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* From a Chicago Tribune editorial entitled “Puerto Rico is the frightening Ghost of Illinois Future”…
The island, an American territory, is weighed down by $123 billion in bond and pension debt it cannot afford. Illinois, meanwhile, has about $130 billion in unfunded pension obligations alone, plus billions more in retiree health care and other liabilities. The circumstances are different, but no government can function properly — indefinitely — under ever-rising debt. Eventually something gives.
One of the different “circumstances” is that Puerto Rico’s population is just 29 percent of the Illinois Census number. So our debt would have to be much, much higher to match PR’s problem.
Another difference is that the vast majority of Illinois’ debt is tied up in long-term pension obligations, while, according to the Tribune editorial, 61 percent of PR’s outstanding debt is in bonds, which are likely much shorter term obligations.
And yet another difference is that Puerto Rico’s top income tax rate is vastly higher than ours: $8,430 on the first $61,500 (13.7 percent) plus 33 percent on any income over $61,500. They simply have much less room to raise their rates than we do at our current 3.75 percent.
…Adding… It has been duly noted in comments that PR residents don’t pay federal income taxes.
…Adding… As noted by a commenter, Illinois’ gross state product is about 7 times higher than Puerto Rico’s.
* The editorial’s conclusion…
The right response for Illinois is to look at the ruin of Puerto Rico and take its fate as a dire warning: This state has an unsustainable debt load. Eventually it will overwhelm government and taxpayers. No plan to reform the economy to spur growth and create more taxpayers. A $12 billion backlog of unpaid bills. Only gridlock and infighting as the debt load grows. But it is not too late for Illinois to change its ways.
You won’t get any argument from me that we need some economic reforms in this state. But that’s more of a long-term issue. Our debt load is currently “unsustainable” because the politicians in charge won’t find the money to pay for it via revenues and budget cuts. What’s happening right now is a completely man-made crisis.
* Scream all you want about it, but Illinois can’t just walk away from that debt. It has to be paid unless Congress steps in. And that’s something that even the Tribune doesn’t like…
It’s a theoretical solution no one should wish for because of the pain and chaos it would create. If bankruptcy protection became an option, bondholders would charge punishing interest rates, or quit buying Illinois bonds, because of the increased risk that the state couldn’t make its interest payments.
posted by Rich Miller
Friday, May 5, 17 @ 9:37 am
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100 billion vs 700 billion GDP as the bond agencies point out Illinois has the means.
Comment by Liberty Friday, May 5, 17 @ 9:42 am
Just keep repeating these mantras, and surely it will be true, right?! OR we can wake up and realize that without major reform, we tie ourselves - and the rising generation - to systemic joblessness, crowding public debt, and normalized political corruption.
Comment by Observant27 Friday, May 5, 17 @ 9:43 am
Whike full time residents of Puerto Rico pay payrolk taxes, they do not pay federal income taxes. So the comparison of income tax rates needs to take that into account.
However, Rich is absolutely right on the main point that Illinois is not Puerto Rico.
Comment by the Other Anonymous Friday, May 5, 17 @ 9:44 am
@Observant, Illinois was paying down its debt and making full pension payments under the ‘horrible’ leadership of Quinn and Madigan.
Comment by Illinois O'Malley Friday, May 5, 17 @ 9:46 am
The reason our problems are so big is because politicians have resisted addressing our “long term issues” for decades.
The duct tape analogy is spot on
If we don’t address it now after two years of impasse, do you think it gets addressed if Pritzker wins?
No way
Right now only one party will address the problem. Sad
Comment by Lucky Pierre Friday, May 5, 17 @ 9:48 am
Thank you for pointing out again to some of the more strident whiners that this is legitimate debt that we cannot just legislate away: It must be paid. We have the means but have established a political culture that has enshrined a lack of will.
Comment by Skirmisher Friday, May 5, 17 @ 9:49 am
So, the Tribune “likes” the solution, but isn’t fond of Congress being the way, legally the only way(?), to do it?
“I want to fix a broken leg, but the other guy went to a doctor, and I’m not cool with that” logic?
Mixed message.
Rich is on this…
===And yet another difference is that Puerto Rico’s top income tax rate is vastly higher than ours: $8,430 on the first $61,500 (13.7 percent) plus 33 percent on any income over $61,500. They simply have much less room to raise their rates than we do at our current 3.75 percent.===
Hate it, but there’s room, and the ILSC also made clear the debt is owed.
Comment by Oswego Willy Friday, May 5, 17 @ 9:50 am
Check the editorial, O27 and TOA: It doesn’t say Illinois is Puerto Rico. It says Illinois is on its own treacherous path. And this:
“So if Puerto Rico can go the bankruptcy court route, Wall Street wonders, are there any other territories or states that might try to follow the same path? This is where Illinois’ name comes up, as one state that might — in a worst-case scenario — seek a form of bankruptcy court supervision, if Congress ever permitted it.
“All the Springfield insiders who didn’t complain as debt piled up in recent decades read that last sentence verrry carefully to see if the Tribune is suggesting that Illinois will or should ask Congress to permit some sort of bankruptcy court protection.
“We aren’t. That is not actively under discussion. It’s a theoretical solution no one should wish for because of the pain and chaos it would create. If bankruptcy protection became an option, bondholders would charge punishing interest rates, or quit buying Illinois bonds, because of the increased risk that the state couldn’t make its interest payments. Just the specter of Puerto Rico is chilling. “I think it will make life more difficult in places like Illinois and New Jersey and Connecticut, where investors are already reluctant to loan the government money,” Matt Fabian of Municipal Market Analytics told USA Today. “It’s going to increase investor trepidation.”
Comment by Fight Fair Friday, May 5, 17 @ 9:52 am
===The reason our problems are so big is because politicians have resisted addressing our “long term issues” for decades===
Well, that’s just not true…
Like it or not, Edgar tried to address it, unlike governors past, and others refused to pay into the pensions which exacerbated the situation, not by ignoring it, but by not paying what’s owed.
Good try.
Comment by Oswego Willy Friday, May 5, 17 @ 9:52 am
And, tronc wants us to pay good money to read nonsense and be misinformed. Great for blind partisans, but not for anyone who cares about truth and understanding reality.
Seeing how much the edit page gets wrong makes one wonder about how much the rest of the enterprise gets wrong. The smell of rotting garbage in the kitchen wafts through the whole house. Too bad, I know there are good reporters there, pinching their noses and trying to do their best.
Comment by Moe Berg Friday, May 5, 17 @ 9:53 am
===Right now only one party will address the problem.===
Bankruptcy isn’t a solution.
Moving new hires “optionally” isn’t a solution.
Tier III overall isn’t a solution.
Comment by Oswego Willy Friday, May 5, 17 @ 9:54 am
Wait until you see your first chupacabra, then we’ll revisit your lectures about calming down.
Comment by Puddintaine Friday, May 5, 17 @ 9:55 am
“Right now only one party will address the problem. Sad.”
I agree, it’s too bad the Republicans won’t abandon Rauner’s losing “run aground” agenda and pass a budget with both (painful) increases in revenue and (painful) budget cuts.
Comment by Me Again Friday, May 5, 17 @ 9:57 am
===All the Springfield insiders who didn’t complain as debt piled up in recent decades read that last sentence verrry carefully to see if the Tribune is suggesting that Illinois will or should ask Congress to permit some sort of bankruptcy court protection.===
Yeah. I’m so sure.
Comment by Rich Miller Friday, May 5, 17 @ 10:00 am
Rich,
Your below line of logic doesn’t hold up. Puerto Ricans are not subject to US federal income tax, while Illinoisans are.
Furthermore, what are PR’s local debt levels versus Illinois’ local debt levels?
“And yet another difference is that Puerto Rico’s top income tax rate is vastly higher than ours: $8,430 on the first $61,500 (13.7 percent) plus 33 percent on any income over $61,500. They simply have much less room to raise their rates than we do at our current 3.75 percent.”
Comment by Lucci Friday, May 5, 17 @ 10:08 am
===Your below line of logic doesn’t hold up===
Pshaw. Nitpick all you want. The fact remains that even the Tribune doesn’t buy into this nonsense.
Comment by Rich Miller Friday, May 5, 17 @ 10:09 am
Does the Trib ed bd just sit around all day and watch Cable news and talk radio before they make up this drivel? It makes as much sense as t-45’s tweets.
Comment by d.p.gumby Friday, May 5, 17 @ 10:10 am
To say that the politicians have failed to address the pension problem is untrue. They created Tier 2, which provides a long term solution. They passed a change to Tier 1, thrown out by the Illinois Supreme Court, but it still counts as an attempt. Cullerton is still pushing his plan, which will probably fail in court but counts as an attempt.
Comment by Last Bull Moose Friday, May 5, 17 @ 10:15 am
Rich,
This is not nitpicking.
You cannot make a credible comparison about tax capacity and debt sustainability by ignoring the federal income tax as a comparative limitation on tax capacity and ignore local indebtedness as a component of total indebtedness.
Comment by Lucci Friday, May 5, 17 @ 10:19 am
Like it or not, Edgar tried to address it, unlike governors past, and others refused to pay into the pensions which exacerbated the situation, not by ignoring it, but by not paying what’s owed.
WOW! Edgar is the biggest can kicker in modern Illinois history.
Comment by Ron Friday, May 5, 17 @ 10:23 am
If Cullerton’s plan doesn’t work. We need a 10% reduction in the state workforce and continue with no raises and hopefully Tier 1 folks leave quickly so we can replace them with Tier 2.
Then amend the Constitution to rid the state of the anchor of public employee benefit protection and potentially allow for a progressive income tax.
Comment by Ron Friday, May 5, 17 @ 10:25 am
Lucci-
Is the combined Illinois income tax burden even remotely in the same ballpark as Puerto Rico’s?
(I’ll save you some research and tell you that no, it isn’t. The Federal brackets aren’t that bad.)
Comment by GraduatedCollegeStudent Friday, May 5, 17 @ 10:26 am
- Ron -
This is me acknowledging you.
Good luck.
Comment by Oswego Willy Friday, May 5, 17 @ 10:28 am
===ignore local indebtedness===
Um, you did too. All you did was speculate on the question, you didn’t actually point to any facts.
Comment by Rich Miller Friday, May 5, 17 @ 10:34 am
Also, you’re ignoring everything else I wrote about population, debt type and GSP. Address that and maybe I’ll listen.
Comment by Rich Miller Friday, May 5, 17 @ 10:35 am
The combined Illinois state and local tax burden is 11%. Then slap on Federal taxes.
Comment by Ron Friday, May 5, 17 @ 10:40 am
‘Hopefully tier 1folks will leave’. I bet a lot of tier 1 folks want to leave but are prob just a tad too young to qualify and a tad too old to start over at another place of employment. Offer an early out. They will leave in droves
Comment by Nick Friday, May 5, 17 @ 10:40 am
Puerto Rico’s reset will be different than whatever happens in Illinois. The main advantage enjoyed by Puerto Rico is location, location, location. The wasted opportunities starting from the west in Cuba, then to Haiti/Dominican Republic and then Puerto Rico are legion. The out-migration and reorganization will create fiscal opportunities lacking in IL to soften the blow.
And there are plenty of really wealthy folks both inside and outside Puerto Rico wearing big smiles right now in expectation. Not so in IL.
Comment by Cook County Commoner Friday, May 5, 17 @ 10:41 am
I agree CCC, there are very few people that look to move to Illinois. It is generally a boring place, without Chicago, it would be like Alabama. The state needs to be attractive to business to succeed. Having the highest tax burden of all the states surrounding it does not help.
Comment by Ron Friday, May 5, 17 @ 10:44 am
===The combined Illinois state and local tax burden is 11%. Then slap on Federal taxes.===
That’s the cost of living in a semi-civilized society.
Comment by 47th Ward Friday, May 5, 17 @ 10:47 am
It won’t be this governor who begs Congress to step in. Gov Kennedy will have his hands full.
Comment by blue dog dem Friday, May 5, 17 @ 10:51 am
One thing we do have in common with Puerto Rico; our citizens like theirs can leave.
Comment by CapnCrunch Friday, May 5, 17 @ 10:53 am
Capn, and more to the point, our people are leaving already. Raising taxes to further coddle a government workforce will not help.
Comment by Ron Friday, May 5, 17 @ 10:59 am
Ron. Don’t forget this governor is agreeable to raise taxes to support DCEO and a multibillion dollar capitol plan. Remember, he, like Madigan, is not a conservative.
Comment by blue dog dem Friday, May 5, 17 @ 11:07 am
Hey, Ron, only bores and the boring get bored - those of us with a wide range of interests never get bored.
Comment by RIJ Friday, May 5, 17 @ 11:08 am
RIJ, cool. Too bad that doesn’t help Illinois. We are losing population.
I personally love Chicago, but if it weren’t in Illinois, I wouldn’t be either.
Comment by Ron Friday, May 5, 17 @ 11:09 am
blue dog, I’m actually not particularly conservative. Just would like a little fiscal sanity, which is impossible when a Constitution “protects” benefits from the date of hire regardless of reality.
Comment by Ron Friday, May 5, 17 @ 11:11 am
We should have legalized pot in this state last year. We would have hundreds of millions more in taxes, reduce crime and allow police to do more important work. But we have the some of the stupidest elected officials in the nation.
Comment by Ron Friday, May 5, 17 @ 11:13 am
Goldman sacks should not have been allowed to change to a bank holding company over a weekend back in 2007. GM bankruptcy should have effectively killed it – but it didn’t – extreme situations call for extreme measure. The Trib offers a cautionary tale..” look at the ruin of Puerto Rico and take its fate as a dire warning:.. This state has an unsustainable debt load. Eventually it will overwhelm government and taxpayers.” So we either get compromise or face the extreme consequences.
Comment by Lech W Friday, May 5, 17 @ 11:17 am
Ron. I am a conservative. But I also realize that those receiving pensions can’t suddenly have the rug pulled from out under. This governor,like all politicians, spends money to secure votes,i.e., increased K-12 spending.
Comment by blue dog dem Friday, May 5, 17 @ 11:21 am
=continue with no raises and hopefully Tier 1 folks leave quickly so we can replace them with Tier 2.=
We aren’t going anywhere. You are going to have to pay up like the rest of us.
=regardless of reality.=
“Reality? I am reality”
The reality is that, historically, Illinois did not provide the revenue to meet the its’ obligations. Those were legal obligations approved by the people’s duly elected government. The obligations are lawfully established contracts.
You want to break the law.
You seem to ignore that absolute fact.
You need to get a grasp on reality.
Comment by JS Mill Friday, May 5, 17 @ 11:44 am
===This state has an unsustainable debt load===
And yet people still loaned it money. Those bond holders understood the risks, and they charged a premium for taking the risks. That’s how the market works, sometimes you win, sometimes you lose.
I don’t feel sorry for the bond holders. I feel sorry for the pensioners who might take a haircut. They weren’t gambling or speculating. I hope they get more relief than bond holders, as was the case in Detroit.
Comment by 47th Ward Friday, May 5, 17 @ 11:50 am
To clarify, I was referring to Puerto Rico, which had obviously unsustainable debt for decades and investors still bought its bonds.
Comment by 47th Ward Friday, May 5, 17 @ 11:51 am
== We should have legalized pot in this state last year. We would have hundreds of millions more in taxes, ==
There ain’t that much tax money there. Colorado is bring in a bit over $200M a year from taxing pot. When you are around $7,000M short of revenue, taxing pot won’t make much difference.
Comment by RNUG Friday, May 5, 17 @ 11:51 am
==hopefully Tier 1 folks leave quickly==
Wait, when the Tier I people leave, doesn’t that mean the state actually has to start paying out the money? How would a sudden outflow of funds to retirees improve the situation? I would think you’d be better off having them working as employees, squeezing every bit of work out of them you can, having them pay into the retirement system, and hope they don’t live to 100 after finally retiring.
I guess I’m confused…
Comment by HangingOn Friday, May 5, 17 @ 11:53 am
=So our debt would have to be much, much higher to match PR’s problem.=
So Governor Rauner has NOT failed, he still has two + more years to “achieve” PR’s debt. He’s winning now with exploding debt and he’s never failed at anything.
Comment by Deadbeat Conservative Friday, May 5, 17 @ 12:04 pm
Back in the Day, Illinois used to report we had a top 30 largest economy in the world or something like that. Not sure how that was measured but wonder where we stand now?
In order to get out of this mess there will be lots of new or increased taxes (revenues) and spending cuts if there is anyplace left to cut after the impasse. No one will be exempt all will suffer in some form or another.
Comment by the Cardinal Friday, May 5, 17 @ 12:18 pm
The troncs are predictably shallow. The state has the ways and means to get its fiscal house in order. The status quo is to choose not to.
For crying out loud, the state cut taxes two years ago. a bankruptcy judge would laugh them out of court.
Comment by wordslinger Friday, May 5, 17 @ 12:30 pm
Bruce and IPI types are also responsible for this problem, because Bruce invested and profited from public worker pensions he called financial tumors. He and IPI types have been paying low state income taxes for decades and ironically invest millions in politics to not pay their fair share.
These are big reasons why it’s wrong to force disproportionally harsh cuts on millions of middle class workers (in the long run). It has to be morally imperative for our elected representatives to find moderation in solving our problems.
Comment by Grandson of Man Friday, May 5, 17 @ 12:47 pm
IPI types and Rauner were not running Illinois
Comment by Anonymous Friday, May 5, 17 @ 12:50 pm
Governor Edgar has no solutions
Can’t do a ramp already did one
Just heckling from the cheap seats
Comment by Lucky Pierre Friday, May 5, 17 @ 12:52 pm
=Just heckling from the cheap seats=
Jealous? That is all you do. You still have not answered a basic question- (why no balanced Rauner budget?).
You are an intellectual coward.
Comment by JS Mill Friday, May 5, 17 @ 12:56 pm
== For crying out loud, the state cut taxes two years ago. a bankruptcy judge would laugh them out of court. ==
-Word-, that is probably the best comment on this topic.
Comment by RNUG Friday, May 5, 17 @ 12:58 pm
Why no balanced budget?
Do you mean now or the last few decades?
Because the “cowards” running the GA are more beholden to their campaign contributors (unions and trial lawyers) than their constituents
Comment by Lucky Pierre Friday, May 5, 17 @ 1:04 pm
===Because the “cowards” running the GA are more beholden to their campaign contributors (unions and trial lawyers) than their constituents===
lol, what’s Gov. Rauner’s excuse for him purposely proposing grossly unbalanced, sham, phony budgets… Madigan?
Comment by Oswego Willy Friday, May 5, 17 @ 1:07 pm
JS Mill, the budgets haven’t been balanced in decades. Stop with the luncacy.
Comment by Ron Friday, May 5, 17 @ 1:09 pm
- Anonymous - Friday, May 5, 17 @ 12:50 pm:
IPI types and Rauner were not running Illinois”
Yep, but we keep hearing the same thing from the public employees.
Comment by Ron Friday, May 5, 17 @ 1:10 pm
“Wait, when the Tier I people leave, doesn’t that mean the state actually has to start paying out the money? How would a sudden outflow of funds to retirees improve the situation? I would think you’d be better off having them working as employees, squeezing every bit of work out of them you can, having them pay into the retirement system, and hope they don’t live to 100 after finally retiring.
I guess I’m confused…”
Is every Tier 1 employee able to retire right now? The sooner we get rid of them, the lower the future obligation is. You can’t accrue more benefits if you are no longer employed. Truth is, you should not be able to accrue a benefit for any future employment, but our silly Constitution defies basic logic and math.
Tier 2 folks will pay into the system though.
Comment by Ron Friday, May 5, 17 @ 1:14 pm
==Tier 2 folks will pay into the system though.==
That would require people being hired. The last 2 years my Agency lost 61 people and not a one of those spots has been filled. Yet people can’t understand why, when they call in a complaint, it can take more than a week for it to be investigated. When you have 1 guy in charge of 14 counties not everything can get done. Especially when Federal Laws mandate regular bi-yearly inspections of places.
Comment by HangingOn Friday, May 5, 17 @ 1:30 pm
Ron, Where You Fired From A State Job? Sound Awful Bitter About State Worker’s?
Comment by Shake Friday, May 5, 17 @ 1:33 pm
==Ron, Where You Fired From A State Job?==
That or he couldn’t pass the testing to get one I’m guessing
Comment by HangingOn Friday, May 5, 17 @ 1:40 pm
Nope, never have worked for any government anywhere. Never even considered it.
Comment by Ron Friday, May 5, 17 @ 1:48 pm
Good to hear HanginOn. That works for me.
Comment by Ron Friday, May 5, 17 @ 1:49 pm
==That works for me.==
What works? The fact that the guy who inspects the nuclear power plant retired last year and that spot hasn’t been filled? Good, we can be Japan next.
Comment by HangingOn Friday, May 5, 17 @ 1:52 pm
“IPI types and Rauner were not running Illinois”
They most certainly benefited from the “status quo” they say wrecked the state. They most definitely fought their hardest to influence politicians to do what they wanted, even though it contributed to our current crisis.
Where are their calls for moderation and their willingness to pony up more to help the state when they’ve benefited for so long via low state income taxes, corporate tax breaks and public employee pensions?
Rauner said in 2011 that public employee pensions were financial tumors, and that private equity was “relatively flush” with public employee pension money. If pensions were so bad for the state, why did he manage and profit so much from them? Now people are tryin’ to cop out from complicity? Please.
Comment by Grandson of Man Friday, May 5, 17 @ 1:54 pm
Lower overhead for a bloated state is a good thing.
Comment by Ron Friday, May 5, 17 @ 1:54 pm
“Where are their calls for moderation and their willingness to pony up more to help the state when they’ve benefited for so long via low state income taxes, corporate tax breaks and public employee pensions?”
I’m willing, once we cut spending say 10% across the board, amend the constitution to eliminate all traces of public employee benefit protection and create Tier 3 with no pensions.
We should eliminate state corporate taxes in exchange for a progressive personal income tax.
Comment by Ron Friday, May 5, 17 @ 1:56 pm
A couple of points
Ron- I would like you to include me in your posts when referring to public employees, union members, and tax payers.
I think if you did that and kept s real human being on mind it might take some of the troll edge off. Ei “we keep the same thing from public employees like Honeybear”
2) I have long suspected that the drive towards state bankruptcy is some kind of masturbatory ALEC fantasy plan to discharge pension debt and destroy unions.
3) please understand we can’t lose any more state employees. We were the smallest per capita workforce at the start of Rauners term and we are down 30% right now. “Service level insolvency” is now. Yes anecdotally but in my office we just lost another senior caseworker. We literally didn’t know how to process a case because of her absence. Now we figured out a patch but don’t know if it will hold. That scared me. We are now an office of mostly new tier 2 employees. A majority have masters degrees and most now have never had a step increase. I’ve said it many times before. We are collapsing. If Rauner takes the state down in a labor dispute. We won’t restart. We’ll lose too many. Tier ones are retiring as soon as they can. Ron you wouldn’t mistreat your employees like this and expect them to stick around. I would hope that you value your people.
Comment by Honeybear Friday, May 5, 17 @ 1:57 pm
Honeybear, if it really is that bad, which I admit sounds awful, then the truth is that we do need the ability to declare BK. Our debt load is crowding out the ability to provide services. That’s what BK is for.
Comment by Ron Friday, May 5, 17 @ 2:01 pm
RNUG, Illinois has double the population of CO and is surrounded by state much more populous than those surrounding CO. Our take would be double. Put it all towards pensions. Doesn’t solve the problem, but it certainly helps.
Comment by Anonymous Friday, May 5, 17 @ 2:03 pm
==Lower overhead for a bloated state==
I guess you figure when people start dying because they don’t have resources anymore it will make up for the lack of state workers. Good thinking. Of course that’s only if it’s kids and old people. You know, the ones who don’t pay taxes. You despise state workers who actually pay taxes so much, can’t imagine what you think of those who don’t.
Comment by HangingOn Friday, May 5, 17 @ 2:08 pm
Taxes need to be raised to pay the bills and the debt
Comment by Nick Friday, May 5, 17 @ 2:09 pm
==with no pensions==
No pensions? I hope you’re joking.
Comment by Demoralized Friday, May 5, 17 @ 2:17 pm
Expenses need to be cut to pay the bills and debt.
Comment by blue dog dem Friday, May 5, 17 @ 2:20 pm
==Expenses need to be cut to pay the bills and debt.==
That, along with a revenue increase and borrowing to pay old bills.
Comment by Demoralized Friday, May 5, 17 @ 2:21 pm
Not a joke. No more pension. Or a bare minimum for low level workers indexed to CPI.
Comment by Ron Friday, May 5, 17 @ 2:22 pm
Elected officials and the vast majority of state workers should have SS and a 401k with no match until the constitutional protection is eliminated.
Comment by Ron Friday, May 5, 17 @ 2:23 pm
Cut first. The state will simply have to do less.
Comment by Ron Friday, May 5, 17 @ 2:23 pm
“I’m willing, once we cut spending say 10% across the board, amend the constitution to eliminate all traces of public employee benefit protection and create Tier 3 with no pensions.”
Thanks for admitting you want to impose harsh cuts and wipe out retirement savings protections for thousands of workers before you pay ballpark to what the highest incomes pay in surrounding states.
If you are not a top earner, then you’re even more radical, because you want to whack public employees and those who get help from the state, even though everybody would be stuck with an income tax increase.
Again, Bruce has zero qualms about profiting from the “status quo” that he’s breaking the state to change. He said in his press conference when he released his tax return and made $188 million in 2015 that he managed public employee pensions, or as he says when he wants to look good and noble, retirement accounts of public servants.
Comment by Grandson of Man Friday, May 5, 17 @ 2:24 pm
Just a few thoughts.
1. Congress will never allow states to declare bankruptcy, because as the Detroit bankruptcy showed, it is the BONDHOLDERS that get hurt the most. Wall Street would go absolutely bonkers if Congress even considered it.
2. Ron, as many people here have pointed out dozens of times, even if you amended the state constitution to change the pension guarantee, both the state and FEDERAL constitutions protect contractual obligations already earned. Or would you like to also repeal the protections for contracts in the state and federal constitutions? Most of the problem with our pension debt is the result of promises made and benefits already earned. That isn’t going away unless you literally want to tear up protection of contractual obligations at both the state and federal levels, and if that’s what you want, well, good luck - all those vendors who rely on the sanctity of contract to get paid might not approve of your solution.
3. People seem to have forgotten that state taxes are deductible from federal taxes. Not everyone itemizes, but if you do, then your state tax rate really isn’t the stated rate; it’s the stated rate less the value of the deduction. If you are in the 20% bracket at the federal level, then the state tax rate isn’t 3.5%; it’s 2.8%. And yes, local property taxes are deductible, too.
4. Ron, I hope you own a Hummer, because after we’re done cutting 10% from the road repair budget, you’re gonna need one. And I hope you have your own police force and fire protection, because you’re gonna need that too, since there will be too few police and firemen to protect your property. And I hope you don’t go to state parks, and that you recently renewed your drivers’ license, because the parks will close and it will now take you an entire day to get your license renewed given fewer employees to staff the offices. And I hope you never need to go to court, because there will be 10% fewer judges handling an ever-increasing caseload. And I hope you have a septic systems, because, well, those sewer districts won’t have the funds to make repairs. And . . . well, you get the picture. Across-the-board budget cuts are never sensible policy. They just make a great sound bite, which is already the major problem with our politics.
Comment by jdcolombo Friday, May 5, 17 @ 2:24 pm
@Ron you realize when there are no more state workers, because there are no incentives to be one, the private companies will end up charging the state twice as much to do half the job, while the pensions still have to be paid out, right? How is that helping? You hate state workers that much that you are willing to pay anyone else more to do the job?
Comment by HangingOn Friday, May 5, 17 @ 2:24 pm
==The state will simply have to do less==
Ok, tell me what things you are willing to do without. We’ll start there. Water? Air? Schools? Roads? Disease free restaurants? Pick a few.
Comment by HangingOn Friday, May 5, 17 @ 2:26 pm
==Cut first. The state will simply have to do less.==
Cuts only doesn’t fix the problem.
==No more pension==
Your zeal against and vindictiveness towards pensions for state employees is sad on so many levels. You seem to be one of those sad people who think that if you don’t have it nobody else should either. I find that attitude sickening
Comment by Demoralized Friday, May 5, 17 @ 2:36 pm
==The state will simply have to do less.==
Also, that comment tells me you have no idea of the magnitude of the problem if you think that’s all that’s needed to solve the problem. You need better logic and math skills.
Comment by Demoralized Friday, May 5, 17 @ 2:37 pm
But Brother Ron, debt of that magnitude can’t be discharged like that without catasytophic consequences for the state, its creditors and most importantly it’s people. The largest factor is that state government is nothing like a business. Nothing. The economics are totally different. Governing is totally different than business. And that has been a huge problem with this administration. Ron I’m not being patronizing. I’m trying to build a bridge to you in understanding.
Comment by Honeybear Friday, May 5, 17 @ 2:40 pm
Ron you mean Honeybear will not get a pension. I hope I get all the money taken out of my check for my pension back. But Honeybear would get nothing in bankruptcy.
Go ahead Ron use my name. Let’s make it personal
Comment by Honeybear Friday, May 5, 17 @ 2:46 pm
–Why no balanced budget?
Do you mean now or the last few decades?–
Walker has tried to explain, but you rely on willful ignorance. Still, how did the backlog of bills get cut in half under Quinn with deficit spending?
Beyond that, what’s your point? They were fiscally irresponsible in the past, but Rauner is the most irresponsible fiscal screwup of them all?
I don’t think that’s what he promised during the campaign. My recollection was a balanced budget, an increase in K-12 and no new taxes.
Comment by wordslinger Friday, May 5, 17 @ 2:48 pm
“I have long suspected that the drive towards state bankruptcy is some kind of masturbatory ALEC fantasy plan to discharge pension debt and destroy unions…..”
-Honeybear- you deliver a powerful punch in a few words. I like your style. Bet you are a voracious reader.
Comment by CapnCrunch Friday, May 5, 17 @ 3:18 pm
I am a voracious reader but unfortunately it’s now 95% articles and snippets from social media feeds. I have literally two dozen books that I’ve only read a chapter of. But honestly it’s my marriage of over two decades to an intellectual Titan that keeps me on my toes. Academic rigor and peer review are strong virtues in our home “oh my God not another lecture, please ,not now” is often the cry of my daughters.
But honestly it’s this blog. Right here. It’s the Alamo.
Comment by Honeybear Friday, May 5, 17 @ 3:29 pm
I believe in concessions by public employees, but they should be reasonable–especially when the people who want to impose them make from around $100 million a year to over $1 billion a year and pay a very low state income tax.
We all benefited from low state income taxes, and state workers benefited from having secure jobs and excellent overall compensation. In a spirit of conciliation, I ask that we be reasonable.
Comment by Grandson of Man Friday, May 5, 17 @ 3:30 pm
Illinois may not be Puerto Rico, but Puerto Rico didn’t think it was Puerto Rico.
Comment by City Zen Friday, May 5, 17 @ 3:48 pm
=. Stop with the luncacy. =
Still cannot answer the question?
Pathetic.
Simple question. Nada. Pretty much the rest of your incessant blathering here is a joke until you and your sidekick LP step up and answer the question, which you dodge every time with false equivalence.
It really does not matter if every budget from 1818 until 2014 were unbalanced. Your hero was going to fix it.
Even if that bad ol’ ILGA didn’t pass them he could have proposed a balanced budget.
But he did not. I wonder why?
Perfidy.
Comment by JS Mill Friday, May 5, 17 @ 3:54 pm
“Congress will never allow states to declare bankruptcy, because as the Detroit bankruptcy showed, it is the BONDHOLDERS that get hurt the most. Wall Street would go absolutely bonkers if Congress even considered it.”
And yet Congress just allowed Puerto Rico to file BK. Bankruptcy is a rational problem solver. Are you opposed to individuals being allowed to file BK?
Comment by Ron Friday, May 5, 17 @ 4:10 pm
JS Mill, the state of Illinois has NOT had a BALANCED budget in DECADES.
I have no idea why these last two years are so different.
Comment by Ron Friday, May 5, 17 @ 4:11 pm
–JS Mill, the state of Illinois has NOT had a BALANCED budget in DECADES.–
I hate to break it to you, but cap letters doesn’t make you smarter.
How did Quinn cut the backlog of bills in half while making full pension payments with deficit spending? Green Stamps?
Comment by wordslinger Friday, May 5, 17 @ 4:13 pm
===I have no idea why these last two years are so different===
Because Bruce Rauner is against the status quo and business as usual.
That’s why.
Rauner wants to be judged “differently” big also wants the same rules to apply.
Also, Puerto Rico, as a possession, not a state, with taxing not at the lower levels that Illinois has, including letting a tax sunset.
So…
Comment by Oswego Willy Friday, May 5, 17 @ 4:15 pm
=NOT had a BALANCED budget in DECADES.=
Although that is untrue, it really isn’t relevant today, as it pertains to a balanced budget.
Yes there is long-term debt that must and will be paid.
=I have no idea why these last two years are so different. =
Do you mean to state that you have no idea why Rauner has not proposed a balanced budget?
Or, can’t you speak the truth?
And settle down with the caps, no need to yell, we are mostly adults here.
Comment by JS Mill Friday, May 5, 17 @ 4:16 pm
The state did not have a balanced budget under Quinn. Sure, it was a little closer to balanced, but closer doesn’t cut it when you are billions in debt.
Comment by Ron Friday, May 5, 17 @ 4:23 pm
Just to clarify a continuing myth, according to an article by such a stalwart Rauner defender as IPI (see below), Illinois had a balanced budget in 2001 and 15 times in the last 41 years. So to shout that there has not been one in decades is quite simply false. So even by IPI standards Rauner is a failure in this respect.
by Kristina Rasmussen
Illinois’s budget is required to be balanced by constitutional mandate, right? Then why has the budget been balanced only 15 of the 41 years between 1970 and 2010? The last time Illinois had a balanced budget was in 2001.
Comment by Decaf Coffee Party Friday, May 5, 17 @ 4:28 pm