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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Bopper09's picture

Just use your gold as backup.


Oh, right.  NO GOLD.  Which is exactly why every western state / country is inevitably going to be in this situation.  This is why fiat currency fails 100% of the time.

G-R-U-N-T's picture

Why would vendors who supply goods and services to State, County or muniple government's do business with them, knowing there is a high risk of not getting paid?

Unfortunatley there are alot of vendors who have put most, if not all, their eggs in one basket and when their main customer goes bankrupt so do they! 

Case and point, one of my rep and colleague had a huge prosthetic manufacturer as a customer, it was bought out by Johnson and Johnson, who had already established vendors, there were local businesses in that community that sold and serviced that companies need for various supplies and services, problem was that was their main customer and when Johnson and Johnson bought them, that put an end to doing business with them and an end to their own company. Though the scenario is a bit different the premise is the same.

Horse Pizzle's picture

Hire consultants from Venezuela.

michelp's picture

"Hire consultants from Venezuela."

Should be: Hire consultants to Venezuela.

There right here - Goldman Sacks.


Berspankme's picture

Raising taxes accelerates the death spiral. People leaving in droves, mainly productive taxpayer types. The freeloaders will stay til the bitter end.

ZIRPY's picture

Up until a couple of days ago I would have agreed. BUt now they cant buy Mega and Powerball tickets in Illinois. And that just may be what gets some of the welfare class to relocate.


There's only so much you can expect them to put up with!

gaoptimize's picture

I'm calling out leftists and Democrats as complete dumb-asses, that they can't look at Illinoise, Venezuela, Zimbabwe, and example after example of socialism ending this way.  F'em.  Die in your own feces, and don't move to other states.

A_latvian's picture

I dunno. NY is just about as left-wing fascist as you can get, and we seem to be putzing along just fine.

Xena fobe's picture

NY was bailed out in the 1970s or was it the 1980s?


peippe's picture

Tell me it will be on YouTube when the repo/collector guys rough up the governor, 

saying 'where's the money? give us the money!' lol.

Matchless's picture

Being a resident I can tell you all where the trouble lies, look to Michael Madigan, he has been in power for 40 years.  He puts up phony Republican candidates which will never win.  Add to this the corrupt school system in which teachers get paid no matter what the outcome you have a system full of corruption. Teachers aren't the main problem however, ther's all kinds of activity, for example, how could RIchard Daley sell off all the parking meters and get a billion dollars and piss it away in less than a year?

In a month I'm gone this state can burn in hell for all I care. Stupid politicians ruined an otherwise great city.  


newworldorder's picture

Madigan is the power broker, but he could not exist without the Democrat Party voting power of Cook County and the other 4 counties around it.

Other than those 4 counties that control the entire state, the rest of the state is a Great Agricultural State.

Fundies's picture

Just do a Greece FFS.

HK21E's picture

When Gov. Jim Edgar left office in the 90s, this state had a surplus. Business was thriving and the economy was strong. Since then, we have had one fucking crook after another (two have actually done time) and Mike Madigan has seized total control of the state. The governor no longer has any power in this state. Ryan, Blagojevich, then Quinn have raped this state and its people, stolen billions, destroyed the pension system, and driven thousands of businesses and people out. While they fiddled, Madigan seized total power and marginalized the entire executive branch. 

Madigan runs the entire state - nothing moves unless that cocksucker gets paid to move it. He is the ultimate influence peddler - he even has a set scale that a contribution of 'x' buys you 'y' amount of minutes of his time. He is impossible to remove, because his fucking daughter is the AG and his district is gerrymandered with the specific purpose of him never being defeated. He is a 40-year cancer on the ass of Illinois, that has killed the patient.

Rauner is a naive fool, who thought that his billions would translate to people listening to him. Madigan doesn't give one happy fuck about anything but his power. Rauner will not get a single item of his turnaround agenda, and will slide out the door in 18 a complete failure. The next hapless prick will be elected, and will be equally useless. 



A_latvian's picture

Why don't they just use Bitcoin as the official currency of state?

HK21E's picture

Why don't we just peddle unicorn shit while we are at it? 


Why dont they just apply for statehood like puerto rico? Then all their problems would magically disappear. Vwallah! Presto changeo the responsible people would pay their debt. Now wouldnt that be great?

Something about all these smucks that keep telling me im wrong for being white. Just cant put my finger on it. Maybe its the fact that they are utterly worthless smucks and cant do shit for themselves but spend others money. Idk. Can illannoy secede along with cali? Please?

any_mouse's picture

Vote a State out of the Union. I like it.

Maybe Canada would want Illinois for moar Diversity. The former drama teacher and part time ski instructor might like that.

As soon as the Obama Library (will Obama's essays and writings from his Harvard days be included?) opens to the Public, then the Tourist dollars should flow. Especially all of his European supporters.

GRDguy's picture

The problems aren't caused by differences between "Democrats" and "Republicans."

The problems are caused by the fact that sociopaths head up both parties.

Theyre the ones who can't make things work,

because sociopaths have no empathy nor conscience.

That's why I'm voting against all incumbents, every primary and general election.


HK21E's picture

I am done voting as long as I live in Illinois. It is pointless because of Shitcago. I have no representation, despite the fact that I pay more in taxes than probably 95% of the parasites that live in that fucking sewer. 

Fuck voting. 

Ace006's picture

Usually the "I'm not voting" moaning is stupid but you make sense here.

Still there are local officials to support. Not every problem is a state problem.

pparalegal's picture

Welcome to the club.  From us real people in Northern CA.

Blankenstein's picture

Chicago has a bunch of CPS "educated" voters and they willing vote for this shit time and time again.  The schools have failed miserably.  Or maybe not in the eyes of the democratic machine led by the evil Mike Madigan.  


OKUSA's picture

Enough politicians are going to whine and complain and they will get bailed out. Or at least be allowed to go bankrupt. Heck Trump might even make an appearance at his tower there in Chicago confirming the stimulus.

Of course I hope this doesn't happen, but they will do something. The problem is once the decision is made for Illinois and they implement whatever decision, a domino effect could ensue with several states. Then the real problems start.

Vilfredo Pareto's picture

I would love to see a bankruptcy and a pension haircut.  That solves problems the fastest with the least amount of pain for the majority.

Free Man's picture

Won't happen. IL is on it's own. Rightly so.

dogismycopilot's picture

If you own real property in Illinois, what do you think is going to happen to your tax bill?


rockstone's picture

Those saps are toast. They're about to realize that they own nothing. The state/county/muni can tax them right out of and keep it.

Megaton Jim's picture

Wait until those EBT cards stop working, then the mambo lipped natives really will be restless! 

rockstone's picture

That's how they get the sane world to capitulate. Once it starts, some will pay anything to have them make it stop.

Megaton Jim's picture

Or Trump gives the National Guard shoot to kill orders!

rockstone's picture

That's my point. Something like that will have to happen. But it'll cost....and they'll pay. We'll all pay.

pparalegal's picture

And fire insurance does not cover acts of God or riots. 

mary mary's picture


short screwed's picture

not to mention "weaponizing" information

homiegot's picture

Die in a fire, Illinois.

katagorikal's picture

Where's Mrs O'Leary's cow when you need it?

any_mouse's picture

Does this mean Ann Margaret won't be appearing at the Illinois State Fair?

Sizzurp's picture

Joker, why don't you take Rafterman out to Chicago's south side and see what's up.

BenBache's picture

Debt slaves like most of the world.  Helped on by massive theft by the upper classes who run the governments.  Most taxes go directly into the pockets of the rich.  Working class people in the US effectively pay 50% or more of their income in taxes, with FICA, income taxes, real estate taxes, and sales taxes on everything.  Then we have "fees," a special sort of non-tax that requires people to shell out cash for things that the taxes should have paid for.  Take ICBM missiles for example.  None of them exist.  Try thinking about the concept.  They bury a giant wingless metal device with no eyes in the ground. Then they set off a giant explosion in the silo.  Why doesn't it melt?  Even if it can get off the ground, what magical device do the masters have to steer a wingless penis and hit something deliberately.  Then even if nukes existed, which they don't, how could a rocket carry a bomb and enough fuel to get anywhere.  Those rockets must get way over 100 mpg to get anywhere.  They just take toy rockets and film them.  The sheep buy it because they saw it on TV.  

Free Man's picture

Sorry, you're wrong.

Most IL taxes go to unproductive lazies, the absurd pensions, and the over paid / under worked state employees.

fishwharf's picture

I wish you were correct.  Unfortunately, WMD do exist.

Free Man's picture

Hey Illinois, how are your sanctuary cities coming along?

JailBanksters's picture

Sounds like a plan to get out paying your bills to me.


Prepaid's picture

Just say MAGA! And that will fix it. I just love the news pieces that make a mockery out of the total joke America is. This comment is for sure going upset the infowhores junkies and the Mark dice junkies that frequent this site. Mark Dice and Alex jones are you people that stupid?

pparalegal's picture

Not really. Just watching the chickens come home to roost after the last 8 years. You say RESIST they say MAGA. Enjoy the ride.

Deplorable's picture

That new Obama Library will fill the gaps when it is constructed with federal money.