Wednesday, June 14, 2017

Bankruptcy Is the Only Solution For Illinois Budget Crisis

A federal judge has ordered the Illinois Comptroller to prioritize its payment. Part of this prioritization includes a $2 billion backlog of Medicare providers. Illinois, a state stuck between a rock and hard place, is trying to raise taxes to cover these as well as ever-rising pension costs, but face stiff resistance to that. Trends clearly show the flight of human capital (migration) from high tax cities and states like Illinois. Like it or not, this leaves default as the inevitable solution to a problem few recognize in Chicago. The implosion of State and muni-debt will be thrust into the headlines in 2018.

Headline: Illinois Budget Crisis Is About to Get Even Harder to Solve

Illinois leaders will blow past a deadline that will leave the state careening toward the third straight year without a budget.

The Illinois House isn’t voting on a budget on Wednesday, which means the gridlock-prone government won’t pass a spending plan by midnight. That means approving a budget -- a usually routine task that has eluded the state for 700 days -- will become even more difficult because a three-fifths majority will be required. Democratic lawmakers, who control both chambers, and Republican Governor Bruce Rauner have repeatedly failed to agree on how to solve chronic budget deficits worsened by the expiration of tax hikes in January 2015.



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