Capitol Fax.com - Your Illinois News Radar

A whole lotta bad ahead

Posted in:

Illinois

* My syndicated weekly newspaper column is not what you would call an optimistic look at the future…

I joked to a Democrat last week that I seriously doubted state Rep. Kevin McCarthy (D-Orland Park) ever would vote for a legislative pay raise again after getting whacked so hard by the Republicans for his pay hike votes this fall. McCarthy has been brutalized for those votes, and he’s had to work harder on this campaign that he has in more than a decade.

“I don’t think Kevin will vote for anything,” came the reply.

He could very well be right, and not just about McCarthy. There are a whole lot of extremely frightened Democratic legislative incumbents out there right now, including those who don’t have serious opponents. And even if individuals survive November 2, they surely will watch in horror as many of their colleagues go down in flames.

One would hope that this brutal campaign season would be a wake-up call for all state legislators and that election day will be a Jeffersonian “refresh” of the “tree of liberty,” albeit with symbolic blood.

But legislators are human beings, and humans often learn the absolute wrong lessons. And the lesson this year could easily be: No matter how you vote, you’re still gonna get zapped harder than you could have ever imagined, so don’t take any chances at all.

For instance, if you vote against every legislative pay raise but then vote for appropriations bills that pay for those raises, you’re slammed for raising your own and (for good measure) Rod Blagojevich’s pay. McCarthy actually voted to raise his pay, but several others who are being pummeled on this issue did not.

Now there are always these sorts of worries right before an election when the negativity is at its peak.

“We talked about this two years ago,” one Republican pal said last week.

“Yeah,” I responded, “and look what’s happened since. A whole lot of bad.”

I’ve talked to some who firmly believe that the Republican game-playing in House Speaker Michael Madigan’s own Chicago district could mean big trouble after the election as Madigan seeks revenge for the humiliation, whether he holds on to his majority or not. The Republicans have publicly taunted Madigan in the media for allegedly recruiting his own candidate, and Madigan is spending more money on his own campaign now than he has in memory.

The fears about a Madigan retaliation could very well be justified. Just look at how House Republican Leader Tom Cross responded after Madigan started funding his own unknown and no-chance Democratic opponent late in the 2008 campaign. Except for the capital construction bill (which everybody desperately wanted) we’ve had more House gridlock since that election than ever before, and that’s really saying something. Republican state Rep. Bill Black didn’t get tossed out of GOP leadership last summer because he was one of three Republicans to vote for the Democrats’ pension bond bill. He got the boot because he consorted with a mortal enemy.

The situation is better in the Senate, but it ain’t all roses. The Senate president’s decision, since abandoned, to go after Republican incumbent John Millner widely was seen as a harbinger of doom. Millner was one of the only Republicans who was regularly willing to work with the other side of the aisle. The Democrats will almost surely wind up with a far smaller majority after November 2. They’ll need to work with the Republicans to get anything done no matter who wins the governor’s race. But why would any Republicans trust them after what they did to Millner?

Then there’s the legislative district remap. If Gov. Pat Quinn loses to Bill Brady and/or Madigan loses his majority, nobody will know who will control the remap process until late next summer or early fall unless they can cut a deal - which hasn’t happened in a very long time. With the map in doubt, there’s even less incentive to work together.

All of this couldn’t come at a worse possible time, of course. The state’s budget deficit is practically insurmountable. Unemployment remains stubbornly and scarily high. People are angry and frightened because nobody can point to any light at the end of this tunnel.

Somehow, some way, the people who lead this state are going to have to find it in them to pull everyone together and address these issues after this bloody fall campaign. But right now all of them are doing everything possible to undermine any sort of resolution.

* Related…

* Pension fund borrowing vote looms two days after election

* Cleaning up state finances will take years, Quinn says

* Polled voters want unrealistic solutions

posted by Rich Miller
Monday, Oct 25, 10 @ 10:01 am

Comments

Your entire analysis is spot-on, but does not state the underlying problem: Illinois legislators (and governors) care more about their own political future than the welfare of its citizens. Leaders would vote as they believe they should, and let the chips fall where they may. We do not have leaders, we have self-centered cowards. (Neither party is exempt here, although the Democrats are worse at the moment in that they control the governorship and senate and still accomplish nothing.)

Comment by Anonymous Monday, Oct 25, 10 @ 10:09 am
Remember: It’s always darkest before the dawn.

Unless you’re being buried alive. Then it’s gonna be dark for quite a while.

– MrJM

Comment by MrJM Monday, Oct 25, 10 @ 10:19 am
Nothing’s going to change if the Republicans do get control (and if Cross does get a majority, it will be thanks to pure dumb luck). In fact things could easily get worse.

The truth (and what Republican officials don’t want naive tea partiers to know) is that most Republican officials in this state really don’t have a problem with what the Democrats are doing. They just want what the Democrats HAVE.

Comment by just sayin' Monday, Oct 25, 10 @ 10:22 am
It makes you wonder where the breaking point is.

The payment delay tactic would seem to be stretched to the limit. Given this year’s early release fiasco, I don’t think we’re going to empty the prisons.

Maybe it’s debt default — which would be a disaster not only for the state, but would have negative repercussions for the national and international economies.

Whether Brady or Quinn wins, I’m guessing massive state employee layoffs, including AFSCME members. That agreement Quinn signed with the union isn’t worth the paper it’s written on if there’s no new revenue. The state already has statutory and bonded indebtedness claims to its revenues that pre-date that piece of paper.

I know, Illinois has a small state payroll. Doesn’t matter. There are immediate savings there, and it has the added benefit of reducing pension liability.

Comment by wordslinger Monday, Oct 25, 10 @ 10:22 am
Any member of the Illinois General Assembly who loses got what he or she deserved.

The simple truth: they haven’t been doing their job.

They all thought they could hide behind flimsy excuses.

Oh well. Accountability cometh…

Comment by Carl Nyberg Monday, Oct 25, 10 @ 10:29 am
Sometimes gridlock helps, but in Illinois right now, gridlock simply means we keep doing what we’ve been doing. And we’ve seen how well that works.

Comment by Fan of the Game Monday, Oct 25, 10 @ 10:33 am
On November 3rd, let’s start the petition drive that makes alteration of the existing pensions CONSTITUTIONAL! Political leaders have been hiding behind that excuse for too long.

The petition drive will gin up the electorate for the 2012 election and keep that issue in front of the legislators for the next two years.

Comment by Downstater Monday, Oct 25, 10 @ 10:37 am
I cannot bring myself to feel one bit of sympathy for the legislators who have put the well-being of the citizens of Illinois as a much lower priority than their jobs. They allowed this system to evolve that puts all of the power in the hands of a few, so that nothing happens unless it meets with their approval.

They have brought a meltdown of the system upon themselves.

Comment by Aldyth Monday, Oct 25, 10 @ 10:51 am
Further, from the fear-factor perspective, it doesn’t necessarily matter what the parties do in the GA. The experience of this election demonstrates that “third entity” movements–teabaggers, SLC, Green Party & creatures yet unknown, but funded by Citizens United–can have major impact. The November results are not going to be decisive of anything. To rephrase: “It’s always darkest before the tornado hits”.

Comment by D.P. Gumby Monday, Oct 25, 10 @ 11:25 am
I think Quinn’s agreement with AFSCME will be hard to undo regardless of who is Governor. Also I don’t think there are enough employees left to do anything “massive”, no matter how that might please the anti-government crowd (and the Tribune).

At DHS the number of staff is at a 20-year low. The state facilities (a huge number of employees) will lose accreditation if they cut too many staff. DCFS has faced similar problems with federal agencies and court monitors due to staffing problems.

I think it is somewhat likely that Quinn or Brady will begin closing some offices one day a week (or one day every other week)- essentially a mandatory furlough in disguise. Since that is not a layoff it is not subject to the Quinn-AFSCME agreement.

Comment by DuPage Dave Monday, Oct 25, 10 @ 11:26 am
It takes too long for a constitutional amendment, and there is a big IF on getting one on the ballot. The next Governor should outsource many government functions to private contractors - that will allow an immediate reduction in state payroll without a reduction in services, and quickly and materially cut the growth of future pension obligations. Given current mood, a Governor might be reelected if he does that quickly, broadly, and well (i.e. no hinky donation links for the US Atty to build a case).

Comment by Alexander cut the knot. Monday, Oct 25, 10 @ 11:37 am
Alexander,
Yes, a constitutional amendment will take awhile. However, it keeps the issue in front of the voters, as petitions are circulated.
The passage would provide needed relief for county, municipal and school board entities trying to negotiate with their own unions.

Comment by Downstater Monday, Oct 25, 10 @ 12:00 pm
ah, good to see that downstater and the rest are back to bashing public workers again.

Guys, here’s what you don’t understand.

Public employees do not pay into social security.
They pay into their own retirement system.

If there were no public employee pension system, we would be putting even more strain on Social Security when retiring. As it is, by having our own self contained system, we are extending the solvency of Social Security.

Conservatives make it out to seem that public workers don’t pay into their pension plan. Wrong again.

Comment by progressive voice Monday, Oct 25, 10 @ 12:01 pm
==On November 3rd, let’s start the petition drive that makes alteration of the existing pensions CONSTITUTIONAL! ==

That will actually require an amendment to the federal constitution’s “impairment of contracts” clause, which would (on its face) allow any state to walk away from any debt simply by passing a new law. Good luck with that.

And to Alexander — given the state’s current track record for paying contractors, who are you going to outsource all those government functions to? How much are they going to charge when they build into their bids the costs of getting paid months late?

I think we are long past digging our way out without a big tax increase, but we will never get a tax increase without the administration demonstrating it’s will to cut costs, which will mean state employee layoffs or furloughs no matter how much it hurts the state vs. the dollar amounts saved.

Comment by Pat Robertson Monday, Oct 25, 10 @ 12:01 pm
===As it is, by having our own self contained system, we are extending the solvency of Social Security. ===
Not sure I totally agree the effect this has on Soc.Security. But one thing I know is that the state would have no choice but to make their matching contributions to Social Security. Weekly. Not down the road 10 to 20 years like they have with the pension payments. Basically the state employees are loaning the state money.

Comment by Been There Monday, Oct 25, 10 @ 12:05 pm
I understand the dire consequences the State is in with the deficit. But as it has been said many times on this blog the deficit is NOT going to be solved by cutting State payroll. There just isn’t that much money there.
Additionally I find it ironic that last week when one of the posts dealt with money given to a private company to train and keep employed a group of workers, the predominate number of comments were along the line of, if we are saving or creating Illinois jobs any cost is worth it.
How are those jobs any different than the Illinois jobs that are held by State employees? Politicians have cultivated the anti-state employee environment by blaming the State employee or teachers for every malady that faces the State. They divert the attention away from the fact that they have done nothing to fix the problem and done everything to exacerbate it. I think this points exactly to the problem that is facing the State. Everyone wants the problems fixed but don’t touch their programs or don’t ask them to have to pay more for those fixes. I believe Rich is spot on with this column. Unless a group of legislators steps up and decides they have to work on the deficit issue in spite of what the leadership does, we are not going to see any of this get better. If the campaigns are any indication of what is to come we are in a heap of trouble. No one is addressing the issues they are too busy playing the blame game.

Comment by Irish Monday, Oct 25, 10 @ 12:14 pm
Maybe if we had members of the GA who were actually leaders of their community they could stand on their own and take the hard votes and it wouldn’t matter in a crazy year. Too many on both sides of the aisle are slotted and supported by leadership. They can’t stand on their own 2 feet. How many of these folks could win without paid for staff? The Millners, Rauschenburgers, Blacks are too far and few between.

Comment by frustrated GOP Monday, Oct 25, 10 @ 12:29 pm
Been There,

You are correct about the State needing to pay regularly instead of robbing from the pension fund. Another benefit would be a totally predictable contribution as opposed to the current system where annual contributions can swing widely. While it would cost the State slightly more to institute a SS/401k contribution system, planning would be much easier for state lawmakers. Furthermore, there would no longer be any promises for growth of the pension fund. I believe that promises of 8% growth were made just before the market tanked.

Comment by Cincinnatus Monday, Oct 25, 10 @ 12:37 pm
progressive voice: not all state employees are in the “non social security” pension system. my retirement will include both (neither huge by any stretch of the imagination).

Comment by wizard Monday, Oct 25, 10 @ 12:55 pm
Progressive Voice,
Removing the provision from the constitution would allow the state to enact reforms that would:
1. Prohibit double dipping
2. Go back and recast pensions that were rear loaded with excessive overtime, etc.
3. Allow cities and counties the opportunity to renegotiate burdensome agreements already in place.

And I’m not bashing the workers. I’m bashing the unions that demanded unreasonable contracts.

Since, taxpayers have to foot the bill, maybe it’s time they were given a chance to start voicing their opinion.

It’s just a simple removal of one provision of the constitution. Why not allow local governments and school boards to rewrite their obligations?

After all, we allowed GM to rewrite bankruptcy law to the direct detriment of bondholders.

If anything, the OBama administration is the one that’s opened the door to the idea that these obligations can and should be rewritten.

Comment by Downstater Monday, Oct 25, 10 @ 1:16 pm
How many workers are there in this state that are here on a temporary visa? The answer is thousands. They are here legally, but they take jobs away from Illinois workers. That forces Illinois workers onto unemployment and the various other state programs, while the CEO’s of these companies rake in the dollars for lowering the bottom dollar.

Every politician running for a statewide office promises to bring jobs to Illinois ….really!?!?! And what are you going to do? Are you going to start by saying businesses can’t use aliens on a tempoary visa as long as the unemployment is at a certain rate? Would it make sense to encourage places to hire U.S. Illinois citizens? The very people who vote for them, the very people who buy houses, cars, clothing, and so on?

Oh …but wait, those very businesses also influence the politicians to make decisions that help their business and line their pockets rather than the worker.

Then you got Brady saying he will give a business a tax credit for hiring more people. Great, but are they getting a tax credit for hiring a person in this country on a temporary visa that is taking the job and spoon from the Amreican Illinois workers?

Comment by Mr. Wimple Monday, Oct 25, 10 @ 1:29 pm
“Basically the state employees are loaning the state money”

That’s why they haven’t changed it. The ponzi scheme needs the money state employee’s are paying. If they dropped defined pensions altogether like people want the money source dries up.

Comment by Anon Monday, Oct 25, 10 @ 2:06 pm
Downstater and other reduce the public pension folks.

I have paid in every month for 29 years–Last year, $11,600. So now you want to reduce my benefits. Did not the Enron folks get thrown in jail for artificially inflating the stock prices that Enron employees had their pension plans based on (while selling off their own shares). State employees did not tell the legislature to not make the pension payments–matter of fact the SURS and SERS members were behind the payment plan being adopted by the legislature. Quit blaming state employees for the budget mess. We have done exactly as promised. Now you want the state to breech its contract with us because it is inconvenient.

Comment by SIUPROF Monday, Oct 25, 10 @ 2:14 pm
Actually, AFSCME employees DO pay social security. We also pay anywhere from 4 to 8 percent of our income into the pension fund. This is where the state has fallen down. For years, they have not paid their share into SERS or any of the other (except their own) state pension programs. Instead, they have used that money to fund programs that they were too lazy to find the revenue for. Now, the bill is due and instead of saying “Hey - we’re sorry that we have stolen your money for years - here ya go” politicians are blaming the people they have stolen the money from for wanting it back! If they had been making those payments like they were supposed to have been doing, there would not be a problem. Plus, if the state can’t make a 4% payment to my retirement account now, why would I think they could make a matching payment to a 401K? DUH! Taxes have to go up one way or the other.

Downstater - They state payroll is about $3billion a year. Even if EVERYONE was laid off, it would take over 4 years to just break even. No police, no prison guards, no highway workers, no driver’s service employees, etc.etc etc. How much do you think the “taxpayers” would be complaining then??

Comment by lincolnlover Monday, Oct 25, 10 @ 2:27 pm
SIUPROF is right. The employees began and have continued their employment based on the pension system is in place. We clearly have an obligation to sustain those benefits as promised.

HOWEVER, the lesson we can learn from what the legislators and Governors (all of them) have done to the payment system is that they cannot be trusted to pay in what is required. That is why we should put the power for state employees retirements into their own hands and convert all future state employees into individually owned and managed 401k type plans. The state should still have an obligation to pay into those plans also, but at least then it would be paid in with each paycheck - and not at the whims of the General Assembly and Governor every July.

I don’t understand why the unions would be against giving their members more control over their retirements and the state more fiscal security.

Comment by siriusly Monday, Oct 25, 10 @ 2:40 pm
=== That is why we should put the power for state employees retirements into their own hands and convert all future state employees into individually owned and managed 401k type plans…
I don’t understand why the unions would be against giving their members more control over their retirements===

You must’ve missed that big financial crash a while back and the fact that so many 401k plans were wiped out.

Comment by Rich Miller Monday, Oct 25, 10 @ 2:43 pm
“Removing the provision from the constitution would allow the state to enact reforms that would:
1. Prohibit double dipping
2. Go back and recast pensions that were rear loaded with excessive overtime, etc.
3. Allow cities and counties the opportunity to renegotiate burdensome agreements already in place”

My understanding is that these 3 items have already occured. See the pension reform legislation Gov Quinn and the DEMOCRATS passed this past session.

And, sorry, but by saying you want to get rid of the system IS an attack on those who have paid into it for their entire careers.

Comment by progressive voice Monday, Oct 25, 10 @ 3:13 pm
Once again, right on the money Rich.
I hear from too many places that legislators that used to get along after business hours are no longer doing so. At some point, something has got to give. We need to expect better from our leaders. Most of us can understand SOME jockeying for position and political games. At some point, enough is enough.
Before any of us became republicans or democrats or greens, we were Illinoisans. We need to come back to that reality.

Comment by Richard Afflis Monday, Oct 25, 10 @ 3:17 pm
Rich,

Annuities did fine during the recent decline, which is where all investors who are concerned with risk should park their money as they near retirement. 401k programs are ones of choice, if the investor chooses high risk equity based investments, so be it. If Social Security (or other privatized retirement programs) we allowed to be owned by the retiree, common-sense rules can be applied to the contributors to minimize the risk. One other great advantage to 401k is that the contributor owns the account, which can be willed to his/her survivors.

Comment by Cincinnatus Monday, Oct 25, 10 @ 3:32 pm
Newbie question here, so be gentle: Why is Madigan spending on his own race? His Republican opponent is a shill who’s not even running any campaign at all, as reported by Kass and others. Is it even conceivable that Madigan could lose to such an opponent?

Comment by Rarely posts Monday, Oct 25, 10 @ 3:51 pm
Part of the problem discussing “state” pensions is the lumping of SRS (SERS, JRS, GARS), IMRF and TRS into one big pot. While all these are administered by and / or an obligation of the State in one way or another, they are separate systems with different rules, etc. and need to be talked about separately.

Almost all actual State employees (members of SERS) pay into both the State pension fund and Social Security. This was changed from the State only system back in the 1970 - 1971 time frame. There are (probably) a very few State employees still working that on the old system and they pre-date the change; the majority of State employees went with the combined system. When I was hired on the State payroll in 1972, I didn’t get a choice - it was the combined system. While the State web site is a bit dated, according to it, there are 87,625 workers and 56,111 retirees / survivors. The at that time unfunded liability was about $12.8 Billion. That unfunded liability is what the State didn’t put in.

Also, someone should put in a good word for the investment people at SERS. Back before the housing meltdown, they often beat the market averages with their investments. Those earnings kept the State from being even further behind.

There’s been a lot of talk about moving to a 457 plan (government version of a 401K defined contribution) and various studies were done. The dirty secret about changing things is the “required contributions” from the State would most likely go up because the “new” employee money would not be going into the “old” fund, requiring the State to contribute to both the old and new fund. Depending on which assumptions you pick from the studies that were done, over the short term the required “State” contributions go up faster that the drop off in future benefits … bottom line is more cash out by the State IF they make the required contributions.

While I won’t go into all the details of the JRS (judges) and GARS (general assembly) systems, the corresponding numbers for GARS is 289 active / 401 retiree / $0.3B unfunded and for JRS 991 active / 983 retiree / $1.5B unfunded.

The confusion on the part of some people comes from newspapers, etc. lumping TRS in as “state employees”. They do not contribute to Social Security, and if you move them to a defined contribution plan, then they would have the right to join Social Security. If that happens, the State, as the “provider” of the teacher’s pensions, would have to pay into both the 457 plan and the required Social Security contribution. The study results I’ve seen show that being much more costly than the current system. The unfunded TRS liability is $35B.

And then there is IRMF which covers the municipal and county workers (but not Chicago / Cook). It’s a whole other bag of worms.

If you want to talk about the pension issues, please go read the stuff on the SRS and TRS web sites first to get the facts, such as they are. You may disagree with some of their analysis and conclusions, but they are required to use fairly realistic assumptions.

Comment by Retired Non-Union Guy Monday, Oct 25, 10 @ 3:57 pm
I cannot believe that my worse economic fears were too optimistic. 2009 came out better than 2010, and god help us if 2010 comes out better than 2011, as a lot of economists are predicting.

Hey, even I know when to stop kicking a corpse, and this economy is obviously stinking to the average Joe out there looking for work and a way to pay his bills.

I see nothing but Bad ahead, and it creeps me out. I am not alone, and next week we are going to find out exactly where the average voter seems to be putting the blame on all of this misery.

Yeah - Madigan is spending money. He’s trying to buy love because his respect credit card has been cancelled.

Comment by VanillaMan Monday, Oct 25, 10 @ 3:58 pm
Progressive,
My understanding is that the pension reforms only deal with new hires. That’s not where the problem is. Only if we reform the pension of existing employees can we realize any savings.
Why hamstring every county and city in the state, if a majority of Illinoisans favor a change in the pension system?

Comment by downstater Monday, Oct 25, 10 @ 5:14 pm
C’mon, for the past few years Speaker Madigan has remembered Tom Cross’ name only when when the House went into overtime budget session.

What is he going to do, ignore him worse?

Comment by Bubs Monday, Oct 25, 10 @ 6:25 pm
–Before any of us became republicans or democrats or greens, we were Illinoisans. We need to come back to that reality.–

There’s so much truth to that. The arithmetic is so simple, it’s stunning that it can be ignored for this long.

Beyond the blame game, here is where we are. We’re a going concern. Sit around the kitchen table, cut a lot, increase a lot, and get it done.

My baseline is the Rock Center. Move up the line from there for cuts.

But the scope of of state taxes and spending is small here in the USA. It’s a solvable problem

Put yourself in a position to take advantage of the economic sunny day that is coming by taking care of business now.

Comment by wordslinger Monday, Oct 25, 10 @ 6:55 pm
Downstater,

yes, the pension reforms only deal with new hires. As far as the current State employee pensions (SERS) are concerned, you can’t change them at the State level … the employees were hired under those rules, it’s an enforceable contract under FEDERAL law, and there are supporting court cases on it. The people who rewrote the State Constitution saw this problem coming years ago. The State has “shortchanged the various pension systems almost since the day they were established (you can Google the facts yourself). They were very careful to use the exact language that Federal law uses to establish an enforceable contract. While you can never 100% predict future case law, given the existing precedents, it is unlikely the State could get out of pension obligations to existing employees and retirees.

I haven’t researched the applicable statutes for teachers, county, and municipal workers but I don’t think they are quite as well protected vis-a-vis federal law. It is my understanding those could possibly be broken with bankruptcy filings. (Note: states can’t go bankrupt; it’s a matter of federal law.)

Comment by Retired Non-Union Guy Monday, Oct 25, 10 @ 7:26 pm