Failure has consequences
Tuesday, Jun 11, 2013 - Posted by Rich Miller
* The special session could have immediate consequences. Illinois is set to go back to the markets to borrow more capital construction money, so a failure would highlight Illinois’ problems even more…
Inaction on pensions for state workers, teachers, legislators and others during the regular session led two credit rating agencies last week to cut Illinois’ bond ratings, a move that could cost the lowest-rated state more money to sell about $1.25 billion of general obligation bonds.
John Sinsheimer, the state’s capital markets director, said that state officials will be meeting with potential investors on both coasts and in Chicago ahead of the June 26 bond sale and in the wake of the rating downgrades to A3 by Moody’s Investors Service and A-minus by Fitch Ratings — both with negative outlooks. The state is also considering bond insurance for the deal, he added.
* And speaking of failure, if you do nothing else today, make sure to listen to a press conference by Speaker Madigan and Senate President Cullerton. They were throwing not so subtle verbal elbows at each other from the same podium. Again, it’s a must-listen…
* Related…
* Legislative leaders bicker over dueling pension reform plans: “This is like a lot of things in the legislature,” Madigan said. “You can make it complicated if you wish, or you can keep it simple. Let me say it again: The best pension bill passed so far, and the one that does the most cost savings, is the House bill, and that’s in the Senate. The governor ought to work to get that passed.”
* Quinn asks lawmakers to combine 2 pension plans: By having two plans, they argued, the courts were essentially being invited to strike down the tougher proposal. “I was one of those people saying that pretty loudly,” state Rep. Elaine Nekritz, the Democratic point-person on pension reform in the House, told the Associated Press Monday. “That’s why I always thought (that) putting it in one bill is really problematic. No way if we can give them the plan that saves a lot less money in the same bill that they’ll pass the other.”
* Gov. Pat Quinn holds Democrats-only pension crisis meeting: The Speaker dismissed claims that he is trying kill pension reform this year to benefit his daughter, Attorney General Lisa Madigan, and her still-possible campaign for Governor. “If I didn’t want pension reform, then I would not have worked to pass the House pension bill as I did,” said Madigan.
* Medicaid delays, reductions play role in drug store closure
* Experts say Illinois youth prisons need independent ombudsman - The head of Juvenile Justice Commission calls on Gov. Quinn to act in response to report on sexual abuse in youth prisons.
* Kadner: Kelly calls for local input on airport
- Empty Chair - Tuesday, Jun 11, 13 @ 12:40 pm:
You’ve got to respect Madigan’s ability to stay on message and not answer questions. He gave the same “keep it simple or make it complicated” answer to maybe 6-7 questions.
- langhorne - Tuesday, Jun 11, 13 @ 12:40 pm:
keep it simple, you nim-no’s, and do it my way. other opinions and bills just complicate it.
- Makandadawg - Tuesday, Jun 11, 13 @ 12:46 pm:
Cullerton blames the commercial club or civic federation. Really? How much power do they actually have?
- Arthur Andersen - Tuesday, Jun 11, 13 @ 12:46 pm:
Keep it simple. My way or the highway. Simple.
Right Senator Cullen?
- Norseman - Tuesday, Jun 11, 13 @ 12:51 pm:
Upon listening to the clip, Cullerton sounds a little silly trying to convince folks that there was some “meeting of the minds” as Madigan is totally ignoring the “combined bill” option.
I think public workers and retirees need to urge Senators to keep it simple by voting down anything but 2404.
- Cook County Commoner - Tuesday, Jun 11, 13 @ 12:55 pm:
Presumably, the June 19 GA special session will be a flop. So, the bond underwriters may want to slice a little more off the price (less net to Illinois and more profit to them) and increase the interest rate to taxpayors. Bond insurance is probably a good move, but, again, less net to Illinois and more cost to taxpayors. I hear Nero’s fiddle in the distance.
- sideline watcher - Tuesday, Jun 11, 13 @ 12:57 pm:
The only thing that wasn’t mentioned is the fact that Madigan will not call HB2404 is because he knows it will pass by overwhelming margins in a bipartisan fashion. That bill has the votes to pass and the Speaker, he that is only called by his title, knows it. I have heard that the Senate Dems are all alone in this. All three Caucuses are against HB2404. Not true at all. The only disagreement is with one person. The Speaker. Amazing. Simply amazing. The architect of the unfunded liability itself is the also the one standing directly in the way of a compromise that would get us to 90 percent funded by 2045 in line with the vast majority of all other states. The House needs to call HB2404, watch it pass and then move on to re-amortize the debt and start working on the coming sunset of the income tax increase. That would be simple. Not complicated.
- Norseman - Tuesday, Jun 11, 13 @ 12:58 pm:
Seriously, instead of doing this Twister game-type dance trying to look diplomatic with Madigan - the complicated, Cullerton should just keep it simple and put 2404 on a House Bill and send it to the House and adjourn.
- sideline watcher - Tuesday, Jun 11, 13 @ 1:05 pm:
Noresman….Amen.
- biased observer - Tuesday, Jun 11, 13 @ 1:14 pm:
unfortunately sb2404 will not contribute meaningfully to solving the fiscal situation.
so sb2404 can be passed to momentarily give peace to the unions who fear a much more draconian pension reform bill, but it won’t really do enough to solve the fiscal mess.
that is what is going on.
- Frank - Tuesday, Jun 11, 13 @ 1:16 pm:
- Makandadawg - The Civic Committee absolutely has the juice to pull Republicans off of pension votes.
Madigan wants to keep it simple. How is it “simple” to pass a bill that has already been called in the Senate and got only 16 votes? He kept talking about Quinn taking a week to lobby Senators to vote for the House pension bill…what a laugh! Madigan knows Quinn is incapable of moving votes.
Interesting that the Speaker made no mention of Cullerton working the vote in his own caucus for the amended SB 1…positioning Quinn to get all the blame when nothing happens next week.
By the way, the most “simple” thing to do is call SB 2404 in the House. It would pass.
- PublicServant - Tuesday, Jun 11, 13 @ 1:28 pm:
I haven’t yet heard why the governor could not use his amendatory veto to eliminate plan B after it was passed. If that can’t be guarenteed, John, then I’d stick to your guns with 2404.
- Ghost - Tuesday, Jun 11, 13 @ 2:06 pm:
Two points:
1. Has the State ever missed a bond payment?
2. If I remember correctly, State Bond Obligations get paid first in front of all other creditors. So with a 52 billion in annual revenues, a prohibition against filing bankruptcy and top priority in payment, why are our bonds a risk or have a reduced raiting? Pretty much the only guranteed payee is somone holding a state backed Bond. Even Apple cant give that kind of Bond assurety and protection.
- Juvenal - Tuesday, Jun 11, 13 @ 2:14 pm:
We’re supposed to believe that Madigan can read the minds of the Illinois Supreme Court or somehow divine their will, but could not foresee the fate of SB 1 in the Senate or count to 30?
doubtful.
SB 1 was designed to fail, both in the Senate and the Supreme Court, for whatever reason.
- Sideline watcher - Tuesday, Jun 11, 13 @ 2:26 pm:
It is true that HB 2404 doesn’t go as far as sb1. It is not true that HB 2404 is not meaningful. It saves billions and becomes even more meaningful with cost shift and re-amortizing the debt. It also stands a much stronger chance of withstanding the inevitable legal challenges. The senate should tweak 2404 to make it better and send it back to the House. Again, the only one making this complicated is the Speaker.
- Formerly Known As... - Tuesday, Jun 11, 13 @ 2:41 pm:
=== The special session could have immediate consequences. ===
The regular session had consequences as well. Didn’t seem to scare Mr. Madigan enough for him to call the Cullerton bill for a vote. Odd.
=== state officials will be meeting with potential investors on both coasts and in Chicago ahead of the June 26 bond sale and in the wake of the rating downgrades to A3 by Moody’s Investors Service and A-minus by Fitch Ratings — both with negative outlooks. ===
Even if an agreement is reached and a bill is passed during special session, significant questions shall remain as to the constitality of the bill.
That seems unlikely to earn Illinois an upgrade by the ratings agencies in less than one week’s time. Perhaps a change in the “outlook”, but not an upgrade.
It seems fairly likely our ratings are locked in for the June 26th bond sale regardless of what occurs in Springfield on or around June 19th.
- Formerly Known As... - Tuesday, Jun 11, 13 @ 2:44 pm:
@Makandadawg - whatever “juice” they have, it isn’t as much as the super-majorities in the House and Senate do.
- Small Town Taxpayer - Tuesday, Jun 11, 13 @ 2:47 pm:
The special session scheduled for later this month, based on the press conference, appears headed for failure. I may be wrong, but Governor Quinn may have called it so as to be able to claim ‘I did all that I could to bring the GA together on pensions.’ During the next election that might be a political ‘positive point’ for Quinn whatever happens (or fails to happen) during the special session.
- Tom S. - Tuesday, Jun 11, 13 @ 3:29 pm:
Can someone clarify this for me? Any pension reform bill that is called during the special session will need a super majority unless its effective date is pushed to June of 2014. If it’s costing $17 million a day to do nothing on pensions, the cost will balloon to a total of 6 billion by June of next year. Then why pass anything with a simple majority during the special? Shouldn’t the GA just wait and pass something after January 1st when the effective date can be immediate? Acting now doesn’t make any financial sense unless the bill gets 36 in the Senate and 71 in the House and it can take affect immediately. Or am I missing something?
- golfman_r - Tuesday, Jun 11, 13 @ 4:00 pm:
If it were a simple problem then a simple solution may work. If it were a simple problem it would have been resolved decades ago. Madigans approach seems simple minded - my way or the highway. I will continue to press my Senator fo a no vote on anything connected to SB1.
- anon - Tuesday, Jun 11, 13 @ 4:03 pm:
The Speaker is possibly the most condescending person in politics today. This performance could be nominated for a golden horseshoe for most arrogant performance at a press conference. I hear a person whose time is slowly passing. His manners and methods are getting outdated. His time as Speaker and leader of the party is nearing an end.
- Dude Abides - Tuesday, Jun 11, 13 @ 4:26 pm:
I think sideline watcher makes sense. Pass SB2404, re-amortize the pension payment and extend the tax sunset date to allow enough time to work on a more progressive type income tax to replace it.
- Charlie - Tuesday, Jun 11, 13 @ 4:28 pm:
I wonder why someone didn`t ask him why he ran and hid from the folks who knocked on his office door last week.
- RNUG - Tuesday, Jun 11, 13 @ 4:48 pm:
Tom S. @ 3:29 pm:
That $17B number has been refuted several times; the daily cost is $5.83B
- mepjtpdad - Tuesday, Jun 11, 13 @ 5:08 pm:
Why not re-amortize the current debit at the lower cost now while the rates are lower than what is projected?
- wordslinger - Tuesday, Jun 11, 13 @ 6:02 pm:
The bond market isn’t an issue. Demand will be great, the interest rate will be historically low.
That has nothing to do with state government, but global capital markets.
Is there a Gary LaPaille thing going on now between Madigan and Cullerton?
Because Cullerton’s not LaPaille. Cullterton’s now going anywhere; and he’ll be there when Madigan is gone.
- Judgment Day (Road Trip) - Tuesday, Jun 11, 13 @ 6:57 pm:
“Even Apple cant give that kind of Bond assurety and protection.”
Irreverent, because Apple doesn’t have to. Btw, Apple also has over $100 bil in the bank and in marketable (liquid) investments and assets. They generate positive cash flow like you can’t believe. Unlike the State of Illinois.
- wordslinger - Tuesday, Jun 11, 13 @ 7:04 pm:
JD, as a wise investor, if you were going long, and security of principal was paramount, where would you put your money: Apple or a State of Illinois GO bond?
For crying out loud, the state is a going concern with sovereign authority and will remain so.
Apple could get blown out the water in the marketplace by Samsung or some Finnish geek living in his mom’s basement that we don’t even know of in a New York minute.
How’s your Wang, WorldCom and Enron stock doing these days?
- Arthur Andersen - Tuesday, Jun 11, 13 @ 7:28 pm:
Judgment, there is no better way to generate positive cash flow than through the power to tax.