fee hikes
State Of Illinois Bankrupt By 2015?
While it’s “business as usual” for Illinois politicians, two influential groups grow increasingly-wary of the state’s financial situation. Paul Merrion reported on the Crain’s Chicago Business website back on April 22:
Most wealthy Chicago-area investors are optimistic about the global and national economic outlook, but many fear a downturn in the Illinois economy this year, a new survey finds.
The state’s financial well-being has 76 percent of local investors “very concerned,” while only 46 percent feel that way about the prospects for the U.S. economy, according to a survey by Morgan Stanley Smith Barney LLC. A bit more than half (52 percent) said the state’s pension crisis was their top concern, and 58 percent foresee that the Illinois economy will get worse by year-end.
Speaking of the state’s public pension crisis, a pro-Illinois taxpayer group is warning it has the potential to bankrupt the State of Illinois. John Cody reported on the CBS Chicago website Tuesday:
A conservative watchdog group is warning of dark days ahead for the entire state unless Illinois mends it’s financial ways, and soon.
Taxpayers United President Jim Tobin, is essentially blaming Democrats with a two house super-majority for failing to act on pension reform reform.
“Illinois will be the first state to go bankrupt, unless pension reforms are implemented,” said Tobin.
And Tobin’s numbers suggest it’ll be sooner rather than later.
“Yeah, 2015 is about right,” said Tobin.
And yet, state lawmakers continue to fiddle (waste time on more trivial issues) while Illinois burns.
My prediction? Illinois residents should prepare themselves for a combination of more fees, taxes, and belt-tightening from and by the State. Most likely, sooner rather than later.
By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)
Sources:
Merrion, Paul. “Rich Chicagoans fret about Illinois economy: survey.” Crain’s Chicago Business. 22 Apr. 2013. (http://www.chicagobusiness.com/article/20130422/NEWS02/130419726/rich-chicagoans-fret-about-illinois-economy-survey). 3 May 2013.
Cody, John. “Conservative Watch Dog: Pensions Could Bankrupt Illinois By 2015.” CBS Chicago. 30 Apr. 2013. (http://chicago.cbslocal.com/2013/04/30/conservative-watch-dog-pensions-could-bankrupt-illinois-by-2015/). 3 May 2013.
Illinois Criminals Count Blessings As Prisons And Other Correctional Facilities Close
Illinois residents- is it just me, or does it seem like there’s no shortage of stories out there of convicted criminals in the state who roam the streets and never see prison time, or if they do, aren’t behind bars for that long?
It a topic I’ve blogged about as recently as a week ago.
And I suspect the ongoing closure of prisons and other related facilities in Illinois as it battles a huge fiscal mess will only make matters worse. Monique Garcia and Rafael Guerrero reported on the Chicago Tribune website last night:
Gov. Pat Quinn on Monday stood by his decision to close two prisons and several halfway homes, even as overcrowding at remaining facilities has forced the Illinois Department of Corrections to convert gym space into housing for inmates.
Other facilities that have been closed or are in the process of being shut down include Tamms Correction Center (a “supermax” prison; closed), Illinois Youth Center at Murphysboro (a juvenile justice center; closed), Illinois Youth Center at Joliet (closing), Dwight Correctional Center (maximum security prison for women; closing), and three inmate transitional centers (closing).
Garcia and Guerrero added:
The Democratic governor said he hoped overcrowding would be eased by a revamped good-behavior credit program the administration plans to implement in the coming months.
Illinois residents might remember that didn’t turn out too well the last time around.
At a time when the State of Illinois looks like it could use more prisons and other correctional facilities, they’re being shuttered.
Surveying the economic landscape, I don’t expect much in the way of a resurgence for Illinois anytime soon (ongoing fee/tax hikes will help take care of that). As such, budgets for law enforcement agencies and the penal system will probably continue to be tightened, and criminals will grow bolder knowing the “thin blue line” is slimmer and doing time may be just a temporary visit to the slammer.
By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)
Source:
Garcia, Monique and Guerrero, Rafael. “Quinn stands by decision to close 2 prisons, despite inmate crowding.” Chicago Tribune. 18 Feb. 2013. (http://www.chicagotribune.com/news/local/ct-met-quinn-prison-closures-0219-20130219,0,2758226.story). 19 Feb. 2013.
Illinois’ Total Unfunded Liabilities: $275 Billion
The following bit about Illinois’ total unfunded liabilities from a January 28 Investor’s Business Daily editorial was so depressing to read that I originally planned to blog about it much earlier this morning- but needed to step away. From the IBD website:
A recent release by the Illinois Policy Institute shows this [$96.8 billion unfunded debt to five state pension systems] is only the tip of the iceberg and when you add in other liabilities such as $54 billion in unfunded liabilities for retiree health insurance and $15 billion in pension bonds that Gov. Pat Quinn and his immediate predecessor, former Gov. Rod Blagojevich, issued to avoid pension reform, Illinois’ total unfunded liabilities amount to $275 billion, or $58,000 in debt for each and every household in the state.
(Editor’s note: Italics added for emphasis)
So what’s it going to be, Illinois? Since a booming economy seems unlikely to return anytime soon, will the Democrat-dominated Illinois General Assembly finally enact significant spending cuts? Raise fees and taxes through the roof? Throw public sector retirees “under the bus?”
They’re going to have to do something real quick.
Or watch the whole thing unravel.
By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)
Source:
“Obama’s Illinois Downgrade Makes It America’s Greece.” Investor’s Business Daily. 28 Jan. 2013. (http://news.investors.com/ibd-editorials/012813-642237-credit-downgrade-illinois-standard-poors-worst.htm). 31 Jan. 2013.
WSJ: Obama, Democrats Want To Raise Taxes Again
Back when I was still running Boom2Bust.com, “The Most Hated Blog On Wall Street,” I suggested Americans should prepare to be force-fed a diet of new/increased fees and taxes in the coming years.
“Get your wallets out,” I used to write.
These days, it’s more like “get your wallets out- and keep them out.”
From the Wall Street Journal website this past Monday:
Let’s focus today on the President’s demand to raise taxes—again. Millions of Americans, rich and middle class, are still recovering from the shock of the income and payroll tax hikes in their first 2013 paychecks, while ObamaCare’s new taxes have also just kicked in. These are the biggest tax increases in at least 20 years, yet Mr. Obama is already stumping for another revenue raid.
The President even invoked the American people to support his third huge tax hike, saying Monday that “They don’t think it’s smart to protect endless corporate loopholes and tax breaks for the wealthiest Americans rather than rebuild our roads and our schools…” You already know the rest…
The big fiscal news here is that Mr. Obama and the Democrats are all but conceding that the recent tax hike is little more than a token reduction in the deficit. The tax hike, while the biggest in 20 years, will raise only $620 billion at most over 10 years, and probably less. Yet Mr. Obama conceded in passing Monday that the debt ceiling will have to rise by something like $1.25 trillion to accommodate this year’s deficit alone.
Other Democrats are also bellying up again to the tax bar…
Rich Americans (again), tax “loopholes,” and “Big Oil” are in the Democrats’ crosshairs this time around.
You can read the informative piece on the Wall Street Journal website here.
By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)
Cook County Enacts $25 Per-Gun Tax On Firearm Purchases
After reading the following a short time ago about Cook County (Illinois) Board President Toni Preckwinkle’s gun tax on law-abiding residents to pay for the stupid actions of local criminals, I thought to myself, “I can’t get out of Cook County fast enough.” From Hal Dardick on the Chicago Tribune website at lunchtime:
The cost of buying cigarettes and guns in Cook County will rise next year after commissioners today voted 16-1 to approve County Board President Toni Preckwinkle’s $2.95 billion budget.
In addition to the $1-per-pack increase on a pack of smokes and a new $25 per-gun tax on firearm purchases, the board also enacted a 1.25 percent use tax on large out-of-county purchases, with an exemption on the first $3,500 spent. There’s also a $1,000-per-year tax on slot machines and a $200-per-year tax on video gambling terminals.
The cigarette tax increases March 1, while the use tax and gun tax are effective April 1.
(Editor’s note: Italics added for emphasis)
So, it’s now “official”- Cook County, Illinois, is now the only place in America that levies a special tax on purchasers of firearms.
Funny how Cook County officials and the “watchdog” Chicago news media never talked about how this new gun tax will impact major sporting goods retailers who do brisk business selling firearms and have a presence in the county, such as Cabela’s and Dick’s Sporting Goods.
I’m guessing their respective corporate offices are running the numbers right now to decide whether or not to shut down their retail stores in Cook County.
A subject that’s already being discussed.
“Opening Soon! The Trinkets And Other Crap For Sale Store”
Soon-to-be-seen signage at the former sites of 40 or so gun shops and the Hoffman Estates Cabela’s in Cook County? There’s plenty of these kinds of businesses already around.
In total, Cook County Board President Toni Preckwinkle and the 17 Cook County Commissioners just hiked fees and taxes for area residents and business by a projected $41.7 million. Meanwhile, Cook County residents and businesses struggle to keep afloat in the ongoing financial crisis.
Forward!
Source:
Dardick, Hal. “New Cook County budget includes $1-a-pack cigarette tax hik.” Chicago Tribune. 9 Nov. 2012. (http://www.chicagotribune.com/news/politics/clout/chi-new-cook-county-budget-includes-1apack-cigarette-tax-hike-20121109,0,384861.story). 9 Nov. 2012.
2012 Election Thoughts
For months now I’ve been saying to those people closest to me that Barack Obama will be reelected as President of the United States of America. Granted, last week I did mention to my girlfriend that Mitt Romney might have a shot at the White House based on analysis done by FOX News and Glenn Beck’s The Blaze TV (these two media outlets need to win back any confidence I had in them as a result). Now that Election Day has come and gone, here are some thoughts about the whole spectacle.
The main reason I kept saying Obama would get reelected as President was that the votes were already “bought and paid for.” A lot of Americans receive government benefits (49.1 percent of Americans lived in a household where at least one member of the family received such benefits in 2011, according to the Wall Street Journal earlier this year). The Obama administration has demonstrated these past four years that it’s willing to provide these benefits (part ideology, part political strategy). If you are someone receiving this, why would you endanger the status quo by voting for someone else who might take it away as part of some publicized push for smaller government living within its means? Where could all this lead to? Full-fledged dependency and eventual bondage, if one buys into the Cycle of the Body Politic.
Young American voters could be more “left-leaning” than their predecessors. How left? Well, “socialist” might not be too far off the mark if one subscribes to the findings of a Pew Research Center survey from December 2011. I wrote back on September 27:
You see, not only am I aware that a good number of Americans aren’t put-off by the idea of socialism anymore, but a recent poll even showed a majority of young Americans aged 18-29 have a positive view of it.
From the Pew Research Center website back on December 28, 2011:
Socialism is a negative for most Americans, but certainly not all. Six-in-ten (60%) say they have a negative reaction to the word; 31% have a positive reaction…
Fully nine-in-ten conservative Republicans (90%) view socialism negatively, while nearly six-in-ten liberal Democrats (59%) react positively.
The poll of 1,521 adults conducted back in early December 2011 revealed that among the 18-29 age group, 49 percent had a positive view of socialism as compared to 43 percent having a negative view.
Is Obama and his White House socialist? I don’t know. Are they “left-leaning?” The available evidence suggests so. Which could be why a lot of young American voters are drawn to the Democrats.
Public sector unions obviously played a big role in this election. I understand that such groups work toward the benefit of their members. However, does such activity work contrary to the common good, destabilizing increasingly financially-challenged public agencies, as critics suggest? Plenty of insolvent government organizations could be available for study shortly.
While incumbent politicians can be more difficult to dislodge from office, President Obama retained the White House despite a dismal economic record in his first term. Measures of (un)employment, food stamps, poverty, budget deficits, national debt, for example, grew increasingly worse over the past four years. I know, what about those “5 million jobs created” the Democrats kept touting during the campaign? Problem is, a closer look at what was “created” reveals a lot of low-paying positions. Burger flippers won’t be spearheading a U.S. economic recovery anytime soon. Perhaps Americans aren’t voting based on their wallets as much anymore. Or perhaps their pocketbooks haven’t been hit hard enough. That may be just a matter of time.
The past four years confirmed for many Americans the transformation of the news media from watchdog journalists to unofficial mouthpieces of the Democratic Party (the press being merely a mouthpiece for any party is bad). I have some journalism experience in my background, and my training included an emphasis on unbiased reporting. Being exposed to the amount of news material I am on a daily basis, it’s all too obvious to me that either that training is no longer given, a refresher course is desperately needed, or today’s journalists just don’t give a damn about it anymore. Sad. The way I look at it, if reporters not assigned to pen an op-ed/column feel the need to express the political creature in them, then get a personal blog! And let’s exchange links. Otherwise, do your country a huge favor and once again occupy the role of the “Fourth Estate”- an independent press. Continue on as the “American Pravda” and suffer the inevitable consequences.
Since Chicago/Cook County/Illinois Democrats play a significant role in running the country, one need only look at where they originate from to get an idea of where they might be taking the country these next four years. Anyone who spends enough time on this blog reading those posts written for my local audience knows exactly where that is:
Into the ground.
While Chicago and Cook County have significant financial woes, the State of Illinois is essentially bankrupt. Too many benefits, too much spending, too little cutbacks, too much borrowing, and now the fee and tax hikes on residents and businesses. It’s going to get ugly in the “Land of Lincoln” real fast. California and Illinois are the two U.S. states competing with each other to go under first as the financial crisis worsens, according to some very smart people. Yet, don’t expect any regime change in “Madiganistan” any time soon. As I wrote back on March 21:
As a result of this redistricting, Democrats could very likely control the state legislature in Illinois for a number of years. Monique Garcia, Alissa Groeninger, and Ray Long wrote on the Chicago Tribune website last night:
Even before unofficial results rolled in, some sitting Republican lawmakers were bound to lose in DuPage County, casualties of the Democratic-drawn state legislative districts. The map is tilted so heavily toward Democrats that the party led by House Speaker Michael Madigan, the Illinois Democratic chairman, is all but ensured November general election victories that could set it on a course to control the General Assembly for the next decade.
And from a Chicago Tribune editorial piece this morning:
Democrats had virtually locked in their Springfield majorities before the first voters cast the first early ballots on Oct. 22. More than half of these legislative races weren’t even contested by both major parties. And while some of the new district boundaries gave Republicans tremendous advantage, the aggregate effect was to keep Illinois and its 12.8 million citizens under one-party rule.
Voters evidently like it that way.
Yes they do. Especially as votes were also “bought and paid for” here in the ‘Stan.
Before this post is misconstrued as being merely some Obama/Democrat-bashing piece, regular readers of the blog know that I foresee a U.S. financial crash at the end of all this “kicking the can down the road.” That being said, at this point in the game, I don’t think it really matters anymore whether the Democrats or Republicans are in charge as it concerns where our economy and larger financial system is eventually heading. Enough damage has already been done (think of the Titanic and her compartments being punctured just enough to guarantee her inevitable demise) that America is fast-approaching a tipping point as both major national political parties make matters worse by refusing to scale back the obscene amounts of government spending when given the chance. If you think about it, when it comes to fiscal policy, both parties have shown to be no better than a two-headed monster. Barack Obama’s economic polices from 2008-2012, in general, were really just an extension of George W. Bush’s economic policies. Spending, stimulus, government intervention, you get the picture. Rather than sit down, have a mature conversation with the nation about the unsustainable track we’re on concerning our finances, and stop the spending, both the Democrats and Republicans continue to pander to Main Street’s desire for more stuff, more benefits, more borrowing, more debt. This time around, Barack Obama and the Democrats won. In the longer run, everyone looks to lose.
In the meantime, congratulations Mr. President and the Democratic Party on your Election Day victory.
Sources:
Izzo, Phil. “Number of the Week: Half of U.S. Lives in Household Getting Benefits.” Real Time Economics. 26 May 2012. (http://blogs.wsj.com/economics/2012/05/26/number-of-the-week-half-of-u-s-lives-in-household-getting-benefits/?KEYWORDS=number+of+the+week). 7 Nov. 2012.
“Illinois Democrats and their realm.” Chicago Tribune. 7 Nov. 2012. (http://www.chicagotribune.com/news/opinion/editorials/ct-edit-legis-1107-20121107,0,2900759.story). 7 Nov. 2012.
Chicago Pension Funding Gap ‘Could Reach $700 Million In Just A Few Years’
I think most of my neighbors are clueless as to how expensive it’s soon going to get being a Chicago homeowner (like it’s cheap already).
Some really big bills are fast coming due, like state-required payments to fully-fund City of Chicago employee pensions (as if the City shouldn’t have been doing this already).
Hal Dardick wrote on the Chicago Tribune website Wednesday:
One of Mayor Rahm Emanuel’s top aides privately briefed aldermen on the city’s pension woes Wednesday as the mayor’s closest City Council ally prepared for hearings that will put city retirement fund officials in the hot seat.
Chief Financial Officer Lois Scott reminded council members that absent significant changes to pension plans, the city will be forced to drastically cut services, raise taxes or do both to close a funding gap that could reach $700 million in just a few years, aldermen said…
Absent a city pension overhaul, the fund for retired city firefighters would become insolvent in nine years, according to a city report issued two years ago. The police pension would go broke four years later. Funds for city laborers and municipal workers would be broke by 2030.
(Editors’ note: Italics added for emphasis)
A $700 million pension funding gap in “just a few years.” The firefighters’ pension fund broke by 2021. The cops’ pension fund insolvent by 2025. Pension funds for other retired city employees toast by 2030.
Chicago residents shouldn’t kid themselves into thinking cutbacks alone will close the pension funding gap. As things stand, fees, fines, and taxes will be going higher- unless changes are made, or the law is. Dardick added:
A state law approved a couple of years ago requires the city to start making payments by 2015 to fully fund the police and fire funds. The city now uses property taxes to cover pension costs, and without changes, aldermen were told they would have to raise that unpopular tax by up to 80 percent.
(Editor’s note: Italics added for emphasis)
Raise Chicago property taxes by “up to 80 percent?”
Some years ago something called “White Flight” took place in (actually, out of) the city. A similar phenomenon could soon happen again- regardless of skin color- if significant service cutbacks and rising fees, fines, and taxes become the reality for Chicago homeowners.
Source:
Dadrick, Hal. “Aldermen reminded of looming pension crisis.” Chicago Tribune. 26 Sep. 2012. (http://www.chicagotribune.com/news/local/ct-met-chicago-emanuel-pensions-0927-20120927,0,6433883.story). 28 Sep. 2012.
Cook County Looking To Plug Projected $115 Million Budget Gap For 2013
Yesterday morning, I talked about Chicago’s newly-projected $298 million budget deficit for FY 2013 and Mayor Rahm Emanuel’s mulling over cuts and hikes to plug the gap.
Around the same time, I was also made aware of Cook County’s projected $115 million budget deficit for the coming fiscal year. Hal Dardick wrote on the Chicago Tribune website Wednesday:
Cook County Board President Toni Preckwinkle is considering a combination of targeted tax and fee hikes along with cutting costs to bridge what’s expected to be a $115 million budget shortfall next year.
But a property tax increase remains off the table…
The county also will likely leave vacant positions unfilled, reduce employee health care costs and lower vehicle expenses by having employees share county vehicles, [Cook County Budget Director Andrea] Gibson said.
Preckwinkle will be presenting her budget for FY 2013 next month (Cook County’s fiscal year begins December 1). In 2012, the county laid off workers and hiked taxes and fees to generate $50 million to go towards balancing the budget.
Cook County’s budget picture looks better compared to a couple of months ago, when it was being reported the county was facing a shortfall of nearly $268 million next year.
However, the second most populous county in the United States still faces a pension fund gap that had grown to $5.2 billion by the end of 2010. As I noted back in April, Cook County’s pension fund will go broke in 26 years without changes being made.
Source:
Dardick, Hal. “Cook County weighs hikes, cuts to fill $115 million gap.” Chicago Tribune. 25 Sep. 2012. (http://www.chicagotribune.com/news/local/ct-met-cook-county-0926-20120926,0,132158.story). 26 Sep. 2012.
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