Fiscal crises in Illinois and Chicago have diverted attention from the $8.4 billion in liabilities other Illinois municipalities faced in 2012, up from $4.1 billion in 2001, Bloomberg News reported yesterday. “In the next three to five years, you’re going to find communities in situations they cannot financially recover from,” said Scott Eisenhauer, mayor of the central Illinois town of Danville, with a population of 32,000. “Pension debt is now factored into bond ratings, and you’ll find that some of them won’t be able to borrow like they once did because of pension debt.” Illinois pays more to borrow than any of the 17 states tracked by Bloomberg, with investors demanding an extra 1.03 percentage points above AAA munis to own state debt, Bloomberg data show. The penalty trickles down to localities. The state itself faces a $100 billion pension liability, the largest in the U.S. In December, after years of inaction, lawmakers approved a benefit-cutting bill last December designed to wipe out the shortage in the next 30 years. Its fate is likely to be determined by the Illinois Supreme Court, but perhaps not until 2015.
