Posted on 11/25/2016 7:43:51 AM PST by Lorianne
Anyone who has ever invested in distressed securities is intimately familiar with the many games that companies play to avoid a bankruptcy filing. The easiest game, and the most obvious red flag for investors to spot, involves stretching out payables and managing down receivable days to build cash so you can live to fight another day. While this may provide a temporary cash boost, it's typically the beginning of the end as vendors simply move payment terms to COD and the game quickly comes to an end.
Well, this is exactly the game that the state of Illinois seems to be playing right now to cover its budget shortfalls. As we just pointed out a couple of days ago (see "Illinois Pension Funding Ratio Sinks To 37.6% As Unfunded Liabilities Surge To $130 Billion"), with a $130BN pension underfunding and minimum annual contributions of $10BN, it's no surprise that Illinois needs every dollar they can squeeze out of vendors.
So, in response to their budget crisis, Illinois has done what every responsible, insolvent debtor does, namely raise more debt. Under the program, Illinois vendors are able to sell their receivables to a consortium of lenders who have decided to provide seemingly perpetual loans to the state at a cost 1% per month. As Reuters points out, the balance of the program is currently around $13.5BN right now but is expected to surge to $47BN by 2022, or nearly double the amount of GO bonds the state has outstanding.
(Excerpt) Read more at zerohedge.com ...
Donors will get under the table bailouts. Don’t worry about them.
If shes old enough her property taxes should be frozen (unfortunately, they are frozen at already-high levels).
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It depends on where she lives in Illinois, property taxes here are assessed at the county level. My property tax is relatively low.
She’s in NJ; our combined municipal and county taxes are high throughout the state...
Appreciate the correction.
I live in central Illinois, moved into my current home in 1994, low tax when I moved in and the tax actually decreased significantly from original tax, when I turned 65, 6 years ago.
I’m glad that turned out that way for you; here in NJ they’ll freeze your taxes at 65, but since they are already among the highest in the nation many retirees can’t stay in their homes. Also, you have to pay a current tax rate up front and receive a refund the following year of the difference between the current taxes and your frozen level.
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