Illinois Budget Crisis

Illinois Budget Crisis

About Illinois Budget Crisis

Illinois, one of the US most populous states in the US is grappling with budget crisis. The state was lowered three steps above its junk by Fitch Ratings in the middle of a political stalemate that has left the state without a budget for the past four months. Hence, budget impasse in the state which is worsening by the day. So far, the crisis has triggered different credit downgrades to local agencies and cities around.

The one step downgrade by Fitch Ratings BBB+ from an A affects up to $26.8 billion of the general obligation in Illinois. According to a statement released by Fitch, Illinois is the worst rated state with four steps above junk, an A3 by Moody Investors service and has an equivalent A- by Standard& Poors.

The state is grappling with unpaid bills amounting $6billion because the Democrat controlled legislature while Republican Governor Bruce can’t agree to it, especially on a spending plan for the financial year that started July 1st.

There are also reports that Illinois would delay its November and December payments to different pension funds. The move is worsening the crisis because it is credit negative for the state. The downgrade further reflects the continued deterioration of Illinois financial flexibility in its extended budget impasse.

The state also has other budget jams including standoffs in the 1990s between the republicans and the legislature. However, the crisis did not last for long.

Effects of Illinois budget crisis

Increased shootings in Chicago-cases of shootings have increased in Chicago as a result of reduced budget to cater for counseling services and other programs aimed at preventing violence and eliminating street children. Community organizers have also cut on summer jobs, churches have lain off jobs and many school activities have been cancelled. The youths are therefore idle and they have more time to engage in shootings and selling of drugs.

Cancellation of police training programs – classes have been cancelled in different police officer training centers including those that offer training on how to handle mentally unstable individuals and proper use of force.

Electricity issues in state Capitol– there are electrical issues according Illinois secretary of State Jesse White and it could worsen if the budget crisis is not addressed as soon as possible. This could also mean halting of garbage pickup in the state.

Workers could soon be laid off– there are organizations that have already laid-off their workers and there are others that are preparing to do at the end of the month.

Increase medical care expenses– the state of Illinois is no longer paying dental and medical claims for more than 150,000 state employees because their insurance is on hold.

Child Care Assistance Program has been interfered with- due to Illinois budget impasse, many parents have stopped enrolling their children in daycare facilities. Many centers are now struggling to stay operational with few children. Parents are also desperate to get nannies to watch over their kids. What’s more, there are new legibility requirements affecting the program.

Loss of energy assistance for low income families– budget crisis in Illinois had also affected the States Low Income Home Energy Assistance Program. It should have provided subsidies to low income families early November but it did not. Therefore, those living with disabilities and senior citizens have to dig their pockets deeper to pay their utility bills without any assistance from the state. What’s more, the state has not approved any funds for the programs, meaning that more than 150,000 low income families will be affected.

Therefore, Illinois must try as much as possible to address its budget impasse and government worker pension crisis. If not, it will be forced to divert a lot of funds from other significant government organs and functions. It is good to note as the fiscal year professes, there are less options remaining for closing the gap based on a current year basis. It could mean pushing a possible Illinois budget crisis solution to fiscal year 2017.

Fortunately, even in the absence of a comprehensive budget and pension reform, there are other things that the state can do to reduce the impact of Illinois budget crisis.

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