A sea of red ink
Wednesday, Aug 5, 2020 - Posted by Rich Miller
* Peter Hancock at Capitol News Illinois…
Illinois Comptroller Susana Mendoza is adding her voice to those warning that the state will face dire consequences if the federal government does not approve an economic aid package for state and local governments. […]
Mendoza, a Democrat who has served as comptroller since December 2016, noted that the state began the fiscal year on July 1 with a backlog of past-due bills totaling nearly $5.4 billion. But that was only because the state borrowed $1.2 billion from the Federal Reserve’s Municipal Liquidity Facility – money that has to be paid back in its entirety, with 3.52-percent interest, during the current fiscal year that ends June 30, 2021.
She also noted that the state has borrowed another $400 million from the state treasurer’s office and the state’s general revenue fund still owes about $763 million that it borrowed from other funds in previous years, which has to be repaid in installments through 2024.
She said the total amount due in the current fiscal year between borrowing from the Fed, the treasurer’s office and interfund borrowing is $1.63 billion.
* House GOP Leader Jim Durkin spoke at an online Paul Simon Public Policy Institute event yesterday…
Durkin faulted Pritzker and majority Democrats for pushing ahead on a new state budget that relies on $5 billion in borrowing from the Federal Reserve while lacking significant spending cuts to reflect the economy’s decline due to the pandemic.
“We should not have spent at that level the governor asked for, plain and simple. You don’t ask for more spending when you are in an economic downturn, and that is my biggest fault with the governor and how he’s handled the economics of the state during this crisis,” he said.
“I’m not sure how we’re going to repay that $5 billion that was taken out unless the feds come back and bail us out on that, but I don’t expect that anytime soon,” Durkin said, reflecting deadlocked talks between congressional Democrats and Republicans on a new coronavirus relief package.
Borrowing that money was a gigantic risk on the governor’s part. No doubt about it. But economic downturns are precisely when government spending is so important. We found that out the hard way during the Great Recession when inadequate federal aid to states and cities made the economic problems worse.
So, hopefully the leader has called his congressional allies and asked them to help out his state. Maybe the governor could pick up the phone and ask him.
- GregN - Wednesday, Aug 5, 20 @ 1:55 pm:
Durkin will NEVER ask the R Congress critters to help IL.
Much better for them to see the state in financial trouble, even if it hurts their own constituents. That’s the Trump playbook too.
Just hoping that Pritzker is right, that R govs are demanding fed relief too.
- Oswego Willy - Wednesday, Aug 5, 20 @ 2:00 pm:
The Raunerites wanted the state to collapse to destroy unions.
Right now, the same Raunerites complain about masks, conspiracies, closed schools, and are enjoying the state imploding?
Durkin could decide working with Pritzker and the CongressCritters to help with an influx of monies that would’ve helped during The Great Recession… that would be bipartisan leadership on all.
We’ll see.
- Norseman - Wednesday, Aug 5, 20 @ 2:06 pm:
=== … hopefully the leader has called his congressional allies and asked them to help … ===
The problem is that when it comes to helping the state, he is not a leader. The congressmen from his cult will only help him spread propaganda on behalf of the cult. Sadly, even if Durkin wanted to help, he is useless when it comes to any influence where it matters- the Senate.
- Amalia - Wednesday, Aug 5, 20 @ 2:09 pm:
Interested to hear about government furloughs. This is what they did in Europe to avoid axing staff. everybody suffers a bit so nobody suffers completely.
- AD - Wednesday, Aug 5, 20 @ 2:15 pm:
Amalia, furloughs just don’t help as much as people believe they do. While salary goes down, the liabilities of employees health insurance and pensions remain the same unless an employee is in their last 4 years of service for tier 1. Also may lead to OT at agencies that require 24/7 coverage.
- Lucky Pierre - Wednesday, Aug 5, 20 @ 2:17 pm:
The Democrats refuse to reform the biggest driver of the State of Illinois fiscal problems because they care more about special interest public sector unions than the collapsing finances of the state.
The Harmon letter makes clear what their priorities are
- Last Bull Moose - Wednesday, Aug 5, 20 @ 2:20 pm:
The Feds should step up, but probably won’t.
Cuts required to balance the budget would not just cut fat, or even muscle. It would require amputation.
- AD - Wednesday, Aug 5, 20 @ 2:27 pm:
LBM, just like in certain life threatening instances, amputation of a body part is required to save someone’s life. In this case, that State should likely amputate some programs, agencies, divisions, staff, etc. to save the State’s finances. It’s absolutely terrible, but an analogy that may fit what is needed.
- Oswego Willy - Wednesday, Aug 5, 20 @ 2:33 pm:
=== just like in certain life threatening instances, amputation of a body part is required to save someone’s life. In this case, that State should likely amputate some programs, agencies, divisions, staff, etc. to save the State’s finances===
No Chicago Governor is going to agree to close a downstate state university.
Show your 60/30 and a governor willing to something like close WIU.
I mean, Bryant might want SIU closed, but…
=== The Harmon letter…===
… was truly sad and hubris and someone lacking the acumen of learning to stay in his/her lane.
If Harmon wants to be governor, Harmon should run for Governor.
Also, Rauner shoulda got his own 60/30 if - Lucky Pierre - you feel change was necessary, but Rauner chose Ken Dunkin to block things, not the cobbling all governors need to change policy or agencies.
The rest? The rest is whining and forgetting;
Winners. Make. Policy,
- Really - Wednesday, Aug 5, 20 @ 2:39 pm:
“Winners. Make. Policy.”
Yep. In Illinois, bad policy.
Tax, spend, borrow, spend. Rinse. Repeat.
Last in out turn off the lights.
- RNUG - Wednesday, Aug 5, 20 @ 2:39 pm:
== The Democrats refuse to reform the biggest driver of the State of Illinois fiscal problems because they care more about special interest public sector unions than the collapsing finances of the state. ==
-LP-, we’ve been down that road, and the courts have spoken. Plus there was reform passed going forward … you just don’t like it.
- RNUG - Wednesday, Aug 5, 20 @ 2:41 pm:
Nothing wrong with State officials asking for more Federal money. The State taxpayers contribute more to the Federal Treasury than they get back.
- Oswego Willy - Wednesday, Aug 5, 20 @ 2:42 pm:
=== Tax, spend, borrow, spend. Rinse. Repeat.
Last in out turn off the lights.===
Is that you, John Kass? Statehouse Chick? Rauner?
“Tax, spend, borrow, spend. Rinse. Repeat.
Last in out turn off the lights.”
Welp… here’s the recipe. Ready?
Win elections. Same as it ever was.
Then?
60/30, signature.
Rauner never learned it.
Now, turn off your lights. Send a postcard.
- City Zen - Wednesday, Aug 5, 20 @ 2:42 pm:
==a backlog of past-due bills totaling nearly $5.4 billion. But that was only because the state borrowed $1.2 billion==
Unless the state paid off that $6 bond issued a couple years ago, the actual bill for past-due bills is closer to $12 billion.
- RNUG - Wednesday, Aug 5, 20 @ 2:44 pm:
== economic downturns are precisely when government spending is so important ==
Rich is 100% correct. Had Illinois gone the budget cut route instead of borrowing, the State response to the pandemic would have been much more limited; there would have been no room for state level relief efforts.
- Leigh John-Ella - Wednesday, Aug 5, 20 @ 2:52 pm:
What’s Durkin want to cut? Fowler’s Cairo port money? IEPA funding? IDOC staff at the prisons in all his members’ districts?
- Downstate - Wednesday, Aug 5, 20 @ 3:07 pm:
“Only when the tide rolls out do you discover who’s been swimming naked.” Warren Buffet
Three options:
1. Borrow more
2. Tax more
3. Spend less
And those are certainties even if the tax increase gets passed.
The tax increase is akin to your child asking for a loan on a new car, because his current vehicle was damaged by the fact that he never changed the oil or fixed the damaged radiator. That’s not the person you entrust with more resources.
- AD - Wednesday, Aug 5, 20 @ 3:07 pm:
OW- universities may not close, but they may need to be more focused on fields that prepare people for success in life in careers that are in demand. There’s tough choices that have to be made in which programs survive. It won’t be pretty even if the fair tax proposal passes.
- Grandson of Man - Wednesday, Aug 5, 20 @ 3:13 pm:
“I’m not sure how we’re going to repay that $5 billion that was taken out”
Where was the worry when the previous governor hijacked the budget and exploded debt? We need ILGOP leaders to advocate strongly for big financial assistance from the federal government.
One thing for sure: the GOP is not the party of fiscal responsibility, not in Illinois or nationally. We know all too well that Rauner and his party deliberately damaged our finances. For the GOP and Trump, who’s had multiple bankruptcies, to call Illinois out by name over financial mismanagement is the pinnacle of hypocrisy. National deficits exploded and debt grew by $6 trillion under Trump and the GOP.
- Downstate - Wednesday, Aug 5, 20 @ 3:29 pm:
“Where was the worry when the previous governor hijacked the budget and exploded debt?”
Yes, Illinois had no fiscal problems until Rauner came along. /s/
And how exactly did he upend the Chicago Police Pension fund…likely the first pension fund in the state to go belly up.
- Demoralized - Wednesday, Aug 5, 20 @ 3:32 pm:
==The Democrats refuse to reform==
That’s funny. Because they did reform it. It’s called Tier II. But, as rnug said, you and your ilk want pensions taken away from people. That’s your end goal. Unfortunately for you the Constitution doesn’t allow that. And for whatever reason your small brain hasn’t been able to comprehend that.
- Lucky Pierre - Wednesday, Aug 5, 20 @ 4:00 pm:
you and your ilk want pensions taken away from people. That’s your end goal.
Perhaps you missed the significant pension reform passed by the super majority Democratic Senate that was ignored by Speaker Madigan and House Democrats and now Governor Pritzker
- Downstate - Wednesday, Aug 5, 20 @ 4:02 pm:
“Because they did reform it. It’s called Tier II”
Tier II reform was a short term band aid (mostly window dressing) for purposes of bonding. The next bite at that apple will come with significantly greater pain.
Don’t get me wrong, Tier 2 reduced the bleeding….a little. But stemming the flow of the aorta by 20% doesn’t mean the wound still isn’t fatal.
- thoughts matter - Wednesday, Aug 5, 20 @ 4:11 pm:
== The Democrats refuse to reform==
As others have said, Tier 2 was reform.
We could eliminate the pension for employees first hired after some future date. Of course, the state would have to immediately cough up money to put social security taxes for positions that aren’t now. The state would have to offer matching contributions into deferred compensation, which it doesn’t now. The state not paying into the pension fund caused a lot of problems in the first place.
In addition, since these employees would not be paying into the pension fund, those graphs that Rich posted a couple day’s ago would look even worse.
- Demoralized - Wednesday, Aug 5, 20 @ 4:29 pm:
==Perhaps you missed the significant pension reform passed==
And again, perhaps you missed the signficant pension reform that was Tier II.
And you’re not really good at understanding what the courts have said about pensions are you?
- Demoralized - Wednesday, Aug 5, 20 @ 4:31 pm:
==Tier 2 reduced the bleeding….a little==
Tier 2 stopped the bleeding and more for new employees. It’s a horrible plan. What the “pension reformers” want is pensions taken away from current members, which isn’t possible. I’m not sure how many different ways the Court can say it.
- Downstate - Wednesday, Aug 5, 20 @ 4:37 pm:
“Tier 2 stopped the bleeding and more for new employees”
Sure. But the gaping hole is with Tier 1 employees.
If Tier 2 is a horrible plan, what would you suggest as a solution? I’m earnest in my question.
- AD - Wednesday, Aug 5, 20 @ 5:31 pm:
For everyone thinking the millionaire tax is the answer, go listen to Andrew Cuomo’s recent press conference. His question is not how do we keep millionaires and billionaires from leaving, it’s how do we get them back. The Governor can do as he wishes, but has to be very careful what he wishes for. None of them rich will be staying around for the Chicago winters.
- low level - Wednesday, Aug 5, 20 @ 6:08 pm:
“hopefully the leader has called his congressional allies and asked them to help out his state”. LOLOLOL.
That said, AD’s point is well taken. Gov Cuomo’s comments were kind of sad to be honest. Man….
- Last Bull Moose - Wednesday, Aug 5, 20 @ 6:11 pm:
I think we will have a Federal solution on January 21, 2021.
- Oswego Willy - Wednesday, Aug 5, 20 @ 8:22 pm:
=== Perhaps you missed the significant pension reform passed by the super majority Democratic Senate that was ignored by Speaker Madigan and House Democrats and now Governor Pritzker===
Show your 60/71 votes.
You can’t. Until you do…
- Oswego Willy - Wednesday, Aug 5, 20 @ 8:24 pm:
=== Yes, Illinois had no fiscal problems until Rauner came along. /s/===
Red Herring.
How many other governors only signed ONE budget in FOUR years… to purposely hurt Illinois.
Yeah, that’s not snark
- Oswego Willy - Wednesday, Aug 5, 20 @ 8:26 pm:
=== universities may not close===
They won’t close. No Governor (except Rauner) looks at closing universities as a positive.
Governors open universities, not close them.
I have my Lincoln University system on the record to what I see could occur.
That and $5.75 will get a cup of coffee, but changes are going to need to occur.
- Rabid - Thursday, Aug 6, 20 @ 9:09 am:
That’ the Illinois GOP platform, the turnaround agenda? Where is your new platform you were rolling out this summer?