Question of the day
Tuesday, Nov 8, 2011 - Posted by Rich Miller
* I just posted this story on the veto session live blog, but then thought it might make for a good question…
A new report shows 46.2 percent of single-family homeowners in the Chicago metropolitan area in the third quarter had negative equity, meaning homeowners owed more on their mortgages than their homes were worth. That represents an increase from 32.9 percent a year earlier, according to the report from Zillow Inc.
It also is up from 42.2 percent in the second quarter.
The report showed home values dropped 9 percent from the third quarter of 2010 and dipped 1.1 percent from the second quarter.
Home values have fallen 37.4 percent since their peak in July 2006 and are now back to the level they were in December 2000, according to Zillow.
* The Question: Is your house currently worth less than what you owe on your mortgage? Take the poll and then explain your answer in comments, please.
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*** UPDATE *** If you’re watching the veto session live blog, you already know that the newly revised gaming bill passed the House Executive Committee 8-2.
[ *** End Of Update *** ]
* As I write this, the House Executive Committee is debating the newly revised gaming expansion bill. Watch the proceedings at our live blog. The Tribune has lots of details on the new bill…
The new Chicago casino would keep its 4,000 gambling positions but wouldn’t be allowed to station them at the city’s airports. Slot machines would no longer be allowed on the state fairgrounds in Springfield. Quinn didn’t want the gambling machines there because the fair is a family destination.
Along with Chicago, new casinos still would be authorized for Rockford, Danville, the south suburbs and Park City in Lake County. Quinn specifically had objected to designating Park City as a location for a new casino when he outlined his framework for what would be a more acceptable gambling expansion plan. Quinn preferred to designate Lake County as a whole instead.
Overall, there would be 7,000 fewer authorized gambling positions than in the plan lawmakers approved in late May, which Quinn threatened to veto.
The current 10 riverboat operators would get 4,000 fewer positions under the new plan — being allowed to expand from 1,200 spots to only 1,600 instead of the 2,000 originally promised.
The four new casinos outside Chicago would get 1,600 fewer positions total — each being allowed 1,600 positions to start instead of the 2,000 previously promised. The rest would be cut from the Quad City Downs track and the fairgrounds.
Gov. Pat Quinn, of course, opposes slots at tracks. But a bill without those slots wouldn’t pass. Quinn also wanted a campaign contribution ban from casino owners, but that was dropped as well. Quinn’s campaign received hundreds of thousands of dollars last year from the Pritzker family, which owns part of a casino, and from the children of the Des Plaines casino owner.
* In other news, Illinois Statehouse News has a good report on yesterday’s hearing on Speaker Madigan’s proposal to set a cap on wages and benefits that can be negotiated by the state’s public employees unions…
In the fight for control over Illinois’ purse strings, House Speaker Mike Madigan says the Legislature, not Gov. Pat Quinn, decides how to spend the taxpayer’s money and balance the Illinois budget.
“I don’t necessarily subscribe to the view that what the executive (branch) does binds the legislative (branch),” the Democrat from Chicago said at a statehouse hearing Monday here.
The hearing allowed Madigan to further showcase his legislative resolution that would allow the Legislature to indicate how much the state can spend on employee pay during upcoming contract negotiations between Quinn and the state’s largest public-sector union, the American Federation of State, County and Municipal Employees, or AFSCME.The contract expires in June.
“One of our responsibilities, under the constitution, is to adopt a balanced budget. Which means, under the constitution, we are expected to be involved in budget making,” Madigan said. “We do not want to replace the governor in negotiations.”
Henry Bayer, executive director for AFSCME Council 31, said Monday that the Legislature gave Quinn the authority that Madigan wants to change.
“The Legislature passed the current collective bargaining (legislation), and gave to the governor the power to negotiate collective bargaining agreements,” said Bayer. “We’ve been doing that … since 1984.
But Madigan said Illinois is broke and the Legislature needs to have input in the negotiations.
* More…
“We do not want to replace the governor in negotiations,” Madigan said. “It’s about getting a handle on costs. It’s not about repealing collective bargaining.”
The resolution says the state “will appropriate no more than X% for wage increases” for union contracts. The “X” percentage has yet to be worked out.
Bayer said the legislature gave the governor authority to negotiate contracts for employees under his jurisdiction. Putting a limit on raises before negotiations start “does have an impact on collective bargaining very clearly.” he said. Moreover, union members will look at the number as the minimum the state can afford, he said.
“I’m not sure this will do what you want to accomplish,” Bayer said.
* Roundup…
* Big issues undecided as end of Ill. session nears: Advocates for the mentally ill are pushing lawmakers to restore $30 million that they say was mistakenly cut from their funds. They also want to block Quinn’s plan to close three state mental centers, arguing that the governor doesn’t have a clear plan for treating the people now living in those centers. The National Alliance on Mental Illness says Illinois has cut mental health funds by $187 million since 2009, or nearly 32 percent. Only three other states have cut a bigger share.
* Quinn paints bleak picture for Tinley Park Mental Health Center
* Plenty on the table heading into last week of veto session
* Lawmakers betting on new gambling plan
* Unions: Lawmakers shouldn’t be involved in collective bargaining process
* Illinois legislators return to capitol for round two of veto session
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*** UPDATE *** Greg Hinz has more bad news…
According to Tom Johnson at the Taxpayers’ Federation of Illinois, those [tax breaks] easily would cost the state treasury $400 million or so a year when fully implemented.
Mr. Johnson’s numbers in part come from an analysis of the bill prepared by House Democratic staff, as first reported by Rich Miller at Capital Fax.
Other knowledgeable sources say the ultimate cost is hundreds of millions of dollars a year higher. [Emphasis added]
Sheesh.
[ *** End Of Update *** ]
* I absolutely hate it when this happens, but I made a mistake in this morning’s Capitol Fax. When calculating the out-year cost of the tax cut package, I missed some crucial language in a House Democratic analysis…
Bonus Depreciation: Decouple from the federal government on the latest bonus depreciation for the current tax year and beyond. This is expected to generate $571 million in FY 2012… The value of this decoupling is reduced to $354 million in FY 2013 and continues to decline until the earlier state benefit is recovered by taxpayers.
So, my calculation that the deficit created by this plan next fiscal year is about $110 million (due to phase-ins of tax cuts and other tax break increases) is way off. The hit to next fiscal year’s budget will actually be about $317 million. And then the hole gets bigger year after year.
Wow.
Just… wow.
* Meanwhile, CME Group’s Terry Duffy plans to spend the week in Springfield…
“It will be an interesting week,” said Duffy. “I am going to be down in Springfield, obviously, all week. Hopefully the legislature understands the value that the CME Group brings not only to Chicago but to the state of Illinois and the rest of the country.” […]
CME’s Duffy will watch what happens and says the General Assembly’s action or lack of same will trigger a decision by his board.
“It will only trigger something that we’ve been looking at all along, which is what’s in the best interest of our shareholders∧ I’ve said that from day one,” said Duffy.
Several states, including Indiana, reportedly have offered CME Group tax incentives to relocate.
Duffy says his company has complained about taxes for many years but apparently the corporate tax increase earlier this year now makes it cost effective to move elsewhere for a better deal.
* And so will opponents of the Sears tax break…
Community Unit School District 300 will be back in Springfield today when the Illinois General Assembly’s veto session resumes, this time “in the red” — literally, wearing red T-shirts — as the district’s budget will be “if we’re not successful this week.” […]
The Carpentersville-area school district for months has opposed an amendment to another bill — Senate Bill 540 — that would extend tax breaks another 15 years for the economic development area surrounding Sears corporate headquarters in Hoffman Estates. […]
District 300 said in a written statement Monday evening it was pleased the amendment to Senate Bill 397 would penalize Sears if it left Illinois before 2018.
But district officials plan to push lawmakers to rewrite this legislation, too. It does not require an audit or joint review committee over the EDA. It also would allow the village of Hoffman Estates to continue collecting money from the area if Sears left and use that money to operate the Sears Centre Arena, according to the district.
“The bill filed today is horribly wasteful in reaching its goal of keeping Sears here, and it might as well be renamed the ‘Hoffman Estates EDA’ bill,” Superintendent Michael Bregy said in a written statement.
The Sears committee hearing has been postponed while legislators attempt to work out more details, according to the Daily Herald.
* And check out how the Tribune straddled the tax cut issue in today’s editorial…
Wealthy traders seeking an advantage in the corridors of power typically elicit zero sympathy. Still, CME raised a valid point. At top exchanges around the world, the open-outcry trading floors with their shouting and arm-waving have mostly gone the way of the dinosaur. The vast majority of trades occur via computer screen. As a result, it doesn’t make sense to tax CME and its smaller kin, CBOE Holdings, as if all their trades still took place in the physical trading pits of downtown Chicago. Most trades originate out of state or even out of the country, so some adjustment to the tax scheme for the city’s exchanges makes sense.
Look out below.
Once word trickled out that CME and CBOE might be receiving a significant tax cut, the wish list grew. Gov. Quinn, channeling his inner populist, proposed increasing the earned-income tax credit for low- and middle-income families. He also reportedly wants to index personal income-tax exemptions so they rise with inflation.
The GOP, meantime, wants a cut in the estate tax and favorable tax treatment of operating losses. Illinois supposedly would pay for the cuts by introducing a longer schedule for depreciation of asset purchases. That proposal may or may not make up for the lost revenue from the tax cuts being talked about, however.
Sears, which wants financial inducements to keep its headquarters in Illinois, also might profit from this package.
We’ve all seen this before: legislative leaders rushing a complicated package that deserves more careful consideration than it’s likely to get in a veto session. Which leaves us wondering:
However good this tax package, will Illinois be able to afford it? Or will it just lead to more unpaid bills and more taxpayer debt?
* Related…
* Lawmakers could start debating Sears’ future today
* CME Is Legally Liable For MF Global Customer Losses
* Senator speaks to media
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[The following is a paid advertisement.]
Three different times, the Illinois legislature has rejected Tenaska’s proposed Taylorville Energy Center, which would have us pay up to SEVEN TIMES today’s market price for electricity for a power plant we don’t need. After three strikes, legislators should say, “You’re Outta Here!” to the Taylorville Energy Center.
Here’s why:
• According to Tenaska’s own report, this project would cost Illinois families, businesses, and government agencies at least $286 million per year.
• Illinois job creators would bear the risk and absorb most of the costs from the Taylorville Energy Center. This project would be costly even if built on schedule and on budget, but consider that a similar coal-gasification project in Indiana has racked up a full $1 billion in cost overruns! Predictably, the plant’s owners are passing most of the costs on to Indiana consumers.
• Tenaska wants Illinois consumers to pay even if the Taylorville Energy Center never produces more than a single megawatt of power.
• Power from the Taylorville Energy Center would be one costly drop in a big bucket. The plant’s 544 megawatts would add only two-tenths of one percent to the overall amount of power generation capacity available to Illinois, at a price tag of at least $8.6 billion.
Please take a moment to let your legislator know that you oppose the Taylorville Energy Center. Visit www.STOPCoalition.com to learn more.
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* House Republican Leader Tom Cross’ pension reform bill will get a hearing today, according to Speaker Madigan’s spokesman…
The Cross bill “will come before committe and they’ll do what they do,” [Steve Brown] told me a bit ago. And the speaker’s position? The bill is “under review,” with “some questions” about its fiscal impact that may or may not get resolved in committee on Tuesday.
The bill will be heard today at the Stratton Building’s D-1 at 2:30.
* More info…
Illinois leaders also are groping for some way to cut government pension costs, but they’re hampered by language in the Illinois Constitution that bars reducing retirement benefits for current employees.
To get around that, House Minority Leader Tom Cross, R-Oswego, has come up with legislation to create three different “tiers” of pension benefits and costs. It would let state employees keep their current level of benefits but would require them to contribute far more money to the retirement system. In other words, it wouldn’t technically reduce their benefits but it would give them a strong incentive to switch to one of the new tiers with fewer benefits.
One of the other tiers is a scaled-down version of the current pension system. It will cost the employee less money but offer smaller payments after retirement. The other tier is a 401k-style “defined contribution” plan, where the state and the employee both contribute money that is invested until the worker retires.
* Details…
Option one is to keep their current benefits, but pay more — a lot more. For instance, according to a fact sheet issued by Mr. Cross’ office, workers in the State Employees Retirement System who also get Social Security would have to pay 9.29% of salary, more than twice today’s 4%.
The hike in Chicago and Cook County pension contributions is somewhat less, but still considerable. For instance, workers in the main Chicago municipal plan would have to pay 12.75% of salary every year, up from 8.5% now.
Option two is to accept lesser benefits, but pay less for them than in option one.
Option three is to give up a traditional defined-benefit pension plan and convert to a 401(k)-style self-managed pension.
* The Tribune editorial board is becoming more frustrated by the day at the possibility of no floor vote…
We expect lawmakers this week to clamp down on some of those sweeteners for union officials — egregious deals exposed in recent weeks by Tribune reporters. But don’t let anyone tell you that a remedy in this area will save a pension system so grievously in debt. It won’t. Only a cut to the benefits public employees earn in future years will begin to fix a debacle Made in Springfield.
Or lawmakers could again hide from the bigger problem here and let taxpayers’ unfunded obligations keep growing until the spring legislative session. What’s a few more billions?
* And so is Ty Fahner...
“We’re broke, as everyone knows,” said Ty Fahner, a former Illinois attorney general and president of the Civic Committee, which focuses on economic growth.
His group has been pushing legislation that would make state workers, teachers and others pay more toward their retirements. Because the state is so far behind paying its share to their retirement accounts, there is little money left over. The debt grows each year, taking a bigger share of the state budget. […]
But lawmakers seem to be gearing up for their final week of session without addressing the single biggest budget pressure facing taxpayers.
“This all comes from basic cowardice, and I mean that word sincerely,” said Fahner who believes lawmakers are more focused on their re-eletion campaigns than on the state’s budget crisis. Goups that oppose the bill are powerful. Unionized teachers and state workers are hounding lawmakers with phone calls and e-mail. And union leaders are determined to run candidates against incumbents who support the idea of making their members pay more.
* Meanwhile…
Union leaders have mounted strong opposition to Senate Bill 512, which would require current state workers to pay more toward their retirements. The proposal was held over from the spring session because legislative leaders lacked the votes to pass it.
Organized labor also reacted furiously to the new proposal from House Republican Leader Tom Cross of Oswego to give the mayor and the Cook County board president power to appoint the majority of employee pension board trustees.
At a news conference last month, Emanuel had acknowledged meeting with Cross about the legislation but declined to say whether he supported it.
On Monday, Cross spokeswoman Sara Wojcicki Jimenez said he was “still waiting on some feedback from Mayor Emanuel’s office” and did not know if Cross would attempt to promote the bill in the veto session.
Discuss.
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*** UPDATE *** If you’re watching our live blog, you already know that the House Executive committee passed a package of speed cam bills this morning.
[ *** End Of Update *** ]
* CBS2 aired this report last night…
Mike Brockway’s “The Expired Meter” website has the results of a trial run of seven red light cameras temporarily enabled to detect speeders in April and May and he said the study shows those cameras alone would have generated more than $100 million in speeding ticket revenue.
That study found speeders were 20, 30, even 60 times more common than red light runners, who are already contributing millions to city coffers.
And remember, the test covered just a handful of cameras.
Just seven speed cams would bring in $100 million a year? Wow. That’s about $40 million more than the city’s entire redlight camera system generates every year.
Astounding.
* From the study…
The current version of the speed enforcement bill would allow Chicago to have speed camera enforcement five school days a week from 6 AM until 10 PM–16 hours a day–not the paltry nine hours during weekdays the study covered. Safety zones around park districts would operate seven days a week starting an hour before the park opens and an hour after it closes.
Extrapolating the numbers provided in CDOT’s study for a school safety zone, based on 48 violations per hour per approach, each camera would produce 768 violations a day or 16,512 citations and potential fines of $1.65 million for the first month. All seven cameras would produce an estimated 115,584 speeding citations or $11.5 million in potential fines for that month
Projecting future revenues is slightly more challenging, as estimates must take into consideration the effect of camera enforcement on driver behavior. The assumption is motorists would alter behavior with the knowledge that enforcement is occurring. Of course, after a few $100 tickets in the mail, people will learn to slow down and violations will decrease over time, but never completely disappear.
But using CDOT’s red light camera violations in 2010 as a model, monthly totals for red light running can be seen to be dropping by an average of 5.3% per month for the last seven months of that year after CDOT stopped adding more cameras to the program.
Applying a regression to the mean to the projected initial numbers, the first twelve months of enforcement where fines would be issued, from just these seven locations would still produce 990,822 speed violations or nearly $100 million in fines–a dollar amount that far exceeds the total revenue generated by the all 382 red light cameras every year.
In other words, projected violations were discounted by 5.3% every month, acknowledging driver behavior will change and violations will fall over time.
Go read the whole thing.
* Not surprisingly, this speed cam bill is at the top of the mayor’s Springfield wish list…
Winning approval for cameras to capture and fine drivers who break the speed limits on Chicago’s streets has zoomed to the top of Mayor Rahm Emanuel’s agenda for the last week of the state legislature’s fall veto session.
Even after enjoying a string of successes in the spring legislative session, Emanuel’s lobbyists still have much that they want to achieve in Springfield by the end of the veto session on Thursday. In addition to the anti-speeding bill, the mayor continued pushing for measures to bring a casino to Chicago and avert the Chicago Mercantile Exchange’s threatened move out of state. […]
“I wouldn’t say it has been quite as intensive as the lobbying on school reform, because that was the main issue of his mayoral campaign, but it’s pretty clear that it’s important to them to get the votes for increased speeding enforcement,” said Zalewski, whose father is the 23rd Ward alderman and was appointed chairman of the City Council’s Aviation Committee by Emanuel.
* The mayor held a press conference yesterday with legislators to push the bill…
Surrounded by 15 state representatives, Mayor Rahm Emanuel on Monday publicly urged the House to approve a bill to retrofit red-light cameras with speed sensors at intersections near schools and parks.
“The victims here are the children, not those who are speeding,” Emanuel said during a press conference at Chicago’s Office of Emergency Management and Communications.
The mayor pointed to the deaths of 6-year-old Diamond Robinson and a CICS Wrightwood 8th grader, both struck by cars, as proof the city needs more speed enforcement to protect Chicago kids.
* Not all legislators are happy about this idea…
As the House vote on the plan nears, Emanuel has stepped up arm twisting. State Reps. Mary Flowers and LaShawn Ford, both Chicago Democrats, said the mayor approached them for support.
Ford said an Emanuel aide later asked him to stand with the mayor Monday. “I didn’t even get the call to say, ‘Are you supporting it?’” said Ford, who didn’t attend.
* And while the mayor touted the safety value of the speed cams, one of his tragic examples wouldn’t have been covered under this proposed law…
The crash that killed Diamond occurred on a Saturday night as she crossed 70th Street and Loomis Boulevard near Altgeld Elementary School. The driver was ticketed for “failure to reduce speed to avoid a pedestrian in the roadway.”
The location of the second crash, at 79th and California, would not fall within a safety zone under the legislation sought by the mayor. The 13-year-old boy struck and injured there stepped into the path of an oncoming car, police said. No citation was issued.
* But…
According to a study done by CDOT of the first 109 red light cameras, there were 23 pedestrian deaths at those intersections before the [red light cameras] were in place. Two years after each intersection had cameras installed, aggregate pedestrian deaths at those locations dipped to six.
Impressive.
* The Senate has already passed the speed cam bill, which is sponsored by Senate President John Cullerton and House Speaker Michael Madigan. The House Executive Committee is taking up the legislation at 10 o’clock this morning in Room 114. You can listen or watch the committee hearing by clicking here.
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Reckless Pension Bill Would Cost Illinois Billions
Tuesday, Nov 8, 2011 - Posted by Advertising Department
[The following is a paid advertisement.]
A group of wealthy Chicago businesspeople has been masquerading as economic experts under an organization called “Illinois is Broke,” pinning the blame for the state’s budget problems on the modest pensions earned by teachers, nurses and other public employees.
It’s ironic on two levels.
First, Senate Bill 512–the pension legislation put forth by “Illinois is Broke”–would make Illinois even more broke.
Buck Consultants, one of the world’s leading actuarial firms – true pension experts –analyzed the legislation, concluding it would actually cost taxpayers an additional $34 billion. (Read here for more details.)
The State Journal-Register raised serous questions about the cost of the legislation yesterday, which would be a disaster for Illinois taxpayers.
Second, the premise that modest pensions earned by public employees caused the state’s budget problems is flat out wrong. Whether they are police or fire fighters, teachers or caregivers, these working men and women have contributed to their pensions from every paycheck. It’s the politicians who failed to make their payments.
Illinois is Broke: Intentionally deceitful? Or just painfully incompetent? Either way, their reckless legislation should not be taken seriously.
For more information, please visit www.WeAreOneIllinois.org.
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