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State problems aren't new, but lawmakers haven't "developed a strategy for resolving the situation and it is rapidly growing worse." Moreover, IGPA analysts say:
"the state's fiscal disaster is even worse than commonly believed, will take years or even decades to remedy and can be fixed only by large and fundamental changes in both spending and tax policies...."
With spending exceeding revenues, and obligations not postponed, unpaid bills are growing "at a frightening rate. For instance, IGPA's Fiscal Futures Model indicates (they) could reach $40 billion by July 1, 2013, with an associated delay in paying those bills of more than five years."
Besides its $13 billion deficit and $6 billion in unpaid bills, its pension fund is about $130 billion in the red - a red flag that state workers may lose out altogether, wiping out their promised retirement savings. Overall, achieving a balanced 2012 budget requires one or a combination of three alternatives, including:
-- enormous increases in personal and corporate taxes to 7.1% and 11.3% respectively;
-- raising the current 6.25% sales tax to 13.5%, and/or
-- cutting spending across the board by 26%, exclusive of debt service, pensions and transportation.
Moreover, IGPA concludes that state fiscal problems "are so enormous that no single tactic will be enough to balance the budget....We start so out of balance that even an absolute freeze on all spending will not achieve balance (over) a 10-year time horizon. Bringing Illinois to fiscal solvency will require state government to implement multiple and massive policy changes. If nothing is done soon, (Illinois) faces a very bleak future."
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