The ongoing financial debacle in Illinois has been getting lots and lots of press these days. And deservedly so, I will add.
Subjects such as its public sector pension woes adding to $85 billion, the recent Chicago Teachers Strike adding to Chicago's perilous debt load and the state's general inability to pay its bills on time, when coupled with the fact that several of its governors have landed in jail, all make Illinois politics a worthwhile and even somewhat enjoyable topic for study.
Along with some of its sister states, such as California and Michigan, Illinois ranks right up there with European countries such as Greece, Italy and Spain as great examples of what not to do.
While Illinois would be insolvent if left to run on its own, it has 49 other states to look to for financial support. Being part of the U.S. federal fiscal pact differentiates it from Greece and Spain, although otherwise its similarities with failed European states are many.
State of Dysfunction is subtitled 'A new report shows how unions and politicians are bankrupting Illinois' and has this to say about the "Land of Lincoln" today:
"The precarious financial situation in liberal states is the big story
no one wants to talk about, but maybe Illinois voters will start to pay
attention with the new report from former New York Lieutenant Governor
Richard Ravitch and former Federal Reserve Chairman Paul Volcker.
"Illinois has been doing backflips on a high wire, without a net," they
write as part of their State Budget Crisis Task Force.
Make that a triple flip with a double twist. The problems are
familiar yet keep getting worse. Unfunded pension liabilities now total
more than $85 billion, while Medicaid liabilities have doubled in 10
years and are "growing far more rapidly than tax revenue." Rampant
borrowing through the sale of pension bonds has made Illinois debt per
capita one of the highest and its credit rating the worst.
Based on a projected $27 billion cash
deficit in Illinois in 2021, the University of Illinois Institute of
Government and Public Affairs Fiscal Futures calculates that "if the
projected deficits were paid for by borrowing, debt service costs would
grow to consume all sales tax and income tax collections in just five
years.". . .
As recently as 2000,
Messrs. Volcker and Ravitch note, the pensions were "relatively sound."
But with a recession and then legislation providing for a funding
"holiday" in 2006 and 2007, the state was on the hook to pay increased
contributions when it could least afford them. By the time the 2008
financial crisis hit, Illinois was "essentially insolvent."
Budget "gimmicks" also became standard
practice, as the state pushed bills into the future and piled up debt to
the tune of $8 billion by the beginning of fiscal 2013. Another culprit
is spending outside of the state's General Fund in the shadier environs
of "special funds." The extra spending has dug a hole so large that the
state is facing an immediate cash flow crisis—it literally can't pay
the bills. . . .
A 2012 survey of business leaders by ChiefExecutive.net ranked
Illinois 48th among states for doing business. The Tax Foundation ranks
Illinois 47th in corporate tax burden, but no worries, it's only 44th
worst in property taxes.
The underlying political problem, which Messrs. Volcker and Ravitch
tiptoe around, is the double helix of government unions and Democratic
politicians. Each side sustains the other, as if they can keep soaking
Illinois taxpayers forever. Sooner or later the charade will collapse.
When government unions and Democratic politicians are joined at the hip, taxpayers are confronted with stark choices.
They can choose to either (1) "go along to get along" or (2) take charge and suffer the venom which they will inevitably experience from union goons--er-- leaders and their partners-in-crime--er-- accomplices, the leadership of the Democratic party.
Any brave patriotic soul who dares to try to take charge will undoubtedly be hit with a barrage of cheap shots alleging that he's attempting to starve poor kids and deprive them of 'great' educational opportunities available at the local public school, or perhaps even making an effort to free dangerous prisoners. And lots of other evil stuff, too.
In that regard, nursing home residents and their relatives, recipients of food stamps and countless other beneficiaries of the welfare entitlement state all have a vested interest in maintaining the status quo as long as possible. That gives the government union leaders and politicians lots of current allies among We the People. Even if there's a financial disaster waiting in the wings.
So what probably will happen in Illinois is that things will go along pretty much as is until the fit finally and completely hits the shan, which it most assuredly will sooner or later. My guess is sooner.
Then the taxpayers of Illinois and probably the rest of us, too, will pay the tab, and the teachers and other public sector workers will get whatever the feckless politicians decide they will get.
While at first glance that may seem unfair to both taxpayers and teachers, maybe that possibility is exactly what's needed to make the good citizens of Illinois take charge NOW.
If they do, the politicians will follow. That's a sure thing and perhaps the only sure thing about this entirely unnecessary and most sorry situation.
Lead, follow or get out of the way, in other words.