The state of Illinois is in big trouble. In fact, they’re facing an economic collapse. Some pundits are calling them “The Venezuela of the United States.”
They owe $14,711,351,943.90 in overdue bills. This does not count their day-to-day operating expenses – this is money that should have already been paid out, but wasn’t. Nearly 15 BILLION DOLLARS.
Like every person who has ever spent more than they’re making with no regard for budget, things are starting to go downhill in an ever-growing avalanche of disasters. Here are 7 thing you need to know about what’s going on in Illinois and how they got to this crisis point.
1) Illinois is about to be the first state ever to have their credit downgraded to “junk.”
They’re about to become the first state ever to see their credit downgraded by Standard & Poor to “junk status,” which means they are a terrible credit risk. If they’re even able to borrow money, it will be at much higher interest rates than ever before. This means that anything they spend on infrastructure (or refinancing their existing debt) will cost much more. And guess who will foot the bill for that? The taxpayers.
To put this in perspective, even Michigan, with all of the issues in Detroit, has not been downgraded to junk status. That’s how much worse things are in Illinois.
Illinois has a tab of unpaid bills worth $15 billion, equivalent to 40% of its operating budget. The state’s backlog of financial obligations will skyrocket to $28 billion by June 2019 without a deal, Moody’s predicted, which would rack up even more interest and penalties than what is already owed. Even if a deal is reached, state debt and taxpayer dues will both likely increase. (source)
2) They haven’t had a state budget in 3 years.
Let me compare this to a household again, yet, of course on a far grander scale. To figure out how to pay off crippling debt, you have to have a strict budget in place. You’ll need to slash expenditures where you can, increase income where you can, and do without some of the finer things. Pennies turn into dollars.
The trouble is, Illinois legislators haven’t passed a state budget in 3 years now.
Part of the issue is that the Democrat-led state Congress can’t come to an agreement with the Republican governor. (Something I think we can all relate to on a national level. Can we please look at this and figure out a way to get along in DC?) The July 1 fiscal year-end deadline has come and gone with no deal in place.
They’ve just been muddling along, not thinking about the big picture.
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