Illinois’ troubles are about to get much worse. On Wednesday, Governor Pat Quinn unveiled what some are calling the state’s “worst-ever budget” and blasted legislators for doing nothing about the state’s $96 billion unfunded pension liability. Another two years of stasis and President Obama’s home state will officially be “spending more on public pensions than on education”, according to Governor Quinn. The FT has more of the gory details:
Mr Quinn laid out his vision for reforming the pension system, which has the highest funding gap in the country, including suspending 3 per cent annual cost of living adjustments for those with higher pensions. The state’s pension obligations are set to rise over $900m in the coming fiscal year, beginning in July. […]Payments for the pension system will take up $6bn, or 19 per cent, of the general fund. […]The pension system’s returns were crippled like many others in the financial crisis. It is now roughly 40 per cent funded, well below the 80 per cent threshold considered “healthy”.
The consequences go far beyond angry pensioners and incensed unions. Education spending has already been cut by hundreds of millions of dollars. Ambulance providers and hospitals have cut back on employees and equipment. The poor are facing high taxes. The state has the worst credit rating in the country. Borrowing costs are rising. And taxpayers are on the hook for billions of dollars in unpaid bills.Something has to give. These pension battles pit public unions against private pensioners, taxpayers, and those dependent on social services—practically everyone else in the state. Even a Democratic Party heavily dependent on union support can’t afford to ignore the fact that the rest of its constituents are getting screwed.In many ways, Illinois has become Ground Zero of blue model decline. With a situation so dire in the President’s home state, one would expect the White House to be a little more vocal in its concern.[Image courtesy of Shutterstock.com]