Getting lucky with a lottery ticket usually makes one feel like a winner… that is of course unless you live in Illinois where it is very likely that the state will once again be handing out IOUs instead of money when people win. For the residents of Illinois this is old news as they went through this last year for around six months when the state’s budget crisis forced the state to stop payments to lottery winners temporarily until a short-term budget deal could be hammered out and as the Daily Herald reports, “Illinois Lottery winners might — again — face the prospects of not being paid their jackpots in a timely manner if no spending deal is struck by the end of the month.” This will likely mean that the state will face another fraud class action suit if they attempt to continue selling lottery tickets and scratchers with no immediate plans to pay winners promptly should they win.
While many states rely on lottery type systems to generate extra money for state coffers and to pay for special programs, Illinois inability to payout winnings in a timely manner is indicative of much more serious problems within the state’s budget crisis. After decades of Democratic rule at the state level and City Hall of Chicago the Illinois’ financial situation has become so dire that Moody’s Investment Service downgraded the state’s credit rating to junk status back in May. The main driver that has caused this fiasco… unfunded pension liabilities. Like the situation that will soon be occurring in California, Illinois is finding that gold plated pension benefits and sweetheart deals for state employee unions have consequences that occur sooner than anticipated.
While Illinois has been trying to kick this can down the road for a few years now it is becoming rapidly apparent that something will have to be done to avert complete collapse of the state’s finances. Any person with a working knowledge of basic budgeting and common sense would have known that asking employees to contribute a mere fraction of what they would receive in benefits over their retirement + allowing people to retire at a younger age and collect near full pay in pension benefits + guaranteed yearly pension increases was a receipt for disaster.
George Windsor wrote a great piece that sums up the cause of this mess in his article “The 7 Deadly Causes Of The Illinois Pension Crisis” so I will not get into the mechanics of the cause other than to say that the root of the issue is greed. Greed of state union bosses to fill their war chests and greed of politicians for increasing amounts of power. Politicians willingly chained the citizens of Illinois with an albatross that will sink them all to ensure that state employee unions continued to crank out the vote for their elections. In the past there was a reasonable expectation that you made a trade off when you worked for the government. It was expected that going into the private sector you would make more money, but would have to contribute more for your retirement and more of that burden was placed on you. The tradeoff for working for the government was lower pay now, but increase job security and great retirement benefits. That tradeoff is no longer required of government workers as in many cases they make as much or more than their private sector counter parts and did not have to relinquish the job security or retirement benefits. While this mess was made by politicians it is the citizens of Illinois who will pay the bill.