The state’s decline is part of a larger story of financial collapse in Illinois. The city of Chicago is already junk-rated. Chicago Public Schools is even deeper in junk territory. And Illinois’ public universities are now facing additional credit downgrades as well. Northeastern Illinois University was recently downgraded further into junk status by the ratings agencies as part of a major review of all universities by Standard & Poor’s. Without major reforms, such as moving state workers to 401(k)-style plans and comprehensive property tax reform, things will only get worse for both Illinoisans and the economy. Illinois needs a real plan Many politicians and pundits and those in the media think that Illinois needs a deal, any deal, to end the current crisis. But Illinois’ past is littered with bad deals enacted in the midst of a crisis. They’re what got Illinois into its current crisis. Former Gov. Jim Edgar’s 1996 pension ramp was a disaster that Illinoisans continue to pay for today. Former Gov. Rod Blagojevich’s $10 billion pension bond deliberately avoided addressing pension reform and simply left Illinoisans with more debt. And former Gov. Pat Quinn’s copycat deals borrowed another $7 billion. Then Quinn’s temporary income tax hike allowed politicians to raise spending, leaving Illinois on a budgetary cliff when that tax hike expired. Every one of those deals had something in common – they all avoided fixing Illinois’ structural spending problems. The Senate’s proposed “grand bargain” does the same. It will only perpetuate Illinois’ dysfunction, something that Illinoisans simply cannot afford. A real plan – and a real balanced budget – must solve those structural problems. If not, Illinois won’t be able to avoid an eventual junk bond rating or get off the path to bankruptcy. 17
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