6/16/17 CBS reports that Illinois may be the first state to go bankrupt:
Like Puerto Rico, Illinois has a massive pension crisis. Its unfunded pension liability for the state's five major plans grew 25 percent alone in one year, reaching $251 billion, according to Moody's. On a per-household basis, the state's pension debt burden stands at $27,000, according to the conservative-leaning Illinois Policy Institute.
So how did the state's pensions balloon into such a crisis? First, the pension problem has been a long time in the making. The state has more than 660 government pension funds, which are sometimes called defined benefit plans because they promise workers will receive a specific pension when they retire.
But critics say some of those pensions carried overly optimistic assumptions, especially given periods of market turmoil like the global financial crisis, which ate into investment returns. The state's general assembly wasn't required to fully fund pensions, which meant tax money was spent on other priorities such as schools or infrastructure.Population is declining as people vote with their feet.
I see people from California all through the Dallas/Fort Worth area. But they say Californians are not leaving and the State's population is growing (5% since the 2010 census). But that number is based on population growth data for the years immediately before the great recession. Nothing on the impact of the sustainability movement (AKA Green Movement), the reduction of manufacturing jobs, or even the afore mentioned flight of people to Texas in the last ten years. The 2020 census should be an eye opener.
ReplyDeleteNow however, Illinois is already reported as down a quarter of a percent since the 2010 census. Not much, but when you consider its the most populous state in the mid-west its important. Now you will not see the population of Chicago reduce by any amount in this because, unlike states, the City has no borders. Its population has been growing for decades by simply absorbing outside communities (and their pension problems). At present it represents 65% of the State's population. Thus the Illinois problem is really a Chicago problem: Chicago citizens will have their property taxes increased 10% in 2017 with additional increases set for 2018, and 2019.
But other cities have similar problems. Liberal Dallas Texas is deeply in trouble with its pension funds for Police and firemen. It is expected the funds will be empty by 2030, prompting an exodus of officers from the Police department to nearby cities like Fort Worth. The point being that Liberal Dallas is having the problems while conservative Plano, Arlington, and Fort Worth are not.