MIller: Illinois will have to finally get its act together - Quincy Herald-Whig | Illinois & Missouri News, Sports

Miller: Illinois will have to finally get its act together

Posted: Updated:

By RICH MILLER

Capitol Fax

As we are all too painfully aware, the past several days have been beyond crazy.

Congress and the president took the nation to the brink of default. Standard & Poor's lowered the federal government's credit rating by a notch. The markets devolved into a swooning bipolar frenzy. And the political rancor emanating from Washington, D.C., showed no signs of abating.

I focus on state politics, however, so I've been trying to keep a close eye on how all this insanity would impact Illinois. S&P lowered the federal credit rating, but bond interest rates actually dropped in response. That wouldn't be the case for a state like Illinois, which is far more sensitive to ratings changes than the feds apparently are. If Illinois is downgraded yet again, then the interest rates the state pays would undoubtedly rise, costing taxpayers hundreds of millions of dollars that they don't have.

Last Monday night, S&P issued a report that said state bond ratings weren't necessarily tied to the US debt rating. "This means a downgrade is unlikely," was how a spokesperson for the state's budget office responded.

Ironically enough, one of the very few "advantages" that Illinois has right now in comparison to D.C. is the absence of a government bitterly divided along partisan lines. There's one party rule here, which means things can get done.

If you read S&P's full statement from last Friday and the firm's statements since then, you'll see that the bone-crushingly partisan federal gridlock during the debt ceiling debacle was as important to the agency's federal downgrade (or even more so, depending on your perspective) as the nation's mid- and long-term debt problems.

Unlike D.C., Illinois showed it could act by raising its income tax rates earlier this year, which has mitigated some of its near-term problems. That action (and other things like pension reform last year and some budget cuts this year) did prove that the state, unlike the federal government, can move itself when necessary.

But while our state government is more "stable" than the federal government in that one, single, very narrow partisan aspect, it is still severely hobbled by an undeniably huge debt load, particularly when $80 billion of future pension obligations are included in the mix.

And if federal payments suddenly stop during a congressional budget-related shutdown, for instance, or are reduced via a federal budget deal that drastically or even significantly cuts aid to states, then Illinois would have almost zero room to maneuver. The same is true if the economy tanks again.

That was essentially the message another ratings agency delivered to Illinois last Thursday night.

Moody's whacked Illinois for its billions of dollars in past-due bills and its failure to control pension and retiree health care costs, which it claimed are on an "unsustainable ascent."

The ratings agency also worried that the state will allow its income tax increase to expire on schedule in 2013 without first shoring up the underlying budget problems.

The revenue from January's income tax hike is about equal to the state's annual pension payments, which the state earlier couldn't afford to pay without borrowing. If the problems with pensions and the rest of the budget aren't addressed, then there's no way the state can get rid of the "temporary" income tax hike without causing yet another serious crisis.

Earlier this year, Gov. Pat Quinn promised the CEO of Caterpillar Inc. that the tax hike would expire on schedule in 2013. The company is the state's largest private employer, and it was getting really nervous about the Illinois' negative business climate.

But last week, Quinn toned down his prediction. "We'll have to take it year by year," Quinn told reporters. "Hopefully, we'll have a much stronger economy than we have four years from today."

Hope is not a plan, of course, and bond ratings agencies very often have more influence over state governments than any big business. Quinn has even admitted that the tax hike was all but forced on the state in the face of a major credit downgrade.

Somehow, some way, this state has to finally get its act together.

 

  • Local HeadlinesLocal HeadlinesMore>>

  • Volunteers respond to report of theft to build new wheelchair ramp for veteran

    Volunteers respond to report of theft to build new wheelchair ramp for veteran

    Monday, October 20 2014 12:58 AM EDT2014-10-20 04:58:50 GMT
    Roger Rupp was incredulous when he learned his wheelchair ramp had been taken from his home two weeks ago. Rupp, a U.S. Army veteran, has multiple sclerosis. The 10-foot by 3-foot aluminum ramp helped him access a garage at the rear of his 11th Street house -- or at least it did. Quincy Police say the ramp and two handrails were swiped sometime between Oct. 5 and 6. "I really couldn't believe it," Rupp said. Neither could a group of local volunteers. After hearing about the ramp's ...
    Roger Rupp was incredulous when he learned his wheelchair ramp had been taken from his home two weeks ago. Rupp, a U.S. Army veteran, has multiple sclerosis. The 10-foot by 3-foot aluminum ramp helped him access a garage at the rear of his 11th Street house -- or at least it did. Quincy Police say the ramp and two handrails were swiped sometime between Oct. 5 and 6. "I really couldn't believe it," Rupp said. Neither could a group of local volunteers. After hearing about the ramp's ...
  • Barry man, 62, gets prison time in battery case involving woman with Alzheimer’s

    Barry man, 62, gets prison time in battery case involving woman with Alzheimer’s

    Monday, October 20 2014 6:44 PM EDT2014-10-20 22:44:51 GMT
    The pictures told the story and ultimately led to a prison sentence for a Barry man in a domestic battery case. Robert E. Cawthon, 62, was sentenced to three years in prison by Judge William Mays. Cawthon had earlier pleaded guilty to aggravated battery and faced a sentencing cap of three years during Monday's hearing in Adams County Circuit Court.
    The pictures told the story and ultimately led to a prison sentence for a Barry man in a domestic battery case. Robert E. Cawthon, 62, was sentenced to three years in prison by Judge William Mays. Cawthon had earlier pleaded guilty to aggravated battery and faced a sentencing cap of three years during Monday's hearing in Adams County Circuit Court.
  • UPDATE: Body discovered in Mississippi River believed to be missing tugboat worker

    UPDATE: Body discovered in Mississippi River believed to be missing tugboat worker

    Monday, October 20 2014 6:27 PM EDT2014-10-20 22:27:45 GMT
    A body pulled from the Mississippi River near LaGrange, Mo., Monday afternoon is believed to be a missing 22-year-old man who fell off a tugboat on Oct. 8, said Adams County Coroner Jim Keller. Keller an autopsy will be conducted Tuesday in Bloomington to determine the cause of death.
    A body pulled from the Mississippi River near LaGrange, Mo., Monday afternoon is believed to be a missing 22-year-old man who fell off a tugboat on Oct. 8, said Adams County Coroner Jim Keller. Keller an autopsy will be conducted Tuesday in Bloomington to determine the cause of death.
Powered by WorldNow
All content © Copyright 2000 - 2014 WorldNow and Quincy Herald-Whig. All Rights Reserved.
For more information on this site, please read our Privacy Policy and Terms of Service and Mobile Privacy Policy & Terms of Service.