“No Man’s life liberty or property is safe while the legislature is in session”.

- attributed to NY State Judge Gideon Tucker

Monday, May 10, 2010

Illinois- Poster Child For Fiscal Failure

I read a troubling piece in the Wall Street Journal over the weekend describing Illinois' budget woes and fiscal desperation.

Amy Merrick's piece in Friday's Journal detailed how out of control the state's financial condition has become. Among the antics occurring are: the state's legislature adjourning nearly a month early and tossing the problems to the governor; the governor's proposed income tax hike on hold; a doubling of the state's cigarette tax to help plug the budget gap, and; a plan to sell the state's tobacco settlement payment stream for a lump sum, a la J.G. Wentworth.

Ms. Merrick writes,

"As a result, Illinois, along with other states, routinely has postponed paying its bills, short-changed pension plans and spent more than it collects in revenue."

The governor's budget has a $10.6B shortfall, which is to be partially addressed through- borrowing.

State tax revenues have predictably fallen- some 8% from last year. The state's cash position, according to its Comptroller, will be, at June 30, "exceedingly difficult."

Ms. Merrick notes that Illinois owes billions of dollars in payments to "hospitals, universities, social-service providers and others." The total is expected to top $5.5B by the end of June.

California, New Jersey and New York figure prominently in most articles about troubled state finances. Now, my home state, once a solvent industrial power, is counting on long term borrowing to meet current obligations.

Does it not make you wonder what our First Rookie learned in his few years as a member of this dysfunctional state's dysfunctional legislature?

Certainly, fiscal rectitude and balancing a government's spending and revenues wouldn't appear to have been among the lessons, would it?

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