* The new “Budgeting for Results” law was supposed to provide us with more accurate budget projections from the governor’s office. One way of doing that was to require that the governor not use new revenue sources in his projections. But maybe the law also needs to be changed to force him to project expenditures using existing laws as well because his projection yesterday is basically a fantasy…
The long-term forecast for the Illinois budget looks gloomy, with less state money available and government services facing cuts, Gov. Pat Quinn’s office said Tuesday.
Quinn’s three-year projection shows state revenues climbing for two years and then dropping sharply when the state income tax increase expires. More federal money could make up the difference, but Illinois government would wind up with roughly the same amount to spend in 2015 that it has now: a little over $33 billion.
Meanwhile, expenses will keep climbing unless officials take action.
The state’s contribution to government pension systems is projected to grow 43 percent, to about $5.9 billion. Quinn’s forecast shows health care costs holding steady, but that assumes something happens in the next few years to control expenses. Without that, Medicaid costs could rise by hundreds of millions of dollars a year.
Most everybody reported that the governor’s forecast was “gloomy,” and it is gloomy, but it deliberately obscures some real spending pressures, so it’s the rosiest gloomy report I’ve seen in a while. Medicaid and state employee/retiree health insurance has been rising exponentially for years. How he plans to hold that spending to zero growth for the next three years is a question that went unanswered yesterday. Here are budget director David Vaught’s thoughts…
“If we can get the rate of growth down, it will be a great victory.”
Yeah, OK, I agree. But totally flat growth for three years? The state will have to inflict serious pain to do that and it will require an enormous amount of political will.
* Vaught, however, also fired a warning shot at AFSCME…
“We’re in a squeeze,” said David Vaught, Quinn’s budget director. “The pension costs and the Medicaid costs are going up more than the rate of inflation and more than the revenue growth. That squeezes everything else out.”
Consequently, Vaught said, other areas of government have to look at 9 percent reductions to compensate.
“Most likely (employee headcount) will go down,” Vaught said. “I don’t see a lot of prospect in the collective bargaining that’s going to be under way for a lot of good news for the employees.”
Vaught said programs also are likely to be cut. The administration is required to file a three-year budget projection as part of the report. It shows a $350 million reduction next year in human service programs, listed on the report as “protecting the most vulnerable among us.”
“These will be painful cuts,” Vaught said. “You don’t cut 9 percent out of budgets that have already been cut just by finding a little extra here and there. It’s going to be real cuts that affect real people.”
* More Vaught…
The governor’s budget director, David Vaught, suggested it’s not so grim despite the “squeeze” but acknowledged, “we’re scrambling.”
“In cash terms, sure, we’re behind, and we need to catch up,” Vaught said.
But Vaught held out a silver lining: At this point, slightly more money is coming in than is going out. The problem, Vaught said, is a “hangover” of costs from the last budget that are slated to be paid before June 30. The state also has an older stack of bills worth more than $6 billion.
Quinn plans to renew his push to pay down that stack by borrowing the money, a move he has long argued would bolster the economy. But Republicans, whose votes are needed to pass the proposal, have opposed more borrowing.
* And I simply cannot understand why nobody reported the most important part of the governor’s forecast: Even with these cuts, Illinois will have an $818 million deficit in Fiscal Year 2015, when most of the tax hike expires. It’s right there in the report. Go look at it yourself.
- Old Milwaukee - Wednesday, Jan 4, 12 @ 8:49 am:
It’s been far worse than they have been telling you for around 5 years.
- Left Out - Wednesday, Jan 4, 12 @ 9:03 am:
“Quinn’s three-year projection shows state revenues climbing for two years and then dropping sharply when the state income tax increase expires.”
The day after he voted to increase the state income tax I talked to my state representative. At that time I told him that the income tax increase was effectively a pernment increase and would not be allowed to expire as scheduled.
For another example of the same thing one only needs to look at the history of the Illinois Tollway. The tollway was to become free after the bonds were paid off. The reality is that while Rod was in office the rate went up for many people. Tollway rates had another major increase again this week while Pat is in office.
- wordslinger - Wednesday, Jan 4, 12 @ 9:18 am:
–Quinn plans to renew his push to pay down that stack by borrowing the money, a move he has long argued would bolster the economy. But Republicans, whose votes are needed to pass the proposal, have opposed more borrowing.–
Interest rates are at historic lows.
As noted in the Crain’s article in the thread below, there’s a great investor demand for Illinois paper.
It’s a crime that the state doesn’t take advantage of this low-rent money to get square with its vendors and pump billions of dollars into the economy.
Instead, it just continues to borrow at a higher interest rate from cash-strapped providers, while indulging in pipe dreams of another $900 million in corporate tax breaks. Because that will stimulate the economy, while paying your bills will not, apparently.
There’s no economic reason not to cash in on these low rates. It’s just dumb politics.
- reformer - Wednesday, Jan 4, 12 @ 9:27 am:
Well said, wordslinger!
Even Treasurer Rutherford is now apparently amenable to some low-interest debt consolidation borrowing. What’s missing is some sense of responsibility from the minority party leaders.
- Old Milwaukee - Wednesday, Jan 4, 12 @ 9:37 am:
You are missing one key aspect, wordslinger. It makes good financial sense to take advantage of these low interest rates and pay off vendors. There is no economic reason not to do it. That is all correct.
However, if Mr. Quinn uses that newfound flexibility by paying off the old bills with new state debt to continue to spend at a rapid clip and build up more backlogs of bills then it makes no sense at all. I think that is specifically what the Republicans are concerned about. With good reason.
Doesn’t it make even more sense to make budget cuts and use that money to pay off bills? That is a 0% interest rate.
- soccermom - Wednesday, Jan 4, 12 @ 9:52 am:
It tells you something that an $818 million deficit doesn’t sound so bad…
- Kasich Walker, Jr. - Wednesday, Jan 4, 12 @ 9:53 am:
I, too, was taken by that rate of over 5% for Illinois debt.
If this state can administer a lotto program it should be able to figure out a way to sell that debt through banks throughout the state at 4% or less in smaller increments via some kind of Sate of IL Savings Bond.
- wordslinger - Wednesday, Jan 4, 12 @ 9:54 am:
–Doesn’t it make even more sense to make budget cuts and use that money to pay off bills? That is a 0% interest rate.–
Say where. Otherwise, it’s just gas.
For crying out loud, Rep. Poe and other House GOP members live in a fantasy world where you can blow a $900 million hole in the budget for corporate tax breaks — with no layoffs, mind you — but scream bloody murder when the state cuts $1 million from a high school rodeo!
You can’t take these guys seriously. They have no interest in governing (hence, no interest in building a majority), they’re just collecting a paycheck and spouting attitude.
- Stuff happens - Wednesday, Jan 4, 12 @ 9:57 am:
Well, they’d better hurry up and figure it out. More and more people are leaving the system and rolling their pensions into a 401K because of the uncertainty; that’s emptying the bank even faster.
- wordslinger - Wednesday, Jan 4, 12 @ 10:09 am:
–More and more people are leaving the system and rolling their pensions into a 401K because of the uncertainty; that’s emptying the bank even faster.–
Anyone rolling their guaranteed pension into a 401K is getting some very bad advice.
- Jade_Rabbit - Wednesday, Jan 4, 12 @ 10:11 am:
Say where. Otherwise, it’s just gas.
______
It’s not about cutting, it’s about policy.
Start with efficency. Too many state programs are being abused. We need to beef up the enforcement agencies and cut the committees that recommend increasing easy state welfare program.
Has anyone been on Unemployment? Have you ever had to show that you contacted and applied for jobs while collecting?
How about people that use both Food Banks and a Link card? Isn’t that an abuse by double dipping?
Central Management Service (CMS). That is a bad Blago control scheme that has create delays and bottlenecks for all of our state agencies. Re-organize that mess and stop using it as a leach for federal dollars that are ear-marked. What is the CMS computer rental/service fees?
Diversity Programs. Do we still need them? Aren’t the same connected minority firms getting the same contracts over and over. It’s not improving areas that needed this program. It’s a feel-good shell that has no substance. Instead, have state sponsored training programs with contracts requiring that those inviduals are hired. That is the only way to get the most efficent returns.
Illinois needs to get firm with Education. Our laws are too lax with regard to who can go to High School. We can put age limits on registration for schools, but we can put residency limits? Something is not right there.
- Kasich Walker, Jr. - Wednesday, Jan 4, 12 @ 10:12 am:
@Stuffhappens
Our state & educational system is in more trouble than I thought if its teachers and public service workers are fleeing a defined benefit plan for the stock market.
- wordslinger - Wednesday, Jan 4, 12 @ 10:16 am:
–Illinois needs to get firm with Education. Our laws are too lax with regard to who can go to High School. We can put age limits on registration for schools, but we can put residency limits? Something is not right there.–
Something is not right there. Jade Rabbit, I’ll have what you’re having. Although, I’m pretty sure you’re pulling a gag. I hope.
- Starlight - Wednesday, Jan 4, 12 @ 10:16 am:
One can always be assured that no how dire the news some still see the world through their Illinois rose colored glasses. We can borow more money some say, yet if Illinois did it wouldn’t be used to pay bills and rather devoted to implementing some new liberal vote buying program. Incedentally PETA is pressing for a monument to cows killed in the state and in Illinois talk, that is a very pressing need.
Illinois has a spending problem. That’s what needs to be attended to; not new sources of funding that will not go towards its intended purpose
- TCB - Wednesday, Jan 4, 12 @ 10:16 am:
@ Stuff happens
That doesn’t make those people very smart. The past contributions they’ve made are safe either way. The uncertainty is with future benefits. So by pulling out their past benefits, they are making a poor financial decision.
Also, I believe you can only pull your money out of the pension system when you leave state government or retire…..In which case you can only take your employee contribution unless you are vested in the system. Somebody, please correct me if I am wrong.
Either way, seems like a pretty dumb move to me….unless of course you believe you can achieve steady & guaranteed gains with your investments. In this day & age, that’s not a bet most people are willing to make.
- John Bambenek - Wednesday, Jan 4, 12 @ 10:21 am:
To all you let’s-bond-the-state’s-credit-card-debt cheerleaders-
Next FY deficit is $500M, in 3 years, it’s $800M. Exactly who will you pay the interest on that $7B? Work into your answer a realistic rate of growth in medical spending, pension costs and interest costs.
Once you answer that question, then we can talk. Simply saying BOND! isn’t a plan… you’re talking money that can be sent out on a discretionary timetable and putting it on a mandatory (first-bite) timetable. There’s some merit to that, but again, where will the money come from to pay those bonds back?
- soccermom - Wednesday, Jan 4, 12 @ 10:21 am:
– How about people that use both Food Banks and a Link card? Isn’t that an abuse by double dipping?
Yeah. If you can’t feed all your kids simply by using one or the other, pick your favorite and starve the rest. Or I guess you could sell them on eBay….
- wordslinger - Wednesday, Jan 4, 12 @ 10:22 am:
–We can borow more money some say, yet if Illinois did it wouldn’t be used to pay bills and rather devoted to implementing some new liberal vote buying program.–
Is that how state bonding works? Give an example of a specific bond issue that was not used for its legally disclosed purpose, but for a “liberal vote buying program.”
Turn off Fox dude, and bring some game.
- TCB - Wednesday, Jan 4, 12 @ 10:24 am:
=Has anyone been on Unemployment? Have you ever had to show that you contacted and applied for jobs while collecting?
How about people that use both Food Banks and a Link card? Isn’t that an abuse by double dipping?=
Yes, this is now a practice if I am not mistaken. My mom lost her job about a year ago. When she filed for unemployment she was told she must prove copies of job applications which she turned in (I believe they requested 5 per week). She decided that it was not worth the trouble & elected to opt-out on unemployment checks & just “retire”
I thought we were talking about state programs here? Link is a federal program administered by the State. So even if we determined that 100% of Link users did so fraudulently & eliminated the program, we would create very little savings at the state level.
- wordslinger - Wednesday, Jan 4, 12 @ 10:25 am:
JB, the state is already borrowing from hospitals, nursing homes, doctors and other vendors at a much higher interest rate. What don’t you get about that?
- Shock & Awww(e) - Wednesday, Jan 4, 12 @ 10:29 am:
It feels as though we’re approaching some sort of tipping / breaking point in IL. Not sure how or where, exactly, but just a sense that we’re finally, actually, really running out of juggling room.
Perhaps it’s a hangover from the poorly planned closure proposal. When push comes to shove I sincerely hope both sides of the aisle will come together (at least behind closed doors) and we’ll get our priorities in order.
IL has made a few tough choices so far as, but it appears they’re about to get much tougher in the foreseeable future.
Man, what a downer post to start the New Year. My next one will be brighter, promise.
- TCB - Wednesday, Jan 4, 12 @ 10:29 am:
@ John Banbenek
And I will ask you how we can afford the 8-12% effective interest rate we are paying currently on that $7 billion. This is debt either way, it is debt that will take years to pay off regardless, and it is debt that is unwillingly being loaned to us by our providers.
How does is not make sense to refincance this debt at a lower rate, over roughly the same period of time and with a creditor who actually agrees to loan us the money?
- Anon - Wednesday, Jan 4, 12 @ 10:30 am:
…The problem, Vaught said, is a “hangover” of costs from the last budget that are slated to be paid before June 30. The state also has an older stack of bills worth more than $6 billion….
So under Quinn’s projections then, does the $6 billion in backlogged bills get added to his projected $507 million deficit, or is he assuming the $6 billion will be paid off in 2012?
- Shock & Awww(e) - Wednesday, Jan 4, 12 @ 10:31 am:
Puppies & kittens! Rainbows! Baseball!
There we go. Told you my next post would be brighter!
—
P.S. - I spent my break spamming Rich 10x a day with press releases… attached to the emails. Happy New Year!
- Kasich Walker, Jr. - Wednesday, Jan 4, 12 @ 10:37 am:
“….who will you pay the interest on that $7B? where will the money come from to pay those bonds back?”
——————-
Decriminalize, legalize, & commercialize. Available wherever lotto and liquor are sold!!
- wordslinger - Wednesday, Jan 4, 12 @ 10:44 am:
–”….who will you pay the interest on that $7B? where will the money come from to pay those bonds back?”–
A portion of the income tax increase was earmarked for just that purpose. It was in all the papers.
Charlie and, as he points out, the AP make a better case for it than anyone.
http://illinoisissues.uis.edu/archives/2011/12/ends.html
When, in some minds, did “conservative” come to mean “deadbeat,” anyway?
- Old Milwaukee - Wednesday, Jan 4, 12 @ 10:44 am:
Anon at 10:30:
Yes. Add the $507m to the $6billion.
- Anon - Wednesday, Jan 4, 12 @ 10:51 am:
Old Milwaukee: Thank you. I don’t understand why, then, the Governor doesn’t give projections that accurately reflect the actual outstanding deficit, which is apparenlty $6.5 billion. Just because you classify something as “backlogged or old bills” doesn’t mean they don’t exist and aren’t payable within the fiscal year. Giving the GA a more accurate picture may actually help him sell his borrowing plan.
- soccermom - Wednesday, Jan 4, 12 @ 10:59 am:
I am fine with bonding to pay off bills now and access a lower interest rate, but I don’t think it’s smart to replace a 6 to 8-month payment cycle with a payment plan that stretches out over a decade or so. Could we bond this over, say, two years? and could we realistically pay it back without starting a new cycle of late payments? Schnorf, help me out here.
- I Love Springfield - Wednesday, Jan 4, 12 @ 11:11 am:
Not only is refinancing to pay backlogged bills the smart and non-partisan thing to do, it needs to be done ASAP, because interest rates are unlikely to remain this historically low for more than the next 3 to 6 months.
- Shock & Awww(e) - Wednesday, Jan 4, 12 @ 11:11 am:
When you factor in likely reductions in Federal funding, the picture is even bleaker.
Leaders in both parties are going to have to step up - we’re running out of room to kick the can down the road.
- reformer - Wednesday, Jan 4, 12 @ 11:20 am:
Old Milwaukee
If there are $6 billion in overdue bills, and you want to pay it off without borrowing, how many years do you suppose that’s gonna take? Esp. if the income tax hike expires in two years?
Please specify where you’d slash $6 billion or even half that out of the budget. Otherwise, as wordslinger said, it’s gas, not a coherent plan to pay our bills.
- Old Milwaukee - Wednesday, Jan 4, 12 @ 11:30 am:
Reformer,
You tell me how you are going to pay the debt service on the all the new debt. Did you see all the debt service costs on the Governor’s balance sheet? You know how those got there? Borrowing.
Did it solve our problems, or did it result in kicking the can down the road? You are arguing for the status quo and it’s not working.
Cut government. Everybody on this site knows where you have to cut, but I’ll restate it for you again. Medicaid. Education. Human Services. Until they start cutting in Springfield, nothing is going to get resolved. Borrowing is not the answer.
- TCB - Wednesday, Jan 4, 12 @ 11:32 am:
@soccermom
You are correct that the backlog is 6-8 months. However, in order to bring that backlog current, it would take 4-5 years. So while a given bill is in the backlog for 6-8 months, the backlog will exist for several years. The idea is to match the new debt (borrowing) with the old debt (backlog) at about 5 years, so as not to extend the debt.
I beleive Quinn’s proposal was for about 7 years, but I don’t totally remember. I’ll bet PQ would be willing to negotiate that down to 5 years if he could get the Senate Dems to even sit down at the table.
This just makes too much sense not to do.
- Soccertease - Wednesday, Jan 4, 12 @ 11:46 am:
As a staunch believer that you NEVER borrow to pay operational costs, it makes economic sense to borrow to pay only the current and potential prompt pay interest. The state is paying a much higher interest to vendors it is borrowing from than current rates-this would be similar to refinancing debt.
- TCB - Wednesday, Jan 4, 12 @ 11:49 am:
=You tell me how you are going to pay the debt service on the all the new debt. Did you see all the debt service costs on the Governor’s balance sheet? You know how those got there? Borrowing.=
Not all debt is bad & the blanket ‘No!” that GOPs are offering is bad policy.
As for other state debt, I doubt you will find any argument that the 2010 & 2011 Pension Bonds were bad policy & the very definition of kicking the can down the road. In hindsight, the 2003 deal looks pretty bad too. However, the capital bonds certainly have plenty of merit…..these pay for essential infrastructure projects throughout the state & are worth every penny. This liability should also decrease every year as this old debt rolls off, given that the new capital program has alternative funding sources.
What you are failing to say is that cuts will need to be made regardless if you’re going to get away from this debt. If the State doesn’t cut, the debt just keeps rolling forward (likely growing). If we can cut to pay a backlog down, why can’t we cut to pay our debt service? By bonding this debt, the cuts needed to pay the debt service would be less drastic than if we tried to play catch up of the next few years, all at a higher cost to the taxpayers.
- soccermom - Wednesday, Jan 4, 12 @ 12:00 pm:
@TCB — I have heard that the total costs of bonding over however many years are substantially higher than the current cost of late payments. Could somebody walk me through this and explain why?
- steve schnorf - Wednesday, Jan 4, 12 @ 12:25 pm:
Not very good news, huh? The great question to me is, was anyone expecting any good news, and, if so, why?
Director Vaught says 9% cuts in most of government, and more than that in Medicaid and Group Insurance. That sounds like around $3B to me. It looks to me like he commits about $1B to paying down old debt over the next 3 year cycle, and I am pessimistic that can be done. It will represent a chance to avoid $1B in cuts, at least temporarily, and that will be powerfully attractive during what lies ahead.
K-12 and Higher Ed collectively appear to be held flat for 3 years. Chances are that means Higher Ed loses some so K-12 can grow some.
When there are no choices available except bad ones, whatever choices you make will be bad ones for someone, and that’s the situation PQ and the GA are in. Vaught hits it foursquare; there will have to be cuts that are very painful to someone.
I don’t see much blame here for the Governor; what’s happening is and has been inevitable, just as I believe it to be inevitable that the tax increases will have to be permanent. Try taking another $7B per year out of the numbers Vaught shows.
Mom, I would rather do some short term borrowing so that we are paying interest to people whose business is lending money rather than paying it to people who thought they were selling us goods and services, not lending us money. I would be thrilled if the Rs would agree to a 3 or 4 year debt program to pay off maybe $3B of the oldest bills. I’m not sure that they would, and I’m not sure the Governor and Vaught would want it anyway.
A fairly big party of the larger problem the Governor faces is, imho, political. Most of the people who push slash and burn aren’t people who are going to vote for him if he does what they wish, and many people who will be most hurt by the slash and burn are the people most likely to vote for him. But, I don’t see how the slash and burn is avoidable.
- Montrose - Wednesday, Jan 4, 12 @ 12:31 pm:
Jade_Rabbit said:
-How about people that use both Food Banks and a Link card? Isn’t that an abuse by double dipping?-
Nope. It is called trying to make sure you have food on the table on a consistent basis. Neither SNAP nor food pantries cover all of a person’s food needs. Also, keep in mind the state does not give one dime to support food banks and SNAP (food stamps) is almost entirely federal money.
Try again.
- TCB - Wednesday, Jan 4, 12 @ 12:41 pm:
@soccermom 12pm
I misspoke. The costs of carrying the debt in the state’s backlog is higher. After 60 days most bills become eligible for prompt payment interest. Most of these vendors are receiving 1% per month on these outstanding bills (the 1st 60 days are interest free). I haven’t seen any estimates on the cost of borrowing for about a year, but I believe the Governor was expecting an all-in rate of around 5% for these bonds. So given that bills are at least 6 months behind, the economic benefit seems pretty obvious to me. It’s also important to note that that the state would be putting $6 billion into the economy, which would allow vendors to pay the short-term loans they’ve been forced to make. I know several people who work for vendors of the State who have already lost their jobs, I think it’s pretty fair to say that this might save some jobs.
Here’s an interesting point (at least I think so) which I don’t think anyone has mentioned. I believe an very good argument can be made that bonding this existing debt actually forces the general assembly to make the cuts to offset it. Let me explain: Given that debt service payments are included in the spending caps outlined in the tax increase, the leaders would be forced to make the cuts in the operating budget to fund the debt service. However, since the backlog isn’t included in the spending cap calculation (other than a mention that any extra revenues must go to repay the backlog) there is nothing requiring the Governor or General Assembly to bring down the backlog. It seems to me that if the GOPs want to make cuts, they’d support a borrowing which would force the Governor to make the cuts.
- Fight Fair - Wednesday, Jan 4, 12 @ 12:46 pm:
Soccermom, you are wiser that commenters who mistakenly think the state pays interest on ALL of its debt. Not true. The most underreported, and arguably most important, info about borrowing to pay down debts surfaced last Feb. 16 when David Vaught and Jack Lavin spoke about the governor’s proposed FY 2012 budget. Whether you favor or oppose borrowing: Why does the myth that borrowing is cheaper than carrying debt persist?
The Tribune’s editorial of Feb. 17 reported the high cost of borrowing, and the paper has repeated the point subsequently. But this truth is just too inconvenient for some folks here:
… Quinn says (borrowing to pay old bills) would lower the late-payment interest the state pays to some of its creditors.
Except, as Tuesday wore on, much of the air came out of that argument. His top aides acknowledged in a conference call with reporters that borrowing $8.75 billion would cost the state maybe $540 million a year in interest. How much do those late-payment charges cost taxpayers? Roughly $60 million a year. “That sounds like less than $540 million,” offered a droll Greg Hinz from Crain’s Chicago Business.
- steve schnorf - Wednesday, Jan 4, 12 @ 12:47 pm:
TCB, though the argument for converting soft debt to hard debt is a good one, remember that generally no GA can bind a future GA
- Cincinnatus - Wednesday, Jan 4, 12 @ 12:55 pm:
Steve said,
“A fairly big party of the larger problem the Governor faces is, imho, political. Most of the people who push slash and burn aren’t people who are going to vote for him if he does what they wish, and many people who will be most hurt by the slash and burn are the people most likely to vote for him. But, I don’t see how the slash and burn is avoidable.”
This is the single admission by Democrats that Republicans would need to support a debt restructuring plan, IMO. All we hear is the first part of the equation, “We must borrow.” We never hear the other side, “We must spend less.”
Only the Republicans can provide the leadership and political cover to increase borrowing. Only the Democrats can provide the leadership and political cover to decrease spending. The people who say that Republicans should provide the spending cut proposal miss this political fact, the Democrats must do it or it ain’t gonna happen. On the flip side, Republicans must do the same thing on the borrowing plan. This was the process that brought welfare reform at the national level during the Clinton administration.
Problem? Nobody political in the state trusts anyone on the other side of the aisle to hold up their end of the bargain, and nobody fulfills a leadership role strong enough to make it happen.
Conclusion. We’re screwed.
- TCB - Wednesday, Jan 4, 12 @ 12:58 pm:
Snorf,
Of course….That is true for every law. I’m simply stating that the GOPs insisted that the spending caps be a part of the tax increase legislation for a reason. Now they have a chance realize some of the cuts they intended to see when they added the cap language. They should now recognize the economic benefit of this & force the Dems to make the cuts. This is actually an opportunity for the GOPs, but they don’t appear to recognize it.
- TCB - Wednesday, Jan 4, 12 @ 1:00 pm:
And my apologies for spelling your name wrong.
- reformer - Wednesday, Jan 4, 12 @ 1:30 pm:
Cinci
You offer a constructive plan to address our fiscal crisis where both parties do some things they don’t want to do. I hope your pessimism is misplaced.
TCB
Good point about borrowing to force cuts. It reflects Cinci’s balanced approach.
- soccermom - Wednesday, Jan 4, 12 @ 1:33 pm:
TCB and Schnorf — I understand prompt pay, and I also understand that a big chunk of current unpaid bills are not subject to prompt pay. So here’s a question: Could we bond to pay ONLY those overdue bills that are prompt-pay eligible?
Also, while the current payment cycle is horrific for many service providers, the prompt-pay penalty is helping to mitigate funding cuts for those agencies that have enough money in the bank to cover the float. I understand the the vast majority of social-service agencies don’t have that capability, but for those that do, this has been a benefit.
- RMWStanford - Wednesday, Jan 4, 12 @ 1:33 pm:
Kasich Walker, Jr,
I would assume the problem would be attracted enough money to cover the kind of bond sale that they want or to expect it be attractive at 4% if the market rate seems to be around 5.
What Illinois really need is economic growth
- wordslinger - Wednesday, Jan 4, 12 @ 1:36 pm:
Cincy, your rigid, party-centric analysis ignores recent history.
This fiscal year’s budget appropriated only expected revenues, fully funded the state’s pension contribution and had spending cuts. It passed on a bipartisan vote.
Workers comp passed on a bipartisan vote in the Senate. Smart Grid passed on a bipartisan vote. Education reform passed on a bipartisan vote. So did the CME and Sears deal.
Bipartisanship can and does happen. So can voting your mind, not your party leadership.
The GOP opposition to ANY borrowing plan is simply political, to keep the old debt number high and to make vendors and schools howling mad at Quinn.
A deal, akin to like Schnorf mentioned, $3-4 billion over four years or so to get square on bills subject to the prompt payment act and pump money into the state economy makes too much sense for opposition to be anything but political.
The Dems should do it on their own. They’ve got their map, so how scared can they be? I’m sure the vendors in GOP districts won’t mind too much.
- Kasich Walker, Jr. - Wednesday, Jan 4, 12 @ 1:48 pm:
“…What Illinois really need is economic growth..”
=====
Yep, but reducing interest expense by another percentage point or two doesn’t hurt.
- Jade_Rabbit - Wednesday, Jan 4, 12 @ 1:49 pm:
The problem is that borrowing will be considered revenue and become part of the annual budget.
It’s time. Our current populous is hardened for this debate. If Illinois and Quinn can’t get the ship right under these conditions… It will only be worse down the road.
- Kasich Walker, Jr. - Wednesday, Jan 4, 12 @ 1:56 pm:
@Jade — Time for what: welching on bills out of a reluctance to borrow at incredibly low rates or rates even lower by performing an end around on the muni market and going straight to small savers?
- Old Milwaukee - Wednesday, Jan 4, 12 @ 1:59 pm:
Slinger,
The Dems can’t do it on their own. The borrowing that Quinn wants is state debt and would need a supermajority to be enacted.
- soccermom - Wednesday, Jan 4, 12 @ 2:11 pm:
Jade Rabbit, at the risk of encouraging you: Millions of people pass up free lunches at schools, partly because the schools do, in fact, check to make sure that participants are eligible, and partly because most of us would consider it morally wrong to sign our children up for free lunch programs designed to promote the health of very poor children. And the story you link shows that CPS’ inspector general system is working to uncover these frauds and punish the evildoers.
And not to further confuse you with the facts, but the proceeds from a bond issue are not paid in unmarked 10s and 20s and handed over to the Governor in a big paper bag. Those dollars must be used for specified purposes, and they are not repeating revenues. So they would not magically transubstantiate into revenue and be used in the next year’s budget.
You might want to take a few weeks or months and look at the information available on budget.illinois.gov and www.civicfed.org to get some basic information on state budgeting practices and regulations. Very informative.
- reformer - Wednesday, Jan 4, 12 @ 2:12 pm:
Jade
Have you tried to live on the safety net programs? If not, why not give it a try before pronouncing it “comfortable”?
- TCB - Wednesday, Jan 4, 12 @ 2:16 pm:
@soccermom
Yes, with the help of the Comptroller, the Governor could identify & bond for just that portion of the backlog. If I’m not mistaken the Comptroller & Governor have a history of working together on this issue with the governor’s voucher payment program, in which a 3rd party buys the receivable from the vendor. This program has been a favorite for the participating vendors because they actually get paid on time (albeit are a small discount).
It shouldn’t be too hard for the Comptroller to identify prompt-payment eligible (and near eligible) vouchers & only borrow for that. It’s of course a moving target, depending on timing, which I think has led some in the GA to distrust OMB’s numbers.
- wordslinger - Wednesday, Jan 4, 12 @ 2:19 pm:
–The Dems can’t do it on their own. The borrowing that Quinn wants is state debt and would need a supermajority to be enacted. –
Old Mil, you are correct, my mistake and apologies.
- Rich Miller - Wednesday, Jan 4, 12 @ 2:23 pm:
Jade, you’re more than a little off the wall. Time out, man.
- walkinfool - Wednesday, Jan 4, 12 @ 2:57 pm:
Just bit of historical reality: both the statutory spending caps, and the new budget process that required this official three-year forecast, were defined, designed, calculated, and pushed thru by a group of Democratic legislators in both chambers, winning eventual Leadership, GOP member, and Governor support. We wouldn’t even be able to have this discussion about the next three years, with some credible forecasts, without their innovative and mostly bottom-up efforts.
Some serious progress with at least an approach to wrestling with these fiscal problems, rather than just talking about them, is now underway with participants from both sides of the aisle. Now we need it to come to fruition, regardless of election cycles.
Onc can always hope.
- Shock & Awww(e) - Wednesday, Jan 4, 12 @ 4:42 pm:
@FightFair 12:46 - fascinating from a #’s perspective. Thanks for sharing that.
- Marty - Thursday, Jan 5, 12 @ 4:12 am:
“In cash terms, sure, we’re behind, and we need to catch up,” Vaught said.
What other terms are there?
- Starlight - Thursday, Jan 5, 12 @ 5:52 am:
>>Turn off Fox dude, and bring some game
- soccermom - Thursday, Jan 5, 12 @ 7:29 am:
@Marty — Terms of endearment?