* Tribune editorial…
A Sangamon County circuit court judge is expected to decide soon whether to allow an unconventional lawsuit that challenges Illinois’ borrowing habits to proceed.
We’ll cut to the chase: We hope Judge Jack Davis Jr. allows the case to move forward. Why? About 244 billion reasons. That’s how many dollars the financial watchdog group Truth in Accounting estimates Illinois taxpayers eventually will owe due to unfunded pension liabilities, health care obligations and unpaid state bills. The debts have piled up over decades but accelerated since the early 2000s, dragging the state’s credit rating to near junk status.
So yes, taxpayers deserve a shot at having someone contest Illinois’ tradition of overborrowing. The case is considered a Hail Mary attempt, even though it raises legitimate concerns about the manner in which Illinois politicians have borrowed money in the bond market to balance budgets and pay for operations.
At this phase, the judge is merely deciding whether the case is frivolous or malicious, the threshold for tossing taxpayer cases before they can be formally filed in Illinois. This lawsuit is neither.
Pension debt has helped drag the state’s credit rating to near junk status, but let’s all cheer on a lawsuit that will certainly push Illinois into junk bond status because reasons.
Brilliant!
Keep in mind that this is the same editorial board which railed against the 2011 income tax hike even though the state was hemorrhaging money at the time. It then stood firmly with Gov. Rauner’s 2+ year impasse, even though the state was piling up billions in debt. Part of this lawsuit is about invalidating the bonds sold to pay off the state’s debt owed to vendors because of the Rauner/Tribune impasse. The only conclusion one can reasonably draw is that the Tribune wants to force the state into default. With that perspective, the editorial makes perfect sense.
* Bloomberg…
The municipal-bond market is putting long odds on a think-tank chief’s bid to have $14 billion of Illinois debt tossed out in court.
While the yields on some of the challenged state bonds jumped by more than a third of a percentage point in the weeks after the suit was filed on July 1, they’ve since reversed course amid the market’s broader rally, indicating little risk that their legal status will be cast into doubt. Taxable Illinois debt due in 2033 is now yielding 4.46%, only about 0.3 percentage point more than bonds the state issued in April that aren’t being questioned by the suit. […]
Even if the Illinois judge allows the case to move forward, Nuveen’s Miller said he “can’t imagine that an outside plaintiff could prevent” Illinois from making its debt payments. The required three-fifths of the state’s legislators approved the debt and its purpose to pay accruing bills, Miller said.
“I would be shocked if that’s not a legitimate purpose,” Miller said.
- Steve - Tuesday, Aug 27, 19 @ 9:31 am:
Illinois claims to have a balanced budget provision in its’ constitution. It appears that provision isn’t being upheld. You can laugh at these lawsuits all you want but there appears to be a small group of people who are looking for the constitution to be adhered to. Eventually , these kind of people will attempt to get the SEC to look into Illinois’ “kinky” accounting.
- Anyone Remember - Tuesday, Aug 27, 19 @ 9:31 am:
Remember Sam Zell took the Tribune private with the employee pension fund. George W. Bush’s economic debacle tanked those pensions’ value. Thus began the Tribune’s crusade to put Illinois into default and eliminate public sector pensions.
- Anyone Remember - Tuesday, Aug 27, 19 @ 9:32 am:
Steve -
Balance on what basis? Cash? Modified accrual? Accrual?
- 47th Ward - Tuesday, Aug 27, 19 @ 9:34 am:
=== there appears to be a small group of people who are looking for the constitution to be adhered to.===
Really? Is that what they’re doing? Standing up for the rule of law and the honor of the state Constitution?
Maybe, but occam’s razor suggests they’re only trying to make an easy score for themselves.
- Steve - Tuesday, Aug 27, 19 @ 9:37 am:
- Anyone Remember -
Excellent question. What we do know is Bruce Rauner’s budgets were not balanced even if someone said they were for 5 minutes. The billions in unpaid bills suggests that anyone reasonable person would come to the conclusion the budget wasn’t in balance violating the constitution.
- Rich Miller - Tuesday, Aug 27, 19 @ 9:38 am:
===who are looking for the constitution to be adhered to===
Perhaps you should read it first.
- Oswego Willy - Tuesday, Aug 27, 19 @ 9:39 am:
===Keep in mind that this is the same editorial board which railed against the 2011 income tax hike even though the state was hemorrhaging money at the time. It then stood firmly with Gov. Rauner’s 2+ year impasse, even though the state was piling up billions in debt.===
It’s truly phony to support all the damage that this board supported then decide that a lawsuit that goes after bonds and debt.
These boards are the relatives you’re required to invite to your house, and you love them and you do all you can to avoid talking politics because your once rational relative becomes a zealot with that based on ignorant biases they are blind to seeing.
===You can laugh at these lawsuits all you want but there appears to be a small group of people who are looking for the constitution to be adhered to.===
… and yet, for four years two of which the Executive wanted no budget, even though its required of a governor, and two other years that same governor begged for an override then signed a budget in hopes of getting over 40% of the vote in re-election (he didn’t get it).
This phony clinging to the constitution is done by the same folks who forget that pensions, it’s been decided; the money is owed.
Now they want to go after the bonds, why, some folks who can’t get their ridiculous thought of fair… unsurprisingly… would rather see it all burn… legal or not.
- Steve - Tuesday, Aug 27, 19 @ 9:45 am:
Rich and OW:
Great stuff in the constitution. Pretty straight forward.
“The General Assembly by law shall make
appropriations for all expenditures of public funds by the
State. Appropriations for a fiscal year shall not exceed
funds estimated by the General Assembly to be available
during that year.”
- Skeptic - Tuesday, Aug 27, 19 @ 9:45 am:
“people who are looking for the constitution to be adhered to” except where it involves pensions.
- Oswego Willy - Tuesday, Aug 27, 19 @ 9:46 am:
===“The General Assembly by law shall make
appropriations for all expenditures of public funds by the
State. Appropriations for a fiscal year shall not exceed
funds estimated by the General Assembly to be available
during that year.”===
See: Wheeler, Charlie.
- Oswego Willy - Tuesday, Aug 27, 19 @ 9:48 am:
To that? Welp.
===- charlie wheeler - Friday, Jun 15, 18 @ 2:42 pm
Points of Information re balanced budgets
“People tell me this is the most balanced budget in 15 years. I don’t know, but I know we’ve had unbalanced budgets for years. We’ve been running deficits for years. It’s the reason we have such big debt, unfunded pensions. There was almost $10 billion of unpaid bills when I became governor. We’ve had financial mismanagement in this state for a long time.”
Gov. Rauner. June 15, 2018
The actual record:
Illinois last ended its fiscal year with a general funds budgetary surplus (GF available balance > lapse period spending) in FY2001, when the AB was greater than LPS by some $300 million.
As measured by declining GF budgetary deficits, however, Illinois last had a balanced budget (current year spending less than current year revenues) in FY2015, when the deficit declined by slightly more than $1 billion.
Starting with FY2002, Gov. Ryan’s next-to-last last budget, through FY2015, Gov. Quinn’s last budget, the GF budgetary deficit improved in eight of 14 years, meaning spending was less than revenues in each of those years.
Sources: Illinois Comptroller Reports, Commission on Government Forecasting and Accountability.
Charlie Wheeler===
- DarkDante - Tuesday, Aug 27, 19 @ 9:51 am:
==“The General Assembly by law shall make
appropriations for all expenditures of public funds by the State. Appropriations for a fiscal year shall not exceed funds estimated by the General Assembly to be available during that year.”==
Professor Merriman at the IGPA always points out that more funds become “available” when you sell bonds.
- but I still have checks - Tuesday, Aug 27, 19 @ 9:56 am:
Article IX is ‘kinda sorta’ (legal term of art) a bit more complicated -
(c) State debt in anticipation of revenues to be collected in a fiscal year may be incurred by law in an amount not exceeding 5% of the State’s appropriations for that fiscal year. Such debt shall be retired from the
revenues realized in that fiscal year.
(d) State debt may be incurred by law in an amount not exceeding 15% of the State’s appropriations for that fiscal year to meet deficits caused by emergencies or failures of
revenue. Such law shall provide that the debt be repaid within one year of the date it is incurred.
- RNUG - Tuesday, Aug 27, 19 @ 9:59 am:
== Appropriations for a fiscal year shall not exceed funds estimated by the General Assembly to be available
during that year.” ==
Yep. They estimated they would be borrowing money to balance the budget.
- Glenn - Tuesday, Aug 27, 19 @ 10:03 am:
Repeal the 16th Amendment to the US Constitution.
Let the Feds beg the States for money instead of the having the States beg the Feds for money.
There is no reason the States, being the wealth producers that the Feds feed on, should be starved while the Feds fund the Department of Defense with 2 billion dollars per day.
- Grandson of Man - Tuesday, Aug 27, 19 @ 10:06 am:
It’s the rich and privileged who didn’t pay their fair share in state income tax trying to wreck the state instead of paying what they should have a long time ago. They can’t beat unions and impose harsh cuts to state workers, which is what they want, so they will try the courts to tank the state via junk status. It’s why I call them and others right wingers and not conservatives. Quinn was more of a “conservative,” paying bills and raising revenue.
- Steve - Tuesday, Aug 27, 19 @ 10:11 am:
Illinois has to issue debt given its’ fiscal health. Who knows what some future federal judge will allow if the SEC wants to stop a bond sale.
” the SEC can only regulate municipal bond issuers through the antifraud provisions of the
Securities Exchange Act of 1934, the Rule prohibits municipal bond underwriters from purchasing or selling
municipal securities unless the municipal bond issuer enters into what are known as “continuing disclosure
agreements” or “continuing disclosure undertakings”.
http://k-plaw.com/wp-content/uploads/2019/01/New-Municipal-Bond-Continuing-Disclosure-Rules-Adopted.pdf
- Roman - Tuesday, Aug 27, 19 @ 10:11 am:
The influence of the Tribsters has waned so much they’ve been reduced to cheering acts of civic anarchy. Is Heath Ledger’s Joker character writing editorials for them now?
- Oswego Willy - Tuesday, Aug 27, 19 @ 10:14 am:
===Who knows what some future federal judge===
Let’s deal with the case we’re talking about today, in this post, and worry about will happen (or won’t) when that occurs.
This idea I need to worry about “X” because talking abut “Y” isn’t a winning argument. Dorm room stuff.
- Fixer - Tuesday, Aug 27, 19 @ 10:14 am:
Steve, see Article XIII, Section 5 then get back to us on how Tillman and his ilk are trying to preserve the state constitution.
- City Zen - Tuesday, Aug 27, 19 @ 10:16 am:
We don’t need someone to push us into default. We can do that on our own.
- Steve - Tuesday, Aug 27, 19 @ 10:16 am:
OW
I’m not suggesting these people have a good case. They probably don’t but as we’ve moved to the “government by judiciary ” one can’t discount what some future federal judge appointed by President Trump might say in court.
- Oswego Willy - Tuesday, Aug 27, 19 @ 10:20 am:
===one can’t discount what some future federal judge===
Been that way since… always.
The reality is your trolling concern for future judicial precedent isn’t helping the reality of this case, it’s trying to seem smarter than the obvious facts here.
Any thoughts on Wheeler, or are we going to discuss what first year “Harvard” law student will be the best federal jurist in 15 years?
- Steve - Tuesday, Aug 27, 19 @ 10:21 am:
Who could forget the San Diego situation from 2006?
https://www.nytimes.com/2006/11/15/business/15pension.html
“The city of San Diego settled fraud charges yesterday with the Securities and Exchange Commission, the first time the commission has sanctioned a local government for misleading municipal bond markets about the condition of a public pension fund.
The S.E.C. found that from 2002 to 2003, San Diego misled investors and credit rating agencies about the amount of money it had promised to retired city workers and how the promises might threaten its ability to pay its bond obligations. In those two years, San Diego issued bonds five times, raising more than $260 million, in addition to the nearly $2.3 billion of bonds it already had outstanding.
As part of the settlement, San Diego agreed to hire an independent monitor for three years and to follow the monitor’s instructions for improving its disclosures and complying with the securities laws.
- Oswego Willy - Tuesday, Aug 27, 19 @ 10:23 am:
===Who could forget the San Diego situation from 2006?===
Thirteen years ago, and further, are you saying the bond sales and Illinois debt is fraudulently being peddled?
Cite please where that’s the case here.
Thanks.
- Da Big Bad Wolf - Tuesday, Aug 27, 19 @ 10:24 am:
==one can’t discount what some future federal judge appointed by President Trump might say in court.==
Because that is the one guy who values people who pay their debts./s
- Rich Miller - Tuesday, Aug 27, 19 @ 10:25 am:
OW is right. Your argument consists of throwing red spaghetti herrings at the wall.
- former southerner - Tuesday, Aug 27, 19 @ 10:26 am:
In general, I lament the loss of newspapers but when the current shell that is all that remains of a formerly great newspaper finally disappears it will be no loss. The current Trib is like the letters to the editor section of the Pantagraph on steroids.
- Oswego Willy - Tuesday, Aug 27, 19 @ 10:39 am:
===Steve raises some good points.===
… so great you can’t articulate them outside this drive by?
To bring this away from that wall of red spaghetti herrings,
The propping up of arguments based on the ignoring of the cheering of the opposite side of the coin and believing in that damage, calling it good… this case isn’t about the honesty of the argument, if it was the hypocrisy would be apologized for, but why can’t they? It’s because the argument itself has no real standing. It’s a want, not a legal maneuver.
- Da Big Bad Wolf - Tuesday, Aug 27, 19 @ 10:42 am:
==Is Heath Ledger’s Joker character writing editorials for them now?==
A member of the editorial board also wanted Chicago to be destroyed in a hurricane, so maybe.
- Jocko - Tuesday, Aug 27, 19 @ 10:55 am:
==The debts have piled up over decades but accelerated since the early 2000s==
…and yet no talk from the Trib board encouraging that we default on Illinois bonds.
- Phil King - Tuesday, Aug 27, 19 @ 10:58 am:
Rich,
Unlike yourself the Trib editorial board seems capable of distinguishing between liabilities and credit issues related to over spending and over promising (pensions) and the entirely different case of trying to enforce the state Constitution’s limit on bond debt.
Warlander and Tillman’s lawsuit is about enforcing the constitution’s limited guarantees against politician’s irresponsible fiscal behavior. In the long run, that’s good even if it leads to a short term drop in the bond rating.
We need to break the 19 year cycle of unbalanced budgets and ever larger debt burdens for already overburdened taxpayers.
- Juvenal - Tuesday, Aug 27, 19 @ 10:58 am:
Not Joker. Joker’s maniacal terror was mayhem for mayhem’s sake, with a little larceny thrown in.
These folks are on a mission to cleanse Gotham of what they see as all its faults, to tear it down so it can be rebuilt right proper. That’s the modus operandi of Ra’s al Ghul and The League of Assassins.
- Phil King - Tuesday, Aug 27, 19 @ 11:00 am:
Steve,
The problem with the balanced budget provision is its toothless. It only requires “estimated” revenues to match “estimated” expenditures. That leaves room for all kinds of smoke and mirrors with the estimates.
True balanced budget requirements demand that outlays cannot exceed ACTUAL revenues at THE END of the fiscal year.
39 states and the district of Columbia have that kind of requirement. Illinois is one of just 11 states with toothless prospective-only requirements.
That’s why we’ve had 19 years where the state spent more than it brought in (and this year will be the same).
- Skeptic - Tuesday, Aug 27, 19 @ 11:03 am:
” In the long run, that’s good even if it leads to a short term drop in the bond rating.” In other words, the ends justify the means. Another winning argument.
- cover - Tuesday, Aug 27, 19 @ 11:05 am:
= We need to break the 19 year cycle of unbalanced budgets and ever larger debt burdens for already overburdened taxpayers. =
Isn’t that what Gov. Pritzker hopes to accomplish with the graduated income tax, if the voters approve the constitutional amendment? That could finally put an end to the state’s structural budget deficit, and “break the cycle of unbalanced budgets”.
- Steve - Tuesday, Aug 27, 19 @ 11:07 am:
- Phil King -
It appears you are correct about the estimates , how far that’s gone is amazing. Illinois had better fiscal health before 1970 and the state income tax.
- Honeybear - Tuesday, Aug 27, 19 @ 11:13 am:
“In the long run, that’s good even if it leads to a short term drop in the bond rating.”
wow….
stunning admission….
You
have
no
idea
of the
human cost
to
what you just said.
- City Zen - Tuesday, Aug 27, 19 @ 11:13 am:
==Illinois had better fiscal health before 1970 and the state income tax==
Growth masks a lot of deficiencies. The pension debt pre-dates 1970 and the state income tax.
- Oswego Willy - Tuesday, Aug 27, 19 @ 11:18 am:
===The problem with the balanced budget provision is its toothless. It only requires “estimated” revenues to match “estimated” expenditures.===
Pesky constitution.
That’s the argument. Meeting the benchmark of the constitutionality, that’s the measure.
Along those same lines, the constitution also talks pensions.
The Supreme Court here in Illinois made clear the provisions necessary about pensions and the state’s obligation.
The bonds are to be paid first. Anyone talking about that?
Anyone discussing the inherent conflict of the plaintiff(s) to bonding issues?
No one is confused that editorial board(s) supported the starving of Illinois, “no budget is fine” was the lines read between the cheers as debt grew. Now board(s) see things different, “fiscal responsibly, no debt” reads the words that but months ago on some of the same pages that worry of debt was missing.
You want changes, 71 and 36. You want the changes made into law, get that signature… oh, it better be constitutional.
It better be able to get thru, it might as well be a full constitutional amendment, so get those votes, or signatures, win at the ballot box, ‘cause if these editorials and phony arguments in court is where your hat rests, you’ll be as angry today as you will possibly be later.
- Cronish - Tuesday, Aug 27, 19 @ 11:31 am:
Illinois needs a new constitution. The current one has ruined the state.
- Oswego Willy - Tuesday, Aug 27, 19 @ 11:39 am:
===Illinois needs a new constitution. The current one has ruined the state.===
When last on the ballot, the choice of a constitutional convention… failed.
- Honeybear - Tuesday, Aug 27, 19 @ 11:41 am:
“Illinois needs a new constitution. The current one has ruined the state.”
IPI has obviously started their propagation program again.
David Koch bequest money?
that was fast.
- A Jack - Tuesday, Aug 27, 19 @ 12:38 pm:
Revenue clause Article IX section 9(f) states that Illinois may issue bonds not secured by revenue, nor required to be paid by revenue, for any legal purposes. I believe that clause makes Tillman’s suit frivolous. Tillman shouldn’t have stopped reading at (b). But then again, the IPI is not known for digging deep into the data.
- RNUG - Tuesday, Aug 27, 19 @ 1:33 pm:
== Who could forget the San Diego situation from 2006? ==
Given how well known the State’s pension problems have been for the past 25 - 30 years, it would be hard to argue lack of disclosure.
Quite frankly, any bond buyer who claims ignorance of the State’s financial problems clearly failed to perform due diligence.
- Demoralized - Tuesday, Aug 27, 19 @ 2:40 pm:
== for already overburdened taxpayers.==
Then leave Phil. The state wouldn’t be any worse off.
- Demoralized - Tuesday, Aug 27, 19 @ 2:44 pm:
==In the long run, that’s good==
Yes, we as a state should strive to not pay our debts. What could be more responsible than that.
Pathetic.
- Rich Miller - Tuesday, Aug 27, 19 @ 2:46 pm:
===Unlike yourself===
I understand it well, and I also understand what’s going on here.
- City Zen - Tuesday, Aug 27, 19 @ 3:30 pm:
==Then leave Phil. The state wouldn’t be any worse off.==
That’s right, Phil. Leave. Why don’t you do
something with your life? Sit around here all day, you contribute nothing to society. You’re just taking up space. How can Illinois be with someone like you? Couldn’t respect ourselves.
(Phil takes his tax dollars with him)
Please. Please. We take it all back, everything. We take it all back, every word. Illinois can’t live without you. We’ll do anything. We love you.
- Da Big Bad Wolf - Tuesday, Aug 27, 19 @ 3:41 pm:
==Please. Please. We take it all back, everything. We take it all back, every word. Illinois can’t live without you. We’ll do anything. We love you.==
Phil can leave or stay, it’s all the same to me. If he leaves someone new will be hired to do his job and somebody new will buy his home and those people will pay taxes too.
- Morty - Tuesday, Aug 27, 19 @ 3:52 pm:
That’s right, Phil. Leave. Why don’t you do
something with your life? Sit around here all day, you contribute nothing to society. You’re just taking up space. How can Illinois be with someone like you? Couldn’t respect ourselves.
And can you take Zen too?
- Anonanonsir - Tuesday, Aug 27, 19 @ 5:14 pm:
CZ has been watching Seinfeld.