Illinois will begin its new fiscal year tomorrow using a budget that Mercatus Center economist Eileen Norcross says lacks the necessary structural changes for a state that will run out of assets to pay for pensions in a few short years.
“The budget is claiming that it will stimulate the economy by issuing more debt,” said Norcross. “I find it hard to believe, given the size of the obligation, that issuing more bonds and starting programs like 'Illinois Now!' will somehow help to offset the debt these programs will add.”
Norcross says that Illinois has the strictest protections for pensions in the country, and that the recent changes to pension formulas won’t affect the debt obligation until at least 30 years from now when the workers hired under new formulas begin to retire.
“Rather than relying on temporary tax increases to pay off obligations, the state needs to make structural changes to spending programs. Illinois should also consider amending pension protections in the state’s constitution in order to create a manageable debt load for the future,” Norcross said.