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Strong interest in Illinois bonds shows muni hysteria is way overblown

Thursday, Feb 24, 2011

* This article pretty much tells us all we need to know about how the muni bond hysteria is overblown and how it’s costing taxpayers a pretty penny

Investors skimmed over Illinois’ well-known financial troubles to vie for a piece of a $3.7 billion taxable pension bond sale on Wednesday.

The state received $6.1 billion in orders from a record 128 investors, according to John Sinsheimer, the state’s capital markets director.

“Well, I have $6.1 billion of bids to tell me the market was comfortable with the budget. And 128 investors must have reached that conclusion as well,” he said. […]

Bonds due in 2014 were priced at a 280 basis point spread over comparable Treasuries, versus 285 basis points from Tuesday. The spread on the longest bonds, due in 2019, also narrowed 5 basis points to 240 basis points over Treasuries.

The amped-up hysteria causes prices to jump, and smart investors know a good buy when they see one. They understand, unlike the freaked out tribe, that Illinois hasn’t missed a bond payment since 1818. The problem is, the hysteria causes prices to jump, which means taxpayers are on the hook for higher interest rates.

…Adding… This is just a ridiculous Wall Street mindset

The longest maturity in the Illinois bond deal, due in 2019, was sold at a yield of 5.877%. In comparison, a $400 million “junk” bond issued by auto-parts maker Dana Holding Corp. and maturing in 2019 had a yield of 6.24%.

Sheesh.

* Speaking of the state’s budget troubles, right now, Downstate and suburban school districts pay only about half a percent of payroll to the Teachers Retirement System. Senate President John Cullerton wants the districts to increase their payments by about $700 million a year

The shift from the state being entirely responsible for downstate and suburban teachers’ pensions to a hybrid of state and local funding would be phased in, Cullerton told The State Journal-Register’s editorial board on Wednesday.

School districts would be responsible only for the “normal costs” of pensions – the cost of paying out benefits to retirees for the current fiscal year and funding part of the future benefits for teachers still on the job. The state would continue to pay down the debt created by decades of underfunding by legislatures and governors, Cullerton said.

Cullerton estimated that normal costs account for one-third of the state’s annual ($2.1 billion) payments to the state Teachers’ Retirement System.

Teachers currently contribute 9.4 percent of their salary to the pension fund.

Thoughts?

* Meanwhile, the furor over the governor’s decision to immediately zero out all funding for substance abuse programs continues to resonate

Jacksonville’s Wells Center is preparing to shut down by the end of March unless Gov. Pat Quinn changes his mind about drastically cutting funding for addiction treatment and prevention.

Providers of such services were notified this week that state funding will end March 15.

“For us, the cuts began on Tuesday,” said Bruce Carter, Wells Center executive director. “We have already begun to prepare layoff notices and patient discharges, creating medical risks involved in the sudden disruption of a patient’s addiction treatment.”

* Other stuff…

* CS-T Editorial: Cut pensions but don’t bust unions

* IL advocates for disabled plan rally to protest Quinn’s proposed budget cuts

* ‘Dire consequences‘ predicted if treatment programs are cut

* Legislators call on Quinn to reverse cuts for drug programs: A Chicago legislator says she will request a symbolic vote in the Illinois House today that calls on Gov. Pat Quinn to rescind an immediate $28 million cut in state funding for substance-abuse treatment programs.

* Lawmakers trying to block cuts to treatment facilities

* Mitchell, school leaders blast merger plan

* Galva, other area schools could be in Governor’s cross hairs

* Support for Quinn’s schools’ plan

* Quinn signs crackdown on organized store thieves

* Ex-Bear Kurt Becker pushes head trauma bill

* Illinois 6th Biggest Polluter According To EPA Records

- Posted by Rich Miller        


50 Comments
  1. - thechampaignlife - Thursday, Feb 24, 11 @ 8:50 am:

    Completely off topic but related to discussions from the past week, I was thinking of a way to reduce school costs while incentivizing home school testing, registration, etc with the added bonus, for those who are advocates of home schooling, of supporting an increase in home schooling. I believe an average teacher makes about $50k/yr and has about 25 kids in class at a time. How about we give parents a $1k/yr check in exchange for them registering and testing their home schooled child? They’d still have the option of skipping that money and not registering. The school saves $1k/yr by higher fewer teachers because there are fewer students to teach. They also save on overhead such as training and administration of the teachers and students that aren’t there and having to build new facilities because they won’t fill up as soon as if those home schooled kids were there. I’m not sure I see any downsides to this but I’m sure someone will point out a few for me here. :-)


  2. - thechampaignlife - Thursday, Feb 24, 11 @ 8:52 am:

    sorry, higher=hiring


  3. - Illinois Mom - Thursday, Feb 24, 11 @ 9:02 am:

    Regarding this school merger/consolidation proposal, is there a hit list of possible districts floating around somewhere? Did I miss this? Thanks.


  4. - John Bambenek - Thursday, Feb 24, 11 @ 9:04 am:

    Of course we won’t miss a bond payment, we’ll just default on our contracts with social service providers instead.

    You can screw the taxpayers, you can even screw retirees, they won’t ever screw the banks.


  5. - wordslinger - Thursday, Feb 24, 11 @ 9:08 am:

    –They understand, unlike the freaked out tribe, that Illinois hasn’t missed a bond payment since 1818.–

    Something never mentioned in any credit ratings report or breathless “business” cable yakker.

    –The problem is, the hysteria causes prices to jump, which means taxpayers are on the hook for higher interest rates.–

    Problem for taxpayers, swell for investors.

    Makes you wonder about all the hysterical press.

    JB, have any retirees been stiffed on a pension payment, ever?


  6. - Anonymouse - Thursday, Feb 24, 11 @ 9:08 am:

    TCL: you don’t really ‘get’ home educators, do you.

    They’d likely tell you to take your 1K and, well,(these are nice folks, so we’ll say) “keep it”.

    If you think these folks are going to trade their freedom for a lousy buck, you’re mad.


  7. - Anonymouse - Thursday, Feb 24, 11 @ 9:10 am:

    Words, not yet, but it won’t be long. How’re you gonna suggest we make up the shortfall? I still like my buckabushel idea. Farmers are making the real dough. Hit them to pay for the state largess to pensioniers. They can’t leave, after all.


  8. - Truth Seeker - Thursday, Feb 24, 11 @ 9:11 am:

    Rich and all….has anybody done the calculation on what percentage of teacher payroll the tax payers contribute to the pension plan? I assume it is much less than the teachers contribution.


  9. - cassandra - Thursday, Feb 24, 11 @ 9:14 am:

    I’m not sure that there is a lot of public sympathy for drug addicts, especially those who aren’t poor enough to qualify for Medicaid. The fact that many if not most of those affected are young single men without health insurance probably doesn’t resonate much either. Even in generous, blue, Democratic Illinois there may be limited sympathy for young males on drugs who don’t work and pay for their treatment.

    Of course, this problem will not exist in 2014 when all will be eligible for Medicaid or some other form of health insurance. The young unemployed single addicts can get on Medicaid.

    Still, you have to wonder why Quinn picked this group for unshared sacrifice. Least sympathetic interest group? They’ll have to wait for Medicaid? The workers aren’t repped by AFSCME?
    Or, perhaps, he’s assuming that there will be a public outcry and he’ll respond by allotting some cash from his huge $8.7 borrowing spree upcoming–if it passes. I wouldn’t be absolutely sure of the latter-at leasst in the jaw-dropping amounts Quinn and Vaught want. And, from a political standpoint, how much waffling can he do. Is there a waffle limit, even in all-Democratic Illinois.


  10. - amalia - Thursday, Feb 24, 11 @ 9:20 am:

    so, do I have this right, Chicago Schools take care of business and downstate and suburban do not when it comes to pensions?


  11. - Frank - Thursday, Feb 24, 11 @ 9:21 am:

    Hardly anybody in the media got the actual facts concerning Meredith Whitney right.

    Whitney’s claim-to-fame, a bearish bank call on Citi, was over-hyped. Her Citi call was late. Jim Rogers, a world famous investor with a provable track record, appeared with her in early 2007 on “Cavuto on Business” and explained why he was short (bearish) on Citi. Whitney refuted him and continued to rate Citi sector “perform”, yet Citi underperformed the sector during this time period. It wasn’t until October 31, 2007, that she took Rogers’ hint and made her call.

    Likewise her Bear Stearns call was late, and her Lehman call was tardy and she or her PR people seemed to take credit for an apparently nonexistent early call on AIG. (See: “Reporting v. PR: Meredith Whitney and AIG,” TSF, March 23, 2009 .)
    http://www.tavakolistructuredfinance.com/Reporting%20v%20PR_Meredith%20Whitney%20and%20AIG%20March%2023%202009.pdf


  12. - Capncrunch - Thursday, Feb 24, 11 @ 9:29 am:

    There must be some reason that the sovereign state of Illinois which hasn’t missed a bond payment since 1818 had to pay 2.01 percent more than a private corporation (ConocoPhillips) to float a bond issue with the same A1 rating and maturity. Somehow I doubt hysteria is the reason.


  13. - Ghost - Thursday, Feb 24, 11 @ 9:38 am:

    I oppose pension reform built around reducing pension benefits or the defined benefit system. Getting rid of defined benefit pensions is just pushing off the burden to the federal systemand creating a rapidly expanding class of poor/impoverished elderly. 401(k) plans are supplements for defined retirment plans, they are not supposed to be the retirmenet plan.

    That said, I fully support phasing in a process where employee’s pay a greater share of the contribtuion. I do not know what the teacher total contribution amount (employer and employee) is supposed to be to comment on their current payment of 9%.

    For most State employees, the ttal contribution is supposed to be 14% combined, and the employees pay 5% - 7 % depending on the agency and which fomula they are under.

    The State pick up used to be 11% with the employees only paying around 3%…but the State never put in the 11% and here we are today.

    I would have the employee pay the entire 14%, ramped up over time. Thus the State would never delay or borrow form the payments as they come staright from payroll.


  14. - Fed up - Thursday, Feb 24, 11 @ 9:43 am:

    Rich maybe the only way Illinois can get buyers is by paying the higher interest thus costing taxpayers millions. I know it’s everyones fault but the actual persons in charge of Illinois. All of this debt can’t be Quinn/blago cullerton/jones and madigans fault.


  15. - Anon - Thursday, Feb 24, 11 @ 9:56 am:

    Fed Up,
    Don’t forget Thompson who started the magic balanced budgeting act that in reality shorted the pension funds. A practice continued by Edgar and Ryan.


  16. - cermak_rd - Thursday, Feb 24, 11 @ 9:59 am:

    Cassandra,

    Yes, I mentioned on an earlier post on this subject that addicts were a highly unsympathetic group of people.

    I wouldn’t be so sure that they are men, though. I believe from stats I’ve seen that women’s use of addictive substances had rapidly increased.


  17. - steve schnorf - Thursday, Feb 24, 11 @ 10:29 am:

    Way too many people still don’t get it. They keep asking why is Pat Quinn doing these terrible things to these programs. The programs are so important.

    Anyone who has paid attention over the past few years knows the answer. He doesn’t have any choice. We don’t have enough revenue coming in to state government to pay for all our expenses. There, is that still too hard to understand?

    People who know what they are talking about have been saying for 2 or 3 years it was going to take tax increases and cuts in spending to get us out of our mess. All the easy cuts are long since made. All cuts negatively effect someone, just like all tax increases negatively effect someone.

    Did anyone bother to read Ralph Martire’s recent column? He said it very well. Governor Quinn has only bad choices left to choose from. Just because Martire is more liberal than most of us doesn’t mean he doesn’t know the numbers and speak the truth.

    Hold on. There are going to be more significant cuts because the math says there have to be.


  18. - Champaign Dweller - Thursday, Feb 24, 11 @ 10:38 am:

    What is it going to take to get people in Illinois to understand that drastic cuts in spending have to be made–every time I open the newspaper, there’s a letter from someone complaining that cuts to this or that program shouldn’t be made because it will adversely affect some group. Maybe Quinn needs to be blunter in his speeches, rather than dwell on what a great STate we are, etc.


  19. - cassandra - Thursday, Feb 24, 11 @ 10:46 am:

    Maybe there will be more significant cuts. Or maybe just more significant borrowing. The public as a whole (and Dems and Quinn/Vaught in particular) seem not to care about the enormous costs (to the taxpayer) of borrowing huge sums of money while only minimally restraining spending. Didn’t it cost much more to borrow for the pension this year than last year–because of the way the 2011 offering was structured.

    I guess it’s up to the Repubs now to rein in the borrowing. But since the public doesn’t understand the negative side of borrowing and the Dems don’t care, why would they bother.


  20. - BW - Thursday, Feb 24, 11 @ 10:49 am:

    Quinn needs to give up the populist rhetoric and stick to his guns. If you are going to make cuts, target the cuts, be realistic and stay the course. While Gov. Christie is clearly an idiot, he at least has the stones to stand behind his actions and not fold like a cheap lawn chair under a 500 lb gorilla.


  21. - VanillaMan - Thursday, Feb 24, 11 @ 10:53 am:

    Wall Street know a lot more about our bond history than our state leaders. It is also their money. They understand opportunities. Wall Street has been buying our bonds at a normal pace until this week. Because while they may feel pity, they will go out of business if they do charity work for Illinois.

    Our Illinois state builders and leaders from our glorious past would recognize our situation and would not expect pity or charity because back then Illinois was a kingmaker on Wall Street and ruled LaSalle Street with similar hand.

    I guess we forgot those lessons.


  22. - Rich Miller - Thursday, Feb 24, 11 @ 11:04 am:

    ====Wall Street know a lot more about our bond history than our state leaders. It is also their money. ====

    That money is no more “theirs” than tax money is Pat Quinn’s.


  23. - wordslinger - Thursday, Feb 24, 11 @ 11:07 am:

    –Wall Street know a lot more about our bond history than our state leaders. It is also their money. They understand opportunities. Wall Street has been buying our bonds at a normal pace until this week. Because while they may feel pity, they will go out of business if they do charity work for Illinois.–

    The history: never missed a bond payment. Ever. Pretty simple.

    Your child-like faith in the wisdom of Wall Street wizards is touching. But you might want to leaven your faith with some history: for starters, see Sub-prime mortgage-backed securities, rated AAA (that’s the most secure investment possible — or so we were told).

    As far as it being “their” money (whoever “they” are), well you might want to read a little history from, say, about September 2008 until about now.

    Also, there’s that neat little trick where banks can go to the Federal Reserve window, “borrow” freshly minted money for virtually nothing, and turn around and lend it the next day for whatever they want. I bet you and I could make money that way.

    Will they go out of business if they fail? History teaches a different lesson there, as well.

    Other than that, you spin an interesting story.


  24. - MikeMacD - Thursday, Feb 24, 11 @ 11:13 am:

    “There are going to be more significant cuts because the math says there have to be.”

    That’s too bad. I would rather see higher revenues such as through legalization, regulation and taxation of marijuana. Which has about as much chance as a constitutional amendment to do away with the flat income tax.


  25. - wordslinger - Thursday, Feb 24, 11 @ 11:15 am:

    –That’s too bad. I would rather see higher revenues such as through legalization, regulation and taxation of marijuana.–

    You’d need federales help to tax a substance banned by the federal government.


  26. - steve schnorf - Thursday, Feb 24, 11 @ 11:33 am:

    c, there’s going to be borrowing too. Maybe cash flow, maybe longer term, but borrowing.


  27. - Bigtwich - Thursday, Feb 24, 11 @ 11:34 am:

    I like Cullerton’s proposal. Giving the local school districts some pain in the process would probably go a long way toward preventing last minute raises before retirement. I do not suggest that money is unfair for an overall career but that the local districts can pay lower wages then they should and fob off the retirement bump on the state. This would probably also go a long way towards forcing school consolidation by making the local districts have to be responsible for more of the real costs.


  28. - Ghost - Thursday, Feb 24, 11 @ 11:44 am:

    === Anyone who has paid attention over the past few years knows the answer. He doesn’t have any choice. We don’t have enough revenue coming in to state government to pay for all our expenses. There, is that still too hard to understand?====

    absolutly. But cut say 1 million for ahigh school rodeo and suddenly the local fiscal conservatives are opposed to the cut.

    The GOP’s campaign and adamant refusal to support bonds to eliminate the back log of debt, or even to capture federal money which will bring in more then we pay in interest, is part of isinformation campaign which makes this issue difficult for people to understand.

    To many GOP politicians pushing forward with the idea that things can be solved without bons, tax increases or cuts to specific programs, and peppering the air waves wth such rhetoric, bing us to this point.


  29. - Bill - Thursday, Feb 24, 11 @ 11:44 am:

    Really, Vannie, it might be time to seek some help or at least try some Xanax.


  30. - CircularFiringSquad - Thursday, Feb 24, 11 @ 11:48 am:

    Vanilla M….please understand much of the mess in IL pension comes from revenue drops and asset value declines attributed to the predatory lenders and their allies on Wall Street. Include the so called rating agencies that gave the junk housing bonds AAA+ ratings.

    Hope the truth does not ruin your day


  31. - steve schnorf - Thursday, Feb 24, 11 @ 11:56 am:

    Ghost, the objections came from local legislators, whose obligations I understand. Do you? You didn’t hear the R caucuses rise up about the cut did you?


  32. - Capitol View - Thursday, Feb 24, 11 @ 12:17 pm:

    Speaker Madigan took the first big step towards modernizing our revenues base when he took action on the income tax increase, once redistricting was locked up. The next steps should come later this year, as an alternative to more cuts as Steve Schnorf acknowledges are otherwise necessary.

    These remaining steps are taxing seniors with pension income over $50 or $75,000 (their payments into their pensions go towards the exempt amount); spreading more sales tax to more services, and going with the Governor’s request in his Budget Message that the income tax needs to be more fairly set - meaning a graduated income tax State Constitutional Amendment.

    The prospect of terrible cuts will make these revenues restructuring actions more palatable.


  33. - Ghost - Thursday, Feb 24, 11 @ 12:33 pm:

    So the local legislators are not part of the caucuses? I speifically did not hear the R Cacuses come out in support of the cut as a good start, or even as an example of cuts that can be made. I would say the silence stood as a deafening affirmation.


  34. - steve schnorf - Thursday, Feb 24, 11 @ 12:33 pm:

    CV, maybe the Ds will pass a second tax increase this Spring, but I doubt it. I doubt if they try, even though the measures you suggest are good ones.


  35. - thechampaignlife - Thursday, Feb 24, 11 @ 12:36 pm:

    Anonymouse@9:08am:

    Well that’s even better for the school districts because they get to keep the full $2k. Sounds like a win-tie.


  36. - One of Three Puppets - Thursday, Feb 24, 11 @ 12:46 pm:

    I thought my increased income tax would pay for state government. Now they want to come after my property taxes too? Prioritize the budget and don’t shift things around!


  37. - thechampaignlife - Thursday, Feb 24, 11 @ 12:46 pm:

    On cutting state funding for human services, I’m surprised to see no talk of local governments picking up the slack. If it will be as devastating as everyone says, the communities that will be most impacted could push through a referendum to increase taxes to pay for these services with local dollars. The state could even give them a hand by allowing a special emergency referedum at next month’s consolidated election.


  38. - One of Three Puppets - Thursday, Feb 24, 11 @ 12:47 pm:

    I don’t mean to sound naive.


  39. - justsickofit - Thursday, Feb 24, 11 @ 1:56 pm:

    @bigtwich, there is now a penalty to the locals for career bumps above a set amount, plus coughing up the added cost to the system. As far as consolidations are concerned, by law, the pay scale goes up to the highest paying school for all the teachers in the consolidated district — it means more costs for beleaguerd property tax payers in some situations (that was the case where I live). I am with One of Three.. — I knew the tax increase would mean cuts, but I didn’t think you were going to tax us AGAIN for the pensions — go Wisconsin!


  40. - Truth Seeker - Thursday, Feb 24, 11 @ 2:10 pm:

    Below is an article from an individual that did an analysis of the retirement system in Rockford.

    Illinois Teacher Retirement System - Who actually pays the 9.4% retirement?

    January 31st, 2011 at 02:00pm Ted Biondo

    There are two schedules in the Rockford Education Association’s online collective bargaining agreement at rps205.com. Appendix A is entitled “Salary Schedule” and consists of 8 lanes and 20 steps representing the salary at various educational levels attained and years of service.

    Appendix B is entitled Computation Schedule for Illinois Teacher Retirement Syetem Purposes and includes salary (A) from the Salary Schedule and the ITRS contribution (C), which is (A) multiplied by 9.4%. The teachers are paid the salary (A); the (C) contribution is sent directly to the state teacher’s retirement system by the district.

    No income taxes are paid on the TRS (C) contribution. The TRS contribution is never given to the teachers to contribute to the state plan; it is paid directly to the state by the district. Some teachers say this contribution is part of their salary, and therefore, the teachers pay for their retirement not the district.

    Let’s look at the contract and the law - you make up your own mind who is paying the 9.4% retirement. I know it’s the taxpayers, but lets go through the exercise, anyway.

    First, look at your paycheck. Social Security and Medicare contributions (C) are taken out of your check as a percentage of your gross salary (A). The company pays half and you pay the other half of the contribution (C). In the school district, the state pays half and the district pays half. There is no contribution made directly from any check received by the teaching staff.


  41. - Bigtwich - Thursday, Feb 24, 11 @ 2:12 pm:

    ==there is now a penalty to the locals for career bumps above a set amount,==

    Thanks. forgot that.


  42. - ispretired - Thursday, Feb 24, 11 @ 2:23 pm:

    Truth Seeker:

    What are you smoking, yes the teacher pays 9.4 % taken out of each pay check and most don’t get SS.
    That means that their pay check is less 9.4 % besides all the other deductions.


  43. - Barry H - Thursday, Feb 24, 11 @ 2:42 pm:

    I think Circular Firing Squad (11:48 am) is right about the mountain peak of our fiscal train wreck. Pension asset balances were devastated by the collapse after the Bush era and the uncertainty of investments of every form. They have come back but the defined benefit pension liabilities never went away. Without giving deference to our Wisconsin Governor to the north, the unions are part of the solution, and part of the problem. They realize this and may never have the leverage they once had.

    Nobody likes to pay taxes, or health insurance premiums for that matter. I have a neighbor who is a proud Tea Partier and we are both shocked at the range of issues we agree upon considering I am a moderate Democrat.

    I believe there is both truth and fiction to Quinn’s devastating cuts to social programs but what is completely true is the State’s deficit hole that we need to crawl out of. I believe that allowing a scaled down bond issue for the State’s vendors and creditors is morally imperative. I don’t believe we need to make everybody current but the social service providers have borrowed, scraped, and financially wiped themselves out to provide services for our state need our gratitude and their cash back.

    Float the bond, pay the creditors, engage participation with Republican ideas, cost cutting, and union givebacks to narrow the gap.

    Citizens have to be more patient with the fragile recovery, pay more for their pensions and healthcare, and pay more in taxes for high income earners.

    Republicans are forcing their agenda by not participating in the middle ground. Please work for the greater good of the state.


  44. - wordslinger - Thursday, Feb 24, 11 @ 2:57 pm:

    –On cutting state funding for human services, I’m surprised to see no talk of local governments picking up the slack. If it will be as devastating as everyone says, the communities that will be most impacted could push through a referendum to increase taxes to pay for these services with local dollars.–

    In Oak Park, the K-8 teacher’s union voted 4-1 to give up a contractually mandated pay raise next year to show sacrifice and good faith for an upcoming tax referendum. (The unions in Wisconsin have offered that, too).

    Oak Park doesn’t get that much state funding to begin with, not like Chicago and Downstate. Our property taxes pretty much support the schools. But we knew that when we purchased. And our property values have gone up immensely, even with the blip downturn engineered by the greedheads on Wall Street.

    As Yellow Dog has pointed out, locals better get prepared to start towing the line. A lot of the state budget is just redistribution of income from the suburbs, and rich pockets in the city and elsewhere, to the rest of the state.


  45. - Retired Non-Union Guy - Thursday, Feb 24, 11 @ 4:58 pm:

    Somebody needs to start voicing the truth to the public about the whole deficit / pension shortfall / budget cutting process instead of the myth the recent tax hike fixed everything. It’s a mess, it can’t be ignored, and because people didn’t pay a little years ago, they’re going to have to pay a lot now.

    If the powers in charge are unwilling to cut spending, then all of us will end up paying more in taxes of one kind or another. If they are going to keep the current income tax structure, the hike should have been to a temporary 7% or 8% instead of the 5% level. Since we’re “stuck” with 5%, then the tax base needs to expand. If it is expanded, hopefully the legislation will include a ban on ANY new spending or expansion of existing programs unless an independent study shows it would save money.

    The income tax needs to spread to services. Or tax pensions over a certain level (but taxing state pensions may bring up a court case over the whole diminishment issue). If state payments levels are cut to local entities (counties, cities, schools, etc.), then local taxes (sales, property) are going to go up. Simple mathematical fact if spending cuts are not made at every level; after all, the money has to come from somewhere. All of those changes will hit everyone, including government and non-government retirees. I don’t want to pay more taxes or “fees”, but I recognize Illinois will never get out of the hole unless something more is done.

    One of the “low hanging fruit” cuts nobody seems to be too excited about would be to get 100% of Illinois Medicaid in to a managed care program immediately. A ton of money is wasted every year by using the emergency room as the first line of care for Medicaid. Plus the current structure is basically “fee for service”. I think the latest “reform” requires half of the Medicaid recipients to be in managed care by either 2014 or 2015. Why are we waiting? It wouldn’t be that hard to do; the ER’s are already doing triage every minute to sort out the true emergencies. It might require a legislative change to cover liability, but just have the hospitals refuse to serve the non-emergencies. Send the non-emergencies off to the local “prompt / urgent” care facility and, once they get there, make them choose a primary care physician (or group practice) before they are treated. It may take a year of refusals to retrain people, but it can be done.


  46. - 2 sides of the coin - Thursday, Feb 24, 11 @ 5:59 pm:

    If the local school district has the added expense of paying the employer (formerly state paid) side of the pension payments for teachers, it will cost the local taxpayers more. However, this is how IMRF works for the non-certified staff at schools, and that pension system is considered “fully funded”. Perhaps keeping more money local isn’t such a bad idea, given that the GA hasn’t been making the obligatory pension payments with the money we’ve been sending for the last 30 years. Of course, if the State is paying less and we pay more locally, they should be looking at backing down on State revenue collection.


  47. - OldIllini - Thursday, Feb 24, 11 @ 6:22 pm:

    Illinoi hasn’t missed a bond payment since 1776; i.e. never.


  48. - Rich Miller - Thursday, Feb 24, 11 @ 6:34 pm:

    Actually, we may have missed some in 1838. Checking.


  49. - Retired Non-Union Guy - Thursday, Feb 24, 11 @ 9:26 pm:

    Missed pension contributions - no problem

    Service cuts - no problem

    Making bond payments on time - priceless!

    For everything else, there is borrowing …


  50. - Rich Miller - Thursday, Feb 24, 11 @ 11:05 pm:

    Retired Non-Union Guy, that really did make me laugh out loud.


Sorry, comments for this post are now closed.


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        * When to Use Positive or Negative Messages to Motivate Yourself

        * Inbox: How will new-look Sox lineup affect Abreu?
        * Keith Law likes the White Sox (more than PECOTA does, anyway)
        * Which prospects will make the Top 100 cut?
        * White Sox embrace their position as favorites
        * White Sox embrace position as contenders
        * What else is returning with Gordon Beckham?
        * Which prospects will make the Top 100 cut?

        ...............


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        * Cullerton: More information needed on high Raun.....
        * Daycare Providers Rally To Get State Funding Re.....
        * State Delaying Payments to Day Care Centers..
        * Standoff escalates over CPS' snub of federal te.....
        * Another optics problem..
        * Marijuana vending machines: Seattle's first dis.....
        * Rauner defends paying staff more than Quinn did..
        * Governing ain’t easy..
        * Rauner Slams Quinn For Leaving Behind “Fundamen.....
        * Rauner defends paying staff more than predecessor..


        * Cullerton: More information needed on high Rauner salaries
        * Gov. Bruce Rauner defends paying staff more than predecessor
        * Pro wrestler cheats at Wing Bowl, hides food in fanny pack
        * Chicago suburb to honor Harold Ramis during Groundhog Days
        * Crundwell court filing says she wants to keep horse trophies
        * SIU student newspaper bids farewell to old printing press
        * AbbVie reports better-than-expected 4Q on Humira sales
        * Cellphone providers bringing 4G coverage to Chicago subways
        * Visitation for Ernie Banks to be held in Chicago
        * On Super Bowl Sunday, veggies are most popular food

        * Rauner defends paying staff more than Quinn did
        * Top Rauner staff receiving higher pay than Quinn's
        * Springfield lawmakers want oversight commission to monitor 10th Street rail promises
        * Rauner staff receiving higher pay than Quinn's
        * New DNR director Rosenthal touts experience
        * Rauner wants bureaucratic cuts in education, elsewhere
        * New DNR director touts experience
        * Springfield unemployment falls to 5.6 percent in December
        * Springfield gaming terminal up 46 percent in 2014; revenue hits $1M
        * Springfield gaming terminals up 46 percent in 2014; revenue hits $1M

        * Ex-Sentinel CEO gets 14 years for investor fraud
        * Citibank shutters seven local branches
        * AbbVie falls on 'disappointing' hep C drug forecast
        * Hanging with Richard Branson at his new Chicago hotel
        * What people don't get about 'boring and bland' Scott Walker


          * Blackhawks legend Stan Mikita facing 'serious health issues'
          * Emanuel won't rule out property tax hike for police, fire pensions
          * State threatens to withhold funds from schools that skip Common Core test
          * Reward offered for missing U. of I. student from Chicago missing since Sunday
          * For Metra riders, fare increase depends on type of ticket, destination
          * Money manager sentenced to 14 years in prison for massive fraud
          * Young homeless get help from those who've walked in their shoes
          * Illinois No. 10 in identity theft -- so beware in tax season
          * Cop falsely accused in 'honeybee' murder case settles suit with Will County
          * Ban will cost Rita Jeptoo the Chicago Marathon title


          * Could Rauner's Spending Hold Derail New Train Routes?
          * Listen to State Week - January 30, 2015
          * Rauner Staff Receiving Higher Pay Than Quinn's
          * Rauner Defends Higher Staff Salaries
          * Unmasking Ernie Banks
          * Guzzardi Wants Parents To Be Able To Opt Kids Out Of Testing
          * National Weather Service Latest Snow Projections
          * Rauner Tells U Of I To Cut Bureaucracy
          * Group Says Railroad Threatens To Isolate East Side
          * Proposal Would Ban Conversion Therapy For Minors


          * Rauner defends paying staff more than Quinn did
          * Our Opinion: Residency not the best gauge of loyalty
          * Cary Collins: Other options for fixing Illinois' pension problems
          * E.J. Dionne: For the Patriots, without apology
          * Esther Cepeda: Paid sick leave is a worthy prescription
          * George Will: Bud Selig's winning legacy
          * Quote of the Day: Friday, Jan. 30, 2015
          * Top Rauner staff receiving higher pay than Quinn's
          * Springfield lawmakers want oversight commission to monitor 10th Street rail promises
          * New DNR director Rosenthal touts experience


          * Loda rejects liquor license that would have meant gaming license
          * School activities being added in Villa Grove
          * GC council recommends approach for backers of Harvest Fest
          * Snowy weekend on tap for East Central Illinois
          * Change of judges granted in retrial over fatal crash
          * Chat recap: 'Bailey wants to play quarterback'
          * Man charged with injuring 1-year-old daughter
          * Tom's mailbag Jan. 30, 2015
          * Bi-State headquarters moving
          * PHOTOS: Hope Academy administrators drink mystery smoothies for students


          * Whistleblower removed from VA press event before it starts
          * Police: 4-year-old Milwaukee boy accidentally shot uncle
          * Braves deal RHP David Hale to Rockies in 4-player trade
          * Wauconda trustee candidate calls vaccines dangerous
          * Indiana library faces major cuts under proposed budget

          * Letter: Bipartisanship from Roskam - North...
          * Hotel Industry Praises House Passage of 40...
          * House immigration rollback bill going nowh...
          * Rep. Jan Schakowsky Statement on Vote Agai...
          * Immigration bill passes with Rep. Schock a...
          * Danny Davis Defeats Robert Bumpers In Illi...
          * Durbin, Gutierrez Slam 'Hateful' Republica...
          * Rehab of Affordable Housing Building in Ol...
          * Rep. Aaron Schock's amendment seeks priori...
          * House votes to undo Obama immigration poli...

          * Flake joins group pushing to end travel re......
          * Guest lineups for the Sunday news shows...
          * The Republican Congress Meets Reality...
          * Immigration drama heats up with DHS funds ......
          * Bob's Blog: Romney out of the race...

          * Sen. Kirk pushes $300 million plan to help......
          * Obama Has Given Iranians “80 Percent of Wh......
          * Sen. Kirk blasts British PM for lobbying a......
          * Top Rauner staff more highly paid than Qui......
          * Sen. Kirk pushes $300-million plan to help......

          * December Unemployment Rate Ticks Down In All Illinois Metro Areas
          * December Unemployment Rate Ticks Down In All Illinois Metro Areas (UPDATED)
          * Rauner’s worker empowerment zones.
          * Tim Furman: Andrea Zopp and the zombie lie.
          * Activists Bring Fight To Save A Rogers Park 'Community House' To Citibank (VIDEO)
          * Deb Mell Takes Heat For Family Ties At 33rd Ward Candidate Forum
          * Study: Top 1% Of Earners In Illinois Captured 97% Of Post-Recession Income Gains
          * U Of C Nurses Vote To Authorize 1-Day Strike
          * Poll: Most Chicago Voters Support Parkland Use For Obama Library
          * New Ald. Beale mailer #Aldertrack


          * IDHS reminds eligible workers to take advantage of free tax help and the Earned Income Tax Credit (EITC) - More than 30 sites offer free tax services Statewide
          * IEMA, American Lung Association Launch Health House - Radon Excellence Program in Savoy - Two Champaign builders coordinating with Heyworth radon mitigator in program to reduce radon-related lung cancer risks in new homes
          * One Confirmed Case of Measles in Illinois
          * Governor announces latest round of agency appointments
          * Rauner announces “Turnaround Team” - Stellar team to help turn Illinois around




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