“Trouble comes in threes,” or so the saying goes.

But when we’re discussing the dismal financial condition of the public sector in Illinois, three is a woeful understatement.

There’s red ink flowing over every level of government—villages, towns, cities, and, of course, the State of Illinois, which is the biggest fiscal train wreck, followed by the city of Chicago and its public schools.

Here are some disturbing details:

  • Chicago schools are, for the first time, on the state’s “watch list.” CPS is spending nearly $1 billion more than it can afford, pension obligations are soaring, there’s management turmoil at the top and Governor Rauner is openly suggesting bankruptcy as the only way out.
  • The city’s credit rating keeps dropping, which increases the cost of borrowing and the burden on taxpayers. City Hall is also coping with an estimated $300 million budget deficit and a state-mandated $500 million-plus payment for police and fire pensions.
  • State government is facing a $6 billion budget shortfall, a mountain of unpaid bills and $100 billion-plus in pension liabilities.

This is arguably the worst multi-level financial crisis in Illinois history, a bi-product of public officials who’ve relied on ill-advised, politically motivated short-term fixes, or inaction—kicking the can down the road.

As a result, these heavy debt burdens put current taxpayers at risk, threaten future generations and undermine our business climate.

It’s ugly. And there’s an urgent need for serious remedial steps.

Unfortunately, that’s easier said than done because the situation is extraordinarily complicated, and there are no simple solutions, so the next few months will be critical to the development of a realistic blueprint to save government from itself.

A rescue plan has to come from: The Governor’s Office, the Statehouse, City Hall and the CPS boardroom; in consultation with public employee unions, and business, civic and academic leaders; and only after extensive public hearings.

Some of the most uncomfortable options and trade-offs have to be considered.

Among them: Curtailing more pension benefits, which will further infuriate unions and punish current and future retirees; restructuring long term financial deals, which will tee off investment bankers; sanctioning municipal bankruptcy, which will rattle local officials; raising taxes, which will take money out of citizens’ pockets and business bottom lines; cutting services, which will affect recipients and antagonize lawmakers; and privatizing some government services, which will create anxiety for everyone who remembers Chicago’s abominable parking meter deal.

This is described as “shared sacrifice,” but that’s actually a misnomer because the architects of the fiscal fiasco—our government leaders—generally walk away unscathed, with no consequences and minimal sacrifice.

It’s not fair, but it’s reality, and righting the ship requires all hands on deck—thinking outside the box, considering every option, including every stakeholder, and maintaining transparency.

Along the way the courts will also play a role, beginning with an imminent ruling by the Illinois Supreme Court on the constitutionality of the General Assembly’s 2013 pension reform plan.

The consequences of that decision are enormous.

And resuscitating this dazed triumvirate—CPS, Chicago and Illinois—is a daunting, gargantuan challenge for even the most powerful political leaders.

But it’s time for them to get going, because the longer they wait, the closer we get to going over the fiscal cliff.

And don’t look down because the drop is precipitous.

Andy Shaw is President & CEO of the Better Government Association. He can be reached at ashaw@bettergov.org. Find him on Twitter @andyshawbga.