IL, will they file for bankruptcy

According to the Texas Comptroller, there is a $27 billion shortfall. https://www.window.state.tx.us/taxbud/bre2012/96-402_BRE_2012-13.pdf

"States cannot declare bankruptcy."

True, but they can default on their bonds. Municipal govts can declare bankruptcy.

State & govts are rapidly arriving at the point where they will faced with paying the bondholders or eliminating services. The state & municipal bond market has been cratering since September. Yesterday NJ had to pull back a bond offering due to a lack of demand.

The feds will soon be faced with bailing out the locals & risk their own bond rating or letting these govts collapse. Either way another financial crisis is looming

Kush, you are absolutely correct. It may not be 27B, but it's in the high teens at least.
I read up on this and found my mistake stems from last budgets figures. Texas only does budgets every 2 years.
It will be very, very interesting to see how Texas, with its total Republican governance, deals with their problems as compared to California, New York and Illinois.

cuomo has promised no taxes and big cost cuts. Whether he can deliver this with one of the most dysfunctional legislatures in the country is another matter

Interesting piece in the WSJ about little known financial crisis in 1841


WSJournal piece

Apparently, the lame duck politicians in Illinois do not know about the Laffer curve and how raising taxes can actually result in lower total revenue.....It's OK - they will find out the hard way, but I as a taxpayer need to pay for their ignorance. Illinois has one of the higher corporate tax rates in the region and they just raised person tax 67% ---- WITHOUT CUTTING SPENDING!

If anyone in Illinois ever again votes for a Democrat they are STUPID .....

Perhaps you can point out a time in history where that technique has actually worked.

Maryland has a millionaire tax that brought in less than anticipated. I believe NY has a similar tax which cuomo is for repealing for the same reason.

Back in the early 90's congress passed a luxury boat tax. The tax was so onerous that the American recreational boat industry almost disappeared. In that case not only did it bring in less revenue, thousands of middle class jobs were lost.

Maybe a state’s future economic well-being is not adequately described by a comptroller’s forecast of future surpluses or deficits. Maybe it’s a little more complicated than that. Perhaps a second opinion would be in order.

Meredith Whitney is a financial analyst who runs NY-based Meredith Whitney Advisory Group. A few years back, she made a name for herself by predicting the looming financial crisis in the banking sector. At the time, the banks insisted that all was well. She said it wasn’t. Guess who turned out to be right.

Meredith is a frequent guest on both CNBC and Fox Business News. The success of her firm depends not upon catering to either the political left or right, but upon being correct.

After completing a study, Meredith and her staff have recently begun warning of the next big financial crisis – state and local government financial insolvencies. In one part of that study, they ranked the financial condition of the 15 largest states. As summarized 3½ months ago in CNN/Fortune, these are their rankings:


Worst States
1. California
2. Illinois, New Jersey, Ohio (tie)
3. Michigan
4. Georgia
5. New York
6. Florida

Best States
1. Texas
2. Virginia
3. Washington
4. North Carolina

Neutral: Maryland, Massachusetts, Pennsylvania


So, maybe Texas isn't in such bad shape after all.

So, Illinois is going bankrupt and lame duck politicians in the final hours pass a 67% tax increase in their final hours without cutting spending......Lets see how unemployment and revenues do in Illinois in 1 year. I think the picture will not be pretty UNLESS they cut corporate tax rates AND DRASTICALLY cut spending.