Gov. Bruce Rauner (R) of Illinois believes that his state is on the verge of “banana republic territory” because the state faces an imminent financial crisis. As described in a story published by The Fiscal Times on June 12:
Last week, the state marked the second full year in which Gov. Bruce Rauner and a combative Democratic legislature were unable to agree on a new operating budget. The state Senate the week before rejected a House-passed budget measure premised on a $7 billion revenue shortfall after Rauner threatened to veto it.
The article further explained the state’s financial predicament:
The state was responsible for a record backlog of unpaid bills totaling $14.7 billion, causing fear among programs and local agencies dependent on state aid. State legislators also failed to approve a stand-alone kindergarten through 12th-grade education budget that was vital to the operations of the financially struggling Chicago school system, Reuters reported. A $15.7 billion bill to ensure schools open in the fall passed the Senate but was soundly defeated in the House.
According to Fox News, the state also has $130 billion in unfunded pension obligations that it needs to take into account. In short, Illinois is on the verge of filing for Chapter 9 bankruptcy, which could shut down the entire state. The actual cause of much of the state’s financial problems originated in 2011 when the state, led by Gov. Pat Quinn (D), decided to hike the tax rate to address a looming pension shortfall as well as offset a $12 billion deficit to account for a $35 billion state-wide budget. Since then, the Democrat-led state failed to reform the pension plans. Illinois Policy, an independent organization that promotes freedom-driven public policy in the state, listed the following drivers for the pension crisis:
- 60% of state pensioners retired in their 50’s, many with full pension benefits.
- Over half of state pensioners will receive $1 million or more in pension benefits over the course of their retirements. Nearly 1 in 5 will receive over $2 million in benefits.
- Almost 60% of all current state pensioners can expect to spend 25 or more years collecting benefits, based on approximate actuarial life expectancies. Due to automatic, 3% compounded COLA benefits, those pensioners can expect to see their annual pension benefits double in size.
- The average career pensioner — retired after Jan. 1, 2013, with 30 years of service or more — receives $66,800 in annual pension benefits and will collect over $2 million in total benefits over the course of retirement.
- The average career pensioner will get back his or her employee contributions after just two years in retirement. In all, pensioners’ direct employee contributions will only equal 6% of what they will receive in benefits over the course of their retirements.
With a financial crisis like this, nobody is going to get their pay-day without destroying the state economy. While Detroit filed for bankruptcy following its own pension crisis, this could be the first time in the 21st century that a state in the union files for bankruptcy in a vain attempt to give excessive pension plans to government employees.
Great job, Democrats!
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Source: The Daily Wire
