When it comes to the full faith and credit of the Great State of Illinois, three major credit rating companies judge it the lowest in the union. The problem is that state politicians made pension promises they didn’t pay for and still aren’t.
How bad is it? Illinois’s total unfunded pension liability now tops $200 billion dollars – that’s roughly 250 percent of the state’s annual revenue. And growing.
But take, heart!
Gov. Pat Quinn just said that the massive pension shortfall will grow at a slower pace than previously thought, $5 million (instead of $17 million) a day.
Whoopee!
Folks at the Illinois Policy Institute are a little mystified by this pronouncement, though. The projection seems based more on wishes and hope than the straight dope. Besides, “this isn’t the first time the state has predicted that the growth in the state’s unfunded liability would slow,” Institute Senior Fellow Jonathan Ingram writes, noting that “the exact same prediction was made last year based on the actuarial projections made in fiscal year 2011. The systems predicted that the unfunded liability would grow by ‘only’ $5.3 billion in fiscal year 2012.”
The conventional wisdom blames too many years of the legislature shorting the annual payments to the five public-employee retirement funds.
Another way to look at it is simply that politicians are a whole lot better at promising than delivering, and defined benefit (rather than defined contribution) pensions are too tempting to trust to any politician.
This is Common Sense. I’m Paul Jacob.