Month: February 2019

Posted on

 Watchdogs & Analysts: Pritzker’s “Structurally Out Of Balance” Budget May Threaten Illinois’ Credit Rating

Pritzker’s one-time revenue measures, delayed pension payments, new pension borrowing, spending increases, and more threaten Illinois’ already-fragile fiscal condition

“Governor Pritzker’s unbalanced budget proposal is setting our state on a road to fiscal ruin. According to the Big Three credit rating agencies and financial analysts, Pritzker’s pension holidays and one-time revenue gimmicks will threaten Illinois’ already-fragile fiscal condition. To move our state forward, we must change our fiscal course, but unfortunately, Pritzker’s proposals maintain the status quo in Springfield.” – Illinois Republican Party Spokesman Aaron DeGroot

 

Last week, Pritzker gave his first budget address, outlining his Fiscal Year 2020 budget proposal which included:

  • Tax increases, including spending of revenue not yet realized
  • Spending increases, expansion of programs
  • Reduction in pension payments, a flip-flop from Pritzker’s campaign pledge
  • Issuing new pension debt and other general obligation bonds
  • No job-creating, economic reforms

Credit rating agencies did not respond positively to Pritzker’s budget. One financial publication said Pritzker’s one-time revenue measures leaves Pritzker’s budget “structurally out of balance,” contrary to Pritzker’s assertion that he’s resolving the state’s structural budget deficit.

Here’s what financial industry watchdogs and analysts had to say about Pritzker’s proposal:

 

The Bond Buyer: Why Illinois budget proposal raises new rating concerns

Illinois Gov. J.B. Pritzker’s pension and budget proposals raised red flags among watchdogs, investors, and analysts, along with questions about the threat it may pose to the state’s investment-grade ratings.

…The [Municipal Market Analytics] report warns that the risks associated with the uncertainties over the valuation of asset transfers and the arbitrage gamble on POBs are ideas that “can become gimmicks that pose credit negatives potent enough — scaled to management’s desperation to shape its spreadsheets — to smother the plan’s benefits to the state’s credit profile.”

The budget also relies on a series of one-shot revenue measures, leaving it structurally out of balance.

…Moody’s Investors Service would view the move to lower near-term pension contributions and extend the amortization period as a negative but is withholding judgment to see how the legislative session plays out and what is the broader context of the package that’s approved, Moody’s lead Illinois analyst Ted Hampton said.

 

Fitch Ratings: Illinois Governor’s Budget Plan Would Make Insufficient Progress

The fiscal 2020 executive budget plan recently introduced by Illinois’ governor would not materially address the state’s structural budget issues in the current fiscal year or the next, says Fitch Ratings.

…Fitch has indicated that we would lower the state’s IDR if Illinois returned to a pattern of deferring payments for near-term budget balancing. Elements of the governor’s proposal, including a $1.5 billion GO bill backlog borrowing that reduces but leaves largely unresolved the 2019 deficit and numerous one-time measures in fiscal 2020, appear to do that without a clear path toward long-term balance.

 

Reuters: Proposed Illinois budget falls short on filling structural gap, credit rating agency warns

Pritzker’s nearly $39 billion general funds budget for the fiscal year that begins on July 1 depends on $1.1 billion in estimated new revenue, including money from yet-to-be legalized sports betting and recreational marijuana. It also frees up cash by reducing contributions to the state’s five retirement systems.

“Illinois faces significant fiscal problems that will likely take multiple years to fully address, but the executive budget does not provide enough clarity on how the state will deal with them,” Fitch said in a statement.

 

Capitol News Illinois: Pritzker’s budget and pension plans could irritate bond markets

But in order to accomplish that, the state would need to borrow money, a lot of money. And there are significant questions about how the financial markets would respond to that.

All three major credit rating agencies — Moody’s, S&P and Fitch Ratings — currently rate state of Illinois bonds at one notch above “junk” status. And there are elements in Pritzker’s plan that some analysts say could cause those agencies to consider making that downgrade, a change that would have dire financial consequences for the state.

Chicago Tribune: Wall Street credit agency warns Illinois could face credit downgrade under Gov. Pritzker’s budget plan

A Wall Street credit rating agency is warning that Illinois could face another debt downgrade if lawmakers adopt Gov. J.B. Pritzker’s budget plan.

Fitch Ratings said in a news release Tuesday that the plan Pritzker presented last week “would not materially address the state’s structural budget issues in the current fiscal year or the next.” The warning comes four days after S&P Global Ratings panned the new Democratic governor’s spending plan for the budget year that begins July 1, calling it “precariously” balanced.

Like S&P, Fitch took issue with Pritzker’s plan to stretch out pension payments to lower short-term costs while extending the state’s funding deadline by seven years.

Chicago Tribune: With ‘precariously’ balanced budget plan, Pritzker ‘punts’ on difficult decisions, ratings agency says

“This revenue stream is far from certain, and there is no detail yet on rates, brackets, or the amount of revenue it is supposed to generate,” S&P said. “Despite the potential for a more collaborative budget process with single-party control of state government, Illinois has yet to prove its ability to make politically difficult decisions in favor of structural balance and sustainability. If it adopts the budget in its current form, it remains at risk of repeating a pattern of putting off hard choices while eroding pension funding.”

###

Posted on

Durbin and Duckworth Vote To Deny Medical Care To Infants Who Survive Abortions

U.S. Senate Democrats block Born-Alive Abortion Survivors Protection Act as Illinois Democrats push radical abortion agenda; ILGOP Chairman Tim Schneider responds

 

“In the not too distant past, then-Congressman Dick Durbin advocated to place limits on abortion and overturn Roe v. Wade. Now, Senator Dick Durbin is voting to deny medical care to infants who survive abortions, allowing infanticide. This is how radical the Democratic Party has become on the issue of abortion. Democrats consistently say they ‘fight’ to protect the most vulnerable, but what is more vulnerable than a newborn baby? I think we all should be able to agree that a living, breathing child recently born deserves to do just that – live.” – Illinois Republican Party Chairman Tim Schneider

 

Yesterday, U.S. Senate Democrats blocked a vote on the Born-Alive Abortion Survivors Protection Act (S. 311). The legislation would have mandated that doctors provide life-saving medical care to infants who survive abortions at the end of a pregnancy. This legislation was introduced by Republican Senator Ben Sasse after the Democratic Governor of Virginia endorsed post-birth abortions and a Democratic lawmaker from Virginia pushed legislation that would authorize a mother to request an abortion during birth.

Illinois Senators Dick Durbin and Tammy Duckworth opposed the legislation. Support for the legislation was bipartisan – Democratic Senators Joe Manchin of West Virginia, Bob Casey of Pennsylvania and Doug Jones or Alabama joined Republicans in supporting the legislation. Only Democrats opposed the legislation.

When he was a Congressman, Dick Durbin opposed abortion and said the “right to an abortion is not guaranteed by the U.S. Constitution” and that “Roe v. Wade should be reversed” by the U.S. Supreme Court. Read more about Durbin’s former pro-life position on abortion here.

Now, Illinois Democrats in Springfield, at the behest of Governor J.B. Pritzker, are pushing legislation to remove all late-term limits on abortion, eliminate statutes protecting children who are born after an unsuccessful abortion, and mandate that all private insurance plans cover abortion procedures.

According to Gallup polling from last year, Americans are evenly split in defining themselves by the “pro-life” and “pro-choice” labels. When broken down by trimester, a majority of Americans generally oppose abortions performed in the second and third trimesters of a pregnancy.

And according to a study performed by the pro-choice Guttmacher Institute, “most women seeking later terminations are not doing so for reasons of fetal anomaly or life endangerment.”

This is how radical the Democratic Party has become on the issue of abortion. Democrats are pushing an abortion agenda most Americans disagree with.

 

###

Posted on

J.B. Pritzker’s “First Major Flip-Flop”: Skipping Pension Payments

Analysts, advocacy groups, newspaper editorial boards, and lawmakers from across the political spectrum threw cold water on Pritzker’s pension flip-flop

“During his budget address last week, J.B. Pritzker said he was a student of history. You would think someone who has studied Illinois’ past would know that pension holidays are a recipe for disaster. Repeating mistakes of the past won’t fix our state’s $135 billion unfunded pension liability. I urge Governor Pritzker to stop taking pages from the Blagovich playbook and stay true to his campaign promise of making our state’s full pension payments.” – Illinois Republican Party Chairman Tim Schneider

One aspect of Governor J.B. Pritzker’s pension plan is being called the “first major flip-flop” of Pritzker’s tenure. During his campaign for governor last year, then-candidate Pritzker told the Crain’s Chicago Business Editorial Board that lawmakers must increase, not decrease, annual contributions to our state’s pension systems. Now, Pritzker has proposed doing the exact opposite – reducing the state’s Fiscal Year 2020 contribution to the public pension systems by $878 million.

During the campaign, Pritzker also pledged to use new, unrealized tax revenues – from taxing legalized sports betting or retail marijuana sales – on increased payments to the pension systems. To add insult to injury, Pritzker’s recently proposed budget spends that theoretical tax revenue on other projects and spending plans.

Pritzker’s budget also increases the state’s contribution to the Public School Teachers’ Pension and Retirement Fund of Chicago by over $20 million, while decreasing the state’s contribution to the Teachers’ Retirement System (TRS) by over $200 million, something that did not go unnoticed by the Illinois Retired Teachers Association. TRS manages pensions for suburban and downstate public school teachers.

Analysts, advocacy groups, newspaper editorial boards, and lawmakers from across the political spectrum threw cold water on Pritzker’s pension flip-flop:

When asked if deferring pension payments without elaborating on a new payment schedule is the equivalent of a “pension holiday,” Ralph Martire of the left-wing Center for Tax And Budget Accountability said “well, yeah.”

The Illinois Retired Teachers Association blasted the “irresponsible” proposal, saying:

Members of the Illinois Retired Teachers Association (IRTA) are imploring Governor J.B. Pritzker to cease the decades-long practice of not fully funding the pension systems.

…During his budget address Wednesday, Governor Pritzker proposed allocating $4.237 billion into the Illinois Teachers’ Retirement System (TRS), a figure $576,000,000 too short of what is legally and ethically required to pay for the pension benefits of retired teachers and current teachers.

…It should be noted that this pension holiday is focused only on teachers outside of the City of Chicago. Pritzker did propose increasing the payments to the Chicago Teachers’ Pension Fund.

The Chicago Tribune Editorial Board published an editorial of takeaways from Pritzker’s budget address, saying it “[kicks] the pension can”:

Pritzker’s plan to address $134 billion in unfunded liabilities relies on notions calibrated to not offend public employees unions: shoring up the pension funds with additional money from tax revenues; the sale of unspecified state assets; borrowing up to $2 billion by selling pension bonds; stretching out the current payment schedule; and making permanent an employee buyout program. Taken together, it’s more can-kicking. The only way to save the pension funds, and protect taxpayers, is to amend the Illinois Constitution’s pension clause. No, Pritzker didn’t say anything about that.

The Daily Journal published an editorial on Pritzker’s plan to short the pension funds, writing:

…Facing pension payments of $7.1 billion this year, $8.2 billion next year and $9 billion by 2022, the J. B. Pritzker administration has a different pension funding plan.

The idea is to short the state payment $800 million per year. Then, take several of those $800 millions and roll them into a bond issue. Three years’ worth of payments, say $2.4 billion, become a much, much higher number when you pile 20 years of interest on them.

…Ironically, a version of this sleight of hand was performed under Gov. Rod Blagojevich. He skipped $10 billion worth of payments — borrowing the money instead. Taxpayers will be making those bond payments until 2033.

…The scheme is akin to taking your credit card payment and rolling it into your mortgage. You’ll feel better this month. Whether you will feel better in 10 years is unknown.

And Republican State Senator Jason Barickman said Pritzker’s pension plan is a “very risky gamble.”

Pritzker’s pension “plan” is more of the same, failed policies that got our state into the mess it’s currently in. Illinois taxpayers and retirees cannot afford to return to the pension holidays of the Blagojevich era.

###

Posted on

J.B. Pritzker’s Unbalanced Budget Proposal: Pritzker Is The New Blagojevich

ILGOP Chairman Tim Schneider issues statement on Governor Pritzker’s first budget address

“Skipping pension payments, borrowing new debt, raising taxes, increasing spending – it’s clear that J.B. Pritzker is the new Rod Blagojevich. Pritzker’s unbalanced budget proposal is more of the same, failed policies that got our state into the mess it’s currently in. Illinois taxpayers cannot afford to return to the budget deficits and failed policies of the Blagojevich era. Pritzker pledged to deliver a balanced budget, and he failed.” – Illinois Republican Party Chairman Tim Schneider

Today, Governor J.B. Pritzker gave his first budget address where he outlined his first, and probably not last, unbalanced budget proposal. In his speech, Pritzker advocated for a return to the same, failed budgeting that got our state in the mess it’s in:

  • Skip pension payments, $800 million a year for the next seven years
  • Issue $2 billion in new pension obligation bonds to make up for skipping pension payments
  • Increase spending by hundreds of millions of dollars
  • Levy new taxes
    • Theoretical graduated income tax, could not be enacted unless voters approve referendum in fall 2020, and Pritzker still refuses to release rates or revenue projections, yet Pritzker promises it will pay for everything – from pensions, to property and income tax cuts
    • Enact statewide plastic bag tax
    • Legalize recreational marijuana use, tax sales
    • Legalize sports betting, tax winnings
    • Increase video gaming taxes
  • Phase out the bipartisan Invest In Kids tuition tax credit scholarship program for low-income schoolchildren

Shorting the pension system $800 million a year might be the most irresponsible proposal from Governor Pritzker’s FY2020 budget. Pritzker’s decision to skip pension payments will cost billions of dollars more down the road. This is the exact opposite of what Pritzker pledged he would do during his campaign for governor. Last year, Pritzker told the Crain’s Editorial Board that the state should increase, not decrease, yearly contributions to the state pension systems.

Furthermore, Governor Pritzker’s spending plan relies on tax revenue the state has not yet received. It will take years to enact a theoretical graduated income tax, yet Pritzker is already committing that revenue to new projects. Pritzker’s budgeting is reckless and fiscally irresponsible.

It’s clear – J.B. Pritzker is the new Rod Blagojevich. Illinois taxpayers cannot afford to return to the budget deficits and failed policies of the Blagojevich era. Pritzker pledged to deliver a balanced budget, and he failed.

###

Posted on

Illinois Republican Party Chairman Tim Schneider Statement On Governor Pritzker Signing Minimum Wage Legislation

Moments ago, Governor J.B. Pritzker signed legislation into law that will nearly double Illinois’ minimum wage over the next six years. Illinois Republican Party Chairman Tim Schneider issued the following statement in response:

“This is only the beginning of J.B. Pritzker’s war on taxpayers and small business. Nearly doubling the minimum wage will destroy entry-level jobs, raise prices for consumers, and bust budgets at every level of government. Pritzker pledged to govern differently and listen to all parties and stakeholders, but those turned out to meaningless words.”

###

Posted on

lllinois Republican Party Statement on the Illinois House’s Passage of Minimum Wage Hike

The legislation passed on a partisan basis; No Republicans supported it

Moments ago, the Illinois House of Representatives voted on a partisan basis to nearly double the state’s minimum wage. No Republicans supported the legislation. The Illinois Republican Party issued the following statement in response:

“Illinois House Democrats had a chance to govern differently and compromise with Republicans and the small business community, but they failed. Like the Senate Democrats, they chose to ram through this costly and short-sighted piece of legislation just so they could make good on a vacuous campaign slogan. In reality, their “Fight for 15” will bust budgets at every level of government, destroy jobs, and make our state an even less desirable place to start and grow a business. Governor Pritzker has one last chance to show he really meant it when he said he wanted to compromise and take bipartisan action on major issues facing the state. We hope he follows through, but we aren’t holding our breath.” – Illinois Republican Party Spokesman Aaron DeGroot

###

Posted on

J.B. Pritzker Falsely Says He Compromised With Republicans On Minimum Wage Hike

Pritzker: “We listened to [Republicans] and included many of their ideas in [the minimum wage legislation]”

 

“Governor Pritzker is misleading the people of Illinois about his minimum wage plan by falsely claiming it’s the product of compromise and Republican input, even though no Republicans support it. If Pritzker thinks it’s a ‘Republican idea’ to phase in the wage hike over six years as opposed to three or enact insufficient tax credits for small business, he’s wrong. Pritzker pledged to listen to Republicans and compromise, but it turns out those were just empty, meaningless words.” – Illinois Republican Party Spokesman Aaron DeGroot

 

Governor Pritzker is falsely claiming that his minimum wage plan is the product of bipartisan compromise and Republican input.

From Governor Pritzker’s press conference yesterday:

“We brought all the parties together, including Republicans, and we listened to them and included many of their ideas in [the minimum wage legislation]. There were people who wanted a three-year ramp to 15 dollars. It’s six-years. That’s quite the compromise… We listened to all parties and made sure we had a bill that is a compromise of interests.”

Republican State Senators have suggested the minimum wage rate vary based on geographic region, cost of living, and other factors, but Pritzker has refused to incorporate those concerns. Republicans have also warned of the negative impacts employers, nursing homes, non-profits, colleges, local units of government, and others will face, yet Pritzker’s only response has been that his budget will address those some or all of those issues.

Additionally, groups that represent small businesses, like the Illinois Retail Merchants Association and the Illinois Hotel and Lodging Association, have offered an alternative proposal, yet Pritzker still refuses to compromise and insists that the Illinois House of Representatives pass the bill without any changes whatsoever.

Pritzker pledged to listen to Republicans and compromise on policy, but it turns out those were just empty, meaningless words. Pritzker’s reckless proposal will cost taxpayers and small businesses dearly, destroying jobs and government budgets along the way.

###

Posted on

Illinois Republican Party Opposes Pritzker’s Reckless Minimum Wage Plan, Citing Huge Cost To Taxpayers, Small Business

Taxpayers will pay at least an additional $1 billion a year in increased spending by the time the plan is fully implemented, and that’s a low estimate

 

“Did Governor Pritzker have any intention to return to the ‘agreed-bill’ process? On his first major legislative initiative, that answer is a hard no. This is the same failed form of governing that put Illinois in the poor fiscal condition it’s in. Pritzker is ignoring the concerns of Republican lawmakers and business leaders as he attempts to ram through legislation that would nearly double the state’s minimum wage just so he can chalk up a ‘win’ before his budget address, but at what cost?

“Pritzker’s minimum wage hike will crush small businesses and will cost taxpayers at least a billion dollars a year once the plan is fully implemented, and that’s not even a complete estimate. Pritzker’s administration has not disclosed the full amount of increased spending his wage hike would require. Pritzker’s reckless budgeting will cost taxpayers and small businesses dearly. It is yet another Pritzker proposal that will bankrupt Illinois.” – Illinois Republican Party Spokesman Aaron DeGroot

Moments ago, the Illinois State Senate voted on a partisan basis to raise the state’s minimum wage to $15/hour. No Democrats voted against the measure.

In early December of last year, the Chicago Tribune reported that a “confidant” of Governor J.B. Pritzker said Pritzker would like to return to the “agreed-bill” process, where all stakeholders on an issue reach a compromise on legislation before it moves forward for passage in the General Assembly.

It turns out that was only talk from Pritzker. He, along with Democratic lawmakers, have so far ignored the concerns of the business community and Republican lawmakers on his first major legislative initiative to nearly double the state’s minimum.

Pritzker has shown no interest in compromise. He has set an arbitrary political deadline of February 20th, the day of his first Budget Address, for passage his minimum wage plan. Pritzker is attempting to ram through this hugely consequential piece of legislation just so he can chalk up a “win” before his first big speech.

The plan has huge consequences for Illinois taxpayers and small businesses:

Capitol News Illinois: Leaked Pritzker memo details minimum wage increase

“…making the total annual cost of the wage increase about $1.1 billion annually by [FY2026]”

Illinois News Network: Minimum wage increase will cost taxpayers in all levels of government

“During a House hearing on the issue, representatives asked staff from the governor’s office if he’ll include the tens of millions of estimated additional costs to taxpayers from an increase in the minimum wage. They couldn’t immediately say.”

Pritzker’s administration has not disclosed a complete estimate of the total increase in spending his wage hike would require. It does not include increased costs other government programs, public universities, community colleges, counties, towns, park districts, and all other units of local government will face.

Pritzker’s reckless budgeting will cost taxpayers and small businesses dearly. It is yet another Pritzker proposal that will bankrupt Illinois.

###