Land of Lincoln Scrounges for Pennies
Illinois's new Republican governor is walking into a big mess. The state's pension system is a disaster, and while legislators have tried to alter the system to make it more affordable, their plan is currently wending its way through the courts and may well be overturned. There's also a backlog of other bills, and the state is paying a premium on its debt because of its fiscal issues. The Land of Lincoln, says Reuters, is "buckling under a chronic structural budget deficit and the lowest credit ratings and worst-funded pension system among the 50 states."
It's not literally true that Illinois is insolvent; the state could enact a whacking great tax hike to cover the shortfalls. Its biggest city, Chicago, is far enough from a state line that it could probably get away with higher taxes.
But Bruce Rauner, the incoming governor, has promised a tax cut, not an increase. That's probably not going to happen--the Democrats in the legislature are not going to lift a finger to help him fit his proposed tax cuts into a balanced budget. That means he will start off his governorship by going back on his word. When you need political capital to make hard choices, that's not a great position to be in, especially in the face of an angry revolt by those public employees and Illinois citizens who stand to suffer from any budget cuts. Going beyond that, to a tax hike, would see the whole populace up in arms; one reason Rauner now holds office is that voters were angry about the tax hikes enacted under his predecessor.
Hard choices are inescapable. The state can't go on juggling its bills and hoping its pension problems go away. But as the federal experience shows, hard choices are especially hard to make when the executive branch and the legislature are controlled by different, angrily polarized, parties.
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