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Budgets are critical policy documents that dictate what’s a priority, and what’s not.
A $41.5 billion capital program. A plastic bag tax. Electric vehicle fees. A higher gas tax. All topics floated at one time or another this legislative session. One that escaped much talk in Springfield: The public pension crisis.
The Tax Cuts and Jobs Act (TCJA), signed into law on December 22, 2018, delivered sweeping changes to the federal tax code. These changes brought with them ambiguity and uncertainty, which will likely lead to federal tax audits and disputes on how such provisions should be applied and interpreted.
The city predicts that, by the 2050s, more than a third of Lower Manhattan would be at risk from a storm surge.
“Of the 10 largest U.S. cities, the ‘City of Brotherly Love’ had the fourth largest taxpayer burden, Truth in Accounting said in its report, ‘Taxpayers on the Hook.’ The ranking was based on outstanding debts – including unfunded pension bills – in the city itself, as well as other units of government. … Truth in Accounting’s report has raised criticism from at least one state-based organization, the Pennsylvania Budget and Policy Center. ‘It’s not a red herring, and it’s not a real problem,’ Director Marc Stier said. “[The debt] will shrink at some point in the 2030s.’ …”
“Let’s talk about ‘fungibility’ – the economic concept that one unit of a commodity may be interchangeable with another. That’s true if the commodity involved is something like a bushel of corn or a barrel of crude oil. But in politics, the commodity is money and fungibility means that a dollar is a dollar and if it’s spent on one thing, it’s not available for another thing, no matter how it may be spun to the public.”
“… the mayor’s most pressing threat is the dire economic straits of the city. Last year, the city very nearly declared bankruptcy, and pensions continue to be a nightmare problem for politicians, unsolvable except by miracle. … Lightfoot’s struggle against the weight of the situation may be determined before it even begins. One cannot bring business into the city, collect more tax revenue, balance a $500 million deficit without debt borrowing, and still make everyone happy.”
“… The GOP suggested in 2009 and in 2010 that $800 million in controversial borrowing could be avoided by selling Bradley International and Hartford-Brainard airports. Nonpartisan analysts could not confirm a projected sales price. The GOP based the idea upon a then-proposed sale of Chicago’s Midway International Airport that hadn’t been completed — and eventually was abandoned.”
“… Consolidation of downstate pension funds is not the answer to the problem. The problem is structural flaws in statutes that regulate pension funds. A closed amortization period and restrictions on investments in equities and fixed investments are the flaws that need to be fixed. These flaws can be corrected by legislation that establishes an open amortization period and the prudent person rule.”
“… Voter approval would mean eliminating the current flat-rate tax of 4.95%. Mr. Pritzker, a Democrat, intends that a progressive structure would increase taxes on incomes higher than $250,000. Mr. Pritzker says 97% of taxpayers would pay no increase in taxes.”