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Tuesday, November 25, 2008

Illinois' bad joke

By Dennis Byrne
Chicago Tribune

If Illinois were a country, it would be Iceland.

That's the country whose high-flying economy collapsed recently, the first to fail in the global economic slump. Crowds, angry at the government's failure to prevent the crisis, have taken to the streets and called for an immediate election.

Don't expect any mobs to show up in Illinois demanding the expulsion of our government for Illinois' fiscal mess. Illinois voters are so tolerant that the government could sell the state to the Outfit for a box of trinkets and no one would notice. Illinois voters have no reason to feel smug about letting conditions get as far out of hand as they did in Iceland.

Illinois is facing a budget deficit of more than $2.5 billion and its backlog of unpaid bills is $4 billion. But, unlike Iceland, Illinois can't blame the global collapse of the credit markets for its financial mess. This has been going on for years, and unlike Iceland, there's no German bank standing by to bail us out. The fact is that no one is standing by but us, and we have shown ourselves to be as incompetent as the American banks that bought hundreds of billions of worthless mortgage derivatives.

Illinois Comptroller Dan Hynes tried recently to rattle our cage with another dire prediction of the morass we're creating, but who's listening? It's such boring stuff, you know. Except for what Hynes warns is coming: poor families denied medical care; schools crying for money; local governments failing to meet payrolls; state police cars parked; mass transit cutting service or raising fares.

Hey, Democrats, these are your people, the ones you supposedly care the most about. Hey, Democrats, the people running the state are yours too. But you keep putting them back into office year after year, despite their incompetence, petty quarreling and whatever else occupies their wee minds. The only one of them doing a good job is Hynes, whose latest warning should make everyone wonder: If our economy is in such a mess, and our 401(k)s have gone to pot, and the federal government is setting stratospheric records for borrowing, and no one is making loans, then how will Illinois ever get out of this mess?

Hynes said the $4 billion in unpaid bills could balloon to $5 billion by March. The state is three months behind in paying its suppliers and by spring it could be five months behind. Keep this up and the state might bankrupt the businesses it needs for products and services.

If you were a doctor or a hospital, how long would you continue to give away your services under these conditions? About 2.2 million people—17 percent of the state's population—rely on Medicaid. Most are children, low-income adults and low-income pregnant women. But the elderly, disabled and blind consume the greatest proportion of aid. When the state goes bankrupt, there will be the usual whine: "How come no one warned us?" And, "Somebody do something!"

Frankly, I don't know what can be done. Hynes recommends urgent short-term borrowing that will keep suppliers going for now. He also wants some form of federal aid, such as paying the state its Medicaid reimbursement before services are provided (in effect, turning reimbursements into advances). He also wants the state to eliminate "Catch 25" (actually Section 25 of the Illinois Finance Act), which requires the state to pay all its bills in the same fiscal year in which they were incurred, with a few exceptions, such as Medicaid. This is a giant loophole that allows the state to push the huge pile of unpaid Medicaid bills into the next fiscal year, and use the money that should have been set aside for Medicaid for other purposes, so that the state budget (fraudulently) looks in better shape than it actually is.

I'm not sure how well any of that will work; it might already be too late. Who would lend Illinois money in its current financial condition? How can we count on the federal government for help when it is borrowing every dollar in sight for its assorted bailouts, mortgage purchases, bank and financial institution assistance and impending auto industry loans coming to more than $1 trillion?

Oh, that's right. In Washington, the answer to any problem is to borrow more. And more. Look for Washington to pull Illinois out of the fire and let us cheer all the taxpayers in the other 49 states.

3 comments:

Anonymous said...

"Illinois voters are so tolerant that the government could sell the state to the Outfit for a box of trinkets...."
We already have - it's the group that John Kass likes to call the Combine, and it's composed of both Republicans and Democrats. Interparty squabbling in Illinois is a distraction from the bipartisn thievery that's been going on for years.

"Frankly, I don't know what can be done."
We could all demand effective ethics reform, and those of us who voted for Obama could tell him we expect him to use Illinois as a test case of how reform can be accomplished by leaving Patrick Fitzgerald alone.
We could all also decide what we are willing to do as individuals to ease the burden on the treasury once the pols stop playing "feed the piggy" with our tax dollars. For example, my income is such that if the state were to adopt a graduated income tax, my taxes would go up. But maybe it's time to do that, especially if it could be combined with reforming school funding or eliminating the property tax. I'm also a retired teacher. As such, I pay no state income tax om my pension. This may have been a nice perk back in the day when teachers were truly underpaid and underappreciated. But today, most suburban teachers are retiring with six figure salaries and high five figure pensions. And suburban administrators, whose salaries are well into six figures, are retriring with six figure, tax-free pensions. It seems reasonable to ask them (and me) to pay an income tax. Maybe low-salaried teachers from poorer districts still deserve a break - so make the first $40,000 tax free. Or dedicate the teachers' tax to funding the pension system.

It seems that at some point, we all have to be willing to sacrifice to fix the sadly broken system and stop pointing fingers at someone else and saying "You fix it."

So what are you willing to sacrifice? (And remember, I'm asking this in the context of first demanding reform and accountability from the pols.)

Peter

Anonymous said...

Anonymous,

that's generous of you to want to start paying more taxes on your tax-free pension. You could send the state a check any time you want.

It's my husband and I whose Keoughs and IRAs are disappearing who have to ante up for the inflated pensions that teachers and other union workers have struck to achieve. We pay the inflated salaries for the teachers and then for the luxurious benefits and pensions that were not covered by appropriate deductions from your salaries while you were working.

I'm mad as hell about the whole scam. I wish my husband would agree to move out of this state and leave the mess.

Time to move to Texas which has the right to secede from the Union and push for that.

Obama and ACORN are what pushed for no-doc loans to people who couldn't afford to pay them back. Now he and his cronies are in charge of fixing the financial collapse they caused that resulted in destroying our savings.

What does he hope to do? Tax us more or inflate the currency to destroy the value of the savings we have left.

If Obama and the Democrats help us anymore, we'll be destitute.

Margaret

Anonymous said...

A quick way to save several million Medicaid dollars every year is for Illinois to stop paying for medically unnecessary cosmetic surgery on male infants' genitals, ie, circumcision. There are 16 states that have already stopped paying for it, and it's about time we stop wasting money on that nonsense too. Not from my wallet!