition, Obama would be eligible for free retiree health care funded by Illinois taxpayers after having served 4 years in office.
*The total amount of President Obama’s pension contributions is an estimate based on his salary history as reported by the Comptroller and based on the contributions required under the Illinois Pension Code. The Institute has filed a Freedom of Information Act request with the state to verify these estimates.
Estimated lifetime payout reflects the total amount of pension payouts over the course of the annuitant’s life, with mortality based upon the Social Security Administration’s actuarial life tables for a 62-year-old retiree. Annual pension payouts were adjusted for a 3 percent compounded cost-of-living adjustment.
Nickel-Plated Tax
Cook County Board President Toni Preckwinkle unveiled her much ballyhooed “violence tax” Thursday by announcing she would levy a nickel for every bullet sold in Cook County.
If approved by the Cook County Board, the county projects the annual tax revenues generated by this tax would be $1 million.
Preckwinkle said the ammunition tax would deter violence in Chicago and help reimburse the county for the cost of caring for gunshot victims.
But will it really deter violence?
President Barack Obama noted earlier this week during his debate with Mitt Romney, “(I)n my home town of Chicago, there’s an awful lot of violence and they’re not using AK-47s. They’re using cheap handguns.”
The added cost under Preckwinkle’s plan for a gangbanger to load up a cheap handgun?
30 cents.
Does anyone really believe that added cost is going to deter crime?
Any revenue raised by tax would likely be at least partially offset by the cost of anticipated litigation over the legality of the tax.
“I think it’s safe to say that there will be a lawsuit over this,” said Todd Vandermyde, a lobbyist for the National Rifle Association. “Just what role the NRA would play in such a lawsuit remains to be seen.”
Scott Reeder is the journalist in residence at the Illinois Policy Institute. He can be reached at: sreeder@illinoispolicy.org.
