We have watched the horizon for this over two years now. HERE and HERE - The best view is through the comparative prism between Illinois and neighboring Wisconsin and Indiana (more following article). In July of 2011 Illinois Governor Quinn signed the largest tax increase in history, raising state income taxes by 60%. Now the state bond rating is the worst in the nation….
ILLINOIS - Illinois’ credit rating has taken another hit. Standard & Poor’s Ratings Service downgraded the state from an “A” rating to “A-minus”, making it the worst in the country.
The New York ratings firm’s ranking means taxpayers may have to pay tens of millions of dollars more in interest when the state borrows money for roads and other projects.
The downgrade is the latest fallout over the $96.8 billion debt to five state pension systems. The downgrade now ties Illinois with California, but California has a positive outlook.
Illinois’ fragile overall financial status netted it a negative outlook, putting it behind California overall. The ratings came out now because Illinois plans to issue $500 million in bonds within days. (article link)
FROM JULY 2011…… AND THIS FROM SEPTEMBER 2011 - This made me laugh so much I had to share it. It provides the best metaphorical contrast so far this year... But first the back story. In Illinois, like many other states, the Democrat Governor and Democrat State Legislature faced a looming budget crisis. Earlier in the year Democrat Governor Pat Quinn signed a 60% increase in state income taxes in order to close a budget shortfall. Faced with the decision to cut budget expenditures or raise taxes the Illinois team decided to raise taxes. (Via Doug Ross)
@IowaHawk alerts us to stunning news from Illinois, where a “state entirely controlled by Democrats is somehow having financial difficulties”:
A decision made by Gov. Pat Quinn may leave thousands of state workers without a job by the end of the week.
The cuts are coming in the face of a budget deficit that doesn’t leave enough money to pay the workers, the governor says. Quinn also plans to close a prison, juvenile detention center and homes for the mentally ill.
If no cuts are made, several agencies will run out of money by spring, Quinn says.
“We can’t spend money we don’t have,” Quinn said Tuesday.
The state’s largest government employee union, AFSCME, promises to sue if the layoffs are made, much like they did over blocked pay raises.
Why don’t the unions just sue the laws of physics? Or basic arithmetic principles?
Because even if the unions somehow forced the state government to raise taxes to 90%, it still wouldn’t be enough to pay for all of their bloated public sector salaries, benefits, pensions and retiree health care programs.
Which is why, I suppose, Mark Levin says that “liberalism is the philosophy of the stupid.”
Where this really contrasts with liberal economic policies and their inevitable conclusions is when you reconcile the decision of the State Of Illinois with the decision in the neighboring state of Wisconsin.
In Wisconsin against the ire of the progressive and entrenched labor movement, including the AFSCME workers, a conservative governor Scott Walker took a divergent approach and chose to cut spending, reform unsustainable state worker entitlements, and empower the local municipalities with structural labor contractual reform tools. This drew the full-throated hate filled opposition toward him from organized labor interests. Including, funnily enough, thousands of AFSCME labor workers from Illinois who crossed state lines to join their Wisconsin counterparts and coordinate the attack within Wisconsin against Walker.
Through Governor Scott Walker’s plan the state and local AFSCME workers in Wisconsin indeed had to make concessions (mostly on healthcare issues/benefits) but retained their ranks. Very few layoffs were incurred. Not only was he able to save jobs, but his state also improved its bond rating to AAA because of the solid sensible fiscal approach, and ended up the budget battle with a surplus. However, because of his approach to solving the budget crisis, and the legislated labor contracting empowerment, Governor Walker is facing the possibility of an organized recall election spearheaded by AFSCME union members.
So what you have is a conservative Governor in Wisconsin saving the union jobs, yet still faced with the ire from the unions themselves, while in neighboring Illinois the increase tax approach is leading to thousands of layoffs within the same union even with the tax revenue increases imposed by a liberal tax and spend Democrat Governor. In Illinois the union is going to sue the state in a bizarre attempt to retain employment as an outcome of the getting the very tax policy from Governor Quinn they demanded. While in Wisconsin the same union lost their tax battle yet retained their jobs and benefits, and are trying to get rid of Governor Walker.