Illinois State Official: "We Are In Massive Crisis Mode, This Is Not A False Alarm"

Tyler Durden's picture

Last week we reported that as Illinois, a state which now faces over $15 billion in backlogged bills, struggles over the next two weeks to somehow come up with its first budget in three years ahead of a June 30 fiscal year end, and faces an imminent ratings downgrade to junk - the first ever in US state history - traders finally puked, sending the yield on its bonds surging after a judge ruled at the start of the month that the state is violating consent decrees and previous orders, and instructed the state to achieve "substantial compliance with consent decrees", further pressuring its financial situation.

In a last ditch attempt to resolve the ongoing budget impasse and prevent a potential crisis, which may culminate with an eventual default by the distressed state, yesterday the WSJ reported that Illinois Gov. Rauner ordered lawmakers to return for a special session this week, but the two sides still seem far apart. Republican Gov. Bruce Rauner ordered the special session starting Monday, as the backlog of unpaid bills reaches $15.1 billion.

“Everyone needs to get serious and get to work,” he said in a video announcing the session that his office posted on Facebook.

As reported previously, the state Transportation Department said it would stop roadwork by July 1 if Illinois entered its third consecutive fiscal year without a budget - the longest such stretch of any US state - while the Powerball lottery said it may be forced to dump Illinois over its lack of budget. For now, state workers have continued to receive pay because of court orders, but school districts, colleges and medical and social service providers are under increasing strain.

And yet, despite the sharp selloff in Illinois GO bonds which some had expected could force the two sides to reach a bargin, neither the Democrat-led legislature, nor Republicans governor Bruce Rauner appear closer to a consensus. Which probably explains today's Associated Press "shock piece" exposing just how serious the situation could become in under two weeks absent a resolution. It focuses on state Comptroller Susana Mendoza - who has had the unenviable job of essentially sitting at the kitchen table trying to figure out how to pay the bills - who is warning that the previously discussed new court orders in lawsuits filed by state suppliers that are owed money mean her office is required to pay out more than Illinois receives in revenue each month. That means there would be no money left for so-called “discretionary” spending - a category that in Illinois includes school buses, domestic violence shelters and some ambulance services.

“I don’t know what part of ‘We are in massive crisis mode’ the General Assembly and the governor don’t understand. This is not a false alarm,” said Mendoza, a Chicago Democrat.

“The magic tricks run out after a while, and that’s where we’re at.

As AP sums it up, "it's a new low, even for a state that’s seen its financial situation grow increasingly desperate", a state which has a website dedicated to tracking the daily amount in overdue bills...

... and has the lowest credit rating of any state.

Lawmakers from both parties have acknowledged Illinois needs to raise taxes to make up for revenue lost when a previous tax hike expired, leaving the state on pace to take in $6 billion less than it is spending this year — even without a budget.

That, however, is being blocked by Rauner, who wants Democrats to approve changes he says are needed to improve Illinois’ long-term financial health before he’ll support a tax increase. Among them are "term limits for lawmakers, a four-year property tax freeze and new workers’ compensation laws that would reduce costs for employers." Democrats have balked at the full list, saying they’re willing to approve some items on Rauner’s list, but that what he’s demanding "keeps changing or goes too far and would hurt working families." Senate Democrats also note that they approved a $37 billion budget with $3 billion in cuts and an income tax increase in May. The House has not taken up that plan.

In a scenario reminiscent of ongoing events in insolvent Greece, state funding has been reduced or eliminated in areas such as social services and higher education. Many vendors have gone months without being paid. And increasingly, they’re filing lawsuits to try to get paid. As discussed last week, the courts already have ruled in favor of state workers who want paychecks, as well as lottery winners whose payouts were put on hold. Transit agencies have sued, as has a coalition of social service agencies, including one that’s run by Rauner’s wife. Health care plans that administer the state’s Medicaid program also asked a federal judge to order Mendoza’s office to immediately pay $2 billion in unpaid bills. "They argued that access to health care for the poor and other vulnerable groups was impaired or “at grave risk” because the state wasn’t paying providers, causing them to leave the program."

As one after another deadline looms, on June 7, Judge Joan Lefkow ruled that Illinois isn’t complying with a previous agreement to pay the bills and gave attorneys for the providers and the state until Tuesday to work out a level of payment.

Meanwhile, comtroller Mendoza says whatever that amount will be, it will likely put Illinois at the point where 100 percent of revenues must be paid to one of the office’s “core priorities,” such as those required by court order. And if this lawsuit doesn’t do it, the next court ruling against the state will.

In other words, the already insolvent state is about to be slammed with another deluge for bills which it can't pay. Then, she’s not sure what will happen, other than more damage.

“Once the money’s gone, the money’s gone, and I can’t print it,” Mendoza said, perhaps envious of the residents of the Marriner Eccles building who have never faced a similar predicament.

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Jubal Early's picture

"330 million shmucks"

Ah, you speak yiddish.  And after your tribe has destroyed the US you will simply use your other passport and move to greater Israel.

Blankenstein's picture

Maybe you shouldn't shit out half a dozen kids if you don't have any money.  

IntTheLight's picture

Starving? No one in the ghetto is starving. Paid for by the government. Boy are you naive.

urhotdogs's picture

You can start the Chicago Go Fund Me and kick in your very generous fair share along with all your Demorat friends as they are all so compassionate.  I'm tapped out and besides,  I didn't create the mess.  I didn't force all those women to have those kids that they couldn't afford to raise.  Govt policies that reward that behavior did.  Illinois has been on the ropes for years and your Democrats? have never tried to fix it except to raise taxes.   

RU4Au's picture

Some of these "innocent People" should learn to work.

auricle's picture

Not even in a recession yet and they are already crying uncle. Funny thing is they'll want more of the drug(debt) that got them into this mess. When will people learn. 

Yog Soggoth's picture

Where does all the money from the tolls go to? That has to be a million a day ripoff.

Moe Hamhead's picture

Maybe they could start taxing ammo in the 'hood.

Dancing Disraeli's picture

The worst outcome of this is going to be all the libs who will flee Illinois for red states, where they will promptly vote democrat, proving that cause and effect cannot penetrate.

Never One Roach's picture

This is a big problem in places like Texas where left wingers and dindus from katrina and LA now populate places like Austin, Central Houston and Dallas. Also happens ot be where crime is almost out of control. That's odd.

 

Mall closings will intensify the migration of criminals to other areas, I'm sad to report. I am already looking at other options of moving further out or perhaps beating Ginsberg to NZ. I hope she kicks the bucket soon, anyway. if the Suprme Court had a mandatory retirment age of 70, she would have been forced to retire 40 years ago.

mary mary's picture

corollary of Gresham's Law "bad voters drive out good".

stacking12321's picture

OXYMORON ALERT!

there's no such thing as a good voter.

if you vote, you are a pathetic worm that deserves whatever fate your overlords choose to dish out.

you've handed away your sovereignty in the hope of some favor or act of charity from the masters, while failing to recognize that YOU are the master over your own life, that YOU could create something much better, and that's why you'll never be more than a lowly worm until you understand this basic concept.

Jubal Early's picture

Ah yes.  Democracy is a sham hijacked by your tribe to fool the Goyim and steal their wealth, their heritage, and their future.  Go back to Israel, kike.

BeansMcGreens's picture

It is amazing to see how this "stacking 12321" has moved from the position of all compasionate to the denigrating of just about everybody, to the point of calling them worms.

The Bible says, once again being true:

James 1:8King James Version (KJV)

A double minded man is unstable in all his ways.'

By the way, if only the Jubal Early of the 1860s had only gotten into Washington DC.

Endgame Napoleon's picture

Okay, the governor wants to cut down on the cronyism by imposing term limits. His wife runs a social services agency that is suing the state for money owned to state suppliers, or is it owed to the more-free-stuff recipients? What a tangled web they've woven.

NeedtoSecede's picture

Sorry you hear that you live close enough to Shitcago that you have to hear their news Auto Choke. But your comment has me wondering about how the MSM will spin this debacle when it does blow up? What propaganda will they try to feed the rest of us to convince us productive citizens of other states that IL is TBTF? Will they pin this one on Putin also? "The Russians hacked the IL budget!l!"

What a bunch of idiots, we are doomed...

Jeffersonian Liberal's picture

Auto-

Screw 'em. Yes, I understand your reaction.

But you do realize where this is headed, right?

If some slimy banksters that cause a financial (and are causing a currency) meltdown are "too big to fail," then certainly an entire state is "too big to fail," as we must provide them with a massive bailout.

Now, we also need to understand the three components that have led Illinois to this state:

1. Socialism in government and socialists running out of other people's money to spend.
2. The sense of 'entitlement' (how'd we ever let the left force that Orwellian Newspeak term into our political lexicon, some people are 'entitled' to take from others?) that naturally follows any socialist system.
3. The government/public-sector unions (part and parcel of the socialist government) and the absurd promises that the politicians made to these unions where they thought for every $1 they took from the private sector in taxes could pay out $2 to each "communionist" employee.

And yes, that is a term I coined. These union thieves are little more than communist union members who hide behind the flag and "Buy 'Merican" to rationalize extorting a better income, benefits, and pension/retirement fund than their neighbor in the private sector has.

Screw 'em. Yes, every one, with a rusty pipe.

But don't give them one red cent to bail out this failed, UNJUST system.

Also, the end goal for all of this is to nationalize all private retirement accounts. They'll confiscate that money we've put aside to bail out "those who have dedicated their lives to serving the public."

techpriest's picture

I think they are only into panic now because the multi-state lottery is dropping them. OhMiGod...no lottery, lions & tigers & bears.

The lottery is what people accuse religion of being. Give the masses a hope that one day their lot will improve, without actually explaining why they are where they are, or how they can change.

So now, its a crisis because the false hope is being taken away. Now people are going to think that there's no way out but rioting.

That's the risk you run when you keep a permanent underclass for a voting base, while running your city into bankruptcy.

EmeraldWI's picture

Junk muni's trading almost 3%, oh my, stop the press and start the presses. IL doesn't have a debt problem, they have an income problem. Full employment and a fair tax rate would pay all $15 billion in maturities in a flash.

Blankenstein's picture

Fair tax rate?  Such as the property taxes that are the 2nd highest in the country?

AllOfGood's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://bit.ly/2jdTzrM

New_Meat's picture

wow, lookie-here all y'all, MDB's bot his own sef is up and runnin' !!!

Shinebama's picture

I have a way you can make $40 for no more than 5 minutes work. And I'll give you an extra 10 if you swallow.

shovelhead's picture

Your friend apparently is unfamiliar with the physics of light waves.

NoPension's picture

Will anybody go to jail? Lose their pension? Be professionally ruined?

No?

Meh....fuck it...who cares?

That is the attitude and the problem.

Just Another Vietnam Vet's picture

Dang, say it aint so Joe,   are The Rats Jumping Ship........???

....debt status critical, population shrinking, schools stinking, roads ..lotsa potholes .......'

Just keep jackin up those big fat pensions and state benies.  

Then stick yer head in the sand ...in Obama land.

It'll all be fine..... with another glass a  shy town wine.  

Zorba's idea's picture

You forgot the main ingredient...our debauched currency

shovelhead's picture

If it's the main ingredient then how come I use it and I ain't broke and owing everyone in the state?

Time for another idea Zorba.

Al Gophilia's picture

Land of the Fed. Get it right. They're all to blame. 

GUS100CORRINA's picture

Illinois State Official: "We Are In Massive Crisis Mode, This Is Not A False Alarm"

My response: ILLINOIS - the LAND OF OBAMA and his fellow DESPOTS! Is anyone surprised??

Never One Roach's picture

Do what every private sector entity does when they screw up; declare bankruptcy and pay off the debts in an orderly manner with whatever remains.

MarsInScorpio's picture

Never One Roach:

How did you miss the multitude of statements telling you that STATES CANNOT DECLARE BANKRUPTCY.

Since speaking to you in lower case flies right past you, perhaps screaming it at you in all caps will make it sink in.

Do tell us the truth - what country are you in - of from - that you haven't caught on to that fact yet?

Regardless, when you owe bills and you don't have the funds to pay them when they are due, it doesn't really matter whether you are de jure, or de facto, bankrupt.

However, it would be interesting to see what would happen if the state began printing State Financial Notes (SFN) which are honored in the state to pay bills to whomever the bills are owed - including payroll.

The state would have to pass legislation declaring the SFN is "Legal tender for all debts, public and private within the State of Illinois."

And of course, the state will pass state banking legislation requiring banks to set up a separate SFN account for each bank customer to deposit and withdraw in terms of notes, or checks.

VOILA! Illinois is now in the money printing business.

People will use them because so much money is handed out by the state to individuals - EBT, Medicaid, pensions, purchases, payroll, et al.

There is no violation of the US Constitution because these are debt obligations issued by the state which the state permits to be freely e changed "for all debts," exactly the same thing the FED does with its FRN. Remember, it's the same scam as the FED uses - these aren't currency, they are debt obligations. Just like the FRN, they work because people are willing to accept them in trade for goods and services.

All of which demonstrates, for those who haven't caught the train yet, the difference between money, and currency.

I keep reading members of Idiots Galore write, "Federal Reserve Notes are worthless."

Really? Then give me yours. Funny how they always sulk off grumbling some foolishness that it's me that doesn't get it . . . I got it: if you can exchange it for goods and services, it is worth whatever number of FRNs it takes to get those goods and services.

So again, I'll call your "worthless FRNs" bluff: Give me your "worthless FRNs." When you spout that poop, all you're doing is talking smack.

Anyway, back to Illinois: Times to issue State Financial Notes that are "Legal tender for all debts, public or private" which banks operating the the state are requires to set up in separate accounts from a customer's FRNs - which can be used to write checks, debit carded, handle out as printed notes, and everything else a non-currency FRN can do.

And if you really want to make it fun, set up cross-state agreements to honor each others SFNs in the respective states making this cross-recognition agreement. If NY agrees to participate, then I can use my Illinois SFNs in NY, and I can use NY SFNs in Illinois.

Think about what that does to FRNs if SFNs sweep the nation!

Goodbye Janet - E S & D!

Count yourselves lucky, fellow ZHers - tonight you just saw the birth of how states are going to bail themselves out of their financial mess.

(OK, someone pass this on to the state comptroller . . . desperate people do desperate things.)

 

TBT or not TBT's picture

The US Constitution only permits states to make currency out of gold or silver. It's pretty abrupt on that.

MarsInScorpio's picture

TBT: I guess you missed it - this isn't currency, these are State Financial Notes identical to Federal Reserve Notes - which in case you missed it, again, FRNs are the debt obligations of a private bank.

If people want to exchange them for goods and services, exactly as they do FRNs, well, good for them. They are covered by the annotation on the SFN that it is "Legal tender in the State of Illinois for all debts, public and private."

Now then, that is identical to what the FRN states (excepting, of course, the refereence to the State of Illinois - duly noted here to pre-empt the Flaming AHole who will petty nic-pick that point out as a cheap shot). And so people use it for money - not currency. Again, maybe you missed it: The US government went out of the currency business beginning in 1913. There is no lawful CURRENCY in the US.

And as for the "abrupt" constitution, please show me where the US Congress is empowered to sign on a private bank to become the vendor of debt obligations to substitute for currency . . .

Are you really reading about the complete collapse of the Rule of Law and haven't figured out yet that nobody in DC cares what the Constitution says . . . ?

MEFOBILLS's picture

SFN's would work.   SFN's would have to be good for state taxes.   

Massachusets bills (before the revolution) worked on the same principle, and they were good money.

My addition:  

1)

Bancors between states, to then trade goods and services in the present.  Bancors have an exchange rate to SFN's, and said exchange rate is a function of goods trade.

2)

Trading banks like what Schacht did in Nazi Germany.  Set up bilateral trading banks in each state.  Then each state posts their SFN in each respective bank.  This is a form of Credit, to then buy future goods.

Between the two, you are taking care of the present (goods exchange in the now) and the future (trading banks holding credit - which is future demand).

Example, Illinois posts their SFN in Texas equivalent trading bank.  Texas posts their SFN's in Illinois.  Each state then demands goods and services to stimulate each other's economy.  When Illinois buys Texas Oil, the Texans are paid in their Texas SFNs and conversely when Texans buy Illinois machinery, the workers in Illinois are paid in their money.  The accounts are cleared when the goods pass.

 

 

MarsInScorpio's picture

MEFOBILLS:

Excellent!

Thank you!

MEFOBILLS's picture

Remember, we are all up against Jewdo.  So, any alternate monetary system will have to be accompanied by the willingess to supress our mortal enemies.  They will pull out every trick in their arsenal to maintain their usury on money, including murder.

http://irishsavant.blogspot.co.uk/2016/05/its-jewdo.html

 

Most of you will be familiar with the ancient and noble martial art of Judo.  In Japanese it means 'gentle way' and its practitioners are adept at diverting an opponent's greater strength against himself, identifying and capitalising on his psychological weaknesses (he won't knee you in the balls when you're not looking) and at mastering diversionary feints. Net result, the powerful opponent capitulates, baffled and bruised, puzzled and confused.

There are many variations of Judo, including taekwondo, jujutsu and and sumo wrestling. And here's another one: Jewdo. This deploys similar techniques to overcome a stronger opponent, redirecting his superior powers against himself. In this case the opponent is the White race, a race of incomparable power and achievement, utterly unstoppable by any opponent should it become aroused and unified. Therefore Jewdo makes sure that it becomes neither aroused nor unified.

But such a thing nearly happened in Germany in the 1930's. The German element of  the White race, large, powerful and gifted, saw through the lies and rose up in righteous fury.  But there were other large, powerful and gifted elements of  the White race as well. And they were induced to fight the German element and ultimately destroy it.

Crazy? No.  It's Jewdo!

You also notice that your White opponent, powerful, advanced and wealthy, has allowed his basic good nature to metastasise into a society-wide form of pathological altruism, rendering him open to a potentially fatal attack.  Potentially fatal because, bad and all as is war, the affected people can eventually rebuilt and regenerate. But what if you induce the people to literally blend themselves out of existence? Seems insane, but an endless campaign of guilt-tripping, heart-rending (and carefully choreographed) pictures of drowned children, plus 24x7 panegyrics to the joys of diversity sees your opponent willingly self-destruct.

Crazy? No.  It's Jewdo!

But what if your White opponent begins to wise up to your tricks? Sees that he's being duped into beating himself?  In that case you roll out the classical technique of Distraction. Bread and Circuses baby! Ample doses of hyped-up football, pornography and the Khardashians should take the proles' minds off any such dangerous thoughts. But what about the more cerebral of your opponents?  Given that they require something more subtle you divert their attention and energies away to issues such as gay marriage and trans-gender bathrooms. And let the cleverer ones fight about these instead of looking at their core existential issues.

Crazy? No. It's Jewdo!

So from now on when you look in amazement as White countries stagger from one inexplicable disaster to another, all seemingly self-inflicted, remember..

It's not crazy, it's Jewdo!

stacking12321's picture

SFNs?

unfortunate that you continue to wallow in the pig-sty of collectivist bullshit.

i don't need another government central-planning scheme.

honest money (gold), and an end to government borrowing, and everything sorts itself out.

MEFOBILLS's picture

Damn,  How many times to I need to come to ZH and explain to you bugs that metal isn't money.  Money is law.

Over 2500 years of metal coin history was LAWFUL FIAT MONEY.  As soon as the coin gets its stamp, by the king, it becomes law.

Puhhllease, I don't need sophmorists telling me about honest money, as if you are a phd in monetary history.  You are just regurgitating  a wrong consensus opinion, or virtue signaling.

Get over it.  Gravity has properties, and it makes you fall down and bump your head.  Money has properties also, and its main property is that it is a legal device.  It's power comes from the law.  The sky is also blue.  Women have vaginas.  Do you need me to state more facts?

Here is a link to protocol 22.

http://www.jewwatch.com/jew-references-protocols-full-text-7-protocols-2... No. 22

Read it, and marinate in the fact that you are passing hypnotism and are part of the problem.  The gold-men always rode their bank credit on top of gold, and they will be happy to do it again.

divingengineer's picture

Silver Eagles are legal tender, though only at their $1 face value.
They appear to be lawful currency to me.

RU4Au's picture

Silver Eagles are truly legal tender. However, legal tender or not, they are money. The value is derrived from energy expended to mine and manufacture it and is good for trade for other energies expended, such as labor or other goods. Silvertown or Sunshine mint rounds are also money, though not legal tender, which answers MEFOBILLS's proclamation that a .Gov has to acknowledge something as legal tenderto render it valuable as money. Not so.

shovelhead's picture

That idea ain't worth a Continental.

MarsInScorpio's picture

shovelhead:

Short answer: So what's your plan?

Easy to complain; coming up with solutions for the nation's problems requires some thought, research, and courage to bring your ideas out.

Let me know when you do any of those things . . . 

divingengineer's picture

Plan?
I'm just going to sit back and watch the show.
Drink a couple beers and watch the Democrats in Chicago try to figure out how to blame this on Trump.

markitect's picture

Interesting.  Concidering Illinois is possibly one of the most fertile grounds on Earth, could an Illinois script backed by corn or soybeans be reasonable?  

MarsInScorpio's picture

markitect:

Intersting question.

I can immediately say this: They would be backed by 1-million percent more than the FRNs!

Thanks for your input.

Clycntct's picture

 

VOILA! Illinois is now in the money printing business.

??????

They been in that business

all along, just been using bad"ink"

 

 

Zorba's idea's picture

I know a lot of hard working people in Illinois..not just chicago..they're hard working honorable people who have been dienfranchised and fleeced to the enth degree. More of this to come for the other 49

divingengineer's picture

Southern Illinois has been sending its tax money up to Chicago for decades.
To pay for Chicago kids' schools and Chicago's roads and Chicago's welfare towers.
I went to a shithole high school in southern Illinois that had no air conditioning, no football team, no workout equipment, and asbestos on the pipes.

Chicago can kiss my ass and go straight to hell. They can fuck off and die.
An entire state labors to support those thieving bastards. When they say Illinois is broke, what they really mean Chicago is broke.
How can people who grow 27 million acres of food be broke????
They can't, but the thieves in Chicago can be, because they produce nothing. Except fatherless little Democrat larvae.

JohnnyHenricksen's picture

Illinois should split.  Everyting north of Kankakee and from Rockford east to the lake.  Draw a line south from just west of Rockford and another from The IN state line on the southern border of Will county to a point just west of Joliet then at a 45 degree angle NW to the point where it intersects the line from Rockford.  Each new state keeps its share of the debt on a per capita basis.

I grew up in a small farm town 50 miles south of the Loop but our family moved away in 1967 when I was in 6th grade.  My parents moved back about 3 years ago to spend the rest of their years at "home" with relatives and their childhood friends.