The Clinton Herald, Clinton, Iowa

December 4, 2013

Even if pensions get fixed, state has work to do

The (Bloomington) Pantagraph Dec. 1
2013

---- — If and when a pension solution is acted upon, expect at least some elected officials to act as if the state’s financial problems are over.

But that’s clearly not the case, and pension reform is just the beginning of a series of issues that need to be resolved with the state’s budget.

Of these issues, pension reform is the biggest and it appears there is a better chance for a solution. House members have been told to return to Springfield for one day on Tuesday after a deal was struck last week by the four legislative leaders.

Reforming the pension system should free up some money in the state’s budget and also bring to a halt recent credit rating downgrades that will cost taxpayers more money every time the state borrows money.

But the state’s budget has a fundamental flaw — most call it a structural deficit. It’s an issue that won’t be solved just by solving the pension crisis.

The problem was pointed out in a bit of news last week — the state’s backlog of unpaid bills is growing again and might reach $9 billion by the end of December. The amount fluctuates because of high revenue and low revenue months. But the fact remains that, at the end of its fiscal year, the state is several billion dollars short of paying its vendors on time.

If you take the budget as a whole, not just the general fund, the state spends more than it brings in. That has been the problem for several years, dating back to before the recession.

The recession undoubtedly made things worse and the state’s slow recovery hasn’t helped. But the state’s budget is fundamentally flawed and until that’s fixed, the financial struggles will continue.

Wall Street 24/7, an online news service, recently did a study looking at the best- and worst-run states in the nation. Illinois ranks third — from the bottom, ahead of only California and New Mexico. The three best-run states are North Dakota, Wyoming and Iowa.

The factors that put Illinois near the bottom of the list are well known: the worst credit rating in the nation by Standard & Poors and Moody’s; the worst-funded pension system; bad fiscal practices like bill-paying delays; the fourth highest state debt; and the second highest unemployment rate in the country.

Hopefully, the state will take a step toward improving its standing this week with effective pension reform. But even if that is accomplished, there is still a lot of work to be done.