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  #791  
Old 07-11-2018, 12:23 PM
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Stop posting things from the future please
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  #792  
Old 07-11-2018, 12:35 PM
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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, 04:18 PM
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https://www.ilnews.org/news/state_po...65587ffca.html
Quote:
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, 04:43 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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Old 07-15-2018, 04:44 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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  #796  
Old 07-18-2018, 12:38 PM
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https://www.ilnews.org/news/statewid...b.html#new_tab

Quote:
Indiana social service providers turn away Illinois foster kids because of state’s Medicaid delinquencies

Spoiler:
Illinois is ramping up efforts to place children under its care in other states to prevent them from having to stay in mental institutions longer than necessary, but some providers in other states won’t take the kids because of Illinois’ poor record of payment.

Recent controversies over Illinois’ youth-in-care being locked up in mental health facilities longer than they need to be has led to a state push to place these kids in other states, officials said Monday. This, they said, is a better alternative to spending longer periods in an institution.

“Obviously we want to pursue every possibility,” said Neil Skene, special assistant to the director of Department of Child and Family Services. “There may be a mix of a behavioral health need and a physical need that cannot be met in the state.”

Skene said 52 minors under Illinois stewardship are currently placed outside the state, 37 in contiguous states and 15 placed more than 150 miles from the Illinois border. A report by ProPublica in June showed that hundreds of children are held in mental institutions longer than is deemed medically necessary on an annual basis.

Skene and other providers said that parents of institutionalized children will often refuse to take their children back, creating an immediate need for placement.

Placement of a child outside of the state may not always sound like an ideal alternative, but in Southeastern Illinois, placement just across the border in the Southwest Indiana Regional Youth Village is closer than a facility in Chicago. Southwest Indiana Regional Youth Village, however, won’t take in children from Illinois.

“Our reluctance in pursuing a contract is really related to the delays in payment that appear to be systemic with the state of Illinois,” said Lynne Rump, director at the facility. “For us to incur delays in payment really places pressure on our cash flow.”

Skene said payment can either come from the state’s coffers or dedicated Medicaid funds, but contract payment is handled by the state comptroller.

Further north, Jane Dobbins, executive director of Group Homes for Children, a group home for teenage girls in Lafayette, Indiana, said the organization was currently at capacity, but would likely decline a request by the state of Illinois due to its history of delaying payment to service providers for weeks, or even months.

“It would be very difficult for us to survive something like that,” she said.

The hesitation was, in part, brought about by Illinois’ historic budget impasse, where providers went months without payment. Rump said her facility has assessed whether it could accept cases originating from across the state line annually for the past 15 years, but hasn’t “found the business climate in Illinois to be particularly attractive over that time span and it’s almost entirely linked to payment history.”

Andrea Durbin, CEO of the Illinois Collaboration on Youth, said she’s been contacted by other providers in Indiana about whether or not they should take in Illinois’ youth-in-care to get them out of mental health facilities.

“These Indiana organizations are asking me, Is it safe to contract with the state of Illinois? Will we be paid?” Durbin said. “This is just one symptom of what happens when the state is not a good business partner.”

Illinois’ Medicaid program has been criticized for leaving many of the state’s most-vulnerable in need of services while expanding services to the able-bodied.

When told about the providers refusing Illinois’ wards due to poor payment schedules, Skene said that he had not heard about it but would look into whether other officials there had been given that reason for declining to take Illinois’ youth.
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  #797  
Old 07-18-2018, 12:39 PM
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https://fixedincome.fidelity.com/ftg..._110.1#new_tab

Quote:
Income tax hike boosted Illinois books, revenue report says

Spoiler:
CHICAGO — Illinois’ wobbly books were propped up last year by $5.7 billion more in income tax revenue thanks to rate hikes.

Base general fund revenues grew by nearly $9 billion in in fiscal 2018. “Increased income tax receipts, fund sweeps, strong transfers, and increased federal sources resulted in the significant gain,” said the legislature’s Commission on Government Forecasting and Accountability’s June revenue report.


That doesn't mean the state can rest on its laurels as risks loom over spending pressures this year and concerns that some revenue sources in the fiscal 2019 budget won't materialize.

Gross personal income taxes finished at $20.8 billion in fiscal 2018. That’s $5.4 billion up — a net of $4.98 billion after refunds. Gross corporate income taxes ended at $2.6 billion. That’s up $1 billion — $689 million net of refunds.

The fiscal 2018 budget package lifted the personal income tax rate to 4.95% from 3.75% and corporate rates to 7.0% from 5.25%.

Overall, sales taxes were up $213 million, but once direct sales tax receipts were diverted to the transportation funds as required, net receipts actually fell $233 million. Federal sources generated $2.8 billion in growth as the state paid down its overdue Medicaid bills allowing it to leverage more federal matching funds.

The actual results marked an improvement over previous estimates from both COGFA and Gov. Bruce Rauner’s administration with general funds totaling $38.4 billion. That’s higher than COGFA’s estimate of $37.5 billion and the administration’s estimate of $37.4 billion but is due in part to higher tax collections that resulted from accelerated payments as a result of last year’s federal tax law changes.

“While overall revenues outperformed the Commission’s February forecast by approximately 2% and nearly 2.3%" in the case of the Governor’s Office of Management and Budget and Illinois Department of Revenue, “when the highly volatile category of federal sources is excluded, both agencies produced forecasts within 1% of actual results,” the report says.

The state finished off the year on a strong note with base revenues in June growing by $469 million over June 2017. “The increase reflected higher income tax rates as well as a strong performance of transfers” from the state’s capital projects fund, the report says.

The state’s general fund is supposed to receive $245 million annually from the projects fund, but an accumulated deficit in transfers has resulted as taxes and fees raised to help cover the state’s $31 billion 2009 Illinois FIRST program have fallen short of expectations. The fund transferred $440 million in fiscal 2018 to help cover past shortages but is still behind $260 million.

The state’s new budget factors in $150 million following the U.S. Supreme Court’s recent sales tax collection decision in the South Dakota v. Wayfair (W). The state’s fiscal 2019 budget package banked on the decision overturning prior law and so it changed the definition of who is liable for collecting the Use Tax and the Service Use Tax to a “retailer maintaining a place of business in this state” to include any out of state vendors who sell more than $100,000 worth of merchandise in a 12-month period in Illinois or have more than 200 transactions. It could eventually result in about a $200 million gain annually.

Potential holes in fiscal 2019 stem from the budget’s reliance on $445 million of pension savings, most of which would come from a voluntary buyout program, about $250 million from the long-stalled sale of the state’s downtown Chicago headquarters, and the lack of funding to cover up to $400 million owed to employees for step increases based on experience. The budget also does little to further chip away at a roughly $7 billion bill backlog.

“The budget legislation directs the pension funds to implement the buyout plan ‘as soon as practical,’ so it is not clear when it will take effect,” the Chicago Civic Federation wrote in a recent review. “Given the uncertainties inherent in actuarial projections, budget officials who are relying on the savings to balance the budget should also outline contingency plans in the event that the assumed savings do not materialize.”

The state also was ordered on July 10 to provide the Illinois Labor Relations Board, within 20 days, a report about the steps it has taken to comply with a previous order to “make whole” employees who saw their step raises withheld by the state as part of the state’s contract negotiations.

The state must pay “back pay with interest” of 7%, the latest order says.

It’s not yet known what time frame the state will propose to make good on the raises or if American Federation of State, County and Municipal Employees, Council 31, which filed the case against the state will challenge it. The board would act as an intermediary through its compliance process if the two sides can’t agree on how to proceed, said board executive director Kimberly Stevens.


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  #798  
Old 07-20-2018, 11:22 AM
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http://www.chicagobusiness.com/artic...gnews-20180719

Quote:
Moody's has some good news on Illinois credit
Spoiler:
A major bond ratings agency today concluded that Illinois has begun to move out of the fiscal woods.

Moody's Investor's Service changed its outlook on state finances from negative to positive. Illinois' rating remains at Baa3—the lowest investment rate before junk status—but the change in the outlook means that it's unlikely the rating will be cut in the near future, as was the case with the negative outlook.

"Despite continued under-funding of pension liabilities, any credit deterioration in the next two years will not affect the state's finances, economy, or overall liabilities to an extent sufficient to warrant a lower rating," Moody's said in a statement. "This view is supported by the continuing budgetary benefits of the state's recent income tax increase, and near-term fiscal risks that remain manageable."

The change in the upgrade is the first positive statement by Moody's about Illinois finances in several years. The state last had a stable outlook in 2012, when it was rated much higher at A2.

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Neither Gov. Bruce Rauner nor Democratic challenger J.B. Pritzker had any immediate reaction to the news, but the state's financial condition is a major issue in the gubernatorial campaign.

Pritzker has argued that the state needs big changes to improve its economy and finances, including passage of a graduated income tax. Rauner argues that more has been accomplished during his tenure than some appreciate, but the tax hike Moody's referenced was enacted over his veto.

The news also likely will affect a continuing debate over state pension costs. Rauner wants to cut benefits one way or another, but Pritzker has opposed that.

The outlook shift applies to approximately $32.4 billion in state general obligation debt, $12.5 billion in Build Illinois bond debt and about $3 billion in debt for the Metropolitan Pier & Exposition Authority and the civic center program.


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Old 07-25-2018, 02:53 PM
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https://www.bondbuyer.com/news/illin...moodys#new_tab

Quote:
Illinois gets some breathing room from Moody's | Bond Buyer
Spoiler:
CHICAGO — Illinois’ rating risks eased Thursday as Moody’s Investors Service moved the state’s outlook to stable from negative.
Moody’s also affirmed the rating at Baa3, the lowest investment grade level, which applies to both the state’s $32.4 billion of general obligation bonds and its $2.5 billion of sales tax backed Build Illinois bonds.

Moody's revised its rating outlook to stable from negative. Adobe Stock
About $3 billion of state-supported bonds sold by the Metropolitan Pier and Exposition Authority and by the state under its Civic Center program were affirmed at one notch lower.
“The state's stable outlook is in line with expectations that, despite continued under-funding of pension liabilities, any credit deterioration in the next two years will not affect the state's finances, economy, or overall liabilities to an extent sufficient to warrant a lower rating,” Moody’s wrote. “This view is supported by the continuing budgetary benefits of the state's recent income tax increase, and near-term fiscal risks that remain manageable.”
The outlook time range gets the state past the November elections in which voters will choose a governor, state House members, and one-third of the Senate.
In June, state lawmakers passed and Gov. Bruce Rauner signed the first, full-year, on-time budget of his term that began in 2015.
Moody's was the weakest link in the state's low ratings because of the negative outlook at the lowest investment-grade rating.
S&P also has the state at its lowest investment grade level of BBB-minus, with a stable outlook. Fitch Ratings has it one notch higher at BBB with a negative outlook.
The two-year budget impasse between the Republican governor and Democratic-led General Assembly dragged the state's rating down to the weakest levels among states and its spreads to a high of more than 300 basis point to the Municipal Market Data benchmark.
Spreads on the 10-year were at 167 bp and at 158 bp on the 25 year Thursday, according to MMD.
“The state's GO rating incorporates substantial credit strengths — sovereign capacity to raise revenue and reduce expenditures, and a broad, diversified tax base — as well as increasing challenges from fixed costs attributable to employee pension and retirement health benefits,” Moody’s wrote.
Moody’s holds the sales tax bonds at the GO level despite strong coverage ratios because they are “not sufficiently separated from the state's general operating needs to carry a higher rating than the GO, under the Special Tax methodology.”
The state could win an upgrade if it adopts a comprehensive plan to address pension liabilities, makes progress in lowering the bill backlog that does not depend on long-term borrowing, and undertakes measures to achieve sustainable budget balance.
The state is carrying $129 billion in unfunded pension liabilities as assessed by system actuaries and a $7 billion bill backlog. Moody’s in past reports has put the state’s pension liabilities at $201 billion based on the application of its own assumptions.
Renewed growth in the bill payment backlog that reverses progress achieved through financing, a reduction in pension contributions to provide fiscal relief, and substantial assumption of debt or pension liabilities accrued by local governments could drive a downgrade.
The state’s $38.5 billion fiscal 2019 budget benefits from the 2017 income tax hike but faces some uncertainties including a reliance on $450 million of uncertain pension reform savings and the $250 million sale of the state’s downtown Chicago headquarters, and it doesn’t account for $400 million in overdue employee raises.
“While the emergence of a more collaborative budget process has potentially constructive credit implications, the substance of the package largely represents an extension of the status quo," S&P said in a recent review.
“Getting a budget done and avoiding a political stalemate is a positive and something we were specifically watching for,” Fitch Ratings analyst Eric Kim said recently. “That said, the enacted budget has some risks and it doesn’t make material progress” on the state’s long-term strains.
Illinois has 12.8 million residents and ranks sixth by population among the U.S. states. The state's gross domestic product of $820.4 billion in 2017 ranks fifth.
Corrected July 20, 2018 at 9:42AM: An earlier version gave an incorrect total for sales tax backed Build Illinois bonds

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Old 07-25-2018, 02:54 PM
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https://www.watchdog.org/illinois/fi..._medium=social

Quote:
Finance watchdog: Bill on Rauner’s desk could let local governments kick debt can | Illinois | watchdog.org

Tuesday, July 24, 2018

Spoiler:
A government finance watchdog is warning that a bill on Gov. Bruce Rauner's desk could allow local governments to use accounting practices shunned by many private businesses.*
Senate Bill 2638 would allow local governments to file annual reports to the Illinois Comptroller based off cash accounting. Truth In Accounting Research Director Bill Bergman said that’s different from accrual accounting, the standard that all publicly traded U.S. companies are required to use.
“Effectively it’s a way to kick the can down the road and accrual accounting, in theory, should help you recognize those expenses at the time they occurred, not when the cash goes out,” Bergman said.
An example of this is Illinois' $130 billion unfunded pension liability, which isn’t accounted for in the state’s annual budget.
A growing number of governments worldwide have moved to*accrual accounting and away from cash accounting,*according to the authors of a 2016*technical manual*for the International Monetary Fund.
"Pure cash accounting has a number of weaknesses from the point of view of government financial transparency, integrity, and accountability," the authors wrote. "Under cash accounting, transactions are recognized only when the associated cash is received or paid and economic events are not reported if there is no immediate exchange of cash. Governments have been tempted to exploit this weakness by deferring cash disbursements or bringing forward cash receipts as a means of artificially inflating their financial balance."
The Illinois Municipal League, which advocates for municipalities, supports Senate Bill 2638.
“In summer 2017, Comptroller (Susana) Mendoza’s Office notified local governments that audit statements using cash basis accounting would no longer be accepted and that the failure to file audit statements on an accrual basis would result in a fine,” IML President Mark Eckert said in a letter to Rauner last month.
Eckert said that would introduce unnecessary complexity “and result in expensive conversion costs for no appreciable benefit to local governments or taxpayers.”
Bergman said cash accounting actually means long-term pain for short-term gain for taxpayers.
“Governments can tax lower amounts (based on cash accounting) and therefore in the short run taxpayers were better off by cash-focused budgeting and financial reporting practices,” Bergman said. “But in the long run, it’s allowed governments to kick the can down the road and taxpayers are facing that consequence now.”
The IML said in its policy position supporting the measure that the initiative clarifies that local governments can continue filing annual audited statements using a cash-basis mention, rather than an accrual method and if governments file accrual method after June 30 next year they’d be obligated to continue that going forward.
The measure also is supported by the Illinois Certified Public Accountants Society. In a letter to the governor earlier this month, ICPAS Vice President of Government Relations Martin Green said “there is no greater degree of likelihood of overlooking financial reporting mistakes or errors in the audit if cash basis financial reporting is used.”
Both the IML and ICPAS said the measure is necessary to clarify the law that they said the Illinois comptroller was interpreting to require accrual-based reports. Mendoza’s office said it’s neutral on the bill.
The Governmental Accounting and Standards Board said most public utilities and private companies use accrual accounting.
“It measures not just current assets and liabilities but also long-term assets and liabilities (such as capital assets, including infrastructure, and general obligation debt),” a GASB pronouncement from 1999 said. “It also reports all revenues and all costs of providing services each year, not just those received or paid in the current year or soon after year-end.”
Rauner’s office said it’s one of 600 bills the governor has received and it isn’t in a position to comment.

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