UPDATE 9/12/19: The News-Gazette has now published it’s own firm response to the Comptroller’s office, linked here.

By: Mark Glennon*

Illinois Comptroller Susana Mendoza released the state’s “CAFR” — the annual, audited financial report — together with her press release, on August 29. The press release is headlined “Illinois cuts its deficit in half in fiscal year 2018, annual CAFR shows. We criticized that press release harshly in our article here, Illinois Hit By Record $47 Billion Loss, Ignored by Regular Media. Why?

The News-Gazette then wrote an article similar to our criticism, headlined “Sharing just portion of state’s finance numbers is fully misleading,” quoting us and other sources.

Now Mendoza’s press director, Abdon Pallasch, has sent a Letter to the News-Gazette’s Editor criticizing their article and ours, saying they had bought “hook, line and sinker” the apocalyptic rantings of a fringe website – Wirepoints.

This is our response to Pallasch and Mendoza.

For your reference, the News-Gazette’s article and Pallasch’s letter are reproduced below.

*******************

Pallasch’s letter simply ignores the main charge both we and the News-Gazette made, which is that Mendoza relied only on misleading numbers from the “general funds” to claim a major deficit reduction. The general funds are only part of the picture, and they effectively count borrowed money as if it is income. We explained that in detail in our initial article. It’s like claiming you cut your losses in half by putting that half on a credit card.

Mendoza’s press release buried the true, whole picture, which shows the state’s reported loss was actually an astonishing $47 billion. Perhaps a few readers so inclined could calculate something close to that if you did some math based on other numbers buried in the press release, but nobody realistically can be expected to do that.

The other central point of our article was the state’s massive $55 billion obligation for state retiree healthcare (“OPEBS”).  That’s a stunningly large addition to Illinois’ debt load that the state and most news reports have historically ignored, now corrected by a new accounting rule. Pallasch’s letter says “that was all in our news release and extensively detailed in the CAFR.”

No. The press release barely mentions it, and says nothing to call attention to the difference from what Illinois was told in earlier reports. And Mendoza totally ignored the long term horror story about which the CAFR is part — $178 billion lost since 2002.

Pallasch and Mendoza knew exactly what they were doing. Well, initially, at least. They cherry-picked an element from the CAFR that distorts the state’s financial health. They wrote a press release in which only the headline and the first paragraph would be intelligible to most reporters, knowing that most reporters could not assess the CAFR on their own. As you would expect, many news stories across the state centered only on those, regurgitating the press release with headlines like “Illinois cuts deficit in half in fiscal year 2018.”

Pallasch’s letter says the News-Gazette reporter should have called him for comment. “We might have been able to save him from getting his facts wrong and misleading News-Gazette readers,” he says.

Well, I did call Pallasch for comment before I wrote. It was a waste of time. I asked specifically why he cited the unrepresentative “general funds” accounting that counts borrowed money as income to claim that the deficit was cut in half. He gave no answer. “It’s all in the CAFR” that was published, he said, adding that they selected the parts they did, focused on the general fund, and that those wishing to write about other aspects can look at the other sections.

Pallasch repeats part of that in his new letter, saying he “invited everyone to explore all the
numbers in the CAFR.”

Come on now. He knows full well that 99% of the public and most media don’t have the background to decipher a CAFR. For proof of that, consider one who tried. They failed. Capital News Illinois is a quality operation that I’ve yet to see make a mistake. But when they tried to go beyond the press release they got the CAFR numbers entirely reversed, writing that the state’s position improved to negative $136 billion from negative $184 billion. They reversed 2017 and 2018.

Comptroller Susana Mendoza

Pallasch also didn’t like our take on Mendoza’s motives for spinning the CAFR as she did. We think it’s part of her endless messaging campaign blaming the budget impasse and Governor Rauner’s failures for pretty much everything bad in Illinois.

Yeah, I guess we were speculating about that being her motive. Maybe that’s because she repeats that claim so often it’s become a joke on Twitter. Heck, just last week she wrote about social safety nets and couldn’t make it past the first sentence without doing it again.

Finally, Pallasch calls Wirepoints “fringe” and our viewpoint “apocalyptic.” That indicates more about the perspective of Illinois’ political establishment than it says about us. Our research and commentary have been cited approvingly in the New York Times, Barron’s, Forbes, Washington Post, The Bond Buyer and many others. We reach hundreds of thousands of readers per month, concentrated in the financial community, and we’ve had over a million page views on a single article.

Pallasch and Mendoza must think the nation’s leading financial paper, The Wall Street Journal, is likewise fringe, since they’ve been as apocalyptic as us, writing recently about Illinois’ “inevitable financial collapse.” They cite our research often.

I said Mendoza’s politically spun press release worked as intended with most of the press – initially. But our article on this has now been viewed over 50,000 times and counting, and we haven’t received a single comment quarreling with our analysis. Pallasch’s letter should make it good for tens of thousands more.

Here’s what this is really about. We are fed up with Illinois politicians covering up accruing debts that surge every day. It’s those accruals that have bankrupted Illinois and many of its municipalities. Politicians hide those losses behind bogus, cash-based budget accounting and meaningless parts of financial statements that count borrowed money as income and ignore accruals, which is what Mendoza did.  As a reminder, here’s our chart showing it:

If you try to hide those accruing debts, we will go after you.

*Mark Glennon is founder of Wirepoints.

************

News-Gazette article from September 10: Sharing just portion of state’s finance numbers is fully misleading

How does one keep the natives — aka Illinois taxpayers — from getting restless?

Don’t tell them the truth, the whole truth and nothing but the truth.

Exhibit A for that proposition is a news release recently issued by Comptroller Susana Mendoza about the state’s Comprehensive Annual Financial Report that put a positive spin on Illinois’ disastrous financial situation.

“Illinois Cut Its Deficit In Half in Fiscal Year 2018, Annual CAFR Shows,” the headline on her office’s press release read.

Fortunately for Mendoza, news reporters, who are generalists, not specialists, not only took her summation at face value, but also mostly failed to track down financial experts who would have had a different interpretation of the numbers.

Specialty publications revealed the real story.

Yvette Shields at The Bond Buyer reported that the state is “covered in red ink.”

“Illinois’ overall fiscal condition continued to deteriorate in fiscal 2018, according to the overdue comprehensive annual financial report,” Shields wrote.

Wirepoints financial analyst Mark Glennon offered an even-more-apocalyptic analysis that asserted the state was “hit by a record $47 billion loss.”

“The State of Illinois recently reported its biggest annual financial loss ever. Instead of clear reporting on that, we’ve seen perhaps the most glaring example yet of how the state’s finances can be misunderstood, misreported and intentionally distorted,” he wrote.

How does one account for the difference in emphasis between Mendoza’s office and the outside analysts?

Mendoza’s office focused on the state’s “general fund” operating budget, claiming that Illinois “cut its general funds deficit by $6.849 billion — from a deficit of $14.612 billion in fiscal year 2017 to a deficit of $7.763 billion in fiscal year 2018.”

It is highly likely that Democrat Mendoza’s more favorable analysis was an intentional misdirection play designed to shield Democratic Gov. J.B. Pritzker from the same shots she took at former Republican Gov. Bruce Rauner.

How so?

Mendoza’s 2016 press release, issued during Rauner’s tenure, emphasized “net position” numbers, while this year’s cited the general fund.

“With no relief in sight, Illinois’ finances deteriorated at an alarming rate in fiscal year 2016, as net deficit totals spiked to a staggering $126.7 billion. … The state’s [CAFR] paints a worsening outlook for the state’s financial future on this un-sustainable path. Mendoza said the CAFR findings reflect a lawless fiscal climate,” that press release stated.

“That ‘staggering’ negative $126.7 billion is now negative $184 billion. … No moral outrage now from Mendoza, however,” wrote Wirepoints’ Glennon.

The huge increase in the state’s “net position” numbers is partly explained by an accounting change that, for the first time, reflects health care costs owed to future retirees. Known as “Other Post-Employment Benefits,” these inescapable obligations remain unfunded by the state.

The fact that these benefits were not previously included in the state’s financial report reflects another accounting scam that was ordered corrected in the most recent report by the Government Accounting Standards Board, a private organization that is the source of generally accepted accounting principles used by state and local governments.

The state’s financial net position has grown steadily worse over the years, the result of a combination of factors.

Now standing at a negative $184 billion, the number includes the obligations for retiree health care.

In 2014, the state’s negative net worth was negative $45 billion, not including the retiree health obligation. It jumped to minus-$120 billion in 2015, minus-$126 billion in 2016 and minus-$136 billion in 2016, according to figures for all three years that do not reflect retiree health obligations.

New Jersey has the largest negative net worth of all 50 states. Illinois ranks second in that category, something few people would know if all they read was Mendoza’s news release.

************

Abdon Pallasch’s letter to the editor:

Dear Editor,

Had your columnist Jim Dey called the Illinois Office of Comptroller for comment before accusing us of “an intentional misdirection play” in his Sept. 10 column, we might have been able to save him from getting his facts wrong and misleading News-Gazette readers.

He bought hook, line and sinker the (Dey’s word) “apocalyptic” rantings of a fringe website that our office highlighted only rosy economic news from the Comprehensive Annual Financial Report (CAFR) because we wanted to make Gov. JB Pritzker look good and former Gov. Bruce Rauner look bad.

The problem with that misrepresentation is the period covered by the recently released CAFR is fiscal year 2018, which was July 1, 2017 to June 30, 2018. Bruce Rauner was governor at that time. Had our goal been to make Rauner look bad, we would have trumpeted the worst numbers chronicled by the CAFR and pointed to the governor at the time.

In fact, our apolitical news release highlighted a few of the more interesting numbers, good and bad, and invited everyone to explore all them numbers in the CAFR:

“The Comprehensive Annual Financial Report (CAFR) released today shows Illinois cut its general funds deficit by $6.849 billion – from a deficit of $14.612 billion in fiscal year 2017 to a deficit of $7.763 billion in fiscal year 2018. That is largely because of a refinancing of state debt from high-interest to low-interest repayment.

“The state’s total assets were approximately $53.9 billion on June 30, 2018, a decrease of $400 million from June 30, 2017. The state’s total liabilities were approximately $248.1 billion on June 30, 2018, an increase of $33.3 billion from June 30, 2017. The state’s largest liability balances are the net pension liability of $133.6 billion and the other post-employment benefits (OPEB) liability of $55.2 billion.”

That $55.2 billion OPEB number is a new calculation required to be included in every state’s CAFR’s this year, which made most states’ numbers jump, as did most states’ pension debt projections. That was all in our news release and extensively detailed in the CAFR itself. Comptroller Mendoza has been outspoken about Illinois’ need to address its pension shortfall.

We expect misinformation from fringe websites. We expect better of the News-Gazette.

-Abdon Pallasch
Director of Communications, Illinois Office of Comptroller

67 Comments
Newest
Oldest Most Voted
Inline Feedbacks
View all comments
Daniels
8 months ago

Mendoza the top Madigan lackey, probably can’t balance her own checkbook, a chronic liar. But she did play soccer in grade school, so that’s something to build a mayoral campaign around.

s and p 500
8 months ago

There’s a story out of Philly about how a long time teacher just got cancer, possibly from asbestos in the buildings. The union is livid and they are demanding $100 million immediately to remove asbestos from all of the school buildings. PFT is ignoring the fact that the school district’s unfunded pension liabilities are a major reason why the school district doesn’t have $100 million in loose cash to spend. The state of Pa. doesn’t have the cash, either. Believe it or not, states and schools actually have to post “profits” and can’t take $50 billion hits on their income… Read more »

Shirley Miller
8 months ago
Reply to  s and p 500

What about the children exposed to the asbestos?

nixit
8 months ago

Sooo many thing wrong with that press release: 1) Totally misleading title: “ILLINOIS CUT ITS DEFICIT IN HALF IN FISCAL YEAR 2018” Of course, they explain it later, but they know this is the phrase the search engines will pick up. Very disingenuous. 2) CYA: “Loss of state data by outside vendor a key factor in delay of report’s release, as forewarned by Comptroller Mendoza” “I told you so” is so amateur hour. No one gives a damn. More words were spent explaining the delay of a report now published than the ginormous deficit in the report. If you knew… Read more »

nixit
8 months ago
Reply to  nixit

More fun:

“At June 30, 2017, the State’s proportionate share of the liability was 49.669% based on its contribution requirement. This is a decrease of 2.661%…”

Not 50%. Not 49.7%. Not 49.67%. 49.669%. Such precision! Let us know immediately if this moves .005% in any direction so we may avert financial disaster.

Mike
8 months ago

Did the News-Gazette delete from its website the above referenced letter to the editor written by Abdon Pallasch, the Director of Communications for Illinois Comptroller Susan Mendoza?
https://www.news-gazette.com/opinion/letters-editor

joe blow
8 months ago
Reply to  Mark Glennon

in an ironic twist of fate, the news-gazette is filing for bankruptcy

MikeH
8 months ago
Reply to  Mark Glennon

What a butthurt response from the Comptroller’s office. While I’m sure some will fall for this obvious attempt at damage control, many others won’t. Then Susana will go back to blaming the weather for the exodus on Twitter while complaining that the state is better of without those who left.

Cass Andra
8 months ago

We can’t and the legislature won’t put them under oath. S.E.C. largely exempts municipal issuers. The judicial and legislative systems depend on adversarial presentations being sorted out by supposedly neutral deciders. The result is to be expected in the light of debates on climate change, pain killers, tobacco and guns. Fighting back is tiresome when the media are ignorant and partisan. Read another Churchill bio and soldier on!

NB-Chicago
8 months ago

Fantastic job socken it to flim-flam/spin mister suzie m!!! Duping the dullard public& press is the easy part the machine figuers. Fooling the bond markets is all they really care about–to keep the gravey train running..they’re scared to death of credit downgrades. But sure, bond markets would have picked up on the $47b OPEB debt? Yes?

NB-Chicago
8 months ago
Reply to  NB-Chicago

Does Mendoza’s misleading/ false press release claims get into any misleading bond investor territory? Or, maybe that’s to much of a stretch

Cass Andra
8 months ago
Reply to  NB-Chicago

If the rating agencies were honest and would reduce the ratings to below investment grade, a lot of funds would stop buying them. Fund managers generally use other peoples’ money and cover their butts (bets?) with fine print. Those who “guard” us take their money up front and investment managers who buy the bonds generally go by the ratings. Rest assured that underwriters, bond lawyers, auditors, actuaries and investment managers are well-insulated against liability for the risks they take. Regulators are mostly in the pockets of the foregoing. If not, they are understaffed or lack the budget to rein in… Read more »

Bob out of here
8 months ago
Reply to  Mark Glennon

Reminds me of the scene at S&P office in The Big Short. “If we don’t give them the ratings they want they’ll go go Moody’s right down the block.” Can’t get links to work here, but search YouTube for “The Big Short (2015) – FrontPoint Partners confronts Morgan Stanley Risk Assessors and S&P”

NB-Chicago
8 months ago
Reply to  Mark Glennon

Cass–agree the bond rating is a whores game w the rating agencies and spin mister mendoza all in on the act as head hookers. Think it was about a month ago mendoza was on flanery fired up, lightweight show, where besides blaming everthing on rauner she said her #1 priority was protecting illinois bond rating ( no mention of protecting tax payers). Can the moodeys &fitch, etc simply ignore the $55 billion in opeb debt that mendoza conveniently leaves out of her cafr summary/press release but is supposedly in cafr without putting illinois go bonds in deep junk status? The… Read more »

Cass Andra
8 months ago
Reply to  NB-Chicago

NB: My experience is that an institutional investment firm will ask for an investment policy signed by its client, take his money, make a record of diligence that no ordinary person could replicate [with every decision to buy, sell or hold documented] and then force a confidential arbitration clause down the throat of anyone who tries to challenge their “prudence.” A well-known brokerage firm cocked up an off-the-shelf 401(k) plan so badly that an IRS audit resulted in about $100K of penalties and costs to the sponsor. A lawsuit ensued. The brokerage firm defended the lawsuit vigorously until the client… Read more »

NB-Chicago
8 months ago
Reply to  Cass Andra

Cass–you are very knowledgeable, would you put the brokers, fiduciaries, brokerage defense lawyers, etc who already got there $ , who are behinde the 600+ local cop & fire pensions in same low regard? Also, watched Warren and the others–theyll pave the street w gold for the nea..as an fiscal independent i dont like any of them. And trumps insane. Cant imagine voting for any of them

debtsor
8 months ago

Ablon’s twitter feed is nothing more than retweeting the tweets of his boss, with a mixture of Orange Man Bad retweets.

Really, in today’s social media driven environment, the Director of Communications can’t be bothered to tweet anything other than Orange Man Bad? I don’t want to stoop to the Democrat’s name calling, but sure are plenty of word for this guy, and none of them are very nice.

U 221f
8 months ago

You guys nailed it again! I so hope more media outlets and citizens of this disaster of a state catch on to your expert analysis and clear writing about the crises we face. Sure, the train is already chugging down the track and you guys have been screaming that the bridge has been blown up by the bad guys (dem pols) for some time now, and even if someone pulls that big brake lever it’s still too late to stop it from streaking over the cliff, but at least you guys are trying. Thanks for that.

StatePensionMillionaires
8 months ago

Nice work Mark and Ted, and whoever else is helping to call out these legislators who have driven the once great state of Illinois to a financial cliff. No more taxpayer passivity. Make or break time.

Remember….a promise is not a promise in the absence of honest dealings….

Adam
8 months ago

I just want to say that mark and Ted are true heroes. These guys are doing heroic work for Illinois citizens. Keep it up, because I think you are really starting to expose all these criminals. Madigan, Cullerton, Harmon, Rich Miller, Mendoza are all nothing but union-owned stooges who don’t care at all about the majority of Illinois citizens. Public unions in Illinois are true criminal organizations, and the day of their financial collapse will be a day I am smiling ear to ear.

Joan
8 months ago

Very foolish to pick a fight with the guy who has been called the most dangerous man in Illinois. Mark, I hope you take this to the national media and really expose them the like you did with New Trier, Northwestern’s president Shapiro and other things..

joe blow
8 months ago

Numbers and facts are Illinois crony politicians worst enemies. Democrats pulled the same crap back in the 90’s when Bill Clinton “ran a surplus” no he didn’t! He borrowed money from Social security and the national debt didn’t decrease one stinkin penny! The Chicago economy is on fire right now and the morons running the state still can’t come even close to a balanced budget, can you imagine how bad things will get when the markets turn? Yikes! Their solution is “more revenue sources” I’m sure… Thank you Wirepoints for calling out these lying crooks on their lies!

MikeH
8 months ago

Good to see she’s following the time-honored leftist tradition of name calling when her position cannot be defended.

nixit
8 months ago

What Menzoda’s clan fails to understand is that the comptroller’s office should be INDEPENDENT. We don’t need politics mixed with accounting. We don’t need her opinion on who’s to blame for a budget impasse, only that the lack of a budget has “x” impact on the financial health of the state. Just present the financial facts – all the facts – in a way we can all understand. No sugar coating, no hiding numbers on a balance sheet, no obscure footnotes. Just the cold, hard numbers. Mendoza is unable to separate her partisanship from her official duties. She is unfit… Read more »

8 months ago
Reply to  nixit

I am not defending her. Tell me which elected official is able to separate politics from policy? Clearly, the Illinois financial statements are nowhere near GAAP.

nixit
8 months ago
Reply to  Jeff Carter

Judy Baar Topinka did a pretty good job. See an excerpt from her July 2014 “Comptroller’s Quarterly” below. No discussions of a “fair tax”. No finger pointing at specific politicians. Just the cold, hard financial truth: There’s not going to be enough revenue. I expect the Comptroller to be a hard-ass, no nonsense position, skeptical of all politicians. Looking ahead to fiscal year 2015, a gradual worsening of the budget situation is expected. In January 2015, the income tax rates are scheduled to drop, reducing the flow of income tax revenues into the state treasury. In addition, the fiscal year… Read more »

Adam
8 months ago

Mark, I think exposing them is very helpful and very great of you and Ted. However, at what point can the state start turning around for all this bullshit? What is your opinion on Peoria and the fact they are using 100% of their property taxes on pensions now? I can’t see that lasting more than a year or two. I feel like bankruptcy for cities and towns will have to be allowed in the next three to five years max. As far as healthcare for state workers, I feel like that is doomed to collapse too because more and… Read more »

Adam McElwain
8 months ago
Reply to  Mark Glennon

One more question if you don’t mind Mark. The state has 12 million people, so obviously it is too big to fail. Something will keep it from totally failing. My question is this: Can people like you and me look forward to it being a better state in time if we tough it out? I still have a good job here in the Galesburg area, and as long as the company I work for stays here, then I am here. I hope it gets better after it gets worse. It should. Again, the state is too big to fail. People… Read more »

riverbender
8 months ago
Reply to  Adam McElwain

The State can last until all private property is taxed at 100%. Like it or not it is the will of the people too based upon past elections.

Adam
8 months ago
Reply to  riverbender

First off, people need to stop acting like the state can take 100% of our money. That ISN’T true. People have to have food, housing and many other things. The state, and the pensions, will collapse well before 100% of our money is taken. That is not realistic, and anyone who says that I can’t take seriously. EVERYONE would move if that happened anyway. Not possible. There IS a limit to taxation, period.

debtsor
8 months ago
Reply to  Adam

What you’re missing is that the middle class is the only class of residents that feel the pain. they’re they ones who complain about the high taxes. theyre the ones who will leave, which is what happened to california. The poor – of which there are many – don’t pay much in tax and feel the pain less; and the upper middle class find chicago to be a progressive utopia, and will stay. as it stands, California with 20%+ poverty rates, which approaches 40 or 50% when you include ‘near poverty’ rates, which is juxtapositioned by the wealthy who live… Read more »

Adam
8 months ago
Reply to  debtsor

Illinois is nothing like California. I am not arguing this again. California has way more going for it than Illinois, and Illinois will collapse much sooner and quicker as well. If I have to I will move, and so will everyone else that pays taxes, which means the pensions go bust, which they WILL no matter what in time. There is a limit to taxation, and if you think there isn’t, then you are frankly an idiot with zero math skills.

debtsor
8 months ago
Reply to  Adam

What does California have going for it that Illinois does not, other than nice weather? Both have substantial agriculture; both have business, both have tourism. Chicago has a huge legal and financial industry that California lacks. That’s why I’m arguing that California today is what Illinois is becoming – a progressive utopia with little to no middle class, with a lot of grinding poverty and a lot of really ridiculous wealth. The poor in California don’t pay much tax, the wealthy can afford it (and enjoy paying it!) – it’s the middle class that bears the brunt. It’s a strawman… Read more »

Adam
8 months ago
Reply to  debtsor

California is not losing people like Illinois is. That is huge. California has way more high income earners, that is huge. Illinois looks and feels like an absolute dump compared to California, and yes that weather matters big time as well. A 10% income tax on the rich in Illinois would drive most of them out in no time because Illinois sucks. By the way, I literally commented to a guy who said 100%, so it isn’t a straw-man. I see idiots say that all the time, and they need to stop already. It won’t happen.

Willowglen
8 months ago
Reply to  debtsor

Look at the proposal by the Chicago Fed to impose a 1 percent tax on property just to service the 5 state pensions, under the guise that property owners deserve what they get for choosing to live in Illinois. That kind of tax will cause hundreds of thousands of middle class people to leave (property taxes already are high), and some upper middle class and upper class people will leave too. And it doesn’t take much of an exodus among the well off to really impact the state in terms of revenue collection. I don’t think it will be a… Read more »

Adam
8 months ago
Reply to  Willowglen

If it becomes a miserable place to live then I will move. If the state only had 9 million people then the pensions would have collapsed long ago from population loss.

debtsor
8 months ago
Reply to  Willowglen

There’s no way to short Chicago because there is no counter-party to that trade! A 1% tax on real property just to pay for pensions is outrageous. I know I wouldn’t be able to afford that.

Willowglen
8 months ago
Reply to  debtsor

I didn’t know what to make of the Fed presentation of 1 percent property tax levy to pay down just the 5 state pension liabilities. I assume the authors meant what they said, which makes them incredibly tone deaf and unable to think practically. On the other hand, it was a great way to show how much trouble the state is in, while garnering the appreciation of the left, which embraces this kind of confiscatory taxation. Medieval kingdoms would often find themselves in the straits Illinois is in. They had to win wars and confiscate property big time or they… Read more »

Cass Andra
8 months ago
Reply to  Willowglen

And are Wirepoints readers “the few, the band of brothers?”

DantheMan
8 months ago
Reply to  Cass Andra

Cass, we differ. For example, I expect you are the only one that would consider voting for Elizabeth Warren.

Cass Andra
8 months ago
Reply to  DantheMan

Perfection has always eluded me. My ideal ticket would be Mitt Romney and Joe Lieberman running on the ticket of a new Coalition Party with a flip of the coin to determine who would be V.P. I expect we differ on that issue also. What kind of beer do you drink?

DantheMan
8 months ago
Reply to  Cass Andra

Prefer wine. First round is on me if we ever cross paths. I enjoy your comments.

riverbender
8 months ago
Reply to  debtsor

The so called middle class has voted either at the voting booth or by not voting against the political situation Illinois citizens are in. It’s the will of the people as shown by the results of the last election.

debtsor
8 months ago
Reply to  riverbender

Not my will. I didn’t vote for the morons.

riverbender
8 months ago
Reply to  Adam

Um hm yes,,,yea right.

riverbender
8 months ago
Reply to  Adam

Please note my post was “all private property is taxed at 100%” and not “100% of our money.” While it certainly is an unprecedented I would suggest that you write as to why that situation would not happen. The Illinois Court System, with Judges being a part of the pension system, has repeatedly rendered opinions that provide that there will be no reductions (impairments) to the pension system as we know it. A “limit to taxation” has not been mentioned in any of their, the judges opinions. I am not trying to belittle your post but elections are about votes… Read more »

Adam
8 months ago
Reply to  riverbender

It is quite simple why it can’t happen to anyone with a working brain: in no way shape or form could anyone in the middle class afford that, and they would be unable to pay. The pensions are doomed. Try to live in mathematical reality. People won’t be able to pay, and people will keep moving. What loses? The pensions.

Adam
8 months ago
Reply to  riverbender

Anyone who thinks there is not a limit to taxation is a fool, plain and simple. There IS a limit, because people will go broke at a certain level and be unable to pay. That is mathematical reality, something Illinois (and the pensions) will lose to 100% of the time

Adam
8 months ago
Reply to  riverbender

100% of my home’s value (or pretty much anyone else’s) is more than I earn in an entire year. Can you tell me how I will pay that? I guess I just won’t eat or go to work since I won’t be able to afford fuel. See how insane that sounds?

Mike Williams
8 months ago
Reply to  Adam McElwain

My prediction is Illinois will remain a liberal state throughout the crisis, which means it will make the same mistakes again even after they start to emerge from years of decline. By all means stay if you have a job that compensates you well enough to put up with all the Illinois BS, especially if you are single. If you have a family, that’s a tougher call. Safety may become an issue at some point. Hopefully you will be able to afford private schools or can home school.

debtsor
8 months ago
Reply to  Mike Williams

There will be enclaves of wealth during the decline. Grosse Pointe and Farmington Hills MI all stayed nice even though Detriot, and Michigan, experienced financial decline. Going back to even the 30’s, when the entire country was in a depression, there was still lots of wealth even though many were in grinding poverty. My unnamed suburban town will likely fare OK as long as the ‘pink hats’ don’t take it over (they’re trying). It’s pension is funded OK and it will have no issues cutting services to the bare minimum – the residents will even demand it during hard times.… Read more »

Adam
8 months ago
Reply to  Mike Williams

When safety becomes an issue then the federal government will have to step in and allow state bankruptcy. Again, too big to fail. On the other side of the coin this whole site misses the larger point: the world is buried in unsustainable debt and at some point the entire global financial system is going to collapse and then we all go bye bye. It will happen in the next fifty years. It all is unsustainable, not just Illinois.

debtsor
8 months ago
Reply to  Adam

Financial collapse is one thing. Countries survive that all the time. Argentina defaults on its bonds on a seemingly regular basis and so have other countries. They get right back into the bond market. They work through it unless its Venezuela which is an outlier. The problems arise from financial collapse when war gets involved. Syria, central african countries, and so on. But unless American has a long drawn out civil war (unlikely), American will work through it’s collapse and be just fine. It’s all just shuffling numbers on a bank ledger. As I once heard someone say, the wealth… Read more »

Adam
8 months ago
Reply to  debtsor

If America collapses then the entire system does. Argentina is a blip on the map, and America is not. The amount of debt America and Europe have is enough to collapse it all alone. At some point growth is not possible anymore, no matter what trick they try to use to stimulate it. Their last effort for growth is negative interest rates, but once that starts failing, then it is game over. There really are no options left once that fails.

DOUG
8 months ago
Reply to  Adam McElwain

Adam, the risk you face is that your company is one of the last to leave. When you go to sell your house at that time you will face utter destruction in home values. Don’t fool yourself, the whole state can go down like Harvey and Peoria.

Adam
8 months ago
Reply to  DOUG

I own my home, and I will abandon it if I have to. I have no worries with that. I could auction it off for ten dollars and I would be fine. Also, there will not be a point where there is one company left in Illinois – that is unrealistic. The pensions will collapse long before then, and they will be cut dramatically. The state is too big to fail.

riverbender
8 months ago
Reply to  Adam

Actually you rent your home from the Illinois political system. If youo think you don’t try not paying your property taxes (rent) and see what happens.

Adam
8 months ago
Reply to  riverbender

You fail to mention that is the same for every state, not just Illinois.

S and P 500
8 months ago

The public should know how to read a CAFR, or at least the balance sheet and the income statement. If they don’t then they need to look at some Accounting 101 videos on you-tube. Yes, I guess that Mendoza is counting on nobody looking at the CAFR online and going to p. 19 and 20. The little footnote “beginning balance is restated due to GASB 75” is a brazen use of fine-print but it’s hilarious. The line item on the balance sheet for $20 billion “deferred outflows of resources” should have a footnote “this is an Enron entry that is… Read more »

Bob
8 months ago

Mendoza is a simple politician who probably has little grasp of such deep financial issues. The hired help puts these things together. When the hired help gets caught bamboozling the common folk they go on the defensive and begin their name calling and attempt to downplay the people who can intellectually call them out. I will take smart “fringe” people’s fact based opinions over politicians and the hired fluffers.

DantheMan
8 months ago

Like I said, the problem with Illinois is liberalism, which falsely thinks borrowing=income.
Conservatives know the correct formula is………………………… borrowing = debt.
The liberal formula for taxes is… taxes = money redistribution.
The conservative formula is.. taxes = legal stealing.
Finally, the liberal overall financial formula is… high taxes + high borrowing = votes.
The conservative formula is … high taxes + high borrowing = bye bye.

Gemini
8 months ago
Reply to  DantheMan

Amen brother. Book me on the next plane to Florida.