Due to its long history of corruption, political paralysis, and bad management, the state of Illinois is a basketcase. It has $15 billion in unpaid bills, $251 billion in pension liability, and a looming revenue drop. It hasn’t had a budget in three years.
State lawmakers are meeting in a special session with a July 1 deadline, but are making little progress in finding a way forward. If they don’t, two major bond-rating services are saying they will downgrade the state’s bonds to “junk.”
Any attempt to raise money by selling bonds–which is inevitable, since the state has such a big shortfall–would demand the highest interest rates, assuming any investors would take the risk. That, in turn, would mean the state would have even less money, which sets up a death spiral.
Chicago Tribune columnist John Kass is proposing that Illinois just be dissolved. Distribute its land to the surrounding states. Chicago can be split between Indiana and Wisconsin (which can rename its part of the city “South Milwaukee”). We can have the Milwaukee Cubs and the Indiana White Sox. He goes on in this vein for Iowa, Kentucky, and Missouri.
He is being (mostly) facetious, but I don’t know what happens if a state implodes on this scale. Any ideas or suggestions (facetious or serious) about what Illinois should do?
Read both an account of the problem and the proposal for dissolution after the jump.
From Sara Burnett, “Illinois Could Be lst State with ‘Junk’ Credit Due to Budget,” Associated Press:
Illinois is on track to become the first U.S. state to have its credit rating downgraded to “junk” status, which would deepen its multibillion-dollar deficit and cost taxpayers more for years to come.
S&P Global Ratings has warned the agency will likely lower Illinois’ creditworthiness to below investment grade if feuding lawmakers fail to agree on a state budget for a third straight year, increasing the amount the state will have to pay to borrow money for things such as building roads or refinancing existing debt.
The outlook for a deal wasn’t good Saturday, as lawmakers meeting in Springfield for a special legislative session remained deadlocked with the July 1 start of the new fiscal year approaching. . . .
Ratings agencies have been downgrading Illinois’ credit rating for years, though they’ve accelerated the process as the stalemate has dragged on between Republican Gov. Bruce Rauner and the Democrats who control the General Assembly.
The agencies are concerned about Illinois’ massive pension debt, as well as a $15 billion backlog of unpaid bills and the drop in revenue that occurred when lawmakers in 2015 allowed a temporary income tax increase to expire. . . .
Battle says the cost to taxpayers in additional interest the next time Illinois sells bonds, which it inevitably will need to do in the long-term, could be in the “tens of millions” of dollars or more.
The more money the state has to pay on interest, the less that’s available for things such as schools, state parks, social services and fixing roads.
“For the taxpayer, it will cost more to get a lower level of service,” Battle said.
Comptroller Susana Mendoza, who controls the state checkbook, agreed.
“It’s going to cost people more every day,” she said. “Our reputation really can’t get much worse, but our state finances can.”
John Kass, “What to Do with a Broken Illinois: Dissolve the Land of Lincoln,” Chicago Tribune:
Illinois is like Venezuela now, a fiscally broken state that has lost its will to live, although for the moment, we still have enough toilet paper.
But before we run out of the essentials, let’s finally admit that after decade upon decade of taxing and spending and borrowing, Illinois has finally run out of other people’s money.
Those “other people” include taxpayers who’ve abandoned the state. And now Illinois faces doomsday.
So as the politicians meet in Springfield this week for another round of posturing and gesturing and blaming, we need a plan.
And here it is:
Dissolve Illinois. Decommission the state, tear up the charter, whatever the legal mumbo-jumbo, just end the whole dang thing.
We just disappear. With no pain. That’s right. You heard me.
The best thing to do is to break Illinois into pieces right now. Just wipe us off the map. Cut us out of America’s heartland and let neighboring states carve us up and take the best chunks for themselves.
Check out the proposed new map with Illinois divvied up among its neighbors.
Illustration by National Atlas of the United States [Public domain], via Wikimedia Commons
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