posted by Alan Greenblatt
I wrote a lovely feature in this month's Governing about how states are struggling with pension and retiree health costs. One of the states I focused on was Illinois, because it had the nation's worst public pension deficit -- $43 billion -- when Governor Rod Blagojevich took office in 2003.
Blagojevich has made a serious effort to chip away at that number, issuing $10 billion worth of pension bonds and stepping up the state's anemic payment schedule. Now the deficit is down to a mere $35 billion. The only problem is, Blagojevich and the legislature haven't had the discipline to stick with the payback program.
State policymakers stripped at least $2 billion that was supposed to be devoted to the pension fund. As John Filan, the state's budget director, explained to me, there were simply other priorities that felt more pressing at the time.
That's the usual problem with pension funding. Something else feels more urgent than the retirement plans of an employee who'll still be on the payroll for 15 more years. The only trouble is that people eventually do retire. Bills do come due.
That day is looming ever-larger for Illinois, as well as other states. Yesterday the bond rating agency Fitch issued a negative warning about Illinois. The agency pretty bluntly says it doesn't believe the state will make good its pension debt.
Becky Carroll, Filan's spokesperson, was unperturbed, telling the Chicago Sun-Times, "We outright reject the idea you have to do a massive tax increase or cut people's health care or education funding."
Okay -- but how are you going to pay down that debt?