Illinois has some serious reason to be worried about as it confronts a full-fledged financial crisis with Republican Gov. Bruce Rauner even saying that the state could be entering “banana republic” territory. In such a condition, even the lottery is not safe.
The state is hitting a cash crunch that is unfamiliar territory to its past standards as it faces billions in unpaid bills and pension obligations. Court-ordered payments will, in fact, eat up to 100 percent of the state’s monthly revenue as warned by a top financial official.
Rauner is asking a special session of the Democrat-led General Assembly in an attempt to pass what he hopes will be the first full budget package in almost three years. Illinois will even stand to lose even the lottery if the budget fails.
Each year, the state lotto requires a payment from the legislature. The current appropriation expires June 30 which translates to not having authority to pay prizes. Under such a scenario of a budget deadlock, the state already is planning to stop Powerball and Mega Millions sales.
Rauner said earlier this month that, “We can’t manage our money”, after the General Assembly failed again to pass a budget package by the regular session deadline. He has called for a special session starting Wednesday. The state so far is operating on a series of stopgap spending packages.
The problem has grown in the past years caused largely by the state’s poorly funded pension system— which led Moody’s Investors Services to downgrade the credit rating to the lowest of any state. The state now has $130 billion in unfunded pension obligations, and a backlog of unpaid bills worth $13 billion.
Illinois can try to declare Chapter 9 bankruptcy but that would only be possible if Congress gets involved. Aside from bankruptcy not being allowed, it would also damage the state’s reputation.
Rauner says, however, that the Republicans have a new plan that could remedy the state’s crippling financial situation. The plan is said to incorporate reforms like property tax relief, term limits, and spending caps.
Rauner has pushed for structural reforms, government consolidation and pension reform—elements that were able to pass on the Senate side.
Should the General Assembly fail to pass a budget package, they do have an option to pass another stopgap package, which lawmakers say while being an option, is really “not a good one.” However, the alternative to not finding a compromise will be devastating to Illinois.