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  #791  
Old 07-11-2018, 11:23 AM
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  #792  
Old 07-11-2018, 11:35 AM
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Originally Posted by campbell View Post
PENSIONS
I scrolled by that really fast and thought it said
PENISONS
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  #793  
Old 07-11-2018, 03:18 PM
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https://www.ilnews.org/news/state_po...65587ffca.html
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One year after historic tax increase, Illinois remains in the red
Spoiler:
One year ago last Friday, lawmakers overrode Gov. Bruce Rauner’s veto, passing a $36.5 billion budget that took an additional $5 billion from taxpayers and ended a more than two-year standoff between the freshman governor demanding pro-business reforms and Democrats in the General Assembly, who passed a budget with the help of a handful of defecting Republicans.

The final vote tallies were slim but Democrats passed the budget Rauner that said in his veto message included “no changes to create jobs and grow our economy. It will push more families and businesses out of our state.”

On the House Floor, Democrats and Republicans that crossed their politically-allied governor extolled the virtues of creating stability for the state’s educational institutions and averting the dubious title of “first junk-rated state” while raising the money to keep social service providers open and paying down billions of dollars in backlogged bills.

State Rep. David Harris, R-Arlington Heights, told his colleagues on the House floor that there was no joy in voting for a tax increase, but "how long can this impasse go on? We all understand where we are. We're looking into a financial abyss."

House Speaker Michael Madigan, D-Chicago, won the day, successfully overcoming Rauner’s veto and securing permanently higher tax rates of 4.95 percent for personal income and pass-through businesses and 7.95 for corporate income. “Our budget agreement was made possible by legislators on both sides of the aisle who looked beyond partisan differences and put the best interests of our state and its residents first," he said.

Whether the budget did that is still being debated.

Orphe Divounguy, chief economist with the Illinois Policy Institute, said the tax increase contributed to Illinois’ sluggish economic growth in relation to the rest of the nation.

“The U.S. economy is doing really well,” he said. “But in Illinois, what we saw after the tax increase is that jobs growth slowed 34 percent relative to expectations and 30 percent relative to the rest of the nation.”

Divounguy said that the budget raised revenues, but failed to slow spending, leading to the ongoing $3 billion budget unbalance.

“Those people who are not leaving the state are going to have to pay are going to pay higher and higher tax bills to take care of their state government obligations,” he said.

Regardless of whom were to blame for the historic budget stalemate, healthcare providers, social services, and various other businesses that relied on the state making good on their contracts and grants were stretched to the limits during that time. Many closed.

“We're happy to have a state budget but what many people don't realise is that the budget impasse effects continue to be felt,” said Andrea Durbin, CEO of the Illinois Collaboration on Youth. “This year's budget didn't address the backlog of bills.”

One of the largest issues the state failed to address with the budget was its largest debt: $130 billion in unfunded pension liabilities.

“Fundamentally we are where we were three years ago in terms of our overall situation concerning the unfunded pension numbers,” said Bill Bergman with the nonprofit Truth in Accounting. “That’s despite a huge tailwind in the stock market.”

The budget that took effect July 1 spends $38.5 billion.
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  #794  
Old 07-15-2018, 03:43 PM
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http://www.chicagobusiness.com/artic...UE07/180709917

Quote:
What the Supreme Court's new majority means for Illinois' fiscal mess
Spoiler:
With a new majority set to take control of the U.S. Supreme Court, it's time to look forward and consider how it may ultimately resolve Illinois' long-running fiscal crisis. As it did with its recent landmark ruling on public-sector unions, the court could have the deciding say on a number of state issues.

First, suppose Illinois amended its constitution to delete or soften its pension-protection clause and proceeded to cut pension benefits. Public unions would sue in federal court, they've said, based on violation of the Contracts Clause of the U.S. Constitution.

Or suppose Congress amends the bankruptcy code to allow bankruptcy for states. That's not far-fetched. Gov. Bruce Rauner spoke openly about it last year, saying he had a bill ready to go. If it passed, a constitutional challenge would be certain.

And suppose the General Assembly authorizes Chapter 9 bankruptcy for its towns and cities, as have many other states such as Michigan. Because it's been used little, Chapter 9 is subject to many important, unresolved issues. For example, we don't know for sure whether the securitized bond structure authorized last year for Illinois municipalities will hold up in court, though it's designed to provide bulletproof protection for bondholders even in bankruptcy. Chicago's bond buyers have bet heavily on it.


The Janus decision by the Supreme Court last month alone will have a monumental impact on Illinois, but more may come. Janus invalidated forced union dues for public employees, but the day after that decision, the court took a further step that got little notice. It ordered the federal appeals court in Chicago to take another look at a decision against a group of home caregivers that had sued to claw back similar union dues already paid. How far such clawbacks may go is unclear.

Underpinning most of those questions is a key matter on which federal courts have a very different viewpoint than Illinois courts. That's what's called the "police power" issue. It's only a matter of time before a federal court faces that issue somewhere in Illinois where essential, basic government services fail. Arguably, some places are there already, like Harvey, East St. Louis and parts of Chicago. The Supreme Court has long recognized that government must be made to work, regardless of the Contracts Clause and other objections.

More:

The sensible way to end the state's pension crisis

What the Supreme Court's anti-union ruling means for democracy

Chicago Fed team proposes perhaps the dumbest 'solution' yet to the state's pension crisis

Perhaps the nation's top court will even give life to the Guarantee Clause in Article IV of the Constitution. Though it has long been ignored, it firmly obligates the federal government to guarantee to every state a "republican form of government." What "republican" means is a story for another day. At a minimum, however, it means government of some kind. If basic services truly fail, federal courts will try to find a way to restore them, and the Guarantee Clause would help if it were honored.

A conspicuous portion of the Janus opinion is pertinent. The court seemed to go out of its way to describe Illinois' financial problems. The court held that the First Amendment prohibited forced union membership because a member should be free to advocate as he or she chooses on those problems because they are so grave and far-reaching. "To suggest that speech on such matters is not of great public concern . . . is to deny reality," Justice Samuel Alito wrote in the majority opinion.

The scope of Illinois' problems, in other words, influenced the court's ruling on the First Amendment. So it will be, I suspect, on other Illinois matters that will end up before the court.

Mark Glennon is founder of Wirepoints, an independent research and commentary organization.​
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  #795  
Old 07-15-2018, 03:44 PM
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https://fixedincome.fidelity.com/ftg..._110.1#new_tab

Quote:
Pension woes take toll on Illinois local government ratings

Spoiler:
CHICAGO – The western Chicago suburb of Forest Park became the fifth Illinois community since early last year to suffer a multi-level rating cut from Moody’s Investors Service with pension strains cited a key factor.

Moody's (MCO) dropped the village just west of Chicago three levels to Baa1 from A1. The downgrade earlier this month affects about $7.2 million of outstanding debt. The outlook remains negative.

The downgrade “is based on the village's weakened reserve position, structurally imbalanced operations and a high and growing pension burden.”

The village of about 14,000 residents has limited ability to raise local revenues and is dependent on uncertain state revenue sources. In its favor is a growing tax base and modest debt burden.

“The negative outlook reflects ongoing operating deficits," Moody's (MCO) said. "The village's pension contributions are also very weak relative to plan funding, pointing to further growth in its unfunded liabilities.”

Further draws on operating reserves, growth in its debt or pension burden, and a weakening of its tax base could drive further rating deterioration.

Pension strains have been a primary driver in 31 downgrades of Illinois municipalities by Moody’s since January 2017. Forest Park marks the fifth, multi-notch cut during that period, according to Moody’s data provided by spokesman Joe Mielenhausen.

Calumet Park slid to Baa1 from A2 last September. Danville fell to Baa2 from A3 in June 2017. Oak Lawn was dropped to Baa1 from A2 in February 2017. Flora lost its investment grade when it was cut to Ba1 from Baa2 in January 2017.

The pension strains of local governments have received heightened political, market, and rating agency scrutiny since the Illinois comptroller’s office put in place this year — as required under a 2011 law — a procedure allowing local public safety pension funds to intercept state collected revenues to cover shortfalls in pension contributions. Reports have found that hundreds of municipalities are behind on contributions and their funds could move to use the intercept. So far only Harvey’s police and firefighters’ funds and North Chicago’s firefighters’ funds have taken such action.

The Illinois Municipal Retirement Fund — a statewide fund that covers most general local government employees — has had the ability to intercept a single revenue source for a few decades and is currently intercepting funds from nearly a dozen municipalities.

It must now move to the same procedure that applies to the public safety funds, which makes available a pool of nearly all state collected funds like sales and gambling taxes. While the IMRF now has access to a wider pool of funds to tap, it will also have to compete with potential claims filed by public safety funds.


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