Editorial | Conflicting views on state coffers

Editorial | Conflicting views on state coffers

Illinois' increasingly precarious financial situation doesn't seem to be making muchof an impression in Springfield.

Two pieces of news were made last week that, at least on their face, might seem to have nothing in common, but in fact go hand in hand.

The General Assembly passed legislation calling for taxpayers, beginning in January 2021, to automatically deposit $50 into a government savings account for every child born or adopted in Illinois.

Legislators touted the measure as a college-savings program to be administered by the treasurer's office. It will cost roughly $8 million in contributions — based on the estimated 155,000 to 165,000 births every year — plus another $1.5 million annually in administrative costs. (The estimated administrative costs are shockingly high but apparently acceptable for government work.)

This is, of course, one of those touchy-feely "for the children" programs, where everyone is supposed to clench their jaws and fight back tears. But there is a reason to weep — Illinois is effectively bankrupt, and legislators still won't stop coming up with new programs to spend money the state doesn't have.

The other bit of news comes from those stuffy corporate types at financial investment firm Franklin Templeton. Analysts Sheila Amoroso, Daniel Workman and Jennifer Johnston took an in-depth look at the quality of state and local bonds across the country. After reviewing Illinois' and Chicago's disastrous financial circumstances, they proclaimed, "Include us out."

"... We have not and will not own uninsured general obligations of the state of Illinois, or bonds from the city of Chicago and Chicago Public Schools," they write in their "Beyond Bulls and Bears" web posting.

The analysts' fear is that the state, Chicago and/or Chicago Public Schools will default on their bond payments. In other words, they suggest these entities will simply run out of money and be unable to pay what they owe on the money they borrowed.

They also have no confidence that Gov. J.B. Pritzker or Chicago Mayor Lori Lightfoot will take meaningful action to prevent what they expect to be massive defaults.

"Neither has been willing to broach the subject of reforms, focusing mostly on new taxes or selling off capital assets like land, buildings and infrastructure. When we add up the projected revenues, the math still doesn't work," the analysts write.

So what is the public to make of the fact that, even as a prestigious financial institution announces it won't touch Illinois and Chicago bonds with a 100-yard pole, the Legislature wants to give away money it doesn't have in $50 increments that add up to millions of dollars a year?

Here's one conclusion — the Illinois Legislature either has no real grasp of the financial situation in this state or simply doesn't care. It is our suspicion that too many legislators simply don't understand the financial reality the state and city face.

There's no point in even discussing the merits of the legislation — $50 per child. When a state is buried in debt, deficits and pension underfunding, there's no extra money to spend on anything but bare necessities. Yet our legislators continue to create new, costly programs when they can't pay for existing ones.

The legislation is just a tiny part of a massive package of bills members of the House and Senate passed or are poised to pass on to Pritzker. They include the 2019-20 budget, capital-spending legislation and a slew of tax increases that won't solve whatever financial problems the state and Chicago have. But the giveaway bill speaks volumes, as does Franklin Templeton's warning. It's too bad that too few are listening.

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