Latest Post | Last 10 Posts | Archives
Previous Post: More horrible pension news
Next Post: Question of the day
Posted in:
* COGFA projected that the stopgap budget would create a $7.8 billion deficit. The governor’s budget office disagrees and has issued its own projection…
Ahead of the [$1.7 billion GO bond] sale, the Republican governor’s office said the stopgap budget is on track to leave Illinois $5.4 billion in the red when the fiscal year ends on June 30 if nothing changes. A bipartisan legislative commission in July projected a $7.8 billion deficit.
* Meanwhile…
Illinois’ pile of unpaid bills continues to grow, hitting nearly $8.3 billion on Tuesday.
The governor’s office said discussions are ongoing with legislative budget working groups over selling about $5 billion of shorter-term debt to pay down the bill pile.
Quinn tried to do similar borrowing to pay off bills (part of the tax hike was actually dedicated to that purpose), but he failed when Republicans wouldn’t cooperate and they couldn’t get all Democrats on board.
*** UPDATE 1 *** COGFA’s director says he stands by the original projection. He also said he does not know how GOMB came up with its projection. I’ve asked the budget office for a brief written explanation.
*** UPDATE 2 *** I just got a quick briefing from GOMB and they made a pretty good case. Several hundred million in special funds spending wasn’t properly accounted for by COGFA, lapse spending wasn’t included, savings from refinancing bonds wasn’t included, and there are big problems with the way COGFA calculated Medicaid spending, including not factoring in projected savings and not fully counting federal reimbursements. They should’ve done this months ago, but they have a bond deal coming up, so better late than never, I suppose.
posted by Rich Miller
Wednesday, Sep 28, 16 @ 2:38 pm
Sorry, comments are closed at this time.
Previous Post: More horrible pension news
Next Post: Question of the day
WordPress Mobile Edition available at alexking.org.
powered by WordPress.
Yeah!
But now it’s their idea - & that makes all the difference!
Comment by WhoKnew Wednesday, Sep 28, 16 @ 2:46 pm
Pretty sure the CGFA estimate assumed that full year appropriations would be enacted for items that currently only have six month appropriations. So, for whatever its worth, the OMB estimate is probably a bit closer to where we stand today.
Comment by Juice Wednesday, Sep 28, 16 @ 2:46 pm
That makes much more sense than the 6 month stop gap coming in at a 7.8 billion dollar deficit - higher than the 7 billion dollar Madigan budget for the entire year. That made zero sense.
More smoke and mirrors out of Springfield
Comment by Lucky Pierre Wednesday, Sep 28, 16 @ 2:46 pm
I do recall part of the Income Tax hike getting tied to the failed bonding proposal. In fact, the individual income tax rate is set to drop another half a point on January 1, 2025.
Comment by SAP Wednesday, Sep 28, 16 @ 2:46 pm
Huh. COGFA is usually spot on. I wonder how GOMB got $5.4 billion when COGFA got $7.8 billion?
“While we are facing a much smaller hole than if the super majority in control of the legislature passed its $7.5 billion unbalanced budget….said Rauner spokeswoman Catherine Kelly….”
Oh, that’s how.
Comment by wordslinger Wednesday, Sep 28, 16 @ 2:49 pm
Stopgap only goes thru December.
I’m good with borrowing to pay ALL the unpaid bills - if Rauner will cooperate on a budget without tying it to any of his agendas.
Comment by Thoughts Matter Wednesday, Sep 28, 16 @ 2:50 pm
Would love to be a fly on the wall when GOMB goes to Radogno and Durkin and says, hey you remember when the PQ guys came to you and talked about borrowing to get bills paid and you send No, that was not good policy? Well, how about we talk?
Comment by Give Me A Break Wednesday, Sep 28, 16 @ 2:51 pm
GOMB better be careful. This is they way one loses credibility.
Comment by Honeybear Wednesday, Sep 28, 16 @ 2:54 pm
–That makes much more sense than the 6 month stop gap coming in at a 7.8 billion dollar deficit - higher than the 7 billion dollar Madigan budget for the entire year. That made zero sense.–
You’re making zero sense. All the deficit projections being referenced are on an annualized basis.
Comment by wordslinger Wednesday, Sep 28, 16 @ 2:56 pm
Few on this blog will take Rauner’s estimates over COGFA. His estimates are more current, but they would have to show what changed.
It is past time for the Senate to play for keeps; no appointments are confirmed, no reorganizations approved, no bills passed, until the Governor submits a balanced budget.
Comment by Last Bull Moose Wednesday, Sep 28, 16 @ 2:58 pm
==GOMB better be careful. This is they way one loses credibility.== Somehow, I think GOMB will come out of this with its credibility intact.
Comment by SAP Wednesday, Sep 28, 16 @ 3:04 pm
so where does the Comptroller come out on this question? As our state’s independent comptroller, if she disagrees, doesn’t she have a responsibility to say so in advance of bond sale premised on faulty statements?
Comment by Anonymous Wednesday, Sep 28, 16 @ 3:13 pm
Isn’t the key phrase “if nothing changes” meaning they don’t pass any appropriations for the second half of the fiscal year. I was always under the assumption that COGFA assumed that programs that were only funded for 6 months, would receive the same level of funding for the second half of the fiscal year. If GOMB assumes they get nothing more, that seems to explain the large difference.
Comment by My button is broke... Wednesday, Sep 28, 16 @ 3:17 pm
–That makes much more sense than the 6 month stop gap coming in at a 7.8 billion dollar deficit - higher than the 7 billion dollar Madigan budget for the entire year.–
All the deficit projections referenced– $5.4B, $7.8B, $7.5B — assume current spending on a 12-month basis.
There is no “six-month deficit” projection. It’s all apples to apples.
Comment by wordslinger Wednesday, Sep 28, 16 @ 3:17 pm
“I wonder how GOMB got $5.4 billion when COGFA got $7.8 billion?” Word, my guess is they just subtracted $2.4 billion in outstanding bills they don’t plan to pay.
Comment by Unsolicited advice Wednesday, Sep 28, 16 @ 3:22 pm
On page 29 of the CGFA report (page 35 of the file) there is a chart where there is a category of “What is Left to Spend…” which has $2.9 billion of items that have not been appropriated yet, so that would largely be the difference.
http://cgfa.ilga.gov/Upload/FY2017BudgetSummary.pdf
Not sure why they can’t just say that.
Comment by Juice Wednesday, Sep 28, 16 @ 3:28 pm
It looks to me as if GOMB is calculating on not spending anything more than the stopgap amounts. If that is the case, we are going to be right back in the weeds again.
My institution got its stopgap funding. And we are being told not to spend money unless we absolutely have to, as no one is expecting more this FY. So effectively, we got a CARE package to keep the kids from starving a while longer.
Comment by Mr. Smith Wednesday, Sep 28, 16 @ 3:30 pm
My guess is that this 2.4 million difference is the amount of savings they’ll realize when striking employees (a) aren’t paid for two weeks and (b) have to foot the bill for their own health insurance during the upcoming strike.
Comment by Bobby Catalpa Wednesday, Sep 28, 16 @ 3:30 pm
Let’s see! Trust the frequently misleading Rauner administration or a bipartisan commission. I’ll go with door number two.
Comment by Norseman Wednesday, Sep 28, 16 @ 3:36 pm
–The governor’s office said discussions are ongoing with legislative budget working groups over selling about $5 billion of shorter-term debt to pay down the bill pile.–
It was a good idea in 2011, and it still is now, given interest rates.
Paying immediately $5 billion owed to Illinois vendors would do more for the economy than any of the mumbo-jumbo Rauner has been yammering on about since Jan. 15.
Given the principled opposition GOP members had when Quinn proposed it, GOMB should run the numbers and show the savings between the juice on the bonds and that of the late-payment penalties.
That’s a pretty simple calculation that even legislators should understand.
Comment by wordslinger Wednesday, Sep 28, 16 @ 3:36 pm
–Somehow, I think GOMB will come out of this with its credibility intact.–
That kind of hubris is part of what got us here. From what I know GOMB is definitely not to be trusted with predictions and numbers.
Comment by Honeybear Wednesday, Sep 28, 16 @ 3:37 pm
When Republicans support selling bonds to pay down debt, they will simply explain that borrowing to pay down debt is bad policy only when a Democratic governor wants to do it. The same logic will apply when they vote to raise the income tax.
Comment by anon Wednesday, Sep 28, 16 @ 3:37 pm
- Anonymous - Wednesday, Sep 28, 16 @ 3:13 pm:
I think the Treasurer and Attorney General have to sign-off on debt issuance, not the Comptroller.
Comment by yeah Wednesday, Sep 28, 16 @ 3:42 pm
–I think the Treasurer and Attorney General have to sign-off on debt issuance, not the Comptroller.–
Under the Short-Term Borrowing Act, cash-flow borrowing is signed off on by the governor, comptroller and treasurer, no legislative approval needed. But that debt has to be paid off in the fiscal year in which it is incurred.
At $5 billion, we’re not talking cash-flow borrowing. I’m guessing a five-year bond. That will require a 3/5 vote in both chambers, under the Constitution.
Comment by wordslinger Wednesday, Sep 28, 16 @ 3:52 pm
re: the update
“Fake it til you make it”
Comment by Precinct Captain Wednesday, Sep 28, 16 @ 3:57 pm
Chickens, meet roost.
Comment by Anonymous Wednesday, Sep 28, 16 @ 4:09 pm
Chickens, meet roost.
Comment by Anonymous Wednesday, Sep 28, 16 @ 4:09 pm
“The governor’s office said discussions are ongoing with legislative budget working groups over selling about $5 billion of shorter-term debt to pay down the bill pile.”
Sounds to me that the state will be paying off one set of people with the same amount of money we will then owe to another set of people. It makes little financial sense to me unless the new set of people are willing to lend the money to the state with the worst bond rating bond rating in the nation at a much lower interest rate. I suspect that almost any possible bond buyers will want a very high interest rate from the states taxpayers to compensate them for the risks associated with the transaction.
Comment by Small town taxpayer Wednesday, Sep 28, 16 @ 4:22 pm
–big problems with the way COGFA calculated Medicaid spending, including not factoring in projected savings–
What like cutting out a lot of Medicaid recipients because they don’t turn in their redeterminations on time by using the new IES software system. If that’s it then people should know that the IES rocket blew up on the launch pad last Thursday. Please elaborate if you can. Thanks!
Comment by Honeybear Wednesday, Sep 28, 16 @ 4:25 pm
To the Post and the Updates,
If Rauner can get 3/5 votes in both chambers, what us that going to cost Rauner… politically?
There’s no question that all should try to get this done, but Rauner poisoning the well… We will see where the 71 and 36 are found.
Comment by Oswego Willy Wednesday, Sep 28, 16 @ 4:26 pm
GOMB should have coordinated with COGFA before releasing numbers. Especially if they are going to challenge methodology. It hurts the State to have competing numbers when selling bonds.
Comment by Last Bull Moose Wednesday, Sep 28, 16 @ 4:43 pm
Two great things about COGFA:
They are very good at forecasting without partisan bias.
If you can show them a legitimately better way to forecast, they will use it and thank you for it.
Comment by walker Wednesday, Sep 28, 16 @ 4:51 pm
COGFA appears to be more conservative in their methodology, and I think that’s more prudent, this day and age.
Comment by Valerie F. Leonard Wednesday, Sep 28, 16 @ 5:12 pm
=== COGFA’s director says he stands by the original projection. He also said he does not know how GOMB came up with its projection. ===
=== I just got a quick briefing from GOMB ===
It would be nice if they talked to each other. But, communications seemed to be a lost art among our government officials. Too much interest in putting the other party at a political disadvantage.
Comment by Norseman Wednesday, Sep 28, 16 @ 5:20 pm
According to their footnotes, CoGFA used GOMB’s earlier estimates of Medicaid spending–did GOMB update those figures? Same for debt service, they were GOMB’s numbers.
Comment by George Wednesday, Sep 28, 16 @ 5:27 pm
The failure of the senate republicans to agree to the borrowing that was part of the tax increase is a huge factor in why we are at where we’re at. We would have paid down the backlog that existed at that time and along with the cuts that Quinn had put in place going back down to 3.75% may have been adequate revenues for the next few years.
Comment by LTSW Wednesday, Sep 28, 16 @ 5:46 pm
I think the house and senate Rs were wrong in their refusal at the time but I certainly believe their refusal was based on a heartfelt belief that they couldn’t trust that the money would be spent fairly.
Comment by Anonymous Wednesday, Sep 28, 16 @ 7:17 pm
7:17 was me
Comment by Steve Schnorf Wednesday, Sep 28, 16 @ 7:18 pm
This has me confused. 1.4% was running around the state claiming that borrowing money to pay debt was a tax in the future. Which he opposes. Not only that he is yapping about how bad the economy is in the state and how we have to “grow the economy” with his crash and burn agenda.
Now all of a sudden, borrowing is a good idea? This is a good idea because he thought of it? But a bad idea when Quinn thought of it?
I’m sorry but the politics have bent my mind.
Comment by Huh? Wednesday, Sep 28, 16 @ 8:18 pm
===but they have a bond deal coming up, so better late than never, I suppose.===
This is how Illinois loses a lawsuit with the SEC again. =-(
Comment by Anon Thursday, Sep 29, 16 @ 9:36 am