Illinois Down; New Jersey Out

According to Bloomberg:

Illinois had its bond rating downgraded to one step above junk by Moody’s Investors Service and S&P Global Ratings, the lowest ranking on record for a U.S. state, as the long-running political stalemate over the budget shows no signs of ending. S&P warned that Illinois will likely lose its investment-grade status, an unprecedented step for a state, around July 1 if leaders haven’t agreed on a budget that chips away at the government’s chronic deficits. Moody’s followed S&P’s downgrade Thursday, citing Illinois’s underfunded pensions and the record backlog of bills that are equivalent to about 40 percent of its operating budget. Illinois hasn’t had a full year budget in place for the past two years amid a clash between the Democrat-run legislature and Republican Governor Bruce Rauner. That’s left the fifth most-populous state with a record $14.5 billion of unpaid bills…

Illinois could have gotten the money to pay those $14.5 billion in bills had they followed New Jersey’s lead.

According to www.publicfundsurvey.org which has kept track of valuation data for the largest public pension plans since 2001 Illinois plans have had Annual Required Contributions (ARCs) totaling $75 billion with $15 billion (21%) of those ARCs not paid.

New Jersey (with several contribution holidays – mostly in the early years) had ARCs totaling $48 billion and walked away from over $29 billion (61%) of that.

And even with a gubernatorial primary next week New Jersey politicians still follow the party line with formulaic non-solutions that can be summed up this way:
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11 responses to this post.

  1. Posted by S Moderation Douglas on June 2, 2017 at 11:14 am

    Disregarding for the moment that in most/all cases the ARCs are set artificially low anyway, who is in worse shape, those states which are not (even close) meeting the minimum contributions, (New Jersey, Illinois, Pennsylvania, Kentucky, et al.) or California, meeting the required levels at the increasing risk of bankrupting local governments?

    Reply

    • Posted by Anonymous on June 2, 2017 at 11:38 am

      Public Sector pension “promises” are grossly excessive EVERYWHERE. I look at it as NJ Taxpayers are at least better off …………. the Public Sector workers/Unions having been LESS successful is getting REAL MONEY out of our pockets.

      And hopefully, they never will …………….. see my other comment below.

      Reply

  2. Posted by Anonymous on June 2, 2017 at 11:34 am

    Quoting ……..

    “New Jersey (with several contribution holidays – mostly in the early years) had ARCs totaling $48 billion and walked away from over $29 billion (61%) of that.”

    Seems we (NJ Taxpayers) have PAID 39% of the ARCs.

    Now considering that NJ’s Public Sector pensions …….. to be fair and EQUAL (but not unnecessarily and unjustly better) than those typically granted Private Sector workers …… should likely be LESS (especially for Safety workers) than 39% of what has been “”promised” (accomplished by the Public Sector Unions’ BUYING of the favorable votes of our elected Officials with BRIBES disguised as camapign contributions and election support), it seems we (the Taxpayers) have likely ALREADY paid “our fair share”.

    Paying more would be acquiescing to the THEFT perpetrated upon us by the insatiably greedy Unions and the Elected Officials who have betrayed us.

    Reply

  3. Posted by skip3house on June 2, 2017 at 12:01 pm

    Per thinking of above comments, didn’t someone here in the recent past suggest NJ renege on promised Defined Benefits and use just contributions from workers and NJ to create new benefit totals, instantly getting NJ out of this mess?
    When value of funds hit just worker contributions, will workers be paid back, and pensions stopped?

    Reply

  4. Posted by Anonymous on June 2, 2017 at 12:05 pm

    If Fair and Equal (Public/Private Sector) pensions is the goal ……. and I believe it SHOULD BE ……. then doing what you stated in your 1-st sentence would accomplish that.

    Reply

    • Posted by Anonymous on June 2, 2017 at 9:22 pm

      That article says ………….”Rates are low and we have this incredible surplus.”

      An “incredible surplus” shouldn’t be held in a cash account earning 1%. If (as seems to be the case) it is not needed in the near future (which IS consistent with it being available to be “loaned” to the pension Plans) it should be invested in a manner IDENTICAL to the assets in the Pension Plans.

      Hence it should earn the SAME return and this whole proposal is just more smoke and mirrors, accomplishing NOTHING.

      Reply

      • Posted by Anonymous? on June 2, 2017 at 10:58 pm

        Please take a seat…

        I agree with you. Whether it is invested at one percent or seven percent, or somewhere in between, the earnings, if any, should go toward the original purpose of the fund.

        Reply

  5. […] « Illinois Down; New Jersey Out […]

    Reply

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