COMMENTARY | Similar to the federal government, Illinois can't live within its means. We borrow and spend too much money. We raise taxes, borrow more money, and don't pay creditors on time. Our biggest issue, however, is that our pension funds and threatening to drag us into insolvency.
As of July 2012, we had 160,000 unpaid bills adding up to $8 billion. Yes, that's billion with a capital "B." By borrowing money to fill in the gaps, we now have a state level debt of nearly $44 billion. This is more than double the $21 billion in 2007. This is $10 billion more than the entire FY2013 budget of $33.7 billion.
Our public employee funds are chronically underfunded. Payments are skipped, or bonds are issued to make the annual contribution. Still, the pension funds are 39 percent funded. This leads to an underfunded liability of $97 billion, nearly three times the state's annual budget. These numbers defy comprehension for most people, me included.
Gov. Pat Quinn worked with legislators at the beginning of the 2013 to alleviate the pension crisis. Modest reforms to cost of living increases and contribution amount failed during the lame duck session. As in the past, fixing the mess will be up to the nest session of the legislature -- who will undoubtedly punt to the next session of the legislature.
The inability to control the deficits has caused bond rates to rise in Illinois. The state and municipal bonds now pay an interest rate of 1.40 percent more than the top rated municipal debt in the nation. The dysfunction and inability/unwillingness to act is highlighted by Senate President John Cullerton: "It's not dysfunctional at all," Cullerton said during a news briefing in the Capitol. "We have a pension system that is not going bankrupt."
- Politics & Government
- Budget, Tax & Economy
- pension funds