Illinois is Broke

[macrockett]

I predicted several weeks ago that CA and IL will be bailed out of their spiraling pension and benefits debt within 2 years by the Federal Government. I am coming to the conclusion that even that is becoming increasingly unlikely as the Federal Government has its own growing deficit and debt problems. We shall see.

If you haven't listened to the message on this site, please do:

www.illinoisisbroke.com/

I also recommend the following sites, many of which follow and discuss our State's unsustainable pension and benefit programs:

www.championnews.net/index.php

www.civicfed.org/

civicfed.org/iifs

civiccommittee.org/index.html

www.familytaxpayers.org/

www.heartland.org/

illinoisissues.uis.edu/index.html

www.iml.org/

www.ioc.state.il.us/

www.illinoisopengov.org/

www.illinoispolicy.org/

illinoisreview.typepad.com/illinoisreview/

www.ntui.org/

pensionfairness.org/ (Here you can see the growing coalitions of local govt that recognizes that public pensions are bankrupting the State)

www.pensionfairness.org/doc/PFIC%20Statement%20HB%205873.pdf

Read this document to see the strength of the public unions in Illinois, even though they are dwarfed in size by private sector employees)

www.state.il.us/budget/

www.proillinois.com/

[macrockett]

Please take the time to tell your government that you want action on the pension problem. Simply go to www.illinoisisbroke.com/takeaction.aspx and fill out your personal information and send the form letter on the site. Alternatively, you can send your own letter from the site.

The site is a wealth of information:

www.illinoisisbroke.com/facts.aspx ...the facts

www.illinoisisbroke.com/trib.aspx .......the advocacy ad in the Tribune

www.illinoisisbroke.com/vendors.aspx ---vendors who haven't been paid by the State

www.illinoisisbroke.com/Pension.pdf ....175 retirees in the last three years that have pensions worth over $1 million.

[macrockett]

Not only is Illinois Broke, so is Chicago.

A recent letter by the Budget Director points out what the city of Chicago has done to get it's house in order:

www.chicagotribune.com/news/opinion/ct-vp-1022voicelettersbriefs-20101022,0,5217679.story
chicagotribune.com
Voice of the People, Oct. 22

October 22, 2010
Advertisement


City's budget

In "Good night, Chicago" (Editorial, Oct. 14), the Chicago Tribune misses the obvious point that we are dealing with the aftermath of the worst recession in more than 70 years, and that the city's finances — along with every other city and state — have been devastated as a direct result.

By the end of 2011, the city will have lost more than $1 billion in tax revenues because of the nation's recession. Economically sensitive revenues (such as real estate transfer, and income and sales taxes), upon which the city relies to fund operations, are expected to generate $300 million less in 2011 than they generated in 2007.

At the same time, the cost of government continues to rise as personnel costs grow each year, regardless of the condition of the economy.

The cost of health care grows, as do employee wages, even as we negotiate contracts to protect taxpayers.

To meet the challenges of a struggling economy, the city aggressively cut expenses, including more than a half billion dollars in the last three years, $100 million in next year's budget and $3 billion since Mayor Richard Daley has been in office.

We have significantly reduced non-public-safety personnel costs through layoffs, a freeze on hiring, eliminating vacant positions and requiring unpaid days.

We have reduced non-personnel costs by renegotiating contracts and cutting the purchase of materials and supplies, among other steps.

When you consider the mayor's overall record of management, there are 6,600 fewer non-public-safety employees than when he took office.

Adjusted for inflation, Chicago's corporate fund expenses have increased by only 18.8 percent since that time, while the average spending increase for other cities and states is 58 percent.

He has reshaped government and eliminated 10 departments.

City property taxes have increased by only an average of less than 1.3 percent a year, far lower than the rate of inflation.

Without these ongoing steps to better manage government, the recession would have been far worse in Chicago.

Had the recession not happened, balancing next year's budget would have been within reach.

Turning to our reserves to fill the last 18 percent of what would have been a $655 million budget gap in 2011 was the last resort because the mayor did not want to burden taxpayers by asking them to pay higher taxes during such a bad economy. The mayor felt that the city must provide essential services that Chicagoans depend on (even while other cities are cutting them).

The proposed budget holds the line on spending for most programs.

We have maintained the $500 million Skyway reserve fund and kept a balance of $76 million in the parking meter fund, decisions that will protect Chicago's future.

In these tough times, we are proud to present a balanced budget that protects taxpayers while still investing in Chicago's future to grow our economy, improve public safety and neighborhood quality of life.

— Eugene L. Munin, budget director, city of Chicago

----------------------------------------------
But what the Budget Director doesn't say, and the reason why Daley may have chosen to leave, is spelled out in the recent Kellogg study on municipal debt:

www.kellogg.northwestern.edu/News_Articles/2010/municipal-pension-systems.aspx#

More specifically www.kellogg.northwestern.edu/news/rauh_chart.htm (take a look at the unfunded pension liability estimate for the city of Chicago...

Finally, in the same chart see the unfunded liability for Cook County.

[macrockett]

These are the form letters I received in response to sending the Illinois is Broke email. I should point out, as a result of Quinn's action, Illinois State employees will receive salary increases totaling 8.25% and no jobs can be eliminated until June 30, 2012 (per Illinois is Broke). You might want to keep that in mind when you vote.


----- Original Message -----
From: "Tom Cross" <[e-mail]>
To: <[e-mail]>
Sent: Saturday, October 30, 2010 1:51 PM
Subject: Re: Illinois Is Broke


Thank you for your letter discussing Illinois’ unprecedented financial difficulties and the need for real budget reforms You are right on target with your assertion that the state’s escalating debt is hurting our business climate and our ability to adequately fund, among other priorities, public education and social services.

Without a doubt, we can no longer continue to borrow money to pay for state operations and avoid addressing our pension debt. Government accountability and transparency is essential to enacting budget reforms that will make a difference.

To reverse Illinois’ budget trend, the focus must be on (1) increasing job opportunities and consumer confidence (2) reducing inefficient, duplicative, and wasteful state government spending, (3) instituting Pay-As-You-Go budgeting, and (4) prohibiting unpaid obligations of the State from being transferred from one fiscal year to the next to ensure a true “balanced” budget. Only then can solid economic recovery advance in Illinois and financial stability be restored to State government.

You mentioned that the pension reforms recently passed by the General Assembly did not go far enough to address Illinois’ accumulated debt of $130 billion. There has been increasing interest in the concept of taking the recent pension reforms one step further by reducing the benefits of current state employees.

Reducing pension benefits for current employees is an issue that will be thoroughly debated in Springfield to ascertain the financial benefits and whether the concept is constitutional. Many believe that reducing current employee pension benefits would be unconstitutional based on Article XIII of the Illinois Constitution, which prohibits the diminishment or impairment of pension benefits. Others, however, are confident that it can be done and withstand judicial challenges.

Illinois taxpayers deserve a more efficient, lean, and accountable government with a balanced budget and a manageable debt burden. Please know that I will continue my efforts to enact budget reforms in Illinois. Again, thank you for contacting me on this very important issue.

Sincerely,


----- Original Message -----
From: Rep Darlene Senger
To: [e-mail]
Sent: Monday, November 01, 2010 12:47 PM
Subject: Re: Illinois Is Broke

November 1, 2010

Dear Constituent,

Thank you for your recent correspondence regarding our state budget. Please allow me to express my thoughts on the issue.

I was deeply disappointed with the eventual conclusion to this year’s legislative session where relatively little progress was made in regards to the state’s terrible financial situation.
In addition to providing Governor Quinn vastly expanded discretionary powers, the state’s Democratic legislative leadership made the ill-advised decision to borrow $4 billion to pay our upcoming pension payment.

There was no recognition given to the fact that state employee unions are in line to receive $336 million in pay raises over the next twelve months, nor was there any acknowledgment afforded to the fact that the state continues to increase spending at an unsustainable rate.

Some quick facts about the budget that you may want to know are:

The budget was passed in the form of three pieces of legislation, Senate Bill 3660, House Bill 859 and Senate Bill 1215 all of which can be found on www.ilga.gov.

Borrow $4 billion to fund pension payment and gives the Governor broad power to make cuts.

Holds the overall budget flat at FY10 levels at $26.01 billion but completely ignores $6 billion backlog in unpaid bills for medical providers and community-based caregivers.

Cuts funding for mandated categoricals for our local schools by $300 million. The Illinois House of Representatives was not provided the opportunity to vote on the Senate measure which would have filled this gap in funding.

Authorizes $1 billion in special fund raids, and borrows up to $1.75 billion in future tobacco settlement proceeds.

One common sense measure I did support was the establishment of a tax amnesty period (SB 0377). This is an idea that Republicans have been pushing for nearly two years (HB 4662) and is expected to generate around $250 million for the state.

I also supported furlough days as well as a reduction in the allowance for lodging and meals and mileage reimbursement for lawmakers; and a measure requiring all state contracts to be reviewed, and potentially renegotiated or canceled.

In addition, the House Republicans offered 60 plus ideas to fundamentally change our budget process, increase fiscal accountability, help employers to create jobs, and rein-in state spending. Unfortunately, none of those ideas were considered.

I have maintained from the beginning that a certain level of fiscal accountability must be enacted before we consider adding new revenues to the state budget.

Being a newcomer to the Illinois House of Representatives, I was shocked at the brazen attitude and utter disregard for transparency in the final weeks down in Springfield. This only points to the crystal clear need for change in how our budgetary process works.

I hope you have a pleasant rest of the week.

As always, it is an honor to serve you in Springfield. Please do not hesitate to call my office at [phone] if I can be of assistance to you. I also invite you to visit my website at www.darlenesenger.com.

Sincerely,

--
Darlene J. Senger
State Representative District 96

[macrockett]

If you want to see what is really happening in Illinois look to California. In material respects their issues are comparable. Here is what the CA's CBO (comparable to the Federal office) says, and it isn't pretty: www.lao.ca.gov/reports/2010/bud/fiscal_outlook/fiscal_outlook_2010.aspx

Here are the cliff notes: www.businessinsider.com/california-fiscal-outlook-2011-2012-2010-11?slop=1#slideshow-start

Here is what the WSJ said about Illinois in an article yesterday: online.wsj.com/article/SB10001424052748704405704575596530258949928.html?KEYWORDS=illinois#printMode

Illinois is a case study in the cost of delay. With revenue falling and payments due to state-employee pension funds, Illinois faces a deficit for the fiscal year beginning July 1, 2011, that could reach $15 billion—more than half the state's general-fund budget. Because the state hasn't made any pension payments for four months, the pension funds have been selling assets.

The state's backlog of unpaid bills reached $5.5 billion at the end of September, $2 billion of which must be paid by Dec. 31. "The ability of the state to maintain any reasonable level of education and social-service funding—and just as importantly, to pay for those services on a timely basis—will be severely jeopardized," Comptroller Daniel Hynes has warned.

Companies that provide foam food trays for prison meals and bullets to train prison guards stopped delivering because they weren't being paid. Social-service agencies have cut staff, reduced caseloads, and, in some instances, closed altogether, as they wait for the state to pay bills.

Earlier this year, Democratic Gov. Pat Quinn, who kept his job by a narrow margin on Nov. 2, proposed a one percentage point increase in the state income tax, to 4%, dubbing it "1% for education." But the Democratic-controlled House balked. His Republican opponent for governor, state Sen. Bill Brady, advocated cutting taxes, saying that would boost the state's economy, as well as cutting spending "a dime for every dollar." Neither candidate laid out a plan to balance the budget.

So far, Illinois hasn't had difficulty borrowing, but it is paying more to do so. Its Moody's bond rating is the lowest of any state.