It’s far worse than that. First, don’t count retirees due to the retirement income tax exemption. Then you’ve got the bottom 1/3 of tax filers who account for less than 2% of income tax revenue in the state, so they won’t be paying anything either.
Remove those 2 large chunks of the population and you have a far scarier tale.
Maybe the Governor really does have a long term plan
Won’t there come a tipping point when we really cannot get out of this mess and all levels of government debt are defaulted and we start over? Sounds crazy but actions speak louder than words
I offer this article from Forbes to those who are interested in getting some basics on states, bankruptcies, alternatives, and who is on the edge of the cliff – like Illinois
Short term, a budget is needed regardless if it’s balanced or not. We had 15 years of unbalanced budgets, one more wont kill us. Long term we need a plan that involves cuts and no more unfunded mandates and changes that prevent the finances from getting worse. This possibly involves adjustment to the Illinois constitution.
There is your explanation for a tax increase. You can’t cut enough to fix that permanently. You can’t borrow enough to fix that - not without a tax increase to fix it permanently. See other threads today for further documentation as to why we spend what we spend.
Short term, a budget is needed regardless if it’s balanced or not. We had 15 years of unbalanced budgets, one more wont kill us. Long term we need a plan that involves cuts and no more unfunded mandates and changes that prevent the finances from getting worse. This may possibly involve adjustment to the Illinois constitution.
- Out Here In The Middle - Tuesday, Mar 14, 17 @ 10:20 am:
DuPage - Find an example where the courts have permitted a sovereign state government to default on legitimate debts. Keep looking . . . .
Here’s what the Forbes opinion column
-Archiesmom- had to say about that issue: “They can change pension agreements going forward, but they are legally required to honor past agreements.”
Basically, Illinois (and other states) can’t dump or change that debt. So the only solution is to pay it.
The problems here won’t get solved until Illinois’ leaders acknowledge this basic truth.
- lake county democrat - Tuesday, Mar 14, 17 @ 10:35 am:
RNUG - absolutely, but what strikes me is how people seem to think it’s wrong to insist on a quid pro quo to change those “pension agreements going forward” (i.e., to a much greater extent) for raising taxes, especially in a flat-tax state where the median family income is $60,000 and their local taxes are going up at the same time. You can’t even make meaningful political reform - which doesn’t cost a penny and which 80% of the voters consistently want - a “must have” in the deal.
(Also worth noting that for the local governments, at least according to the 9th Cirucit, there is one way to change the past agreements: bankruptcy (as the federal bankruptcy law appears to take precedence. Obviously huge downsides, but if the debt gets bleak enough, not convinced they outweigh, at least for every government/entity).
- thechampaignlife - Tuesday, Mar 14, 17 @ 10:37 am:
===We need a budget. Like yesterday.===
More like 10+ years ago (balanced). At the least, 2 years ago.
States can not go bankrupt. Illinois public pensions are protected by the Illinois Constitution. The cause of the shortfall is the state skipping/shorting payments for a long time, in order to run the state below cost. The state needs more revenue, period.
The solution requires a tax increase, period.
- NeverPoliticallyCorrect - Tuesday, Mar 14, 17 @ 11:05 am:
The Doomsday clock is ticking for most non-profits who contract with the state. But does anyone really care, Dem or Repub? I don’t think so.
DuPage,
Territories cant go bankrupt either yet Puerto Rico is essentially bankrupt. The retirees in Puerto Rico relying on pensions there will get a haircut along with bond holders and everyone else. Regardless of why it happens if there isn’t any money to pay out it cant be paid out. Your blanket statement of the solution requiring a tax increase over-simplifies the situation. Go ahead, push taxes up to 20%, why not? Now watch the entire tax base leave the state and the bills pile up and then there is no money available for obligations.
I was reading a story about the legal bills for outside counsel run up by the Florida governor and GOP. Sounds familiar, but I digress.
The story noted that Florida has a $92 billion annual budget. Seemed high but it was pretty accurate.
Florida is number 4 in GDP nationally with $893 billion in 2015.
I found that interesting since I knew Illinois was 5th with about $771 billion for the same period.
Illinois’ GDP is about 86% of Florida’s yet our budget is around 42%?
The amount quoted in the article may have included Federal sources as well, but even if those sources were added to the Illinois figure we would still be in the very low 50%’s at best.
What it tells me is that Illinois is not tapping into the necessary resources to pay its’ bills.
make the argument for cuts, sure I’m fine with that. But how can the state of Florida, not known as a social welfare haven, double our budget?
=== Illinois’ biggest problem is the pension debt. ===
Respectfully disagree.
Pension obligations are a long term problem. But a manageable one. Pension debt will continue to decline as long as we keep making our payments, and no one has missed a pension check. The primary problem it creates is our perceived credit-worthiness.
The $12 billion in unpaid bills by contrast is an immediate crisis. It has nearly tripled in two years and will double again before Rauner’s first term ends at this pace. At that point, the interest alone on our unpaid debt will be a towering $3 billion, for which we will get no actual services.
Combine that with the secondary effect that our unpaid bills has on vendors, programs, etc…again, long term problem versus immediate crisis.
@ Juvenal with respect, I agree with RNUG- the long term pension debt is the biggest challenge.
If you take the debt payment out of the budget we are nearly balanced.
You are not wrong about the $12 billion being an issue but it has a more straightforward solution that has limited ongoing impact.
I personally do not believe we need to aim for 100% pension funding. The industry standard for well funded pension plans is lower, 70-80% would be much better. Re amortize based on that goal and pay the bills is the approach I would take.
If every one else would pony up their $1,000.00, I would pony up ours also. Don’t think it is possible tho. GA on both sides of the aisle need to get things done starting with a legitmate budget as the “governor” does not appear capable of presenting one.
== … 70-80% would be much better. Re amortize based on that goal and pay the bills is the approach I would take. ==
The current ramp has an 80% target. Re-amortizing the debt really won’t fix anything because a true level based payment scheme will cost more than the ramp, at least for the next several years.
That is what everyone keeps glossing over; both just paying the ramp or reamorization requires more revenue than the state has today. Revenue is required … even without a budget.
We have 2 more years of Rauner. No matter whom the next elected Governor, Illinois will not recover for 20 years. And the next Governor will not be Rauner.
Actually, there needs to be more effort put into the amount spent/billed for the ERP project. The 250k is only the original amount agreed on; however, it should be known that billing for this project has already reached 1 billion and climbing. The project isn’t even close to being finished either.
- TaxesBuyCivilization - Wednesday, Mar 15, 17 @ 12:00 am:
I like to think of it as 1.6% of GDP. $1,000 bucks per person is expensive, but it isn’t a helpful statistic.
I would imagine it would be pretty easy to raise this 1.6% of GDP — even easier with a progressive income tax rate.
I’d be pretty unrealistic to expect some elementary school kids to fork over a grand each — besides, joke on them, their tuition is already going to exceed out of state costs at our neighboring state’s public schools. So, they’ll be paying for our failures to collect enough revenue one way or another.
- Anonymous - Tuesday, Mar 14, 17 @ 9:02 am:
Is this the highest backlog in the country?
- Blue dog dem - Tuesday, Mar 14, 17 @ 9:03 am:
You know the Rauner response. $120 billion in debt. Thats $10,000 for every man, woman, child in this state.
- wordslinger - Tuesday, Mar 14, 17 @ 9:05 am:
The backlog was $4.5B when Rauner took office.
Trey, could you give us another fiscal responsibility lecture, just for laughs?
- Oswego Willy - Tuesday, Mar 14, 17 @ 9:08 am:
Governors need budgets.
Ignoring that fact, Rauner has exacerbated an awful situation to a situation that has Illinois collapsing, just as Rauner had hoped it would.
Rauner is heartless.
This doesn’t faze Diana or Bruce.
When they (Diana and Bruce) spend millions to stop a “Grand Bargain” you know both Diana and Bruce are pleased with this “business decision”
Right? Exactly right.
- How - Tuesday, Mar 14, 17 @ 9:09 am:
Yea. We need a budget. That spends more money we don’t have. Which makes the payables rise. Which fixes things how?
- Rabid - Tuesday, Mar 14, 17 @ 9:10 am:
$1,000 for everybody, now that’s a grand bargain
- Anonymous - Tuesday, Mar 14, 17 @ 9:10 am:
So how does running the state like a business involve not having a budget and not paying the state’s bills?
- OpenYourEyes - Tuesday, Mar 14, 17 @ 9:10 am:
I would love to know the amount this was at on the day that Gov Rauner took office.
- Liberty - Tuesday, Mar 14, 17 @ 9:12 am:
Mendoza should just stop paying any bill that doesn’t have an appropriation.
- Oswego Willy - Tuesday, Mar 14, 17 @ 9:13 am:
===I would love to know the amount this was at on the day that Gov Rauner took office.===
Google is your friend.
Also, read.
From - Wordslinger - above…
===The backlog was $4.5B when Rauner took office.===
- Foster brooks - Tuesday, Mar 14, 17 @ 9:14 am:
I’m going with RNUG’s theory that they have no intention of paying it off and seek the courts for relief
- City Zen - Tuesday, Mar 14, 17 @ 9:15 am:
It’s far worse than that. First, don’t count retirees due to the retirement income tax exemption. Then you’ve got the bottom 1/3 of tax filers who account for less than 2% of income tax revenue in the state, so they won’t be paying anything either.
Remove those 2 large chunks of the population and you have a far scarier tale.
- DuPage Saint - Tuesday, Mar 14, 17 @ 9:37 am:
Maybe the Governor really does have a long term plan
Won’t there come a tipping point when we really cannot get out of this mess and all levels of government debt are defaulted and we start over? Sounds crazy but actions speak louder than words
- Archiesmom - Tuesday, Mar 14, 17 @ 9:46 am:
I offer this article from Forbes to those who are interested in getting some basics on states, bankruptcies, alternatives, and who is on the edge of the cliff – like Illinois
https://www.google.com/amp/s/www.forbes.com/sites/johnmauldin/2016/07/28/dont-be-so-sure-that-states-cant-go-bankrupt/amp/
- Maximus - Tuesday, Mar 14, 17 @ 9:50 am:
Short term, a budget is needed regardless if it’s balanced or not. We had 15 years of unbalanced budgets, one more wont kill us. Long term we need a plan that involves cuts and no more unfunded mandates and changes that prevent the finances from getting worse. This possibly involves adjustment to the Illinois constitution.
- Thoughts Matter - Tuesday, Mar 14, 17 @ 9:55 am:
There is your explanation for a tax increase. You can’t cut enough to fix that permanently. You can’t borrow enough to fix that - not without a tax increase to fix it permanently. See other threads today for further documentation as to why we spend what we spend.
- Maximus - Tuesday, Mar 14, 17 @ 9:55 am:
Short term, a budget is needed regardless if it’s balanced or not. We had 15 years of unbalanced budgets, one more wont kill us. Long term we need a plan that involves cuts and no more unfunded mandates and changes that prevent the finances from getting worse. This may possibly involve adjustment to the Illinois constitution.
- Out Here In The Middle - Tuesday, Mar 14, 17 @ 10:20 am:
DuPage - Find an example where the courts have permitted a sovereign state government to default on legitimate debts. Keep looking . . . .
- RNUG - Tuesday, Mar 14, 17 @ 10:23 am:
Illinois’ biggest problem is the pension debt.
Here’s what the Forbes opinion column
-Archiesmom- had to say about that issue: “They can change pension agreements going forward, but they are legally required to honor past agreements.”
Basically, Illinois (and other states) can’t dump or change that debt. So the only solution is to pay it.
The problems here won’t get solved until Illinois’ leaders acknowledge this basic truth.
- lake county democrat - Tuesday, Mar 14, 17 @ 10:35 am:
RNUG - absolutely, but what strikes me is how people seem to think it’s wrong to insist on a quid pro quo to change those “pension agreements going forward” (i.e., to a much greater extent) for raising taxes, especially in a flat-tax state where the median family income is $60,000 and their local taxes are going up at the same time. You can’t even make meaningful political reform - which doesn’t cost a penny and which 80% of the voters consistently want - a “must have” in the deal.
(Also worth noting that for the local governments, at least according to the 9th Cirucit, there is one way to change the past agreements: bankruptcy (as the federal bankruptcy law appears to take precedence. Obviously huge downsides, but if the debt gets bleak enough, not convinced they outweigh, at least for every government/entity).
- thechampaignlife - Tuesday, Mar 14, 17 @ 10:37 am:
===We need a budget. Like yesterday.===
More like 10+ years ago (balanced). At the least, 2 years ago.
- DuPage - Tuesday, Mar 14, 17 @ 10:39 am:
States can not go bankrupt. Illinois public pensions are protected by the Illinois Constitution. The cause of the shortfall is the state skipping/shorting payments for a long time, in order to run the state below cost. The state needs more revenue, period.
The solution requires a tax increase, period.
- NeverPoliticallyCorrect - Tuesday, Mar 14, 17 @ 11:05 am:
The Doomsday clock is ticking for most non-profits who contract with the state. But does anyone really care, Dem or Repub? I don’t think so.
- Maximus - Tuesday, Mar 14, 17 @ 11:18 am:
DuPage,
Territories cant go bankrupt either yet Puerto Rico is essentially bankrupt. The retirees in Puerto Rico relying on pensions there will get a haircut along with bond holders and everyone else. Regardless of why it happens if there isn’t any money to pay out it cant be paid out. Your blanket statement of the solution requiring a tax increase over-simplifies the situation. Go ahead, push taxes up to 20%, why not? Now watch the entire tax base leave the state and the bills pile up and then there is no money available for obligations.
- Henry Francis - Tuesday, Mar 14, 17 @ 11:26 am:
Grow up people. $12 billion is not THAT much money. Especially to people like Bruce and Diana. Or Kenny boy.
- Last Bull Moose - Tuesday, Mar 14, 17 @ 11:48 am:
States cannot file for bankruptcy protection in the Federal Courts. But they can run out of cash. Then the solutions get messy.
- JS Mill - Tuesday, Mar 14, 17 @ 12:13 pm:
I was reading a story about the legal bills for outside counsel run up by the Florida governor and GOP. Sounds familiar, but I digress.
The story noted that Florida has a $92 billion annual budget. Seemed high but it was pretty accurate.
Florida is number 4 in GDP nationally with $893 billion in 2015.
I found that interesting since I knew Illinois was 5th with about $771 billion for the same period.
Illinois’ GDP is about 86% of Florida’s yet our budget is around 42%?
The amount quoted in the article may have included Federal sources as well, but even if those sources were added to the Illinois figure we would still be in the very low 50%’s at best.
What it tells me is that Illinois is not tapping into the necessary resources to pay its’ bills.
make the argument for cuts, sure I’m fine with that. But how can the state of Florida, not known as a social welfare haven, double our budget?
We need to do better.
- flea - Tuesday, Mar 14, 17 @ 12:43 pm:
i’ll pay a grand if everyone else does, Flea the rapper!
- Lucky Pierre - Tuesday, Mar 14, 17 @ 12:44 pm:
Florida has 0% income tax and their property taxes are lower than ours.
- City Zen - Tuesday, Mar 14, 17 @ 12:55 pm:
==The story noted that Florida has a $92 billion annual budget.==
If they’re quoting wikipedia numbers, that same chart has Illinois at $87B.
- JS Mill - Tuesday, Mar 14, 17 @ 12:56 pm:
=If they’re quoting wikipedia numbers, that same chart has Illinois at $87B.=
Wikipedia does not publish news articles.
- Juvenal - Tuesday, Mar 14, 17 @ 3:00 pm:
=== Illinois’ biggest problem is the pension debt. ===
Respectfully disagree.
Pension obligations are a long term problem. But a manageable one. Pension debt will continue to decline as long as we keep making our payments, and no one has missed a pension check. The primary problem it creates is our perceived credit-worthiness.
The $12 billion in unpaid bills by contrast is an immediate crisis. It has nearly tripled in two years and will double again before Rauner’s first term ends at this pace. At that point, the interest alone on our unpaid debt will be a towering $3 billion, for which we will get no actual services.
Combine that with the secondary effect that our unpaid bills has on vendors, programs, etc…again, long term problem versus immediate crisis.
- JS Mill - Tuesday, Mar 14, 17 @ 3:40 pm:
@ Juvenal with respect, I agree with RNUG- the long term pension debt is the biggest challenge.
If you take the debt payment out of the budget we are nearly balanced.
You are not wrong about the $12 billion being an issue but it has a more straightforward solution that has limited ongoing impact.
I personally do not believe we need to aim for 100% pension funding. The industry standard for well funded pension plans is lower, 70-80% would be much better. Re amortize based on that goal and pay the bills is the approach I would take.
Again, with respect.
- blue collar - Tuesday, Mar 14, 17 @ 3:51 pm:
If every one else would pony up their $1,000.00, I would pony up ours also. Don’t think it is possible tho. GA on both sides of the aisle need to get things done starting with a legitmate budget as the “governor” does not appear capable of presenting one.
- Mama - Tuesday, Mar 14, 17 @ 4:09 pm:
And yet Gov. Rauner makes statements that IL doesn’t need to raise taxes. Go figure..
- RNUG - Tuesday, Mar 14, 17 @ 5:26 pm:
== … 70-80% would be much better. Re amortize based on that goal and pay the bills is the approach I would take. ==
The current ramp has an 80% target. Re-amortizing the debt really won’t fix anything because a true level based payment scheme will cost more than the ramp, at least for the next several years.
That is what everyone keeps glossing over; both just paying the ramp or reamorization requires more revenue than the state has today. Revenue is required … even without a budget.
- JLR - Tuesday, Mar 14, 17 @ 6:34 pm:
We have 2 more years of Rauner. No matter whom the next elected Governor, Illinois will not recover for 20 years. And the next Governor will not be Rauner.
- DHSBob - Tuesday, Mar 14, 17 @ 7:24 pm:
Actually, there needs to be more effort put into the amount spent/billed for the ERP project. The 250k is only the original amount agreed on; however, it should be known that billing for this project has already reached 1 billion and climbing. The project isn’t even close to being finished either.
- TaxesBuyCivilization - Wednesday, Mar 15, 17 @ 12:00 am:
I like to think of it as 1.6% of GDP. $1,000 bucks per person is expensive, but it isn’t a helpful statistic.
I would imagine it would be pretty easy to raise this 1.6% of GDP — even easier with a progressive income tax rate.
I’d be pretty unrealistic to expect some elementary school kids to fork over a grand each — besides, joke on them, their tuition is already going to exceed out of state costs at our neighboring state’s public schools. So, they’ll be paying for our failures to collect enough revenue one way or another.
- Rabid - Wednesday, Mar 15, 17 @ 4:44 am:
If everyone paid $765 for their lifetime hunting & fishing licence you could get something for your money
- Rabid - Wednesday, Mar 15, 17 @ 4:59 am:
Why don’t they have lifetime drivers licence too?