85 Comments - Ohhaimark - Thursday, May 4, 17 @ 1:24 pm: Just a wee bit ironic coming from them, the peddlers of fake news. - Romeo - Thursday, May 4, 17 @ 1:25 pm: “But passing a budget and saving Illinois aren’t the same thing. In fact, passing a bad budget will only worsen the state’s outlook” Every DAY, Illinois accrues $11,000,000 in INTEREST on our debts. The LACK OF A BUDGET IS worsening the state’s outlook. - Lt Guv - Thursday, May 4, 17 @ 1:26 pm: Thank you Rich. - Norseman - Thursday, May 4, 17 @ 1:27 pm: LOL. Allegations of fake news from a fake news organization. - Henry Francis - Thursday, May 4, 17 @ 1:30 pm: Rauner’s accomplishments as Guv: 1. Kept MJM from increasing taxpayers’ taxes 2. Held the line on no bad, unbalanced budgets Now he needs IPI and the rest of the bought and paid for “media” outlets to convince 50.1% of the voters it’s true and good for Illinois. - Ron - Thursday, May 4, 17 @ 1:34 pm: Puerto Rico essentially just declared Bk. - DeseDemDose - Thursday, May 4, 17 @ 1:35 pm: Henry Francis, Rauner held the line and passed NO BUDGET. Rauner Failed, Rauner Lied. - Honeybear - Thursday, May 4, 17 @ 1:36 pm: Henry Francis you forgot Rauners two greatest achievements! 1) hundreds of millions in tax forgiveness to large corporations only ( not small business) through EDGE. This includes 49 million to Rivian, a car company that’s never made a single car. AND…….drumroll UNITING ALL LABOR! - Ron - Thursday, May 4, 17 @ 1:38 pm: https://www.usatoday.com/story/money/2017/05/03/puerto-rico-bankruptcy/101243686/ - Pc - Thursday, May 4, 17 @ 1:41 pm: What, I wonder, could be a meaningful difference between Puerto Rico and Illinois? - Ray del Camino - Thursday, May 4, 17 @ 1:41 pm: Ron– Pssst. *Puerto Rico is not a state.* –Ray - kitty - Thursday, May 4, 17 @ 1:45 pm: The IPI diminishes its already low level of credibility anytime it implies States can declare bankruptcy. It continues to support positions which enrich the wealthy at the expense of middle class workers. - Rod - Thursday, May 4, 17 @ 1:48 pm: Ron the situation of Puerto Rico is unique because of the passage of a bill in the US Congress that applies to only Puerto Rico, Guam, American Samoa, the United States Virgin Islands and the Northern Mariana Islands. It is a sort of special chapter 9 provision. This article discusses this development https://mobile.nytimes.com/2017/05/03/business/dealbook/puerto-rico-debt.html - City Zen - Thursday, May 4, 17 @ 1:48 pm: ==Puerto Rico is not a state.== Nor is it technically declaring bankruptcy. It’s under PROMESA, which might serve as a POC for similar state-level restructurings. - Anonymous - Thursday, May 4, 17 @ 1:48 pm: Ray, lol, you don’t think a Roberts Court won’t allow this for a state? LOL! - Dirty Red - Thursday, May 4, 17 @ 1:49 pm: You can’t kill a phoenix and expect its eggs to regenerate with it. - tobor - Thursday, May 4, 17 @ 1:55 pm: State bankruptcy is at the top of the IPI and ALEC wish list. - Anonymous - Thursday, May 4, 17 @ 1:59 pm: Puerto Rico is not a state, so it is different than IL. However, the special law (PROMESA)passed by , but congress scares me because it could be used as a blueprint for allowing states to file for such protection in the future. If this happens, us pensioners could be headed for a pretty good haircut. IL is not where Puerto Rico is today but if things dont change and quickly, who knows what the future holds here. - XDNR - Thursday, May 4, 17 @ 2:00 pm: More fake news from the IPI Alternatve Fax blog… - Anon221 - Thursday, May 4, 17 @ 2:00 pm: When you make sauerkraut in a crock, you have to skim off the bubbling mass every now and then. This is IPI’s skimmings a few “days” too late. They’re just gettin’ the “mold” out. No wonder they don’t have any press credentials. https://www.youtube.com/watch?v=BeMPkyMnr7g - Ron - Thursday, May 4, 17 @ 2:03 pm: Anyone who thinks that the Federal government won’t allow this for a state has their head in the sand. - Nick Name - Thursday, May 4, 17 @ 2:07 pm: Illinois Bruce Rauner Institute. There. - Illinois Retiree - Thursday, May 4, 17 @ 2:08 pm: I would be interested to hear what RNUG has to say about the Puerto Rico situation. Does the special provision passed by congress for Puerto Rico possibly clear a pathway for states to file for some sort of protection in the future? - Nickname - Thursday, May 4, 17 @ 2:11 pm: A Roberts court is less likely to allow a state to declare bankruptcy than, say, a Warren (Earl, not Elizabeth) court would be because of the stricter interpretation of the Constitution. Allowing the State to declare bankruptcy to avoid paying contractually obligated pension payments is the textbook definition of a state retroactively impairing the right to contract, which is banned under Article I, Sec. 10. What ALEC wants and what textualists will allow are not one in the same. - Nick Name - Thursday, May 4, 17 @ 2:13 pm: Dear “Nickname,” please pick a different capfax handle. Thanks. - illini - Thursday, May 4, 17 @ 2:16 pm: Unfortunately, far too many voters do not realize this BS is “fake” and because of their basic distrust of government will believe something that reaffirms their basic instincts. - John Gregory (ex-IRN) - Thursday, May 4, 17 @ 2:17 pm: This coming from the IPI’s third “news director” in the past year. - Ron - Thursday, May 4, 17 @ 2:17 pm: “Historically, Puerto Rico was barred from declaring bankruptcy. In the end, however, financial reality trumped the statutes, and Congress enacted a law last year allowing bankruptcy-like proceedings.” Illinois is next. - Han's Solo Cup - Thursday, May 4, 17 @ 2:27 pm: The first thing any bankruptcy court will assess is whether the state can increase it’s income and pay it’s liabilities. The answer to this is obvious. Illinois attempting to declare bankruptcy will end in a court ordered tax hike. But if that’s how you want to spend your extra cash, Ron, by all means, keep advocating it. - Anon221 - Thursday, May 4, 17 @ 2:27 pm: Using the intentional and previously used “blueprint” from Koch, et.al. to create and intensify a state’s debt just to push a state into the legal “ask” of being the first to be allowed to declare bankruptcy is, frankly, sick. Is that what the US is all about now? Is that how the Republicans plan to “Make American Great Again”? If so, then Steven Hawking is right, prepare to depart Earth within the next couple of generations. Personally, I feel we can become stronger if we stop trying to “trump” each other and focus on what needs to be done, including raising taxes to take ownership of the mess we are all in. - Anonymous - Thursday, May 4, 17 @ 2:28 pm: I want a pony. How come no one’s talking about that? - City Zen - Thursday, May 4, 17 @ 2:29 pm: The ability to declare bankruptcy is a far better negotiating tool than actually declaring bankruptcy. - Mouthy - Thursday, May 4, 17 @ 2:29 pm: President Trump has shown you can win without telling the truth and until it’s proven otherwise you’re gonna see a lot more of it. You can call it gaslighting or just plain lying but a bigly group of people don’t care and will cheer for their side regardless. That’s today’s republican party and in Illinois Rauner is using it to the hilt.. - Hottot - Thursday, May 4, 17 @ 2:33 pm: Rich, thank you for calling them out! - 47th Ward - Thursday, May 4, 17 @ 2:34 pm: Has it ever occurred to IPI that passing a budget and implementing structural reforms are not mutually exclusive? Just because Governor Rauner has decided to use the budget as leverage doesn’t mean that is the only way forward. In fact, a wiser governor might pass a budget and continue to press for reforms in their own merits, like a world-class salesman, a governor could sell his vision to the public and the legislature without manufacturing a crisis. - The Other Nickname - Thursday, May 4, 17 @ 2:34 pm: A court can’t order a tax hike. The whole separation of powers thing kinda precludes that. The actual first step a bankruptcy court would do is say “you’re a state, you can’t file bankruptcy. Petition dismissed.” - City Zen - Thursday, May 4, 17 @ 2:35 pm: ==including raising taxes to take ownership of the mess we are all in.== If we’re all in this mess, why isn’t the state taxing retirement income? Why are working people taking all the ownership? Get the retirees on board the “owner ship” and I’ll board as well. Until then, I’ll remain on the pier. - VanillaMan - Thursday, May 4, 17 @ 2:43 pm: IPI? WTH? How in the world could not passing a budget be better than passing a bad budget? You people are insane! We are spending MORE of your tax dollars by NOT passing a budget. You people are foolish to believe that Rauner is holding the line on tax increases. SOMEONE is going to pay for this disaster. HINT: YOU! This editorial page shows such an incredible lack of how governments work, finance, and maintain themselves, it is sickening. IPI literally has exposed itself as having no credibility at all. If IPI had half a brain, they’d might qualify as fake news. This stuff is pathetic. - Anon221 - Thursday, May 4, 17 @ 2:43 pm: City Zen- No reason that couldn’t be part of the fix. Depends on will and greed levels. It’s not a new idea. - Ron - Thursday, May 4, 17 @ 2:45 pm: Retirees will move even faster than they do now. - Anon221 - Thursday, May 4, 17 @ 2:54 pm: Ron- Fine. So are people who are losing their jobs because of Turnin’ and Shakin’. So are people that might lose their health insurance. So are people who have lost their college MAP grants. So are people that are dying because they cannot receive the basic care they needed to get to their health appointments or stay safely in their homes. If you are a retiree that receives more than $250,000 a year in retirement income, I don’t really think you are making the same levels of sacrifices. - Il Constitution detail - Thursday, May 4, 17 @ 3:01 pm: Ron, not even the Federal Government can pass a law that would invalidate the Diminishment clause in the Il Constitution. - illini - Thursday, May 4, 17 @ 3:07 pm: ” Illinois spent significantly less on higher ed in 2016 than in 2000 under Gov Ryan “. I really wish more people would be as upset about this as I am. Yet this fact always seems to get lost when talking about the budget. - Ron - Thursday, May 4, 17 @ 3:07 pm: Detroit had that protection. The pensioners pensions were diminished. - kitty - Thursday, May 4, 17 @ 3:11 pm: Puerto Rico’s situation is not analogous to what Illinois or any other State is facing or could face. Unlike states, PR does not exercise sovereignty and remains an unincorporated commonwealth. The use of a federal court to restructure sales tax revenue bonds such as is happening in PR is not something a State could avail itself of. Sovereignty would preclude a judge from seizing state assets and directing their liquidation. As a prior poster referenced, Article I, Sec. 10 (aka Contract Clause) also remains. Implying Illinois is insolvent is a disingenuous charade by the IPI and wealthy interests it represents. Change the constitution to permit more progressive income taxation and close corporate loopholes. - Pundent - Thursday, May 4, 17 @ 3:19 pm: =In fact, a wiser governor might pass a budget and continue to press for reforms in their own merits, like a world-class salesman, a governor could sell his vision to the public and the legislature without manufacturing a crisis.= Too me this has always been where the rubber meets the road. If Rauner’s “reforms” had the broad appeal he pretends they have, he would be able to accomplish them without holding the budget hostage. At a minimum it would be the catalyst to flip seats from (D) to (R). - lake county democrat - Thursday, May 4, 17 @ 3:25 pm: No, the federal government is never going to allow a state to go bankrupt. The state could stop funding local government units and pass laws allowing them to go bankrupt (CPS), freeing up money to pay it’s unshedable debts. But that’s not what this column said. - Pc - Thursday, May 4, 17 @ 3:31 pm: That states became insolvent and defaulted on debts several times in the 1800s without congress drafting bankruptcy provisions for them indicates two things: 1) there is no need for congress to do so, and 2) congress does not have the power to do so. - The Dude Abides - Thursday, May 4, 17 @ 3:34 pm: Ron, knock it off with trying to scare the uninformed. Detroit is a municipality. We’ve already had this discussion. Ron see Article 1 Section 10 US Constitution. The title of the section, Powers Prohibited of States, tells us that this clause is directed to the states and prevents the states from enacting any state laws that retroactively impair obligations and rights between two contracting parties. - 37B - Thursday, May 4, 17 @ 3:38 pm: Interesting discussion of state bankruptcy. http://www.csg.org/pubs/capitolideas/enews/issue65_3.aspx The upshot: Even if the Bankruptcy Code is amended to allow for state bankruptcy, there is still the Contracts Clause which prohibits state governments from “impairing the obligation of contracts.” Although originally viewed as prohibiting state legislatures from passing any laws to relieve either private debt or the state government’s own debt, the Supreme Court now takes a more flexible approach, although still maintaining that “a state cannot refuse to meet its legitimate financial obligations simply because it would prefer to spend the money (on something else.)” United States Trust Co. v. New Jersey 431 U.S. 1 (1977). - City Zen - Thursday, May 4, 17 @ 3:51 pm: ==That states became insolvent and defaulted on debts several times in the 1800s without congress drafting bankruptcy provisions== What was COLA back then? - Anonymous - Thursday, May 4, 17 @ 3:52 pm: Pc is correct. When the money dries up, a state can default. No law can stop math. - Demoralized - Thursday, May 4, 17 @ 3:53 pm: Ron: Illinois ain’t Detroit or Puerto Rico. Totally different animals. Your continued comparisons are silly. - City Zen - Thursday, May 4, 17 @ 3:53 pm: ==If Rauner’s “reforms” had the broad appeal he pretends they have, he would be able to accomplish them without holding the budget hostage. At a minimum it would be the catalyst to flip seats from (D) to (R).== To which gerrymandered districts would you be referring? - City Zen - Thursday, May 4, 17 @ 3:54 pm: ==Illinois ain’t Detroit or Puerto Rico.== And Detroit ain’t Puerto Rico. - Demoralized - Thursday, May 4, 17 @ 3:55 pm: ==When the money dries up== A state isn’t like a company that can just close. The state will always exist and it will always collect revenue. - HangingOn - Thursday, May 4, 17 @ 3:55 pm: ==Detroit reduced pension benefits== Once again, Detroit is not a state. Just like Puerto Rico is not a state. - Gruntled University Employee - Thursday, May 4, 17 @ 3:57 pm: Ron, As you toss and turn trying to get to sleep tonight keep this in mind. I am less than 10 years away from retiring at 59 years old and until recently I was in pretty bad shape health wise, until I had a heart attack, now I’m 50 pounds lighter and my cardiologist says I could live to be 100. That’s 41 years of collecting my pension along with a 3% annual COLA, just think how much of your tax money I’m going to go through. - Ron - Thursday, May 4, 17 @ 4:00 pm: The Contract Clause applies only to state legislation, not federal legislation or court decisions. Don’t hold your breadth. - 47th Ward - Thursday, May 4, 17 @ 4:02 pm: ===IPI’s commitment to uncomfortable truths=== You spelled “Randian philosophy” wrong. - Ron - Thursday, May 4, 17 @ 4:03 pm: Gruntled, I’ll be fine. I can move. - Demoralized - Thursday, May 4, 17 @ 4:05 pm: Why are we even discussing bankruptcy like it’s a serious discussion as it pertains to the State of Illinois? This conversation is as “fake” as the IPI’s “news.” - City Zen - Thursday, May 4, 17 @ 4:22 pm: ==That’s 41 years of collecting my pension along with a 3% annual COLA, just think how much of your tax money I’m going to go through.== What makes you think Ron will be around that long? And if he’s retired (or soon will be), you won’t collect hardly anything from him. But if you’re interested in whose tax money your pension will really go through, just visit the nursery at your local hospital. - CEA - Thursday, May 4, 17 @ 4:34 pm: Let me guess: a “bad budget” is any budget that doesn’t slash taxes for the IPI’s wealthy patrons. - Ron - Thursday, May 4, 17 @ 4:44 pm: There will be no slashing of taxes in Illinois. Even Rauner knows that. But we should not raise taxes until state government is rationalized. The sooner we can get rid of tier 1 pension employees the better. - wondering - Thursday, May 4, 17 @ 4:44 pm: Lot’s of luck convincing a bankruptcy court of insolvency while refusing to raise the third lowest income tax rate in the nation. - City Zen - Thursday, May 4, 17 @ 4:52 pm: == third lowest income tax rate in the nation.== That’s quite an accomplishment, considering 7 states have a 0% state income tax rate and 2 others only tax dividend income. - Chicago 20 - Thursday, May 4, 17 @ 4:59 pm: IPI is nothing more than well funded trolls, bought and paid for by the Koch brothers and BVR. They have no credibility and should not be acknowledged as anything other than the trolls that they are. Stop feeding the trolls. - Anonymous - Thursday, May 4, 17 @ 5:38 pm: Wondering, nice of you to ignaore all the other outrageous taxes in Illinois. How about those RE taxes? Sales tax? - Whatever - Thursday, May 4, 17 @ 5:46 pm: ==The first thing any bankruptcy court will assess is whether the state can increase it’s income and pay it’s liabilities.== And if it decides the state cannot, it will whack the bondholders, contractors, local governments and everyone else the state owes money, not just the state employees and retirees. The rich bondholders who support IPI and ALEC will not be happy. And to The Other Nickname @ 2:34, about 30 years ago a federal court ordered Kansas City to increase its property taxes. Even if a court could not do it directly, it could dismiss the state’s bankruptcy case if it finds the state could pay its debts by increasing taxes and the state refuses to do so. - Molly Maguire - Thursday, May 4, 17 @ 5:48 pm: Well-stated, Rich. I think it is time to ignore the IPI, or at least treat it solely as a propoganda and disinformation outlet. - Six Degrees of Separation - Thursday, May 4, 17 @ 5:51 pm: ===The sooner we can get rid of tier 1 pension employees the better.=== “Attrition” will get rid of all of them and their spouses, sooner or later. Every year there is less and less of them, and even Mr. Gruntled will someday no longer be among their number. - Tim - Thursday, May 4, 17 @ 5:57 pm: == IPI’s commitment to uncomfortable truths == Oh, that’s a good one. Does the P stand for “propaganda” or “Pravda”? - MyTwoCents - Thursday, May 4, 17 @ 6:01 pm: Anonymous (pick a name), property taxes & partially sales tax (only the 6.25% State rate) have nothing to do with the State and would not play into any sort of State revenue discussion so there’s no relevance to your comment. - David - Thursday, May 4, 17 @ 7:59 pm: Pravda because the methodology is just like the Russian trolls …Russian friendly sites often obsess about out pensions. Lid Wahl who worked at RT explained the Russians like to take wedges and shove them . Pensions are one of those.Its stunning how similar the MO is to Rauner and the Kochs . it may be coincidence but I have found no connection. Ron Paul another Libertarian however is an RT regular. - David - Thursday, May 4, 17 @ 7:59 pm: Pravda because the methodology is just like the Russian trolls …Russian friendly sites often obsess about out pensions. Lid Wahl who worked at RT explained the Russians like to take wedges and shove them . Pensions are one of those.Its stunning how similar the MO is to Rauner and the Kochs . it may be coincidence but I have found no connection. Ron Paul another Libertarian however is an RT regular. - lost in the weeds - Thursday, May 4, 17 @ 8:52 pm: If a government cannot manage its taxation and expenditures to remain solvent, that is a government that should be dissolved and replaced with a government that will govern. State of Illinois could become a territory to avoid its self imposed obligations. California Attorney General investigated the territory option and the people of that state did not pursue territory status. http://www.puertoricoreport.com/puerto-rico-a-u-s-territory/#.WQvZ9NLytEY Puerto Rico is not a sovereign state responsible for its own government or governing. Propagandists do not use facts or law if the facts or law contradict the goal of the propagandist. - wondering - Thursday, May 4, 17 @ 9:01 pm: we are talking state bankruptcy…re tax is local….quible…3rd lowest of states with an income tax. - wordslinger - Thursday, May 4, 17 @ 11:08 pm: Meh, cash and tic tacs are on the nightstand. Calll yourself a cab. Say hi to Dan and John at the dorm. - RNUG - Thursday, May 4, 17 @ 11:11 pm: == Does the special provision passed by congress for Puerto Rico possibly clear a pathway for states to file for some sort of protection in the future? == I don’t think so … but you never know. I am keeping an eye on what is happening in Puerto Rico; right now it looks like he bondholders are going to be the biggest losers. This is one of the be careful what you wish for issues. Giving states the ability to undermine contracts, especially on a selective basis like shorting pensions but making bondholders complete, would be a blow against both capitalism and contract law. Just don’t see that happening. If there is anything that is sacrosanct like the first ten amendments​, it is contract law. Contract law is the entire basis for capitalism. - RNUG - Thursday, May 4, 17 @ 11:25 pm: == Detroit reduced pension benefits == Let’s revisit Detroit. Michigan doesn’t have the same level of pension protection as Illinois. Even so, the pensioner’s still got to keep +90% of what they had coming while the bond holders fared much, much worse. In fact, one of the more interesting aspects of that case in Detroit was the judge ordering the city museums / art work sold off to fund the pension funds and some wealthy people in the city magically found the money for the pensions without selling off the museums. The judge never ordered the museums sold off to pay back the bonds … the bond holders and other city debtors just got shortchanged. - RNUG - Thursday, May 4, 17 @ 11:35 pm: == A court can’t order a tax hike. == Maybe, maybe not. Remember, the IL SC has already said, in effect, the State can fund the 5 pension funds anyway the GA wants to, but the State has to pay the pensions when due. The court can also order bills paid in excess of current revenues. This is effectively where the State is today. The court won’t say raise taxes to this number or by this amount, but it can keep ordering payments. And, if the court wants to, it could find the other 2 branches in contempt for failing to pay the bills. It could even order them to match expenditures with revenue, leaving exactly how to the GA and Governor. IMO, this is the game that is being played at the moment by both parties: trying get the IL SC to, one way or the other, issue an order that could be spun by everyone as forcing a tax hike with all the blame for it going to the courts. - Harvest76 - Friday, May 5, 17 @ 6:03 am: “We’re the only ones telling the truth as we see it and promoting the actions and outcomes as we want them!” There, fixed it. - Generic Drone - Friday, May 5, 17 @ 8:00 am: Geeesh Ron. Most tier1 employees are already gone. - Well then - Friday, May 5, 17 @ 10:49 am: I wish I had every dollar my elderly mother gave to the IPI because “they wrote her nice letters “. Thanks Rich for this analysis. Sorry, comments for this post are now closed.