by Jim Dey
Wow — calling the lying swine in state Comptroller Susana Mendoza’s office lying swine really got their back up.
They should take it as a badge of honor when they issue a misleading press release touting good news from a devastatingly negative 397-page financial report that is, for the most part, swallowed whole by a statewide audience. But instead of congratulating itself for a dirty job well done, the empire is striking back.
Readers can examine the full response to my Tuesday column in today’s Letters to the Editor section.
Suffice it to say, this yapping cur won’t be getting any Christmas cards from Mendoza or her minions. My sin: “getting his facts wrong and misleading” readers.
Mendoza’s gripe concerns the recently released Illinois Comprehensive Annual Financial Report, which includes the tawdry details about the state’s state of effective bankruptcy.
The comptroller’s office put a positive spin on its press release about the report, announcing that “Illinois Cuts Its Deficit In Half In Fiscal 2018.”
That’s a selective reference to the state’s “general fund,” one of its multiple funds, not its overall financial “net position” picture.
Mendoza said the state managed the feat of cutting its general fund debt of $14.6 billion in the 2017 fiscal year to $7.7 billion in the 2018 fiscal year. It did so by issuing a new round of bonds, counting the bond proceeds as income and using the money raised to pay off part of the state’s general fund debt.
In other words, it traded higher-interest debt for lower-interest bond debt. That’s a sensible arbitrage play, but all it did was remove taxpayer debt from the general fund column and add it to its bonded indebtedness column.
What the comptroller’s press release — conveniently, just by happenstance, accidentally on purpose — overlooked is that the state’s overall net worth — its “net position” — declined by $47 billion. In fiscal 2016, Illinois’ net position was a negative $126.7 billion. In fiscal 2017, it declined to a negative $184 billion.
The numbers are right there on P. 358 of the CAFR report under the heading, “Total Government Activities Net Position.”
That figure was cited — and quoted in The News-Gazette — by a financial analyst at Wirepoints, a source the comptroller characterized as a “fringe website” unworthy of notice.
The comptroller’s office may prefer to pretend Wirepoints has zero credibility. But its analyses of the state’s financial problems have been cited by many general and specialty publications, including the Wall Street Journal, New York Times, Barrons, Washington Post and The Bond Buyer.
Further, while the comptroller’s office dismissed Wirepoints, it ignored an article from The Bond Buyer that echoed Wirepoints’ concerns and also was quoted in the N-G piece.
The comptroller’s office defended itself from suggestions that its rosy release had a political spin — nothing to see here, move along.
It said it “highlighted a few of the more interesting numbers, good and bad, and invited everyone to explore all the numbers in the CAFR.”
Yes, everyone, let’s get out a copy of that 397-page CAFR — filled with page after page of columns of numbers — and go over it with a fine-toothed comb. But how realistic is the underlying assumption in the comptroller’s “explore-all-the-numbers” invitation that non-experts can understand reports prepared for experts?
Not very, but it’s not all incomprehensible. Under the heading “Financial Analysis of the State” (P. 180), it reads, “The state’s combined net position decreased $47.426 billion or 34.7 percent during the current fiscal year.”
Of that overall $47 billion decline in the state’s net position, roughly $41 billion comes from including previously ignored costs for retired employees’ health care.
So maybe the Wirepoints analysis, denounced by the comptroller for its “misinformation,” and The Bond Buyer article, ignored by the comptroller, were more worthy of public consumption than Mendoza suggests.
Sheila A. Weinberg, the founder and chief executive officer of Truth in Accounting — www.truthinaccounting.org — attributes the conflicting perspectives to “confusion and misunderstanding” caused by “the way state and local government accounting is done.”
“Under these rules governments maintain two sets of books that produce two vastly different pictures of the government’s finances. In Illinois’ latest Comprehensive Annual Financial Report one picture is that the general fund made $6.85 billion and cut its deficit in half. While another picture indicated the state lost $6.2 billion,” she said, citing the “two sets of books” the state uses.
One — the general fund — is “cash-based accounting,” and the other is “full accrual accounting,” which Weinberg said is “similar to how businesses calculate their numbers.”
The comptroller, of course, prefers the “don’t worry, be happy” spin in her press release. But, overall, Illinois’ negative net worth — ranked 49 of the 50 states — isn’t anything to be happy about.
Jim Dey is a staff writer for The News-Gazette. His email is email@example.com.