Thus begins the classic "A Tale of Two Cities." If you live in Illinois, it is absolutely the WORST of times -- and not getting any better anytime soon.
Barron's released their run down of the Best and Worst run states in their August 29, 2011 issue, and if you live in Illinois you may want to move.
Did you know that states get rated for their credit worthiness? Illinois is ranked a dismal "A+", right behind the dead last California with an "A-" Janney Capital Markets did the number-crunching for Barron's and here's where the numbers shake out.
They examined each state under 7 different categories
1. Federal spending as a % of state GDP
2. Medicaid as % of outlays
3. % Change in Tax receipts
4. Tax-backed debt as % of state GDP
5. Funded % of state pensions
6. Troubled mortgages (*including foreclosed and seriously delinquent home loans.)
7. June Unemployment rate %
Under the "AAA" category - Indiana is a standout. Gov. Mitch Daniels has done a tremendous job with that state, bringing conservative principles to the fore.
Fed spending as a % of state GDP: 20.7
Medicaid as % of outlays: 23
% Change in Tax receipts: 9.9
Tax-backed debt as % of state GDP: 1.92
Funded % of state pensions: 67
Troubled mortgages : 8.3
June Unemployment rate %: 8.3
For "AAA" Iowa-
Fed spending as a % of state GDP: 17.5
Medicaid as % of outlays: 18
% Change in Tax receipts: 8.7
Tax-backed debt as % of state GDP: 2.24
Funded % of state pensions: 81
Troubled mortgages : 4.8
June Unemployment rate %: 6.0
For "A+" Illinois-
Fed spending as a % of state GDP: 15.9
Medicaid as % of outlays: 33
% Change in Tax receipts: 13.7
Tax-backed debt as % of state GDP: 3.97
Funded % of state pensions: 51
Troubled mortgages : 10.5
June Unemployment rate %: 9.2
Illinois does not have a good, competent governor. We don't have a Scott Walker, Mitch Daniels or John Kasich leading us. We have the Illinois Combine: Durbin, Schakowsky, Madigan and Quinn.
Illinois has the lowest state pension funding out of all. Only West Virginia comes close at 56. Washington state is at 100% of funding their state pensions. Another nail in the coffin is Medicaid. Only Missouri (33%) and North Carolina (37%) equal or exceed Illinois' Medicaid outlays.
What does it come down to? The article is spot on: You must control spending and reign in the unions.
The governor's want the unions to contribute more to their pension funds and health plans to ensure the system's soundness. Controversially, Walker and Kasich even have tried to convince the unions to surrender or reduce their collective-bargaining rights.Moreover, many states are creating new tiers of public employees provided with much less munificent pension and health-care plans. Retirement ages are being boosted, automatic cost-of-living adjustments to pensions are being eliminated, pension vesting periods are being increased and shenanigans like income-spiking at the end of careers to fatten benefits are being banned. Such moves will do much to ameliorate a long-term pension and health-benefit funding gap that the Pew Center on the States puts at $1.26 trillion.~~Barron's Aug. 29, 2011 (pg. 26, para 3)
You'll also note that Illinois % change in tax receipts is +13.7 - that's because Governor Quinn and the brain-trust down in Springfield raised taxes by 67% this year. States like Hawaii actually took in less money.
Walker, Christie and Scott are cutting spending, and they're reducing taxes on corporations and the wealthy. They're doing that to spur employment and investment. Wisconsin even scaled back its earned-income tax credit for 152,000 families ($518 for a family of 5).
To be fair, I thought it would be worse. I thought we'd be dead last, with 50% Medicaid outlays, and a negative tax receipts number. Well second from the last isn't so bad I guess.