Illinois careens into financial meltdown
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  1. #1
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    Default Illinois careens into financial meltdown

    June 20, 2017

    “We’re like a banana republic,”



    Illinois is grappling with a full-fledged financial crisis and not even the lottery is safe – with Republican Gov. Bruce Rauner warning the state is entering "banana republic" territory.

    Facing billions in unpaid bills and pension obligations, the state is hitting a cash crunch that is rare even by Illinois standards.

    A top financial official just warned 100 percent of the state's monthly revenue will be eaten up by court-ordered payments. Rauner is calling a special session of the Democrat-led General Assembly in a bid to pass what he hopes will be the first full budget package in almost three years.

    And Illinois will – literally – lose the lottery if the budget fails.

    The state lotto requires a payment from the legislature each year. The current appropriation expires June 30, meaning no authority to pay prizes. In anticipation of a budget deadlock, the state already is planning to halt Powerball and Mega Millions sales.

    “It is disappointing that the legislature’s inability to pass a budget has led to this development and will result in Illinois lottery players being denied the opportunity to play these popular games,” Illinois Lottery Acting Director Greg Smith told Fox News.



    “We’re like a banana republic,” Rauner said earlier this month, after the General Assembly failed, yet again, to pass a budget package by the regular session deadline. “We can’t manage our money.”

    The governor has called for a special session starting Wednesday. The state so far is operating on a series of stopgap spending packages.

    But the problems are years in the making, caused in large in part by the state’s poorly funded pension system— which led Moody’s Investors Services to downgrade the credit rating to the lowest of any state. The state currently has $130 billion in unfunded pension obligations, and a backlog of unpaid bills worth $13 billion.




    Reports have suggested the state could be the first to attempt to declare Chapter 9 bankruptcy -- but under the law, that’s impossible unless Congress gets involved.


    “Nobody here in Illinois is considering bankruptcy—first of all, it’s not allowed,” said Steve Brown, press secretary for Illinois House Speaker Michael Madigan. “Second of all, it would damage the reputation of the state and it’s just not necessary.”

    U.S. Sens. Dick Durbin and Tammy Duckworth, both Democrats from Illinois, declined to respond to Fox News’ request for comment on whether they would consider getting involved in introducing a measure allowing state bankruptcy.

    “Illinois is the fiscal model of what not to do,” Rep. Peter Roskam, R-Ill., told Fox News, while not commenting on the bankruptcy question. “This avoidance in behavior toward dealing with our challenges is what leads to the devastating impacts we are seeing today.”

    Just last week, the Illinois comptroller, who is responsible for paying the state’s bills, warned the office would be paying out 100 percent of Illinois’ monthly revenue, leaving negative funds for “discretionary spending. ”

    But Rauner claims the Republicans have a new plan that could remedy the state’s crippling financial situation.

    “Republicans in the General Assembly have laid out a compromise budget that I can sign,” Rauner said, calling it a “true compromise.”

    The plan incorporates reforms like property tax relief, term limits, and spending caps, which have caused an “ongoing confrontation” between Madigan and the governor, one Republican leader told Fox News, adding that the two have been in a “stalemate” since Rauner took office two years ago.

    “Gov. Rauner inherited this financial mess when he took office, and his proposals have been met by resentment from the speaker,” Deputy House Republican Leader Dan Brady said.

    Brady added, “we are asking that the speaker allow for a date and a vote before June 30.”

    But Brown told Fox News the governor isn’t making enough concessions.

    “He’s not walking many back—the financial issues are serious enough, and he’s forcing things that have nothing to do with state government,” Brown said. “The biggest problem here is that the governor keeps associating a lot of things that do not have anything to do with the budget.”

    Rauner has pushed for structural reforms, government consolidation and pension reform—some components that were able to pass on the Senate side.

    “The people and businesses of Illinois deserve stability, not this ongoing chaos,” Senate President John J. Cullerton, a Democrat, told Fox News. The Illinois State Senate approved a balanced budget before the initial May 31 deadline that “matches” the governor’s spending proposal.

    If the General Assembly fails to pass a budget package, they do have an option to pass another stopgap package, which lawmakers say is an option, but “not a good one.”

    “We have a very real deadline looming,” Senate Republican Leader Christine Radogno told Fox News. “The alternative to not finding a compromise will be devastating to Illinois.”




    http://www.foxnews.com/politics/2017...y-is-safe.html
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  2. #2
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    Like Detroit before them, liberal societies fail and are unsustainable. Civil war will break out if these idiots are left in control.

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    You're going to see more of this as pie in the sky promises to votes to win elections crash into economic reality.

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    Municiple debt is the next depression imo. Just a matter of time. Democratic states are worse but republican states are close behind them. Its not just Puerto Rican bonds. State run pension funds for employees will go broke too. Munies were once the safe haven for investors and tax free federally and in the state you live in.
    Last edited by edwardv; 06.21.17 at 11:09 AM.
    10-6-2020 RIP King of sixstrings.

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    Illinois and California are both screwed financially. I'm sure there's a common thread there about why, but I just can't place my finger on it...

    The Illinois legislature, particularly Michael Madigan who has controlled the budget for the last 30 something years, deserves ALL of the blame. They have been completely irresponsible with funding pensions and making promises they can't possibly deliver on (where have we heard that before?).

    The trouble states have is that they have to run a balanced budget eventually since all of those loans come due. They don't have the luxury of a Fed to make shit up as they go along.
    CNN may think my opinion matters, but you shouldn't.

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    Sooo, I can tell you part of how a state like Illinois goes broke. I work in the electronic contractor field. I have sold various services to State facilities. In the process of submitting a bid, they require a number of things. One of these things is that depending on what area you are working in, you have to pay "prevailing wage" to your employees. Let's say I normally pay my employees $25 per hour, but if I work in a county north of Interstate 80, I'm required to pay my employees $44 per hour. Obviously, we aren't just going to eat that extra expense, so we adjust our price accordingly to offset the extra expense. As a result, we take a job that could have been done for $20,000, and end up having to price it at $32,000, for no other reason than the state requires us to pay our technicians more in a certain area. It sure seems like one of the first things they may want to think about, is suspending the Prevailing Wage for all state work, and taking truly competitive bids, rather than protecting regional contractors and laborers. The funny thing is, they limit the contractors in what they can mark their parts up to, basically making us give them away because that makes them good stewards of tax payer money.

    So after all the paperwork you have to fill out to do business with the state of Illinois, after basically giving away your equipment and trying to compete with other business to get a project, when you are done, you have to sit and wait to be paid, which takes forever. Let's say a business gets a big state job, maybe a $100,000 project. The contractor gets to buy all the equipment, pay all the labor, fill out all the union reports, turn in all the stupid paperwork to show them we don't do business with Iran, bribe politicians, or mark up our parts too much. After the job is done, we get to wait for months or even years to get paid. Let's say our raw cost after the job is done is $85,000. Not only do we not make a profit while we don't get paid, we basically financed the project, including the extra-expensive labor to do the job. The vendor not only is the service provider to the state, but also gets put in the position of being their bank. When the bank won't lend you money, just owe the people who work for you I guess.

    When you try to collect money from the state, they tell you that you will basically have to be awarded the money owed to you through the court-of-claims, which assigns you a voucher number that entitles you to be paid, at which point you are notified by the Comptroller that the General Assembly has not appropriated sufficient funds to pay you, but you will get paid whatever they can when they have some money. Meanwhile, you still have to make payroll, buy parts for other projects, and try to keep your balance sheet in the black.

    The really really awesome part for business owners is, this is the same state that tells them they aren't paying enough in taxes, and Illinois needs to take a little more from them, because they can afford it.
    Last edited by nobozos; 06.21.17 at 02:56 PM.
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    Quote Originally Posted by edwardv View Post
    Municiple debt is the next depression imo. Just a matter of time. Democratic states are worse but republican states are close behind them. Its not just Puerto Rican bonds. State run pension funds for employees will go broke too. Munies were once the safe haven for investors and tax free federally and in the state you live in.
    You mean like this?

    http://www.denverpost.com/2017/06/27...d-liabilities/

    I'm getting real tired of this shit. These assholes ought to have to fund their own retirement account just like my wife and I have to do - no extra taxpayer money to sweeten the deal. Actually, this crap ought to be abolished and put them in a 401k instead just like everyone else.

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    Quote Originally Posted by Get The Show On The Road View Post
    You mean like this?

    http://www.denverpost.com/2017/06/27...d-liabilities/

    I'm getting real tired of this shit. These assholes ought to have to fund their own retirement account just like my wife and I have to do - no extra taxpayer money to sweeten the deal. Actually, this crap ought to be abolished and put them in a 401k instead just like everyone else.
    Try getting the state employees unions to go along with that line of thinking. And then if they do go to a 401k type of self funded retirement plan good luck in getting the state to cut back on property tax rates. Its like in PA when they legalized gambling they promised to lower property tax rates in the 90s. It has had little to no effect. Like I said thieves will gather where massive amounts of money are.
    10-6-2020 RIP King of sixstrings.

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