* Tribune editorial…
A Sangamon County circuit court judge is expected to decide soon whether to allow an unconventional lawsuit that challenges Illinois’ borrowing habits to proceed.
We’ll cut to the chase: We hope Judge Jack Davis Jr. allows the case to move forward. Why? About 244 billion reasons. That’s how many dollars the financial watchdog group Truth in Accounting estimates Illinois taxpayers eventually will owe due to unfunded pension liabilities, health care obligations and unpaid state bills. The debts have piled up over decades but accelerated since the early 2000s, dragging the state’s credit rating to near junk status.
So yes, taxpayers deserve a shot at having someone contest Illinois’ tradition of overborrowing. The case is considered a Hail Mary attempt, even though it raises legitimate concerns about the manner in which Illinois politicians have borrowed money in the bond market to balance budgets and pay for operations.
At this phase, the judge is merely deciding whether the case is frivolous or malicious, the threshold for tossing taxpayer cases before they can be formally filed in Illinois. This lawsuit is neither.
Pension debt has helped drag the state’s credit rating to near junk status, but let’s all cheer on a lawsuit that will certainly push Illinois into junk bond status because reasons.
Keep in mind that this is the same editorial board which railed against the 2011 income tax hike even though the state was hemorrhaging money at the time. It then stood firmly with Gov. Rauner’s 2+ year impasse, even though the state was piling up billions in debt. Part of this lawsuit is about invalidating the bonds sold to pay off the state’s debt owed to vendors because of the Rauner/Tribune impasse. The only conclusion one can reasonably draw is that the Tribune wants to force the state into default. With that perspective, the editorial makes perfect sense.
The municipal-bond market is putting long odds on a think-tank chief’s bid to have $14 billion of Illinois debt tossed out in court.
While the yields on some of the challenged state bonds jumped by more than a third of a percentage point in the weeks after the suit was filed on July 1, they’ve since reversed course amid the market’s broader rally, indicating little risk that their legal status will be cast into doubt. Taxable Illinois debt due in 2033 is now yielding 4.46%, only about 0.3 percentage point more than bonds the state issued in April that aren’t being questioned by the suit. […]
Even if the Illinois judge allows the case to move forward, Nuveen’s Miller said he “can’t imagine that an outside plaintiff could prevent” Illinois from making its debt payments. The required three-fifths of the state’s legislators approved the debt and its purpose to pay accruing bills, Miller said.
“I would be shocked if that’s not a legitimate purpose,” Miller said.