Now comes this news.
Illinois’ pile of unpaid bills topped $16 billion for the first time as the state deals with the fallout of an unprecedented two straight fiscal years without complete budgets, the state comptroller’s office reported on Tuesday.
The bill backlog is growing despite the enactment of a fiscal 2018 spending plan and income tax increase in July that ended a budget impasse between Illinois’ Republican governor and Democrats who control the legislature.
. . .
A provision in the budget enacted by lawmakers over the vetoes of Governor Bruce Rauner authorized the sale of up to $6 billion of general obligation bonds to pay bills from vendors and service providers that are accruing late payment penalties of as much as 12 percent.
. . .
But on Monday, the governor told reporters that the bonds do not solve any problem because lawmakers failed to set aside money to make principal and interest payments over the 12 years the debt would be outstanding.
“We need to come up with roughly half a billion (dollars) of cuts just to be able to service a bond offering,” he said, adding that he planned to meet with legislative leaders for discussion.
There’s more at the link.
So, Illinois wants to borrow another $6 billion . . . to pay current bills presently totaling about $16 billion . . . but the state has made no budgetary provision whatsoever to pay the interest on those new borrowings, let alone the principal? Does that sound like something the average bond investor will find attractive? I don’t know about you, dear reader, but to me, it sounds absolutely insane.
Illinois’ current population is reportedly about 12.8 million people. That means every resident of Illinois, man, woman or child, is on the hook for $1,250 of currently outstanding short-term state expenditure, over and above the state’s longer-term debt (estimated to come to $5,041 per resident), and over and above the state’s $130 billion backlog in pension funding (equal to another $10,156 per resident, all of whom are liable for the shortfall). In case you were wondering, that’s a total of $16,447 in state government debt owed by every resident of Illinois. (That leaves out questions of their share of the US national debt, of course – but let’s focus on state-level finances here.)
Even leaving aside federal debt, if Illinois owes you money in any way, shape or form – a pension, payment for goods you’ve sold to a state agency, reimbursement for expenses, whatever – I suggest you urgently begin examining ways to survive financially without it. I suspect you’re not likely to be paid in full – that is, if you’re ever paid at all.
(There are, of course, many other states that are almost as badly off, and to which the same caution applies.)