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Cuts for thee, but not for me

Wednesday, Jan 26, 2011

* The Dome currently has this as its top news story

Rep. Jack Franks, a Marengo Democrat, wants to take the chances for state pensions away from all future lawmakers.

Franks has filed legislation that would keep all members of the Illinois General Assembly taking office in 2013 and after out of the state pension system in an effort to save money.

But what about Franks’ own legislative pension?…

He said Tuesday that the law doesn’t allow the state to take away benefits that any state employees, including lawmakers, have already earned.

True, but he could vow to return the cash, minus what he’s already put into the system. Actually, he could just simply cash out rather than accept pension payments.

* These legislators, on the other hand, are putting their money where their mouths are

State Sen. Ron Sandack, R-Downers Grove, has added his name to a list of legislators who will not be offering any legislative scholarships this year because the state’s broke. […]

State Rep. Jim Durkin, R-Western Springs, who eliminated the scholarships from his district last year, said attempts have been made in the past to eliminate the program but were always shot down in the Senate. […]

Sen. Kirk W. Dillard, R-Westmont, said he has supported bills to eliminate the scholarships for the past two years as well and will not be awarding in the future.

- Posted by Rich Miller   46 Comments      


This just in… Appellate court strikes down capital bill, video poker, lottery privatization and lots, lots more - PLUS: Lisa Madigan sides with Quinn against Cullerton

Wednesday, Jan 26, 2011

* 12:30 pm - An appellate court has struck down the state’s capital construction program and all of its funding sources, claiming the legislation violated the constitution’s “Single Subject Rule.” Read the opinion by clicking here. A lawyer friend summarizes…

The unanimous court held that Public Act 96-34 (Video Poker, Capital Spending Accountability Law, Capital Projects Fund, taxes on beverages, candy, grooming and hygiene products, privatizing the Lottery, U of I study on effects of study of Lottery on families, increase in truck fees, and liquor tax increase) violated the single subject rule of the Illinois Constitution.

Public Acts 96-35 (clarifying changes to Public Act 96-34 and changes to River Edge Redevelopment Zone Act, Vehicle Code rental car provisions, an urban weatherization program, Gaming Board peace officers provisions, and CDB provisions), Public Act 96-36 (trailer bill amending Public Act 96-34), and Public Act 96-37 (appropriations for Capitol Projects) all fall since they by their terms were contingent on Public Act 96-34.

Public Act 96-38 was also nullified. That was the tax hike on candy and some trailer language on the video poker bill.

* This has to be, without a doubt, the biggest appellate court ruling on Illinois policy in decades. Everything, and I mean everything has to be redone if the capital projects are to be saved.

Oy.

* 12:42 pm - So much for that new $5 billion capital construction bond the state is about to sell. There’s no longer a funding source and the program itself is now declared unconstitutional. The Lottery privatization deal was just finalized, but that’s now out the window as well, pending appeal.

This is just unreal, campers. It’s beyond huge.

* 1:40 pm - Sun-Times

A state appeals court Wednesday struck down Illinois’ $31 billion capital construction program, asserting that the legislation that authorized it was unconstitutional. The ruling invalidates the revenue streams for the borrowing that has funded the construction program, meaning that video poker, privatization of the lottery and higher liquor taxes are now on hold. The case was brought by W. Rockwell Wirtz, owner of the Chicago Blackhawks, and his liquor distributorship, Wirtz Beverage Illinois. The court found that the legislation that was the basis for the construction program violated the state Constitution’s single-subject requirement.


* 1:56 pm -
Fox Chicago

A spokesman for Illinois House Speaker Michael Madigan estimated that the ruling eliminated at least 40 percent of the funding sources devoted to the state’s giant capital construction program.

*** 2:22 pm *** From Gov. Pat Quinn’s office

The administration intends to appeal the appellate court’s decision and to seek an immediate stay from the Illinois Supreme Court.

The Illinois Jobs Now! capital program is an important part of Governor Quinn’s plan to put Illinois back to work. Capital bill projects are putting thousands of people to work in every corner of the state, while supporting local businesses, improving our infrastructure and increasing energy efficiency.

While the administration’s request for a stay is pending with the Illinois Supreme Court, capital projects already in progress will continue as scheduled. We would expect the Supreme Court to rule on the request for a stay in the very near future.


* 12:57 pm - I meant to tell you about this earlier and forgot.
Amanda Vinicky of Illinois Public Radio has the scoop…

Despite claims their nominations had expired, dozens of the Governor’s appointments to state agencies and commissions still stand.

Attorney General Lisa Madigan has sided with Governor Pat Quinn in a dispute between the administration and the Senate President’s office … a dispute that had temporarily put in limbo whether a major state agency, the State Police, still had a director.

In the ruling … Madigan says a governor’s nominations DO carry over into the next legislative session.

The Senate President had claimed 38 pending nominations … including that of the State Police Director Jonathon Monken … expired earlier this month because Senators hadn’t acted on them before adjourning. The President’s office claimed there wasn’t even the legal authority to keeping paying what it referred to as “former” nominees.

But Madigan’s opinion says the constitution is clear. And she backs it up with statements by the constitution’s authors. She says the Senate has 60 legislative days to act on nominees, and that clock carries over between Senates. After 60 days, an appointment’s automatic.
Which means the Senate’s time to act on Monken is just about up. He’s a controversial pick to head state troopers as he has no police background.

* 1:01 pm - Cullerton response…

Based on our concern that key state personnel would be making decisions and being paid with no legal authority, we alerted the Comptroller on the matter.

Our opinion was based on 40 years of precedent followed by the attorney general’s office, six prior governors, and 21 prior General Assemblies regarding executive appointments. We are assessing how this impacts the legislative process, but we will comply with the opinion.

We intend to schedule executive appointment committee hearings for each of the nominees in question when the Senate reconvenes next week.

- Posted by Rich Miller   107 Comments      


Justice Burke lashes out at critics - Poll shows most want Emanuel on ballot - Chico’s new crime ad - Emanuel’s young video star

Wednesday, Jan 26, 2011

* Justice Burke had some sharp words for those who say she should recuse herself from the Rahm Emanuel residency case because her powerful husband is backing Gery Chico

Illinois Supreme Court Justice Anne Burke today rejected the notion that she should recuse herself from deciding on the residency case involving mayoral candidate Rahm Emanuel.

“Aren’t we beyond that? Women have minds of their own. We have spouses in every kind of business. Are we returning to the days of Myra Bradwell?” she said, referring to the Illinois suffragette who was initially denied the right to practice law because she was a woman. She went on to become the state’s first female lawyer. […]

As for Mr. Burke, she notes that she also worked for former Gov. Jim Edgar — a Republican stalwart. Her Democrat husband “didn’t like that much either,” she said.

* Meanwhile, a new poll from We Ask America has Emanuel above 50 percent for the first time, and shows that over 70 percent want him to stay on the ballot

* John Kass, however, thinks the only people who want Emanuel to win are our corporate overlords and does his best today to undermine whatever decision is made by the Illinois Supreme Court

Rahm has all that big money behind him, that Chicago corporate and business muscle, and more money from the coasts. They want Rahm, and it seems as if they’ll kick the law right in the behind to make him mayor. […]

Now the Illinois Supreme Court has ordered Rahm back on the ballot, pending its ruling. Cudgeling the court to get the political result you want is supremely practical. But it does come with some cost.

It reinforces in the mind of the people that in Chicago, election laws apply only to those without clout. And when you hope to bend the law to suit your politics, even if the politics are the right politics, there’s another cost.

You’re not talking about the rule of law anymore. You’re talking about feudalism. And that’s what Chicago politics is about.

Whatever. If the Supremes side with Emanuel the score would be 4-1 to keep him on the ballot (hearing officer, board of elections, trial court judge and Supremes vs. a bitterly divided appellate panel).

* The Tribune editorial board gets it

To arrive at their ruling, those two judges — Thomas Hoffman and Shelvin Louise Marie Hall — advanced a groundbreaking residency standard far more restrictive than the one courts have applied for more than a century. That’s right, a new rule, starting with Rahm Emanuel.

In doing so they disregarded several appellate cases that support Emanuel’s position, including one case in which Hoffman concurred. They also ignored a guiding principle of elections law interpretation: It is supposed to be construed with an eye toward allowing ballot access, not limiting it.

Having just tossed the front-runner off the ballot in the biggest city election in decades, they then refused to certify the case as worthy of expedited Supreme Court review. Fortunately, the high court recognized the emergency. The appeal is now fast-tracked.

* As does Mark Brown

But now we’re to believe that because he rented out his Chicago home he forfeited his residency — a distinction by the way that is never spelled out in the appellate court’s opinion.

The justices say Emanuel was indeed a legal Chicago resident for voting purposes, but they say he did not “reside in” the city for purposes of being a candidate.

It doesn’t add up to me, and that’s why I’m glad the Illinois Supreme Court agreed Tuesday to hear Emanuel’s appeal and to leave him on the ballot until they make a ruling.

Emanuel’s eligibility to be on the ballot is a question of law to be decided by the courts, not something to be put to a popular vote. But the long history here is that the courts have liberally interpreted what it means to be a resident.

* In other news, Gery Chico has a new TV ad. Rate it

Script…

Woman: “My son Anthony was riding his bike home…when somebody took his life. He was a wonderful boy.”

Chico: “If we don’t fight back for moms and dads of kids who have lost kids to gang violence, we’re not going to be a great city anymore.”

Woman: “We need to work together to stop this.”

Chico: “These murderers, these punks are stealing our children and they’re stealing our communities. We’re going to add thousands of police to the force, we’re going to rebuild community policing, we’re going to take our neighborhoods back and we’re going to be a city that protects its own.”

So far, that’s the most forceful ad by anyone this season and it stands in sharp contrast to Emanuel’s boring, predictable spots. Like Pat Quinn eventually did, Emanuel might want to take a look at his young, bright Internet video guy for a bit of inspiration. This piece was made by Chris Ramirez, who’s just 20 years old, but has a great eye

Our old friend Simon Edelman, by the way, is now Resolute Consulting’s creative director. Congrats to him.

* Related…

* Press Release: Planned Parenthood, Personal PAC endorse Braun

* Mayoral Candidates Respond to BGA Questionnaire

* Parents rate charter schools higher than public schools, but see improvement

* Chicago election official: Might want to hold off on early voting

* Marin: Getting on ballot has never been easy

* Zorn: Absurd `Arnold’s Law’ needs to be terminated

* Daily Show: Chicago Snubs

- Posted by Rich Miller   61 Comments      


Question of the day

Wednesday, Jan 26, 2011

* You’ve probably seen this already

Mayoral hopeful Gery Chico said Tuesday he’s open to abolishing the residency requirement for city employees, arguing that Chicago’s middle-class tax base can survive without it.

Chico dropped the political bombshell as he accepted the endorsement of a Chicago Firefighters Union Local 2 that has long advocated allowing firefighters and paramedics to live outside Chicago.

The Fraternal Order of Police, which has also chafed at the residency rule, has also endorsed Chico. Together, the two unions represent nearly 25,000 active members and retirees. […]

After the state state Senate voted earlier this year to lift the residency requirement for teachers in the Chicago Public Schools, Daley lambasted the idea as the beginning of the end for Chicago’s middle class.

From Carol Moseley Braun’s response

“Mr. Chico’s support for lifting the city’s residency requirement poses a direct threat to our city’s middle class. Our neighborhoods are maintained through a strong and reliable tax-base and lifting the residency requirement endangers this important resource.

* The Question: Do you agree or disagree with ending Chicago’s (or any city’s) residency requirement for public employees? Explain.

- Posted by Rich Miller   60 Comments      


New Jersey’s Christie to swoop into Illinois

Wednesday, Jan 26, 2011

* New Jersey Gov. Chris Christie is heading to Illinois next week

The trip coincides with advertisements that [Christie’s] administration began running Tuesday in publications including the Chicago Tribune and the State Journal-Register in Springfield, encouraging businesses to relocate and invest in New Jersey, Christie said. […]

“If [Gov. Pat Quinn] wants to tank his economy, that’s just fine,” Christie, a 48-year-old Republican, said in an interview at Bloomberg News headquarters in New York on Tuesday. “I’ll go and try to collect as many businesses as I can, and every job that I create, that I take from Illinois, which comes to New Jersey, will be a net plus for us.” […]

Christie characterized Quinn’s move to raise taxes as a “typical bait and switch” after the Illinois governor campaigned saying “he might raise taxes about half as much as he wound up doing.”

Christie said Quinn did it because “he got in bed with the public-sector unions in order to win election by half a point.”

According to the Sun-Times, Christie’s ads were paid for by taxpayers. No word yet on the cost. Here’s the radio ad if you haven’t heard it…

Download link

The print ad is here. Christie’s taxpayer-funded photo is prominently displayed in the state’s newspaper ad, which would be illegal under Illinois law if Quinn tried to do the same thing…

Caption?

* When Gov. Christie arrives, reporters need to keep in mind that in spite of his rhetoric to the contrary, he’s reduced his budget deficit by just $200 million.

* Also, while we’re on the topic, a Wisconsin company just announced that it’s opening a new plant in Illinois

American Aluminum Extrusions Co. intends to open a plant at the former Warner Electric site, creating 130 jobs by 2013.

Village President Dave Krienke believes the Beloit, Wis.-based aluminum manufacturer would initially create 60 jobs and could have its first line running by July 1.

“We have a great opportunity here — this is a company that’s going to be a leader in its field, and I see growth in its operations for many years to come,” Krienke said Tuesday. “You know we need jobs and we need people working … to spend their money in our community. This could create a great economic incentive for Roscoe.”.

* But, all is not wonderful, of course

Illinois taxpayers donated more than $1.3 million to 10 nonprofit causes last year, but many charities have yet to see the money.

The Crisis Nursery of Champaign County is still waiting to get its share of $44,771 donated to a statewide Crisis Nursery Fund on 2009 tax returns. It’s supposed to get more than $6,300, said Executive Director Stephanie Record.

And Feeding Illinois, which oversees the state’s eight food banks, has not received the $100,246 given by taxpayers for hunger relief.

“We were supposed to get it in July,” Record said. “Like everything with the state, it was held up a little bit. That’s frustrating.”

* Roundup…

* Illinois customers now have four choices for electricity - More alternative suppliers enter the market

* Museums, zoos see visitors drop 3% last year

* Chicago HIV agency closes, cites financial woes

* David Vite: Gov. Quinn needs to OK Main Street Fairness Act

* Tweaked Gateway Arch plan has gondolas to IL

* Waukegan weighs proposed foster home: A proposal to transfer ownership of a foreclosed property on South Park Avenue to a Chicago-based agency that provides housing for foster children is scheduled to go back before aldermen next week after running into opposition late last year.

* Rockford schools to face painful budget solutions

- Posted by Rich Miller   33 Comments      


Topinka unveils her list of “painless” cuts

Wednesday, Jan 26, 2011

* I told you last week that Comptroller Judy Baar Topinka had boasted that she could easily find $1 billion in painless cuts to the state budget that nobody would miss. I asked for the list, and I received it late yesterday…

· FISCAL OFFICE CONSOLIDATION ($12 million in savings): Combining the offices of Treasurer and Comptroller will save an estimated $12 million annually – and while we’re at it, let’s look at the Lt. Gov’s office and all the other unnecessary layers of government that exist in Illinois.

· UNIVERSAL PRESCHOOL ($100 million in savings): If we roll back this Blagojevich giveaway and require financially-able families to pay for preschool, the state would save an estimated $100 million.

· SENIORS RIDE FREE ($40 million in savings): The bill to eliminate free rides for financially-able seniors is currently on Governor Quinn’s desk – I hope he signs and saves $40 million for the state.

· LATE PAYMENT PENALTIES ($60 million in savings): The recently passed tax hike budget plan allows for 2-percent in annual growth. If we eliminate that extra spending and instead use the dollars to pay down our bill backlog, we would save the $60 million spent annually on late payment penalties.

· MEDICAID ELIGIBILITY ($480 million in savings): By moving Medicaid to a managed care system and making slight adjustments to eligibility requirements, we would save $480 million annually.

· FEDERAL TAX COLLECTION COOPERATION ($30 million in savings): The state is considering a tax collection cooperation plan with the federal government where we withhold refunds until each other’s delinquent taxes are collected. Maryland conducted a similar pilot program and collected $22 million – we estimate Illinois would get at least $30 million.

· CAPITAL PROJECTS ($30 million in savings): The state plans to spend $65 million on capital projects this year – if we scale that back to $35 million we would save the other $30 million.

· SENIOR HOME HEALTHCARE ($120 million in savings): By improving access to home health care for seniors, we would save on nursing home costs. We project it would save $120 million annually, and that number will go up as the population ages.

· MERCHANT SALES TAX PAYMENTS ($60 million in savings): Illinois allows retail merchants to retain a portion of the sales tax they collect (1.75%) throughout the year. By cutting that in half, we would save $60 million annually.

· ELIMINATE AMTRAK SUBSIDY ($26 million in savings): Illinois cannot afford to continue its subsidy to Amtrak – if that is eliminated, the state will save $26 million annually.

· ELIMINATE CAPITAL LITIGATION TRUST FUND ($20 million in savings): The General Assembly has voted to repeal the death penalty. If Gov. Quinn signs the legislation, the state would realize savings in the Capital Litigation Trust Fund.

* OK, first of all, Republicans love to attach big numbers to Medicaid savings without really explaining what they are, and half of Topinka’s billion dollars is saved via Medicaid. I asked for a breakdown, but haven’t received it yet. Also, kicking people off the Medicaid rolls would not be “painless” for those folks. And a widely hailed bipartisan Medicaid reform bill signed into law yesterday would save between $624 million to $774 million over five years. It’s not clear at the moment if any of those Topinka reforms overlap.

* The Amtrak subsidy is a favorite target of Republicans without a train station in their districts. Bill Brady had a station in Bloomington, and he was and is very pro-train. But to put this into perspective, I checked a few sources online and found one which has the cost of milling and resurfacing a four-lane rural interstate highway at about $1.2 million a mile. So, if this estimate is about on-target for Illinois, getting rid of the Amtrak subsidy is equal to repaving less than 22 miles of Interstate 55.

The suggestion of abolishing the Capital Litigation Trust Fund to realize savings is one brought up by fiscal conservatives who were mostly agnostic on the death penalty. It’s an interesting argument, but notice there’s no declaration of where she stands on the abolition bill.

Also, good luck with that battle against the Illinois Retail Merchants Association on the sales tax collection fee. It’s been tried a dozen times at least and has always failed.

* Response from Gov. Pat Quinn’s budget office…

We appreciate Comptroller Topinka’s efforts to offer specific examples on how to further reduce state spending and we will take these suggestions into consideration. Governor Quinn has reduced appropriations by $3 billion since taking office and will continue to work with legislators to make further reductions to save taxpayers money. The Governor’s budget address will take place on February 16.

* Meanwhile, Kevin McDermott reports on new legislation introduced by the House Republicans

Illinois House Republicans have already filed a bill to repeal the state’s new income tax hike, which was passed earlier this month in the final hours of the lame duck session of the last General Assembly.

The bill (HB175) doesn’t have the proverbial snowball’s chance in you-know-where of getting even a committee hearing, of course. Democrats still control the chamber and aren’t about to play games with the tax hike, which they barely squeezed into law in the first place.

Rolling back the tax hike isn’t ultimately the point of this bill. The point is so that co-sponsors like state Rep. Dwight Kay, R-Glen Carbon, can send press releases like the one we got this morning– “Kay Introduces Legislation to Repeal Tax Increase'’ –which doesn’t mention anywhere in it that he’s one of a couple dozen GOP co-sponsors of the thing. Which means there are likely a couple dozen press releases under those other lawmakers’ names, going out to their local papers, each one similarly claiming credit for spearheading this doomed expedition.

(In fairness to Kay and the Repubs, this is standard practice in Springfield, and no one’s better at it than Democratic House Speaker Michael Madigan.)

There is also not a single appropriations bill introduced by the Republicans to pay for this income tax hike rollback. Don’t expect one, either. Instead, expect lots of press release reprints like this one in the Carmi Times

“…Sadly, the Chicago Democrats who passed the measure have no recognition or remorse for the severity of their actions on citizens struggling to make ends meet. Worse yet, it will not solve our long term structural deficit.”

Your thoughts on all this?

- Posted by Rich Miller   66 Comments      


What’s really behind that SEC probe

Wednesday, Jan 26, 2011

* Nobody in Illinois really got to the bottom of what was going on with yesterday’s report about an SEC investigation of Illinois pension funds. This was typical

Gov. Pat Quinn’s administration confirmed Tuesday that the federal Securities and Exchange Commission is conducting an inquiry into statements made by Illinois officials about prospective long-term savings from pension reforms passed last year.

Kelly Kraft, spokeswoman for Quinn’s budget office, said the SEC contacted the state in September regarding a “non-public inquiry” it was conducting regarding the financial effects of the reforms on the pension systems. The inquiry includes “communications relating to the potential savings or reduction in contributions by the state to the Illinois public pension systems,” Kraft said.

“We feel our disclosures are accurate and complete,” Kraft said. “In terms of what the SEC has told us, the non-public inquiry ‘should not be construed as an adverse reflection on any entity or individual involved, nor should it be interpreted as an indication by the Commission or its staff that any violations of the federal securities laws has occurred.’”

* Gov. Pat Quinn was also asked about it yesterday, but he didn’t say much

“They called, and I think nationwide they are probably looking at everything in light of what happened in New Jersey,” Quinn added. “So, you know, we want to make sure that we answer any and all questions. We’re totally confident that everything we do here is done in the right way and that’s the way it will always be.”

“We’ve never had a problem going into the market and getting plenty of bidders to lend money to Illinois, and I think that’ll be even more so in light of our most recent action,” Quinn said, referring to the income tax increase.

* The New York Times, however, got to the bottom of it

The S.E.C. contacted Illinois after an article appeared in The New York Times about an unusual actuarial technique the state had been using to save money by shrinking its annual pension contributions.

The method, enacted last year, is based on sharp cuts in benefits for state workers who have not yet been hired. Although the cuts will not produce an appreciable savings until far in the future, Illinois has begun funding its plans as if its current workers were already earning the smaller benefits of the future.

The SEC probe began in September, which is when this story appeared in the NYT

Earlier this year, Illinois said it had found a way to save billions of dollars. It would slash the pensions of workers it had not yet hired. The real-world savings would not materialize for decades, of course, but thanks to an actuarial trick, the state could start counting the savings this year and use it to help balance its budget.

Gov. Pat Quinn of Illinois approved a plan in April that seemed to help balance the budget, but it may imperil the pension fund.

Actuaries, including some who serve on the profession’s governing boards, got wind of what Illinois was doing and began to look more closely. Many thought Illinois was using an unorthodox maneuver to starve its pension fund of billions of dollars, while papering over a widening gap between what it owed and how much it had. Alarmed, they began looking for a way to discourage Illinois’s method before other states could adopt it.

They are too late. The maneuver, and techniques that have similar effects, are already in use in Rhode Island, Texas, Ohio, Arkansas and a number of other places, allowing those states to harvest savings today by imposing cuts on workers in the future.

* And the Bond Buyer dug even deeper into the state’s latest bond offering for these gut-wrenching nuggets

More than 20 pages [in the current offering statement] are devoted to pension fund reporting in the $3.7 billion offering statement, more than double the section in past offering statements, including the one for the state’s $3.5 billion sale of GOs to fund its fiscal 2010 pension payments early last year.

The section underscores just how troubled the Illinois pension system remains. The unfunded liability rose to $75.7 billion in fiscal 2010 from $62.4 billion in fiscal 2009. That lowered the state pension system’s funded ratio to 45.4% from a 51% funded ratio that is among the worst in the nation.

Illinois shifted to a five-year smoothing model in fiscal 2009 that limits the impact of near-term investment losses and gains. The unfunded liability would stand at $85.6 [billion], for a funded ratio of just 38.3%, based on the fair market valuation that recognizes gains and losses annually.

The unfunded actuarially accrued liability “increased between fiscal 2009 and the end of fiscal 2010 primarily as a result of insufficient state contributions as compared to the actuarially required contribution,” or ARC, the state wrote in the offering statement. [Emphasis added]

Oy.

- Posted by Rich Miller   31 Comments      


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* Rauner vetoes second bill to address gender wage gap
* Munger moves to DCEO
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* Empty threat? Or does somebody know something we don't?
* A couple of quick debate clips
* Supremes side with hospitals on property taxes
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