Illinois could be 1st state with 'junk' credit due to budget

[TexasTowelie]

CHICAGO — Illinois is on track to become the first U.S. state to have its credit rating downgraded to "junk" status, which would deepen its multibillion-dollar deficit and cost taxpayers more for years to come.

S&P Global Ratings has warned the agency will likely lower Illinois' creditworthiness to below investment grade if feuding lawmakers fail to agree on a state budget for a third straight year, increasing the amount the state will have to pay to borrow money for things such as building roads or refinancing existing debt.

The outlook for a deal wasn't good Saturday, as lawmakers meeting in Springfield for a special legislative session remained deadlocked with the July 1 start of the new fiscal year approaching.

That should alarm everyone, not just those at the Capitol, said Brian Battle, director at Performance Trust Capital Partners, a Chicago-based investment firm.

Read more: http://thesouthern.com/news/local/state-and-regional/illinois-could-be-st-state-with-junk-credit-due-to/article_4553d721-5252-588a-9795-a6e48b317cf1.html

[murielm99]

1. Thank you Rauner.

Ruin our state, all so you can break organized labor.

[Duppers]

2. How, Why did this happen?

Anyone?

[Yonnie3]

3. Politicians

They simply could not make the tough decisions as expenses, especially public employee pensions spiraled out of control. I read about this a few days ago.

Here is one story (not the one I read - haven't found it)

http://money.cnn.com/2017/06/30/news/illinois-what-happens-next/index.html?iid=hp-stack-dom

[Duppers]

4. Thank you, Yonnie.

I read that yesterday. The article describes the problems but not why the politicians were stalling, i.e. on what issues they disagree and why. I suppose I'd like details. Illinois has a billionaire governor but a democrat controlled legislature, so is the main problem a power struggle? Usually there are underlying issues.

I do not live in the state but am appalled by the condition this once prosperous state is now in. An omen for the rest of the country? Hope not.


Thanks again!

[Yonnie3]

5. How Illinois became America's failed state

I found a better article. I don't think this is the one I read, but it discusses what happened.
+++++
“Illinois is a real outlier in the most striking way. The sheer size of the state’s unfunded pension liabilities … just looking at the state’s finances, its habit of deferring payments from one year to the next, has created a vicious circle,” said Ted Hampton, vice president with Moody’s Investment Services. “Illinois has had a very large negative balance both in absolute terms and relative to its budget for many years.”

What does the crisis all boil down to? It began with an ego-laden brawl between two powerful men: Rauner and Democratic House Speaker Mike Madigan. Rauner was elected in 2014 as the first Republican governor in Illinois in more than a decade, vowing to “shake up Springfield” in a campaign that demonized Madigan — the longest serving House speaker in state history — and targeted “corrupt union bosses.”

Upon taking office, Rauner, a multimillionaire businessman, laid out a list of policy demands that initially included right to work elements as a condition of signing a budget into law. Rauner wanted changes to laws affecting workers' compensation, collective bargaining and state property taxes, among others. Democrats considered the agenda an attack on unions, which the governor had vilified, saying they had too much power in Illinois politics. Rauner called the measures pro-business and necessary to address decades of financial mismanagement.

But Madigan, who has served as speaker under governors from both political parties, was loath to condition the passage of a budget on the governor’s political agenda. Each side dug in, with unions rushing behind Madigan and Republicans — tired of being shut out for years by Madigan and thrilled to have a generous donor to their campaigns in the governor’s office — lined up behind Rauner. "
+++++

It's a long read with much more info than in my quote.

http://www.politico.com/story/2017/06/10/illinois-debt-deficit-budget-election-239384

[Duppers]

8. Thank You!

That's a very informative article, Yonnie.

Wow, what an ass Rauner is - a combo of Mitch McConnell and Trump.

The article ends: "Right now, the General Assembly and the governor — none of them are choosing to do what’s in the best interest of the state.”

[davsand]

11. The IL GOP attack on the property tax issue leaves me scratching my head.

Property taxes in Illinois, are LOCAL taxes. They are levied by local governmental bodies, and they are voted up or down by local elections. When you pay a property tax bill you are paying for local schools, local government, roads, bridges, libraries, mass transit, all that stuff outside the sphere of the state government. The state legislature does not get that money, and they do not control it.

But now, the Illinois Republicans want to step into that system.

Property tax has gone up as expenses have gone up. You have to pay to keep the lights on at City Hall, and you gotta pay to keep the employees paid, and the teachers have to be paid, the students transported to and from school, and the books purchased, and equipment updated, etc. Outside of Chicago (the tax code for Cook County is not the same as it is in the rest of the state) when you pay your taxes, roughly a third of that goes to pay for the schools and the local Jr. Colleges. "Freeze" that money, and you are handicapping those districts--driving them further into debt. The state has not paid what they owe the schools since ruiner went into office, and now they want to freeze schools' ability to raise funds while they duck out on their own legal responsibility to the schools. Not gonna lie, if he want to kill any public education in this state, I can't think of a more efficient way to do it.


Laura

[beachbum bob]

7. Illinois finances has been a mess for 30 plus years as govenors of both parties and the

legislature has viewed the pension monies as their own personal slush fund and redirect the "states contribution" as well as the payroll deductions from state workers paychecks to pay for state programs and services and they "wrote IOUs to the pension funds...This was all done to avoid RAISING OUR STATE INCOME TAX...as with most politicians, they are cowards at heart and only care bout their own survival. So 30+ years later we have what we have. Rauner's actions are 2 fold.....profit for sure with junk bond status AND place Illinois into such dire financial state that the constitutional protection of public worker pensions (state workers, teachers, etc) can be removed by calling a special constitutional convention or place on the state ballot as referendum. The hate of protected pensions runs deep in conservative world, doesn't matter if they were earned and workers monies were contribute or not. The conservative disrespect of americans who worked in the public sector is disgusting.

[Yonnie3]

9. "The hate of protected pensions runs deep in conservative world"

It's much the same for Social Security and Medicare. It still astounds me that they use the word "entitlement" to mean some thing different and bad. They say let's "privatize" it which translates to "we are going to let our chosen few get rich on this."

Thanks for the additional information on Illinois' situation.

[beachbum bob]

10. conservatives lack the integrity of a social conscience and believes govt is not

a means to improve the "general welfare" of americans nor is there any such inherent concept of a social contract between citizens and their govt and....their govt to their citizens, Nothing exemplifies it more than the 21st century american conservative


and Illinois is all about cowardly politicians, greed and idiotic voters of all persuasions

[beachbum bob]

6. rauner made his money as hedge fund guy,,,guess who has been buying up Illinois debt ???

hedge funds guys....who are going to benefit when junk bond status is declared and interest rates skyrocket? Why the hedge fund guys who have scooped up the debt, Rauner, his inner circle stand to make hundred of millions $$$$$...all rauner has to do,,,is well...nothing