Taxable Talk

Two stories out of Illinois that are, perhaps, linked. First, the Illinois Lottery forgot to send some money to their bank. While a spokesperson for the Illinois Lottery said it was a mistake, one would think that balancing the checkbook is a high priority. While only $159,000 of checks bounced, and the Illinois Lottery will make good on the bounced check fees, it certainly can’t be considered good planning. (I do believe that this was an oversight.)

A far more serious issue for the Land of Lincoln is the growing backlog of bills. The Chicago-based Civic Federation says that unless pensions and Medicaid are cut, Illinois’ backlog of bills will triple to $22 billion in five years. The annual budget in Illinois is currently $24.3 billion. To put this in perspective, the total budget for the most recent fiscal year for Nevada is $4.9 billion.

Unlike the federal government which can print money, states can’t. Sooner or later Illinois will have to balance its books. The pension costs are not sustainable. So, do you increase taxes further, which drives business out of state, or do you cut pensions? Democrats control most offices in Illinois, and they don’t want to cut pensions. Yet tax increases won’t work in the long run, so cuts to entitlements on the state level will occur…sooner or later.

In the end, spending more money than you take in is a good way to go broke. If I were offered a government contract by the state of Illinois, I’d turn them down unless they’d pay me up-front. That’s the level that I think Illinois has fallen to.

This entry was posted on Wednesday, February 27th, 2013 at 8:10 pm and is filed under Illinois, Pensions. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.