Richard Porter, an attorney and Republican National Committeeman from Illinois, laid out a swift process for Illinois to deal with its crippling pension debt, restructure its bloated government, reduce taxes and become an attractive place to live and do business.
Porter discussed the state's financial options Tuesday at an event in Chicago hosted by Truth in Accounting and DePaul University's Driehaus College of Business' John L. Keeley Jr. Center for Financial Services.
His solution? A quick GM-style bankruptcy that would replace "Old Illinois" with "New Illinois," with help from the federal government.
It's a solution that's unlikely to gain any traction in Springfield without a whole lot of voters undergoing Howard Beale-like epiphanies. But Porter's solution has some interesting points that voters – and the people they elected – would do well to consider as Illinois circles the drain.
Porter argues that Illinois can't afford to dig out through a series of small, incremental changes as its debts continue to grow and its population continues to decline and home values fall. Those things will only exacerbate the state's financial problems and push more people to move out.
Illinois' government, he said, has essentially stopped serving the people. Rather, lawmakers continue to search for more revenue to repay its creditors. And it's not just the state. Porter pointed to Chicago's debt and population losses. He also singled out municipalities such as Harvey and North Chicago that have had to cut services as they struggle to pay for promised pensions.
Porter proposed state lawmakers come up with a plan to create a New Illinois, with a new constitution, to buy the assets of Old Illinois. During this process, he said other changes would be needed for the state to be successful once it emerges from bankruptcy. He suggested consolidating the state's more than 7,000 units of government – by far the most of any state in the nation – down to about 1,000.
"Rather than grinding through all these problems – who wants to do that? Do you want to spend 80 years grinding through 400 different, separate municipal bankruptcies?" he said.
Porter's plan calls for the federal government to guarantee the debt that New Illinois would take on to buy the assets of Old Illinois. It's another long shot, but not without precedent. He pointed to Brady bonds that were used in Mexico and other countries.
And the federal government would have some motivation to act because Illinois isn't alone, Porter said.
"We're not the only state – we're sort of at the leading edge, but Connecticut's right there and New Jersey's right there," he said.
Porter's proposal calls for some federal help paying off the state's accumulated pension debt. However, he said that pensioners wouldn't get 100 cents on the dollar. Rather, he suggested some kind of cap or maximum – he tossed out $80,000 annually per pensioner as a limit.
In a state with a median household income of about $63,575, taxpayers can't afford to pay huge pensions to former school superintendents who retired before they turned 60. Porter singled out former New Trier Superintendent Henry Bangser's annual pension payout of more than $300,000. WTTW reported in 2017 that Bangser retired at age 57 and had already collected nearly $3 million in retirement benefits.
"Is the purpose of government to collect taxes to pay people who have the status of government workers so they can stop working in their 50s and live the rest of their lives in comfort? Is that the purpose of government?" he said "... If the average person is making $65,000, I'm not going to pay someone $90,000 or $100,000 or $120,000 or $350,000 a year not to work for 40 years. That's called feudalism. That's not a republican form of government."
He also recommended doing nothing to help out the state pension system with the worst funding ratio: The General Assembly Retirement System.
Porter's proposal is certainly interesting, but could it work? He said it will if voters continue to see their taxes increase and services decline as the value of their homes decline. He encouraged everyone to keep an eye on Zillow.