And they even have a responsible governor now in Republican Chris Christie.
With the market for municipal bonds tumbling, cities, hospitals, schools and other public borrowers are scrambling to refinance tens of billions of dollars of debt this year, another sign that the once-safe market is under duress.
The muni bond market was hit with the latest wave of bad news Thursday, prompting a selloff that sent the market to its lowest level since the financial crisis. A New Jersey agency was forced to cut the size of a bond issue by about 40% because of mediocre demand, and pay a higher rate than expected. And mutual fund giant Vanguard Group shelved plans for three new muni bond funds, citing market turmoil.
Illinois this week earned the honor of becoming the first state in 2011 to sock it to taxpayers, passing a tax hike the size of Lake Michigan. Citizens cried out, legislators deflected, but the most interesting response came from neighboring Wisconsin, where newly elected GOP Gov. Scott Walker had three words for Illinois businesses: "Escape to Wisconsin."
Across the country, dozens of new governors are taking office, fine-tuning state-of-the-state addresses, polishing budgets. With each event we are seeing a growing national divide.
On one side are wide swathes of the country that this past midterm elected reformers intent on slashing spending and reviving growth. On the other are the holdout pockets—Illinois, California, Massachusetts, Connecticut—drifting further into the abyss of tax and spend. The chasm has huge implications, not just for local and regional politics but for Washington.
No, no, no, Illinois is funding retirees paying no income taxes nor health care fees making $8,000 a month. And still increasing spending rather than cutting it, still stiffing vendors, borrowing to pay day to day expenses ensuring the piggish pols will be back for more taxes.
But fewer and fewer taxpayers will hang around to be fleeced. And interest costs will only rise as the state falls into disrepair, repeated in blue holdouts around the country.
More. Illinois, a kleptocracy in action James Pethokoukis, Reuters. A comparison to Indiana. And it's not pretty. Indiana "spends half as much per citizen as Illinois".
So where does the money go? Ha.
Related post: Is Bill Daley Too Big To Fail?