* 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%.
* 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.
* 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