The state of Illinois is broke, so broke that the state government sent a notice to contractors that beginning July 1, they are to halt all road work, except what is needed for safety.
Investment adviser Mike “Mish” Shedlock of Mish Talk reports that after years of over-spending and a very business unfriendly environment, the state of Illinois is in dire financial straits. The state government has not passed a budget for close to three years, its unpaid bills are a whopping $14.3 billion, and Moody’s has downgraded its bond rating, with five Illinois universities rated junk.
Yesterday, June 14, 2017, the state told contractors to halt all non-safety related roadwork.
Below is a screenshot of the letter sent to contractors by Pam R. Simon, Director of Illinois’ Office of Business and Workforce Diversity, stating that:
“At this time appropriate funding is not available after June 30, 2017 . . . .
On July 1, 2017, all work shall cease except for maintenance of existing traffic controls, maintenance of erosion and sediment controls and such efforts that will secure conditions of danger to highway system users as directed by the engineer.”
The parlous state of Illinois’ finances can be seen in its universities and the state’s economic activity:
- Illinois’ economic growth is worse than during the Great Depression: total state economic activity has increased by only 4% since 2007, which is lower than the U.S.’ 10% GDP growth during the worst decade of the Great Depression according to the Illinois Policy Institute.
- Despite an increase in population, Illinois has 146,000 fewer people working than during the Great Depression.
- Although the number of administrators in Illinois’ universities grew by nearly a third (31.1%) between 2004 and 2010, the number of faculty and students only increased 1.8% and 2.3%, respectively. Student tuition and fees increased 100% since 2006, and retirement costs now consume more than 50% of all state spending on higher education.
Illinois’ answer to its financial insolvency is to raise taxes. But it took $31.6 billion of new tax revenue to reduce the backlog of bills by only $1.3 billion. At the same time, the state’s pension debt got worse, increasing by more than $25B from 2010 through 2015.
Shedlock says that 5 reforms are desperately needed:
- Municipal bankruptcy legislation
- Pension reform
- Right-to-Work legislation
- End of prevailing wage laws
- Workers’ compensation reform
Illinois is a Democratic stronghold and considered one of the most Democratic states in the nation, as you can see in the posts FOTM has published:
- Illinois delays pension payments; out of money
- Illinois overdrew hundreds of millions of federal Medicaid dollars, audit says
- Why this state senator left Illinois for Texas
- Illinois House committee OKs $100 million for Obama library
- New Illinois child & family policy discriminates against Christians who are not pro-LGBT
- Illinois dems aim high with minimum wage proposals
- U. of Illinois invites porn star to teach orgasm
- Illinois going after guns, criminals volunteer to comply – not