How does one keep the natives — aka Illinois taxpayers — from getting restless?
Don’t tell them the truth, the whole truth and nothing but the truth.
Exhibit A for that proposition is a news release recently issued by Comptroller Susana Mendoza about the state’s Comprehensive Annual Financial Report that put a positive spin on Illinois’ disastrous financial situation.
“Illinois Cut Its Deficit In Half in Fiscal Year 2018, Annual CAFR Shows,” the headline on her office’s press release read.
Fortunately for Mendoza, news reporters, who are generalists, not specialists, not only took her summation at face value, but also mostly failed to track down financial experts who would have had a different interpretation of the numbers.
Specialty publications revealed the real story.
Yvette Shields at The Bond Buyer reported that the state is “covered in red ink.”
“Illinois’ overall fiscal condition continued to deteriorate in fiscal 2018, according to the overdue comprehensive annual financial report,” Shields wrote.
Wirepoints financial analyst Mark Glennon offered an even-more-apocalyptic analysis that asserted the state was “hit by a record $47 billion loss.”
“The State of Illinois recently reported its biggest annual financial loss ever. Instead of clear reporting on that, we’ve seen perhaps the most glaring example yet of how the state’s finances can be misunderstood, misreported and intentionally distorted,” he wrote.
How does one account for the difference in emphasis between Mendoza’s office and the outside analysts?
Mendoza’s office focused on the state’s “general fund” operating budget, claiming that Illinois “cut its general funds deficit by $6.849 billion — from a deficit of $14.612 billion in fiscal year 2017 to a deficit of $7.763 billion in fiscal year 2018.”
It is highly likely that Democrat Mendoza’s more favorable analysis was an intentional misdirection play designed to shield Democratic Gov. J.B. Pritzker from the same shots she took at former Republican Gov. Bruce Rauner.
Mendoza’s 2016 press release, issued during Rauner’s tenure, emphasized “net position” numbers, while this year’s cited the general fund.
“With no relief in sight, Illinois’ finances deteriorated at an alarming rate in fiscal year 2016, as net deficit totals spiked to a staggering $126.7 billion. ... The state’s [CAFR] paints a worsening outlook for the state’s financial future on this un-sustainable path. Mendoza said the CAFR findings reflect a lawless fiscal climate,” that press release stated.
“That ‘staggering’ negative $126.7 billion is now negative $184 billion. ... No moral outrage now from Mendoza, however,” wrote Wirepoints’ Glennon.
The huge increase in the state’s “net position” numbers is partly explained by an accounting change that, for the first time, reflects health care costs owed to future retirees. Known as “Other Post-Employment Benefits,” these inescapable obligations remain unfunded by the state.
The fact that these benefits were not previously included in the state’s financial report reflects another accounting scam that was ordered corrected in the most recent report by the Government Accounting Standards Board, a private organization that is the source of generally accepted accounting principles used by state and local governments.
The state’s financial net position has grown steadily worse over the years, the result of a combination of factors.
Now standing at a negative $184 billion, the number includes the obligations for retiree health care.
In 2014, the state’s negative net worth was negative $45 billion, not including the retiree health obligation. It jumped to minus-$120 billion in 2015, minus-$126 billion in 2016 and minus-$136 billion in 2016, according to figures for all three years that do not reflect retiree health obligations.
New Jersey has the largest negative net worth of all 50 states. Illinois ranks second in that category, something few people would know if all they read was Mendoza’s news release.
Jim Dey is a staff writer for The News-Gazette. His email is email@example.com.