A note to subscribers
Monday, Jan 14, 2013 - Posted by Rich Miller
* My new bookkeeper is updating our contact list, so you may have received an e-mail today asking for your info. This isn’t some scam. It’s legit, so please respond. Thanks.
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Today’s numbers
Monday, Jan 14, 2013 - Posted by Rich Miller
* I’ve banned four commenters so far today.
Four.
Sheesh.
Two were over the top gun rights advocates who’d never commented here before. One was a disgusting homophobe. And the other was somebody trying to comment multiple times on the same thread using different names.
Take it easy, people.
* I’m a semi-regular at Springfield’s Butternut Hut tavern. They have a stage and are serious about hosting good music. I went last week during session and almost nobody was there. But they do have five of those new video gaming terminals. A couple of friends played briefly, one won a few bucks.
Anyway, I checked the Illinois Gaming Board’s December video gaming revenue report and noticed that $517,078 had been bet at that little bar in December alone. Half a million bucks. Wow. In that little place.
* Speaking of big things from tiny places…
In a tiny office in rural Sycamore, next to a chiropractor and an attorney, United Airlines buys billions of dollars in jet fuel.
But the jet fuel never gets anywhere near Sycamore, which is 100 miles west of Chicago.
It goes to O’Hare, and that upsets the Regional Transit Authority, which says it is out at least $96 million in lost sales taxes as a result of the actions of United and another company, American Airlines.
The RTA filed suit Monday against United and the city of Sycamore, contending United operates a “sham” office in the DeKalb County town in order to avoid higher sales taxes in Cook County.
We’ve discussed this scam several times in the past. So far, though, nothing has been done to close this loophole.
* Bulking up…
FBI records show a spike in the number of firearm background checks initiated through its National Instant Criminal Background Check System.
The figures do not represent a one-to-one correlation between background checks and firearm sales, but they do show an increased interest in qualifying to acquire firearms.
In Illinois, background checks through the FBI system increased 43 percent from October to December. A total of 1,036,061 background checks were conducted statewide in 2012, compared to 828,962 in 2011 — a 24.9 percent increase.
Nationally, Kentucky requested the most background checks with more than 2.5 million, while Hawaii initiated the fewest with 17,428.
* Other number stories…
* Shedding more light on the United Center tax break
* Why the race to succeed Jackson Jr. is a bargain
* Illinois coal production on increase, bucking national trend: Preliminary figures from the U.S. Energy Information Administration show Illinois mines produced 47 million tons of coal in 2012, the most since 1995.
* State budget cuts mean many women to wait for mammograms: More than 4,700 low-income women throughout the state, including dozens in Sangamon County, could face months-long waits for mammograms because of funding cuts to the Illinois Breast and Cervical Cancer Program.
* Medicaid’s best-selling drugs in Illinois
* A suburban gunmaker is overwhelmed with orders, for now
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Question of the day
Monday, Jan 14, 2013 - Posted by Rich Miller
* The setup…
Hollywood is coming to Chicago in April.
On Monday, Governor Pat Quinn announced that Lionsgate/Summit Entertainment will be filming the movie, “Divergent”, the film adaptation of the novel by Chicagoan Veronica Roth.
The movie production is expected to bring 1,000 jobs and more than $30 million in spending to Illinois. It is the first major Hollywood film for Cinespace Chicago Film Studios, the sound stage Governor Pat Quinn worked to attract to Illinois.
“Illinois is an ideal place for filmmakers with our skilled workforce, iconic shooting locations and one of the largest sound stages in the country,” Governor Quinn said. “The film industry is creating good jobs for Illinois electricians, welders, construction workers, actors, make-up artists, security guards and more while also fueling growth in our economy.”
* The Question: Who would play Pat Quinn in a movie about Illinois?
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Schock blasts Rauner over ads
Monday, Jan 14, 2013 - Posted by Rich Miller
* On Saturday, Congressman Aaron Schock’s chief of staff posted a diatribe against Bruce Rauner on his boss’ Facebook page…
Dear Schock Supporters,
By now most of you have heard or seen a negative ad on radio or television attacking Aaron Schock by falsely accusing him of voting to raise taxes and spending.
This blatantly false ad portrays the opposite of Congressman Schock’s strong record, which is founded on the principles of economic growth and deficit reduction.
The ad is from a previously unheard of out-of-stat…e organization (Jobs & Progress Fund) that does not disclose who is funding it.
This is all about the possibility of Aaron running for Governor in Illinois next year and that any opponent fears facing him more than any other candidate in an election–in this case, the Republican primary for Governor in March of next year.
One candidate is Bruce Rauner from Chicago. He is a billionaire financier. He has never been elected to any office. In recent years as he began to position himself to run for Governor as a Republican. Rauner has donated to many Republican candidates. However, Rauner has donated hundreds of thousands of dollars to Democrats, including hundreds of thousands of dollars to Rich Daley and Rahm Emanuel in their races for mayor of Chicago. Rauner is frequently commented on in media stories as an “advisor” to Rahm Emanuel who has “unchecked access” to the mayor’s office.
One group that Rauner helped to create and lead gave a single $100,000 contribution to Democrat State Representative Jehan Gordon in 2010. Rauner and his wife have made major donations to: the Democratic National Committee (DNC), the Democratic Congressional Campaign Committee (DCCC), the Democratic Senatorial Campaign Committee (DSCC), Emily’s List, Senator Dick Durbin, Barack Obama for U.S. Senate, John Kerry for President, Tammy Duckworth for Congress and one of the harshest left-wing members of Congress—Congresswoman Jan Schakowsky, among others.
Notice that the post doesn’t come out and say that Rauner is behind the ads, but it sure seems clear that Schock believes that to be the case.
Rauner is rumored to have budgeted $50 million for the 2014 race. He could drown his opponents in cash, but that’s been tried before and it didn’t work. Should be a lot of fun.
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Robling to Republicans: Leave Springfield
Monday, Jan 14, 2013 - Posted by Rich Miller
* Chris Robling penned an unusual op-ed for the Tribune. Robling, a former executive director of the Cook County Republican Party, wants state legislative Republicans to boycott Springfield in protest of the lack of a pension reform plan…
Walk away. Now. And issue a joint statement by Senate Republican leader Chris Radogno and House Republican leader Tom Cross: “When a serious, comprehensive Democrat pension plan is offered, members of the Republican Party will return. Until then, we protest the Democrats’ refusal to address the issue that will send Illinois across the financial brink.”
Leaving does important things. It shows voters that Republicans are serious about overhauling the pension systems. It shows them that Dems can do what they want — by themselves. It shows who is willing to address this decade’s biggest issue in Illinois, and who is grandstanding so that they may secretly serve special interests. It prevents Republicans from getting sucked into a sneaky deal. (Check with U.S. House Speaker John Boehner on that one.) […]
Deny Democrats that narrative. Deny them their foil. Deny them the appearance of “needing” you — so that they may later blame you. Deny them their evasion of responsibility. Deny them their dithering by showing it to all Illinoisans.
Congratulations, you are sworn in. Now leave.
Um, how does leaving show anyone that Republicans are serious about anything, or that the GOP is willing to address anything, or that they’re not grandstanding, or evading responsibility?
* And remember how this state’s Republicans reacted when Wisconsin’s Democratic legislators hid out in Illinois? From an Illinois GOP press release…
…it is imperative that Governor Quinn do the right thing and tell these 14 Senator from Wisconsin that Illinois will harbor them no more,” said Illinois Republican Party Chairman Pat Brady. “It time they get back to Wisconsin and back to work.
I really hope Chris was being tongue in cheek here.
Those Wisconsin legislators left their state to prevent legislation from being passed. That at least made some sense because of parliamentary realities. Robling’s idea, however, is another matter entirely. Leave until something happens? Huh? What would be the point of ever voting for a Republican if they publicly cede all of their responsibilities?
And, actually, the House won’t be back until January 30th and the Senate isn’t returning until February 5th. So they’re already gone.
Maybe the Republicans ought to come to Springfield and work while the Democrats are back in their districts. That would show far more seriousness than some boycott.
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Quinn will veto gaming bill
Monday, Jan 14, 2013 - Posted by Rich Miller
* As if there was ever any doubt, Gov. Pat Quinn will veto the gaming bill that was finally released last week from a parliamentary hold…
On Oct. 17, 2011, Quinn announced that if Cullerton ever did send him the 2011 bill, he would veto it. So the bill sat, until last week. At the end of the expiring General Assembly, Cullerton cleared off his desk and sent the measure to Quinn. And on Friday, Quinn spokeswoman Brooke Anderson assured us that the governor will follow through on his 2011 threat.
* Meanwhile, I’m not so sure this smoking ban explanation is correct…
According to a year-end report issued by the Illinois Gaming Board, [casino] revenue for the 2012 calendar year was $1.6 billion, which was up slightly from 2011, but down by about 38 percent from 2007.
Tom Swoik, director of the Illinois Casino Gaming Association, which represents the Metropolis casino, Harrah’s, said that the 2007 smoking ban and an economy that took a turn for the worst are two reasons for the dip.
“Once the economy starts improving, I think that casino revenues will pick up,” Swoik said. “I think it will be a long time if ever that we get back to the 2007 figures because they’re not going to change the smoking ban.”
“All of the bordering states that have casinos do not have a smoking ban, so we lost about 20 percent in 2008, and we’ve lost an additional 18 or 19 percent on top of that since then just because of the economy,” Swoik added.
* It turns out, things are tough all over, despite casinos allowing smoking. For instance…
Revenues at Northwest Indiana’s five casinos dropped by $24.3 million in 2012, the second straight year of decline with the state of Indiana predicting more declines ahead.
The five Northwest Indiana casinos raked in $1.11 billion total in 2012, as compared to $1.13 billion in 2011, for a 2.1 percent drop overall, according to a tally by The Times of Indiana Gaming Commission monthly revenue reports. That drop compares with a 5.5 percent drop statewide in 2011.
And…
All but one of the St. Louis area’s six casinos experienced revenue declines in December.
Pinnacle Entertainment’s River City Casino, in Lemay, received 3 percent more from gamblers last month than it did in December 2011. But that was the only growth among the area’s casinos, according to figures released Thursday by state regulators.
Winnings fell slightly at Lumière Place, Pinnacle’s other casino in the St. Louis market.
The biggest drop took place at Hollywood Casino, which changed hands late last year. Penn National Gaming paid Caesars Entertainment $610 million for the casino and adjoining hotel in Maryland Heights.
And…
Nevada gaming revenues took a nosedive in November.
Statewide, casinos collected $782.6 million from gamblers during the month, a drop of almost 11.1 percent compared with $880.1 million collected in November 2011.
On the Strip, gaming revenues fell 12.8 percent with casinos collecting $431.8 million from customers, compared with $495.2 million collected a year ago.
The Gaming Control Board released the November numbers this morning.
Clark County gaming revenues as a whole fell 13 percent as every reporting area showed year-over-year monthly declines. Casinos along the Boulder Strip reported a 26 percent decline in gaming revenues while revenues were off 24 percent in North Las Vegas.
Downtown Las Vegas gaming revenues declined 17.2 percent.
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Scratching my head
Monday, Jan 14, 2013 - Posted by Rich Miller
* Look, I don’t think that the proponents of the soon to be law that allows undocumented immigrants to obtain driver’s permits are right about every point. But, I’ve been scratching my head about this line of opposition…
State Rep. Elizabeth Hernandez, D-Cicero, who sponsored the bill, asserts it will make Illinois’ roads safer and save lives.
We would say that’s highly debatable. What evidence does Hernandez cite to indicate that illegal immigrants with driver’s licenses are safer drivers than those without them? Simply having a driver’s license is no guarantee that a motorist will obey traffic laws or maintain sobriety while operating a vehicle. Don’t thousands of licensed drivers break those laws and drive under the influence each year?
Apparently, the Alton Telegraph editorial board doesn’t believe that driver’s licenses are worth the plastic they’re wrapped in. I eagerly await the paper’s next editorial advocating the abolishment of all driver’s licenses as a waste of time and money, since obviously they don’t work to prevent automobile accidents.
* And then there’s this…
We agree with opponents of this measure who argued that a driver’s license is a privilege, not a right, and that giving illegal immigrants the privilege to drive in Illinois legally when they broke our laws by coming here is bad public policy.
So, I suppose, then, that people who have not yet completed their parole should be denied driver’s licenses as well? How about we forever revoke driver’s licenses from anybody who has ever broken any laws?
Again, I’m not wholly in agreement with every single argument made by the proponents. But these two arguments by the Telegraph just seem like a major reach to arrive at a predetermined position.
* By the way, this is something else that Rep. Hernandez said during debate…
State Rep. Elizabeth Hernandez (D-Cicero) said it goes beyond simply road safety and touches on a fundamental fairness - so that if an immigrant parent taking a sick child to the doctor, they can’t be humiliated and sanctioned by the state for not being a licensed driver.
“When you have children with Down Syndrome left at the curb witnessing their parents being arrested, handcuffed and their car being impounded…that’s disgusting,” she said. “That’s distrurbing. This cannot continue.”
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What does Madigan want?
Monday, Jan 14, 2013 - Posted by Rich Miller
* My weekly syndicated newspaper column…
“Frankly, I’m not sure they want it,” Illinois Senate Minority Leader Christine Radogno (R-Lemont) said Tuesday about Democratic legislative leaders and state pension reform.
It sure looked liked she was right last week, at least in the House, where Speaker Michael Madigan (D-Chicago) barely lifted a finger for any of the pension reform bills that were on the table.
His top aides insist that Madigan does want pension reform. Madigan has said he wants a bill to pass. So, what will it take to get him off the dime and start pushing for a solution?
Madigan’s members almost always take their cues from their leader on the big stuff. When he says “this is the bill I want right now,” they tend to go along. Until they get that message, House Democrats hold back and wait.
For his part, the conservative Madigan doesn’t usually get too far ahead of his members. He polls his caucus regularly, and if he sees major resistance to an issue, he’s almost always reluctant to push it. Unlike Gov. Pat Quinn, Madigan understands that defeat makes you look weak, and Madigan is obsessed with projecting an image of power.
And sometimes, especially when Madigan wants something big, he’s willing to wait and wait, and then wait some more, until the time is right before he makes his move.
So, let’s take him at his word that he realized the need for pension reform. What’s he waiting for?
The most obvious answer is the pension payment cost shift, which he strongly favors along with Senate President John Cullerton (D-Chicago) and Chicago Mayor Rahm Emanuel.
The controversial plan would shift pension bills for suburban and downstate teachers from the state to local school districts, forcing districts to be much more cautious in granting pay raises that lead to bigger pensions.
Republicans and plenty of suburban and downstate Democrats oppose the cost shift, claiming it would lead to substantial property tax increases because the public schools are largely financed via that tax. Chicago has a separate teachers retirement system, which is why Emanuel supports the idea.
But proponents of the cost shift point to a recent pension plan as having a workable framework. That proposal would raise the employer’s pension costs by half a percentage point of payroll per year. If school districts and universities can’t absorb such an increase each year without a big tax or tuition hike, proponents say, then they need to send their leaders back to management school.
When Madigan dropped the cost shift as a “must have” in the days leading up to the recent lame-duck session, Quinn trumpeted the move as a major breakthrough that would lead to a pension reform deal.
But the lame-duck session turned out to be very much like last May, when Madigan agreed to back off the cost shift and handed a pension bill to House Minority Leader Tom Cross (R-Oswego). Quinn also hailed that decision as progress, but Madigan’s members quickly realized that no Madigan sponsorship meant no Madigan support, and the bill crashed and burned.
So, how the heck is this cost-shift thing ever going to pass? If the Republicans and lots of members are against it, fearing a voter revolt over higher tax bills, how does Madigan find the votes and persuade the GOP to climb aboard?
Madigan’s people won’t say, but a major crisis would be the most obvious avenue.
If the state’s credit rating is seriously downgraded, tons of pressure will be put on the General Assembly to act and restore some credibility to state finances. The Republicans might be more willing to sign on if their nervous big-business allies/donors insist that they participate in a solution.
Barring that, the only other way forward in the interim might be to do some small things toward pension reform that Madigan’s caucus could agree to. But even that might not go anywhere if Madigan decides to continue withholding support until he reaches his ultimate goal.
* Related…
* As pension debt climbs in Illinois, other programs suffer
* Finke: Quinn wish list goes unfulfilled
* Erickson: Illinois inching toward edge of big cliff
* Editorial: Newly minted assembly should focus on jobs
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* Mayor Emanuel wants divestment…
Chicago Mayor Rahm Emanuel said Monday he was ordering all city pension funds to divest any investments they have in gun manufacturers.
“We’re going to divest of any investment in any gun manufacturer,” he said.
He said he would lead a charge of mayors across the country urging them to do the same.
* But despite his comments today, his press release only says it’s about assault weapons..,
MAYOR EMANUEL ORDERS REVIEW OF PENSION AND RETIREMENT FUNDS FOR DIVESTMENT OF ASSAULT WEAPON COMPANIES
Funds Will Be Asked To Divest From Companies that Manufacture or Sell Assault Weapons
Mayor Rahm Emanuel today ordered Comptroller Amer Ahmad to request a portfolio analysis from the five pension and retirement funds for city employees to determine if fund managers hold underlying debt or equity positions in companies that manufacture or sell assault weapons as the first step towards removing these companies from the investment plans.
“We cannot support or invest in companies that profit from the proliferation of assault weapons and the violence these guns bring to our communities,” said Mayor Emanuel. “If our fund managers have invested in a company that manufactures or sells assault weapons, I will ask them to remove these investments from our retirement funds.”
Ahmad is requesting the review from the five major funds, including the Fireman’s Annuity & Benefit Fund of Chicago, the Laborers’ & Retirement Board Employees’ Annuity and Benefit Fund of Chicago, Municipal Employees’ Annuity & Benefit Fund of Chicago, Policeman’s Annuity & Benefit Fund of Chicago and the City of Chicago Deferred Compensation Plan. The five funds contain more than $13.5 billion in assets.
Will Burns, Alderman of the 4th Ward, will join the Mayor to introduce a resolution at City Council this week to support the review.
“Just as these weapons have no place in our communities, these companies have no place in the retirement planning for our employees,” said Burns. “The damage caused by these weapons is far greater than any return on investment.”
He may have gone beyond his intended remarks. We’ll see.
*** UPDATE *** He did go beyond what he intended to say…
In his speech, Emanuel said, “We’re going to divest of any investment in any gun manufacturer,” but he later clarified that he was talking about those who make or sell assault weapons.
[ *** End Of Update *** ]
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* 3:08 pm - From Mayor Rahm Emanuel…
This afternoon I received a letter from Alderman Sandi Jackson tendering her resignation from City Council, effective January 15th.
As Sandi takes this time to focus on her family, we give her our deepest thanks and support for her service to our City and the residents of her ward. Her leadership has been greatly appreciated in the Chicago City Council.
The process to identify a replacement for Alderman Jackson to serve and represent the residents of Chicago’s 7th ward will be announced early next week.
Ald. Jackson’s resignation letter can be read by clicking here.
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* The ads attacking Congressman Aaron Schock over his vote for the “fiscal cliff” resolution are more widespread than first reported…
The ads have been running on Fox News stations on cable systems across the 18th Congressional District, said Steve Shearer, Schock’s chief of staff. Similar radio ads have also been running in the district from the same sponsoring group — Jobs & Progress Fund.
An official of WICS-TV in Springfield said the group has purchased $34,300 worth of time combined on that Springfield broadcast station and its sister station in Champaign, WICD. Those ads started running Wednesday and are scheduled to continue through Jan. 26, said Jennifer Valenti, local sales manager at WICS. […]
In a radio ad being played in Springfield, a man and woman are talking about Schock. The man says that Schock “sided with the liberals and raised taxes.”
“Unbelievable,” the woman says.
* Schock’s office has sent a letter to stations demanding that they stop running the ads…
The passage of H.R. 8 on January 1st cut taxes significantly. Indeed, the universally respected and non-partisan Congressional Joint Committee on Taxation and the Congressional Budget Office each scored H.R. 8 as nearly a four trillion dollar revenue decrease over the next decade. […]
Your station is hereby on notice that the Advertisement makes false statements intended to deliberately deceive Illinois voters and defame Congressman Schock’s reputation. Based on the foregoing, we respectfully demand that your station immediately cease the airing of this false and misleading Advertisement.
*** UPDATE *** From Congressman Schock’s office…
STARadio Quincy, parent company of QuincyJournal.com, has received a cease and desist letter from lawyers for Aaron Schock regarding the ad. STARadio Vice President and General Manager Mike Moyers says the company will comply and not accept a scheduled ad buy for next week.
[ *** End Of Update *** ]
* The more calls I make, the more I’m starting to think he might be serious this time around…
Sneed has learned former White House Chief of Staff Bill Daley has commissioned the prestigious polling firm of Anzalone Liszt, which does polling for President Barack Obama and Illinois Senate President John Cullerton, to determine his viability in a race for governor of Illinois.
“We are hoping he’ll run, but the polls will tell all,” said a top Dem source.
Sneed is told the results of the poll will be released soon, although a call to the Montgomery, Ala., firm would not officially confirm or deny Sneed’s tip.
We’ll see.
* Meanwhile…
Last fall’s general election in Illinois saw $1.6 million in independent expenditures in targeted races for 15 House and 16 Senate seats, more than $900,000 of which was used negatively to oppose candidates, according to a January report by the Illinois Campaign for Political Reform.
The top five committees reporting the most independent expenditures, according to the report, were: JOBS PAC ($412,932), Personal PAC ($334,392), National Association of Realtors ($232,500), Liberty Principles PAC ($215,168), and GOPAC Illinois Legislative Fund ($186,524).
All told, those five committees spent the bulk of all independent expenditures while achieving success in only 12 of the 31 races they targeted. Out of all independent expenditures, the SuperPACs only had success in 19 of 77 races.
While independent expenditures only made up about 5.5% of the $29.4 million that candidates reported raising in the fall’s targeted legislative races, David Morrison, deputy director of the Illinois Campaign for Political Reform, predicted a larger SuperPAC role in 2014 statewide elections.
“We have some experience with these but not at the state and local level,” Morrison said at an Illinois Campaign Finance Reform Task Force hearing Thursday. “We expect to see significant SuperPAC involvement in the governor’s race.”
There will definitely be bigtime SuperPAC involvement in 2014. Bet on it.
* Here’s the list of the top spenders in legislative races, according to ICPR’s interim report…
The JOBS PAC $412,932
Personal PAC Independent Committee $334,392
National Association of REALTORS® Fund $232,500
Liberty Principles PAC $215,168
GOPAC Illinois Legislative Fund $186,524
For the Good of Illinois PAC $78,430
Republican State Leadership Committee- IE Com $74,799
Citizens for a Better Quincy $60,000
Illinois Immigrant Action PAC $22,378
Adam for IL Committee (Adam Andrzejewski) $20,000
* One of the biggest winners was Personal PAC…
Illinois Immigrant Action PAC was another big winner…
Liberty Principles PAC was a big loser…
From the report…
Former Republican gubernatorial candidate Dan Proft filed the Statement of Organization for Liberty Principles with the State Board of Elections and also filed a statement of organization with the Federal Elections Commission. […]
Most of the receipts reported by the federal Liberty Principles PAC came from two donors: Richard Uihlein at $125,000 (of Uline Industries, his giving includes $50,000 received on March 20 and disclosed on April 12, $50,000 received on August 24 and disclosed on October 15, and $25,000 received on October 29 and disclosed on December 6) and real estate developer John Buck at $100,000 (received on June 29 and disclosed on July 12). All told, the federal PAC received $65,500 prior to Election Day that was not reported to the public until one month afterwards.
* And the Justice Department is suing the State Board of Elections over the 2nd Congressional District special primary…
The U.S. Department of Justice is suing the Illinois State Board of Elections, saying it hasn’t allowed enough time for military personnel serving overseas to know who they can vote for in the special election to replace U.S. Rep Jesse Jackson.
By law, overseas U.S. voters were supposed to receive by Saturday absentee ballots that include the names of all qualified candidates’ for the Second Congressional District primary, the federal lawsuit filed late Thursday says.
But snafus mean they aren’t likely to receive the full printed ballots for at least another two weeks, it’s alleged.
Though federal law requires that overseas voters receive their ballots 45 days before the Feb. 26 primary, state law gives candidates until Monday to challenge their rivals’ nominating papers. Those challenges could take the state another two weeks to deal with, leaving overseas voters less than half the time they’re supposed to have to vote, the lawsuit says.
In an attempt to get around the federal law, Gov. Pat Quinn signed a state amendment in December that required overseas voters be sent blank “write in” ballots by Saturday — but the Justice Department says that won’t fly.
It wants a federal judge to intervene to ensure that overseas voters’ rights are protected and that their votes are counted — though the lawsuit doesn’t specify how that should happen or whether the primary should be delayed.
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* From Fitch…
Fitch Ratings has placed the ‘A’ rating on the general obligation (GO) bonds of the State of Illinois on Rating Watch Negative. The rating action affects approximately $26.2 billion in outstanding GO bonds of the state. Ratings linked to the state GO rating, listed at the end of this release, have also been placed on Rating Watch Negative.
The Rating Watch Negative reflects the ongoing inability of the state to address its large and growing unfunded pension liability, most recently through the failure to pass pension reform in the ‘lame duck’ portion of the 97th general assembly legislature that ended on Jan. 8. Fitch believes that the burden of large unfunded pension liabilities and growing annual pension expenses is unsustainable. The Rating Watch Negative will be resolved after an assessment of the extent to which the state takes action within the next six months that limits the impact of pension payments on the budget while bolstering pension funded levels. Failure to achieve meaningful results would lead to a downgrade of the rating.
Illinois’s long-term liabilities, particularly pension liabilities, are very high for a U.S. state. As of June 30, 2012, the unfunded actuarial accrued liability was reported at $94.6 billion, resulting in a 40.4% reported funded ratio. This large unfunded pension liability is despite the issuance of pension obligation bonds and passage of bipartisan comprehensive pension reform affecting new employees in March 2010.
Annual pension funding requirements have been increasing significantly and growing pension payments are crowding out other expenditure growth and absorbing revenue growth. Pension payments from the general fund increased $965 million to $5.1 billion in 2013, an increase of 23%, reflecting in part the use of more conservative investment return assumptions. Fitch notes that even these large payments, which consume a well-above-average percentage of the state’s general fund budget, are based on statutory formula and are below the actuarially required contribution (ARC).
Several reform proposals have been presented by the governor and various legislators that would adjust benefits for existing employees, increase employee contributions, limit cost of living increases, and increase the retirement age. Other proposed structural changes to the pension program include shifting some responsibility for employer contributions to school districts and state universities and establishing a 30-year funding schedule based on the ARC that aims to reach 100% funding by 2042. Under current statute, annual contributions are designed to reach 90% funding by 2045. Fitch believes that enactment of reform is critical to the long-term stability of the state’s fiscal position, although legal protection of pension benefits is particularly strong in Illinois and Fitch expects any changes to be litigated.
The ‘A’ rating on Illinois’s GO bonds reflects the state’s broad based and diverse economy offset by the challenges presented by a budget that is balanced through significant temporary tax increases, high long-term liabilities including pensions, and a large accounts payable backlog that reflects the payment deferrals the state used to manage its operating deficit through the downturn.
The state’s GO bonds benefit from an irrevocable and continuing appropriation for all GO debt service, and continuing authority and direction to the state treasurer and comptroller to make all necessary transfers from any and all revenues and funds of the state. The state funds debt service in advance by setting aside 1/12 of principal and 1/6 of interest every month for payments due in the ensuing 12 months. [Emphasis added.]
That’s not nearly as bad as it could’ve been, but there are other ratings agencies.
*** UPDATE 1 *** From the governor’s office…
“The Fitch report speaks for itself. This should be required reading for every member of the new General Assembly. We have an emergency and it’s not going away.”
*** UPDATE 2 *** Sun-Times…
The move may not have a direct impact on the state’s finances and posts “very minimal risk” to existing state bond holders, but it ultimately could foreshadow higher borrowing costs the next time Illinois goes to market for long-term loans, a company spokeswoman said.
“The immediate result, to be honest, is probably nothing. It doesn’t affect what they’re doing on a day-to-day basis,” Fitch analyst Karen Krup told the Chicago Sun-Times. “But for direct impact on the state, when they try to go to market the next time, there could be implications on borrowing costs.”
*** UPDATE 3 *** From Leader Tom Cross…
“Fitch’s downgrade of our bond rating is embarrassing and may cost the state more money—money that we clearly do not have. How many more times do we have to be downgraded to prompt action in the General Assembly? I have worked and will continue to work with other members in the House and Senate to pass meaningful pension reform.”
*** UPDATE 4 *** Treasurer Rutherford…
“Fitch Ratings announced that the agency has placed Illinois’ general obligation bonds rating on negative watch. Fitch decided to do this because of the state’s inability ‘to address its large and growing unfunded pension liability.’ The next step could potentially be the downgrade of the state’s credit rating from Fitch. Failure to enact pension reforms will eventually bring Illinois to its financial breaking point, and it will be worse than any fiscal calamity we have seen thus far in this state. Our state’s credit rating cannot afford to take another hit.”
“Furthermore, it has now been two years since Governor Pat Quinn’s 66% income tax hike was passed, and though it was billed as a measure that would help solve the state’s financial problems, money matters in Illinois have only gotten worse. On January 11, 2011, the state’s backlog of bills was reportedly $8.5 billion. Today the state owes vendors nearly $9 billion dollars.”
“In the past decade, the state’s bonded debt has nearly tripled. Illinois’ debt is colossal and growing– our debt obligations now exceed $200 billion. It is estimated that the failure to address the state’s pension liability is costing the state at least $17 million per day. It is beyond irresponsible to let this continue. The state needs to reign in the pension escalation and not use long-term borrowing as a ‘solution’ to this problem.”
Also, the governor was asked about Fitch’s move today. Raw audio…
*** UPDATE 5 *** Rep. Elaine Nekritz and Sen. Daniel Biss…
“This announcement just confirms what we have feared and warned about: our state finances are in real trouble. We must act quickly and decisively to address the pension problem and send a strong message that Illinois is serious about getting its fiscal house in order for the long term.”
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* I did a bit of checking and the vote appears to be close right now, but it may not be a done deal yet…
Illinois Review has learned that the Illinois Republican Party’s State Central Committee may very well have the votes needed to force Chairman Pat Brady’s resignation. We’re told that the SCC is working out a plan for IL GOP Vice Chairman Carol Donovan to step in as the interim chairman, and will oversee a deliberate, thoughtful process to pick the next permanent party chair.
Insiders are frustrated that Chairman Brady’s calls to GOP state senators in support of gay marriage have distracted from discussions about the state’s fiscal and pension crisis.
Three-fifths of the State Central Committee’s weighted votes are needed to oust a sitting chairman. Several 2012 Platform Committee members, one GOP lawmaker and the Grundy County GOP have called for Brady’s resignation.
It only takes 25 percent of the central committee’s weighted vote to call a special meeting, so this could play out pretty quickly.
The biggest problem for Chairman Brady is that there are a lot of other issues out there. Last year’s election was not a success, to say the least. He’s made some enemies on the central committee, to say the least.
But if he is ousted, the media will undoubtedly play up the gay marriage angle, and the GOP will go right down the public opinion path that Brady was trying to avoid when he pushed for gay marriage.
*** UPDATE *** Sen. Kirk steps up for Chairman Brady…
He has at least one huge ally: U.S. Sen. Mark Kirk. Says Mr. Kirk’s office in a statement, “Senator Kirk has full confidence in Pat Brady’s leadership as chairman of the Illinois Republican Party and looks forward to working with him to elect Republicans in 2014.”
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Question of the day
Friday, Jan 11, 2013 - Posted by Rich Miller
* It’s Friday. It’s been a long, rough, useless week. I’m tired. I know many of you are as well.
White Sox pitchers and catchers report February 12th, just 32 days from now.
* The Question: Your thoughts on the 2013 baseball season?
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* Last year, $122 million was wagered through what are known as advanced deposit wagering (ADW) websites in Illinois. The sites, like this one, require people to open up an account and then they can place bets on horse races by phone or via the Web. That $122 million represented about a fifth of last year’s total in-state “handle” and the $1.72 million in tax receipts funded 28 percent of the Illinois Racing Board’s budget.
The state legalized ADWs in 2009 and the law was scheduled to sunset last July 1st. The General Assembly extended the sunset to this past January 1st, but then didn’t extend it again. So, ADW is now again illegal in Illinois.
From the Illinois Racing Board’s website…
In the absence of legislation extending the authorization to conduct advance deposit wagering (ADW) beyond the current expiration date of December 31, 2012, effective January 1, 2013, advance deposit wagering (via internet/telephone) is prohibited in Illinois. Hopefully this is a short-term situation since it is expected that the Illinois General Assembly will address this issue in the 2013 Spring legislative session. Upon resolution of this issue, the Illinois Racing Board will provide further notice and you should expect to be notified by your ADW provider.
* Scott Jagow at the Paulick Report has more…
“It’s been made clear to those providers that it’s the position of the board that ADW wagers on Illinois racing are now illegal,” said Marc Laino, the board’s executive director.
“There was legislation introduced in the veto session in January. It went to committee but didn’t receive enough votes.” […]
The initial legalization of ADW wagering in Illinois took place in 2009. The law was extended for six months in 2012 but expired Jan. 1.
“I’m being told the issue will be taken up by the legislature in mid-February,” Laino said, although he didn’t know whether the ADW authorization might be in stand-alone legislation or rolled into a larger gambling bill.
If this gets rolled into a big gaming bill, then the ongoing legislative impasse could mean even more delays. And that means even more revenue will be lost and more companies at risk of going under.
* And speaking of gaming, the Sun-Times asked Gov. Pat Quinn Wednesday about the Senate releasing its parliamentary hold on a gaming bill that the governor has repeatedly vilified…
But on Wednesday, the strident tone the governor once had toward the measure was nowhere to be found as he avoided repeated questions about his intentions with the bill.
“Today’s the day for the Senate and House. The members are sworn in. It’s a day of ceremony and family and democracy,” Quinn said after presiding over the swearing-in ceremony in the Senate at the state Capitol.
“I think it’s important to kind of give the House and Senate their day. There will be plenty of time for us to work on bills,” he said.
Quinn was asked if he still held the same hawkish views against the package.
“I’ve already opined on that in the past, but today is really a day for the new members and re-elected members to come together in bipartisan opportunity to celebrate the fact we have a democracy and we’re always going to keep one,” the governor said.
Pressed on why then he wouldn’t just say he’d veto it, the governor continued to weave.
“There’s plenty of time for that. But today, I think it’s to honor the election of new members and re-elected members of the House and Senate. I’m going to do that. I think that’s a good way for all of us to celebrate the fact the election is over, and now is the time for bipartisan work on important issues like pension reform,” Quinn said.
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Emanuel to unveil gun control plan
Friday, Jan 11, 2013 - Posted by Rich Miller
* Tribune…
Mayor Rahm Emanuel today indicated he will put forward his own city gun control ordinance in the next few days after state lawmakers did not reach agreement on the divisive issue.
Emanuel refused to give details about what specifically his proposal will address. But he said he isn’t willing to wait until state lawmakers take up gun control. Last month, a federal appeals court tossed out the state’s longstanding ban on carrying concealed guns in public. The court gave the state six months to set up new rules.
During his remarks today, Emanuel hit on several of the firearms regulations he has said he would like to see in place at the state level since the Sandy Hook Elementary School shootings in Connecticut.
“Waiting is not a strong suit of mine,” Emanuel said when asked today about the General Assembly’s failure to pass a proposed state ban on assault weapons. “First of all, I believe there’s, I know there’s a majority in the state, an overwhelming majority in the city for a ban on assault weapons, clips, and comprehensive background checks on all sales, wherever they take place, wherever the location may be. And there’s also a majority in the legislature.” […]
Emanuel also has spoken in recent weeks about the need for laws requiring people to report if their guns are lost or stolen.
* More from the Sun-Times…
The mayor’s new gun ordinance is likely to focus on the wish list that Police Supt. Garry McCarthy unveiled at an anti-gun rally last week that included parents whose children were innocent victims of gun violence.
McCarthy argued then that his officers would continue “drinking from a fire hose” until Illinois: bans assault weapons and high-capacity magazines; requires gun owners to report lost, stolen or transferred firearms; mandates criminal background checks before every single gun sale and imposes mandatory minimum penalties “sufficient to deter people” from carrying illegal firearms.
“We need those five things. Not just assault weapons. Not just high-capacity magazines. We need all of it,” McCarthy said on that day.
Noting that Chicago Police recover nine guns for every one recovered in Los Angeles, he said, “That’s insanity, folks.”
While the mayor was talking tough on guns, the City Council’s Public Safety Committee was relaxing city regulations on shooting ranges in Chicago that are the subject of yet another pending court challenge.
Ald. Pat O’Connor (40th), the mayor’s City Council floor leader, acknowledged that whatever Emanuel does locally is certain to end up court. That’s why the mayor’s legal brain trust has been scouring recent court rulings across the country on the subject.
“It’s the art of going to the end without going over the edge. … It’s nuanced pretty well. There are significant enough changes,” O’Connor said, careful not to spill the beans.
“We believe, based upon what we’ve done and researched, that the ordinance will stand [legal] muster. Obviously, if the state and federal government were to step into this in a big way, they could save a lot of time and energy that municipalities spend trying to do what states and the federal government have been unwilling to do.”
Emanuel will likely unveil his plan Monday morning during a Center for American Progress Action Fund event with Representative Mike Thompson (D-CA) and Senator Chuck Schumer (D-NY) on gun control. You’ll be able to watch that live by clicking here.
Keep your tempers under control in comments, please.
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Quinn defends himself
Friday, Jan 11, 2013 - Posted by Rich Miller
* Gov. Pat Quinn talked briefly to the Associated Press this week about pension reform…
He has been widely praised for good intentions and efforts, but now it could be more months without movement and no promise of a solution on his signature issue as Republicans — and even a few fellow Democrats — begin angling to challenge him in the 2014 governor’s race.
Quinn just shrugged it off Wednesday as a new General Assembly was sworn in, effectively restarting the process.
“You have to have deadlines in life,” he said. “Sometimes you make those deadlines, and sometimes you have to keep working, keep running. That’s what long distance is all about. You never stop working on something until you get to the finish line.”
* Quinn also sat down with ABC7’s Charles Thomas…
“When they pounded the gavel down and said we’re finished for this session of the legislature, you know that was the end for the time being,” Quinn said.
As we met this afternoon in the Quinn’s Chicago office, he was disappointed but not discouraged. […]
“We came close, but we’re not there yet. So you keep on pushing. That’s what governors do,” he said. […]
Former U.S. Commerce Secretary and White House Chief of Staff Bill Daley has publicly questioned Illinois’ leadership and says he’s considering a primary run to replace Quinn.
“There are politicians who stand on the sidelines and point fingers. They make excuses and alibis, I’m not one of them,” Quinn said. “I never walk away from a tough battle. I stay in there and fight to the end to get the job done.”
* The governor expressed optimism and counseled patience to the Illinois Radio Network…
Gov. Pat Quinn is ready to resume tackling the old problems in the new General Assembly, with pension restructuring again chief among them. Quinn says his experience as a cross-country runner in high school taught him something about persistence and patience.
“(Senate) President (John) Cullerton indicated Senate Bill 1 will be a pension reform measure. I talked to his staff, and they indicated it would cover the four major systems,” Quinn said. “They also indicated it would not include what is called the ‘school shift,’ so if we can get a bipartisan majority out of the Senate on that bill, I’m optimistic; then, we’ll get it over to the House, where we have, obviously, a lot of work still to do.”
Quinn said he is disappointed the 97th General Assembly adjourned Tuesday without passing a pension bill. In fact, the House did not even call it for a vote. He’s aware the House and Senate do not always agree on legislation, and he said he is not too put out by Cullerton’s comments that Quinn is a good guy but not a very good governor, especially when it comes to passing legislation. “I’m not a member of the legislature,” Quinn said. “I can advocate for ideas and bills.”
Thoughts?
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* Ralph Martire of the Center for Tax and Budget Accountability explains why he believes the current pension reform plans on the table are unconstitutional, but he also inadvertently helps point out why judges shouldn’t ever be included in the plan…
Back in the early 1980s the Illinois General Assembly was worried about the unfunded liability owed to the Judicial Retirement System. So to save some money and reduce that unfunded liability, it passed a law changing how a judge’s salary would be measured for purposes of calculating pension benefits.
This miffed a few justices, who sued claiming the change was a violation of Article XIII, Section 5 of the Illinois Constitution. That article provides: “Membership in any pension or retirement system of the state … shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”
One of the named plaintiffs in this case, James Felt, showed that upon his retirement, the new computation would cause him to lose $3,187.44 in annual benefits. The state countered that its police power allowed it to impair contracts where the impairment was insubstantial and the state’s interest was compelling — in this case ensuring the fiscal viability of its underfunded judicial pension system.
While recognizing the state’s legitimate interest in ensuring the fiscal viability of its pension systems, the Illinois Supreme Court nonetheless struck down the legislation as an unconstitutional diminishment of a pension benefit.
In the process, the Felt Court rejected every single argument the state made. Indeed, the court maintained that doing otherwise would ignore the plain language of the Illinois Constitution, overrule prior Illinois Supreme Court decisions and run counter to the clear intent of the drafters of the Illinois Constitution.
As to this last point, the Supreme Court cited an explanation of Article XIII, Section 5 given by its author in the Record of Proceedings from the 1970 Constitutional Convention. That explanation plainly stated the intention of the provision was to prohibit the state from “changing the terms of” or “lessening” the pension benefits payable to workers “after they have embarked upon employment.”
I’m sure it also didn’t hurt that judicial salaries are protected by the Illinois Constitution…
Judges shall receive salaries provided by law which shall not be diminished to take effect during their terms of office. All salaries and such expenses as may be provided by law shall be paid by the State
But that diminishment clause also gives ample precedent for the pension language’s even broader language…
Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.
Discuss.
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Egg noodles and ketchup
Friday, Jan 11, 2013 - Posted by Rich Miller
* My Sun-Times column…
At the end of the movie “Goodfellas,” mobster-turned-informant Henry Hill laments that he’s out of the business.
“Today everything is different. There’s no action. Have to wait around like everyone else. Can’t even get decent food. Right after I got here, I ordered some spaghetti with marinara sauce and I got egg noodles and ketchup. I’m an average nobody. Get to live the rest of my life like a schnook.”
I’ve often said that if you want to understand politics, then you have to watch that movie. The insights it offers about Outfit members applies loosely to politicians, who operate under a surprisingly similar set of rules based on the old Roman legions.
And right now, Gov. Pat Quinn is living the high life, kinda like Henry Hill once did. No, Quinn isn’t paying off cops and judges, or highjacking trucks. But governors have a lot of power and do live well.
Quinn has a staff who attend to most of his needs, a mansion available at his disposal, a car with a driver and security, a fleet of airplanes and invitations to swank parties and major events like the Kentucky Derby. Rich and powerful people demur when he walks into a room. He’s recognized just about everywhere he goes.
And if loses his next election, that all ends. He’ll be just another schnook in a world full of schnooks.
Passing a pension reform bill won’t get Quinn re-elected. In fact, it will likely hurt him badly with state workers, teachers and other public employees.
But the failure to pass a pension reform bill and deal more completely with the state’s wrenching budget problems does enormous harm to Quinn in the public’s mind every time he swings and misses.
And, man, does he ever swing and miss a lot. If he was a baseball player, he’d have been sent back down to the minors a long time ago.
Yes, this is a very difficult problem that, as Quinn rightly notes, has been building for 70 years. No governor has been able to solve it, although Jim Edgar did give it a go.
But an important part of politics is projecting an image of strength and leadership, and Quinn has done neither, which has hurt him badly.
Quinn told reporters last year that he was “put on Earth” to solve the pension crisis. He demanded a solution by the end of the spring session. The deadline came and went. Then he called a special session to deal with pensions in August, but the General Assembly ignored him and did nothing. Then came the November veto session, which passed without any activity.
Gov. Quinn set a “final, final” deadline this past Tuesday, the last full day of the 97th General Assembly. It turned out to be a total disaster. Nothing happened, no votes were taken and an 11th-hour effort by Quinn to hand the problem over to an unelected commission with legislative and executive powers failed miserably.
“Desperate and weak,” was how Sun-Times columnist Mark Brown described Quinn’s commission move. I couldn’t agree more.
Pat Quinn has had four years to learn how to be a real governor. He just hasn’t done it. Quinn is a well-intentioned, decent man, but he hasn’t shown that he’s up to this job.
The next election isn’t until 2014. So unless he somehow manages to change, we’re stuck on a rudderless boat for two more years.
Maybe then, when Quinn is back to eating egg noodles and ketchup, things will start to get better around here. One can only hope.
Discuss.
…Adding… Yepsen is thinking along the same lines and summed it up well…
“Every time he tries and loses a fight it just makes him weaker for the next one,” said David Yepsen, director of the Paul Simon Public Policy Institute at Southern Illinois University in Carbondale.
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