SPRINGFIELD - A group that follows state financial policies thinks the answer to the state's soaring pension debt could be found in more borrowing.
Specifically, the Illinois Policy Institute suggests Illinois borrow nearly $18 billion over the next 15 years to ensure the required, annual payments are made to the state's pension accounts.
But before fiscal conservatives scoff, Illinois Policy Institute chief executive John Tillman argues this borrowing would be responsible, not a gimmick to make the budget look balanced.
"We integrate the borrowing plan with the spending freeze and the spending cap," Tillman said. "We recommend sensible borrowing."
The plan couples the borrowing with freezing state spending at current limits for the next three years and then restricting any growth in spending by linking it to inflation and population shifts. Spending beyond the limits and any tax increases would require voter approval.
The combination, institute leaders predict, will keep the state on course to have the pension systems fully funded by 2045, wipe out a nearly $85 billion unfunded liability and ultimately result in taxpayers getting refund checks beginning in 2023 as the state's finances and pension systems stabilize.
The institute also supports efforts to overhaul public pension benefits, generally by requiring new employees to work longer, pay more into the systems and retire with less lucrative annuities.
But the focus of Tuesday's report was tying the hands of lawmakers to make sure they budget for pensions rather than shirk the responsibility, which is why the state's system is so behind and struggling to catch up.
"Our focus today - is on funding reform. Keep in mind, even with benefit reform, the problem will not be solved," Tillman said.
The idea of the plan is that the spending freeze and caps would result in excess state revenues, which would automatically go to make the pension payments. The problem is there wouldn't initially be enough. Next year's payment is pegged at $5.7 billion, Tillman said. That's where the borrowing comes in.
That borrowing would continue through the 2015 budget year. By then the spending restrictions would have ensured the payments can be made and also begin paying back the pension borrowing.
Once the pension borrowing is repaid in 2023 via this system, any excessive revenue would create an emergency fund within the state budget and also result in rebates to taxpayers.
Tillman said there was initial interest from lawmakers and hopes it gets consideration during the upcoming spring session at the Capitol.
"We'll see how that goes," he said.