Sunday, December 13, 2009

Illinois Credit Rating Tanks

We are repeating the lead story on our last Radio Show, because the fact that the State of Illinois had its credit rating effectively lowered by Moody's to just above California's Baa1 making Illinois 49th out of the 50 states has, to my knowledge, received no media attention in paper, radio, or television.  Why?

General obligation bonds went from A1 to A2 citing problems from the US recession; other Illinois bonds including sales tax revenue bonds from A1 to A2.  Illinois has dropped from the middle of the pack of 50 States to next to last in one fell swoop.  Moody's said Illinois has not taken action of any sort to deal with the budget gap it is facing.  Moody's said that gap is in the order of $11 billion.  Actually, it is conservatively a deficit of $12 billion and could be closer to $15 billion depending on how you account for Federal stimulus money, funds from borrowing, and other one time monies which are not revenue.

It is well known we have made the case for State employee's Pension reform.  It is not funded and there is no economically competent system for funding Illinois pensions.  Despite a recession in which taxes should not be increased according to economic theory, Illinois has been so corruptly and incompetently run for so many years that a flat income tax increase is so imperative it has become a rotting corpse.  Illinois local governments have placed an intolerable burden of regressive taxes and levies (in Chicago 25%, approximately, of the cost of gasoline at the pump goes to taxes and Chicago has the highest sales tax in the country) that the burden on the lowest 40% of taxpayers in Illinois is unconscionable.  But no politician wants to help those people.  While cost savings should always be investigated and pursued each and every year just as private business does, cutting expenses cannot in any rational, conceivable way balance the Illinois budget.  The Democrats need to conduct rational program and employee reviews of double exempt and exempt personnel and the Republicans need to bite the tax bullet.  Given the coming Primary in February, neither political party wants to assume any responsibility for getting the job done.  They just want to be elected.  Maybe it is time to just vote against any incumbent and make the lobbyist fork out even more money to buy the new legislators and executive branch officers.

The Illinois budget situation is so beyond hope that the solutions are few and narrow.  The pretense and posturing of political purity is a poor disguise for a deadly social disease.  Represent the people and get it done.  It does not take a rocket scientist to figure out the obvious much less require the unanimity of any 13 politicians with a bag of 30 silver coins.  No Hope.


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