Capitol Fax.com - Your Illinois News Radar


Latest Post | Last 10 Posts | Archives


Previous Post: Question of the day
Next Post: Comments closed for a while *** Updated x2 ***

This just in…

Posted in:

* 12:55 pm - Bad news, budgeteers. The state’s investment income is gonna be way down

Like investors everywhere, Illinois is watching its investment income shrink along with the swooning financial markets.

State Treasurer Alexi Giannoulias warned lawmakers today the stock market decline will “trigger a significant reduction in interest income” in the current fiscal year.

Giannoulias said the state probably will collect $38 million to $50 million less in investment income during the 2008 fiscal year, which ends June 30.

Things will get worse next year, when the treasurer expects the state to collect $243 million, at best, from investments. In the last full budget year, Giannoulias’ office made $426 million in investment income. The treasurer’s office invests surplus state funds.


* 1:12 pm -
Big money

Democrat Barack Obama raised $7.2 million in less than 48 hours post Super Tuesday and rival Hillary Rodham Clinton collected $4 million, giving him a financial edge that’s caused consternation within a Clinton campaign clamoring for attention-getting debates.

It emerged yesterday that Clinton loaned her campaign $5 million last month, so it’s probably only a matter of time before some reporters question whether this little deal is somehow connected to that action.

* 1:14 pm -
From a press release…

Governor Blagojevich today announced that more than 50,000 seniors across Illinois have pre-registered to receive free public transportation since he first launched the toll-free hotline and website two weeks ago.

posted by Rich Miller
Thursday, Feb 7, 08 @ 12:55 pm

Comments

  1. Rich:
    Does anyone know as to what % is investment income to the total funds for the state, or where to find the info?

    Comment by Siyotanka Thursday, Feb 7, 08 @ 12:58 pm

  2. This should reign in Blago’s penchant to spend, spend, spend. However, it won’t. Expect another long drawn out spring and summer in Springfield!

    Comment by MOON Thursday, Feb 7, 08 @ 12:59 pm

  3. Steve Schnorf or AA should be able to answer this one.

    I think Giannoulias is referring to “other than state pension investments”.

    Because, if the state pensions are losing money to this degree, and it is on top of what Giannoulias is referring to, we are possibly looking at a few billion dollar hole. Of course, we can always do another pension holiday and kick the can further down the road, which would be 2010 or later in someone’s self interest.

    Comment by Six Degrees of Separation Thursday, Feb 7, 08 @ 1:06 pm

  4. Given this info plus the overall national economic
    picture, dare we hope that the Blago administration will rein in the state hiring, especially the hiring of ever more unqualified hacks into state government. It’s getting harder and harder for us taxpayers to support these
    legions of losers in the style to which they
    have become accustomed.

    Sigh. Probably not.

    Comment by Anonymous Thursday, Feb 7, 08 @ 1:12 pm

  5. To Republicans who have not maxed out their primary contributions:

    Since McCain is now the deifinitive nominee, go here, https://contribute.hillaryclinto
    n.com/form.html?sc=2337, andhelp make this democratic race one to truly remember!

    Comment by Bud Man Thursday, Feb 7, 08 @ 1:18 pm

  6. In the twenty minutes since Capitolfax posted the fundraising story, Obama has raised an additional $400,000, bringing his total to $7.6 million in 31 hours, or $4000 a minute. Geepers.

    Watch the clock roll here, if I can get the link right (you might have to refresh the page).

    Comment by Yellow Dog Democrat Thursday, Feb 7, 08 @ 1:42 pm

  7. Or here.

    Comment by Yellow Dog Democrat Thursday, Feb 7, 08 @ 1:44 pm

  8. I pointed out before Super Tuesday that Clinton was in serious money trouble. Obama had ads up in every state while Clinton advertised only in 12, sure signs she was out of money.

    As the AP story points out, Clinton is now calling for five debates. Some pundits think that this is about trying to nail Obama down on the issues, because Clinton’s team thinks that she’s a better debater.

    Not really. This is about Clinton trying to get national airtime for free that she can’t afford to buy.

    Comment by Yellow Dog Democrat Thursday, Feb 7, 08 @ 1:49 pm

  9. I get the feeling that Bill’s wheeling and dealing will be a huge story before this is over. Dubai, Kazakistan, undisclosed contributors to the library….

    Comment by wordslinger Thursday, Feb 7, 08 @ 2:00 pm

  10. “The treasurer’s office invests surplus state funds.”

    Surplus Funds? Surplus Funds?? What surplus funds???

    We can’t pay our bils, but we’re keeping money in the bank to earn interest?

    Comment by Don't Worry, Be Happy Thursday, Feb 7, 08 @ 2:12 pm

  11. Take a breath. The surplus funds is money that is waiting to be moved around. You can’t take money from some sources and use it for others. Just the way it is.

    Comment by Rich Miller Thursday, Feb 7, 08 @ 2:14 pm

  12. I find it amazing that Illinois, which is something of a wild west when it comes to campaign finance law, has much better disclosure of last-minute infusions of cash. If the Clinton campaign had been operating under Illinois disclosure law, the public would have known that she was self-funding and therefore running out of money before the vote on Tuesday. Interestingly, the federal law DOES require such immediate disclosure for House and Senate races (e.g., Blair Hull) because it triggers an increase in the $2300 individual campaign contribution limit (that’s why Barack and Danny Hynes have lots of $12,000 contributions in the spring of 04). As best I can tell, Presidential races are exempt from both the reporting mechanism AND the trigger that permits increased contributions. The Clinton campaign appears to be exploiting the loophole, and no one would have known about it until April if the $5 million loan hadn’t been leaked.

    Comment by Anon Thursday, Feb 7, 08 @ 2:36 pm

  13. Rich,

    Now that the primary is over, can’t the Capitol Fax be a haven from Presidential news?

    Comment by Choo Thursday, Feb 7, 08 @ 2:41 pm

  14. Good point.

    Comment by Rich Miller Thursday, Feb 7, 08 @ 2:47 pm

  15. Should she become president, could Hillary possibly avoid a major conflict of interest scandal involving Bill’s financial ties with “friends” all over the globe?

    Comment by Vole Thursday, Feb 7, 08 @ 2:56 pm

  16. What’s the beef with B. Clinton’s cash? Kids, we live in a global economy these days. Get used to it. It’s not like Dubai is some back water, middle eastern country with their people living in mud brick huts. It is definitely not North Korea. It’s a city in he UAE. Geez, Dubai is more modern, cosmopolitan and diverse than large US cities.

    Its a nice place to visit, work in and invest in. BTW. There are not a bunch of Borat’s running around.

    Comment by Dirty Bath Water Thursday, Feb 7, 08 @ 3:13 pm

  17. I do not care forwhom the cash register tolls — we are talking about obscene amounts of money with which to campaign.

    Which is another way of saying, the campaign season is too damn long. Time is money spent. Some people call it an exercise of free speech which should not be limited. That is egregious b.s. It effectively keeps people with good ideas but little money out of the races. It keeps the lobbyists and the rich investment bankers, private equity companies and entertainment companies on top of the pile.

    Special interests with huge amounts of cash win every time. The people lose. Cut the campaigns short.

    Comment by Truthful James Thursday, Feb 7, 08 @ 3:38 pm

  18. “What’s the beef with B. Clinton’s cash?”

    There are some serious questions raised about how he has used his influence in helping his friends and what he is getting in return. In case you missed the recent NY Times article:

    “Upon landing on the first stop of a three-country philanthropic tour, the two men were whisked off to share a sumptuous midnight banquet with Kazakhstan’s president, Nursultan A. Nazarbayev, whose 19-year stranglehold on the country has all but quashed political dissent.

    Mr. Nazarbayev walked away from the table with a propaganda coup, after Mr. Clinton expressed enthusiastic support for the Kazakh leader’s bid to head an international organization that monitors elections and supports democracy. Mr. Clinton’s public declaration undercut both American foreign policy and sharp criticism of Kazakhstan’s poor human rights record by, among others, Mr. Clinton’s wife, Senator Hillary Rodham Clinton of New York.

    Within two days, corporate records show that Mr. Giustra also came up a winner when his company signed preliminary agreements giving it the right to buy into three uranium projects controlled by Kazakhstan’s state-owned uranium agency, Kazatomprom.”
    from:
    After Mining Deal, Financier Donated to Clinton
    http://www.nytimes.com/2008/01/31/us/politics/31donor.html?ex
    =1359435600&en=23a4d96223965ebf&ei=5090&partner=rssuserland&emc=
    rss&pagewanted=all

    Comment by Vole Thursday, Feb 7, 08 @ 3:39 pm

  19. I commend the Treasurer for his forthright approach to running his office and not just issuing happy talk press releases.

    Unfortunately, Treasurer’s interest income, in good years or bad, is not a major revenue component of the State budget.

    The Total State Budget for FY07 was around $55 billion and of that, the General Funds group totalled roughly $30 billion. (very roughly-if you’re into detail, visit Comp. Hynes’ excellent Website.)

    Treasurer’s income is therefore about 1 to 1.75 percent of GRF.

    However, in our current environment, that incremental $180 million for FY09 is just one more pressure on the already out-of-balance budget.

    Comment by Arthur Andersen Thursday, Feb 7, 08 @ 3:43 pm

  20. perhaps Obama could come raise money for the Illinois budget. Might be our only hope.

    Comment by LS Thursday, Feb 7, 08 @ 3:59 pm

  21. I heard blago ask how the state could out of money when he still had checks left in the checkbook.

    Comment by Huh? Thursday, Feb 7, 08 @ 4:08 pm

  22. Perhaps Blago could borrow some money from the
    Iraqi billionaire who is helping out Chris Kelley
    via a multimillion dollar loan secured by some
    property Kelley owns. The one Rezko was trying
    to help get un-barred from entering the country.

    I’m sure the billionaire would be happy to buy
    up various pieces of Illinois from our Democratic
    governor and mostly-Democratic legislature to help out. They’ll offer it cheap, no doubt. And those Democrats do love the sound of cash, no matter where it is pouring in from and no matter what they have to do to get it.

    Comment by Anonymous Thursday, Feb 7, 08 @ 4:18 pm

  23. AA-

    Re: my previous question.

    It appears this investment income is separate from the state pension fund investments.

    1. Are they tanking right now?

    2. If they are, how big of a budget hole are they going to blow?

    This is a serious matter which might directly impact some cap’faxers more than the silly national distraction on this thread.

    Comment by Six Degrees of Separation Thursday, Feb 7, 08 @ 4:20 pm

  24. The Pension Fund managers, I think, are separate from the State Treasurer. They need to be queried regarding investment performances.

    What is the current rate of return on the investments?

    In their rush to lock up yields, did they by any of the poola of sub prime mortages put together by the investment bankers and the private equity funds. Even those which were rated AAA have been downgraded by the market, some written down to 30 cents on the dollar. Let us see what they are holding in the way of CDOs and SIVs

    A set of good quwations needs to be asked. I am surprised that nobody has done that yet. But when all parts of the state government are in the hands of one party, perhaps it should be no surprise.

    Comment by Truthful James Thursday, Feb 7, 08 @ 4:26 pm

  25. I don’t understand the governor’s press release about 50,000 seniors registering for free mass transit. There is no such thing except in the la-la land that Blago lives in. The mass transit districts are not registering anyone. And that doesn’t mean that 50,000 people will even use it. There’s just a freebie out there and a toll-free phone number. He’s doing this only for publicity to show how badly help was needed for the senior citizens. It’snothing more than PR for Elvis, plain and simple, and the press is biting. Heck, I might sign up as well, even though I don’t need it and won’t use it. Fitzgerald, can’t you come quickly and put this idiot of a governor and the rest of us out of our misery.

    Comment by Just My Opinion. Thursday, Feb 7, 08 @ 4:30 pm

  26. TJ-

    They are separate, but each year the State Treasurer and Comptroller have to square up with the pensions in order to meet the “catch up” provision of state law. Their “catching up” might require a lot more work this year unless things improve. Well worth looking into.

    Comment by Six Degrees of Separation Thursday, Feb 7, 08 @ 4:31 pm

  27. Six and TJ, good questions. Here’s what I know, which is far from a complete answer:

    1) All the State pensions are totally separate from the Treasurer, although he is a member of the State Board of Investment.

    2) Doug Finke had a very good article about 2 weeks ago (Rich had it posted here) that covered the effect of the credit crunch on the Treasurer, pensions, etc. The ISBI guy said that they were down about 6% in late January; the TRS guy didn’t give numbers, but they have substantially outperformed ISBI over the past few years, as has SURS. All the funds reported as of 12/31 that they were about even or slightly above their 7/1 values.

    3) All the State pension funds have stated, in Finke’s story and in other media reports that they did not hold any material amount of subprime CDOs that have to be written down. If their funds are invested in the broad bond market (Treasuries, Munis, High Quality Corporates, etc, etc.) that bond index is actually up for the FY to date.

    4) The odd State pension funding law really hurts the worst in bad times. Because of the “ramp” feature of the law, investment losses or gains are recognized over the life of the program instead of in a shorter term. Hypothetically, if SURS returned 4% instead of the 8.5% they expect to return over the long term, they may only receive $10-15 million (AA is SWAGging here) in extra State contributions to cover the roughly $700 million they didn’t earn. (The reverse is also true; if they make 12%, the contribution is only reduced a small amount.)

    5) Regardless of this year’s investment performance, the FY09 pension contribution requirement is estimated (I think) to be $600-700 million above last year’s. There’s not a lot of spare change laying around Springfield to cover that tab.

    Perhaps Mr. Auchi would give the State a loan. We could give him Bill as collateral…

    Comment by Arthur Andersen Thursday, Feb 7, 08 @ 5:22 pm

  28. Arthur –

    The CDOs AND the SIVs were tranched out into packages some of which were rated AAA and insured and so on down the line. The Bond Insurers have just been and/or are now getting kneecapped.

    Of the monolines, only MBIA (which brought in $1 Billion in new equity and FSA which got no more than a little toe in this mess are now AAA without negative rating implications. Others are sliding down. Tripple A insured paper now trades at yields above AA uninsured. The blood letting has not stopped.

    Regarding the Finke article, as Reagan said to Gorby — Trust, but verify.

    You will recall that the article was, I believe, pre-election and a lot of the dancing had not yet started.

    This ain’t the New Testament “Blessed are they that never see, but still believe”

    Reagan said it better. The Public deserves to see the investment spreadsheets

    Comment by Truthful James Thursday, Feb 7, 08 @ 6:14 pm

  29. Dirty Bath Water, the issue related to money going to Bill Clinton seems relevant to me.

    Money going to a political campaign gets reported — voters know who is giving — and some sources are limited or restricted. We assume that it is important to know who is giving and how much because then voters can determine who — or what interests — might be influencing a candidate.

    But money going to Bill’s foundation or presidential library is not so reported as far as I can determine. Influence could be exerted indirectly then, and we would not know. This is particularly relevant when you have a situation where a candidate and spouse are quite open about the political inter-relationship: the “Co-Presidency”.

    It is reported that Sen. Clinton made a personal loan to her campaign, but we don’t know if the source of these funds came thru deals laundered thru Bill. May be unfair to question it, but its the Clinton’s who have made “two for the price of one” a campaign issue.

    Sort of like having someone seeking to influence a Governor by paying his realtor wife a lot of money to handle a real estate transaction she really wasn’t much involved in.

    Comment by Cogito Friday, Feb 8, 08 @ 4:19 pm

  30. Rich, since there wasn’t anywhere else to post this, my condolences on your family’s loss.

    Comment by Concerned Voter Friday, Feb 8, 08 @ 4:59 pm

  31. Tell State Treasurer Alex Giannoulias not to worry about the $38-$50 million reduction he anticipates in the way of a shortfall of state investment income for 2008. I have a great idea that will solve Alex’s problem: (Plan A)Since fellow Illinois Democrat Barack Obama seems to have a talent for raising money quickly ($7.2 million in less than 48 hours), let’s have Alex ask Barack to give the taxpayers (from his own state of Illinos) some of Barack’s excess campaign funds that he has collected! Then, Barack can hold several more fundraisers to secure the balance of what is needed to make up for our shortfall. Perhaps, Barack “could go to the well” one last time and ask his buddy, Tony Rezko, to help Barack out with some further “campaign contributions” from his Middle East buddies.

    Or, (Plan “B): Which is where we ask our Governor Rod Blagojevich to make a gift to the Illinois state government and Illinois taxpayers of some of his excess campaign contributions. Rod still has a huge political campaign war chest left over which he should gladly take a little from to give to Alex Giannoulias. If Rod wants to consider this his personal contribution for “giving away” Illinois taxpayer’s money to 50,000 pre-registered seniors for free public transportation, that will be fine, too. He can call it whatever he wants and he can feel free to rationalize why he is making this contribution until his heart is content.The Democrats have always been notorious for playing Robin “from the Hood” so now here is Barack’s and Rod’s chance to “put their money where their mouth is” and show us that “they really do feel our pain”. Come on Barack and Rod, get your wallets out. Show us that you “really care”. Alex will be waiting for your donations. And, since I know that you really care about the people of Illinois, let me extend to you a heartfelt “Thanks” on behalf of myself and the other taxpayers in Illinois.

    Comment by Aaron Slick Sunday, Feb 10, 08 @ 11:52 am

Add a comment

Sorry, comments are closed at this time.

Previous Post: Question of the day
Next Post: Comments closed for a while *** Updated x2 ***


Last 10 posts:

more Posts (Archives)

WordPress Mobile Edition available at alexking.org.

powered by WordPress.