Brian's Column 11-06-2015

 Standing Firm for the Future

When are you going to pass a budget? That is the number one question my office receives on a daily basis.  I have spoken with many people who have been directly affected by this political process.  The most vulnerable citizens in Illinois have been used as political pawns to put pressure on legislators to give up on changing Illinois for the better.  People who do not have a voice are being told there is no money to help take care of their specific needs until a budget is passed.

I hear them even if they feel like they are not being heard.  The legislation that is being brought forth for a vote to “help” these people and programs is a political trap set by House Speaker Madigan.  If it was not a trap, then the Democrat supermajority would have already appropriated for these services.  Neither Governor Rauner nor the super party controls the legislative agenda or has the power to call legislation for a vote.  Even though they have a supermajority in both chambers and could end this impasse tomorrow, they choose not to.

Why? It’s not because Governor Rauner wants “non-budgetary” items passed first, which they say are budget related however the Governor has already dropped almost all issues except for a few.  It’s because House Speaker Madigan wants to show Governor Rauner who is in charge.  Plus, Speaker Madigan is going to need a massive tax increase to help cover a portion of his budget that spends $4 billion more than state revenues.  Add another $2 billion in spending for a delayed budget and now we are going to have to make dramatic cuts as well.

This delayed budget has had other harmful effects on Illinois finances.  Comptroller Leslie Munger told Illinoisans two weeks ago that the State’s unpaid bills, in the absence of budgeted appropriations for FY16, have reached $6.9 billion.  Based on the assumption that no significant changes will alter current trends, the State’s backlog of unpaid bills will be about $8.5 billion by December 31, 2015. What has this done to Illinois’ credit rating? Fitch Ratings, whose credit ratings are closely watched by Wall Street and the global investment community, reduced Illinois’ “general obligation” (GO) bond rating from single-A-minus, the former ranking, to one notch closer to junk-bond status on Monday, October 19.  The new BBB+ rating is only two notches above the lowest investment-grade rating (BBB-) and is three notches above BB+, which signals non-investment-grade (“junk bond”) status.  Illinois’ GO bond rating is the lowest among the 50 states.

Following Fitch’s downgrade, Moody’s Investor Services downgraded its ratings on Illinois bonds. Moody’s downgraded Illinois outstanding $27 billion of GO bonds to Baa1 from A3, while also lowering ratings on the state’s sales-tax (Build Illinois) bonds to Baa1 from A3, and on the state’s subject to appropriation bonds to Baa2 from Baa1.  The outlook for all of these obligations remains negative.

Even worse, Moody’s reduced credit ratings for six State universities last week.  The downgrades reduced the credit ratings of, and increased the interest rates due and payable by, six Illinois universities.  The affected institutions were Eastern Illinois University (EIU), Governors State University (GSU), Northern Illinois University (NIU), Northeastern Illinois University (NEIU), Southern Illinois University (SIU), and Western Illinois University (WIU).  The New York-based credit rating firm attributed the decision to the budget turmoil facing Illinois.

However, some movement has been made between the four leaders.  Governor Rauner will chair a public meeting with legislative leaders on Nov. 18.  We should be meeting every day until we have a budget, but some progress is better than none.  The meeting is expected to examine the delayed FY16 budget process.  The State has continued to operate under consent decrees, court orders, continuing appropriations, and school appropriations, which has created many operational problems.  Recipients of State services, and providers of goods and services to the State, have all been affected by the lack of a legal budget document.

I have said from the beginning that this is going to be a fight for a better Illinois.  Not everyone always agreed with President Lincoln, but he believed in what he stood for.  He once stated, “Be sure you put your feet in the right place, then stand firm”.  I am and will always continue to stand firm for the future of Illinois.