Tuesday, February 18, 2020

Doomsday Chronicles -- Illinois Re-Visited -- February 18, 2020

It's laughable to see former President Obama arguing with President Trump about (the) origins of the incredibly good economy we now have. Three observations:
  • Democrat nominee Hillary Clinton never ran on the great Obama economy;
  • the Obama recovery was the worst in the nation's history (if it was a recovery at all);
  • the $800 billion stimulus did not contribute to the recovery (it was a recovery at all) -- had it been a recovery, Hillary would have ran on that;
Things were so bad during the Obama administration, I had a whole section of the blog dedicated to "the doomsday chronicles," where state/city finances and city bankruptcies were discussed and linked."Doomsday chronicles" for the states were linked here.

Then, all of a sudden, those stories disappeared in 2017. Completely gone.

Well, not completely.

Over at ZeroHedge, we are reminded of Illinois.

At that link, look at two charts. 

The authors say Illinois' unfunded pension liability is $241 billion, FY 2018.
Two charts: 

This is very interesting.

In 2015 (http://themilliondollarway.blogspot.com/2015/02/illinois-americas-greece-eonomist.html) the unfunded pension liability was said to be $111 billion.

If those numbers are accurate and measuring the same thing, Illinois more than doubled their unfunded pension liability in less than three years, from $111 billion in 2015 (perhaps 2014) and $241 billion in FY 2018.

One-fourth of the Illinois budget is required to fund annual pension costs. The graph that is missing, is this percentage over time. Are things getting worse, or are things getting better? 

Another way to look at this: 75% of Illinois revenue funds the state (outside of the pensions). What is the per capita tax collection by state? Link here.
  • DC: $11,000 
  • New York: $9,000 (second highest in the nation)
  • ND: $6,600
  • MN: $6,000
  • CA: $6,000
  • TX: $4,000
  • FL: $3,500
So, what is it for Illinois? $5,654. Within the ballpark for other other "high-tax" states, but a long way from NYC and DC.

75% of Illinois' $5,654 = $4,240 -- in the same ballpark as that of a lot of other states. And still significantly more than Florida, New Mexico, Arizona, South Carolina or Alabama.

One could argue that Illinois has two problems:
  • underfunded pensions; and,
  • mismanagement of the taxes they do collect.
By the way, look at the two states at the far right in the two graphs.

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