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* An entrance fee for state parks shouldn’t be surprising, since Gov. Blagojevich has never been to a state park…
Gov. Rod Blagojevich’s proposed budget could target everyone from people who use state parks to big businesses.
Although the final touches are still being made to the governor’s latest spending proposal, officials acknowledge they’ve considered imposing entrance fees at state parks as a way to balance the budget in tough financial times.
Word’s going around that the new budget could eliminate nearly all General Revenue Funding for the Dept. of Natural Resources. More at Illinoize.
* Also, there’s bad news on the capital bill front…
State officials haven’t approved a major capital construction plan since 1999, the first year of former Gov. George Ryan’s administration.
Whether they pull it off this year — amid continuing, maybe growing, acrimony in Springfield — is anybody’s guess. But even if they manage to clear their political obstacles, they may an emerging financial one. As Stateline.org reports, bonding — the type of borrowing the state must do to support a capital plan — is getting more expensive.
And here’s the Stateline story…
The problem isn’t with cities or states issuing the securities but with the insurance carriers that promise to pay interest and principal on municipal bonds in the unlikely event that states or local governments default. In recent years, the insurance carriers also began guaranteeing securities based on car loans, commercial real-estate deals, credit card debt and mortgages, including subprime loans that are now defaulting.
The bad loans are threatening to cause securities ratings firms such as Moody’s Investors Service, Fitch Ratings Ltd. and Standard & Poor’s to drop the credit rating of the insurers, which in turn would drop the credit rating of bonds they insure.
A ratings drop would drive up costs for state and local governments, forcing them to pay higher interest rates to borrow, or could keep investors away in a time of tight credit.
The story has numerous examples of failed bond sales, including this one…
The Port Authority of New York and New Jersey, which operates the region’s airports and runs the World Trade Center, got a rude shock this week when it tried to get buyers for a special type of bond whose rate is set at frequent auctions. They found no takers.
Bottom line: Even if there is an agreement on expanding gaming to pay for a capital bill, there might be a big problem selling the bonds.
* More budget stuff, compiled by Kevin…
* Blagojevich. Budget. Brick wall. Bang head
* Tribune: ‘My fellow deadbeats . . . ‘
* The danger in big promises
* Lawmakers face budget puzzle
* Budget cuts threaten Pilcher programs
* Local officials say politics aren’t in our favor
* Andy McKenna: Talk of change, but not much walk
posted by Rich Miller
Tuesday, Feb 19, 08 @ 11:33 am
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They should just do a capital program without selling bonds.
Find some regular revenue source for it…
Kind of as - pay as you go kinda deal?
Comment by j Tuesday, Feb 19, 08 @ 11:35 am
Why can’t the state increase the cost of products being shipped out of state (out of country), such as corn, meat, etc? Why not increase the tax of those companies who export their biz out of state (country)?
Sorry if this is a naive question, Rich.
Comment by anon Tuesday, Feb 19, 08 @ 11:46 am
===Why can’t the state increase the cost of products being shipped out of state (out of country), such as corn, meat, etc? Why not increase the tax of those companies who export their biz out of state (country)?===
I think that would violate the interstate commerce clause.
Comment by Rich Miller Tuesday, Feb 19, 08 @ 11:49 am
Rich-
Good to mention the bond point. There are several Illinois entities that had auctions fail last week. The result is that they have to pay around 15% for the week, and then again if the auction again fails. That’s around 5x more than usual.
Comment by Greg Tuesday, Feb 19, 08 @ 12:00 pm
“Word’s going around that the new budget could eliminate nearly all General Revenue Funding for the Dept. of Natural Resources.”
I’m almost surprised that the word going around is not that Blago wants to sell off state parks. The guy has no use for DNR.
The entrance fee idea which has been passed around to some degree prior, is not such a bad idea, but it not workable at some sites. I have visited parks in Indiana where they do this and had no problem paying to enter a park, spend the day. And I can see some of are larger parks doing the same. But I have real fears until I hear Rod’s plans as to the plots and plans he has for DNR in this budget. Sites are having to jump through hoops to get the basic maint. needs now.
Comment by Princeville Tuesday, Feb 19, 08 @ 12:11 pm
Great Sunday editorial in the Trib…” My Fellow Deadbeats”. I’m not a wagering man but I would be willing to wager a tidy sum that if Blagojevich took the approach suggested in the editorial his points would go up double digits. The people of Illinois want the fighting to stop and the debt to stop growing. Rod…Mike…Tom…Frank and Emil….FIX IT!
Comment by downhereforyears Tuesday, Feb 19, 08 @ 12:12 pm
Regarding the Andy McKenna column-
What kind of change is McKenna bringing about? The party has no money, no field operation, it’s just kind of “there” to say there’s a Republican Party in Illinois.
Comment by Centrino Tuesday, Feb 19, 08 @ 12:33 pm
A user fee at state parks would be sad, indeed.
But maybe it would wake people up to the fact that we’re spending so much of our state’s general funds on individual entitlements that we don’t have money left to provide these basic general services anymore.
Comment by grand old partisan Tuesday, Feb 19, 08 @ 12:38 pm
GOP,
A free state park is not a basic general service. Given the state of many state parks, privatization would probably be a great improvement over the status quo.
Comment by Bill Tuesday, Feb 19, 08 @ 12:51 pm
So are we to surmise that the guv’s new Bogeyman for this budget speech will be DNR ? We all know he can’t resist putting forth some perceived evil target to divert the blame for Illinois’ mess from himself. DNR doesn’t seem big enough for the needed diversion - maybe he could use the collar states as the evildoers.
Comment by A Citizen Tuesday, Feb 19, 08 @ 12:53 pm
I don’t have a problem with fees for state parks if it would lead Illinois to have some sort of commitment to parks other than Starved Rock. I buy Wisconsin and Michigan stickers every year to take advantage of their wonderful state park systems.
The muni credit squeeze is troubling, but I’d be against the feds insuring munis. Lot of weird projects backed by wacky muni paper out there.
Comment by wordslinger Tuesday, Feb 19, 08 @ 1:16 pm
Bill, privatization is not the solution.
Look no further than local parks, which in Illinois are very well maintained and very heavily used. Compared to other states, this occurs because the form of local government called a park district has enough resources to serve the community. Parks look nice and are safe, and the public comes out and uses them.
Parks look bad and are unsafe…the public stays away. Pretty simple concept really.
Privatization of DNR sites would not improve DNR parks, it would only result in the private owner getting a profit for something that you enjoyed at a lower cost before.
Is that how the Governor plans to “rock the system”? Put a profit in some guys pocket?
Comment by Mongo Tuesday, Feb 19, 08 @ 1:28 pm
Rich - that might be a good contest:
What do you think the Governor is going to announce?
Or a poll on whether the state park fees and carbon tax will be in there?
My bet? GRT.
Comment by j Tuesday, Feb 19, 08 @ 1:38 pm
Perhaps, Bill, if they would fund DNR instead of cutting them back and back the parks would be in better shape. What do you expect when budgets are cut and staff is not replaced?
Many moons ago when my family first came to this area and my husband began the task of developing a bike trail, he got a gun in the face from a property land owner. Did he run and hide? No, learned their trust got down in ditches and culverts with the owners and drank coffee on off mornings with them and learned their concerns verses the sites need/wants. Not many privates going to take the time and effort/knowledge to do that. He’s back through a transfer up more north now, but for those twelve years, my house was the point where all hikers/bikers brought there whines/concerns/problems to there was no office help and noone around after hours. I hope the privates are up to that kind of service to their visitors.
Comment by Princeville Tuesday, Feb 19, 08 @ 1:39 pm
This year you let Rod charge fees for park use, next year he’ll sweep them into GRF as “excess funds”. He won’t care because deer and fish don’t vote or contribute to campaigns.
DNR does remarkable and noble work but has also for years been a major patronage dumping ground under all previous admins, to be sure. But certainly no less so under Blago. I believe it was a Blago appointee who got caught trading away and giving away extra deer hunting licenses to insiders and celebs who didn’t want to go by the lottery system. Any problems at DNR are on his own head.
The State parks are where “normal” folks recreate. Where elderly and vets can go fish or hike or whatever. Where young families can take their kids camping or exploring nature without leaving the county or breaking the bank. Does this sound like a huge untapped revenue stream??? Hardly.
And privatizing parks may not be in the best interest of citizens either; for-profit operations have very different value systems than non-profit or government systems, and they are likely to make decisions favoring a quick buck, that do not always reflect good long-term stewardship of the land, water, and wildlife. Nor a long view of sustainability.
Keep your grubby mitts off the parks, governor; for some of us working stiffs, its all we have left.
Comment by Smokin' on the veranda Tuesday, Feb 19, 08 @ 1:50 pm
Mongo: “Privatization of DNR sites would not improve DNR parks, it would only result in the private owner getting a profit for something that you enjoyed at a lower cost before.
Is that how the Governor plans to “rock the system”? Put a profit in some guys pocket?”
Isn’t profit the base from which all government services derive?
Some privatization of services may very well improve the state park system. Why have state employees mowing grass, cleaning toilets, painting picnic tables, etc.? The natural resource base of many state parks is degrading because state employees have only time for basic infrastructure maintenance. The park system and state natural areas would be much better off if the state employees were managing the resource and assisting the biologists instead of concentrating on visitor services and lawn grooming.
First park to be privatized should be the World Shooting Complex. It is ridiculous in a budget crisis for the state to be assuming such roles better fit for private enterprise.
Comment by Vole Tuesday, Feb 19, 08 @ 1:59 pm
Vole, lawn grooming and routine mowing is what the ’summer help’ is for. What the summer help is not for is boom mowers. Alot of the deer check stations are done by the high school biology classes in the small rural areas and alot of the customer service centers are closed weekends and cheaply staffed or volunteered when are open.
I’ll keep my over opinionated mouth shut on the World Shooting and Recreation Center for the most part, but I think as it grows in rep it has the ability to bring in some decent funding through tournaments ect. I do agree with private on the vendors and dining though.
Comment by Princeville Tuesday, Feb 19, 08 @ 2:15 pm
Someone should point out that it takes a lot of staff resources to collect entry fees to parks and historic sites. The problem now is that there is scarcely enough staff to pick up trash and keep restrooms open. Entry fees will require higher headcount, and would be worth the cost only at a few select sites.
Comment by Skirmisher Tuesday, Feb 19, 08 @ 2:29 pm
“Smokin” makes a good point…for some, parks are a vacation site that they have and enjoy as a part of the culture of the State.
Vole, not all privatizin’ is a bad idea…but the notion that “visitor service” would be privatized is a bad one. The visitor is the reason the park exists…and that visitor should be welcomed and accommodated by an employee, not a greeter-for-hire. Florida state parks are a great example of a strong work ethic, pride in unique state parks, and a recognition that its all about the visitor.
Restaurant? Privatize. Lodging? Privatize. Registration system? Privatize. Visitor service? State staff!
Comment by Mongo Tuesday, Feb 19, 08 @ 2:38 pm
A lot of state park services are already privatized. The Starved Rock Lodge and restaurant are run by private firms under state contract.
Comment by Six Degrees of Separation Tuesday, Feb 19, 08 @ 2:56 pm
I should note that privatization is not any kind of priority for me. Strong points can be made for either side of this issue.
The main focus should be that the entire funding of the DNR needs revamping. MO has a sales tax that finances a dedicated fund. With poor funding in IL, and lack of good leadership in Springfield (which could get worse should another political patron be put in the director position), the failure to fill key staff positions, the excessive work load on much of the staff, insufficient operating budgets and resulting low morale, much of IL natural resources are being neglected and degraded.
We have really neglected our own roles as environmental stewards by not putting the heat on the administration to make this more of a priority. Except for one major episode involving Blago’s diversions of dedicated conservation funding, this has really not been given the public and media scrutiny it deserves.
Comment by Vole Tuesday, Feb 19, 08 @ 2:57 pm
Don’t forget, Vole, that when special funds are set aside through fees and ‘taxes’ for certain areas, the Blago comes alone and tries to raid the special funds. I’m all for listening to what Blago has in mind for DNR (okay, I’m lying, I’m all but having an anxiety attack) and I think some restructure would not be a bad thing, I have no faith that Blago is the man to do it. And as a side point–the moral might be down in the middle but the front liners are a committed bunch and have become pretty inventive/creative. I’m sure you’ll find differences from park to park, site to site, but many of the DNR working frontline has been there a long time and work under a different set of morals and ethics then the new comers up above. Okay, obviously this subject (DNR) is way too close to home for me so time for me to say, ‘good day all’, and take my exit for the day.
Comment by Princeville Tuesday, Feb 19, 08 @ 3:17 pm
I would predict no shortage of qualified entities ready to underwrite Illinois GRF bonds.
Comment by steve schnorf Tuesday, Feb 19, 08 @ 3:58 pm
I don’t think anyone thinks the bonds wouldn’t sell, but yields are looking pretty high if credit doesn’t ease. NY port authority 1-week paper went for 8% today, and that’s about the lowest Wouldn’t be the greatest time for the state to issue, unless things clear up.
Comment by Greg Tuesday, Feb 19, 08 @ 4:06 pm
Whoa, on the concerns over a failed bond auction….what’s been failing out there is a very specific type of debt instrument and the state of Illinois does not have this type of debt known as “auction securities” outstanding….and for issues over insurance…given that the difference between what the insurers are rated or once were in some cases — top marks of AAA — and what the state is in the double-A category there isn’t much difference in interest rates, so it won’t really be more expensive for Illinois to borrow to finance a capital plan and all should remember that longer-term, traditional fixed-rate bonds remain quite low….all this reinforces efforts to keep the state from engaging in too complex debt instruments as some previously have proposed….
Comment by bondgeek Tuesday, Feb 19, 08 @ 4:52 pm
Representative Yields
Click For More
MTY INS AAA AA
3 M 1.69 1.59 1.63
6 M 1.69 1.59 1.63
1 Y 1.70 1.58 1.62
2 Y 2.30 2.20 2.25
3 Y 2.50 2.39 2.45
5 Y 2.93 2.78 2.84
10 Y 3.73 3.53 3.66
15 Y 4.28 4.09 4.22
20 Y 4.58 4.41 4.54
30 Y 4.71 4.57 4.66
02/19/08, 4:46 PM
Comment by steve schnorf Tuesday, Feb 19, 08 @ 5:00 pm
Steve and Bondgeek beat me to it, but I would point out that the representative yields Steve mentions make a second pension bonding deal even more attractive than the last time.
Comment by Prairie Sage Tuesday, Feb 19, 08 @ 5:21 pm
Sorry if my post was confusing. The auction rate yields (and I’m in this market myself) are indicative of funds’ unwillingness to commit too much capital–something that has deteriorated just in the last week. I would be nervous if I were preparing to issue bonds later this year. Obviously I expect to be able to do so, but not at the yields I might otherwise hope for.
Comment by Greg Tuesday, Feb 19, 08 @ 5:40 pm
I think another POB issue is very attractive right now.
Comment by steve schnorf Tuesday, Feb 19, 08 @ 6:10 pm
Vole, on that we agree…good exchange by all. And yes, the issue isn’t whether to privatize or not…lots of good examples of places doing that…and many that have failed to do as good a job too.
But in the end, it’s about leadership. Hmmm…we keep running into that issue with this administration.
Comment by Mongo Tuesday, Feb 19, 08 @ 6:14 pm
A couple points to remember-
-There is no alternative to fixed-term debt given the 2004 revisions to the GO Debt Act which took away the option to back-load principal payments.
-Before you fellas run out and sell all that debt, remember that selling bonds is only half the deal. The other half is investing that huge amount of cash successfully and sustaining the earnings over the life of the bonds.
Recall that last year when the bond sale was being floated, one pension fund said it was a bad idea, another one was more or less neutral, and the third (a wholly owned subsidiary of the Governor’s Office) said “great time to sell bonds.” If that $26 billion sale had gone forward last July, depending on what is assumed about the investment of the funds, a conservative estimate would be that at least a $1 billion loss would have occurred in the first six months.
Anybody think Big Bob will get a fee on this one?
Comment by Arthur Andersen Tuesday, Feb 19, 08 @ 7:25 pm
A minor point: The Michigan student loan program was shut down after the state tried to use long-term bonds instead of the auction rate securities. They couldn’t get a deal. Now, granted, bonds for student loans are a different creature than bonds for capital projects. But it’s not just the auction rate securities at issue.
Comment by Dan Vock Tuesday, Feb 19, 08 @ 8:54 pm
I just thank God the legislature was not fool hardy to go along with gambling expansion last fall when more than one person in the know told me the traing was coming and to either get off the track or stand a little more squarely in the center. Well the Task Force to Oppose Gambling in Chicago stood in the center and the proponents broke and ran.
This year may be no different. I hope this time the media including Rich comes to us and “begs” for a story of how gambling expansion has gotten derailed for 20 years!
We’re for a capitol bill, just not funded by ecpanded casinos, including one in Chicago.
Doug Dobmeyer
Spokesperson
Task Force to Oppose Gambling in Chicago
Comment by Doug Dobmeyer Wednesday, Feb 20, 08 @ 5:23 am