* S&P looks at the governor’s budget, but won’t yet evaluate its credit rating, so the question it asks isn’t really answered…
S&P Global Ratings acknowledges that this is only a budget proposal and there is uncertainty about the pace of economic recovery and prospects for additional federal stimulus. Future credit direction will be evaluated as greater clarity is available on these key issues.
* Key takeaways…
- Although Illinois ‘proposed fiscal 2022 general fund operating budget is slightly smaller than the previous year’s proposal, and balanced in terms of current-year obligations, we do not view it as structurally balanced due to the treatment of pension obligations.
- Pension contributions are budgeted to fully meet increasing statutorily set amounts but are still less than actuarially determined amounts.
- The state expects to close fiscal 2021 with a small surplus, after prepaying the next fiscal year’s municipal liquidity fund’s debt service.
- Illinois has a bill backlog, limiting flexibility, but this is markedly reduced from this time last year.
- The COVID-19 pandemic continues to affect state economic activity with unemployment through December 2020 above the national average, with 2021 activity improving employment conditions.
* Potential risks…
Federal uncertainty: The budget does not rely on additional federal aid, but educational enhancements and further efforts to retire MLF borrowing obligations early could be aided by further stimulus. Should additional aid materialize, the state could adjust budget expectations.
Pensions remain a high fixed cost: Included in the budget is $9.4 billion for general fund contributions to the state’s various pension systems. This is a $739 million increase over the previous budget contribution. The statutory contributions are forecast to continue to increase, but the state projects its share of the budget will remain at about 25% of expenditures through 2045.
Challenge in changing tax structure: The fiscal 2022 budget relies on changing business tax provisions to generate an estimated $932 million in additional revenues. Legislative scrutiny of the tax-structure proposal could limit change and revenue projections.
Prolonged economic disruption: Outside the timing of vaccine distributions, any long-term permanent changes in business, travel, or consumer patterns in and around Chicago will likely have a material effect on the state’s economic recovery.
* Capital program debt…
We view Illinois’ general obligation (GO) debt burden positively. With more than 75% of GO debt retired in 10 years and the state in the third year of a long-term $45 billion Rebuild Illinois capital improvement plan, it is expected to maintain debt ratios at similar levels. As of Feb. 1, 2021, the state has $27.2 billion of fixed-rate GO debt outstanding and $2.845 billion of GO MLF debt, equating to debt per capita of about $2,375, which we consider moderate.
*** UPDATE *** Something weird is going on. Check out this press release, which doesn’t seem to be written by the same people who wrote the actual report…
Illinois’ Proposed Fiscal 2022 Budget Could Signal The State Is Turning The Corner, Report Says
BOSTON (S&P Global Ratings) Feb. 25, 2021—The Illinois governor’s proposed fiscal 2022 general fund operating budget could be a small step toward putting the state on firmer financial footing, S&P Global Ratings said today in a report titled “Is Fiscal Stabilization On The Horizon For Illinois?”.
The $41.7 billion general fund budget is slightly smaller than the initial $42 billion budget proposed last year before the COVID-19 pandemic began, and $1.8 billion or 4.2% less than the estimated final spend in fiscal 2021. The introduced budget is designed to generate a $120 million surplus.
However, the state still faces fiscal challenges, including a significant bill backlog, underfunded pension plans, and the ongoing effects of the pandemic.
“Although Illinois’ proposed fiscal 2022 general fund operating budget is slightly smaller than the previous year’s proposal, and balanced in terms of current-year obligations, we do not view it as structurally balanced due to the treatment of pension obligations,” said S&P Global Ratings credit analyst Geoff Buswick.
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* Background is here if you need it. ILGOP press release…
ICYMI: Speaker Welch’s first priority is a tax hike
Just one month into the job, new Speaker of the House Chris Welch has proposed that Illinois Democrats should try again to pass a constitutional amendment implementing a progressive income tax.
Chicago Tribune…
“We have to tell the voters what we’re going to do with that money,” Welch said during a virtual event hosted by the Economic Club of Chicago. “I certainly think tying that new revenue to pensions would be a winner.”
ILGOP Spokesman Joe Hackler responded, saying, “What the new Speaker doesn’t understand is that the people of Illinois did not reject the Madigan-Pritzker tax hike amendment because they were confused on what the revenue would be used for. They rejected the tax hike amendment because new revenue would be sent to Springfield to be squandered by the same corrupt politicians and Democratic party that got us into this financial crisis in the first place.”
Speaker Welch’s ill-conceived proposal not only shows a lack of judgment, but it also reveals his true priority: paying off those inside state government while the rest of us pick up the tab.
As more and more former elected officials and insiders are indicted as part of former Speaker Madigan’s corruption scheme (including just last night), Democrats in Springfield continue to plead for more money. The reality is that the Madigan-Pritzker tax hike amendment was defeated overwhelmingly last year because Illinoisans don’t trust the corrupt insider system that has controlled state government for years.
Sometimes, it takes a while before new leaders fully appreciate how every word they say will be examined and even twisted. Welch never said it was his first priority, for instance, but he walked right into this.
Even so, the ILGOP appears to prefer magic fairy dust to actual solutions. “Just make it go away and never bother us again” is not a constitutional option here.
*** UPDATE *** Sean Anderson on behalf of Speaker Welch…
As usual on this subject, Illinois Republicans have nothing constructive to offer because their only solution is to cut programs and services for underserved populations and communities of color. They can send their little press releases to play petty politics, but the Speaker is focused on having serious conversations to find solutions that benefit working class people across the state.
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* The Democratic committeepersons of the 22nd House District appointed Angie Guerrero Cuellar to the open seat this morning without debate. Cuellar was supported by Ald. Silvana Tabares at Sunday’s meeting. 13th Ward Democratic Committeeperson Mike Madigan announced yesterday he would also be supporting her after the abrupt resignation of his own candidate, three-day apppointed state Rep. Ed Kodatt. After the meeting, Madigan spoke briefly with reporters…
Q: Was it a lack of vetting?
A: The events developed as they developed. The action of the committee taken on Sunday was nullified because of the resignation, creating a vacancy, and so today we fill the vacancy. I don’t plan to speak to background questions. I don’t plan to speak to the background questions.
Q: You’re normally very meticulous…
A: I think that proper questions were asked, proper questions were asked.
Q: Proper questions were asked or weren’t?
A: They were, the answer is yes. As I said, the events developed, Mr. Kodatt resigned creating the vacancy, today we filled the vacancy. I’m interested in moving forward with Angie Guerrero Cuellar. She’s been anchored in the community. As you can read from her resume, she’s worked with various community organizations in the Southwest Side of Chicago. Therefore, she’s had good experience and understanding of the needs and the desires of the people of the Southwest Side.
Q: People have a certain social media life that some of us older folks don’t. Is that something you’ve neglected to look at, their social media and what might have been evident had his name been put out there ahead of time, a little more vetting.
A: His name was put out in advance like everybody else. It was a complete circulation of resumes. Every resume that was submitted…
Q: That morning. It wasn’t until that morning. It wasn’t enough time for folks to really take a look at who he was.
Q: So, when you say questions were asked, does that mean the answers were not true.
A: See, I’m not going to get into that. I’m just not going to speak about…
Q: When did you first learn about the…
A: A little bit ago. A little bit ago.
Q: Was it after he was named, though?
A: Yes.
Q: People like Pritzker and Sen. Durbin, they blame you for the failure of the Fair Tax or Democrats have a disappointing election day…
A: I’m not going there. I’m not going there. I’m not going there.
Q: Why not?
A: Because I don’t want to?
Q: Is what happened to Mr. Kodatt another manifestation of the cancel culture? Are you concerned about that?
A: What culture?
Q: Cancel culture.
A: Uh-huh. Really. [Looks puzzled at the question.]
Q: The new chairman is going to be selected. Do you have a preference of who that would be?
A: You know what, I’m anxious to move out of here and wish all of you a good day. [Walks away.]
Subscribers know more about why and how the questions were asked and what happened after they were asked.
Cuellar is a resident of the 13th Ward.
…Adding… Bill Wheelhouse recently wrote about his experience covering Madigan at the Statehouse…
He appeared unflappable. I never witnessed a heated exchange with a reporter. He might make a wry comment about a news outlet with a smile on his face. At most, his anger might lead him to ignore a question. He was honest in answering the questions he did answer, but what would sound like a good answer to a question, was, upon further reflection, often an answer that could be interpreted more than one way, which made it hard to determine if he flipped on an issue or was dishonest. […]
One evening, I was lucky enough to catch Madigan alone walking back to his office, asking about some controversial legislation. It was an adversarial but polite exchange. He kept walking at the same pace. He was not trying to run away like many others seem to do when questioned by a reporter. Yet he never directly answered the question. We got to his office door, and he calmly, matter-of-factly, shut it in my face. That is what it was like to cover Madigan.
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* Greg Hinz…
Illinois lawmakers probably ought to take another whack at passing a graduated income tax amendment but should specifically tie much of the proceeds to paying off old pension debt.
That was the suggestion today from the new speaker of the Illinois House, Emanuel “Chris” Welch, as he came under strong questioning [during a webcast event hosted by the Economic Club of Chicago] about how the state should handle $144 billion in unfunded pension liability for state workers and educators. […]
Welch did not say what share of a new amendment should be promised to pensions. But he did predict that given the state’s fiscal problems, the income tax issue isn’t going to disappear.
“If we don’t change (the current flat tax) . . . we’re going to be talking about this in another five years,” Welch said. Adopting a graduated tax like most other states have is “one of the structural changes we need.”
I reached out to Welch’s spokesperson Sean Anderson, who said the House Speaker was “simply highlighting the unfairness” of the state’s tax system and that Welch “doesn’t think anything should be taken off the table.”
Asked if Welch was prepared to move legislation this spring, Anderson said “I think he’s prepared to have a conversation with his caucus and with the governor on the best way to move forward, given the budget, given the deficit.”
Considering that the Fair Tax seemed to drive Republican turnout last year and that many House Democrats were actively running away from it by the fall, I’m thinking they’re gonna need a much different approach than last time, if this is actually anything beyond some public spitballing during a webcast. Tying it to debt might help, I suppose, but people would rather pay for things they can touch and fixing past mistakes by throwing money at them is never an easy sell. And maybe applying it to annual income over a million dollars could work, too. Madigan put an advisory referendum on the ballot to do just that back in the day and it got a lot of votes.
Thoughts?
*** UPDATE *** I asked Jordan Abudayyeh for a response…
The Governor believes the fair tax was the best option for addressing the state’s long term structural challenges, but for this year he looks forward to working with the General Assembly to pass a balanced budget that lifts up working families who have suffered amid this pandemic and that continues to rebuild our economy.
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* Daily Herald headline…
Cronin: DuPage’s vaccine allotment ‘completely and totally inadequate’
* Scroll way down in the story…
As of Monday, state data showed the DuPage health department held a vaccine inventory of 3,120 doses, while providers had 45,487. The county overall had a total inventory of 28,386 doses available for use in the first week of the month.
“Like every state in the country, Illinois receives limited doses from the federal government, so it’s imperative that every single dose coming to the state is used as quickly as possible,” Gov. J.B. Pritzker’s spokeswoman Jordan Abudayyeh said. “DuPage County currently has three times more doses on hand than other collar counties.”
Abudayyeh said, “IDPH has urged local health departments with large numbers of vaccine doses on hand, like DuPage County, to reach out to providers to express a sense of urgency and provide support so any backlog can be administered as soon as possible.”
“As the state’s allocation is expected to increase in coming weeks,” she said, “it is vital that county health departments get a handle on their inventory and operations so they can manage the next phases of vaccine rollout efficiently and vaccine is not sitting on shelves in their community.”
It’s actually a few thousand less than that because of a coding error that put Copley in DuPage. But click here for the spreadsheet and you’ll see where the doses are sitting.
The county needs to tell its provider partners to get a move-on or they’re taking the doses back before the state steps in and does just that. DuPage has plenty of vaccines, but they’re deflecting blame on others when the problem is in their own back yard.
*** UPDATE *** Tribune…
Illinois expects to begin administering an average of 100,000 doses per day by mid-March, Gov. J.B. Pritzker said after touring a vaccination site in West Peoria on Wednesday. He said the increase is based on “public commitments from the White House and from vaccine manufacturers.” […]
With the Food and Drug Administration’s decision on Johnson & Johnson’s single-dose vaccine moving forward this week, the governor added that an approval of the third vaccine would result in a 20% increase in the state’s incoming vaccine supply by the end of March.
The FDA on Wednesday confirmed the J&J vaccine, which is 66% effective at preventing moderate to severe COVID-19, compared with Pfizer’s 95% and Moderna’s 94.1%.
In terms of preventing death and severe illness, all three vaccines are 100% effective, Monica Hendrickson, public health administrator for the Peoria County Health Department, said Wednesday.
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* Exelon press release…
Exelon Corp. (Nasdaq: EXC) today announced its Board of Directors has approved a plan to separate Exelon Utilities (RemainCo), comprised of the company’s six regulated electric and gas utilities, and Exelon Generation (SpinCo), its competitive power generation and customer-facing energy businesses into two publicly traded companies with the resources necessary to best serve customers and sustain long-term investment and operating excellence. The separation gives each company the financial and strategic independence to focus on its specific customer needs, while executing its core business strategy. […]
SpinCo will operate the nation’s largest fleet of carbon-free nuclear power plants, which produced 150 million megawatt hours of electricity last year – enough to power 13.6 million homes and avoid more than 106 million metric tons of carbon emissions. The company also operates approximately 12,000 megawatts of hydroelectric, wind, solar, natural gas and oil generation assets, which provide a mix of baseload, intermediate and peak power generation. These characteristics make SpinCo uniquely positioned to advance the nation’s clean energy strategy and priorities.
To maintain the generation fleet’s legacy of safety, operational excellence and financial stewardship, the company will retire uneconomic assets that negatively affect its ability to provide a reliable source of clean power to tens of millions of American homes and businesses.
So, the fight over closing Illinois nuke plants will continue.
* Crain’s…
Approvals are needed from the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission and New York’s utility regulators. Illinois, where Exelon is based, will have no official say.
Exelon has faced calls from consumer advocates and others for years that it ought to split its regulated utilities like Commonwealth Edison from its unregulated power plants like the nuclear stations in Illinois.
…Adding… Illinois PIRG Director Abe Scarr…
Exelon’s ownership of ComEd has created long-standing conflicts of interests and Illinois consumers have suffered as a result.. Separating Exelon’s generation assets from its regulated utilities is good news for ComEd’s customers and the public. At the same time, Illinois policymakers should recognize that conflicts persist and take action to address them.
Every year, Exelon bills hundreds of millions of dollars of services to ComEd, a subsidiary it controls, a subsidiary which can fully recover those costs from its captured customers. Illinois policy has so far failed to adequately recognize, much less mitigate, the numerous potential conflicts inherent in this relationship.
The Illinois General Assembly has the opportunity this spring to begin undoing the policy harms of the ComEd bribery scandal. That means winning restitution for ComEd customers, restoring effective utility regulation by ending automatic rate hikes through formula rates, and reforming utility political influence by no longer allowing utilities to charge their customers for charitable contributions. Addressing the conflicts of interest that persist beyond an Exelon breakup should remain on the General Assembly’s agenda.
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* Tribune…
Former state legislator Daniel Biss declared victory Tuesday in the election for Evanston mayor.
Meanwhile, incumbents appeared to have held off primary challenges in Waukegan and North Chicago, according to unofficial totals.
In a speech to supporters over Zoom just after 9 p.m., Biss claimed victory in the three-candidate race.
“I of course want to thank the community of Evanston for this remarkable victory,” Biss said.
He received nearly 74 percent of the vote that’s been counted so far in the three-way race. Gov. Pritzker endorsed Biss, which probably didn’t matter much but it did prompt this quote…
Biss’ challengers are Evanston resident and grassroots activist Lori Keenan and 2018 Evanston Township High School graduate Sebastian Nalls. Last Sunday, Evanston Fight for Black Lives published a statement on Facebook endorsing Nalls.
Nalls responded in a statement Thursday that Pritzker’s endorsement of Biss showed “desperation.”
* Southtown…
Results for the Democratic primary election for Calumet City mayor were unclear Tuesday, according to unofficial results.
State Rep. Thaddeus Jones, D-Calumet City, had recently been returned to the ballot to challenge incumbent Mayor Michelle Markiewicz-Qualkinbush, who is seeking a fifth term.
With all 24 precincts reporting, the Cook County clerk’s election website showed Markiewicz-Qualkinbush had 100% of the vote but no totals for Jones.
The Cook County Clerk’s site says 3,029 ballots were cast. Qualkinbush received 1,374.
Anything else out there you’ve seen?
*** UPDATE *** The Illinois Supreme Court ordered the results suppressed yesterday because the other side asked it to take up the appellate court decision that restored Jones to the ballot. So, while Rep. Jones is declaring victory today, it’s up to the top court to decide whether he was on the ballot legally to begin with…
The results of the elections in Calumet City are clear, I have won the Democratic Nomination to become the First African American Mayor in the 120-year history of Calumet City! I want to thank the voters of Calumet City for believing in me and for wanting a new direction for Calumet City. I want to thank my family and friends for their loyalty and support. My wife Saprina and sons Thaddeus Jr and Preston Jones. I also want to thank Speaker Chris Welch, Senator Napoleon Harris and Rep Rita Mayfield who played a enormous part in this election. Today, it is time to get to work on behalf of all residents of Calumet City.” Jones received an estimated 1655 (54%) votes out of the 3,029 ballots cast and the Mayor received 1,374 votes. Jones will be having a zoom announcement at 10:30am today.
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[Bumped up to Wednesday from Tuesday night for visibility.]
* I’ve been working on a story about newly appointed state Rep. Ed Kodatt (D-Chicago) since yesterday. This is from 13th Ward Democratic Committeeman Michael Madigan and 13th Ward Ald. Marty Quinn…
“After learning of alleged questionable conduct by Mr. Kodatt, it was suggested that he resign as state representative for the 22nd District. We are committed to a zero tolerance policy in the workplace.”
There’s some question about whether a resignation was properly filed today.
Anyway, the guy replaced the longest-serving House Speaker in history for what may be the briefest period in history.
*** UPDATE 1 *** The House’s website now lists Kodatt as having resigned.
*** UPDATE 2 *** Madigan says he will back Angelica Guerrero Cuellar this time around. She was supported by Ald. Silvana Tabares last Sunday. Ald. Tabares, you will recall, refused to make the appointment vote unanimous…
13th Ward Committeeman Michael J. Madigan issued the following statement on the process to select the next representative of the 22nd Illinois House District:
“After a fair and robust process on Sunday, we are prepared to proceed with selecting a replacement for the 22nd District Illinois House seat from the pool of candidates who already presented to the selection committee. I believe the most equitable way to proceed is to nominate the candidate who received the second-highest vote count. It is my intention to nominate Angelica Guerrero Cuellar.”
WHO:
Committee members
Michael J. Madigan (13)
Rep. Aaron Ortiz (14)
Ald. Derrick G. Curtis (18)
Ald. Silvana Tabares (23)
Vince Cainkar (Stickney)
WHERE:
Balzekas Museum ballroom
6500 S. Pulaski Rd.
2nd Fl.
Chicago, IL 60629
WHEN:
Thursday, Feb. 25
10 a.m.
Doors will open at 9:30 a.m.
Due to COVID restrictions set by the Centers for Disease Control and the Illinois Department of Public Health, in-person seating will be limited.
*** UPDATE 3 *** Food for thought…
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