Last week it was reported that the illinois Budget was in dire financial straits making it a perfect candidate for Sate Bankruptcy. The state faces $15 billion in backlogged bills and mounting ratings downgrades from credit agencies. The struggling state is poised to obtaining the dubious honor of being the first state to be rated junk status in US history. Traders have responded in kind sending the yields on Illinois bonds higher-a reaction from court orders that claim the state violated previous orders and must adhere to prior obligations to vendors.
The State has yet to pass a budget for the last three years – the longest for any US state- and has recently announced via its Transportation Department that roadwork would stop starting July 1st. The Powerball lottery is also considering dropping Illinois over its lack of a budget. Compensation to state employees is in jeopardy of evaporating. According, to a recent piece from the Associated Press, the state Comptroller Susan Mendoza is sounding the alarm regarding the turmoil the financial strapped state is facing. The piece explains that court ordered lawsuits by state suppliers are binding but the state’s monthly revenue isn’t enough to meet these obligations. This puts services such as school buses and ambulance services at risk of shut down.
In the state legislator, both parties are battling over the finances of the state. The Governor, Bruce Rauner, has been adamant about instituting changes to the budget before supporting any tax increases. Democrats in the State argue that his demands like term limits for lawmakers, a four-years property tax freeze, and new worker compensation laws would hurt working families. Such arguments will fall on deaf ears as the State increasingly faces the harsh reality of mounting bills coming due. State suppliers and vendors are increasingly lining up to file lawsuits against the state demanding payment. Recently, The administrator for the State’s Medicaid program went to court to obtain a order for $2billion of unpaid bills. The city is running out of time and drastic measures are needed urgently for the Illinois budget. “Once the money’s gone, the money’s gone, and I can’t print it,” Mendoza said.
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