ROCK ISLAND, Ill. - Illinois state lawmakers gave everyone more reasons to lose confidence in their ability to fulfill their most basic responsibility.
Midnight came at the end of May 31st with no budget adopted by the state House of Representatives.
The Senate passed a plan that did not clear the House in time.
There's a lot of partisan finger pointing when they should only be pointing fingers at themselves rather than each other.
It's now three years in a row the state will need a supermajority to approve a spending plan.
So far, the only things that seem to move in Springfield are politicians lips spewing rhetoric against their opponents.
"We should be negotiating the final terms," said Gov. Bruce Rauner, (R) Illinois. "They know darn well where we apart, what we need to do to cut, what we need to do reform the system."
"I'm hopeful the governor to will figure out being governor means to govern," said Rep. Barbara Flynn Currie, (D) Chicago.
Here's the challenge now. Any budget brought to the floor for the rest of the year requires a three-fifth supermajority from the House and Senate to pass. That's 36 votes in the Senate and 71 votes in the House.
Democrats enjoy a supermajority in the Senate, but will need some Republican support to pass any deal in the House.
The governor holds court with the threat of the almighty veto if he doesn't get what he wants.
Illinois immediately felt the repercussions from the failure with another credit downgrade. Both Moody's and Standard and Poor's dropped the state's general obligations bonds to one notch above junk status. S & P actually moved two other bond issues into junk bond status.
Illinois now has an operating deficit of about $6 billion this year. Its unpaid bills total $14.5 billion. Interest and fees alone on those overdue bills will amount to $800 million by the end of June.
Don't forget. The pension problem hasn't gone away either. The state has $130 billion in unfunded liabilities there.
All of those things are on the hook for taxpayers.
One man who doesn't have a say in how that money is spent, but is in charge of watching to make sure those taxpayer dollars are secure and invested properly is State Treasurer Michael Frerichs. He discussed Illinois' finances during an appearance on 4 the Record.
It's hard to find anything more frustrating than what we've seen in Springfield over the last three legislative sessions.
"What we saw this week is the rating agency sent a very strong signal. that there are going to be real consequences for the state of Illinois and the state's going to be punished for the lack of action so we saw two credit downgrades," said Illinois State Treasurer Michael Frerichs. "I think we have more coming in the future if the governor and the General Assembly can't sit down, work out their problems and pass a budget."
Frerichs is responsible for managing the state's investments. That's roughly a $25 billion portfolio. These semi-regular credit downgrades are trouble. The combination of the budget stalemate and credit issues impacts the treasurer's responsibilities.
"It makes our job more difficult," Frerichs said. "When we didn't have a budget in place, when there was no spending plan and you didn't know when money was going to go out, we had to keep our investments more liquid.I think everyone can understand if you just put money in to a simple savings account, you get less interest than if you put it in a CD for 12 months. And, that's what we had to do. We cut back on the amount of time. But, I've tasked my banking staff to look and do some analysis to see spending patterns. And, we've been able to increase the amount of time we're investing for and actually increase interest income in the last year."
Frerichs said the state's cash flow problems caused the state to miss out on $45 million in investments. Illinois cannot declare bankruptcy ,but it sort of seems like the state is bordering on insolvency operating from a weak financial position.
"It is not functioning well, but money still comes in, people are still paying their taxes," Frerichs said. "Vendors ultimately get paid, but the amount of time they have to wait increases and increases as that backlog of bills goes on and we risk a tipping point where people stop doing business with the state."
It's unreal to see a pile of unpaid bills worth more than $14 billion. That's something that seems unrealistic for the state to manage.
"It starts by passing a budget," Frerichs said. "Once you stop the bleeding, you could go out and issue more debt to pay off that debt. Think of it as refinancing your mortgage. If you had an eight percent mortgage and you could refinance for four percent, who wouldn't do that? The state of Illinois right now, on a lot of that debt, is paying nine to 12 percent interest. We could go out on the market and refinance at a much lower rate, but it doesn't make sense to do that when you don't have a budget in place and you're near junk bond status. It's going to be that much more expensive to issue that new debt so the first thing you should do, pass a budget, make it balance and then you can reprioritize your payments."
Budget problems in Bettendorf. It's not an expression you expect to hear.