On May 18 we wrote that we appreciate how busy you and the other credit rating agencies are overseas, what with Europe gridlocked at the intersection of debt and social democracy. We offered to keep you posted on another basket case, the insolvent state of Illinois.
We were alarmed by your threat to impose a further downgrade of "more than one notch" if Illinois "makes no progress on structural budget solutions and does not address the significant pension liabilities and associated cost pressure." We noted that your earlier downgrades of our long mismanaged state government already are costing our taxpayers hundreds of millions of dollars each year in premium interest payments to buyers of Illinois bonds.
Today we're back. First, S&P, the good news, which won't take long: Illinois now has a budget for the fiscal year that starts Sunday. Program cuts and a cigarette tax hike will provide $2.7 billion in relief to Medicaid.
But the good news doesn't resolve your concerns about the $83 billion in unfunded pension obligations, or even the nearly $9 billion in unpaid bills, does it?
Here's where we would love to explain how Democrats and Republicans have agreed on substantial pension reforms that will let Illinois rescue its pension system and free up future revenue to pay for public education and everything else the pensions are squeezing.
But there is no agreement. So we'll try to make the best of things:
• We can report candor: Gov. Pat Quinn warns that the unfunded pension liability now is growing by $12.6 million every day. That's easier to comprehend if you think of it as ... $525,000 ... every ... hour.
• We can report stability: A new report from the Pew Center on the States says Illinois still ranks 50th among the 50 states in the share of its pension burden that is funded. True, the report, which relies on data through fiscal 2010, shows Illinois slipping even further behind other states. But we didn't drop to 51st!
• We can report breadth of vision: The libertarian Illinois Policy Institute, looking beyond that $83 billion shortfall for the state's pension system, calculates that Illinois taxpayers actually owe $209 billion if you add in the unfunded pension liabilities of local governments, unfunded retiree health costs and pension bonds. We could quibble at the edges, but the edges aren't the problem.
• We can report growth: The state's auditor general says Illinois' total liabilities exceed its assets by nearly $44 billion. That, too, ranks worst in the nation. It's up more than 16 percent in one year. Isn't growth good?
• We can report intellectual renewal: Having whiffed at the big pension fix Illinois desperately needs, our legislators are on summer vacation, waiting for their leaders to tell them what to do next.
Meeting Thursday, though, the leaders and Quinn couldn't agree to do much more than look at numbers and meet again. Democrats want to shift some pension obligations — which the state now pays — to suburban and downstate school districts. Republicans see that as a wedge to explore whether too much state education money goes to Chicago.
The more this drags on, S&P, the more you'd think it's really about the Nov. 6 election: Some Democrats want to boast that they've done something about pensions; other Democrats worry that any fix is sure to anger their allies in public employees unions. Republicans aren't eager to help any Democrats politically, especially if it means raising costs on local schools.
What the politicians ought to fear is that you'll follow through on your threat to crash Illinois' credit rating. Clearly, the pols don't take you seriously. Maybe incumbents of each party think that, whatever happens, they can bamboozle voters into blaming the other party.
Yes, Standard & Poor's, we know: Voters aren't that stupid.
Think what you will of these Illinois officials, S&P. We'll keep you posted.