Volcker Group to Say Illinois Budget Is Unsustainable has the breaking news:
" Illinois has dug itself into such a huge financial hole that it may not be able to provide basic services to residents or meet employee benefit obligations, according to a national task force that is due to release a report about the state's finances.
The report, prepared by the nonpartisan State Budget Crisis Task Force and expected on Wednesday, will also say that the state's fiscal stress is a "serious drag" on its economic performance, a statement from the task force said. The group is led by former Federal Reserve Chairman Paul Volcker and former New York Lieutenant Governor Richard Ravitch.
The statement was due on Wednesday with the report, but it was mistakenly emailed to reporters a day early.
"Illinois's budget is not fiscally sustainable," Ravitch said in the statement. "Despite recent progress and difficult choices, it is still in a deep hole."
The report is due to be released at a press conference in Chicago on Wednesday.
Ravitch said in the statement that Illinois "cannot simultaneously continue current services, keep taxes at current levels, provide all promised benefits, and make needed investments in education and infrastructure."
The task force highlighted the state's unfunded pension liability and high debt per capita compared with other states; about $8 billion in unpaid bills that were pushed into fiscal 2013; high tax rates levied on narrow taxable bases; a reliance on federal aid; increasingly stressed local governments throughout the state.
The statement said the report would call for tax and pension reform. Other recommendations will include working with the federal government to control Medicaid costs, maintaining a "meaningful" rainy day fund, adopting a "nonpolitical" revenue forecasting process and monitoring local governments' finances. . . .
Efforts to reduce Illinois' $83 billion unfunded pension liability failed to gain traction in the legislature this year but could be resurrected after the November 6 election.
Illinois is paying a big price to sell its debt in the $3.7 billion U.S. municipal market. Its so-called credit spread over Municipal Market Data's benchmark triple-A scale for 10-year debt was 150 basis points in the latest week, more than double California's credit spread and that of other large debt issuers tracked by MMD."
The heat's on in Illinois to do something about its precarious financial situation --- and soon!
Even if the politicians want to keep kicking the can down the road, that can't continue much longer.
The state's creditors won't allow it, and neither should the Illinois taxpayers and public sector workers.