Illinois Legislators Look for More Road

Sticking to their core competency, Illinois legislators are desperately trying to kick the can of Illinois’s fiscal problems one month down the road:

The financially troubled state of Illinois edged closer on Tuesday to a government shutdown as Democratic lawmakers and the Republican governor failed to resolve a budget impasse ahead of a midnight deadline.

Veteran House Speaker Michael Madigan said he would present an emergency one-month budget on Wednesday to keep essential services operating, but Republican Governor Bruce Rauner, in office since January, has signaled he would not accept such a measure.

“This is another opportunity to not shut down the government,” Madigan told reporters.

Also on Tuesday, the Chicago Public Schools made a $634 million state-mandated payment to its teachers’ pension fund beating a midnight deadline, according to a fund official.

Madigan said the payment eliminated the need for legislation that would have given the cash-strapped district another 40 days. School administrators did not say how they came up with the funds for the huge payment that had become the latest in the recurring fiscal crises rocking Illinois and its biggest city, Chicago.

Illinois has the worst-funded pension system and the lowest credit ratings among the 50 states, and one credit rating agency has assigned junk-bond status to Chicago.

Madigan said his $2.26 billion temporary state budget will fund services including Medicaid, corrections, state police and childcare.

Rauner, who last week vetoed most of a $36.3 billion budget passed by Democrats, has said he would not accept a temporary fiscal 2016 budget.

Speaker of the Illinois House Madigan and Illinois Senate President Cullerton don’t need the governor’s cooperation to pass a budget. They just don’t want to bear the political heat alone or, possibly, at all. They’d much prefer blaming it on the governor.

10 comments… add one
  • Guarneri Link

    Four posts in a row on financial instability based in uncontrolled spending, unsound financing and crass political considerations. Predictable by anyone with even a modest amount of financial acumen, and predicted. I’d suggest that the magnitude of the financial imbalances is sufficiently large that the party is just getting started.

    Where’s Steve to tell us he’s unimpressed?

  • What bugs me is that the only solutions being offered are robbing Peter to pay Paul. As Shaw observed, under those conditions you’re always assured of the support of Paul.

    Taking out a second mortgage only makes sense if you expect your income to increase. If you expect it to decrease or remain stable, it’s disastrous. Proposing such a thing should only be done in the presence of realistic plans to increase future revenues and they aren’t doing that.

    Increasing today’s revenues by decreasing tomorrow’s revenues is also problematic. I can only speculate that they’re taking an IBGYBG stance. The problem with that is that they’re not gone.

  • steve Link

    I am impressed by the magnitude of the problem, and how long people have been ignoring it. I don’t follow Illinois except through Dave’s writings, and the occasional national piece, but it looks like an extreme case seen elsewhere. You have the rural parts of the state in opposition to the large urban center. They don’t work together well. Creative finance takes the place of actually paying for the stuff you think people want.

    Just as a general point, I think tax policy and spending are too often used to achieve the wrong ends. The main purpose of taxes should be to pay for the government that people actually want. If people aren’t willing to pay for it, then cut the program(s). Cutting the taxes first never works. Then people are getting the same services at a lower cost (for a while). Once in trouble, no one wants to do the right thing since it means they will lose the next election.

    Query- It sounds like Madigan had little to do with achieving this mess, but since he is in charge now, will he take a hit for the inability to resolve this? Should he?

    Steve

  • You have the rural parts of the state in opposition to the large urban center.

    Similar to the situation in Germany vis a vis Greece downstate Illinois (Illinois outside the Chicago metropolitan area) is fueled by righteous indignation over having to pay for the spendthrift, corrupt (minority population) city of Chicago. Also as in Germany and Greece that’s a myth. The Chicago metropolitan area produces a disproportionately large amount of the state’s revenue and accounts for a disproportionately small amount of the state’s spending.

    Query- It sounds like Madigan had little to do with achieving this mess,

    No. Madigan is the main problem. He’s been Speaker of the Illinois House since 1983. Most of that time Democrats have held veto-proof majorities. If he supports a bill, it passes. If he doesn’t, it fails like the recent bail-out bill for the CPS. His fingerprints are on everything. I don’t see any great likelihood of his “taking a hit”. Who would challenge him? He basically holds the position for life.

  • PD Shaw Link

    “You have the rural parts of the state in opposition to the large urban center.”

    Meh, The state is a three-ring circus, with the City, the Suburbs, and Downstate, and depending on how you draw the lines, each might have a third of the legislative seats. So governing requires some ability to form coalitions and spoils to share.

    BTW/ there are still a lot of rural Democratic seats, like in Southernmost Illinois. They are Southern Democrats.

  • PD Shaw Link

    Madigan is good at staying in power.

  • steve Link

    Oops. Meant the governor, Rauner.

    Steve

  • No, it’s not the governor’s fault. Unless by “fault” you mean he’s not willing to take the blame for decades of misgovernance.

    I blame a lot of our problems on Rod Blagojevich but when it comes right down to it he was just a dumb cluck who rubber-stamped everything that came out of the legislature.

  • Guarneri Link

    Well, I think its been covered in comments. Steve, my snark on “impressed” is just your traditional reaction to admonitions of the sort you see at Zerohedge. IL and Chicago financial issues have been brewing for so long, and they mirror nations, including the good ol’ USA. Its not fear mongering to note that current policy is not sustainable, it just takes a long time to happen. I knew you meant Rauner, but look up Madigan in the dictionary under “classic liberal Democrat policy.” He’s everything that’s wrong…………..with a lot of co-conspiritors.

  • TastyBits Link

    They are hardly @steve types, and yet, almost every post at Zero Hedge endorses Tsipras, encourage Greece to default, and think they were screwed. The Zero Hedge guys/gals are anti-Fed, anti-fiat money, pro-gold standard, and they hate Keynesian economics.

    When people are lending their own money they are a little more cautious. At Zero Hedge, they know the lenders are creating money to lend, and as long as they can create it, they will lend it to anybody.

    I would suggest fully understanding the context of the Zero Hedge posts before referencing them. The Wall Street Journal would be a better reference for anybody who is pro-Fed, pro-fiat money, and anti-gold standard, and while you are ranting against the Keynesians, you might ask yourself why they are pro-Fed, pro-fiat money, and anti-gold standard also. Once you understand the answer, then you will understand Zero Hedge.

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