State of Illinois Presentation to Summary of ratings presentation to Moody’s Investor Service, Standard and Poor’s, and Fitch 1
Presentation Overview I. Economy II. Budgetary Performance III. Financial Management IV. Debt and Liabilities V. Pension Update VI. Concluding Highlights and Questions 2
Economy 3
Illinois is a State of Diversified Economic Strength • • Illinois’ economy ranks 5 th in the nation and 21 st in the world at Illinois has a deep and diverse economy, with its workforce composition mirroring that of the U.S. $777 Billion (behind Florida and ahead of The Netherlands). • • O’Hare is the 4 th busiest airport in the world. Broad employment base anchored by Trade/Transportation/Utilities, Professional/Business Services and Education/Health – all sectors • Chicago is the only city in North America where all 6 Class 1 with recent income and job growth. intercontinental railroads meet to interchange. 2016 U.S. & IL Non-farm Jobs by Industry Growth in IL GDP U.S. Illinois 800 Trade, Transportation and Utilities 3% 2% 6% 750 Professional and Business Services 6% 5% Education and Health Services 700 6% 20% 20% Government Billions 650 11% 10% Manufacturing 600 16% 15% 9% 9% Leisure and Hospitality 550 15% 14% 16% Financial Activities 16% 500 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Mining, Logging, Information and Other Services Construction Source: U.S. Department of Labor, Bureau of Labor Statistics Source: Federal Reserve Bank of St. Louis Railroad & Highway Network Highways Railways 4 Source: Village of Tinley Park Source: IHS
Illinois is ranked 17 th in the U.S. for Income • Employment increased with jobs exceeding 6.0 million in 2016. • Illinois’ Per Capita income is ranked 4 th among the 10 largest states. • • Median Household Income has grown 4.5% annually on average since Unemployment continues to decline along with national trends; 2011, outpacing the U.S. (3.1%) and neighboring states (3.1%). higher unemployment is concentrated in older manufacturing centers such as Rockford, Danville, Decatur, Kankakee and Peoria • Income as measured by both PCI and MHI ($60,413) remains well while other MSAs are closer to U.S. average. above national ($56,516) and Great Lakes States’ ($53,728) averages. Per Capita Income Average Non-farm Employment and Unemployment Employment Unemployment Illinois United States Great Lakes Region $50,000 (Thousands) Rate 6,100 12.0% 10.2% 10.4% 9.7% 9.0% 9.1% 6,000 10.0% $45,000 5,900 7.1% 8.0% 6.5% 5.9% 5.9% $40,000 5,800 5.0% 6.0% 5,700 4.0% $35,000 5,600 2.0% 5,500 $30,000 2014 5,400 0.0% 2011 2012 2015 2013 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Median Household Income Unemployment Rate 12.0% Illinois U.S. Great Lakes Region Illinois U.S. $65,000 10.0% $60,000 8.0% 6.0% $55,000 4.0% $50,000 2.0% $45,000 0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Jan-17 $40,000 2011 2012 2013 2014 2015 Source: U.S. Department of Commerce, Bureau of Economic Analysis; Bureau of Labor Statistics 5
Illinois is Home to Some of the Largest Fortune 500 Companies in the World • Fourteen of the World’s Largest Companies (by revenue) are based in Illinois (up from 12 in 2015), representing diverse sectors of the Illinois economy, according to Fortune’s Global 500 list. • Thirty six Illinois-based companies made the U.S. Fortune 500 list, with companies like Groupon, Hyatt, Northern Trust, Mead Johnson and Kemper climbing the ranks. • Annual mean wage in Illinois is $49,970 (2015) – 3.4% higher than the U.S. average of $48,320. • “(In Nov 2016), Chicago’s median base pay grew at the fastest pace of any of the five markets we examined. ” “As one of the nation’s largest sites with many employers of in-demand workers in tech, consumer sales, marketing, retail and hospitality, we expect to see continued healthy pay grow in Chicago-area pay throughout 2017. ” Chief Economist, GlassDoor. January 2017 . Fortune Global 500 Companies Based in Illinois Fortune Global 500 Companies Based in Illinois Rank Company Industry Category Number of Employees Rank Company Industry Category Number of Employees 47 Walgreens Boots Alliance Food and Drug Stores 302,500 352 Mondelez International Food Consumer Products 99,000 61 Boeing Aerospace and Defense 161,400 355 Exelon Utilities: Gas and Electric 29,762 Insurance: Property and Casualty 93 State Farm 70,425 364 Deere Construction and Farm Machinery 57,180 (Mutual) 112 Archer Daniels Midland Food Production 32,300 420 McDonalds Food Services 420,000 194 Caterpillar Construction and Farm Machinery 112,200 425 Sears Holdings General Merchandiser 178,000 265 United Continental Holdings Airlines 84,000 461 US Foods Holding Wholesaler: Foods and Groceries 25,000 Insurance: Property and Casualty 283 AllState 41,350 469 AbbVie Pharmeceuticals 28,000 (Stock) 6 Source: Fortune.com
Budgetary Performance 7
FY 2017 Budget Framework • In June 2016, the Governor and General Assembly agreed to a “bridge” FY 2016 and FY 2017 appropriations bill (P.A. 99-524) to cover essential State spending that includes: • Passage of a full year of FY 2017 funding for elementary and secondary education and for federal and all other State funds outside of the General Funds covering FY 2016 and FY 2017 • FY 2017 road capital appropriations and limited other construction appropriations • Limited FY 2017 General Funds appropriations for critical State government operations tied to forgiveness of repayment of interfund borrowing for expenses incurred prior to December 31, 2016 • Utilizing existing resources in Budget Stabilization Fund, Commitment to Human Services Fund, Fund for the Advancement of Education and Personal Property Tax Replacement Fund to pay bills – taking some pressure off of limited General Funds resources • Allowing the State to keep larger share of federal Affordable Care Act money coming into Illinois • Providing FY 2017 relief to debt structuring restrictions to allow the State to more efficiently refinance existing bonds to lower rates This agreement was viewed as a bridge until the Governor and General Assembly can come to agreement on a full FY 2017 budget. The Governor supports working together with the legislature for a comprehensive package that includes economic reforms, revenues and spending reductions. 8
FY 2017 Revenue Update 1 FY 2017 General Funds Estimated Revenues FY 2017 Revised Revenues • Under current statutes, total General Funds revenues FY17 FY17 for FY2017 Estimated Budget are projected to be FY 16 Original Revised $31,677 million, an increase from FY2016 base revenues $ in millions Actual Estimate Estimate of $387 million (1.2%). Base Resources State Sources: Revenues 1 • Individual income tax performance has been consistent Individual (gross) 15,301 15,665 15,665 with estimates and was not adjusted. Refund Fund Deposit (1,494) (1,754) (1,754) Net Individual Income Taxes 13,806 13,911 13,911 • Corporate income tax estimates were revised down Education/Human Services Funds set aside (916) (940) (940) primarily due to non-economic factors such as pass- Corporate (gross) 2,336 2,354 1,814 through withholding accounting changes, technological Refund Fund Deposit (362) (406) (313) improvements at DOR enabling the department to Net Corporate Income Taxes 1,973 1,948 1,501 better match returns to payments, and the expiration of Education/Human Services Funds set aside (1) (6) (5) cap on Net Operating Loss deductions. Sales Taxes 8,063 8,220 8,155 Public Utility Taxes 926 935 899 • Sales tax estimates were revised down due to All Other Sources 2,276 2,288 2,392 accounting change related to distribution of prepaid Total State Sources: Revenues 27,044 27,302 26,858 sales tax on motor fuel purchases. State Sources: Transfers In • Federal revenue estimate has been reduced due to the Lottery 677 720 720 Riverboat Gaming Taxes 277 270 270 recognition of the probable lapse of certain Medicaid Other Transfers 627 757 667 appropriations related to Medicare premium payments Fund Reallocations - - - to the federal government and related offsets of federal Total State Sources 28,625 29,049 28,515 revenue in lieu of the state’s direct payment. The final amount will depend on timing of payments released by Federal Sources 2 2,665 3,809 3,162 the Comptroller. TOTAL RESOURCES 31,290 32,858 31,677 1 General Funds revenues reflect the inclusion of the revenues from the Fund for the Advancement of Education and the Commitment to Human Services Fund. 2 Revised Federal estimate reflects a change in methodology. 1 General Funds in this presentation reflect the inclusion of the Commitment to Human Services Fund, Fund for the Advancement of Education and Budget Stabilization Fund as part of the General Funds consistent with the Governor’s proposal to reclassify these funds as General Funds. 9
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