Editorial | Willful failure?

Editorial | Willful failure?

A prominent bond-ratings agency doesn't see much good on Illinois' political and financial fronts.

As the heavily politicized state budget process goes forward in this election year, Republican Gov. Bruce Rauner and Democratic leaders of the General Assembly are setting rhetorical markers to establish ground rules for how matters proceed.

Recalling that his losing battle with Democratic House Speaker Michael Madigan took two years and included a partial-year budget before a deficit budget and a state income-tax increase were passed over his vetoes, Rauner is urging legislators to limit expenditures to estimated revenues and decide in advance not to pass any partial budget.

Democrats, too, say they want a full-year budget and fiscal stability in state government.

The Legislature can certainly — and should — pass a full-year budget. But spending stability is another matter altogether, thanks to at least two decades of fiscal chicanery by Democrats and Republicans that includes excessive spending, deficit spending, ignoring mandated payments to state pensions and passing new programs without having sufficient funds to pay for existing ones.

That fiscal picture, obviously, is not a good one. But how bad is it?

Answering that question probably requires an explanation from someone not on the ballot in November, like the number crunchers at the Fitch Ratings service.

The bond-rating agency recently issued a lengthy report explaining why Illinois' bonds rank just above junk status.

Illinois, like many states, borrows money both for short- and long-term purposes to fund operations, and it repays the debts out of existing revenues.

Unlike many other states, Illinois has so badly handled its finances that it's forced to pay exorbitant interest rates to sell its bonds to investors.

The extra-high interest rates are just one way the state's chronic mismanagement of its finances punishes taxpayers.

Fitch points out that Illinois has a "large, diverse economy centered on the Chicago metropolitan area" but notes that its "economic growth has lagged that of the U.S. as a whole" since the recession of 2007-2009 came to an end.

"By most measures, the economy has grown slower than the nation for many years, and population levels have been stagnant," Fitch reports.

The report notes that Illinois has $8 billion in unpaid bills and $130 billion in pension debts, explaining in part why "carrying costs for debt service and retiree benefits ... are among the highest in the nation and rising."

Fitch reports that the Legislature has "adequate expenditure flexibility" in fashioning a budget, meaning it's not required to spend so much. But it says Illinois "did not significantly reduce spending either during or since the Great Recession."

That's why deficit budgets, despite the Illinois Constitution's mandate of balanced budgets, have become a fact of life here.

The state's practice — for years — has been to do its best to ignore fiscal realities and just get by. Hence, there is now a tiresome cliche — kicking the can down the road — that is routinely invoked to describe our elected officials' continued refusal to face reality and act as circumstances dictate.

The problem is, that behavior ensures continued failure. There is no short-term pain for long-term gain, just short-sighted decision-making that guarantees the state sinks deeper and deeper into a financial morass.

If Illinois ever is to prosper, it has to change. But Fitch suggests that's not going to happen, and there are precedents going back years demonstrating why.

"Illinois has demonstrated a repeated inability to address its structural challenges due to an absence of consensus and resistance from key stakeholders. The political environment in the state remains a negative consideration," the rating agency concluded.

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