The editors of the Chicago Tribune point out, correctly, that COVID-19 did not create Illinois’s problems and, although an infusion of cash may allow Illinois’s politicians to kick the can down the road for a little while longer, as Illinois spends money it doesn’t have while concurrently losing revenues, the federal response to COVID-19 can’t save Illinois:
Last year, Gov. J.B. Pritzker’s Office of Management and Budget offered a grim fiscal assessment: “Even with the balanced budget for fiscal year 2020, the underlying structural deficit of the state’s budget has not been addressed. Sizable deficits in the general funds budget are projected for fiscal years 2021 through 2025.†The governor hoped to change the picture by getting voters to approve a constitutional amendment allowing a graduated income tax. But its approval in the November election is hardly guaranteed nor a prescription for fixing state government.
The budget forecast, however, is far worse now than it was just a few weeks ago. The coronavirus pandemic has required a long list of unforeseen expenditures to cope with the public health crisis. At the same time, by closing businesses and forcing most people to stay home, it has crushed economic activity and slashed revenue.
A new report by the University of Illinois System’s Institute of Government and Public Affairs offers a scary preview of how the fiscal landscape will look after this earthquake. In its best-case scenario, revenues would drop by a total $4.3 billion in the 2020 and 2021 calendar years. Worst case? $14.1 billion. The IGPA also anticipates a big jump in outlays for public health, Medicaid and various human services.
As if these consequences weren’t bad enough, the state’s public pension program will suffer as well. At the end of fiscal year 2018, the report notes, the state had only about 40% of the funds needed to cover its long-term obligations. Now, it says, “recession-induced declines in asset values could result in a sharp and sudden increase in unfunded liabilities.â€That means more and more revenue will have to be diverted to supporting government retirees instead of providing services to the general population.
Illinois already has the worst bond rating of any state, a product of its endless fiscal mismanagement. After getting a negative rating from S&P Global Ratings, it could see its bonds sink to junk status — making it the first state to earn that badge of shame since the 1930s.
If the federal government had its wits about it, they wouldn’t let this crisis go to waste. They would compel Illinois legislators to do what they will never do under their own steam—amend the state’s constitution to allow the state to rewrite its public employee pension programs, if not for current retirees at least for present public and future public employees in exchange for short term bailout funds.
Sadly, it doesn’t and Illinois politicians will do everything in their power to blame their own bad decisions over the last 40 years on Washington.
“amend the state’s constitution to”:
Require a balanced budget year by year.
Congratulations! Because of covid-19, the Federal Government will be bailing out the States via printing money (aka the Federal Reserve).
https://www.barrons.com/articles/the-fed-will-buy-state-and-local-muni-bonds-it-might-not-cover-the-virus-tab-51586524201
The Fed says they will stop after 2 years…. who wants to guess its more like 20 years (if they are lucky).
As the editorial points out, the amount approved by the federal government will only allow Illinois politicians to ignore the state’s fiscal problems for a short time. It’s not a solution—it’s just kicking the can down the road. Again.
Another aspect of this that bears mentioning is moral hazard. Any bailout of states rewards the states for irresponsible, profligate behavior and the states that are the most irresponsible and profligate, e.g. Illinois, benefit the most.
The way to mitigate the risk, as I point out in my post, is to impose requirements on the states taking the case from the feds.
Oh, and by the way it won’t even come close to covering Illinois’s shortfall. It may be short by as much as two-thirds.
There is already such a provision in Illinois’s state constitution. It is ignored year by year. We can’t even get our legislators to enact a budget every year let alone balance one.
Yes, governors have been behaving in just sparkling fashion, eh?
So I think its a legitimate question to debate: do the Feds bail out the states? Hmmm. IL or CA, or NY bailed out by Indiana, or Texas.
Get yer guns and ammo………
By what Constitutional procedure could the President, Congress, and the courts compel Illinois to change its Constitution? You would have to prove that the Illinois Constitution’s pension clauses violated some article of the federal Constitution
Perhaps you failed to notice, but all the lockdowns were actually done by governors and mayors. The President does not have the authority to close schools or malls. Trump will recommend a date for ending them, but the governors and mayor will make the decision.
Similarly, in the recent OPEC+ negotiations, Trump could not enter into an agreement to reduce oil production, because he lacks the authority to do so. He would have to convince the Texas Railroad Commission to do it, and that would only apply to Texas.
For better or ill, we have a federal republic, and there are all sorts of things the feds cannot (Thank God!) do. Illinois will have to save itself.
As long as there is a Madigan in office in Illinois matters will only get worse.
If Gov. Pritzker hasn’t yet understood that being elected governor doesn’t actually mean he’s in charge, he’s going to find out very soon.
By making a distribution of funds to the state contingent on amending its constitution. As the legislation presently stands there will be a distribution of funds to Illinois with, essentially, no strings attached and, as far as I can tell, no audit of how the funds are used.
Is Illinois pensions a contract under Federal law? Even if State law was amended, Illinois cannot impair a contract under the contracts clause.
Do you really think the feds could dictate to Illinois by refusing to distribute funds? Illinois has a vote on that. And the Dims control the House. There is no way to make Illinois reform.
PS. I have said it before, but get you and yours out of Illinois. It is a death trap. Go south to Kentucky or Tennessee. Or whatever.
OT- Are you watching any of the briefings. For the first couple weeks I didnt really have the time, but for the last week I have tried to watch some. It is difficult because of the constant lies. Last night was pretty bizarre. He kept perseverating on January 17th as though someone had suggested locking down the country on that date, which no one had. He kept referring to the “travel ban” when it didnt stop American citizens from flying back and forth to China, probably the main vectors of the disease. He talks about testing without acknowledging it was a failure and we did not get tests when needed. The list goes on and on.
As an aside, the patience of the reposters is incredible. I wouldnt put up with that shi$. He is an elected president, not king. Also, the amount of sucking up required by people who work for Trump is just incredible. Can you imagine yourself working for someone who required that you just constantly suck up like that? I would be out the door in seconds.
Steve
It’s easy to imagine. Practically the only time in my life that I didn’t experience it was when I had my own business. And then I had to suck up to my clients. It’s how a lot of people live their entire lives, particularly if they work for large companies.
I avoid watching the briefings, whether by Trump, Pritzker, or Lori Lightfoot, Chicago’s mayor. What you characterize as “lies” I see, possibly more generously, as half-truths, politically motivated claims, exaggeration, or wishful thinking but, yes, it’s hard to take.
So, for example, when Pritzker claimed that the number of deaths per day would peak the day before yesterday, was he lying, engaging in wishful thinking, exaggerating? It upset me because it was pretty obvious it wasn’t true.
I find the claims, made by Pritzker, that everything he is doing is based on “science”, hard to stomach. It’s not science because we don’t know enough. He doesn’t have the luxury of basing his decisions on science. Maybe he’s basing his policies on the advice of scientists, maybe not. When scientists boost their own political preferences, tell him what he thinks they want him to hear, guesstimate based on experience, or extrapolate from analogies nobody knows are relevant, it’s not science. It’s just more or less informed opinion.
If a scientist specializing in infectious diseases or a physician recommends “stay at home” directives, are they engaging in science, speculation, or just plain policy-making and completely outside their wheelhouse? I don’t think there’s any way to tell. Are they just recommending that because they don’t know what else to do?
Maybe it’s just me but I think you can distinguish between the experts and the dilettantes because the experts are willing to say “I don’t know”.
” the experts are willing to say “I don’t knowâ€.”
But when you work in real time you cant just say I dont know, ou have to make a decision. When I have a pt with critically low BP I dont always know why it is low. I could order a few tests, do an echo, maybe cath them and get an answer so that I know exactly why their BP is low, but by then they are dead. Often you make decisions based upon experience and expert opinion and your best judgment. So that scientist recommending stay at home is basing it upon years of experience by other people, expert opinion and the judgment they have gained by working in the field for years. Not the perfect science you want, but the best we have and so far it looks pretty good. WE have a saying for this. Perfect is the enemy of good. What you want works and is necessary for nuclear physics and chemistry and the other hard sciences that dont have time limits.
If you are unhappy with this, and there is a lot of experience with lockdowns to stop pandemics, then you should be really unhappy with folks like Drew who are proposing stuff that has not even been tried before and is not working well in the one or two places trying it, even though those places have unique characteristics that would make you think they would have a chance.
“It’s easy to imagine.”
Then I guess I am lucky. Never saw that in the military (12 years) or all of my time in medicine, including training. You needed to be respectful and keep down the smart-assery, but I never worked anywhere that I had to spend the first minute of any statement I made describing how wonderful, smart and awesome my boss was and how lucky I was to work for him or her.
Steve
When, prior to SARS-CoV-2, was there a lockdown that involved a third of the world population?
The Black Plague. More recently we have multiple examples on a smaller scale like what the Asian countries did with SARS and MERS.
Steve
You might want to look into it more closely. What the experience with Black Plague and later with smallpox showed was that the larger the quarantine, the less effective it was. The only areas that escaped Black Plague were extremely isolated. No entire country or large city did, regardless of measures taken.
In the case of smallpox Frederick’s attempts at sealing his empire from infection via Turkey were futile despite enormous efforts and expenditures. He ended up dying of it.
In other words the evidence that lockdowns or quarantines scale linearly or better is lacking.
“But when you work in real time you cant just say I dont know, ou have to make a decision. â€
That’s just wrong IMO. In my previous profession of intelligence, saying that you know when you didn’t is what got people killed.
Those providing information to decisionmakers should not make the decisionmaker’s job easier through overconfidence in what they know. Full stop.
Now, if they ask for your “expert opinion†then you can give it as long as it’s clear that it’s expert opinion and not based on solid evidence.
PS, I have a comment in moderation, please delete it, it’s a duplicate.
Plague and later with smallpox:
Quite different animals. Easier to self quarantine people than fleas and rats.
And I’ve read the smallpox virus was quite happy to lie in bedding for up to two years waiting for a new host.
What’s so frightening about the new virus is how little we know about transmission, latency period, after recovery immunity and transmission.
We know we can slow it down by distancing ourselves, hygiene, and isolation. But how long can we wait, and how long is the virus designed to wait. We don’t know.
IMO people will bust loose by the Fourth of July no matter what authorities say. There are a large number of the young who already distance themselves…..from mortality.
“That’s just wrong IMO. In my previous profession of intelligence, saying that you know when you didn’t is what got people killed.”
So the next time I have a patient with a critically low BP I will just tell them that since I am not 100% sure what is wrong with them I am not going to do anything. After they are dead I can tell them I figured out the cause. IOW, I think our professions are very different.
Dave- Exactly. Those areas that were completely isolated survived. It was difficult to do that, bout it doesnt mean that it would not work. You ignore the positive results in Asia, not to mention our won positive effects.
Steve
There’s practically nowhere in the continental U. S. it takes a week to get in or out of. That’s the kind of isolation. I’m interested in hearing how you plan to effect that WRT, say, New York City.
I don’t “ignore” South Korea, Taiwan, and Singapore. I have held South Korea up as an example of what can be done with a highly socially cohesive population. I just don’t think that their experiences are particularly applicable to the U. S. I ignore China because I think their reports are concocted.
This mismanagement manifestations itself in lethal ways. Residents of Detroit can’t wash their hands or flush their toilet because they didn’t pay their bills. It all reminds me of the daily death tolls in the late 70’s early 80’s of elderly dying in Chicago apartments from the heat.
No effort was made to evacuate them.
“I’m interested in hearing how you plan to effect that WRT, say, New York City.”
When their politicians told them to go party and not worry about the virus they did, and their infection rate rocketed up. When they told them to isolate, they did and now their rates are dropping. So my plan would be to tell them to distance and isolate (when needed) and wear masks.
Steve