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  #661  
Old 01-04-2018, 12:40 PM
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Originally Posted by JMO View Post
And all the people who prepaid will be very unhappy not to get the tax deduction they expected.
Nobody wins.
Huh? They'll get the tax deduction.
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  #662  
Old 01-04-2018, 12:42 PM
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It's a bit complicated -- some of the property taxes could be prepaid ... IF you had already been billed for them. (I think the terminology is that there's a tax warrant...)

Here's the example: I get sent a property tax bill at the end of August. I can pay it in two installments - the first due by Sept 30, the second due by Jan 31 of the following year.

I'm not really "prepaying" the tax when I pay the second installment in December instead of January. (This is what I actually did this year).

The confusion surrounding the prepayment of property taxes is that some counties/towns are like that - they give the bill well in advance of the due date, but if you pay the full amount up front, that's not really "prepaying". You paid it before the due date.
I thought it had to do with when the tax was actually for.

Like my property tax bill that comes out in February of 2018 and is due in March of 2018 is actually for January - June of 2017.

I think I'm fine paying that in 2017 even though the bill doesn't get mailed until February 2018. I mean, if I would have sold my house on December 31, 2017, I certainly would have been required to pay the January - June 2017 tax at that time... as well as the July - December tax for that matter!

And it's on the tax assessor's website, so in that sense I was already billed for it, even if I hadn't yet received the paper statement.
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  #663  
Old 01-04-2018, 04:42 PM
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Originally Posted by twig93 View Post
I thought it had to do with when the tax was actually for.

Like my property tax bill that comes out in February of 2018 and is due in March of 2018 is actually for January - June of 2017.

I think I'm fine paying that in 2017 even though the bill doesn't get mailed until February 2018. I mean, if I would have sold my house on December 31, 2017, I certainly would have been required to pay the January - June 2017 tax at that time... as well as the July - December tax for that matter!

And it's on the tax assessor's website, so in that sense I was already billed for it, even if I hadn't yet received the paper statement.
I was thinking about it the way you describe, but I also heard (or read) somewhere about it having to be billed. Would be curious if anyone knows exactly what will be allowed (or maybe it will depend on some future IRS ruling/guidance)?
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Old 01-04-2018, 06:28 PM
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I was thinking about it the way you describe, but I also heard (or read) somewhere about it having to be billed. Would be curious if anyone knows exactly what will be allowed (or maybe it will depend on some future IRS ruling/guidance)?
Come to think of it, the version of the bill that I saw had no restrictions at all around *property* tax, it was only *income* tax that had timing restrictions.

ETA: How would that work anyway, if they didn't let you deduct it when you paid it? Would you get to deduct it the following year?

So the 2017 tax that I paid in 2017 that wasn't due in 2018 becomes deductible from my 2018 taxes? Not deductible at all???

With state & local income tax what they do is they say that any amount you paid in 2017 above what you actually owed for 2017 is income in 2018... regardless of whether you take a refund or apply it to your 2018 taxes. (You can then re-deduct it if you apply it to your 2018 income taxes... subject to the $10,000 cap of course.)

But there's no refund for property taxes. I just won't owe as much come March since I paid them in December.
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  #665  
Old 01-08-2018, 07:54 PM
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UNPAID BILLS

http://www.daily-journal.com/news/lo...2ad80bf02.html

Quote:
Bill backlog brings criticism from comptroller

Spoiler:
State Comptroller Susana Mendoza has a chart she likes to show people. It's a simple graph, charting the growth of the Illinois general fund backlog over time – money due to nursing homes, colleges, social service providers, local governments and other organizations across the state.

The graph starts in 2011, with Illinois facing nearly $8 billion in unpaid bills. The backlog decreased steadily over former Gov. Pat Quinn's second term, reaching $5 billion by the time Gov. Bruce Rauner took office. Under Rauner, it climbed again to a high of almost $17 billion.

"I've never said Rauner created this mess," Mendoza said, looking over the chart on her Thursday visit to the Daily Journal offices, "but what he did, indisputably, is triple the bill backlog."


Mendoza, a Democrat, already had a long career in politics when she decided to run for comptroller in a 2016 special election against Rauner appointee Leslie Munger. In 2001, she began her career as an Illinois state representative at only 28 years old, then moved on to serve as city clerk of Chicago from 2011 to 2016. During her time in the Legislature, Mendoza learned the importance of forming cross-party relationships. By the time she became comptroller in December, she was ready.

Without a budget in fiscal years 2016, 2017 and part of 2018, the most recent crisis was the longest in the state's history, forcing anyone who receives funding from state agencies to cut down on services.

The first step was to essentially refinance the debt by selling billions of dollars of bonds, avoiding late bill payments of up to 12 percent interest in favor of an interest rate of about 3.5 percent despite the state's low credit rating. It was a victory for Mendoza, who had publicly pressured the governor's office to follow through and issue bonds.

"Every day, we put out money but we're only getting more bills in," Mendoza said. "There's potentially going to have to be another round of bonding, but the market responded well to the first because they gave us a rate of 3.5 percent. Nobody in our office or in the governor's office thought we would get below 4 percent."

Then, Mendoza threw her support behind the Debt Transparency Act, using what she learned in the Legislature to get bipartisan support for the bill, which required state agencies to forward monthly reports to the comptroller's office detailing the agency's backlog and interest payments. Rauner vetoed the bill, but his veto was overturned unanimously in the house and nearly unanimously in the Senate in a showing of bipartisan support. State Rep. Lindsay Parkhurst voted nay on the bill, along with 40 other representatives, but was absent when the veto was overruled.

Along the way, Mendoza, who is running for re-election this year, has made an enemy of the governor. While the governor's office didn't immediately respond to a request for comment on Friday, he previously had this to say about the subject:

"The inclination to provide more transparency about the state of our finances is a good one. Unfortunately, this legislation more closely resembles an attempt by the comptroller to micromanage executive agencies than an attempt to get the information most helpful to the monitoring of state government," Rauner wrote in his August message vetoing the bill.

He's called the bill a form of "political manipulation" and Mendoza a "puppet" for controversial House Speaker Michael Madigan, a charge Mendoza refutes by pointing to her first, unsuccessful run for the Legislature against a Madigan-backed candidate.

"I'm very proud of my record as a legislator, and over time, I think the speaker saw I'm my own person," Mendoza said of her relationship with the speaker. "I'm feisty, and I can build a bipartisan coalition, which you don't usually see.

"My beef is with the governor because I think he's a failed governor who didn't lead the state, and he's incompetent and frankly incapable of working with other people," she later added.

Though the debt transparency has made Mendoza's job easier, she cautions people not to be too optimistic yet. Illinois still faces the worst budget crisis in the nation, with its credit rating hovering above the dreaded "junk" status that signals investments would be risky. Alongside trying to improve the state's finances, Mendoza has been traveling, talking to service providers across Illinois and asking them to spend carefully should a budget not be passed for 2019.

"It's not fun when you hear about someone being disconnected from a ventilator because we haven't paid our bills or a dentist who had to close shop after 20 years," she said. "Illinois is so anti-business, it's not funny."


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  #666  
Old 01-08-2018, 09:10 PM
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HARVEY, ILLINOIS

http://www.chicagotribune.com/suburb...105-story.html

Quote:
Harvey officials' pay delayed by 'financial constraints,' comptroller says, but spokesman insists it's a glitch

Spoiler:
Elected officials in Harvey learned Thursday they would not be getting paid this pay cycle due to the city's "financial constraints," according to an email obtained by the Daily Southtown.

City Comptroller Louis B. Williams notified officials early Thursday afternoon that the city could not pay them this pay period but hoped to process payments as early as within a week.

"Due to the financial constraints the City is experiencing, we are unable to pay elected officials for this current pay period 01/05/18," reads the email, which Williams sent to the mayor, aldermen, the treasurer, the clerk, the deputy clerk and a mayoral aide. "Regarding your paychecks, we will keep you all updated, as we are hoping to process them sometime next week if funding is available. Thank you for your patience and understanding at this time."

The brief communication prompted email responses from multiple aldermen, who claimed they had been left in the dark about the city's financial state and requested that a meeting be called to discuss the matter, emails provided by one of the aldermen show.

"It is important to me as an elected official to have facts and written statements documenting the severity of our city's financial dilemma," Ald. Joseph Whittington said in an email to Williams. "It saddens me that we have had no meetings to discuss the financial future of the Great City of Harvey as a whole.

"What are the alternatives? How are we going to turn around the business affairs of our city? Should we downsize, layoff, offer buyouts? These are questions that should be discussed at the next City Council meeting."

Ald. Christopher Clark said that upon receiving the comptroller's email, his concern immediately turned to the fate of Harvey's employees.

"What's going to happen to them?" he said. "Are they OK?"

According to a chain of emails Clark provided the Southtown, he inquired with Williams about the fate of city employees and the exact nature of the "financial constraints" that were said to be responsible for the city's inability to make its biweekly payroll disbursements.

Clark said Williams later called him to assure him that all city employees would be paid on time and claimed the issue stemmed from cash-flow problems that would be resolved by savings recouped following planned layoffs or other cuts. Mayor Eric Kellogg had committed to the layoffs, Clark said Williams told him, but they had yet to take effect.

City spokesman Sean Howard said all employees had been paid Friday but Local 2404 union president Dominique Randle-El said he'd heard from 10 to 15 workers who had not received paychecks as of 8:30 p.m.

Randle-El, whose union represents the city's non-police and fire department workers, said some employees had received paper checks, but that those who are normally paid via direct deposit, as most workers are, were still waiting for their money.

Meanwhile, Howard refuted Clark's claims Friday and said the entire issue over the delay in payment had been overblown.

"It's not as explosive as I'm sure some of the phone calls you're getting from various elected officials are making it out to be," he said.

The delay in paying elected officials was due not to the city's financial difficulties, Howard said, but rather stemmed from a technical glitch involving a third-party vendor.

When Kellogg learned that the glitch would prevent the city from making timely payroll disbursements this cycle, he and other elected officials opted to forgo their own paychecks so that city employees could get paid on time, Howard said.

"I applaud the mayor for making sure that I got a check before he did, and people are very happy about that," he said.

When asked about the "financial constraints" referenced in the comptroller's email to elected officials, Howard said Williams was referring to the technical glitch, not a cash-flow problem. He acknowledged that the comptroller's use of the phrase "financial constraints" could easily be misconstrued and said Williams could have "rephrased it much better."

The comptroller could not be reached for comment on the conflicting interpretations of his email.

While Howard conceded that Harvey had some financial challenges, he said the situation was not nearly as dire as Clark had asserted and denied that layoffs were a done deal.

For the past year city leaders had been discussing ways to cut costs, he said, but no final decisions on that front had been made.

Howard said elected officials would be paid next week and that the comptroller was now "very comfortable" and "feeling better" about the situation since sending the email Thursday.

"We're good," he said. "The town isn't broke, and we're doing well."


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  #667  
Old 01-12-2018, 04:12 PM
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Chicago Fed Letter

https://www.chicagofed.org/~/media/p...cfl391-pdf.pdf

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Fiscal condition of Illinois
Spoiler:
Rick Mattoon, senior economist and economic advisor, Federal Reserve Bank of Chicago, presented his assessment of Illinois’s fiscal condition and potential solutions. Between fiscal years (FY) 1995and 2010, Illinois was a lower tax state compared with the national average and most neighboring states.1 Rather than raise taxes, it borrowed funds to close the gap between revenues and expenditures. According to a 2015 analysis by the Institute of Government and Public Affairs (IGPA) at theUniversity of Illinois,2 the state has run a budget deficit since FY2000, and the deficit is projected to increase from FY2016 through at least FY2026. Illinois has become a higher tax state relative tot he national average and most neighboring states; this was a necessary adjustment to address the accumulation of debt, Mattoon explained.

What is the magnitude of Illinois’s debt? Mattoon referenced a 2016 study by the Mercatus Center at George Mason University,3 which estimated Illinois’s total outstanding debt to be approximately60% of total state personal income in FY2014. Furthermore, Mattoon explained that the amount of unfunded pension liabilities—a significant portion of the overall debt—may be understated.Lowering the assumed rate of return on the state and local governments’ pension assets from 7.9%(the rate estimated in 2014) to 3% (which Mattoon suggested is closer to a risk-free rate) increases the combined pension debt from $140 billion to $371 billion, or approximately $78,000 per household.

As Mattoon explained, Illinois’s FY2018 budget reduces spending and raises additional revenues,primarily through hikes in income tax rates, freeing up funds to pay off some of its backlog of debt.Adopting the complete set of spending cuts and revenue increases proposed in the 2015 IGPA study could close most of the budget deficit in ten years. However, Mattoon underscored the need for a binding budget plan to prevent further poor fiscal management. He observed that public pension cuts would be difficult to implement: Less generous benefits already exist for new pension employees, and the state constitution prohibits impairment of benefits for existing pension employees and retirees.
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  #668  
Old 01-12-2018, 05:40 PM
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http://www.sj-r.com/news/20180111/mo...graded#new_tab

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Moody’s report: If Springfield doesn’t change, credit rating will be downgraded
Spoiler:
Moody’s Investors Service issued a report Thursday maintaining the city of Springfield’s and City Water, Light and Power’s water fund’s downgraded credit ratings, though the agency revised both of the ratings’ outlooks from stable to negative.

“The outlook means we believe that if the city keeps going in the same direction, it will get downgraded,” said Moody’s spokesman David Jacobson. A negative outlook could mean a downgrade within 12 months to two years, according to the report.

Citing growing pension liabilities, Moody’s downgraded Springfield’s credit rating two notches (from A1 to A3) and the water fund’s rating (from Aa2 to A1) in October 2016. An A3 rating ranks seventh on a scale of 21 possible ratings, Jacobson said, indicating Springfield can pay its debts.

A better credit rating leads to lower costs when borrowing.

Three main factors contributed to the city staying at A3, but having a negative outlook: a growing unfunded pension liability, high retiree benefit burdens and weak revenue growth.

In its report, Moody’s acknowledged Springfield put a high percentage of its budget toward annual pension payments. Last budget year, 19 percent of the city’s budget went to pension payments. Moody’s predicts the city will have to pay 25 percent of its operating budget in the current fiscal year, which ends Feb. 28.

“It’s our opinion that (Springfield) is not keeping pace with the growth of their unfunded pensions liabilities,” Jacobson said. “They are not contributing enough.”

The report points to some factors that could lead to an upgrade: revenue growth aimed at chipping away at pension obligations and retiree healthcare costs, changes to the city’s budget that allows for bigger pension contributions and better reserves.

What do Moody’s credit ratings mean?
Credit ratings indicate a city’s ability to pay off debt. The better a city’s credit rating, the more likely a financial institution will invest and the better irate a city can get on loan payments.

Moody’s Investors Service evaluates over 550 taxing bodies in Illinois, according to spokesman David Jacobson.

The highest credit rating a city can receive is Aaa, then Aa1, Aa2, Aa3, A1, etc. “Junk bond” status, or the level at which investment is impractical, starts at Ba1. The city’s credit rating is A3, four notches above “junk bond” status. The city’s water fund has an A1 credit rating.

How to deal with the city’s unfunded pension liability has been a constant discussion among Springfield aldermen. This year, for the first time, Springfield’s property tax revenue will be $600,000 less than the city’s pension payment, according to budget director Bill McCarty. In previous years, property taxes were solely used to cover pension payments.

With a looming $11.5 million revenue shortfall, the city has chosen to make, not exceed, statutorily required pension payments.

“There is a plan, it’s just not a plan that Moody’s or some councilmen are in favor of,” McCarty said.

If the city were to chip in more for pensions, it would either need to cut services, increase taxes or spend down its fund balance, or reserves, McCarty said.


When Mayor Jim Langfelder proposed that generated revenue from a sales tax increase would go solely toward pension payments last year, aldermen voted down the idea, he said. Of the four tax increases he proposed, three were shot down. The revenue generated from a hotel-motel tax increase went to help Oak Ridge Cemetery.

Instead of raising money for the general fund, the city chose to spend down its fund balance, which Moody’s took note of, McCarty said. Currently, the city’s fund balance is projected to be 11.9 percent this year, McCarty said. Best practice has reserves between 12 and 15 percent. Last week, aldermen codified an internal policy to vote if the city were to dip below 8 percent of operating expenses.

“If (aldermen) had taken corrective action, we probably would have a positive outlook,” Langfelder said in an interview Thursday.

McCarty said the city’s credit rating isn’t affecting its finances because it doesn’t have any plans to borrow money, unlike in years past when the city shelled out for big infrastructure projects.

However, Langfelder pointed out the health of the water fund’s rating was crucial if the city were to build a backup water source, Hunter Lake.

For the second year in a row, Langfelder has proposed a 0.25 percentage point sales tax increase. He also proposed upping the city’s telecommunication tax from 4 percent to 6 percent. He also will present budget cuts to aldermen this week, ahead of budget negotiations.

“I don’t want (taxes) to go up, but what are our alternatives?” Langfelder said.


Both McCarty, Langfelder and McCarty agreed on one thing:

″(The report) does seem to be more of a message: ‘You need to do something here,’” McCarty said. “Doing nothing certainly would in my mind likely result in a downgrade next year.”
https://www.ilnews.org/news/economy/...3.html#new_tab

Quote:
S&P: Illinois’ long term debt obligations won’t be solved by short term increased economic activity
Spoiler:
While state coffers may reap the reward of increased tax revenues from expected economic expansion in the short term, a ratings agency warns Illinois’ long-term liabilities are a growing concern.

A new S&P report forecasting the state sector says federal tax reform is expected to increase economic activity in the short term, but S&P Managing Director and lead credit analyst Gabe Petek said there are risks that states must address, like high public sector pension debt and high Medicaid costs.

“All of the risks that we talk about in the state sector outlook, to a significant extent, Illinois embodies all of them in sort of the strong form,” Petek said.


Illinois’ unfunded pension liability is the highest in the country at $130 billion. Adding post-employment benefits taxpayers are on the hook for makes that debt top out at more than $200 billion.

Then there are signals from Congress to pull back on some Medicaid costs.

“States are obliged to pick up that share,” Petek said.

Petek’s report also said with the health insurance mandate coming to an end, there could be up to 5 million fewer people enrolled in Medicaid across the country, reducing expected expenditures for the states. But that still won’t diminish Illinois’ massive debt obligations.

“It really means that other state services are going to be crowded out of the budget,” Petek said.


Even with expected increased revenues, Petek said other Illinois programs likely will take a hit to make up for the fixed costs.

“These are things like higher education funding or infrastructure spending,” Petek said. “[There are] items in the budget that my not be mandatory in a legal sense but certainly are important for any state’s longer-term economic prospects.”

Another problem Illinois embodies, Petek said, is the ongoing partisan budget battles the state has endured, “which can make it hard to enact prudent fiscal policy. So that’s a challenge that we see for the state of Illinois.”

Petek said 30 percent of Illinois’ budget is eaten up by debt service, public sector pensions and post employment benefits. He said the ratings agencies are watching Illinois closely.
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