Editorial: Illinois IS Broke: Fix it, now!

Wednesday, October 06, 2010

Shouting in an empty room. That's how we characterize reception to the clarion calls warning that Illinois cannot sustain a crisis that has the state $160 billion in the hole.

Everyone shudders at such a mind-boggling number at first, but the eyes begin to glaze over when you try to focus on the details. Given the magnitude and complexity of the problem and the fact that fixing it requires tough choices, it's easy to look away. That's exactly what our leaders have been doing. Meanwhile the mountain of debt rises and its Everest is the state's unfunded pension obligations, which stand at $130 billion. Right now that equals $25,000 for every Illinois household. Unless some action is taken, that debt burden will only go up.

A group of Illinois business leaders is hoping to wake up voters so they will demand that elected officials stop ignoring the mess. The message from the Illinois Is Broke Campaign is dire. They worry that the state is but a decade away from an all-out meltdown. No, governments cannot legally go bankrupt, but if Illinois' financial black hole is not plugged, the state will not be able to pay its debts, and it wouldn't be able to get any more. No money to spend and no access to credit? Sounds like bankruptcy to us.

Already the price of borrowing has risen dramatically because of our leaders in Springfield. The latest Moody's bond rating report was particularly savage as such documents go. "The outlook for the state of Illinois is negative, reflecting the state's fiscal deterioration as demonstrated in its fiscal 2009 audit, as well as a heightened potential for further weakening as a result of economic underperformance and the inability to meet statutory pension funding requirements," Moody's analysts said in the report, which lowered an already bad June rating. "The June downgrade was based in large part on the state's failure to enact significant recurring measures to address its structural budget imbalance for the fiscal year starting July 1, 2010; its reliance on delays of payments other than debt service, and the magnitude of the state's pension liabilities in relation to available resources," Moody's said.

The result? The state's terrible credit rating has ballooned the payments on our debts. That money has to come from somewhere and that's usually from social service agencies which can least afford it.

So Illinois Is Broke, an offshoot of The Commercial Club of Chicago, was in the Quad-Cities Tuesday with a message to business leaders and citizens who go to the polls Nov. 2: It's time to put pressure on state elected officials. Don't just ask about the pension debt and the ongoing operating deficit, but "get in their face" and demand they do something about it, says James Farrell, retired CEO of Illinois Tool Works and Commercial Club chair. "It's obvious as the day is long. No one disagrees, in state government, with our numbers. Everyone disagrees with the approach to solving the problem."

Even figuring out how bad the problem is was difficult. Financial experts assembled by the coalition spent nine months poring over the books to come up with the $160 billion figure. As far as they could tell, no one in state government really knew the depth of the mess and that, of course, is the first step toward resolving it.

Now that we're here, Illinois is Broke is offering solutions worth considering. Among them are 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. It also backs cutting costs, increasing efficiencies and, finally, modestly increasing revenues. Raising the income tax alone won't fix what's broken, Mr. Farrell stressed. And, if we do nothing, the state will likely run out of money in 10 years, crippling social services, hospitals, universities and community colleges. Those we met with last week also fear that the meltdown will send even more businesses packing. It certainly will do nothing to attract news ones to a flat-broke Land of Lincoln.

The reality is painful. The solutions hard, but unavoidable. "Everybody talks about kicking the can down the road," Mr. Farrell said. "Well, the end of the road is in sight now. There's only one more kick of the can, and that's it."
Nothing will happen, however, if citizens and those who represents them continue to treat the calls for reform like so much white noise. So, find out all that you can. For example, visit www.IllinoisisBroke.com. Thus armed, confront candidates, get in their faces, make them tune in and do something before it's too late.