* Media advisory…
Moody’s has placed the State of Illinois’ Baa3 rating on review for possible downgrade.
The review incorporates our expectation that the Illinois House of Representatives will override Governor Rauner’s veto and implement revenue increases as part of the budget proposal. The review will assess the budget plan’s credit implications and address the likelihood of further deterioration in the state’s most pressing credit challenges:
· Pension liabilities (appx. $251 billion in FY ending June 30, 2016)
· Backlog of unpaid bills (appx. $15 billion)
Moody’s places ratings on review when a rating action may be warranted in the near term, but when further information or analysis is needed to reach a decision. A majority of reviews are concluded within 30 to 90 days.
* More…
New York, July 05, 2017 — Summary Rating Rationale
Moody’s Investors Service has placed the general obligation rating of the State of Illinois, currently Baa3, under review for possible downgrade following the state’s failure to fully enact a timely budget for the fiscal year that began July 1, and its failure to achieve broad political consensus on how to move toward balanced financial operations. The review also applies to several related state debt ratings: the Baa3 assigned to sales-tax backed Build Illinois bonds and the Ba1 ratings assigned to Illinois subject-to-appropriation bonds, the convention center bonds issued by the Metropolitan Pier and Exposition Authority and bonds issued under the state’s Civic Center program. Illinois has outstanding debt of about $32 billion, of which 82% is general obligation.
The state’s government in recent days has made legislative progress towards a fiscal recovery plan based on permanent income tax rate increases, after going through two fiscal years without a complete budget in place. The decision to place the state’s ratings under review for downgrade incorporates our expectation that the legislature will implement revenue increases, overriding the governor’s vetoes. The review will provide a limited amount of time for the Illinois General Assembly to finish voting on the measures, and for assessment of the plan’s credit implications. The review process will also address the likelihood of further deterioration in Illinois’ most pressing credit challenges: its severely underfunded pensions and a backlog of unpaid bills, which has doubled during the past year.
Despite the progress toward budget balance that the emerging fiscal plan embodies, the plan entails substantial implementation risk. The governor yesterday vetoed the plan’s revenue, spending and implementation legislation, citing a $2 billion current-year deficit and the plan’s failure to incorporate proposals in areas such as workers compensation insurance reform and caps on local property taxes. The plan’s approval relied almost entirely on Democratic party support in the state’s senate, and a vote to override the governor’s vetoes of the measures has been deferred by the state’s house of representatives. The plan therefore appears to lack broad bipartisan support, which may signal shortcomings in its effectiveness once implemented. In addition, the state’s baseline tax collections declined in fiscal 2017, suggesting that any tax increase may yield less revenue than anticipated in coming months.
So far, the plan appears to lack concrete measures that will materially improve Illinois’ long-term capacity to address its unfunded pension liabilities. A June 30 order from a federal judge that the state accelerate payments owed to Medicaid managed care organizations and service providers cast doubt on the state’s immediate ability to keep up with its statutory pension contribution schedule while also meeting obligations for debt service, payroll and school funding. 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. Moreover, the effectiveness of the state’s strategy to contain and reduce its deferred bills, once the backlog-financing debt has been issued, remains to be seen.
Whew. It never ends.
* By the way, the lead House Democratic budget negotiator Rep. Greg Harris told me this about a recent Tribune story claiming that the bill backlog could be reduced as much as $8 billion…
$6 billion is the total that could be authorized. Currently the revenue available would support $3 billion which could turn to $5 billion if it is used to pay down [federally] matchable Medicaid bills. Should another revenue source become available you could have another $3 billion issuance.
$5 billion is only about a third of the current backlog.
…Adding… Rep. Harris just sent me another text…
There are several other sources to pay down old bills besides bonding. There is $1.2 billion in interfund borrowing, $300 million in limited sweeps, about $800 million in EAF and CHSF and several hundred million from Drug Rebate Fund so the total resources added to the GO bonding would make about $8 billion available for backlog of bills
*** UPDATE 1 *** Just for clarity, I followed up with Moody’s and asked: “So, are you saying that Illinois could still get downgraded even if the House overrides the governor’s vetoes?” The response from Joe Mielenhausen…
Essentially, yes.
We are anticipating that the House will override the veto and the budget plan will be implemented, but essentially 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 – and whether this mitigation will be enough to avoid another downgrade.
*** UPDATE 2 *** House Democratic budget negotiator Rep. Greg Harris…
All 3 rating agencies have been clear that we must override the Governor tomorrow or we could hit junk bond status. Moody says they assume we will override and “….will provide a limited amount of time for the General Assembly to finish voting”. That time will be tomorrow afternoon. Passing a balanced budget is clearly the single most important thing we must do to start stabilizing our State.
159 Comments  
|
Mrs. Rauner’s group urges budget veto override
Wednesday, Jul 5, 2017 - Posted by Rich Miller
* Earlier today, Gov. Rauner told reporters that he would do “everything possible” to stop his budget vetoes from being overridden. He might want to check in with his wife. This press release is from Illinois Action for Children and Mrs. Rauner’s Ounce of Prevention Fund…
Over the long holiday weekend, the Illinois General Assembly worked in a bipartisan manner to end the unprecedented budget impasse, passing a full-year budget for FY2018 and the revenue increases needed to fund that budget. The governor vetoed the bills and the Senate has voted to override that veto. We strongly urge the House of Representatives to now follow the Senate in voting to override the governor’s veto.
The approved budget — the first full-year, fully-funded budget since FY2014 –provides significant funding to early childhood programs including Preschool for All and Prevention Initiative, home visiting programs, the Child Care Assistance Program, and Early Intervention.
We applaud the members of the General Assembly in both parties who took the tough vote to try to end this impasse. We hope the House can take one more important vote to move Illinois forward.
While it will take some time for early childhood programs to rebound from the impasse, with this override, we are relieved that early childhood programs will be able to shift their focus to rebuilding their programs, providing vital services for children and families, and planning for the future of those children and families they serve.
So, apparently, Diana Rauner is a Speaker Madigan “subordinate” and a supporter of our “broken” system.
Man, what a weird state this is.
…Adding… From the Ounce’s Policy Specialist…
Hoo, boy.
49 Comments
|
* Gov. Rauner was asked today what he planned to do to stop his vetoes from being overridden…
Rauner: We are doing everything possible to make sure my veto stands and that it’s not overridden.
Reporter: Like what?
Rauner: Everything possible.
* And he more than implied that the Republicans who broke ranks were tools of the House Speaker. Here’s what he said when he was asked about the Republicans…
You know what? Speaker Madigan and his subordinates should not be working for Wall St. credit agencies, they should be working for the people of Illinois. […]
What we have is a continuing failure by elected officials in Springfield on both sides of the aisle. It’s been led by Speaker Madigan for 35 years. This is more of the same. Our system is broken.
* Asked whether he was concerned that blocking an override would hurt the state’s credit rating…
Rauner: We have to put the peoples’ concerns, what the people need and want ahead of all else. The people should come first in Illinois. Not Wall St., not special interests, not the political class, not the political insiders, not the politicians, not the folks who make money from the government.
Reporter: You don’t think people care about a junk credit rating?
Rauner: What people want is jobs. We need more jobs. What people want is lower property taxes. What people want is a political system that’s not rigged, that’s not dominated by one person, or it’s not corrupt and corroded with special insider deals. People want change, and let’s be clear, this budget is more of the same, this budget and this tax hike is what’s been going on in Illinois for the last 35 years and the system is broken and this tax hike will not fix it.
* More on Wall Street…
Don’t listen to some Wall St. firm. That’s not what matters. Listen to the people of Illinois. It’s their concern, it’s their lives… Don’t listen to Wall St., don’t listen to a bunch of politicians who want power and to stay in power like they’ve been for 35 years. Listen to the people of Illinois. People of Illinois don’t want more taxes on their lives. People of Illinois want more jobs. People of Illinois want property tax relief. People of Illinois want a better future for their kids and their grandkids. People of Illinois want a political system that works for them not for the political insiders. And term limits can help get that done. And the people of Illinois want those things.
He did say at one point that his office has been in frequent contact with credit agencies.
* The governor claimed that he’s been negotiating in good faith for “more than two years.” He claimed Madigan “wanted a crisis” to force a tax hike…
And we have got to stand against it. We’ve to to get the people to realize, Democrats, Republicans, independents, this is not about partisanship. This is about the people coming together, rising up and saying, ‘Enough. No more. No more of this system that Speaker Madigan and his loyalists have been doing to us.’
* He was then told by a reporter that he didn’t sound too concerned about a downgrade…
What I’m concerned about is the people of Illinois, so they have a better future. That’s all that matters. We’ve got to put the interests of the people ahead of all else. That means jobs, more good paying jobs. That means property tax relief. That means term limits. And that means better education funding, more education funding for all schools on an equitable basis. Not a special deal for certain politicians here in Chicago. That’s what that means.
* The Pritzker campaign was there, by the way…
…Adding… Yep…
119 Comments
|
* From this morning’s House quorum call…
Notice that both leaders did not respond to the call.
The House has adjourned until tomorrow at 1:30.
* From the Speaker’s office…
The staff continues to assess members’ schedules so we can afford all the supporters of the bipartisan, compromise balanced budget plan the opportunity to vote on the override motion.
*** UPDATE 1 *** Speaker Madigan’s chief of staff just sent this e-mail to House members…
Session is set for Thurs., July 6 at 1:30 pm to consider SB override motions.
In other words, tomorrow could be the big day.
*** UPDATE 2 *** Press release…
Speaker Michael J. Madigan issued the following statement Wednesday:
“The House will hold a vote on Thursday, July 6 to override the governor’s vetoes of the balanced budget sent to him. House Democrats look forward to working with our colleagues on the other side of the aisle to begin healing the wounds of the last several years.”
74 Comments
|
*** LIVE *** Overtime session coverage
Wednesday, Jul 5, 2017 - Posted by Rich Miller
* The Senate left town after overriding the governor’s vetoes yesterday, the House is in at 10 and Gov. Rauner will talk about the “Impact of Speaker Madigan’s 32% tax hike with Hegewisch community and business leaders” at 1 o’clock. So, watch whatever happens in real time with ScribbleLive…
2 Comments
|
* Here we go…
He has reportedly vetoed the entire budget package.
*** UPDATE 1 *** It won’t be long now…
*** UPDATE 2 *** The veto of SB 9 has been overridden on the same roll call as earlier today.
*** UPDATE 3 *** The BIMP veto has also been overridden.
*** UPDATE 4 *** The veto of SB 6, the approp bill, has been overridden.
95 Comments
|
* Keep in mind that these are Senate bills, so the Senate has to go first, and as of 12:01, the bills aren’t on the governor’s desk according to LIS, but Cullerton’s spokesman said a short while ago that he believed they had been delivered. The Senate Democrats told me they would send them to Rauner as soon as possible.
But, man this could be cutting it close because the markets and the ratings agencies re-open tomorrow morning…
#FacePalm.
*** UPDATE *** They’ve been officially transmitted…
38 Comments
|
* Press release…
JB Pritzker released the following statement following the passage of a bipartisan state budget by the Illinois General Assembly:
“For nearly three years, Bruce Rauner has driven our state into crisis and inflicted pain on tens of thousands of Illinoisans,” said JB Pritzker. “Now, as Republicans and Democrats come together to declare enough is enough and finally pass a budget, for Bruce Rauner, not even the threat of a complete meltdown can get him to do his job.
“Bruce Rauner has no intention of letting this crisis end. As he has for 734 days, Rauner will continue using school children, college students, seniors and people with disabilities as pawns in his game to drive this state to bankruptcy and junk status. Rauner is a one track mind with a single goal of ramming through a special interest agenda that leaves most Illinoisans behind.
“Democrats and Republicans in the General Assembly did their job. And while the damage caused by Bruce Rauner can never be undone, for the sake of our children and families, I hope Governor Rauner will step up and sign the bipartisan budget plan that’s being delivered to his desk.”
So, Pritzker is openly willing to own support for a tax hike. Interesting.
* Biss campaign…
Daniel Biss released the following statement as the House and Senate reached agreement on a budget.
“The House and Senate have agreed on a budget, and sent it to Governor Rauner’s desk. This budget has support from Democrats and Republicans—it’s far from perfect, but it will open schools in the fall, fund vital social services, pay public sector employees, and put our state within the realm of financial solvency. Governor Rauner has committed to veto it.
“Rauner’s obstructionism is nothing new to Senate Democrats, or to the people of Illinois. What is new, however, is that he is losing control of his own party. In response pressure from their constituents, many of my Republican colleagues, including members of both houses, voted in favor of the budget and in defiance of Rauner. This isn’t about political parties or ideological commitments, it’s about doing what is necessary to save our state — and we will be prepared when it becomes necessary to override the Governor’s veto.”
…Adding… Press release…
Ameya Pawar, 47th Ward alderman and Democratic candidate for Illinois governor today issued the following statement in response to Gov. Bruce Rauner’s decision to veto a bipartisan and balanced budget bill that passed both chambers of the Illinois General Assembly:
“Republicans and Democrats in both houses came together this week to pass a responsible budget that protects middle class families and finally puts our state on a steady fiscal path. With his veto, the governor made very clear that he doesn’t care about the future of our state and the hard-working families that make it great.”
“Instead, he is holding our future hostage to achieve two selfish and dangerous goals: to destroy organized labor and the fundamental protections they have won for workers, and to use Chicago schools as a scapegoat now that he’s done paying to clout his own child into the public school of his choice. Today’s actions make it clear that only one person stands between a bankrupt state and a bright future. It’s time for Bruce Rauner to go.”
10 Comments
|
*** UPDATE 1*** Raw audio of Sen. Righter’s media availability thanks to our very good buddy Dave Dahl…
*** UPDATE 2*** Righter said he’s had several conversations over the past several day which helped him come to the conclusion that a “Yes” vote was the right vote…
“This state has to start balancing its budgets. That is the first and most important thing. Every dollar that we throw on to the backlog of bills is a dollar that the next generation has to pay for even though we got to spend it. That’s simply wrong.” […]
“Obviously, I am elected and work for the people of the 55th Senate District and that’s who made the call today.” […]
Righter said the impasse has been “very harmful” for EIU and the “university system as a whole.”
“In the end you vote your district, and my district told me to vote for this package.”
Asked what people should cut from their household budgets to pay for the tax hike, Righter said, “Everyone’s gotta balance their budget at home.”
Righter said he spoke to the governor’s office and Leader Brady and “both were very respectful” of how he was planning to vote.
“Today, I represented my district,” he said at the end.
[ *** End Of Update *** ]
* So, why did Republican Sen. Dale Righter break with the governor and vote for a tax hike, budget and BIMP bills? His local Eastern Illinois University president worked him…
17 Comments
|
* The Senate approved SB 9, the revenue bill, on a vote of 36-18.
Senate Republican Leader Bill Brady asked for more time to negotiate. But the bill’s sponsor, Sen. Toi Hutchinson, replied “We don’t have any more time. We know we don’t.”
“We are faced with the fierce urgency of now,” Hutchinson said. “We don’t have any more time.”
Hutchinson claimed the package before the Senate was the result of two years of bipartisan talks and a “lot of give and take.”
“It is time to be the independent legislature the framers demanded,” Hutchinson said, urging her colleagues to show they are members of a “co-equal branch,” which was a clear dig at Gov. Rauner.
…Adding… Sen. Dale Righter, a Republican, voted for the bill. Democratic Sens. Tom Cullerton and Julie Morrison voted against the tax hike.
…Adding More… Roll call…
*** UPDATE 1 *** The Senate has approved SB 6, the omnibus appropriations bill with 39 votes. It should’ve had 40, but Sen. Martinez said her button wasn’t working. Roll call…
Republican Sens. Anderson, Fowler, McCann and Righter voted for the bill.
*** UPDATE 2 *** The budget implementation bill passed 36-17 without any debate at all.
…Adding… The Tribune’s headline writer strikes again…
* Illinois Senate approves major income tax hike despite Rauner veto threat
60 Comments
|
Madigan accused of breaking deal
Tuesday, Jul 4, 2017 - Posted by Rich Miller
* Tina Sfondeles at the Sun-Times…
Madigan told reporters that Republican leaders skipped out on a leaders meeting on Monday afternoon but said he will continue to work with Republican leaders about changes to workers’ compensation and a property tax freeze.
While he described Republican support for the income tax as a show of resistance against Rauner, Republican leaders believe Democrats abandoned the negotiating process by moving forward with the votes. Illinois Republican Leader Jim Durkin’s office confirmed he wouldn’t attend a leaders meeting on Tuesday.
At issue are some of the requests made during negotiations. Durkin’s office contends Democrats asked for a “good faith” vote from Republicans on the spending plan, which they came through with last week, and an assurance they would help to override the governor’s veto of a bill which, in part, authorizes phone carriers to pay out 911 centers.
Both of those happened, yet Madigan — despite ongoing negotiations on reforms — moved forward with votes.
Good points. But 15 of Durkin’s own members broke ranks to support the tax hike. They clearly saw different writing on the Statehouse walls.
…Adding… From comments…
Also, the day before, when Madigan announced his plans to not hold votes on Saturday and Sunday, Durkin went to the floor to excoriate Madigan for not getting a budget package to the floor that very day. And then the House GOP applauded Durkin wildly, and one GOP member even heckled the Speaker.
So Madigan called his bluff.
Don’t gamble unless you are willing to have your bet called. Durkin has no leg to stand on here.
* Meanwhile, the Republican leaders have stopped talking…
“We worked with Republicans today on those issues; we’ll continue to work with the Republicans on those issues until they’re resolved,” Madigan said.
Republicans appear unconvinced. Rauner spokeswoman Catherine Kelly said the speaker is “clearly trying to distract from his 32 percent permanent tax hike.” Spokeswomen for Senate Minority Leader Bill Brady and House Minority Leader Jim Durkin would not say why the two men didn’t attend Monday’s meeting, but Durkin’s office said he would not attend Tuesday. Brady’s spokeswoman indicated without all leaders attending, Brady won’t either.
The absences raised questions in Cullerton’s mind about where negotiations, particularly on the tangential Rauner demands, stand.
“We have to do something,” Cullerton said. “The House has acted but we’d prefer to do it in agreement with Republicans.”
27 Comments
|
* From The Southern…
Southern Illinois University System President Randy Dunn, according to a spokesman, called the vote by Bryant and the other 14 Republicans a “heroic stand” in the midst of a historic political standoff. Bryant said she’s also received words of encouragement and thanks from regional school superintendents, health care providers and others. […]
Southern Illinois’ economy is more vulnerable to the effects of the ongoing impasse than other regions because large percentages of people are employed by the state — at prisons, mental health facilities, and public aid, driver services and other government offices — or by entities that are directly supported by state funding, including hospitals, social service agencies, universities and community colleges and K-12 schools, she said. […]
Bryant and the others who supported the bill, “stood up not just for SIU, but the entire Southern Illinois region,” Charles added.
Dunn also thanked Rep. Brandon Phelps, D-Harrisburg, who joined with the majority of Democrats voting in favor of Senate Bill 9. The bill would raise the personal income tax from 3.75 percent to 4.95 percent, and the corporate income tax from 5.25 percent to 7 percent.
It’s about time that a university president finally stepped up on this. Their institutions are on the verge of death. They need to speak out.
Also, where’s AFSCME been? Where’s SEIU? Where are the trade unions that rely on road construction work?
The groups that are against a tax hike have ginned up an intense social media firestorm. But the groups which rely on government have stayed mostly mum.
* Both of the teachers’ unions have announced support for the tax hike, however. This is from the Illinois Federation of Teachers President Dan Montgomery…
“Last night, we breathed a sigh of relief as a bipartisan supermajority of lawmakers found a way out of our state’s two-year budget crisis. As we prepare to celebrate the 4th of July, it finally felt like we had gained independence from Governor Rauner’s political threats and radical agenda that lowers taxes on the wealthy while working families struggle.
Of course, it didn’t last long.
The Governor’s pledge to veto this strong, bipartisan agreement and worsen the damage is deplorable. Five universities have reached junk bond status. The state owes more than $1 billion to our K-12 schools and $15 billion to businesses who have provided goods and services expecting to be paid. Social services are shuttered.
But Governor Rauner couldn’t care less, because he’s never wanted resolution.
He said he would happily shut down government and create a crisis for leverage to enact his agenda. And while claiming to negotiate in good faith, he spent millions of dollars on political ads attacking those with whom he was supposed to be working.
On behalf of more than 100,000 educators, staff, and public employees across Illinois, we want to thank lawmakers for doing the right thing, particularly the fifteen House Republicans who courageously stood up to Bruce Rauner who would rather see Illinois crumble than prosper.
We urge the Senate to follow the example of their House colleagues and vote for this bipartisan revenue and spending plan, and when approved, we urge Governor Rauner to end this madness and sign the bills immediately.”
* I had to go to the IEA’s website to find this blog post generically titled “Illinois House moves forward on budget plan”…
Tonight, the Illinois House of Representatives took a major step toward stabilizing the financial crisis Illinois has been in for more than two budget-less years.
We thank the members of the House for taking this step to vote on a full and balanced budget – especially those Republicans who saw the dire circumstances our education systems in this state were facing – and stepped up to support them.
We urge the Senate to concur with this budget plan and we strongly urge Gov. Bruce Rauner to sign it.
“From the preschool student learning to write his name and add his numbers to the university student planning her future career, this budget bill gives our state hope,” said IEA President Cinda Klickna.
“Education and the state of Illinois are too important to be allowed to crash and burn. Thank you for finding common ground for the good of us all.”
But there is no “action alert” about this issue on the union’s website.
*** UPDATE *** Shortly after the Senate’s votes today, the U of I sent this to legislators…
We are grateful to the legislators who voted to support the budget that provides funding for the second half of FY17 and for the full year of FY18. This financial support is crucial to ensure the continued excellence of the University of Illinois System, which enrolls more than 81,000 students and plays a key role as an engine of progress for our state. We hope the lessons learned during this long and difficult impasse will help to restore long-term stability and provide predictable funding year after year so we can plan our future and expand our impact on the public good. We urge the governor to sign the legislation.
Thank you!
Jennifer M. Creasey
Director State Relations
Office of Government Relations
* Related…
* Loss of Accreditation Could Cost Colleges Billions
* State Budget Crisis Eliminates Funding For Holiday Traffic Enforcement
* Layoffs begin as state road construction shuts down
65 Comments
|
|
Support CapitolFax.com
Visit our advertisers...
 
...............
...............
...............
...............
...............
...............
|
   
|
Hosted by MCS |
SUBSCRIBE to Capitol Fax |
Advertise Here |
Mobile Version |
Contact Rich Miller
|
