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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IntTheLight's picture

White adolescent males? They built this country and are the only sane people in this country. White countries work. Women and minorities are the ones voting for an ever expanding welfare state with open borders and high taxes on white males.

rockstone's picture

So the fuck what? Come on down and kick us out of the basement. Never mind bringing a goon, he'll be worthless

dchang0's picture

HAHAHA

How funny that they think that there's still a way out of this that doesn't "hurt working families."

Years of cowardly politicians kicking the can down the road guarantees that working families will get smashed no matter what they do in Illinois. They're dreaming if they think they can escape this inevitability.

Al Gophilia's picture

..... which brings us to the inevitable conclusion of the state of the Union.

DollarMenu's picture

"They" have no idea what work is.

"They" do not give a runny shit for working families.

"They" will say whatever they think will keep their scam running.

 

Antivenom's picture

"Hurt working families"...

Translated as...

Downsizing useless city, county, state payrolls...tax sucking leeches (employees) getting laid off

Lost in translation's picture

"Working families" is code for Illegal Alien families.

Those are the only families the neo-Jacobin Left gives a rat's ass about...

QQQBall's picture

Puerto Rico can buy their bonds! Just increase PR's bailout! Worked in Urope

Andrew Mellon's picture

Illinois is the Greece of America.

Andrew Mellon's picture

Illinois is the Greece of America.

Faeriedust's picture

With the Republican governor playing the role of the EU Commission aka Germany.  You know, luv, there are already plenty of people calling the Republicans Nazis.  

HominyTwin's picture

Yes, because Hitler's main goal was balancing the budget and not genocidal, imperial expansion. You should write history books.

Herodotus's picture

It's time to let the state employees go.

HRH Feant2's picture

It looks like school bus services are about to become optional. I remember my mother talking about walking to school in Maine carrying a hot potato to keep her hands warm. Guess what was for lunch? That potato she carried and that my grandmother had baked in a wood stove. People have no idea how easy they have had it. No fucking idea.

GeezerGeek's picture

On the positive side, perhaps it will provide a good reason to return to the concept of neighborhood schools. It worked fine in New Jersey in the 1950s. Everyone got to walk home for lunch, too, at least for K=6 grades.

sinbad2's picture

Sell Illinois to China.

HRH Feant2's picture

They are going to have to sell something! I don't know what but maybe they could copy Houston and auction off streets to the highest bidder!

Woo hoo Illinois is going to have a state yard sale! First of the century!

What are pensioners going to get? S C R E W E D. Lucky if they end up with .10 on the dollar.

artichoke's picture

Chicago already sold its parking meters, iirc for $75 million, for decades forward, to pay for its losing bid for the Olympics.  If it had advanced to the final round and especially if it had won, the damage would  have been much worse.

Faeriedust's picture

You'all are missing an important point.  This crisis is MANUFACTURED.  It 1) started when taxes which had been previously passed were repealed due to a sunset provision, no doubt required by Republican house-niggers of the 1%.  It is continuing because the Republican governor is acting like Wolfgang Schnauble in Greece: he's vowed to veto any tax increase to pay the bills unless and until the Assembly revises the entire commercial code of the state to suit his owners.

They should just shoot Rauner.  They can have that budget fixed inside of a week once they get rid of him.

silverer's picture

Shoot Rauner? I'm sure that will help? But I don't know how. Taxes are so high now people are leaving the state. The liberals don't want to lock taxes for four years because it will hurt working families? I guess working families don't pay taxes in Illinois? Maybe you can explain that one. If you raise taxes in Illinois you think everything will be fine? I'd sure like to see that. I guess with a big tax increase people will flood into Illinois, all eager to hand over the money they work for to the government, so the government can piss it away. Anyway, you've made some good points, like "shoot the governor". That's where most liberals start these days to solve problems. They just shoot somebody.

Anarchyteez's picture

Well said sir. Like it's the lone republicans fault the liberals have ruined wealth...again.

Antivenom's picture

If all democrats would quit shooting people, gun violence would decrease by 95%

Antivenom's picture

If all democrats would quit shooting people, gun violence would decrease by 95%

Vilfredo Pareto's picture

Demographics suggest you are correct lol.  Anecdotally I see few republican types in the jail.  Mostly nonvoting democrat leaners.

Not My Real Name's picture

"I guess with a big tax increase people will flood into Illinois, all eager to hand over the money they work for to the government, so the government can piss it away."

The government won't piss the money away, you moron. They're going to use it to cover those well-deserved six-figure pensions for the retired Illinois state government employees!! Oh, wait ...

Antivenom's picture

Republican haters love guns and violence...very telling...

Korprit_Phlunkie's picture

James T. Hodgkinson, is that you? I thought you died after shooting those congressmen. Damn fake news again.

Bigly's picture

My, you are a violent cocksucking basement-dweller, aren't you cupcake?

Omen IV's picture

the solution is not taxe increases - it is reducing the pensions by 75% to be fair to everyone in the state

 

government workers dont deserve a pension its time for change

Omen IV's picture

the solution is not taxe increases - it is reducing the pensions by 75% to be fair to everyone in the state

 

government workers dont deserve a pension its time for change

HK21E's picture

Not going to happen since they are written into the Constitution for all current workers and retirees. They could limit or eliminate pensions going forward, but they are stuck with the promises they made to their employees. 

The actual solution is for the state to have actually made the pension payments they were required to by law, instead of stealing the money and giving it to the worthless fucking parasites in the form of endless social justice programs. The workers kept their part of the bargain.

Don't like it? Crucify the politicans that broke the law - not the workers who paid into their retirement their entire lives. 

Not My Real Name's picture

Bullshit. Fuck those government "workers." Most of them will end up making more in retirement than they ever did working. Those mo-fos voted for the crooked politicians in exchange for impossible financial promises guaranteed by taxpayers -- most of whom have no pension of their own.

 

 

Blankenstein's picture

You have no idea what you are talking about.   The reason Illinois has a crisis began in the late 1990s.   Illinois increased .gov employee salaries and not long after increased their pensions.  As they did this, they stopped fully funding the pensions BECAUSE there wasn't enough money to fund the pensions and pay for operating expenses and projects at the lame level.

It was all about buying votes.  They couldn't cut current spending because they would lose votes and they gained votes by increasing employee salaries and benefits.  The solution was to quietly stop fully funding pensions.  

And bullshit we should pay higher state income taxes.  The property taxes here are the 2nd highest in the country and there are plenty of other taxes and fees at state and local levels that are extremely high.  

The uniformed idiots are the ones who should be tarred and feathered.  

 

IntTheLight's picture

What world do you live in? Illinois is run by a criminal enterprise called the Democrat party which has fleeced the state for decades.

Anderson Coopers Gerbil's picture

Why didn,t Obama just mint a 20 trillion dollar coin and pay the whole debt off?

max2205's picture

Do a Colorado and legalize and tax WEED no more Crack dealers and lots of taxes   win win 

Korprit_Phlunkie's picture

If they would tax chicago murder they could balance the budget in one average weekend.

Korprit_Phlunkie's picture

He needs that 20 trillion for his library. Tranny bathrooms are expensive.

SantaClaws's picture

Every other state is watching to see which group takes the hit and by what methods.  Public pension holders, public employees, taxpayers, bondholders, etc.  Some interesting precedents could come out of this, so I suspect many forces from outside Illinois are trying to influence events.

are we there yet's picture

Politican salaries and expense vouchers should be classified as discretionary.

HRH Feant2's picture

This could be the snowflake that starts the avalanche. Or the first black goose that is about ready to be cooked and served up for dinner. Goose pate, anyone?

RightLineBacker's picture

Progressive Liberalism = Socialism = Venezuela = Chicago = Detroit = Baltimore, etc.

Running out of other people's money is a real bitch for Socialists, every single time.

 

Korprit_Phlunkie's picture

As long as there is at least one white male with a job they think they can still make it work.

Antivenom's picture

Goose that laid the golden eggs died...long ago...

TeethVillage88s's picture

Write a song about it?

Running on empty,
Running blind,

"Running On Empty"

Looking out at the road rushing under my wheels
Looking back at the years gone by like so many summer fields
In sixty-five I was seventeen and running up one-o-one
I don't know where I'm running now, I'm just running on

Running on - running on empty
Running on - running blind
Running on - running into the sun
But I'm running behind

Gotta do what you can just to keep your love alive
Trying not to confuse it with what you do to survive
In sixty-nine I was twenty-one and I called the road my own
I don't know when that road turned onto the road I'm on

Running on - running on empty
Running on - running blind
Running on - running into the sun
But I'm running behind

Everyone I know, everywhere I go
People need some reason to believ

silverer's picture

The only logical solution is to re-elect the democratic representatives that have been expertly running the state and managing affairs for the last 50 years. What could possibly go wrong?

IENTJ's picture

Illinois is a hell-hole ...

HK21E's picture

So is anyplace run by progressives. 

kbohip's picture

Illinois should just do what Key West did back in 1982.  Secede from the Union, declare war on the US, then surrender immediately and demand foreign aid.  At this point it's about the only option they have left!