Capitol Fax.com - Your Illinois News Radar » 2011

Monday, Jun 13, 2011 - Posted by Rich Miller

* As the Rod Blagojevich jurors deliberate, let’s take a peek at Jim Warren’s column about former Mayor Daley…

And since I was rushing back to the trial of former Gov. Rod Blagojevich, I asked about him. Mr. Daley is wary of kicking a guy while down, so I got the response I did when he was mayor.

“Cuckoo.”

* The Question: What one word would you use to sum up Rod Blagojevich’s tenure as governor?

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*** UPDATED x1 *** Stand for Children wins big as CME wants a tax change

Monday, Jun 13, 2011 - Posted by Rich Miller

* Capitol Fax readers have been learning about Stand for Children’s attempt at big-footing Illinois politics since last October. It took the mainstream media months to catch up, even after Stand for Children accumulated and spent huge money during the election, and even as the group’s major issue, education reform, played out at the Statehouse.

Today, Gov. Pat Quinn will sign the education reform bill that probably wouldn’t have even been introduced without the group’s involvement. So, it’s the Tribune’s turn to catch up…

As Edelman focused on Illinois last fall, he saw an opportunity. A new state law set to take effect Jan. 1 would for the first time limit the size of political donations, but the window was closing fast.

“I didn’t need a rocket scientist,” Edelman said.

He shook the money tree.

The people who quickly poured big bucks into Stand for Children’s campaign kitty include a Chicago-centric crew of philanthropists whose interests in improving education coincide with a willingness to write big checks. […]

The group didn’t spent it all, and it’s now sitting on about $2.9 million, a significant sum now that the biggest check an individual can write a political action committee is $10,000.

Go read the whole thing.

* Speaking of campaign contributions, the Chicago Mercantile Exchange gave big bucks last year to politicians who turned around and raised the company’s taxes - a move that Merc’s parent company says could force it to leave Illinois…

The exchange has donated $1.27 million to Illinois politicians in the last two decades, with almost $500,000 of those campaign contributions coming in the last 1-1/2 years, including: […]

* Two contributions together worth $150,000 to state Democratic Party leader Michael Madigan’s efforts to continue as speaker of the Illinois House.

* A $50,000 donation to Quinn’s general election run last year, after the exchange gave $40,000 to the governor during the Democratic primary campaign.

* CME’s estimates of its state tax liability means it will pay about 5 percent of all new corporate income taxes generated by January’s tax hike. The company certainly has a point about the unfairness of the corporate tax structure here…

But in the April interview, Duffy said the tax hike felt like a slap coming right after the company’s investment in Aurora, which created a lot of jobs in the state.

He also noted the state’s tax structure hits some companies harder than others.

A restructuring of the state’s tax law restricted the tax to profit on in-state sales and eliminated property value and payroll size from the formula. The change benefited multinational manufacturers with sales all over the world.

In fact, two-thirds of corporations filing Illinois returns owed no taxes in 2008.

“I’m not suggesting I have the answers,” Duffy said in April. But, he said, it would be better if everybody paid a little.

* And here’s what the company wants…

CME Group may not only seek an incentive package. According to sources, the company is considering a request for a change to its industry’s corporate income tax formula. […]

Revising “apportionment rules” in this way would require the approval of the General Assembly. Already, some industries have different rules. For instance, airlines operate under a different tax formula than other transportation companies.

If the changes being considered by CME Group are approved, Illinois’ overall corporate income tax rate of 9.5 percent would remain the same for Chicago’s exchanges. What is subject to that rate would change, in order to lower the company’s tax burden. […]

CME Group is expected to argue that because of the way its business is structured and conducted, the company had the highest effective state and local corporate income tax rate among the top 50 Illinois public companies that paid those taxes in 2010. […]

According to an analysis of public filings obtained by the Tribune, CME Group’s state and local income tax rate was 8.9 percent in 2010. It was the only company in the 8-9 percent range; four companies had a rate between 7 and 8 percent.

* And while we’re on the subject of taxes, Mayor Emanuel says he wants to roll back the city’s head tax…

Mayor Rahm Emanuel said today he remains committed to phasing out a corporate employee “head tax” that brings in about $19 million annually to the city.

“I believe it’s a disincentive for companies,” Emanuel said at a news conference to announce United Airlines will be bringing 1,300 more jobs to Chicago. “My goal is — and it will reflect it when I do my budget — that we will roll back a buck a year, so that over my term, it will be the $19 million that is quote unquote raised, will be eliminated.”

*** UPDATE *** Interesting…

CME Group Inc. is looking to sell most of the Chicago Board of Trade building, putting one of Chicago’s most iconic structures on the market.

The disclosure comes less than a week after the exchange operator warned it may leave Illinois to avoid an increase in corporate taxes. Yet a CME spokesman said the sale of the Board of Trade building isn’t connected to discussions over a potential move and declined to say whether it would make an exit easier.

The 80-year-old Art Deco building is comprised of three towers and houses the trading floors for agricultural commodities such as corn and wheat and financial derivatives such as interest-rate futures. It was designated as a historic landmark in 1978 and anchors Chicago’s financial district.

CME said it has hired Jones Lang LaSalle Inc. and Holly Duran Real Estate Partners LLC to market the north and south towers, which include the trading floors for agriculture commodities. CME said it would lease back the space it currently occupies in the buildings, including the trading pits.

* Related…

* Education reform bill makes it tougher for teachers to strike, easier to be fired

* Jean-Claude Brizard: A push for longer school days

* Tribune editorial: The leadership gap

* Sun-Times Editorial: U. of I. must be open to kids of all incomes

* Sun-Times Editorial: Now not the time to cut preschool funds

* Editorial: State’s college savings programs fail

* Report: Suburbs spending more on lobbying

* Transit agencies spend big on lobbying at state level, study finds

* Report Maps $140M in City and County Savings

* Controversial O’Hare concession contract poses test for Emanuel - Mayor must support Daley’s selection process or start over

* Chicago’s new transportation chief sets a new course - Klein hopes to drive city toward public transit options

55 Comments

Could the gaming bill shrink?

Monday, Jun 13, 2011 - Posted by Rich Miller

* Three stories over the weekend suggest the gaming bill could be lopped off a bit. AP…

Senate President John Cullerton has put a hold on the measure as he and other Democrats consider ways to scale it back. That hold stops the clock on the legislation and buys legislators time before an upcoming special session.

* But scaling it back won’t be easy…

If Quinn amends the bill, the House and Senate must approve his changes. But removing proposed sites in Chicago, Rockford, Danville, the south suburbs or Park City, or dropping the racing components, would reverse support from lawmakers representing those interests.

“I control the bill. I’m the only one who can call the bill, and I’m the only one who moves the bill,” said state Sen. Terry Link (D-Waukegan), whose district includes Park City. “Do you really think I would allow the bill to move forward without mine being in it?”

Multiply Link’s stance by 95—the number of lawmakers who voted for the bill — and you can understand how changes could sink it. It received the bare minimum 30 votes to advance from the Senate.

Link said he plans to meet with Quinn in the next few weeks to discuss the possibility of follow-up legislation to address Quinn’s concerns. The goal would be to convince Quinn to sign the bill on the condition a follow-up bill might later scale down the scope.

* And the House sponsor isn’t all that excited about reducing it…

State senators are looking for ways to shrink the size of a major casino expansion lawmakers just approved in the hopes of avoiding a veto by Democratic Gov. Pat Quinn, who fears too much gambling is packed into the plan.

The gambit faces two significant challenges. It’s unclear how much lawmakers would have to cut out to pass muster with the governor. And the gambling deal had so many pieces to satisfy so many interest groups, removing one could send the whole thing toppling down. […]

Rep. Lou Lang, a Skokie Democrat who sponsored the measure in the House, said he was surprised to hear his colleagues were considering changes when Quinn has yet to weigh in with specifics about what he would sign off on and what he wouldn’t.

Lang said it’s “premature” to start nixing parts of the plan, noting that negotiating such a large deal requires weighing many interests. He said peeling away some portions in an attempt to bring Quinn on board could put the whole thing in danger.

“I’ve been working on this bill for 20 years, and I finally found the right combination,” Lang said. “If slots at tracks come off, you can’t pass the bill. If the money for downstate agriculture comes off, you can’t pass the bill. If you take out casinos for Danville and Rockford, it might damage the ability to pass the bill.”

* Related…

* Gambling package hinges on Quinn decision: “I wouldn’t have voted for it if it didn’t have slots at the racetracks,” Poe said. “I’ve got an agricultural background. It’s a lot bigger business than people realize. There’s a lot of jobs that surround horseracing. We’re just losing that industry. In that main gaming bill, excluding the fairgrounds, there’s a lot of money going to (university) extension (programs), water conservation. There’s a lot going to rehabilitate 4-H, county fairs. I think that brought a lot of downstaters onboard that wouldn’t have been with that. I don’t think it would have passed without that.”

* Churchill urges customers to push slots in IL

* How casinos can be a boon-or bust-for local economies

26 Comments

“See you in July”

Monday, Jun 13, 2011 - Posted by Rich Miller

* If you’ve been wondering what’s really going on with this potential special session, read my latest syndicated newspaper column…

Illinois Senate President John Cullerton says he had a simple message for House Republican Leader Tom Cross in the waning hours of the spring legislative session: “See you in July.”

As you probably know by now, Cullerton’s Senate voted to add $430 million to the House’s austere state spending plan. The Senate initially wanted to spend a billion dollars more than the House, but many of Cullerton’s Democratic members demanded that they at least get something, so they came up with a list totaling $430 million.

House Speaker Michael Madigan couldn’t agree to the additional spending unless Leader Cross also signed off because the two had decided months earlier to stand together on the budget. Cross said he wouldn’t agree to the additional Senate spending, even though Cullerton said he’d found a way to pay for it.

So, Cullerton tacked his member requests onto the capital plan bill, which also contains road construction money. The House refused to agree to the amendment and Speaker Madigan announced that he wanted to appoint a conference committee to work out a deal over the summer.

No dice, said Cullerton. The Senate has no intention of acting on Madigan’s request and wants a new bill, he said. Cullerton could be voted down by the other three caucuses in a conference committee, so that idea is out, he said.

And despite claims by House leaders in both parties that the administration can spend money approved this fiscal year on projects next fiscal year because the state’s “lapse period” was extended out to six months, Cullerton believes that lots of road construction will stop very soon.

“They have the money,” Cullerton explained, “but they have no authority to spend it.”

Gov. Pat Quinn agrees with Cullerton, saying all construction work will have to start shutting down after June 17.

Quinn has said that a special session may have to be held sometime soon to work out this problem, or, as Cullerton put it, “The second largest road construction season in the history of Illinois will come to a halt.”

“I won’t be forcing a special session,” Cullerton said. “The road builders will.”

Cullerton promised to reduce his caucus’ budgetary add-on demand from $430 million down to $280 million. He said he’s backing away from $150 million for the General State Aid program for schools. The House’s budget keeps the official school spending level the same, Cullerton explained, but it deliberately under-funded the program by $150 million. The Legislature can come back in January and add back that cash, he said.

But how will he pay for these budget requests? Well, the Senate President said he purposely left out at least $280 million in what are known as “trouts” from the budget implementation bill to fund the increased spending he wants.

This may seem complicated, but it’s not, so stay with me.

Transfers out, or “trouts” as they’re more commonly called, are inserted into the budget implementation bill every year to transfer cash from the state’s bank account into special funds. They’re done almost as a matter of course, but Cullerton decided to short some of the trouts this year to pay for his members’ requests. But the House Republicans wouldn’t go along with the plan and that’s when Cullerton made his comment about seeing Leader Cross in July.

Cullerton also more than hinted that he plans to reintroduce his dollar a pack tax hike on cigarettes to help pay for the capital plan when the General Assembly returns — a proposal that has so far been rejected by the other three leaders.

As I write this, he’s also preparing to demand that both chambers come back to Springfield to pass a new legislative furlough plan. The Senate introduced a 12-day furlough plan, but never passed it. The House passed an identical proposal, but it’s still sitting in the Senate awaiting action.

The House, for its part, wants the Senate to come back to town on its own, back off its demand for that extra program spending and then pass the furlough bill that the House already approved. But several members of the Senate President’s Democratic caucus are itching for a fight over that extra spending, as is the governor.

For right now anyway, nobody is backing down and I’m not making any vacation plans.

* Related…

* Road builders already see effects of capital-bill impasse: Mike Sturino, president of the Illinois Road and Transportation Builders Association, said contractors have been notified by the state not to start work on projects on which bids were approved April 29.

* Finke: Lislators set to begin work on capital bill

* They’ll be back: It’s a dangerous game the Senate Democrats are playing. If they insist on pursuing the additional cash and the House doesn’t concur, they could be facing serious backlash for putting tens of thousands of laborers out of work.

17 Comments

Today’s must-read

Monday, Jun 13, 2011 - Posted by Rich Miller

* Unions have gotten the blame for the high costs at McCormick Place. But they’ve never been the real problem. It’s mostly about the contractors and the associations. Crain’s explains why…

Average drayage rates at Orlando and Las Vegas convention centers are 42% and 51% lower than McCormick Place, respectively, according to a 2009 Tradeshow Week survey. GES and Freeman say one reason is that labor costs are lower in those cities, but drayage is also 38% cheaper at the Donald E. Stephens Convention Center in Rosemont, which operates under the same labor agreements as McCormick Place.

The Stephens center uses an in-house contractor, Rosemont Exposition Services, to manage its freight.

Show management — the trade associations that stage conventions — also make good on the exhibitors’ nickel. McCormick Place leases floor space to the associations at $1.30 to $1.80 per square foot.

But associations charge exhibitors $20 to $40 per square foot. A show with 300,000 square feet of exhibitor space would pay McCormick Place up to $540,000 but collect $12 million from exhibitors — a better-than-2,000% markup. […]

In its exhibitor kit for the Digestive Disease Week Show in April, Freeman misleadingly implied exhibitors didn’t have a choice. “As the official service contractor, electrical installations must be performed by Freeman union labor,” the document reads.

Neither Freeman nor the critical-care association bothered to tell Ms. Canavan she had a choice. She saved money by choosing ETS but only after McCormick Place called to say she had that option.

There’s more. Much more. Go read the whole thing.

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