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 Illinois' worst-in-the-nation pension systems alone owe at least
$130 billion, but now comes a new warning about the high cost of
simply managing that debt.
In her latest fiscal report, Illinois Comptroller Judy Baar Topinka
warns that Illinois will see billion dollar payments in interest on
the state's exploding debt.
"(Last year) Illinois spent $1.45 billion on its general obligation
bonds' interest alone," Topinka wrote in the December Fiscal Focus
report. "Every dollar spent on interest is a dollar not spent on
some other pressing need."
The state rushed to borrow to pay for roads, bridges and schools,
but that at least left the state with something to show for its
spending, she writes. Borrowing for pensions has left little more
than debt.
"Spending priorities really suffer," said Cory Eucalitto, author of
State Budget Solutions' fourth annual report on state debt. "That's
bad for taxpayers who expect a quality education for their children and all of
the other state services."
Eucalitto's newly released report details sky-rocketing debt in all
50 states.
The 50 states combined owe $5.1 trillion in debt, mainly for public
pensions.
Illinois is among the worst offenders. The Land of Lincoln is in the
top five when it comes to debt per capita ($25,959), debt in
relation to state spending (727 percent) and unfunded pension
liability ($254 billion).
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BROKE AND GETTING BROKER: State Budget Solutions says debt is eating
up state spending. |
State Budget Solutions uses a far less optimistic formula to
calculate pension funding and total debt than does Illinois and most
other states.
Topinka uses numbers that are substantially lower than the figures
from State Budget Solutions. The comptroller lists Illinois' debt
total at $127 billion and puts the state's unfunded pension
liability at $97 billion.
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Illinois, Topinka notes, has been on a borrowing spree. The state
has borrowed $16 billion in the past four years, including two
pension bond sales in 2010 and 2011.
With increased debt comes increased payments.
Illinois will pay $1.6 billion in interest on pension debt in the
coming year, on top of a $6 billion pension payment.
"In the last 10 years, the state of Illinois has issued $17 billion
in (pension debt) that will not be completely paid off until 2033," Topinka writes in her report.
"For the majority of those years, taxpayers will pay $1 billion in debt
service."
Eucalitto said taxpayers may notice the $1 billion interest
payments, but he thinks the $17 billion in debt will be forgotten.
"The regular budget process focuses on balancing an annual budget,
no matter, in a lot of cases, what the cost is," Eucalitto said.
Until taxpayers demand a new budgeting process, and new spending
priorities, debt at the state level will continue to grow at an
alarming pace, he said.
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Contact Benjamin Yount at
Ben@IllinoisWatchdog.org and find him
on Twitter:
@BenYount.
[This
article courtesy of
Illinois Watchdog.]
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