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*** UPDATED x1 *** Rauner says he’ll “enact” the budget

Thursday, May 31, 2018 - Posted by Rich Miller

* Press release…

Gov. Bruce Rauner today offered the following comment on the passage of the Fiscal Year 2019 budget:

“We started this year’s budget process with the common-sense goals of a full-year balanced budget and no new taxes. With this budget, we can come as close as any General Assembly and Governor in Illinois have in a very long time. It’s a step in the right direction, though it does not include much-needed debt paydown and reforms that would reduce taxes, grow our economy, create jobs and raise family incomes. The Fiscal Year 2019 budget is the result of bipartisan effort and compromise. We worked together to provide a budget to the people of Illinois that can be balanced, with hard work and continued bipartisan effort to deliver on the promises it makes. I’ll be taking action quickly to enact the Fiscal Year 19 budget into law.”

*** UPDATE *** Speaker Madigan…

House Speaker Michael J. Madigan issued the following statement Thursday after passing a bipartisan, balanced budget:

“For the second time in as many years, House Democrats have worked alongside our Republican colleagues in the Legislature to pass a bipartisan, balanced budget. As House Democrats have said throughout the past four years, when we can work together in good faith we can accomplish great things.

“Our budget holds the line on taxes and spending, and creates a $15 million surplus that will be used to pay down old bills. We cut government bureaucracy like high-paid consultants and duplicative IT systems at state agencies to invest our finite resources in critical services, provide $350 million in new funding for public schools, and reverse the governor’s cuts to education programs, health care, child care and senior services.

“While there is more work to be done, this compromise budget shows yet again that when extreme demands are not preconditions to negotiation, Democrats and Republicans in the Legislature can work together to move Illinois forward.”

35 Comments

*** UPDATED x1 *** More on Loncar’s bribery allegations

Thursday, May 31, 2018 - Posted by Rich Miller

* Illinois News Network…

During questioning from media members, [Maryann Loncar] also said that [Rep. Lou Lang] was retaliating against her because she witnessed an attempted bribe involving Lang. She said having that knowledge made her fear for her life. When asked why she hadn’t gone to the authorities about the potential crime, she said she was waiting for the right time but had the details journaled. She said others were also privy to the bribe offer.

* Hannah Meisel transcribed this part of Loncar’s press conference…

Bernie: And you learned the bad information about him when?

Loncar: Probably about five years ago. The real, yeah this isn’t right.

Bernie: Does this it involve money?

Loncar, Yes of course it involves money. This is Illinois.

Bernie: How so? Somebody giving somebody something?

Loncar: Yes.

Bernie: Like what? Like a bribe or something?

Loncar: Yes.

Bernie: Who was offering that? Was it taken?

Loncar: No, because we stopped it. We were the meddling kids who stopped it.

Reporter: You’re saying the bribe was offered to Lou Lang?

Loncar: Um, y- It was offered — it was spoken to to him and two other senators. Democrats.

Amanda: You’re saying two other senators?

Loncar: Yeah. There were three of them.

Bernie: By a grower? Or developer?

Loncar: Down those lines yes.

Bernie: You wanna say who as long as we’re going this far?

Loncar: Um *long pause*

Rotheimer: It’s your call.

Ives: Maryann, if you don’t want to —

Loncar: You’re dealing with a lot of people who have a lot of money. The truth is you all know the truth.

Hannah: How much money are we talking about?

Loncar: We’re talking about at least 170-something million dollars. Is that enough for everybody to know?

Hannah: That sounds more like —

Reporter: A contractual bribe?

Loncar: No, it doesn’t. We have many people over the years that have written about this. Many.

Bishop: So you said earlier you wanted the cannabis title program to be non-profit. So it’s in this context that this bribe —

Loncar: Yes, the people who had the choice of writing HB1.

Reporter: You’re not talking about contractual arrangements, you’re talking about a bribe to three people of $170 million?

Loncar: Yeah, I’m talking about a meeting at the Capitol. That we weren’t supposed to be privy to, that we weren’t supposed to know about.

Reporter: And they didn’t accept the bribe?

Loncar: This is Illinois. Do I have to bring it back to that we’re the most corrupt state of all of the states?

Tina: But did they accept the bribe?

Loncar: We didn’t give them the chance to accept it.

Hannah: When you’re saying you meddled, what did you specifically do?

Loncar: We went to the news. I went to Andy Shaw specifically and sent him all the information I had on it and he wrote something about it.

…

Loncar: “I have written all of this down and I have documentation.” “Eventually I will release it…I’d like to be able to show all this to

Bernie: And the illegality is often in offering the bribe. If he didn’t take it, then it’s not illegal. If you offer it, it’s illegal. So you’re saying it’s not Lou Lang but somebody else who was illegal.

Loncar: Um, no. I’m saying all of these people were culpable of going that direction. And as advocates when we found out about it we stopped that direction. And this is why I am being targeted. Make no mistake about it.

Bishop: Do you fear for your life?

Loncar: Yes, yes every day.

—

Tina: How did you end up at that meeting?

Loncar: Mike Graham was at the meeting with another individual. I was at a hotel waiting for them to be done.

……

Bernie: And is the person who offered the money for this —

Loncar: They didn’t get a license and they sued.

Bernie: Okay and they’re not in operation now?

Loncar: Nope, they sued because they thought they had worked this legislation. Their lawyer basically said that they earned it.

Bernie: Are they in Chicago?

Loncar: They are up north near Lake County.

Hannah: Do you know if they sued in federal court or county court?

Loncar: They sued downtown. They sued saying that they should have gotten a license and they put a lot into it.

*** UPDATE *** Mike Graham and I have talked before on Facebook, so this afternoon I reached out to him about Loncar’s claim that he was a witness to an attempted $170 million bribery scheme. His response…

Maryann misspoke on the “bribe” was not an accurate description. I believe it was 12/4/12 stakeholders meeting. (As written before)Medponics owners entered the meeting and said “we can just give you $170M and we will take all operations”, at which time the room erupted with no’s–Lang was never directly offered or demanded anything! Maryann was just overwhelmed by the enormity of the situation

He added that he believed the $170 million was intended as a payment to the state for all of the operating licenses.

96 Comments

*** UPDATED x1 *** *** LIVE VIDEO *** Rep. Lang press conference to respond to allegations

Thursday, May 31, 2018 - Posted by Rich Miller

* Again, many thanks to the folks at BlueRoomStream.com for access to this press conference which is scheduled to begin at 3 o’clock. Rep. Lang’s press release did not deny any of the allegations made against him, so I’m sure he’ll be asked about them at his event…

Click here if the embed doesn’t work for you.

And if you can’t watch videos at work, click here to follow along with our live coverage post.

*** UPDATE *** Rep. Lang was asked if the allegations were true: “From beginning to the end the allegations are absurd.”

31 Comments

*** UPDATED x1 *** *** LIVE VIDEO *** Alleged abuse victim’s press conference

Thursday, May 31, 2018 - Posted by Rich Miller

* Many, many thanks to the folks at BlueRoomStream.com for this access to today’s press conference. I’m hearing there may also be a follow-up presser by the accused legislator. The first presser is scheduled to start at 1 o’clock…

Click here if the embed doesn’t work for you.

And if you can’t watch videos at work, click here to follow along with our live coverage post.

*** UPDATE *** The worst-kept Statehouse secret of the week is now public. House Deputy Majority Leader Lou Lang is the alleged abuser. He also sits on the Legislative Ethics Commission. Here’s the press release…

Here is her press release pic.twitter.com/eUQFjARSSY

— Hannah Meisel (@hannahmeisel) May 31, 2018

99 Comments

Report: Trump “strongly considering” Blagojevich commutation

Thursday, May 31, 2018 - Posted by Rich Miller

* Dana Kozlov last night…

Former Governor Rod Blagojevich is preparing to formally ask President Donald Trump to release him from prison early. […]

Blagojevich’s attorney, Len Goodman, says he plans to send his formal petition for a commutation of sentence to the President in the next few weeks.

* Today…

Pool report: "Trump said he is strongly considering a commutation of the rest of former Illinois Gov. Rod Blagojevich’s sentence."

— Sam Stein (@samstein) May 31, 2018

…Adding… More info…

Via pool aboard AF1: Trump said he is strongly considering a commutation of the rest of ex-Gov. Rod Blagojevich’s sentence. Bragging about getting something back for a Senate appointment, Trump said, was “a stupid thing to say—but 18 years?” He was sentenced to 14 years.

— Rick Pearson (@rap30) May 31, 2018

As the President considers commuting Blago's sentence, read the BGA's fact check on his claims that's he was merely "practicing politics" https://t.co/7w4UibRhs2

— Paris Schutz (@paschutz) May 31, 2018

64 Comments

*** UPDATED x1 *** Moody’s warns against reducing pension contributions

Thursday, May 31, 2018 - Posted by Rich Miller

* Moody’s press release…

When fiscal 2019 begins on July 1, the State of Illinois (Baa3 negative) faces a sharp jump in its budgetary fixed costs for debt service, retiree healthcare, and pension contributions, part of a trend that may intensify in future years, Moody’s Investors Service says in a new report. A failure to adopt mitigating strategies soon will greatly increase the state’s risk that these rising costs will become unaffordable without severe public services cuts.

Without any revenue increases or legislation to reduce the state’s retirement benefit burden, Illinois’ total fixed costs will reach or exceed 30% of state-source revenue next year, with pensions accounting for more than half of the costs. Debt service, reflecting the state’s issuance of $6 billion of bonds in November 2017 to help reduce a backlog of unpaid bills, is scheduled to increase by 17%.

“Given their magnitude and growth trajectory, the state’s unfunded pension liabilities will likely require more than a single response,” said Moody’s analysts Ted Hampton and Tom Aaron, co-authors of the report. Illinois could raise revenue, shift some of the funding responsibility to local governments and public universities, or seek to reduce benefits. All of these approaches face potential political or even legal impediments, but the risks of inaction are significant for the state’s credit quality.

“Under some scenarios, Illinois could eventually find the burden of paying for retirement benefits becomes extremely difficult to manage,” Hampton said. “Part of the problem is that state officials always face the temptation of making the ultimate reckoning worse by pushing costs to the future, and they’ve used that approach many times in the past.”

In 2017, Illinois managed to keep the impact of its fixed costs from exceeding 30% of own-source revenues – approximately triple the median level for US states — by increasing income tax rates to boost revenues and passing legislation requiring that recent actuarial assumption changes be phased in over five years.

However, the growth of Illinois’ projected pension funding requirements will outpace its organic growth of tax revenues and the state’s economy. Moody’s says it anticipates that the state’s economy will continue to lag national trends as in recent years.

Severely unfunded pension liabilities leave Illinois far more exposed to adverse events such as a recession. Illinois’ pension funding needs will remain elevated even under favorable circumstances, but if the coming years include a recession and stock market downturn, the state’s funding burden could quickly become unsustainable without painful corrective actions.

“Illinois does have some ability to keep pushing costs to future years, in view of its plans’ assets on hand, but a decision to reduce current pension contributions would cast doubt on the state’s long-term ability to afford both accumulated liabilities and current services,” Aaron says. “Easing funding in favor of fiscal relief could erode the state’s credit.”

It’s unclear if Moody’s is aware of the pension proposals in the new budget.

*** UPDATE *** I asked David Jacobson, Moody’s VP for communications, if the ratings firm was aware of the pension changes in the BIMP. His e-mailed response…

We are, but don’t comment on pending legislation. Should this become official we will analyze the credit implications.

14 Comments

*** UPDATED x1 *** Pension savings explained

Thursday, May 31, 2018 - Posted by Rich Miller

* Click the pic for a larger image of these internal legislative dot points…

I’m told the savings were calculated by the pension funds’ actuaries.

*** UPDATE *** From Rep. Mark Batinick (R-Plainfield)….

There are a lot of misconceptions about the pension buyouts. Let me clarify a few things:

Is the only savings the “haircut” annuitants take to get the lump sum?

No. Depending on the system, we have an expected rate of return of 7-7.25%. Therefore the unfunded portion of the shortfall grows at that amount each year. By bonding to buy people out of the system we are saving interest costs because we can sell bonds at less than 7% right now. The spread between 7-7.25% and whatever we sell the bonds for is additional long term savings.

Will anyone take the buyout?

When I introduced HB4427 in Jan 2016, buyouts had only been done in the private sector. But since then, Missouri passed a bill very simliar to the HB315 I filed last Jan. That bill is for vested inctives. In Missouri there was a 22% take-up rate. That is the take-up rate that is being used.

What is done with the money?

It does need to be rolled into a qualified retirement account. It will not be immediately taxed by the Feds. But, once it is in the account the annuitant can do with it whatever it wants to do.

What about negative-selection?

The reason there is a “time-window” for these buyouts is to limit negative selection. People have to decide quickly. Plus, at a haircut of 30%-40% we would have to have a whole bunch of sick people in the state to have to plan lose money.