State Bankruptcy and Bailout Reaction: The News Sources and State of the States and Cities
State Bankruptcy and Bailout Reaction: The News Sources and State of the States and Cities
Real Fiscal Pain Behind All the Smoke
Over this week, I will be bringing together all the reactions to Mitch McConnell’s floating the concept of state bankruptcy in order to discharge onerous public pensions. Oh, and he said no pension bailouts for the states and cities. Definitely not as part of coronavirus-related bills.
For this post, let’s look at how various outlets covered McConnell’s statements [and any politician’s official reaction], in their “news” sections. Editorials and op-eds will be in future posts. I will also look at projected revenue shortfalls for states and municipalities.
Washington Post
I will be excerpting most from the Post, as it’s on the scene, as it were.
McConnell takes flak after suggesting bankruptcy for states rather than bailouts: The Senate majority leader said he does not favor giving “free money” to governors to help cover lost revenue during the coronavirus pandemic.
Senate Majority Leader Mitch McConnell (R-Ky.) drew flak Thursday from governors in both parties after suggesting that states hit hard by the coronavirus outbreak should be allowed to seek bankruptcy protections rather than be given a federal bailout.
McConnell’s comments, made during a radio interview Wednesday, came amid a renewed push from states for help from Washington to cover lost tax revenue that has been among the dire consequences of the ongoing pandemic.
“This is really one of the dumb ideas of all time,” New York Gov. Andrew M. Cuomo (D) said during a briefing in Albany in which he warned that bankruptcy declarations by multiple states would lead to “a collapse of this national economy.”
Republicans who panned the idea included Maryland Gov. Larry Hogan ®, chairman of the bipartisan National Governors Association, which has asked McConnell for $500 billion to help states deal with lost revenue.
“Mitch McConnell probably regrets saying that,” Hogan said. “If he doesn’t regret it yet, I think he will regret it. . . . The last thing we need in the middle of an economic crisis is to have states all filing bankruptcy all across America and not able to provide services to people who desperately need them.”
This is idiotic. Not only is it the case that it’s not all states would need to declare bankruptcy, but also even the ones that should wouldn’t until absolutely forced to.
Back to this piece:
“I would certainly be in favor of allowing states to use the bankruptcy route,” McConnell said. “It saves some cities. And there’s no good reason for it not to be available. My guess is their first choice would be for the federal government to borrow money from future generations to send it down to them now so they don’t have to do that. That’s not something I’m going to be in favor of.”
…..“There’s not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations,” McConnell said. “So this is a much bigger conversation than we’ve had providing assistance for small business because the government shut them out, put them down, put them out of business, or assistance to hospitals which were overwhelmed by the covid-19 disease.”
States, he pointed out, have taxing authority, as does the federal government.
Several U.S. cities — most prominently Detroit, in 2013 — have declared bankruptcy under Chapter 9 and used the process to restructure debts and cut costs. That route is currently not available to states.
In a tweet Thursday, Senate Minority Leader Charles E. Schumer (D-N.Y.) dared other Republicans to get on board with the path McConnell is advocating.
“Republican Senators: Raise your hand if you think your state should go bankrupt,” he wrote.
One GOP senator, Patrick J. Toomey (Pa.), said he was “open to the idea of allowing state bankruptcy” as McConnell suggested.
I’m a bit tired of the overwrought language re: bankruptcy. Most of the people blathering about it have no clue what it really means. Some do, but would rather use people’s ignorance about the consequences of bankruptcy.
McConnell was lambasted by governors after suggesting some of their states should go bankrupt.
The Senate Majority leader took a hardline on funding for states: “I think this whole business of additional assistance for state and local governments needs to be thoroughly evaluated,” McConnell said in an interview with the conservative radio host Hugh Hewitt. “There’s not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations.”
“McConnell’s comments were an explicit rejection of a top priority of Democrats who have pushed to spend tens of billions of dollars to help states. His staff members highlighted their partisan cast in a news release circulated a short time later, in which his statement appeared under the heading ‘Stopping Blue State Bailouts.’ The phrase suggested that the top Senate Republican was singling out for scorn some of the hardest-hit, heavily Democratic states such as California, Illinois and New York,” the Times’s Carl Hulse reports.
New York Gov. Andrew Cuomo (D) slammed McConnell:
“One of the dumb statements of all time,” Cuomo told his brother CNN anchor Chris Cuomo.
The bill was the fourth economic rescue and stimulus bill Congress has passed in the past two months to deal with the ravages of the coronavirus, bringing the total federal commitment close to $3 trillion. Lawmakers have already begun to debate what next steps to take, with Democrats and Trump pushing for quick action on another giant rescue bill that would include funding for cities and states left out of the legislation being passed Thursday.
But Senate Majority Leader Mitch McConnell (R-Ky.) has expressed opposition to aiding states in such a way, telling a conservative radio host Wednesday that perhaps some states should have the option of falling into bankruptcy. This elicited fury from some governors and House Democrats on Thursday.
3 takeaways from Thursday’s White House coronavirus briefing
3. Trump seems open to letting states go bankrupt
The next big debate in coronavirus economic relief is whether to help states and localities, which are suffering from a lack of tax revenue. On Wednesday, Senate Majority Leader Mitch McConnell (R-Ky.) said he’d be okay letting states in trouble go bankrupt, prompting outrage from Democratic and Republican governors. McConnell’s office suggested approving something like this would be a “blue state bailout.”
But Trump seemed open to it, too, saying he’s talked to McConnell as well as the Democratic governors of New York, New Jersey and California about it. New York Gov. Andrew M. Cuomo had some strong feelings about it Thursday, saying: “This is really one of the dumb ideas of all time,” and that multiple states going bankrupt risks “a collapse of this national economy.”
Trump said he hadn’t made up his mind, but what he did say echoed McConnell’s sentiments: “Some states have not done well for many years, long before the virus came.” He added later: “It is interesting that the states that are in trouble do happen to be blue.”
Larry Hogan, the Republican governor of Maryland who chairs the National Governors Association, said earlier Thursday that a similar comment by McConnell was “complete nonsense.”
It wasn’t total nonsense. We will come back to which states are in danger when I do the roundup of people sharing my opinion [no pension bailout, and no state bankruptcy process]. It doesn’t really matter if the states are “blue”, “red”, or “purple”, currently, because these problems took decades to build up.
While the coronavirus crisis has made it worse, most of the states that “need” bankruptcy were essentially bankrupt before the crisis.
Ok, that’s enough from WaPo.
The New York Times
McConnell Says States Should Consider Bankruptcy, Rebuffing Calls for Aid
Sen. Mitch McConnell took a hard line on Wednesday against giving cash-short states more federal aid in future emergency pandemic relief legislation, saying that those suffering steep shortfalls amid the coronavirus crisis should instead consider bankruptcy.
“I think this whole business of additional assistance for state and local governments needs to be thoroughly evaluated,” McConnell, R-Ky., the Senate majority leader, said in an interview with conservative radio host Hugh Hewitt. “There’s not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations.”
McConnell’s comments were an explicit rejection of a top priority of Democrats who have pushed to spend tens of billions of dollars to help states. His staff members highlighted their partisan cast in a news release circulated a short time later, in which his statement appeared under the heading “Stopping Blue State Bailouts.” The phrase suggested that the top Senate Republican was singling out for scorn some of the hardest-hit, heavily Democratic states such as California, Illinois and New York.
The remarks drew a caustic reaction from Gov. Andrew M. Cuomo of New York, who called the bankruptcy suggestion “one of the saddest, really dumb comments of all time.”
“OK, let’s have all the states declare bankruptcy — that’s the way to bring the national economy back,” he said.
Cuomo accused McConnell of hyperpartisanship, criticizing him for distinguishing among states based on their political leanings, rather than “states where people are dying. Why don’t we think about that? Not red and blue. Red, white and blue. They’re just Americans dying.”
Fine, then money should go to pay for current healthcare costs. That’s not so controversial.
Paying for pensions earned decades ago is not related.
Mr. McConnell had already made it clear on Tuesday that he would approach the next round of emergency funding much more cautiously. He went further in his comments on Wednesday, saying that he did not want Washington rescuing the pension plans of states that were struggling to keep up with their commitments to an array of union workers.
“We’ll certainly insist that anything we’d borrow to send down to the states is not spent on solving problems that they created for themselves over the years with their pension programs,” he said.
Mr. McConnell is likely to run into considerable resistance to his position from the White House, congressional Democrats, governors of both parties and even some lawmakers in his own party.
Yes, because there are some Republicans in places like New York and Illinois.
In his rebuke to Mr. McConnell, Mr. Cuomo said the most recent round of coronavirus relief was woefully inadequate, complaining that the lack of money for states was ridiculous.
“They funded small businesses,” he said. “Great, good move. How about police? How about fire? How about teachers? How about schools?”
Come to the table with a bill related to current costs. Heck, New York State doesn’t even have much of a pension problem (don’t ask about New York City.)
Financial Aid to Struggling States Is Next Big Congressional Battle
Sen. Mitch McConnell, R-Ky., the majority leader, alarmed and angered state officials on Wednesday when he said he wanted to approach the next round of pandemic legislation more deliberately. He said he was opposed to shipping money to state governments if they were going to apply it to fiscal problems unrelated to the pandemic, such as shoring up underfunded pension plans for public workers.
Rather than looking for handouts, McConnell said states, which shared $150 billion allocated in previous pandemic legislation, should consider filing for bankruptcy. His aides threw fuel on the fire in a news release that said the Senate leader was opposed to “Blue State Bailouts,” suggesting it was Democratic-leaning states that were seeking the money to take care of problems caused by fiscal mismanagement.
Those comments prompted a sharp backlash, including from Gov. Andrew M. Cuomo of New York, a Democrat, who lashed out at McConnell for a second day Thursday.
…..
In a virtual interview sponsored by Politico, Gov. Larry Hogan of Maryland, a Republican who heads the National Governors Association, said he expected that McConnell would come to regret his remarks and noted that the Trump administration had been supportive of state assistance.“I’m hopeful that we are going to, between the administration and the 55 governors in America, including territories, we are going to convince Senator McConnell that maybe he shouldn’t let the states go bankrupt,” said Hogan, who added his state would soon face a $2.8 billion shortfall.
Simply having a shortfall doesn’t mean you go into bankruptcy. Jeez.
“Most state trust funds are underfunded for this crisis,” said Jared Walczak, the director of state tax policy at the Tax Foundation. “It’s hard not to be. The magnitude of this crisis meant that very few states were prepared.”
At least three states — California, New York and Ohio — are expected to deplete their trust funds within two weeks, with Kentucky, Texas and Massachusetts close behind. Once those funds run out, the states can borrow money from the federal government, but must repay it within two years.
Republicans on Capitol Hill say they believe McConnell, who opposed new state aid in talks that produced the most recent measure, was trying to reassure restive conservatives that he would not give easily on more funding in upcoming talks after Congress has already allocated about $2.7 trillion in deficit spending in response the emergency. But he faces significant obstacles if he intends to block the aid, and most see that as an unlikely outcome given the extent of bipartisan support for more state relief.
I think there will be state relief. It just won’t have much to do with pensions.
While many Republicans back the state relief, top aides said that most would join McConnell in balking at the idea that it could be applied to a pension bailout and that a compromise could include strict prohibitions on how the money is spent. A top state lawmaker in Illinois last week included a request for $10 billion in pension relief in the state’s appeal for federal help, though the problems long preceded the pandemic.
Many state and municipal pension systems have been underwater since the dot-com crash of 2001, when much of their funding from the booming 1990s melted away. Their problems worsened substantially during the market crash of 2008. Investment losses that year and in 2009 prompted officials in a number of states to attempt pension overhauls in the hope of making their plans sustainable. They were promptly sued by retirees and public workers’ unions, who cited state laws and constitutional provisions that make it illegal to tamper with public pension plans.
The pension problem is not unique to red states or blue. Illinois, a steadfast Democratic stronghold, is seen by experts as the state with the most intractable pension problems. But in Kentucky, McConnell’s home state, the pension system is in nearly as grave danger as the one in Illinois.
Yes, and Kentucky pensions shouldn’t be bailed out, either.
Bloomberg
McConnell Says He Favors Letting States Declare Bankruptcy
The host [Hugh Hewitt] cited California, Illinois and Connecticut as states that had given too much to public employee unions, and McConnell said he was reluctant to take on more debt for any rescue.
“You raised yourself the important issue of what states have done, many of them have done to themselves with their pension programs,” he said. “There’s not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations.”
McConnell’s remarks drew a biting response from state and local officials.
New Jersey Governor Phil Murphy, a Democrat, said he was stunned by McConnell’s comments, which he called “completely and utterly irresponsible.”
“He’s dead wrong. You have my word we won’t go bankrupt,” he said. Without cash to states, Murphy said, governors will be forced to “gut the living daylights out of every state of America,” slashing budgets and eliminating the services people need.
New York Mayor Bill de Blasio, also a Democrat, tweeted that McConnell “wants police officers to lose their jobs. He wants firefighters to go broke. He wants hospitals to close and sick people thrown out on the street.”
We will be hearing more and more from the “YOU WANT US ALL TO DIE!!!” contingent later this week.
Later, on Fox News, McConnell said that any state or local aid must be specifically linked to the pandemic and shouldn’t be viewed as an opportunity for “revenue replacement.”
“We’re not interested in solving their pension problems for them,” McConnell said. “We’re not interested in rescuing them from bad decisions they’ve made in the past. We’re not going to let them take advantage of this pandemic to solve a lot of problems that they created for themselves with bad decisions in the past.”
Coronavirus bailouts should be just that; related to coronavirus impacts.
Fox News
Senate Majority Leader Mitch McConnell, R-Ky., told “Bill Hemmer Reports” Wednesday that he has no plans to pass legislation to provide additional federal funding to state and local governments who he said are trying to “take advantage” of the coronavirus crisis to get help with their ballooning deficits.
…..
“What I’m saying is, we will take a pause,” McConnell told Bill Hemmer. “We’re gonna wait at least until May the 4th … before we provide assistance to state and local governments who would love for us to borrow money from future generations to make sure that they have no revenue losses.“Before we make that decision,” he continued, “we’re going to weigh the impact of what we’ve already added to the national debt, and make certain that if we provide additional assistance for state and local governments, it’s only for coronavirus-related matters. We’re not gonna let them take advantage of this pandemic to solve a lot of problems [and] bad decisions they’ve made in the past.”
The Hill
NJ, NY governors blast McConnell for pushing ‘bankruptcy route’ for states: ‘Repugnant’
The governors of New York and New Jersey, two of the states hardest hit by the outbreak of the novel coronavirus, on Wednesday denounced Senate Majority Leader Mitch McConnell (R-Ky.) for suggesting that states could “use the bankruptcy route” instead of receiving financial assistance from the federal government.
New York Gov. Andrew Cuomo (D) called McConnell’s remarks “politically repugnant,” arguing they would do nothing to help states reopen portions of the U.S. economy.
“It’s one of the dumb statements of all time,” he added.
“Encouraging, explicitly almost hoping for bankruptcies of American states in the midst of the biggest health care crisis this country has ever faced is completely and utterly irresponsible,” New Jersey Gov. Phil Murphy (D) said during a news briefing, according to Politico.
…..
Cuomo, who has repeatedly criticized Congress for the lack of financial assistance, said on CNN Wednesday night that McConnell’s suggestion of a “blue state bailout” is “offensive.”“You talk about one issue where you think you can get past partisanship and pettiness, and you talk about communities where people are dying and you say they are blue states,” Cuomo said during an interview with his brother, Chris Cuomo, on CNN. “How am I supposed to reopen if you want me to declare bankruptcy?”
Andrew Cuomo said that Republicans and Democrats alike are to blame for the lack of state funding. He also asserted that the failure to address state budget challenges meant police and fire departments and public schools would face more economic harm.
His comments were echoed by GOP Rep. Pete King (N.Y.), who called McConnell’s remarks “shameful and indefensible.”
The National Governors Association sent a letter to McConnell earlier this week asking for $500 billion to help states cope with lost revenue.
The Wall Street Journal
At this point, I’m going to take a turn on news stories from the comments on McConnell’s bankruptcy remarks, to the need for funding to cover increased costs and lost revenue. Because McConnell’s comments weren’t in a vacuum — they were in response from multiple states and municipalities requested bailouts, and in response to Illinois Dems explicitly asking for a pension bailout.
States See No Immediate Sign of Financial Help
States are hemorrhaging money responding to the public-heath crisis at the same time tax revenue is cratering because of widespread stay-at-home orders and business closures. Some governors have already frozen or cut billions of dollars in spending.
The nation’s governors are pushing Congress to give states $500 billion to make up for lost revenue. The bipartisan National Governors Association is also asking Congress to help with health-care costs, unemployment-insurance payments and access to test kits and protective equipment.
All of those sound like reasonable requests. I can see not wanting to make the revenue whole, but even so, some cover for lost revenue seems in order.
Senate Majority Leader Mitch McConnell poured cold water on the pleas this week. The Kentucky Republican said he supports letting states use bankruptcy protection to cut their debts rather than providing more federal aid.
…..
State officials called the idea of filing for bankruptcy a nonstarter. “You want to see the market fall through the cellar?” New York Gov. Andrew Cuomo said during his daily briefing on Thursday. “Let New York state declare bankruptcy. Let Michigan declare bankruptcy. Let Illinois declare bankruptcy. Let California declare bankruptcy. You will see a collapse of this national economy.”Congress previously passed a $2 trillion aid package with $150 billion for state and local governments, but the money can be used only for coronavirus-related expenses. States say they need additional funding to plug budget holes, and some want greater flexibility when it comes to spending the $150 billion already approved.
Especially since many localities ended up having not much in the way of coronavirus expenses, in terms of healthcare, etc.
The National Association of State Budget Officers says a cash influx would help the national economy rebound and warns states might have to cut essential services if Congress doesn’t approve more aid.
“States are currently facing revenue impacts that could dwarf what was observed in the last recession,” Marc Nicole, the association’s president, wrote in a letter Wednesday to President Trump and congressional leaders. States project declines of as much as 20%, as the pandemic hammers their biggest revenue sources, income and sales taxes, Mr. Nicole said, whereas total general-fund revenue fell 11.6% over two years during the 2007-09 recession.
….
David Adkins, executive director of the Council of State Governments, said he thought Mr. McConnell’s comments were a posturing tactic in continuing negotiations with Capitol Hill Democrats. Sooner or later, he said, Congress is going to have to direct significant funds to state and local governments to prevent a wave of public-sector layoffs.
For what it’s worth, many states and municipalities had to lay people off over 2009-2010, as revenues dropped. In some places, they played the game of “OH NOES, WE GOTTA CUT THESE ESSENTIAL PEOPLE!” to argue for higher taxes [while leaving untouched scores of bureaucrats who were less-than-essential], but many places really did shrink their public workforce at the time.
States and Municipalities Are Facing Deep Budget Holes
I do want to end with looking at the revenue hit, if not increased costs, that states and municipalities are looking at. Some are realizing they have to cut now, and others are hoping the feds will make them whole. And thus haven’t started to cut yet.
Even with Chapter 9 bankruptcy for municipalities, for many it will not help if they’ve got no bonds or other debts. They still need cash flow to pay employees right now, and frankly, I don’t think the federal government can credibly push out enough money to make revenue numbers whole for states and municipalities across the board.
Everybody is going to have to take a hit. That does not mean bankruptcy, per se.
Detroit Cuts
Let’s take a look at a place that did go through bankruptcy: Detroit.
Sickness, death — then layoffs. Coronavirus forces cities to cut budgets and furlough staff.
The people of Detroit had already endured a devastating month, marked by sickness and death, when the city’s mayor, Mike Duggan, stepped in front of a livestreaming camera Tuesday night to deliver some more awful news.
Not only had the coronavirus sickened more than 7,000 residents, killing more than 400 of them, Duggan said, but it had also stolen an estimated $348 million from the city’s budget for the next 16 months — nearly a quarter of the money the city had been counting on.
Thousands of workers, laid off from factories, restaurants and other businesses, had stopped paying income taxes. The three casinos that typically pay nearly a fifth of the city’s expenses had been shut down by a state emergency order. And parking meters, court fees and other sources of city revenue had suddenly, unexpectedly, ground to a halt.
“We expected a downturn, and we prepared for it,” Duggan said as he announced layoffs for all of the city’s 200 part-time or seasonal employees, as well as steep pay cuts or reduced hours for more than 2,200 full-time staffers. “We didn’t expect it to be this sudden or this dire.”
Just doing some quick math: so you say the revenue is down 25%, and we also know that about 20% of the revenue is from casinos.
I mean, they should have been expecting a hit of at least 20% to revenue.
In Detroit, Duggan said the city’s success in building a rainy day fund in the 5½ years since it emerged from the largest municipal bankruptcy in U.S. history softened some of the blow of this latest crisis. So far, using savings, he’s been able to protect police, fire and emergency workers, as well as bus drivers, from pay cuts and furloughs.
Well, that’s some good news. The whole point of a rainy day fund is for situations like these. Obviously, it will eventually run out.
The city also expects $36 million from the CARES Act, which will help minimize the pain of budget cuts. But in addition to the layoffs of part-time workers, about 900 full-time employees who do jobs such as directing traffic, selling bus tickets, repairing roads and issuing building permits will lose about 90 percent of their salaries — keeping just enough to maintain health care coverage — and will essentially be furloughed until further notice. About 1,300 office workers, including accountants, financial managers and information specialists, will go down to four days a week and take 20 percent pay cuts, while top executives like the mayor will take 5 percent pay cuts while continuing to work full time.
Other States Seeing Gaps
State governments face financial abyss with coronavirus
In increasingly urgent pleas to Congress, states have asked for $300 billion to $1 trillion to bail them out, and that may not even be enough to replace their lost revenue.
“This is going to have a very severe impact on the economy and on revenues, not only for this fiscal year but for the next fiscal year and several fiscal years to come,” said H.D. Palmer, deputy director of external affairs at the California Department of Finance.
Arizona is predicting a $1.1 billion gap. Illinois expects to be more than $4.6 billion short, while Pennsylvania could be up to $3.9 billion short.
Given that Illinois is expecting a $5 billion gap, the $10+ billion request just for pensions is even more disgusting.
Congress has already appropriated $150 billion in emergency funding to the states through the CARES Act. But the latest round of coronavirus relief funding passed the Senate on Tuesday did not include the $150 billion Democrats wanted to send to state and local governments. The White House and Senate Majority Leader Mitch McConnell (R-Ky.) objected to that spending, though President Trump has said he would support money for state and local governments in the next coronavirus package.
McConnell said Wednesday the full Senate would debate how much to send to the states.
“I think the next debate, which I assume will relate to state and local government relief, needs to be when the Senate is back in session with full participation,” McConnell told reporters.
Sens. Bob Menendez (D-N.J.) and Bill Cassidy (R-La.) have proposed a bill to spend $500 billion on state and local government relief.
There are all sorts of ways that could be divided up, and that’s going to be the dispute — how it goes to the states and municipalities, and what strings will be attached.
Some Sort of State and Local Government Relief to Come
Trump commits to state aid in the next emergency bill
Infrastructure spending and aid to state and local governments will be part of the next round of coronavirus emergency spending, if President Donald Trump has his way.
That legislation, which is being called COVID 4, will follow the Coronavirus Aid Package 3.5 that passed the Senate in a voice vote Tuesday and is expected to be approved by the House Thursday. Trump said Tuesday he expects it to include spending for state and local governments.
…..
Efforts by state and local governments to allow some of the massive amount of federal aid in the 3.5 package and the earlier CARES Act to plug their revenue shortfalls so far have been unsuccessful.…..
The Coronavirus Aid, Relief and Economic Security (CARES) Act allocated $150 billion to a Coronavirus Relief Fund to help states and local governments offset the cost of the health emergency, but the money is limited to COVID-19 related costs.State governments and some major cities and counties already have received 50% of their share of that $150 billion, according to the Government Finance Officer Association.
But state and municipal groups were unsuccessful in trying to amend how that money can be used to include revenue shortfalls.
……
Trump told reporters that he discussed the issue with New York Gov. Andrew Cuomo during a private White House meeting Tuesday.“We mentioned briefly the state aid,” Trump said. “We talked about that — Governor Cuomo and myself — and I agree with him on that. And I think most Republicans agree too, and Democrats. And that’s part of phase four.”
The president also said he envisions infrastructure as “a big part” of the next round emergency legislation. “We have to rebuild our country,” he said, citing the need to rebuild bridges, tunnels and “even schools.”
Trump said that Treasury Secretary Steve Mnuchin “can go and start phase four, as the ink is drying” on the legislation just approved by the Senate.
In any case, all the current debate over McConnell talking state bankruptcy is really posturing over how much in total should be doled out to states and cities over revenue losses.
I don’t expect any state bankruptcy anything will be on the table, and this is more of a brushback pitch against the Illinois Dem request for pension payment bailouts [note: it was never to fill the hole completely, but to cover a couple of years of pension contributions.]
In addition, there will be talk of strings attached to these funds. Yes, I know governors and mayors won’t like that.
I see this all as political negotiation.
Plan for the Week
I will be linking editorials, op-eds, and other analysis pieces this week, with three large categories. The “YOU WANT US TO DIE!” contingent [aka: give us the bailout, don’t talk about bankruptcy], the “Yay! State bankruptcy!” folks [and I may throw in the “Sure, bailout, but attach these strings” people here], and my group: “No pension bailouts and no state bankruptcies”.
I believe that will keep me occupied til Friday.