City Of Chicago Shunning Fossil Fuel Investments. Who Benefits? Russia. – Wirepoints

Link: https://wirepoints.org/chicago-shunning-fossil-fuel-investments-as-nation-struggles-with-higher-energy-costs-wirepoints/

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The timing on Wednesday was impeccable. I was looking at the price of oil, which was up four percent that day and about to pass $100/barrel. Energy stocks were up over one percent despite a horrible day for the rest of the market.

That’s when an email popped up with a story in Crain’s headlined “Chicago moving to divest from fossil fuels.”

….

So, with inflation raging, gasoline moving towards $4.00/gallon and Russia murdering Ukrainians with the help of American oil purchases, Chicagoans can take comfort knowing that the city will refuse to invest in oil and other fossil fuel production and thereby “will be sending a message that Chicago is permanently leaving dirty energy in the past and welcoming a clean energy future for generations to come.”

That’s from Chicago Treasurer Melissa Conyears-Ervin. She and members of the City Council, with Mayor Lori Lightfoot’s support, are pushing for an ordinance to mandate that the city divest its funds from fossil fuel companies, as Crain’s reported.

In fact Conyears-Ervin had already made oil and gas divestment office policy. The new ordinance would make the change permanent going forward. Her office has already removed $70 million in fossil fuel-associated bonds from the city’s portfolio, she says.

How wise has it been lately to be shunning fossil fuel investments? Here’s a chart comparing performance year-to-date of the S&P 500 to XLE, an ETF basket of mostly oil and gas companies. While the market in general is down some 10% the oil and gas stocks are up over 21%.

Author(s): Mark Glennon

Publication Date: 25 Feb 2022

Publication Site: Wirepoints

Senator Martwick At It Again, Leading Move To Increase Chicago Pension Liability By Billions – UPDATED – Wirepoints

Link:https://wirepoints.org/senator-robert-martwick-at-it-again-leading-move-to-increase-chicago-pension-liability-by-billions-wirepoints/

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Illinois State Senator Robert Martwick (D-Chicago) is pushing ahead with legislation that, according to a Bloomberg report, could increase Chicago’s police pension obligations by another $3 billion in total through 2055. An earlier city estimate put the cost at $2.1 billion. Senate Bill 2105 would do that by removing a birthdate restriction on eligibility at age 55 for a 3% automatic annual increase in retirement annuity.

Where would Chicago get money to cover the additional liability? No answers.

….

Chicago’s police and firefighter pensions already are in utterly abysmal shape, having just 18% and 23%, respectively, of the assets their actuaries say they should have. Together with two other pensions sponsored by the city, Chicago officially reports about $33 billion of unfunded pension liabilities. But using more realistic assumptions, Moody’s estimates the total unfunded liability at $60 billion. Moody’s also reports the city of Chicago’s total debts as a percentage of annual revenues are at 735%, the highest of any major city in the country.

….

It’s as if Martwick is saying, “We rob banks routinely so you might as well make it legal for us to rob banks.”

Author(s): Mark Glennon

Publication Date: 28 Jan 2022

Publication Site: Wirepoints

Comptroller Mendoza claims Illinois paying its bills but needs more federal bailout to avoid a big one – Wirepoints Quickpoint

Link: https://wirepoints.org/comptroller-mendoza-claims-illinois-paying-its-bills-but-needs-more-federal-bailout-to-avoid-a-big-one-wirepoints-quickpoint/

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As for Mendoza’s claim that Illinois is paying its bill, that’s simply not true. The state entirely ignored the hole in its unemployment fund in its current budget and future budget forecasts. In reality, the state will not just have to repay the loan but must also restore the fund to a sound balance, which will probably take another $1.5 billion at least, which was the balance before the pandemic. Nor does Illinois pay its full bill for the 800-pound gorilla, pensions. Year after year it contributes far less to its pension funds than actuaries say is required to prevent unfunded liabilities from growing.

Mendoza supported her claim that Illinois is paying its bills by saying, as she frequently does, that Illinois shrunk its bill backlog by about 80% since its historic high of $16.7 billion during the 2015-2017 budget impasse.

Author(s): Mark Glennon

Publication Date: 3 Jan 2022

Publication Site: Wirepoints

Lightfoot messages indicate how flippantly state government stuck Chicago with higher pension cost – Wirepoints Quickpoint

Link: https://wirepoints.org/lightfoot-messages-indicate-how-flippantly-state-government-stuck-chicago-with-higher-pension-cost-wirepoints-quicktake/

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You may recall earlier this year when the General Assembly passed a bill that Gov. JB Pritzker signed to increase certain pension benefits for Chicago firefighters. The new law is expected to cost Chicago some $850 million and could drop the funded status from what was an already abysmal 18% down to an even-worse 16%.

Well, it appears that Illinois Senate leadership didn’t even bother to talk to Chicago Mayor Lori Lightfoot before mandating that additional burden.

The Chicago Tribune has released Lightfoot email and text messages it obtained on a number of matters. One went from Lightfoot to Senate President Don Harmon. “A courtesy call regarding the fire pension bill would have been helpful, particularly since there is no funding for it,” Lightfoot said. “When that pension fund collapses, I will be talking a lot about this vote.”

Author(s): Mark Glennon

Publication Date: 31 Dec 2021

Publication Site: Wirepoints

Comptroller Mendoza claims Illinois paying its bills but needs more federal bailout to avoid a big one – Wirepoints Quickpoint

Link: https://wirepoints.org/comptroller-mendoza-claims-illinois-paying-its-bills-but-needs-more-federal-bailout-to-avoid-a-big-one-wirepoints-quickpoint/

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Most states have either repaid what they borrowed for their unemployment funds or never borrowed in the first place. Illinois is one of ten states with loans still outstanding. The other states that joined Mendoza’s request to the Treasury are, like Illinois, heavily Democratic — New York, Colorado, Pennsylvania, Connecticut, New Jersey, Massachusetts and Minnesota. A recent research report detailed how federal pandemic bailout money, in general, has gone disproportionately to Democratic states.

As for Mendoza’s claim that Illinois is paying its bill, that’s simply not true. The state entirely ignored the hole in its unemployment fund in its current budget and future budget forecasts. In reality, the state will not just have to repay the loan but must also restore the fund to a sound balance, which will probably take another $1.5 billion at least, which was the balance before the pandemic. Nor does Illinois pay its full bill for the 800-pound gorilla, pensions. Year after year it contributes far less to its pension funds than actuaries say is required to prevent unfunded liabilities from growing.

Author(s): Mark Glennon

Publication Date: 3 Jan 2022

Publication Site: Wirepoints

One chart tells you much about Chicago’s property tax and its pensions – Wirepoints Quickpoint

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The above is only for taxes that fund the city’s main operating account — its Corporate Fund. Property tax bills in the city include separate charges for the school district and other overlapping taxing districts.

Also, since money is fungible, it’s a bit arbitrary for the city to budget a portion of the property tax to pensions. The city has other revenue sources, though the property tax is the biggest.

Still, the chart makes the point everybody should know: Pensions are a huge and growing crisis. They are the 800-pound gorilla in the room — for Chicago, the state and most of its municipalities.

Author(s): Mark Glennon

Publication Date: 19 August 2021

Publication Site: Wirepoints

Editorial | When it comes to Illinois bond ratings, up definitely better than down

Link: https://www.news-gazette.com/opinion/editorials/editorial-when-it-comes-to-illinois-bond-ratings-up-definitely-better-than-down/article_d17d487c-5ff3-5da1-a958-60d7edd5c3e6.html

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Citing a “material improvement in state finances,” Moody’s Investor Services recently raised the state’s bond rating by one notch — up to Baa2 from Baa3.

Ordinary mortals won’t know what that means. But Illinois has climbed the ladder from being one notch above junk bond status to two notches.

It’s the first time Illinois’ bond rating has been raised in 20 years. The improvement comes after a steady spiral downward.

Author(s): Editorial Board

Publication Date: 4 July 2021

Publication Site: The News-Gazette

How much is your community getting under the American Rescue Plan? A searchable database for the nation is here – Wirepoints

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Embedded below are a set of searchable databases that provide the estimated allocation of the $360 billion in direct government aid to states, counties and cities under the $1.9 trillion American Rescue Plan. The remaining stimulus includes funding for schools and other programs, for which detailed data is not yet available.

The $360 billion is split as follows: State governments are set to receive $230 billion in direct and capital project grants, county governments will receive $65 billion, and municipal governments will receive the other $65 billion.

Author(s): Ted Dabrowski, Mark Glennon, John Klingner

Publication Date: 17 April 2021

Publication Site: Wirepoints

Relief from SALT cap for Illinois pass-through businesses may be on the way – Wirepoints

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It’s Senate Bill 2531. The bill is sponsored by Sen. Win Stoller (R-Germantown Hills) and it has picked up additional sponsors from both parties. It would allow a small business to elect to be taxed at the entity level, instead of letting the income pass through to their personal return. The owner would then claim an offsetting credit on their state return. It passed the Senate Revenue Committee with a vote of 9-0 and now goes to the Senate floor for further consideration.

We hope and expect the bill will become law. While we support the $10,000 federal SALT cap, it’s entirely appropriate for Illinois to facilitate exceptions recognized by the IRS, just as other states are doing. At least fourteen other states have passed or are in the process of passing similar legislation. The legislation could help up to 400,000 Illinois small business owners save thousands of dollars annually on their federal tax filings, according to Stoller.

Author(s): Mark Glennon, Ted Dabrowski

Publication Date: 17 April 2021

Publication Site: Wirepoints

Pritzker Lobbies For Huge Federal Tax Cut For The Rich With Dishonest Letter To Biden – Wirepoints

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The SALT cap increased “taxes on hardworking families,” says the letter. That’s “untenable given the dire economic conditions caused by the pandemic.” It goes on to say, “In short, middle-class Americans are struggling under this federal tax burden, while corporations – which are still able to fully deduct SALT as business expenses – are profiting because of the same law. The negative impacts of the SALT cap on middle class families are particularly egregious when you consider that in the states most affected by this cap, the federal government already takes more in federal taxes than the states receive in federal support, effectively subsidizing federal payments to other states.”

Tax analysts on the right and the left have documented why that’s completely false. The cap on SALT deductions was a windfall for the middle class and hammered high income taxpayers. The conservative Tax Foundation explained why here, and the liberal Institute on Taxation and Economic Policy, ITEP, wrote this in an article opposing elimination of the cap:

ITEP estimated that this would cost more than $90 billion in a single year. We found that 62 percent of the benefits would go to the richest 1 percent and 86 percent would go to the richest 5 percent. There is no state where this is a primarily middle-class issue. In every state and the District of Columbia, more than half of the benefits would go to the richest 5 percent of taxpayers. In all but six states, more than half of the benefits would go to the richest 1 percent. 

Author(s): Mark Glennon

Publication Date: 5 April 2021

Publication Site: Wirepoints

Washington helped Illinois kick the can again, rating agencies affirm, so expect no fiscal reforms – Wirepoints

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The recently signed American Rescue Plan designated about $7.5 billion of new money directly for the state’s government. Tens of billions of more federal dollars indirectly help the Illinois budget by assisting higher education, K-12 schools and municipalities. Direct aid to people and businesses also kept tax revenue flowing at far higher rates than initially projected.

In fact, federal money from the American Rescue Plan alone dwarfs the revenue lost to the state because of COVID and the lockdowns by a stunning 1665%, according to a Tax Foundation estimate.

It should be noted, however, that federal cash has been showered on the entire nation, where it needs it and not. The State of Wisconsin, for example, is getting $3.2 billion in direct money from the American Rescue Plan even though the state has a budget surplus. We are still waiting for a comprehensive analysis of all recent federal aid to determine whether Illinois got more than its fair share. Surprisingly, nobody seems to have offered one yet that includes all units of government and private sector assistance.

Author(s): Mark Glennon

Publication Date: 17 March 2021

Publication Site: Wirepoints

Mass Federalization: How Washington is Bailing Out Failed States, Decapitating Competitive Ones and Ending America As You Knew It – Wirepoints

Link: https://wirepoints.org/mass-federalization-how-washington-is-bailing-out-failed-states-decapitating-competitive-ones-and-ending-america-as-you-knew-it-wirepoints/

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Don’t think that might ease your state and local tax burden. The downpour of cash on cities and states, most of which don’t need it, is all tied to a provision in ARP that bans tax cuts. It’s a mandate for statism – big government – whether states with small government philosophies like it or not.

“Thou shalt be statists and big spenders” – that’s what ARP might as well say as a direct federal mandate.

Most of ARP commentary about cities and states has wrongly focused only on the $350 billion that’s will go directly to them. That’s a small part and entirely misses the bigger picture.

Author(s): Mark Glennon

Publication Date: 22 March 2021

Publication Site: Wirepoints