Illinois Treasurer: State $200 Billion In Debt

Illinois Treasurer Dan Rutherford recently calculated how much debt the state has accrued. $200 billion. This includes:

• $45 billion in bond debt
• $8 billion in unpaid bills
• $140 billion in unfunded pension and health care benefits for state employees

According to Rutherford’s calculations, each household in Illinois owes $42,000.

And despite this mountain of debt, some state politicians are still trying to borrow more money (increasing the debt) to pay off existing debt. Say what? From a Chicago Tribune editorial piece last night:

With all that debt squeezing spending on schools and other priorities, [Illinois Governor Pat] Quinn now wants legislators to, yes, authorize still more billions in borrowing to pay the state’s bills. Why? Because (a) Quinn cannot bring himself to propose a budget that would spend only what Illinois collects in revenues and (b) Quinn also cannot bring himself to campaign for the more economical pension system that Illinois desperately needs.

To that Rutherford, bless him, retorts:

“You can’t borrow any more money. If I need to send letters to the rating companies to tell them the treasurer of Illinois is opposed to more borrowing, I’m going to do that. If it means I have to get ahold of the bond houses to let them know that, ‘I agree with you, we are a major risk, and I am the finance officer of this state,’ I intend to do those kinds of things if that’s what it’s going to take to keep Illinois from going into further debt. …

“Borrowing is an addiction. … Illinois. Cannot. Borrow. Any. More. Money.”

That’s what Rutherford said Monday at a news conference. Legally, he can’t block long-term borrowing binges. His resolve, though, makes him stand out in Springfield. Many legislators of both parties are hoping to escape their spring session Tuesday without slashing state spending or reforming a pension system headed for implosion. Some of them instead would take the timid route and keep on borrowing billions.

Timidity. Oh great. That’s a trait much desired in those we send to represent us in government. And when did living within one’s means, and reform, become a fate worse than Hell? Apparently when political support is derived from entities that benefit from substantial state spending, as the Tribune has pointed out in the past. I have a pretty good idea that upstanding citizens still residing in the “Land of Lincoln” are disgusted over what’s going on. I know past supporters of “the machine” are even starting to come around. The other day I spoke to a relative who’s a die-hard Democrat, and who had nothing but nasty things to say about the state leadership in his own political party. Knowing the extent of his political partisanship, after hanging up the phone the only thing I could think was…

Hell hath frozen over.

But what should I have expected, living in a state more people are referring to as “Madiganistan” (referring to powerful Democratic House Speaker Michael Madigan).

I’m not going to delve into politics (this isn’t what this post is about)- so here’s the score. The state treasurer calculates Illinois’ debt is $200 billion. Despite no sweeping cuts or reform in state spending and operations (the state’s spending ceiling in each of the next four budget years is $36.8 billion in the 2012 budget year, $37.5 billion in 2013, $38.3 billion in 2014 and $39 billion in 2015), personal income taxes were hiked 67 percent and corporate income taxes were hiked 46 percent earlier this year. However, Illinois Comptroller Judy Baar Topinka reported back on April 27 that the state will still end the budget year $8 billion “in the red.” Governor Quinn is on the record for saying he doesn’t believe in radical cuts in government spending. And according to that Tribune editorial piece from last night, state legislators from both parties are hoping to end the spring session next Tuesday without having to make significant cuts in spending or reforming the pension system. Some politicians, including Governor Quinn, even want to keep borrowing billions (thereby going into more debt) to pay back a portion of the state’s existing debt.

So, even if these billions of dollars are borrowed, it looks to me as if the writing’s on the wall. Illinois residents will almost certainly see significant cutbacks in government spending- along with higher taxes and fees- in the coming months and years. It’s hard to envision any other way of paying back this debt- as the system currently stands.

Like that saying goes… “You can pay me now, or you can pay me later.”

Source:

“Your share: $42,000.” Chicago Tribune. 25 May 2011. (http://www.chicagotribune.com/news/opinion/editorials/ct-edit-legis-20110525,0,6020211.story?obref=obnetwork). 26 May 2011.