The second and final week of the annual state legislative veto session was a disappointing dud.
Just about nothing came together, except that one tiny part of the massive state budget problem was solved.
Sort of. And only for a year.
Gov. Pat Quinn vetoed $11 million for regional school superintendents’ salaries. The temporary one-year solution involved taking money from a corporate tax fund tapped by local governments. Chicago and suburban Cook County governments get half that fund’s money, so they contributed to half the solution, though Chicago and suburban Cook don’t have a regional superintendent.
Consider it an early Christmas present for Downstate and the collar counties.
The favor wasn’t returned when it came time to give Chicago a new casino, even though Lake County, the south suburbs and two Downstate towns would get in on the action. Quinn hated the bill the General Assembly passed in May, so the bill’s sponsors increased government oversight and significantly pared back the expansion.
Quinn didn’t much care for that bill, either, mainly because it still allowed slot machines at racetracks. Last May’s version of the gaming bill received 65 House votes, which was six votes shy of overriding Quinn’s veto. When the new version was called on Wednesday, it received just 58 votes. That’s not even a majority.
Quinn’s people were pleased the gaming bill went down. It was a victory, though there’s no real evidence that the governor was responsible for the bill’s defeat.
The governor may not have killed that gaming bill, but he most certainly kept it from getting more votes than it did last May. He “won” by staying away from the TV cameras.
During the first week of the veto session, a perpetually angry governor raged at lawmakers. All that did was make people mad.
His antics actually helped ComEd override his veto of their “smart grid” bill. By zipping his lip this week, Quinn didn’t create a harmful legislative backlash, so he “won.” Except all that tax money and all those jobs went right out the window.
By now you may be thinking, “Man, Rich, we live in a messed up state.”
Yeah, well, I have to admit, we kinda do live in a messed up state. Just ask Terry Duffy, CME Group’s executive chairman.
Duffy has been complaining about his company’s state tax burden since January. His company pays more income taxes than any other Illinois corporation, though it’s far from the largest.
Duffy has a valid point that CME is overtaxed. Most of its transactions take place out of state, so those transactions shouldn’t be taxed by Illinois.
And though Duffy started threatening to move somewhere else way back in January, nobody bothered to really talk to him about solving his problem until Senate President John Cullerton stepped in back in June. By then, Duffy had been inundated with lucrative relocation offers.
But the proposed solution, a $100 million tax reduction, shocked many legislators. The shock deepened when others began demanding even more tax breaks in return for supporting Duffy’s agenda. At last count, the “Great Illinois Tax Cut Bonanza of 2011” would cost the state budget somewhere around $700 million a year in just three years.
So, of course, that deal fell apart as well. The General Assembly will return for a rare post-Thanksgiving session to work some more. Nobody knows what Duffy will do next.
But, hey, the Legislature did pass a bill to let Chicago install speed-enforcement cameras. Maybe Chicago can give Duffy a ticket as he races out of town.
* Mayor gets speed cameras, not much else in ‘slackluster‘ fall session
* No action for gambling bill
* General Assembly takes no action on pensions, gambling
* Illinois lawmakers put off major decisions
* Gambling proponents not tossing in chips on new Southland casino
* Editorial: Foolish casino games
* Editorial: Quinn becoming irrelevant at Capitol
* Senate sends Quinn plan to pay school chiefs
* Senate passes bill funding state’s ROEs
* House adjourns without votes on CME/CBOE tax break, pension reforms
* State Senate overrides Quinn’s veto to allow harvesting of roadkill
* New plan forms to keep state facilities open, for now
* Quinn still plans to close Tinley mental health center by July
* JDC spared … at least for now
- Yellow Dog Democrat - Friday, Nov 11, 11 @ 8:58 am:
I’d love to know who thinks that Danville is a viable location for a casino.
Its hard to imagine a location in the state that is further from any population center.
- just sayin' - Friday, Nov 11, 11 @ 9:02 am:
Wish we could get rid of all of them and start over. Our General Assembly makes Greece look functional.
- walkinfool - Friday, Nov 11, 11 @ 9:17 am:
Gaming bill and tax break proposals both blew up and failed for the same reason: too many people demanding their piece.
- wordslinger - Friday, Nov 11, 11 @ 9:29 am:
Of course, if you were against further tax breaks for CME and not particularly keen on expanded gambling, it wasn’t such a bad session after all.
Yesterday, HisGirlFriday lived up to her Ben Hecht, “Front Page”-inspired handle and did some excellent digging on CMEs tax burden, drilling deep into its 3rd quarter SEC filing. As it turns out:
–“In the first nine months of 2011 when compared with the same period of 2010, the decrease in our effective tax rate was primarily attributable to a change in state tax apportionment recorded in the first quarter of 2011. This change resulted in a reduction in our income tax provision of $118.1 million due largely to a revaluation of our existing deferred tax liabilities. Additionally, in the first quarter of 2011, we began marking to market our investment in BM&FBOVESPA which resulted in a $48.8 million reduction in valuation allowances on other unrealized capital losses previously reserved.”–
Way to go, HisGirlFriday.
http://www.sec.gov/Archives/edgar/data/1156375
/000119312511304112/d231771d10q.htm#toc231771_2
- Peter - Friday, Nov 11, 11 @ 9:29 am:
@YellowDog Really? Southeastern Illinois called and wants a recount. And they even HAVE a casino.
- Michelle Flaherty - Friday, Nov 11, 11 @ 9:30 am:
That Danville casino idea is just laying the ground work for the inevitable move elsewhere. Kinda like the Silver Eagle license to Rosemont by way of Des Plaines and a decade of bumbling.
- sad - Friday, Nov 11, 11 @ 9:43 am:
So basically all the legislature has done so far is accept a bunch of money from com ed and ameren and raise our electric delivery rates. Nice job! Keep up the great work! You should all commend yourselves for demonstrating such an utter lack of caring about the public. How sad.
- Rich Miller - Friday, Nov 11, 11 @ 9:47 am:
word, as far as I can tell, there was no change in “state” tax apportionment.
- Bill - Friday, Nov 11, 11 @ 9:51 am:
As long as no gambling bill passes the campaign contributions continue to roll in from both sides. I don’t think anybody wants to kill off the golden goose just yet except maybe Rahm who doesn’t need the cash.
- Yellow Dog Democrat - Friday, Nov 11, 11 @ 9:59 am:
@just sayin’ - Most voters have very little understanding of the state’s fiscal crisis or how we got here, let alone how to get out.
Heck, they don’t even understand the fundamental relationship between taxes and spending. If you don’t believe me, look at the polling data from across the years which shows people generally oppose higher taxes while overwhelmingly supporting spending increases in nearly every area of state government.
If the General Assembly is dysfunctional, its only channeling the voters.
And the best efforts of well-intended lawmakers and advocacy groups to shift public attitudes is barely helping.
The new buzzword is “Investment.” Really? We’re going to rely on a public mired in credit card debt, a mortgage crisis, and with very little savings to understand and act responsibly based on the concept of Investment?
The reason the Investment-framed message doesn’t stand on its own is because people still ask what’s in it for Me and My Family, and they usually think of it in the same frame that guides their own personal spending: Short Term.
Think of it this way: Our veterans aren’t heroes because they were willing to lay down their lives to protect themselves and their families today. They had the courage to make great sacrifices for future generations of complete strangers.
We live in a time where most Americans are completely unconscious and ungrateful for the fact that our way of life was made possible by the sacrifices of past generations. And I’m not just talking about the sacrifices made on the battlefield.
The Interstate Highway System, our world class hospital system, our communications infrastructure, our world class university system, the energy grid, our public schools — all provide benefits to us today that were paid for by some total stranger long ago.
Yet we cling to and idolize this myth of the Rugged Individual who pulled himself up from his bootstraps.
Really, Pal? Did you make those boots yourself? Who built the hospital you were born in and the University you were so proud to attend? Who built the roads your delivery trucks drove on every day while you were making your fortune?
No man is a rock, an island unto himself. But we have forgotten that.
- Shore - Friday, Nov 11, 11 @ 10:02 am:
I’d love to see you write a column 10 ways to fix springfield or state government or the state. Or all 3.
- wordslinger - Friday, Nov 11, 11 @ 10:02 am:
Rich, their words, not mine. They seem happy with the situation, as reported to the SEC.
- Cincinnatus - Friday, Nov 11, 11 @ 10:07 am:
YDD said,
“Our veterans aren’t heroes because they were willing to lay down their lives to protect themselves and their families today. They had the courage to make great sacrifices for future generations of complete strangers.”
========
A beautifully worded statement, sir. And especially appropriate today on Veterans Day.
- Robert - Friday, Nov 11, 11 @ 10:14 am:
from a “what helps/hurts in balancing city or state budgets perspective?” I believe the legislature was 2-for-4 on the things Rich listed.
Helps - no corporate giveaway for CME; red-light camera.
Hurts - casino bill stoppage; raiding another fund to pay superintendent salaries.
- wordslinger - Friday, Nov 11, 11 @ 10:24 am:
Well said, YDD. Like our parents did, we’re supposed to be leaving it better than we found it, not just selling it off for scrap.
At the risk of losing my Commie Pinko Bolshevik Lunatic reputation when it comes to the current generation of financiers, my hat’s off to Fifth Third Bank for the whale of a show they’re putting on today at Union Station in Chicago for vets and current service members.
Walked in at 6 a.m. and the Great Hall was already decked out with balloons, giant flags and booths where you could make donations to or volunteer to assist veterans groups, send care packages or letters to those serving today, etc.
Lot of folks there at that early hour making it happen. Splendid behavior.
Now let’s get the rest of them home and refrain from seeking dragons to slay in land wars in Asia for a while.
- walkinfool - Friday, Nov 11, 11 @ 10:28 am:
Word: I wonder if CME means state tax “apportionment” between states … or if they previously over-valued deferred taxes …. or if Illinois has already provided them some beneficial allowances without changing the law.
In any case, point well-made. They are not as hurting with Illinois state taxes as they were a year ago.
- Wickedred - Friday, Nov 11, 11 @ 10:30 am:
Having been down in Springfield this week, it sickened me the lack of care that the legislators had for their constituents. Didn’t matter that people took the time to go there to try and have their voices heard, amongst the paid lobbyists who were there. Blatantly ignoring the common folk were the legislators, by the dozens. And their staff were no better. Secretaries too busy to look up from their cell phones to take information from us.
I’ve been going to Springfield for years and this was the worst I’ve seen it. Those elected officials are supposed to be representing OUR interests, yet can’t be bothered to speak with any of us. They had better think twice before asking for my vote in the future.
- mokenavince - Friday, Nov 11, 11 @ 10:31 am:
Any State that elects a guy like Quinn is going to end up messed up.And gives legislators and easy
out and do nothing. Meanwhile our State’s unemployment hovers at 10% and Quinn and the boys
still get paid. Not a word about a pay for cut that gang, the whole lot of them make me ill.Our
State flag should be flying upsidedown.P.S Bravo
for Yellow Dog.
- hisgirlfriday - Friday, Nov 11, 11 @ 10:55 am:
Thanks for the shout-out wordslinger.
Rich, thanks for looking into this situation with CME regarding state tax apportionment.
I still am mystified though how their comments to state legislators and their comments in their SEC filing can be reconciled and CME is required to tell the truth to both of them so I hope someone can ask CME to clear this up before they get handed more money from the state or more business from CME-friendly regulations approved by the CFTC.
- CicularFiringSquad - Friday, Nov 11, 11 @ 11:03 am:
Thanks to GA for
—not starting a constitutional crisis over pensions
—- correcting PQs blunder on smart grid
—- not writing a big blank check to CME before we see how much gets shelled out to MF Global
— trying to get Chicago and other towns some fresh cash from gaming
- Yellow Dog Democrat - Friday, Nov 11, 11 @ 11:16 am:
@Peter - Actually, Metropolis, IL is part of the Paducah, KY MSA which has a population that is 25% greater than the Danville, MSA.
And even in its heyday, Harrah’s Metropolis offered only 800 jobs. If you love slots, they’ve got over 1000, but only about two dozen tables.
We must dissplell ourselves of the myth of Las Vegas or Monte Carlo. Unless your entire region is branded as a gambling destination, the bread-and-butter of any casino is people who live within 30 minutes, gamble every week, and lose an average of $100.
How else do you explain the fact that the casino boasts over 1 million visitors annually while Harrah’s hotel has only 250 beds.
- Yellow Dog Democrat - Friday, Nov 11, 11 @ 11:30 am:
Thanks Cinci and wordslinger: the admiration is mutual.
I am lucky to come from a large family with even a larger oral history. My great-grandfather lived only a few miles away and passed away when I was 12. He fought in the trenches of France during WWI.
Both of my grandfathers served in Korea, and my crazy brother is in Afghanistan right now.
But it goes much deeper than that. Before she passed away, my grandmother told me about growing up in the Depression.
“We were so poor, we couldn’t afford hired help.”
It seemed like an odd, out-of-touch statement. But she went on to explain that during the Depression, instead of thinking only of themselves, families who were struggling to put food on the table would dig into their pockets to hire people who *couldn’t* put food on the table to cook, clean and do odd jobs. Oftentimes it was the black woman from across town, but sometimes it was the homeless drifter or stranger.
There have been some tremendous films made about battlefield heroism, but we have lost touch with this broader, deeper greatness of America.
- Rich Miller - Friday, Nov 11, 11 @ 11:52 am:
Word, this is the CME response…
===We recorded a reduction to tax expense of $164 million in the first quarter of 2011. Only about 1% of this related to a reduction to tax expense related to that quarter’s income. The rest of the credit related to a reduction in our deferred tax liabilities (which does not relate to cash payments or receipts of taxes) and a reduction in our tax reserves due to the increase in value of our BM&F stock (which does not relate to cash payments or receipts of taxes). ===
- wordslinger - Friday, Nov 11, 11 @ 1:03 pm:
Thanks for the CME response, Rich.
Somewhat related, there’s a hilarious story in Crains that Kraft is negotiating with the state for incentives to finance its company split.
They’re not threatening anything. They’re not leaving. They just want the state money, lol.
Kraft posted a $4.1 billion profit last year on $49.5 billion in revenue.
http://www.chicagobusiness.com/article/20111111/NEWS02/111119968/all-carrot-no-stick-kraft-seeks-state-incentives-but-has-no-plans