ICYMI: Illinois Is California's Ghost Of Christmas Yet To Come

Tuesday, October 11, 2016

"If you want to know the fate that awaits California, just watch the state of Illinois.  It's a slow-moving fiscal train wreck and California is on the same track. The catalyst? Underfunded pensions.  I drove through Illinois, from top to bottom, last October to see it for myself.

"California's pension problem has officially reached crisis level and, finally, others are acknowledging it. California must avoid becoming Illinois. I'm ready to work with public employees and my colleagues in the Legislature to create a long-term solution for these currently unsustainable retirement problems."

-Senator John Moorlach (R-Costa Mesa)

When It Comes To Pensions, Illinois Is California's Ghost Of Christmas Yet To Come

Capital Public Radio News
Monday, October 10, 2016
By Dan Weissmann | WBEZ
[Excerpts]

"As California’s public-employee pension crisis grows—with taxpayers on the hook for hundreds of billions of dollars, and no clear plan for how to pay—other states are facing similar problems, and have lessons to teach."

“'Illinois is one of the worst-funded states in the country,' says David Draine, a senior researcher at Pew Charitable Trusts and co-author of a new Pew report on the state pension funding gap. Pew pegs that gap, which extends across most of the 50 states, at more than $1 trillion nationally.'"

"The recipe for California to replicate the problems of Illinois, says Mr. Laurence Msall [executive director of the Civic Foundation] would be to simply take its existing problem and 'ignore if for a long time. And when you finally come back to check on it, you find—because of the nature of compound interest— the problem has gotten much, much bigger.'"

"Illinois, he says, 'has had plenty of chances to fix this over the last three to four decades. But instead the easiest and least-resistant path was the hope that some future revenue growth or some future legislature or governor would magically come up with the ability to pay.'”

"Everyone else—including Medicaid providers, state-funded social service agencies, even state legislators looking for their paychecks—simply gets in line. On average, it currently takes more than three months to get to the front of that line, and get paid."

"The longer Illinois waits, the higher the price will be. That’s a lesson any state can learn from."

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