Capitol Fax.com - Your Illinois News Radar » 2011

Wednesday, Aug 24, 2011 - Posted by Rich Miller

* On a scale of one to ten, with one being the worst and ten being the best, rate House Republican Leader Tom Cross’ job performance.

Take the poll and then please explain your answer in comments…

Online Surveys & Market Research

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Airlines, Sears taking advantage of Downstate tax havens

Wednesday, Aug 24, 2011 - Posted by Rich Miller

* The sales tax haven scam is a very big deal. I’ve been covering the issue for months. And now it appears that two very large airlines are also in on it…

The two biggest airlines at Chicago’s O’Hare International Airport route their jet fuel purchases through an outlying Illinois town, shaving millions of dollars off their tax bills but raising the hackles of Chicago officials.

The airlines’ tax break agreements with Sycamore, which have flown under the radar for years, have allowed United and American subsidiaries each to trim as much as $12 million to $14 million off their annual tax bills in recent years, documents show.

By routing big purchases through a lower-tax enclave, the airlines are taking advantage of Illinois’ unusual tax rules to avoid tax rates that are as high as 9.75 percent in Chicago. […]

United Aviation Fuel Corp. opened a small office in Sycamore after negotiating a sales-tax rebate agreement with the city in 2001, which was updated in 2003. American Aviation Supply LLC negotiated a pact in 2004, opening an office in a city-owned building the next year. Each operation employs only one or two people, city officials said. [Emphasis added]

* According to the RTA’s top lobbyist, Sears is also participating…

Matyas said his agency knows of 33 companies getting sales tax rebates from Kankakee and eight from Channahon. He said Sears Holdings Corp. is among the companies involved.

Sears gets all those state and local subsidies and then avoids paying regional sales taxes? Great. Just freaking great.

* However, as I told you yesterday, the suits filed by Chicago and the RTA against Kankakee - and the resulting publicity in the Chicago media - appear to be flawed. Kankakee has cut deals with a large number of out of state companies to be their Illinois sales tax nexus, which is why those dollar amounts claimed for the city are so large. Kankakee Mayor Nina Epstein responded via press release…

“There seems to be a great deal of misunderstanding with what we are doing here in Kankakee - a vast majority of these businesses are located outside of Cook County and Illinois, and in fact, we are actually bringing in revenue to Illinois.”

* Meanwhile, it’s absolutely baffling to me that WBEZ would allow these claims by Indiana Gov. Mitch Daniels to stand without comment…

Daniels insists he isn’t trying to start a border war with Illinois and doesn’t take issue with it for raising its corporate income tax.

“It’s not for me to give advice to anybody else. Every state has to make its own decisions and I respect that,” Daniels said. “I never say anything negative about anywhere else…”

* He never says anything negative about anywhere else? You could’ve fooled me…

The burgeoning fiscal crises in state and local governments took a turn toward fiction Tuesday, with Indiana Gov. Mitch Daniels comparing Illinois’ problems to an episode of “The Simpsons.”

“You guys are nothing if not entertaining over there,” he said with a laugh on the Don and Roma show on WLS-AM. “It’s like living next door to the Simpsons — the dysfunctional family down the block.”

* And then there’s the Illinoyed website and ad campaign run by Daniels’ adminstration…

* And the accompanying earned media hit by his commerce secretary…

“The new marketing slogan for Illinois must be: ‘Come for the higher taxes, stay for the corruption,’” said Indiana Commerce Secretary E. Mitchell Roob.

* The AP quoted Roob yesterday dissing us again…

Illinois Chamber of Commerce President Doug Whitley has been a harsh critic of the income tax increase, but he said regional cooperation makes far more sense than the scrambling states are doing now to lure jobs from each other. It’s an argument many economists make, too, saying that working to draw companies from one location to another doesn’t create new jobs.

“The reality is, our economies are very much intertwined; when a plant is built in Indiana there’s a very good likelihood that they’re getting products and they’re getting components from Illinois,” Whitley said. “It is in Illinois’ interests to have a better relationship with our neighboring states.”

Indiana Secretary of Commerce Mitch Roob, though, said his state sees no benefit in trying to work with its higher-tax neighbor.

“We’ve got to differentiate ourselves nationally and internationally from Illinois,” he said. “As long as Illinois is not a competitive location from a tax standpoint, there’s no way we can market with them.”

And, of course, there was this…

Daniels invited the company executives to a mock citizenship naturalization ceremony Tuesday to welcome them to the state.

But, hey, maybe if Mayor Rahm Emanuel threatened to site the Chicago casino in Gary, then Gov. Pat Quinn might finally get off the dime on the gaming bill.

* If suburban voters weren’t already angry enough about the income tax hike, the ruling Democratic Party ought to prepare itself for another hurricane of rage…

Illinois tollway leaders signaled they’ll vote on proposed toll hikes this week as a series of tempestuous public hearings concluded Tuesday.

“At this point, we’ve had nearly 1,400 people attend the hearings, and based on the comments we’ve received, about 85 percent have expressed support for the plan,” tollway Chairman Paula Wolff said in an email. […]

Tuesday’s hearings were in Schaumburg, Buffalo Grove and Montgomery. Construction unions and professional engineering associations were strongly represented at the Schaumburg hearing, with members speaking passionately in favor of the jobs that would be created by the project.

Wolff is dreaming if she thinks this price hike will be beloved.

* Related…

* Power out to several Loop buildings after second ComEd ‘issue‘

* Competitive era begins in downstate electricity market

* Illinois granted $5.1M for insurance exchange

* City biz leaders back Emanuel’s call for casino

* Microsoft co-founder Bill Gates’ investment firm now owns nearly 6 percent of equipment maker Deere & Co.’s stock.

* Foreclosures keeping cleanup companies busy

* AIG launches search as it mulls downtown move

* Art Institute names insider Douglas Druick as president

* Head of Sears’ Kenmore, Craftsman brands resigning

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Madigan and Boehner, sitting in a tree

Wednesday, Aug 24, 2011 - Posted by Rich Miller

* People are certainly all atwitter about this Sun-Times story…

Talk about strange bedfellows.

Two weeks ago, U.S. House Speaker John Boehner (R-Ohio) came to Hinsdale to raise money for Republicans to fight the congressional map drawn under the direction of state Democratic Party chief and Illinois House Speaker Michael Madigan.

The very next night, the congressman broke bread with Madigan (D-Chicago) at a fund-raiser for Boehner’s leadership fund at the Lemont home of Chicago Mercantile Exchange Chairman Terry Duffy.

Madigan’s spokesman said he didn’t contribute to Boehner and was at the leadership fund event as a guest of Terry Duffy, who has repeatedly said that he’s considering moving part of CME’s operations out of Illinois.

Speaker Madigan skipped Governor’s Day at the Illinois State Fair last week and was a no-show for President Obama’s Illinois visit the same day. But that was a week or so after Boehner’s event. By then, he was on vacation, as was US Sen. Dick Durbin, who was also a no-show for both events, but obviously didn’t go to Boehner’s shindig.

Madigan is not a party builder, except when it comes to his own legislative chamber. He is perhaps the oddest Democratic chairman of any state. Then again if he did get more involved in local party building activites, he’d almost definitely get whacked for trying to extend his “evil tentacles.”

* The Sun-Times found a hostile Democrat to comment on Madigan’s attendance…

“Going to a fund-raiser for the speaker of the House, who has done nothing to cooperate with the president of the United States, really is unfortunate,” Democratic Party strategist and consultant Kitty Kurth said. “I think that the speaker could strengthen the Democratic Party in Illinois if he showed the same kind of respect and cooperation with other Democrats, including Gov. Quinn.

“I would hope that the chairman of our Democratic Party in Illinois can find some time to attend events with Democrats across the state and support their campaigns,” she continued. “If you want Democrats to show up for you, you need to show up for them.”

So, the Speaker of the Illinois House meets the Speaker of the US House. Your thoughts?

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Sandoval scholarships forwarded to FBI - And more on that withdrawn amendatory veto

Wednesday, Aug 24, 2011 - Posted by Rich Miller

* The Sun-Times drives another very large nail into the legislative scholarship program’s coffin…

A tan-bricked bungalow in the 4500 block of South Avers Avenue must be a popular hangout for college kids.

Five students certified that same home —owned by a paid campaign staffer to state Sen. Martin Sandoval (D-Cicero) — as their permanent residence in order to qualify for highly sought tuition waivers handed out by Sandoval.

The senator told the Chicago Sun-Times he has no explanation for that peculiar coincidence and blamed the State Board of Education for not discovering it, even though Sandoval put his signature on each scholarship application before submitting them to the agency.

After being questioned about the oddity last week by the Sun-Times, a State Board of Education spokesman said his agency has turned the matter over to the FBI and to the Legislative Inspector General’s office for further investigation.

“It seemed strange five individuals who did not have the same last name would list the same address, and so we wanted someone to look into that,” board spokesman Matt Vanover told the Sun-Times.

State law requires that students receiving legislative scholarships live within the awarding lawmaker’s district, and providing any “false or misleading” information on their applications can result in the waivers being revoked and the students having to repay the colleges for the tuition freebies.

Sen. Sandoval blamed his staff, the Illinois State Board of Education and Rudy Acosta, who owned the home. He took no blame for himself.

* Meanwhile, the Legislative Inspector General wants much tougher ethics rules for legislators…

Illinois lawmakers should be subject to censure for misconduct, banned from voting on legislation where there is a conflict of interest and required to make more of their financial matters public, according to a state inspector general’s proposal.

The changes are needed because the 44-year-old law now in place has “proven to be weak medicine,” Legislative Inspector General Thomas Homer wrote in a letter to all 177 lawmakers. Ethics violations result in “no remedial action whatsoever” because the law suggests “merely ideals toward which legislators should strive.” […]

Lawmakers are allowed to declare conflicts of interest and then vote their consciences on legislation. But Homer, a former Democratic lawmaker, said legislators with conflicts should not be able to debate bills, let alone vote for or against them. He also said the current economic disclosure forms are too vague to be effective and need to be beefed up to require lawmakers to make public more financial matters.

Homer said he has seen “apparent violations” of the code of conduct from 1967 that could not be enforced because the law more or less outlines guidelines that “preclude enforcement.”

* As you already know, Governor Pat Quinn’s staff mistakenly sent out an amendatory veto late yesterday afternoon that would have addressed some of Homer’s concerns. The staff then withdrew the notification and asked that it not be published. The AV can be read in full by clicking here…

Recently, the Legislative Inspector General called for stronger provisions related to conflict of interest voting. For over three decades, I have supported ending conflict of interest voting by members of the General Assembly. In 1976, the people of Illinois signed a petition containing 635,158 signatures demanding a prohibition on conflict of interest voting. Today, the people of Illinois demand no less.

* The governor’s proposed (but not really, since they withdrew it) changes to the statute…

When a legislator must take official action on a legislative matter as to which he has a conflict situation created by a personal, family, or client legislative interest, he shall eliminate ~~should consider the possibility of eliminating~~ the interest creating the conflict situation if that is feasible. If that is not feasible, he shall abstain ~~should consider the possibility of abstaining~~ from such official action. […]

He need not abstain if he decides to participate in a manner contrary to the economic
interest which creates the conflict situation. […]

Sections 3-201 through 3-205 shall ~~are intended only as guides to legislator conduct, and not as rules meant to~~ be enforced by disciplinary action, including fines and censure as determined by the Legislative Inspector General.

Thoughts?

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