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* Mark Brown warns of the coming junk bond rating for Illinois if nothing is done to end this impasse…
With junk-rated Chicago Public Schools now paying the state’s legal maximum of 9 percent interest on a portion of the borrowing it has relied on to keep the doors open, the school system’s options for further fiscal juggling keep shrinking.
Sadly, that’s always been what this fight was about: whether Rauner could leverage the worsening financial problems of the city’s schools to win political concessions from the Democrats who control the Legislature before the state’s own problems caught up with him.
The resulting impasse has wreaked havoc on the state’s universities and social service delivery system. But, as bad as things have been, they’re on the verge of getting even worse. […]
The state’s falling bond rating, coupled with its long-running structural deficit, are causing problems for governments across Illinois.
“This negative contagion means all cities, counties, school districts and universities throughout the state see lower ratings and higher borrowing costs,” John Miller, managing director of Nuveen Asset Management, told a legislative committee last month.
This so-called “Illinois penalty” is costing those governments an estimated $930 million a year in added debt service, Miller said.
And it’s only going to get much worse if the state falls further.
* Related…
* AP: Illinois could be 1st state with ‘junk’ credit due to budget
posted by Rich Miller
Saturday, Jun 24, 17 @ 11:23 am
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“This negative contagion means all cities, counties, school districts and universities throughout the state see lower ratings and higher borrowing costs,” John Miller, managing director of Nuveen Asset Management, told a legislative committee last month.”
I don’t think people understand how bad the junk ratings will affect our schools & local communities.
Comment by Mama Saturday, Jun 24, 17 @ 11:43 am
If a local governments finances are such that it *has* to borrow to meet ongoing, day to day operations, it already has a problem. Taking on debt is a useful tool, not a mandatory requirement.
Comment by RF Guy Saturday, Jun 24, 17 @ 11:54 am
Rauner’s buddies will make millions off the higher interest rates.
Comment by DuPage Saturday, Jun 24, 17 @ 12:01 pm
The ultimate confidence man scam, the mark is the taxpayer, I’m here fight for you as govenor junk, while my financial buddy pick you pocket
Comment by Rabid Saturday, Jun 24, 17 @ 12:04 pm
If I was a Billionaire I could see risking $100,000,000 on 9% state of Illinois bonds when the state can’t file bankruptcy. But….
Comment by Slippin' Jimmy Saturday, Jun 24, 17 @ 12:15 pm
“This so-called “Illinois penalty” is costing those governments an estimated $930 million a year in added debt service, Miller said.”
As Laurence Msall said the other day, it’s like taking a billion dollars and lighting it on fire. Astonishing that this is what we’ve become. I didn’t vote for him, but thought he’d be a pragmatic deal maker. Never have I been so wrong about a politician in my life.
Comment by Chicago Cynic Saturday, Jun 24, 17 @ 12:40 pm
==This so-called “Illinois penalty” is costing those governments an estimated $930 million a year in added debt service==
Yes, but that’s money desperately needed for Rauner and Griffin’s financier friends! I shudder to think that they could only vacation on the Riviera, and not also take a Tuscany trip!
Comment by Precinct Captain Saturday, Jun 24, 17 @ 1:20 pm
$100 ,000,000 for the governorship, $100,000,000,000 annual return priceless
Comment by Rabid Saturday, Jun 24, 17 @ 1:38 pm
Rauner and Madigan seem to prefer that Illinois slip into junk status.
Both of these men have the power to stop this but for some reason, are allowing this to happen.
Bankruptcies and closure shocks are headed our way.
Makes you wonder why you still live here?
Comment by cdog Saturday, Jun 24, 17 @ 1:44 pm
Mutually Assured Destruction….
Comment by TinyDancer(FKASue) Saturday, Jun 24, 17 @ 2:10 pm
–This so-called “Illinois penalty” is costing those governments an estimated $930 million a year in added debt service, Miller said.–
Sorry, took the bread off the table. Hope you like juice.
Yeah, but what about those hundreds of manufacturers that the governor has lined up? He’s going to Austin first…. to get all those manufacturers…. in Austin. Remember?
Are you goin’ to believe him or your lyin’ eyes?
Comment by wordslinger Saturday, Jun 24, 17 @ 2:36 pm
Start watching at 1:00 min
https://www.youtube.com/watch?v=61XUb28jkUI
Comment by the Cardinal Saturday, Jun 24, 17 @ 9:37 pm