I have been a big fan of the work of Sheila Weinberg and the Institute for Truth in Accounting. Now another website has been launched to highlight the bipartisan fiscal mess that is Illinois: IllinoisIsBroke.com.
The Reuters news service reports that the site was set up by “a group of Chicago area business leaders”:
R. Eden Martin, president of the nonpartisan Civic Committee of the Commercial Club of Chicago, said the state is buried by a backlog of unpaid bills, and more importantly, is sinking under its enormous unfunded pension and other retirement-related liabilities.
‘Yes, Illinois is broke,’ he said, pointing out that a cash crunch has severely delayed essential payments to schools, universities, hospitals and others…
The campaign’s website, IllinoisIsBroke.com, includes a continuously updating tally of the state’s mounting debt.
The website gives the bad news:
By July, Illinois will be $130,000,000,000 (that’s BILLION!) in debt. This crushing load hampers the state’s ability to fund public schools and universities, health care, and other essential public services. Most of that money is owed to the state’s pension funds and retiree health care plans. And YOUR SHARE of that debt is $25,000 per household.
How did this happen? Basically, Illinois spends $3 for every $2 it takes in. Only in Springfield is this kind of math possible. The state accomplishes this by borrowing or by simply ignoring its unpaid bills. And it has been doing so for years.
Then the site asks, “Is the situation hopeless”? Its answer:
No. Other states have solved similar problems by cutting costs and bringing pension and health insurance benefits in line with the private sector. Illinois could save billions of dollars if it just implemented a two-tiered system that kept promises made to existing employees but offered all employees a less costly retirement option going forward.
All this talk of a two-tiered system misses the point. Of course we can’t continue to promise unaffordable and unfairly generous pensions to state employees. But the problem isn’t solved by a second “tier,” the problem is the first/existing tier. The best plan proposed to address the problem tier is that put forward by salary and pension researcher Bill Zettler.
Zettler wrote last month:
We don’t need politicians to tinker at the edges of this problem – we need them to take a meat cleaver to it. The future tab for pensions and retiree healthcare cannot be paid as currently defined. Pretending we can will bankrupt the state, the pension funds or both.