Illinois is a Fiscal Train Wreck

When Illinois voters consider their choices in the next several weeks, it is important that they decide whether to hold incumbants accountable for their financial responsibility.

Just a few days ago, the Civic Federation of Chicago disclosed that the delayed funding of the state's pension obligations will cost taxpayers $12 billion vs the $3.5 billion that was not funded in the fiscal 2011 budget (source COGFA). Earlier in September, the Civic Federation was quoted on the NPR website:
 
"The financial condition of the state of Illinois is a fiscal train wreck," says Laurence Msall, president of the Civic Federation, a Chicago-based nonpartisan, not-for-profit group[ http://www.civicfed.org/ ] that analyzes and researches state and local government budgets.
 
He says Illinois' fiscal problems are not simply the result of a bad economy.

"The state's train wreck is caused by inaction and dereliction of duty in Springfield; the failure to provide a balanced budget," Msall says, adding that Illinois' last two governors and the Democratic-controlled state Legislature haven't cut spending to match declining revenues. In fact, he says, they keep spending more.


They've been relying on borrowing money to meet the state's pension obligations, for capital projects, and just to pay rent and other government operating costs. The state has been borrowing so much in recent years that credit agencies keep downgrading its bond rating. One agency has cut the state's rating four times in the past 17 months. Illinois now has the lowest rating among all 50 states, just barely above junk bond status.
That, in turn, makes borrowing more expensive.


Illinois has borrowed a whopping $9.6 billion in just the past 12 months. A report released Aug. 30 by Msall's Civic Federation projects that because of the state's dropping bond rating, borrowing that $9.6 billion will eventually cost Illinois taxpayers $551 million in extra interest payments.


"That's $551 million that's not going to be available for schools, for public safety, for public transit," and other needs, Msall says.

"And there is no recognition right now that the state knows how to get its fiscal house back on track," he adds. "It is almost as if it thinks by ignoring the fact that it is being charged these enormous costs in borrowing, by not paying its bills, and not balancing its budget, that those problems will somehow go away.

"It’s an alternative reality … a train wreck that will get worse."