Illinois Bankruptcy Bailout/Tax Burden (Fulton, Hamilton: 2015, health insurance, home)

[wase4711]

I'm not a constitutional lawyer, but didnt the suck hole Illinois politicians amend the constitution awhile ago, making pensions untouchable without a constitutional change?

Not sure if bankruptcy negates that, but, as others have said, the chances of the state filing in the not too distant future is about 0000000000.1%, IMO..

So much easier for the political criminals running the state to keep raising taxes, pretending that does anything to undo the nightmare THEY created, and watch the endless exodus out of Illinois....

[MSchemist80]

I would assume a federal bankruptcy trumps state constitution.

[wase4711]

but is it a "federal" bankruptcy, if a "state" files it?

obviously, its never been done before, and, if there is any way of screwing residents/creditors/pensioners, no one would probably be better at that then the criminals who inhabit Springfield..

[MSchemist80]

It would be filed in federal court so yes.

[LTU2]

Originally Posted by wase4711

but is it a "federal" bankruptcy, if a "state" files it?

Article 1 sec. 8 of the U.S. Original 7 Articles authorizes Congress to enact uniform Bankruptcy laws. They are under the Exclusive Jurisdiction of federal authority/courts.

Although states have their own supplements, such as Exemptions, they are passed under authority of the Federal Bankruptcy Code.

As the chemist said, it has to be filed in Federal court, as there is no such document as a State Bankruptcy Petition.

[Bamaman1]

My father worked and retired after 40 years at the Tennessee Valley Authority--the largest electricity provider in the U.S. It's a U.S. government agency, and used to build and maintain their own dams, coal fired steam plants and nuclear plants.

Like many government agencies, they maintained a work force at lower than normal wages by offering lots of vacation and great pension programs--and better retirement programs than private industry.

But at one point, salaries increased to equal levels in private industry, and the pension benefits also increased exponentially. And TVA realized they could no longer generate the cash profits to support the retirement benefits while spending massive amounts to switch over to nuclear power plants.

So TVA decided to go out of the construction business and turnover future building and annual maintenance to private industry. They had massive layoffs and went from 33,000 employees (approx.) to about 12,000 employees. At the same time, they had massive retirements--many early retirements--and people cashing in.

Since then, the power rates have just about doubled. TVA still has possibly $ billions in unfunded retirement liabilities, and they still cannot on top of the benefits--despite most of the retirees dying.

At least they faced reality, and they were not corrupt state, county and city agencies like what's in Illinois. And Illinois governmental agencies' promised pensions are "Pie in the Sky" pensions--much more monthly pension payments than the employees deserve to be paid.

Illinois and many states simply are far past the point of no return. There's no way any elected officials are willing to take incredibly difficult decisions to force mass layoffs--and I'm talking 50% or more of their employees they cannot afford to support in their retirement years. It's simply a problem with no plan of action and no way out other than governmental bankruptcy. And at one point, individuals will have to take a pension cut--a pension they never deserved in the first place.

[My Kind Of Town]

Quinn took a gigantic axe to pensions back in 2010. Tier 2 benefits are SIGNIFICANTLY worse than Tier 1. Like night and day. The state won’t see the real benefit of that reform for another 10 years though.

[ctr88]

States being able to declare BK would be great. Let the MUNI bondholders take a huge haircut too. That will provide more underwriting discipline in future MUNI bond lending. They will not be so quick to lend, and states like IL will be forced to live "within their means" like everyone else needs to, in order to issue bonds that investors will buy.

[Curly Q. Bobalink]

I happened to speak with a guy at my former place of employment today, he had bought a nice, new home in a south suburb just before I retired a couple of years ago, and I asked him about it. He said the place is worth about $300K today, but that his taxes are currently $15K per year. That's what, five percent? The guy probably makes an "average" wage for the area (I'd guess in the 50's). On what planet is that sustainable? I don't understand how he is able to pay it. Who will he be able to sell that cash-sucking machine to, especially if mortgage rates ever go back up? The guy is still fairly young, with a nice wife and kid, but man, FIFTEEN THOUSAND A YEAR, before he ever pays his first water bill? Imagine if he were able to pay a much more reasonable $5K per year, and put the rest into a 401k, how his life would be different in thirty years.

Illinois is a sadist with 12 million masochists living inside its borders. "Bleep" me, I'm tellin' ya.

[Rag King]

Originally Posted by SLKNWJXNQ

As a resident of Illinois (not a home owner), I have read extensively about the Illinois tax burden and especially the amount of property taxes, owners must pay. As someone who wants to own a home, the amount of property taxes scare me to a point where I have thought about moving to other states to buy a home.

In the next year I believe Illinois and Chicago will declare some form of bankruptcy because of the amount of financial stress the pandemic has put on the state.

What would bankruptcy look like? If the federal government does not bail the state out would we see taxes continue to climb?

If the federal government did give us a bailout taxes would theoretically be lowered? Right?

Also I am a state employee very far from retirement but how would this situation effect pensions and salaries for state employees? I currently work in the schools where most of the teachers make upwards of 70,000 per year. Would Illinois continue to pay state workers well?

The longer you stay, the harder it is to leave. Many older state employees hired prior to 1/1/2011 are locked into pension systems that are non-transferrable. I would suggest contacting the administrator of your pension plan and look into what transfers versus what money you will leave on the table if you quit your state job. That issue notwithstanding, I have personally watched state university employees with up to 15 years of experience abruptly quit and head to other universities out of state. Leave Illinois - especially if you are under 35 and single.