Illinois - another Democratic party fiscal mess

Illinois Stops Paying Its Bills, but Can’t Stop Digging Hole


For the last few years, California stood more or less unchallenged as a symbol of the fiscal collapse of states during the recession. Now Illinois has shouldered to the fore, as its dysfunctional political class refuses to pay the state’s bills and refuses to take the painful steps — cuts and tax increases — to close a deficit of at least $12 billion, equal to nearly half the state’s budget.

Then there is the spectacularly mismanaged pension system, which is at least 50 percent underfunded and, analysts warn, could push Illinois into insolvency if the economy fails to pick up.

States cannot go bankrupt, technically, but signs of fiscal crackup are easy to see. Legislators left the capital this month without deciding how to pay 26 percent of the state budget. The governor proposes to borrow $3.5 billion to cover a year’s worth of pension payments, a step that would cost about $1 billion in interest. And every major rating agency has downgraded the state; Illinois now pays millions of dollars more to insure its debt than any other state in the nation.

“Their pension is the most underfunded in the nation,” said Karen S. Krop, a senior director at Fitch Ratings. “They have not made significant cuts or raised revenues. There’s no state out there like this. They can’t grow their way out of this.”

Comment: Name the states dominated by Democrats: New York, New Jersey, California, Illinois .... and they are all in fiscal crisis

1 comment:

  1. Update on 12/13/12: Moodys downgrades Illinois credit outlook

    Moody's cited Illinois' “severe pension funding shortfall.” Gov. Pat Quinn has set a Jan. 9 deadline to overhaul the state's pension system, which is underfunded by an estimated $96 billion.

    The ratings agency also said Illinois has long-term weak management practices that are reflected in the state's pension under-funding and bill payment delays. Thousands of vendors that provide state services are owed $9 billion in back-due payments.


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