CHICAGO • Like your cousin who doesn't pay his bills on time and squanders money he doesn't have, Illinois is paying the price — in both cash and reputation — for years of ignored warnings about its pension crisis, the worst in the nation.
Largely because of its unfunded retirement plans, Illinois has replaced longtime bottom-dweller California as having the lowest credit rating of any state. So when Illinois tries to borrow money, it faces the same problem as the spendthrift cousin: far higher interest rates.
The state's financial failings are so well-known, they have inspired a name on Wall Street — the "Illinois effect," a reference to the fact that cities, universities and other bond-issuing entities here must pay more in interest, even if they are responsible spenders.
H/T Mark Sletten