Where would you prefer your Illinois taxes go: to wealthy bondholders or to the Department of Children and Family Services to protect innocent, vulnerable and abused kids?
Who in his right mind would pick the wealthy bondholders? But that is precisely what the state of Illinois has done when setting its priorities. Investors and lenders are reaping nice profits by buying Illinois bonds that, because of the state’s extraordinarily low credit rating, pay a high interest rate.
Billions of dollars go to pay off Illinois’ ballooning debt while the Department of Children and Family Services struggles to do its job. Witness how a police officer tried to report suspected child neglect to the state’s 24-hour hotline. He was told to leave a message and wait up to 4 days for a callback.
The Department of Children and Family services simply don’t have enough people to rescue the state’s abused and neglected children. It’s budget is over $1 billion, but that’s a pittance to what Illinois, i.e. taxpayers, spend to pay the interest on all its outstanding loans amounting to more than $200 billion.
If the state wasn’t burdened by all these interest payments, more money could be directed at saving children from the nightmares we regularly read about.
It’s the same way for their education. Greg Hinz of Crain’s Chicago Business recently reported that state “spending on pensions overtakes spending on children’s education:”
The cost of servicing Illinois’ pension debt continues to soar, devouring state government resources. This year, the state spent more on pensions than on educating children, according to data from the Illinois Commission on Government Forecasting & Accountability, the Legislature’s fiscal research unit. By contrast, in 1996, the state spent almost six times as much on aid to elementary and high schools as it did on pensions.
Who are these bondholders–the lenders who keep saving Illinois from plunging into bankruptcy, while charging high interest rates, thank you very much? It would take some serious investigating to find out, if it’s possible at all. One would suspect that they are very wealthy people who could afford to risk taking a flyer on such risky bonds–the riskiest of any state. The one-percenters that progressives decry?
Years ago, Chicago media made an issue of bondholders who allegedly were harvesting nice profits from government indebtedness. One Donald Bonniwell, an investment banker who (or his clients) held bonds for the Chicago Skyway. It was a financial flop, not attracting enough traffic to pay the tolls to fully fund the bonds. Each time the city tried to raise the tolls, the media spotlighted the effort to “bail out” the bondholders.
Not anymore. Bondholders apparently no longer interest the media or the Democrats who run the state, who now seem content to let paying the interest on loans come before the welfare of Illinois’ children.
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