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
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.
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.
=== Illinois’ biggest problem is the pension debt. ===
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.
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.