Illinois' pile of unpaid bills could hit record of $14 billion next summer
The stopgap budget agreement struck by Republican Gov. Bruce Rauner and Democrats who control the legislature is only adding to the state's financial problems, according to a new report from Moody's Investors Service, which estimated the state's backlog of unpaid bills could reach a new high of $14 billion by next summer.
The main problem? Illinois is spending more than it's taking in following the rollback of a 2011 temporary income tax increase that's resulted in revenues dropping by several billion dollars the last two years. Indeed, the stopgap agreement put off many tough decisions on cuts or tax hikes until after the November election, with much of state government spending essentially on autopilot in the meantime due to legislative action and various court orders.
Under the stopgap budget, expenses jumped 12 percent despite revenues remaining flat, according to Moody's. The agency said it expects Illinois to get by as it has for years: by delaying payments and going further into the red. Without changes, Moody's said Illinois could see a bill backlog of $14 billion by the time the new fiscal year starts in July, a figure that dwarfs the previous high of $10 billion under former Democratic Gov. Pat Quinn.
As the state struggles to make ends meet, Moody's raised concerns about payments that are normally prioritized, such as debt payments. Doing so could further impact the state's already worst-in-the-nation credit rating.
Read more: http://www.chicagotribune.com/news/local/politics/ct-bruce-rauner-illinois-moodys-met-0901-20160831-story.html
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If it fails again and again and again, just have to try again. We must have faith in the Laffer theory that an economic boom caused by lowering taxes will finally cause more riches than ever to flow into the public kitty. And that Laffer's giant sucking sound will be followed by a gentle rain of wealth from above.
