Question of the day
Wednesday, Apr 9, 2014 - Posted by Rich Miller
* Bruce Rauner spoke to the Illinois Bankers Association today…
* The Question: Caption?
As always, keep it clean.
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*** UPDATED x1 *** “We have a half”
Wednesday, Apr 9, 2014 - Posted by Rich Miller
* During today’s debate on a bill to do away with a state commission which can overturn local school board decisions on charter schools, sponsoring Rep. Linda Chapa LaVia was trying to make a point about minority parents.
“So, listen to me minorities,” she said turning toward the Democratic side of the chamber. “I’m over here because we’re all over on this side, right?”
The Republicans erupted. They have an African-American member, Rep. John Anthony.
Responding to the HGOP outburst, Chapa LaVia said, “Wait,” and then, pointing her finger at the other side of the aisle, said “We have a half. We have a half.”
What. The. Heck. Was. That?
Oy.
* Watch…
That’s just awful.
Yes, the debate was contentious. But nothing justifies stuff like that. Ever.
* The Republicans rose to object strongly, as they rightly should have done. I’ll see if I can get video later. Chapa LaVia gave one of those “I apologize if anyone was offended” apologies.
Not enough, Representative. Not nearly enough.
* By the way, the bill failed to achieve a majority. It was put on postponed consideration.
*** UPDATE *** Rep. Reboletti demands an apology…
* The apology..
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A whole lot of progress on ride sharing
Wednesday, Apr 9, 2014 - Posted by Rich Miller
* The taxi companies have backed way off their outlandish legislative push to all but outlaw ride sharing companies like Uber and Lyft. There is no final agreement yet, however. Word is that insurance details are still to be worked out, but here’s the press release from Rep. Mike Zalewski outlining what’s been put into a bill and will be heard tomorrow…
Local governments can regulate ride-sharing services more strictly than the new state standards, except for chauffeur license requirements and establishing fares
A two-tiered regulation system is provided for ride-sharing systems – for drivers/vehicles participating more than 18 hours per week and those doing it 18 or fewer hours a week
Regulation for more than 18 hours per week
Drivers must secure a chauffeur’s license from the local government where the vehicle is registered or where the ride-sharing arrangement is conducted
Vehicles must have distinctive registration plates to designate them as ride-sharing participants
Vehicle age must be the same as local government requirements for other vehicles transporting passengers commercially
Vehicles must pass the same inspections local governments require of other vehicles transporting passengers commercially
Regulation for 18 or fewer hours per week
Drivers do not need a chauffeur’s license
Dispatchers must conduct background checks on prospective drivers and certify they fall under the 18-hour threshold
No distinctive registration plates are required
Dispatchers must certify that vehicles have passed an annual safety inspection before it can be used in ride-sharing
An IDFPR state commercial ride-sharing dispatcher’s license is required, with annual renewals
Dispatchers must have commercial liability insurance with primary coverage for the dispatcher, driver and vehicle
Ride-sharing arrangements cannot be done by “hailing,” hand gestures or verbal statements
Ride-sharing cannot be done at designated taxi stands, queues or loading zones, nor at any place banned by local governments
Ride-sharing drivers must follow all rules a local government has for licensed chauffeurs for servicing under-served areas and providing wheelchair accessible vehicles
Dispatches can only be made to properly licensed drivers and vehicles that have distinctive registration plates
Violations of ride-sharing requirements are subject to penalties under IDFPR
Anyone injured or in danger of being injured from an actual or imminent violation of this new law can sue in circuit court
Allow taxis to establish a system for “surge pricing” in situations where rider demand is high, as long as the service is contacted by an Internet or smartphone device and drivers clearly agree to higher prices for using the service
Dispatchers must collect records on all commercial ride-sharing vehicles
IDFPR must adopt rules to implement the provisions in this proposed law
All the truly goofy over the top stuff is gone. That’s a good thing.
I also like the idea of taxi companies getting into the online ride share business. It’ll help spur even more competition and force the companies to improve their service.
* Meanwhile, Mayor Emanuel is also continuing to work on a compromise…
Emanuel is still refusing to regulate ride-sharing fares for fear of snuffing out a burgeoning industry on the cutting edge of technology that gives Chicagoans more transportation options.
But he’s reserving the right to “place a cap on surge pricing” during periods of peak demand if increased disclosure requirements fail to “alleviate consumer complaints.”
In the meantime, ride-sharing companies would be required to “publicly announce” when surge pricing periods are in effect and “take steps to ensure that customers clearly agree” to those higher prices. That includes providing customers with a “true fare quote in dollars and cents” instead of a multiplier.
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Correlation or causation?
Wednesday, Apr 9, 2014 - Posted by Rich Miller
* There are two premises for this Chicago Reader article. The most important…
On March 5 the City Council voted 46-3 to approve Mayor Rahm Emanuel’s proposal to spend $55 million in property taxes on a new Marriott hotel in the South Loop—part of his ambitious development plan that also features a basketball arena for DePaul University.
The vote followed a September decision by the Metropolitan Pier and Exposition Authority, a state-city entity, to award Marriott the coveted contract to run the new hotel. […]
However, what the mayor and his aides didn’t mention—and what has gone unreported until now—is that in the year leading up to the lucrative deal for Marriott, the hedge fund of one of Emanuel’s largest campaign contributors bought millions of shares of stock in the hotel chain.
That hedge fund, Citadel LLC, is run by billionaire Kenneth Griffin, whom Forbes last fall deemed the wealthiest man in Illinois. He is famous in the financial world for making a killing in high-frequency trading. […]
According to SEC filings, the firm began buying major portions of Marriott stock in late 2012. By September 2013, SEC filings showed the hedge fund owned 2.3 million shares of Marriott. As of the last SEC filings at the end of 2013, Citadel owned roughly 1.6 million shares of Marriott stock worth an estimated $89 million.
I dunno. Was this whole thing really greased a year in advance? There was, after all, a bidding battle and Mariott in the end wound up beating Hilton for the project…
The board of the Metropolitan Pier and Exposition Authority approved the 10-year contract for hotel operations. Its net value to Marriott, in today’s dollars, is $13.6 million over the life of the deal, according to a spokeswoman for the authority, the state-city agency known as McPier. […]
Marriott’s proposal beat out one by Hilton Worldwide, the other finalist. That deal would have netted Hilton an estimated $15.8 million, McPier officials said.
* And after ten years, McPier will own the hotel…
The $400 million hotel is part of a larger project that will include a multiuse arena that will host DePaul University basketball and a 500-room boutique hotel.
Ultimately, the authority will own the larger convention hotel, financing its construction with bonds backed by hotel revenues.
* Perhaps these stock purchases were just a good investment by Citadel.
As noted above, Citadel sold quite a bit of its stock, but that’s probably because the price has been skyrocketing since last fall. I doubt that increase has a whole lot to do with the Chicago deal.
And revenues are skyrocketing at the company. Take a look at Marriott’s 2013 annual report…
We added 161 properties (25,420 rooms) and 51 properties (10,299 rooms) exited our system in 2013. These figures do not include residential units. During 2013, we also added five residential properties (301 units) and no residential properties or units exited the system.
Total segment financial results increased by $24 million to $1,197 million in 2013 from $1,173 million in 2012, and total segment revenues increased by $992 million to $12,518 million in 2013, a 9 percent increase from revenues of $11,526 million in 2012
While the 1,200 room hotel will be pretty sweet, it’s less than five percent of the total gross rooms added by the company last year alone.
However, taxpayers will pay to build the hotel, bumping up its margins. And a casino could also be built down the street. That wouldn’t be bad, either. It’s a very good deal for Marriott, without a doubt. Courtesy of taxpayers. Hooray!
* Which brings us to the second premise, which is pretty funny…
In speeches and interviews Griffin has lashed out at business executives who put the needs of their companies over Illinois while accepting tax breaks and public subsidies.
“Government being involved in picking winners and losers invariably leads to a loss of economic freedom and encourages corruption,” he told the Tribune last year.
Yet the taxpayer-financed Marriott project is very much a governmentally engineered deal, siphoning public resources into a tax increment financing scheme that will underwrite a private hotel chain.
Yep. But, then again, he’s a stockholder, not a company executive.
…Adding… From Citadel…
“The Reader story is completely irresponsible. It is comprised of nearly equal parts baseless speculation devoid of any real factual grounding and preposterous conclusions.”
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Today’s number: $1.5 million in RGA cash
Wednesday, Apr 9, 2014 - Posted by Rich Miller
* From yesterday’s twitters…
* Sun-Times…
For the second consecutive month, the Republican Governors Association plowed $750,000 into Bruce Rauner’s gubernatorial bid, for a total of $1.5 million since the political newcomer clinched the GOP nomination in March.
It’s a sign that there will be no shortage of resources in this gubernatorial race. The RGA was a major player in 2010 and will be again — despite Rauner’s own resources. Rauner, a multi-millionaire, has put $6 million into his own campaign. He far outraised — and outspent — his three opponents in the primary. The Democratic Governors Association is sure to be a major player as well in its efforts to back Gov. Pat Quinn’s reelection.
Hours after Rauner’s victory in March, the RGA wired over a $750,000 donation to Rauner, who has already aired two TV ads, one in Spanish and one elevating his wife, Diana Rauner.
The Tribune’s campaign contribution Twitter feed is really helpful, which is why it’s featured here on the blog. There are days when campaign nuts are just focusing solely on that particular box in our center column. I love it.
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“Worst public policy in Illinois history”
Wednesday, Apr 9, 2014 - Posted by Rich Miller
* Bob Grey is the president of the Citizens Club of Springfield and sits on the city’s Citizens’ Efficiency Commission. He sent this out today…
An initial finding of the [Citizens’ Efficiency Commission] was the discovery of a 2% tax on out-of-state companies selling fire insurance in Illinois.
This Foreign Fire Insurance Fund, which the state does not call a tax and does not collect, generates dollars that the Illinois Municipal League collects for downstate fire departments and distributes (after taking several thousands in fees) directly to a committee of firemen with no oversight, review or accountability by any public officials.
The [Springfield Fire Department] ’slush fund’ totaled about $1 M over the past 4 years. This would rank with the worst public policy in Illinois history.
* That’s definitely a biased interpretation. But what is the Foreign Fire Insurance tax? The Municipal League explains on its website…
The Illinois Foreign Fire Insurance Fund is distributed by the state of Illinois Muncipal League. The Municipal League collects insurance taxes from companies outside of the State of Illinois. Those funds are distributed to fire departments across the state to provide for the needs of the departments as the department sees fit to compensate for what is not provided by the municipality.
* The firefighters are trying to shed some light on how much is distributed to municipalities each year and how much the Illinois Municipal League’s cut really is, so they have a bill…
Any entity that maintains a website and that is charged with the collection of a tax or license fee and the rendering of the tax or license fee to the treasurer of the foreign fire insurance board or fire protection district secretary must publish to its website by the first day of August of each year the following information for the year ending on the preceding first day of July:
(1) the total amount of the tax or license fee collected on behalf of each municipal fire department or fire protection district;
(2) the total administrative fees, if any, charged to each municipal fire department or fire protection district;
(3) the aggregate amount of taxes or license fees collected on behalf of all municipal fire departments or fire protection districts; and
(4) the aggregate amount of administrative fees, if any, charged to each municipal fire department or fire protection district.
The bill hasn’t moved yet, but it may advance later in the session.
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Major school funding overhaul advances
Wednesday, Apr 9, 2014 - Posted by Rich Miller
* AP…
A proposal to dramatically overhaul the state’s school funding formula and allocate more money to poorer districts moved ahead in the Illinois Senate on Tuesday. The regionally divisive issue, however, likely faces a tough road in gaining support from both parties in both chambers. […]
After a nearly three-hour subcommittee debate, the issue was sent by a party line vote to another Senate committee, where it must be approved before it can advance to the chamber floor.
Under the plan, 92 percent of total state education funding would be distributed by factoring in districts’ poverty levels, accounting for low-income students using a weighted formula. The legislation also uses the number of students receiving free and reduced-priced lunches to determine who qualifies for additional low income dollars, which Manar says is in practice with most other states.
Only specialized programs for special education and early childhood education would be exempted from the formula. And, for the first time in decades, funding for Chicago Public Schools would be treated under the same formula as the rest of the state.
* Republicans have so far been against the proposal…
Sen. David Luechtefeld, R-Okawville, served as co-chair with Manar on the education funding committee and agrees with the bill’s concept of a single formula that would fund schools more equitably. But he believes Manar’s proposal goes too far and said “it’s debatable whether we should put over 90 percent into the formula.”
Luechtefeld pointed out that some expenditures, such as transportation, are based on factors other than a district’s need.
* Not having numbers is a problem, for sure…
[Sen. Matt Murphy (R-Palatine)] agreed that the system used to fund schools needs to be fixed, but questioned the wisdom of acting on a proposal when school administrators and lawmakers alike don’t know how the proposed overhaul would affect funding levels of individual districts.
“How do we know that this formula in this bill will work better than the current one if we have no idea how it’s going to work because we haven’t run the numbers?” Murphy said. “Why can’t we run the numbers and find out?”
Illinois State Board of Education legislative liaison Amanda Elliot said the agency is working on compiling that data, but cautioned that the figures span “multiple divisions.” According to ISBE public information director Matt Vanover, it could be at least a month before the numbers are available.
“We’re looking at having (the data) by mid-May,” he said.
David Lett, superintendent of Unit 8 schools in Pana, told the subcommittee he’s run some of the numbers internally on his own to see whether his ailing district would see relief under the proposed new formula and found they would do better than they do currently.
* But having numbers could also be a big problem…
[Bloom Township Schools Treasurer Rob Grossi] said districts like D.167, which receives nearly a third of its funding from the state, are at the mercy of state government financial woes. More wealthy districts that take in more in property taxes and need less state money can weather the fiscal problems in Springfield easier, Grossi said. Most districts in Cook County have low property tax values per pupil.
Once the calculations are done for individual school districts, it will be difficult for senators and representatives of districts who will lose funding to vote for the bill, Grossi said.
“The changes in this bill are so significant that it changes the entire model (for education spending),” Grossi said Tuesday. “Once the numbers determine the winners and losers, it will be hard for some of them to support it.”
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* The House overwhelmingly passed House Speaker Michael Madigan’s proposal to prohibit voter discrimination…
House Speaker Michael Madigan’s proposed constitutional amendment, which would be placed on the Nov. 4 ballot, says no person should be denied registration and voting rights based on race, color, ethnicity, gender, sexual orientation, religion, language or income.
The House sent the measure to the Senate on a 109-5 vote.
The measure seeks to counter a June 2013 U.S. Supreme Court ruling that dislodged part of the 1960s-era federal Voting Rights Act and prompted eight states to attempt to restrict access to polling booths, Madigan said.
”That has brought on legislation in other states that some of us would consider voter suppression,” Madigan said, pointing to how voter photo identification laws have disproportionately impacted minorities and the poor.
* This argument against the idea was totally bogus…
State Rep. David Reis, R-Willow Hill, voiced concern that the push by Madigan was merely an attempt to short-circuit a move by GOP gubernatorial nominee Bruce Rauner to get his signature-driven, term-limits constitutional amendment on the fall ballot.
Some commenters have also repeatedly brought up this issue even though I’ve pointed out to them that they’re wrong. Nowhere in the Illinois Constitution are there limits to the number of popular initiatives. Legislative initiatives are limited…
The General Assembly shall not submit proposed amendments to more than three Articles of the Constitution at any one election.
But that has zero impact on how many popular initiatives can be submitted to voters.
* Anyway, back to the debate…
“The intent of this constitutional amendment is to provide in Illinois, constitutionally, that voter-suppression laws would not be permitted,” said Madigan, D-Chicago. “Some might say, ‘Well, today in Illinois, you don’t need this. Voter suppression wouldn’t happen in Illinois.’
“We don’t know that,” Madigan continued. “We don’t know what the future holds. What we do know is we can constitutionalize the protection of the right to vote.” […]
Reis, who voted against Madigan’s plan, also said there is no evidence Illinois is currently engaging in any form of voter suppression.
“This is a constitutional amendment in search of a problem,” Reis said.
On that point, Rep. Reis is probably more accurate.
* AP…
Jim Durkin told The Associated Press on Tuesday the state party has “had an identity crisis for many years now.” He said he believes it’s important for people to know Republicans believe Illinois residents who are citizens should not denied the right to vote.
“Republicans, we’re going to win with addition,” Durkin said. “We need to dispel some of the notions that have been hanging over the GOP for years, that we’re a party of white suburban men. For me this was an easy decision.”
Discuss.
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Rahm’s self-made rough road
Wednesday, Apr 9, 2014 - Posted by Rich Miller
* Gov. Pat Quinn isn’t at all pleased with the way Mayor Rahm Emanuel handled the pension reform bill…
Quinn chided Emanuel Tuesday for not consulting with him before proposing the pension reform plan, which would have hiked Chicago property taxes.
And he said the mayor and his allies apparently “got the message” about his concerns.
“I learned about this kind of after the fact,” Quinn said of the original proposal. “I think collaboration is always a good way to go in life – whether in politics, government or getting along with people. It’s always good to touch base with as many people as you can.”
* And that silly idea last week to insert language into the bill requiring the Chicago City Council to raise property taxes is still a very big problem…
Even though Madigan moved Monday to remove language authorizing the City Council to impose that property-tax hike, some Republicans still voiced worries that the legislation being voted on amounted to a huge new property-tax burden on city taxpayers.
“Let’s not kid anybody. What we’re talking about today is a massive property-tax increase,” said Rep. David McSweeney, R-Barrington Hills. “This is not a comprehensive solution.” […]
The legislation is deeply steeped in the gubernatorial campaign, where Republican Bruce Rauner shares McSweeney’s stance and has called for the legislation to move city employees into a 401(k)-style retirement program and eliminate future pension benefits.
* And why did the mayor even bother putting this thing in?…
Removed from the bill Tuesday was a provision some unions balked at that would have dissolved the municipal and laborers funds and replaced them “as provided by the General Assembly” with recommendations made by the city.
Madigan Spokesman Steve Brown said that provision was added “because the mayor’s office thought that was a component.” The Emanuel administration had no comment.
Keep in mind that Madigan didn’t write the bill or the amendments. Rahm did. This is on him.
* OK, so he passed the bill anyway. But this was the “easy” one. Teachers, coppers and, most importantly, firefighters are next on the list. They will be far more difficult to negotiate with and/or steamroll. He can’t keep making these easily avoidable mistakes. He has to start including more people in his discussion, including the governor and the minority leaders.
The General Assembly ain’t the city council.
* Roundup…
* CTU chief hits pension bill as ‘theft,’ calls for Quinn veto
* Illinois Legislature Passes Emanuel’s Pension Bill
* Mayor Emanuel’s pension fix passes Illinois House and Senate (with rollcalls)
* Chicago pension overhaul OK’d by House, Senate
* House, Senate pass Rahm’s pension bill — now it’s up to Quinn
* Pension reform bill passes Springfield with some GOP support: During debate, House Republican leader Jim Durkin was statesmanlike. “I want to make sure that we do the best we can to ensure that the City of Chicago will be vibrant, that it will be a place where we will feel safe and secure about sending out children, encouraging our international friends and our friends from out of the state to come visit, spend your money in the City of Chicago,” Durkin said. “Everyone in this chamber, we spend time in the City of Chicago. They’ve got a hospitality industry that is better than anywhere else in the United States. It’s a jewel. But I don’t want to see the City of Chicago fall in line with Detroit.”
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Today’s quote
Wednesday, Apr 9, 2014 - Posted by Rich Miller
* From the SJ-R’s story on Bruce Rauner’s Springfield visit…
Asked by a reporter why he has not seemed to use the phrase “government union bosses,” which he often mentioned in the primary campaign, after he won the nomination, Rauner said he is “very pro-worker.”
“I’m not anti-union at all,” he said. “Unions to me are fine if you want to join ’em or not join ’em. That’s not the issue. Conflict of interest inside the government is. I don’t like folks who are in contract negotiations using political cash from taxpayers to influence politicians. That I’m against.”
He also said he wanted people in Springfield to know he doesn’t want to take away pension benefits already earned.
“I’m the one person in this race who doesn’t want to modify” pensions already earned, he said. “I want to freeze the current pension system … and for future work, create a second pension system that’s a defined contribution plan, more of a 401k-style plan.
OK, first of all, he totally sidestepped the question.
Secondly, ““Unions to me are fine if you want to join ’em or not join ’em” is a major rhetorical twist, since he wants counties to be able to institute their own so-called “right to work” ordinances.
And lastly, he most certainly does want to “take away pension benefits already earned.” Rauner would freeze all pension benefit payments forever. No protection at all from inflation. Period. That’s far harsher than anything else on the table.
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* Bill Cellini attended Bruce Rauner’s Sangamon County Republican event last night…
“The first time I heard him tonight,” Cellini said when asked his thoughts about Rauner so far in the governor’s race and whether he was supporting him. “He was very impressive.”
“I’ve been a Republican all my life, and he’s the Republican candidate,” Cellini said of Rauner. […]
When told that Cellini described him as “very impressive,” Rauner sidestepped a question about whether he welcomed an endorsement from Cellini, who sat near the front of the room during one of Rauner’s two speeches.
“I don’t know,” Rauner answered. “I didn’t even know he was here. I don’t really know him. I can’t comment on that.”
* Gov. Quinn’s campaign e-mailed this hyperbolic missive today…
As first reported by the Chicago Sun-Times, while in Springfield last night Billionaire Bruce Rauner met up with infamous corrupt insider Bill Cellini, who proceeded to endorse Rauner. Instead of immediately renouncing Cellini, a convicted felon, Rauner told the Chicago Sun-Times he “couldn’t comment on that.”
One of the most powerful insiders in Springfield, King of Clout Bill Cellini was caught in an extortion plot to shake down Oscar-winning producer and investment mogul Thomas Rosenberg for a major campaign contribution. Cellini was released from federal prison last November for his role in the political fundraising scheme.
“Clearly Billionaire Bruce Rauner is afraid to alienate the King of Clout,” said Quinn for Illinois Deputy Press Secretary Izabela Miltko. “Mr. Rauner claims to want to root out corruption and ‘shake up Springfield,’ yet when faced with an endorsement from the King of Shakedowns, mum’s the word.
“Instead of saying no to the King of Clout, Mr. Rauner said he ‘can’t comment on that’ – and that’s the real Bruce Rauner.”
This is not the first time Rauner has partnered with corrupt insiders who have conspired to cheat taxpayers, in order to gain political support. Currently imprisoned Stuart Levine – whom Cellini conspired with in the shake down scandal – was making $25,000 a month on Rauner’s payroll while sitting on the board of the Teachers Retirement System and voting to give Rauner’s investment firm GTCR a $50 million contract to manage it. Rauner failed to disclose the conflict of interest and still hasn’t returned the hundreds of thousands of dollars in fees he collected from the deal.
When he served as state treasurer, Governor Quinn took on Cellini on behalf of Illinois taxpayers regarding the financing of the Abraham Lincoln Hotel.
Rauner didn’t “meet up” with Cellini. C’mon, already.
But Rauner’s refusal to reject the “endorsement” does show his inexperience on the campaign trail. This ain’t the primary, Bruce. Up your game.
*** UPDATE 1 *** Cellini and Kjellander? John Kass’ head might very well explode…
Bob Kjellander of Springfield, a former member of the Republican National Committee, said after participating in a small-group discussion with Rauner that the candidate “did an outstanding job. He said Rauner is picking up support with African-American ministers, and there will be “some major Hispanic players in the city of Chicago as well.”
*** UPDATE 2 *** From the Rauner campaign…
Bruce is running against the corrupt, insider ways of doing things in Springfield and obviously renounces Cellini.
While you can’t control who endorses you, you can control who you endorse - and that’s why Pat Quinn is making another ridiculous attack. Pat knew about Rod Blagojevich’s corrupt dealings and vouched for him anyway, calling Blago ‘honest’ and ‘ethical’ and someone who ‘always does the right thing.’
This is the biggest lie yet from Quinnocchio. Quinn should have resigned and helped expose Blagojevich, instead Quinn stood by him.
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A city lease tax?
Wednesday, Apr 9, 2014 - Posted by Rich Miller
* Sneed has the scoop…
Sneed hears rumbles that a City Council proposal to levy a lease tax on office buildings may be in the mix of suggestions to restore two of the city’s pension funds to fiscal health. […]
“The downtown real estate interests lobbied long and hard against it and won [during the Jane Byrne years], but it could bring in tens of millions of dollars to offset the upcoming $600 million bill to stabilize police and fire pension funds, which don’t have enough assets to cover their liabilities,” the source added.
Mayor Rahm Emanuel’s pitch for a City Council ordinance to levy an additional $250 million in property taxes is going to be a tough vote with anticipated artillery pointed at Emanuel by Aldermen Bob Fioretti (2nd), Scott Waguespack (32nd) and Brendan Reilly (42nd).
“The mayor needs to get the tax to solve the city’s fiscal problems off the back of property owners and figure out a mix of non-property tax revenue sources to get this ordinance passed,” the source said.
* I kinda doubt that this idea will bear much fruit…
The governor acknowledged the need for additional revenue to bolster the city’s pension system. But the kind of revenue Quinn discussed Tuesday may not be music to Emanuel’s ears.
“I think it should be a focus on the tax code and giving a full review of all these loopholes,” Quinn said, while declining to offer specifics. “I said yesterday, very clearly, we need to relieve the property tax burden, and I’m committed to that.”
The Tribune’s article called the idea “an old standby that has failed to get traction.” Correct.
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About those property taxes
Wednesday, Apr 9, 2014 - Posted by Rich Miller
* Greg Hinz wrote this before the Senate voted on the city’s pension reform bill. Only one Senate Republican voted for the measure…
Why are the Senate Rs balking when half of the House Rs voted yes? As answered by Sen. Matt Murphy, who usually speaks for Senate Rs on budget and financial matters, they want to see what else Mr. Emanuel will be asking for when he comes back with deals covering police, firefighters and city teachers. And they want to know if the state will have to pony up then.
“If we’re going to be partners in the process, If would make some sense to cut us in on the whole,” Mr. Murphy said.
Particularly sticking in the Senate R’s craw is Mr. Quinn’s budget proposal to send every home owner a $500 property-tax refund. That would help city taxpayers more than suburban ones, Mr. Murphy said, since suburban home values are higher. “So it looks like we’re pouring money into Chicago just at the time when Chicago’s talking about raising property taxes.”
* Murphy does have a point. This graphic produced by the Sun-Times compares city property taxes to some Cook County suburban taxes…
They could’ve looked at the south suburbs and seen even more of a discrepancy, or even Downstate, where property taxes are almost twice as high.
* To the article…
Emanuel aides say the plan would cost the owner of a $250,000 home an additional $58 a year on top of a $4,000 property tax bill for each of the next five years. That works out to $290 per homeowner, to raise a total of $250 million.
Those numbers may prove dramatically low, as some suggest. But Ameya Pawar, the first-term alderman who represents Emanuel’s home 47th Ward, says he’s ready to support a tax increase.
“I will take the tough vote,” he said Tuesday. “I understood when I ran that this term was going to be about pensions. But at some point Chicago has to think about K-12 education.”
Pawar said many homeowners move from his ward to the suburbs when their children are on the cusp of going to high school, unless the kids test into the best public high schools. He says they often tell him, “I’m willing to pay more taxes if you’re willing to give us some stability and equity” in the Chicago Public Schools system.
“The taxes where they move to are higher, but let’s not forget what they get in the suburbs — a complete K-12 system,” Pawar says.
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Quinn, Rauner to share the same IEA stage
Wednesday, Apr 9, 2014 - Posted by Rich Miller
* From the Illinois Education Association…
Illinois Gov. Pat Quinn and businessman Bruce Rauner, his opponent in the November election for governor, will make their first joint appearance on Friday, April 11th, at the Illinois Education Association’s (IEA) 160th Representative Assembly (RA) and Annual Meeting in Chicago.
The two have accepted the union’s invitation to sit together and answer education policy questions posed by IEA President Cinda Klickna in front of the more than 1,200 teachers, education support professionals, higher education faculty and staff and retired educators who make up the delegation for the meeting.
The union did the same thing four years ago. I’ll see if we can get a live video feed out of there. Should be fascinating.
* Sun-Times…
“I don’t know if Bruce Rauner is really willing to sit and talk with me or talk with our unions,” [IEA President Cinda Klickna] said in March. “This campaign has characterized me in a way that I never characterized myself nor do our members. I guess we’ll just have to see.”
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* At first, a resolution sponsored by Rep. Linda Chapa LaVia seemed fairly straight forward. The Illinois Press Association and the Illinois Broadcasters Association asked the legislator to sponsor the measure to get some oversight hearings of the Illinois High School Association. From a press release…
“Citizens throughout Illinois have been calling for more transparency in government. With the General Assembly once again facing difficult budget decisions, its reasonable for the taxpayers of this state to know how the IHSA is spending the funds it is bringing in. I applaud the Illinois Press Association for bringing this to my attention,” [said Rep. Chapa LaVia].
Dennis DeRossett, executive director of the Illinois Press Association, said the following — “We thank Representative Chapa LaVia for introducing this resolution. The IHSA is presently subject to almost no accountability or oversight; they claim to be exempt from both the Freedom of Information Act and Open Meetings Act, and they argue that they alone should control any revenue that is ultimately derived from taxpayer-funded sporting events.”
He said the IHSA is clearly profiting directly off of public, taxpayer-funded events.
“It should be public knowledge how much revenue is being generated by these events and other exclusive arrangements, along with what percentage or amount of that revenue is being remitted back to local school districts,” DeRossett said. […]
“Kudos to LaVia,” echoed Dennis Lyle, President and CEO of the Illinois Broadcasters Association. “There exists today just too much confusion with both the public and those businesses associated with high school sports with respect to the IHSA’s role and limitations when it comes to high school athletics. The taxpayers of Illinois are the rightful owners of public high school athletics, just as they are of the gymnasiums and athletic fields where high school sports are played. LaVia’s resolution simply sets the stage for seeking clarity to the blurred lines that clearly exist today in regards to the IHSA and high school athletics.”
Rep. Chapa LaVia could’ve just held hearings on her own. She didn’t need a resolution. But this was obviously meant as a shot across the IHSA’s bow by the media groups, which have battled bitterly with the IHSA in the past.
* The IHSA zealously guards its turf, and they took full advantage of a line in the resolution that recommended that the House committee look at the feasibility of “statutorily transferring the duties and functions of the IHSA to the Illinois State Board of Education.” From Shaw Media…
[IHSA Executive Director Marty Hickman] said in a radio interview with WRMJ in Aledo that Chapa LaVia’s proposal amounts to a state takeover. In a phone interview with Shaw Media on Friday afternoon, Hickman said the IHSA felt blindsided by the legislator’s efforts.
“We feel like we’re a very responsible organization,” Hickman said. “We pay our bills, we fund our pension, we balanced our budget and I would be happy to put our record of fiscal responsibility up against anyone – including the state of Illinois.
“If it’s that kind of conduct that warrants the government coming in and targeting you, then we are really in a bad way.”
* The proposal was even bashed as a money grab by Illinois Watchdog…
The Illinois Legislature certainly does not want to administer the state’s high school chess tournament, but lawmakers wouldn’t mind getting a piece of the millions of dollars high school basketball and high school football bring in each year.
* Rep. Chapa LaVia had to push back…
The potential hearings have raised concerns from the IHSA, which was warning people in recent weeks the state was trying to take over its operations and place control with the Illinois State Board of Education. Chapa LaVia, though, said that’s not her plan.
“My intention is not to move the IHSA under ISBE,” she said. “My intention is to bring them forward to answer questions.” […]
Chapa LaVia said when she tried to talk with the IHSA directly, its leaders “thought they could give me their records right there and keep it at that in a closed-door meeting. That’s not what we do around here.”
* And…
The group overseeing high school sports and extracurricular activities in Illinois will answer questions about its finances, despite its protests, which, ironically, have helped place it in front of a legislative committee.
“(It’s) suspicious,” state Rep. Linda Chapa LaVia, D-Aurora, said Monday. “Why would anybody be afraid of a House resolution and hearings? If they don’t want to come, it’s kind of interesting.”
* She backed all the way off yesterday during floor debate…
State Rep. Linda Chapa LaVia, D-Aurora, told colleagues Monday she was no longer trying to determine whether the Illinois State Board of Education should assume the duties now governed by the Bloomington-based IHSA.
“My intention is not to take them and put them under ISBE,” Chapa LaVia said. “That’s not my intention.”
* She also went on the attack…
She listed several instances where she contended the IHSA hadn’t acted properly and ought to explain itself.
She cited the 2013 controversy in which organizers of an IHSA-sanctioned Scholastic Bowl used plagiarized questions, and then the official who discovered they were plagiarized was fired.
Chapa LaVia also brought up how the IHSA had violated the rights of disabled athletes by preventing them from participating in sporting functions, which brought a lawsuit from Attorney General Lisa Madigan.
A ton of House members had excused absences yesterday, so the resolution only received 55 “Yes” votes. But 51 voted against it, and resolutions can pass with simple majorities of those voting.
So, on to the hearings. Ought to be great fun.
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Question of the day
Tuesday, Apr 8, 2014 - Posted by Rich Miller
* Sneed…
Mayor Rahm Emanuel, a heat-seeking missile, just got bazooka’d by Gov. Pat Quinn’s populist popgun.
◆ Translation: The pile driver just got poked.
◆ To wit: Rahm may be a tough cookie, but he got bitten in the butt by Quinn’s refusal Monday to back Rahm’s plan to solve the city’s pension crisis on the back of Chicago’s property tax payers.
◆ Upshot: It forced Rahm, the tough, foul-mouthed scrapper and tough, taciturn Illinois House Speaker Mike Madigan, D-Chicago, to erase language from legislation mandating a huge Chicago property tax hike.
◆ Hmmm: It begs the question: Didn’t Rahm know how Quinn felt about the property tax hike in the first place?
◆ Wow! How is Rahm, who is a close friend of GOP gubernatorial candidate Bruce Rauner, going to heal this ow ow now?
Ironically, Quinn dissed the property tax increase while announcing a massive plan to fix Chicago’s potholes with state funds
* The Question: What do you think the next conversation between the two men will be like? No profanity, please. Yeah, I know that makes it tougher and far less believable, but I don’t wanna spend all day deleting comments. One and only warning. Thanks.
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* The Fox News Channel ran a story about former Democratic state Senator Rev. James Meeks’ support for Republican Bruce Rauner…
“The Democratic party just assume always that 97 percent of the African-American vote will go to the Democratic party. If that assumption is true, they never have to work for our vote,” Meeks said.
He speaks of the gun violence that plagues Chicago’s West and South Sides, the poverty and the appearance that there is no end in sight. “Our schools are still broken and getting worse. We’re last in employment or business. Our neighborhoods are deplorable,” says Meeks. “And we still get the same promises from the Democratic party, but we don’t get any deliverable. I think it’s time we should look at another candidate.”
Chicago political analyst Thom Serafin says few Republicans have been able to win statewide in Illinois without collecting 20 percent of the city vote. To do that, a candidate must win a significant portion of the African-American vote. Serafin believes Meeks can deliver. “He understands what it means to turn out the vote here in the city. He is well respected,” he said. […]
Rauner has already had an opportunity to speak to the faithful at Salem Baptist and Meeks is talking with other pastors about getting Rauner to speak to more African-American congregations.
“I would hope that I would get a chance to influence a lot of African-Americans to look at how we, as a voting bloc, [are] being take
The first time I had a chance to see just how influential Meeks was came during a visit to Springfield by then Mayor Daley. Hizzoner was in town for various meetings, and either before or after walking into the governor’s office, Daley made sure to have a long chat with Meeks, who was standing nearby. Speaker Madigan did the same. Other powerful folks walked up to pay tribute.
He’s lost some of his juice since then - on-again-off-again runs for governor and mayor had a lot to do with it - but he still wields a bunch of influence in the city.
Rev. Meeks has the second largest congregation of any church in the state. He has so many churchgoers that the city has required him to station ambulances outside during services. His church building is the state’s largest, with as much square footage as the United Center. He also has a big, old Catholic church that he uses for youth services. It’s quite an impressive operation.
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Wildy popular idea
Tuesday, Apr 8, 2014 - Posted by Rich Miller
* From the Paul Simon Public Policy Institute’s latest poll…
Legislative Term Limits
Would you favor or oppose a proposal to limit state legislators to a total of eight years of service, whether in the House of Representatives , the State Senate, or a combination ofthe two?
Strongly favor 61.7%
Somewhat favor 17.8%
Somewhat oppose 8.5%
Strongly oppose 8.6%
Other/Don’t know 3.4%
Leadership Term Limits
Would you favor or oppose a proposal to limit how long state legislators could serve in leadership roles – such as Speaker of the House or President of the Senate – before they stepped down to let other legislators lead?
Strongly favor 65.1%
Somewhat favor 17.6%
Somewhat oppose 8.3%
Strongly oppose 6.3%
Other/Don’t know 2.7%
* From the Institute…
In statewide Simon Polls going back to 2010, between 75 and 80 percent of Illinois voters surveyed have supported legislative term limits. Support for leadership term limits — in offices such as Speaker of the Illinois House and President of the Illinois Senate — has been just as strong.
“Regardless of your position on term limits, it’s clear the idea has support. If organizers are able to get the measure on the ballot – and it’s not clear the courts will allow that – it should be easy for them to win approval,” said David Yepsen, director of the Institute. […]
Support for term limits is strong in every demographic, geographic, and ideological subgroup in the Institute’s poll. For example, while Republicans were among the groups most likely to support the term limit proposal (89.9 percent strongly or somewhat in favor), even an overwhelming majority of Democrats approved of it (73.4 percent strongly or somewhat in favor).
In the 2014 Simon Poll, the wording of the term limit question referred to a combined eight - year limit of service in either or both houses, in order to reflect the proposal pushed by the group Term Limits and Reform, backed by Republican gubernatorial candidate Bruce Rauner. Previous versions of the question referred to limits of five terms in the Illinois House and three terms in the Illinois Senate.
“Regardless of whom you ask or how you phrase the question, legislative term limits are extraordinarily popular among the Illinois electorate,” said Charlie Leonard, a Simon Institute visiting professor who supervised the poll. “Unable or unwilling to limit their own representatives ’ terms through the ballot box, the voters seem to hope a blanket constitutional amendment will do the job for them.
* And here’s a different take on leadership term limits, which came during a committee debate over a proposed constitutional amendment…
The amendment was sponsored by Sen. Matt Murphy, R-Palatine. Sen. Don Harmon D-Oak Park, asked Murphy if he knew how many leaders, past or present, the amendment would have applied to. Of course, as an attorney, Harmon already knew the answer to his question when he asked it. That answer was only two: House Speaker Michael Madigan, D-Chicago, and former Senate President Phil Rock, D-Oak Park.
Murphy said he started toying with the term-limit idea after his first year in the Senate. That would have been 2007, a year that good ol’ Rod Blagojevich went particularly amok. He kept the legislature in session all summer before Madigan essentially told the House to go home and stay there until he called them back.
“It was my first experience with the concept of the consolidation of power in Springfield in just a few hands,” Murphy said.
Harmon had a different take.
“Without strong legislative leaders, can you imagine how awful that summer would have been that you experienced with a rogue governor and no one in the legislature to stand up and say no?” Harmon asked.
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* I don’t think I’ve ever seen anything like this before. From a press release…
Springfield, IL – Hundreds of religious leaders from around the state will march on the offices of the Illinois Policy Institute (IPI) in Springfield beginning today at noon at the Lincoln statue at the Capitol building. The group will call on the organization – funded by the wealthiest corporate special interests in America – to stop their false attacks on a Fair Tax, and to let the citizens of Illinois make the decision for themselves about a Fair Tax on the November ballot.
Documents exposed in a December news report revealed that the Illinois Policy Institute has been serving as a conduit for the national State Policy Network, a group financed by America’s wealthiest corporate interests, including billionaires David and Charles Koch. The documents revealed funding to IPI from the group as earmarked for the purpose of making a Fair Tax “politically toxic” to Illinois voters.
The Illinois Policy Institute is responsible for many false attacks on the Fair Tax, including claims it would raise taxes on low- and middle-income families—claims which have been thoroughly debunked. The truth is that a Fair Tax – implemented with a rate structure proposed by the Fair Tax Act’s chief sponsor, Sen. Don Harmon – would cut taxes for 94% of Illinois residents, including everyone making up to $205,000.
In February, more than 100 religious & faith leaders gathered in Chicago to call for a Fair Tax, with lower rates for lower incomes and higher rates for higher incomes. They believe the Fair Tax is important because it gives tax relief to vast majority of families while also preventing devastating cuts to important public priorities, which would have an especially harmful effect on Illinois’ most vulnerable citizens. Today, in addition to demanding accountability from the Illinois Policy Institute, faith leaders will be visiting their elected officials in Springfield to urge them, among other issues, to pass the Fair Tax Act before the May 4th deadline.
The march is being organized by the Community Renewal Society. Its legislative agenda is here. The group publishes Catalyst Chicago and The Chicago Reporter. Its board members include SEIU Healthcare’s Director of External Relations plus lots of ministers.
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It’s a beautiful day, so let’s talk baseball
Tuesday, Apr 8, 2014 - Posted by Rich Miller
* Wordslinger demonstrated once again today why we named our best commenter of the year award after him with this perfect gem…
As an aside, my greatest baseball memory:
When I was about 12, my buddy Wags and I were hanging one hot summer Sunday afternoon at the Dairy Queen by the Kish on Lincoln Highway in DeKalb.
We’d been fishing at the lagoon on campus and had stopped off to freeze our brains with a Mister Mistee.
While we loitered in a booth there, a couple of old gents walked in for an ice cream cone, clearly coming straight from the golf course.
One of them was a giant — tall, thin, regal, decked out in the most elegant golf duds …
…it was Joe Dimaggio.
Wags and I about plotzed.
Turned out Joe was in town to visit a friend, Sam Brody, who owned Brody Coats in Sycamore. As my very jealous brothers told me later, they’d played together in the Pacific Coast League before Joe went east to take possession of New York, baseball, and Marilyn Monroe.
Joe and Sam stood and enjoyed their cones, then Wags and I finally mustered the courage to approach them.
“Excuse me, mister, are you Joe Dimaggio?”
The giant looked down, smiled and said “yes.”
“Can we have your autograph?”
“Sure. I see your fishing poles. You boys catch anything?”
“No sir.”
“You like baseball? I used to play baseball, you know….”
Joe Dimaggio on a Sunday afternoon at the Dairy Queen in DeKalb. When you’re 12.
Can. You. Dig. It.
Your favorite baseball memory?
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*** UPDATE *** The mayor’s pension bill easily passed the House 73-41. On to the Senate.
[ *** End Of Update *** ]
* I told you this would happen yesterday…
Mayor Rahm Emanuel and House Speaker Michael Madigan Monday stripped out controversial language from city pension legislation that had authorized the City Council to impose a property-tax hike, putting the stalled measure back on the fast-track at the state Capitol. […]
Madigan, D-Chicago, filed an amendment to Senate Bill 1922 after the House adjourned Monday without taking any action on the stalled legislation. Sources now expect the legislation to be voted upon as early as Tuesday.
* More…
Unions had also opposed removing the property tax mandate from the bill, but City Hall is convinced labor leaders won’t object to Monday’s revisions because of language that gives the state the right to withhold state funding to Chicago during any year that the city fails to make its required contribution to municipal employees or Laborers pension funds
* To the bill…
Still in the bill are two provisions to penalize the city if it does not make the pension payments. The state comptroller would be allowed to divert millions of dollars in annual state payments away from the city and into the pension funds a provision that was made stronger in the most recent version.
The proposal also spells out that pension boards could sue to get the state to divert millions in city funding to the pension funds. […]
The new plan also includes a minimum cost-of-living increase of at least 1 percent every year for retired workers who are getting pensions of $22,000 or less. The bulk of retirees would get annual increases of half the rate of inflation or 3 percent, whichever is less, based on the amount of their annual pension payments upon retirement. Currently, all retirees get 3 percent, based on their previous year’s pension income. […]
The latest version also includes a new provision that would allow Emanuel to change the makeup of the two retirement boards that oversee the laborers and municipal funds. It would terminate the terms of current members next year and allow the mayor to recommend how new members of the board should be appointed.
* A labor activist who opposes the bill sent me this commentary about that last paragraph…
Here’s what that means: The supposed “funding guarantee” in this legislation is a provision that the municipal and laborers funds may go to court if the city doesn’t pay what’s required. Now, the municipal fund’s board consists of three elected members who are employees, plus the city treasurer and comptroller. But under this provision, the entire board could be political appointees of the mayor. Besides eliminating the voice of employee participants, it could give mayoral appointees total discretion to enforce the funding provision – or look the other way.
Except the state comptroller is also required to skim city grants, and the comptroller’s office says that includes Chicago’s giant pile of revenue-sharing cash from the Local Government Distributive Fund.
* And this shows how weird some folks can get around here…
To some, Quinn’s decision to draw a line in the sand on property taxes and dangle the city’s elusive quest for a Chicago casino as a replacement was part of an elaborate political dance.
Those Machiavellian theorists believe the plan for $50 million property tax hikes for each of the next five years may have been a stalking horse for a casino all along.
But the fact is, Chicago probably needs both property tax hikes and the jackpot from a land-based casino to wipe out an $32 billion unfunded pension liability that’s eight times the city’s operating revenue and, what Moody’s calls “by far the highest” of any rated U.S. local government.
That last sentence is far more in line with reality.
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So, now they’re against testing?
Tuesday, Apr 8, 2014 - Posted by Rich Miller
* As I made clear yesterday, I like choices in education and am not a big fan of the educational establishment and the educational system we have here. But now that mandatory student testing shows there’s not a whole lot of overall difference between Chicago charter schools and Chicago neighborhood schools and on the same day as a big pro-charter school rally in Springfield, the Tribune editorial board trots out a study from three years ago that shows charters are better…
Not every charter is superior to local schools. Some lag and should be shuttered. But check out a recent study by Mathematica Policy Research on the effects of charter schools in Chicago and Florida. The group found that charter high schools “appear to have substantial positive effects on students’ long-term educational attainment.” In Florida, researchers found evidence that charters may have “large positive effects” on students’ later earnings.
Bottom line: “Charter high schools seem to be endowing their students with skills that are useful for success in college and career but that are not captured by test scores.” [Emphasis added.]
*Facepalm*
This is the same Chicago Tribune that demanded more testing of students and teachers during the education reform debates a few years back. And now testing doesn’t really gauge outcomes? Who knew?
Sheesh.
* Meanwhile, Mayor Rahm Emanuel was asked yesterday about the standardized testing results…
The mayor was asked whether charters funded by CPS, but freed from regulations impacting traditional public schools shouldn’t have students performing “measurably better” on test scores.
He never answered the question.
“It’s an old debate to look at brand. The new debate is to look at high-quality education that achieves the goal of college readiness, college preparation and career readiness. That’s what I’m focused on at every level,” he said.
“[That’s] why I made sure our neighborhood schools at [the] high school [level] gave parents choice. They need to have the choice. We need to provide quality. Regardless of whether it’s military, selective enrollment, STEM, IB or charter, I want to make sure there’s quality throughout the system and parents will then have the choice of high-quality options.”
* And, while we’re at it, take a look at this story about how New York’s mayor got steamrolled by the big bucks charter school backers.
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[The following is a paid advertisement.]
In any discussion about treating mental illness, patients and their families must come first. But Senate Bill 2187 – sometimes called “RxP” – puts the interests of a small group of professionals ahead of protecting patients.
SB 2187 would allow psychologists who have no medical training to prescribe medications. Current Illinois law allows only people who have medical training – doctors, nurse practitioners and physician assistants – to prescribe drugs.
Why does medical training matter? Physical illnesses and mental disorders are often intertwined. Additionally, psychiatric medication, such as drugs for schizophrenia and bipolar disorder, can interact negatively with medication for chronic illnesses. Finally, many drugs are powerful and have risky side effects. To understand these complexities, psychiatrists go through four years of medical school and four additional years of residency, on top of their college training in the sciences. They learn to treat the whole patient – not just the brain.
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Biss savings bill picks up momentum
Tuesday, Apr 8, 2014 - Posted by Rich Miller
* I watched the debate on Sen. Biss’ retirement savings bill in the Senate Executive Committee not long ago. The NFIB and the Republicans spoke against the proposal, despite claims by Biss that this was actually a creation of the Heritage Foundation and the Brookings Institute in 2006. It was, he says, supported by both John McCain and Barack Obama in 2008.
The Tribune looked beyond the partisan politics of the moment today and wholeheartedly endorsed the bill…
Americans have longer life spans than their ancestors dreamed possible. The private-sector pension, by contrast, flirts with extinction. Federal trustees warn that Medicare’s hospital insurance trust fund goes insolvent in a mere 12 years — followed seven years later by the main Social Security trust fund. And many among us save so little for the future that they risk a retirement diet of Meow Mix.
Sum those perils and the money math looms menacing for today’s workforce. Fitting, then, that the Illinois Senate’s sole research mathematician, Evanston Democrat Daniel Biss, proposes a clever savings plan for some 2.5 million private-sector Illinoisans whose employers don’t offer retirement plans. […]
Workers at companies with 25 or more employees but no retirement plan would be automatically enrolled, with the choice to opt out at any time. Smaller companies could join voluntarily. The workers could choose how much to invest in a selection of mutual funds managed not by the state, but by a low-cost provider (think Vanguard or T. Rowe Price). Individuals who make no choices would have 3 percent of their wages go, via payroll deduction, into diversified target-date retirement funds. Many companies that offer 401(k) plans do the same, automatically enrolling employees in default target-date funds.
Administrative costs for the investment provider and the state could total no more than 0.75 percent of invested assets. An unpaid, seven-member board including the state treasurer, comptroller and governor’s top budget officer would choose the provider and perform risk management and oversight duties. The best protection against corruption, theft or pinstripe patronage: Illinois never would touch the investments. State government instead would wave at the payroll deductions as they travel to employees’ accounts. Those accounts would be portable from job to job; workers with more than one employer would have a single account.
* The Sun-Times looked closely at the opposition…
Business groups, including the Illinois Chamber of Commerce and the National Federation of Independent Business are opposed, saying it will burden small businesses, financially and administratively, forcing employers to act as a go-between on a program many don’t want to offer. Insurance and financial advisers also are opposed, but we suspect that’s mostly because the automatic IRA would cut into their business.
The business concerns are legitimate, but given the careful design of the Illinois program, we think the burdens would be minimal. In a country that’s reliant on employer-based retirement systems, it’s inevitable that business will face burdens. The question is how much is too much? This bill does not tip the scales.
Jeffrey Brown, a University of Illinois finance professor and expert on retirement security, is one of many supporters of automatic IRAs, citing research on the power of automatic deductions in increasing participation rates. Brown tell us he likes Biss’ idea, particularly since it avoids the pitfalls of automatic IRA proposals in other states, including ill-advised attempts to guarantee a rate of return. He worries, though, that the state board, as currently envisioned, may become politicized, something we’d like the bill sponsors to address.
Brown, to whom we were referred by the bill’s opponents, the American Council of Life Insurers, said he would prefer a federal automatic IRA program, as would we. But the odds of that passing Congress aren’t good.
Opposition by the insurance industry is probably more important here than anything else. We’ve got a lot of big insurance companies in this state, so that may explain much of the GOP opposition in committee.
* SJ-R…
The slow economic recovery has contributed to the problem. More Americans have found themselves chronically unemployed or underemployed. Companies have cut back on wages and benefits, including retirement plans, for workers.
Low-wage workers aren’t just high school lifeguards or college students selling jeans at the mall on weekends. They include manufacturing workers, retail staff, salespeople, cashiers, restaurant cooks and wait staff, small-business owners and employees and more.
Dreams of a comfortable, carefree retirement are considered out of reach for many Americans. Sen. Daniel Biss, D-Evanston, calls it “a straight path to poverty in old age.”
“There is no example in America or elsewhere now in history of a system that just kind of hopes for the best and educates people and leaves 25-, 30- and 40-year-olds making the kind of decisions necessary for a dignified retirement,” he said. “I know that sounds paternalistic, but I think there is a giant wealth of overwhelming research that makes that clear. So you have to do something.”
Thoughts?
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