Today’s number: $14 billion
Wednesday, Aug 31, 2016 - Posted by Rich Miller
* Tina Sfondeles reports…
Moody’s Investors Service on Wednesday issued an ominous report about Illinois’ finances, warning that the lack of a full year budget will more than double the state’s deficit and could lead to further credit downgrades. […]
According to the report, the partial budget will likely widen the state’s operating fund deficit with a backlog of bills likely to reach $14 billion or more — a new high — this year “absent actions by the government to align revenue and spending.”
The report says current spending authorizations, appropriations, court orders and consent decrees in the fiscal year which began on July 1 will drive expenditures up by an estimated 12 percent compared with the revenue coming in.
The report warns that the state might “resort to actions that cast doubt on an otherwise strong legal framework prioritizing debt payment, such as borrowing from funds set aside for debt service.”
Moody’s also warns that a reliance on payment deferrals to offset the budget imbalance will be hard to end, calling the payment backlog “the by-product of a weak governance structure that includes permissive laws and legal interpretations.”
- Keyrock - Wednesday, Aug 31, 16 @ 1:27 pm:
That can’t be. Bruce would never sign an unbalanced budget–even for 1/2 year. /s
Actually, it’s good to see someone other than CapFax stating the obvious.
- Huh? - Wednesday, Aug 31, 16 @ 1:28 pm:
First it was $8 billion in unpaid bills. Now it is $14 billion?!?! This is more than 1/3 of the proposed annual budget. Wow.
- VanillaMan - Wednesday, Aug 31, 16 @ 1:33 pm:
I think Rauner told us that we need more deficit if Illinoisans want to do a complete turnaround, right?
- RNUG - Wednesday, Aug 31, 16 @ 1:52 pm:
Playing to the only thing Rauner knows: busting up a business. Trying to make the situation / debt so bad that there might be a case to try to get the Federal courts to allow bankruptcy.
- Anonymous - Wednesday, Aug 31, 16 @ 1:54 pm:
Well said RNUG. Sounds like an excellent commercial.
- Delimma - Wednesday, Aug 31, 16 @ 1:58 pm:
We wouldn’t be in this situation if a balanced budget had been proposed; negotiated; and then some version passed. Even an out of balance budget is better than this situation.
- Dr X - Wednesday, Aug 31, 16 @ 2:02 pm:
What was the deficit before and after the income tax increase? Any news report should mention that.
- Thoughts Matter - Wednesday, Aug 31, 16 @ 2:05 pm:
OMG. First story - Rauners number 1 priority - redistricting . Second story - this one. Enough said about our sorry state in those two posts.
- Skeptic - Wednesday, Aug 31, 16 @ 2:07 pm:
“try to get the Federal courts to allow bankruptcy” or put the budget under Federal supervision/control?
- Winnin' - Wednesday, Aug 31, 16 @ 2:15 pm:
It took Moody’s to do that analysis.
Comptroller Munger already a similar pronouncement, but she got reined in by Rauner.
Another duh moment, unless Rauner starts caring.
Thanks Bruce.
- Winnin' - Wednesday, Aug 31, 16 @ 2:17 pm:
And in less than two years, Rauner has put Illinois in a worse fiscal condition than it was before the income tax increase.
He can blame others, but Governors Own.
- Winnin' - Wednesday, Aug 31, 16 @ 2:22 pm:
A final thought…
Rauner likes to criticize Jim Edgar for the Edgar pension ramp, but Rauner’s Ramp will create a legacy for future administrations.
That is, of course, unless he has some magic beans he hasn’t yet told anyone about.
- Shemp - Wednesday, Aug 31, 16 @ 3:04 pm:
Didn’t get here overnight. Didn’t even get here in the last 2 years.
Singling out the current Governor or even handing him the majority of the blame is nonsense. We were always on this path, it’s just being brought to a head now instead of 5-10 years from now.
- Winnin' - Wednesday, Aug 31, 16 @ 3:21 pm:
Shemp:
The number was around $9 billion when the tax increase was passed in Jan. 2011. The number was then systematically whittled down over the next four years.
Rauner’s insistence of not negotiating a balanced budget until his turnaround agenda passed is what got us to $14 billion.
He went to court to keep paying state employees without a budget and the courts also ruled that human services expenditures must continue at 2014 spending levels.
Remember, the governor pleaded and threatened to allow the tax rate to go down in Jan 2015.
He got what he wanted…and he was hoisted by his own petard. Governors own, yes they do.
- Anonymous - Wednesday, Aug 31, 16 @ 3:23 pm:
As the courts ruled on the pension attempt (police powers), you can’t claim default when you actively took measures to destroy this state financially. There are actions that could be taken to prevent this financial calamity, the courts would say. Like restoring the 5% income tax……like restructuring the pension ramp…..there are ways to prevent this downward spiral. But no. Our governor is into destruction not creation. Nice.
- City Zen - Wednesday, Aug 31, 16 @ 3:27 pm:
==Singling out the current Governor or even handing him the majority of the blame is nonsense. We were always on this path, it’s just being brought to a head now instead of 5-10 years from now.==
Nailed it. We paid for 1985/1995/2005 services with 2016 budget dollars, then wonder why there’s no money for services today or why we won’t borrow from 2025/35/45 to pay for it.
- City Zen - Wednesday, Aug 31, 16 @ 3:40 pm:
==The number was around $9 billion when the tax increase was passed in Jan. 2011. The number was then systematically whittled down over the next four years.==
Whittled? It should have been eliminated. The state collected 4x more than necessary to pay down those bills. Not only did Quinn leave office with a substantial backlog of bills, but he failed to resize the budget to fit the new tax rate. 4 years to prep. 4 years to fail.
- Rich Miller - Wednesday, Aug 31, 16 @ 3:41 pm:
===The state collected 4x more than necessary to pay down those bills===
You think that’s all there was?
C’mon. Didja happen to forget about all the pension payments the state finally made?
Don’t argue like a child.
- Anonymous - Wednesday, Aug 31, 16 @ 3:50 pm:
“resort to actions that cast doubt on an otherwise strong legal framework prioritizing debt payment, such as borrowing from funds set aside for debt service.”
This is sure to make the bond holders unhappy. Not paying the bond holders on time and in full is a sure way to prompt more expensive litigation. One only needs to look at the recent events in Puerto Rico.
- Mama Retired - Wednesday, Aug 31, 16 @ 4:25 pm:
- RNUG - Wednesday, Aug 31, 16 @ 1:52 pm: =
BINGO!
- Anonymous - Wednesday, Aug 31, 16 @ 6:05 pm:
“Moody’s announced today that their research department had found that the sky was blue, and was uncovering growing evidence that the grass was green”
- RNUG - Wednesday, Aug 31, 16 @ 10:25 pm:
== One only needs to look at the recent events in Puerto Rico. ==
And some of the bondholders there got the short end of the stick while the retirees, so far, have done well.
- Term Limits, Like ONE - Wednesday, Aug 31, 16 @ 11:37 pm:
Rauner baaaaaad deficit spending goooooood