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Summary and audio linked here.
Chicago’s political leadership is floating a pension buyout program as evidence it is seriously addressing the city’s thirty-six-billion-dollar unfunded pension liability, but Mark Glennon, founder of the Illinois policy research organization Wirepoints, said that the proposal moves debt from one column to another rather than reducing it, and that the broader fiscal picture facing the city continues to deteriorate across every measurable dimension. Audio here.
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
Full interview and summary linked here.
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Why in the hell would someone want to buy a house in Illinois?
great article!!
both gas tax increase and gambling are regressive taxes that fall predominately on low to middle income folks. so much for taxing the rich and all that progressive tax nonsense
At 25 cents driving to Indiana for gas makes sense for way more people. Especially if they combine the trip for groceries to make the extra ‘time worthwhile.
Bond proceeds go from investors to pension fund with a few % to consultants, underwriters, lawyers, etc. Pensions and health can be paid for a few more years and the pensioners have a higher level of security in the ultimate bankruptcy. Bond holders get screwed down the road but they are either large institutions or, more likely, smaller investors (probably rich people) from all over the country who decided to put some of their assets into tax-exempt bond funds. Politicians, and public workers who voted them in, think it’s great. Bond lawyers who got paid in front think it’s great.… Read more »
Taxpayers hosed before bankruptcy and after as bondholders learned their lesson with Detroit and Puerto Rico and have been securitizing revenue streams. The biggest debtor is Pensioners who will vote for continual Death Spiral before accepting cents on the dollar settlement.
Michigan Republicans had passed a law permitting the Governor to give state approval to municipal bankruptcies. Agreed that in Illinois it probably would require legislature and governor to authorize it and the new incumbents would march to the union drummer. Simple default or repudiation will result when the pension trust is empty. Nevertheless, the money from the proposed bonds would be in the pension fund and probably impossible for the bondholders to recover. So the pensioners will have more in their trough to divide or fight over than they’d have had without the bond issue. Everyone foresees the end result… Read more »
J.A. I believe that bondholders (I am not one) are totally protected. According to the last implementation bill Section 5-13-10 “Assignment of Receipts” bondholders can get 90% of future sales tax revenue for up to 40 years in the event of municipal bankruptcy. This even trump’s (pardon the pun) pensioners. Did Detroit have this provision? Does this pertain to Chicago only or is it state wide?) This is in SB0042 starting at page 709. This will ultimately fall on taxpayers as the Kobayashi Maru of deals (no-win scenario from Star Trek) until someone changes the rules as in changing the… Read more »
I’ll look into this further. I think it would be the pension sponsor (e.g. the municipality) that was attempting to invalidate its own assignment via whatever legal arguments could be put forward. Public safety, public health and whatever else falls within the municipality’s responsibilities seem paramount. I believe there are some depression-era precedents to this effect. I assume the parties would be in bankruptcy court with municipality as debtor and the bondholders as creditor and the bondholders would be trying to enforce their lien. The bankruptcy judge has SOME equitable powers (though I don’t know if the judge can extinguish… Read more »
Update: I looked into this a bit but don’t have time to do more. There is a concept of “service delivery insolvency’ that arose in the Stockton and Detroit bankruptcies. In those cases the concept was used to find the municipalities eligible for Chapter 9, but I think it might be extended to impairment of security interests under the equitable power of a bankruptcy court Following is a quote from the Bankruptcy Court opinion in the Detroit bankruptcy: “Service delivery insolvency “focuses on the municipality’s ability to pay for all costs of providing services at the level and quality that… Read more »
A preview of the United States after the 2020 election.
Thank the cowardly, braindead, stupid republican party; the worst political party in the entire universe.
The only question is how fast will the collapse be? Definitely going down the Death Spiral Democrat way of higher Taxes more people leaving and lower growth. At the same time they are raising Taxes and people leave, the problem gets nightmarishly worse as debt and unfunded entitlements grow exponentially.
Why aren’t we looking at legalizing prostitution also?
I guess the General Assembly doesn’t want to be licensed.
Just think how much money legalized riverboat child prostitution could bring in! It’s ok because it’s on a riverboat and it’s for the sacred pensions!!