QUOTE OF THE DAY
Chicago Tribune: Lawmakers, go first. No more pensions.
Illinois lawmakers are busy* this summer.
(*Campaigning, golfing, fundraising.)
The House and Senate adjourned in May and won’t reconvene until Nov. 19, the start of the fall veto session.
U.S. News: Collectively, Not a Bargain for America
The Obama administration has sounded the warning loud and clear: As fewer American students commit themselves to the fields of science, technology, engineering and mathematics (STEM), the bedrock subjects of innovation, the United States stands to lose its position as a global leader. Data from the 2013 World Economic Forum’s “Global Competitiveness Report”suggests America’s leadership position has already begun to fade badly. The 2013 report places America seventh among 144 countries included in the study. The 2007 World Economic report had the U.S. ranked No. 1. So what is the President’s solution to get America back on top? The U.S. must “out-innovate ” and “out-educate” the rest of the world.
Out-innovating our global competitors in the near future will prove difficult. According to data from the U.S. Department of Education, just 16 percent of high school seniors are “proficient” in mathematics and say that they are interested in STEM careers. Of those who do choose to major in science, technology, engineering and mathematics in college, less than half go on to work in those fields. Moreover, in the most current international assessment test administered by the Organization for Economic Co-Operation and Development, American 15 year olds were ranked 17th in the world in science and 25th in math.
Out-educating the rest of the world will not be easy, either. Particularly as the process of K-12 public education in the United States remains at the mercy of teacher unions and collective bargaining contracts that clearly define the work rules of teachers but have no discernible impact on improving public education in America since they were introduced 54 years ago.
Crain’s: Business taxes: Illinois vs. Indiana, Texas
State and local business taxes totaled $32.3 billion in Illinois, equal to 5.0 percent of the state’s output of goods and services, in the year ended June 30, 2013. That ranks the state’s business tax burden 14th-highest in the nation, relative to the size of its economy, and slightly above the national average of 4.7 percent.
Wire Points: Monday morning quarterbacking Illinois pension bonds
A debate is emerging over whether Illinois’ pension obligation bonds, seen through the rear view mirror, were wise.
The idea behind pension obligation bonds is actually pretty simple. Instead of the state funding its pensions, it borrows from the public by issuing bonds and uses the borrowed money to fund the pension, with the pension then investing the proceeds. Whether that works out depends, at least in part, on whether interest the state pays on the borrowed money exceeds the returns the money earns on the investments the pension makes.
In 2003 Illinois issued $10 billion of those bonds to fund pensions at an interest rate of 5.05%. Last week the Civic Federation issued a report about whether that worked out, comparing the returns the pensions made on that borrowed money to the interest paid. In seven of the ten years since that bond issuance the returns exceeded that interest, but the state lost money in the other three, according to that report.
New York Times: Foreign Powers Buy Influence at Think Tanks
WASHINGTON — The agreement signed last year by the Norway Ministry of Foreign Affairs was explicit: For $5 million, Norway’s partner in Washington would push top officials at the White House, at the Treasury Department and in Congress to double spending on a United States foreign aid program.
But the recipient of the cash was not one of the many Beltway lobbying firms that work every year on behalf of foreign governments.
It was the Center for Global Development, a nonprofit research organization, or think tank, one of many such groups in Washington that lawmakers, government officials and the news media have long relied on to provide independent policy analysis and scholarship.
Wire Points: A troubling report on state revenue
Each month, the Commission on Government Forecasting and Accountability issues an update on how much revenue the State of Illinois is taking in. The August report, including fiscal year-to-date numbers, came out last week. (The state’s 2015 fiscal year started July 1).
Unfortunately, year-to-date total revenue numbers are actually down by 6% compared to the same period last year. (See page 7 of the full report, linked here.) Much of the decline is attributable to a decline in certain refunds to the state, according to the report, but it still remains troubling. Personal income tax receipts, by far the state’s largest source of revenue, were basically flat. Sales tax receipts, the next largest source of revenue, improved by 1.5%, but corporate income tax receipts declined by 20%.
Hope that an economic recovery will rekindle state revenues isn’t working out so far this year.
Chicago Sun Times: Illinois pension debt rate nation’s worst, Moody’s report says
Illinois’ pension liability as a percentage of state revenue is far and away the nation’s highest, according to a new report from a major credit-rating agency.
The state’s three-year average liability over revenue is 258 percent, Moody’s Investors Service says.
The next closest? Connecticut, at about 200 percent.
Dealbook: Puerto Rico Hires Supervisor for Utility Restructuring
Puerto Rico’s electric power authority, which has been in negotiations with lenders over its debt burden, said on Thursday that it had hired the consulting firm AlixPartners to supervise its restructuring.
The assignment will be led by Lisa J. Donahue, the head of AlixPartners’ turnaround and restructuring practice, the authority said in an announcement.
The hiring of a chief restructuring officer was part of a deal reached last month between the electric authority and its creditors.
Jim Pethokoukis: The anemic August jobs report: Where are the jobs? Where is the wage growth?
This was not a good jobs report. Certainly not one that suggests a shift into a higher growth gear. The Two Percent-ish economy crawls on. The US economy added 142,000 jobs in August — much less than 225,000 expected — as the unemployment rate ticked down to 6.1%. But the jobless rate fell only because the labor force shrank by 64,000, notes economist Paul Ashworth of Capital Economics. The alternative household survey found employment increased by only 16,000 last month. Also, payroll gains in June and July were revised lower by 28,000, although those downward revisions were all in government. Private payrolls were actually nudged up, according to RDQ Economics. And consider: There are just 1.2 million more private jobs today than January 2008 despite 15.6 million more non-jailed, non-military adults. While the unemployment rate has dropped by 1.1 percentage points over the past year, the employment rate is up just 0.2 points.
CARTOON OF THE DAY
