Illinois is the Only State to Borrow Money from the Fed

Mish

The Fed has a Municipal Liquidity Fund (MLF). Illinois has tapped it twice.

Fed is Lender of Last Resort for Illinois

Wirepoints reports Illinois set to borrow from Fed’s “lender of last resort” facility a second time

Illinois is set to borrow several billion from the Federal Reserve’s Municipal Liquidity Fund (MLF) for a second time if a new U.S. stimulus package and a progressive tax hike scheme for Illinois don’t come through, according to comments from Illinois Gov. J.B. Pritzker.

Illinois already borrowed $1.2 billion from the MLF earlier this year in an attempt to close some of the state’s 2020 budget shortfall.

The borrowing is significant since Illinois is the only state in the country to tap the MLF. The Fed created the MLF in April to be a “lender of last resort,” where cities, states and other government entities can go if they can’t raise money as a result of COVID-19. 

Covid Not The Problem

The MLF is for states and municiplaitioes that cannot raise money due to Covid.

Finances, not Covid are the problem in Illinois.

Illinois' Alleged Balanced Budget 

The Illinois constitution requires a balanced budget.

The Illinois budget is "balanced" by borrowing money year after year. 

Governor Pritzker "balanced" the fiscal year 2021 budget by borrowing $5 billion from the Fed.

$261 Billion Shortfall

$261 Billion Shortfall

Year in, year out the numbers keep adding up. Moody’s new estimate of Illinois pension shortfall increases to $261 billion

Moody’s estimates the shortfall in Illinois’ five state-run pension funds will jump to $261 billion in 2020. The rating agency, in “Medians – Pension and OPEB liabilities fell in fiscal 2019 ahead of jump in 2020,” says a drop in interest rates and lower investment returns will worsen Illinois’ shortfall. 

Moody’s estimation for all 50 states makes Illinois’ $261 billion shortfall the worst in the country. 

Illinois’ shortfalls will be even larger when Moody’s finally releases its 2021 estimates, which will capture the impact of COVID-19 on the interest rate and financial markets. Wirepoints estimated earlier this year that Illinois’ unfunded liability may reach $300 billion under today’s volatile conditions.

Get the Hell Out of Illinois

On October 5, 2019, I commented Escape Illinois: Get The Hell Out Now, We Are

Get Out of this Progressive Socialist Hellhole

We are out of here. Can't take it anymore.

We pay close to $15,000 a year in property taxes on a home worth about $400,000.

Firm plans in place to move to Southern Utah in 2020.

I am pleased to report we made it to Utah. 

But note that It Takes 3 Weeks to Escape Illinois

Why 3 weeks? That's how long it takes to reserve a one-way U-Haul outbound.

"Everyone is leaving. No one is coming," a U-Haul agent told us a few weeks ago.

I wrote that on July 10, the day we left.

Yep, summers are hot here but we have already adapted. Love it here and would not go back. 

Photography and hiking opportunities are second to none. We just spent a week in Grand Staircase-Escalante National Monument and Capitol Reef National Park.

Will post some images later on Mish Moments. 

Mish

Comments (25)
No. 1-14
Felix_Mish
Felix_Mish

Does this MLF thing work like the national debt? That is to say, will it never be paid back, just rolled over forever?

Casual_Observer
Casual_Observer

Well they maybe the only state using that particular instrument. All 50 states have state and local pension funds in the stock market or bond market. The Fed has supported all kinds of bonds that have caused a flood of money into stocks. This makes all states dependent on asset values the Fed has created out of electrons.

davebarnes2
davebarnes2

"move to southern Utah in 2020"
For me, personally, way too Mormon.

Eddie_T
Eddie_T

Utah is lovely. I have spent a lot of time there. I think it would be hard for me to live there, though, since I'm not LDS.

And I have many fine LDS acquaintances..one of whom is famous and one of my favorite professional mentors....and I ski there every year....have for the last twenty years.

I love Sundance, the Homestead Resort, Alta...the Red Iguana....so many places.

I have one married kid in Chicago...they are young, and they have no future there. I expect then to be back here in year or so.

numike
numike

dont chat up the loveliness and ease of living to much regarding Utah; your inviting more (there are lot of homeless in Utah already)) homeless, down and out, vagabonds and all the rest who will flock there to set up camp

Webej
Webej

There are ways to move without a U-Haul.
How mormon is Utah, really?

Dodge Demon
Dodge Demon

The sooner it goes bankrupt the better.

Jackwagon
Jackwagon

I love it, the progressive crap holes are going bankrupt, and the very ones drawing the pensions will move to Florida to keep from paying the taxes that support the progressive policies

Mish
Mish

Editor

I have not had any problems with mormons. None, unless you count looking for a restaurant on Sunday off the beaten path.

Mormons not an issue at all.

George_Phillies
George_Phillies

I see an interesting business for a group of enterprising out-of-work folks. One of you has a large van. All the rest of you approach Uhaul about driving their trucks from wherever back to Illinois. You visit Illinois. You then all hop in the van and go home. Of course Uhaul has to be desperate enough to pay for the service. Alternatively you rent Uhauls in a neighboring state with immigration, pair up with would be escapees, and get them to pay you for the service.

Greggg
Greggg

Illinois' G O bonds paying 5.45% with maturity in 2045. How long until the bidders push that yield through the clouds?

Curious-Cat
Curious-Cat

Mish - I love Utah too. Especially enjoy Moab.

I think you said you moved to St, George. Have you ever visited Hillsdal UT or Colorado City AZ right next door. Not too far from St. George. These are the homes of the fundamentalist Mormons. It's interesting just to see the how the buildings are different (very large houses for polygamist families). Colorado City was home to Warren Jeffs before he went to jail.

KidHorn
KidHorn

People don't want to live with Mormons? Is it because they take care of their property, have a low crime rate, and have a good work ethic?

There are far worse people to live around than Mormons.

surrealist
surrealist

It's funny because I just fled utah because of the influence of the church and being an ex member I don't want that influence in my children's lives. I moved the opposite direction as you to des moines where we bought our first house with cash because land is so cheap and the country is very peaceful.