State Budgets & the Next Financial Crisis

"60 Minutes" recently aired a powerful segment illustrating how dire budget circumstances are for state governments in America. Read the entire synopsis here to learn about the plight of New Jersey from reform-minded Governor Chris Christie. But hitting closer to home, you might be surprised to learn what’s going on with our neighbor to the West:

And nowhere has the reckoning been as bad as it is in Illinois, a state that spends twice much as it collects in taxes and is unable to pay its bills.

"This is the state of affairs in Illinois. Is not pretty," Illinois state Comptroller Dan Hynes told Kroft.

Hynes is the state’s paymaster. He currently has about $5 billion in outstanding bills in his office and not enough money in the state’s coffers to pay them. He says they’re six months behind.

"How many people do you have clamoring for money?" Kroft asked.

"It’s fair to say that there are tens of thousands if not hundreds of thousands of people waiting to be paid by the state," Hynes said.

Asked how these people are getting by considering they’re not getting paid by the state, Hynes said, "Well, that’s the tragedy. People borrow money. They borrow in order to get by until the state pays them."

"They’re subsidizing the state. They’re giving the state a float," Kroft remarked.

"Exactly," Hynes agreed.

"And who do you owe that money to?" Kroft asked.

"Pretty much anybody who has any interaction with state government, we owe money to," Hynes said.

That would include everyone from the University of Illinois, which is owed $400 million, to small businessmen like Mayur Shah, who owns a pharmacy in Chicago and has been waiting months for $200,000 in Medicaid payments. Then there are the 2,000 not-for-profit organizations that are owed a billion dollars by the state.

Jim Rogers Bringing Energy Philosophy Back to Indiana

So what has Jim Rogers, chief executive of Duke Energy, been up to in recent months?

  • Appearing on "60 Minutes" to support cap and trade, while also discussing on the show the necessity of carbon capture and sequestration of coal
  • Talking to the top players in China’s power industry about partnering on clean energy technologies
  • Being named the 2009 Citizen of the Carolinas by the Charlotte Chamber of Commerce (some of the past winners: Rev. Billy Graham, Dean Smith, Michael Jordan and Ben Bernanke)

Rogers "comes home" to Indiana on September 2 as the keynote speaker for the Indiana Conference on Energy Management. Rogers came to Plainfield-based PSI Energy in 1988 as chairman, president and CEO. Mergers led to similar roles at Cinergy in Cincinnati and then Duke, one of the nation’s largest energy companies.

“When Jim Rogers arrived at PSI Energy  in the late 1980s, he brought a level of enthusiasm and vision that challenged the historically conservative power industry,” declares Vince Griffin, who worked for Rogers at that time and is now the Indiana Chamber vice president of environmental and energy policy. “This is unquestionably a challenging time for the electric power industry. Jim Rogers will undoubtedly bring his passion and perspective to this energy conference."

Duke Energy is also looking at its Edwardsport, Indiana facility as a pilot project for the future with its investment in a 630-megawatt IGCC (integrated gasification combined cycle) facility.

Energy Leader Ready and Willing to Adapt to New Rules

Companies and business leaders want to know the rules. Take out the controllable surprises (tax rates, energy expenditures and other costs of doing business) and they will find a way to achieve success.

You can count Duke Energy’s Jim Rogers among that crowd. Duke is one of the largest energy companies in the country with four million customers receiving power that is primarily generated by coal. While cap and trade legislation in Congress is seen as devastating to the coal industry, Rogers would rather know what lies ahead (and find a way to deal with it) than be faced with the uncertainty of patchwork regulations or making investments today that could become obsolete in a few years.

Coal will not go away. Rogers told "60 Minutes" earlier this year that carbon capture and sequestration absolutely have to happen. If Democrats in Congress and the Obama administration are successful in putting their blueprint for reducing emissions in place, Rogers and Duke can make more investments like the current groundbreaking project at Edwardsport in southwestern Indiana.

Rogers will undoubtedly share updates on the progress at Edwardsport, his passionate views on federal legislation and more when he keynotes the Indiana Chamber’s September 2 Indiana Conference on Energy Management. A critical Washington perspective will be shared during the luncheon portion of the event from Ross Eisenberg, environment and energy counsel for the U.S. Chamber of Commerce.

Ball State, Obama and Football

Some family, friends and co-workers are getting sick of hearing me talk about it. Instead (or in addition to), I’ll write about it, try to come up with a way to justify it being in this space and move on — for the time being.

It is Ball State University football, the magical 11-0 season (entering Tuesday night’s regular season finale at home against Western Michigan) and where its bowl destination might be. OK, I know it’s not the Golden Domers back in their glory days, the IU hoops (see back in glory days reference, although I believe they will return to prominence in a few years under Tom Crean) or Purdue’s Rube Goldberg contest dynasty, but give us Cardinal fans a break.

Even if the Cardinals go 13-0 (a conference championship game in Detroit awaits if, and only if, a Tuesday win is recorded), the BSU faithful are looking at a return to Detroit the day after Christmas (bowl games are supposed to be a reward, aren’t they), Toronto (nothing against the Canadians, but I’m not anticipating sunny weather up north on the third day of 2009) or Mobile (better, but no New Orleans, Phoenix or south Florida).

Ball State won’t be going to one of the grander destinations because that appears reserved for Utah or Boise State, which also fall in the non-Big Boy category of college football and its allotment of "only one of you gets to come to our season-ending party."

What’s the solution? Don’t know. What’s next? Hope for three more wins, 14-0, more publicity for the university and increased alumni donations (now there’s a business angle).

Or how about this justification: president-elect Barack Obama stirred the pot the night before the election by championing a college football playoff and repeating the wish in his recent "60 Minutes" interview. If the future world leader can take time to examine the college football postseason structure, why can’t I?

Go Cardinals!