Chicago fuel tax reserves running on fumes
Thursday, Oct 1, 2015 - Posted by Rich Miller
* Standard & Poor’s, June, 2015, all emphasis added…
Standard & Poor’s Ratings Services affirmed its ‘AA+’ long-term rating and underlying rating (SPUR) on Chicago’s existing motor fuel tax (MFT) revenue debt. The outlook on all ratings is stable. The rating reflects our view of: The pledged revenue stream’s diverse statewide base; The insulation of pledged revenues from the financial challenges facing the state of Illinois, because we view the governing statute as not allowing tax revenues to be used to support the state’s general operations. The fact that although MFT revenues are subject to state appropriation, the state historically has never been late in disseminating the MFT revenues…
What was that line in “Animal House”? Something like “You (messed) up, you trusted us”?
Oops.
* From the Bond Buyer…
The Illinois budget stalemate has left Chicago on the hook to cover monthly payments to the trustee on its motor fuel tax bonds because state transfers are trapped without a fiscal 2016 budget in place.
Pending legislation would allow the state to distribute the motor fuel revenues without a budget, but its fate is uncertain.
Chicago is tapping residual revenues it collects and pledges to bond repayments in order to cover monthly payments on $270 million of outstanding bonds.
Once those funds are exhausted, the city intends to look elsewhere for revenue to avoid a default, according to city finance officials. Biannual debt service payments to holders are made in January and July. […]
The state Senate in early September passed a bill that would allow the motor fuel distribution appropriations to resume without a state budget in placed. The bill was not called up in the House during its session last week because it lacked the votes.
Ugh.
* But, a new bill has been introduced…
Several suburban House Democrats yesterday rolled out a bill to authorize the release of tax money owed to Illinois cities.
Introduced on Wednesday, the proposal, House Bill 4305, would require the state to release money owed to local municipalities that is collected through gaming operations, the motor fuel tax, and other surcharges.
“The money collected from these funds is meant to be distributed to local municipalities, not used as a political pawn,” said State Rep. Marty Moylan (D-Des Plaines), the bill’s chief sponsor. “The governor’s refusal to let these funds go to their intended recipient is hurting our local communities and weakening the region’s economy.”
Moylan, a former mayor of Des Plaines, notes that the town is the recipient of revenue generated by Rivers Casino, totaling almost $9 million last fiscal year. Currently, the city is receiving no money from its share of the gaming tax revenue.
Additionally, the bill also allows winners of the state lottery to collect their full prizes. Currently, winners are only allowed to collect $25,000 regardless of their prize value.
- Norseman - Thursday, Oct 1, 15 @ 9:57 am:
Another ridiculous consequence due to Rauner’s crusade against unions.
- Norseman - Thursday, Oct 1, 15 @ 9:58 am:
=== What was that line in “Animal House”? Something like “You (messed) up, you trusted us”? ===
Thank goodness you cleaned this up. I wouldn’t want you to be banned from the blog.
- thunderspirit - Thursday, Oct 1, 15 @ 9:58 am:
I fully expect Governor Rauner to veto this bill too, should it reach his desk.
- Apocalypse Now - Thursday, Oct 1, 15 @ 10:01 am:
The courts should stay out of this budget process.
- Wordslinger - Thursday, Oct 1, 15 @ 10:07 am:
– the courts should stay out of this budget process–
LOL, what does that even mean? That citizens should not have a venue for redress under the law?
I’m guessing you’d like to keep the legislature out of it, too.
What do they call that form of government you’re advocating?
- Oswego Willy - Thursday, Oct 1, 15 @ 10:08 am:
===The courts should stay out of this budget process.===
“Too late”.
- Oswego Willy - Thursday, Oct 1, 15 @ 10:09 am:
Rich,
I’m going to listen to you, you’re Pre-Med…
- Langhorne - Thursday, Oct 1, 15 @ 10:12 am:
Make sure you include lottery winnings. Thats my financial plan for retirement.
- Tequila Mockingbird - Thursday, Oct 1, 15 @ 10:14 am:
I get awful tired of the blame everything on Rauner howls. Yes he is playing hardball and could govern more and campaign less, BUT there is plenty of blame to share among the powers before he showed up. The system was “messed” up before. The reliance on gaming, mtf, and sin taxes as a revenue stream instead of overall fiscal responsibility goes back a few years. Good news for Chicago is bond ratings can’t go down much.
- pool boy - Thursday, Oct 1, 15 @ 10:17 am:
Winter is coming. Can’t plow roads because no MFT. Can anyone say Bilandic? No even Bruce almighty can beat mother nature.
- Wordslinger - Thursday, Oct 1, 15 @ 10:17 am:
Surprisingly optimistic analysis from S&P, given the Mac Place fiasco.
That had never happened before, either, not even under an incompetent goof like Blago.
But the new guy managed to pull it off. .
- Jack Stephens - Thursday, Oct 1, 15 @ 10:19 am:
More Class Warfare meant to inflict pain to convince us that lower wags are good for us.
Bruce,
Is this your plan to “shake up Springfield?”
Jack
- McEnuf - Thursday, Oct 1, 15 @ 10:19 am:
It looks like Rauner’s cuts to law enforcement are starting to impact public safety as well. The legislature should let him stew him this crisis…maybe he’ll start to take a more common sense approach to negotiations.
http://madisonrecord.com/stories/510640334-911-what-s-your-emergency-st-clair-county-etsb-may-default-on-bond-payments#sthash.ffaXilRZ.uxfs&st_refDomain=t.co&st_refQuery=/QxppVxRhUN
- AC - Thursday, Oct 1, 15 @ 10:26 am:
If only Illinois government wasn’t vapor locked, we wouldn’t be in this volatile situation.
- McEnuf - Thursday, Oct 1, 15 @ 10:29 am:
It looks like the GA is heading into “double secret probation.”
- A Jack - Thursday, Oct 1, 15 @ 10:36 am:
Perhaps a political stunt is in order for the Chicago Mayor. Maybe shut down Union Station for a day due to lack of funds and blame it on the Governor?
It’s not without precedent. As Chris Christie had his Bridgegate. And Mayor Daley bulldozed that runway.
It might cause enough of an outcry to get some movement. Certainly human services going down the tubes hasn’t had any effect on the Governor.
- Huh? - Thursday, Oct 1, 15 @ 11:01 am:
It is not just Chicago that is being hurt by the state withholding the MFT. There is a downstate county that is planning to lay off everybody in their highway department because of this problem.
- Bluefish - Thursday, Oct 1, 15 @ 11:01 am:
Most municipalities that have reserve funds will dip into them to cover the lost revenue. Those without sufficient reserves are out of luck. Either way, local property taxpayers will get the bill for the withheld state funding.
So much for Rauner claiming he wants to lower property taxes.
- Captain Illini - Thursday, Oct 1, 15 @ 11:29 am:
“Most municipalities that have reserve funds”
That use to be the case with most special funds as well…until they were swept a few times…that’s what reserve funds are suppose to do - in times of need.
Fiscal sanity has never been this state’s strong point, but it’s writ large with this gang occupying the mansion.
- Downstate AgMan - Thursday, Oct 1, 15 @ 11:58 am:
GA and Governor “your grade Point is Zero point Zero!”
- Blue dog dem - Thursday, Oct 1, 15 @ 11:59 am:
Crisis=opportunity. How much we got left in that EDGE account. Kinda think we ought to make a play for a car manufacture or something. I hear there are some willing to relocate….
- The Machine - Thursday, Oct 1, 15 @ 12:09 pm:
===Another ridiculous consequence due to Rauner’s crusade against unions. ===
At least he’s on the good side in that. Someone to finally take the taxpayer’s side.
- Last Bull Moose - Thursday, Oct 1, 15 @ 1:01 pm:
Chicago is showing itself to be the Democratic Party’s financial weak link. I do not see how it gets through January without State action.
When Chicago (and the State ) are unable to pay their bills they fit the financial description of bankrupt. Legal bankruptcy provides an organised way to deal with the inability to pay. With legal bankruptcy off the table, expect a chaotic and disorganized response.
- Tournaround Agenda - Thursday, Oct 1, 15 @ 1:03 pm:
Yes, the taxpayers are being so well-served by this budget debacle in the name of destroying unions. Tell me how the long-term benefits from doing that will counteract the long-term damage being done right now.
- Mama - Thursday, Oct 1, 15 @ 2:35 pm:
Gee Rich, not sure I can handle any more of the good news you are reporting today. Whoa…