Illinois’ financial situation worsens despite receiving billions in federal aid

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A new report from watchdog Truth in Accounting shows that each taxpayer’s share of government debt has nearly doubled since 2009 to $ 57,000, with total debt increasing by $ 10 billion, mostly in due to pension obligations.

Tax watchdog Truth in Accounting calculated the numbers for Illinois and gave the state an F rating in its latest Report on the financial state of States. The report showed Illinois had just over $ 36 billion in assets available to pay bills totaling over $ 272 billion, leaving the state needing $ 236 billion in additional assets to pay. his bills.

Every Illinois taxpayer now owes a share of $ 57,000 of this growing debt, almost double what it was just a dozen years ago in 2009. That means every taxpayer in Illinois should send as much money to Springfield to eliminate the state’s debt burden on top of that. that he is already paying so that the state can pay its bills. This amount represents a $ 5,000 increase of the fiscal year 2019 report, despite the fact that Illinois received billions of dollars in federal aid due to the coronavirus pandemic.

Director of Accounting Truth Research Bill Bergman noted the doubling of the burden over the past 12 years is worrying. “The start of this period was in the midst of the worst economic and financial crisis since the Great Depression and Illinois has only worsened since then despite the massive recovery in financial markets since 2009. It’s frightening.”

The state has received more than $ 8 billion in flexible budget relief from the federal government as well as billions more to cover pandemic-related expenses, but its financial position has continued to deteriorate over the past year. year. Total debt inflated an additional $ 10 billion, mainly due to rising pension costs, which remain the main driver of the state’s failing fiscal health. Even this unprecedented level of federal spending could not help stabilize the state’s finances. Despite billions of dollars in aid, Illinois lawmakers passed another unbalanced budget for fiscal 2022 on 21st times they have done so since 2001.

Illinois isn’t the only state struggling with huge debt and high tax burdens. The report noted that only 11 states have a taxpayer surplus rather than burden. However, only struggling New Jersey and Connecticut taxpayers faced a higher taxpayer debt burden than Illinois. Among deficit states, Illinois debt per taxpayer is more than 3.5 times the average of about $ 15,500.

Unfortunately, Illinois retirement debt continues to rise. According to Moody’s Investors Service, it hit a record high of $ 317 billion in June 2020. Such massive debt has big effects on the rest of the state. Illinois has one of the highest local and state tax burdens in the country, crushing residents under rising taxes that are used to pay off retirement debt rather than paying for much-needed programs and services. Illinois also has the second highest property taxes in the country, forcing homeowners to struggle to pay steadily rising tax bills, while still seeing cuts in basic government services.

Kiplinger (a financial magazine) recently named Illinois the The least tax-efficient state for middle-class families. The report cites taxes on the state’s income, sales and property as factors in its status as a state hostile to middle-class families. Perhaps the only silver lining for Illinois is that neighbors Iowa, Wisconsin and Michigan are also in the top 10. Unsurprisingly, seven of the states on Kiplinger’s list are also in the top 10. lower half of the state financial report.

The high taxpayer debt burden in Illinois shows just how serious the state debt problem has become and that the solution requires more than any bailout could provide. The only viable solution to redress the fiscal future of the state is a comprehensive pension reform plan. The Illinois Policy Institute’s proposed neutralization plan would preserve vested benefits, but slow future benefit growth for existing workers and retirees. This plan protects accrued benefits, ensures the stability of future benefits and saves the state $ 50 billion until 2045.

Lawmakers should allow Illinois residents to vote on a constitutional amendment for pension reform. Illinois has a problem with rising and unsustainable retirement costs crushing the state and threatening the economic security of current and future generations. Pension reform is the state’s only way to ensure a better, more prosperous future for all Illinoisians.


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