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Sears offered $50 million to move to Michigan

Monday, Jun 27, 2011

* Suburban Detroit has jumped into the grab a headquarters game

A package of incentives worth at least $50 million is being offered to Sears to relocate its headquarters and some 5,000 jobs to the Detroit metropolitan area, two sources familiar with the talks said Friday.

Two potential sites in metro Detroit are being offered to Sears. One is Regent Court, a Ford Motor office building in Dearborn. The other is the former Blue Cross Blue Shield of Michigan complex in Southfield, which is on the market as BCBSM moves employees to downtown Detroit.

Both Wayne and Oakland counties, as well as the Michigan Economic Development Corp., are participating in the attempt to lure the Sears headquarters, the sources said. MEDC had no comment.

The incentives being offered are said to include a mix of tax breaks, relocation grants, housing incentives and more. […]

Kimberly Freely, a spokesperson for Sears Holdings Corp., issued a noncommittal statement Friday. “We do owe it to our associates and shareholders to consider options and alternatives and intend to be very thoughtful and thorough in our deliberations,” the statement said. “Speculation about whether Sears will remain in Hoffman Estates is not fair to our associates, particularly so early in this process.”

* More

If Sears were to take Michigan up on its offer, it would mark a homecoming of sorts. Sears Roebuck & Co. bought Troy, Mich.-based Kmart Corp. in 2005 to form Sears Holdings.

Gov. Pat Quinn has said he would work with Sears to find a way to keep it from leaving Illinois.

The retailer is among 107 companies that will see tax breaks expire in the next three years, a situation that could lead to a number of defections.

* Jim Thompson was the father of Illinois corporate chasing tax breaks, and he reminisced recently with the Tribune’s Melissa Harris

“I think it would be fair to say, that 25 years later, Mitch Daniels next door has the attitude toward his job — as chief salesman for his state — that I did,” Thompson said. “It’s not just the laws of Indiana. It’s what’s the attitude of the state officials? And don’t leave out the legislature. They have as much responsibility for giving the governor the tools, as he does for using the tools.” […]

The Mitsubishi agreement was enormous, even by today’s standards, totaling an estimated $276.1 million when it was announced in 1985, or about $580 million in today’s dollars. The package included everything from $40 million for job training to $11 million for buying the land and $29.7 million in savings on federal import duties. The Tribune reported that Michigan bowed out of the competition the week before, calling the automaker’s requests “excessive.” But Illinois’ package for Sears in 1989 eclipsed it.

Thompson acknowledged it’s harder for Illinois to play offense today because of the state’s fiscal crisis and underfunded pensions. But he said Illinois can still put together a strong pitch based on its transportation infrastructure, universities, cultural attractions and workforce.

The rest, he said, comes down to personality and instinct — “knowing the people and judging their credibility.” Thompson said he couldn’t recall ever turning down a company threatening to leave; nor could he recall writing job-creation or retention requirements into an incentive agreement. Omitting job requirements is rare in the incentive business today.

* In other news, the Post-Dispatch looks at the costs and other drawbacks of smart grid technology

Across the country, smart grid projects, especially those involving new digital smart meters, have sparked a backlash. In Texas, regulators were asked to investigate the accuracy of the new meters. In San Francisco, customers are worried about electromagnetic radiation. A few California cities have declared moratoriums on the new meters. Privacy advocates worry about what utilities will do with the data they collect on consumer energy use. […]

In Illinois, it’s the debate over the regulatory framework being proposed by utilities that’s raising second thoughts. David Kolata, executive director at Citizens Utility Board, a Chicago-based utility watchdog, said the group backs the bill’s smart grid provisions. What it objects to are more sweeping changes in the legislation that could expose consumers to higher rates. […]

But getting from here to there won’t be easy or cheap. The Electric Power Research Institute estimates implementation of a nationwide smart grid will require investment of as much as $476 billion. […]

Advancing the smart grid also requires consumers to buy in. And it has been a tough sell so far. Earlier this month, Kansas City-based Black & Veatch released results of an industry survey showing the main impediment to smart grid implementation is a lack of customer interest and knowledge.

Much of the controversy has focused on the new digital meters. Some consumer advocates, like John Coffman, an attorney for the Consumers Council of Missouri and AARP, worry the devices will prove too expensive and need replacement too quickly. Coffman also worries it could make it too easy for utilities to disconnect customers who fall behind on bills.

* Related…

* 10 brands that won’t be around in 2012: The parent of Sears and Kmart — Sears Holdings — is in a lot of trouble. Total revenue dropped $341 million to $9.7 billion for the quarter which closed April 30, 2011. The company had a net loss of $170 million. Sears Holdings was created by a merger of the parents of the two chains on March 24, 2005. The operation has been a disaster ever since. The company has tried to run 4,000 stores which operate across the US and Canada. Neither Sears nor Kmart have done well recently, but Sears’ domestic locations same store numbers were off 5.2 percent in the first quarter and Kmart’s were down 1.6 percent. Last year domestic comparable store sales declined 1.6 percent in the total, with an increase at Kmart of .7 percent and a decline at Sears Domestic of 3.6 percent. New CEO Lou D’Ambrosio recently said of the last quarter that, “we also fell short on executing with excellence. We cannot control the weather or economy or government spending. But we can control how we execute and leverage the potent set of assets we have.” D’Ambrosio needs to pull a rabbit out of his hat soon. Sharex are down 55 percent during the last five years. D’Ambrosio only reasonable solution to the firm’s financial problems is to stop supporting two brands which compete with one another and larger rivals such as Walmart and Target. The cost to market two brands and maintain stores which overlap one another geographically must be in the hundreds of millions of dollars each year. Employee and supply chain costs are also gigantic. The path D’Ambrosio is likely to take is to consolidate two brand into one — keeping the better performing Kmart and shuttering Sears.

* Quinn to sign workers’ compensation reform Tuesday

* Tribune editorial: Conventional wisdom: Whatever it takes. Better union rules are only the beginning. To remain a world-class convention venue, Chicago needs to make sure exhibitors and attendees get good value at every turn. That means reining in operating costs unrelated to trade-union rules. It means improving the McCormick Place experience by tying together the convention floor with mobile applications and social-media innovations.

* Federal government takes over fund with ties to Daley’s son, Patrick

* CTA cuts 54 jobs, details $15M in savings

* Indiana Economy Stronger Than Others, but at a Cost

* Sears to spin off hardware chain Orchard Supply

* Motorola Mobility, RIM having a ragged day

* Emanuel announces plan to expand teacher training program - Academy for Urban School Leadership matches National-Louis graduate students with failing schools

* Chicago test scores up, but officials not satisfied - More kids meet standards on ISAT, but other tests show students are not prepared.

* Troubled West Side School Celebrates a Milestone

- Posted by Rich Miller   25 Comments      

Report: Lura Lynn Ryan on respirator

Monday, Jun 27, 2011

* From the Kankakee Daily Journal

Lura Lynn Ryan, wife of former Gov. George Ryan, is on a respirator at Riverside Medical Center after being admitted to the hospital last week, Ryan’s Chicago attorney Jim Thompson said this morning.

Officials at Riverside would not confirm any information regarding her patient status.

Thompson, a former governor himself, would not say when she was admitted. He also would not comment on whether or not George Ryan will be allowed out of the federal penitentiary in Terre Haute, Ind., to visit her. Lura Lynn has been diagnosed with terminal lung cancer.

Commenters should try to remember that this is someone’s mother, grandmother and wife. Disrespectful comments will be deleted.

…Adding… Mrs. Daley has also been in the hospital recently

Former Chicago first lady Maggie Daley has spent the past week at Northwestern Memorial Hospital, her doctor said today.

Dr. Steven Rosen would not disclose why she was in the hospital or the current state of her health. Daley, 67, has battled metastatic breast cancer since 2002. […]

Rosen said she was scheduled to go home on Sunday.

- Posted by Rich Miller   31 Comments      

Quinn says new seatbelt law follows “biblical principle”

Monday, Jun 27, 2011

* Backseat passengers now have to buckle up in Illinois

Illinois drivers and passengers need to buckle up.

That was the message Monday from Gov. Pat Quinn, who signed a new Illinois law requiring everyone riding in a vehicle to wear their seat belts.

Senate President John Cullerton was 1 of the measure’s sponsors, and he says the law will save lives. The bill also was sponsored by the late GOP Rep. Mark Beaubien.

Currently, people riding in the front seat of a vehicle have to wear their seat belts, but people in the back seat are only required to be belted in if they are under 18.

* More

The move strengthens the state’s current seat belt laws, which require passengers in the front seat and anyone under the age of 19 to wear safety belts. Police will be able to stop vehicles if they notice a passenger isn’t strapped in. Fines start at $25.

Exemptions include those riding in taxis or emergency vehicles such as police cars and abulances. The measure was sponsored by Senate President John Cullerton, a Chicago Democrat who authored the state’s first law requiring passengers to buckle up during the 1980s. […]

Cullerton and Quinn both recognized the work of the late Rep. Mark Beaubien, a Republican from Barrington Hills, who pushed the bill in the House. Beaubien’s family was at the bill signing at Quinn’s Chicago office.

The governor also signed a law making it illegal for passengers to ride in trailers, wagons and other vehicles while they are being towed on highways. Farm-related activities and parades are exempt.

* Listen to Gov. Quinn and others talk about the bill…

* The governor said the bill “follows the biblical principle that if you save one life, you save the whole world.”

- Posted by Rich Miller   38 Comments      

Illinois borrows from charities to pay bills as College Illinois teeters on the brink

Monday, Jun 27, 2011

* The Illinois Times broke this story a few weeks ago. The AP is now picking it up, but crediting it to the News-Gazette

Illinois has borrowed more than $1 million this year to help cover its own expenses from money taxpayers give to charity.

The state government has borrowed about $1.17 million this fiscal year from money that Illinois taxpayers designate on their tax returns for charitable use, The News-Gazette in Champaign reported.

Lawmakers signed off on the plan to help deal with a multibillion-dollar state budget deficit.

Kelly Kraft, spokeswoman for the state Office of Management and Budget, said she expects the state to repay the money within a few months. By law, the money has to be returned, with interest, within 18 months, she said.

* From the News-Gazette

Kraft said last week she expects the money to be repaid within a few months, at most. She said legislators approved the temporary borrowing to address cash-flow problems when they passed Gov. Pat Quinn’s lump-sum budget.

But some nonprofit agencies are unhappy, to say the least.

“My concern is that the taxpayers don’t know that they’re donating to charities that don’t even get their money. It just seems really inappropriate to use charities to pull money in, and then pull that money out to pay for bills,” said Stephanie Record, executive director of the Crisis Nursery of Champaign County. “This is crazy.”

Record, whose agency is slated to get about $7,000, said she had no idea the state could borrow against that money.

When the state’s crisis nurseries went through the process of getting on the tax checkoff list in 2009, they asked that very question: Will the money get held up because of the state budget crisis?

“We were told over and over and over again, ‘No, it’ll flow straight through an account at DHS (the Department of Human Services),’ and that the flow-through account would be released directly to the nurseries. Obviously, that wasn’t the case,” she said.

* From the original, June 9th Illinois Times article

For the 2008 tax year, Illinois workers donated a total of $1.4 million to 10 different funds. But, with the approval of the General Assembly, Gov. Pat Quinn authorized $434,300 in sweeps from seven of the funds in Fiscal Year 2010, when the 2008 tax year donations were first available for spending. Sweeps are transfers from special funds with specific purposes to the general revenue fund, the state’s largest pool of money, which pays for basic government operations.

For the 2009 tax year, Illinois taxpayers donated $1.37 million to 10 different funds, but during the current fiscal year, FY2011, Quinn has borrowed $1,176,100 from seven of those funds as well as five other check-off funds that are no longer listed on tax forms but were holding donated money from previous years. […]

“Soon after Governor Quinn took office after former Governor Rod Blagojevich was impeached, the state needed to exercise ways to manage cash flow due to decades of fiscal mismanagement,” Kelly Kraft, spokesperson for the governor’s office of management and budget, said in an emailed response to Illinois Times’ questions about the sweeps. She says the state has not swept any funds since the FY2010 sweeps and that the governor’s office “has no intention of sweeping funds going forward.” As to the borrowed funds, Kraft says the state only tapped “excess” funds.

Though the state had not entered into grant agreements for most of the borrowed funds, at least four fund beneficiaries were told to put their projects on hold until the money was repaid.

On March 21 Gov. Pat Quinn took $134,900 from the Alzheimer’s disease research fund, leaving less than $1,300 behind. During the previous fiscal year, the state swept $112,500 from the fund. In response to the borrowing, the Illinois Department of Public Health this spring had to renege on approved grants for researchers at Eastern Illinois University, the University of Chicago and Northwestern University, which was supposed to receive two grants.

“While promises have been made that the funds will be returned, this money was already committed to Illinois researchers for their projects. Those projects now need to be put on hold and the possibility exists that the funding will not be repaid,” the Illinois chapter of the Alzheimer’s Association told Illinois Times in a written statement.

* In other awful news

Illinois’ prepaid tuition program is facing a crisis of confidence that threatens to push it toward insolvency.

During the past three months, families have withdrawn more than $12 million from College Illinois!, according to documents obtained by Illinois Statehouse News. Families pulled out just more than $2 million during the same period last year.

Panicked parents who have asked for their money back make up a small percentage of the total contract holders, but a large contingency now are debating whether to follow suit.

The huge increase in refunds comes after scathing articles in the media, an Illinois auditor general’s report, an Illinois Secretary of State investigation and an Illinois attorney general inquiry into possible mismanagement of the program. […]

Created 12 years ago, College Illinois! allows people to pay for tuition and mandatory fees at universities and community colleges years in advance at a lower cost. The money people contribute to the program will be invested and the return on these investments will cover tuition and fee inflation over the next several years or decades.

Most of the anxiety about College Illinois! stems from its large deficit. The fund is a defined benefits program in which a person who pays in now is guaranteed a certain payout. The program went from being 7 percent unfunded for future and current contracts in 2007 to 18 percent as of May.

Adding to the crisis of confidence is a decline in new enrollments, which could dry up as soon as 2014 if recent trends continue, according to projections by Illinois Statehouse News based on Illinois Student Assistance Commission numbers.

“I don’t think there’s going to be very many people who are willing to now subscribe to this program anymore, because it’s like investing in a bankrupt company,” George Pennacchi, professor of finance at University of Illinois in Urbana Champaign.

Andrew Davis, executive director for the Illinois Student Assistance Commission, or ISAC, said he is confident the fund is sustainable and will honor all current and future contracts.

“We’ve paid all our current bills on time and in full. We have fully accounted for with an aggressive view towards what future tuition will be,” Davis said. “The fund is significantly stronger than it was two years ago.”

* Related…

* Quinn spokeswoman gets 48% pay increase: Gov. Pat Quinn’s budget office spokeswoman will be making nearly 50 percent more money after receiving an additional job title this spring. Kelly Ann Krapf, a former broadcast reporter who uses the name Kelly Kraft, received a salary boost from about $71,000 to more than $105,000. Krapf, 38, joined the budget office in 2009 after working at the Fox News television station in Chicago. Quinn spokeswoman Annie Thompson said Krapf now holds a dual position of communications director and assistant director of the office.

* College Illinois on slippery footing

* Video: Jim Durkin on College Illinois

- Posted by Rich Miller   11 Comments      

Cullerton: No apologies

Monday, Jun 27, 2011

* My weekly syndicated newspaper column

Illinois Senate President John Cullerton has received a lot of bad press, sharp condemnation from Republicans and even some quiet criticism from his own members over the past month.

But Cullerton made no apologies during an interview last week for the way his caucus sought to hold the state’s public works bill hostage by tacking on $430 million in additional budget items. The move was rejected by both parties in the House and by the Senate Republicans and even, in the end, by Gov. Pat Quinn, who had pushed for additional spending all year. The General Assembly had to return to town last week so the Senate could officially back down from the spending and send a “clean” bill to the governor’s desk.

The Senate President told me numerous times over the past several months that he believed he could convince fellow Democrat House Speaker Michael Madigan to go along with his budget plans. In the end, however, Madigan stuck to a budget pact he’d made months earlier with House Republican Leader Tom Cross and beat back the Senate Democrats’ plan. So, what went wrong?

“I don’t think anything was a mistake,” Cullerton insisted. He blamed Cross for the collapse of his members’ spending plan. Cross, he said, couldn’t comprehend what the Senate Democrats were proposing: moving money away from some special state funds in order to pay for his caucus’ program spending demands. Cullerton claimed he first approached Cross about the idea three weeks before the end of the session. It wasn’t until the session’s end, he said, that Cross finally grasped the concept, but by then, Cullerton claimed, it was too late.

Several members of his own caucus have grumbled since May 31st about the way Cullerton seemed to give free rein to Black Caucus members and others who aggressively pushed for a showdown with Madigan over the budget and absolutely demanded the additional spending which caused all the trouble. At one point last month, many in that group wanted to force an overtime session rather than pass any budget bill.

Ironically enough, many of those same grumblers who said Cullerton needs to act more forcefully to quell the chaos within his caucus were also the most unhappy with the way former Senate President Emil Jones too often ran his show with a heavy hand. What seemed to irk them most, however, was that a minority of the caucus was able to once again force the majority into an untenable position.

To be fair, no caucus has experienced more internal revolts than the Senate Democrats over the past 40 years. It is, by far, the least “manageable” of the four legislative caucuses. And white legislators from the city and suburbs (in both chambers) always complain at the end of spring session that Downstaters, Latinos and African-Americans are being placated while they’re being left out.

The Senate President chose to look at the bright side.

“Rather than take us into overtime, I got the caucus to vote for the budget,” he pointed out. That was most certainly no mean feat considering the intensely heated opposition to the House’s budget within his own caucus. “My goal was to pass a budget, which we did.”

He also said he now has “leverage to renegotiate the budget in the middle of the fiscal year.” Why? Because, Cullerton said, the House’s budget is full of “phony” cuts. Indeed, the House put off well over a billion dollars in spending until after the end of the fiscal year.

Cullerton seems determined to undermine the legitimacy of that budget, and his focus appears to be on forcing Tom Cross to admit he made a mistake. It’s arguable, Cullerton said, that the Senate cut more than the House did. And the Republican Cross, he claimed “is unaware of how bad his budget is.”

“We’ll get our vindication, if you will, in January, when people realize that we have to cut the budget again,” Cullerton predicted.

As for the grumbling in his own caucus, Cullerton said that nobody has come to him with any of those concerns. “I’m not going to change my personality,” he said, adding “I don’t like to dictate to people.”

However, Cullerton also had a piece of advice for those in his caucus who are constantly clamoring for war with the House Speaker. “You do not win by fighting Mike Madigan.”

Very true.

* Meanwhile

There’s another potential problem with the operations budget state lawmakers approved last month: Not enough money to pay all employee salaries for the full year that begins July 1.

“I don’t see Quinn announcing firings,” said state Rep. Frank Mautino, D-Spring Valley. “I think they will pay them until the money runs out.”

Quinn’s options are limited. He signed an agreement with the American Federation of State, County and Municipal Employees union to not lay off employees or close facilities before June 30, 2012, the end of AFSCME’s current state contract.

“There is not enough money in the budget to fully fund (salaries),” said Quinn budget spokeswoman Kelly Kraft. “This is something we continue to examine as we work to manage and implement an incomplete budget passed by the General Assembly.”

* And

“There’s a lot of things in the House budget that need to be corrected,” Cullerton said Wednesday. “The House budget grossly under-appropriates a number of areas.”

As an example, the budget reduces spending on schools but didn’t change the way the money is distributed, which could result in the formula running out of money before the end of the next fiscal year.

Voices for Illinois Children, a statewide advocacy group, says the budget cuts spending on pre-school programs, which could result in a loss of services for 5,000 children.

Advocates for Illinoisans with disabilities say the plan shortchanges funding for state developmental centers like the Choate Developmental Center in Anna.


- Posted by Rich Miller   13 Comments      


Monday, Jun 27, 2011

* From Ward Room’s Twitter feed

Blagojevich jury says they have come to a unanimous decision on 18 counts and can not come to an agreement on 2 counts

Blagojevich jurors do not feel further deliberations will end their disagreement. Verdict is soon

* NBC5’s live feed is here. ABC7’s feed is here. CBS2’s feed is here. WBBM Radio’s feed is here. WGN’s live feed is here.

* BlackBerry users click here. Everybody else can just kick back and watch the situation play out…

- Posted by Rich Miller   188 Comments      

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