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Illinois could be first state to go broke

October 2, 2012 By 2 Comments

Illinois’ public pension crisis is still making news and despite a $7 billion state income tax hike last year, state government remains far behind in paying its bills. 

The Teachers’ Retirement System (TRS) recently readjusted its view of expected rates of return on its investment portfolio.

“The lower expected rate of return from 8.5 percent to 8 percent is more realistic given the condition of our national economy,” said Sen. Kyle McCarter.

The lower expected rate of return has implications for state taxpayers.  It means that more money, about $300 million, will have to be diverted from other parts of the state budget in order to keep required pension payments at their proper level.

“This is a crisis that not only affects us today but our children and grandchildren well into the future.  We are on an unsustainable course and pension reforms that protect the integrity of the pension systems and protect the taxpayers who pay the bills must be implemented.”

Illinois’ pension problems caught the attention of the respected Wall Street Journal.  According to the WSJ editors: “Sooner or later, we knew it would come to this since the Democrats who are running Illinois into the ground can’t bring themselves to oppose union demands. Illinois now has some $8 billion in current debts outstanding and taxpayers are on the hook for more than $200 billion in unfunded retirement costs for government workers. By some estimates, the system could be the first in the nation to go broke, as early as 2018.”

The entire Wall Street Journal report can be found online at http://online.wsj.com/article/SB10000872396390444032404578008291279754994.html

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Filed Under: 2012 Election, Economy & Tax/Spend, Public Pension Crisis, Top Stories Tagged With: , , ,
  • concerned taxpayer

    Nothing will happen in Illinois until the state goes “broke,” at which point everyone who can will flee.
    Madigan will retire and leave Illinois, as well as retired teachers and legislators. I try to tell “20-somethings” how great it was to live here in the 1970′s and 1980′s when you could get a job easily, buy an affordable home, raise a family on one income, and pay low sales taxes. Since then, however, property taxes have shot through the roof, the sales tax is almost 10%, we, have the highest gas prices in the nation, and our schools (except for small pockets) are awful. I have lived my whole life in Illinois and have seen the changes. Sad.

  • http://NA Wolf

    Illinois like the US is bankrupt. The outright fraud of the millionaire pension plans throughout the entire Public Sector have put a $15 Trillion obligation on the backs of the taxpayers. In addition to consistent tax, license, fee increases to cover the 50% over staffing and compensation systemic in the Public Sector. There are several major actions required to save the nation 1) major restructuring and reform of the entire public sector operations at every level and function meaning a reduction of at minimum 9,000,000 heads and 50% reduction in most pay grades, 2) Pension Reform means a maximum payout of $50K annually for those beyond 35 years of age and limited COLAs and all other Public Sector Employees will be put into Social Security, Medicare and a self-directed 401K with a maximum 3% match, 3) all Public Sector Labor Agreements must be ratified and approved a the Ballot Box and 4) there will be universal School Vouchers at $7K per child and the taxpayers can take their students to any school of their choice. These actions alone will start to end the massive corruption and fraud in the entire Public Sector and eliminate the deficits today. There is absolutely no reason that the taxpayers should support the 23 million millionaires of the Public Sector today…the excess here has reached the tipping point. If possible the administrators and Politicians that have promoted this level of fraud should be put into jail but since the entire judicial system is part of the Public Sector we would need a real judicial system in fact new governments throughout the entire system….