The credit crunch has brought the finances of many US states into sharp focus. None more so than Illinois. There is even an activist non-partisan organisation which calls itself Illinois is Broke which highlights the mess the finances are in. Total debt is over $170bn and is rising at around $15bn per annum. During the boom years many states and countries were able to hide behind strong tax revenue growth and ignore unsustainable spending. When the crunch came the spending was left high and dry along with the debt as the revenues dried up. In Illinois' case that debt is equivalent to $25k per household. That's a lot in a state where the per capita income is around $41k. The retirement age for public sector workers is just 55 - look to a big increase in that in the years ahead. Illinois and other crisis states like California are interesting because they highlight the problems of countries like Greece and Ireland in the Eurozone. US states are now irrevocably part of the Union. Greece and Ireland could yet pull out (I think they won't). In the 1800s it was by no means certain that US states were permanently in but they are now. The QSL is from the Chicago, IL station WMVP, a sports broadcaster on AM 1000 heard in Cape Town 2007.
Sunday 16 January 2011
The sorry state of Illinois
The credit crunch has brought the finances of many US states into sharp focus. None more so than Illinois. There is even an activist non-partisan organisation which calls itself Illinois is Broke which highlights the mess the finances are in. Total debt is over $170bn and is rising at around $15bn per annum. During the boom years many states and countries were able to hide behind strong tax revenue growth and ignore unsustainable spending. When the crunch came the spending was left high and dry along with the debt as the revenues dried up. In Illinois' case that debt is equivalent to $25k per household. That's a lot in a state where the per capita income is around $41k. The retirement age for public sector workers is just 55 - look to a big increase in that in the years ahead. Illinois and other crisis states like California are interesting because they highlight the problems of countries like Greece and Ireland in the Eurozone. US states are now irrevocably part of the Union. Greece and Ireland could yet pull out (I think they won't). In the 1800s it was by no means certain that US states were permanently in but they are now. The QSL is from the Chicago, IL station WMVP, a sports broadcaster on AM 1000 heard in Cape Town 2007.
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