For state lawmakers desperately trying to come up with ways of reviving the state of Illinois' long sputtering economy, the wounds are piling up.
U.S. Sen. Tom Cotton (R-Arkansas) recently all but assured that a government cavalry will not be riding in to save the day for the state by proposing Senate Resolution 268, which clearly and forcefully establishes “the federal government should take no action to redeem, assume, or guarantee any debt, including pension obligations, of a state; and the secretary of the treasury should report to Congress any negotiations to engage in actions that would result in an outlay of federal funds on behalf of creditors of a state.”
This means Illinois cannot depend on the federal government to rescue it from its mounds of unfunded pension liability.
Meanwhile, some suspect lawmakers are almost certain to return to the tax increase, a traditional maneuver in tough times.
“While the city attempts to pass the burden of its debts to residents through taxes, residents can choose to stay and pay or leave — and thereby leave their share of the burden behind for others to bear,” a recent Chicago Tribune letter to the editor argued.
In recent times, more and more residents have been opting for the latter option, leaving all those who remain with an even heavier burden to carry.
“Our city government obsesses over raising revenue, rather than focusing on competing and improving the value proposition to its citizens,” the Tribune letter added. “It drives away more value-minded taxpayers, which lessens demand for property and causes values to fall, thus increasing the expected tax burden and wealth loss for those who stay.”
To some, the only answer lies in the city of Chicago stopping the bleeding by pulling the plug on funding and filing for federal bankruptcy.
“Chicago is in a hole that tax hikes only deepen,” the Tribune letter added. “The only way out of Chicago’s death spiral is debt reduction.”
The city has plenty of company among other local municipalities struggling with rising pension obligations and providing needed services to its residents.
In one instance, state officials in East St. Louis were recently asked to divert funding earmarked for services to the city’s pension plans. Previously, the state has taken similar actions against Harvey and North Chicago.
“Authorizing bankruptcy puts people first and will not impair access to credit for well-run municipalities,” the Tribune letter added. “Instead, empowering municipal bankruptcies harnesses Wall Street to the mission of requiring prudent municipal management to the benefit of all people.”
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