Tick, Tick, Tick.....Someone desperately is needed to solve this $35 billion time bomb! Where is Bruce Willis when you need him? Or Superman for that matter? How about McGyver? Somebody? Anybody?
Illinois Institute for Fiscal Sustainability's at the Civic Federation today released their analysis of the State of Illinois’ fiscal condition and it is NOT pretty.
"The Civic Federation’s Illinois research institute warns that Illinois could face an unprecedented $34.8 billion backlog of unpaid bills if action is not taken immediately by the Governor and General Assembly to stabilize the State’s finances in FY2013 and beyond. The Federation’s five-year forecast incorporates known spending pressures in the areas of Medicaid, health care and pensions while keeping other areas of spending flat and takes into account future revenue expectations including the scheduled reduction in income tax rates beginning in FY2015.
The increase in the State’s unpaid bills is driven by an unsustainable rise in State Medicaid costs and rising pension costs. The Civic Federation urges aggressive implementation of Medicaid reform legislation passed in January 2011. In this analysis, the Federation also recommends for the first time that current Illinois retirees and employees hired before January 1, 2011 receive reduced annual increases to their pension benefits."
The game of kick-the-can will only go on for so long at the state level, not to mention the concurrent issue occuring at the Federal level. Granted, what can be done at the state level to reduce the deficit is notably different in implementation than at the Federal level, but both require similar difficult actions....namely, acknowledging that the current spending environment is unsustainable and the future is in jeopardy.
Over the weekend, I heard a fellow business owner joke that the best thing that happened to Wisconsin was Illinois raising their sales tax to 10.25% at one point in the recent past. The city of Chicago has the highest total sales tax of all major U.S. cities (9.50% as of 12/2011).
Granted taxes have their place in fighting budget deficits, but so does a reduction in spending...what if government, state and Federal drop their tax loads at the same rate that the economy declined?
Michael Hobbs, PahRoo Appraisal & Consultancy
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