As Illinois battles with the country’s second-largest state budget deficit—some $13 billion—its treasurer, Dan Rutherford, told CNBC Tuesday that bankruptcy, an idea being floated to close budget gaps, would disrupt the bond market and break trust with vendors who do business with the state.
“It’s taken many years get the state in the condition that it’s in,” said Rutherford, a Republican. “That is going to take adult leadership. It’s going to take statesmen standing up and politicians sitting down.”
Under current US law, states are prohibited from filing for bankruptcy protection, but a movement is afoot to change the law and allow it. However, the proposed change has its detractors, too.