Debt explodes as state passes 194th birthday
Treasurer: It is time to right financial ship
Illinois achieved statehood in December 1818. We’re rapidly approaching 200 years of achievement and general prosperity in this great state I’ve always called home and will always love.
After 194 years, not all is financially right in our beloved state. Illinois’ accumulated debt was modest just 10 years ago, but today’s totals leave the state heading toward a financial demise. Escalating debt, associated mainly with rising pension costs, is eating away at our ability to fund even essential Illinois services like education and public safety.
In 2002, Illinois had been in existence for 184 years and had accumulated only $21 billion of bonded debt. As of 2012, our state is on the hook for $58 billion of bonded debt – nearly tripling our debt in only the last decade.
The source for almost half of our current debt is associated with borrowing to make payments into the public pension system. Included in the $58 billion is the whopping $10 billion borrowed back in 2003 to supplement the pension system, by far the largest one-time chunk of debt Illinois has ever incurred.
I’m sounding the alarm again; our financial crisis doesn’t stop with our outstanding bonds. None of this debt takes into account the $9 billion of unpaid bills or our massive $96 billion unfunded pension obligation.
Managing our debt is important, but none of this should distract from the most pressing issue at hand: The public pension system needs to be protected in a fair and constitutional way to preserve benefits that have been earned, and avoid the crowding out of essential core services.
In 2002, our unfunded pension liability was a relatively small $35 billion, but similar to our bonded debt, mismanagement of the last decade has made this liability almost three times what it was only 10 years ago.
Borrowing more cash will not fix this structural problem. As the state’s banker, it is my responsibility to alert taxpayers when I believe money is being mismanaged.
It’s time to right the ship that has been guided off course over the last 10 years. How we manage our debt and accumulated liabilities in the upcoming budget years will set Illinois on a defining course. I’ve checked any partisanship at the door and will work with the governor and Democrats to find the best solutions.
I took the oath to be the treasurer of Illinois to serve all people – Republicans, Democrats, Greens, tea partiers, Libertarians and all those who aren’t quite sure where they stand in this murky political swamp. As I said at my inauguration, I intend to use this statewide stage not to be an obstructionist, but to be outspoken about articulating what will help the financial standing of this great state.
It’s time for state leaders to act with conviction and valor. I believe we can eliminate our massive debt, fund our liabilities, build an environment that job creators are seeking, and provide financial security for taxpayers.
Illinois is indeed broke, but after 194 years, this wonderful state is not beyond repair.
Note to readers – Dan Rutherford has been state treasurer for 2 years.