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Moody’s analyst issues warning about state budget

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Illinois

* Sound budgetary advice from Moody’s…

“The question is what progress will the state make, if any, in breaking out of those long-running challenges?” Moody’s Investors Service analyst Ted Hampton said in a phone interview. He added that the outcome of the budget process will be more significant than when the process ends.

In other words, don’t pop the champagne if the GA wraps up by May 31st. Moody’s and other raters will likely care more about what’s actually in the budget. And Illinois is just two clicks above junk bond status, so it won’t take much.

* And speaking of which…

Gov. Bruce Rauner froze automatic compounding pay hikes for around 14,000 members of the American Federation of State, County and Municipal Employees Council 31 in 2015, saying lawmakers never appropriated the money. Now, a court order is due later this year that could make all that due at once.

Records obtained by the Illinois News Network via a Freedom of Information Act request show Rauner’s office estimates it will cost $412 million for just the four years of higher pay if the state is forced to pay all of the past years’ frozen step increases in the fiscal 2019 budget.

In 2015, the cost of the raises was $38.7 million, but that balloons to more than $170 million by the coming fiscal year. […]

The state’s fiscal 2018 budget is on the hook for the cost of about 1,400 applications from Medicaid for seniors in nursing homes that never got processed. That’s $311 million for nursing homes, [Rep. Greg Harris, D-Chicago] said. This bill, Harris said, combined with a supplemental spending request for the Department of Corrections totals up to $1.8 billion lawmakers still need to fund.

* And then there’s this…

Using recently revised criteria, Fitch on Friday downgraded by five notches the rating on $2.5 billion of Build Illinois sales tax revenue bonds to A-minus. The firm cited too big a spread between the debt’s previous AA-plus rating and the state’s GO rating of BBB with a negative outlook.

That downgrade was clearly a warning shot.

* More sound advice from Doug Finke…

The recurrent theme of this year’s budget negotiations is optimism, as in optimistic that there will be a successful outcome.

It’s worth remembering, though, that a hiccup before a budget is passed used to be a regular occurrence before the chaos of the past couple of years. It was something of a routine at the Capitol that a budget would be negotiated and then presented in private briefings to the individual caucuses. Almost inevitably, the deal would blow up somewhere that appeared to jeopardize the budget. Some further tinkering would be done, the revised agreement would be sold to lawmakers and a budget approved.

So even if something crops up this week, it’s not necessary reason to panic.

* So, does this WGN Radio headline indicate a problem ahead or just a minor speed bump?…

Deputy Majority Leader of the IL House Lou Lang: “I don’t expect the Governor to sign the budget”

Probably the latter.

* What about this from a Tribune story entitled “A focal point in governor’s race, Quincy veterans home now part of budget talks”?…

“In his budget address that he came out with … (he) said, ‘I’m going to fix everything for $50 million,’ ” said state Sen. Tom Cullerton, D-Villa Park, the chairman of the Senate Veterans Affairs Committee. “We’re going to get it fixed and done. Now, all of a sudden, ‘I’m going to need $245 million?’ ”

Tom Cullerton said the state would actually need to come up with $85 million because federal funding through the Department of Veterans Affairs would pay another $160 million. But lawmakers must still authorize the entire amount.

Democrats want assurances of the federal funding and that provides another way for them to go after Rauner, who avoids speaking about the White House and President Donald Trump.

“We need a letter from the president that says, ‘After speaking with your governor I am going to expedite that $160 million that you need because it’s important that our veterans stop dying and that it’s important that our veterans and their families stop getting sick,’ ” Tom Cullerton said. “If the governor can’t make that phone call, then I don’t know what else to say.”

Likely more show biz.

* Related…

* As budget deadline looms, business community worries federal tax benefits could be targeted by state lawmakers: One budget leader, state Sen. Heather Steans, D-Chicago, said budget details are coming together. “We’ve been meeting very regularly and we continue to really narrow the gap,” Steans said Friday. “It’s very close now. I think there’s a real path to having an agreed budget and it’s feeling that way.”

* Final countdown: Area lawmakers hopeful for budget in last days of session: State Sen. Andy Manar, a Democrat from Bunker Hill and one of the budget negotiators in the Senate, is cautious to go into much detail about the state of negotiations, but did say the talks have been more bipartisan than in recent years. “I want to say, I have found that this year that my Republican colleagues in the legislature and the Democrats have come together in a good faith effort to do what we can to forge compromise,” Manar said. “There are many, many … outstanding issues that we have to deal with, but I’m confident the process we have put in place is going to continue. And my hope is we can present a budget that is representative of compromise.”

* Local Legislators Remain Optimistic State Budget Will Pass Before Deadline Next Week: Republican Sen. Sue Rezin of Morris, whose district also covers parts of the WSPY listening area, is also hopeful about a full budget being passed.

posted by Rich Miller
Monday, May 28, 18 @ 11:54 am

Comments

BTIA strikes again! These mopes need to stay out of government.

Comment by El Conquistador Monday, May 28, 18 @ 1:31 pm
IDOC ruling highlights how hard it is to cut spending. The State must meet constitutional standards. And IDOC has little or no federal money with strings attached.

Most human services programs have federal money and federal requirements. Cutting costs is extremely difficult without losing the federal money.

Comment by Last Bull Moose Monday, May 28, 18 @ 5:43 pm
No a court order is not due later this year
We won in court
We won the appeal
We won Period
Legal options are over for Rauner
He illegally withheld pay
Period
It’s before the labor board to figure out how
to pay it to us.
That infuriates me.
Rauner stole over 10,000 dollars from me.
That was negotiated in 2011.
He unilaterally illegally withheld it.
The courts agreed

Comment by Honeybear Monday, May 28, 18 @ 8:16 pm