Illinois is a poster child for liberal fiscal mismanagement. Illinois is facing the typical end result of any state that follows the siren song of liberalism.
You know it is bad when even the liberal Chicago Tribune is complaining.
The state of Illinois admits to $83 billion in pension underfunding, a staggering weight on today's and tomorrow's taxpayers. Add to that the as yet uncalculated billions in unfunded pension obligations for city, county and other local governments. During a Tribune forum Wednesday, Mayor Rahm Emanuel explained how that overhang — some estimates run far higher — deters businesses from locating in Chicago: Companies don't want to buy shares in a phenomenal tax burden that will unfold over decades.
One nice thing about pension obligations: When you know the number of employees and their ages, the actuarial estimates start falling into place. The mystery is the investment return a pension fund will earn over time.
A second, often overlooked time bomb merrily ticking for governments nationwide is the cost of health insurance for all those retirees. That number, too, is hard to gauge, because health care costs — like future investment returns — are unknowable. Yet governments typically don't put aside money for future health care, as they do for future pensions. The culture is to pay-as-you-go.
In Illinois, that means pay-as-you-go-even-more-broke. The Illinois Policy Institute, a right-leaning think tank, now is releasing 133 pages of frightening data — we obtained a copy Thursday — that project yet another devastating hit to taxpayers: Beyond that $83 billion in unfunded pensions, state government alone faces an unfunded liability of more than $54 billion in retiree health liabilities over the next 30 years.
Illinois lawmakers haven't yet seen that startling number, but they do know they have to confront a retiree health debacle. Last year Illinois Senate legislation to begin addressing that debacle didn't make it to a floor vote. Gov. Pat Quinn's pointed words on the subject in his February budget address both encourage us and make us hope he sticks to his word that something has to happen.
The IPI says that only 8 percent of private-sector retirees are offered health insurance benefits, and those retirees pay an average of 54 percent of the cost. Similarly requiring Illinois retirees to pay an average of 54 percent of insurance costs would save Illinois $500 million a year. Over the next 30 years, that change by itself would shrink the anticipated $54 billion shortfall by $21 billion. IPI suggests leaving benefits essentially intact for retired state and university employees with household incomes below $70,000 a year. Those with incomes between $70,000 and $200,000 a year would receive monthly subsidies of $302 and pay $369 themselves. And "retired union heads or university executives collecting pensions nearing $200,000 would be required to cover their own health insurance costs."
Illinois has followed liberalism to the letter. It has spent lavishly on unions and public employee benefits. It never gave much thought to how all of this would be paid for.
Last year, instituted massive tax hikes. Surprise, they did not work. Illinois has not balanced its budget with tax hikes. Guess what? Any conservative could have told them it would not work.
Illinois will not cut its budget. What it will do in the next few years, when the bills come due, it will ask the rest of the nation to pay for its excesses.
Then, the rest of America should just say no.
It's a little late to respond, but when Illinois (or any state) is in such financial crisis that they need the Feds to bail them out, the Fed should do what the British Commonwealth did to New Foundland during the first great depression - make them a territory until they became financially sound.