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

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.


French Bloke peddling-fiction Sat, 06/17/2017 - 19:35 Permalink

US economy rejected by half the world and now imploding from within. Hyper inflation looming for the US and all western economies who support via the printing presses. Getting interesting. Buy metals and keep your money safe. If you feel like a flutter, buy crypto's but beware the risk as folks are now chasing bubbles. A friend of mine once said, "If you see a bandwaggon, it's already gone". That applies to bitcoin and Eth IMO. How wonderful hindsite is.... :-(

In reply to by peddling-fiction

Automatic Choke 07564111 Sat, 06/17/2017 - 20:04 Permalink

I listen to jazz stations while working.  One of my favorites is a chicago station, so I get regular injections of chicago style NPR news.   ugh.This has been a major deal for well over a year.   I think they are only into panic now because the multi-state lottery is dropping them. lottery, lions & tigers & bears.  Screw 'em. 

In reply to by 07564111

jeff montanye Bumpo Sat, 06/17/2017 - 21:46 Permalink

it's not like national republicans have been pillars of fiscal rectitude.  the closest prez to fiscal integrity was that old dress splatterer w.j. clinton. the dems and the reps both want to spend more than they tax, just on different things.  but, as noted, they can print money.that's why precious metals.

In reply to by Bumpo

stacking12321 Haus-Targaryen Sun, 06/18/2017 - 04:43 Permalink

"Lawmakers from both parties have acknowledged Illinois needs to raise taxes to make up for revenue lost when a previous tax hike expired"

it's interesting that lawmankers from both parties are willing to "ackknowledge" a lie, but they aren't willing to acknowledge the truth:

that what illinois really needs is to CUT taxes and cut spending if they don't want to frighten away anyone with talent and wealth to have some glimmer of home for the state in the future.

further, they should PROSECUTE previous state officials who chose to kick the can down the road instead of acting like responsible adults, and in so doing destroyed any possibility the state has to continue as an ongoing concern.

In reply to by Haus-Targaryen

Mareka Pairadimes Sun, 06/18/2017 - 08:54 Permalink

US Citizens need alternatives to opt out of government services. I’d love to see 5 states declared as nanny-free zones. Parallel gold or silver based currencies, i.e. New Texas Dollars. No welfare available, no public housing, no EBT. Immigration laws enforced. Minimize federal taxes & benefits. Give it 10 years and see which states are prospering.

In reply to by Pairadimes

GreatUncle agNau Sun, 06/18/2017 - 05:59 Permalink

Turning Japanese ... debt > 250% of GDP a total bullshit scenario.The poker game only needs to be called now and its over.So the CB's are playing blind and a continual CTRL-P so they can never be seen.Remind me if I ever play poker to make sure I got a central bank printing press to keep raising the stakes."and that is a game us ordinary people are not allowed to play although you are expected to pay for it!"

In reply to by agNau

stacking12321 warsev Sun, 06/18/2017 - 04:48 Permalink

i would, as well, but freddie doesn't deal in facts, he deals in innuendo and hate: look at those other people over there, they are out-breeding us, we gots to DO SOMETHING against them!

i'm as against the welfare state as he is, but i don't support his particular brand of race-based hatred.

In reply to by warsev

stacking12321 My crotch itches Mon, 06/19/2017 - 01:46 Permalink

that's completely irrelevant to the point, call muslims a religion then, instead of race, if you prefer.

but the point remains, freddie is full of white guilt, and relates to them through jealousy, he feels that those darker people over there with different beliefs will take away what we have.

freddie is so full of white guilt, he would make a great liberal, if he could be turned to the rainbow side.

In reply to by My crotch itches

GreatUncle Freddie Sun, 06/18/2017 - 06:08 Permalink

I got a piece of paper off the UK government as a check a few months back and I have 32 years of paid up contributions ...Come the end those 32 years of contributions will all be gone if they ain't all gone already.Split coming up for me and my criminal government real soon one way or the other ... it is going to be so fucking hilarious.Time to end such a fraudulent system however you want ...  

In reply to by Freddie

new game Freddie Sun, 06/18/2017 - 06:42 Permalink

the state of ill repute needs to create a central bank.problem solvedon another note; i see a trend. where the blues have had a mojority for decades, it seems to be coming to fuition, prograns for free shit are running out of other people labor(tax) AND the pension bloat has rolled over to "floating in the river" PIGs. (pensions in grievance)ps. fuk the red team too.ONE PARTY TYRANNY, USSAillinois is just a sympton of  this nation, broke as a mutherfuk, fuken sad...

In reply to by Freddie

Mareka Vilfredo Pareto Sun, 06/18/2017 - 08:01 Permalink

$15,115,000,000 Debt Backlog 12,830,000 residents statewide in Illinois $1,180 Debt backlog per resident 2,100,000 Residents on food stamps 4,837,000 Households in Illinois $3,125 / Debt backlog per household 1,596,000 Households occupied by residents over 60 years old (33%) 6,100,000 Employed in Illinois May 2017 $2,480 Debt backlog per employed resident

In reply to by Vilfredo Pareto

Anon2017 Mareka Sun, 06/18/2017 - 16:05 Permalink

The $15.1 billion figure only includes current accounts payable not long term debt or unfunded pension liabilities. If you are familiar with government financial statements, you can read Illinois' annual financial report here:… on 2016, for the latest published report. The report for fiscal 2017 will look a lot worse when it is eventually published. The big question is: Who will be left holding the bag? 

In reply to by Mareka

Shinebama IntTheLight Sun, 06/18/2017 - 00:41 Permalink

The city is being overrun by the "free shit" army. The only reason the population hasn't decreased more than it has is due to illegals moving in. I'm hoping like hell to sell my condo and get the fuck out of Shitcago and the whole state. Rauner is the only one who understands you can't spend money you don't have, the evil leprechaun Madigan spends it like it grows on trees.

In reply to by IntTheLight

Jubal Early (not verified) IntTheLight Sun, 06/18/2017 - 04:43 Permalink

Illinois is just another previously prosperous christian white state on the talmudic conveyor belt.  It is somewhere behind Greece and infront of Portuigal in the queue.  If the whites still living there would open their eyes they would see Rhodesia is already over the edge of the Zionist shit pile and being picked clean by scavenging baboons while South Africe is just going over the lip now.  Britain, Sweden, Norway and France are well past the point of no return. 

In reply to by IntTheLight

stacking12321 Jubal Early (not verified) Sun, 06/18/2017 - 04:56 Permalink

you are another divider, another tool of the globalists.

all people should be united against our oppressors, the elites, but for some reason you keep trying to divide people on racial and ethnic lines, you are a divider.

maybe you are a troll paid by the globalists, maybe you're too damn stupid to understand what you are doing.

but i'm not going to follow you down into the gutter, i'm going to stay focused on the enemy, which is the ruling class.

you, sir, are an irrelevant nobody, a hindrance in the war against the elites, but you won't thwart our victory.

In reply to by Jubal Early (not verified)

Jubal Early (not verified) stacking12321 Sun, 06/18/2017 - 05:25 Permalink

The truth can be very divisive, especially for people who believe centuries of lies.  This is why Stockmans ranting, just like others of his ik like Peter Schiff, can be 100% correct but 100% off target.  It is like trying to model a system while omitting crucial variables.By the way, maybe you are a kike.

In reply to by stacking12321