* The projection by Moody’s Analyticals that Illinois ranked 50 out of 50 in likely 2014 job growth has brought critics out of the woodwork. The firm, however, has revised its projection and moved Illinois up ten spots, to 40th. Still lousy, but at least it ain’t the worst in the freaking country. An e-mail from Moody’s to the governor’s office..
The state moved up 10 spots like we discussed, with the 2014 projection for Illinois job growth increasing from 1% to 1.2%. When it comes to the job market, slower healing in housing and government is primary reason Illinois has lagged behind during the economic recovery. In terms of the job market, industries such as construction, finance and state/local government have significantly underperformed whereas other industries have performed in line with the nation. Construction, finance and state/local government made some progress in 2013 but it was limited and in the near-term they will continue to be a drag on the state’s relative performance.
As for the better forecast and improved ranking in January, this reflects (1) stronger than anticipated economic data toward the end of last year, including leading indicators that suggest momentum is strong entering into 2014, (2) limited fall-out from the federal government shutdown and the agreement by lawmakers to reverse some of the spending cuts under sequestration over the next two years, (3) better performance of manufacturing and the fact that strengthening private sector demand should lessen the need to trim inventories by curtailing output. Since pension reform was assumed in the forecast its passage did not directly impact the forecast, though it does reduce downside risk in the outlook.
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Question of the day
Wednesday, Jan 29, 2014 - Posted by Rich Miller
* Illinois Radio Network has a piece about where the GOP candidates stand on Amtrak funding…
Rutherford, the state treasurer who is in a four-way Republican primary for governor, said it’s ridiculous for the government to prop up an outfit which makes customers wait in gravel parking lots for trains which are four hours late.
“Until they can get those trains to run on time, I don’t see having any good government money going to it without a great deal of accountability,” Rutherford said in a public broadcasting debate in Peoria.
State Sen. Kirk Dillard (R-Hinsdale) has supported Amtrak but echoed Rutherford’s concerns: “If the trains don’t get there, it doesn’t mean that they need to run faster. Yes, Amtrak’s vital, but it needs to perform better.”
Financier Bruce Rauner says the passenger rail system is part of a big, important picture. “To the degree we don’t have the money to invest,” Rauner said, “we should form creative public-private partnerships to help finance investments in our infrastructure so it’s world class.”
* The Question: Your thoughts on state Amtrak funding?
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Today’s quotable
Wednesday, Jan 29, 2014 - Posted by Rich Miller
* Bruce Rauner…
“We’re being bombed every day by [Pat] Quinn, by the Democrats, by Republican opponents, by the establishment, but that’s OK,” Rauner told the group. “They’re trying to throw mud but it’s not going to stick. I’m very proud of the fact they are attacking because leaders take arrows. I’m happy to take arrows.” […]
“Things are going really well,” Rauner said. “They’re going so well that now we’re being bombed every day. People don’t talk about much of anything else. They just attack us. That’s a sign that we’re winning. Our message is scary to the career politicians.” […]
“They’re trying to spin me as being anti-union. I’m not anti-union,” he said. “I’m anti-conflict of interest. It’s the government unions, when they can bribe the politicians to give them free health care. Give them bigger pensions. Give them more pay … It pushes up our taxes and drives businesses out of our state.”
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Pension lawsuit roundup
Wednesday, Jan 29, 2014 - Posted by Rich Miller
* Tribune…
The union coalition also contends the pension law is a violation of the state constitution’s contracts clause and breaches another constitutional provision — the so-called takings clause — which prevents a person’s private property from being taken away for public use without “just compensation.”
As part of the “takings” argument, the unions raise the issue of the legal theory of consideration. They counter that provisions in the new law that reduce the current employee contributions to their pensions by 1 percentage point and allow pension systems to file suit to ensure state government pays its proper share for retirement are inadequate and were never agreed upon.
The lawsuit alleged the changes foisted upon public employees are “substantial and will grow in magnitude over the course” a person’s retirement, a point that underscores why the new law is “unconstitutional and unfair.”
By way of example, the lawsuit highlighted the cases of 25 active and retired government workers. One was Chicagoan Lee Ayers, who has worked about 25 years as a clinical lab technician at a state university and expects to get an initial pension of $53,366 when he retires in 2019. Under the new law, he would lose more than $218,000 if he spends 25 years in retirement, the lawsuit contended.
In contrast, the new law lowers the regular pension deduction from his paycheck by 1 percentage point. That means he’d get to keep an extra $3,733 before he retires — a major difference from what he’d give up, according to the court papers.
* Lee Newspapers…
The 55-page suit notes the plaintiffs have “faithfully” contributed to their pension systems during their tenure with the state.
“Unfortunately, the same cannot be said of the state,” the lawsuit notes. “The state chose to forgo funding its pension systems in amounts the state now claims were needed to fully meet the state’s annuity obligations. Now, the state expects the members of those systems to carry on their backs the burden of curing the state’s longstanding misconduct.”
“Misconduct” is a pretty harsh word.
* WBEZ…
Tuesday’s lawsuit comes on the heels of other similar lawsuits that the Illinois Attorney General’s office has asked be consolidated into one case to be heard in Cook County. But the We Are One Illinois coalition filed its case in Sangamon County, home to Springfield, the state Capitol, and thousands of public workers.
The difference in location could prove significant in the outcome of the case. House Speaker Michael Madigan takes credit for negotiating the compromise and putting the needed votes on the bill for approval. Critics of the law express concerns about whether the suit could come before a Cook County judge who has connections to Madigan, who also serves as the chairman of the state’s Democratic Party.
The case is expected to eventually be argued in front of the Illinois State Supreme Court.
* Bloomberg…
The case was assigned to Sangamon County Circuit Judge Peter C. Cavanagh, according to the court’s electronic docket. Running unopposed as a Republican, Cavanagh was elected to a six-year term in 2010, according to Sangamon County voting records.
* ABC7…
Legal experts agree the case filed Tuesday in a Sangamon County Circuit Court will eventually find its way to the Illinois Supreme Court. The litigation certainly will take months, perhaps more than a year.
* Crain’s…
“This landmark law was urgently needed to resolve the state’s $100 billion pension crisis,” said Mr. Quinn in a statement. “We expect it to be upheld as constitutional.”
Said a spokeswoman for Senate GOP Leader GOP Christine Radogno, “We are hopeful the court will move expeditiously so that we can stabilize the systems for the participants and save taxpayers.” Though unions are unhappy, the law will cut taxpayer payments more than 40 percent over the next three decades, she added.
And from Mr. Cullerton: “I supported (the law) to break the political impasse between the Senate and House, (and) to send a test case to the courts.”
* Sun-Times…
By contrast, Rutherford is not a believer in the law that passed the House and Senate and that Quinn enacted into law. In a brief interview Tuesday, the treasurer said he believes it’s unconstitutional and that pension reform of any sort should be negotiated with the unions.
“We anticipated this latest lawsuit by the We Are One Illinois coalition regarding the new pension law,” Rutherford said in a prepared statement. “We will now wait and see how the Supreme Court rules.”
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SOTS preview
Wednesday, Jan 29, 2014 - Posted by Rich Miller
* Everybody’s gonna be at the Statehouse SOTS address today…
Quinn’s Democratic challenger anti-violence activist Tio Hardiman, who has worked in Chicago for years, confirmed he’d attend. All four Republican candidates will listen in person, three of which are public office holders: State Treasurer Dan Rutherford and state Sens. Kirk Dillard and Bill Brady. Bruce Rauner, a venture capitalist, will also attend.
* Here’s some of what they’ll hear…
Quinn has refused to say if he supports extending the tax hike or putting in place some other money-raising measures, and he’s expected to avoid the topic until he delivers his budget address Feb. 19. Instead, the governor will use Wednesday’s speech to unveil a number of voter-friendly initiatives, including several aimed at job creation and helping small businesses.
The governor will propose slashing the fee for filing as a limited liability company from $500 to $39, according to an aide familiar with the governor’s plans. The state’s fee is among the highest in the nation, and the idea is to let business owners spend the money on getting off the ground instead of paying for bureaucracy.
Quinn also will issue an executive order to create a new position in his office that will focus on ways to improve the climate for small businesses in Illinois, including ways to streamline regulations, aides said.
The proposals may be aimed at blunting some of the blowback Quinn has experienced from business interests over his push to raise the state’s minimum wage from $8.25 an hour to $10. He first unveiled the idea during last year’s State of the State, but it gained little traction. The governor may be hoping for an election-year boost this time around as Obama also has pushed a federal increase.
* Sneed…
Watch for Gov. Pat Quinn to propose an ambitious early childhood education initiative in his 2014 State of the State address in Springfield on Wednesday.
In the wake of recent pension reform and marriage-equality legislation, Sneed is told Quinn wants to up the ante from proposals for universal access to pre-K education.
“The governor’s initiative will call for a more comprehensive approach starting before birth,” said a source. “It will include increasing access to prenatal care, which is pivotal to ensuring the healthy birth and development of a child.”
◆ Added the source: “You want to reduce crime and create more jobs? You want to drive down the dropout rate? You want to help more people get college degrees? It all starts with early childhood education − birth to five − and the governor believes this must be the critical focus over the next five years.”
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* Former GOP Congressman Bobby Schilling is pretty darned hardline on abortion, as this recent fundraising e-mail clearly shows…
Radical pro-abortion groups, including EMILY’s List—one of my opponent’s top financial contributors—are fighting to not only protect abortion, but to grow the abortion industry by leaps and bounds. Apparently claiming 1.2 million lives each year isn’t enough. EMILY’s List is fighting to increase access to third-term abortions, strike down parental notification laws, and increase taxpayer funding for abortion.
Folks, when you stop and think about it, EMILY’s List is downright disgusting. Their agenda is designed to promote young teenage girls getting third-term abortions paid for by the taxpayers without the parents ever finding out. That’s as radical as radical gets, and my opponent has pledged to stand with them on each and every issue.
EMILY’s List previously put me “on notice” because of my strong record on life, and that’s a badge of honor I wear proudly! Sorry, EMILY’s List, but genocide is not a right.
I stand with the unborn. I oppose all taxpayer-funded abortions, and I will continue to do everything in my power to protect life.
In liberty,
Bobby Schilling
P.S.-My opponent has received hundreds of thousands of dollars from the radical pro-abortion lobby. Will you help us defeat her this November? Let’s stand for life together. Please chip in $25 to our campaign today!
Freshman Democrat Cheri Bustos’ campaign circulated the Schilling e-mail to their own e-mail list with a fundraising request: “Chip in $3 or whatever you can to help Cheri fight back against the nonsense and do what’s right for Illinois.”
Obviously, we can expect another rough and tumble race.
*** UPDATE *** From the Schilling campaign…
Hi Rich!
I saw your post on the pro-life e-mail we sent out last week.
I wanted to clarify Bobby’s position on the abortion issue. He is steadfastly pro-life. He also supports the “exceptions” — rape, incest, and when the mother’s life is at risk.
However, Cheri Bustos is incredibly extreme on abortion with no exceptions. Bustos has received hundreds of thousands of dollars from EMILY’s List. Last year she voted against the Pain Capable Unborn Child Protection Act, fighting to ensure that the government continues to subsidize abortions after 20 weeks.
Bustos highlighted the word “disgusting” when we were referring to EMILY’s List’s radical agenda.
So that begs a few questions:
Does Cheri Bustos think third-term abortion is not disgusting?
Does Cheri Bustos really believe parents shouldn’t be involved in their teenager’s crisis pregnancy?
Does Cheri Bustos really believe a baby isn’t alive at eight or nine months?
And does she support legalized, subsidized abortion up until the last week of the pregnancy?
These are simple questions she could answer. So far she has refused to. If she supports no exceptions, how is she anything but a radical pro-abortion extremist?
Jon Schweppe
Communications Director
Bobby Schilling for Congress
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Stock prices and the SOTS
Wednesday, Jan 29, 2014 - Posted by Rich Miller
* Based on a recent study, you might wanna call your broker and buy some stock in Illinois-based companies this morning. Crain’s…
The study looked at 388 state of the state speeches between 2002 and 2010, along with data on 5,271 publicly traded firms, including 211 in Illinois. Software called Diction 6.0 counted the positive and negative words in the speeches and scored them for net optimism, certainty and activity.
“The results show that firms that are located in a state where the governor gives a more optimistic speech are more likely to significantly increase investment and employment, and experience higher abnormal returns, relative to similar firms located in a neighboring state,” the study concluded.
In 2005, for example, former Gov. Rod Blagojevich’s state of the state speech scored 26.45 for net optimism, twice the nine-year average for all speeches nationwide. Illinois stocks beat the market by 1.59 percent that week, according to the study. In the 2010 election year, Mr. Quinn’s speech scored only 6.61 for net optimism, and the state’s stocks fell 0.5 percent.
The study controlled for variables such as the size of companies, the health of a state’s economy and even the possibility of media leaks before the speeches — leaving the speech itself the only variable.
“I was really surprised by the results,” said Larry Fauver, another co-author and associate professor of finance at University of Tennessee in Knoxville. “Most people are skeptical. I’m comfortable saying the correlation is 100 percent.”
The market react was supposedly even stronger in election years.
Discuss.
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Drilling down into the OR
Wednesday, Jan 29, 2014 - Posted by Rich Miller
* Let’s revisit Greg Hinz’s interview of Bruce Rauner’s about convicted influence peddler Stu Levine…
“I didn’t have ‘a relationship’ with Levine. I didn’t know him,” Mr. Rauner told me. “I didn’t interact with him. What I’ve been told is that he was an employee of a company in which we had a minority interest.”
In further comments over our tea, Mr. Rauner said GTCR’s ownership in the medical-services company that employed Mr. Levine varied from 5 percent to 40 percent, depending on the time. Two other GTCR officials — not him — served on the board of the firm, he said. And the medical services firm was one of scores owned by GTCR at the time, all of which had a number of highly paid officials, he said, though I doubt too many people at just one firm made $300,000 a year.
* OK, first of all, let’s go to the April, 1999 SEC filing when the Compbenefits company was bought…
It is anticipated that immediately after the Merger the following individuals and entities will beneficially own the number of shares of common stock and the number of shares of Convertible Preferred Stock of the Surviving Corporation shown in the following table.
The table shows that two GTCR funds were slated to own slightly over 40 percent of the new company’s stock. So, you’d think that Rauner’s firm would be looking at the company’s numbers pretty darned closely.
* A few months after that April, 1999 SEC filing, Rauner said this to the Wall Street Journal…
“We spend a lot of time living with our companies on a week-to-week basis, understanding what’s going on, and being in the flow of information, so we can be helpful and knowledgeable about the operation. That’s a challenge for public investors. That’s where credibility and consistency and reputation counts for so much.”
* And this is where it gets interesting. Greg Hinz doubted yesterday that “too many people at just one firm made $300,000 a year.” Turns out, he was absolutely right.
Another 1999 SEC filing shows executive compensation at the medical-services company bought by Rauner’s firm.
According to that filing, the medical company’s CEO made $250,009 in 1998, the year before the merger. The company’s president and COO made $215,000 plus about ten grand in “other compensation.”
* In other words, Stu Levine’s $25K per month contract meant he was making more than the CEO and COO the year before the merger.
And yet, somehow this escaped Rauner’s notice.
As former TRS executive director Jon Bauman told Hinz, “On one hand, GTCR was one of four owners in a company that was one of maybe 80 to 100 in (its) portfolio. On the other, limited partners pay general partners (like GTCR) a good fee to know what’s going on in their portfolio companies and to be accountable for them. I’m missing the accountability here.”
* But, even so, other partners were in charge of the acquisition, and GTCR does have a whole lot of companies in its portfolio, so maybe Rauner really didn’t know. But it’s just a bit more difficult to take him at his word with this new information.
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* You can watch the State of the State address here or here. Our friends at BlueRoomStream.com will have live Democratic react at about 1 o’clock here, and live GOP react about the same time here. The Senate is convening a little early today, and you can watch its session beginning at 11 o’clock here. I’ll also probably post videos in our constantly updated ScribbleLive coverage…
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