By: Ted Dabrowski

Illinois media is widely reporting that no news on Illinois’ budget negotiations is good news – that a quiet battleground in the statehouse means all is well. Especially after a nasty three-year impasse between Gov. Bruce Rauner and House Speaker Mike Madigan.

But if you are an ordinary Illinois resident, don’t buy the “no news is good news” pitch. It’s bunk. For a bunch of reasons. Here are five.

1. Illinois should be a battle zone for deep reforms

Just because politicians and the media are happy doesn’t mean you will be. History tells us it’s the opposite.

The fact is Springfield should be fighting over which reforms to pass and how deep they should be.

Instead, most politicians want to do nothing but continue the status quo. And they’ll fight to maintain it at all costs. The nearly three-year impasse – where absolutely nothing changed – is evidence of that.

But the status quo is unsustainable. Illinois is a fiscal and economic basketcase and its people are bearing the costs daily, many painfully. With just days left for legislators to agree to a budget in the regular session, they should be battling for reforms that are a kind of shock-therapy. Just look at the mess the state is in:

  • Illinois has the worst credit rating in the nation, just one notch above junk. Chicago is already junk rated.
  • Illinois has the nation’s worst state pension crisis. Its 650 muni pensions are just as bad. The state has already begun garnishing municipal revenues to pay down local pension debts.
  • The state’s unpaid bills reached as high as $16 billion recently. The state borrowed $6 billion in bonds to reduce the bills outstanding.
  • Illinois hasn’t had a balanced budget since 2001.
  • The state’s manufacturing base has collapsed. It has 300,000 fewer jobs than in 2000.
  • The state’s labor force and tax base are shrinking. Illinois has lost population four years in a row. Only West Virginia has done the same.
  • Illinois has the nation’s highest African-American unemployment rate.
  • Higher ed students are fleeing Illinois.
  • Illinoisans pay the nation’s highest property taxes and the some of the highest combined state and local taxes in the nation.

And all of the bad is happening despite a hugely positive national backdrop. The US economy is booming and the stock markets are at all time highs. Imagine what things will look like in Illinois when the inevitable recession and a stock market correction come?

There should be all kinds of noise coming out of the Illinois statehouse. If you’re hearing crickets, you can bet they aren’t fixing problems.

2. Secretive sessions are bad

It’s impossible for government watchdogs to cover Springfield’s misdeeds when it’s quiet and negotiations are done behind closed doors between a handful of select “budgeteers.” Nobody seems to know anything. Read the media reports and most legislators can’t really offer any comments of value. Rank-and-file legislators know nothing, which means Illinoisans know nothing.

Do you really think those “budgeteers” are going to come out of the room with a $3 billion tax cut, property tax relief for all and collective bargaining reforms that give relief to residents in cities like Danville and Harvey and Rockford? Or with reforms to Illinois’ expensive workers comp regime to create more jobs? Or with a plan to reduce the number of duplicative school districts to bring costs in line with what people can afford?

When all is quiet, the opposite is happening. The “budgeteers” are figuring out how to spend the $5 billion more they are now taxing you – and how to fund (or hide) any additional amounts they want to spend.

3. Go-along-to-get-along politics is back

Go-along-to-get-along politics over the last three decades has brought Illinois to the brink. Most of the mess has come when governors and the legislature agreed to compromise and work together. As Gov. Jim Edgar said of his own efforts at cooperation, he attempted to bring “civility, compromise, compassion.” Unfortunately, those three c’s have taken Illinois in the wrong direction.

It’s how Edgar got his failed and damaging pension ramp passed. It’s how Govs. Rod Blagojevich and Pat Quinn kicked-the-can with multi-billion dollar pension bonds. It’s also how, year after year, the Illinois legislature passes phony budgets that are always unbalanced. Quiet, maybe a little fuss, then agreement at the last minute. That’s how they like it.

Quiet negotiations today means that Rauner is no longer fighting back like he used to. 

Maybe his political calculations tell him to go along to get along – that it might get him more votes. Or maybe, as cartoonist Eric Allie suggested in an older piece, Rauner is just the next Republican governor to capitulate.

This time last year, the opposing sides weren’t even talking to each other about the budget. Now, the secretive “budgeteer” meetings are reportedly going well. The rumor is the two groups are only off by some $500 million.

If that’s all true – and we certainly haven’t heard much from the governor – then Rauner’s no longer fighting to partially roll back the tax hike as he recently promised. It seems, rather, that he’s now happy to use every penny and more of that $5 billion tax hike.

Nor is he fighting for major pension, labor or property tax reforms. At least none that he’s communicated openly.

4. These budgets are always phony anyway

Illinois has a balanced budget requirement. But you wouldn’t know it considering the state hasn’t had a truly balanced budget since 2001 and it ends up with billions in unpaid bills every single year.

It’s all a function of the games and accounting tricks lawmakers use every year to make things “work” on paper. From pensions, to Medicaid to unpaid bills, politicians move money around to make things balance one year, but end up building deficits for the next.

And how many budgets can the Illinois legislature balance with the same proceeds? Apparently, many.

Take, for example, the apparently eternal sale of the Thompson Center. Illinois’ last several budgets have included the same revenues – some $300 million – from selling off the building. Expect to see the Thompson center revenues featured again in the new budget.

They still haven’t sold the building.

5. They’ll shove a 500-page bill down our throats

No news and “healthy” negotiating don’t mean Madigan and his team won’t shove a 500-page budget down our throats with no time to read it.

They will.

***********

Illinois is really sick. Don’t let anybody tell you that no news is good news.

Wirepoints isn’t buying it. Neither should you.

 

Sign up here for Wirepoints’ free daily news and commentary. We’ll help you connect the dots.

33 Comments
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Advocate
2 years ago

If I understand correctly…..you dont want Rauner to compromise/negotiate……you do want Rauner to hard ball like he did for his first three years, and where did that get us? For three years we got Impasse with no budget at all. Rauner used to listen to his far right and it got him nowhere. In this state, working WITH the dems instead of impasse serves us better. (Btw. Rauners political moderation won him the primary over the alternative Ives. In the primary his approach had more support amongst repubs.) If Rauner even were to play hardball again maybe enuff mod repubs… Read more »

Admin
2 years ago
Reply to  Advocate

The point is that all sides need to embrace drastic reforms.

Advocate
2 years ago
Reply to  Mark Glennon

Yes all sides need to come together, with Rauner working with the Dems, this was my point.

nixit
2 years ago
Reply to  Advocate

Under a Democrat-controlled Governor and Legislature:

State pension debt 2002 = $40B
State pension debt 2014 = $110B

Been there…done that.

S and P 500
2 years ago

Even if there’s no news, stuff is happening, if silently. Infrastructure is crumbling I just found that out the hard way. My water heater died and I thought the cost would be around $800. Two plumbers told me sorry–your iron pipes are 60 years old and you have to put in new pipes as well I ended up spending $16,000. Infrastructure really does die after 50 years. The Philadelphia Inquirer had a series on crumbling school buildings filled with mice and asbestos. It was like the show “The 100” So if nothing changes with the deficits then schools and roads… Read more »

Bruce ross
2 years ago

Bipartisan agreement = bad for taxpayers. Simple math.

Advocate
2 years ago
Reply to  Bruce ross

Yes unless Repubs can impose a budget without any input or compromise from democrats the State will suffer. As only republicans have the true answer. All or nothing approach in a very blue state. What a typical attitude promulgated by Mark and wirepoints, a political approach to the news. We want all republican policy, or nothing, in our very blue State. The minority wants to impose its will on the majority. I guess we know what will get….and know what to expect with an all-or-nothing approach. Nothing! We will get nothing, and will have squandered 4 years of a republican… Read more »

Admin
2 years ago
Reply to  Advocate

Advocate, do give us a rough outline of a plan you think would restore Illinois to stability.

Advocate
2 years ago
Reply to  Mark Glennon

Such a total disregard, or simple lack of memory, as to what I have wrote before on this, leaves you asking yet again?

Admin
2 years ago
Reply to  Advocate

I don’t recall you or anybody else, here or anywhere else, ever doing that. The search feature in the upper right works well so kindly point me to what you are referring to.

advocate
2 years ago
Reply to  Mark Glennon

Well Mark I posted this not long ago…..I am sure you read it. A rough plan for my Illinois pension fix….. Payments over time. Nobody, who argues for insolvency wants to use the element of TIME, but TIME makes the unaffordable affordable ….payments over TIME. Time refutes the “its the math dogma” It truly does. Ya see “its the math” is a dogmatic phrase used to end debate. Because, get ready folks, here is your ILLINOIS PENSION SOLUTION a basic economic math formulae: (Payments over Time)+(Budget reductions) +(Increasing revenues)=balanced budget over time and a pension fix. Simple economics right? Hard.… Read more »

Admin
2 years ago
Reply to  advocate

Oh, yes. I forgot about that. Probably because it’s so painfully stupid. “Time” is your word for kicking the can down the road. You have no understanding that our insolvency is deepening every day, not improving. Time is our enemy and not our salvation.

Advocate
2 years ago
Reply to  Mark Glennon

WRONG MARK, I figured you would answer on one SINGLE point quite summarily and not at all seriously. You simply address one portion of the equation Time. And did not address TIME seriously at all, only reflexively. When the pension fix involves much more, like many junior mathematicians, you ignore the ENTIRE EQUATION in your answer. The equation also includes BUDGET REDUCTIONS The equation also includes REVENUE INCREASES These are area’s where bipartisan steps need to address both substantial cuts and revenue increases. These are some areas where we can find overlap…..but all you can do is answer back with… Read more »

Mr. Common Sense
2 years ago
Reply to  Advocate

Advocate:
The only real solution is allowing states to file bankruptcy.
Those ridiculous and obscene pensions will never be able to be paid. Illinois does not have the economy to afford them. And 1 thing you never mention: Illinois is rapidly declining in population. So right there, your, “Payments over time” theory is blown out of the water.

Hope this helps.

Admin
2 years ago
Reply to  Advocate

Sorry, but saying the words “budget reduction” and “revenue increases” isn’t a plan either.

Mike xyz
2 years ago
Reply to  advocate

The cost to financing pensions is interest and as with financing anything, increases the overall cost.

Thus payments over time increases the overall cost, as it increases interest, and increases the unfunded liability, and increases the cost for the government service.

Advocate
2 years ago
Reply to  Mike xyz

If we agree on anything, can we agree on basic economic theory? And many of us know some economic basics. If we remove ourselves from Illinois politics, and instead take an economical approach, using Basic Economic Theory, we might have a discussion on the merits, instead of on the politics. Lets us give it a try? The politicians, and their shills, can stay away. Economists say: The longer the debt note, with debt service spread out over TIME, the lower the total per annum cost. Yes the OVERALL costs are higher but the per annum is lower. Agree? Can we… Read more »

Mike xyzx
2 years ago
Reply to  Advocate

This is exactly how we got into this mess. Your solution perpetuates the problem. Here is the best deal for you today, is the pitch. That’s more important than the ultimate cost of that deal, the pitch continues. Here’s the counter. It is bad public policy for future taxpayers to finance higher pension costs for past and current services rendered. It is even worse public policy to legislatively hike pension benefits while pensions are already underfunded. It is even worse than that to hike pension benefits while pension are underfunded, and keep hiking salaries, almost annually, for four decades (forty… Read more »

Admin
2 years ago
Reply to  Advocate

The per year cost is lower but the total cost goes up. We’re looking for a plan that reduces the burden our kids face, not increases it.

S and P 500
2 years ago
Reply to  Mark Glennon

I’m eagerly awaiting a budget plan from this guy, too. I don’t think an answer is coming. If he does have a answer for you it will be the usual: “we need to ask the rich to pay more”, or “unfunded pensions are what happens if everybody tries to retire at once.”

Admin
2 years ago
Reply to  S and P 500

It’s long overdue to say “put up or shut up” to most everybody in Illinois. Ted and I have for years put up the dozens of things we think Illinois needs to do, which, as a package, represent the best approach we can come up with. If there’s a better alternative, great, let’s hear it with open minds. But nobody offers one, including Pritzker and every single Dem politician in Illinois. And shame on the press for never demanding one.

Advocate
2 years ago
Reply to  Mark Glennon

So much for “open minds.”

Mark M
2 years ago
Reply to  Advocate

Advocate – I don’t understand why you think “time” would work. And for discussions sake, by time I assume you mean eliminating the $250B state pension shortfall (Moody’s estimate) over 50-60 years. Of course, without massive structural reform the unions will never agree to, that number will continue to grow at a rate which outstrips available taxpayers’ ability to pay. But even assuming that the liability stays at $250B, the interest cost, especially the interest that near deadbeat Illinois pays, will eat Illinois alive. And remember that interest compounds annually. Right now the State consumes 25 percent of its budget… Read more »

Dave
2 years ago
Reply to  Mark M

The state will cease to even function if 50% of the budget went towards pensions. It isn’t possible in reality. The reality is that the state AND the pensions will collapse before the budget gets to 50% of it being used for the unsustainable pensions. The end will come for the pensions before 50% of the budget goes towards them. It is time to get real about all of this, and the reality is 50% of the budget cannot and will not go towards pensions; reality will arrive before that.

Mark M
2 years ago
Reply to  Dave

Dave – I absolutely agree but wanted to rebut Advocate’s point about time being a savior. What I don’t understand about his perspective is that one starts by looking at a gargantuan liability, which even in the best realistic case over time grows to an almost indescribable mega-liability. And if you take Advocate’s view that bankruptcy is to be avoided at all costs, just how does one pay a $500B liability against an annual budget of $40B, which in and of itself runs a $3B deficit right now (budgets are not financial statements)? The only way to even more be… Read more »

Dave
2 years ago
Reply to  Mark M

Mark M: To sum it up, math and reality always win, and that means the pensions and unions lose big time. The end. The pensions are toast as is. Agreed?

Mike xyz
2 years ago
Reply to  Dave

Before an end there is a middle which is hiked taxes in pursuit of the Laffer Curve (the point of diminishing returns)..

Mark M
2 years ago
Reply to  Dave

Yes, agreed. I fear anarchy abd desperation in the future, however.

Dave
2 years ago
Reply to  Mark M

Anarchy and desperation is coming to the world economy, not just Illinois. One state will not just have that going on – the Fed would step in and bail a state out before that happened. No one would stay in a state in that shape. But, the Fed cannot bail out everything, and the world economy is a sinking ship.

Advocate
2 years ago
Reply to  Mark M

What apparently you don’t understand is history of Sovereign debt repayment. Illinois is not the first sovereign to run into fiscal problems…..Illinois does not have to rediscover what has worked before to lift sovereigns out of debt. TIME. It took a long time to create the problem, YEARS! It will take a long time to fix the problem YEARS. The already enacted pension reform of Tier 2 has ended undefined benefit plans or pensions in Illinois as we have known them. THE BLOATED PENSIONS ARE NO LONGER GRANTED TO NEW EMPLOYEES PERIOD. Illinois pensions are NOW on par with Social… Read more »

Kvetch 22
2 years ago
Reply to  Advocate

I think there may be a difference between sovereign debt (generally owed to foreign creditors) and unfunded obligations to a state’s or a nation’s citizens. Let’s call the latter “entitlements.” While I’m not a macro-economist (or even a micro…) I believe the usual response to entitlements is inflation that destroys most citizens’ wealth but significantly helps the debtors. This process also trashes the sovereign debt if that is payable in the currency of the sovereign in question. The Soviet Union and Greece and Venezuela come to mind. I don’t think the federal government will come to the rescue. We’ll get… Read more »

Adam
2 years ago
Reply to  Kvetch 22

The reality is the only way Illinois does not collapse is that the pensions get lowered, and so they will be lowered. That is that. The dopes on Cap Fax that spend all day trying to make up reasons how the pensions will somehow get paid in full are just fooling themselves in an echo chamber of dumb. The pensions are toast as is.

mark m
2 years ago
Reply to  Advocate

Advocate – I am not sure invoking the mere element of time is helpful. Yes, people here are generally very intelligent, and do get the notional concept of having lower costs in the near future through an extended financing of this ridiculous debt, understanding that this will cause far more to be paid in the future. But I am still at a loss as to see how your time paradigm works. Look, no matter how much you want to use the element of time, it doesn’t work if the pension liability keeps growing. It has been increasingly growing since around… Read more »