Here's a modest proposal for solving Illinois' debt crisis: Illinois should join the European Union. With a state GDP of $581 billion, Illinois would have the EU's ninth-largest economy.
Even with outstanding pension and bond debt of $119 billion and $9.2 billion in unpaid bills, Illinois' debt is just 22 percent of GDP. That's downright prudent compared with, say, Greece, where public debt stands at 128 percent of its $301 billion GDP, or even Germany, the EU's beacon of fiscal sanity, which has debt of 75 percent of GDP.
Alas, relative to most of the other 49 states, Illinois is a mess. Gov. Pat Quinn addressed that problem — but not very thoroughly — Tuesday in his annual budget address to the Legislature.
In five years, the $9.2 billion in past-due bills will mount to $34.7 billion, according to a study by the Civic Federation of Chicago. A 50 percent (or more) hike in the flat individual and corporate income tax rates in early 2011 helped pay some bills, but it didn't offset rising Medicaid and pension costs.
Long story short: The state will take in $700 million more in the next fiscal year than it did in this one, but pension costs alone will increase by $1 billion. And by the end of June, the state still will have $1.9 billion in past-due Medicaid bills.
"The truth is that over the past 35 years, too many governors and members of the General Assembly have clung to budget fantasies rather than confronting hard realities, especially with respect to pension and Medicaid investments," Mr. Quinn told lawmakers. "Today, our rendezvous with reality has arrived."
Mr. Quinn arrived at the rendezvous unarmed with specifics. He favors reforming the pension and Medicaid systems, but he didn't commit himself to any hard choices. He mentioned closing tax loopholes, but not adopting a progressive income tax.
Nor did he mention requiring current state employees to contribute more to their pensions or cutting Medicaid reimbursements for doctors and hospitals.
The governor did announce the closing or reorganization of some 60 state offices or facilities; some 750 state workers will lose their jobs, many through attrition. Developmental disability centers in Jacksonville and Centralia will be closed along with mental health hospitals in Tinley Park and Rockford, with residents and patients moved to community care centers. That could be a net positive.
Mr. Quinn plans to close the maximum-security prison in Tamms, in Alexander County in far Southern Illinois. It will be a terrible blow to the community, but the Tamms prison has been a hellhole. Even the "worst of the worst" deserve humane treatment.
Mr. Quinn and the Legislature have a lot of work to do. In his three years in office, Mr. Quinn has not demonstrated much ability, or even inclination, to bend the Legislature to his will, even when he's not being wishy-washy. The Democratic-controlled Legislature has preferred to nip and tuck, preserve its perks and kick the can down the road.
That's not going to do it, but there are not many votes in austerity.
