Posted on 07/01/2017 7:42:25 AM PDT by Lorianne
The train wreck that is the state of Illinois has generated a lot of questions lately, including “Will its government ever pass a budget?”, “Will it ever pay its overdue bills?”, and “Is it possible for a state to go bankrupt?”
Looks like we’re about to get some answers to these questions, along with one more: “What happens to the financial markets when people finally realize that Illinois is far from the only impending bankruptcy?”
Today’s Wall Street Journal has an anecdote-filled article illustrating what certainly looks like a case of terminal financial mismanagement (How Bad Is the Crisis in Illinois? It Has $14.6 Billion in Unpaid Bills):
Among the many, many data points: •The state comptroller predicts unpaid bills will soon top $16 billion. “It is almost hard to say those numbers out loud because they seem so insane, but that’s where we are right now.”
•Unfunded pension liabilities now total $250 billion. That’s about one-third of state GDP, and is in addition the myriad other debts taken on in recent years.
•S&P Global Ratings has warned that it could lower the state’s rating to junk as early as this week if a budget isn’t passed.
•Peoria-based OSF Healthcare, a network with 10 Illinois hospitals, is owed about $115 million for bills over four months old, the equivalent of 18 days of operating expenses.
•The state owes Illinois dentists $225 million. Some dentists with lots of state workers are selling receivables to keep the lights on. Others are asking state employees to pay in cash.
•The state owes two Springfield hospital systems more than $200 million.
•The Coliseum building at the state fairgrounds closed indefinitely earlier this year after the state failed to fund needed repairs.
•Eastern Illinois University has received $53 million less in state funding in the past five years than the previous five. Professors in the chemistry department haven’t been able to print in color since the department’s printer ran out of yellow ink a year ago. Enrollment has fallen from 12,000 to 7,000 in the past decade.
•If the state doesn’t pass a budget in the current special legislative session or allocate emergency funding, about 700 road projects under way across the state—worth $2.3 billion and employing 20,000 people—will come to a stop.
•Some social-services agencies are operating without state help while others have closed entirely, leaving some rural communities without mental-health clinics, domestic-violence shelters and drug-treatment clinics, despite a raging opioid crisis.
•Illinois has lost more residents than any other American state for the third year in a row, with 90% of the state’s counties seeing a drop in population, shrinking the state’s tax base. In 2016, a net of 37,508 people left, according to census data, putting the population at its lowest in nearly a decade.
The impending downgrade to junk status might be the final push off the cliff, since Illinois – despite a constitution that kind-of-sort-of requires a balanced budget – still borrows a lot of money each year, mainly to fund its out of control pension system. As a junk-rated borrower, its interest costs will be much higher, making its financial imbalances that much worse. Assuming that anyone will lend money to the state on any terms.
SNIP
Two words:
NO BAILOUTS!
Maybe importing hordes of poor people from south of the border isn’t such a good idea..........
Simple fix: pay for the ongoing necessities: police, fire, teachers, road repair.
Pensions and anything else gets what’s left over.
(And if that means they get only IOUs, then that’s too bad, but the retirees were presumably sensible people, who must have known that the pie-in-the-sky benefits they were being offered must run out someday; and likely most of them were just hoping they managed to die before the evil day arrived. Well, the evil day has arrived.)
Huh.
So voting Democrat does eventually catch up with you.
Oh c’mon. You know they are going to get a bailout. A Greek size bailout.
And then other States will be in line for their bailouts.
Oh c’mon. You know they are going to get a bailout. A Greek size bailout.
And then other States will be in line for their bailouts.
Add to that $293 million a federal judge yesterday ordered Illinois pay towards Medicaid bills and it will reach another $1 billion by years end.
Maybe they could hire Scott Walker away from Wisconsin...it was in the same boat as Illinois
I live in Illinois (not much longer ....) and I agree with you! Let the state default and hit bankruptcy.
This state deserves it and it may be the only thing that finally makes the idiots in Springfield Illinois do what it takes to fix this mess: CUT SPENDING and fix the State Constitution to remove guaranteed pensions so that those "obligations" stop killing us financially.
Enough is enough.
When and if they pay, it will be with hefty interest. With the crappy bond rating, they were paying ~9% interest before payments stopped.
Remember a few years ago when they were protesting Gov Scott Walker in WI. there were IL. Union and other lieberals drecks crossing the state line to participate. WI. is at least stable now while ILL annoyed is a flaming mess.
“Simple fix: pay for the ongoing necessities: police, fire, teachers, road repair.”
That isn’t even a “difficult fix!” Those groups you enumerate, are essentially all of the operating budget of the State, it’s counties and municipalities.
In the bankruptcies here in California (notably Vallejo and Stockton) the cops and the FFs accounted for 80% of those cities budgets. And in Vallejo it was noted taht a lieutenant in the Vallejo PD with benefits cost $311,000 per year. This is the problem, and the Firefighters out here are far worse than the cops when it comes to stealing from the public, because of their “overtime practices.” So from what I have read, it isn’t enough to limit spending here, you are going to have to make serious cuts to both compensation and benefits or the whole thing is going to collapse.
What’s worse is loss of Federal Funding.
When the borrowing limit is not raised the Treasurer must find cash. The best place to raise cash is not paying bills. Illinois knows that and had been slow paying or no paying for years. The US Treasurer can increase cash available by not paying anything to Sanctuaries.
If Illinois loses fed funds because of sanctuary status, it’s all over.
As you correctly conclude, voting Democrat/Left will eventually catch up with you (that is, reality will not be denied).
Just to show you how bad Illinois is, they owe me about $35,000 dollars. I over paid my taxes because of estimated taxes. I got a windfall in 2015 from selling stocks. So last year I was required to pay estimated taxes. But I had no stock wins in 2016. Even though I should get a refund Illinois has not paid me. I have a very conservative accountant, a democrat. And she can’t believe they are just not paying. First they acted like I had done something wrong. Even though everything is electronic, I proved that I had done everything correctly. Its not very hard, just a W2 from a fortune 500 company. I don’t have any real exemptions. No mortgage, just a wife and a couple kids. They now agree they owe me the money but they are simply refusing to write the check.
Nephew is an accountant at a large Chicago CPA firm. He does taxes for a living and says that Illinois is refusing to write any refund checks larger than $5000 in refunds. He has several clients that are in the same position I am. And some of his clients are companies too.
The reality is that State workers in Illinois, mostly teachers are stealing from the state. Each one who retires after 30 years is a multi millionaire. And its still going on. Even teachers who are just 30 can work until they are 55 and retire getting 75% of last three years pay plus 3% increases for life. It works out to be a 2 to 4 million dollar annuity. And here is the kicker. Its tax free. They don’t pay state taxes even though the average teacher with full benefits who lives past 75 makes more money in retirement than the entire time they were working. Its the best retirement ever.
And the Illinois Supreme Court (who receives these retirements too) says that Illinois can in no way change the pension plans. Its not that they can’t change the plans for those ho retired or those who worked the years. They can’t even change the plans for those who worked a few years. Some how its okay to change the plan if your in the private sector or you work for any other state. But not this state.
If, as stated, Illinois’ Constitution requires a “balanced budget”, isn’t ANY borrowing by Illinois “un-Constitutional?
If so, then let Illinois’ “lenders” sue the lawyers, rating agencies and accountants who sugar-coated that basic risk to recover the principal that they lost when they illegally lent funds to Illinois.
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