The state of Illinois has the worst public employee pension shortfall in the country, even worse than the more populous California. In fact, the Illinois shortfall amounts to more than the shortfalls of about 36 other states combined. At a shortfall of $172 billion, Illinois’ deficit for fully covering its pension promises to public sector employees is worse than the $140 billion shortfall in California, worse than the $90 some billion shortfall in New Jersey, and worse than the deficits of between $30 billion and $80 billion seen in Texas, Massachusetts, Connecticut, and Kentucky.
As Wirepoints notes, Illinois is a dark blot of red ink and irresponsibility on the Midwest map compared to its neighbors. None of the six surrounding states bordering Illinois have anywhere near the pension bomb Illinois has. Kentucky comes in next worst at $34 billion, but that deficit isn’t even a third of what Illinois totals. Next comes Missouri at $13 billion, then Indiana at $11 billion, Michigan at $8 billion, Wisconsin at $4 billion, and Iowa at a mere $2 billion. But even with that adding up to $72 billion, all six surrounding states still total $100 billion less than the massive shortfall in Illinois.
The problem, of course, is in politics. Both Republicans and Democrats in the state have played favoritism with the public employee unions by offering a never-ending hike in benefits and goodies despite the current promises already being out of reach financially. But Illinois has an even greater problem because the gravy train nature of the pensions is actually enshrined in the state constitution.
The disastrous clause added to the state constitution during the 1970 Constitutional Convention maintains that it is actually unconstitutional to cut any part of a public pension. Meaning, no adjustments can ever be made to public pensions no matter how bad the debt bomb gets.
The provision rules that public pensions are an “enforceable contractual relationship, the benefits of which shall not be diminished or impaired.” This puts any possibility of reforms or adjustments out of reach for policy makers and legislators. Consequently, as each new legislature added more and more benefits and higher compensation, the time bomb was set off.
Illinois has been fully controlled by the Democrat Party with a super majority for two decades. And the liberal Republicans who had some small semblance of power before that were no better on the issue.
To further display how bad Illinois’ pension mess is, Fitch Ratings recently calculated the pension debts of the 50 states as a portion of the state’s economy. And, once again, Illinois soared above the rest for its worst-case situation.
Illinois’ pension bomb is 19 percent of its economy, far above the 15 percent in Connecticut and the 14 percent in Kentucky, the next two worst states. Also, compared to the bordering states, Illinois stands out by drowning in a sea of red ink. Compared to its 19 percent pension crisis, Missouri’s and Indiana’s figure in at around 3% each, while Michigan, Wisconsin, and Iowa only reach up to one percent of their economies.