Illinois Makes Forbes' List Of Death Spiral States

Yeah Illinois! We made Forbes’ list of death spiral states  – states to avoid when buying a home or investing in municipal bonds.
States ended up on this list by excelling in two areas: 1) having a high ratio of inhabitants dependent upon the state relative to the number of people productively employed and 2) ending up in the bottom half of credit worthiness rankings of all the states.
The first measure is called the taker/ maker ratio and Illinois scored 9th out of 11 with a ratio of 1.03 – slightly more than one dependent person for every productive person. Illinois is known for it’s huge unfunded pension liability and in this ranking every $100,000 of unfunded liability counts as an additional taker. According to the Forbes article:

Illinois is especially known for its dishonesty, whether among officeholders (future license plate motto: Land of Corruption) or in the habit of under-accounting for promises to government employees. The Rauh study counted $66 billion in the till to cover pension obligations of $233 billion.

The second ranking is based upon Conning & Co’s evaluation of a state’s debts, business climate competitiveness, home price strength and employment trends. Illinois excelled in this metric also.
The article goes on to say:

To lend money to California, Illinois or the other nine states perched on the precipice requires a leap of faith. So does buying a house in those locales. Don’t count on a property tax limit to protect your home’s value. If other taxes are high enough, there won’t be any buyers.

This list comes out at a great time. I recently bought a house here. Of course, I knew all this going into it. I just took a leap of faith that prices were so low they couldn’t go much lower and that eventually the politicians and/ or the voters would wake up to the problems brewing here.


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