By: Mark Glennon*
Illinois and many of its municipalities, including Chicago, are bleeding red with no end in sight. It doesn’t matter whether one side or the other capitulates or compromises in the state’s budget negotiations because nothing approaching a truly balanced budget is being considered. There is no such budget solution to be had.
We began writing here four years ago by warning that a humanitarian crisis will come, the cost of which would exceed the combined damages of Hurricanes Katrina and Sandy, all concentrated on Illinois, though hitting slowly. That crisis is already here for some, and it’s growing. The majority controlling the General Assembly offers just one solution to both the fiscal crisis and the struggling state economy — tax increases, despite already accelerating flight of people and employers from the state.
We repeat our hope that attention will turn to the place that offers a solution, the United States Bankruptcy Code. The primary focus of our Congressional delegation should be amendments to the Code to make it a fast, efficient and predictable means to a fresh start for insolvent municipalities, and perhaps expanding it to offer an option to the state itself. The new administration and a Congress with more fiscal realists should be receptive to those efforts. Those efforts must prioritized.
A broad amendment to the Illinois Constitution deleting the pension protection clause is also long overdue, though the General Assembly remains steadfastly opposed. Bankruptcy and that amendment offer the only constitutional means by which pensions can be seriously reformed in Illinois, and pensions are the primary cause of our fiscal crisis. (The state constitutional amendment, however, would still be subject to challenge for federal constitutional reasons.)
Time is our enemy. More debt accumulates each day, deepening the pain that will come no matter how the crisis eventually resolves.
*Mark Glennon is founder of WirePoints. Opinions expressed are his own.