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Illinois State Treasurer Dan Rutherford on S&P’s credit downgrade of the state and the impact of the state’s pension costs on its budget.
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Illinois downgrade S&P lowering its rating on the state on concerns.
That it is failing to address that 96 billion dollar pension fund deficit.
Dan remembered as a state treasurer for Illinois.
And he joins us now you can't tell practical implication of this.
I know that your pension fund they say is only thirty -- 35%.
Funded they consider 80% to be healthier mean this really is about your pension.
What is the implication.
The downgrade.
Well for the taxpayers I think it's two things one of them is a real psychological.
You know do you you keep hear about how Illinois doing so bad -- Moody's Standard and Poor's or Fitch.
But the other is the fact is when Illinois does go into the bond market.
It costs us more money than if we were for example a triple A rated state like the other some other states in the nation are so.
It costs more in interest on the long term type of debt that we're looking to go into.
They said that -- weaken pension fund ratios and a lack of action on reform measures.
-- and they further going to say that they believe the legislative consensus on reform will be difficult to achieve.
Given the poor track record in the past two years which basically means that big downgrading your -- -- feel like.
The politicians in the state are going are still not gonna take action to -- -- -- -- -- -- Right what they did says he also did a negative at negative bond as well.
You know I -- -- the treasure state of Illinois for two years and when I came into office the governor in the general assembly without my support.
Pass the large income tax increase here in January 2011.
And the sad thing of it is were now two years into this income tax increase and -- they did was raise money and that respond to the problem.
I think that this year this spring session of the general assembly he'll finally come home to reality because not only the downgrades.
In fact Moody's Fitch and standard have had eight.
Negative warning watches or downgrade since the income tax increase went into effect.
I think what's gonna happen is now come the next fiscal year 2014.
The natural revenue growth of Illinois coming from sales tax or gain needed income tax without tax increases is about 600 million dollars.
But the reality of the amount of increase payments into the public pension systems.
-- 945.
Million dollars so I think they're gonna have to deal with this 345 million.
You know the reality is that that.
I applaud your opportunity to easily that this is out of my -- that's sort of come to Jesus moment where they realize that -- -- like huge problem.
But I don't know that -- necessarily the kiss because we see California going down the same -- it seems like politicians almost never have that reality moment.
That they have to act I -- what -- -- have to happen.
To have them wake up and and respond to the fact that they committed to these pensions that there is no way they can possibly -- I and that struggle -- -- the idea of good downgrades warnings or watches have been eight times that's an idea.
For the first time now coming up natural revenue growth 600.
Payments intentions 945 increase history -- -- 45 million dollars they have to come up with the either borrowing which is bad.
Going out raising taxes which is bad are cutting -- 45.
Million dollars I get a Democrat general assembly -- a Democrat governor I'm a Republican treasure.
I could tell you what they don't like country under 45 million dollars what they have to look at is how to keep that 945 from growing exponentially like you will be over the next coming years.
I don't know I hope they don't just trying to raise taxes again and not use the money I solve the problem like -- that's we're headed.
Damn I hope that you'll keep us posted you'll come back on the show let us know how it's going is -- is a huge problem we're seeing all across the country California is facing -- more states facing its and is well thanks for permanent.
It's nice -- -- thank you.
