The state of Illinois has not passed a budget for close to three years.
Arguably it’s just as well because Illinois budgets for decades have been nothing but a moth-eaten collection of lies, one time deficits repeated endlessly, and financial wizardry statements designed to disguise Illinois’ real problems: failure to rein in spending coupled with a very business unfriendly environment.
As Illinois’ bond rating careens towards junk, Illinois’ Unpaid Bills Jumped to $14.3 Billion. Today, the state told contractors to halt roadwork other than required for safety.
Dear Contractor
I do not have a link, but here is the letter in image form.
This does not raise much alarm in Illinois as these kinds of letters went out last year as well. It’s simply business as usual in Illinois.
My IDOT contact, who wishes to be left unnamed, reports …
Hello Mish
Last year when they did this the extra work bill to the state cost millions of taxpayer dollars. At the last minute, the shutdown was averted but not until the shutdown measures were employed and thus extra cost was due to contractors and consultants.
Look out for the Road Builders Association to come out with an estimate of what it will cost this time around after the letter today.
Last year, the supplier for paper and toilet paper had not been paid and thus various offices were reportedly cut off of supply. IDOT employees were going to have to work from home due to the potential unsanitary conditions.
Five Illinois Universities Rated Junk
Yesterday, the Illinois Policy Institute reported MOODY’S DOWNGRADES 7 ILLINOIS UNIVERSITIES, 5 ARE JUNK.
Everybody wants to blame the downgrades on the state’s current budget impasse. The stalemate of nearly two years has led to cuts in state appropriations to Illinois universities. But the universities’ financial difficulties started before the state’s budget gridlock and are largely of their own making. Illinois colleges and universities have long overspent on bloated bureaucracies and expensive compensation and benefits, prioritizing administrators over students.
For years, university and college officials across the state have hiked tuition to pay for administrative hiring sprees, generous executive compensation and out-of-control pensions. Their spending priorities distorted university finances long before the budget impasse began.
The number of administrators in Illinois’ universities grew by nearly a third (31.1 percent) between 2004 and 2010. At the same time, faculty only increased 1.8 percent, and the number of students only grew 2.3 percent.
Illinois Tuition Fees
Retirement Costs Soars
Blame Who?
It is easy to blame Governor Rauner, but he is last on my list. Illinois has been in trouble for decades. The state’s only solution has been to tax, and tax, and tax.
That is precisely the same position as Chicago Mayor Rahn Emanuel.
The result is easy to predict.
Illinois’ Economic Growth is Worse than During the Great Depression
Illinois’ total state economic activity has increased by only 4 percent since 2007, which is lower than the U.S.’ 10 percent GDP growth during the worst decade of the Great Depression according to the Illinois Policy Institute.
Illinois Employment
Feed Me
Illinois Debt Backlog
It took $31.6 billion of new tax revenue to reduce the backlog of bills by $1.3 billion. But the complete picture is much worse as Illinois’ pension debt rose more than $25B from 2010 through 2015.
Failed State
- On June 4, 2017, Politico reported How Illinois became America’s failed state.
- The Heratige Foundation beat Politico to the idea by a mile with its September 28, 2015 analysis Illinois: The Anatomy of a Failed Liberal State.
- The Chicago Tribune is behind the times with its January 3, 2017 analysis, Illinois in danger of becoming a failed state.
Illinois is not in danger of becoming a failed state, it is a failed state. I have been talking about this for years.
Five Desperately Needed Reforms
- Municipal bankruptcy legislation
- Pension reform
- Right-to-Work legislation
- End of prevailing wage laws
- Workers’ compensation reform
Number one on my list of Illinois reforms is bankruptcy legislation. It is the only hope for numerous Illinois cities whose hands are also tied by union-sponsored prevailing wage laws.
Despite massive gains in the stock market since 2009, Illinois pension plans have gotten deeper and deeper into the hole.
Even a modest pullback in the stock market will sink numerous Illinois pension plans. I expect much worse than a modest pullback.
Tax hikes are not the answer. Reform is the answer, and bankruptcy reform is at the top of the list.
Required Pension Contributions to Double or Triple
Inquiring minds will also wish to consider Required Pension Contributions of California Cities Will Double in Five Years says Policy Institute: Quadruple is More Likely.
The same fate or worse faces Illinois.
Madigan Sponsored Problem
The problem is on Speaker Madigan’s side. He insists on tax hikes first and reforms second.
Governor Rauner has held out and I support that policy. Once the governor agrees to tax hikes, no reforms will ever take place.
Illinois is Bankrupt
Illinois is essentially bankrupt. Unfortunately, there is no provision for states to declare bankruptcy.
States can default, however, and default is an easy prediction for Illinois’ public union pensions.
Mike “Mish” Shedlock
Is this why the Bears are so bad?
If I had an 5-8 year expected career with a very high salary ahead of me, and very uncertain prospects afterwards; I would certainly want to avoid being contract bound to earn that money in a locale as uncertain about future default related taxgrabs as Illinois. Neither would I want to buy/build an NFL star appropriate mansion there…. Talk about honeypot for the Madigans of the world.
The last thing the Illinois politicians would ever do is lay off some of their deadbeat relatives and campaign workers from the government payrolls.
One wasteful part of Illinois government is the Townships, an unnecessary extra layer of government. Efforts have been made to get rid of them, but when it comes to a vote, the politicians talk the voters out of ending townships. So, the voters of Illinois have the state & local governments and politicians they deserve, because the majority vote for them.
Wikipedia says only 20 states still have townships, none of which are from the Rocky Mountains and westward.
Only the people voting for the clowns “have the state & local governments and politicians they deserve.” Those who didn’t vote for them, do not. At least not any more than the Weimar Jews got the government they deserved. Just because they happened to be outvoted.
A good argument can be made that current Illinoisans have the government they deserve, on account of them failing to follow, to the letter, Jefferson’s dictum of a revolution per generation, however. The Israeli founders seemed to have largely learned their particular lesson. Illinoisans as of yet…. not so much.
Also alert welfare recipients to cease procreation on 1July. The working class cannot afford to feed your spawn.
Stop procreating or face sterilization procedures. It would be nice if that might finally happen!
At least the Cubs won the World Series.
It wouldn’t have happened if the Cubs were run by the State of IL! lol
A financial crisis in when you borrow money you shouldn’t. A social crisis is when you finally fess up to it.
Mish, as a fellow Illinois/Chicagoan, what’s the solution other than that you and I get hammered with tax increases? Who was on watch when public employee pension “security” was written into the state’s constitution??! Isn’t there a SCOTUS challenge there under “equal protection” theory? I don’t have a pension, and a lot of people who do are not similarly protected under the constitution like public employees–those who by-the-way find ever ingenious means to game the system to land completely outlandish, inflated pension payouts! Why should I pay when I don’t have the same protection, or even a pension to begin with?? Get me outta here.
At an individual level or corporate level, the solution is to leave.
At a municipal level the solution is for the state to allow municipal bankruptcies – otherwise default
At the state level, we need legislation at the national level – otherwise default
I agree, but you and I know that the Democrat-controlled political dynamic here will first and foremost demand taxes lest their voting base suffer any reality checks from major although much needed restructurings. And even if that occurs, what stops them from starting the same whole thing all over again? That “clean slate” going to look pretty tempting to state and local politicians.
The same lunacy prevails in WI. I know of retired clerical workers here that can afford to winter every year in HI. Had they done similar work in the private sector, they’d be lucky if they were to have any pension whatsoever!
Reblogged this on John Barleycorn and commented:
The blue state blues
We’ve got basket cases like Illinois on one side – following economic models from the 1960’s (you know, when “America was great again” – fucking idiot) and nut case policies in Kansas.
It isn’t that difficult, it just requires haircuts all around, but everybody wants to cut somebody else’s hair and keep their beautiful locks intact.
Rauner is as right as is possible in an impossible situation.
@monosynaptic — you are just a really offensive self righteous prick
Yup, fair enough.
Illinois is failing…Good!
Amen brother, *&%$#! people get what they deserve! Illinoisans should have burned down the governor’s mansion long ago and then moved on to the state house. I voted with my feet and it’s wonderful to see justice being done in Illinois. They the People allowed this to happen every time they went to the voting booth so they should either light the torches already or quit bitching.
genius!
of course.
make it more
difficult to leave.
Illinois is junk. Got it.
Please no state level bankruptcy. They can default and pay what they can, when they can. A work out. No need to force the creditors and the US government to pay. This would lead to other states doing the same thing. Illinois needs to act like a sovereign state or there is no reason for a governor or assembly. No more undeclared but implied back stop from uncle Sam.
State level bankruptcy; quick, simple and easy as heck to obtain at the flick of the wrist, is exactly what is needed. Anything else is just welfare payments to ambulance chasers, “consultants,” “negotiators” and other produce-nothings. While at the same time slow boiling and harassing people who had no say in the decisions that led Illinois to this point to begin with, instead of providing them with a clean slate from which to rebuild the ruins that progressivism and fate in the state brought.
Illinois is a failed state. Toss ALL of it out, in about 5 minutes worth of deliberation. And start anew.
And yes, other states would do the same. Perfect! They are all failed. Then, have the federal government do the same. The whole bloody country is a failure. Toss them all out, and start anew. There’s nothing meaningful left that’s worth preserving anyway.
If you do that, creditors will quickly take note, and stop throwing money at the clowns. Instead of acting like some lemming herd, uncritically marching to the drumbeat of whatever corrupt ratings agency the clowns get to bless their trash paper. While cheering on the clowns to use their asymmetric superiority of armaments to rob others for creditors’ benefits.
If creditors hadn’t willingly lent money to the clowns, things could never have gotten this bad to begin with. The only way to ensure future creditors do not repeat the travesty, is to ensure creditors loose as much money as possible, when they knowingly choose to aid and abet government growth. A clause stating no debt obligation outlives the administration that entered into it, would be ideal, as it would prevent can kicking that is at the heart of current “policy making.”
But first: In your face, raised middle finger, bankruptcy! Excessive debt is the problem. Hence, the solution is to get rid of the debt. In the process, burning all those who enabled and benefited from the runup, as harshly and directly as possible, tot maximally inoculate against a repeat. While leaving those who did not, to the greatest extent at all possible, completely out of it.
https://s-media-cache-ak0.pinimg.com/736x/34/4e/af/344eaf5f3706deb4305e3a1a40e7606d.jpg
Same scenario in California. The democrat controlled state is passing new laws to drive more people & businesses out of the Golden State. Pity; it’s a nice state, except for the government.
In case you missed the news , California is the richest US state. It hosts most of the companies that headmark the Internet Revolution. As far as I know, Silicon Valley is not precisely located in Missouri
Will California eventually fail ? Yes for sure. But it will take at least 20 more years
It’s nominally rich for sure. But less and less of the wealth in Silicon Valley is coming by way of money earned. Some companies are wildly profitable, but more and more of the wealth is just stolen from others. Via debasement and it’s attendant pumping up of stock, real estate and other “asset” prices. It’s a very different situation than back in the 70s and 80s,
Of course, given that the other regions similarly benefiting from theft-by-debasement (New York, DC, Boston….) combined adds up to where most of the ruling/leeching class lives; I wouldn’t exactly expect the theft racket to somehow magically be dismantled within the next 20 years, either….
So are you suggesting that California seize the privately owned assets in Silicon Valley to pay for its extravagant spending ?
So I’m moving to Seattle to escape California income tax this year and Lo and behold Seattle wants to levy a city income tax they claim is an excise tax which is nuts. It’s complicated but also it’s a sign of the times. Mish should do a post on this. Desperate men are doing desperate things these days that’s for sure.
Follow Musk to Reno….. Nevada, being nothing but a pile of sand, will likely forever be more dependent on favorable treatment of citizens to prevent them escaping, than the coastal states.
I don’t see Trump or a Republican-controlled congress coming to the rescue.
Pity the farmland cannot emigrate.
The produce produced on it can. And will, if it becomes cost prohibitive to produce in Illinois.
Socialism causes economic suffering everywhere it is tried.
Illinois, California and Connecticut are all in the same situation… terrible governors and a legislature that is ultra liberal bankrupted the states. And those three are just the leading edge of the bankruptcies.
PS — Bernie Sanders made $1 million writing a book stirring up trouble…. wonder when the courts will seize his ill gotten wealth and use it to pay the hospital costs for today’s shootings? Funny how the socialists don’t volunteer to take responsibility for the suffering they cause
too ironic: June 14, 2017 10:31:19 at 10:31 PM
Public pensions will soon be as extinct as most corporate pensions already are. Bankers are printing pensions away. Don’t even ask what bankers are doing to retiree health care.
Printing is confiscation. Bankers are confiscating purchasing power from state and local revenue. States and cities continue to reduce services, and magnify tax rates. States and cities continue to reduce real wages/benefits/pensions (the CPI is not accurate). Its not enough. Bankers continue to confiscate no matter what states do. Double digit service inflation is a slow doom spiral. Education inflation and medical inflation are to the moon.
Bond default and additional wage/pension trims would slow the process, but not stop it. If states don’t get together and pass a Constitutional amendment to prevent bankers from confiscating their revenue, they will continue to slowly move backward.
That which cannot be paid, will not be paid. Mathematics trumps pension promises. Illinois pensions are a classic Ponzi scheme. Oldest and first to retire will collect big, and last into the pension pool will get shafted up the kazoo.
University administrators will terminate faculty and shaft students to the max before cutting their own kind (fellow administrators). Students who are truly smart and want value will outsource their education and head to online universities, China, India and elsewhere. Even if all the Illinois public universities closed their doors, the world would still be oversupplied with universities. California perhaps worse with too many $300k salaries and needless overexpansion of university campuses to gratify administrative egos, but will take much longer to collapse.
Why on earth is that letter written from the “Office of Business and Workforce Diversity”?
Kind of like Michelle Obama being paid over $300K per year as “Diversity Director” at a hospital in Shitcago. “Oh, we have an emergency situation! I can’t find enough sick Pacific Islanders in your hospital. You must close down until you find some.” Just joking about the Pacific Islanders but I hear it was a no show job provided by Valerie Jarret after she was disbarred. More precisely surrendered her law license so she would not be prosecuted and THEN disbarred for lying to a judge as an attorney in court.
…or Chelsea Clinton making $600K as a “consultant” for NBC!
Well, they had to get the $$$ for their $8 million house in DC somehow!
My retired engineer friends from IDOT told me those ridiculous concrete barriers they line the Tollways with during construction are rentals and consume 10% of the annual budget! They tell me roads which all engineering principles tell them require concrete are overridden by an IDOT computer program which always tells them to use asphalt provided by some connected a-holes.
Personally witnessed by me. I was in the IDOT HQ in Dixon and a guy said he wanted to show me the garbage dumpster. I knew there was a dumpster behind a set of doors and said “what for?” He opens the doors and there was now a handicapped accessible ramp and platform of concrete behind the dumpster. It cost $50,000 Purpose? Some idiot decided employees could possibly injure themselves lifting a waste basket and dumping the paper scraps into the dumpster. Soooooo, the employees were then instructed to take their wastebasket up the platform and place it on the concrete floor and tip it over into the dumpster.
They also used to throw out all unused automotive parts they stocked for state vehicles every fiscal year. “Otherwise they might get their budget cut for parts”
How do we get rid of Madigan is THE question.
My father was in the Air Force after the Korean War ended. Some time in late ’53 early ’54 stationed in Biloxi he and several others were assigned a task of loading thousands of jeeps onto an aircraft carrier. His thought was “Holy crap! Something major is going down.” One week later the aircraft carrier returned to Biloxi. The jeeps were war surplus – all dumped into the Atlantic.
My point is every government waste permeates every nook and cranny of every government in the US. And as bad as the waste was in the 1950’s, it has only grown since then. The military surplus given to police departments is only a symbolic sliver of the surplus and waste.
Heh. My great uncle reported the same “war surplus disposal” in the Gulf of Mexico. I wonder if its the same story, or it just happened so often!
My favorites are the drive up ATM’s being required to have Braille keyboards.
Mish, Mish, Mish. College administrators HAD to increasedby a third in seven years. The precious snowflakes DEMANDED it! They made demands for Directors of Diversity, Directors of Safe Spaces, Directors of Sensititivity, Directors of Multisexual Access, Directors of Non-Bigoted Toilet Paper Dispensers — and the universities complied, at the same time hiring lots and lots of Directors of Endowment Investments with Wall Street-style compensations to go with it.
Hey, we’ve seen this gig before. Of course, back in Old China, the enunuchs actually had to castrate themselves in return for robbing the Imperial treasury and running the country into the ground. We can’t expect the same kind of sacrifice from today’s eunuch class, can we?
I would pile on Illinois, but I believe every government is insolvent. Some are more insolvent than others and some are better at hiding it.
Reblogged this on The Most Revolutionary Act and commented:
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The state of Illinois has not passed a budget for close to three years. As Illinois’ bond rating approaches junk bond status, Illinois paid bills jumped to $14.3 Billion. Road contractors have been instructed to suspend all roadwork other than that required for safety.
Reblogged this on Debatable News: Mainstream to Tinfoil Hat and more and commented:
They are as broken as it gets, but they want to use their population size to force their broken ideas on the rest of us. That stinks.
There’s more than just bonds that is junk at IL universities!
Reblogged this on sentinelblog.