The American Interest
Analysis by Walter Russell Mead & Staff
Illinois Continues Its Sad, Slow Slide

Illcap

The Illinois pension saga just keeps getting worse. In response to the state legislature’s failure to pass a pension reform bill before adjourning, Fitch downgraded Illinois’s bonds from A to A- earlier this week. On Thursday Moody’s joined the party, lowering the state’s rating from A2 to A3. S&P is now the only agency not to have downgraded the state, but it is issuing its own dire warnings.  As Reuters notes, Illinois now has the lowest credit rating of any state in the country even without the S&P downgrade, and the worst rating in its history.

The higher borrowing costs that accompany credit downgrades are bad news for a state already struggling with its finances. This fact is not lost on Governor Pat Quinn, who has called lawmakers back to Springfield for a special session to get something passed before the state is hit with another downgrade.

The Governor is right to be anxious for a budget fix. Illinois has allowed this problem to drag on far too long; each day of delay is costing taxpayers. Unfortunately, there’s still no reason to be optimistic that the special session will succeed where past efforts failed. The legislature has been trying to get a bill through for well more than a year now. Three different plans have come up for a vote in the last 12 months alone. If there’s a compromise solution out there somewhere, it has hidden itself very well.

Maybe that explains why House Speaker Michael Madigan isn’t answering his phone: after the reform bill failed last Friday, Quinn called a special meeting with legislative leaders to formulate a plan to address the crisis; Madigan, however, was reportedly unreachable by phone, despite being made aware of the call in advance.

If Illinois wants to stanch the bleeding, it needs to get serious, and fast. Unfortunately, it may take another credit downgrade to do that.

[State Capitol of Illinois image courtesy of Shutterstock]

Published on June 7, 2013 2:00 pm
  • Aaron1960

    Well, Washington’s just going to have to print more money!

  • shootist MP

    Illinois continues its sad, slow, slide.
    Illinois to lay off 7000 teachers.
    Chicago to close 23 skrools.

    This is obviously racist and Bush’s fault anyway.

  • drkennethnoisewater

    Detroit Mark II.

  • http://chicagoboyz.net/ TMLutas

    Is it really that hard to draw up actionable priority lists by each individual legislator and to compare to find items that a working majority don’t find that important?

    • shootist MP

      Too much graft, too much corruption.

      Throw the blighters out and re-elect no one.

      • http://chicagoboyz.net/ TMLutas

        What you’ll get with your strategy is new collection of randoms for the Combine to corrupt. What you’d get with my strategy is a new collection of randoms who have already committed to a very specific course which they can be held account to much easier.

        There isn’t much difference in result in the first election, but a lot more in the second.

        • shootist MP

          But they are only in office for one term.

          If you elect an honest man he might be able to resist, if he is in office for only one term.

          • http://chicagoboyz.net/ TMLutas

            This is how Mexico ended up with a one term presidency. The model does not work out in reality how you hope it will. You end up with thieves who start stealing on day one of their single term and create a chain of impunity by never investigating their predecessors so they themselves will not be investigated.

  • steve bourg

    Is there anything Democrat legislators hate to do more…..than to lower the pay and bfts for govt ‘ees ? Because it seems to always be ‘off the table’. And yet it’s really Problem #1.

  • GRL

    Couldn’t happen to a more deserving state, unless it were California. Only bad thing is we’ll all pay for it when reality finally does hit, when they should be forced to deal with it themselves.

    • shootist MP

      Michigan
      New Jersey
      New York
      Maryland
      Pennsylvania
      West Virginia
      Washington
      Oregon

      Oh, there are lots of buttheads that need kicking.

  • http://blog.thought-mesh.net Annoying Old Guy

    One thing those out of state need to know (and Mead misses here) is that the state constitution prohibits any state, local, or municipal government from decreasing any pension benefits for public employees. See Article XIII, section 5. This is a bit of a sticky wicket, given that most of the financial pressure is from public employee pensions.

  • mikekelley10

    I wouldn’t buy a municipal bond from California or Illinois if you held a gun to my head.

  • Fred Chittenden

    The solution to bloated, underfunded public pensions is relatively simple — tax the underfunded payouts to cover the underfunding. It’s not like these unions didn’t know of and promote fixing this problem with more contributions of their own. It might also have helped their pensions if the high taxes and heavy regulations they tend to support didn’t make it so difficult for the private sector their pensions are vested to prosper.

    Sucks to be the victim of your own actions… No reason they should expect anyone to bail them out when such a “simple” solution is available. If taxation is the solution to the problem, pay their pension, then tax the unfunded part back.

  • OldmanRick

    Why is it that states controlled by the jackasses are in such dire financial straights? My bad. It’s cause they like to spend, spend, spend until they run out of other people’s money. Afterwards, they borrow, borrow, borrow until they can’t borrow anymore. It seems the problem is similar to that of a gluttonous spendthrift who doesn’t have the willpower to manage and restrict his/her excessive eating and spending habits.

  • mhjhnsn

    Your slant is all wrong. Quinn has been utterly useless in the attempts at pension reform, standing on the sidelines and occasioanlly saying we need reform, but doing nothing constructive, while the Speaker of the House (Madigan) and President of the Senate (John Cullerton) have tried to wrestle with the problem but have different opinions on what is allowable under the IL Constitution. And Madigan is the one taking the strongest stand for reducing costs.

  • Leon0112

    If state employees and teachers paid 30% of their income into the pension fund and another 20% into health care insurance premiums, that would help solve the problem.

  • teapartydoc

    The mob has been running Illinois since prohibition. The money troubles will go away when the mob does.