Unable To Pay Bills, Illinois Sends "Dear Contractor" Letter Telling Firms To Halt Road Work On July 1

Tyler Durden's picture

Authored by Mike Shedlock via MishTalk.com,

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 that 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 has 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

  1. On June 4, 2017, Politico reported How Illinois became America’s failed state.
  2. 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.
  3. 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

  1. Municipal bankruptcy legislation
  2. Pension reform
  3. Right-to-Work legislation
  4. End of prevailing wage laws
  5. 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.

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SilvaDolla's picture

Out of money?! What happened to all that jack that Uncle Ben printed?

are we there yet's picture

Senator Obama sucked Illinois dry, then as president he sucked the US dry. Can we send Obama to Saudi Arabia?

SmittyinLA's picture

Walking in Lincoln's footsteps, did we ever pay off that slavery fix-debt?

Does that make us slaves?

Pvt Joker's picture

Think all of that was bad ? Wait , there's more!

"Powerball, Mega Millions ending in Illinois due to budget impasse, lottery officials say"

http://www.chicagotribune.com/news/ct-illinois-lottery-powerball-megamil...

That's right, folks .  They won't take our marker.   You know you are a failed state when even the lottery won't take a chance on you .    Illinois - too broke to gamble on.

ali-ali-al-qomfri's picture

Welcome to the Hotel Illinois, you can check out anytime you like, but you can never leave,

using the highway, it's shut for repairs or rather non-payment of repairs.

 

GOSPLAN HERO's picture

Don't bring your Yankee ass / Illinois big government shit to Dixie - stay the fuck out!

SmittyinLA's picture

Have they halted bond issuance prep work too?

They cant pay but I bet they're still borrowing hand over fist.

Illinois is a Socialsit pig farm let them eat themselves, let the mob tax municipal bond debt payments and fees.

Release the Cracken!

Golden Showers's picture

K, well, you can bitch all you want about Illinois. Or you can play Dwarf Fortress. http://bay12games.com/dwarves/

Strike the Earth!

mathew913's picture

Save some money for the illegal immigrants you can't afford

ManofSorrows's picture

Grew up in northern suburbs of chi-town. I'm sure the "roaring '00's" (fiat pump) and the Obo years made it seem like Chicago was a great place to be but.... it just seemed that way. Roads! Chicago and anywhere close has NEVER had good roads. And what makes it worse is that they're always under construction. There were never any Republicans in the Chicago Republican party just Demo plants. They ask for volunteers to run as a Republican so they can make it seem legit. Think I'm kidding?

Illinois is a good state filled with good people outside of the Chicagoland/Quad cities/DeKalb areas. Those are just filled with parasites sucking off the host. They will eat themselves, the survivors will then look for new hosts. Run, don't walk. There is no solution inside the wire.

Dougs Decks's picture

I woouullld have to say,,,,,,,,     there are not alot of local gov. workers.....    here on the Zerohedge,,,,,,

Publicus's picture

Where we're going there is no need for roads.

squid's picture

Ok, the real problem even if you leave pensions out of it is...

The state does too much stuff for too many people.

In a Sane world when people used to have balls you'd say fuck the bond market and go it alone but...

Like with Greece, Illinois has been living beyond its means for so long they need bonds to fund day-to-day Operations. They can't even pay the interest on last year's bonds without more bonds sold this year. That's just for normal Operations while NOT putting money into those impossible pensions.

 

To all idiots and fund managers buying Illinois bonds or any muni issue out of Illinois, HA, HA, HA, HA!

The greater fool theory of investing depends on an endless supply of greater fools but in Illinois' case, we're running out of fools.

There will soon be NO ONE LEFT to roll the bonds to. Can you spell DEFAULT?

You get nuthin. Gone, done.

 

You lot better check you IRAs and 401Ks to make sure you're not holding any fund that holds any Illinois paper, it's worthless so get rid of it.

 

This puppy is done. The poloticians won't fix it. They've convinced people that they have have shit that someone else will pay for.....we're officially out of someone elses. It's done.

 

Just walk away and let them enjoy the bankruptcy and default that they earned and deserve.

 

Squid

OKUSA's picture

Was in Chicago this past weekend for a graduation. We took several Uber's around town and the roads were complete sh*t. Also, 75% of the drivers were named Mohammad or Hassan etc. At least they spoke English.

At the graduation senator Durbin spoke. Nothing but pure liberal garbage and masked hatred for Trump. God I couldn't get out of there fast enough. What a cesspool. Especially with the gay pride rammed down your throat everywhere you go. Saw a few trannys in grocery store. My how this nation has fallen.

ZeroLounger's picture

How poignant.  Yep, it's a Miley Cyrus and Snoopdog nation now.

And don't forget about the 'windy city'.  It's always windy in Chicago 'cause Indiana blows and Michigan sucks.

Eddielaidler's picture

Serves them right for that highway robbery toll system that is impossible to pass through without getting fined. Even Oprah left.

moorewasthebestbond's picture

Musical $ chairs just stopped.

Jayeles's picture

ILL-INOIS:
1. Of the more than 3,000 counties in the USA, St Clair, Madison, and Cook counties in Illinois are almost always on the top ten judicial hellholes per the judicialhellholes.org website.

2. Per Chief Executive magazine, Illinois is consistently one of the worst states to do business in. Some of their rankings and comments below.
2013 rank-48th:
"Illinois—a complete and utter disaster when it comes to fiscal management."
"California and Illinois have incompetent politicians and inimical outlooks for business.”
“Illinois is a joke when dealing with the financial and healthcare issues..."
“Living in Illinois… this state is too “corrupt”.
2014 rank-48th:
“Illinois is a horrendous state in which to do business. It is governed by a class of incompetent, corrupt politicans. It’s like doing business in a third-world country.”
2015 rank-48th:
"The Democratic politicians have been bullshitting the voters in Chicago for close to 40 years. The state fiscal situation is a mess and Bruce Rauner may be the last, best chance to save the state.”

“Illinois politicians are elected and controlled by the public service unions. All focus is on keeping them happy and funded. All else takes a second or third seat. Business is only viewed as a source for taxation revenue.”
*******end Chief Executive mag comments********

barysenter's picture

Alinskyites get what they deserve

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