Dupage Policy Journal

Chuck Smith thinks Senate Majority Leader Mitch McConnell has an idea that could do a lot of good in Illinois.

McConnell, a six-term Republican senator from Kentucky, said last month he thinks states that cannot cover their bills, especially pertaining to underfunded pension programs, should consider declaring bankruptcy instead of seeking billions from the federal government.

“I think this whole business of additional assistance for state and local governments needs to be thoroughly evaluated,” McConnell told radio host Hugh Hewitt on April 23. “There’s not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations.”

He said Democrats wanted to add to the debt and let someone else pay it off down the road.

“My guess is their first choice would be for the federal government to borrow money from future generations to send it down to them now so they don’t have to do that,” McConnell said. “That’s not something I’m going to be in favor of.”

Smith, a precinct committeeman who lives in DuPage County, said he likes the idea.

“I agree that states should be able to file for bankruptcy,” he told DuPage Policy Journal. “In Illinois we need to void state employee pensions that are driving the state into insolvency and preventing the funding of critical needs.”

Smith said he’s not sure what chance it has for success but it would solve a problem in Illinois, where state pension funds are guaranteed in the state constitution. 

The state offers five retirement systems that provide pensions for state employees, public university employees, teachers, judges, and members of the Illinois General Assembly. There are another 662 pension programs for municipal workers, police officers, firefighters and retirees.

Although full Social Security benefits don’t kick in until the age of 67, the majority of state workers — 60 percent — retire in their 50s, many at full benefits. Since people are now living into their 70s and beyond, that means decades of pension payments.

Smith said he has read where the average state worker collects $2.2 million in pension dollars.

“That’s clearly not sustainable,” he said.

Smith, 73, who is retired, said this is why he supports McConnell’s idea. Because Illinois has protected the pensions in the state constitution, the only way to break that hold it has on the state budget may be bankruptcy.

“I would certainly be in favor of allowing states to use the bankruptcy route,” McConnell said. “It saves some cities. And there’s no good reason for it not to be available.”

McConnell’s idea has come under fire from Democrats in Congress and in statehouses. 

A spokesperson for Gov. J.B. Pritzker said “every state is facing budget shortfalls and we need partners in Congress who will work with us on real solutions, instead of using this crisis to propose an ideological Hail Mary.”

While cities and other local governments can use Chapter 9 municipal bankruptcy if permitted by the state, and Puerto Rico, a U.S. commonwealth, did so in 2017, there is a question if states can apply for it. 

Smith said it is worth considering.

“I don’t know if it has any chance but I think it can serve as the only way they can deal with the Illinois pensions,” he said.