Now It's Illinois

We have been watching CA and mentioning NY, NJ, IL, and NV as other states who are woefully underwater in deficits.

Today the New York Times is reporting that Illinois isn't paying it's bills...and it's getting worse every day.

CHICAGO — Even by the standards of this deficit-ridden state, Illinois’s comptroller, Daniel W. Hynes, faces an ugly balance sheet. Precisely how ugly becomes clear when he beckons you into his office to examine his daily briefing memo.

He picks the papers off his desk and points to a figure in red: $5.01 billion.

“This is what the state owes right now to schools, rehabilitation centers, child care, the state university — and it’s getting worse every single day,” he says in his downtown office.

Mr. Hynes shakes his head. “This is not some esoteric budget issue; we are not paying bills for absolutely essential services,” he says. “That is obscene.”

For the last few years, California stood more or less unchallenged as a symbol of the fiscal collapse of states during the recession. Now Illinois has shouldered to the fore, as its dysfunctional political class refuses to pay the state’s bills and refuses to take the painful steps — cuts and tax increases — to close a deficit of at least $12 billion, equal to nearly half the state’s budget.

See it here; http://www.nytimes.com/2010/07/03/business/economy/03illinois.html?_r=3&partner=MYWAY&ei=5065

As the article goes on to say, states technically can't go bankrupt...it's against the law. So that means that somehow they are going to have to cut all the services and programs and figure out a way to pay all that they owe.

And of course this doesn't include the 50% unfunded public pension that the state has.

Of course they WILL be going to the Federal Government asking for some more free money.

Fire up the printing press! Sell some more Treasury Bonds!

It's like bailing water from a sinking boat and throwing it into a sinking ship.

That might float the boat for a while....but common sense says it's only prolonging the fact that they are both sinking.