Tyler Durden of Zero Hedge wrote this article.
By
now, Illinois' budget problems are no secret.
Back in May, after the State Supreme Court
struck down a pension reform bid, Moody's move to downgrade the city of Chicago
thrust the state's financial woes into the national spotlight.
Since then, the situation hasn't gotten any
better and despite hiring an "all star" budget guru (for $30,000 a
month no less), Bruce Rauner was unable to pass a budget in a timely fashion
leading directly to all types of absurdities including everything from the
possibility of shortened school years to lottery winners being paid in
IOUs.
Now, as Bloomberg
reports, pension payments are set to be
delayed. Bond payments,
apparently, will still be made.
Illinois
will delay pension payments as a prolonged budget impasse causes a cash
shortage, Comptroller Leslie Geissler Munger said.
The spending standoff between Republican
Governor Bruce Rauner and Democratic legislative leaders has extended into its
fourth month with no signs of ending. Munger
said her office will postpone a $560 million retirement-fund payment next
month, and may make the December contribution late.
Munger said the pension systems will be paid in
full by the end of the fiscal year in June. The state still is making bond
payments, she said.
“We prioritize the bond payments above
everything else,” Munger told reporters.
And from Reuters:
Illinois
Comptroller Leslie Munger said on Wednesday a $560 million November pension
payment will be delayed due to a cash crunch stemming
from the state's budget impasse.
Despite the delay, state pension funds will be
paid in full by the end of fiscal 2016, Munger said at a news conference in
Chicago.
Here's some color (again via Reuters) from
Tuesday's preview:
Oct 13 Illinois' budget impasse has reached a
point where full and timely payments for big ticket items such as pensions
could be in jeopardy, the state comptroller's office indicated on Tuesday.
Comptroller
Leslie Munger set a Wednesday press conference "to discuss the significant
cash flow constraints the continuing budget impasse is placing on state
finances and the challenges of making timely state payments in the months
ahead," according to an advisory from her office.
The battle between Republican Governor Bruce
Rauner and Democrats who control the legislature has left Illinois without a
budget for the fiscal year that began July 1. However, the state is required,
even without a budget, to put aside money each month for pensions and debt
service on bonds.
One wonders what these means for Chicago's
bankrupt school system, which, as we reported early last month, was depending upon
nearly a half billion in funding from Springfield to plug a gaping budget hole.
Further, this would seem to suggest that anyone who wins more than a few
thousand in the Illinois lottery can go ahead and figure on getting a pieces of
paper with Bruce Rauner's picture rather than Ben Franklin's for the
foreseeable future.
We also encourage readers to review this piece by
Reuters in full as it contains several of the most egregious
examples of government waste and inefficiency you'll ever come across and
goes on to say that reform simply isn't an option, as the Illinois legislature
is filled with lawmakers who have at one time or another themselves benefited
from the state's sprawling local bureaucracies. Reuters also says it has
identified nearly a dozen instances where husbands employ wives, mothers
employ daughters, and fathers hire sons," suggesting nepotism weighs
heavily on the already elephantine system.
Bear in mind that this is the same state whose
court system refuses to allow efforts at pension reform to move forward, and
while all of this may seem like a recipe for default disaster, just
remember, PIMCO sees a lot of "long-term
value" in Chicago's debt.
Finally, a look at just how underfunded
Illinois' pension system truly is:
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