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*** UPDATED x2 *** The problem is escalating very fast: Backlog to grow to $23 billion

Wednesday, Jun 7, 2017 - Posted by Rich Miller

* From an e-mail sent by the Commission on Government Forecasting and Accountability to Rep. Dave McSweeney…

See attached requested update of FY’17/18 estimated deficits. As shown, the FY17 estimated deficit is approx. $6.249 billion. It includes updated spending figures published in the Gov’s FY’18 budget book. We then updated the resource section with CGFA’s last official forecast of March 2017.

Similarly, updated FY’18 spending under the “maintenance” scenario per the Budget Book was combined with CGFA’s revenue estimate to yield a FY’18 deficit of $7.651 billion. When that figure is added to the Comptroller’s reported likely $15-16 billion end of FY’17 owed bills projection—the total end of FY’18 unpaid bills would approach $23 billion.

Click here for the attachment.

* Back in 2016, GOMB’s forecast for the unpaid bill backlog by the end of Fiscal Year 2018 was $19.9 billion. It’s been a widely used number ever since then. But COGFA’s new projection is a $22.7 billion mountain of bill backlogs by June of 2018 - almost $3 billion higher.

We weren’t supposed to hit a backlog like that until sometime in the spring of 2019.

To give you an illustration of how bad this is, if they don’t pass a real budget, then by the end of June, 2018 our unpaid bill backlog will equal 73 percent of state revenue collections.

*** UPDATE 1 *** Ugh…

cause there hasn't been enough bad news…Univ of Ill and Illinois State University Debt Ratings Lowered Following Downgrade to state.

— yvette shields (@Yvette_BB) June 7, 2017

* And…

Odds are greater than even that Illinois debt officially will be rated junk—and soon—if lawmakers do not resolve an impasse with Gov. Bruce Rauner and enact a new budget by the beginning of the state’s new fiscal year on July 1.

That was the word from S&P Global Ratings today as the New York financial firm turned up the pressure another notch in a political feud that shows no sign of breaking soon.

In a call with reporters, analysts at S&P, which on June 1 moved state debt to just one level above junk, said that without a budget, the state’s rating could drop more than one notch.

“We think (a further downgrade) is above one in two likelihood around the time” the fiscal year 2018 begins on July 1, said Gabriel Petek, a managing director and sector leader for the firm. “This situation definitely is moving quickly if they don’t have a budget.”

Passing a temporary stop-gap budget—something Rauner has vowed to veto without Democratic concessions—”would be helpful” if only because it would provide cash to some programs and units that now are totally without help. It also “might result in us having a less than one notch” downgrade. But without new revenue, too, “the fiscal situation could continue to erode,” he added.

*** UPDATE 2 *** Pritzker campaign…

“Bruce Rauner is stumbling from crisis to crisis as Illinois families pay the price for his failed leadership,” said JB Pritzker. “Rauner ran for office attacking the previous governor for downgrades and promising a turnaround. But all we’ve gotten under Rauner’s failed leadership is eight downgrades so far and ratings agencies essentially promising that there will be more. These agencies are confirming what so many Illinois families already know: Bruce Rauner’s manufactured budget crisis has wrecked our state’s economy. S&P, Moody’s, and Illinoisans across the state have had enough. We need a real leader in Springfield who can pass a budget and clean up Rauner’s fiscal mess.”

* Related…

* Press release: Social Workers Call For End To Stop-Gap Budgets

60 Comments

*** UPDATED x1 *** Open thread

Wednesday, Jun 7, 2017 - Posted by Rich Miller

* Oscar got a haircut today, so I have to go get him and will be back a bit later. Here’s a pic from the other day…

He loves that spot.

Stick to Illinois issues and be nice to each other. Thanks.

*** UPDATE *** Here’s the “after” pic…

33 Comments

*** UPDATED x1 *** Hays says things are brewing behind the scenes

Wednesday, Jun 7, 2017 - Posted by Rich Miller

* As we’ve already discussed, Rep. Chad Hays (R-Catlin) led the mini revolt that passed a 911 emergency call center fee hike last month. He talked to Tom Kacich…

“I came to the conclusion that my constituents weren’t that concerned with the amount that the people of Chicago paid and if Chicago legislators were comfortable with that amount, fine,” Hays said. “But what I was not willing to do was go home and tell my own constituents that when you dial 911 and on the other end of the line it says that this has been disconnected and people ask, ‘Why did this happen?’ I was totally uncomfortable with saying that the mayor of Chicago and the governor are in a wrestling match over something peripheral to your 911 service.” […]

“I suspect that with this subject matter, if the governor chooses to veto the bill, he will be overridden,” Hays declared.

The problem comes if Rauner chooses to use his amendatory veto powers and then Speaker Madigan does his usual thing and rules it out of compliance with the Constitution and the bill dies from inaction.

* Hays also talked about if that template could be used to break the impasse…

“In the House, it’s very difficult to get anything passed that the speaker doesn’t at least allow for a vote. That’s the inherent problem with the rules of engagement in the House of Representatives, that the speaker of the House has the rules screwed down so tight that if he doesn’t want to run a bill, it doesn’t run,” Hays said. “So going over the head of the speaker in the House of Representatives and doing what you just darn well please whether he likes it or not is nearly impossible. […]

But Hays insisted that “there are budget talks going on as we speak behind the scenes” and “people talking to ascertain if there is a deal to be made.”

“If that is the case,” he added, “I think you’ll be seeing some more concrete proposals coming in the next couple of days.”

Hays said again he’s prepared to vote to raise taxes and cut spending as part of a budget deal.

If anybody can get this done from the ground up it’s gonna be people like Chad Hays. There aren’t many of them in the House, but you takes what you can gets.

*** UPDATE *** I just talked to Rep. Hays, who said that while people are holding discussions to see if there’s a pathway to ending this impasse, he didn’t mean to imply that something was imminent.

* Related…

* Kansas legislature overrides Brownback’s veto of bill that rolls back his 2012 tax cuts: Lawmakers marshaled together a coalition of moderate Republicans, conservatives and Democrats to overcome the governor’s opposition to seeing his landmark tax cuts, which have in large part come to define his tenure in Topeka, fundamentally come to an end.

* Illinois owes billions to suburban non-profits, companies, government agencies: In the suburbs, that adds up to $2.2 billion owed to more than 5,100 health care providers, local government agencies, small businesses and other state vendors… The amount is roughly 15 percent of the $14.7 billion the state owes all vendors. Chicago-based vendors are owed close to $5.6 billion, according to the comptroller’s figures.

26 Comments

*** UPDATED x1 *** Trib probe finds poorer areas pay higher property taxes

Wednesday, Jun 7, 2017 - Posted by Rich Miller

* Jason Grotto…

From North Lawndale and Little Village to Calumet City and Melrose Park, residents in working-class neighborhoods were more likely to receive property tax bills that assumed their homes were worth more than their true market value, the Tribune found.

Meanwhile, many living in the county’s wealthier and mostly white communities — including Winnetka, Glencoe, Lakeview and the Gold Coast — caught a break because property taxes weren’t based on the full value of their homes.

As a result, people living in poorer areas tended to pay more in taxes as a percentage of their home’s value than residents in more affluent communities. Known as the effective tax rate, the percentage should be roughly the same for everyone living in a single taxing district.

But the Tribune’s analysis shows the rates became skewed in favor of wealthier residents.

*** UPDATE *** ILGOP…

“What the Chicago Tribune has revealed today is nothing less than an illicit enterprise that runs right through the Speaker’s office. The Chicago political machine has manufactured a property tax system designed to punish the poor and extort millions from taxpayers for their own benefit. Democratic candidates for Governor – J.B. Pritzker and Chris Kennedy – have profited from this corrupt system. They all have some explaining to do.” – Illinois Republican Party Spokesman Steven Yaffe

A bombshell three-part series released by the Chicago Tribune this morning documents how the Chicago political machine – Mike Madigan, Joe Berrios, and others involved in the property tax appeals business – have manufactured a property tax system that targets the poor and puts millions in their own pockets.

Some Key Highlights:

Cook County Assessor Joseph Berrios has “resisted reforms and ignored industry standards”, creating a “staggering pattern of inequality.”
Berrios, whose “strongest allies” include Mike Madigan and Ald. Edward Burke, has “raised more than $5 million since 2009, more than have of which came from property tax attorneys and businesses associated with them” in his capacity as chairman of the Cook County Democratic Party.
“Some of the state’s most influential political families have been tied to the office or the industry of tax attorneys that has grown up around it; Madigan, Burke, Hynes and Cullerton are among the most prominent.”
They have created “a property tax system that harmed the poor and helped the rich.”
The Assessor’s office “would not say” what methodology is used to determine valuation adjustments.
Property tax appeals lawyer’s fees – lawyers like Mike Madigan and those used by J.B. Pritzker to get massive breaks on his “uninhabitable” mansion – have soared to $35 million per year.
The wealthy are able to get huge tax breaks through the appeals process and loopholes like those that claim properties are not inhabitable.

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