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  #941  
Old 07-26-2019, 05:58 AM
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Mary Pat Campbell
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CAFR

https://www.truthinaccounting.org/ne...inally-appears
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One item to look at when Illinois’ (late) financial report finally appears
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For citizens and taxpayers hoping to learn about the quality of Illinois state government finances, 2019 has been a long, long wait. Illinois still hasn’t issued audited financial statements for fiscal 2018, which ended June 30 last year. In other words, the latest year for which we have audited financial statements ended more than two years ago.

Speaking of a long wait, and state government, I’ve been on hold now for more than five minutes. I’m not calling to try to get that report again. I’m actually calling the Illinois Department of Employment Security. I’m trying to find out how much money has been paid in unemployment insurance taxes on my behalf in my lifetime, and how much money, if any, I ever get back for this “insurance.” A topic for another day.

In the forthcoming (hopefully) Illinois annual financial report, Illinois will finally report an OPEB liability on its balance sheet for the first time. “OPEB” stands for “Other Post-Employment Benefits,” principally retiree health care benefit payments but also including things such as life insurance benefits. For decades, just like pensions, state and local governments distributed OPEB promises without funding the benefits, leading to massive liabilities that the Governmental Accounting Standards Board (GASB) allowed governments to accumulate off the balance sheet.

Until the latest fiscal year, when Illinois will finally be reporting that debt on its balance sheet. We’ve been recasting state and local government balance sheets for years at Truth in Accounting to include our estimate for both pension and OPEB debts, which are now arriving on reported balance sheets with the thud of billions and billions of dollars.

Here’s a chart comparing OPEB debts for Illinois, Indiana and Michigan since 2009, based on underlying actuarial and other reports. This chart is created using Truth in Accounting’s State Data Lab, which allows you to create and share charts with others. You can see Illinois’ OPEB running above $50 billion in 2017.



In turn, coincidentally or otherwise, here’s a look at the share of outbound moves for Illinois, Indiana and Michigan reported in United Van Lines’ annual migration study. Illinois, one of the most indebted state governments in the nation, has fewer and fewer stones to try to draw blood from.




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  #942  
Old 07-26-2019, 04:50 PM
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Mary Pat Campbell
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https://fixedincome.fidelity.com/ftg..._110.1#new_tab
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Illinois has path to fiscal stability, says deputy governor

Spoiler:
WASHINGTON — Illinois built a foundation for future revenue streams during the spring legislative session that will allow it tochip away at the state’s massive fiscal challenges, according to Deputy Governor Dan Hynes.

During his keynote remarks at the eighth annual Brookings Municipal Finance Conference Monday night, Hynes touted a number of measures lawmakers approved to bring in new revenues from expanded gambling, sports betting implementation, legalized marijuana and raising the state’s gas tax.


He also credited Gov. J.B. Pritzker with pushing through a proposal that will go before voters in 2020 to eliminate the requirement that Illinois have a flat income tax structure.

Hynes is one of several deputies appointed by Pritzker, who took office in January.

“We wanted to make sure we had something that was fair, comprehensive, long-lasting and that would set Illinois on the right trajectory financially,” said Hynes of the proposed progressive rate structure that would raise about $3.5 billion in new annual revenue by hiking taxes on the top 3% of earners. “That flat tax has been raised and lowered, raised and lowered…many times over the years which creates budgetary and economy uncertainty.”

Illinois is pressured by $133.7 billion of unfunded pension liabilities and an unpaid bill backlog that stood at $5.9 billion Monday.

It has the worst general obligation ratings among states at Baa3 by Moody’s Investors Service, BBB-minus minus by S&P Global Ratings and BBB by Fitch Ratings. The S&P and Moody’s ratings are one notch above junk territory and Fitch’s is only two steps. Fitch assigns a negative outlook and the other two assign a stable outlook. Moody's (MCO) affirmed its rating after the legislative session ended in late spring.

The Pritzker administration is planning on putting $200 million annually from the new graduated tax revenue toward pensions if voters approve next year’s progressive tax constitutional amendment.

Lawmakers approved a structure that raises taxes on the top 3% of earners to generate more than $3 billion annually. Hynes said Monday the state is also looking to monetize or transfer state assets such as the James R. Thomson Center in Chicago that can be used to improve the pension system’s funding ratio that is at only 40%. A task force is expected to report back on asset sales and transfers this summer.

“We have a massive liability in our pension system that has to be paid, but we also have a balance sheet of assets that could maybe help offset those liabilities,” said Hynes, who served three terms as the elected state comptroller from 1999 to 2011. “We have a whole inventory of surplus properties.”

Illinois is the only state that has not yet released its fiscal 2018 comprehensive annual financial report and officials have blamed the delay on the transfer of power from former Gov. Bruce Rauner to Pritzker.

Hynes said in an interview after his remarks during a discussion moderated by Brookings senior fellow David Wessel that he spoke to Illinois Auditor General Frank J. Mautino last week about the status of the CAFR and is expecting the report to be released “soon.”


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  #943  
Old 08-15-2019, 09:20 AM
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https://www.thecentersquare.com/illi...5.html#new_tab

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Public finance watchdog warns Illinois taxpayers about reports from credit rating agencies
Spoiler:
A public finance watchdog said a recent credit rating outlook change for Illinois may be good for bondholders, but it’s not necessarily good for taxpayers.

Fitch Ratings issued a report affirming Illinois' BBB rating, which is the worst of all states in the nation and nearing junk status. Fitch upgraded the state’s outlook from "negative" to "stable."

Fitch analysts changed the state's outlook in part because of a windfall in tax revenue the state got unexpectedly in April “and the potential for a rating downgrade in the near-term has receded,” according to the report.


Truth In Accounting Research Director Bill Bergman said taxpayers need to be cautious of such reports. Credit rating agencies are looking out for bondholders.

“And they want to get paid and that’s why the credit rating agencies, if they see revenue increases, and those are tax increases, you almost have a conflict of interest between the bondholder and the taxpayer,” he said.

Bergman said what’s good for credit rating agencies, bondholders and the state’s pensioners isn't always good for the taxpayers.

“Illinois historically has proven that any short-term fiscal stability has been abused with longer-term [policies], and in fact, we have more aggressive capital spending plans and other plans that are going to threaten us down the road,” Bergman said.

Illinois lawmakers passed and Gov. J.B. Pritzker enacted a $45 billion, six-year infrastructure plan to be paid for with higher state taxes on gas, gambling expansion that has yet to be implemented and other tax and fee increases.

The Fitch report noted the state’s rating will “continue to reflect an ongoing pattern of weak operating performance.”

“The state's elevated long-term liability position remains a key credit challenge,” the report said.


Bergman said Fitch and other rating agencies, as are taxpayers, still waiting on a Comprehensive Annual Financial Report to be published by the Illinois comptroller from a budget year that ended more than a year ago.

“Among other things, the state’s retiree healthcare benefit liability is going to show up for the first time on the balance sheet and that number could be massive and surprise us,” Bergman said.

Recent reporting standards have changed to require the inclusion of other post-employment benefits, or OPEBs, which Illinois’ retiree healthcare has been estimated by Truth In Accounting to cost more than $50 billion.

While Fitch and other rating agencies give Illinois’ credit a near-junk rating, Truth In Accounting gives Illinois a letter grade of F, driven by the state’s massive debt which includes $136 billion in unfunded pension liability.


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