April 18, 2014

QUOTE OF THE DAY

Hux

Rare: Foxes are guarding the pension henhouse

There’s nothing more infuriating to public sector unions than when state and local governments attempt to scotch decades of deals made with the unions in order to shore up virtually-insolvent pensions.

So it wasn’t surprising when Illinois affiliates of several unions, including the American Federation of State County and Municipal Employees, the National Education Association, the Service Employees International Union and the American Federation of Teachers, came together in January to sue the state for daring to address its pension woes by passing a modest reform plan.

As far as the unions were concerned, it was an outrage that the Land of Lincoln was addressing its $95 billion in underfunding – the nation’s second-largest tally of pension liabilities after California – by reneging on its “promises.”

Read more…


Crain’s: Dear Mr. President: Pay for your library yourself

I’ve always considered myself to be a Barack Obama fan — and not only because I can say I once had lunch with the future president of the United States.

Enacting national health care, if imperfect, was only a dream for a half-century of prior presidents. His view that America is not alone in the world but needs to act in cooperation with our allies is essentially correct. He admittedly was a little slow to come around on some issues I care about, such as gay marriage, but, hey, what counts is not where you start but where you end up.

But I have this to say to the president from Chicago as his representatives play off city against city in a financial derby to pay for the rights to host his presidential library: Pay for it yourself, sir. Get the money from your buddies and donors and supporters. Don’t ask the taxpayers of the city and state to come up with what, at the moment, is at least $100 million. We can’t afford it.

Read more…


Dropout Nation: Illinois’ $76 billion pension problem

These days, Illinois’ virtually-insolvent defined-benefit pensions — along with those of Chicago — have become as much a topic of conversation for taxpayers in the state as last night’s Bulls or Cubs game. From the lawsuit filed earlier this year by a group of unions (including the National Education Association affiliate and that of the American Federation of Teachers), to the move last week by state legislators to help the Second City address insolvencies in two of its pensions, to the declarations of pension reform by both Illinois Gov. Pat Quinn and Republican rival Bruce Rauner, there will be more talk about how the Land of Lincoln must pay down its $95 billion in long-term pension obligations, the nation’s second-largest after California, according to data from the Pew Charitable Trusts.

But none of the discussions will matter unless the Land of Lincoln deals honestly with the level of insolvencies it faces. This is especially true when it comes to dealing with the Teachers’ Retirement System, which likely has the second-worst teachers’ pension deficit in the nation after that of the notoriously-underfunded California Teachers Retirement System. And based on TRS’ latest comprehensive annual financial report, the state is still refusing to deal candidly with reality.

Read more…


Washington Post: Taxpayers loaned $192 billion to the government last year. Here’s where that money came from.

American tax filers made roughly $192 billion in interest-free loans to the federal government last year, according to IRS data just released by the Brookings Institution. All told, 80 percent of tax filers overpaid on their taxes and received refund checks from the IRS for tax year 2012, with the average refund worth $2,742. In effect, those are a zero-interest loans to Uncle Sam.

The sum of $192 billion is huge. To put in perspective, that’s more than a quarter of the federal budget deficit last year. For a country that gripes as much about taxes as we do, it’s frankly incredible that so many of us willingly overpay our taxes year after year.

Where are people most likely to overpay (and get refunds)? Appalachia and the deep South stand out in the map below. This is partially related to poverty rates — people at the lower ends of the income spectrum have much lower tax burdens, due to lower overall rates and tax breaks like the Earned Income Tax Credit. Overall, Chattahoochee County, Ga., takes home the prize for the highest share of filers getting refund checks — 95 percent, to be exact. At the other end of the spectrum lies Liberty County, Mont., where only 38 percent of tax filers got refunds.

Read more…


Reuters: A bankruptcy scorecard for Detroit

Settlements in the Detroit bankruptcy case are arriving quickly. I thought that it might be useful to have a scorecard to tally the pieces. I took the chart above from the Detroit’s June 13, 2013 Proposal to Creditors (page 98). It lists the unsecured creditor claims. So far, Detroit has settled four unsecured liabilities valued at $4.107 billion for $1.213 billion, or 30 percent.

Here are four announced settlements with numerous caveats.

UTGO settlement: Detroit originally argued that the unlimited tax general obligation bonds (UTGO) were unsecured. This interpretation flew in the face of established muniland legal precedents and was watched closely by market participants. In its settlement with the bond insurers who wrapped these bonds, the city reversed its stand and agreed to acknowledge that the debt was secured by a specific lien on property tax revenues. Bond insurers will be paid 74 cents on the dollar and bondholders will be made whole by the insurers. The property tax lien will continue to be collected by the city and 26 cents on the dollar will go to a fund to help the lowest income retirees. It will cost the city $287 million to resolve $369 million in liability with the bond insurers.

Read more…


Chicago Tribune: House committee OKs $100 million for Obama library

An Illinois House committee endorsed a plan today to contribute $100 million in state funds toward construction of a Barack Obama presidential library in Chicago.

The proposal, pushed by House Speaker Michael Madigan, goes to the full House next.

Madigan said it’s appropriate for Illinois to commit public funds for the library even though the state is grappling with serious financial problems.

Read more…


Chicago Tribune: Union: Northwestern’s position in student labor case ‘castle built on sand’

The union seeking to represent football players at Northwestern University called the school’s position in the case “a castle built on sand” in a document filed with the National Labor Relations Board on Wednesday.

The document was filed in response to Northwestern’s appeal of the regional director’s ruling last month that cleared the way for players to vote on April 25 on whether they want to be represented by the College Athletes Players Association. To prevail, the majority of scholarship players voting would have to side with the union.

The election could be delayed if the board accepts Northwestern’s appeal before April 25, but that’s unlikely. After the election takes place, the ballots will remain secret until the board makes a final decision on the appeal. The issue eventually could be resolved in federal court.

Read more…


WSIL: Illinois Unemployment Drops to 8.4 Percent

State officials say unemployment in Illinois dropped in March to 8.4 percent. That’s its lowest level since 2009.

The Illinois Department of Employment Security said Thursday that March unemployment was down from 8.7 percent in February. But the department noted that new-job creation was still down for the month by about 3,200 jobs. That’s a drop of less than 1 percent.

Department Director Jay Rowell called the report a sign of “significant progress.”

Illinois continues to have one of the highest unemployment rates in the country. The federal government said earlier this month that the March unemployment rate for the nation was 6.7 percent.

Read more…


CBS: By The Numbers: Problems For Illinois

What’s wrong with Illinois?

Compared with neighboring states: A lot.

Based on several economic indicators tracked by the U.S. Bureau of Economic Analysis, the Land Of Lincoln continues to struggle.

Unemployment is the second-highest in the country at 8.7 percent. Only Rhode Island is worse.

Read more…

CARTOON OF THE DAY

ocare_census