Friday, May 26, 2017

Top Illinois Stories

Majority of Illinois Cities Are Shrinking – Illinois Policy

While major headlines broke over news that Chicago was the only one of America’s largest 20 cities to shrink from July 2015 to July 2016, most of Illinois’ other cities with 50,000 people or more also lost population.

Six Terrifying Graphs That Summarize America’s Public Pension Crisis – Zero Hedge

"Illinois nearly completed the coveted state, county and city trifecta but was narrowly 'bested' by Wayne County, Michigan."

Senate passes first-in-nation financial tax, despite government report saying it will cause mass evasion – INN

Less than an hour after Democrats in the Illinois Senate endorsed a budget that would raise income taxes, they voted to become the only state in the nation to impose a new 20 percent tax on financial managers.

Comment: This may be the stupidest, most suicidal bill the Illinois Senate has ever passed. It would destroy Illinois' financial services sector. See our earlier article on the bill linked here.

Other Highlighted Illinois Stories

‘Secret’ Sanctuary State Bill Set To Pass Illinois Legislature – Daily Caller

llinois politicians have devised a legislative euphemism, the “Illinois Trust Act,” to keep the bill hush-hush. In fact, ICIRR organizers say they intentionally avoided the word, “sanctuary." If voters actually knew what was in the bill, there would be political hell to pay.

Legislation requiring cost estimate on new state mandates heads to Gov. Rauner – INN

Comment: "Cost" -- what a novel concept for Illinois to start considering.

Health insurers stiffed by budgetless Illinois take plea to federal court – Crain’s

A federal judge could decide today whether insurers collectively owed more than $2 billion by the state of Illinois can move to the front of the long line of vendors waiting to get paid.

Not Even a Petite Bargain in Illinois Budget Wrangling – Stump

A good summary of where thing's stand from an actuary's perspective.

The Scorecard: The damaging cost of a retroactive income tax hike – Opinion – INN

The income tax increased passed yesterday by the Illinois Senate would nearly double the impact on taxpayers in 2017, because they would have to make up for the tax deductions that weren't taken out of their paychecks in the first five months of the year. If enacted June 1, the effective income tax rate on Illinois wage earners actually would be 5.81 percent for the remainder of 2017.  

Richard Epstein: Progressively Bankrupt  –  Ricochet

Comment: This is a must-read on Illinois' crisis.

Fact-checking BGA’s claims on ‘low-spending’ Illinois – Illinois Policy

While the Better Government Association has claimed Illinois’ budget contains no fat to trim, a deeper analysis reveals the state has many areas of expensive inefficiency to reform in state and local government costs, the Medicaid program and K-12 education.

Illinois Senate Democrats pass $5.4B tax increase – Illinois Policy

Each Illinois household would have to pay an additional $1,125 more in taxes each year, on average, under the Senate's tax-hike plan.

Next month’s electricity price hike is just the start – Crain’s

The substantial hike in Northern Illinois' cost of electricity beginning next month is just the beginning of the increases for years to come.

BGA: Here’s what you probably don’t know about Illinois pensions – Crain’s

Comment: Wirepoints regulars will quickly see at least two huge errors in here: 1) the 80% funding myth, and 2) "average" pensions.

Illinois’ middle class shrank over the last 40 years. Here’s why. – Chicago Tribune

The shrinking of the middle class has come as the middle-income jobs that used to form its bedrock have eroded. In 1980, nearly 20 percent of middle-income heads of household were working in office and administrative support, and that declined to 15 percent by 2015. The sharpest decline has been in production, which includes manufacturing.

Government financial disclosure: words matter too – Truth in Accounting

Do governments in weak financial condition exhibit unclear writing in their annual financial reports, compared to governments in relatively good condition? Illinois has dug a significantly worse financial hole for itself than Indiana.  Coincidentally, or not, the latest letter of transmittal for Illinois shows a higher passive verb frequency and a higher comma/sentence ratio than for Indiana.

New focus on Illinois swap terms amid threats to state’s bond ratings – Fidelity

A downgrade to junk would mean Illinois faces termination events on some swaps tied to $600 million of floating-rate paper while any rating cut would raise its interest fees.

Puerto Rico’s Bankruptcy: Template For Other Troubled Cities [and for Illinois] – Forbes

From a fixed income money manager: "I project this bankruptcy will become the template for all the cities, counties and a few states whose budgets, unfunded pension and health care liabilities are out of control. As a matter of fact, many of us in Bondland have a new word: Illi-Rico. That’s right. Illinois, the state that is $14 billion in arrears paying its bills, two years without a budget, with under funded pensions like you wouldn’t believe."

Top Chicago Stories

Other Highlighted Chicago Stories

Pritzker company loses $100M contract after Ald. Reilly insults San Antonians – Chicago Tribune

Just two weeks after Ald. Brendan Reilly went viral for mocking San Antonio's touristy waterfront as "cheap and crappy-looking," his counterparts on the San Antonio City Council snubbed a Chicago boat business in Reilly's 42nd Ward, instead handing a $100 million contract to run San Antonio's tourist boats to a local company.

Chicago’s Midwestern Niceness? The Data Show It’s Good for Business – Fortune

Corrupt and broke? Yeah, but at least we're nice.

Supreme Court decision puts dent in ‘patent troll’ cases, may put companies on defense in Chicago court – Cook County Recod

“The potentially far-reaching implication of this case is that instead of seeing cases brought by mainly Illinois-based patent owners, the Northern District is likely to see patent owners from around the country suing Illinois corporations here. In other words, the Northern District could go from being more offensive-based to a more defensively-based venue.”

Chicago firm will run $1 billion overhaul of Union Station – Associated Press

Chicago-based Riverside Investment & Development is calling redevelopment of the iconic building a "transformative" project for the city. It's expected to include retail, hotel and office space. Officials say there'll also be a pair of 12-story residential towers.

April home sales down in Chicago as limited choices discourage buying – Chicago Tribune

Sales were down 2.3 percent compared with a year ago, but prices rose 5.2 percent as sellers raised prices amid a limited supply of homes for sale. There were 10,157 homes sold.

The bill is due: CPS owes staggering amount on teachers’ pension fund – WGN

Comment: The only real news in this "news" piece is that maybe the regular media are waking up to what's obviously been coming for a long time, as reader here well know.

Karen Lewis finds J.B. Pritzker’s progressive credentials ‘hilarious’ – Chicago Tribune

"Can one oligarch replace another oligarch?" Lewis asked, rhetorically. "What's going to be different?"
Comment: When will Karen Lewis learn that it's not wise to insult those from whom you may be asking for money?

CPS Emphasizing Science, Financial Literacy in New Grad Requirements – WTTW

Comment: This is wonderful, but the question is whether there are any Chicago Teachers Union people qualified to teach it.

Record number of city homes under contract – Crain’s

In the week that ended May 13, buyers put 874 homes under contract in the city, according to data posted Monday by the Chicago Association of Realtors. (It's the latest week for which data is available.) The contract figure is on pace to end May as a record-setter. Both weeks of May have had more contracts than any week in March, which saw more contracts signed than any month going back to 2007. If the momentum continues through the later weeks of May, the monthly total will eclipse March's 3,141 contracts.

Hartford latest U.S. city on the brink of bankruptcy – Fox News

Hartford, is just the latest city to mull over the bankruptcy option. Since 2010 a total of nine municipalities have filed for bankruptcy protection—which is on top of an additional 42 utilities, water districts, hospitals and other municipal agencies that have actually gone full-fledged bankrupt.

Trial begins for West Side nonprofit head accused of using funds for spending spree – Chicago Tribune

As the leader of a small nonprofit in Chicago's poverty-stricken West Garfield Park neighborhood, Franshuan Myles was supposed to use a $60,000 state grant to help impoverished youth learn new skills and stay out of trouble over their summer break. Instead, federal prosecutors allege that Myles started stealing the funds the moment they hit her bank account

Preckwinkle: Soda tax will stand – Chicago Tribune

Cook County Board President Toni Preckwinkle believes efforts to repeal a countywide sweetened beverage tax before it takes effect in July will come to naught.

Apple is nearly 40% more valuable than the city of Chicago – Marketwatch

Comment: Comparing market capitalization to annual GDP is stupid. Pretty shocking that Marketwatch would write this.

Wirepoints Original Stories

Brace for a Major Worsening in Illinois’ Fiscal Crisis – Wirepoints Original

A far deeper crisis for Illinois is inevitable, we've long said, but it's now more imminent because that certainty is becoming more obvious.

New Stanford Study Exposes Illinois Pensions as the Farce They Are – Wirepoints Original

Using a "market value" discount rate, just to keep Illinois pensions from sinking further into debt, the state would have to contribute "well over twice of what it actually contributed." Chicago and Cook County are toast, too.

Why Won’t Illinois Political Reporters Ask Meaningful Questions? – WP Original

Just ask, and keep asking. It's really not that hard.

NOTE TO READERS: New Software and Other Changes

By: Mark Glennon* We've switched over to a new software program, so please excuse us if we are down for a bit and you encounter bugs. If you do see any problems we don't fix, let us know by email linked here. Yes, we will be restoring a comments section. Cosmetically, it should look pretty much the same as soon as we are finished. However, the new software is more robust and will allow us to add other functionality as we...

Illinois Isn’t Puerto Rico, But…. – Wirepoints Original

...Stockton and San Bernadino weren't either. Not being Puerto Rico doesn't mean you can't run out of money and go bankrupt. And it doesn't mean Puerto Rico won't frame the debate about how to resolve government fiscal crises.

COGFA: State Revenue Weakness Continued in April – WP Original

Total tax receipts compared to April last year were off 1.3%. However, transfers from the federal government increased, putting total sources $216 million ahead for the month (a 6.5% improvement for the month). For the fiscal year to date, however, the decline remains troubling.

How About an Illinois March for Math? – Wirepoints Original

It’s hard to see thousands of people rallying to the cry, “no unsustainable pension systems,” but it might do more good than yelling about “science.”

Myth on Top of Myth: Illinois’ Bill Backlog and the Temporary Tax Increase – WP Original

"If only Illinois had extended the temporary income tax increase we'd be in good shape." Wrong.

Crony Capitalism’s Latest Scheme for Illinois is Green – WP Original

“Sweet,” the guys who sell renewable energy hardware must be saying.

Sellouts, Handouts and Bailouts: The Illinois General Assembly is Out of Control – WP Original

By: Mark Glennon* It's hard to overstate how bad the Illinois General Assembly has become. Let's look at just three sets of bills this session that have gotten so far along, have so much support and are so crazy that you truly should be frightened. Foolish bills that don't go anywhere are an old story in Springfield. Sometimes they're just grandstanding for a particular interest group or lobbyist. Sometimes they're "fetcher bills" -- proposed by one guy so his buddy can fetch...

Media Watch

Oversight group’s leader laments lack of good reporting on bad government – Chicago City Wire

Andy Shaw, president and CEO of the Better Government Association (BGA) President and CEO, argued that the lack of coverage brought about by big cuts in newspaper staff in recent decades makes it difficult for Illinois voters to make informed decisions in elections.

Chicago Tribune and L.A. Times publisher may acquire Chicago Sun-Times parent – Marketwatch

Comment: Horrible. Already too much concentration in the media.

Crain’s to charge ‘nomination fee” to be considered for its ‘Forty Under Forty’ list – Feder

For the first time in 27 years, Crain’s Chicago Business is requiring payment from people to be considered for its annual “40 Under 40” feature spotlighting up-and-coming business and civic leaders.
Comment: After all, this is Chicago. Personally, I've always hoped they'd do a forty-over-forty, fifty-over-fifty, sixty-over-sixty, etc. That way I figure I'd just have to run out the clock to win something.

— Connecting the dots between our economy, government and business —

Top Illinois Stories

Majority of Illinois Cities Are Shrinking – Illinois Policy

While major headlines broke over news that Chicago was the only one of America’s largest 20 cities to shrink from July 2015 to July 2016, most of Illinois’ other cities with 50,000 people or more also lost population.

Six Terrifying Graphs That Summarize America’s Public Pension Crisis – Zero Hedge

"Illinois nearly completed the coveted state, county and city trifecta but was narrowly 'bested' by Wayne County, Michigan."

Senate passes first-in-nation financial tax, despite government report saying it will cause mass evasion – INN

Less than an hour after Democrats in the Illinois Senate endorsed a budget that would raise income taxes, they voted to become the only state in the nation to impose a new 20 percent tax on financial managers.

Comment: This may be the stupidest, most suicidal bill the Illinois Senate has ever passed. It would destroy Illinois' financial services sector. See our earlier article on the bill linked here.

Top Chicago Stories

Wirepoints Original Stories

Brace for a Major Worsening in Illinois’ Fiscal Crisis – Wirepoints Original

A far deeper crisis for Illinois is inevitable, we've long said, but it's now more imminent because that certainty is becoming more obvious.

New Stanford Study Exposes Illinois Pensions as the Farce They Are – Wirepoints Original

Using a "market value" discount rate, just to keep Illinois pensions from sinking further into debt, the state would have to contribute "well over twice of what it actually contributed." Chicago and Cook County are toast, too.

Why Won’t Illinois Political Reporters Ask Meaningful Questions? – WP Original

Just ask, and keep asking. It's really not that hard.