The Sun-Times came out in support of Blagojevich’s plan to restructure Illinois’ pension debt. Now, Steve Neal has jumped in trying to sell it as an obvious choice.
The problem is that it isn’t clear that the deal is that great and the profits are taken up front. The revenue crunch isn’t likely to be one year, though this will be the worst. If a 10 profit is booked upfront, why is that a good thing? It continues the states’ tendencies to take one-shot deals to cover continuing expenses.
Not to be overlooked, it assumes that the return will be 6%. While that might be likely, the State of Illinois needs to fully examine the effects if that assumption fails and what it will do to Illinois bond ratings.
Finally, the fact that business supports the idea shouldn’t be surprising given Illinois state businesses will benefit from the sale and transactions.
Neal overlooks all of these issues which a responsible legislature should.