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Illinois To Delay Pension Payments Amid Budget Woes: "For All Intents And Purposes, We Are Out Of Money Now"
By now, Illinois' budget problems are no secret.
Back in May, after the State Supreme Court struck down a pension reform bid, Moody's move to downgrade the city of Chicago thrust the state's financial woes into the national spotlight.
Since then, the situation hasn't gotten any better and despite hiring an "all star" budget guru (for $30,000 a month no less), Bruce Rauner was unable to pass a budget in a timely fashion leading directly to all types of absurdities including everything from the possibility of shortened school years to lottery winners being paid in IOUs.
Now, as Bloomberg reports, pension payments are set to be delayed. Bond payments, apparently, will still be made.
Illinois will delay pension payments as a prolonged budget impasse causes a cash shortage, Comptroller Leslie Geissler Munger said.
The spending standoff between Republican Governor Bruce Rauner and Democratic legislative leaders has extended into its fourth month with no signs of ending. Munger said her office will postpone a $560 million retirement-fund payment next month, and may make the December contribution late.
“This decision is choosing the least of a number of bad options,” Munger told reporters in Chicago on Wednesday. “For all intents and purposes, we are out of money now.”
Munger said the pension systems will be paid in full by the end of the fiscal year in June. The state still is making bond payments, she said.
“We prioritize the bond payments above everything else,” Munger told reporters.
And from Reuters:
Illinois Comptroller Leslie Munger said on Wednesday a $560 million November pension payment will be delayed due to a cash crunch stemming from the state's budget impasse.
Despite the delay, state pension funds will be paid in full by the end of fiscal 2016, Munger said at a news conference in Chicago.
Here's some color (again via Reuters) from Tuesday's preview:
Oct 13 Illinois' budget impasse has reached a point where full and timely payments for big ticket items such as pensions could be in jeopardy, the state comptroller's office indicated on Tuesday.
Comptroller Leslie Munger set a Wednesday press conference "to discuss the significant cash flow constraints the continuing budget impasse is placing on state finances and the challenges of making timely state payments in the months ahead," according to an advisory from her office.
The battle between Republican Governor Bruce Rauner and Democrats who control the legislature has left Illinois without a budget for the fiscal year that began July 1. However, the state is required, even without a budget, to put aside money each month for pensions and debt service on bonds.
One wonders what these means for Chicago's bankrupt school system, which, as we reported early last month, was depending upon nearly a half billion in funding from Springfield to plug a gaping budget hole. Further, this would seem to suggest that anyone who wins more than a few thousand in the Illinois lottery can go ahead and figure on getting a pieces of paper with Bruce Rauner's picture rather than Ben Franklin's for the foreseeable future.
We also encourage readers to review this piece by Reuters in full as it contains several of the most egregious examples of government waste and inefficiency you'll ever come across and goes on to say that reform simply isn't an option, as the Illinois legislature is filled with lawmakers who have at one time or another themselves benefited from the state's sprawling local bureaucracies. Reuters also says it has identified nearly a dozen instances where husbands employ wives, mothers employ daughters, and fathers hire sons," suggesting nepotism weighs heavily on the already elephantine system.
Bear in mind that this is the same state whose court system refuses to allow efforts at pension reform to move forward, and while all of this may seem like a recipe for default disaster, just remember, PIMCO sees a lot of "long-term value" in Chicago's debt.
Finally, a look at just how underfunded Illinois' pension system truly is:
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This article does not get to the bottom. In a conversation with a state worker, the State of Illinois is also out of money for the healthcare that they are contracted to provide to state workers. It has been made known that state workers can expect that their contracted providers can demand payment in personal funds up front, as the state is so far behind in paying past bills. Expect a lawsuit that will put liens on state property next.
consultants to the state: architects and engineers and so forth designing roads, bridges, and building improvements may not be getting paid as well I hear.
You suck ass ZHer Libertarians. Neither the article nor two full pages of comments mentioned Republican Governor Bruce Rauner's tax cuts for corporations, the rich and himself. Wait till the shit hits your fan and we start hunting you to ground.
you need to be specific, not just spout off talking points. what alleged tax cuts are you specifically referring to?
Ahh so. So, the problem is NOT related to a corrupt legislature, corrupt bureaucracy, corrupt, mob-controlled unions, a corrupt and derelict teacher's union supporting derelict teachers, padded pensions and fleeing, over-taxed corporations and homeowners. Nope, the entire problem can be resolved by just adding a few extra mils to the evil corporations, and killing some ZH libertarians. Good luck with that one. Unless you're one of the rare urbanites fluent in drop, windage and clicks for .338 Lapua, better plan on becoming a menu item when SHTF.
I know nothing of Illinois.
But I can plink straight.
Does that count?
Oh, come on, now. That's a little over the top, don't you think?
Everyone is going to need human plow horses and domestic servants in their manor houses.
A reasonable alternative, Tara, except 'horses' like Mike couldn't pull a greasy string out of a cat's ass, much less pull their own weight. Better to make jerky from jerks than listen to the complaining and having to feed and house them.
Fuck off, Mike.
xom - You have no idea what you are talking about. The tax rate decreases that you refer to were the result of a sunset clause in the "temporary" tax increase many years ago. Rauner had absolutely nothing whatsoever to do with it, other than not agreeing to reinstate the "temporary" increase.
Madigan, eat shit and die you scummy bastard.
If you can't manage your money, create your own state bank! Money created out of thin air. Hell, use the pension and the lottery funds you owe to help you. I'm sure there are plenty of funds to barrow from to create your very own fiat money supply...
Yes, Illinois wants to create there own bank as do several states that can't budget properly. Why not even make Medical cannabis the reason to do it? Seem's legit...
http://ilnews.org/4177/rep-flowers-medical-cannabis-makes-state-bank-nec...
They're changing the name of the state to Ponzinois.
"Rahm Emanuel is the mayor of Chicago, Ponzinois" sounds more natural.
Way back in kindergarten, we were taught there is no such thing as a free lunch / you can't get something for nothing.
Turns out the kindergarten teachers were right, and Obama/Sanders are wrong.
Bullshit. There are plenty of self -serving shirt lifters who do fuck all and get everything on a plate. Aristocrats, Royalty, kids of rich people, people over-paid. Your Kindergarden teacher was just that a kindergarden teacher. Brainwashing starts at a young age.
While that may be true.....
Don't you think it HOPELESSLY naive for the workers in the State if Illinoise to have trusted the state government?
Squid
And you parasite govt employees have already taken free sh!t -- you aren't fooling anyone but yourselves.
Decades of collecting a full paycheck without doing a full job. Decades of collecting higher benefits than the public you are supposed to serve, but are not.
Now you expect to be paid a second time, for not doing the work even once?
You base your naive claim on a promise you got from a liar (they are sometimes called politicians)?
You have no claim, even if your fellow parasites on the bench act corrupt and rule on a case where they have a huge conflict of interest.
Face it losers -- not even the liberal tree huggers in California felt any obligation to make good on lies to Stockton's parasites. If anything, the parasites sucking Chicago dry have even less claim.
Be thankful your union doesn't get charged with fraud and charged under RICO (millions of fraud cases, far above the three required). Be thankful if you can collect 20 cents on the dollar for your bullsh!t "promises" you got behind closed doors from corrupt politicians -- its 20 cents more than you earned
I am going to retire in about 6 weeks. I work for the gov't in Ohio so I should be scared but I don't think anyone really knows what the future will bring or when it will happen. I am not mad about the comments bashing government workers but I will say that for every fuck up there are at least 10 others doing their jobs. But people don't notice all the things that are being done well. Human nature I guess.
I do believe that forces are at work against the gov't pensions but they'll be the very last to go.
"I am going to retire in about 6 weeks. I work for the gov't in Ohio so I should be scared but I don't think anyone really knows what the future will bring or when it will happen."
You're half right...everyone on this site KNOWS what the furture will bring....and so do you deep in the back of your mind. Enjoy the state pension while it lasts or while it can still buy somehting.
The question of when the reckoning will happen? THAT, my friend, is the question.
Squid
I upvoted for your brave admission. I am on an Ohio board and get paid maybe $3k per year. I already have over $2k in a retirement fund even though I have only been paid maybe $10k or so total so far. I also have a health account with maybe $500 in it. If I show up to a 1 hour board meeting I get paid for 8 hours. this all adds up.
I think some people have been on board for say 17 years and then get a full time job for 3 years. They then retire having their 20 years in and get a pension based on the average pay for the last 3 years. Maybe they have clamped down on that.
The nicest buildings in downtown columbus are the public pension fund buildings. State Teacher's is a veritable palace costing over $200/sf at a time when half of that would get you a nice building. The furnishings would make a banker blush.
A relative is a retired teacher who got credit for working part time for the State when he was in college. It was a surprise to him. The state employees will dig up all of that info to help sweeten the pot. He cashed out $30k in sick time to spike his retirement. I think he made $48k his last year teaching, so you add in that $30k and it made his 3 year average $10k more. So he gets paid on that basis for the rest of his life. Take a healthy, vibrant man in the prime of his life and give him a deal to stay home from work and get the equivalent of 80% pay for the remainder of his life.
This guy has a home in Ohio and a vacation home in FL. Lives a nicer lifestyle than many, many others who supposedly been more "successful" in life.
Just print some more up.
shoe meet floor....
shoe meet 30,000 feet of thin air
shoe meet furnace
Sounds like ill noise is coming to the state...
"Bond payments, apparently, will still be made."
The bankers and people with no shortage of money will get a bigger number in the their bank account while:
"Pension payments are set to be delayed."
People who live day to day will potentially go hungry and homeless.
What a joke!? Are they serious funded for all of 2016...
September 29, 2015, 02:53 pm
House invokes 'martial law' to speed vote on spending billhttp://thehill.com/blogs/floor-action/house/255310-house-invokes-martial-law-to-speed-spending-bill-vote
By Cristina Marcos
They should make a pension payment commitee that can meet once a month and threaten to pay pensions eventually, but never do it. Maybe even hint at a negative pention payment policy to test which way the wind is blowing.
Gotta love it when reality sets in. But please, we need moar Socialism to combat the issues of Socialism.
Standard government procedure. In this case and in months to come, it's not "double down". It's "triple down", "quadruple down", "whatever it takes". Because too many in power are still getting rich off the printing press. Musn't let that stop, eh?
How long before illinois demands independence?
reduce payouts by 50 to 70% immediately. only seems fair. many of these people probably played the game of spiking their pensions by cashing out sick time to increase their average pay at the end thereby siphoning off more than was intended for years. plus the colas were probably a little high compounding the insanity over time.
We delayed pensions to some folks... Welcome to Venezuela, bitches!
The road is getting a lot more difficult for the progress of the can.
We gots NO money, but hey, we're still having fun...
https://www.youtube.com/watch?v=Tfs03YwLWGE
Why do you think the cabal pressured Chicago and Illinois to change the election requirements, so that Rahm Emmanuel, duel Israeli/US citizen, and former member of Israel's military, could become mayor of one of the most corrupt cities on the planet?
The cabal is fully aware that the rising conflict between real taxpaying Americans in rural Illinois and the cabalist controlled ghetto of Chicago will explode very soon, as fiscal reality and corruption collide. Chicago will be an early flashpoint as things unwind.
When it blows, they want to make sure one of the tribe is in charge, so the outcome can be manipulated in their favor, to the extent that is still possible.
They will not succeed, but their gambit is becoming increasingly transparent.
It is also no coincidence that our latest cabalist puppet and "diversity hire" president was groomed there as well.
I will celebrate to a year solid, if the evil and corrupt, peoples Republic of Illinois goes down the toliet bowl! :-) And I don't think I will be the only one.