159 Comments - Lucci - Wednesday, Jul 5, 17 @ 3:33 pm: This makes clear that Illinois is in a debt crisis. The budget impasse is a symptom. The debt crisis is the problem. - Foreman - Wednesday, Jul 5, 17 @ 3:34 pm: Why not downgrade? Long term challenges remain. - Anonymous - Wednesday, Jul 5, 17 @ 3:36 pm: In other words, they view it as a similar budget measure as previous years with no long term measures to solve the states pension problems or address job/income loss - Sue - Wednesday, Jul 5, 17 @ 3:36 pm: And this comes despite the budget deal- I have been saying for months going to 5 percent given Illinois’ present fiscal condition is far from sufficient. Madigan era has so damaged the State that going to 8 percent is probably required but you won’t hear that from any one with a first initial of D - Arsenal - Wednesday, Jul 5, 17 @ 3:38 pm: ==going to 8 percent is probably required but you won’t hear that from any one with a first initial of D== Which Republicans are advocating an 8% tax rate? - Towney - Wednesday, Jul 5, 17 @ 3:40 pm: Why didn’t anyone suggest structural reforms to go with the tax increase? /s - 47th Ward - Wednesday, Jul 5, 17 @ 3:42 pm: ===we’re now reviewing how the budget implementation will impact the state’s two most pressing credit challenges – pension liabilities and the backlog of unpaid bills=== Ugh. Something tells me they are not going to like what they see. This budget is inadequate and barely balanced. Making the required pension payments will help, and so might Tier 3, although that may cause some problems too. The unpaid bills are still going to be unpaid, even after we’ve raised the income tax. Knocking $3-5 billion off is all we can expect without further action. Moody’s isn’t going to like that. There is more work to do, gang, but the over ride took a lot of the pressure off. Moody’s may turn up the heat a little, we’ll have to wait and see. But a plan to pay those unpaid bills is the logical next step. - Boone's is Back - Wednesday, Jul 5, 17 @ 3:42 pm: Maybe Moody’s doesn’t want a budget - Mouthy - Wednesday, Jul 5, 17 @ 3:46 pm: So if the downgrade happens anyway will Rauner start saying “Listen to wall street”… - Chicago Cynic - Wednesday, Jul 5, 17 @ 3:46 pm: Not. Helpful. - Ducky LaMoore - Wednesday, Jul 5, 17 @ 3:48 pm: ===and so might Tier 3=== If Tier 3 is a 401k style retirement program, how would the pension system benefit from new hires not contributing to the pension system? - Texas Red - Wednesday, Jul 5, 17 @ 3:49 pm: So much for the victory lap planned for tomorrow. The pension issues remain, the bond rating houses have an unbiased professional view, best to heed the warning…”the plan appears to lack concrete measures that will materially improve Illinois’ long-term capacity to address its unfunded pension liabilities” - Oswego Willy - Wednesday, Jul 5, 17 @ 3:50 pm: This budget… it was always just one step in a whole bunch of steps needed to get things back going after 2 years plus without a budget. If there is/was no override, it sounds like the downgrade may have been considered earlier(?) - Moe Berg - Wednesday, Jul 5, 17 @ 3:51 pm: They also have to be figuring, even if this somewhat stabilizes the situation, what happens when a recession hits? Since 1946, there have been 11 recessions in the U.S. There’s no reason to think one is imminent, but the current expansion is getting on the lengthier side and rating agencies have to anticipate future conditions (as much as anyone can). Eventually another one will arrive. - DuPage Moderate - Wednesday, Jul 5, 17 @ 3:51 pm: Yep - this is all Rauner’s fault. Hopefully it’s now abundantly clear that the Democratic majority has absolutely no idea what it’s doing and has no interest in actually addressing and fixing the problems of this state. - AnonymousOne - Wednesday, Jul 5, 17 @ 3:51 pm: Rauner’s next idea will probably be to eliminate the state tax altogether. He’s had such amazingly productive solutions so far. Why not give the taxpayers a real break - Liandro - Wednesday, Jul 5, 17 @ 3:55 pm: The budget doesn’t adequately address underlying structural issues, which is part of why there has been a stalemate this whole time. - Anotheretiree - Wednesday, Jul 5, 17 @ 3:57 pm: 251B ? Uh Oh…RNUG, I wonder how their count is different than the common 130B figure ? And where is the call for term Limits /s - AnonymousOne - Wednesday, Jul 5, 17 @ 3:57 pm: Ducky Good question. But no matter what goes on for new hires, going forward, the debt from neglecting to pay into the pension funds has to be paid down. Somehow, someone has to pay it. It won’t go away, won’t disappear, only grow. All this talk of reform does nothing for the debt. Whatever happens going forward, be it Tier 3 or Tier 10, or whatever reform of the day, the courts have ruled that the annuitants must be paid. So reform does nothing for now. - A guy - Wednesday, Jul 5, 17 @ 3:58 pm: Moody’s is aptly named. If the veto is overridden, their factors improve beyond where they are at this moment in time. They may be preparing us for “no change”, and not an upgrade, based on implementation. Downgrading it after the override would send a very odd signal. That’s not the sort of thing these agencies would care to be known for. Stopping the bleeding and implementing any positive change shouldn’t be met with a further downgrade. - Ducky LaMoore - Wednesday, Jul 5, 17 @ 3:58 pm: ===Hopefully it’s now abundantly clear that the Democratic majority has absolutely no idea what it’s doing and has no interest in actually addressing and fixing the problems of this state.=== Obviously Rauner doesn’t either. Where are his cuts? What has he proposed that would fix the long-term viability of the state? There are problems no matter which party controls that house, senate, governorship etc. Politics is more than what party you belong to. So if Bruce would have come into office glad handing and working with people, he may have gotten a portion of his agenda passed. But when you immediately alienate and run ads against the very people who control your agenda in the legislature, how could you not expect failure? - Real - Wednesday, Jul 5, 17 @ 3:59 pm: Liandro Moody’s didn’t say anything about term limits or property taxes - Sue - Wednesday, Jul 5, 17 @ 4:03 pm: Arsenal- as usual you miss the point - Madigan is being dishonest as far as the depth of the problem he has created for the State over the past 40 years. He spent money for decades as if we had a 5 percent tax rate while it was only 3 and hid the cost by under funding pensions. You don’t make up for that by going to 5. As Moody’s states the unfunded pension liabilities are 250 B - the backlog of bills at 15 plus and no funding for retiree health care which the Supremes mistakenly ruled is subject to the pension clause provision. Anyone who thinks the 5 gets us solvency probably also believed Quinn and Madigan was the Temp tax would fix everything. Delusional - Arsenal - Wednesday, Jul 5, 17 @ 4:09 pm: This may well just be “we won’t say until we say” kind of message, but…yikes! - Movin' On - Wednesday, Jul 5, 17 @ 4:10 pm: The state has no choice but to work w/ the feds to structure an reasonable bankruptcy. - Liandro - Wednesday, Jul 5, 17 @ 4:11 pm: @Real: Neither did I. - Prairie Dog - Wednesday, Jul 5, 17 @ 4:11 pm: It appears that the Governor doesn’t get it. Madigan, finally, does. The situation is dire. What needs to happen is for the egos and brinkmanship to cease. There will need to be some austerity and streamlining. There are too many chiefs in government (supervisors, executives, administrators, assistants, aides and spokesmen) and not enough indians. How many people do you need to read the same spreadsheet? A big consolidation must take place. The numerous boards, commissions, zones, authorities,townships, etc. must be pared down. There are too many layers in Illinois. Politicians must have the intestinal fortitude to cut the true fat. The contract process must be made open and altruistic. The idea of privatization is fraught with integrity problems. The long-term pension solution is to have a pension fund that cannot be fleeced by the politicians. That is where we see so much intellectual dishonesty by the politicians. The workers did not cause the problem and should not be the scapegoats. A promise was made and it is not time to become Enron. Finally, it is time for politicians from both sides of the aisle to admit that Illinois cannot afford to provide what it cannot afford and that government is not the “Sugar Daddy” for everyone. - Sue - Wednesday, Jul 5, 17 @ 4:13 pm: Move on- please move on- the United States constitution and statues do not permit a State to file for bankruptcy - sensen - Wednesday, Jul 5, 17 @ 4:13 pm: “…to start stabilizing our State. I guess the past 35 years was not long enough time to stabilize the state. - MovinToSomalia - Wednesday, Jul 5, 17 @ 4:13 pm: =The state has no choice but to work w/ the feds to structure an reasonable bankruptcy.= Calling for the 5th most populous state in the USA to fail is un American. - Deja Lou - Wednesday, Jul 5, 17 @ 4:13 pm: Did Rep. Harris happen to say that while giving a speech on an air craft carrier with a large mission accomplished banner behind him? - ArchPundit - Wednesday, Jul 5, 17 @ 4:15 pm: ===The state has no choice but to work w/ the feds to structure an reasonable bankruptcy. Or just start to pay down the bill backlog and work to refinance the debt to turn it into a manageable long term liability. Or just blow everything up. What makes more sense? - Anonymous - Wednesday, Jul 5, 17 @ 4:16 pm: How did they get 251 billion in pension liabilities. Its half that and as RNUG says after the ramp it will decline - Chicago Cynic - Wednesday, Jul 5, 17 @ 4:16 pm: How exactly does Moody’s propose fixing that pension liability all at once with the IL Constitution non-diminishment clause? If they think they’re going to encourage better behavior by the GOP and gov, they’re kidding themselves. - view from the cheap seats - Wednesday, Jul 5, 17 @ 4:17 pm: time for unions to take a hair cut… - Anon III - Wednesday, Jul 5, 17 @ 4:17 pm: How do you say “Don’t kick the can down the road again,” in English so that the GA will understand? If there is an override, we will be in the same place a year from now, except there will be an election campaign going on. From Moody: “… The state anticipates addressing its approximately $15 billion backlog of payments owed partly through a bond offering that probably will rank among the largest in the state’s history. This component of the state’s broader fiscal plan leaves Illinois not only dependent on market access to ease liquidity pressures, but also facing a significant increase in its tax-supported debt burden. …” That is stunning. Nothing will happen until the bond window closes, until no one will buy the State’s paper. Then I think that the Federal Government will create a later-day counterpart of the N.Y. Municipal Assistance Corporation that bailed out New York City. We may see a “State Assistance Corporation” which will substitute Federal credit for a State’s credit. When that happens, the feds will call the tune. - Dirty Red - Wednesday, Jul 5, 17 @ 4:18 pm: Moody’s: “Pension liabilities (appx. $251 billion in FY ending June 30, 2016)” CAFR: “As of June 30, 2016, the State reported a net pension liability totaling $116.024 billion.” Is Moody’s considering all liabilities versus those that are unfunded? Are they tossing something else into the “pension liability” definition? Is there another headline that could be written about this report? - Sue - Wednesday, Jul 5, 17 @ 4:19 pm: Anon- the 251 either includes the. State’s retiree healt exposure or mistakenly picks up the municipal pension liabilities - view from the cheap seats - Wednesday, Jul 5, 17 @ 4:20 pm: further, the comments of ‘we just need to pass the tax hike to get away from junk bond status” versus actually fixing the problems is exactly why we are in this mess. - AC - Wednesday, Jul 5, 17 @ 4:21 pm: ==I guess the past 35 years was not long enough time to stabilize the state.== Over 2 years ago we tried making things better by making them even worse, how’d that work? - Interesting - Wednesday, Jul 5, 17 @ 4:22 pm: This could give all those Republicans who voted for a tax increase the “fig leaf” they need to vote against an override — i.e., the ratings agencies say the state may still get downgraded if the veto is overridden because the budget does nothing to address the longer term issue of pension liability. They could say they are holding out now for reforms, having demonstrated their willingness to vote for additional revenue. - Mike Royko - Wednesday, Jul 5, 17 @ 4:23 pm: There was no chance ratings agencies were going to increase the state’s credit rating as a result of this budget. Why? The budget doesn’t change the mid to long term trajectory. - kitty - Wednesday, Jul 5, 17 @ 4:23 pm: Rauner’s goal has been to economically destroy Illinois to facilitate implementation of “right to work” laws, elimination of collective bargaining and prevailing wage laws albeit with no mandate to do so. Hopefully the pending veto overrides will be the first step of on-going efforts for the mainstream GOP in IL to take back their party from plutocrats like Rauner who want to destroy the middle class and create a Gilded Age, Dickensian era economy. Rauner does not represent mainstream Republicanism. - Generation X - Wednesday, Jul 5, 17 @ 4:25 pm: This is a band aid on a gaping flesh wound. If either side had any sort of interest in fixing this State they would start being innovative and stop relying tax and spend combined with corporate welfare. -Raise income tax to 4.95% -Legalize Marijuana -Authorize additional Casinos -Worker Comp reform -Entitlement reform Individuals don’t have enough wealth to pay for this type of spending and debt. - Prairie Dog - Wednesday, Jul 5, 17 @ 4:26 pm: My family was in Illinois long before it became a state. We Illinoisans have integrity and values. We do not break our word and we do not attempt to file for bankruptcy. I would pay a much higher income tax to stop bankruptcy. We have honor and we meet our obligations. - Dirty Red - Wednesday, Jul 5, 17 @ 4:29 pm: = the 251 either includes the. State’s retiree healt exposure = The unfunded liability for group health are roughly $5B, and that, to the best of my knowledge, is for active AND retired employees. The most recent pension report from DOI had unfunded liabilities for the municipalities at $158B. That could be a factor… - chad - Wednesday, Jul 5, 17 @ 4:30 pm: The bond houses have the duty to point out that the bipartisan financial game has played out to its end. They need to advise that some of our bonds are not going to be paid in full. That is want these rating are all about. Our state government will stand behind the unions and retirees when that time comes and bondholders will take the haircut. So, Moody and their colleagues can either do their duty or be help partly responsible for the bond losses when the time comes. All this circular talk about what is fair or politically clever just misses the point of the moment. - Midway Gardens - Wednesday, Jul 5, 17 @ 4:31 pm: Why is this not just the start of a 30-year crisis as the pension ramp continues to grow, crowding out other spending or requiring large tax increases? Don’t think economic growth is going to save this state. - Dirty Red - Wednesday, Jul 5, 17 @ 4:35 pm: In March, COGFA had unfunded liabilities at just below $130B. - Sue - Wednesday, Jul 5, 17 @ 4:35 pm: Chad -actually the constitution specifies that bond holders are first in line.. things would really have to implode for the bond holders not to get paid. In the absence of a restructuring( not permissible) the bonds are money good though the values take a hit they will get paid off. The rest of the Astarte suffers but bond holders and yes the pension beneficiaries are fine - Anotherretiree - Wednesday, Jul 5, 17 @ 4:40 pm: ==Sue which the Supremes mistakenly ruled is subject to the pension clause provision== That’s the same tack Judge Narduli took. Defining the pension obligation as only pertaining to the annuity. He didn’t see that S on the end of the word Benefits in the Pension clause.. . Meaning plural, and not just the Annuity.The Supreme Court saw the S..Perhaps you need the same glasses at your age that Judge Narduli needed ? - Generic Drone - Wednesday, Jul 5, 17 @ 4:40 pm: Tier3,4,5,6. What difference will these make. This kind of thinking just makes me wanna punch a wall. The real problem is not rank and file benefits as much as abuses like double dipping, special officers appointees from political bed fellows. Its those who are in positions of administration who eat up taxpayer money the most. Stop the corruption at the capitol and we might see our grandchildren finally get the state back on track. - Sue - Wednesday, Jul 5, 17 @ 4:40 pm: Midway has just stated the obvious. When Edger did the ramp it was presumed that normal revenue growth might suffice to keep the growing obligation at a reasonable percentage of revenue. State growth has been either flat or negative so pensions which were at or about 12 percent of revenue in 1995 is now bumping 35 percent. You just hit the nail on the head- pension payments are strangling the Statecand with the growth being what it is- the obligations will ultimately overtake everything absent draconian tax rate jumps - Prairie Dog - Wednesday, Jul 5, 17 @ 4:41 pm: I assume that most people believe that if you incur a debt, then it must be paid back. I also assume that most people believe that you can’t spend more than you bring in. The fact is that most of our politicians have college degrees. Obviously, our educational system failed them. - Anonymous - Wednesday, Jul 5, 17 @ 4:41 pm: Moody’s cares that some action is taken toward paying down the pension debt. That the state is attempting to do something/anything in that direction. That it is decreasing next year? NO. It’s not looking for results at the moment, it’s looking for positive movement. Does this budget/tax increase even address payment toward the pension debt? If not, why would they not proceed to downgrade? - Montrose - Wednesday, Jul 5, 17 @ 4:43 pm: *This could give all those Republicans who voted for a tax increase the “fig leaf” they need to vote against an override — i.e., the ratings agencies say the state may still get downgraded if the veto is overridden because the budget does nothing to address the longer term issue of pension liability. They could say they are holding out now for reforms, having demonstrated their willingness to vote for additional revenue.* And if they do that and the veto is not overridden, downgrading is a given. To Rep. Harris’ point, the veto override is the start. I hope to God no one is looking for cover to switch their vote, because they put their neck on the line for nothing then. - Sue - Wednesday, Jul 5, 17 @ 4:43 pm: Another- please refer me to which provision of the Pension code pertains to retiree health care. The Supreme Court decision was spun out of whole cloth. - Anonymous - Wednesday, Jul 5, 17 @ 4:46 pm: Our educational system can’t teacher morality. That is the family’s job. These actions have everything to do with integrity and morality. I’d say if anything, their church failed them - CEA - Wednesday, Jul 5, 17 @ 4:47 pm: It’s hard to see how the Democrats would own a post-override downgrade, since without the passage of the spending bill and tax increase, a downgrade was guaranteed. What Moody’s seems to be saying is that the spending bill and tax increase are a start, but Illinois also needs pension reform and a proactive way to address the bill backlog, neither of which anyone who has been paying attention should disagree with. - Illinois Native - Wednesday, Jul 5, 17 @ 4:48 pm: ===So far, the plan appears to lack concrete measures that will materially improve Illinois’ long-term capacity to address its unfunded pension liabilities.=== It looks to me that Rauner should have done an AV rather than a total veto to cut at least some spending. The cuts could have been used to support, at least in part, paying off the unfunded pension debt and the backlog of unpaid bill from the last two years. - Demoralized - Wednesday, Jul 5, 17 @ 4:49 pm: Sue: The legislature linked healthcare to the pension code. See the 20 year rule. Work 20 years and get healthcare paid for. It’s a retirement benefit. That was how they made the nexus. Blame the General Assembly and the Governor who signed that legislation, not the Supreme Court. - DuPage Moderate - Wednesday, Jul 5, 17 @ 4:49 pm: So sick of the hand-wrangling over the “last two years.” Is Rauner a failure in all of this? Yes. But the last two years are a drop in the bucket. We have been on a path to self-created destruction for the last 20 years - and nobody has done anything to stop it. In fact, Madigan and his merry men have only perpetuated it. At least Rauner tried to do something I guess. We are doomed. - Demoralized - Wednesday, Jul 5, 17 @ 4:50 pm: Excuse me. They linked healthcare to retirement, not the Pension Code. - Anothertiree - Wednesday, Jul 5, 17 @ 4:50 pm: Its says membership in the pension system. Membership includes health and dental. When you retire it is specified as a benefit in writing..It doesn’t have to be in the pension code. Its specified as a benefit of membership. It would be whole cloth to say membership isn’t membership. - Mike Royko - Wednesday, Jul 5, 17 @ 4:52 pm: Chad is correct. Rating agencies will downgrade (soon or eventually) bc ultimately state will pay pensions before bond holders. The passed budget doesn’t change this trajectory. - Prairie Dog - Wednesday, Jul 5, 17 @ 4:54 pm: I chuckle when I view the comments recommending legalization of marijuana and more casinos as a solution. In a state where one might assume that we are in this mess because the politicians were high and gambled away our money, I don’t think so. But, then again, for all I know, we’ll have elected a Kennedy as Governor of Illinois. - Lucky Pierre - Wednesday, Jul 5, 17 @ 4:54 pm: interesting they quote 251 billion in unfunded pension liability in stead of the 130 billion number we so frequently see quoted. Maybe that would light a fire under the Speaker if we finally got downgraded because of the obscene and immoral pension liability that will have to be paid by the next few generations. The Speaker is only concerned about protecting the middle class families who are the beneficiaries of the pensions, not the ones who have to pay for them. - Moody's Blues - Wednesday, Jul 5, 17 @ 4:55 pm: Moody’s didn’t make a mistake or include municipal liability or any such. Unlike politicians and pension fund boards that foolishly think they’ll earn 7 percent every year, Moody’s assumes a lower replicable rate of return. That more realistic view raises the unfunded liability — in this case to $251 billion. The lousy performance of Illinois’ pension fund investments in recent years proves the point: Here’s what Moody’s said: “The downgrade to Baa3 for Illinois’ GO bonds is consistent with the state’s intensifying pressure from pension liabilities; by our calculation, the state’s unfunded pension liability (Moody’s adjusted net pension liability, or ANPL) for its five major plans in aggregate grew 25% in the year ended June 30, 2016, to $251 billion.” - Chicago Cynic - Wednesday, Jul 5, 17 @ 4:59 pm: One possibility, and I hesitate to suggest this because the ratings agencies are never wrong (see 2008 mortgage meltdown), is that Moody’s is wrong on the unfunded liabilities. The other ratings agencies have us much lower as I recall. I would defer to RNUG on this point. - tobias846 - Wednesday, Jul 5, 17 @ 5:03 pm: Moody’s is just reminding the state of who’s boss. “Eat your peas, or no video games after dinner.” “So if I eat them, I can play games?” “Maybe.” - Arsenal - Wednesday, Jul 5, 17 @ 5:04 pm: ==This could give all those Republicans who voted for a tax increase the “fig leaf” they need to vote against an override== Such is my new fear. - Sue - Wednesday, Jul 5, 17 @ 5:05 pm: Demoralized- you just made my point. The constitution specifies pensions- that’s why it is referred to as the “pension clause” - the Supreme Court decision was total BS as far as protecting retiree health benefits - JoeMaddon - Wednesday, Jul 5, 17 @ 5:20 pm: The interesting thing with this is that there are no “structural reforms” that address Moody’s concerns. There is simply no pension reform - that would be upheld by the ILSC - that makes a real dent in the unfounded liability. The one real solution to these two problems - pensions and backbills - is more revenue. And the only real way to do that is do start thinking about how we can structure our tax code differently. Obviously the place to start is a progressive income tax. But there are some other options - tax and regulate marijuana is one. The carried interest loophole is another. And less likely are things like financial transactions tax. But the state can’t “reform” its way out of its debt problems. More revenue - on top of what was raised in SB9 - is the long term answer. - Mike Royko - Wednesday, Jul 5, 17 @ 5:26 pm: Joe Maddon - Your analysis is correct. And that is why I would urge everyday folks to look at how much they would save in taxes by moving to a different state. The impact of lower taxes on a family’s situation can be compelling. - Former Hillrod - Wednesday, Jul 5, 17 @ 5:37 pm: @ Lucky Pierre Didn’t these same “beneficiaries” also work many years doing the people’s business and were paid income to do so? Did these same people not pay income tax on that income? How is it that state employees aren’t taxpayers? What is your solution? Do you even have a solution other than parroting the IPI’s talking points? Tell us LP, enquiring minds want to know. - Former Hillrod - Wednesday, Jul 5, 17 @ 5:39 pm: Part of my post didn’t make it. I am referring to those middle class beneficiaries of the pensions that LP says Madigan is protecting. - Sue - Wednesday, Jul 5, 17 @ 5:46 pm: A long term freeze of all public employee salaries would go a long way in driving down the future long term pension liabilities at least for active employees. Good luck with that - Chad - Wednesday, Jul 5, 17 @ 5:47 pm: Sue and others: We just won’t have the cash to pay the retirees, basic state operations and the bonds. It just cannot add up at this point unless our economy booms. The effort to change economic growth dynamics was effectively blocked. Those bonds are just not going to be paid in full. Federal action will ultimately be required to respond to the financial crack-up of our tragic state (and a few others), the retirees will win and services will continue to be provided. The bond rating organizations know this. They would not even bother to rate our bonds if these investments were 100% secure. - Frank O'Pinion - Wednesday, Jul 5, 17 @ 5:50 pm: It’s been abundantly clear for some time now that the state needs more revenue. Why is it that talk of a graduated income tax is akin to Groundhog Day for our state pols, I.e. seemingly only worth mention once a year? It’s amazing to hear them all crow about how the state must be saved as the reasoning behind this all-important vote, yet the most plausible decision at which they could arrive was an elevated flat tax. Nonsense. - Anon - Wednesday, Jul 5, 17 @ 5:59 pm: Moody’s Blues is correct about the Moody’s unfunded liability calculation. Since there is no legislative or judicial “get out of jail free” card associated with pensions, additional revenue has to be generated to pay for the benefits promised but not funded by the state legislature over the past decades. This likely involves the “pension shift” to the school districts and expanding the income tax base to cover retirement income. Otherwise, the state is running out of realistic options to pay down the liability, as Moody’s has clearly stated must occur to improve the bond rating. Having worked in ratings for 20 years, the bond houses are telling the state the same thing they’ve been telling municipalities, counties and other units of government for years. There are no surprises here. - Mike Royko - Wednesday, Jul 5, 17 @ 5:59 pm: Frank - Illinois pre-tax hike already 9th highest tax burden in US. Post tax hike it will be in the top 5. The long term issues cannot be overcome with increased taxes, decreased spending, or any combination of the two. - Pete - Wednesday, Jul 5, 17 @ 6:08 pm: Would it legal to change retirement benefits for those not vested in that retirement system. For tier 1. You have to have 8 years service In order to be vested why not change Those the. employees may be in tier 1. But they haven’t earned the right to have the tier 1 benefits yet Same thing for the 20 year health insurance benefit - Foreman - Wednesday, Jul 5, 17 @ 6:09 pm: Predictions for the next 10 years: Illinois becomes 6th most populous state University of Illinois men’s teams remain irrelevant Illinois credit rating of BB (down 2 notches from current) Illinois narrowly misses an interest payment Illinois infrastructure noticeably shabby Illinois state sales tax increased by .5% One Chicago area agency misses an interest payment, CPS maybe? No new airport built in south Chicago - Foreman - Wednesday, Jul 5, 17 @ 6:10 pm: meant chicago park district to miss interest payment not cps - Macbeth - Wednesday, Jul 5, 17 @ 6:16 pm: What surprises me — and I mean genuinely surprised — is that no one is apparently saying to Rauner: “Okay, look, what’s your solution? What’s your plan to get the votes? We know you want jobs. Got it. Got it. But what’s the solution? How do you solve the problem?” Rauner keeps talking about jobs, about ignoring Wall Street — that’s great. Disingenuous — but great. But then .., what? What’s the alternate path? How do you get the votes? Apparently, many GOP — not all — many aren’t asking this question. It boggles my mind. If I were there — if I were a GOP mushroom under Rauner’s thumb — I’d be like, “yeah, great, great — but what’s the way out?” - illinois manufacturer - Wednesday, Jul 5, 17 @ 6:18 pm: Out pension returns have been very goid historically at or above that means this is Moodys doing fake figures…but they have a recent history of this. The bond investors the market voted for this budget today - Sue - Wednesday, Jul 5, 17 @ 6:20 pm: Pete - fast answer is no - pension clause as interpreted by Supreme Court requires the changes to be made before first day of employment - Lucci - Wednesday, Jul 5, 17 @ 6:21 pm: Harris’ plan is to borrow more from the banks and sweep funds to pay $8 bil from the backlog of bills. In other words, put the debt on a different credit card and drain your liquidity. This is exactly what a debt crisis looks like. - Moody's Blues - Wednesday, Jul 5, 17 @ 6:21 pm: Thank you, Anon @ 5:59. Michael Bloomberg on the unrealistic rates of return baked into U.S. public pension systems: “If I can give you one piece of financial advice: If somebody offers you a guaranteed 7 percent on your money for the rest of your life, you take it and just make sure the guy’s name is not Madoff.” - Anonymous - Wednesday, Jul 5, 17 @ 6:33 pm: The 20 years and health insurane applies to state workers. THis does not apply to teachers. Please realize that there are 5 different pension systems with different rules, different benefits. Teachers Retirement Insurance Program is not cheap for retired teachers. Just sayin….. - Pete - Wednesday, Jul 5, 17 @ 6:35 pm: Sue if an employee leaves service before they are vested. They get their contributions returned they don’t get to receive future annuities since they were never vested Why has t the retiree health insurance been changed for new employees - Pete - Wednesday, Jul 5, 17 @ 6:39 pm: It just seems that modifiying something that hasn’t been earned yet is not a diminishment since you really don’t have that benefit yet - jdcolombo - Wednesday, Jul 5, 17 @ 6:40 pm: @Mike Royko 5:59, and everyone else that routinely quotes “the tax burden.” The Illinois combined tax rate IS quite high. And the main reason for that is that we exempt large swaths of economic activity from taxation, resulting in a higher tax RATE on what is left. I teach tax. The first thing I cover in my basic income tax class is the equation “tax rate x tax base = revenue.” If you need $20 and decide to tax $100 of economic activity, the rate has to be 20%. But if you decide to tax $1000 of economic activity, the rate suddenly drops to 2%. Illinois has an $800 billion economy. If it taxed that full economic output at, say, 7.5%, it would generate $60 billion in revenue every year. The budget bill calls for spending of about 36.5 billion; that would leave 23.5 billion left over. In 2016, local communities spent about $30 billion on education, and that $30 billion drives the sky-high property taxes. So . . . take $15 billion of that extra 23.5 billion, fund education with it, and tell local communities to drop their school tax rate by 50%. Since schools account for about 70% of the total property tax burden, that becomes an instant 35% property tax decrease. Now what to do with the other 8.5 billion? Pay down the state’s debt, and when we are debt free, invest massively in education and infrastructure, which are actually the most important factors for enticing businesses (not taxes - taxes are usually 4th after labor force, infrastructure and proximity to markets). The examples of economic activity that the state lets go scott free include retirement income (I’m retired; I have a pension, and the fact that I don’t have to pay taxes on it is ridiiculous - I enjoy the same services as everyone else, and should pay tax like everyone else) and service transactions. A broad-based service tax is something that even Florida has figured out. In 1986, Ronald Reagan and Tip O’Neill compromised on the biggest tax reform since the 1969 TRA. The reform vastly broadened the tax base, and reduced rates from 50% to 28%. Reagan got credit for a massive tax rate reduction, which arguably spurred economic growth, but the tax reform bill also produced more revenue, so Tip got money to spend on programs. Tax rate x tax base = revenue. If the God of Republicans (Reagan) and an old-style Massachusetts Democrat (O’Neill) could figure this out, I don’t know why our current leaders in Illinois (or Washington, for that matter) can’t. The math is pretty easy. - RNUG - Wednesday, Jul 5, 17 @ 6:40 pm: First off,I’m not sure how Moody’s came up with their Pension liability number. My guess matches some of years; they assumed a much lower rate of return … and they might have mixed Tier 1 and Tier 2 together, even though the benefits levels are different. - Ducky LaMoore - Wednesday, Jul 5, 17 @ 6:42 pm: http://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp If only Illinois just bought a S&P ETF instead of contracting pensions out to GTCR vultures. - Ducky LaMoore - Wednesday, Jul 5, 17 @ 6:48 pm: @jdcolombo That’s pretty good. But let’s not forget that Reagan tripled the deficit and raised taxes 11 times. - RNUG - Wednesday, Jul 5, 17 @ 6:48 pm: == Another- please refer me to which provision of the Pension code pertains to retiree health care. The Supreme Court decision was spun out of whole cloth. == -Sue-, as was said, the Health Insurance was linked to retirement as a benefit. I think that is where the IL SC came down in including it. Personally, I expected them to come down with the same result, but base it on contract law since it was structured as an offer) premium free health insurance) with a condition / acceptance (work 20 years). If you look back, I argued the contract aspect and I think my initial comment was “wow, just wow”. Rethinking it now, I think the IL SC used the Kanerva case to signal their SB-1 decision in advance, which is why they leaned on the Pension Clause. - Not It - Wednesday, Jul 5, 17 @ 6:50 pm: Our state is an embarrassment to the institution of democracy. - RNUG - Wednesday, Jul 5, 17 @ 6:51 pm: Reading Moody’s statement (and trying to read between the lines), I came away with: 1) ok, you bought a day or two 2) you’re turning s corner, but don’t expect an upgrade yet 3) you need more revenue to pay down the pension fund debt, so get to work on a progressive income tax - RNUG - Wednesday, Jul 5, 17 @ 6:53 pm: == Its half that and as RNUG says after the ramp it will decline == But we are 15 - 20 years from turning that corner - Mike Royko - Wednesday, Jul 5, 17 @ 6:54 pm: JDcolomvo. Thx for post. I agree. Illinois will have to increase revenues jhopefully they overhaul the system in line with your post. - DuPage - Wednesday, Jul 5, 17 @ 6:58 pm: @- Pete - Wednesday, Jul 5, 17 @ 6:08 pm: ===Would it legal to change retirement benefits for those not vested in that retirement system. For tier 1. You have to have 8 years service In order to be vested why not change Those the. employees may be in tier 1. But they haven’t earned the right to have the tier 1 benefits yet Same thing for the 20 year health insurance benefit=== For people already employed, no. For new employees, yes to a point. Tier 2 is already cut pretty far, any further cuts may cause the state to be required to additionally furnish social security to TRS members (teachers) and SURS members (university and community college employees). As it is now, Tier 2 employees will pay more in to the retirement systems then they will get in pensions. - Sue - Wednesday, Jul 5, 17 @ 6:59 pm: Ducky- try talking about something you know about- GTCR and most other private equity has performed well for TRS. It is the hedge funds over the last 10 or so years that have lagged big time. Private equity and real estate has driven returns. Occasionally when trustees make what can be described by some as a politically motivated investment decision( Illinois Ventures Ventures led by David Wilhelm)the portfolio has done fine. Why no one sued to terminate Wilhelm who was with Blago’s campaign and in 2003 got investment dollars from Illinois is a good question. Wilhelm’ returns have been negative for mos t of the relationship yet the State funds have paid his fund millions in fees. Don’t criticize GTCR but you can criticize Rainer for not imposing more oversite over the state funds investments so they at least generate returns in the upper tier of public funds - RNUG - Wednesday, Jul 5, 17 @ 7:15 pm: == Why has t the retiree health insurance been changed for new employees == It was a long time ago, but it was changed from an 8 year requirement to a 20 year one. The main reason it was changed was to stop private sector early retirees from going to work for the State just to get the health insurance. - Anonymous - Wednesday, Jul 5, 17 @ 7:15 pm: Looks to me as though Moody’s isn’t buying what Speaker Junk is selling. Any opinion on who would buy an Illinois Junk Bond to pay down our bills at ANY cost? - RNUG - Wednesday, Jul 5, 17 @ 7:19 pm: == It just seems that modifying something that hasn’t been earned yet is not a diminishment since you really don’t have that benefit yet == People forget about the “contract” part of the Pension Clause. You accept the contract the first day of employment. The clause also says you can’t diminish. Add the two together, and you get the IL SC position about benefits at time of hiring (plus granted enhancements). - Pete - Wednesday, Jul 5, 17 @ 7:25 pm: Why not make the health insurance 30 years. Or max benefit of 50% rather than 100% - Realist - Wednesday, Jul 5, 17 @ 7:28 pm: I believe the $250B is the total liability. $130B is unfunded. - Mama - Wednesday, Jul 5, 17 @ 7:36 pm: RNUG, don’t they have to change the state constitution in order to switch IL from a flat tax to a progressive income tax? - The Great Zamboni - Wednesday, Jul 5, 17 @ 7:38 pm: If I were the bond rating agencies, I would downgrade Illinois to junk status and hold them up as an example of the pain that might be offered to any other states that might consider going down the same path. Illinois is not the only state in bad financial shape. Make an example of Illinois and the other states may start to become fiscally more responsible. By the way, my wife has one more year of school. After that, we are out of here. We will be 2 six figure incomes moving out of state. - Ducky LaMoore - Wednesday, Jul 5, 17 @ 7:39 pm: @Sue 1.5% management fee plus 20% of profit. Illinois got hosed. - DeseDemDose - Wednesday, Jul 5, 17 @ 7:47 pm: The Override will happen tomorrow, I have not heard one coherent reason why it is not necessary. Keep it simple. - RNUG - Wednesday, Jul 5, 17 @ 7:57 pm: == RNUG, don’t they have to change the state constitution in order to switch IL from a flat tax to a progressive income tax? == Yes. To get it on the 2018 ballot, they need to start soon. - Sue - Wednesday, Jul 5, 17 @ 7:59 pm: RNUG- what never made sense is the enhancement part? The 3 percent COLA didn’t exist until 20 years after the pension clause went into the constitution? It would be equally logical for the diminishmdnt applying to the date of employment in terms of not taking anything away as the employment effective date but that’s not how they interpret it - Mama - Wednesday, Jul 5, 17 @ 8:05 pm: RNUG, I know we need to change to a progress tax, but I don’t trust them to open the state constitution. I’m afraid they will mess with the pension clause that protects our pension benefits. - Arthur Andersen - Wednesday, Jul 5, 17 @ 8:07 pm: Realist, wrong. I thought the same thing until I read the statement. To repeat what a couple others have said, Moody’s uses a lower, Treasury-level discount rate for its calculation of the unfunded, sending the total soaring to $251 billion. Personally, I think their number is Junk, but that’s one guy’s opinion. Sue, why don’t you file a lawsuit to terminate Wilhelm? Oh, never mind, prolly too late. BTW, if you do, get the name of the firm correct, ok? It ain’t Illinois Ventures. You are correct that PE and RE returns have been stellar and Hedge well, meh. Ducky, though, is correct that over 30 years, a 100% S&P allocation (10.3% per year) outperformed the actual allocation (appx. 9.0% per year.) Not that we would want to put all our eggs in any single basket. - Mama - Wednesday, Jul 5, 17 @ 8:08 pm: “I have not heard one coherent reason why it is not necessary” DeseDemDose, They have 20M hanging over their heads. - RNUG - Wednesday, Jul 5, 17 @ 8:10 pm: == what never made sense is the enhancement part == The clause is explicit about diminishment; it is silent on enhancement. The court has chosen the silence to include enhancements,I think, because (a) the GA was well aware of the Pension Clause, (b) still chose to add the benefit, (c) it was in place of the GA’s sporadic granting of increases, and (d) there is a presumption any law passed by the GA is valid unless challenged. - RNUG - Wednesday, Jul 5, 17 @ 8:17 pm: == RNUG, I know we need to change to a progress tax, but I don’t trust them to open the state constitution. I’m afraid they will mess with the pension clause that protects our pension benefits. == Short of a Con-Con, the GA can propose any amendment at any time. And I believe amendment proposals have to also follow the single subject rule. So the GA can propose just a graduated income tax without a convention or proposing other Amendment. If they did so, I would like to see them spell out the initial rates, lock them in for 5 or 10 years, and have a limit on future increases. Structured as part of a property tax swap, and with a good spokesman, I believe it could be sold. - David - Wednesday, Jul 5, 17 @ 8:41 pm: With the ptax swap I agree with Rnug. All the income growth has been in the super rich. Illinois can still remain competitive with NY and CA.I notice few have moved to hang out with their poor can clubs in places like West VA. - Anonymous - Wednesday, Jul 5, 17 @ 8:51 pm: Rating Agencies can downgrade as they they see the need. Illinois has shown no real reform - just higher taxes and the Kick the Can approach. The point I see here is that more the tax increase will not generate anywhere the near revenue projected and expenses will be higher, I can not believe and these guys and the people have not changed, - a modest proposal - Wednesday, Jul 5, 17 @ 9:04 pm: So the ratings agencies are essentially saying “too little too late” This means they want to see reforms along with revenue… - AnonymousOne - Wednesday, Jul 5, 17 @ 9:14 pm: ILlinois has shown no real reform–just higher taxes== You mean the rating agencies would upgrade us if we passed term limits. LOL - Rabid - Wednesday, Jul 5, 17 @ 9:15 pm: I think rating agencys want reforms that produce revenue, not the one that wet your pants - Anonymous - Wednesday, Jul 5, 17 @ 9:34 pm: This is what it sounds like when the music stops and you don’t have a chair It would be wise on the Speaker to take this as an opportunity to go back to the drawing board and make some meaningful reforms before calling the budget for the override vote. Otherwise it is painfully clear what is going to happen. - Pundent - Wednesday, Jul 5, 17 @ 9:37 pm: Rating agencies are agnostic when it comes to politics. If “reforms” had a quantifiable return (1.4% won’t cut it) they would consider it in their analysis. The litmus test is still math not political affiliation. - ArchPundit - Wednesday, Jul 5, 17 @ 9:37 pm: ====It would be wise on the Speaker to take this as an opportunity to go back to the drawing board and make some meaningful reform Could you specify which reforms you think will help? - Anonymous - Wednesday, Jul 5, 17 @ 9:53 pm: ArchPundit, the reforms must include a way to either reduce future obligations or increase revenue to reduce those obligations. From my perspective, Moody’s gave the Speaker an opportunity to fix this before he 1) owns a tax increase and 2) owns a downgrade to junk status. The ball is in his court right now, and I don’t think he has a win with an override passage. - Generation X - Wednesday, Jul 5, 17 @ 9:58 pm: ==Could you specify which reforms you think will help== Work for welfare reforms with job training and education for able bodied non parents. It has been wildly successful in Maine and Alabama - Anonymous - Wednesday, Jul 5, 17 @ 9:59 pm: The Speaker will be wise to take this opportunity to override the Governor’s veto. Then the state can begin to pay the bills that are driving up the state’s debt and causing the credit downgrades. Paying our bills will be the reform that is most needed. - ArchPundit - Wednesday, Jul 5, 17 @ 10:02 pm: –increase revenue to reduce those obligations. So he needs to increase revenue even more or he’ll own a tax increase? I’m confused by what you are proposing here. Maybe some specifics? ===Work for welfare reforms with job training and education for able bodied non parents. It has been wildly successful in Maine and Alabama Errr..how would that affect the rating agencies’ decisions? - Generation X - Wednesday, Jul 5, 17 @ 10:09 pm: ==Errr…how would that affect the ratings agencies’ decision?== By reducing spending in certain areas to meet obligations in others. No one thing will fix our long term outlook but we can chip away in a variety of ways along with revenue increases. - RNUG - Wednesday, Jul 5, 17 @ 10:14 pm: == Work for welfare reforms with job training and education for able bodied non parents. == Not saying we shouldn’t try it, but most of that money is Federal; the State savings will be relatively small. - Generation X - Wednesday, Jul 5, 17 @ 10:26 pm: ==Not Saying we shouldn’t try it, but most of that money is Federal; State savings will be relatively small== You are not wrong, but I think it sends a positive message to voters who oppose the tax increase that Illinois will look at more than just taxes. Somewhat symbolic change that may make future deals more palatable. Could help influence a Federal change as well since Blue and Red states have had success - Generation X - Wednesday, Jul 5, 17 @ 10:29 pm: Also with a heavy emphasis on job training as part of the workfare, hopefully you could create a broader workforce, tax base, and unlock some entrepreneurs who previously didn’t have an avenue for their ideas - Anonymous - Wednesday, Jul 5, 17 @ 10:33 pm: ArchPundit, let’s not cherry pick comments. He will own both a tax increase as a downgrade to junk. Unfortunately I can’t give any specifics on how to fix this, the debt is insurmountable in my opinion when you factor in what it will balloon to when the inevitable recession comes in the next decade. We need to be reducing unfounded obligations in the economy we are in, the ratings agencies know this - Quiet Sage - Wednesday, Jul 5, 17 @ 11:02 pm: Moody’s is one out of three major credit rating agencies, and it is thus far the only one that has threatened further downgrades even if the vetoes are overridden. It is not clear how strongly Moody’s lone analysis will influence the markets. I don’t frankly trust their analysis/motivation. - Arock - Wednesday, Jul 5, 17 @ 11:04 pm: Seems like the CEO’s of many industries in Illinois have offered suggestions that would help keep jobs in Illinois or even expand operations which have seemed to have fallen on deaf ears. While the states surrounding Illinois have done things to spur job growth Illinois has seen industries move from out of state as well as out migration of its population because of failure to adapt. It has especially hit the downstate part of Illinois. - q34 - Thursday, Jul 6, 17 @ 12:10 am: This crisis will be the good old days very shortly. - Anonymous - Thursday, Jul 6, 17 @ 6:23 am: =Moody’s is one out of three major credit rating agencies, and it is thus far the only one that has threatened further downgrades even if the vetoes are overridden. It is not clear how strongly Moody’s lone analysis will influence the markets. I don’t frankly trust their analysis/motivation.= Head firmly planted in the sand. Well done. - Anonymous - Thursday, Jul 6, 17 @ 6:26 am: =The Speaker will be wise to take this opportunity to override the Governor’s veto. Then the state can begin to pay the bills that are driving up the state’s debt and causing the credit downgrades. Paying our bills will be the reform that is most needed.= You do, of course, realize that the ‘balanced’ budget does none of this, and that the state is borrowing another 8 billion to pay down about 1/2 of the current backlog? - Anonymous - Thursday, Jul 6, 17 @ 6:29 am: =Could you specify which reforms you think will help?= How about an honest budget that isn’t full of gimmickry and bogus savings (sell the JRTC again, anyone?) and a realization that you cannot continue to fund many of the programs and services that got us here in the first place. - TookFinanceInCollege - Thursday, Jul 6, 17 @ 6:43 am: Madigan Budget Summary: Raise taxes, spend 8B more than what you bring said new taxes, borrow new money to cover that $8B and continue to act surprised that a plan involving money borrowed at 7% funding pension investments returning 6.4% doesn’t solve any fiscal issues. - Pointless - Thursday, Jul 6, 17 @ 6:46 am: I find this pension liability numbers meaningless and used to scare people. My electricity usage liability over the next 30 years is well over $100,000. My mortgage liability is over $200,000. My food liability is over $300,000 for the next 30 years. My toilet paper liability is probably over $2,000. $251 billion. And how long projected into the future is that? 20? 30? 40 years? Liabilities never go away. Why don’t they say it’s $10 trillion over 300 years? That would scare people more. - CapnCrunch - Thursday, Jul 6, 17 @ 7:09 am: “I find this pension liability numbers meaningless and used to scare people” Your liabilities are assets to other people. Your ability to pay your liabilities represent risks to their assets. Do you think they think these ratings number are meaningless? - Moody's Blues - Thursday, Jul 6, 17 @ 7:30 am: To the “TookFinanceInCollege” post: In your reading you missed a word: This discussion is about UNFUNDED liabilities — those for which people who took more finance in college know Illinois won’t have the money. If you have the income (revenue) to cover your other expected costs (health care, your SJR subscription), great. But if you can reliably estimate that you won’t have funds to cover all the future liabilities you list here, then you — like Illinois state government and lots of our 7,000 local governments — have a dreadful problem. - Mike - Thursday, Jul 6, 17 @ 7:31 am: Did people think just because we have a budget everything would be just dandy? Has everyone already forgot what happened last time we raised taxes…..let me remind you. Not much - Arock - Thursday, Jul 6, 17 @ 8:09 am: “I find this pension liability numbers meaningless and used to scare people.” - I think the number that should scare you is the $9 billion in interest payment that consumes 25% of the budget. I guess someone lied about the budgets being balanced for a few decades. No reason to think that this one will be any different. - Anonymous - Thursday, Jul 6, 17 @ 8:11 am: ===last time we raised taxes, not much happened== El Wrongo. If everyone’s freaking out over pension liabilities, there was positive progress made during that last tax increase. Can you imagine that? THe state actually paid something toward what they owed to workers/retirees instead of stiffing them yet again? Yes, progress was made. - Jax - Thursday, Jul 6, 17 @ 8:17 am: @pointless. if you don’t understand the concept of unfunded liabilities I am not sure anyone can help you but all of your examples are not applicable. These are expenses that are already spent and not put away for. A better example would be if you had not paid your electric bill for 20 years. that is closer. - Moody's Blues - Thursday, Jul 6, 17 @ 8:28 am: Profound apologies to TookFinanceInCollege. My 7:30 a.m. post was directed to Pointless’ post, not to yours. - Arock - Thursday, Jul 6, 17 @ 8:40 am: Pension debt continued to grow during the last tax increase but it is good that some of the tax revenue was paid toward the debt. Unfortunate that Illinois made no attempt to get their fiscal house in order for when the tax expired as promised. - AgainWithTheFinance - Thursday, Jul 6, 17 @ 8:44 am: “Yes, progress was made.” No, there was no progress - the total deficit GREW throughout the 2011-2015 period. Every year under the temporary tax hike the state spent more money than what it received in revenue that year and covered the hole by borrowing money at rates higher than the returns on the pension investments. 1) Borrow money at 7% 2) Investment said money at 6.4% 3) ????? 4) Profit - Dr. Bronners - Thursday, Jul 6, 17 @ 8:59 am: Two things: 1. This mess is going to take years to fix no matter what this budget looks like. The structure things that matter most (progressive income tax and pension reform imo) require constitutional changes. Everything else is shuffling chairs on the titanic and literally throwing them overbord every year there isnt a budget. Anyone who is taking the one budget to solve them all approach isnt serious. 2. Rauner is in an interesting spot here. He wants to pull Rs off the deal for his ultimate goal, but he doesnt want to wear governor junk. Do we see the tail wag the dog here with enough Rs for an override? - Ducky LaMoore - Thursday, Jul 6, 17 @ 9:22 am: ===the total deficit GREW throughout the 2011-2015 period.=== How so? - DeseDemDose - Thursday, Jul 6, 17 @ 9:22 am: The real Mike Royko is spinning in his grave seeing his name being disrespected and used in vain. - Pointless - Thursday, Jul 6, 17 @ 9:35 am: @Jax, I understand unfunded liabilities. I disagree with your statement that they are already spent. They are not owed today, they are owed sometime in the future. There is a real cost today to pay what is owed today. 251B is a projection based on assumptions and brought forward to present dollars. Notice they didn’t say unfunded liability. Now it’s just liability. Too make the number larger to scare people. - Anonymous - Thursday, Jul 6, 17 @ 10:51 am: “How so?” Every single year during the temporary tax hike the state expenditures exceeded revenues. That is, the state was borrowing at yields around 7% to largely to pay into a pension fund that returns 6.4%. Have you ever used credit card debt to get cash to put into your savings account? - Rich Miller - Thursday, Jul 6, 17 @ 1:09 pm: ===In other words, put the debt on a different credit card and drain your liquidity.=== Right now, the state is borrowing billions of dollars from non-profits, small and large businesses and school districts by not paying them on time. Sorry, comments for this post are now closed.