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Question of the day
Friday, May 3, 2019 - Posted by Rich Miller
* Left to right: Former Chicago Bulls star and NBA World Champion Horace Grant, Senate Republican Leader Bill Brady, former Chicago White Sox player and White Sox World Series manager Ozzie Guillen and Chicago Bulls and White Sox Chairman Jerry Reinsdorf…
* The Question: Caption?
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Our sorry state
Friday, May 3, 2019 - Posted by Rich Miller
* COGFA looks at the ramp…
If the State continues funding according to Public Act 88-0593, the projected accrued liabilities of the State retirement systems will increase from $229.3 billion at the end of FY 2019 to $331.0 billion at the end of FY 2045. At the same time, the projected actuarial value of assets is projected to increase from $92.5 billion to $297.9 billion. Consequently, the projected unfunded liabilities are projected to decrease from $136.8 billion at the end of FY 2019 to $33.1 billion at the end of FY 2045, and the projected funded ratio is expected to increase from 40.3% in FY 2019 to 90.0% by the end of FY 2045. All of the projected figures in this paragraph come from the various systems’ actuaries and are predicated upon the State making the necessary contributions as required by law.
Remember that last sentence.
* This is based on current statutory requirements…
The governor has proposed lowering that FY20 payment by almost $900 million, but Amanda Kass puts the actual figure at about $1.1 billion. And this is every year for seven years.
* According to COGFA, the pension funds currently have assets totaling $89.8 billion. But…
Over the last 24 years [since fiscal year 1995], the State of Illinois has appropriated $91.8 billion to the five retirement systems
So, the pension funds currently have $2 billion less than the state has put in, and we most definitely didn’t start at zero in 1995.
Ugh.
* And while the unfunded liability percentage dropped a tiny bit over the past fiscal year, the dollar amount increased…
Despite a roaring stock market, combined unfunded liabilities in the state’s five pension funds rose again and hit a record $133.5 billion in the year ended June 30. […]
According to the Commission on Government Forecasting and Accountability, the difference between what the state has set aside for retirement benefits and what it has committed to pay (the unfunded liability) rose $4.8 billion in fiscal 2018, up 3.7 percent from the prior year. […]
There are some small bits of good news in the report.
One is that the funded ratio of the funds actually ticked up from 39.8 percent to 40.2 percent. But it’s still below what it was in 2011, with huge gains in the equity markets since then.
Another dollop of good news is that the amount being paid out by funds in benefits seems to be leveling off. But it’s not clear whether that will continue.
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Pols behaving badly
Friday, May 3, 2019 - Posted by Rich Miller
* WBEZ…
John Coli Sr., the former Chicago-area union boss who was influential in Democratic politics and was an early backer of Chicago Mayor Rahm Emanuel, is scheduled to change his not guilty plea in his federal corruption case, according to new court records.
Coli’s change of plea hearing in his extortion and tax fraud case is scheduled for June 4 in front of Judge Rebecca Pallmeyer.
It’s not yet clear what the terms of a possible plea deal could be. Neither Coli’s lawyers nor a spokesman for the U.S. Attorney’s Office in Chicago immediately responded to WBEZ’s requests for comment.
Federal prosecutors allege Coli used his former leadership position at Teamsters Joint Council 25 to get $350,000 in kickbacks from two firms. One was the Chicago film studio Cinespace, a one-time state grant recipient where a series of network television programs are filmed, including NBC’s Chicago Fire and Fox’s Empire. The government accused Coli of threatening work stoppages and labor unrest at the studio, which employs Teamsters members, unless Cinespace paid him off.
Prosecutors accuse Coli of then lying on his income taxes and on labor documents to cover up the scheme.
A classic old-style union shakedown.
* Meanwhile…
State Rep. Steven Reick was charged Wednesday with driving under the influence of alcohol in Sangamon County, online court records show.
Reick was charged with driving under the influence of alcohol and driving with a blood-alcohol content greater than 0.08%, according to Sangamon County online court records.
The charges were filed by Illinois State Police, who would not immediately provide further details Thursday evening on Reick’s arrest.
A representative with the Sangamon County Jail said Reick was released about 2:15 a.m. Thursday with a notice to appear in court later this month.
* Looks like he was heading back to his hotel…
State Police also issued tickets alleging that Reick was traveling 15 to 20 mph above the speed limit, and committed a turn-signal violation.
State Police could not immediately be reached for details, but WCIA-TV reported Reick was arrested at the intersection of South Grand Avenue and Eastdale Drive about midnight. […]
Reick issued a one-sentence statement Thursday evening via a spokeswoman: “I made a stupid and regrettable decision last night and accept full responsibility for my actions.”
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It’s just a bill
Friday, May 3, 2019 - Posted by Rich Miller
* The problem with stories like this (and we see these sorts of stories all the time) is that the quoted “critics” will never be in favor of the legislation no matter what changes are made. They’re not critics who can be swayed or even who want to be swayed.
And while it is important to hear the perspective of “Heck No” votes and addressing some of their concerns could help convince members who haven’t yet come to a conclusion, Rep. Flowers has already made up her own mind about this bill…
The chief sponsor of a Senate bill to tax and regulate adult use of recreational cannabis is answering some of the concerns raised by critics. […]
State Rep. Mary Flowers, D-Chicago, said she has concerns for her community.
“I don’t see where the community is going to benefit and quite frankly I don’t see where the state is going to benefit,” Flowers said. […]
Flowers said she’s worried about the possible social costs.
State Sen. Heather Steans, D-Chicago, said Flowers’ concerns are legitimate. However, she said legalization isn’t an endorsement.
“What it does do is say ‘we know that people are getting a safe product and you know that they’re now going to card people or to make sure that they’re not under 21 [years old], so you’re really limiting it,” Steans said.
* Not mentioned in this column is, right or wrong, the bill passed the Senate unanimously last month…
Illinois gardeners, growers and landscapers are ready for spring.
With the “last frost” date approaching for most of the state, planning, building, tilling and planting will soon be in full swing.
But hold on …
You got a license for that?
A bill passed out of the Illinois Senate would create a new hedge maze for anyone with a green thumb. It’s an unfortunate example of just how confusing and unnecessary new licensing regimes can be. And unsurprisingly, it’s being pushed by a special interest group looking to grow its own bottom line.
Senate Bill 1899 says that anyone working in the field of landscape architecture must obtain a special license from the state. That means passing an exam, and you’ll need to jump through some high hoops just to take it.
* Related…
* Coal, nuclear interests spar at Senate committee hearing: “Illinois ratepayers will be compelled to buy what amounts to be the most expensive megawatt hours under the guise of a clean energy market that isn’t a market at all,” she said, adding that FERC has not yet officially made the capacity market changes Exelon has written the bill to address.
* Sen Plummer sponsors resolution rescinding 1861 Corwin Amendment
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* Press release…
U.S. Representative Robin Kelly, along with Illinois House Speaker Mike Madigan and 52 south suburban officials, sent a letter to Governor JB Pritzker requesting his support for the South Suburban Airport (SSA) and surrounding infrastructure.
“The time has come to finally build the South Suburban Airport. We know it will create thousands of good-paying jobs, boost our economy and allow Illinois to reclaim its aviation pre-eminence,” said Congresswoman Kelly
The lawmakers wrote: “Just as Midway and O’Hare spearheaded Illinois’ growth for the past century, SSA will be a cornerstone for prosperity in the 21st Century…As proposed, it will create an economic engine south of Chicago that would generate tens of thousands of jobs, hundreds of millions in annual tax revenues, and billions in new economic activity for Illinois.”
They continued, “Chicago is the largest US market without three airports;” adding that New York, Washington, Miami, Los Angeles and San Francisco each have three major airports.
Acknowledging that airports take decades to plan and rarely happen, officials wrote: “Thanks to the bipartisan efforts by five governors over decades, Illinois has secured the key components – land assemblage, legislative authority, and broad business, labor and political support.”
The FAA first urged Chicago to build a third airport in 1985. Due to capacity constraints, the city has been losing cargo and passenger market-share to places like Denver and Dallas for 20 years.
Kelly and lawmakers also urge the Governor to “apportion $150 million in the 2020 capital bill for initial off-site improvements—a new interchange on I-57, local road upgrades, and connectivity to utilities.” The actual airport, near Monee, will be financed with private dollars.
The letter was signed by three members of Congress; 14 state legislators, including Speaker Madigan; 29 mayors; four Chicago aldermen; two Cook County commissioners and two mayors-elect who represent Cook, Will and Kankakee counties.
The letter is here.
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Senate’s gonna Senate
Friday, May 3, 2019 - Posted by Rich Miller
* First up…
OK, that’s just silly, mainly because no rate bill had ever passed in the first place. It was just numbers on a piece of paper and the package was always up for negotiation before passage. Also, the Senate only raised the rates on the highest brackets.
Even so, the Senate Dems walked right into that simplistic rhetorical punch.
* And now this…
The following statement was issued Thursday by Illinois House Progressive Caucus Reps. Ammons (co-chair), Guzzardi (co-chair), Mah (co-chair), Villanueva (treasurer), Ramirez (secretary), Cassidy, Gabel, Harris, Mason, Moeller, Ortiz, Robinson, Stava-Murray, and West.
“We strongly disagree with the passage of SB 689.
“Our state is finally trying to fix its deeply unfair tax policy. We are finally asking the wealthy to pay their fair share in funding the basic operations of government. A $300 million tax cut to the estates of the super-rich is a move in precisely the opposite direction.
“We urge our colleagues to join us in opposing this giveaway to the wealthy few.”
* One Illinois…
Senate Democrats said the estate tax “has increasingly been an issue in agriculture communities across Illinois.” Yet economists, such as Thomas Piketty in his book “Capital in the 21st Century,” have argued that it’s one of the most effective methods of addressing income inequality and leveling the economic playing field between rich and poor. […]
[Representatives in the Progressive Caucus who signed the statement opposing SB689] might well ask whom the compromise is meant to appease. Senate Minority Leader Bill Brady of Bloomington voted against SB689, as did Sen. Chuck Weaver of North Peoria.
Just last month, Weaver joined in a debate with Guzzardi and Sims on the “fair tax” at the City Club of Chicago, and when Guzzardi argued that the rich weren’t fleeing the state because of taxes, and that the state was actually encouraging seniors to move here by not taxing retirement income, Weaver countered that they were leaving Illinois because of its estate tax.
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* I’m not totally sure what the “smart money” is saying right now, but here’s the Tribune’s take…
The smart money says that if Illinois lawmakers are going to legalize sports betting this spring, it’s going to be part of a larger gambling expansion deal that also includes new casino licenses and expanded betting options at horse tracks.
Democratic Gov. J.B. Pritzker did not want to squander the opportunity to bring in new state revenue through legalized sports betting, made possible by a U.S. Supreme Court ruling last year, by tying the issue to the parochial gambling debates that have failed to produce an agreement for the better part of a decade. The governor is counting on more than $200 million in sports betting revenue in his spending plan for the budget year that begins July 1.
But with their scheduled May 31 adjournment approaching, lawmakers are faced with the reality that winning broad support for a sports betting bill likely will require resolving issues they’ve been kicking around since then-Gov. Pat Quinn in 2013 vetoed the last gambling expansion bill passed by the General Assembly. Because Pritzker has placed such a high priority on sports betting, all sides see it as leverage to achieve their long-sought goals.
* The speculation kicked into high gear yesterday when Mayor Emanuel’s people weighed in. Here’s the take from Tony Arnold at WBEZ…
At a House committee hearing Thursday, a lobbyist for the mayor’s office testified that the city would support Pritzker’s call for legalized sports gambling as part of a bill that would allow for a Chicago-run casino.
“The city of Chicago supports sports wagering and the legalization of it within a comprehensive amendment that provides for a publicly-owned Chicago casino license,” said Derek Blaida, a lobbyist for the city of Chicago.
The city’s request is in line with a controversial speech Emanuel gave in December about solving the city’s underfunded pension crisis. He urged state lawmakers to approve a Chicago casino to help prop up City Hall’s massively underfunded retirement systems. Per state law, any revenue from a Chicago casino is supposed to go toward the police and fire pensions. […]
Pritzker warned against this exact approach less than three months ago in his budget address to lawmakers. Saying previous attempts to expand gambling in Illinois failed because they would “get bogged down in regional disputes and a Christmas tree approach,” Pritzker called sports betting “different” since it was only recently legalized by the U.S. Supreme Court.
It’s unclear if tying a Chicago casino to Pritzker’s legalized sports gambling push has the blessing of Mayor-elect Lori Lightfoot, who takes office May 20. A spokeswoman did not immediately respond to WBEZ’s request for comment. Lightfoot voiced support for a city-run casino during the campaign.
To put this in context, the House and Senate have nine scheduled session days between now and the day Lightfoot is sworn into office at noon on May 20th. And one of those days is a Friday without an official deadline, which are often canceled. There are, on the other hand, 12 session days scheduled starting on May 20th.
In other words, Rahm’s ability to influence the process is waning fast. This deal likely won’t be cut until he’s out of office.
I reached out to Lightfoot’s transition team this morning and haven’t yet heard back.
* But Chicago isn’t the only city pushing for a casino. Rockford and Danville, along with towns in the counties of Lake, Williamson and south suburban Cook all want licenses.
And then there’s the horse racing industry, which wants a slice of the gaming pie…
“Racing will only succeed in those areas where income through gaming coincides with commissions on horse racing,” said Mike Campbell, president of the Illinois Thoroughbred Horsemen’s Association, which represents the labor side of horse racing.
Such revenues could come from a measure proposed in last year’s gambling bill that would have allowed video gambling and table games at racetracks, turning them into racinos. […]
Tony Petrillo, president of Arlington Park, said he’d like to see lawmakers focus on passing sports betting legislation first, because trying to incorporate too many interests in a comprehensive gambling bill might leave racetracks with the same outcome as last year – nothing.
“While [sports betting] is not the answer to our overall problems, we feel it can reach and expand our customer base until those big gaming issues are worked out,” Petrillo said.
Clear as mud.
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Pension buyouts begin, another in the works
Friday, May 3, 2019 - Posted by Rich Miller
* SJ-R…
“We were surprised at the level of participation,” said Tim Blair, executive director of the State Employees Retirement System that covers state workers. “We thought it would be somewhat lower because we thought the 3 percent compounded COLA was a very attractive part of the benefit package that people would want to keep that.”
Under the COLA buyout plan, participants in the pension fund can agree to give up the 3 percent compounded annual raises they get in their pension benefits. Those people would still receive an increase in their pension benefits, but it would only be 1.5 percent annually and not compounded.
In exchange, those people would be eligible for a cash payment that would be made to them now. The state would calculate the difference in benefits a person would receive with the 3 percent annual increase and the 1.5 percent increase and a person could get 70 percent of that amount placed in an alternative retirement vehicle.
Blair said that since the plan went into effect at SERS Dec. 1, there were 1,700 people who retired. Of those, 402 opted to take the buyout program. The payouts average $100,000 per person, Blair said, although the range ran the gamut from a couple of thousand dollars to $400,000.
The payouts will cost the pension system $37.7 million, although the systems are expected to save money in the long run by paying smaller annual raises. Studies have shown the annual 3 percent compounded raises are the biggest reason for ongoing increases in pension costs. Money for the payments will come from bonds the state is issuing, although not all of the bonds have been issued yet.
* More…
“We offer two buyouts,” state Rep. Robert Martwick, D-Chicago, said. “One is what’s called vested and active and that’s someone who’s worked for a while and just left government service and they just buy out their whole pension. So that’s No. 1. No. 2 is the [cost of living allocation or] COLA buyout where they can sell their three percent compounded COLA for a one and a half percent simple COLA and a lump sum payout.” […]
Martwick said there are plans for an annuity buyout.
“So they could sell a portion of their annuity, so any amount of their annuity which exceeds the maximum Social Security benefit and still keep their compounding COLA so it’s an easier calculation, it would be easier to administer and probably easier to understand for the retiree,” Martwick said. “And it creates an option so they can say, ‘should I keep my annuity and sell a portion of my COLA or keep my COLA and sell a portion of my annuity,’ and again more options means greater participation.”
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*** UPDATED x1 *** Our sorry state
Friday, May 3, 2019 - Posted by Rich Miller
* Gov. Bruce Rauner deliberately slow-walked this process, but the Pritzker administration is in charge now…
As of March 15, more than 112,000 Illinois Medicaid applications remained unprocessed beyond the 45-day limit the federal government puts on those eligibility determinations.
The federal Center for Medicare and Medicaid Services has warned state officials that Illinois is out of compliance with regulations on timely determinations of eligibility for the federally funded program to provide health coverage for low-income people and asked how they plan to fix that, records show.
If a case is delayed past the federal time limit, Illinois Medicaid applicants are supposed to be able to get cards granting them temporary medical benefits. But those also are backlogged. The state’s Medicaid application-processing delays and failure to issue temporary medical benefits have left some of Illinois’ poorest residents without access to health care, in some cases for more than a year.
Illinois provided no temporary medical benefits at all between June 2016 and September 2017, state Department of Human Services records filed in federal court show. […]
Charlotte Brown, who works for Christopher Rural Health in southern Illinois, said most Medicaid applications in her part of the state are processed within two weeks but that it often takes months to get newborns added to their mothers’ Medicaid cases.
That’s just ridiculous. How would a newborn not qualify if their moms already did?
* Promises…
Jordan Abudayyeh, a spokeswoman for Gov. J.B. Pritzker, said: “It is unacceptable that people across the state are waiting for healthcare coverage, and he has directed the administration to take immediate steps to address this problem from the previous administration.”
In a written statement, the heads of the Illinois Department of Healthcare and Family Services and the Department of Human Services said: “Our departments are working together closely to bring on more workers to process applications and redeterminations, as well as training and technical experts to support front-line staff.”
*** UPDATE *** From Meghan Powers at the Illinois Department of Human Services…
We’ve made a lot of progress in the last two months and newborns are now being added to their mothers’ cases in a timely manner. We have eliminated the backlog of more than 26,500 newborn applications.
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* Rick Pearson takes a look at the Senate’s property tax freeze proposal…
First, it would only happen if voters ratify that proposed graduated-rate income tax amendment to the Illinois Constitution. And, it would only take effect if the state shouldered more of the overall funding for education in Illinois — including funding special education, transportation, free and reduced meal programs and other mandated categorical programs. The state also would have to meet its decadelong commitment to boost funding for the new general state aid formula by $350 million a year.
That means a state price tag of at least $650 million for the state budget that takes effect July 1, 2021. If the state doesn’t meet recommended funding levels, as lawmakers and administrations have failed to do repeatedly over the years, the freeze melts. […]
But a March study by the progressive-leaning Center for Tax and Budget Accountability showed the process of the state assuming a much larger share of funding for schools is still far away, even after enacting a new general state aid funding formula and making the first $350 million deposit last year. The center did not factor in potential new dollars from a graduated-rate tax.
The center cited the State Board of Education in saying the $7.89 billion state appropriation to public schools for the 2018-19 school year was $7.35 billion short of the legislature’s adopted Evidence-Based Funding for Student Success Act. Evidence-based funding is considered the best practice in school funding because it ties the dollar amount taxpayers invest in schools to educational practices that research shows enhance student achievement over time, the center said.
While the new statute commits the state to fully funding the formula by June 30, 2027, the center said the promised $350 million in additional school funding each year will not be enough to meet the full-funding goal.
Categoricals have not been fully funded since… I don’t know when.
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