Possible pension shift to local districts a concern; organizers work to change income tax

Published: Thursday, Nov. 28, 2013 5:30 a.m. CDT

Local school officials have fretted that the state will shift its teacher pension burdens to their districts, and the Illinois Association of School Boards issued a statement that it would be against such a move.

In a statement, the association reported that representatives of more than 390 school districts supported a resolution against such a move at its annual conference in Chicago last week.

According to the resolution, the state’s pension problem “can only be truly solved by addressing the state’s failure to meet its financial obligations and adhere to actuarial principles when expanding pension benefits.”

Batavia Education Association President Tony Malay agreed.

“Shifting the cost is pushing off their responsibility,” Malay said, as state lawmakers are expected to vote Tuesday on a pension reform package.

Instead, Malay said he supports an effort to change the state’s constitution to allow for a graduated or progressive income tax instead of the state’s flat income tax rate.

“We have a revenue problem in Illinois,” Malay said. “If we can have a fair tax instead of a flat tax ... We have been giving tax breaks to companies and individuals for too long.”

Malay said he is part of an effort with A Better Illinois, a coalition of businesses and labor associations, to get signatures to put the question of a constitutional amendment on the March 18 primary ballot. 

“We are looking to have a system like Iowa, Indiana, Wisconsin – they have a graduated income tax,” Malay said. “We need to do that. If we mirrored Iowa, we would be raising $6 billion more a year.”

Kaneland School Board President Cheryl Krauspe said she agrees with the association and Malay’s assessment of the state’s needs.

“I do believe it’s wrong to try to correct the debt problem on the backs of Illinois teachers and on the backs of local taxpayers,” Krauspe said.   

Opinions differ among local legislators. 

While State Rep. Linda Chapa LaVia, D-Aurora, agrees with the goals of a constitutional amendment for a progressive income tax, State Sen. Karen McConnaughay, R-St. Charles, and State Rep. Mike Fortner, R-West Chicago, do not.

Chapa LaVia said additional revenue would allow the state to address its bills and pension issues.

And a graduated income tax structure would have to be readdressed every five or six years to make sure it was providing enough revenue for state services.

“Illinois gets revenue from property tax, sales tax and income tax,” Chapa LaVia said. “Money coming in is very narrow compared to money going out. Every department is overworked and overloaded. There are fewer and fewer dollars being spent on the least amount of state workers ... in state prisons, IDOT [Illinois Department of Transportation], state police, caseworkers, [that] we’re doing a disservice to our constituents.”

Fortner said shifting school pensions locally is not part of next week’s reform issue, but likely will come up in other discussions.

“A cost shift is a big concern, because simply moving it to the local school districts in this area is probably just moving it on to our property tax bills,” Fortner said.

But Fortner said he did not think a progressive income tax would solve the state’s fiscal problems.

“I’m against it because I don’t think it does what proponents think it does. Because, in general, I have not seen a full set of numbers,” Fortner said. 

Iowa, for example, has lower property tax rates than Illinois, Fortner said.

His concern would be an increased income tax on his constituents, along with high property taxes for school funding.

“I’ve looked at the progressive [income] tax, and I think [that] by itself, it does not address these structural problems,” Fortner said. “We have the highest property tax burden in the state in terms of school funding.”

McConnaughay said she would not support more money for the state until lawmakers manage the money they already are given.

“Why on Earth would any taxpayer in the state of Illinois trust the state of Illinois governor and legislature with another dime when we have repeatedly demonstrated that we cannot manage the tax dollars we are given responsibly?” McConnaughay said. “If they increase taxes, it’s not going to be spent where they say it’s going to be spent.”

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