Rauner’s turn to be triangulated
Thursday, Jul 23, 2015 - Posted by Rich Miller
* House Speaker Michael Madigan doesn’t exactly love Forrest Claypool, so when the mayor hired him as his chief of staff things got a bit icy on the 3rd Floor. Eileen Mitchell was Madigan’s Issues (campaign) Director and, once in that organization, always in that organization…
Mayor Rahm Emanuel on Thursday named Eileen Mitchell as his next Chief of Staff. Ms. Mitchell currently serves as Vice President of External Affairs for AT&T Illinois. Since 2003, she has been responsible for leading the company’s initiatives in public policy, community relations and charitable giving in Illinois. She previously served as Issues Director and Special Assistant to the Speaker in the office of the Illinois Speaker of the House of Representatives in Springfield.
“During her time in public service and the private sector, Eileen has demonstrated a unique ability to help pass important legislation and manage complicated issues – a critical skill set for any Chief of Staff,” said Mayor Emanuel. “Eileen has a passion for public service that will benefit the residents of Chicago as we continue our work to right the City’s financial ship while creating jobs and spurring neighborhood development.”
* Sun-Times…
Republican Gov. Bruce Rauner has been trying to isolate Madigan — and drive a wedge between the mayor and the Speaker — to resolve a state budget stalemate over Rauner’s demands for pro-business, anti-union reforms.
The mayor’s decision to put Mitchell in City Hall’s hottest seat only serves to underscore the futility of Rauner’s strategy.
Yep.
Eileen is also a lifelong White Sox fan. Good people.
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Anti-BDS bill signed into law
Thursday, Jul 23, 2015 - Posted by Rich Miller
* Press release…
A measure that adds companies that boycott Israel to the state’s existing divestiture requirements was signed by Governor Rauner today, making Illinois the first state in the country to enact anti-BDS legislation.
Sponsored by state Rep. Sara Feigenholtz (D-Chicago), Senate Bill 1761 creates the Illinois Investment Policy Board, which will maintain a list of restricted companies for the state-funded pension systems and Illinois State Board of Investments (ISBI).
“Israel is one of our closest allies, and we have a responsibility to protect the economic wellbeing of all of our friends,” said Feigenholtz. “This law ensures that our state invests in a way that is aligned with our interests and moral obligations.”
The pension systems and ISBI could not invest in any restricted company, which includes companies that boycott Israel or have relations with Iran or Sudan. Pension systems currently investing in companies on the restricted list would be required to divest. Divestment is not required if the total investment in a restricted company is less than 0.5% of the market value of all assets of the pension system or ISBI.
“With every investment we’re making a statement about the kind of society we want to live in,” said Feigenholtz. “This legislation uses taxpayer dollars in a conscious, responsible manner and makes it clear that Illinois stands with Israel.”
…Adding… From the governor’s office…
Flanked by bipartisan legislators, Jewish community leaders and the Consul General of Israel to the Midwest, Gov. Bruce Rauner today signed historic legislation making Illinois the first state in America to divest its public pension funds from companies that participate in the Boycott, Sanctions, Divestment (BDS) movement targeting Israel.
The Illinois law is the first state-based measure to take specific concrete action against boycotts of Israel. The legislation, which was modeled after past measures relating to Iran and Sudan, requires state pension systems to terminate direct investment in companies that boycott Israel and issue warnings to fund managers when such companies are held indirectly inside larger portfolios. The statute defines “boycotting Israel” as “engaging in actions that are politically motivated and are intended to penalize, inflict economic harm on, or otherwise limit commercial relations with the State of Israel or companies based in the State of Israel or in territories controlled by the State of Israel.”
“We need to stand up to anti-Semitism whenever and wherever we see it,” Gov. Rauner said. “This historic legislation is an important first step in the fight against boycotts of Israel and I hope other states move quickly to follow our lead. I want to thank Sen. Silverstein, Rep. Feigenholtz and all the sponsors of this legislation for working with our Administration to take a stand against BDS.”
The anti-BDS measure, SB 1761, was initiated by Gov. Rauner and sponsored by Sen. Ira Silverstein (D-Chicago) and Rep. Sara Feigenholtz (D-Chicago). It passed 49-0 in the Senate and 102-0 in the House.
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Remove your tinfoil hat, please
Thursday, Jul 23, 2015 - Posted by Rich Miller
* WUIS…
As a candidate last year, Rauner talked a lot about term limits. Now that he’s governor, he’s pushing for lawmakers to sign on. The governor often repeats his goal of removing power from what he calls the “political class” — in particular from, House Speaker Michael Madigan whom he charges “controls” legislators.
The governor’s also calling for changes to redistricting, the process for determining what neighborhoods will comprise a legislative district.
Madigan, a Democrat, says Rauner’s plans are pure politics.
“They were Republican Party campaign issues, designed to be used in Republican campaigns. They haven’t changed. That’s the purpose of the Rauner advocacy of those two issues: Republican Party campaign purposes.”
* Today…
The biggest contribution reported today was $100K from Sam Zell, a bigtime Rauner backer.
But Robert Judelson was also listed as contributing $20K. Judelson and his company have given to Republicans over the years, but also to some Democrats, including the Illinois Senate Democrats.
* It would be nice if, for once, the Democrats could finally get themselves out in front of a “reform” idea. I get why they don’t want to do term limits. But remap reform is long overdue in this state. Calling it a Republican plot is just plain silly.
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* From an AFSCME Council 31 handout, scanned and then pasted below. Emphasis added for obvious reasons…
After more than six months at the bargaining table, the Rauner Administration continues to hold to its demands that would drive down the standard of living of state employees and drastically weaken union rights. While there has been agreement reached on a few issues, the Administration still has a large number of proposals on the table, including:
• No wage increases or step increases for the entire term of the contract
• Eliminate longevity pay (including for all those currently receiving it)
• Eliminate maximum security pay and reduce call-back pay, stand-by pay and roll call pay
• Restructure the group health plan to drastically shift costs to employees-with employees paying as much as 500% more for out-of-pocket costs.
• Increase dental premiums by more than 100%.
• Eliminate all restrictions on subcontracting or personal service contracts.
• Require all employees hired before July 1, 2011 to “voluntarily” agree to reduce their pension benefits to the Tier 2 level.
• Eliminate the Upward Mobility Program in its entirety, as well as a other forms of tuition reimbursement, continuing education, and licensure reimbursement.
• Eliminate any restrictions on forced overtime.
The AFSCME Bargaining Committee has made very clear that state employees will not accept the drastic decline in family income and union rights that these demands represent.
When the union contract expired on June 30, AFSCME proposed that the contract terms be extended until negotiations on a new contract are completed. The Administration refused, agreeing only to sign a so-called “tolling agreement” which keeps the contract’s terms and conditions in place until July 31st. As that date approaches, AFSCME has again proposed that the expired contract be extended. Management has not responded.
AFSCME members want to reach a fair contract settlement at the bargaining table-as we’ve been abl e to do with governors of both political parties for nearly forty years now. For us, a strike is a last resort, a step we wi ll take only if absolutel y necessary to protect our rights and our standard of living.
That’s why we are working to enact SB 1229, legislation that would provide an alternative to a strike or lockout by relying on an ind e pendent arbitrator to resolve outstanding contract issues. We’re calling our legislators to urge them to stand with us and pledge to vote to override the governor’s anticipated veto of this important measure.
But we also know that the Rauner Administration still appears to be planning to try to force a strike or lockout. The Union has received information that the Administration is recruiting retirees to come back to work on contract; hiring temporary workers to ’shadow’ state employees and learn their jobs; and trying to get the Illinois National Guard to perform state employees’ work.
So we have to be prepared as well. AFSCME local unions are beginning now to develop their own plans should a strike be necessary-and many AFSCME members are beginning to plan financially too.
Even in the midst of the current budget uncertainty, state employees are on the job providing the vital services on which citizens depend. We go the extra mile–and then some–to keep Illinois working. Coming together through our union over many years, we’ve gained the fairness and respect that are essential to getting the job done even under the most difficult circumstances. Now we’re at a crossroads. If the Rauner Administration values state employees and the work we do, then we can continue to work constructively toward a fair contract settlement without any disruption in state services. But if the Administration is hostile to state employees and seeks confrontation, then we will be prepared to respond.
This much we know for certain-If we continue to stand together, united and determined, we can preserve the decent standard of living and fair treatment on the job that are so essential to us all.
Click here to read more details.
* One other item of note…
AFSCME does not have a fund that pays out a stipend when employees are locked out or on strike. However, the Union has a Solidarity Fund that can help in grave emergencies. The Fund will coordinate assistance from other unions that want to support locked out or striking workers and will also work with community organizations that provide emergency assistance.
No strike fund.
Sheesh.
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A truly historic year
Thursday, Jul 23, 2015 - Posted by Rich Miller
* Charlie Wheeler has today’s must-read…
As Illinois government slogged into uncharted territory — weeks into a new fiscal year with no budget agreement in sight — one might be tempted to wonder whether the warring camps ever will find common ground to agree on much of anything.
Looking beyond the harsh partisan rhetoric and trashed civility that so far has been the norm for legislative overtime, though, across-the-aisle cooperation and give-and-take compromise produced significant results earlier on, before the budget stalemate.
The most notable achievements came in the area of criminal justice, including a far-reaching measure proponents said would become a national model for law enforcement reform. A product of intense, months-long negotiations among police groups, community leaders and civil rights organizations like the NAACP: Senate Bill 1304 cleared both chambers by wide margins — 107 to 3 in the House, 45 to 5, with 6 present votes, in the Senate. As of press time, the legislation awaited action by Gov. Rauner.
Go read the whole thing, please.
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Rauner’s GOTV gift cards
Thursday, Jul 23, 2015 - Posted by Rich Miller
* From the governor’s most recent quarterly campaign report, filed under “Other receipts”…
From the campaign’s January, 2015 D-2…
* The Tribune explains what’s going on…
In the critical days leading up to Republican Gov. Bruce Rauner’s election last fall, his campaign handed out thousands of $25, $50 and $75 gift cards to people helping get the vote out for him. […]
Asked about the gift cards by the Chicago Tribune, the Rauner campaign said in an email that it bought 5,145 of them in denominations of $25, $50 and $75. A source close to Rauner’s 2014 bid said the campaign office was “awash” in the debit cards, some of which were then passed along to township and county GOP operations. The cards were distributed to people who worked on phone banks as well as those who walked streets to canvass for votes, the campaign said. […]
But the Rauner campaign has not disclosed who got the prepaid gift cards, including anyone who may have received multiple cards worth $150 or more — the threshold in state campaign finance law for reporting compensation to workers. […]
“If they’re giving them a debit card with value on it, that’s payment to these people. You can’t get around it,” said Noble, now senior counsel at the Washington-based Campaign Legal Center, a nonpartisan, nonprofit group involved in campaign finance legal issues. […]
“The campaign reported the gift cards correctly,” Sarah Clamp, a spokeswoman for Rauner’s campaign, said in an email statement. “The campaign is only responsible for reporting when the campaign makes an expenditure and did this by reporting the purchase of gift cards.”
The Rauner folks say this wasn’t compensation, just “property.”
I don’t hugely care about the reporting issue.
* What does interest me is that they used those cards in their GOTV efforts. According to the story, they were handing them out willy nilly, including to township parties. And they had so many that they returned 20 percent of them for refunds.
Your thoughts?
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* Illinois’ Gender Balanced Appointments Act…
All appointments to boards, commissions, committees and councils of the State created by the laws of this State and after the effective date of this Act shall be gender balanced to the extent possible and to the extent that appointees are qualified to serve on those boards, commissions, committees and councils. If gender balance is not possible, then appointments shall provide for significant representation of both sexes to boards, commissions, committees and councils governed by this Act and Section 5-510 of the Departments of State Government Law (20 ILCS 5/5-510). If there are multiple appointing authorities for a board, commission, committee, or council, they shall each strive to achieve gender balance in their appointments.
Appointments made in accordance with this Act should be made in a manner that makes a good faith attempt to seek gender balance based on the numbers of each gender belonging to the group from which appointments are made.
* From Rob Sherman News “Brought to you by: Rob Sherman Airplanes - Builder Assist Center for builders of Zenith Kit Airplanes”…
Rob Sherman is challenging illegal sex discrimination by Illinois Governor Bruce Rauner.
The Governor has chosen to nominate only men to the Illinois Toll Highway Authority Board of Directors and to the Secure Choice Savings Board in violation of Illinois’ mandatory Gender Balanced Appointment Act, which requires that all Boards and Commissions be gender balanced to the greatest extent possible.
Rauner has nominated 6 men to the Tollway Board, thus creating an all-male 11-person board.
Yes, that Rob Sherman.
* Anyway, he managed to get the attention of a national feminist group…
The National Council of Women’s Organizations, a coalition of over 200 national, regional and local organizations, has joined Rob Sherman in opposing illegal sex discrimination by Illinois Governor Bruce Rauner in his nominations to State government boards. […]
In a letter that was intended to be dated yesterday, July 21, 2015, but which was dated June 21st due to an inadvertent typo, Martha Burk, the NCWO’s director of their sex discrimination project, urged “that these nominations be withdrawn, as they are in violation of Illinois law as well as basic principles of fairness and good government. Our organization stands ready to publicly oppose any nominations that do not adhere to both the letter and spirit of the law.”
I will be speaking at tomorrow’s (July 23, 2015) Tollway Board meeting, at which time I will ask that the illegally nominated Tollway Directors submit a letter to Governor Rauner, asking that their nominations be withdrawn so that the Governor can present a gender balanced set of nominees to the Illinois Senate for confirmation. I will tell the Board that their nominations are doomed, anyway, because the Senate is dominated by the Democratic Party, which is known for embracing and advocating for diversity. There is no chance that the Democratic Senate or the Democratic controlled Senate Executive Appointments Committee will confirm a Republican slate of nominees that illegally contains zero gender diversity.
The National Council of Women’s Organizations is most famous for its protests against the Augusta National Golf Club’s all-male policy.
* Anyway, the Tribune picked up on the story today…
The National Council of Women’s Organizations is charging that Rauner is violating the Illinois Gender Balanced Appointments Act. The 1991 law is aimed at equalizing representation on state panels “with a good faith attempt to seek gender balance.” It makes no mention of consequences for failing to comply.
The organization urged the nominations be withdrawn. The nominations “are in violation of Illinois law as well as basic principles of fairness and good governance,” the group said in a letter to Rauner.
Rauner administration response…
“Fifty percent of the members the governor has appointed or reappointed to the Tollway board are minorities, so to insinuate that the administration hasn’t made diversity a priority is misguided,” Kelly said Wednesday.
Rauner’s appointments bring the number of African-Americans on the Tollway board to two. Two members have Hispanic surnames.
Diversity isn’t the issue here, it’s the state statute on women.
We’ll see if this gets any legs. If past is prologue, Sherman may do something to step on the story and screw it up.
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Rauner won’t reveal who he’s talking to
Thursday, Jul 23, 2015 - Posted by Rich Miller
* Mick Dumke has had no luck obtaining Gov. Bruce Rauner’s unredacted meeting calendar. He has history and the law on his side, however…
Five years ago I went through a similar battle with lawyers for the city of Chicago over schedules for then-mayor Richard M. Daley. They argued that releasing them would be too “burdensome” and could endanger the mayor.
But the attorney general’s office eventually rejected those claims and determined that the mayor’s schedule and meeting calendar were indeed public records. “The public has a legitimate interest in learning of its Mayor’s public meetings held in City Hall,” wrote an assistant attorney general.
I cited the ruling in a lawsuit against the city over its FOIA denials. City officials now cough up Mayor Rahm Emanuel’s schedule when asked. […]
And last month I requested a list of private-sector law firms hired to do state work—that is, firms paid with taxpayer money. McClernon refused to provide that information either, saying it too was protected by attorney-client privilege.
Is the governor really claiming that the public doesn’t have the right to know how taxpayer funds are spent? Public contracts are among the classic and longstanding examples of “information regarding the affairs of government” meant to be disclosed under the Illinois FOIA.
* And there was a follow up this week…
During a press conference Tuesday, he said that he and his administration are as open with the public as they need to be, and he doubled down on his claim that he has the right to conceal who has access to his office.
“It’s very clear where I’m going, and we do much more than other elected officials and much more than is required by law,” Rauner told reporters in Springfield. (You can see the video here; these comments start at the 8:40 mark).
The governor made the statement after Illinois Public Radio reporter Amanda Vinicky asked him about my story detailing his efforts to keep his daily meeting schedules a secret. The calendars involve state business, but Rauner doesn’t think the public should get to see whom he’s consulting, even weeks or months after the meetings occur.
“Why are you blocking so much of your public schedule?” Vinicky asked.
Rauner smiled and shook his head. “Boy, I don’t agree with your supposition,” he said.
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Memory lane
Thursday, Jul 23, 2015 - Posted by Rich Miller
* October 17, 2014, just days before the November election…
“Pushing any specific labor regulation is not my priority at all,” Rauner said.
* Brian Mackey takes a look at this quote and more in his story: Governor’s Top Priorities? Message, Message, Message…
In an interview, my public radio colleague Amanda Vinicky asked Rauner when he changed his mind about that. Rauner pointed to early campaign statements: “We talked about it all through. Now, I don’t remember a particular timing of emphasis. Obviously there a lot of issues to talk about.”
From a politician as disciplined about adhering to his talking points as Rauner, that answer required a bit too much credulity. That’s particularly true because the “timing of emphasis” was so clear: Before he won the Republican primary, Rauner was rabidly anti-union in his rhetoric, so frequently villifying “government union bosses” that his repetition of the phrase approached the realm of farce. Then, after he won the primary, Rauner was virtually silent on the subject until after the general election. You say timing of emphasis, I say obfuscation, let’s call the whole thing off.
Go read the whole thing.
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Candidates start to emerge
Thursday, Jul 23, 2015 - Posted by Rich Miller
* Paul Schimpf has the Rauner/SGOP backing in this race…
Murphysboro attorney Sharee Langenstein threw her hat into the ring to run for the 58th Senate District seat.
That seat is currently held by Sen. Dave Luechtefeld, R-Okawville, who announced he is not seeking re-election in 2016.
Langenstein, a constitutional law attorney specializing in First Amendment rights, ran unsuccessfully for Jackson County State’s Attorney in 2012. She also specializes in elections and government relations. […]
Langenstein is a registered lobbyist, whose clients include Family PAC and Eagle Forum.
Also having expressed an interest in the seat are former Lt. Gov. Sheila Simon of Carbondale and former attorney general candidate Paul Schimpf, a former military lawyer, of Waterloo.
* Bernie…
A Springfield native and assistant state’s attorney in Sangamon County is considering a run for state Senate against incumbent SAM McCANN, R-Plainview, in the 50th Senate District.
“Several people have approached me about running for state Senate,” said STEVE McCLURE, 31. “It is something that I am seriously considering, and I’ve reached out to a lot of really intelligent people that are more politically astute than I am to get their advice.” He said he doesn’t expect to make a decision until at least September.
McClure says he’s a conservative Republican. He has history and political science degrees from Arizona State University, and he was vice chairman of the College Republicans in Arizona. He also was president of Valparaiso University Law School Republicans when he attended there, graduating in 2011.
He has a master’s degree in political studies from the University of Illinois Springfield, was a legislative intern and worked on the appropriations staff for Senate Republicans.
Sangamon County types have never really gotten over the fact that they’re represented by a non-Sangamon County type.
But McCann could very well be vulnerable in a GOP primary. It’ll be interesting to see how the union issue plays out here as well. McCann started off as a tea partier, but has moved to the left on some economic issues.
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The math doesn’t add up
Thursday, Jul 23, 2015 - Posted by Rich Miller
* From Gov. Bruce Rauner’s State of the State Address…
Empowerment means giving governments the ability to lower costs by reforming project labor agreements and prevailing wage requirements that block true competitive bidding. These requirements can increase the costs of taxpayer funded construction projects by 20 percent or more.
As we all know by now, Gov. Rauner has since made getting rid of the prevailing wage a key demand of his “Turnaround Agenda.”
* But…
That’s not mathematically possible, according to Frank Manzo of the Illinois Economic Policy Institute.
He points out that wages only account for 20 to 25 percent of the cost of public construction projects, so reducing costs by that amount solely through wage cuts would require paying workers something close to zero.
The range may be more like 20-30 percent, but point taken.
* There are also studies showing that low wage states have higher total costs. For instance…
While the hourly wage rate for the high wage states was 73 percent more than the low wage, labor hours were 35 percent less and total cost per mile was 4 percent less. Again, not only was hourly wage rate a poor predictor of total highway cost per mile, but there were cost per mile savings associated with construction in the average high wage state
And…
Economic research that is summarized in this report indicates that the use of skilled construction labor is very sensitive to wage rates. As wages decrease, less productive employees replace more skilled craft workers. Manual labor is also used instead of productivity - enhancing capital equipment. In a comparison of states with “ weak ” or no prevailing wage laws to states that have “average” or “strong” laws (like Michigan’s), value added per construction worker is 11 percent higher in the states with effective wage policies. .
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Another pressure point removed
Thursday, Jul 23, 2015 - Posted by Rich Miller
* Interesting…
As of yesterday, about 60 percent of the state budget was being spent without specific FY16 appropriations. This’ll add another big chunk.
…Adding… Background from WBEZ…
Some hospitals serving low-income communities are in imminent danger of closing, according to Shriver Center’s court filing. The filing further states that If those hospitals close because of the state’s failure to pay bills, it would violate a decade-old court order. The Shriver lawyers argued that order requires the state to complete Medicaid payments to hospitals in Cook County, even though Gov. Bruce Rauner and lawmakers have not approved a spending plan authorizing the state to reimburse those hospitals.
The court filing specifically named The New Roseland Community Hospital. It said delayed payments “will force Roseland Community Hospital, in less than a week, to begin the process of closing its hospital.” Roseland Community Hospital is dependent on the Medicaid program for 71 percent of its funding and it anticipates a $2 million shortfall in July and a $2.4 million shortfall in August, according to the Shriver Center’s filing.
Roseland Hospital said in a written statement that it has enough funding to make payroll on July 31st and it will be implementing a voluntary furlough, layoffs and service line suspensions before August 1.
“The families of those who are going to die because of this political budget impasse will not give a damn about party lines,” said Tim Egan, New Roseland President and CEO, in an emailed statement. “Just as bullets don’t recognize political boundaries, grieving families, critically injured patients and an abandoned community will not care about Republicans or Democrats. They will just know that the State of Illinois failed them. And the State of Illinois will have failed the New Roseland Hospital, its patients and its employees over a political stalemate.”
The Illinois Department of Healthcare and Family Services is a named defendant in the lawsuit. John Hoffman, a spokesperson for the department, said in response to the filing, “While we believe this motion incorrectly interprets the consent decree, this does highlight the importance of the General Assembly passing a balanced budget so our most vulnerable citizens will know they can continue receiving the care they need in the long run.”
…Adding More… Illinois Hospital Association…
“IHA and the hospital community appreciate the action taken by the Shriver Center seeking to assure access to health care services for Illinoisans who are insured by the Medicaid program – children, seniors, families and persons with disabilities. Access to health care should not be a bargaining chip in the budget debates in Springfield. Just like state employees, physicians, nurses, pharmacists, aides and other health care workers need to be paid during the budget impasse. IHA continues to urge legislators on both sides of the aisle and the Governor to find a reasonable and workable state budget solution so Illinoisans are able to receive the health care they need.”
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It’s a feature, not a bug
Thursday, Jul 23, 2015 - Posted by Rich Miller
* Jim Nowlan…
To get an assessment of how the fight is playing out, I meandered from my home office in Toulon down the main drag to Connie’s Country Kitchen, the fount of all wisdom.
The farmers start coming into Connie’s about 5 a.m., sitting communally at the big back table near the kitchen. The ladies come in later and sit at an equally big table in a small side room.
I asked about 20 at the two tables what they thought of the budget stalemate in Springfield. After making sure they wouldn’t be quoted, the caffeine addicts opened up.
One in this Republican-oriented café said he thought, “Rauner is trying to do what’s right.” Then came the torrent of general criticisms:
“I think we should fire the whole bunch,” and “They need to act like grownups,” and “We should put them in a room, lock the doors and not let them out ’til they solve this thing,” and, “I wish they could just get along.”
Then the comment that got everyone’s heads nodding in agreement: “They’re both to blame. I’m disgusted with the whole lot!”
* Jim believes that the situation isn’t yet “ripe” and that people will eventually settle on who won and who lost.
But I think his admittedly small sample is saying what Speaker Madigan has been shooting for all along.
Speaker Madigan knows he’s grossly unpopular and that most editorial boards, columnists, etc. will pile on him. And he likely has no illusions that he can increase his popularity in any way during this mess.
* So the object from the beginning, I believe, has been to drag Gov. Rauner down with him.
And I think Rauner understands this, which is why he’s fought so hard to project a good guy image in this battle. He’s the guy pushing to get state employees paid. He’s the reasonable guy who can work with Mayor Emanuel and Senate President Cullerton. He’s the guy in the white hat (literally) pushing popular “reforms” like term limits. And don’t forget that his TV ads featured him in a highly positive light.
According to Jim’s informal little coffee klatch focus group, the governor’s strategy may not be working. But I have yet to see any credible polling on this matter, so we’ll have to wait and see.
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* The Senate President referenced this early July Standard & Poors report yesterday. It’s worth a read…
Because the state has a backlog of payments (estimated at $4.25 billion as of May), it is paying its vendors several months in arrears. Illinois’ ability to continue making payments owed from fiscal 2015 will delay the cash flow impact on vendors, at least while these vendors continue to collect back payments from fiscal 2015. However, to the extent that budget adoption is delayed, the state will continue to build on its payables as payments that require appropriations cannot be made.
Furthermore, protracted budget negotiations could have a detrimental effect on the state’s economy due to reduced and delayed spending and investment. Illinois already ranks 48th in year-over-year change in personal income in first-quarter 2015, 49th in year-over-year population change as of July 1, 2014, and 38th in year-over-year employment change as of May 2015.
I made that same economic impact argument in my recent Crain’s Chicago Business column.
* Stating the obvious…
In our view, the absence of a budget, while not affecting debt service, reflects a failure in the fiscal policymaking process. The legislature is looking for the governor to propose tax increases to close the budgetary gap. Gov. Rauner has indicated his willingness to increase income taxes and expand the sales tax base to tax services, but only in exchange for several reforms he is proposing and which haven’t garnered significant support from the legislature. These measures include worker’s compensation and tort reform, and a property tax freeze tied to limits on prevailing wage requirements and collective bargaining. We have yet to see either side exhibit flexibility on their core policy objectives.
* A September pressure point…
And while an extended legislative session can sometimes result in an improved structural alignment or adoption of substantive policy reforms, it can also lead states to resort to budgetary gimmicks. On May 8 we placed our Illinois ratings, including our ‘A-‘ GO rating on the state, on CreditWatch with negative implications. In our view, the outcome of the fiscal 2016 budget deliberations will be pivotal to the state’s credit trajectory given the magnitude of structural imbalance, pension spending burden, and overall liquidity.
As we indicated in our CreditWatch, we could take a rating action within the next two months, even in the absence of an adopted budget if, in our view, there is limited progress in budget deliberations or if credit fundamentals weaken.
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