April 29, 2012

"Illinois is a lesson in why companies are starting to pay more attention to the long-term fiscal prospects of governments."

"Indiana's debt for unfunded retiree health-care benefits, for example, amounts to just $81 per person. Neighboring Illinois's accumulated obligations for the same benefit average $3,399 per person."
... Dana Levenson, Chicago's former chief financial officer, has projected that the average city homeowner paying $3,000 in annual property taxes could see his tax bill rise within five years as much as $1,400. The reason: A 2010 Illinois law requires municipalities to raise the funding levels in their pension systems using property tax revenues but no additional contributions from government employees. The legislation prompted former Chicago Mayor Richard Daley in December to warn residents that the increases might be so high, "you won't be able to sell your house."
No additional contributions from government employees... In other words: Don't do what they did in Wisconsin.

Meanwhile in Wisconsin, we've been pulled into a recall election to replace the current governor with someone who thinks Illinois has got the right idea.

46 comments:

chickenlittle said...

Chicago ill

Quayle said...

Plus, there is often a hidden bomb in these numbers.

In determining the future size of the pension fund, the state itself (via committee) projects (decides) the "likely" growth rate of the pension fund.

So often the states further hide the true extent of the hole by setting a ridiculous, unattainable number, like say 8%, as the annual growth rate.

If by committee I can set the "likely" future growth rate at 15%, my pension hole won't look at bad as it really will be when I get 5% true corpus growth.

Time for voter to wake up - the party is over. It's just that nobody has turned on all the lights.

Patrick said...

Meanwhile in Wisconsin, we've been pulled into a recall election to replace the current governor with someone who thinks Illinois has got the right idea.
That observation is so apt, I don't know whether to laugh or cry. I guess that'll depend on the outcome of the recall.

WV: workedno: That pretty much sums up the typical union boss.

Curious George said...

Althouse: "Meanwhile in Wisconsin, we've been pulled into a recall election to replace the current governor with someone who thinks Illinois has got the right idea."

You must not have gotten the memo. The recall is not about having public union workers pay into their pension. It's about workers rights. Well, it's not about even that anymore. It's about jobs. Or the war on women. Or something.

edutcher said...

Like John Kasich, Scott Walker, having made reforms, spends his time on the road wooing companies from states like IL.

It turns out "Corruption That Works" doesn't.

EDH said...

The public employee unions' endgame has to be a federal bailout.

It has to be.

edutcher said...

Second term.

CWJ said...

In the private sector, pensions are funded. Depending upon the quality of the actuarial and investment assumptions used, they may be under funded or over funded, but not UNFUNDED. The legal and accounting fictions that allow governments to escape real world accounting are a disgrace.

PatCA said...

Along the same line as the Illinois law that forbids adjusting union benefits downward, Gov. Moonbeam is trying to get a law passed that forbids city bankruptcy, to solve the...er, problem due to lack of funds.

Tyrone Slothrop said...

Google:

"Businesses leaving Illinois"; 14,300,000 results.

"Businesses leaving California"; 17,200,000 results

Quayle said...

In the private sector, pensions are funded. Depending upon the quality of the actuarial and investment assumptions used, they may be under funded or over funded, but not UNFUNDED

Yeah. Public pensions should be subject to ERISA.

But once again, the measures that are deemed critical for the government to impose on businesses (and not arguing in the case of ERISA) are never critical for government.

The Drill SGT said...

My younger bro and S-I-L are retired CA school teachers (as is Mom).

While in Coronado a couple of years ago for a niece's wedding, I saw a flyer aimed at the Bakersfield City Council (where Bro and wife worked). It went something like:

"You guys have a temporary budget surplus, what you should really do is committ that long term to funding 100% retiree dental care. Yeah, we know you dont have to, but why not make people happy :) "

Fundementally that is what is wrong with the synergy between Dem public unions and the predominately Dem local elections that are dominated by public unions.

Every time there is a bit of surplus, it is given away in long term promises, and when there is an inevitable downturn, the promises cant be undone. It's a ratchet mechanism that can only turn one way.

The Drill SGT said...

The Drill SGT said...
My younger bro and S-I-L are retired CA school teachers (as is Mom).


PS: They retired in their early 50's

borgjess said...

I was gonna comment as Jess, but google has decided that they detected unusual activity on my account, and they absolutely positively must have a telephone number to send me a verification code. Good thing I don't use gmail for anything important; I think I'm done with them.

rhhardin said...

It's more than companies moving out.

There's also companies not existing at all because they would not be profitable after taxes and fees.

The unseen effects are always bigger than the ones that are noticed.

borgjess said...

Basically the voters get the government that the majority of them deserve.

fleetusa said...

Yep, IL and CA are like the Titanic with foolish captains.

The sad thing is the Dims running the two states will turn to the Dim in the WH or Congress for handouts.

rhhardin said...

The pension deal will be solved eventually with a RICO suit.

bagoh20 said...
This comment has been removed by the author.
bagoh20 said...

I posted this in the previous post by accident and screwed up the spelling and punctuation pretty bad. So wrong place, unreadable, careless. I'm barely able function at all.
~
I love living in California, but I just passed up buying a new building for my growing business here because I'm desperately looking for a way out of this state, solely because the governments (local and state) are completely insane, and all chronically liberal Democrat controlled.

Both Los Angeles and the state are completely under water financially, while having the highest tax rates and revenues in the nation. There has never been an amount of money they could not overspend. A middle income earner in CA pays higher tax rates than millionaires in most other states.

So I'm willing to take substantial risks and sacrifices in lifestyle and finances to get away from what appears to be a huge drowning man who will clearly drown us both if I let him.

I really don't want to do it. I love it here, but I'm just a small-business man, and the state sees me as prey or enemy, and the voters seem to be fools, unable to see what they have done.

Unfortunately, I don't know if I can afford either the cost of moving or staying, but I'm looking for a safer place for my business and employees. If we leave, we take 100 tax payers with us and a growing tax-paying company that supports many other businesses.

How stupid can a government be? California is your answer. It was all voted for democratically: dumb policies, dumb politicians, dumb voters. Learn from us, and vote wisely. Nothing is so good that it can't be destroyed by the foolishness of thinking government expenditures are free, and that's exactly the way Californians voted.

MadisonMan said...

Why do states have unfunded debt for retirees? Why don't they do like Wisconsin and have a fully vested plan that -- I believe -- doesn't cost the taxpayers money (except for contributions).

The lawsuit that prevented TT -- the one running for Senator -- from raiding (he called it "borrowing") the pension fund -- did such lawsuits not happen in Indiana or Illinois? Or did they not even bother, just voting in luxe benefits and deciding to pay for them "later". What is the history?

bagoh20 said...

I sincerely implore you Wisconsinites and those in other states too. Don't go down the spending road any further. You will lose so much, and probably not get it back in your lifetime, or even your children's.

It doesn't help to just be right, if you have to live by the rules of those who are wrong. Everybody loses when fools rule.

Alex said...

So if Wisconsin decides to reject Walker and the GOP in favor of more socialism, business will end up fleeing to business friendlier states. Not sure how Illinois fits into that, they're as horrible as Wisconsin. But Arizona beckons.

Alex said...

The public employee unions' endgame has to be a federal bailout.

That's what scares me the most.

Alex said...

There's also companies not existing at all because they would not be profitable after taxes and fees.

Feature, not bug. It gets even more people on welfare, dependent on the state teat.

Beorn said...

As a California resident I look at Wisconsin and New Jersey as the epicenter of the battle that will decide the future of the republic.

If the parasitic public employees unions (and its symbiotic partner, the democrat party) win these battles, the end will be nigh.

Rusty said...

MadisonMan said...
Why do states have unfunded debt for retirees?


Are you serious?

Pensions are the payback for voting for them. You reward your union voters by raising their pensions. It's really not that hard.
Read this next part csrefully.
They don't give a fuck about the average voter because they can't buy your vote. As a matter of fact when they talk about you at all , "fucking idiot" is in the discription somewhere.

NotquiteunBuckley said...

Things in Alameda County and near it are much worse than I can portray, given limited skills.

The short of it: Rich, white males are bad therefore all others, even if exhibiting symptoms of badness, cannot ever be bad or wrong.

The entire court system in Alameda County favors fraud--after all the white male defrauded the people, the little guys and gals, so this is only fair.

This lying and cheating and stealing under oath with permission via due process is only fair.

Rick67 said...

Wow. We're going to raise your taxes to the point where you can no longer make ends meet. So you think "cr*p I need to sell my house and move to another state". But no - you can't! because no one in their right mind is moving in!

Give me an S! L! A! V! E! R! aw you know the rest. Yeah you're working for the Man now.

(My brother has been dealing with a similar situation in the Minneapolis suburbs. His property taxes *doubled* in three years - mostly to pay for new schools... with marble columns and facades and probably the Armani suit that the diversity officer wears - while thanks to the economy his salary either stayed flat of even dropped 10%.

Presto! Chango! You ain't making ends meet any more.

PatCA said...

CA has been getting bailed out for years already! Bush helped fund the hospitals that were going broke from treating immigrants for free with Medicare money, and CA has been borrowing from the feds to pay unemployment benefits for years (about $40M per day).

lemondog said...

California is a mess and the pols still do not get it!!!

Get out before they impose an exit tax.

California's Greek Tragedy

California's economy, which used to outperform the rest of the country, now substantially underperforms. The unemployment rate, at 10.9%, is higher than every other state except Nevada and Rhode Island. With 12% of America's population, California has one third of the nation's welfare recipients.

NotquiteunBuckley said...

Also:

If anyone can make something witty out of:

heuristic's and character combining to form a new thing characheuristic let us know, along with that Buckley GIF I never made of Bill hitting home runs against all foes.

This was because I feared a Kim Jong Il 28 under par performance comparison.

Comparison is perhaps my most feared, hated even (Colbert like though? No.) speech enhancer that, foibles expounded, I always underestimate.

tim in vermont said...

"Good thing I don't use gmail for anything important; I think I'm done with them."

I was using google docs to work on a novel, and ads started showing up in my surfing based on themes in the novel. I will pay for a word processor from now on.

tim in vermont said...

"California is a mess and the pols still do not get it!!!"

No, California is a mess and the *voters* do not get it.

tim in vermont said...

Crazy left as Vermont is, we don't have the union thing going on. In fact when the bridge between Vermont and NY was recently condemned and had to be rebuilt, Vermonters who paid attention were torqued that Obama's rules requiring union labor froze Vermont out of the money.

When the left in this state grow old and die, and their kids have all left, which they do as soon as they are out of college, we will get this state back in reasonable shape.

Tyrone Slothrop said...

im in vermont said...

"California is a mess and the pols still do not get it!!!"

No, California is a mess and the *voters* do not get it.


Alas, speaking as a California voter, I am afraid that this is so.

bagoh20 said...

How stupid can a government be? California is your answer. It was all voted for democratically: dumb policies, dumb politicians, dumb voters.


This. Every project, worthwhile or not, is approved by voters regardless of cost. "Somebody" will pay for it. The Democrats in the state legislature sing the same tune, and our moron urbanite voters keep returning them to office. Gawd. There really is no hope, is there?

lemondog said...

While California proposes sales tax increases many other states -KS, OK among others - are proposing tax cuts.

No, California is a mess and the *voters* do not get it.

Point taken.

Revenant said...

Saying "the voters don't get it" isn't really accurate.

California is gerrymandered like you wouldn't believe. Many districts don't even field an opposition candidate at all.

It also means that the candidates that DO run need only appeal to the base. So Republican candidates tend to be brain-dead on the fiscal issues that actually matter, but highly skilled in bleating all the right things about abortion and gay marriage -- two issues that could not possibly matter LESS to the future of this state.

The simple reality is that voters here never have good candidates to choose from, and everything is set up in a way that guarantees no such candidates will ever run in the first place. It is a damned shame, because this could be the greatest state in America if it wasn't for the politics.

Revenant said...

CA has been getting bailed out for years already!

California hasn't been a net recipient of federal tax money for decades.

Tay-paying Californians have a right to complain about those bailouts, because it means the taxes we paid to the federal government are being redirected to our crooked state government instead of going to federal programs. Residents of other states, on the other hand, have no real cause to complain -- their tax money isn't going to California.

Chuck66 said...

The Sioux Falls Economic Development Agency runs commercials quite frequently in the Twin Cities. Working to get Minnesota companies to move or expand in South Dakota.

If Walker and the Republicans lose in Wisconsin....well, in Sioux Falls, you have.........

cubanbob said...

The public employee unions' endgame has to be a federal bailout.

It has to be.

Not if President Romney and the new republican congress have a pair. All they would have to do is:
1- make it explicit through legislation that there is no implied federal bailout such as was the case with Freddie and Fannie in so far as the full faith and credit of the United States.
2- subject the states and their subdivisions to confirm with GAAP principles.
3- ban the tax excempt status of bonds issued by those entities that do not comply with GAAP rules.

If the above were to happen all of the states and their subdivisions would be forced to declare their respective civil service retirement and benefits plans as odious debts thus cancelling them and reinstating them along fiscally sustainable lines.

Revenant states don't contribute to the to the federal treasury more than they receive back. No state does.
And certainly not with the current federal deficet. Besides states and local governments do not pay federal taxes, only individuals and corporate for profit entities pay taxes.

cubanbob said...

The public employee unions' endgame has to be a federal bailout.

It has to be.

Not if President Romney and the new republican congress have a pair. All they would have to do is:
1- make it explicit through legislation that there is no implied federal bailout such as was the case with Freddie and Fannie in so far as the full faith and credit of the United States.
2- subject the states and their subdivisions to confirm with GAAP principles.
3- ban the tax excempt status of bonds issued by those entities that do not comply with GAAP rules.

If the above were to happen all of the states and their subdivisions would be forced to declare their respective civil service retirement and benefits plans as odious debts thus cancelling them and reinstating them along fiscally sustainable lines.

Revenant states don't contribute to the to the federal treasury more than they receive back. No state does.
And certainly not with the current federal deficet. Besides states and local governments do not pay federal taxes, only individuals and corporate for profit entities pay taxes.

Phil 3:14 said...

California is your answer. It was all voted for democratically: dumb policies, dumb politicians, dumb voters. Learn from us, and vote wisely. Nothing is so good that it can't be destroyed by the foolishness of thinking government expenditures are free, and that's exactly the way Californians voted.

A couple of years ago, driving back from Santa Barbara to our home in Phoenix, I noted the wine country, the exotic crops, Hollywood, the blossoming desert of El Centro, the hi-tech revolution of Silicon Valley...I thought of all of that AND the beautiful geography and I turned to my wife and asked:

"How did they f**k this up!?"

Revenant said...

Revenant states don't contribute to the to the federal treasury more than they receive back. No state does. And certainly not with the current federal deficet. Besides states and local governments do not pay federal taxes, only individuals and corporate for profit entities pay taxes.

Maybe you should re-read what I wrote.

I never said states paid taxes. I said, correctly, that the "bailouts" of California are entirely funded by taxes paid by Californians. The residents of the other 49 states contributed exactly $0 to those bailouts.

So if you don't live in California, STFU about how we're being "bailed out" by you. We aren't.

Carnifex said...

Do you hear yourselves? Just a few scant years ago, such talk was poopooed as right wing paranoia. Something that militia gun nuts in Montana talk about.

Brothers! Amigos! Welcome to the club!

It is not a Democrat problem, this over spending. It is a government problem. When the hell has anyone but tea partiers ever tried to actually lower spending. And we got shouted down by Boehner, McConnell, and their Dead Elephant Party compatriots.

I don't like the gratuitous use, but fuck all politicians. Remember Jeffersons quote about the tree of liberty. Does anyone really believe Romney is going to make even a scintilla of difference?

This problem is systemic of all politicians. And it will not be cured until the infection is sterilized. And there will be pain and suffering.

It's coming. Surely as a train down a track. There is no sudden turns, there is no reversing course, there is no avoiding what is coming.

Do you think the unions are going to give up their cash cows quietly? Do you think the Dem..oh hell, politicians are going to give up their perks, and their power? The Fed? Do you think the are arming the TSA, and holding training scenarios in American cities for no good reason?

Why does the NEA even need a SWAT team? They have one!

Did you know the TSA has been running "terrorism exercises" on Houston public buses? Because they are such a target for terrorist. "This is a highjack! Take this bus to Cuba!" used to be a punchline.

Did you know the TSA was running road blocks and conducting vehicle searches in Tennessee? I guess AQ is gonna' blow up the Grand Ol' Opry!. Not a big loss I admit, but still.

Did you know that the TSA has purchased millions of rounds of ammunition. Millions.

Do you remember Zero saying he wanted an armed force, equal at least to the US Army? How serendipitous! How many TSA agents respect the constitution more than their paycheck? Not as many as like to fondle nuns, children, and paraplegics to be sure.

Another serendipitous event, the draw down of the US Military. The guys who DO swear to protect the constitution. Wow! How lucky can a Marxist from Kenya get?

And the IRS, suddenly getting thousands of more officers to make sure you pay your share...excuse me, your fair share.


Bagoh, I would say get out , but really, it's too late. Get you, and your family out. Find a nice quiet town, with a good water source, fertile land, and preferably in a box canyon.

All of you. Get out of your big cities. Have a remote retreat. Learn a skill if you aren't a doctor or a nurse. Make friends with your neighbors because no one is gonna' make it through this storm without support. Buy chickens, and goats for your kids. Milk and eggs are gonna' be tight.

Understand, when the hammer falls it will be wielded by the US Government. If you resist expect the consequences. Don't expect the Army to save our asses, they get trained to take orders, if they don't they get sent to Leavenworth, and the next guy is ordered to do it,and the next, until they find the one who will. Don't even start on police. Police just want to go home safe at the end of a day.

They will make an example of you like the TSA does when people refuse the scanner. Or like the EPA does. Or the IRS. It is a power game, and they think you have none. Why shouldn't they, we've done little but acquiesce to this shit for decades.

Paul Ciotti said...
This comment has been removed by the author.