As we reported earlier this year, Chicago School District bonds have slipped to an all time low credit rating, and the City itself has seen their municipal bonds completely go in the tank. Well now word is out that the state of Illinois is feeling a major financial crisis thanks to years of Liberal non-leadership and the state may soon have something in common with Puerto Rico. Yes, that’s right boys and girls, Illinois may soon be in the line for federal bankruptcy court with Detroit and the Island Paradise.
It seems that the current financial crunch is spiraling into a serious problem for Illinois lawmakers, prompting many to wonder if the state is about to become the first in history to go bankrupt. Currently, federal law does not have a process for states to ask for protections under Bankruptcy laws, but the protections that are given to counties and Municipalities may have to be extended in the near future if something doesn’t change.
While it would take an act of Congress to extend that protection to states according to Stanford Law School professor Michael McConnell, he believes that such action would be iffy. But Illinois’ present financial problems is so serious there may not be any options left, which is why many in the legislature are floating such a radical option as one of the possible solutions.
Earlier this month, Moody’s Investor Service dropped Illinois’ general obligation bonds to its lowest investment grade rating, saying that the state’s growing pile of unpaid bills and its mounting pension deficit was continuing to get worse and was not being addressed. Illinois, even surpasses the Liberal havens of New York and California being able to claim the lowest credit rating of any state.
Thanks to liberal obstructionist attitudes, “Legislative gridlock has sidetracked efforts not only to address pension needs but also to achieve fiscal balance, allowing a backlog of bills to approach $15 billion, or about 40 percent of the state’s operating budget,” Moody’s said. Also the Fiscal Times says, Illinois is the only state that’s been operating without a balanced and complete budget for almost two years. Those statements caused Governor Bruce Rauner to tell reporters, “We’re like a banana republic. We can’t manage our money,” after the Illinois Legislature once again failed to produce a full 2017 budget earlier this month.
Illinois is facing a massive pension crisis, with unfunded pension liabilities for the state’s five major plans growing some 25 percent just this year. Currently the liability is in excess of a staggering $251 billion. That means that every household in the state has debt burden of about $27,000, according to the conservative-leaning Illinois Policy Institute.