It’s more than just a coincidence that people are leaving the state as Illinois’ unfunded liability continues to grow. That’s according to the group Truth In Accounting.
Moody’s Investors Service issued a short report this week that says Illinois backlog of unpaid bills totalling $6.6 billion as of the end the 2015 calendar year is a clear indicator of weak liquidity and governance.
Bill Bergman, director of research for the budget transparency group Truth In Accounting, says things are much worse that that and it has impacts on the state’s economy and services for taxpayers.
“Now the chickens are coming home to roost in terms of the short-term consequences,” Bergman said, “at least today in economic growth and also, for instance, in the provisions of the social services for the poorest citizens in the state.”
Moody’s said “while state spending persists through court orders, continuing appropriations, statutory transfers and the handful of appropriation bills that have been enacted for fiscal 2016, Illinois is also accruing an estimated $5.3 billion of expenses on programs for which no state payments are being made.”
Bergman says the real picture is much more staggering when you include other liabilities.
“It’s a tough thing to measure exactly,” Bergman said of the unfunded public employee pension liability that continues to grow, “but certainly using the state’s own assumptions we’re talking about more than $100 billion of retirement debt that hasn’t been reflected.”
Meanwhile Moody’s says the latest developments “pose little immediate threat to timely payment of principal and interest on the state’s $27 billion of general obligation bonds, the prospects that the unpaid bill backlog will rise to substantially higher levels, or that growth will extend beyond the current fiscal year, are likely to put further pressure on the state’s credit standing.”
Bergman takes a different approach saying the state’s finances are taking a toll on the economy and population.
“It’s not news anymore, the out-migration implications here in the last few years,” Bergman said.
“It’s also a coincidence, more than a coincidence, that we’re seeing people leave the state because of not just the current tax burden but the prospects of future reduced government services and/or higher taxes in the future,” Bergman said, “and the sooner we address the issues, the better.”
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