Unfunded Lie-abilities

The rubber hits the road, the.....

Illinois' profligate spending and overdue bills lead to a day of reckoning. Will the all-Dem-in-charge legislature and our governor summon the political will to tackle the problem? Sun Times on the Civic Committee report that identified the state's $106 billion in unfunded liabilities:

But it was clear the situation stems from long-term inattention to the costs of the state's pension and health benefits, which are uncommonly generous compared with those in private industry.

"Let the facts speak for themselves," Martin said. The group hopes its report can influence the content of Gov. Blagojevich's next budget address to the General Assembly in early 2007.

The unfunded pension obligation totals $56 billion, counting bonds issued to pay some of the cost, the committee found. It estimated the health care tab at $48 billion.

Martin said Illinois is funding only about 59 percent of its pension liabilities, the fourth-worst performance among the 50 states. But he said the dollar amount of the liability may be the largest of any.

Sun Times editorial:

It's a tough slap at a governor who has introduced meaningful programs such as early education and health care for all Illinois children and claims he has balanced the budget. But the balanced budget has been created by delaying payments to state employees' pension plans and borrowing to fund new programs.

(Gee, didn't you endorse Governor Empty Suit?) And recall this.

Tribune editorial:

And yet, what was all the talk during the election? How we're going to spend more money for education and health care. The money isn't there for what we're spending now. State revenues are growing about 4 percent a year, but state expenses will grow by 7.5 percent each of the next three years, the Civic Committee says.....

State employees who retire after just eight years on the job are eligible for a partial retiree health-care subsidy. They get a full subsidy after 20 years on the job. They can begin drawing this benefit at age 55.

Amazing stuff enshrined in the Illinois Constitution---state employees pension benefits can not be reduced. One of the Committee's recommendations is to immediately enroll new employees in 401K plans, in line with other states and the private sector.

But this is not just a problem for the state. Municipalities, school boards, etc., are dodging the same disclosure, the same unfunded LIE-abilities. The Civic Federation, another watchdog group, has examined the state's pension problem as well.

One of their recommendations it to require financial expertise on the pension board.

And in this related post, the federation looked at the alarming unsustainable rate of spending by municipalities in northeastern Illinois, at rates almost double that of revenue. Much of it was spent on health care and pension costs. The federation points out that by far the best solution in the near and long term is to CUT SPENDING. Starting in 2007-09, accounting rules will force more accountability in health care liabilities.

Ask your political representatives, local and state-- what are the level of obligations, and what are they doing about them?

UPDATE: Governor's office disputes the numbers.

UPDATE: Here's a related story on the governor's spin on healthcare. At Reverse Spin.