Chicago's post-riot "Magnificent Mile" – Mark Weyermuller photo
From last Friday's Forbes: "At this point, Illinois has no hope of its underfunded state pension ever returning to solvency …" and will be the first to declare state bankruptcy.
Ike Brannon, a senior fellow at the Jack Kemp Foundation, writes:
The dispute between Senate Majority Leader Mitch McConnell and House Speaker Nancy Pelosi as to whether the next stimulus bill will contain money for state and local governments should resonate in Illinois because, absent a very big dollop of federal dollars or a miraculous economic rebound, the state will soon need Senator McConnell to make good on his alternative plan to create a path to bankruptcy for the states.
At this point, Illinois has no hope of its underfunded state pension programs ever returning to solvency—even a quick economic recovery and a robust bull market won’t make a dent in its structural deficit, and its aging—and fleeing—population means that pension costs are going to continue to grow and outpace revenues without some sort of structural change that cannot be accomplished without federal help.
The passage of the amendment in November that would allow the state to impose progressive taxation may buy it some time—expect it to follow California's lead and increase tax rates for all of 2020 shortly after the election—but even that windfall won't be enough to fix things.
Read more HERE.
