Amidst a flurry of reports on the State of Illinois’ inability to solve its ongoing pension crisis and worst bond rating of all 50 states, a new study claims that the State’s $96.8 billion unfunded pension liability poses no risk of default to bondholders. The report, published by the Mercatus Center at George Mason University, compares Illinois’ current financial woes to the last state to default on its bonds, which was Arkansas in 1933. As an example of a highly-rated state, the report…
The FY2014 budget for the State of Illinois approved by the General Assembly has an operating deficit of $89 million, according to documents published in connection with an upcoming State bond sale. The legislature’s budget authorizes General Funds spending of $35.699 billion for the year that begins on July 1, 2013, the bond documents show. General Funds revenues are projected at $35.610 billion, resulting in an operating deficit of $89 million. The bond-related disclosure is the first formal…
Despite increasing its revenue estimate on the final day of the regular legislative session, the Illinois General Assembly appears to have enacted a spending plan for FY2014 that exceeds the State’s expected resources. On May 31, 2013, the legislature increased its General Funds revenue estimate for FY2014 to $35.4 billion in a resolution passed by the House of Representatives (HR389). That was an increase of $365 million over its original revenue estimate of $35.1 billion adopted in House…
In the latest session of the General Assembly, the Illinois legislature approved extensions of two Chicago-area tax increment financing (TIF) districts. This blog explains what happens when TIF districts are set to expire and what local governments gain and lose from expirations and extensions. Next week, the Civic Federation blog will explore the specifics of the approved legislation. TIF Districts Tax increment financing (TIF) is a financial mechanism that is widely used by municipalities…
Due to its large backlog of outstanding bills, the State of Illinois has permanently extended its annual deadline for paying old bills to December 31—six months after the end of the fiscal year. The extension was enacted without fanfare in August 2012 as an amendment to the State Finance Act. Beginning in FY2013, the General Assembly gave the Comptroller’s Office six months after the fiscal year ends on June 30 to make the required payments. Permanently extending the deadline is a reflection of…
Less than a week after the Illinois General Assembly adjourned its regular spring session without approving reform of the State’s underfunded retirement systems, two of the three major rating agencies have downgraded the State’s bond ratings. Both Fitch Ratings and Moody’s Investors Service cut the State’s rating one level, while Standard and Poor’s issued a statement calling the lack of pension reform, “another missed opportunity.” The General Assembly closed the books on its regular session…
As the Illinois General Assembly approached its scheduled adjournment date of May 31, 2013, the State’s pension systems produced new reports estimating the financial impact of proposed pension legislation. The reports by the retirement systems’ actuaries concern two bills—Senate Bill 1, as amended in the House, and Senate Bill 2404—designed to reduce the State’s pension costs by cutting benefits for employees and retirees. Before the reports were issued, potential State savings from the…
Due to a surge in income tax receipts, the Illinois Comptroller’s Office has been able to reduce the State’s backlog of unpaid bills by $3.8 billion in the last four months. General Funds bills and other payables in the Comptroller’s Office declined by 54.8% to $3.1 billion on April 30, 2013 from $6.9 billion on December 31, 2012. In addition to bills owed to vendors, State obligations include payments owed to school districts, universities and pension funds and fund transfers to support State…
Many cash-strapped states are looking to a proposal in the U.S. Congress to help collect sales taxes on internet purchases. The legislation could lead to a windfall in recaptured state sales tax revenues but currently would exclude Illinois. The U.S. House of Representatives and the U.S. Senate are debating identical versions of the Marketplace Fairness Act (H.R. 684 and S. 743). The new law would require larger online retailers to collect and remit sales taxes due for online purchases to the…
The Civic Federation supports Governor Pat Quinn’s $62.4 billion FY2014 recommended operating budget for balancing revenues and expenditures without borrowing and making progress toward reducing the State’s backlog of unpaid bills. However, this budget proposal is only a stopgap that further demonstrates the urgent need for comprehensive pension reform. The State’s pension costs, including debt payments on past borrowing for pensions, will consume nearly 25% of State-source General Funds…
