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Today’s numbers are mind-boggling

Friday, Mar 14, 2014

* We got caught up in politics yesterday and I didn’t get around to this story. Sorry about that. Greg Hinz has a solid take on the state comptroller’s Comprehensive Annual Financial Report…

Illinois’ net cumulative deficit for “governmental activities” — a broad measure of obligations the state has accrued, relative to resources it has to pay bills — rose an additional $1.2 billion in the fiscal year ended June 30, to $47.8 billion. The overall figure is nearly triple what it was just seven years ago, though the annual increase was the smallest it’s been since at least fiscal 2006.

“Governmental activities” includes almost all the programs and spending normally run by state government, from prisons and education aid to Medicaid and highway construction. Some, though not all, pension obligations are included. Excluded are self-contained business activities, including the unemployment insurance trust fund, the college tuition assistance program and the Illinois Lottery. […]

In his analysis, [Auditor General Bill Holland] reported that the net deficit for governmental activities has steadily risen from $18.7 billion in fiscal 2006 to $47.8 billion in fiscal 2013. Only one other state, Massachusetts, has a negative net position in the governmental activities account, he reported. Even other Midwestern states such as Michigan and Ohio are in the black.

Illinois is doing somewhat better by a narrower measure, the net balance in its general (or operating) funds, Mr. Holland found. It improved from a negative $9.1 billion in fiscal 2012 to “only” negative $7.3 billion in fiscal 2013, the lowest since the 2009 recession.

But the good news is limited, Mr. Holland conceded. “The deterioration is slowing,” he said. Ending the deficit entirely is going “slowly — very, very slowly.”

The CAFR is here. The Auditor General’s analysis is here.

* Meanwhile

Interest payments on Illinois’ late bills cost the state $318 million last year – enough to cover the annual budget of the Illinois State Police, according to a published report.

The state auditor’s overview of Illinois’ finances shows interest payments from fiscal year 2013 were more than double what was paid in the previous year when the figure was $136 million, according to a report by the Springfield bureau of Lee Enterprises newspapers.

The state’s interest on unpaid bills was $91 million in 2011, $97 million in 2010 and $36.9 million in 2009.

Brad Hahn, a spokesman for Illinois Comptroller Judy Baar Topinka, said this year’s interest payments should be much lower because the state has been “aggressive” about working to reduce the backlog of unpaid bills.

* And

An Illinois State Board of Education report released Wednesday shows more Illinois schools are in poor financial shape and borrowing money or dipping into reserves than previous years, a problem that could worsen as the state faces overall budget cuts next year.

The annual review, which places school districts into four categories ranging from high financial strength to high risk, shows an overall downgrade in the financial position of the state’s districts. About 120 of Illinois’ 862 districts are in the two categories that indicate higher risk — an increase of nine from last year. And the problems are only expected to get worse as about 60 percent of school districts forecast they’ll have a deficit in the 2014 fiscal year, an increase of more than 10 percent the previous year.

State education officials say the state has underfunded education for the past three years, causing the overall downgrade in financial strength.

* Not to mention this mess

Proposed state rules designed to crack down on sales tax havens are running into heavy fire from key business and tax policy groups — a possible sign that the highly contentious issue is headed back to the Illinois General Assembly.

Both the Illinois Retail Merchants Association and the Taxpayers Federation of Illinois told me that proposed rules issued in the wake of the state Supreme Court’s Hartney decision are still too vague on who owes how much and where.

I hear that a third influential group, the Illinois State Chamber of Commerce, also is prepared to ask for major revisions at a public hearing scheduled next week in Springfield.

The proposed rules were issued by the Illinois Department of Revenue after the high court on Nov. 21 tossed out old rules that the state and agencies such as the Regional Transportation Authority charged had been exploited by firms that established “order acceptance centers” in low-tax jurisdictions including Kankakee and Channahon to avoid paying higher taxes on goods that ended up in Chicago and its metropolitan area.

Taken together, it’s almost too much to fathom.

- Posted by Rich Miller        


29 Comments
  1. - Tweed Jacket - Friday, Mar 14, 14 @ 9:39 am:

    Wait, What? That’s asinine. We have a structural revenue issue that has existed for decades. I would argue since the ConCon and going for a flat instead of a graduated income tax. We’ve had a spending issue since the Cold War between Blago and Madigan. Along with a host of other things. However, a back room deal this was not.


  2. - Wensicia - Friday, Mar 14, 14 @ 9:40 am:

    So much for the increase in income taxes is needed for the schools.


  3. - wordslinger - Friday, Mar 14, 14 @ 9:41 am:

    –Interest payments on Illinois’ late bills cost the state $318 million last year –

    That’s a nice score for some vendors out there. Not everyone has a problem with late bills.


  4. - wordslinger - Friday, Mar 14, 14 @ 9:43 am:

    Frosty, that’s not a theory, that’s a mental illness.


  5. - Mason born - Friday, Mar 14, 14 @ 9:49 am:

    I think we’ve found Rauners 2nd general election commercial. Right behind the 54 million to buy the election.

    I may despise Rauner but it’s not hard to see how his I’m not one of the fools that created this mess schtick is working.

    The hair stands up on the back of my neck when someone says they want to change things but can’t share exactly how they want to change things. I guess we will see how many people can imagine him supporting what hey want to change enough to pull the lever for him.


  6. - VanillaMan - Friday, Mar 14, 14 @ 9:51 am:

    This is not surprising.

    What I see our state leaders doing is hoping that somehow the national economy will return and that the tough choices they don’t want to make, can be avoided.

    The national economy will not be returning for another several years. The Boomers aren’t booming anymore and there are not enough younger people to take up the slack demanded by a growing economy. We’ve all seen this coming since the Boomer generation was first labeled. We all knew that when they began to get gray and retire, our economic ducks would need to be in a row to handle the economic downturn and change. This didn’t happen and time marched onwards, catching us unable to handle this Boomer download.

    I have been amazed at how long Illinois has held onto it’s sacred cows as the rest of the country corralled them into the slaughterhouse. I don’t see any economic cavalry appearing on the horizon to protect us soon enough.

    We can’t keep bleeding hundreds of millions of dollars in unwatched legislator grants. We can’t keep bleeding hundreds of millions of dollars in redundant state programs. We cannot be both Good Samaritans and broke.

    We can be both big - and failing. We’ve seen this happening in Illinois for a long time.


  7. - Cassidy - Friday, Mar 14, 14 @ 9:59 am:

    Blago and Quinn have been responsible for creating this fiscal calamity since they took office in 2003. They made the budgets, borrowed the money and we will all pay for their fiscal folly.

    Everytime I hear Quinn announce some new bike path or grant I cringe. They say its all “Capital Money” so it doesn’t require any current increase in taxes. Borrowed money is borrowed money and it eventually has to be paid back. Companies borrow money to acquire assets to increase the ability to generate revenue. Quinn borrows money for political deals and public announcements.


  8. - Frustrated Voter - Friday, Mar 14, 14 @ 10:04 am:

    Why would anyone desire to be the governor of Illinois right now?


  9. - Demoralized - Friday, Mar 14, 14 @ 10:10 am:

    ==Blago and Quinn have been responsible for creating this fiscal calamity since they took office in 2003==

    They have certainly contributed, but they are not the sole culprits. I wish people could be a little more honest in these thinks and acknowledge that this problem began before they were in office and was aided in no small part by the members of the General Assembly. All parties have contributed to the mess we find ourselves in now. Why can’t we be honest about this stuff?


  10. - wordslinger - Friday, Mar 14, 14 @ 10:10 am:

    –The Boomers aren’t booming anymore and there are not enough younger people to take up the slack demanded by a growing economy.–

    I didn’t know young people were at full employment.

    Also, no one wants to get into the United States to do the heavy work? That’s news, too.


  11. - Demoralized - Friday, Mar 14, 14 @ 10:10 am:

    *things* not thinks


  12. - From the 'Dale to HP - Friday, Mar 14, 14 @ 10:12 am:

    @Cassidy, Blago isn’t innocent by any means but it’s not like the state was in a great financial state in 2002, then Blago was elected and it all went ka-boom. The seeds were planted in the 80s and 90s.


  13. - Frustrated Voter - Friday, Mar 14, 14 @ 10:24 am:

    Which party has been in control of the GA for the past 30 years?


  14. - Mason born - Friday, Mar 14, 14 @ 10:29 am:

    Demo

    – Why can’t we be honest about this stuff?–

    Because that makes it harder to root for your team (i.e. d or r). After all wouldn’t want the blame for the mess hurting my party!!


  15. - Oswego Willy - Friday, Mar 14, 14 @ 10:30 am:

    ===Which party has been in control of the GA for the past 30 years?===

    Republicans held the Illinois Senate for 10 years with President Phillip in the Chair; Speakers Ryan and Daniels, I recall, were Republican Speakers…

    So what was your point?


  16. - Walker - Friday, Mar 14, 14 @ 10:31 am:

    When Holland speaks, people listen.

    Or they should.

    No surprises here for the well-informed.

    We need to restructure income taxes to net more revenue, add services to the sales tax base, reduce growth in pensions, continue to close some institutions, better manage grants and third-party contracts, establish budgets which are not just technically “balanced”, produce annual operating surpluses to pay down late payables and debt, and stop clogging up the legislature with nonsense bills which just build egos and campaign literature. We need to stop talking about fiscal plans which don’t meet a simple arithmetic test.

    All of the above. No trade offs. All of the above.

    When we get in substantially better fiscal shape, (in 5 years?) we can reconsider.

    There are only maybe a dozen people in the entire legislature willing to stand up and do it all, without concern for their own futures. IMHO. Hope I’m wrong.


  17. - PoolGuy - Friday, Mar 14, 14 @ 10:33 am:

    some of these posts match up with general public views, sadly. blame the Gov, no blame the General Assembly. blame Gov Ryan, Blago, Quinn. blame Madigan. blame the Dems. blame the Repubs. no one can agree on anything, so we all blame each other and things get worse. nothing changes this way, ever. ugh…


  18. - Demoralized - Friday, Mar 14, 14 @ 10:42 am:

    ==Which party has been in control of the GA for the past 30 years?==

    Thanks for proving my point. No honesty in this particular debate.


  19. - Mason born - Friday, Mar 14, 14 @ 10:47 am:

    Walker

    Thanks for saying what we all know. The only thing i disagree with is i doubt a dozen are willing to do it.


  20. - Oneman - Friday, Mar 14, 14 @ 11:05 am:

    Walker,

    You are on target. The only catch I put on this is if we go to a progressive system it stays away from being punitive. I realize if it happens my taxes are going to go up more than other folks, I would just rather not take it in the shorts so others can pay less.


  21. - Mason born - Friday, Mar 14, 14 @ 11:32 am:

    Oneman

    The thing that scares me about the Progressive tax isn’t the tax so much but the habits of IL pols. I have seen no reason to think that they wouldn’t simply continue exactly the same way as the last 20+ years. Just hike the higher end every time they don’t get enough cash for their pet projects.

    That was the best part of Walker’s statement all of the above is what is needed.


  22. - Capitol View - Friday, Mar 14, 14 @ 12:58 pm:

    Walker, political courage in addressing our outdated revenue system is harder to find than the Northern Lights in the Springfield sky.


  23. - Pensioner - Friday, Mar 14, 14 @ 1:28 pm:

    Tax increase in the past was not high enough obviously. Politicians took a hit for doing it, should have gotten something in return. Back to square one. On it goes.


  24. - Last Bull Moose - Friday, Mar 14, 14 @ 1:32 pm:

    Voters want more government services than they want to pay for in taxes and fees. For years they have gotten what they wanted.
    Thus far I have seen no proposals that come close to fixing the problem. A radical reshaping of state government is needed and our choices seem to be a pig in a poke or marginal changes.
    Walkers approach is the right attitude. Execution would be brutal. People of good will and character will fight the cuts. Other people of principle will fight the tax increases
    I hope we have enough people who can create and accept imperfect solutions to get us through these difficult times.


  25. - Anon - Friday, Mar 14, 14 @ 2:00 pm:

    On sales tax sourcing, IDOR has come up with impossible vague and uncertain rules. Business rightfully needs and deserves clear rules, not some set of “factors” to weigh in an imprecise way — no business or local government will ever be assured that they has guessed correctly, with both being subject to possible liabilities down the road from second guessing by IDOR. Tax policy needs to be clear, objective and certain…and this set of rules is vague, subjective and uncertain.


  26. - Rod - Friday, Mar 14, 14 @ 3:02 pm:

    Today’s Illinois House Appropriation – Elementary and Secondary Committee held in Chicago discussed some deeply disturbing funding scenarios for K-12 education in Illinois that Rich touched on in his post. The Chicago Public Schools was put under some pressure by chairman Davis and Representative Jeanne Ives to considering calling a referendum (pursuant to 35 ILCS 200/18-185) raise property taxes beyond the PTELL cap. Basically CPS officials at the hearing did not respond.


  27. - Anon. - Friday, Mar 14, 14 @ 3:55 pm:

    ==Business rightfully needs and deserves clear rules, not some set of “factors” to weigh in an imprecise way — no business or local government will ever be assured that they has guessed correctly, with both being subject to possible liabilities down the road from second guessing by IDOR.==

    Tell that to the court that threw out the existing rule.


  28. - Anon - Friday, Mar 14, 14 @ 3:57 pm:

    It’s true that profiles in courage are the smallest caucus in Springfield. Membership grows after each election when lame ducks join the caucus, tho by then it no longer takes much courage.


  29. - Anon - Friday, Mar 14, 14 @ 4:12 pm:

    The Comptroller, the Auditor Gen & the ISBE all describe the lack of adequate revenue in a state that is one of the lowest spenders among the 50 states. Yet
    friends insist there’s only a spending problem insists the rightwing.


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