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Friday, May 15, 2015

* Stop trippin’

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Friday, May 15, 2015

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Gov. Transparency

Friday, May 15, 2015

* Gov. Bruce Rauner and secrecy, by the AP

— Most talks are being held by special working groups, but the meeting times, locations and topics are secret. Lawmakers involved say Rauner’s staff has demanded they don’t reveal what was discussed.

— Rauner has so far refused to let anyone see copies of legislation outlining his desired reforms, though he has publicly assured reporters the legislation exists, and more information is coming soon. On top of that, his legal staff has rejected freedom of information requests seeking the information.

— Rauner’s staff has consistently taken more than one month to provide copies of his non-public schedule in response to requests from The Associated Press. Those documents, once provided, are redacted — making it impossible to see who’s attending “legislative briefings” and other meetings with the governor, and therefore who may be influencing his policy decisions… Responding to AP requests, Rauner’s office has so far provided only the governor’s schedules for January through March. AP is appealing to the attorney general’s public access counselor because the schedules that have been provided have redacted portions that appear to include the names of people with whom Rauner met or spoke.

* The governor’s response

“I don’t think I could be more transparent,” he said Thursday. “I’ve laid out everything we’re working on and why. I think we couldn’t be more crystal clear from our point of view. … I believe we’ll be able to come forward with a lot of detail in the not too distant future. “

- Posted by Rich Miller   77 Comments      

Question of the day

Friday, May 15, 2015

* Monique…

* The Question: Caption?

- Posted by Rich Miller   43 Comments      

Madigan schedules vote on millionaire tax hike

Friday, May 15, 2015

* I posted on the ScribbleLive feed earlier this week that Madigan had started advancing this legislation. From a press release…

Encouraged by November’s referendum results showing widespread, statewide support, House Speaker Michael J. Madigan said the full House will vote next week on a constitutional amendment to increase state funding for elementary schools and high schools through an income tax surcharge on millionaires.

“I’ve believed for a long time that Illinois schools need and deserve greater resources to help give students the best education possible, and that more needs to be done,” Madigan said. “January’s income tax rollback is putting greater pressure on schools’ finances and the state’s ability to increase funding for schools. Once enacted, this measure would bring needed relief for students and schools.”

Madigan’s proposal provides for an additional 3 percent surcharge on incomes over $1 million. Based on a five-year average of taxable income over $1 million, Madigan’s measure would generate an estimated $1 billion in additional funding each year. The additional revenue would be earmarked exclusively for elementary schools and high schools throughout Illinois and would be distributed on a per-pupil basis.

Millionaires affected by the surcharge would pay the current individual income tax rate of 3.75 percent on income under $1 million and pay 6.75 percent on income over $1 million.

Illinois voters voiced broad support for Madigan’s measure, contained in House Joint Resolution Constitutional Amendment 26, through a referendum in November’s general election. Statewide, nearly 64 percent of all those voting on the surcharge supported it. More than 40 counties supported the referendum with at least 60 percent of the vote, and 100 counties supported the measure with at least 50 percent of the vote.

In light of the budget challenges Illinois faces in the coming years, Madigan said the funding would help schools provide needed programs and avoid teacher layoffs while lessening the need for local property tax increases.

“This measure deserves legislators’ approval. The majority of Illinois voters made a clear statement in November that they support this idea, whether they live in Cook County, DuPage County, Jackson County or Montgomery County. Budget decisions have been very difficult in recent years, and they’re only going to get tougher with the rollback of the tax increase. While the surcharge proposal is not a complete solution to our education funding challenges, opposition to this legislation ensures property taxes at the local level will be increased.”

- Posted by Rich Miller   64 Comments      

20 years of diversions cost pension fund $3.2 billion

Friday, May 15, 2015

* Twenty years ago, the General Assembly (then in GOP hands) and Gov. Jim Edgar gave Mayor Daley a gift. Buried deep within a big school reform bill which gave Daley pretty much complete control of the school system was a nice little sweetener that keeps on “giving” to this very day. From a press release

The Chicago Teachers’ Pension Fund (CTPF), the Retired Teachers Association of Chicago (RTAC), the Chicago Principals and Administrators Association (CPAA), and the Chicago Teachers Union (CTU) announced their support for House Bill 3695, a measure which reinstates the pension tax levy diverted from CTPF in 1995. […]

The proposal reestablishes a specific tax levy for contributions to CTPF beginning in Fiscal Year 2016. In 1995, legislation diverted the CTPF tax levy into the CPS operating budget, giving CPS administrators control over pension contributions. CPS then deferred their contributions from 1996 to 2005. As a result, CTPF lost $2 billion in revenue. CPS again deferred contributions from 2010 to 2013 and cost the fund another $1.2 billion. In total, CTPF has foregone more than $3.2 billion in funding.

The bill restores the tax levy, equal to 0.26% of all taxable property within the Chicago Public Schools district, and would generate approximately $160 to $180 million in 2016. The bill does not increase taxes, but reduces the CPS levy from 3.07% to 2.81% to fund pensions. The 0.26% of tax levied each year will be deposited directly with CTPF.

* Rep. Barbara Flynn Currie strongly objected when that bill was passed in 1995

And, yet, $3.2 billion in diversions later, nobody has ever bothered to repeal it. Indeed, it was apparently renewed four years after it first passed - under a Democratic House while Rep. Currie was Majority Leader.

- Posted by Rich Miller   14 Comments      

Thank you!

Friday, May 15, 2015

* Earlier this week, I asked if you could help transport some rescued puppies from Missouri to points north. The response was strong. From Teri DeGrado in comments…

I am so excited! I just heard from Judy that she has many emails from folks offering to help. Thank you so much!! For the first time I can remember, we may actually have more drivers than we need.

But have no fear! There will be another transport in two weeks, so let Judy know if you want to be informed of future transports. We are almost always looking for drivers in northern Missouri/southern Illinois and southern Illinois over into Iowa.

If you couldn’t help this weekend, but would like to volunteer for a future caravan, contact Judy Kirkpatrick at:

* More from Teri…

A little background, these transports run every two weeks (excluding Holiday weekends) to bring shelter dogs and puppies (with the occasional cat) up from high kill shelters in southern Missouri. These shelters still use gas chambers to euthanize dogs. Several rescuers work tirelessly to get those dogs up here where they are vetted and eventually find their forever homes.

Thanks again!

- Posted by Rich Miller   8 Comments      

*** UPDATED x2 *** Zopp says she’s running for Senate

Friday, May 15, 2015

* From the twitters and via the Mark Kirk campaign…

…Adding… Oops. I didn’t notice that Michael had the scoop

Sneed hears Urban League President and CEO Andrea Zopp, whose resume reads like a corporate bible, is all in.

• Translation: Top Sneed sources claim Zopp plans to run against Sen. Mark Kirk, R-Ill., and will make the announcement shortly.

On April 1, Sneed reported Zopp was mulling over such a run and encouraged to do so by former White House Chief of Staff Bill Daley, the brother and son of former Chicago mayors.

“She [Zopp] is now making phone calls, she is not waiting any longer,” a source said. “She feels the time is right now.”

Top Dem leaders, concerned about an absence of African-Americans on the Illinois Dem ticket — besides perennial candidate Illinois Secretary of State Jesse White — were urging Zopp, whose nickname is Andy, to run.

* Oh, and by the way, check out the NRSC’s bizarre new slogan about Duckworth…

*** UPDATE 1 *** Hmmm

Sen. Mark Kirk said Friday that he’d rather take on Urban League President and CEO Andrea Zopp in the general election than U.S. Rep. Tammy Duckworth.

“Zopp is an easier candidate for me to defeat … Because she’s not as well known,” Kirk said Friday, before participating in a lunchtime event with the Chicago Council on Global Affairs downtown.

“Tammy is a war hero. She has a great story to tell because she’s given a lot to this country . . . ” Kirk said. Duckworth lost both her legs when her helicopter was shot down over Iraq.

*** UPDATE 2 *** Press release…

“Tammy Duckworth is a partisan voice who sides with Washington insiders and powerbrokers, not the independent-minded people of Illinois. The inability to clear her path in the US Senate primary demonstrates a massive failure by her Washington friends. Mark Kirk is the person Illinois needs in the nation’s capital as he works across the aisle to get things done that benefit all of us,” said Nick Klitzing, Executive Director of the Illinois Republican Party.

- Posted by Rich Miller   55 Comments      

Credit Unions – Providing “Peace of Mind” to Members

Friday, May 15, 2015

[The following is a paid advertisement.]

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“If it wasn’t for the credit union, we wouldn’t have had the chance to buy our first home.

“I especially enjoy how willing you are to work with people on loans!”

“I can’t put in words how much you have helped me!”

“We love the credit union!”

As not-for-profit financial cooperatives, credit unions truly live out their ‘People Helping People” philosophy every day. And at United Community, they are “Community Minded, Just like You!” Members know their credit union will be there during the good times and can provide “peace of mind” when times get tough.

Building families. Building bright financial futures. That’s the credit union difference.

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Today’s number: $350 million

Friday, May 15, 2015

* An extremely important piece of information is missing from this story

The Illinois Department of Transportation released its annual five-year report Thursday, saying the department continues to fall behind on maintaining the state’s roads.

IDOT issued the report as part of an announced $8.4 billion, six-year construction program. The report says funding will likely remain flat for any future projects without some kind of capital bill.

“While this latest multiyear program will have a positive impact on many of our communities, it also underscores the urgency to find a long-term, sustainable solution for our infrastructure needs,” acting Illinois Transportation Secretary Randy Blankenhorn said in a prepared statement.

The report says 83 percent of the state’s highways and 93 percent of its bridges are in “acceptable condition” today. That number will drop to 62 percent for highways and 86 percent for bridges by 2021 at current funding levels. […]

The multiyear program IDOT announced includes $1.85 billion in projects for the fiscal year beginning in July.

* It’s not this, either, but we’re getting closer

In addition to a budget deficit of as much as $6 billion in the coming year, several factors crimp road spending. A $31 billion capital-construction plan which buoyed road work ended last year. The state’s road fund collects money from vehicle registrations — stagnant for the last decade at about $1.3 billion annually — and a motor fuel tax which, with falling gas prices, dropped about $100 million in the past two years from a 2004 high of just under $600 million.

* It’s this

What’s more, to erase a deficit in the current budget left when a temporary income-tax increase was allowed to roll back in January at incoming governor Rauner’s insistence, the [legislature] and Rauner agreed to take more than $350 million from accounts devoted to road-building [Emphasis added]

So, instead of $1.85 billion in spending next fiscal year, IDOT could’ve spent $2.2 billion - almost 20 percent more - if the Road Fund hadn’t been swept - not to mention the other $150 million swept from various state construction accounts.

- Posted by Rich Miller   50 Comments      

Today’s quotable

Friday, May 15, 2015

* AP

A report from the state auditor’s office has found more than $321,000 was paid for services to dead people through a program in the Illinois Department of Aging. […]

The audit released Thursday from the Illinois Office of the Auditor General says the funds went for senior citizen services in the department’s Community Care Program last year. It also says another $38,000 was paid for services to incarcerated people.

OK, this is a serious story and somebody could be in big trouble, but check out this last line

Auditors recommend stricter controls be placed on the program to prevent dead or imprisoned people from receiving services in the future.

Somehow, I’m thinking that the dead and the jailed didn’t actually receive any services.

Anyway, the audit is a doozy. Go read it. Whew.

- Posted by Rich Miller   17 Comments      

*** UPDATED x1 *** Your daily “right to work” roundup

Friday, May 15, 2015

* Meh

Gov. Bruce Rauner’s desires to have right-to-work in Illinois went down in flames in the House on Thursday, gaining zero yes votes in a fiery debate Democrats aimed squarely at the governor.

The vote tally was 0 yes votes, 72 no votes and 37 voting present, offering a blistering rebuke to Rauner’s anti-union agenda.

Republicans were ordered to vote “Present.” So “zero yes votes” was completely expected. They were also ordered to stay away from the merits of the bill, which is why nobody rose to speak in favor.

* Umm

Republicans, as they did in a vote on a portion of Rauner’s budget plan last week, once again objected to Democrats staging the symbolic vote, and with all but one member voted “present” on the bills. The “present” votes, in place of “no” votes — allowed Republicans to avoid taking a stand on the politically-sensitive issue.

“This isn’t about right to work,” Republican state Rep. Bill Mitchell, of Forsyth said. “It’s about dividing people and it’s not fair.”

Only GOP state Rep. Raymond Poe of Springfield, the state capital where many unionized government workers live, voted against the plan.

Poe did vote “No,” but a handful of Republicans took a walk yesterday and didn’t vote either way: Anthony, Cabello, Fortner, David Harris, McAuliffe, McSweeney and Bill Mitchell. Those were the cracks in the Rauner armor.

But some Republicans are gonna get some real grief from unions for their “Present” votes yesterday.

* Sheesh

Republicans called the ordeal a political stunt. They said Democrats weren’t taking the idea seriously, noting that the language in the bill was not written or reviewed by the Rauner administration.

“People are watching us and they’re demanding results in Springfield that are going to put people back to work,” said House Republican leader Jim Durkin. “This governor was not elected with just Republican votes, he was elected with Democrat votes, independent votes, who told him to come to Springfield and fix the problems that we have.”

The governor has been traveling the state giving speeches almost every day for six months bashing unions, and yet his House leader calls yesterday’s vote a political stunt?


* Several Republicans also bashed the Democrats yesterday for being “divisive.”


For months, the governor has cynically attempted to turn the non-unionized have-little’s in this state against the unionized have-some’s while simultaneously catering to the grotesque self-interest of the have-it-all’s.

That’s not infinitely more divisive than a little floor debate?

Rep. Hoffman also addressed the allegation yesterday


* This one could bite him back

Rep. Ron Sandack, R-Downers Grove, generated a chorus of boos when he said Democrats were just staging the event to produce videos for their next campaigns.

“The idea you are standing up for the working man is an embarrassment,” Sandack said. “You’re for no one but yourselves.”


* Meanwhile, from a labor official via text last night…

Rauner resolution defeated tonight in Stephenson County. More than 200 in attendance.

70 people at Kewanee city council on Tuesday morning. No vote on Rauner resolution.

Also Tuesday, no support for Rauner resolution at Cuba city council.

On Monday night a resolution rewritten to include nothing about RTW was introduced at the Freeport city council. It was tabled until next week.

* From the Stephenson County debate

District E’s Dan Neal said he supported working on creating equitable pensions and improving workers’ compensation issues, among other things, but he didn’t support the entire resolution.

“(Rauner has) really put this forth to us as: Take it or leave it; it’s all or nothing,” Neal said. “I don’t think we’re subject to that kind of dictation. I think we should look at this as what should be supported.”

Clukey, however, questioned when Rauner demanded that the resolution considered without any revisions, pointing out that other local governments had. Neal said he talked with a governor’s office representative who said county members could add an addendum but not change the language.

Control freaks.

*** UPDATE *** From the governor’s office…

Good morning, Rich!

Moultrie County and Arthur both passed the Turnaround Resolution.

Have a nice day!

- Posted by Rich Miller   98 Comments      

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Friday, May 15, 2015

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Rauner drops $400K on GOP legislators this week

Friday, May 15, 2015

* Buried at the very bottom of this Tribune story is something I told subscribers about on Tuesday

Rauner is hoping to put forth a united front heading into the final, frenzied days of session. The governor, whose campaign fund held more than $20.5 million to help supportive Republicans and potentially punish obstinate legislators, made the unorthodox move of doling out $400,000 to GOP lawmakers this week, a Rauner aide said.

The donations to the Republican legislators, who are a minority to the overwhelming Democratic majority that controls the House and Senate, included $10,000 to Senate Republican leader Christine Radogno of Lemont.

“We are encouraging the Republicans to stay strong together,” Rauner told reporters Thursday without mentioning his campaign donations to members of the Republican caucuses. “To have more influence in the process we need to stay unified, and that’s a message I’ve been saying that for the entire process and that’s important.”

Madigan spokesman Steve Brown said the massive donations seem “a bit contradictory” since Rauner railed during the campaign about what he considered to be corrupt fundraising practices and has sought to ban political donations from some interest groups.

“He is a special interest,” Brown said of the governor. “It confuses the average person who thinks he’s about changing the whole environment, when he’s engaged in the very same activity.”

If some big votes were coming up on any topic and any leader or interest group dumped $400,000 on every legislator of a single party, I highly doubt it would be at the bottom of a story.

Just sayin…

* More

New representative Carol Ammons (D-Champaign) insinuated the Republicans had been bought by donations from political action committees including one on behalf of the new governor.

“Whether we will be able to represent the rest of us that don’t make it into the one percent, don’t cash that check,” Ammons said.

Click here for her full speech, which begins at the 49:13 mark.

* Rep. Lou Lang also whacked the Republicans for the governor’s contributions during yesterday’s “right to work” floor debate. Relevant comments start at the 2:50 mark

- Posted by Rich Miller   80 Comments      

*** LIVE *** Session coverage

Friday, May 15, 2015

* The Senate left town yesterday, the House convenes this morning. Watch as stuff happens via ScribbleLive

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Friday, May 15, 2015

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Good morning!

Friday, May 15, 2015

* From the BBC

The “King of the Blues”, guitarist and singer BB King, has died aged 89.

King, known for his hits My Lucille, Sweet Little Angel and Rock Me Baby, died in his sleep in Las Vegas.

Born in Mississippi, King began performing in the 1940s, going on to influence a generation of musicians and work with Eric Clapton and U2.

* The thrill is gone, baby

- Posted by Rich Miller   39 Comments      

Madigan schedules votes on workers’ comp, tort law

Thursday, May 14, 2015

* From a press release…

Working to bring closed-door discussions on important issues into the open, House Speaker Michael J. Madigan on Thursday announced the House will vote next week on proposals to change laws dealing with the civil justice system and assistance received by injured workers.

“Changes to the assistance received by those injured on the job and putting a constitutional limit on lawsuit judgments are at the top of the governor’s agenda, and they have a direct impact on the financial security of middle-class families and the victims of horrible tragedies due to the negligence of others,” Madigan said. “Changes to laws that impact so many Illinois families deserve serious and open discussions.”

Madigan said the House will vote on the issues on Thursday, May 21. Madigan’s announcement follows two full House hearings on the issues of assistance received by workers injured while on the job through no fault of their own and Illinois’ civil justice system and the protections it provides to victims and their families.

“We’ve had two thorough and informative hearings in the full House on both these issues, and legislators had a great opportunity to listen to the stories of real Illinois families, their experiences with Illinois’ workers’ compensation and civil justice systems compared to the systems in other states, and how their lives have been impacted,” Madigan said. “If the governor is serious about the changes he is proposing, the right thing to do now is for us to bring these issues into the open and have a constructive and open discussion, vote and see what steps need to be taken from there.”

Madigan pointed out the Legislature’s scheduled adjournment of May 31 is nearing. Madigan again encouraged the governor to file his legislation in anticipation of the votes next week.

- Posted by Rich Miller   29 Comments      

Seersucker day at the Statehouse

Thursday, May 14, 2015

* I’d pay a dollar to know what Dring was saying…

- Posted by Rich Miller   34 Comments      

The Key to Lowering Workers’ Compensation Costs is Insurance Transparency and Oversight

Thursday, May 14, 2015

[The following is a paid advertisement.]

In 2011 the Workers’ Compensation “Reform” package was signed into law, aimed at lowering costs for employers in Illinois. These changes have had a negative effect on workers in Illinois and their ability to receive fair and reasonable compensation when they are injured on the job and have not resulted in insurance premium reductions for employers in Illinois, even though workers’ compensation costs have undeniably come down.

The National Academy of Social Insurance reports workers’ compensation is the second most profitable line of insurance after auto insurance. Over 300 insurance companies compete for and write workers’ compensation insurance in Illinois, more than just about any other state in the country. If Illinois is so unprofitable, why are these insurance companies climbing over one another to sell insurance here? It may be because insurance companies in Illinois are essentially unregulated when it comes to setting insurance premiums.

Decreased benefits for injured workers, medical reimbursements plummeting, claims falling, and reduced costs have all resulted in big profits for the insurance industry. This is the real result of the 2011 workers’ compensation reform.

Any further changes in workers’ compensation laws should instead look to promote insurance premium transparency and oversight – not further sacrifices by the injured worker.

For more information on workers’ compensation, click here.

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Fun with numbers

Thursday, May 14, 2015

* Umm

The Illinois Supreme Court just blew a $2.2 billion hole in the 2016 budget that begins July 1.

That is how much in anticipated savings evaporated from the spending plan because of the court’s ruling [on pension reform].

And that means layoffs and steep cuts to state services.

There is no avoiding it.

That budget hole was there from the moment the governor introduced his budget. No way was he going to get those savings next fiscal year. C’mon.

* Uh

While government union executives like to complain about the state shorting past pension payments (in some instances to maintain or grow the workforce unions could skim dues off of), just 40% of the unfunded liability can be attributed to a lack of funding. More generous benefits, actuarial miscalculations and lackluster investment returns account for most of the problem.

Actually, according to COGFA, benefit increases had absolutely zero to do with last fiscal year’s unfunded liability increase, and salary increases actually reduced unfunded liabilities.

* Hmm

It’s not like taxpayers have not already paid their fair share. According to an analysis… “While government worker contributions to Illinois’ five pension systems have increased by 75 percent since 1998, taxpayer contributions have increased by 427 percent over the same period. In 2012 alone, Illinois taxpayers contributed $3.5 billion more to the pension systems than state workers did.”

Yeah, well, when the state doesn’t make its payments and the employees do, the state’s payments are gonna rise a whole lot more than the workers’ payments when the state tries to catch up.

Anybody wanna guess which organization produced all three of the above paragraphs?

- Posted by Rich Miller   55 Comments      

Question of the day

Thursday, May 14, 2015

* From the twitters…

* The Question: Caption?

- Posted by Rich Miller   81 Comments      

Springfield News: Broad Coalition of 60+ Organizations Voice Support for Illinois Low Carbon Portfolio Standard

Thursday, May 14, 2015

[The following is a paid advertisement.]

Over 60 organizations representing a broad coalition of business, labor, conservation and civic organizations from across Illinois and around the country signed an open letter to voice their support for the Illinois Low Carbon Portfolio Standard (LCPS) (HB 3293/SB 1585), currently being considered by the Illinois General Assembly.

Signatories include the Chicago Urban League, Exelon, GE Hitachi, IBEW Local 15, Illinois AFL-CIO, Illinois Clean Energy Coalition, Illinois Hispanic Chamber of Commerce, Illinois Pipe Trades Association, Sargent & Lundy and United Scrap. Their support comes on the heels of a rally in the state capitol last week that drew nearly 600 Illinoisans who delivered a petition with over 10,000 signatures urging state lawmakers to enact the legislation.

“Illinois’ nuclear facilities provide tremendous economic, reliability and environmental benefits to the state and the region,” said John Grimes, vice president of GE Hitachi Nuclear Energy. “The Low Carbon Portfolio Standard is the only legislation that properly values these plants. We urge the General Assembly to vote yes on this important bill.”

Illinois’ six nuclear energy facilities generate nearly half of the state’s electricity and 90 percent of Illinois’ low-carbon electricity. However, three of these plants have been losing significant amounts of money each year and may soon close without legislative action. If these plants close early, it will cost the state an estimated $1.8 billion per year in economic activity, 8,000 jobs and up to $500 million per year in higher electric costs statewide, according to a State of Illinois report.

Click here for the list of organizations that signed the letter.

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Rauner talks to the media about pensions, unions, “Turnaround” and secrecy

Thursday, May 14, 2015

* Gov. Bruce Rauner told Statehouse reporters today that he and the legislative leaders are “feverishly endeavoring” to come up with a viable pension reform solution. He also said they might pursue “several options simultaneously” and send them all to the courts. He laughed off a question about the Illinois Policy Institute’s idea to fire all state workers and put them in a new pension plan. Rauner said he will “negotiate in good faith” with the unions.

He also spoke a bit about “right to work,” blaming “special interest groups” for opposing his changes. He encouraged Republican lawmakers to “stay unified” with his program.

* “We have taken a number of things off the table,” Rauner said about his “Turnaround Agenda,” but wouldn’t say what those things were. He also dodged a question about a potential income tax hike.

And despite all the secret “working group” meetings, Rauner claimed he was being totally transparent, and essentially blamed the secrecy on the General Assembly, which is, sorry to say, a total crock.

* Listen to the raw audio

- Posted by Rich Miller   36 Comments      

CPS and City of Chicago Downgraded to “Junk Bond Status” Yet Exelon Bailout Would Cost Them More than $20 million

Thursday, May 14, 2015

[The following is a paid advertisement.]

Maybe Exelon should bail out CPS and the City of Chicago instead of demanding a $1.6 BILLION subsidy form struggling family, business and government ratepayers.

“A plan to financially reward Exelon Corp. for producing no-carbon energy and potentially save three Illinois nuclear plants from closure would cost ratepayers $1.6 billion over five years and strain budgets for financially strapped businesses and municipal governments, a study released Tuesday found.” - Associated Press, 4/21/15

Chicago Tribune: “Exelon-backed legislation could cost ratepayers $1.6B, study says”

We simply can’t afford to pad the pockets of Exelon shareholders while governments from Chicago to Cairo are in such dire straits. Businesses and governments can learn how much the bailout would cost them at

Just say no to the Exelon bailout. Vote no on SB1585/HB3293.

BEST Coalition is a 501C4 nonprofit group of dozens of business, consumer and government groups, as well as large and small businesses. Visit

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Not so fast, indeed

Thursday, May 14, 2015

* Bloomberg plays with statistics, engages in false equivalency and jumps the gun in its story entitled “We’re not like Detroit? Not so fast”

BIG, SCARY NUMBERS: Chicago’s unfunded liability from four pension funds is $20 billion and growing, hitting every city resident with an obligation of about $7,400. Detroit’s, whose population of about 689,000 is roughly a quarter of Chicago’s, had a retirement funding gap of $3.5 billion, meaning each resident was liable for $5,100.

For one thing, Chicagoans can afford more than broke, under-educated Detroit residents…

Detroit: Median household income, 2009-2013 $26,325
Chicago: Median household income, 2009-2013 $47,270

Detroit: Persons below poverty level, percent, 2009-2013 39.3%
Chicago: Persons below poverty level, percent, 2009-2013 22.6%

Detroit: Median value of owner-occupied housing units, 2009-2013 $50,400
Chicago: Median value of owner-occupied housing units, 2009-2013 $233,200

Detroit: Bachelor’s degree or higher, percent of persons age 25+, 2009-2013 12.7%
Chicago: Bachelor’s degree or higher, percent of persons age 25+, 2009-2013 34.2%

Detroit’s economy has been Iraq-style devastated for years.

Also, that unfunded liability is longterm debt unless all employees decide to retire tomorrow, which they won’t. The city absolutely must start paying down its debts, but it doesn’t have to do that all at once. It ain’t gonna be easy, there’s much pain ahead, but the screamers need to calm the heck down a bit.

* More drivel

HOSTILE COURT: When Detroit filed for Chapter 9 in July 2013, a federal bankruptcy judge exerted his considerable powers and decreed that everyone—taxpayers, employees, bondholders and creditors alike—would get a haircut to settle the crisis. When the Illinois Supreme Court ruled on May 8, it said the state couldn’t cut pension benefits as part of a solution to restructure the state retirement system.

False equivalency. A state court is not a federal bankruptcy court. And this situation clearly hasn’t had a chance to play itself out yet. I mean, it’s been less than a week since the Supremes ruled. If you want to jump out your window, be my guest. I think you’re a fool, but go right ahead.

* Read on

POLITICAL PARALYSIS: Just as Detroit slid into bankruptcy after decades of economic and actuarial warnings, Chicago politicians have watched the train wreck rumble toward them for more than a decade. During that time, they skipped pension payments and paid scant attention to the financial damage being done. In 10 years starting in 2002, the city increased its bonded debt by 84 percent, according to the Civic Federation, which tracks city finances. That added more than $1,300 to the tab of every Chicago resident.

There’s no doubt that Chicago has been paralyzed with the tax fear and that Daley and Emanuel over-borrowed. There’s also no doubt that Detroit’s economic problems have been far, far worse than Chicago’s. They couldn’t even afford to buy firefighters any equipment. The place had been a bombed-out ruin forever before it declared bankruptcy.

* Onward

NO BAILOUT: Detroit’s bankruptcy filing allowed it to restructure its debt, officially snuffing out $7 billion of it by cutting pensions and payments to creditors. In Illinois, the nation’s lowest-rated state, with unfunded pension obligations of $111 billion, Rauner had a blunt message last week in an unprecedented address to Chicago’s City Council: The city will get no state bailout.

It’s simply too early to tell if Gov. Rauner’s threat is real. We’ll probably know in a few weeks. There’s a whole lot of horse-trading ahead.

* Downward

DENIAL: After years of denial, Detroit officials finally, if grudgingly, agreed to major surgery. At least for now, Chicago’s Emanuel is sticking to his view that the Illinois Supreme Court’s rejection of a state pension reform law doesn’t apply to the city. “That reform is not affected by today’s ruling, as we believe our plan fully complies with the State constitution because it fundamentally preserves and protects worker pensions,” he said in a statement on May 8.

Again, we need to let it play out a bit before rushing to screaming judgements.

* I want to make it crystal clear that I’m not attempting to downplay Chicago’s very real, very serious, even dire problems. The city is in a world of bigtime hurt. But it’s a Tier One city, not some backwater dumping ground. People have been saying Chicago would become another Detroit since at least the days when Harold Washington first ran for mayor. Know what happened? He raised taxes after years of avoidance by Richard J. Daley and his machine successors and the city eventually took off like a rocket. Emanuel tried to follow the Daley path after succeeding yet another Daley. It’s a failed strategy, and it has truly endangered the city’s fiscal and economic health. Taxes will have to rise so much that some people will leave. But it’s gonna take a whole lot more than that to make Chicago into Detroit.

* Meanwhile

Even before the triple-whammy to Chicago’s finances, Gov. Bruce Rauner was using the b-word, as in bankruptcy, particularly for CPS. That’s a status from which Detroit recently emerged.

Emanuel said Wednesday it would be “irresponsible and reckless to do that” as a first option. But, for the first time, he did not entirely rule out the possibility of bankruptcy. That would free the city and CPS to do things it would not otherwise be permitted to do while unions would lose their leverage.

“It exists. It can happen. [But] rushing there means you haven’t gone to your partners in labor and said, `Do you want to be part of the solution?’ ” Emanuel said.

Pressed on whether a post-election property tax increase was inevitable to solve the combined, $30 billion pension crisis at the city and the public schools, Emanuel insisted once again that raising property taxes was the “last option, not the first option.”

He maintained that the jackpot of revenue from a city-owned Chicago casino would be enough to save police and fire pension funds and that an end to the “double-taxation” of city residents for teacher pensions in Chicago and across the state would go a long way toward solving the $9.5 billion pension liability at CPS.

If the General Assembly and the governor can’t help sort this mess out, then it’s time to start worrying. Otherwise, we need some clear, calm heads around here for a change.

…Adding… It’s gonna play out over time

A lawsuit by unions and retirees challenging Mayor Rahm Emanuel’s changes to city pension funds ultimately will be decided by the Illinois Supreme Court when all is said and done, a Cook County judge said Wednesday.

To that end, Associate Judge Rita Novak set a July 9 hearing in the lawsuit centering on a state law the mayor pushed through to cut costs in an attempt to shore up the city laborers and municipal workers pension funds.

* Related…

* A Tale of Two Cities

- Posted by Rich Miller   45 Comments      

Still in pension reform denial

Thursday, May 14, 2015

* From the Tribune

Gov. Bruce Rauner is sticking to his plan to reduce retirement benefits for government workers, even after a recent Illinois Supreme Court ruling severely limited options for cutting state pension costs, administration officials said Wednesday.

That position was relayed as the Republican governor dispatched a lawyer and policy adviser to a House committee to discuss the approach on pensions months after Rauner floated it. While no legislation has been filed, the new governor has talked broadly about moving all current workers to a less generous benefit package beginning in July. Upon retirement, those workers would collect two pensions — one from the more generous plan in place now, and a second from the less generous benefits accrued after July. […]

“We continue to believe that the governor’s proposal … is constitutional under the current constitution even after the Supreme Court’s ruling that came out Friday,” [Rauner administration attorney Kim Fowler] said.

The Rauner team’s view is that the court was unclear about whether future benefits have the same protections as those benefits already earned. “We don’t think the court clearly answered what benefits are protected,” Fowler said.

C’mon. The Supremes were abundantly clear. Do we have to go over this yet again?

Under article XIII, section 5, members of pension plans subject to its provisions have a legally enforceable right to receive the benefits they have been promised… The protections afforded to such benefits by article XIII, section 5 attach once an individual first embarks upon employment in a position covered by a public retirement system, not when the employee ultimately retires… Accordingly, once an individual begins work and becomes a member of a public retirement system, any subsequent changes to the Pension Code that would diminish the benefits conferred by membership in the retirement system cannot be applied to that individual.

* Democrats on the committee were skeptical, to say the least

Some Democrats on the committee said they disagreed. Rep. Scott Drury, D-Highwood, said that once an employee joins a pension system, they are locked into its benefits.

“We can increase the benefits, but once we do that, we can’t take it away,” Drury said. “The court poked a lot of holes in what we did. I think (Rauner’s plan) needs to be set aside because it’s just not realistic anymore. The holding is not nearly as ambiguous as you are making it out to be.”

Rep. Mike Zalewski, D-Riverside, expressed a similar view.

“There’s no reading of that decision that squares with your testimony here today,” he said. “Benefits are benefits under this law, and there’s nothing we can do to alter them. This false distinction between benefits earned and future benefits earned is not realistic.”

Republicans said they think the governor’s plan will work. Rep. Tom Morrison, R-Palatine, said he has had teachers in his district tell him they can accept Rauner’s plan because they know that pension costs are cutting into other state services, including education.

* More

Rep. Carol Sente, D-Vernon Hills, said she liked Rauner’s proposal to amend the constitution to change the wording of the pension clause — although that couldn’t be voted on until November 2016 at the earliest — but that “I feel the ruling was very clear and I do feel that the items in this proposal are not constitutional and would fall to the same ends.”

“I do feel that a decision has been made and we’re going down the same path in a slightly different way,” she said.

* And

“I think its absolutely fantastic,” state Rep. Jeanne Ives, R-Wheaton, said of the proposal.

The partisan split suggested attempts to rein in state pension problems will remain a major headache as lawmakers work toward a scheduled May 31 adjournment date.

“I feel like its groundhog day,” said state Rep. Elaine Nekritz, D-Northbrook.

* But

The committee seemed less chilly to the governor’s desire for a constitutional amendment ballot question in time for the 2016 general election.

Fowler said the proposed amendment language would make clear that benefits already accrued under the law in effect during a period of service must be protected. With that said, the amendment also would make clear the General Assembly and governor have the right to alter pension statutes through new legislation, she said.

A three-fifths vote of each chamber of the Legislature could place a constitutional amendment question on the 2016 general election ballot. To be enacted it would also need approval by three-fifths of voting on the question or a majority of those voting in the election.

* Meanwhile, the News-Gazette editorialized about pension reform today, and added this little nugget

[Senate President John] Cullerton’s planned legislation is not the only solution he’s put forward. Months ago, he suggested another approach.

It’s unclear if he was serious. But if he wasn’t then, he and others may be now because it could be the only way to hold the semblance of a line on pension costs.

Cullerton suggested the state refuse to agree to any future pay increases for state employees. If the state can’t take control of pension costs on the benefits end, perhaps it can through salary freezes.

Such a freeze would have to last several years to have a significant impact.

- Posted by Rich Miller   185 Comments      

Rate Sen. Mark Kirk’s new TV ad

Thursday, May 14, 2015

* From the AP

U.S. Sen. Mark Kirk is touting his recovery from a debilitating stroke in the first television ads of his 2016 re-election bid.

The Illinois Republican launched the ads Thursday in Chicago and the Champaign area.

The early ad buy — which his campaign says cost more than $320,000 — is a sign of how competitive the race is expected to be.

* The press release…

“Courage”, the first television ad of the 2016 U.S. Senate election in Illinois chronicles Senator Mark Kirk’s unending determination to fight for Illinois families in the Senate. The over $320,000 advertisement flight starts airing today on broadcast and cable networks in the Chicago and Champaign media markets.

“Because we all have our own steps to climb, Kirk in spite of his stroke, is driven to fight for Illinois families in the Unites States Senate. Senator Kirk’s independent voice in the midst of partisan gridlock is a source of pride for Illinois. Senator Kirk has climbed the steps of the Capitol for fellow stroke survivors, veterans and everyone in Illinois working to overcome a challenge in their own life. He goes to work for them,” said Kevin Artl, campaign manager for Kirk for Senate.

    · In 2010, Senator Kirk won President Obama’s Illinois Senate Seat defeating former Illinois Treasurer Alexi Giannoulias in one of the closest elections in the nation.

    · Despite suffering a major stroke in 2012, Senator Kirk returned to work just a year later and capped off his inspiring recovery by climbing the U.S. Capitol steps surrounded by a collection of bipartisan Congressional leaders.

    · In 2015, Senator Kirk, a veteran of the U.S. Navy, created the group ‘Kirk’s Battle Buddies’, to offer encouragement, support, and counseling to fellow stroke survivors and veterans. ‘Kirk’s Battle Buddies’ participated in stair climbs at the John Hancock Center and Presidential Towers with more climbs scheduled this year.

Described in press accounts and by political pundits as a “moderate” and “independent”, Senator Kirk’s record has matched the description as he has often voted against party lines to support measures important to Illinois voters, including his work to protect the Great Lakes from pollution and contaminants, his support for marriage equality as a means to end discrimination and his votes for rigid background checks for gun purchases to prevent gang members from gaining access to firearms.

During previous elections when Kirk ran in a presidential year, Kirk has outperformed the Republican presidential candidate by an average of 12 points, demonstrating strong crossover appeal to independent voters and reform-minded democrats.

* The ad

* The script…

remember being in the ambulance, and holding the hand of the paramedic…

…and knowing something was very wrong.

I thought that was the last human being I would ever touch.

I had to learn how to walk again.

I forced myself to climb up steps everyday, even up our tallest building.

I was determined to return to the Senate, to do the job you elected me to.

Second to my service in the Navy, being your Senator is the greatest honor of my life.

As I learned to walk and climb again, I thought of our Illinois families struggling to get by…

I thought of our veterans and our heroic men and women who are serving in harm’s way.

They’re the reason why I fought so hard to get back.

They’re why I never doubted that I would climb the Capitol steps again.

I climb the steps for everyone facing their own challenges.

I’m Mark Kirk, and I approve this message.​

- Posted by Rich Miller   48 Comments      

Setting the stage for today’s “right to work” vote

Thursday, May 14, 2015

* AP

The Illinois House is planning a vote on Republican Gov. Bruce Rauner’s proposal that would allow local governments to permit workers to opt out of unions.

Democratic Speaker Michael J. Madigan’s office says Thursday’s vote is planned even though the governor hasn’t filed a bill with the Legislature.

Rauner has spent recent months pitching city councils and business groups on the idea of local “empowerment zones.” The zones would allow voters to make union membership voluntary, rather than mandatory, at unionized workplaces in their communities.

The legislation is here.

* Sun-Times

“Our message has been to House members that this is a very serious vote, we want to see a solid “no” vote,” said Illinois AFL-CIO president Michael T. Carrigan who represents the We Are One coalition of public unions in Illinois. Last week, House Republicans voted “present” when Madigan surprised them by putting Rauner’s social service cuts language into a bill and calling it for a vote. On Thursday, he’s expected to do the same with right to work, which is designed to undercut unions’ power.

“We’re not looking for “present” votes. Present votes are not acceptable,” Carrigan told the Chicago Sun-Times. “If there are too many absences by House members, we will look at their absences with suspicious eyes. No. It’s time to find out where an elected legislator, an elected person is on this subject.”

Sources say the governor’s office has been working behind the scenes to influence the Republican House caucus.

In recent weeks, in what is viewed as an attempted show of force by the governor, Rauner has moved hundreds of thousands of dollars into various campaign committees. That is on top of the $20 million already in Rauner’s campaign committee and millions more in a Turnaround Committee that says part of its mission is to “oppose those who stand in the way” of Rauner’s “bold and needed reforms.”

Even Republican lawmakers privately say they hope that a public vote will allow legislators to move forward on issues such as the budget and how to fund pensions.

Subscribers were told about Carrigan’s demands two days ago, and learned much more about the governor’s campaign contributions that same day, plus a behind the scenes account of the governor’s lobbying this morning.

Keep an eye on our live coverage post for updates.

- Posted by Rich Miller   55 Comments      

*** LIVE *** Session coverage

Thursday, May 14, 2015

* Watch it all go down with ScribbleLive

- Posted by Rich Miller   10 Comments      

Protected: SUBSCRIBERS ONLY - Today’s edition of Capitol Fax (use all CAPS in password)

Thursday, May 14, 2015

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- Posted by Rich Miller   Comments Off      

Another one bites the dust

Wednesday, May 13, 2015

* Oy…

…Adding…. From Moody’s

Rating Action: Moody’s downgrades Chicago Board of Education, IL’s GO to Ba3; outlook negative
Global Credit Research - 13 May 2015
Ba3 rating applies to $6.2 billion of GO debt
New York, May 13, 2015 — Moody’s Investors Service has downgraded to Ba3 from Baa3 the rating on the Chicago Board of Education, IL’s $6.2 billion of outstanding general obligation (GO) debt. The Chicago Board of Education is the primary debt issuer for the Chicago Public Schools (CPS) (the district). The outlook remains negative.


The Ba3 rating reflects CPS’s steadily escalating pension contributions and use of reserves to fund those contributions. We believe pension costs will place increasing strain on the district’s precarious financial position absent material revenue growth or expenditure reduction, both of which appear increasingly difficult for the district to achieve. Based on the Illinois Supreme Court’s May 8 overturning of the statute that governs the State of Illinois’ (A3 negative) pensions, we believe that the district now has fewer options for reducing its own pension costs. We view the district’s ability to grow operating revenue as similarly constrained. In our opinion, state budget pressures may limit future state aid increases to the district. The district’s credit profile is also pressured by competing demands placed on the local property tax base from the debt and unfunded pension liabilities of the City of Chicago (Ba1 negative) and other overlapping local governments. Finally, the district’s governance ties to the city inform our credit opinion.


The negative outlook reflects our expectation that CPS’s budget pressures will intensify due to rising pension costs. The district’s net annual pension contribution will increase by 6% this year. In fiscal 2015, the district’s mandatory net annual pension contribution totals $635 million (an amount which equals the $697 million contribution less state support of $62 million). In fiscal 2014, the district’s mandatory net annual pension contribution totaled $601 million (an amount which equaled the $613 million contribution less state support of $12 million). Further increases are scheduled in future years. CPS officials are actively working to identify revenue enhancements and expenditure adjustments that will be needed to accommodate the increased payments, but solutions remain uncertain. This budget gap is a credit negative that is becoming more pronounced as fiscal 2016 approaches. The outlook also incorporates the likelihood of continued growth in the unfunded pension liabilities of the City of Chicago. The costs of servicing those liabilities exacerbate the practical limitations of generating revenue from a shared tax base.

WHAT COULD CHANGE THE RATING UP (or revise the outlook to stable)

    • Revenue growth and/or reductions in other operating expenditures that enable the district to accommodate increased pension costs into annual operating budgets without reliance on non-recurring revenue sources

    • District or state actions that halt the growth of the district’s unfunded pension liabilities

    • Improvement in the City of Chicago’s credit profile that strengthens CPS’s credit quality given the two entities’ governance ties and coterminous tax base


    • A continuation of structurally imbalanced operations

    • Narrowing of the district’s fund balances and liquidity

    • Continued growth in the debt and/or unfunded pension liabilities of the district and/or overlapping governments

    • Declines in the City of Chicago’s credit profile that weakens CPS’s credit quality given the two entities’ governance ties and coterminous tax base

* And

Rating Action: Moody’s downgrades Chicago Park District, IL’s GO to Ba1; outlook negative
Global Credit Research - 13 May 2015

Ba1 rating applies to $616 million of GO debt

New York, May 13, 2015 — Moody’s Investors Service has downgraded to Ba1 from Baa1 the rating on the Chicago Park District (CPD), IL’s $616 million of outstanding general obligation (GO) debt. The Ba1 rating applies to $333 million of general obligation unlimited tax (GOULT) debt and $283 million of general obligation limited tax (GOLT) debt. The outlook remains negative.


The Ba1 rating on CPD’s GOULT debt reflects the district’s governance ties to the City of Chicago (Ba1 negative). Based on the Illinois Supreme Court’s May 8 overturning of the statute that governs the State of Illinois’ (A3 negative) pensions, we believe that the city’s options for curbing growth in its own unfunded pension liabilities have narrowed considerably. We perceive increased risk that the city’s intensified pressures will adversely affect CPD’s financial operations and position. CPD’s tax base, which is coterminous with that of Chicago, is highly leveraged by the debt and unfunded pension obligations of the city and other overlapping governments. Our opinion weighs the severity of these challenges against the district’s credit attributes, which include an ample liquidity position; considerable ability to reduce expenditures; and manageable direct debt levels.

The Ba1 rating on CPD’s GOLT debt reflects the credit characteristics inherent in the GOULT rating and the sufficient debt service coverage provided by the debt service extension base (DSEB) levy that secures CPD’s GOLT debt. The DSEB is a dedicated debt service levy that is unlimited by rate but is limited by the amount of the DSEB. The district’s 2015 DSEB levy equaled $46.8 million, which provides adequate coverage as it exceeds maximum annual debt service (MADS) on outstanding GOLT debt.


The negative outlook reflects the district’s governance ties to the City of Chicago, the GO rating of which carries a negative outlook. The outlook also incorporates the likelihood of continued growth in the city’s unfunded pension liabilities, and the costs of servicing those liabilities. The substantial funding needs of overlapping governments exacerbate the practical limitations of generating revenue from a shared tax base.


    • Improvement in the City of Chicago’s credit profile that strengthens CPD’s credit quality given the two entities’ governance ties and coterminous tax base

    • Change in governance framework that reduces the influence of the city on the district


    • Declines in the City of Chicago’s credit profile that weakens CPD’s credit quality given the two entities’ governance ties and coterminous tax base

    • Substantial reduction in the district’s reserves or liquidity

    • Determination by a court of law that the current statute governing the district’s pension plan is unconstitutional

- Posted by Rich Miller   41 Comments      

Janette Weatherall

Wednesday, May 13, 2015

* From the IEA…

Services are scheduled for Saturday in Belleville for Janette Weatherall, former lobbyist for the Illinois Education Association.

Weatherall served IEA members and public education from 1993 until her retirement in 2013.

Visitation will be held from 10:00 a.m. to 11:00 a.m. Saturday, May 16, with the funeral service following the visitation at 11:00 a.m.

All services will be held at Signal Hill United Methodist Church, 47 Signal Hill, Belleville, IL 62223.

I’ve known Janette since I started in this business. She was a sweet, kind and inspirational person. She was also a very hard worker and an inspired hire by the IEA. The union was primarily suburban and Downstate focused and had few African-American allies. Janette, who is black, helped build the IEA into the force it is today.

Janette had cancer, beat it, and was enjoying the good life in retirement when the cancer came back.

“My heart hurts,” Sen. Toi Hutchinson told me after I informed her of Janette’s passing yesterday. Mine does too.

- Posted by Rich Miller   11 Comments      

*** UPDATED x1 *** Unions demand Emanuel drop pension court battle

Wednesday, May 13, 2015

* Sun-Times

On Wednesday, four unions — AFSCME Council 31, the Chicago Teachers Union, the Illinois Nurses Association and Teamsters Local 700 — urged Emanuel in a joint statement to drop the city’s court battle over his plan, given the state Supreme Court decision last week.

“We believe the Supreme Court’s ruling leaves no room for doubt that Chicago’s pension cuts also violate the plain language of the pension clause. In light of that decision and the city’s credit downgrade, we urge Mayor Emanuel to stop wasting time and money in a futile attempt to defend these unconstitutional cuts, and instead work with us to develop fair and constitutional solutions to funding city retirement plans,” the statement reads.

* John Schmidt begs to differ

Chicago still has a winning argument: Its reforms do not “diminish or impair” pension benefits. That means the Illinois Constitution is not violated.

The reforms include some reductions in how future benefit increases are calculated, and they require modest increases to employee contributions. But they couple these changes with massive increases in the city’s contributions to the two funds — from $177 million in 2014 to an estimated $650 million in 2021.

The two pension funds were going broke. Twenty-eight of the 31 unions with members in these funds supported the plan because they recognized that in a few years their pension assets would be depleted and benefits would not be paid.

The city, for the first time, would be legally responsible for the funds’ liabilities. That’s a major change. Under state laws that established the pension funds, the obligation to pay benefits has always been on the funds themselves, not the city.

The city has had no obligation beyond a specified contribution to the funds each year. If the city paid its required contribution and the pension funds still went broke, the city had no legal obligation to step in and beneficiaries would receive pennies on the dollar.

Now the city has the obligation. Far from “diminishing or impairing” pension benefits, the city’s reform plan strengthens and protect benefits that were endangered.

But aren’t “reductions in how future benefit increases are calculated” a diminishment, even though they may have saved the funds from insolvency?

* The immediate pricetag

Ralph Martire, director of the Center for Tax and Budget Accountability, said the latest downgrade to junk bond status will cost the city an additional $200 million to $300 million, on top of its existing budget deficit and employee pension fund shortfalls.

“It’s already looking at a deficit north of $250 to $300 million. Now pile on another couple hundred million – let’s be conservative – from the impact of the downgrade of the bond status. Now pile on the $550 million increase in pension funding that’s due this year, and you’re talking about a problem that’s collectively in excess of $1 billion, or a third of their budget for current services,” he said.

* And then there’s this monster

Chicago may have to pay banks as much as $2.2 billion after Moody’s Investors Service dropped its credit rating to junk, deepening the fiscal crisis in the third-largest U.S. city.

The company’s decision Tuesday to cut Chicago’s $8.1 billion of general obligations two ranks to Ba1, one step below investment grade, allows banks to demand that the city repay debt early and exposes it to fees to end swaps contracts, Moody’s said in a statement. Mayor Rahm Emanuel plans to refinance $900 million of debt to reduce the penalties. […]

City officials may be able to persuade banks not to demand the penalties as long as Chicago can move ahead with its refinancing plan, said Johnson.

“I would guess that most of their counterparties would be fine letting them go,” he said. “If they end up not selling it, then that creates significantly more risk.”

Those big brains in the Daley administration really messed things up, didn’t they? But those swaps probably should’ve been renegotiated long ago.

*** UPDATE *** Press release…

Legislation sponsored by state Senator Daniel Biss (D – Evanston) seeks to shore up local pension funds by diverting state payments from an employer into the local pension fund when the employer fails to make the required pension contributions.

“Just as we must hold our state government accountable for pension contributions, so should we hold Illinois’ local governments accountable,” Sen. Biss said. “This legislation provides the enforcement mechanisms necessary to first encourage and then require the adequate funding of local pension funds.”

For decades, the Illinois Municipal Retirement Fund (IMRF) has had the ability to divert State payments to employers who failed to make their required pension payments. This is the main reason why IMRF is in excellent fiscal health, unlike so many other pension funds in Illinois. In recent years, police and fire pension funds and the Chicago municipal and laborer’s pension funds have acquired this power as well. Under House Bill 3484, the other local public pension funds, including those of the Chicago Public Schools, Cook County, and the Chicago Transit Authority, would be granted this ability.

“The history of pensions in Illinois makes one thing crystal clear: it is absolutely imperative that employers make adequate payments into the pension systems,” said Biss. “Last Friday’s Supreme Court ruling only serves to underscore the importance of this essential truth. Our legislation takes a major step to ensure that we will not repeat the mistakes of the past.”

House Bill 3484 passed out of committee today and now goes to the Senate floor for a vote.

[ *** End Of Update *** ]

* In other city-related budgetary news

The CTA is already enacting contingency plans to absorb deep cuts in state funding sought by Gov. Bruce Rauner, the transit agency’s top finance official said Wednesday.

The CTA will erase from this year’s budget anticipated revenue of $21 million in state subsidies that would have helped the CTA to offset some of the cost of providing reduced fares and free rides to disabled riders and some senior citizens, Ron DeNard, CTA chief financial officer, told the CTA board at its monthly meeting.

The CTA received about $28 million in state funding last year for the reduced-fare and free-rides programs, which are mandated by state and federal laws.

Rauner is seeking to zero-out the state subsidy in fiscal 2016.

CTA President Forrest Claypool has said that the actual cost to the transit agency for the two programs exceeds $100 million a year in uncollected fares.

- Posted by Rich Miller   28 Comments      

Question of the day

Wednesday, May 13, 2015

* From a reader…

Hi Rich,

Wanted to give some props to the Governor and Rep. Tim Butler for addressing the Curb Your Car Crowd at the Governor’s mansion. The Governor didn’t ride, but said he would if we could find him a seat that didn’t hurt his tookus. (My word, not his)

I think the Viking hat really sets off the moment.

Thanks for being you and doing what you do!

* The pic…

* The Question: Caption?

- Posted by Rich Miller   55 Comments      

Your daily “right to work” update

Wednesday, May 13, 2015

* From the governor’s office…

Hi, Rich!

Hope you’re doing well today.

Just wanted to let you know Piatt County passed the resolution this morning.


I am doing well, Catherine. Thanks!

* Upcoming votes via the IL AFL-CIO

Wednesday: Kendall County Legislative/Judicial Committee - cancelled

Thursday: Stephenson County Board, 6:30 p.m., 50 W. Douglas Street, Freeport

* Meanwhile, from the Elgin Courier-News

A Kane County resolution calling for state reform got thumbs up from county board members and union members who cited the county as an example of how efficiently government should operate.

Scott Roscoe, of the Fox Valley Building and Construction Trades Council, spoke at several meetings earlier this month regarding the resolution, but his speech had a different tone Tuesday when he conceded the county board’s work on the matter has not been easy.

He thanked the county board for what the resolution says — and what it doesn’t say.

Gov. Bruce Rauner asked the county board, like other governmental bodies, to pass a resolution — provided by his office — supporting his Illinois Turnaround Agenda. Union members have protested Rauner’s reforms accusing the governor of attacking the middle class and unions.

Kane County officials chose to draft their own document that does not touch on any of the controversial issues in Rauner’s version while touting the county’s best practices.

* Daily Herald

“We needed something that (Rauner) would value that didn’t cost us our unity,” Lauzen said.

The result was a resolution that passed 21 to 3 Tuesday, with only three Aurora-based Democrats objecting. The vote signaled a bipartisan win for a document that calls for budget and pension reform in Springfield while also being a document local union supporters, like Fox Valley Building Trades President Scott Roscoe, lined up to support Tuesday.

“I rise today to thank our county board,” Roscoe said. “Thank you for not including support for right to work, repeal of the prevailing wage act or bans against project labor agreements. We all agree Springfield has work to do. The state of Illinois should be looking to Kane County to see how efficient and effective government operates and how to work within its means.”

In reply, county board member Mike Kenyon, a former chairman of the Kane County Republican Party, voiced his appreciation for local unions.

“I’ve come to realize that if we didn’t have organized labor we wouldn’t have paid vacations. We wouldn’t have health insurance. We wouldn’t have sick days. And I don’t think it’s fair for anybody to blame any of the state’s problems on organized labor,” Kenyon said.

* Related…

* Chamber walks a thin line between Emanuel, Rauner: But the only specifics the chamber’s resolution gets into are “minimizing regulatory burdens and mandates” and “reasonable reforms to minimize the high employer cost related to workers compensation and unemployment insurance.” Nary a word about stripping power from unions, right-to-work, term limits on lawmakers or the prevailing wage. Those omissions are intentional, says Michael Reever, the chamber’s vice president of government relations. “It’s very clear which issues we support and which issues we think the governor should focus on,” says Reever. The ones referenced in the resolution—workers comp, unemployment insurance and tort reforms—”are issues we have supported for decades.”

- Posted by Rich Miller   22 Comments      

Urgent puppy help needed!

Wednesday, May 13, 2015

* My old pal Becky Carroll pointed me today to Teri Ulatoski DeGrado’s Facebook post

Transport help needed. Please read and share.

We have a huge transport this week with over 70 dogs, more than 40 of which need to get from St. Louis to Joliet and many on to Kenosha! The schedule is below.

Can you spare a few hours on Saturday to help save some lives? Many, MANY puppies, so lots of puppy breath.

To answer a few questions:

1) NO the dogs do not bark the entire trip (they usually all fall asleep within 5-10 minutes of getting on the road.

2) NO you don’t have to worry about taking a dog home! These dogs are all going to rescue, fosters or adoptive homes. That is why they need to get up here .. to start their Happily Ever After!

3) NO you don’t need to have a large vehicle. A regular car, hatchback or small SUV works great! If you look at the sizes of the dogs and puppies, most are under 20 lbs (and lots are much smaller!). If you need crates, I have some extra, but many times the dogs don’t even need to be crated. Even a few dogs in your car helps!!

Leg 3IM: St. Louis, MO to Springfield, IL (1 hr. 35 min./ 98 miles)

    Passengers 1-7, 14, 17-31, 33-43, 49-54, 65-71
    11:05 am to 12:40 pm

Leg 4IM: Springfield, IL to Bloomington, IL (1 hr. 10 min. / 67 miles)

    Passengers 1-7, 14, 17-31, 33-43, 49-54, 65-71
    12:55 pm to 2:05 pm

Leg 5IM: Bloomington, IL to Joliet, IL (1 hr. 40 min. / 99 miles)

    Passengers 3-7, 14, 17-31, 33-43, 49-54, 65-71
    2:20 pm to 4:00 pm

Leg 6IM: Joliet, IL to Kenosha, WI (2 hr. / 98 miles)

    Passengers 3-7, 30-31, 54, 65-71
    4:15 pm to 6:15 pm


    Leg 6IN: Bloomington, IL to Crawfordsville, IL (2 hr. / 124 miles)
    Passengers 1-2
    2:20 pm to 4:20 pm

    Leg 7IN: Crawfordsville, IL to Kokomo, IN (1 hr. 25 min. / 69 miles)
    Passengers 1-2
    4:30 pm to 5:55 pm CST TIME CHANGES TO EST – ADD ONE HOUR

* Contact Judy Kirkpatrick at if you want to help. I think I’m gonna do this one.

* Some of the pups who need your help

How can we say no to this?

- Posted by Rich Miller   16 Comments      

Protected: SUBSCRIBERS ONLY - “Right to work” update

Wednesday, May 13, 2015

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- Posted by Rich Miller   Comments Off      

Kirk already running cable ads

Wednesday, May 13, 2015

* I just got this from the folks at Comcast…

Kirk for Senate
Mark Kirk, GOP Incumbent US Senator from Illinois
Agency: Mentzer Media, DC
Total Order: $135,170
5/14 – 6/6/15
:60 spots
Networks: CNN, FXNC, MNBC
All dayparts bought
5170 / Chicago Interconnect

Attempting to get the spot. Watch this space.

…Adding… The Kirk campaign says it won’t be distributing the TV ad until tonight.

- Posted by Rich Miller   10 Comments      

Another day, another dodge

Wednesday, May 13, 2015

* I’ve tried two or three times over the past week to get Speaker Madigan to talk about why he is not voting on bills this year. No luck, except he joked in agreement last week when I suggested that part of it was to mess with my head. Reporters asked him about it today…

I’m most certainly confused as well.

- Posted by Rich Miller   26 Comments      

Hype versus reality

Wednesday, May 13, 2015

* I’ve seen this very same argument made over and over in recent weeks. Rep. Jeanne Ives, for instance, brought it up during an appearance this week on “Chicago Tonight,” and the Illinois Policy Institute has continually harped on it. Here’s another one from Michael Lucci at the Illinois Policy Institute. Emphasis added

Though the [Illinois Supreme Court] justices pointed to more tax revenue as the answer, recent history proves tax hikes cannot fix Illinois’ pension problem. In 2011, the General Assembly raised income taxes on every household by a staggering 67 percent, bringing in an additional $31 billion in tax revenue that largely went to pension contributions over the next four years. Despite an additional $7.5 billion per year in additional funding, the state’s pension liabilities continued to skyrocket, increasing by $7.2 billion in 2011, then by $11.5 billion in 2012, then by $6 billion in 2013 and $10.5 billion in 2014. The state staggered along with billions more in borrowing and unpaid bills.

For the four years from 2011-2014, during which income-tax hikes brought in an additional $31 billion in revenue for pensions and the Standard & Poor’s 500 index rose for a net gain of 64 percent, the state’s total unfunded pension liability still rose by a staggering $35 billion. These are the makings of a completely broken system.

The essential argument is, the tax hike didn’t work. It doesn’t matter how much money you throw at it, the pension crisis is unsolvable because the unfunded liability continues to rise.

But the important issue for policy-makers and budget-drafters isn’t really the unfunded liability. It’s how much the state has to pay every year to keep up with former Gov. Jim Edgar’s pension “ramp” schedule.

* Even so, let’s look at why the unfunded liability has risen so much. COGFA took a gander back in February

Yikes. What the heck is going on here?

* Read on

Chart 1 is based upon calculations using the market value of assets for all years, including FY 2014. The full effects of the large investment losses during FY 2009 and investment gains for FY 2011 are therefore reflected in the bars for these years. These extremely large investment losses are the main reason for the significant jump in unfunded liabilities during FY 2009. The asset smoothing approach, required by Public Act 96-0043, only recognizes 20% of the FY 2009 investment losses during the current year. Chart 1 above recognizes 100% of the FY 2009 investment losses in FY 2009, and is therefore a much more realistic representation of the retirement systems’ true financial condition. In FY 2013, the market value of investment returns were above the actuarially-assumed rate for all systems. This helped control the growth of unfunded liabilities to a certain degree, however they still rose primarily due to insufficient contributions made by the State.

* And

In anticipation of the June 30, 2014 actuarial valuations, the State Universities Retirement System (SURS), the State Employees’ Retirement System (SERS), and the Teachers’ Retirement System (TRS) all voted to reduce their assumed rates of investment return as per a recommendation by the State Actuary. On April 8, 2014, SERS voted to reduce their assumed rate of investment return (ROI) from 7.75% to 7.25% as recommended, with SURS following suit on June 13, 2014. TRS did not receive a specific rate recommendation from the State Actuary but voted to change its ROI assumption from 8.0% to 7.5% on June 24, 2014. Although investment performance far exceeded actuarial expectations in FY 2014, the rate of investment return assumption changes helped contribute heavily to an increase in total accrued liability, and hence, the significant increase in unfunded liability of $7.1 billion in FY 2014.

* Most of the FY 14 jump in unfunded liability was due to those changes to assumed rates of investment return

Despite the fact that the funds had great real-life returns

During FY 2014 the total unfunded liabilities utilizing the actuarial value of assets increased to $111.2 billion from $100.5 billion in FY 2013. This equates an increase in unfunded liabilities of 10.6 % over FY 2013, due primarily to actuarially insufficient State contribution amounts and the lingering effects of the investment losses caused by the 2008 financial crisis. In FY 2014, market value investment returns for all five State systems were above the actuariallyassumed rates of return, as shown below:

    • TRS- 17.2%
    • SERS- 17.5%
    • SURS- 18.2%
    • JRS- 16.8%
    • GARS- 16.3%

* But

While all systems earned positive returns on a market value basis, the asset smoothing approach, required by Public Act 96-0043, only recognizes 20% of the FY 2014 investment returns. FY 2013 was the last fiscal year that investment losses from the 2008 financial crisis were “smoothed” in the retirement systems’ annual actuarial valuations. With negative returns in the double-digits no longer being recognized, the investment gains of the last five years are now subject to smoothing. This has resulted in a cumulative market value of assets that is now higher than the actuarial value of assets, and therefore the funded ratio using the market value of assets is considerably higher than the funded ratio using the actuarial (smoothed) value of assets

So, a Great Recession accounting gimmick is backfiring on us.

* OK, now on to employer contributions

The largest factor was the insufficient employer contributions which caused a $38.7 billion unfunded increase [out of $92.47 billion] during the period under review [start of Edgar ramp in FY 1996 through FY 2014] . Changes in actuarial assumptions; including the changes of interest rate assumptions in FY 2014, caused an additional increase of $19.8 billion

And, as anyone who knows anything about the Edgar ramp understands, those insufficient employer contributions were a feature, not a bug. The ramp put off the problem into the future, which is now.

* But the Edgar ramp will pretty much level out for the next few years, and then the state will see a payment decrease in 2020 when the Quinn pension borrowing is paid off

And, of course, we could just change the ramp, do another obligation bond and lower the targeted funding percentage. That would increases state costs in the long run, but it would take immediate pressure off of us now.

Without revenues from the expired tax hike, which even the Policy Institute admits went to the pension funds, this is a huge problem. With the revenues, it’s a manageable problem.

Unless somebody can come up with a magical solution that can pass muster with the Illinois Supreme Court, however, it’s time we start working on a practical fix while ignoring the doomsday prophets who claim nothing can be done.

- Posted by Rich Miller   87 Comments      

AP and Chicago Tribune - Study: Exelon subsidy would cost $1.6B over 5 years

Wednesday, May 13, 2015

[The following is a paid advertisement.]

“I never did give them hell. I just told the truth, and they thought it was hell.”

    - President Harry S. Truman

“A plan to financially reward Exelon Corp. for producing no-carbon energy and potentially save three Illinois nuclear plants from closure would cost ratepayers $1.6 billion over five years and strain budgets for financially strapped businesses and municipal governments, a study released Tuesday found.” - Associated Press, 4/21/15

By applying legislative mandates in SB 1585 / HB 3293 to historical data on Illinois electric costs and consumption, the Kestler Energy Consulting study simply calculated how much of a rate hike Exelon’s legislation would impose on families, businesses and local governments statewide.

Chicago Tribune: “Exelon-backed legislation could cost ratepayers $1.6B, study says”

Businesses and governments can learn how much the bailout would cost them at

Just say no to the Exelon bailout. Vote no on SB1585/HB3293.

BEST Coalition is a 501C4 nonprofit group of dozens of business, consumer and government groups, as well as large and small businesses. Visit

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Putting a “human face” on tort reform

Wednesday, May 13, 2015

* Trib

For the second time in as many weeks, Democratic House Speaker Michael Madigan summoned the entire Illinois House for a daylong hearing that put the spotlight on business-friendly measures sought by Republican Gov. Bruce Rauner.

Rauner has joined the national push for what’s known in political circles as tort reform — setting geographic limits on lawsuits to stop trial lawyers from shopping for venues, restricting medical expense calculations to include amounts paid rather than billed, and allowing defendants to spread their liability to other parties. The idea is to limit multimillion-dollar legal judgments in civil lawsuits.

Madigan’s hearing put a human face on what those changes would mean, with lawmakers hearing testimony from nearly a dozen victims of medical malpractice and corporate negligence who told stories of botched diagnoses, mishandled pregnancies and a deadly road collision. […]

Noticeably excluded from the hearing were representatives from the business community, who were left to air their views at a sparsely attended news conference in a basement room at the Capitol.

“There are two sides to civil justice reform, not just what you’re seeing up on the House floor today,” said Todd Maisch, president of the Illinois Chamber of Commerce. “Hopefully, we’ll get, I’ll get, a chance to go ahead and make our case to the House and the full legislature in support of the governor’s agenda.”

* Illinois Public Radio

Rauner, a Republican, also wants a constitutional amendment in 2018 capping what he broadly phrases “unreasonable damages.”

Elizabeth Sauter is the widow of state police trooper James Sauter, who was in his squad car on the shoulder of I-294 when a truck driver — who’d logged too many hours behind the wheel — fell asleep. The semi crossed over lanes of traffic, and caused a fiery crash.

“Anyone thinking about voting yes to a bill that would put a cap on civil wrongful death lawsuits in the state of Illinois would also be voting yes to killing more innocent civilians,” Elizabeth Sauter told members of the House. “Putting a cap on penalizing these companies just further encourages them to make careless decisions and continue unsafe practices. Putting a cap on these lawsuits mean you care more about big businesses than you do the citizens that you represent.”

Sauter says the $10.8 million settlement she was awarded a year ago shouldn’t be considered “winning the lottery.” Sauter says it was never about money; she says he’s using it to help pay for a state police memorial park in Springfield. Sauter also says the money is being used to care for her deceased husband’s family and to create a scholarship at his high school. She says she also is on the board of The Chicago 100 Club — an organization that helps families of first responders killed in the line of duty.

* AP

Jennifer Hill of Huntley told lawmakers doctors delayed performing a C-section during the birth of her oldest son, Ryan, which she said led to profound brain damage. The jury in her family’s civil suit awarded millions, money the mother of three says will ensure her son’s health care is managed.

“The verdict has secured Ryan’s future,” Hill said.

But Indiana resident Crystal Bobbitt, who said her daughter suffers from cerebral palsy, received less than 10 percent of $15 million a jury awarded her family in their malpractice case. She said those responsible for injuring her daughter should pay for her care and that she would rather not have to rely on Medicaid and other sources.

John Pastuovic of the Illinois Civil Justice League, which argues that too much litigation hurts the business environment, said Illinois has become a magnet for plaintiff attorneys across the country because of the “lawsuit-friendly courts.” A report from the group found disparities in case filing and verdict totals between Cook and five southern Illinois counties versus the rest of the state.

* React from Gov. Rauner’s office…

“Illinois has one of the worst lawsuit climates in the country, and reform is essential to address the shortcomings of current laws so we can begin to grow the economy. Reforms are needed to stop venue shopping, clarify liability and to repeal the jury compensation law passed during last year’s veto session. The governor is pleased to see lawmakers discussing reforms to restore sanity in our courts.”

I’m not sure what Rauner saw yesterday, but that wasn’t what happened.

Even so, it’s a sign that the governor isn’t letting this stuff get under his skin.

- Posted by Rich Miller   21 Comments      

*** LIVE *** Session coverage

Wednesday, May 13, 2015

* Follow along with ScribbleLive

- Posted by Rich Miller   Comments Off      

Stop the satellite TV tax

Wednesday, May 13, 2015

[The following is a paid advertisement.]

The cable industry is asking lawmakers to place a NEW 5% tax on satellite TV service. The satellite tax is not about fairness, equity or parity – it’s a tax increase on the 1.3 million Illinois families and businesses who subscribe to satellite TV.

Satellite Tax Will Hurt Illinois Families and Small Businesses

    • Satellite TV subscribers will see their monthly bills go up 5%.
    • This tax will impact every bar, restaurant and hotel that subscribes to satellite TV service, which will translate into higher prices, decreased revenues, and fewer jobs.
    • Rural Illinois has no choice: In many parts of Illinois, cable refuses to provide TV service to rural communities. Satellite TV is their only option.

Satellite Tax Is Not About Parity or Fairness

    • Cable’s claim that this discriminatory tax is justified because satellite TV doesn’t pay local franchise fees could not be further from the truth. Cable pays those fees to local towns and cities in exchange for the right to bury cables in the public rights of way—a right that cable companies value in the tens of billions of dollars in their SEC filings.
    • Satellite companies don’t pay franchise fees for one simple reason: We use satellites—unlike cable, we don’t need to dig up streets and sidewalks to deliver our TV service.
    • Making satellite subscribers pay franchise fees—or, in this case, an equivalent amount in taxes—would be like taxing the air. It’s no different than making airline passengers pay a fee for laying railroad tracks. They don’t use; they shouldn’t have to pay for it.

Tell Your Lawmakers to Stop The Satellite TV Tax

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Lynch responds to Trib bashing

Wednesday, May 13, 2015

* From a recent Tribune editorial

A supervisor at the Illinois Department of Revenue made a mistake last fall. She decided to help out with a backlog of tax returns in her department.

For that, the American Federation of State, County and Municipal Employees filed a grievance. The union claimed the supervisor violated a clause in AFSCME’s contract by doing “bargaining unit” work. The case went to a mediator. The union demanded overtime pay for the employees whose work the supervisor performed. Both sides settled instead on comp time for the workers. The supervisor got verbally reprimanded by the union.

Welcome to Illinois, where trying to be productive gets penalized.

When Gov. Bruce Rauner talks about the grip public employee unions hold over state government, this is an example of what he means. The demands in AFSCME’s 196-page contract often controvert the interests of taxpayers. From overtime costs to seniority rules to the endless grievance process, public employee unions can be an enormous drain on state resources. Unions resist progress, efficiency, modernization — anything that threatens a union job.

That’s one reason why Rauner kicked off his first month as governor with a clenched fist toward organized labor. It can be tough to streamline state government alongside obstructionists.

* AFSCME Council 31 Executive Director Roberta Lynch responded via a letter to the editor….

…It doesn’t take much thought, however, to realize that our union’s action was squarely in the public interest, keeping costs down by preventing managers from wasting time on work assigned to lower-paid employees. If the agency doesn’t have enough clerical workers, it should hire more instead of overpaying at a management rate.

In reality, public-service workers in state government are helpers and problem-solvers. Every day American Federation of State, County and Municipal Employees members protect kids, care for the elderly and vulnerable, respond to emergencies and keep their communities safe. By having a voice at work through our union, they are able to advocate for the tools and resources they need to do their jobs. The union contract also ensures fair treatment, protects against political interference and helps to limit outsourcing deals that place private profit ahead of the public good.

We want to work with anyone of goodwill to address the state’s real challenges, constructively, together. But that requires mutual respect, something lacking in both the governor’s incessant pummeling of union members and your editorial’s misleading complaints.


- Posted by Rich Miller   106 Comments      

Cullerton floats revised pension reform proposal

Wednesday, May 13, 2015

* Erickson

Senate President John Cullerton is dusting off an old pension overhaul plan he says has a chance to beat the constitutional odds.

Four days after the Illinois Supreme Court ruled that a 2013 plan to reduce pension benefits for state workers was unconstitutional, the Democrat from Chicago made a pitch for his proposal to a special committee working behind closed doors in the governor’s office. […]

But, in addition to being on the table during the meetings being sponsored by Gov. Bruce Rauner, members of the House Personnel and Pensions Committee could publicly discuss the Cullerton plan as early as Wednesday.

Cullerton’s plan seeks to avoid the constitutional ban on reducing pension benefits by offering employees a choice. For example, a worker could choose between having future raises count toward their pension or freezing their current salary and then receiving a 3 percent compounded cost-of-living adjustment once they retire.

* React in the Trib

Cullerton estimates his latest plan could save the state about $1 billion a year, a fraction of the pension system’s overall debt, but savings he says could be spent elsewhere. Cullerton pitched the idea Tuesday before a group of lawmakers and Rauner officials examining the pension idea, but overall support remains unclear.

“We’ll keep the Supreme Court decision close by,” said Madigan spokesman Steve Brown. “It’s an important topic that can’t be ignored.”

A Rauner spokesman declined to comment specifically on Cullerton’s proposal, saying “the governor has his own pension plan but recognizes that he will need to work with the General Assembly to fix our pension problems, which he believes should include a constitutional referendum.” […]

Sen. Bill Brady, R-Bloomington, said Rauner’s plan would bring about more savings than the one put forth by Cullerton but said lawmakers may need to pass several plans in order to see which would withstand any legal tests. “You can do both and see which survives, if that’s possible,” said Brady, who sits on the pension overhaul group.

It’s not being immediately rejected, which is a good sign.

* Kerry Lester...

However, despite the state’s dire financial condition serving as an impetus to find consensus on a new pension overhaul plan, some lawmakers warn that a solution should not be hastily agreed upon.

“Time is of the essence, but working too fast and therefore getting it wrong is not good time management,” said state Sen. Daniel Biss, an Evanston Democrat and a leading negotiator of the original plan. “There are a lot of limitations placed on the legislature by this ruling. We need to think carefully about what the options are, what rules can be utilized and design something accordingly.”

* Finke

[Rep. Elaine Nekritz] said there may be legal questions about Cullerton’s plan as well.

“There are certainly lawyers who say that the opinion precludes that plan,” Nekritz said. “I think it is something we will need more discussion on.”

The House Personnel and Pensions Committee will hold a hearing on the Cullerton plan on Wednesday. Nekritz, the committee chair, said the meeting was scheduled before last week’s ruling.

* Related…

* Zorn: Lay off the layoff idea for state workers

- Posted by Rich Miller   116 Comments      

Did the City wait too long?

Wednesday, May 13, 2015

* Former AFSCME Council 31 Executive Director Henry Bayer still regularly blasts out e-mails to his friends and acquaintances. Here’s his latest missive…

Did the City wait too long to raise revenue? Shouldn’t it have moved before getting to junk bond status? CFO made it quite clear long ago what needed to be done, just chose not to do it

* From a January 10, 2014 Chicago Policy Review interview of now-former Chicago CFO Lois Scott

“The reason that we have received the rating agency downgrades that we have is not because we can’t afford our pensions, but rather because we haven’t funded them. Chicago is a highly levered organization, and the issue that the rating agencies and investors have with Chicago is that we can resolve our issues, we just have chosen not to.

“What we know, however, is that the minute we pull the lever of increasing revenue, our ability to drive reform in the system will be gone. The city needs to implement reforms that will promote long-term health, even if it means short-term stress and discomfort for people in the financial community about the fact that we haven’t increased revenues at this point. We are balancing revenues with reforms. That’s what you saw with the recent Chicago Park District reform proposal. When we enact reforms, we increase revenues. When the employees increase what they pay into the system, the state increases its contribution multiplier.”

I have enormous respect for Lois Scott, and that seems like a reasonable approach. But the process dragged out far too long, so Moody’s eventually lost patience and now the City is in junk bond territory.

- Posted by Rich Miller   25 Comments      

Credit Unions – Providing “Peace of Mind” to Members

Wednesday, May 13, 2015

[The following is a paid advertisement.]

Credit unions exist to help people, not to make a profit. With a goal of serving all members well, including those of modest means, every member counts. For nearly 3 million Illinois consumers, credit unions represent the bright spot in their daily lives — the one place that has helped them through difficult financial times… went the extra mile to make their financial dreams a reality… and other circumstances for which members are forever grateful. At United Community Credit Union in Quincy, hearing those member testimonials have become a way of life:

“If it wasn’t for the credit union, we wouldn’t have had the chance to buy our first home.

“I especially enjoy how willing you are to work with people on loans!”

“I can’t put in words how much you have helped me!”

“We love the credit union!”

As not-for-profit financial cooperatives, credit unions truly live out their ‘People Helping People” philosophy every day. And at United Community, they are “Community Minded, Just like You!” Members know their credit union will be there during the good times and can provide “peace of mind” when times get tough.

Building families. Building bright financial futures. That’s the credit union difference.

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Second bananas replacing Meat Loaf at State Fair

Wednesday, May 13, 2015

* From an Illinois State Fair press release…

Following the announcement that Meat Loaf was canceling his Illinois State Fair performance, fairgoers took to the phones. Calls came into the Illinois State Fair office with people pleading with state fair staffers to the keep Styx and Tesla on the Grandstand schedule. Ask and you shall receive! Keeping with our theme of Growing Illinois, the Illinois State Fair is pleased to announce Styx, a band with Illinois ties, and Tesla will remain on the Grandstand lineup.

Styx is entering their second decade of averaging over 100 shows a year, and fans repeatedly remark about the bands energy which is apparent in each and every time they take the stage.

Tesla is touring once again with four of its five original band members. Known for their down to earth, melodic tunes, this multi-platinum-selling rock band is once again wowing crowds worldwide. The group is best known for songs like, “What You Give,” and “Love Song,” and credits their loyal fan base (and their younger generations) for their years of success.

Tickets for the Wednesday, August 19thshow will go on sale via Ticketmaster on May 16th. Tickets will be available for purchase at the Illinois State Fair office the following Monday, May 18th.

Tickets to see Styx and Tesla will range from $35 for VIP tickets to $13 for Tier 3 track tickets.

Well, at least now we know the musical tastes of the new State Fair manager.

I mean, really, I saw Styx way back in 1978. It was a decent show I suppose, but I only went because Thin Lizzy was the opening act

* And speaking of Thin Lizzy

Looking back it seems so strange

- Posted by Rich Miller   37 Comments      

Moody’s to Chicago: You’re junk!

Wednesday, May 13, 2015

* From Moody’s

Rating Action: Moody’s downgrades Chicago, IL to Ba1, affecting $8.9B of GO, sales, and motor fuel tax debt; outlook negative

Global Credit Research - 12 May 2015

Also downgrades senior and second lien water bonds to Baa1 and Baa2 and downgrades senior and second lien sewer bonds to Baa2 and Baa3, affecting $3.8B; outlook negative

New York, May 12, 2015 — Moody’s Investors Service has downgraded to Ba1 from Baa2 the rating on the City of Chicago, IL’s $8.1 billion of outstanding general obligation (GO) debt; $542 million of outstanding sales tax revenue debt; and $268 million of outstanding and authorized motor fuel tax revenue debt.

We have also downgraded the following ratings on debt secured by net revenues of Chicago’s water and sewer enterprises: to Baa1 from A2 on $38 million of outstanding senior lien water revenue bonds; to Baa2 from A3 on $2.3 billion of outstanding second lien water revenue bonds; to Baa2 from A3 on $35 million of outstanding senior lien sewer revenue bonds; and to Baa3 from Baa1 on $1.5 billion of outstanding second lien sewer revenue bonds.

We have also downgraded to Ba2 from Baa3 the rating on $6 million of outstanding MetraMarket Certificates of Participation (COPs), Series 2010A, and to Ba3 from Ba1 the rating on $3 million of outstanding Fullerton/Milwaukee COPs, Series 2011A.

Finally, we have affirmed the Speculative Grade (SG) short term rating on $112 million of Chicago’s outstanding Sales Tax Revenue Refunding Bonds, Series 2002.

The outlook on all long term ratings remains negative.


The Ba1 rating on Chicago’s GO debt incorporates expected growth in the city’s highly elevated unfunded pension liabilities. Based on the Illinois Supreme Court’s May 8 overturning of the statute that governs the State of Illinois’ (A3 negative) pensions, we believe that the city’s options for curbing growth in its own unfunded pension liabilities have narrowed considerably. Whether or not the current statutes that govern Chicago’s pension plans stand, we expect the costs of servicing Chicago’s unfunded liabilities will grow, placing significant strain on the city’s financial operations absent commensurate growth in revenue and/or reductions in other expenditures. The magnitude of the budget adjustments that will be required of the city are significant. Furthermore, Chicago’s tax base is highly leveraged by the debt and unfunded pension obligations of the city, as well as those of overlapping governments. Balanced against the city’s many credit challenges are several attributes, the greatest of which is the city’s broad legal authority to tap into its large and diverse tax base for increased revenue.

The Ba1 rating on Chicago’s sales tax and motor fuel tax debt reflects the absence of legal segregation of pledged revenue from the general operations of the city. This lack of separation caps the ratings at the city’s GO rating, despite sound maximum annual debt service (MADS) coverage provided by pledged revenue.

The Baa1 rating on Chicago’s senior lien water revenue bonds reflects the water enterprise’s large and diverse service area that extends well beyond city boundaries; the Chicago City Council’s unlimited rate setting authority; and sound debt service coverage. These credit attributes are balanced against challenges including an elevated debt ratio and the water system’s status as an enterprise of the city, a connection which we believe links the system’s credit profile to that of the city’s GO. The Baa2 rating on the city’s second lien water revenue bonds is based on the credit characteristics of the senior lien water revenue bonds and the subordinate lien pledge of net water system revenue. The Baa2 rating on Chicago’s senior lien sewer revenue bonds reflects similar credit characteristics as the senior lien water revenue bonds and also incorporates the sewer system’s relatively smaller service area, the boundaries of which are conterminous with those of the city. The Baa3 rating on the city’s second lien sewer revenue bonds is based on the credit characteristics of the senior lien sewer revenue bonds and the subordinate pledge of net sewer system revenue.

The Ba2 rating on the MetraMarket COPs, Series 2010A, reflects the tax increment financing (TIF) district’s moderate equalized assessed valuations (EAV) and sound debt service coverage provided by pledged revenue. The Ba3 rating on the Fullerton/Milwaukee COPs, Series 2011A, reflects the TIF district’s small size, negative trend in incremental EAV growth, and the COPs’ subordinate lien on pledged TIF revenue, which is first used to pay debt service on certain series of the city’s GO debt. The ratings on both series of COPs incorporate the relationship of the TIFs with the city’s GO credit profile.

The SG short term rating on the Sales Tax Revenue Refunding Bonds, Series 2002, is based on the credit fundamentals inherent in the city’s Ba1 long term sales tax rating and the conditional liquidity support associated with the bonds.


Our negative outlook reflects our expectation that Chicago’s credit challenges will continue, both in the near term and in the long term. Immediate credit challenges include potential draws on liquidity associated with rating triggers embedded in the city’s letters of credit (LOCs), standby bond purchase agreement (SBPA), lines of credit, direct bank loans, and swaps. The current rating actions give the counterparties of these transactions the option to immediately demand up to $2.2 billion in accelerated principal and accrued interest and associated termination fees. Of this amount, the GO and sales tax revenue rating actions trigger $1.7 billion of potential payments; the second lien water revenue rating action triggers $99 million of potential payments; and the second lien sewer revenue rating action triggers $355 million of potential payments.

The negative outlook also reflects our expectation that Chicago’s credit quality will weaken as unfunded liabilities of the Municipal, Laborer, Police, and Fire pension plans grow and exert increased pressure on the city’s operating budget. In the near term, Chicago’s administration must comply with a 179% contribution increase to its Police and Fire pension plans in 2016.

Developments involving the Municipal and Laborer plans present longer term risks to the city’s credit profile. In our opinion, the Illinois Supreme Court’s May 8 ruling raises the risk that the statute governing Chicago’s Municipal and Laborer pension plans will eventually be overturned. If so, the city’s obligation to fund the Municipal and Laborer plans would likely revert to that which existed before the statute took effect in January 2015. Under the prior funding requirements, the city’s pension contributions were well below the plans’ actuarial requirements. Therefore, if the Municipal and Laborer statute is overturned, and no other adjustments are made to plan revenues and/or expenditures, we believe the plans will continue to extinguish assets to pay annuitants. As the plans move toward insolvency, the city’s credit standing will continue to deteriorate, given our view that the state may eventually implement legislation forcing Chicago to pay annuitants directly. Annuitant payments would materially exceed current employer contribution levels. In our view, Chicago’s ability and willingness to fund annuitant payments, should they be required of the city, is uncertain.

WHAT COULD MAKE THE RATINGS GO UP (or revise the outlook to stable)

    - City or state actions that halt the growth of the city’s unfunded pension liabilities

    - Revenue growth and/or reductions in other operating expenditures that enable the city to accommodate increased pension costs into annual operating budgets

    - Demonstrated legal separation of pledged revenue from the city’s general operations (sales tax and motor fuel tax ratings)


    - Determination by a court of law that the current statute governing the city’s Municipal and Laborer plans is unconstitutional

    - Continued growth in the debt and/or unfunded pension liabilities of the city and/or overlapping governments

    - Narrowing of the city’s fund balances and liquidity


The City of Chicago, with a 2010 US Census population of 2.7 million, is the largest city in the State of Illinois and the third most populous city in the US. Chicago’s water enterprise serves an estimated population of 5.3 million in northeast Illinois consisting of residents of the city as well as 125 suburban communities. Chicago’s sewer enterprise serves 2.7 million city residents.


Chicago’s GO bonds are secured by a pledge to levy a tax unlimited as to rate and amount to pay debt service. The city’s outstanding CP bank bonds are secured by the city’s GO full faith and credit pledge but do not benefit from a dedicated levy.

Chicago’s sales tax revenue bonds are secured by a senior lien pledge on both receipts of the city’s local home rule sales tax revenue and the city’s share of state sales tax collections.

Chicago’s motor fuel tax revenue bonds are secured by a senior lien pledge on 75% of the city’s annual allocation of state motor fuel taxes as well as additional revenues pledged by the city that primarily consist of dock licensing fees collected from tour boats operating on the Chicago River.

Chicago’s senior lien water revenue bonds are secured by a senior lien on the net revenue of the city’s water enterprise. Chicago’s second lien water revenue bonds are secured by a second lien on the net revenue of the city’s water enterprise. Chicago’s senior lien sewer revenue bonds are secured by a senior lien on the net revenue of the city’s sewer enterprise. Chicago’s second lien sewer revenue bonds are secured by a second lien on the net revenue of the city’s sewer enterprise.

The MetraMarket COPs, Series 2010A, and the Fullerton/Milwaukee COPs, Series 2011A, are secured by a pledge of payments made by the city on developers’ notes to finance redevelopment in the respective TIF districts. Neither series of COPs is an obligation of the City of Chicago. The city’s payments on the respective development notes have been assigned to the trustees by the developers as security on the COPs.

One thing the city needs to do right away is separate those special funds from the general operating fund. But that’s only a small step.

* React from Mayor Rahm Emanuel

“While Chicago’s financial crisis is very real and at our doorsteps, today’s irresponsible decision by Moody’s to downgrade the City’s credit by two steps goes far beyond that reality. Their decision was driven solely by the overturning of a state pension bill that did not include Chicago’s pension reform, yet they did not downgrade the State of Illinois. Moody’s is out of step with other rating agencies – by as many as six steps – as they refuse to acknowledge Chicago’s growing economy, progress we have made on our legacy financial liabilities, balancing four budgets without raising property taxes while adding to our reserves, securing pension reforms for two of the City’s four funds to preserve and protect retirements for 61,000 employees that were previously in danger, and the progress we are now making with our partners in labor at the other two city funds. This action by Moody’s is not only premature, but it is irresponsible to play politics with Chicago’s financial future by pushing the City to increase taxes on residents without reform. I am committed to focus on both reform and revenue to address Chicago’s fiscal crisis, and we will continue our work in Springfield and with our partners in labor to ensure we will always meet our obligations, protect the retirements of our workforce, continue to deliver vital city services, while protecting our taxpayers.”

“(I)t is irresponsible to play politics with Chicago’s financial future by pushing the City to increase taxes on residents without reform.” Heh. Sounds a bit like the governor.

* Tribune

One analyst was sympathetic to the mayor’s argument that Moody’s acted too quickly, but noted the message being sent about Emanuel’s leadership as he enters a second term.

“A cut below investment grade is a major statement, implying that there is material risk to the city not paying its bondholders on time or in full,” said Matt Fabian, a managing partner at Municipal Market Analytics. “To have gone there without waiting to see the city’s approach to the current budget gap, or whether or not they will raise revenues is clear demonstration of a lack of confidence in city management. In other words, they see little reason to wait because they expect little in the way of a management response.” […]

Some financial analysts said they were caught off guard by the downgrade, which came less than three months after another significant Moody’s downgrade of Chicago’s debt. Those analysts said they weren’t sure if the Moody’s action would increase city borrowing costs, given that other agencies have given the city higher ratings and the city’s already paying relatively high interest rates.

“The downgrade is a surprise to me, because I see no reason to give up on management yet,” Fabian said. “There is still time for them to formulate a plan and, over time, fix their budget issues.”

* Reuters

Clint Krislov, the attorney representing retired city workers in one of two lawsuits against the Chicago pension reform law, said he will ask a judge on Wednesday for a summary judgment invalidating the law. […]

The latest Moody’s downgrade gives banks that provide credit support and interest-rate swaps the right to demand a total of $2.2 billion in accelerated principal, interest and termination payments from Chicago, according to Moody’s.

Chicago debt has been trading at huge spreads over the municipal market’s triple-A benchmark yield scale. Chicago’s descent into junk status could obligate managers of some high-quality muni funds to dump the city’s bonds, warned Dan Heckman, senior fixed-income strategist at U.S. Bank Wealth Management.

“We would continue to urge investors to have an extreme level of caution here,” Heckman said.

If Krislov is successful, we could see a stampede.

* Sun-Times

Budget Director Alex Holt said Tuesday the city plans to forge ahead with that plan, even though “swaps that overlay variable rate debt” could be called in immediately as a result of the double-downgrade.

“If they do, there will be termination payments we’ll need to make. But we were going to take out $200 million in variable rate debt anyway over the course of this year,” Holt said.

As for the city’s ability to borrow to fund capital projects, Holt said, “We think the capital markets will continue to be available to us. We think investors still have confidence in the city.”

Yeah, but some institutional investors won’t be able to buy those bonds now.

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