While J.B. Pritzker has not released a detailed tax plan of his own, reasonable cost estimates suggest the tax hike required to pay for the candidate’s spending promises would require doubling Illinois’ state income tax rate and cost the state an estimated 132,000 jobs and $31.3 billion in forgone GDP.View Report
Sears, a long-time beneficiary of Illinois tax credit programs, has filed for Chapter 11 bankruptcy.
If lawmakers continue to balk at building the tools necessary to reform pensions, bankruptcy will be the only way out for communities across the state.
Avenues for state oversight for cities with financial difficulties have limited utility in the face of massive pension debt and have almost never been invoked since Springfield passed them into law in 1990.
Illinois’ pension laws are forcing the city of Harvey to pay its creditors through short-term negotiated agreements just to meet payroll.
Central Falls, Rhode Island, filed for bankruptcy largely because of pension debt. If Illinois municipalities can’t meet or lower their pension obligations, they too could face fiscal collapse.
Pension funds aren’t immune to the volatility of the stock market. Even before Brexit, Moody’s warned that low investment returns are already putting Chicago’s pension funds at risk. A major stock market correction or another recession just might put Chicago and CPS over the edge if their already-underfunded pension systems collapse.
The state must get its financial affairs in order by allowing municipal bankruptcy and enacting real pension reforms.
Gov. Bruce Rauner and Republican state lawmakers have proposed bankruptcy for Chicago Public Schools; Mayor Rahm Emanuel has rejected the idea of bankruptcy, repeating his demand that Illinois taxpayers bail out the struggling school district.
If the White House wants to give Puerto Rico the right to bankruptcy, it should extend the option to all states and territories.
Where is the school district going to get $1.1 billion? The state? Think again.