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Fun with numbers

Monday, Jan 27, 2014

* AP Chicago

Days ahead of Gov. Pat Quinn’s State of the State address, his budget director has sent lawmakers a letter detailing “encouraging” developments on Illinois’ billions in unpaid bills.

The Sunday letter says the backlog will be $5.6 billion by fiscal year’s end, down from roughly $10 billion. Budget chief Jerry Stermer says if progress continues Illinois will be in line with “private-sector benchmarks.” […]

A budget spokesman says there isn’t a connection between the letter and Quinn’s Wednesday speech. He says Quinn will later outline budget issues.

It’s AP Chicago, and it’s a quickie Sunday story, so those unfortunate realities make this story worth a closer look to see if it’s actually true.

* From Stermer’s letter

I am writing to you today with encouraging news. Over the past five years we have worked together and made progress on many critical issues, from reforming our pension systems to overhauling Medicaid, and we have made tough choices and focused on policies that drive our economy forward. Thanks to this collaboration, we are projecting that the state’s backlog of bills will be down to $5.6 billion at the end of this fiscal year. That is more than 43 percent lower than the $9.9 billion backlog at the peak of the recession. […]

If the outstanding bills are paid down – and not allowed to pile up again – the amount of bills making their way through the state’s payment system in any 30-day period ($3 billion or 10 percent of the state’s general-funds budget) will be in line with private-sector benchmarks. Thank you for your collaboration and feel free to contact me with questions.

* But if you look at the accompanying charts, you’ll see that the governor’s budget office actually projects that the bill backlog will be about $400 million higher at the end of this fiscal year ($5.6 billion) than it was at the end of last fiscal year ($5.2 billion).

And this is old news. At the end of March, 2013, the backlog stood at about $9.1 billion. It dropped to $5.5 billion by the end of April, 2013. It’s stayed pretty much constant since then, rising a little, falling a little, rising a little. It was as low as $4.7 billion last July, and stood at $6.4 billion by the end of this past December.

So, why tout this old news? Well, despite the denials above, this is all about setting the stage for the governor’s State of the State address. He’ll probably outline some grand new ideas and he needs to show that, fiscally, things are looking up.

In reality, it looks like the state did a good job last April paying down bills, but they remain stubbornly high now and in the foreseeable future. The budget office says they were “conservative” with their end of fiscal year projections, but it is what it is. The pile was reduced nine months ago, and it’s remained at about the same height ever since.

* Meanwhile, along those same lines, Gov. Quinn’s office touted some new pension numbers

The Quinn administration highlighted another part of the new estimates: if the pension law withstands a legal challenge from unions, the state will see its $100 billion pension debt immediately drop by about $24 billion instead of the previous $21 billion estimate. The better-than-expected projection is being driven by last year’s improved performance of the billions of dollars the pension funds have invested.

* But

New calculations show the state will save about $15 billion less than initially projected from the controversial major government worker pension overhaul that lawmakers and Democratic Gov. Pat Quinn approved last month. […]

Last month, House Speaker Michael Madigan championed the pension overhaul as saving $160 billion over 30 years. But when the financial minds at the pension systems covering state workers, teachers outside Chicago and public university employees took a look, the savings estimate came out to $145 billion.

The full report that the story is based on can be accessed by clicking here.

* Related…

* Quinn sure to tout pension deal in State of the State

…Adding… The Tribune has changed “The Quinn administration highlighted another part of the new estimates” to “Legislative supporters highlighted another part of the new estimates.”

Can’t speak for the Tribbies, but the Quinn administration is pointing at those unfunded liability numbers behind the scenes.

- Posted by Rich Miller        


12 Comments
  1. - Careful - Monday, Jan 27, 14 @ 10:53 am:

    “…the better-than-expected projection is being driven by last year’s improved performance of the billions of dollars the pension funds have invested.”

    The ones invested by GTCR? Careful there, Governor.


  2. - Marty - Monday, Jan 27, 14 @ 11:07 am:

    Have the unions filed a lawsuit against the pension reform law? Last I heard 3 suits have been filed, all by retiree associations.


  3. - Howard - Monday, Jan 27, 14 @ 11:16 am:

    Yes, Quinn will be looking real good when SB1 is thrown out. The governor can’t make the state look too well off, as that could work against him as in the SB1 preamble. Are the unions attorneys listening?


  4. - Formerly Known As... - Monday, Jan 27, 14 @ 11:37 am:

    This reminds of the time Mr. Quinn attempted to buffet a string of bad employment news by announcing a company was moving to Illinois…

    and it turned out to be a “re-announcement” of news from many months prior.


  5. - Formerly Known As... - Monday, Jan 27, 14 @ 11:46 am:

    @Marty - if I were filing such a lawsuit, I would announce the suit either within 24 hours or on the day of Mr. Quinn’s State of the State address.

    Said announcement would be made outside the speech venue for convenient media access. It would also include a stop by the office to personally serve notice.

    That’s just me, however.


  6. - BIG R. Ph. - Monday, Jan 27, 14 @ 12:07 pm:

    So we are supposed to stand and give him an ovation that we are “only” $5 Bill in the red? When every other state that touches Illinois has budget surpluses?
    He is just setting up making the 67% income tax increase permanent.


  7. - Frank - Monday, Jan 27, 14 @ 12:34 pm:

    Interesting editorial decision by the Trib in the pension numbers story. If my calculations are correct, the long term “savings to the state” are down 9 percent from the promised level. But the reforms will improve the pension debt outlook immediately by a level 14 percent higher than previously thought.

    The Trib could have led with a “Review of pension numbers shows mixed results.”

    But, no surprise, they led with the negative and buried the positive.


  8. - Irish - Monday, Jan 27, 14 @ 1:00 pm:

    Are the back wages owed to the state employees that Quinn tried to punish because their unions would not support him, part of the backlog?
    Will Quinn mention that he still owes them? Will he mention that the GA got their back pay immediately after they passed Madigan’s SB-1 ? With interest? But in spite of a judge’s order they just can’t seem to find the money for the state employees who were not paid for work done?
    Or is this a forgotten issue now and we are on to things that affect real people, not those pesky undeserving state employees? I already know the answers.

    Oh look, a kitty.

    Marty - @ 11:07 am The union that represents(?) me, the IFT, is taking it’s time to make sure it files the best lawsuit possible. The president of the union explained this in an email several weeks ago. His email also wanted to make it clear that the lawsuits filed already were NOT the union’s. Evidently the retiree groups have quicker thinking lawyers. So a bunch of us will retire so we miss being under the new law because our union was not ready for SB-1 to be passed, and we will have no idea if SB-1 will be repealed until our union finally catches up.


  9. - downstate hack - Monday, Jan 27, 14 @ 1:49 pm:

    Only in Illinois would a $5 BILLION backlog in bills and an unbelievably unbalanced budget be encouraging. These guys are delusional.


  10. - Meanderthal - Monday, Jan 27, 14 @ 2:54 pm:

    I thought Stermer got the boot a while back?


  11. - walker - Monday, Jan 27, 14 @ 3:55 pm:

    Stermer’s statement is perfectly reasonable, and we are making some progress.

    We apparently are at $5.6B in outstanding payables, while for the private sector company of our size, the standard would be around $3B in outstanding payables. No CFO in the private sector pays bills immediately and keeps his or her job. Stermer is aiming for the correct benchmark.


  12. - for what it's worth - Monday, Jan 27, 14 @ 4:39 pm:

    @Irish - From my experience with litigation, just because the retiree groups lawyers appear to be “quicker thinking” doesn’t mean they’re better. They could be filing a hastily-prepared suit that has no chance.


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