By IL Radio Network
Chicago, IL – An accounting watchdog says Illinois is so far in debt the state is teetering on the verge of bankruptcy.
Institute for Truth in Accounting founder Sheila Weinberg says state employees have accumulated an entitlement to certain pension payments, and if those are included in the ledger as liabilities, that state is $82 billion in the hole.
Weinberg says Illinois is near bankruptcy, which would be unprecedented.
The state has $29 billion in assets and $111 billion in obligations, including bonded indebtedness, and pensions and health care benefits earned so far by state employees who are not yet retired, she says.
Weinberg says the state should be setting aside billions to pay its obligations, but it doesn't do it, with lawmakers allocating leftover money each year against these looming obligations.
Meanwhile, Illinois' plan to borrow $3.5 billion to help pay for a $26 billion state budget could come with high interest rates.
Wall Street-based Moody's Investors Service says it is reviewing the State of ' general obligation bond ratings to see if they should be downgraded. If downgraded, that would mean any borrowing the state does would come at a higher cost.
Governor Pat Quinn says he had to sign the $26 billion state budget to keep Illinois afloat, even if it could mean the state's bond rating will be downgraded. Quinn says he believes lawmakers will eventually believe it's a bad idea to borrow.
A lowered rating would mean that the $31 billion capital plan would buy less, as more money is diverted to interest on the bonds.
