Reis: More Borrowing, Spending and Pension Raids -
"Dems show no inclination to tackle continuing budget crisis"

May 4, 2006

Springfield.….State Rep. David Reis (R-Ste. Marie) said this week Democrats in the General Assembly approved a new state budget and robbed another $1.1 billion from the public pension systems and are spending taxpayer money as though the state coffers contained an endless supply of cash.  

"Showing no inclination to tackle the state's continuing budget crisis with serious solutions other than more borrowing and spending, the Governor and the Democrats again turned to their bag of tricks as they approved $1.4 billion in new spending for their pet projects and programs" Reis said. "Last year, they changed the law so that the 2006 budget included $1.2 billion less for pensions than lawmakers had previously agreed to pay. Now they follow through with their plan and cut the scheduled contribution for the 2007 budget by $1.1 billion."

Reis said it is obvious the willingness to shirk financial commitments is something they need to explain to all Illinois taxpayers. The state has $97.2 billion in pension liabilities, but $58.6 billion in assets -- an unfunded liability of more than $38 billion.   Illinois is the most under funded pension system in the nation. "Deferring contributions doesn't magically make those commitments go away" said Reis "It just increases our indebtedness.   At some point taxpayers will have the increased burden of playing catch-up."

In the meantime, Fitch Ratings agency thinks Illinois is a credit risk.   They have given the state a "negative outlook" rating because of the pension obligations.   This rating could lead to a lower bond rating, which means it would cost the state more to borrow money.   "According to Fitch, we are a credit risk because we borrow too much and haven't shown an inclination to confront our debt and do what it takes to pay the money back" Reis said.   "The Democrats seem content to pass the buck, figuring they'll be long gone by the time things really get ugly."

While the state is failing to meet its pension obligation, it can't afford to meet its current debt and is expected to end the fiscal year owing around $2 billion to nursing homes, pharmacists and others who care for the sick and disabled. "Some of these providers have been waiting six months for reimbursement for services they have already provided" said Reis. "The state's inability to pay its bills has forced some providers out of business and others to turn away Medicaid patients."

The 108 th District State Representative said that virtually all of the Democrats' initiatives have been financed through borrowing, adding that over the past three years, all of the Democrat's new programs and new spending have been paid for by raiding pensions and increasing bond debt.   "This year Illinois taxpayers will pay $1.68 billion just to make the payment on this debt" said Reis.   "That is a lot of money we could be spending in our classrooms and paying our Medicaid bills."

Reis said he and his colleagues proposed passing a budget that reins in spending and borrowing.   Anticipating $900 million in new state revenues this year, House Republicans said that money could have begun to pay down the debt and get the pension payments back on track.   "It is shortsighted and selfish to continually spend the next generation's money to keep this generation's government functioning.   Illinois has borrowed enough from its children."