The Dispatch-Argus

Business group: Illinois broke, and fix is needed now

Wednesday, September 29, 2010

It is an irrefutable fact that Illinois is broke.

A non-partisan, non-profit coalition of concerned business leaders organized around that fact is traveling the state, discussing the consequences if Illinois' budget practices aren't soon reformed

The Illinois Is Broke Campaign, an offshoot of The Commercial Club of Chicago, brought its message to the Quad-Cities on Tuesday where they met with more than two dozen business leaders and the editorial board of The Dispatch and The Rock Island Argus.

"It's obvious as the day is long," said James Farrell, retired CEO of Illinois Tool Works and chairman of The Commercial Club of Chicago. "No one disagrees, in state government, with our numbers. Everyone disagrees with the approach to solving the problem."

The campaign encourages Illinois citizens to pressure state representatives to solve the problem, sooner rather than latter.

"They have to resolve this issue or we will have a disaster very shortly in our state that will cause numerous problems," Mr. Farrell said.

At the center of the budget mess is Illinois' "Mount Everest" — its pension obligations, he said.

"The pensions are under-funded by some $80 billion," Mr. Farrell explained. "In the five pension funds in Illinois, there is roughly $50 billion in assets. If those pension funds were fully funded to cover the future retirements of state employees, they should have $130 billion in it."

Illinois is Broke suggests raising the state's retirement age from 55 to 67, decreasing the guaranteed cost of living adjustment for state retirees from 3 percent to 2 percent and setting $106,000 as the maximum pension benefit for any state employee.

Illinois also must reduce costs and "inefficiencies in state government" and pursue potential ways to increase revenue, Mr. Farrell said. Raising the income tax rate alone won't solve the problem. And if the problem is not solved, Illinois will run out of money within 10 years, crippling social services, hospitals, universities and community colleges that depend on state financing, he added.

Businesses in Illinois also will continue to suffer, the group contends.

"There are lots of ways that states lose out in the competition for jobs. People talk about businesses picking up and leaving. That's just one way," said David Weinberg, chairman and CEO of Judd Enterprises, Inc. of Chicago.

"There's a natural flow of businesses in and out of the state. You have to replace them with growing businesses and new businesses coming in," he said. "Those last two things are dead in the water (in Illinois). Right now, there's a level of uncertainty that prevents investors from betting on Illinois."

The local business community responded to this message with "shock and dismay," Mr. Farrell said. Tuesday's meeting was not open to the press.

"Everybody talks about kicking the can down the road," he said. "Well, the end of the road is in sight now. There's only one more kick of the can, and that's it." On the Internet: www.IllinoisisBroke.com