Only Money

Two stories, seemingly unrelated.

First, the Wall Street Journal notes that Illinois has a few issues to deal with:

Illinois is an object lesson in why firms are starting to pay more attention to the long-term fiscal prospects of communities. Early last year, the state imposed $7 billion in new taxes on residents and business, pledging to use the money to eliminate its deficit and pay down a backlog of unpaid bills (to Medicaid providers, state vendors and delayed tax refunds to businesses). But more than a year later, the state is in worse fiscal shape, with its total deficit expected to increase to $5 billion from $4.6 billion, according to an estimate by the Civic Federation of Chicago.

Rising pension costs will eat up much of the tax increase. Illinois borrowed money in the last two years to make contributions to its public pension funds. This year, under pressure to stop adding to its debt, the legislature must make its pension contributions out of tax money. That will cost $4.1 billion plus an additional $1.6 billion in interest payments on previous pension borrowings.

Business leaders are now speaking openly about Illinois' fiscal failures. Jim Farrell, the former CEO of Illinois Toolworks who is heading a budget reform effort called Illinois Is Broke, said last year that the state is squandering its inherent advantages as a business location because "all the other good stuff doesn't make up for the [fiscal] calamity that's on the way." Caterpillar, the giant Peoria-based maker of heavy construction machinery, made the same point more vividly when it declined in February to locate a new factory in Illinois, specifically citing concern about the state's "business climate and overall fiscal health."

I have a college friend who is a teacher in Illinois and he seems amazed that the pension he's been promised seems to be swallowing up the state budget. Math is hard.

Next, our old pal John Marty, in William Proxmire mode, has been running the numbers on the Vikings stadium:

If the bill for the Minnesota Vikings new stadium passes the cost to taxpayers will be $77.30 per ticket, per game, for 30 years, according to an analysis by state senator John Marty, who submitted his findings to his colleagues yesterday. . . . If the taxpayers of Minnesota think $77.30 is too much, Marty has even worse news: the real cost is much greater because his calculation does not include the value of the property tax exemption on the stadium and the parking ramps, nor the value of the sales tax exemption on construction materials.

To be fair, there will be many more events than 10 Vikings games a season in the building, so that cost will be less, potentially substantially less, than $77.30 per ticket. At the same time, Marty is correct about the property tax exemption and there's also the likelihood that the project costs we've heard are seriously lowballing what a stadium would actually cost. So, while the $77.30 per ticket subsidy is probably overstated, it may not be overstated by much.

The larger issue is this -- beyond the crushing amount of debt the federal government runs up each year, many states are looking at equally crushing debt loads. More importantly, there seems to be no understanding of how screwed we really are already. The money that so many people have assumed would be forthcoming simply won't be, for a variety of reasons. So when I see Mark Dayton and Paul Thissen braying about Republican obstructionism, I only wish I were more confident that the Republicans would actually do some obstructing.