We’ve heard a lot over the past few weeks about California being on the precipice of fiscal disaster, but did you know that Illinois is in a similarly catastrophic situation? Illinois is in such financial trouble that its deficit is $13 billion, nearly half of its $28 billion budget. Tom Elia of The New Editor links to an article by Ambrose Evans-Pritchard, who writes this:
Barack Obama’s home state of Illinois is near the point of fiscal disintegration. “The state is in utter crisis,” said Representative Suzie Bassi. “We are next to bankruptcy. We have a $13bn hole in a $28bn budget.”
The state has been paying bills with unfunded vouchers since October. A fifth of buses have stopped. Libraries, owed $400m (£263m), are closing one day a week. Schools are owed $725m. Unable to pay teachers, they are preparing mass lay-offs. “It’s a catastrophe”, said the Schools Superintendent.
In Alexander County, the sheriff’s patrol cars have been repossessed; three-quarters of his officers are laid off; the local prison has refused to take county inmates until debts are paid.
Oh my. When Sheriff’s patrol cars get repossessed, the public is in serious trouble.
The Chicago Tribune has more on the potentially devastating impact of the state’s deficit:
Rather than confront the imbalance head-on, standard practice in Springfield has been to resort to a combination of fiscal tricks. Revenue projections are unrealistically rosy, money is borrowed with full repayment pushed off years into the future, and multibillion-dollar backlogs of unpaid bills are allowed to fester.
The system was already primed for calamity when the steep recession that began in 2008 knocked it over the edge.
Perhaps the most chronic headache involves pensions. For decades, elected officials have shorted promised contributions to the state’s public employee retirement funds. As a result, Illinois by far has the worst-funded pension systems in the nation.
It would be a tall order for the state to totally dig its way out of the hole in one year’s budget. But playing catch-up is extremely expensive, and it grows more expensive the longer it takes. Because the state was so short of cash, it borrowed $3.5 billion to meet this year’s pension obligations. Next year, debt service on that loan will cost $800 million. And that’s in addition to more than $4 billion in pension obligations that the state will be on the hook for in fiscal 2011.
As [president of the watchdog Civic Federation Laurence] Msall sees it, Illinois is in such poor financial shape that it risks getting to the point where it can no longer make loan payments or meet state aid commitments to schools.
If that happens, he says, “Illinois’ ability to borrow will be eliminated and the state will come to a screeching halt.”
I wouldn’t want to be anywhere near Illinois, particularly the big cities like Chicago, when the everything comes crashing down. Then again, we can expect the federal government to ride the rescue at the eleventh hour to save the Illinois state government from itself.
Knowing this information as we do now, it’s hard to believe that government officials thought it would be a good idea for Chicago to bid for the Olympics. If it had actually been selected, the state and city would have been required to spend millions of dollars in preparation when its deficits were already overwhelming the state budget. Illinois is sinking so far into insanity and chaos that it’s like we’re watching Lord of the Flies come to life.