"Social-services agencies are worried about paying staff, and time is running short to address a huge budget deficit in Illinois amid a political fight between candidates in the race for governor. ... Concerns about the political impacts of tough choices are likely to hinder the ability of governors and legislatures to address deficits. Illinois is confronting an estimated $4.3 billion budget gap for its current fiscal year, which ends June 30. The shortfall equals 16.5% of the state's general-fund budget, the third-highest percentage gap in the US behind Oklahoma and Arizona, according to a November report from the National Conference of State Legislatures. ... 'In a tough recession like the one we're in ... we have to have a safety net to prevent human beings from falling into despair,' Mr. [Pat] Quinn said in an interview Wednesday. ... The state's budget problems have been persistent. The non-partisan Pew Center on the States pronounced Illinois in 'fiscal peril,' noting in a November report that the state has run deficits every year since the 2001 recession. ... The pension plan has unfunded liabilities of nearly $80 billion--among the worst in the nation, with no solution in place for catching up. ... In 2003, for example, Illinois under then-Gov. Rod Blagojevich sold $10 billion in 30-year bonds to cover two years' worth of payments to the pension fund. The proceeds from the bond sale went into an investment portfolio that included stocks; the expected profits haven't materialized, leaving Illinois far behind", Amy Merrick at the WSJ, 4 January 2010, link: http://online.wsj.com/article/SB126256615856614247.html.
Illinois is following California. Cut spending.
1 comment:
Extend and pretend.
Until the rating agency tanks your borrowing capability or revenues fall off a cliff.
Most states are at or beyond that point now.
(I find it amazing that the rating agencies have limited the downgrades as much as they have... I guess it's payback for lenient new legislation.)
I guess Congress will raise the debt ceiling by 50 or 100 trillion dollars and then bail out the states.
These pass throughs will be in the form of "fiscal stimulus".
The common political choice is to keep the money cycle flowing. No diminution.
I'm sure Secretary Geithner has a fancy, new scheme to swap Illinois debt for Chinese imports. Or some magic trick.
Cut spending you say? How would that work?
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