State fiscal reform is not a matter of choosing "heads" or "tails." The tax-cutting, starve-the-beast approach alone cannot sufficiently control the growth of government, either on the state or federal level.
Public pensions are wildly underfunded in many political jurisdictions across this country. The pension crisis in Illinois is perhaps the most dramatic: Illinois municipal bonds are treated as "junk" by the markets for good reason.
"Let them sell their summer homes and jets, and return those fees to their investors."
For Chicago Public Schools, the day of reckoning has arrived. Unfortunately, Mayor Rahm Emanuel and the Chicago Board of Education have yet to seriously confront this cold, hard fiscal truth.
Now that the Illinois Supreme Court has said that the state's 2013 pension reform law won't fly, Illinois finds itself in a difficult position. How to (legally) reform the state's pension systems in a way that saves money and maintains the necessary components of the pensioners' benefits?
The three Republican justices on the Illinois Supreme Court appeared to be the biggest skeptics of the state's case in the Illinois pension reform lawsuit. That's not what most observers expected as both sides presented their arguments to the seven members of the court.
The seven justices have been tasked with judging whether or not the state's failing pension systems can be saved by adopting the 2013 pension reform law. The law, which would dial back some of Illinois' public pension system benefits, was found unconstitutional in a lower court. Now, the highest court in the state will have its say.
The recent GAO report stated that tax revenues as a percentage of gross domestic product will not return to the historical high reached in 2007 until 2058. Such a drastic gap indicates that states will not be able to tax their way out of the problem.
It's not just basic finance, it's common sense: A large pool of money invested by professionals will yield far greater returns than small, separate accounts managed by individuals with no professional training in finance.