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PostPosted: Wed Jun 21, 2017 7:23 am    Post subject: state of Illinois headed for finanical meltdown ? Reply with quote

( you wonder if these sort of stories will be coming out of Ontario sooner rather than later , were not much better off )

Illinois careens into financial meltdown – and not even the lottery is safe

Brooke Singman
By Brooke Singman Published June 20, 2017
Fox News

Illinois Lottery, June 08, 2017

Illinois Lottery, June 08, 2017 (AP)

Illinois is grappling with a full-fledged financial crisis and not even the lottery is safe – with Republican Gov. Bruce Rauner warning the state is entering "banana republic" territory.

Facing billions in unpaid bills and pension obligations, the state is hitting a cash crunch that is rare even by Illinois standards.

A top financial official just warned 100 percent of the state's monthly revenue will be eaten up by court-ordered payments. Rauner is calling a special session of the Democrat-led General Assembly in a bid to pass what he hopes will be the first full budget package in almost three years.

And Illinois will – literally – lose the lottery if the budget fails.

The state lotto requires a payment from the legislature each year. The current appropriation expires June 30, meaning no authority to pay prizes. In anticipation of a budget deadlock, the state already is planning to halt Powerball and Mega Millions sales.

“It is disappointing that the legislature’s inability to pass a budget has led to this development and will result in Illinois lottery players being denied the opportunity to play these popular games,” Illinois Lottery Acting Director Greg Smith told Fox News.

“We’re like a banana republic,” Rauner said earlier this month, after the General Assembly failed, yet again, to pass a budget package by the regular session deadline. “We can’t manage our money.”

The governor has called for a special session starting Wednesday. The state so far is operating on a series of stopgap spending packages.

But the problems are years in the making, caused in large in part by the state’s poorly funded pension system— which led Moody’s Investors Services to downgrade the credit rating to the lowest of any state. The state currently has $130 billion in unfunded pension obligations, and a backlog of unpaid bills worth $13 billion.

Related Image

FILE - In this Jan. 25, 2017 file photo, Illinois Gov. Bruce Rauner speaks in the Illinois House chamber in Springfield, Ill. Gov. Rauner has called state legislators back to the state Capitol for a 10-day special session starting next week to hammer out a budget deal and end an unprecedented impasse that could soon enter a third year. The Republican announced the news Thursday, June 15, 2017 in a Facebook video and statement. (Ted Schurter/The State Journal-Register via AP File)
Expand / Collapse

Reports have suggested the state could be the first to attempt to declare Chapter 9 bankruptcy -- but under the law, that’s impossible unless Congress gets involved.

“Nobody here in Illinois is considering bankruptcy—first of all, it’s not allowed,” said Steve Brown, press secretary for Illinois House Speaker Michael Madigan. “Second of all, it would damage the reputation of the state and it’s just not necessary.”

U.S. Sens. Dick Durbin and Tammy Duckworth, both Democrats from Illinois, declined to respond to Fox News’ request for comment on whether they would consider getting involved in introducing a measure allowing state bankruptcy.

“Illinois is the fiscal model of what not to do,” Rep. Peter Roskam, R-Ill., told Fox News, while not commenting on the bankruptcy question. “This avoidance in behavior toward dealing with our challenges is what leads to the devastating impacts we are seeing today.”

Just last week, the Illinois comptroller, who is responsible for paying the state’s bills, warned the office would be paying out 100 percent of Illinois’ monthly revenue, leaving negative funds for “discretionary spending. ”

But Rauner claims the Republicans have a new plan that could remedy the state’s crippling financial situation.

“Republicans in the General Assembly have laid out a compromise budget that I can sign,” Rauner said, calling it a “true compromise.”

The plan incorporates reforms like property tax relief, term limits, and spending caps, which have caused an “ongoing confrontation” between Madigan and the governor, one Republican leader told Fox News, adding that the two have been in a “stalemate” since Rauner took office two years ago.

“Gov. Rauner inherited this financial mess when he took office, and his proposals have been met by resentment from the speaker,” Deputy House Republican Leader Dan Brady said.

Brady added, “we are asking that the speaker allow for a date and a vote before June 30.”

But Brown told Fox News the governor isn’t making enough concessions.

“He’s not walking many back—the financial issues are serious enough, and he’s forcing things that have nothing to do with state government,” Brown said. “The biggest problem here is that the governor keeps associating a lot of things that do not have anything to do with the budget.”

Rauner has pushed for structural reforms, government consolidation and pension reform—some components that were able to pass on the Senate side.

“The people and businesses of Illinois deserve stability, not this ongoing chaos,” Senate President John J. Cullerton, a Democrat, told Fox News. The Illinois State Senate approved a balanced budget before the initial May 31 deadline that “matches” the governor’s spending proposal.

If the General Assembly fails to pass a budget package, they do have an option to pass another stopgap package, which lawmakers say is an option, but “not a good one.”

“We have a very real deadline looming,” Senate Republican Leader Christine Radogno told Fox News. “The alternative to not finding a compromise will be devastating to Illinois.”


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PostPosted: Thu Jun 22, 2017 8:28 am    Post subject: Reply with quote

Illinois Financial Crisis Looks Ever More Dire

Even as the state enters "a new phase of crisis," the Comptroller promises to make payments to creditors.

Amey Stone
June 20, 2017 10:51 p.m. ET

Tuesday was a tough day for Illinois state finance.

"We are now reaching a new phase of crisis," State Comptroller Susana Mendoza said in a letter to the governor that described unsustainable deficit spending made worse by a court requirement that the state has to pay Medicaid bills.

She says the state owes $15 billion in unpaid bills which is "growing rapidly." She addds:

We are effectively hemorrhaging money as the state’s spending obligations have exceeded receipts by an average of over $600 million per month over the past year.

However, she did promise to make debt service payments to bondholders:

For the record, however, and as a message to the financial markets, please know that debt service payments will not be delayed or diminished going forward and I will use every statutory avenue or available resource to meet that commitment. It is a necessary pledge in order to attempt to avoid further damage to our already stressed credit ratings and to make possible the additional debt financing that we all know will be required to achieve some measure of stability going forward.

She ends the letter:

My closing message is simple: The state can no longer function without a responsible and complete budget without severely impacting our core obligations and decimating services to the state’s most in need citizens. We must put our fiscal house in order. It is already too late. Action is needed now.

In a separate, but related bit of financial trauma, Chicago public schools are now paying an exorbitant (and tax free) rate of 9% on its adjustable-rate bonds. Bloomberg explains:

The junk-rated district, reeling from escalating pension costs and fallout from the Illinois budget gridlock, has been stuck paying punitive interest rates on $167.5 million of adjustable-rate bonds after PNC Capital Markets failed in March to resell the securities once previous owners sold them. The rate on the bonds, which are supposed to stay extremely low because investors can resell them to banks periodically, jumped to a maximum 9 percent on March 1 from 4.64 percent the week before and has stayed there ever since, according to data compiled by Bloomberg.

After the Illinois state legislature adjourned without a budget June 1, S&P Global Ratings warned that the state could face a “negative credit spiral” and indicated it would lower the rating again if there was no budget agreement by July 1.


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PostPosted: Thu Jun 22, 2017 8:29 am    Post subject: Reply with quote

Multi-State Lottery Association: No Illinois Budget, No Lottery

Image: Multi-State Lottery Association: No Illinois Budget, No Lottery

(Mark Ralston/AFP/Getty Images)

By Zoe Papadakis | Friday, 16 Jun 2017 07:14 PM

The Multi-State Lottery Association may dump Illinois unless the state agrees on a budget, which soon means no Powerball or Mega Millions tickets unless you go to another state.

According to the Chicago Sunday Times, first to report on the matter, the games would be dropped by the end of June without a budget agreement.

The Illinois Lottery said on its website that if the lottery didn't receive a Fiscal Year 2018 appropriation prior to June 28, Powerball and Mega Millions sales at retail locations and online would be suspended.

Both games are big draws. Mega Millions, which has a drawing Friday night, has a jackpot sitting at $113 million. The Powerball Jackpot, with a drawing Saturday, is currently at $52 million.

“The groups that own and operate these two popular games will not permit Illinois to sell the games without funds available to pay prizes. The Illinois Lottery must have an appropriation from the legislature to fund the prize payments, which has not yet happened,” said Illinois Lottery.

“When a Fiscal Year 2018 appropriation for the Illinois Lottery is passed, the Lottery will work with the Multi-State Lottery Association to determine a path for the return of Powerball sales. The timing is unknown.”

Illinois has been locked in a budget stalemate since 2015 and, with the approach of the new fiscal year on July, 1, there has been a desperate call for lawmakers to reach an agreement.

On Thursday, Gov. Bruce Rauner called on state legislators to meet and discuss viable options to fix Illinois’s financial problems.

The Southern Illinoisan noted that lawmakers gathered last month to address the budget ahead of a critical May 31 deadline but the meeting was adjourned.

The budget deadlock has strained various industries.

Illinois Department of Transportation (IDOT) may be forced to halt all roadwork by the end of the month, reported ABC eye Witness News.

IDOT may not be able to pay contractors and, according to reports, has alerted them of the potential shutdown.

However, in a statement, the department said that the travelling public would remain its priority.


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PostPosted: Thu Jun 22, 2017 11:43 am    Post subject: Reply with quote

When Detroit went bankrupt, Obama appointed an official to sort it all out. It turned out the first priority was to save the pensions of the civil servants -- which are extravagant compared to the private sector.

It was the same when the government screwed the bond-holders and bailed out the UAW pensions of auto-workers.

It's no doubt the same in Illinois.

They could (under Obama) get bailed out by the money-printing facility they have, called the Federal Reserve. I doubt if that is going to be so easy under Trump.

There is no long term solution to this problem that does not involve these jurisdictions breaking out of their contracts with the civil wervice unions -- which happen to be main players in the Democratic party. It provides them with funding and workers, as well as votes.

Anything short of that is throwing good money after bad. But if you think there's a war on the streets now, wait until the people who control the state find out they face some losses. That will amp up the violence and craziness.
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state of Illinois headed for finanical meltdown ?

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