* We’ll have more on this later, including some video, but the Senate Appropriations II Committee held a hearing this morning on a ten percent across-the-board budget cut. The idea was to illustrate what would happen if the likely Republican gubernatorial nominee Bill Brady is elected.
Stan Ikenberry, head of the U of I, said the cuts proposed would mean a $74 million cut in state support to that university’s campuses. For perspective, he said that is the amount of support combined for Illinois’ Springfield campus, law school, med school campuses, dental school and college of education.
Glenn Poshard said such a cut would immediately trigger a 15 percent layoff across the SIU campuses, something he said is “not practical, prudent nor possible.”
The underlying but publicly unmentioned goal of today’s discussion in a Senate budget committee — discussion that will carry over to tomorrow — is to focus political ire on state Sen. Bill Brady, a Bloomington Republican and the likely GOP nominee for governor. On the campaign trail, he’s denounced tax increases and called for across the board 10 percent cuts.
The Democrats who control the General Assembly are now giving members and the public a taste of what Brady’s budget would do. So far, the state’s two largest public universities are describing layoffs, program cuts and double-digit tuition increases, which will further drive up the costs of a degree.
They’ll continue the hearing tomorrow. Check back for some videos in a few.
*** UPDATE *** Senate Approp II Chairman John Sullivan was asked repeatedly today what his committee was supposed to accomplish with this hearing and whether it was a shot at Sen. Bill Brady. He denied everything. Sullivan did, however, say that Brady was free to testify if he wanted. Have a look…
* I showed this video to subscribers this morning, but it’s worth showing everyone. Watch Rep. Julie Hamos and Rep. John Bradley go after each other over a provision in Bradley’s concealed carry bill that would not allow guns in schools…
The state’s school superintendents are cutting costs in a gruesome budget cycle, but they can take some consolation: Their own paychecks are growing comfortably.
The average salary and benefits of Illinois’ top school executives grew 4.1 percent last year, about 10 times faster than raises enjoyed by other wage earners in the Chicago metro area, according to state data. A record number of superintendents — 150 — earned $200,000 or more.
The earnings report comes as school districts from Amboy to Zion have threatened to trim teaching positions, close swimming pools or cancel lacrosse and band programs — all in an effort to balance budgets.
The new salary information, provided by the Illinois State Board of Education, shows that the average compensation of full-time superintendents grew from $145,000 during the 2007-08 school year to $151,000 in 2008-09.
We see the same thing in the private sector all the time. Corporate boards award lavish salaries to CEOs and high-level execs. Look at the Tribune Co.’s recent request to a bankruptcy court to award $45 million in management bonuses. Meanwhile, the Trib lays off reporters.
The difference, of course, is that this is taxpayer money we’re talking about here.
If the locals won’t control themselves, should the state step in? Worth pondering.
* No statewide repeal of red-light cameras: State Sen. Dan Duffy, a Lake Barrington Republican, admitted he’ll have to do “a lot of selling” to get others on board with his proposal to purge cameras from the state except in construction zones and railroad crossings, but he’s confident he’ll be able to work with colleagues to refine camera enforcement.
* House committee approves break for hair braiders: The measure would require hair braiders to take 300 hours of training, including 70 classroom hours and 230 hours as an intern. But that would be a break from the current rules.
* Alexi Giannoulias told the Sun-Times today that his family’s bank may very well go under…
“The bank has always been well-capitalized and has always been prepared for a 10- to 15-percent, even 20-percent, decline in real estate values, which, that would be almost unprecedented, But I don’t think anyone, very few people could have foreseen a 40 percent drop in real estate values and that’s why we’re in the position we’re in,” Giannoulias said.
When pushed, Giannoulias conceded he had little hope for his family’s bank to survive, “And that breaks my heart. … It was my father’s whole life.”
Will the bank still be there in November for the general election?
“It’s quite likely that the bank will not be around,” Giannoulias said. “There’s not a lot of capital out there for somebody to find $60, $70 million [as federal and state regulators want the Giannoulias family to reinvest in the bank in the next two months]. I hope I’m wrong.”
He also owned up to his share of the problems…
“I take my share of responsibility for possibly concentrating too much in commercial real estate,” Giannoulias told the Sun-Times’ editorial board. “Obviously, it’s easy to look back four or five years and say that, but I think in my role, that’s part of what I should be doing. This is not something I’m shying away from. This is not something I’m hiding from. I’m here to answer as many questions as I possibly can.”
This does not sound like a guy who would be pushed out of the race if his family’s bank does, indeed, go under. Just the opposite.
*** UPDATE *** We have two press releases. The first is from the Illinois Republican Party…
Appearing before the Chicago Sun-Times editorial board this morning, Illinois Senate candidate Alexi Giannoulias denied he helped a former campaign staffer become Illinois’ top banking regulator get his job – a role that could ultimately determine whether regulators close the Giannoulias family’s Broadway Bank.
“Giannoulias denied having any role in getting his former campaign policy director in 2006, Brent Adams, his current post as Acting Secretary of Financial and Professional Regulation for the state of Illinois, which would have jurisdiction over Broadway Bank,” the Sun-Times reported.
On January 26, 2010, Broadway Bank entered a consent decree with the Illinois Department of Financial and Professional Regulation (IDFPR) and the FDIC. When banks are closed, the IDFPR makes the final decision to close and then names the FDIC as the receiver of the bank. IDFPR is headed by Brent Adams, whose official state biography shows he served as Giannoulias’ Policy Director in 2006. Additionally, Illinois State Board of Elections records show Citizens for Giannoulias paid Mr. Adams $500 in salary in July 2006.
“We already knew about loans to organized crime and Blagojevich insider Tony Rezko,” Illinois Republican Party Chairman Pat Brady said. “Now we see Broadway Bank’s fate in the hands of a Giannoulias insider. We deserve a full accounting of how the State of Illinois will deal with this obvious conflict of interest and why this conflict was never declared.”
The second is from Kirk for Senate…
***FACT CHECK***
Giannoulias Misleads Chicago Sun-Times on Risky Investments, Loans to Organized Crime
False Giannoulias Claim: “I would vehemently disagree that these are reckless or risky loans,” he said. The only reason Broadway Bank appears ready to collapse is because the bottom fell out of the real estate market, he said. (Chicago Sun-Times, “Giannoulias ‘clears air,’ denies risky loan-making, 3/3/10)
Get The Facts:
On January 26, 2010, the Illinois Department of Financial and Professional Regulation and the FDIC ordered Broadway Bank to “cease and desist from engaging in unsafe and unsound banking practices.” (www.idfpr.com)
From 2002 to 2006, Alexi Giannoulias increased Construction & Development loans from $80 million to $356 million – expanding such risky investments from 25 percent to 46 percent of the bank’s total loan portfolio. (Chicago Reader, Alexi’s Albatross, 12/3/09)
From 2002 to 2006, Alexi Giannoulias increased the bank’s brokered deposits (also known as “hot money”) fourfold to $640 million. The typical bank at this point was growing brokered deposits at about 9 percent a year. (“As Lender, Senate Candidate Impacted Bank Woes,” New York Times, 1/30/10)
When Alexi Giannoulias left the bank, the ratio of brokered deposits to total assets at Broadway was 68 percent, according to FDIC records. The average for all federally insured banks nationwide was 4.5 percent. (Chicago Reader, Alexi’s Albatross, 12/3/09)
False Giannoulias Claim: “The bank has always been well-capitalized.” (Chicago Sun-Times, “Giannoulias ‘clears air,’ denies risky loan-making, 3/3/10)
Get the Facts:
From 2006 through 2009, the Giannoulias family took over $100 million in dividend payments out of the bank – money that could have been used to shore up capital reserves. (Consolidated Reports of Condition and Income for A Bank with Domestic Offices Only)
In 2006, the bank set aside $2.2 million as a provision against loan losses, a safety measure that federal regulators require banks to take. Despite its large increase in risky loans, Broadway only doubled its bad-loan reserve in the time Mr. Giannoulias was there. (“As Lender, Senate Candidate Impacted Bank Woes,” New York Times, 1/30/10)
False Giannoulias Claim: But, Giannoulias said, he did his due diligence on those loans and never knowingly gave loans to people linked to organized crime. (Chicago Sun-Times, “Giannoulias ‘clears air,’ denies risky loan-making, 3/3/10)
Get the Facts:
In 2005, Alexi Giannoulias authorized $15.4 million in loans to a convicted mob bookmaker and pimp named Michael “Jaws” Giorango. (“Boulis kin, 2 felons own Martha’s site,” Miami Herald, June 18, 2006; “Loans cast pall over candidate; Treasurer nominee oversees mortgages to crime figures,” Chicago Tribune, April 9, 2006)
Alexi told the Chicago Tribune he once discussed Giorango’s criminal past with him. (David Jackson, “Giannoulias Speaks Up On Loans,” Chicago Tribune, 4/27/06)
Alexi Giannoulias said he traveled to Miami to inspect property the bank had financed for Giorango and met with him there. Giannoulias declined to provide details of that meeting. (“Giannoulias ‘Embarrassed’ By Remarks About Convicted Felon,” Chicago Tribune, 4/27/06)
In 2005, Alexi Giannoulias authorized a $3.6 million loan for Demitri Stavropoulos of Oak Brook, who was convicted in 2004 for his role as ringleader of a multistate sports bookmaking operation that grossed about $1 million a year. (David Jackson, “Loans Cast Pall Over Candidate,” Chicago Tribune, 4/9/06)
Stavropoulos was in federal prison in June 2005 when the $3.6 million Myrtle Beach loan was made. The inmate’s wife signed the loan papers as his ‘attorney in fact,’ land records show. (David Jackson, “Loans Cast Pall Over Candidate,” Chicago Tribune, 4/9/06)
* The Tribune editorialized today in favor of Sen. James Meeks’ school voucher bill…
Meeks’ bill would focus on 49 elementary schools and 15 high schools, the worst-performing schools in Chicago. As many as 35,000 kids would be eligible. The vast majority of those kids are poor.
They would qualify for vouchers to pay tuition at any school that admits them.
The Meeks plan wouldn’t cost the state an extra dime. It would match the money the state already provides for the children.
And it would actually leave the Chicago Public Schools with more money to spend on kids who stay.
A suburban congressional candidate who’s stressed the need for fiscal restraint lost a condominium to foreclosure last October, the same month he announced his bid for office, court records show.
Joe Walsh, the Winnetka Republican running against Democratic incumbent Melissa Bean in the 8th House District, used to own a condominium on the 1400 block of Sherman Avenue near downtown Evanston. The two-bedroom unit went into foreclosure in 2008 and Walsh was evicted last fall, Cook County circuit court records and real-estate reports indicate. […]
Walsh now opposes abortion and a weapons ban, but he didn’t when he first ran for Congress in 1996. Earlier this year, he told the Daily Herald his views on abortion changed after a spiritual journey, and he shifted on gun control after being “educated” on the issue.
He also said he had a more liberal stance on gay rights in 1996 “because I was running in Evanston, Ill.,” a reference to the largely left-leaning city.
Cook County President Todd Stroger has quit his post as Democratic committeeman in Chicago’s 8th Ward, and he all but announced his retirement from politics after today’s County Board meeting.
“I’m going to continue to be involved in public service,” Stroger said, “but I won’t be running for office any time soon.”
Quitting the committeeman position was more than symbolic, as Stroger’s father, John Stroger, built the 8th Ward Democratic organization into his political power base as he became the county’s first black president.
Ald. Michelle Harris is taking over the committeeman’s job. More on Stroger…
A Sneed spotter claims since his election loss, outgoing Cook County Board President Todd Stroger has become a fixture at the East Bank Club. “I guess he doesn’t need to be bothered by his current job,” said the Sneed source.
* It will be interesting to see how the editorial boards handle these interviews today…
Illinois Democratic Senate nominee Alexi Giannoulias will face the editorial boards of the Chicago Sun-Times and the Chicago Tribune on Wednesday to answer questions about his connections to his family-owned troubled Broadway Bank.
Giannoulias, the state treasurer, has to factor into his campaign the potential for the bank to fail in the coming weeks as his GOP rival Rep. Mark Steven Kirk (R-Ill.), makes the Giannoulias tenure at the bank as a loan officer a central part of his campaign. On Tuesday, the Kirk campaign sent out a memo titled, “Mounting questions surrounding Alexi Giannoulias’ risky lending practices take center stage in Illinois Senate race.”
* So far, the only applicants for lt. governor are people who haven’t done much in politics. Here’s a coverage roundup…
* Sen. Kirk Dillard talks about the ongoing vote-counting process. Not much new here, but take a look if you get the chance…
* I don’t write about it much, but some of you know that my wife is an Assyrian from Iraq. Mark Brown has an interesting read today on how the Christian exiles/immigrants are not pleased with the voting venue for Iraq elections this year…
One of the little tricks of the old Chicago Democratic Machine was to screw around with the polling places in areas where the opposition was expected to run strongest by moving them to locations that would tend to discourage voters from turning out.
Strange, but that’s exactly what some members of Chicago’s Iraqi community say has been done to them in advance of their national parliamentary elections, the balloting for which opens here Friday.
The one and only Chicago area polling place for Iraqis living in the U.S. is located inside a martial arts studio in the back corner of an out-of-the-way Glenview industrial park with no access via public transportation and limited parking.
And when I wrote “exiles” I meant exactly that. My wife’s family home was bombed three times and a Muslim gang demanded that they hand over my brother-in-law so he could be martyred for their cause. They finally left for Syria, obtained UN refugee status and are now in Finland, of all places.
Want more evidence that video poker has links to the mob?
Look no further than Tuesday’s arrest of Casey Szaflarski.
As part of a federal investigation into the Chicago Outfit, Szaflarski has been charged with running an illegal gambling business, not paying $255,000 in business income taxes and filing no return for 2007.
Szaflarski owns Amusements Inc. of Berwyn, which distributes video gambling machines. The government accuses it of involvement in illegal gambling. Moreover, Szaflarski shared gambling proceeds with Michael Sarno, the reputed head of the Cicero mob, according to an affidavit filed in the case.
In July, Gov. Quinn and the General Assembly legalized video gambling machines to help pay for a $31 billion statewide construction program. The worry is that the expansion of video gambling will funnel new revenues to the mob.
Yes. We all know that video poker machines have been linked to the Outfit. That’s why legalizing video poker is important.
Right now, if you own a tavern and allow gambling on your machines, you split the cash proceeds with the distributor. Some of these distributors are allegedly unsavory types, and the long-held suspicion is that tavern owners don’t report all their cash profits to the taxing authorities.
With legalized video gaming, the Outfit is cut out. The Gaming Board is super-sensitive to this problem and is developing a process to make sure the Outfit stays out. The board has also decreed that any tavern owner busted for illegally paying out winnings will automatically be denied a video terminal license.
Currently, video poker machines are licensed as “for amusement only.” Under the new law, those machines would be subject to seizure by the police. No more long, expensive sting operations would be required to bust tavern owners for paying out.
So, if you want organized crime out of video gambling, do what this country did after inadvertently allowing the Mob to control alcohol via Prohibition. Legalize it.
The same goes for illegal drugs. You want the gangs busted up? Kill off their top money source. Walgreen’s and CVS won’t be shooting bullets at each other to vie for street corner space. I guess I should do a Google search first, but I really doubt that Budweiser and the Miller Brewing Co. resorted to armed violence after Prohibition ended.
* Related…
* Illinois Capital Construction Plan Gets Slow Start
* James R. Thompson Center Facelift 2 Years Away - Chicago Landmark Will be Under Scaffolding Until Money Comes Through For Repairs
* Former Gov. Jim Edgar echoes what many of us said over and over last spring: Not nearly enough emphasis was being placed on the budget mess because of the intense fight over ethics…
“To me the big issue was not ethics, it was finance,” Edgar said.
I asked if he meant campaign finance, and he said no, government finance. He said lawmakers, pressured by the media, missed a unique opportunity to actually do something about the state’s crippled economy and sinking budget.
“Last year I think the media blew it,” Edgar said. “Last year was a huge disappointment. I thought something positive might happen, not ethics, just making government function again. And it didn’t happen. Last year nothing happened. It was just a huge disappointment.”
It’s not right to completely blame the media for the failures. The leaders could’ve found a way to end the ethics debate far earlier, instead of allowing it to shove aside the budget until after the end of May - when a three-fifths majority was required to pass anything.
Still, I can’t argue too much with him. Edgar’s conclusion was that last spring was “one of the worst sessions, if not the worst session I’ve ever seen.” True dat.
* Speaking of the budget, let’s revisit the Chicago Tribune editorial board’s budget cutting proposals. Greg Hinz obtained some revealing quotes this week…
Civic Committee President R. Eden Martin told me that it is true, as the editorial posited, that trimming state employee benefits via later retirement and other shifts would save roughly $20 billion in coming decades, allowing the state to trim its annual pension payment by $2.1 billion.
But, Mr. Martin added, Illinois’ unfunded pension liability was most recently estimated at around $80 billion, so cutting $20 billion still would leave a $60-billion hole. The cut suggested by the Trib “doesn’t save that kind of money,” he said.
In other words, Illinois still would have to do something else to close the hole — like raise taxes.
There’s more to it than that, as subscribers know, but I can’t fault the Trib for not tackling the entire unfunded issue all at once. This is a crisis that simply cannot be solved today.
At the Civic Federation, President Laurence Msall agreed that cutting most state operating expenditures 7.2% to 2007 levels would indeed save $2.5 billion a year. But extending those cuts to grade and high schools — and applying them to state aid to municipalities, as the Trib proposed — would be extremely painful and politically difficult, he added, placing pressure on local governments to raise their property taxes.
Those proposed cuts to local governments were described this way in the Tribune’s editorial…
This subsidy gives municipalities a free ride: A dollar from Springfield is a dollar they don’t have to conserve, or fight citizens to raise in local taxes.
That’s some pretty harsh language, particularly in an era when revenues are drying up and more people are in need of more services. Here’s a roundup of related municipal revenue stories for today alone…
* Gurnee eyes hike in phone tax; Increase to 6 percent would give $650,000 boost
Putting pressure on municipalities to trim costs is a laudable goal, but the Tribune seems to be on board with the idea that government ought to be practically strangled to death.
Thankfully, though, the Tribune isn’t making their editorial a must-do for legislators, which would mean precisely the sort of thundering editorials that Edgar complained about above…
The Tribune’s John McCormick, who wrote the editorial, noted that the piece was titled “A no-tax-hike option,” and stated in its second paragraph that, “We haven’t voted yes or no on this.” In other words, he said, it was just a discussion starter.
It has certainly started a discussion. I’ll give them that.
