Why is Illinois the Worst Credit Risk in the Nation?

Illinois is the worst credit risk in the nation. A quick way to generate an immediate $400 million/year is to lift the ban on smoking in casinos.


Illinois is the heartland of Blue America. They sent Barack Obama to the U.S. Senate with 70% of the vote in 2004 and they returned the Democratic Whip, Dick Durbin, with a thundering 68% in 2008. Obama won another statewide landslide that year.
The last two gubernatorial elections were won by the disgraced Rod Blagojevich (D), who is now on trial. The court proceedings revealed Blago and his wife spent $400,000 on clothes during the six years he was Governor. The state has a history of corruption in both parties. Now Illinois has taken over from California and is the worst credit risk in the nation. California has a $19 billion deficit this year, and sovereign debt of more than $500 billion. California also has off balance sheet obligations for state employee union pensions of nearly $400 billion. California is so deep in debt that it is difficult to see how it can work its way out.
Nevertheless, the rating agencies say Illinois is number one. Illinois has over $5 billion in debt and can not pay its bills. The Democratic legislature refuses to cut spending. The state comptroller says “We are not paying bills for absolutely essential services. That is obscene.”
Other states would cut their budget or generate revenues, but Illinois rejects that path. For example, the state legislature refuses to lift the ban on smoking in casinos. I am not smoker, but as this chart demonstrates, it would bring in $400 million/year in additional revenue.
Illinois needs money now, and if they are not going to cut public employees, the smokers are a quick way to generate immediate cash. The ban can go back into effect when their fiscal situation is better.
The New York Times describes the current situation by saying:

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 to close a deficit of at least $12 billion, equal to nearly half the state’s budget.

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