Deciding to do nothing is costly
Legislative inaction is costing Illinois taxpayers a fortune.
Illinois legislators have repeatedly over the past few years decided to do nothing in the face of a growing pension crisis that's drowning the state in debt and threatening the future viability of the state's five public pension systems.
They, of course, would not describe it that way, claiming instead that they have considered a variety of decisions but reached agreement on none. But not deciding to act is deciding not to act, and there's an growing cost to the General Assembly's indolence.
Many people are aware that the under-funding of the state's public pensions is an estimated $97 billion, and that it's increasing by an additional $17 million per day. That's just one cost of refusing to take action.
Here's another. The state's bond rating is in the tank because its finances — overall debt in addition to pension under-funding — have created doubt about its creditworthiness.
Hence, the cost of borrowing to the state's taxpayers steadily goes up.
Illinois sold $1.3 billion in bonds Wednesday to pay for a variety of development projects, and, to do so, it was required to pay a higher interest rate, 5.042 percent, on the borrowing because bond buyers insist on being paid more for the extra risk they're taking.
Gov. Pat Quinn said the cost was driven up because the state's bond ratings have been repeatedly downgraded.
"Without the downgrades the state has suffered as a result of inaction on its pension shortfall, the rate would have been lower, based on the prices other units of governments that did not suffer similar downgrades earned Wednesday. That difference works out to about $130 million over the 25-year life of the bonds," Quinn said
Public institutions in Illinois, including the University of Illinois, municipalities, counties, park districts, routinely borrow money in the bond market, and many are paying inflated interest rates because of the state's mismanaged finances.
Most people don't see it, but they pay it. It's part and parcel of the cost of the Legislature's repeated decisions to do nothing in the face of an undeniable financial crisis.