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  #521  
Old 06-13-2017, 05:36 PM
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https://www.bloomberg.com/news/artic...o-junk#new_tab

Quote:
Illinois Reduces Risk of Bank Swap Fees If Rating Is Cut to Junk

State renegotiates triggers to 2 steps below investment grade
Without a budget, S&P has warned of junk rating around July 1
Illinois’s bankers agreed to soften the blow if the state’s bond rating is downgraded to junk.

Barclays Bank Plc, JPMorgan Chase & Co. and Bank of America Corp. revised interest-rate derivative contracts so Illinois won’t face some $38 million in fees as long as it’s not dropped any further than one step below investment grade, Eleni Demertzis, a spokeswoman for Governor Bruce Rauner, said in an emailed response to questions from Bloomberg News. That threshold had been one step higher, which would have allowed the banks to cancel the trades and demand payment for the full market value.

It’s become increasingly likely that Illinois will become the first state cut to junk-bond status because of the political impasse that’s left Illinois without a full-year budget since 2015. Moody’s Investors Service and S&P Global Ratings lowered its rating to one level above junk on June 1 and signaled another downgrade may follow if it doesn’t enact a spending plan that starts chipping away at chronic budget deficits.


“We have renegotiated all of the ratings triggers on the swaps associated with the state’s variable rate debt to below BB+ or Ba1,” said Demertzis.

The state’s gridlock has driven its backlog of unpaid bills to an all-time high of nearly $15 billion and hurt entities that depend on state aid. With the government avoiding a shutdown because of continuing appropriations and court orders, Illinois is spending more than it’s bringing in, leaving it on track to post a more than $6 billion deficit for the year that ends this month.

Illinois purchased the derivative contracts to protect against the risk that interest costs would increase on variable-rate debt, utilizing a financing technique that was popular before the 2008 financial crisis because it could be cheaper than selling traditional fixed-rate bonds.

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  #522  
Old 06-13-2017, 05:38 PM
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http://www.truthinaccounting.org/new...a-special-fund

Quote:
What exactly is a special fund?
June 9, 2017
Illinois has some very unusual special funds, such as:
The State Furbearer Fund
The State Pheasant Fund
The Salmon Fund
The Sorry Works! Fund
The Ducks Unlimited Fund
The National Wild Turkey Federation Fund
These and 622 other special funds are included in Section 5 of the Illinois Finance Act, which states “special funds, which are established to collect taxes and fees for a designated purpose.” A more simplified list of the Special Funds can be found here.
Another fund that caught my eye was the Octave Chanute Aerospace Heritage Fund, which established the operations of the Chanute Air Museum. Even though the museum closed at the end of 2015, the fund is still accumulating money. In 2017 the fund received more than $14,000, and did not spend any money. As of May 31, 2017 the fund balance was more than $27,000.
My state and local government subcommittee of the Union League of Chicago Public Affairs Committee is currently drafting an issues brief that will discuss Illinois special funds in more detail. It will answer questions like:
• What are special funds?
• How are special funds created?
• What is a special funds “sweep?”
• Should the state have special funds?
• Can a special fund be eliminated?
• Where does money from unused special funds go?
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  #523  
Old 06-13-2017, 05:39 PM
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https://www.illinoispolicy.org/illin...come-tax-hike/


Quote:
ILLINOIS’ PENSION DEBT GREW BY $25B DURING 2011 INCOME TAX HIKE

Despite $30 billion in extra tax revenue, the politicians who passed Illinois’ 2011 income tax hike failed to solve Illinois’ pension crisis or pay off the state’s bill backlog.

What happens when government hikes income taxes by 67 percent but never reforms spending?

When Illinois politicians increased income taxes in 2011, the state brought in more than $30 billion in additional income tax revenue, but continued running huge deficits and racking up more long-term debt.

After lame-duck politicians pushed through the tax hike on the last day of lame-duck session, the income tax rate rose to 5 percent from 3 percent for individuals and to 9.5 percent from 7.3 percent for corporations. Politicians sold the tax hike under the guise of tackling pension debt, fixing the economy, and paying down an $8 billion backlog of bills.

The tax hike ran from 2011 through 2014.

Yet after four years and nearly $32 billion in new tax revenue, Illinois’ economy was a wreck, and the backlog of bills still stood at $6.6 billion. Masses of people picked up and left the state. Illinois shrank every year from 2013-2016, and was the only Midwestern state to lose population on net.

Politicians barely made a dent in Illinois’ unpaid bills

Illinois’ backlog of bills declined to $6.6 billion from $7.9 billion during the years of the tax increase.

That’s a measly $1.3 billion reduction in unpaid bills during a time when the state took in more than $30 billion of additional tax revenue, according to the Illinois comptroller’s website.

Spoiler:

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  #524  
Old 06-13-2017, 05:55 PM
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http://chicago.suntimes.com/news/sp-...get-by-july-1/

Quote:
S&P warns of junk status with no budget by July 1

Adding more weight to the coming weeks, S&P Global Ratings on Wednesday warned that the state’s debt will be rated junk if there’s no budget agreement in place by July 1 — the beginning of the new fiscal year.

As lawmakers left Springfield with no budget in place, S&P on June 1 downgraded Illinois’ bond rating to one step above junk. Moody’s Investors Service followed S&P’s downgrade.

Now, analysts say no budget means a downgrade to junk status come July 1. And the blame is all on a political war that analysts say puts the state at great risk.

“In this case, given the very pronounced and protracted impasse that’s gone on for almost two full fiscal years, we think that it’s above one in two likelihood that we would lower the rating at around the time of the new fiscal year if the lawmakers were unable to pass a budget to begin the new fiscal year,” analyst Gabriel Petek said during a conference call on Wednesday.

“Around that time is what we’re looking at given the duration of the impasse, the accumulation of these unpaid bills and all of the implications that not having a budget has for a state’s finances. We just really see this as a situation that’s deteriorating quickly if they don’t pass a budget.”

Petek noted that that the state’s fiscal downgrades are out of step with the economic cycles of other states which have gradually improved their fiscal condition.

“We think that leads to them [Illinois] being vulnerable to even greater stress in the event of a downturn,” Petek said.

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  #525  
Old 06-14-2017, 02:22 PM
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LAWSUIT

https://www.ilnews.org/news/justice/...4.html#new_tab

Quote:
Appellate court hears case about paying state employees without budget

An attorney for the state’s largest public employee union argued in front of appellate court judges Tuesday that if state employees show up for work, they should be paid. Attorney General Lisa Madigan’s office said if there’s no state budget, there shouldn’t be paychecks.

When the Illinois state budget impasse began in the summer of 2015, Madigan filed suit to halt state employee pay because there wasn’t an appropriation to do so. Both Gov. Bruce Rauner and the AFSCME union then got a temporary restraining order blocking Madigan’s move. The Attorney General's Office waited until January of this year to file an appeal.

During oral arguments of the case Tuesday in front of a three-judge panel of the Fifth Circuit Court of Appeals, Madigan's Deputy Solicitor General Brett Legner explained why the Attorney General’s office waited so long to appeal the temporary restraining order. Legner said they weren’t sitting on their hands. He said they saw a stopgap budget that paid for some government operations as a sign the impasse was breaking, but it became clear at the beginning of the this year that was not the case.

With the impasse continuing, Madigan tried to expedite the case to the Illinois Supreme Court, but the high court said it should go through the normal route.

In front of the appellate court Tuesday, Legner said it’s clear "the Illinois Constitution provides that the General Assembly by law shall make appropriations for all expenditures of public funds by the state.”

Legner argued that even the founders of the United States knew appropriations determined by Congress were important as a check against government fraud, corruption and extravagance.

But AFSCME attorney Steve Yokich said the Attorney General’s Office is going against its own argument “because she has ordered her employees to work despite the fact that there’s no appropriation for her office.”

Yokich said either the AG’s argument is too broad, or there are certain exceptions. He also said there are similarities between the constitution’s contracts clause upholding pension as a guaranteed benefit that can’t be diminished and paying state employees for the work they are contracted to do.

The state hasn’t had a contract with AFSCME since the summer of 2015, but several agreements continue the terms that were in place in the previous contract, which includes a no-lockout, no-strike agreement.

Yokich said if the courts block pay, they better be ready to indicate who is and isn’t an essential employee.

Legner said that’s not the question before the courts.

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  #526  
Old 06-14-2017, 02:28 PM
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EDUCATION SPENDING

https://www.illinoispolicy.org/repor...tions/#new_tab

Quote:
WHAT’S REALLY WRONG WITH EDUCATION FINANCE IN ILLINOIS: PENSIONS AND ADMINISTRATIVE COMPENSATION

The problem with education finance in Illinois isn’t the state’s funding formula and how it distributes education funds. In general, the formula works as intended, with poorer districts receiving the vast majority of the state’s support.

Nor is the problem an overall lack of funds. The amount Illinois spends on education has grown steadily over the past few decades, with Illinois now spending the most per student in the Midwest.

However, increasing the amount spent on education has not guaranteed that more money has been spent on teaching children.

That’s because state education spending is made up of much more than what is spent daily to run Illinois schools. Billions of dollars are spent annually on teacher pensions and district administrators’ compensation, siphoning funds from Illinois’ classrooms.

Education funding cannot be reformed without resolving Illinois’ pension crisis and reducing the state’s teacher retirement costs. Pensions are consuming billions of dollars and crowding out state funding for classrooms and new programs. In 2015, nearly half of the state-level spending on downstate and suburban districts went toward retirement costs.

Illinois also needs to dramatically reduce the amount of bureaucracy in education. That reduction starts with the consolidation of Illinois’ 859 school districts – the fifth-most in the nation.
......
State pension contributions are regressive

State contributions to teachers’ pensions are a regressive portion of the education funding system – the wealthiest districts actually benefit far more than poor districts do.

Currently, the state – not individual school districts – is responsible for paying the employer portion of teachers’ pension costs.

Teachers in the wealthiest districts tend to have higher salaries, and therefore higher pensions. So when the state makes contributions toward the pension funds on behalf of each district, it’s the wealthiest districts that benefit the most from not having to pay the cost of their teachers’ pensions.30

As a result, state taxpayer funding for pensions ends up favoring the districts in Illinois that require the least support. An Illinois Policy Institute study showed that wealthy districts, such as New Trier Township High School District 203, received over $1,000 per student in pension subsidies, while poor districts, such as Edinburg Community Unit School District 4, received less than $250 per student.31

......
Too many districts and too many administrators drain classroom funds

The growing cost of teacher pensions also plays a prominent role in education’s other big problem: too many school districts.

Illinois has 859 school districts – the fifth-most in the nation – many of which are overlapping and unnecessary, providing little value but costing taxpayers millions annually in administrative compensation.

Those costs include hundreds of millions in operating costs and billions more in pension costs that could be spent in the classroom instead.

On average, Illinois school districts serve just 2,399 students per district, the fifth-lowest among states with school populations over 1 million. Conversely, California school districts average 6,067 students.

If Illinois school districts served the same number of students as California, Illinois would have 500 fewer school districts than it has today.36

Nearly 25 percent of Illinois school districts serve just one school, and over one-third of all school districts have fewer than 600 students. An additional layer of administration for these districts is inefficient.37
......
2. Encourage consolidation across Illinois’ 859 school districts

Illinois law makes it difficult to successfully pursue consolidation efforts. And consolidating school districts comes with unique challenges – it is the one type of local government that local residents are generally unwilling to change. Serious consolidation of the state’s 859 school districts will only happen when the state partners with local districts to provide a cooperative solution.

To that end, the Illinois General Assembly should authorize the creation of an official District Consolidation Commission, which would function in a manner similar to the federal government’s Defense Base Closure and Realignment Commission. The commission’s consolidation recommendations – of school district administrations, not of schools – would be approved by an up or down vote, meaning no amendments would be permitted, in the General Assembly.43

Illinois could experience school district operating savings of hundreds of millions annually and could conservatively save several billion dollars in pension costs over the next 30 years by cutting the number of school districts in half.

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  #527  
Old 06-14-2017, 02:32 PM
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http://www.news-sentinel.com/2017061...e=1048#new_tab

Quote:
Michael Hicks: Illinois a joking matter no longer

Over the past several years many folks in the Midwest have enjoyed a good chuckle at the expense of Illinois and its hapless public policy. I’ve heard at least four different governor’s chortle over Illinois debt, the gubernatorial cell mates and the general insensibility of the Chicago Way. Of course, Mitch Daniels was the most humorous, likening the situation to that of living next to the Simpson’s family, with all of their dysfunction. I have even indulged in a bit of it myself, but all of this has been good-humored. Governor Daniels was quick to note the seriousness of Illinois troubles and the potential effect on the rest of us. But that was back in 2011 when no one thought the situation could worsen. It is time to stop joking, as the situation has become much more grim.Chicago is the nation’s third largest metropolitan area, and is the most important city in the Midwest. It offers a focal point for the region, arguably is the nation’s most critical transportation center and has long enjoyed a vibrant economy that could readily survive the bipartisan shenanigans of state government and the corrupt politics of the city. There are now signs that the economic growth, which allowed many to look past the governance failures, is at an end. This will be a disaster for the Midwest.

.....
A Chicago bankruptcy is likely unavoidable, as even the Obama Administration and Democratic Congress made clear that no bailout was in the cards. The bigger problem is that a state cannot really go bankrupt, and will have to deal with the problem through the same dysfunctional politics. One result is that no one will now prudently lend money to Illinois. The state’s bond rating is near junk-bond status, which means precious little infrastructure improvement and no stability over an inevitable recession. Even if wise, effective leaders were to punch through the uncaring party machines, Illinois faces decades of troubles due to its unfunded debt.
......
Chicago matters to Hoosiers because more than one in 10 of us lives within the Chicago metropolitan area. More importantly perhaps, the role of Indiana as a transportation hub relies on the ability of Illinois to maintain its public infrastructure. The time for jokes about Illinois has passed.

Michael J. Hicks is the director of the Center for Business and Economic Research and professor of economics in the Miller College of Business at Ball State University.
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  #528  
Old 06-14-2017, 02:36 PM
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http://www.politico.com/story/2017/0...lection-239384

Quote:
How Illinois became America's failed state
The Land of Lincoln is drowning in red ink. And it's about to have its most expensive election ever.

Illinois has compiled $14.6 billion in unpaid bills. It’s running a deficit of $6 billion, and its pension liability has soared to $130 billion.

That’s not the worst of it. The state’s nearly two-year failure to pass a budget has sent its bond ratings careening toward junk level, downgraded a staggering eight notches below most other states.

With university enrollments plummeting, large-scale social service agencies shuttering and the Chicago Public Schools forced to borrow just to stay open through the end of this school year, Illinois is beginning to devolve into something like a banana republic — and it’s about to have the most expensive election the state has ever seen.

Democrats have flooded the primary to challenge GOP Gov. Bruce Rauner, with billionaire J.B. Pritzker among them. Pritzker has already poured $14 million into his campaign for a general election that’s still 15 months away.

“Illinois is operating in a way 49 other states would never try to operate,” said Laurence Msall, president of the Civic Federation, a nonpartisan fiscal watchdog group. “There is permanent damage that is being done that will take decades to repair.”

.....
To troll Rauner about the budget, Pritzker's campaign created "Tick Tock the Budget Clock," a character dressed as a clock, who follows Rauner at his public events carrying a sign that displays the number of days the state has gone without a budget.

As of Friday, it stood at 709 days, an unprecedented amount of time for a state to go without an operating budget.

“Illinois is a real outlier in the most striking way. The sheer size of the state’s unfunded pension liabilities … just looking at the state’s finances, its habit of deferring payments from one year to the next, has created a vicious circle,” said Ted Hampton, vice president with Moody’s Investment Services. “Illinois has had a very large negative balance both in absolute terms and relative to its budget for many years.”

.....
It’s increasingly possible that Rauner — who promised that he carried negotiation credibility and the know-how to fix the state’s finances — could complete his four-year term in office without ever having passed a budget. At that point, economic forecasts indicate the state’s unpaid bill pile would soar beyond $20 billion. The bill backlog was at about $6 billion when Rauner first took office.

To put it into perspective, the Republican-dominated Kansas Legislature just overrode a veto by its governor from the same party that reversed the governor’s tax cuts and created $1.9 billion in revenue. Lawmakers there panicked after the state found itself $900 million in the hole — a drop in the bucket compared to Illinois.

Few Illinois state pols seem to be panicking. That could be a reflection of voters who don't seem rattled.

Instead of voting on full-fledged budgets, including possibly increasing revenue, the governor and the General Assembly have signed off on stopgap spending plans. That means they’re cherry picking certain areas to fund — keeping schools open and roads paved.

“This impasse has been sort of cleverly positioned to diminish the immediate, obvious impacts on your middle-class voters,” said Andrea Durbin, chief executive officer of Illinois Collaboration on Youth. “Those voters are being deceived, because every single one of us is going to pay more every single day that this goes on. Having the DMV open, state parks, highway construction and K-12 open, it allows your sort of average middle-class voter to be deceived about what is going on.”


Illinois was creative in how it pays its bills long before Rauner took office. It has for years taken the politically palatable option of avoiding tax hikes while borrowing from pension funds, allowing its pension backlog to balloon and failing to sock away money for emergencies. Illinois is just one of nine states to not have a rainy day fund, according to the National Association of State Budget Officers.

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  #529  
Old 06-15-2017, 04:04 PM
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Almost two years since I posted previously about the problems for the lottery. Now...

http://www.chicagotribune.com/news/c...615-story.html

Quote:
Lottery players will no longer be able to purchase Powerball or Mega Millions tickets in Illinois after the end of this month due to state lawmakers' inability to pass a budget, lottery officials said Thursday.

"It is disappointing that the Legislature's inability to pass a budget has led to this development and will result in Illinois Lottery players being denied the opportunity to play these popular games," Acting Illinois Lottery Director Greg Smith said in a written statement. "This is why it's so critical the General Assembly deliver a balanced budget to the governor's desk that he can sign."[...]

A spokeswoman for the Multi-State Lottery Association, which runs Powerball, declined to confirm that a decision had been made to end sales of that game.

"The Multi-State Lottery Association is focused on protecting the integrity of its games and the experience of its players," MUSL spokeswoman Anna Domoto said in a written statement to the Tribune. "We work closely with the Illinois Lottery, and all lotteries selling Powerball, to achieve those objectives…. Matters involving the Illinois Lottery should be directed to Illinois officials."

Officials for Mega Millions could not be reached immediately for comment.
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  #530  
Old 06-15-2017, 04:11 PM
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dangit, I was gonna come here to post that.

here is my post from 2016 on the lottery issue:
Quote:
Originally Posted by campbell View Post
And here is NoName's from 2015:
Quote:
Originally Posted by NoName View Post
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