By Jon Dougherty
(TNS) The state of Illinois, which has been in steady but steep decline for years thanks to near-universal Democrat rule, is on its way to junk bond status and economic collapse, along the lines of Puerto Rico, another Democrat/Leftist-run U.S. possession.
And in fact, bankruptcy court may not be that far off for the Land of Lincoln.
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As reported by The Wall Street Journal, the tax-and-spendthrift nature of the state’s Democrat politicians is catching up with them big time, after losing nearly 900,000 residents over the past six years — each of them taxpayers.
The paper adds:
Like Puerto Rico, Illinois is drowning in a sea of red ink. Growing government debt and a crushing tax burden are depressing economic growth. State spending is up, but personal-income growth is lagging. Since 2000, Illinois’s per capita personal income growth has been 21% lower than the national average. Home prices are growing at the second-slowest pace in the nation, at only 2% compared with 5.1% on average nationwide. With speculation that Illinois could be the first state to go into default, ratings firms are paying attention. Illinois’s credit rating is one notch above junk.
Puerto Rico has already filed for bankruptcy protection, having amassed $70 billion in debt. The WSJ notes that Illinois is moving along the same glide pattern:
llinois’s public pension payments already consume nearly a third of the state budget, yet the unfunded liability—which the state currently pegs at $137 billion, though others put the figure much higher—continues to rise. Local government services are also being squeezed by pensions, contributing to rising property taxes that are the second-highest in the nation. Since 2000, Illinois has increased pension spending by more than 500% but cut by a third services that help students pay for college, protect children from abuse, aid the poor, and fight disease.
The “solution” is typically Democrat and always the same: “Let’s raise taxes.”
Well, the state has done that several times since 2011, and each hike not only fails to close budgetary gaps in the billions of dollars, but also runs more people out of the state. And they take their tax contributions with them.
Worse, the current Democrat governor, J.B Pritzker, signed 20 new taxes and fee hikes, including a doubling of the gas tax, since taking office in 2018. Now he wants a major progressive income tax he says will for sure close the gap after raking $4.6 billion on the last wave of tax and fee hikes. The issue is on the Nov. 3 ballot.
Still worse, he’s, um, ‘fibbing’ to residents when he claims that 97 percent won’t see their income taxes rise. That’s because they aren’t going to get to vote on the rates.
“As the Illinois Policy Institute reported, solving the pension issue would require a progressive income-tax hike of $10 billion. Mr. Pritzker’s current plan to tax $3.7 billion out of the state economy dedicates only $200 million to pensions,” the WSJ reports. And currently, pension debt is conservatively estimated at about $137 billion.
Let’s recall that for every dollar taken by the state in taxes and fees, that’s a dollar that does not get invested in the state or spent in the economy. Not in a productive way, at least.
Orphe Divounguy of the IPI, who penned the article, says that there’s a way out of the pension nightmare if Democrats are willing to do it:
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Policy makers can finally shrink Illinois’s pension liability by reducing the main driver of its growth: the cost-of-living adjustment, or COLA. Currently, the COLA doesn’t reflect any actual cost-of-living increase, since it isn’t pegged to inflation. By simply replacing the existing guaranteed 3% compounding postretirement raise with a true COLA pegged to inflation, among other modest changes, Illinois can save $2.4 billion in the first year alone. No current retiree would see a decrease in his pension check. Current workers would preserve their core benefit.
We’re wagering that Democrats will simply keep tripling down on the failed fiscal policy of taxing and spending instead, winding up someday soon in federal court begging for a federal (taxpayer) bailout.