Tammany has raised a good many salaries… don’t you know that Tammany gains ten votes for everyone it lost by salary raisin’? The Wall Street banker thinks it shameful to raise a department clerk’s salary… but every man who draws a salary himself says: “That’s all right. I wish it was me.” And he feels very much like votin’ the Tammany ticket on election day, just out of sympathy.
The quote above is from the infamous Tammany Hall political machine in New York.
But these days it could describe Illinois, where the budgeting process has devolved into a scramble to ensure “a good many salaries” for each party’s voting base.
The state has gone 23 months without a budget, and now has a $14.6bn backlog of unpaid bills. That includes $467m promised to the troubled Chicago Public Schools, which never appeared. So the Chicago Board of Education was forced to seek out a short-term loan to cover operations through the end of the school year.
Its persistent budget gridlock prompted S&P and Moody’s to downgrade the state’s debt on Thursday, to one level above junk. Perhaps more importantly, the ratings companies said they would downgrade Illinois again if warring factions in the state’s government aren’t willing to make a deal before the next fiscal year starts. That gives them a month. Another downgrade would push out investors who are prohibited from owning speculative-grade debt, such as commercial banks, said Howard Sitzer, an analyst with CreditSights.
Illinois’s budget problems are confounding at first glance. The state has the fifth-highest economic output in the US and relatively low income taxes, so it should be painless to raise revenues. But this is driven by politics,