* The House voted unanimously yesterday to pass a very important item…
The House approved two resolutions, both of which say that the House believes there will be just less than $34.5 billion in revenue available to spend in the fiscal year that starts July 1.
That is about $1 billion less than what lawmakers thought would be available last year when they set about crafting the current state budget.
* Senate President John Cullerton’s earlier projection didn’t include additional spending pressures…
State Rep. John Bradley, D-Marion, said the figure is a “cautious” estimate that does not take into account any possible savings from changes the General Assembly made to the state’s employee pension systems.
The pension overhaul currently is being challenged in court.
Lawmakers are ramping up their budget talks without input from Gov. Pat Quinn. The Chicago Democrat had been scheduled to introduce his budget blueprint last week, but postponed the plan until after the March 18 primary election.
Senate President John Cullerton, D-Chicago, predicted tough budget times in a recent speech, suggesting that the rollback of the tax hike combined with rising costs for a number of key state programs could create a $3 billion hole, leaving little money for new programs or to pay down a nagging pile of unpaid bills.
In recent years, lawmakers have generally stuck to the spending number approved by the House when creating the budget.
The Governor’s Budget Office projects a revenue amount that is larger than the House’s number by $705 million. However, legislators said they are encouraged that Gov. Pat Quinn’s number is close to theirs. “And I want to compliment the governor’s office because their numbers were very similar to the COGFA numbers this time, and I find that very heartening because a lot of other times, they have been very far apart,” said Democratic Rep. Jack Franks of Marengo.
While Republicans joined in establishing the spending cap for fiscal year 2015, which begins July 1, they insisted their votes did not endorse anything beyond that estimate.
Rep. Jim Durkin, R-Western Springs, said he thought the revenue estimate was a “responsible number” but that it “doesn’t mean we’re supporting the budget.”
- Posted by Rich Miller
|Bankruptcy? C’mon, man
Wednesday, Feb 26, 2014
* Eden Martin recently made the case for allowing Chicago to declare bankruptcy in order to get out of its pension obligations…
It seems to me that the most important issues have to do with the fiscal future of Illinois and Chicago. Whatever the fate in the courts of the state’s pension reform law, Chicago has its own unfunded pension debts to deal with, and it needs state legislative permission to do just about anything. So here are some questions for the candidates.
Detroit was able to seek federal bankruptcy protection only because Michigan law expressly permitted it. Illinois, unlike Michigan, has not permitted cities here to seek such bankruptcy protection. Would you, Mr. Candidate, support an Illinois law authorizing Chicago to seek bankruptcy protection, like Detroit? If Chicago can’t pay its bills, isn’t a bankruptcy process of some kind necessary to avoid chaos? […]
If the state’s pension reforms are upheld and if similar reforms are enacted for Chicago, do you think pension reform — by itself — would be enough to avoid fiscal collapse? Have you looked at the numbers lately?
* Kind of extreme, no? Standard & Poor’s now has a negative outlook on the city’s credit rating, but bankruptcy? C’mon, man…
The negative outlook reflects our view of the risks involved in how the city will address its upcoming, large pension payments.
A pledge of the city’s full faith credit and resources, as well as ad valorem property taxes without limitation as to rate or amount, secures its GO bonds.
The rating reflects our assessment of the following factors for the city, specifically its:
• Strong, broad, and diverse economy given its status as a major regional economic center;
• Adequate budgetary flexibility, which indicates that, although the city has home rule status, which provides increased taxing and borrowing capacity, its flexibility is limited by the city’s historical reluctance to adjust property taxes;
• Very weak budgetary performance, reflecting recent deficits and reliance on reserves to balance operations and an outlook of continued budget challenges; however, we note that the city has no plans to utilize its long-term reserves in the service concession reserve fund;
• Very strong liquidity providing very strong cash levels to cover both debt service and expenditures;
• Strong management conditions with good financial practices and policies in place;
• Very weak debt and contingent liabilities position, driven mostly by the city’s high net direct debt; and
• Weak Institutional Framework score.
* From the narrative…
Very strong liquidity
Supporting the city’s finances is liquidity we consider to be very strong, with total government available cash of more than 100% of debt service. We believe the city has exceptional access to external liquidity. The city has issued bonds frequently during the past 15 years, including GO bonds, enterprise fund revenue bonds, and sales tax bonds.
We view the city’s management conditions as strong, supported by “good” financial management practices under our financial management assessment (FMA). The city produces long-term financial and capital plans, which officials update annually. The city has a formal debt management policy and has adopted ordinances that limit the use of nongeneral fund reserves for budget-balancing purposes.
Very weak debt and contingent liability profile
In our opinion, the city’s debt and contingent liabilities profile is very weak, with pension funding levels and upcoming pension payments posing a significant challenge. The city has a combination of fixed-rate and variable-rate debt, and swaps are utilized to hedge risk. We do not view the city’s debt portfolio as being vulnerable to interest rate risk or speculative contingent liabilities. Direct debt is manageable in our view, with total governmental fund debt service at 13% of total governmental fund expenditures in 2012. The city has a roughly $3 billion, five-year bond program, most of it focused on water and sewer projects. We do not expect debt issuance within the next two years to lead to significant increases in the GO debt burden. The city has used bonds to improve and modernize its infrastructure.[Emphasis added.]
* The pension stuff is darned serious, though…
The city’s debt profile is challenged by its pension obligations. The city contributes to four different pension plans. The city’s budgets include pension payments for the four defined benefit plans that fully meet the statutorily required amounts. However, current state statutes in effect base contributions on a multiple of payroll and do not address unfunded liabilities. The budgeted pension payment amount for 2013 is $479.5 million, based on the statutory formula. This stops short of the $1.47 billion actuarially required contribution (ARC) determined in the Dec. 31, 2012 actuarial report. If it was included in the 2013 corporate fund budget, the ARC payment of $1.5 billion would represent roughly 35% of the corporate fund budget, an amount we consider very high.
The overall unfunded liability of the four plans is $19.5 billion as of 2012, up from $11.9 billion in 2009, and the plans altogether are 35% funded. [Emphasis added.]
* While not diminishing the problems, S&P seems to believe they’re manageable. For example…
We consider Chicago’s economy to be strong, broad, and diverse, with employment opportunities spanning all the major industries. Furthermore, the city is home to the headquarters of several large corporations, has a large tourism base, and is a transportation hub.
Adequate budget flexibility
In our opinion, the city’s budgetary flexibility is helped by its reserves in the service concessions and reserve funds. […]
Although the city has taxing flexibility owing to its home-rule status, it has not historically availed itself of that flexibility. Hindering budget flexibility is a political unwillingness historically to raise property taxes to meet budgetary challenges, particularly with respect to looming pension payment increases. In our view, the city also has a limited capacity to cut spending given that nearly two-thirds of 2012 general fund expenses were in the area of public safety.
Bankruptcy would mean a horrible credit rating for possibly decades to come. It should not be an option.
- Posted by Rich Miller
|Let’s reach the goal!
Wednesday, Feb 26, 2014
* As I told you yesterday, I signed up to take the “Polar Plunge” on behalf of the Special Olympics. We’ve raised some money and many thanks to all who’ve donated so far…
Chavez-respecting Obamist $25.00
Mark Denzler $50.00
Peter A. Quilici $50.00
David McSweeney $100.00
Matt Butterfield $25.00
Nathan Ross $50.00
Louis G. Atsaves $25.00
dupage dan $30.00
Kevin Fanning $25.00
lake county democrat $30.00
I’ve given $150 so far, but if we can get your contributions to total $1,000, I’ll match it.
* So, let’s get on with it. Click here. And thanks!
Also, if we can get your contributions to total $2,000, I’ll stop bugging you. Promise. Click here.
- Posted by Rich Miller
* I broke this story on Monday for subscribers. The Champaign News-Gazette followed up with more details…
The head of the Douglas County Democratic Party is under investigation for accepting campaign contributions from a company that he oversees as a state official.
Michael L. Woods Sr., of Tuscola, has been moved to another position in the Department of Natural Resources by Director Marc Miller. Woods, an IDNR employees since 2004, is being investigated for taking a total of $14,000 in 2012 and 2013 from Foresight Energy Services of St. Louis.
Foresight is a coal mining company with operations at four Illinois sites.
In addition to being chairman of the Douglas County Democratic Party, Woods is acting director of the Office of Mines and Minerals at the Illinois Department of Natural Resources. As such, he is a chief regulator of mining operations in the state.
Campaign disclosure records show that Foresight last August gave $10,000 to the Douglas County Democrats, a highly unusual sum given that the organization generally had no more than $4,000 on hand.
Within a few days of Foresight’s $10,000 donation to the Douglas County Democrats, officials disbursed much of it to Democratic candidates and other party organizations outside of Douglas County.
The largest sum — $5,000 — went to Gov. Pat Quinn’s re-election campaign. Another $1,200 went to the Illinois Democratic County Chairmen’s Association. And $250 went to the campaign fund of state Sen. Mike Frerichs, D-Champaign.
The Douglas County Democrats also gave $1,000 to the campaign fund of Tony Mayville, a Democratic candidate for the Illinois House in the 115th District in southern Illinois. Mayville is a state mine safety officer for IDNR.
* You may recognize the name of Tony Mayville. He’s the DNR employee who was suspended for also taking contributions from those same mining interests.
* The Illinois GOP rightly called on Gov. Quinn and Sen. Frerichs to return the tainted cash. From a press release…
Gov. Pat Quinn and State Sen. Mike Frerichs, both candidates for statewide election, found themselves caught up this week in an investigation involving campaign contributions and the Illinois Department of Natural Resources.
“After all the damage that’s been done to our state’s reputation on ethics, you’d think Gov. Quinn and Sen. Frerichs would know better,” said Andrew Welhouse, communications director for the Illinois Republican Party. “At the very least, both Gov. Quinn and Sen. Frerichs need to return this tainted cash immediately, and any other contributions they’ve had funneled to them in a similar way.” […]
“Illinois deserves better than this,” Welhouse said. “Gov. Quinn shouldn’t stand for his public employees using their taxpayer-funded jobs to grease the wheels of the Democrats’ campaign operation. And why should the taxpayers trust Mike Frerichs with their tax dollars if he’s not even willing to separate himself from this kind of scandal?”
- Posted by Rich Miller
* From a press release, with emphasis added. Read it all…
Illinois House and Senate Republicans are urging the Illinois Auditor General to refer findings from the Feb. 2014 audit of the Illinois Violence Prevention Authority’s Neighborhood Recovery Initiative (NRI) to the Executive Inspector General (EIG) for further review and potentially the U.S. Attorney for further investigation of potential criminal activity.
The lawmakers further called for freezing of any unexpended dollars – which could be as much as $31 million.
“Every component of this audit is barraged with questions of ethical integrity,” said State Rep. David Reis (R-Ste. Marie). “From the very beginning, many of us had grave reservations about the formation and implementation of this program. This audit supports these concerns. This is nothing more than Governor Quinn using taxpayer dollars to fund precinct walkers in Chicago.”
Sen. Barickman (R-Bloomington), Co-Chair of the Legislative Audit Commission, called the program “nothing more than a political slush fund for Governor Quinn.”
Sen. Murphy (R-Palatine) said, “There was no documentation, no monitoring, no attempt to recover funds. We need to get this information to the appropriate law enforcement authorities and freeze the spending. It’s a shameful waste of taxpayers’ dollars to bail out a failed politician.”
“When critical care services remain on the chopping block and transportation funding for rural schools have been cut, the Governor was able to increase limited state resources for the Neighborhood Recovery Initiative from $20 million to $50 million in less than two months,” said State Rep. Dwight Kay (R-Glen Carbon).
Sen. Tim Bivins (R-Dixon) said, “I’ve spent 32 years in law enforcement and the information I’m looking at is the kind of information indictments are made of. This warrants in my estimation a criminal investigation.”
The Auditor General stated the $54.55 million NRI program was “hastily implemented” with “pervasive deficiencies in Illinois Violence Prevention Authority’s (IVPA) planning, implementation, and management.”
The Audits also found Governor Quinn broke state law when he shuffled funds among various accounts in order to circumvent the legislature’s authority to annually appropriate General Fund dollars. In effect, the Governor was able to create a non-appropriated slush fund of $91 million that he could use in future fiscal years without having to request that the General Assembly re-appropriate those dollars. Approximately $45 million was eventually given to the Neighborhood Recovery Initiative. (IVPA Compliance Audit, for two years ended June 30, 2012; pages 10-14; Released 2/25/14. Finding 12-1.)
The Auditor General’s performance audit included the following key findings.
· A troublesome timeline – beginning with Governor Quinn’s appearance in a Chicago neighborhood in August, 2010. In less than two week, $30 million was allocated to the program – before the IVPA staff was ever notified. In September, 2010 the “Governor’s office” tells the IVPA Board of the commitment to release some funds immediately and the “rest after the election.” By October 6, the program increased from $20 million to $50 million. (page 10) Subsequent funding brings NRI’s totals to nearly $100 million in taxpayer funds.
· Auditors questioned 40 percent of spending in the NRI program.
· IVPA turned over decision-making to Chicago aldermen for organizations to serve as lead agencies for the NRI program.
· While billed as a violence prevention program, the city of Chicago’s most violent neighborhoods were not included. (page 73)
· Quarterly reports were submitted late and were inaccurate.
· IVPA failed to adequately monitor spending of State NRI funds by providers. (page 92) and failed to exercise due diligence in selecting the agencies.
· Lead agencies struggled for direction and management (page 29-31)
· Lead agencies expended $46.2 million for NRI – over $37 million was for day-to-day activities.
· They failed to properly ensure unspent taxpayers funds were returned to the state.
· NRI failed to meet its goals and failed to measure outcomes.
The 2012 resolution (HR 1110) originally called upon the Auditor General to conduct a performance audit of State moneys provided through the Illinois Violence Prevention Authority to the Neighborhood Recovery Initiative in Fiscal Year 2011 and Fiscal Year 2012. The resolution was adopted in the House 100-16-1. Similar resolutions were blocked in the Illinois Senate.
For Years 1 and 2 of the NRI the Illinois Violence Prevention Authority received $54.55 million which $44.55 million came from the Governor’s Discretionary appropriations in FY11 and the remain $10 million were appropriated from General Revenue Funds in FY12.
Let’s be clear here. This is no murky, hard to comprehend, constantly changing, hyperpartisan “Benghazi!” pseudo-scandal. We’ve got a blistering Auditor General report and some possibly serious wrongdoing.
Background and the audit are here. My “favorite” part…
According to the former IVPA Director, IVPA selected the communities to be served by NRI based on an analysis performed by the Department of Human Services (DHS) for the Safety Net Works program. However, IVPA and DHS could not locate the analysis used nor could IVPA provide any other documentation to auditors showing how Chicago communities were selected to participate in NRI.
Additionally, the communities selected for NRI were not all the most violent in terms of crime in the Chicago area. Our comparison of NRI communities to the violent crime totals published by the Chicago Police found 7 Chicago neighborhoods that were among the 20 most violent neighborhoods that did not receive NRI funding. In Year 3 of NRI, another Chicago community, Hermosa, was added to the NRI program. This community ranked 48th in violent crime from 2005-2010.
* Coverage roundup…
* Audit raises 2010 election concern for Brady: State Sen. Bill Brady said Tuesday he’s unsure whether a now-discredited $55 million anti-violence plan launched by Gov. Pat Quinn might have altered the outcome of his 2010 bid for governor. The Republican from Bloomington said he believes federal prosecutors should investigate the taxpayer-financed program in light of questions raised in a blistering audit released Tuesday.
* State auditor slams Gov. Pat Quinn’s $54.5 million anti-violence program: “Clearly, the governor implemented a plan 30 days before the election that was a $50 million slush fund. It smacks of promises made in areas that he needed good turnout to win,” Brady told the Chicago Sun-Times.
* Audit: Anti-Violence Program Rife With Problems: But the now-defunct Illinois Violence Prevention Authority, which created the project, couldn’t produce the criteria it used to choose the communities and failed to include seven neighborhoods that Chicago police consider to be the most crime-ridden, the audit found. And it relied on Chicago aldermen — not an open bidding process — to find community organizations to run the programs.
* State audit criticizes Quinn anti-violence program: “The timing of those expenditures cause great concern for those of us who know that those funds were spent just prior to a major election for which the governor was on the ballot,” said Barickman, a Bloomington lawmaker.
* Rauner campaign takes shot at Quinn for ‘bungling’ anti-violence program: Republicans at the Statehouse called for a criminal investigation and even floated the word “impeachment” following Holland’s assessment that Quinn’s administration failed to monitor how those funds were spent, gave Chicago aldermen power to dictate which groups got funding and allowed some of the city’s most violence-prone neighborhoods to miss out entirely.
- Posted by Rich Miller
* Sen. Kirk Dillard has jumped 4 points since the last We Ask America poll on February 18th, and nine points since February 13th. The IEA endorsement is having an impact, along with Dan Rutherford’s major troubles.
But second place is still second place. The latest We Ask America results, with previous two results (most recent first) in parentheses…
Rauner: 36% (35, 39)
Dillard: 17% (13, 8)
Brady: 13% (14, 11)
Rutherford: 7% (8, 8)
Undecided: 27% (30, 35)
* Methodology, etc…
Poll type: Automated - Date: 2/25/2014 - Participants: 1,178 Likely GOP Voters - Margin of Error: ± 3%
* Rauner, Brady and Rutherford are plateauing, Dillard is rising. But Dillard is probably gonna need vastly more resources than he currently has to pull closer to Rauner. Besides the $50K from the IEA last week, he’s raised just $9K in recent days. But there is a bit more coming…
The Illinois Retired Teachers Association is backing state Sen. Kirk Dillard, the Hinsdale Republican is expected to announce on Wednesday.
The group is some 35,000-members strong.
A source with knowledge of the endorsement said there’s a likelihood that the group will send out a direct mailer backing Dillard’s candidacy to its members.
That mail program won’t be very big unless the IRTA PAC raises more than the $64K it had on hand.
* And while Brady and Dillard are publicly sniping at each other over who is the best candidate to challenge Rauner, the kabillionaire is going full steam ahead with lots of TV ads attacking Gov. Pat Quinn and the entrenched Statehouse establishment.
- Posted by Rich Miller
* 8:26 am - From a press release…
Same-Sex Marriage In Champaign County
URBANA, IL – Champaign County Clerk Gordy Hulten today issued the following statement on same-sex marriage in Champaign County:
“On Friday, federal judge Sharon Johnson Coleman held that the Illinois statute banning marriage for same-sex couples is unconstitutional and violates the Fourteenth Amendment’s Equal Protection Clause. The Illinois Attorney General and the Cook County Clerk were parties to the suit. The precise effect of the ruling on other Illinois counties is unclear. However, after consulting with State’s Attorney Julia Rietz, I have come to the conclusion that the rationale of the case applies to all citizens of Illinois and that Champaign County residents should have no fewer Constitutional rights than those in Cook County. Furthermore, given the ruling, denying a license to a same sex couple would provide no benefit to the County and would likely result in litigation at taxpayer expense.
“Therefore, effective immediately, the Champaign County Clerk’s office will issue marriage licenses to same sex applicants, in accordance with the 14th Amendment, and the Illinois and United States Constitutions.”
Gordy is a Republican, by the way.
*** UPDATE *** Equality Illinois is urging other county clerks to start issuing licenses and is encouraging Downstaters to travel to Champaign County for marriage licenses. From a press release…
“Clerk Hulten recognized both the humanity of helping gay and lesbian couples to fulfill their dreams and the legal soundness of following the decision of a federal court that denying marriage licenses was unconstitutional,” said Berrnard Cherkasov, CEO of Equality Illinois.
“It is simply time for the other county clerks to follow suit,” Cherkasov added. “As we saw in the immediate rush to the Cook County Clerk’s marriage bureau after Friday’s ruling, gay and lesbian couples are eager and ready to take the step that not only grants them and their family the legal benefits and rights of marriage but also bestows society’s recognition that their love is equal.”
It is also significant that the licenses are now available in a Central Illinois county, which is within easy driving distance of not only Champaign-Urbana but also Peoria, Decatur, Springfield, Bloomington-Normal and Danville for couples and their families. “While we were thrilled with Friday’s ruling that applied to Cook County, this is a major step that instantly spreads marriage equality to another major region of the state,” Cherkasov said. “We are working with more county clerks to help them step up.”
The Champaign County Clerk’s office is at 1776 E. Washington Street, Urbana, Illinois. The website is http://champaigncountyclerk.com/vitals/marriage.php.
With the swiftness of the ruling and its immediate effectiveness, there are many questions about implementation of the law. The Equality Illinois guide Marriage Rights in Illinois helps answer them. It can be read and downloaded here: http://www.equalityillinois.us/wp-content/uploads/2013/12/Marriage_Rights-5.pdf.
- Posted by Rich Miller
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