Good news — kinda, sorta
Illinois' financial situation isn't quite as putrid this week as it was last week.
Those unfortunates who live in a state as corrupt and dysfunctional as Illinois have to learn to take their good news in whatever form they find it.
So today it's worth cheering (not too loudly) the news that surrounds Illinois' hugely underfunded public pension programs.
Gov. Pat Quinn recently announced that new financial projections reveal that the total pension underfunding is increasing by $5 million a day for the new fiscal year that began July 1. Residents of states other than Illinois might scoff at the notion that such a disastrous number could be construed as a positive. But the new $5 million daily increase in debt is far better than the previous estimate of $17 million a day for the fiscal year that ended June 30.
Think of the difference. Instead of being burdened by an additional $119 million in new debt each week, Illinois taxpayers now are under water by only $35 million per week.
Quinn attributed the improvement to his decisions to make "the full statutory payment to the pension systems every year since taking office and enacting pension reform for new employees" that significantly reduced benefits enjoyed by older employees.
The daily increase in underfunding liability is computed by taking the projected growth in underfunding of the state's five public pension plans and dividing it by the number of days in a year — 365.
The $17 million-a-day sum was calculated in November 2012 by dividing the five public pension systems' projected underfunding total by 365.
Much of the increase from the previous year's $12 million-a-day figure was attributed to a decision by the Teachers' Retirement System to lower its projected rate of return on its investments from 8.5 percent to 8 percent.
So bad as they are, the underfunding numbers, at least for now, are heading in the right direction.
But it's still an increase in daily debt. Everyone should hope that legislators — so deep is their collective lack of understanding of financial issues — don't conclude they now have an extra $12 million a day to squander.
The overall problem, of course, remains deeply serious. The pension systems' total underfunding stands at an estimated $97 billion, and Quinn has given a special conference committee of legislators a July 9 deadline to come up with a comprehensive plan to address the problem. Their response has been to hold a couple of public hearings while gleefully thumbing their noses at Quinn's deadline and announcing their intention to ignore it.
Legislators may find, for a variety of reasons, defying Quinn's warnings, pleas and deadlines to be a source of amusement. But the cost of inaction remains high, even if not as high as it has been in the past.
Money that must be appropriated to address the underfunded pensions is money that cannot be appropriated for vital state programs.
Despite a huge 2011 state income tax increase, there is not enough money to go around. Quinn noted that a lack of funds during his tenure has resulted in $2 billion in education cuts and $3 billion in social service cuts. Illinois' flagging finances also have resulted in a number of downgrades in the state's bond ratings that make it more costly to borrow, to the tune of hundreds of millions of dollars over the life of the bonds. Further, the state owes more than $5 billion in unpaid bills.
This is no way to do business, but it's the new normal for Illinois. That's why the people here have their own perverse way of deciding what's good and bad news.