Why Illinois is Circling the Drain

[Scout26]

http://money.cnn.com/2017/06/29/investing/illinois-budget-crisis-downgrade/index.html

Illinois is about to be downgraded to Junk bond status.  That's the good news.  It will make it harder for the state to borrow.   The even better news is that it will force various "triggers" for swaps and other payments from Illinois governmental entities.  Money that they don't have like in the Chicago Public Schools.  (The teachers are still demanding a raise or are threatening to go on strike....Have fun striking while you are unemployed.)  If that happens CPS will go bankrupt.  They don't have the money to cover.   That will drag Chicago down, and then the whole rotten edifice will collapse.

http://www.businessinsider.com/r-fear-of-junk-rating-spurs-illinois-to-renegotiate-swaps-triggers-2017-6

[Angel Eyes]

http://money.cnn.com/2017/06/29/investing/illinois-budget-crisis-downgrade/index.html

Title:  "How Illinois became America's most messed-up state"

Jerry Brown and the California legislature are upset.  All the work they put into screwing up the Golden State, and they lose out . . . to Illinois??

"All of these problems are governance and management weaknesses," Hampton said.

That's a polite way of saying the political leaders broke the system.

Can I get an Amen?

[Perd Hapley]

Why?

[lee n. field]

That will drag Chicago down, and then the whole rotten edifice will collapse.

This state only, or everywhere?

[HankB]

The reason they're getting worried is that Hillary is not POTUS.

I really think that Illinois/Chicago politicians were counting on a Federal bailout - soaking the taxpayers in better run states to come to their rescue. But with a GOP POTUS and a GOP congress, that's unlikely to happen. (Despite the best efforts of the RINO caucus.) So that's why we're seeing so many stories now about the state's pending implosion.

Illinois just lost the lottery - one story I saw said it's because they no longer have the money available to contribute to winnings because of various court orders. Now think about that for a moment - lottos are money makers for all the states that have them, including Illinois. But they're going to LOSE a source of millions of dollars a year in income, because judges have decided their spending priorities don't include lotto payouts. So the income of this cash-strapped state is further reduced. 

I see the potential for problems down the road - including in the worst case scenario, outbreaks of violence. (Chicago is already the USA's murder capitol.) And if riots begin to spread, who's going to stop them? Police who haven't been paid?

[MillCreek]

I wonder if this means that the state will default on pension payments. 

[RevDisk]

It's actually worse than that. The Illinois lottery runs at a profit. Obviously. $90m per year, give or take. They could self-fund but aren't allowed. The bills to allow them to are tied up in committee.

Convenience store owners are worried locals will start making more out of state trips for soda (specially taxed), cigarettes (always highly taxed) and now lottery tickets that will actually pay out. They've been sued for delaying winner payouts already.

http://www.chicagotribune.com/news/ct-illinois-lottery-payout-met-20161209-story.html

They semi recently privitized the lottery and that went as well as expected. The games were rigged even more than usual. Often games would not allow anyone to win the top prizes. The management company has been paid based on how much profit it brought the state, so they have every incentive to cheat the purchasers. Normally states pay out 85 ish percent in winnings compared to revenue. Under NorthStar, it's around 60%.

Illinois has been killing their lottery long before the budget hostage issue. The neighboring state appreciates the additional revenue.

I wonder if this means that the state will default on pension payments. 

That's the extremely big concern that is frankly causing the junk bond downrating. They owe hundreds of billions, have a drastic shortfall, and continue to raise union pay and benefits. The biggest problem being the pension obligations.

Short of ending the majority of corruption, reducing spending and increase revenues, there's going to be a default at some point. I assume they were betting on a federal bailout.

[lee n. field]

I should probably mount spikes and a flame thrower on my Taurus, for our impending Mad Max environment.  And tell my daughter to stay on in NYC, "where it's safer", once her summer class is over.

[Kingcreek]

I should probably mount spikes and a flame thrower on my Taurus, for our impending Mad Max environment. 

I would suggest taking out the rear seats and mounting a Dillon Aero M134
https://www.youtube.com/watch?v=atHYe9qiz6w

[HankB]

. . . Convenience store owners are worried locals will start making more out of state trips for soda (specially taxed), cigarettes (always highly taxed) and now lottery tickets that will actually pay out . . .

I was in the Chicago area (one of the outer-ring suburbs) last Thanksgiving. My cousin - older than me, and long retired - is in a condo on the top (fourth) floor with a little more than half my single level, single family home's square footage, and is paying 50% more in property tax than I am. Soda in Chicago (or Cook County?) carries an additional penny an ounce tax as well as sales tax. According to her, ALL the grocery and convenience stores within a few miles of the county line on the Chicago side have seen a drastic loss of business, and all the ones within a few miles of the county line on the OTHER side have seen a significant uptick. People drive a couple of miles to save on soda, and as long as they're there, they do the rest of their shopping as well.

[mtnbkr]

Soda in Chicago (or Cook County?) carries an additional penny an ounce tax as well as sales tax. According to her, ALL the grocery and convenience stores within a few miles of the county line on the Chicago side have seen a drastic loss of business, and all the ones within a few miles of the county line on the OTHER side have seen a significant uptick. People drive a couple of miles to save on soda, and as long as they're there, they do the rest of their shopping as well.

How much soda do you have to drink for that to make sense?  I sure as hell wouldn't drive *miles* (ie more than 1) to save what I'm guessing is a couple bucks on a larger grocery bill.

That's like driving across town to save a few cents per gallon on your gas (resulting in a $1 savings on a $30 gas purchase).

Chris

[Scout26]

How much soda do you have to drink for that to make sense?  I sure as hell wouldn't drive *miles* (ie more than 1) to save what I'm guessing is a couple bucks on a larger grocery bill.

That's like driving across town to save a few cents per gallon on your gas (resulting in a $1 savings on a $30 gas purchase).

Chris

Soda tax is $.01 per ounce.  Cigarette tax is over 100% per pack*.  Sales tax is ~11% (depending on the town/village). Then you're paying $.80 in Chicago and Cook county taxes.

Slide into one of the collar counties and you avoid the 1 per ounce soda tax (and it's not just soda, but anything that comes in bottle/can/dispenser that's not plain water or alcohol.)  $4.18 per pack of cigs, Sales tax on everything else drops to 7-8% again depending the town/village you shop in.  Gas near me runs about $.30-$.50 more per gallon then what I pay in Indiana.   And that's in my NON-Chicago/Cook County city.   Gas prices in Chicago were around $2.79.  The local, to me stations, were ~$2.49.  I paid $2.10 in Indiana on the way to Indy this weekend.

If your going to get gas and maybe a large pop, it makes sense to hit the stop and rob just across the county line.  Doing Grocery shopping for the week.  Depending on where you live (South Suburbs especially), head for the border.


*- 1. Chicago ($1.18) plus Cook County ($3.00) plus Illinois ($1.98). $6.16 per pack plus actual cost of the cigarettes plus 11% sales tax.  So you are looking at $7-8 per PACK.  A carton will run you $70-$80 bucks.



Meanwhile the state is being sued by everyone and everyone they owe money to.  Illinois has lost control of the budgeting process and it's checkbook.  Judges are now deciding how Illinois is to spend (it's little) money.  In fact, more than they have, and more than their cashflow.  We're boned.  We're Doomidid.  Here's the elected state Comptroller.  And this is just the tip of the Iceberg.  By having to give more to debtors then we have (or can cash-flow) there's nothing for schools, local .gov's (they are supposed to get a portion of the state sales tax), etc.  I'm sooooooOOOOOOOOooooooOOOOO glad we expanded medicaid as part of Obamacare.  That went well...

https://www.facebook.com/ILComptroller/videos/460195857665935/




*- 1. Chicago ($1.18) plus Cook County ($3.00) plus Illinois ($1.98) = $6.16 per pack + cost of pack and sales tax.

[HankB]

. . .  Sales tax is ~11% (depending on the town/village), cross over into one of the collar counties.

Chicago has multiple taxes near suburbs don't have. Several decades ago under mayor Jane Byrne, Chicago put in a CTA gas tax (CTA - Chicago Transit Authority, the local bus service) and a higher sales tax, and ordered the suburbs to collect it, too.

They didn't.

So Ms. Byrne went to court, and after much wrangling, got a court order for suburbs to collect Chicago taxes from Chicago residents. Only thing is, the order came from a Chicago MUNICIPAL judge, whose authority ended at the city limits.

Suburbs STILL didn't collect Chicago's taxes, and don't to this day.

But it showed you what kind of mentality existed even back then.

[Andiron]

We'll end up paying for this bullshit in the end.  The Feds won't let them fail as they absolutely deserve.

 Mark my words.

[Fly320s]

We'll end up paying for this bullshit in the end.  The Feds won't let them fail as they absolutely deserve.

 Mark my words.

Marked.  July 1st, 2017.  1400Z. 

And I agree with you that Chicago is "too big to fail."

[MechAg94]

Marked.  July 1st, 2017.  1400Z. 

And I agree with you that Chicago is "too big to fail."

I would say it has already failed.  The question is will they have to live with the consequences. 

[Fly320s]

I would say it has already failed.  The question is will they have to live with the consequences. 

You aree right; Chicago has failed.  To clarify, "too big to fail" means Chicago will get a bailout, but nothing will actually change.  So, no, there will be no consequences.

[RoadKingLarry]

I would say it has already failed.  The question is will they have to live with the consequences. 

Here is my plan for the Chicago/Illinois "bailout":
All current elected officials are removed from office and replaced with interim appointees, appointments to be made by the Trump administration
All current political appointees to be removed and replaced as above.
All financial records and goings on to be reviewed for malfeasance by non-partisan inspector appointed by the Trump administration.

[Scout26]

Here is my plan for the Chicago/Illinois "bailout":
All current elected officials are removed from office and replaced with interim appointees, appointments to be made by the Trump administration
All current political appointees to be removed and replaced as above.
All financial records and goings on to be reviewed for malfeasance by non-partisan inspector appointed by the Trump administration.

50% of all state and local employees are handed pink slips, and their Pensions (or portions thereof) are converted to IRA's.  Current pension hold are given lump sums (current pension fund balances divided evenly) and converted IRA's. 

Mike Madigan and John Cullerton along with the other leaders of the House and Senate are put up against the wall.

I'm currently visiting family in Southern Illinois.  Things down here have not gone all Mad Max yet, (not that they ever really would no matter what happened in the rest of the state, nation or world.)

However, I am returning to the Northeast corner on 4 July, so hope springs eternal that I can put on football pads with spikes on them and mount a flame thrower on the roof of my Subaru.

[Kingcreek]

Its sad, really. I have the home I dreamed and worked for for years. Nice house on 40 acres of mixed hardwood and prairie 1/2 mile from a state recreation area with lake. Deer, turkey, pheasant and quail, huge variety of songbirds visit the yard daily. But its in Illinois. 6 miles from a community that has become a medicare/medicaid town with a struggling economy. Our property taxes have gone up 50% in the last 4 years and all our taxes are getting ready to rocket.
I'm prepared to hunker down in place. at least for as long as I can. I can't bring myself to sell it for what I could get, maybe half of what it should be worth. Hoping I can hang on until they move me to the nursing home or the funeral home.

[RevDisk]

Here is my plan for the Chicago/Illinois "bailout":
All current elected officials are removed from office and replaced with interim appointees, appointments to be made by the Trump administration
All current political appointees to be removed and replaced as above.
All financial records and goings on to be reviewed for malfeasance by non-partisan inspector appointed by the Trump administration.

https://en.wikipedia.org/wiki/Harrisburg,_Pennsylvania#21st_century_fiscal_difficulties_and_receivership

Na. Look at Harrisburg.

Basically, the state 'tookover' the city finances for the bare minimum time to cover the 'crisis', restructured the debt to kick the crisis down the road a bit, and left everything virtually as-is. There's some talk about criminal indictments, but even the SEC barely slapped from wrists for outright fraud.

The original plan was to overspend like no tomorrow and bet that a bankruptcy filing would cost nothing, eliminate near all of the debt and allow them to keep everything. It didn't help that the mayors involved were literally insane. Mayor Stephen Reed went insane over his 30 years in office. He blew millions on a wild west museum, not joking, and an infamous trash incinerator that was a spending boondoggle on par (scale wise) with the the Iraq War. Hundreds of millions were spent with literally nothing in return. Then they elected Mayor Thompson. Reed slowly went insane or senile. Thompson was insane from day one, and everyone knew it.

The guy appointed by the state leased off the parking garages for 40 years and issued new debt. Lancaster County is taking their trash, for $6.65 million per year for 20 years. Which we'll make a tidy profit. They'll try to sell their incinerator. Harrisburg will have less revenue to repay more debt. I doubt they'll recover anytime soon.

[TechMan]

https://en.wikipedia.org/wiki/Harrisburg,_Pennsylvania#21st_century_fiscal_difficulties_and_receivership

Na. Look at Harrisburg.

Basically, the state 'tookover' the city finances for the bare minimum time to cover the 'crisis', restructured the debt to kick the crisis down the road a bit, and left everything virtually as-is. There's some talk about criminal indictments, but even the SEC barely slapped from wrists for outright fraud.

The original plan was to overspend like no tomorrow and bet that a bankruptcy filing would cost nothing, eliminate near all of the debt and allow them to keep everything. It didn't help that the mayors involved were literally insane. Mayor Stephen Reed went insane over his 30 years in office. He blew millions on a wild west museum, not joking, and an infamous trash incinerator that was a spending boondoggle on par (scale wise) with the the Iraq War. Hundreds of millions were spent with literally nothing in return. Then they elected Mayor Thompson. Reed slowly went insane or senile. Thompson was insane from day one, and everyone knew it.

The guy appointed by the state leased off the parking garages for 40 years and issued new debt. Lancaster County is taking their trash, for $6.65 million per year for 20 years. Which we'll make a tidy profit. They'll try to sell their incinerator. Harrisburg will have less revenue to repay more debt. I doubt they'll recover anytime soon.

A wild west museum in PA, yea that is not one that I would think of.

[RevDisk]

A wild west museum in PA, yea that is not one that I would think of.

https://www.washingtonpost.com/news/morning-mix/wp/2017/01/26/ex-harrisburg-mayors-almost-pathological-preoccupation-with-wild-west-artifacts-may-land-him-in-prison/?utm_term=.01f010339e9a

They never opened the museum, and I believe auctioned off the crap he bought.

[lee n. field]

https://www.washingtonpost.com/news/morning-mix/wp/2017/01/26/ex-harrisburg-mayors-almost-pathological-preoccupation-with-wild-west-artifacts-may-land-him-in-prison/?utm_term=.01f010339e9a

They never opened the museum, and I believe auctioned off the crap he bought.

Oh, let's see

Reed, 67, admitted to the charges because he is suffering from prostate cancer and felt it was the right thing to do, according to his attorney, Henry Hockeimer Jr.

“We think this is an opportunity now to move on with his life and get the treatment he needs for his illness,” Hockeimer told the AP.

Move on?  Oh, dude.

Some sympathy I have.  And some not.

Interesting wheelgun.  Euro pinfire?

“I’ve repeatedly stated over the years the long-standing plan, as part of the city’s overall economic development program, is to create national, first-class facilities to attract and retain business, jobs, residents and visitors,” he told the AP in 2003.

Typical civic booster bulldropping.

[lee n. field]

Illinois House session delayed as Capitol on lockdown, emergency crews arrive for hazardous materials situation