by Mish Shedlock, The Street:
Wirepoints reports Illinois set to borrow from Fed’s “lender of last resort” facility a second time
Illinois is set to borrow several billion from the Federal Reserve’s Municipal Liquidity Fund (MLF) for a second time if a new U.S. stimulus package and a progressive tax hike scheme for Illinois don’t come through, according to comments from Illinois Gov. J.B. Pritzker.
Illinois already borrowed $1.2 billion from the MLF earlier this year in an attempt to close some of the state’s 2020 budget shortfall.
The borrowing is significant since Illinois is the only state in the country to tap the MLF. The Fed created the MLF in April to be a “lender of last resort,” where cities, states and other government entities can go if they can’t raise money as a result of COVID-19.
Covid Not The Problem
The MLF is for states and municiplaitioes that cannot raise money due to Covid.
Finances, not Covid are the problem in Illinois.
Illinois’ Alleged Balanced Budget
The Illinois constitution requires a balanced budget.
The Illinois budget is “balanced” by borrowing money year after year.
Governor Pritzker “balanced” the fiscal year 2021 budget by borrowing $5 billion from the Fed.
$261 Billion Shortfall
Year in, year out the numbers keep adding up. Moody’s new estimate of Illinois pension shortfall increases to $261 billion
Moody’s estimates the shortfall in Illinois’ five state-run pension funds will jump to $261 billion in 2020. The rating agency, in “Medians – Pension and OPEB liabilities fell in fiscal 2019 ahead of jump in 2020,” says a drop in interest rates and lower investment returns will worsen Illinois’ shortfall.
Moody’s estimation for all 50 states makes Illinois’ $261 billion shortfall the worst in the country.
Illinois’ shortfalls will be even larger when Moody’s finally releases its 2021 estimates, which will capture the impact of COVID-19 on the interest rate and financial markets. Wirepoints estimated earlier this year that Illinois’ unfunded liability may reach $300 billion under today’s volatile conditions.
Get the Hell Out of Illinois
On October 5, 2019, I commented Escape Illinois: Get The Hell Out Now, We Are
Get Out of this Progressive Socialist Hellhole
We are out of here. Can’t take it anymore.
We pay close to $15,000 a year in property taxes on a home worth about $400,000.
Firm plans in place to move to Southern Utah in 2020.
I am pleased to report we made it to Utah.
But note that It Takes 3 Weeks to Escape Illinois
Why 3 weeks? That’s how long it takes to reserve a one-way U-Haul outbound.
“Everyone is leaving. No one is coming,” a U-Haul agent told us a few weeks ago.
I wrote that on July 10, the day we left.
Yep, summers are hot here but we have already adapted. Love it here and would not go back.