State Budgets
Budget shortfalls, city defaults & bankruptcies, potential state bankruptcies means the budgets of individual states will impact the economies of the other states and the federal budget/deficit.

How Bad Is the Crisis in Illinois? It Has $14.6 Billion in Unpaid Bills

6/27/17
from The Wall Street Journal,
6/26/17:

Two years without a budget has left a mammoth past-due backlog, with hospitals, dentists and university towns feeling the pain.

This is what happens when a major American state lets its bills stack up for two years. Hospitals, doctors and dentists don’t get paid for hundreds of millions of dollars of patient care. Social-service agencies help fewer people. Public universities and the towns that surround them suffer. The state’s bond rating falls to near junk status. People move out. A standoff in Illinois between Republican Governor Bruce Rauner and Democratic Speaker of the House Michael Madigan over spending and term limits has left Illinois without a budget for two years. State workers and some others are still getting paid because of court orders and other stopgap measures, but bills for many others are piling up. The unpaid backlog is now $14.6 billion and growing. Illinois is even late paying its utilities bills to Springfield, its own capital city. On July 1, the beginning of the next fiscal year, billions of dollars in road projects are scheduled to grind to a halt. “Right now, our state is in real crisis,” said Gov. Rauner last week, on the eve of a special legislative session where lawmakers are trying to hammer out an agreement before the state enters its third budgetless year. Susana Mendoza, the state’s Democratic comptroller, is in charge of doling out limited funds to organizations demanding payment—a job she likens to handing out crumbs to starving children. She predicted unpaid bills will soon top $16 billion. “It is almost hard to say those numbers out loud because they seem so insane, but that’s where we are right now,” she says.

Any solution to the state’s dismal finances will need a three-fifths legislative majority to pass. Looming behind the fiscal train wreck are an estimated $250 billion in unfunded pension liabilities, the worst in the nation, according to Moody’s Investors Service. S&P Global Ratings has warned that it could lower the state’s rating to junk as early as this week if it doesn’t pass a budget. The Republican draft budget includes a temporary income-tax increase. Gov. Rauner has also pushed for spending cuts in areas including state pension benefits, which are protected under the state constitution, and social services. He also wants to freeze property taxes and ease workers-compensation protections to attract new businesses.

Illinois remains the business center of the Midwest with numerous Fortune 500 companies based in and around Chicago, major rail infrastructure and one of the nation’s busiest airports. That hasn’t stopped the deadlock from rippling through towns from Rock Island on the Mississippi River to Charleston in central Illinois. Hospitals and doctors are feeling the brunt as the state delays Medicaid payments and insurance payments for state employees.

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