* I often think JB Pritzker plays things way too safe, but I gotta give the candidate credit for even doing this event. Emotions can get so raw that one wrong move could’ve knocked this thing horribly off the rails. I was a bit skeptical when I first saw the video, and it appears he had some help keeping things on track, but I also thought he handled himself well, particularly when he pointed to his history of involvement with the Center on Wrongful Convictions and other programs and causes. NBC 5 was there…
MARY ANN AHERN: Emotions raw today as these mothers met with Democratic candidate for governor J.B. Pritzker. They’ve lost children to gun violence or in a police shooting, moving on for their other children, far from easy.
MOTHER 2: What the effect is afterwards? Nah, nah. Nightmares, he can’t even go in his Daddy’s room ’cause he hears stuff.
MARY ANN AHERN: They explain there are few resources for them to turn to.
MOTHER 3: We have to come up with the monies to pay for these funerals. The state doesn’t help us. You know? Cause if we go to the Attorney General or they are involved with a crime they don’t help. The city doesn’t help. So we are left all alone.
MARY ANN AHERN: Pritzker notes these mothers might have found help but the state’s budget crisis depleted social service agencies.
J.B. PRITZKER: Agencies closed. Things that people really need on the ground closed. Violence prevention programs closed. And so now we got to rebuild all of that.
MOTHER 2: I wasn’t expecting to do this.
MARY ANN AHERN: Frustrations are high. As they say they have heard campaign promises from politicians before.
* Black Lives Matter posted the video on Facebook. It’s worth a look…
- Posted by Rich Miller
|Question of the day
Friday, Jul 20, 2018
* Dusty Rhodes…
Speaking on behalf of the Illinois Education Association — the state’s largest teachers’ union — Bridget Shanahan says more than 1,000 teachers have received emails from MyPayMySay, and they aren’t buying it.
“How could you honestly think a legal team that was out to destroy workers’ rights is actually going to stand up for you in the face of adversity in the workplace?” she asks.
MyPayMySay is funded by a conservative think-tank called The Mackinac Center for Public Policy. Based in Michigan, the non-profit filed one of the three amicus briefs cited by the high court in its Janus decision. Mackinac is a member of the State Policy Network, a national consortium of conservative think-tanks (Illinois Policy Institute is among them) whose funders include the Koch brothers and the Walton family.
School districts across the state have received Freedom of Information requests seeking teacher records, Shanahan says. Some requests come from a post office box in Austin, Texas, and another comes from Prairie State Wire, the umbrella group comprising more than two dozen publications funded by conservative radio talk show host Dan Proft. Proft’s Liberty Principles political action committee has received major donations from Gov. Bruce Rauner.
“They are looking for our members’ personal information,” Shanahan says. “Some of them are asking for the amount that our members pay in dues. They are asking for personal contact information for our members — home address, home email address, phone numbers. They’re looking for ways to contact our members.”
Personal information about some public employees, like cops and prison workers, are already shielded from public disclosure in Illinois.
* The Question: Should the state’s Freedom of Information Act be amended to specifically shield all public employees’ personal contact information from disclosure? Take the poll and then explain your answer in comments, please.
- Posted by Rich Miller
Friday, Jul 20, 2018
* WXEF Radio…
The Thelma Keller Convention Center ballrooms were jampacked Thursday night to hear retired Marine and FOX News contributor Oliver North.
North, the new president of the National Rifle Association, was in town in part on behalf of the local Republican state representative candidates, but also to promote traditional values in the face of a changing world. […]
About a half-dozen protesters were on hand ahead of Thursday’s event. Local police present in case of any problems said there was a “civil discourse” between protesters and attendees…the attendees saying they appreciated the protesters’ differing point of view, the protesters shaking hands with the attendees.
* The official caption under the accompanying photograph is “Oliver North w/officials From Effingham, Iroquois, Christian And Mercer Counties Who Have Passed Firearms Sanctuary Legislation. 33 Counties Have Now Passed Such Legislation”…
* President of NRA visits Effingham
- Posted by Rich Miller
* Well, this is a first…
Illinois Democrats Celebrate the 170th Anniversary of the Seneca Falls Convention
SPRINGFIELD, Ill. — Michael J. Madigan, chairman of the Democratic Party of Illinois, released the following statement celebrating the anniversary of the Seneca Falls Convention, the influential first women’s rights convention:
“170 years ago, Lucretia Mott and Elizabeth Cady Stanton brought together more than 200 women and 40 men to awaken the long fight for women’s right to vote. Today we celebrate these trailblazers and their tireless work to advance the rights of women. Now more than ever it is crucial that we protect everyone’s right to the voting booth and continue the fight for equality. Determined persistence over generations from countless women is what has produced progress.
“Just this year in a historic vote Illinois became the 37th state in the country to ratify the Equal Rights Amendment to the Constitution to formally declare that equality of rights will not be denied by the U.S. or any state on account of sex.
“Illinois Democrats recognize that the fight for true equality is far from over and we are committed to honoring this legacy and progress.”
Headline explained here.
- Posted by Rich Miller
* From Moody’s…
Moody’s Investors Service has revised the outlook on the State of Illinois to stable from negative, while affirming the Baa3 ratings assigned to both the state’s general obligation and Build Illinois sales tax revenue bonds. Bonds issued by the Metropolitan Pier and Exposition Authority and by the state under its Civic Center program, which together account for $3 billion of debt, have been affirmed at Ba1.
The state’s GO rating incorporates substantial credit strengths - sovereign capacity to raise revenue and reduce expenditures, and a broad, diversified tax base - as well as increasing challenges from fixed costs attributable to employee pension and retirement health benefits. Build Illinois bonds’ allocation of sales tax revenue, despite providing substantial coverage of debt service, is not sufficiently separated from the state’s general operating needs to carry a higher rating than the GO, under the Special Tax methodology.
The Met Pier and Civic Center program bonds carry ratings below the state’s GO because, in both cases, annual legislative appropriation is required for payment of debt service. A legal structure with additional strengths - enhanced incentives to appropriate — in both cases offsets the arguably less essential nature of the financed facilities.
The state’s stable outlook is in line with expectations that, despite continued under-funding of pension liabilities, any credit deterioration in the next two years will not affect the state’s finances, economy, or overall liabilities to an extent sufficient to warrant a lower rating.
This view is supported by the continuing budgetary benefits of the state’s recent income tax increase, and near-term fiscal risks that remain manageable.
FACTORS THAT COULD LEAD TO AN UPGRADE
-Adoption of a comprehensive plan to address pension liabilities
- Progress in lowering the bill backlog that does not depend on long-term borrowing
- Measures to achieve sustainable budget balance
FACTORS THAT COULD LEAD TO A DOWNGRADE
- Renewed growth in payment backlog that reverses progress achieved through financing
- Reduction in pension contributions to provide fiscal relief
- Substantial assumption of debt or pension liabilities accrued by local governments
Baa3 is one notch above junk status.
I gave subscribers my take on this earlier today, so I’ll just let it stand at that.
* Frankly, the lack of an actual upgrade with a mere change in “outlook” from negative to stable is about the least Moody’s could do. In fact, it is the least Moody’s could do. I suppose that’s better than nothing, particularly considering the last three years, but check out all the “Huzzah, we’re not gonna die today” headlines…
* Moody’s has some good news for Illinois’ credit
* Moody’s has some good news on Illinois credit
* Moody’s rating outlook revision pulls Illinois from edge of junk
* Illinois gets some breathing room from Moody’s
There’s almost no way that Moody’s could’ve put us in junk territory after last year’s tax hike. And now that we have an agreed budget, a “stable” outlook is justified.
So, let’s not start dancing in the streets. A lot of tough choices and pain remain in our future.
- Posted by Rich Miller
* What Proft is seeking to do here is allow his independent expenditure PAC to operate like a regular political action committee after the contribution caps are lifted. Press release…
Today Liberty Principles PAC filed a lawsuit asking a federal district court to immediately suspend Illinois’ campaign contribution limits for ”independent expenditure” groups in state races in which contribution limits have been eliminated for individuals and other groups.
Liberty Principles PAC is an independent expenditure committee run by radio host, political consultant and political activist Dan Proft. Liberty Principles PAC promotes free-market principles and supports candidates for office who share those principles. It works to oppose candidates who do not share free-market principles.
Illinois campaign finance laws limit how much money individuals and organizations may contribute to political candidates. But once certain fundraising thresholds are met in a given race, the campaign contribution limits are eliminated for all types of donors in that race – except “independent expenditure committees,” such as Liberty Principles PAC. Groups such as Liberty Principles PAC remain forbidden from giving to candidates or even talking with candidates about their plans. This means that individuals, corporations, unions and political parties can give unlimited amounts of money to candidates and coordinate with those candidates’ campaigns, but groups such as Liberty Principles PAC cannot.
The lawsuit filed today, Dan Proft, et al. v. Lisa Madigan, et al., asks the court to suspend the campaign contribution limits that restrict independent expenditure committees in races where limits have been eliminated for individuals and all other groups.
“This lawsuit seeks to level the playing field in Illinois elections,” said Patrick Hughes, president of the Liberty Justice Center, which is representing Liberty Principles PAC. “If individuals and every other kind of group are allowed to make unlimited contributions and speak freely with the candidates they support, then independent groups like Liberty Principles PAC should be allowed to do so as well.”
The lawsuit was filed in the United States District Court for the Northern District of Illinois.
* From the lawsuit…
Injury to Plaintiffs
Plaintiff Dan Proft is a political activist who associates with others for the purpose of communicating with the public about political ideas and candidates for state elective office in Illinois.
Mr. Proft would like to raise unlimited funds from like-minded individuals and organizations and, in turn, spend unlimited amounts on communications (such as television and radio advertisements and literature) supporting and opposing candidates for state elective offices.
Mr. Proft also would like to be able to communicate and coordinate freely with the candidates he supports because he believes that doing so would make his communications (and the candidates’ communications) to the public more effective.
The Code, however, does not allow Mr. Proft to do all these things he wishes to do.
* First Amendment claim…
The United States Supreme Court has recognized only one government interest that can justify campaign-finance restrictions: the prevention of actual or apparent quid pro quo corruption. See Wis. Right to Life State PAC v. Barland, 664 F.3d 139, 155 (7th Cir. 2011).
Therefore, in any challenge to campaign-finance restrictions, the government must show, at a minimum, that its restrictions are narrowly tailored to prevent actual or apparent quid pro quo corruption. See McCutcheon v. FEC, 134 S.Ct. 1434, 1441, 1456-57 (2014).
* Equal Protection claim…
No corruption-related difference between independent expenditure committees and other donors justifies banning coordinated expenditures by independent expenditure committees while allowing unlimited coordinated expenditures (and contributions) by the others.
…Adding… From a close pal…
So he wants the right to break caps through independent expenditures, and then say “oh, someone broke the caps so now I can coordinate”
He makes a good point.
- Posted by Rich Miller
* Yesterday, Larry Sabato moved the Illinois governor’s race from lean to likely Democratic. Today is Charlie Cook’s turn…
When it comes to rating races, it has long been our practice not to move extremely vulnerable incumbents into the other party’s territory until well into the election cycle – generally around Labor Day. Even then, they rarely move further than Lean. There are lots of good reasons for this policy, most of which grew out of lessons learned the hard way.
Republican Gov. Bruce Rauner has held the dubious distinction of being the most vulnerable incumbent of the cycle, and despite much heckling, has been sitting in the Toss Up column. But, the race recently hit a tipping point that moves it into the Lean Democrat column.
There are lots of reasons not to jump the gun on what amounts to waving the white flag on an incumbent’s chances for re-election. Some of them include the power of incumbency, the competence of an opponent’s campaign, and the increasing unreliability of public polls. All three factors collided in 2016 when Republican U.S. Sen. Ron Johnson of Wisconsin was seeking re-election and former Democratic U.S. Sen. Russ Feingold, whom Johnson had defeated six years earlier, was running to avenge his loss. There were 56 general election polls in that race, and Johnson was only ahead in four of them. Given those statistics, Johnson was moved into the Lean Democratic column pretty early in 2016. But, 15 of the 56 surveys went into the field between October 15 and Election Day, and Johnson was (barely) ahead in three of them. Johnson won the contest, 50 percent to 47 percent for Feingold and 3 percent for a Libertarian candidate. Of course, it wasn’t until after the election when Democratic operatives shredded Feingold’s campaign, holding it up as an example of malpractice. We put Johnson back into the Toss Up column 10 days before the election and no amount of second-guessing will resolve the question of whether Johnson should ever have left the Toss Up column.
One factor guaranteed to hurt an incumbent locked in a close race is the presence of one or more third-party candidates on the ballot. Again in 2016, GOP incumbent U.S. Sen. Kelly Ayotte of New Hampshire lost her re-election bid to Democrat Maggie Hassan by just 1,017 votes. But, there were two other candidates on the ballot running to Ayotte’s right; they combined for 30,339 votes, costing Ayotte the election. There are similar stories from statewide races in Montana in 2006 where Libertarians cost Republicans elections, and multiple elections in New Mexico in which Green Party candidates undercut Democratic nominees. It is rare when third party and independent candidates are truly competitive. More often than not they simply serve as spoilers for one party or the other.
It is the presence of a Conservative Party candidate and a Libertarian on the ballot that has created the latest obstacle to re-election for Rauner, and is the tipping point that moves the race into the Lean Democrat column. Rauner has had a very difficult tenure. First, he is a Republican in a very blue state, and while he is relatively moderate, he hasn’t enjoyed the same levels of popularity and success that fellow GOP Govs. Charlie Baker of Massachusetts or Larry Hogan of Maryland have experienced. His job ratings have sunk under the weight of a long-running battle (and its aftermath) over the budget, and adversarial relationships with state House Speaker Mike Madigan and Chicago Mayor Rahm Emanuel, who have proven adept at robbing Rauner of victories.
There’s more, including reliance on what I would consider some dubious polling, but whatevs. A pundit consensus is most definitely building.
- Posted by Rich Miller
Friday, Jul 20, 2018
* Rep. Allen Skillicorn was recently interviewed on Berkowitz’s show…
Jeff Berkowitz: What percentage of those 340,000 Republicans who voted for Jeanne Ives in the Republican Primary in March will vote for Bruce Rauner in November [instead of staying home, skipping the Governor’s slot on their ballot or voting for someone else].
Rep. Allen Skillicorn: …55%
BerKowitz: So, he loses because similarly there is a bunch of Republicans who didn’t vote in the Republican Primary who have similar preferences to the Jeanne Ives’ primary voters—they also wouldn’t vote for him, so if the Governor can’t get his base up to the 85%, 90%, 95% supporting him, he can’t win in IL. [losing about 175,000 Republican votes that are usually a gimme]
Rep. Allen Skillicorn: So,there is an opportunity to grow that—
Berkowitz: Tell him, tell the Governor how to grow his vote among the base Republican voters!
Rep. Skillicorn: He has to reach out to the conservative base. He has to give them something they want in terms of policies- here’s a great step-
Berkowitz: We only have a minute left in the show, so tell him!
Rep. Skillicorn: In one minute, he would advocate to take Medicaid pieces that are not federally reimbursed, so the Medicaid bills that we [IL State Government] has to pay 100% for- like taxpayer funding of abortion, things like that, the Federal Government does not match those abortion funds, those are 100% paid for by Illinois Taxpayers, if he would rescind that, help rescind that or promise to rescind that, it would get a lot of those people back to vote for him, and he has to acknowledge that the State is not all North Shore [Winnetka, Kenilworth, Wilmette, etc], that would bring a lot of those people back.
The governor’s problem is that he has to unify his party base without alienating independent voters. So, I just don’t think moving right on social issues is the way to go. The “Because… Madigan!” schtick may be tiring for some here, but it’s the single best issue Rauner has, considering his record these past few years.
* With that in mind, on to the Sun-Times…
With the general election, Rauner needs votes outside his base to win — especially since he still has not unified his right flank. The Thursday day trip [to Washington, DC] was pegged to accepting an award from the National Black Chamber of Commerce for his work helping African American companies win state contracts.
There are about 23 Illinois Black Chamber of Commerce chapters in Illinois and Rauner is well-known to the group. The event took place in the Dirksen Senate Office Building.
It looks like the Rauner campaign will peg an appeal to African-American voters in part on his procurement policies, which have been criticized by Illinois state Senate Democrats.
Republican African-American outreach has had two general purposes in Illinois: 1) Drive down black turnout a bit; and 2) Signal to suburban moderates that you’re not hostile to black people.
- Posted by Rich Miller
What if they built a railroad depot and no trains came?
That’s the situation the Quad Cities find themselves in after proposed Amtrak service between Chicago and Moline — originally expected to begin in 2016 — has been held up by the state budget impasse and other snags.
“They haven’t given us any kind of date” for completion of the project, said Ray Forsythe, Moline’s economic development director.
A $177 million federal grant that got the project rolling in 2011 has been extended to this time next year, but service is no closer to getting underway. Gov. Bruce Rauner halted funding for the project shortly into his term in 2015, blaming the state budget impasse. While funding has since been reinstated, the project is still mired in logistical problems, with track improvements required on the western end of the line between Moline and Wyanet, owned by the Iowa Interstate Railroad.
According to Forsythe, the Illinois Department of Transportation was leading the project at this point. IDOT spokesman J. Scott Speegle said the agency is working on it with the Federal Railroad Administration. […]
There’s no timeline for service to begin.
A year ago, Rich Harnish of the Midwest High Speed Rail Association blamed Rauner for the failure to get service going, telling WQAD-TV, “The reason why this project isn’t done yet is because he put it on hold when he came into office.”
- Posted by Rich Miller
* I told you earlier this week that the CEO of the Illinois Primary Health Care Association had resigned under a cloud after being accused of making racist remarks to the leader of a health care and social service agency.
The IPHCA’s chairman and legal counsel pushed back hard against Aunt Martha’s CEO Raul Garza for making the accusations against the CEO. Those two men have now resigned, along with the entire executive committee. From the new acting CEO of the Illinois Primary Health Care Association Jordan Powell…
Dear IPHCA Members,
Thank you for the frank dialogue on the challenging issues currently facing IPHCA. I have had numerous conversations over the past few days which have only solidified my commitment to leading our organization through and beyond where we are today. It is clear that to most effectively serve our members, changes must be made.
I have spoken with the Executive Committee and its members have acknowledged the need for new leadership. They have decided to resign their positions as Executive Committee members effective immediately. We will call an Assembly of Delegates meeting as soon as possible and follow the protocols outlined in our by-laws to elect a new Executive Committee which will then be seated immediately. The by-laws are attached for your review.
I assure you that we will prioritize this process. And I ask that you remain patient as we transition to a new Executive Committee in an expeditious and orderly manner.
We expect to select a meeting date, time and location by Monday, July 23 with the objective of meeting no later than Friday, August 3. We hope that this advance notice will allow all interested members plenty of time to plan their attendance.
Additionally, I have asked IPHCA counsel Bob Birndorf to step aside and will conduct a search to identify his successor. In the interim, I have reached out to Hinshaw & Culbertson’s Springfield office to serve as interim legal counsel for the Association. I have worked with Hinshaw’s lawyers in my prior employment and have valued their counsel. Hinshaw will assist our association through this transition.
As indicated in my July 17 email, I plan to meet personally with each of our member organizations over the coming weeks. I want to hear from you. That feedback will be incorporated into my planning and vision for the future.
I remain confident in our staff and anticipate no changes at this time. We will require additional workplace training for all staff members and will also solicit human resources expertise to review all relevant policies and procedures.
Let me reiterate my unequivocal commitment to guiding our organization forward and to working with each of you so you may thrive and continue to passionately serve the 1.4 million Illinois residents who rely on your care.
By all accounts, Jordan is a really good guy. He also happens to be African-American, which will give that organization a much-need perspective change right now.
- Posted by Rich Miller
* Press release…
The board of trustees of both the University of Illinois and The John Marshall Law School have voted to create UIC John Marshall Law School — Chicago’s first and only public law school.
“The decision to create a public law school marks a historic day for higher education in Chicago,” said Michael Amiridis, UIC Chancellor. “It is also a historic day for UIC, which will fill a 50-year gap in its academic offerings as a comprehensive research university. Through our research and scholarship, we have celebrated and contributed to the rule of law for decades and now we open the doors of our academic community to those who teach the law and those who study the law. We look forward to welcoming the John Marshall family into UIC.”
UIC initiated informal discussions with The John Marshall Law School leadership in 2016. Subsequently, the parties determined that the transaction would be financially feasible without requiring any new state funds. At the closing, significant John Marshall assets will transfer to UIC and the University of Illinois Foundation. The law school’s real estate in the Loop will initially be leased and then transferred within five years. UIC will bear no financial obligation for the acquisition and will fully integrate the law school into UIC after the closing.
In addition to providing current and prospective students with a more affordable legal education, UIC’s acquisition of John Marshall will create opportunities for interdisciplinary courses and new joint and dual-degree programs aligned with UIC strengths in disciplines such as the health sciences, engineering and technology, urban planning and public administration, the social sciences and business. John Marshall joining UIC will also open up new possibilities for research collaborations between UIC and John Marshall faculty.
* But Inside Higher Ed notes some downsides…
Skeptics could find reason to be wary of adding a law school at this particular moment in time. The number of law students nationally has dropped in recent years, schools have slimmed down and the American Bar Association has been more active publicly as an accreditor. The John Marshall Law School — which is a distinct institution from several other similarly named law schools in the country — is no different.
The private Chicago law school enrolled more than 1,466 students in 2012-13, according to American Bar Association reports. Enrollment fell to 938 in 2016-17. Applications dropped from 2,518 to 1,681 over the same period.
Leaders at Illinois Chicago, which has more than 30,000 students, were concerned about the state of law schools generally, said Susan Poser, a former law dean at the University of Nebraska who is UIC’s provost and vice chancellor for academic affairs. UIC administrators completed extensive due diligence, taking two years before proceedings reached the point of board approval Thursday.
“What we discovered was the John Marshall Law School was hit by this downturn, as just about everybody was,” she said. But, she added, the law school leaders were “very smart in how they downsized.”
Considering that current downward trend, a good question to ask is whether the new Chicago school will pull students away from UIUC’s law school. At a time when Champaign-Urbana is already worried about how the new Discovery Partners Institute in Chicago will impact the Downstate campus, and when college students in general are expressing a preference for urban campus life, this could just add to the fretting.
- Posted by Rich Miller
* Republican Governors Association…
Despite not paying his own fair share in taxes, Illinois Democrat gubernatorial candidate J.B. Pritzker has promised an “immediate increase” in the state’s flat income tax if elected. Now, the Wall Street Journal editorial board is slamming Pritzker’s tax hike plan, saying it will do nothing to solve Illinois’ massive pension crisis.
The Wall Street Journal explains, “The solution, according to unions, is always to raise taxes. But no tax hike is ever enough because [pension] benefits keep growing faster than revenues… Yet the Democratic candidate for Governor, J.B. Pritzker, and unions are now campaigning to kill the state’s flat tax rate and raise taxes again.”
The contrast in the Illinois governor’s race could not be more clear. GOP Governor Bruce Rauner favors lowering taxes to grow the economy and reforms to fix the pension system, while J.B. Pritzker is already pledging a massive tax hike if elected. Illinoisans need tax relief, not a massive tax increase on every family.
No surprise that the WSJ editorial page would publish a missive entitled “Why Your Pension Is Doomed.” The piece was based on a Wirepoints study…
The real problem plaguing public pension funds nationwide has gone largely ignored. Most reporting usually focuses on the underfunding of state plans and blames the crises on a lack of taxpayer dollars.
But a Wirepoints analysis of 2003-2016 Pew Charitable Trust and other pension data found that it’s the uncontrolled growth in pension promises that’s actually wreaking havoc on state budgets and taxpayers alike.1 Overpromising is the true cause of many state crises. Underfunding is often just a symptom of this underlying problem.
Wirepoints found that the growth in accrued liabilities has been extreme in many states, often growing two to three times faster than the pace of their economies.2 It’s no wonder taxpayer contributions haven’t been able to keep up.
The reasons for that growth vary state to state – from bigger benefits to reductions in discount rates – but the reasons don’t matter to ordinary residents. Regardless of how or when those increases were created, it’s taxpayers that are increasingly on the hook for them.
* Also from Wirepoints…
Total promised benefits in Illinois are nearly 1,100 percent higher now than they were in 1987. In contrast, Illinois personal income – a proxy for GDP – was up just 236 percent during that 30-year period.
Illinois is the poster child for why the common narrative surrounding pensions – that crises are due to taxpayer underfunding – is false. The real problem has been the enormous growth in accrued liabilities across the nation.
* Meanwhile, the Champaign News-Gazette recently published this editorial…
Financial problems swirling around state and local pension systems across the country will be coming to a head in the next few years, and financial experts contend that Congress and the states must be prepared to address the problem.
That’s why James Spiotto, managing director at Chapman Strategic Advisors, is urging Congress to create a special federal bankruptcy court to deal with these impending bankruptcies.
In an address delivered to the Brookings Institution’s seventh annual Municipal Finance Conference, Spiotto said it’s imperative for Congress to act because states and localities won’t be able to continue to ignore the problem.
* However, Rep. Mark Batinick (R-Plainfield) sent me his pension funding idea, entitled “How to Solve the Illinois Pension Crisis And Dramatically Lower Property Taxes”…
Arguably the two biggest issues facing the State of Illinois are its unfunded pensions and high property taxes. Past misdeeds and underfunding has led to a massive unfunded pension liability. Annual required pension payments are increasing quickly. Just a few years ago our annual payment was less than $6B. This year it is almost $9B and it is scheduled to reach $20B by 2045. Every annual increase requires either a cut elsewhere in the budget, or a tax increase.
Illinoisans pay some of the highest property taxes in the nation. This has been a driver of job and population loss. It is a regressive tax that disproportionally affects the poor, unemployed, and elderly. It also hurts small business growth as they are required to pay the tax whether they are profitable or not. Manufacturers are hit extra hard as they have a large real estate footprint. That footprint comes with a large property tax bill.
This article will outline a long-term solution to address both issues.
The Center for Tax and Budget Accountability (CTBA) recently offered a solution on pensions. Their idea was to use the power of compound interest to help drive down massive pension costs in the future. Relatively small skips in pension payments, sometimes called “pension holidays”, in the past led to large-long term debt because of compound interest. Their idea was to reverse that mistake by increasing upfront payments in order to avoid more dramatic increases in the future.
The CTBA’s plan would level pension payments out over the next 25 years until we reach the required funded status. However, this plan would require the state to contribute additional funds over the next 8 years. The initial additional investment by the state would be $2.4 billion which would then slides downward to $320 million in the eighth year. Over the course of eight years additional, and significant funds, would be invested into the pension plans. In total roughly $11 billion extra would be invested quickly. The net effect of this would be that our annual pension payment would never rise above $12 billion. In fact, around the tenth year, our pension payments would actually start to decrease. One important note is that if our system was fully funding pensions in the past, our ongoing costs would only be $2 billion per year.
The CTBA recommends borrowing the additional $11 billion investment. That is where the plan can be tweaked. Borrowing another $11 billion adds additional pressure to the budget. It also does not allow us to phase in property tax relief which is part two of the plan. We need to, and can, find the additional $2.4 billion per year elsewhere.
As the additional pension payments decrease from the initial $2.4 billion, the remainder should be used to lower property taxes on a per pupil basis. So year one, $2.4 billion is going to shore up the pensions. By year nine, all $2.4 billion is going to property tax relief. For every additional dollar in state funding a school district receives, its levy will be required to drop by exactly $1. $2.4 billion is roughly $1200 per pupil. That amount would lower the property taxes where I live by 20 percent. The exact amount of relief per district would vary based on local per pupil spending but it would be significant throughout the state.
Actually having a long term solution to both problems would dramatically improve our credit rating, business climate, and borrowing costs. This would lead to the best way to improve our debt situation – growth.
So where would we get the $2.4 billion? There are several options. First, we need to be much better stewards of the taxpayer’s dollars. Things like workers’ comp reform, expanding the pension buyout plans, reforming Medicaid are some immediate areas that can be addressed. We also need to prioritize our spending. Remember the $3 billion we committed to “medium speed rail”? Wish we had that back.
$2.4 billion separates Illinois from solving the pension crisis and significantly addressing high property taxes. All of us in the legislative and executive branch should be working to find that $2.4 billion. If we don’t, we will be looking for much, much more in the near future.
That $20 billion payment by 2045 is a bit of a misnomer. As we’ve already discussed, the ramp shoots way up in the final few years before 2045 even though the pension systems will be close to fully funded by then. I seriously doubt that the General Assembly will keep that ramp in place.
Anyway, your thoughts on Rep. Batinick’s proposal?
- Posted by Rich Miller
* Dave McKinney and Tony Arnold at WBEZ…
A west suburban man sued the state on Thursday for negligence over its inability to contain Legionnaires’ disease at the Quincy veterans’ home, deepening a legal and political morass dogging Gov. Bruce Rauner’s re-election.
The lawsuit, filed with the Illinois Court of Claims, comes from the son of former Illinois Veterans’ Home resident Valdemar L. “Roy” Dehn, an 88-year-old Korean War veteran and ex-Chicago Tribune employee who died from Legionnaires’ last October.
Dehn’s case is the 12th lawsuit to arise from a series of Legionnaires’ outbreaks that have been linked to 14 deaths at the home since 2015. Dozens more residents and staff have been sickened from the waterborne bacteria that can cause a sometimes fatal form of pneumonia.
Dehn, who moved into the home in April 2016, had not been informed by facility staff about the earlier fatal Legionnaires’ outbreak in August 2015 when he was admitted, said his son, Matthew Dehn.
He said his father experienced kidney difficulties before succumbing to Legionnaires’ but noted he remained mentally sharp until his death.
“For a year and a half, he loved that place. And it killed him,” Dehn told WBEZ in an interview. “So, you know, I’m still very, very mad about that.
Go read the whole thing.
* Earlier this week, McKinney tried to get some answers on this general topic from both JB Pritzker and Gov. Rauner…
* This morning, the Pritzker campaign had this react to the latest WBEZ report…
“Bruce Rauner’s mismanagement of Legionnaires’ in Quincy has had serious and sometimes fatal consequences — 14 Veterans died, over 60 people got sick, and the state is now facing a dozen lawsuits in the wake of this epidemic,” said Pritzker campaign spokeswoman Jordan Abudayyeh. “Meanwhile, Bruce Rauner still refuses to accept any responsibility for his failure to protect Veterans, and families continue to suffer from the consequences of his negligence.”
Nothing yet on the policy aspect, however.
- Posted by Rich Miller
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