Illinois' pension issues go back decades because politicians, both Republican and Democrat, but lately only the latter, have been kicking the can down the road all of that time.
Yesterday on the Hugh Hewitt Show Senate majority leader Mitch McConnell (R-KY) doused hopes of any federal bailout. Instead he proposed bankruptcy as an option, which Illinois' Democratic governor, JB Pritzker, rejected.
Which leads Forbes' Elizabeth Bauer to look at the Prairie State's grim prognosis.
From her column:
Consider, after all, the state of Illinois, and the ways in which it’s impacted by the coronavirus. Its own forecast for revenue losses is for a drop of $2.2 billion for FY 2020 (ending on June 30), out of an original total of $36.9 billion, and a drop of $4.625 billion in FY 2021, out of an original projection of $38.5 billion, with losses coming from income tax drops, sales tax drops, a drop in lottery proceeds, casino gaming, and so forth. How much additional money the state has already spent, relative to what was budgeted, and how much that will sum to in the future, hasn’t been reported yet. Will the state run into issues, not merely with debt, but with solvency [emphasis mine] — the ability to make payroll? The state already has a bill bnacklog of $7.8 billion, and that’s a longstanding failing of the state, long preceding the coronavirus.
And if Illinois, or another state, simply can’t make payroll, would the federal government cover those costs? Would states be obliged to borrow — which is already a part of Illinois’s plan, that is, borrowing $1.2 billion in FY 2020 and paying it off with as-yet-unknown funds in 2021? Is Illinois, and are the 49 other states, simply counting on federal funds to avoid borrowing, or pay off these debts?
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