Posted on 03/15/2017 4:47:15 PM PDT by Lorianne
Despite a massive rally in the stock market, Illinois public pension liabilities continue to grow.
GARS, the Illinois General Assembly Retirement System, is only 13.52% funded, down from 17% funded in 2013. How long can GARS last?
Meanwhile, Illinois has accrued a combined net pension liability of roughly $130 billion on which it assumes a 7% return.
Effectively, that is an interest liability of $9.1 billion a year even though that liability technically does not bear interest.
This is a guest post from Michael Lucci at the Illinois Policy Institute.
Interest on Illinois’ Pension Debt is $9.1 Billion Per Year
Illinois isn’t covering the interest payments on its pension debt. Those interest payments total $9.1 billion a year.
This is the reason Illinois’ pension debt continues to grow. As with personal credit card debt, until the interest is paid off none of the actual debt gets erased. Illinois’ pension debt is so large that it’s unlikely payments will cover the interest on the pension debt until 2028, according to a November 2016 special pension briefing from the Commission on Government Forecasting and Accountability.
Illinois politicians have known for years about the state’s pension crisis, even if they have not taken serious steps to address the problem. Gov. Bruce Rauner recently spoke out on the cost of interest on the pension debt. Former Gov. George Ryan weighed in as well, saying:
““First off, the biggest problem we got with the budget right now is the interest they are paying on the debt. If I were the governor, … I’d say we are never going to be able to pay the full debt back, so let’s eliminate half the debt right now and write it off.
“If that’s not constitutional, it might be worth changing the constitution. That would dramatically reduce the amount of interest that they’re paying. The bond ratings would go up and the interest would go down.””
Ryan seemed to be referring to the annual “interest cost” on Illinois’ pension debt, which is about $9.1 billion per year, or $25 million per day. The portion of interest cost that isn’t covered each year is simply added to the debt.
SNIP
The state itself owes over a hundred billion in debt. Some now put that amount at nearly two hundred billion. they’ve had their credit rating lowered 3 times. It got bad enough that Illinois state troopers were having their fleet gas cards for their cruisers declined. Illinois is a financial time bomb.
CC
[so let’s eliminate half the debt right now and write it off.]
Jerry: You don’t even know what a “write off” is.
Kramer: Do you?
Jerry: No, I don’t!
Kramer: Well they do. And they’re the ones writing it off.
Robbed. And they never contributed a dime to Social Security.
The result of one-party rule. Guess which party.
I have no sympathy for them, and I know that is harsh. At least Detroit tried to get out of their mess, even if they were nudged, these morons are doing a freaking thing and it is going to be flinging parts anytime soon as it liberates in a catastrophic fashion.
Bond Guru Meridith Whitney was so correct on her call on Muni Bond warnings and failures it wasn't even funny...
Somehow it will be found to be the Republicans’ fault anyway
Not enough money, you say? Simple. Seize their homes, automobiles and all financial assets. (That's what the unions plan to do to us.) Sell off their body parts if necessary. Meanwhile, ask them to sit down and negotiate on a real solution.
It got bad enough that Illinois state troopers were having their fleet gas cards for their cruisers declined. Illinois is a financial time bomb.
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As long as 40 to 50 years ago, I saw signs posted on gas pumps here in Illinois that said, “No state credit cards accepted here”
The democrats/wall street/republicans are looting the pension plans thru out the country.
I read that (ex-con Ryan suggesting that 1/2 the debt just be written off, that this would help with bonding companies, and so on.)
What the bleep?! After such a move, why would anyone loan IL another nickel? I understand a write-off decreases the interest burden, but, somebody just lost over 50 billion dollars.
I have a better idea: Take it out of the hides of the people who made this happen in the 1st place. We can start with the judges who ruled against pension reforms as unconstitutional. Then come the nits who wrote such idiocy into the IL Constitution, and promoted it. Then come the rest of the pols who enabled the mess, then comes the union leadership...
It’s been many(!) years since I studied the French Revolution. It came up again in my daughter’s home schooling curriculum, recently, and I was explaining to my daughter that I thought Thomas Jefferson’s “take” might have been a bit extreme. After all, a lot of aristocrats who were sympathetic to “the people”, or who did not directly cause the people’s woes, were brutally executed.
However, the further we get into 2017, and Trump’s efforts to set things straight, the more I worry about what these deeply corrupt, deeply entrenched interests will do to retain power. What then follows, if, per Jefferson, the people must take matters into their own hands, and the country is nearly evenly split? Will “justice” murder hundreds of thousands who may be “wrong”, but are not the true evildoers, and do not deserve to be murdered? It could get very ugly indeed.
Until Madigan is gone there will be no change
The people behind the curtain pulling the strings?
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