WBEZ | civic federation

New report shows Illinois' finances could go from bad to worse

Mon, 25 Feb 2013 05:00:00 -0600

A new report projects Illinois’ state budget will go from bad to worse if legislators don’t address some key issues. If things stay as they are, Illinois can expect to see more money devoted to rising pension costs and more bills go unpaid, according to a new report by The Civic Federation, a financial watchdog group.

The report says pension contributions are eating up money for other essential government programs and will go from $5 billion this fiscal year to $7 billion five years from now.

“Illinois is in a horrible financial situation,” said The Civic Federation’s Laurence Msall. “It is continuing to get worse and we’re at the breaking point where core government services will not be able to be funded if we are going to maintain the existing pension structure.”

Legislative leaders have not been able to agree on the best way to pay for state employees’ pensions. They have disagreed on everything from which plan is considered to save the most money, to the legality of certain proposals, since the state constitution says a pension cannot be “diminished or impaired.”

The Civic Federation’s report says another factor why the state is expected to continue to struggle financially is the personal income tax rate. Gov. Quinn raised it from three percent to five percent two years ago, but the rate is scheduled to go down in 2015. Corporate taxes were also raised to seven percent. Those are also scheduled to be cut in 2015.

The decision to keep the income tax rate where it is or cut it is expected to be a big part of next year’s governor’s race.

“We might not be able to make it to 2015 if the state doesn’t address the pension crisis and reduce that $97 billion in unfunded liability,” Msall said.

Msall’s report also details the consequences of the state’s financial problems. Illinois is expected to have a backlog of unpaid bills owed to vendors of $21.7 billion in five years if the pensions stay where they are and the tax rates are cut. The state has $7.8 billion in unpaid bills in fiscal year 2013.

Quinn is scheduled to give his budget address next week.

Civic Federation approves of city's 2013 budget

Wed, 31 Oct 2012 18:25:00 -0500

Chicago is moving in the right direction with its proposed 2013 budget. That’s according to the Civic Federation, a 118 year old nonpartisan budget watchdog group.

Civic Federation President Laurence Msall said Mayor Rahm Emanuel is showing restraint by not raising property taxes, eliminating the employee head tax ahead of schedule and allowing seven TIF districts to expire. Msall also noted Mayor Rahm Emanuel’s decision to eliminate 275 city jobs.

But the Civic Federation still has concerns about the city’s financial situation.

Msall said the city still relies too heavily on one-time revenue sources. According to the Civic Federation’s report, about $47 million of the 2013 budget comes from sources like declaring TIF surpluses and restructuring existing debt to take advantage of lower interest rates.

The Civic Federation is also recommending the city leave more money aside for unforeseen costs, like the recent court decision in the firefighter discrimination lawsuit.

But Msall said the elephant in the room is still pensions for city employees.

“Every Chicagoan is on the hook for approximately $7,000 per man woman and child just in pension promises, and as a result, everybody is going to have to pay more and receive less,” Msall said.

During his testimony to aldermen on Wednesday, Msall said state and local legislators are to blame for underfunding their pension systems in the past.

Chicago’s pension systems are short by about $16.7 billion.

Board to vote on 2012 CTA budget

Mon, 14 Nov 2011 23:29:00 -0600

The Chicago Transit Authority's board of directors is scheduled to vote on the agency's $1.24 billion proposed budget on Tuesday.

Under the proposed budget, CTA President Forrest Claypool hopes to close the agency's $277 million deficit next year and avoid fare hikes or service cuts in large part by re-negotiating union contracts.

On Monday, budget watchdog group The Civic Federation released a statement supporting the budget plan. President Laurence Msall said changing the labor rules is the most reasonable way the CTA can balance its budget.

"These are enormously inefficient rules that need to be eliminated," said Msall. "The riders of the CTA are having a difficult time paying their own bills and maintaining their jobs. And to go to a fair increase at this time would be very difficult."

The Civic Federation warns if CTA can't get the savings from union negotiations, it will have to raise fares or cut services.

Union leaders have said the estimated savings from those negotiations are exaggerated.

County won't charge unincorporated areas for policing yet

Fri, 04 Nov 2011 17:11:00 -0500

After much criticism, the Cook County Board President is backing off a controversial push to tax unincorporated residents for police services. Instead, Toni Preckwinkle announced Friday she's creating a task force to examine other options.

"Our effort is to figure out how we're going to deal on a case by case basis with the unincorporated parts of this county and to come up with a plan that we can incorporate into next year's budget," Preckwinkle said.

Solutions include the creation of special service areas, contracting for services with adjacent municipalities or incorporation.

Two percent of Cook County's residents live in unincorporated areas. But charging them for police services could net up to $11 million dollars.

While that's not much when sized against the $315 million dollar shortfall the county faces heading into 2012, the Civic Federation's Laurence Msall said this task force may be the starting point for recovering even more money.

Msall is one of 13 members on the new task force and cites a study his organization released last year on modernizing Cook County.

"The magnitude we've been able to identify in our 2010 study was about $70 million dollars of county expenses can be drawn to providing the broad municipal services," Msall said.

Beyond police protection, he said that includes the inspectors the county provides to maintain zoning, liquor control and animal control.

Msall said there are myriad ways to solve the county's problem of unincorporated areas receiving free services by default, and he's not ruling out a push for new legislation.

Current law does not allow the county to force unincorporated areas to incorporate.

Report finds Chicago's charter schools 'in good fiscal health'

Tue, 04 Oct 2011 12:03:00 -0500

A new report out Tuesday shows Chicago's Charter schools are in good financial shape. But the Civic Federation, a non-partisan budget watchdog group, finds there are some concerns.

The group awarded Chicago's charter schools a B+ 2007 and B in 2008 for meeting key standards of fiscal accountability. But its 170-page report also found threats to long-term fiscal sustainability due to declining budgets.

Charter schools aren't subject to the same legal and school board requirements as Chicago's public schools. So the Civic Federation says it couldn't conclusively measure every indicator because every Charter reports data in its own way.

The group's key recommendation is for charters to standardize their reporting data.

New report: CPS faces "enormous budget gaps"

Mon, 22 Aug 2011 11:27:00 -0500

Chicago Public Schools 2012 budget is acceptable, but only for the short term. That's according to a report released by the Civic Federation on Monday.

The checkbook that Chicago Public Schools has to balance is like any of ours, but far bigger and far scarier. Laurence Msall, President of the Civic Federation said, "It is in a very dire situation."

The Federation's 82-page analysis of next year's CPS budget endorses some painful decisions - like denying teachers a four percent cost of living increase and raising property taxes. It says such decisions are in part necessary to maintain class size.

Despite these hand-wringing choices, Msall said, "This is a good budget and a good short-term plan for Chicago Public Schools. It is not the long-term plan that they need in order to get through the next three to five years."

Looking ahead, the Federation report uses phrases like "fiscal calamity in the very near future." Some of the highlighted causes include a broken pension system that may be beyond repair, and the financial instability of the state of Illinois as a whole.

The Federation is urging CPS leadership to start planning for the widening future budget shortfall now. In a press release, Msall stated, "If nothing is done, the pain and controversy of the FY2012 budget will seem mild in comparison to the massive cuts in personnel and services that will be necessary to balance the budget in FY2014."

Report finds Quinn's proposed budget unbalanced

Mon, 09 May 2011 11:48:00 -0500

A new report by a fiscal watchdog group shows Illinois Governor Pat Quinn's proposed budget is unbalanced by more than $2 billion. The report by the Civic Federation found Quinn overestimated some of the money the state is bringing in, specifically when it comes to income taxes.

Quinn's proposed budget estimates Illinois raised $7 billion when it increased the personal income tax rate earlier this year, but the Civic Federation's report finds Quinn's budget for next year does not set aside enough money for income tax refunds. It's about $1 billion short.

Legislators approved the tax increase in January to help balance the state's $13 billion deficit. Quinn also wants to borrow money to pay bills and temporarily suspend some state funding to local governments.

Recently, Illinois' comptroller announced that by her count, Illinois' budget is still some $8 billion out of whack.

New report highlights Illinois' state budget woes

Wed, 08 Dec 2010 20:42:00 -0600

A new report by the National Conference of State Legislators described llinois' fiscal situation as dire.

The group surveyed budget conditions in each of the fifty states and Puerto Rico.

Laurence Msall is the president of the Civic Federation, he said the report does not exaggerate Illinois' problems, but he said, the state has a few options to help reduce the budget deficit.

“What needs to happen is the state has to reduce the amount of money it’s spending each year,” he said. “That’s going to require cuts in programs. If it’s not able to drastically reduce it’s spending it’s going to have to dramatically reduce its pension contributions.”

State lawmakers are still debating a plan to sell more than $3 billion in bonds for state pensions. A report put out Monday by Moody's Investment Service warned such a bond sale could weaken the state's already fragile bond rating.

Government Watchdog: Problems with Chicago's 2011 budget

Thu, 04 Nov 2010 10:00:00 -0500

A non-partisan government watchdog group is opposing Chicago's 2011 fiscal year budget. The Civic Federation says it won't support the nearly $6.2 billion dollar budget because it doesn't address the city's structural deficit effectively.

Laurence Msall is the group's president. "The future financial strength of the city is at risk if we don't start changing the way the city delivers services and reduce the city's operating cost to more match up with our recurring revenues for the city," Msall said.

Msall says the city needs to reform pension funds. He also says Chicago should rely less on short term revenue funds like Daley's highly controversial privatization deal of the city's parking meters.

Civic Federation rejects Quinn budget plan

Mon, 11 May 2009 14:00:00 -0500

A non-partisan government watchdog group is calling for the Illinois General Assembly to reject Governor Pat Quinn's budget proposal.

The Chicago-based Civic Federation says it can't support Governor Quinn's $52.9 billion budget proposal because it raises taxes without fixing some of the state's core problems.

The group says the plan doesn't go far enough to bridge a major budget deficit, despite over a billion dollars in spending cuts.

The Civic Federation doesn't flat-out reject Quinn's proposed income tax hike, but the group says revenue generated by a smaller tax increase could be used to pay down the state's existing pension and healthcare obligations.