Monday, May 16, 2016

Many States Headed Towards Bankruptcy

Illinois, New Jersey, New York, California all facing huge budget holes that will likely increase taxes to egregious levels in a vain attempt to fill them. Residents with properties in these states should sell and rent or move before the panic to meet bond payments begin in 2017. States like New Jersey have already placed a constitutional amendment on the ballot in November that prioritizes state payments of $79 billion per year to the New Jersey Pension Fund over all other types of spending. This includes spending on education, healthcare, police and fire protection, environment, and welfare programs. This will not sit well with many in the private sector that pay the bulk of the taxes. Even more troublesome, total tax receipts will struggle to expand or may even contract dramatically as liquidation intensifies in 2017.

Headline: In Illinois, Some Push Bankruptcy As Solution To Troubled Public Budgets

Each year in Illinois, increasing pension obligations are consuming more of its taxpayers’ dollars, pushing cities and towns to cut core services and raise property taxes just to keep up with the payments, policy experts say.

It’s led a Republican lawmaker to float the idea of allowing municipalities and other agencies to declare bankruptcy. Rep. Ron Sandack even introduced a bill specific to allowing the financially troubled Chicago Public Schools system – whose teachers are preparing to strike – to use the bankruptcy system, but he has no plans to attempt to further it.



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