If you are familiar with any aspect of Illinois governance, and Chicago governance, then you know that the Democratic machine that has been running the state for the better part of a century has been raiding state and local pension systems for decades to finance all their politically-connected pork spending. Both Chicago and Illinois are functionally insolvent entities, and have been surviving by using dumbass junk bond investors in the municipal bond market to cash flow from year to year. This isn’t even a new development, coming from a year of profound economic stress. This is business as usual for them. Democratic leaders have done the same thing in California, New York, New Jersey, Connecticut, and Kentucky (this is part of the reason Kentucky swung to the far right in recent years, not just Trump).
But since Illinois is the original school for “never let a good crisis go to waste,” policymakers there have – without shame – demanded a multi-billion dollar bailout for their state and local pension systems get rolled up into future federal assistance for the coronavirus:
Democratic Illinois Senate President Don Harmon is asking federal lawmakers to provide more than $41 billion to the state as part of the next coronavirus relief package, including $10 billion to stabilize a massively underfunded pension system.
“I realize I’ve asked for a lot, but this is an unprecedented situation, and we face the reality that there likely will be additional, unanticipated costs that could result in future requests for assistance,” Harmon wrote in a Tuesday letter to members of the state’s congressional delegation…
Harmon’s request of more than $41.6 billion in direct federal assistance is roughly the equivalent of the $42 billion budget Pritzker proposed in February, prior to the effects of the pandemic on Illinois and the nation.
Noting the state’s long-running public employee pension debt of $138 billion, Harmon asked for $10 billion in direct pension relief. With pension funding taking up about 25 cents of every state tax dollar, Harmon said “in a normal year the size of those payments crowds out funding for services and programs.”
“Clearly, this will not be a normal year and that crowding out effect will be exacerbated by significant revenue losses,” said Harmon, who asked in his letter for either “direct cash assistance” or a “low interest federal loan.”
Harmon also wants $9.6 billion in direct federal aid to cities and villages, to be distributed by population, to boost local public employee pension systems. Harmon said his request was backed by the Illinois Municipal League and called the funding “critical in aiding municipal governments provide for the safety and well-being of the constituents and employees they serve.”
In addition, Harmon asked for $15 billion in federal block grant funding to help plug in budget gaps over three years, particularly to assist human service providers.
The new Senate president, who took on the role in January after Sen. John Cullerton’s retirement, also requested $6 billion to buttress the state’s unemployment insurance trust fund at a time it is seeing record claims.
I’ve said this before, but the aspect of the blue state – red state war on reopening the economy that no one is talking about (yet!) is that blue states across the country were operating with massive structural deficits before this happened because they are constantly blowing their taxpayer money on stupid stuff. The longer they continue to nuke their tax base, the more they are going to come to the feds (translation: your future earnings) for to replace it. That means if you live in a fiscally conservative state that got back to work early, there’s a nonzero chance you are working hard to bankroll their bullshit.