Question: What could cause Moody’s to change its GO rating on Chicago, in either a positive or a negative direction?
Answer: Our future rating actions on Chicago will largely reflect city officials’ actions on pension contributions and, ultimately, the growth of debt and pension leverage on the city’s balance sheet. Chicago’s pension funding requirements are governed by PA 98-0641 (the statute that applies to the Municipal and Laborer plans) and PA 96-1495 (the statute that applies to the Police and Fire plans). Whether or not either statute ultimately stands, we believe that Chicago’s administration will eventually have to increase pension contributions through some combination of operating revenue growth and operating expenditure reduction. The magnitude of those expected budget adjustments will be significant and will force city officials to make difficult decisions for years to come.
If both PA 98-0641 and PA 96-1495 stand, Chicago’s annual pension contributions are projected to increase by 135% in 2016; by an average annual rate of 8% in 2017-21; and by an average annual rate of 3% in 2022-26. To comply with these requirements, Chicago’s administration will need to grow revenue or cut spending by an average annual rate of 12% year-over-year (YOY) for the next decade in order to bring net pension contributions back to historical norms of 10% of annual operating revenue by 2026. (Given the scheduled contribution increases, actual annual revenue increases or spending cuts would likely be greater in 2016 than in 2017-26.) If PA 98-0641 is ultimately overturned, however, future pension funding will depend on how the city responds.
» Chicago officials could respond to an adverse ruling on PA 98-0641 by pursuing new state legislation that authorizes the city to increase contributions to the plans. If Chicago’s administration increases pension contributions in the context of balanced operating budgets that do not rely on non-recurring revenue sources, we could move the rating up or revise our rating outlook to stable.
» Chicago officials could also respond to an adverse ruling on PA 98-0641 by declining to pursue new state legislation that would allow the city to increase contributions to the plans. Chicago’s funding commitments would presumably revert to those which existed prior to the passage of PA 98-0641. Under the prior funding framework, the city’s contributions were well below those called for by plan actuaries, who projected that the Municipal and Laborer funds would deplete assets in the next decade. If the plans reach insolvency, the state could potentially implement legislation forcing Chicago to pay benefits to annuitants, either directly or through the plans. Benefits paid from the city’ four pension plans (Municipal, Laborer, Police and Fire), net of employee contributions, would significantly exceed the city’s employer contributions to those plans, as required under current laws (see Exhibit 2). If Chicago is forced to pay benefits from city operating revenue, we believe the city’s finances and GO credit profile would weaken. Therefore, if PA 98-0641 is overturned, and the city’s response raises the risk of plan insolvency, we could move the rating down.
* And here’s something for all you “We’re the next Detroit!” fanatics…
Meaning of Chicago’s Ba1 Rating in Terms of Default and Loss Potential Upon Default
Question: Does Moody’s Ba1 rating signal an expectation that Chicago will declare bankruptcy or default on its debt?
Answer: No. Moody’s ratings speak to both probability of default and expected loss upon default. The Ba rating range implies speculative elements in the risk profile but only a relatively small risk of default. Historically, approximately 1% of credits rated in the Baa range have defaulted over a three-year horizon. For credits in the Ba rating range, the share is 5%, and for B-rated credits, 15%.
We do believe, however, that the city’s pension-related challenges are significant and introduce speculative elements into the credit profile. Chicago’s pension plans will fund annuitant payments as long as assets remain in the funds. If plan insolvency occurs under the conditions described above, new questions would arise. Illinois law (40 ILCS 5/22-403) defines pension benefit payments as obligations of the pension funds, but if the pension funds are unable to fulfill these obligations, it is unclear which party will be responsible for paying annuitants.
If Chicago is forced to pay net benefit payments directly to annuitants or to the plans, elevated pension costs would compete with essential public services for city resources, creating particularly tough challenges for Chicago’s administration. We expect that this scenario would present city officials with several difficult options.
» One option would be to pursue massive revenue raising and expense cutting initiatives. Given the sheer size of the pension benefit payments that would be required, we believe that the magnitude of such budget adjustments would be extreme and would therefore be difficult to execute.
» A second option could be to pursue bankruptcy. Currently, Illinois local governments cannot file for bankruptcy, but in March 2015, proposed legislation (House Bill 298) was introduced in the Illinois General Assembly that would grant local governments authority to file for protection under Chapter 9 of the federal bankruptcy code.
» A third option would be bondholder impairment. In fact, we note that for cities in distress, pensioners have fared better than bondholders. For example, the City of San Bernardino, CA recently put forth a plan of adjustment that proposes no impairment to pensioners but a 99% loss to holders of the city’s pension obligation bonds (POBs).
Chicago’s decisions on future pension contributions – whether or not current laws stand – will be critical to our placement of the GO rating going forward. [Emphasis added.]
Question: Why hasn’t Moody’s taken rating action on the State of Illinois when the Illinois Supreme Court ruling concerned the state’s pensions?
Answer: The Illinois Supreme Court’s May 8 ruling has clear implications for the state because it appears to close the door on efforts to reduce accrued liabilities through benefits cuts. However, our credit view and rating was not dependent on the implementation of the state’s 2013 reforms, which had been stayed during the litigation. Our A3 rating on the State of Illinois reflects the state’s broad legal powers and fiscal tools to address its budget challenges, including pensions. Among the state’s options are reversing its recent income tax cuts and reducing revenue sharing with local governments. We note that the state itself also retains the option of shifting pension costs to lower levels of government, notably public universities and school districts (other than CPS), the pension liabilities of which are currently funded by the state. State shifting of pension costs to public universities and school districts would be credit positive for the state but credit negative for affected entities.
The state’s outlook remains negative, which reflects cuts in state income taxes and rising fixed costs, including those associated with pensions that have contributed to a budget gap of approximately 21% in the fiscal year starting July 1. Reliance on one-time or questionable fixes to address this gap – such as deficit financing, reduction in pension contributions or increased payment delays – would put downward pressure on the state’s ratings. [Emphasis added.]
* If you have time today, you should listen to Gov. Bruce Rauner’s address to members of the Large Unit District Association Superintendents’ meeting. It’s quite good, particularly the Q and A. The man has this stuff down. He also doesn’t scream about the unions, or whatever. I’m telling you, it could be the best speech I’ve ever heard him give. Yeah, there are some nitpicky little things I’d change, but it was his speech, not mine..
* I delayed fixing a chimney and it recently cost me a small fortune to have it repaired. The very same short-sighted principle applies here…
Although an initial analysis of deteriorating conditions at the [governor’s] mansion estimated minimal repairs will cost $8.8 million, organizers of the private fundraising campaign expect the figure to be higher when historic restoration experts release a more detailed report later this month. And officials expect the cost of repairs will continue to increase the longer the wait for repairs. […]
Last year, $2.4 million in emergency repairs for the mansion was approved but never spent. The mansion’s roof was patched last summer to prevent leaks that had continued to damage walls, buckle floors and cause mold to grow in the basement.
Problems with the mansion include roof leaks, water damage, wood decay, faded carpets, peeling paint, and outdated mechanical, electrical, plumbing and heating and cooling systems.
* Annual reports? Maybe they should reconsider and do them quarterly…
Governor’s spokeswoman Catherine Kelly said donations will be made public in annual reports. The campaign also has a website: illinoismansion.org.
Van Meter, a Springfield businessman who chairs the Sangamon County Board, said legislative leaders will be asked to highlight the fundraising campaign with constituents. But he said the Rauners were specific when it came to tax dollars.
“It’s 100 percent private funding,” Van Meter said. “It will be through memberships to the association and donations to the association.”
Gotta wonder if the unions will picket.
* And, look, if the swells wanna kick in I’m fine with that because the repairs are definitely needed. But will kids really care?…
Van Meter said the coming campaign will be statewide for donations large and small, perhaps including a “pennies for the mansion” appeal to schools.
…Rauner’s communications deputy, Mike Schrimpf… answered my email request to interview his boss this way:
“We aren’t going to do this while your organization continues fishing expeditions into individuals who work for the administration. This randomly trying to dig up dirt on people is sickening.”
The “dirt” apparently refers to some of our document requests, and these BGA stories about the new administration’s appointments and associates:
A Gaming Board selection heads a law enforcement group that took donations from a suburban casino that’s regulated by the board.
A campaign committee created by the new head of the Department of Natural Resources received money from a giant downstate coal company.
Rauner’s former campaign manager joined a lobbying firm that may lobby the governor’s office.
The stories expose potential conflicts the public should know about and the Rauner administration should care about.
That’s not “dirt” — it’s the road to “better government” and the goal of our investigations.
I can certainly understand how the BGA would be peeved.
But, from what I’m told, those requests are not what necessarily ticked off the governor’s office.
* Instead, the BGA FOIA’d Rauner spokesman Lance Trover’s Internet browsing history - not once, but twice (once through the governor’s office and a second time through CMS). Both BGA fishing expeditions were denied. And then they threw out their net again when they FOIA’d Schrimpf’s personnel file.
Seems a bit much, particularly if you know how the Internet system at the governor’s office works (any sites remotely political or otherwise prohibited are blocked) and personnel records are supposed to be private.
* I recommended Andy Shaw for the BGA job. 90 percent of what his group does is valuable. But maybe 10 percent is just weird. Nobody’s perfect, of course, but, c’mon, man. How about disclosing those three incendiary FOIA’s?
* Paul Krugman’s point is about some national and international stuff, which we really do not need to get into here because, well, this is a state blog. But his conclusion is well worth discussing in the context of Illinois’ failed “pension reform” law…
It doesn’t matter that the skeptics have been proved right. Simply raising questions about the orthodoxies of the moment leads to excommunication, from which there is no coming back. So the only “experts” left standing are those who made all the approved mistakes. It’s kind of a fraternity of failure: men and women united by a shared history of getting everything wrong, and refusing to admit it. Will they get the chance to add more chapters to their reign of error?
This is most definitely a conversation we need to have in Illinois. We were misled into this battle by people and institutions who shouted down anyone who dared to object or so much as voiced concerns.
The Civic Committee, a group of wealthy business executives headed up by former Republican Attorney General Ty Fahner, also has claimed that [Senate President John Cullerton’s] proposal wouldn’t save enough money. But last year, Fahner supported a bill that actually would have increased state costs in the short term and saved the state just a few billion dollars over the long term.
Fahner has been all over the place. He supported a pension bill sponsored by House Speaker Michael Madigan last year, then claimed a few months later that the pension problem was “unfixable.” He demanded that cost-of-living increases be eliminated altogether, but now backs a plan that allows COLAs on the first $30,000 of pension income.
Cullerton took the plan endorsed by Fahner and grafted his own pension reform language onto it. Cullerton’s “consideration” proposal wouldn’t take effect unless and/or until the courts ruled that the Fahner-backed proposal was unconstitutional.
Fahner didn’t like that idea, either. And he and lots of big-business types lobbied hard against it, along with a certain editorial board down the street, and forced Republicans off the bill. That killed the proposal, and the Fahner-backed bill was defeated as well.
The person who leads the Senate and who holds significant influence over his members prefers his own pension bill. Cullerton’s Senate Bill 1, which also could come to a vote Wednesday, includes the provisions of Biss’ bill. But it also does something odd: It says if the courts strike down those provisions, a Plan B would kick in.
Cullerton’s Plan B comes up far short of the savings needed to restore fiscal health to the pension plans. It depends on multiple choice: Government workers would choose between the much-coveted, compounded cost-of-living increases they receive in retirement, or access to the state’s health care plan. Cullerton believes his bill has a better chance of being found constitutional by the courts.
But the real message from lawmakers to the courts would be this: Hey, we don’t really trust Plan A, so be our guest, throw it out, we’ll live with Plan B. No, really. We beg you.
Both Fahner and the Tribune were on exactly the same messaging track. And they were both wrong.
That’s not to say that Cullerton’s proposal at the time would’ve necessarily passed constitutional muster. It’s just that anyone who objected to the Fahner/Tribune orthodoxy (Cullerton, Ralph Martire, public employee unions, etc.) was marginalized by the powers that be. Debate was stifled, and that was ridiculous.
Even I felt so beaten down by the end of that debate that I wanted the darned thing passed just to get it off the table for a while and let the courts decide.
Rauner, who was pushing his “turnaround agenda,” including right-to-work zones, also said in that speech: “We have bipartisan failure. … The problem is which members in each party are on the take with the insiders. … And we’re gonna take ‘em on.”
The governor also told the group that “crisis creates opportunity.”
* So, if you think you have members in your own party who are “on the take” - particularly from unions - and you want to create a little “opportunity” ahead of the “right to work” House floor vote, what do you do? Well, perhaps you give your folks some money to put ‘em in your own back pocket…
Gov. Bruce Rauner has started doling out money from his campaign fund to fellow Republicans as the Illinois Legislature approaches what could be difficult votes on several big issues.
Rauner divided $400,000 among every Republican member of the Illinois House and Senate, spokeswoman Catherine Kelly said Saturday.
The contributions, made [last] Monday, come with just weeks to go before the May 31 end to the spring legislative session, and with Rauner looking to his GOP allies to support his pro-business agenda in the Democrat-controlled General Assembly. […]
Kent Redfield, a professor emeritus of political science at the University of Illinois at Springfield, called the donations and their timing in such close proximity to possible votes “very unusual.” While labor unions, businesses and other groups often ramp up their contributions this time of year, a governor or other elected official doing so “really isn’t something we’ve seen,” he said.
Redfield also said it could create a perception issue for Rauner, a multimillionaire who ran for office on a promise to “shake up Springfield.”
Yeah, it’s a cynical explanation, but those contributions weren’t exactly uncynical. However, accepting those contributions could sure raise questions for Republicans who abandoned the unions last week.
One option to balance the budget is reducing the state’s contributions to the retirement plans, which are the most underfunded in the nation. The state’s scheduled $6.6 billion pension payment in fiscal 2016 is larger than the entire deficit. Such a move would give the state some breathing room “for a few years” but would threaten its credit rating, Durkin says.
One big target to bolster revenue: income taxes. Increasing the personal tax rate to 4.75 percent—a quarter-point below the temporary tax hike—would raise $3.5 billion, according to the Civic Federation, which favors increasing the rate to 4.25 percent. Raising corporate taxes to 6.25 percent from 5.25 percent would add $445 million. The federation supports upping the corporate rate to 6.0 percent. […]
Other options include expanding the sales tax to 32 services, a move Rauner proposed during the campaign as a way to generate more than $600 million in revenue. An even broader expansion would raise $937 million, the federation says. […]
Taxing retirees with an annual income of at least $50,000, not counting Social Security, would generate between $1.5 billion and $2.0 billion a year, the Civic Federation says.
“Everything has to be on the table, at least for discussion,” says state Sen. Kwame Raoul, D-Chicago, co-chairman of the General Assembly’s conference committee that produced the pension bill two years ago. “The pension problem is not just a pension problem. It came about as a result of the state balancing its budget on the back of the pension system.”
When Minnesota jacked up income taxes, it back-dated the hike to January 1st. That would bring in a whole lot more revenue, but it would also hit the poor and middle class particularly hard.
Retiree taxes are almost assuredly off the table, but one never knows, I suppose. Service taxes can’t be implemented right away, but the future revenues can be bonded for a capital plan.
And, of course, the final option is to do essentially nothing and let Gov. Rauner take the heat.
* The House convenes at 1 today, the Senate convenes at 3. The Illinois Kids Campaign is now sponsoring this post, so the group’s daily Tweet will “stick” to the top for the duration of the month.
Believe it or not, legislators usually try to reflect their constituents’ core values. If the folks back home are convinced that their representatives have strayed too far from those values, those representatives are in danger of losing their jobs.
Some politicians are so popular that they can get away with anything. But few elected officials want to risk sparking up an opponent. Even though they’d likely win, they’d have to actually work during an election year. Politicians are like everybody else. Not many enjoy doing extra work for the same salary.
But sometimes a problem becomes so large that politicians finally have no choice but to stick their necks out.
This is one of those times.
The 2011 income tax hike was reviled. But the truth is it had to be done. The state had skipped and skimmed on pension contributions for so many decades that it needed to start making payments or risk a fiscal catastrophe.
Those payments aren’t small. They amount to several billion dollars a year. Without that tax hike, the state essentially would have had to gut the entire government.
But in an attempt to free up some money for vital services, pension benefits were cut. As you know, the Illinois Supreme Court recently rejected those cuts, in a strongly worded opinion.
Part of the “temporary” income tax hike expired in January, creating a $6.16 billion hole in the budget that begins July 1. Pension benefits can’t be cut to fill even part of that chasm.
Legislators and the governor are scrambling to come up with a solution.
Gov. Bruce Rauner had several House Republicans over to the executive mansion last week to ask them to vote “present” when the House Democrats called their “right to work” bill the following day.
Right-to-work laws allow union members to not pay for any of their union’s services, even though unions are required by federal law to service all their members. The laws can cripple unions, which may help businesses, but it tends to drive down wages for working folks.
Why would the Democrats bring an anti-union bill to the House floor? Various reasons, one of them being that they are so opposed to the idea and the governor has pushed it so forcefully that they wanted to finally get the issue off the table by killing it dead. They also wanted to put the Republicans in a tight spot of choosing between the governor and their friends in organized labor.
Anyway, the governor’s push last week was resisted by a handful of Republicans, even after House GOP Leader Jim Durkin demanded that they stick with the governor and vote “present.”
Several eventually relented, and the governor reportedly said that they would be free to vote “no” when a “real” bill is presented but that they all needed to stick together and hit their yellow buttons to protest House Speaker Michael Madigan’s ploy to put them all on the hot seat. It probably didn’t hurt that Rauner contributed a grand total of $400,000 earlier in the week to what his staff said was every Republican legislator in Springfield.
The meeting at the mansion was often tense, insiders say, although there was reportedly a moment of levity when one of the governor’s beloved dogs made a doo-doo in front of legislators while Rauner was giving his pitch.
Believe it or not, quite a few unions in this state have spent years wooing Republican legislators. The Illinois Education Association has a strong presence in suburbia and downstate and the union has long endorsed a significant number of GOP candidates—including in Tier One races against Democrats. Getting on their wrong side can be a hazard to one’s political health, which is just one reason so many Republican legislators were nervous last week.
The IEA sent House Republicans a “simple” message last week: “We expect a ‘no’ vote,” said one IEA lobbyist. “Show that you are supportive of the middle class. A vote to the contrary and they will have to explain themselves to our members.”
The Republicans pleaded their case that the bill was mainly just political theater designed to make them look bad. But the IEA and other unions wouldn’t budge, leaving legislators to choose between their party’s governor (and his tens of millions of dollars in campaign cash) and their union allies.
Illinois AFL-CIO President Mike Carrigan said last week that “anything but a solid ‘no’ vote” will “not be tolerated and will be considered as an inexcusable vote against labor.”
Carrigan also specifically said that “present” votes weren’t acceptable. Skipping the vote altogether wouldn’t be a good idea, either, he warned. “House member absences will be reviewed with suspicious eyes.”
In the end, only one Republican sided openly with the unions and Democrats by voting “no” on the bill, Rep. Raymond Poe of Springfield. Four union-friendly Republicans didn’t vote at all (Reps. John Anthony, Bill Mitchell, Michael McAuliffe and John Cabello). A few others didn’t vote, either, but that likely had more to do with the process and/or their relationships with their party leaders than anything else.
Some Republicans with past union ties voted with the governor. Rep. Dwight Kay, for instance, was endorsed by the IEA for the first time last year, but he voted “present.”
One of Rauner’s main goals is to split the Republican Party from all union ties. If the unions follow through with their threats, some of those ties will most certainly be broken.
And the Republicans aren’t the ones that unions have to be worried about. The House Black Caucus sent a clear message to trade unions during the debate that they need to start admitting more minorities or they’ll face retaliation.
Rauner has tried to peel off black and Latino legislators from labor by playing up the historic “whiteness” of the trade unions and promising affirmative-action-style reforms. In remarks planned in advance with other Black Caucus members, Rep. Ken Dunkin, D-Chicago, said during debate that the problem needed to be addressed soon or trouble could arise.
Almost all minority legislators stood during his speech and stared at the gallery where labor leaders were seated.
* Becky Vevea at WBEZ has an excellent look at the history of Chicago Public Schools. I’m probably excerpting more than I should but you should still go read the whole thing…
There’s a growing body of evidence that Chicago’s schools are improving quickly and — for certain populations of students — doing better than other districts. U.S. News and World Report just released its annual rankings of the nation’s best high schools: Six of the top 10 in Illinois are in CPS and another three in the top 20.
“When the state’s not doing well or not making great progress, there’s always some number of people who say, ‘Well maybe that’s just because Chicago’s not doing well. Maybe they’re just dragging down the rest of the state,’” says Robin Steans, executive director of Advance Illinois, a bipartisan group focused on improving the state’s education policy. “What we found is that’s not true. Chicago has made steady gains both academically and in terms of some critical outcomes, like graduation.”
Steans’ group looked at scores on the National Assessment of Educational Progress, from 2003 to 2013 and found Chicago students grew 11 points on the 8th grade math test and 7 points on the 4th grade reading test. The state grew just 7 points and 3 points, respectively.
Advance Illinois also compiled state graduation data from 2014 to compare Chicago with other districts for certain subgroups of students. They found that Latino students enrolled in CPS are more likely to graduate high school than their counterparts in many suburban districts, including Maine Township High Schools and Evanston Township High School.
“It’s so counterintuitive to what they think they know about Chicago that they just disregard it,” Steans says of the data. “There’s been so much noise, with the teachers strike and the school closings. The political heat and noise tends to crowd out what’s actually beneath and behind that.”
Paul Zavitkovsky, a leadership coach and assessment specialist at the Urban Education Leadership Program at the University of Illinois - Chicago, may be able to help. In a forthcoming study, Zavitkovsky’s findings mirror what Advance Illinois found.
“On an apples-for-apples basis, if you compare yourself with your counterparts based on race and socioeconomic status in other parts of the state, you have a higher probability of having a better educational experience in Chicago,” he says.
But Zavitkovsky goes further. He shared a preliminary version of the report with WBEZ that showed students in the 75th percentile for 4th grade math achievement grew 20 points between 2003 and 2013. The performance of that subgroup in the rest of the state grew only 3 points in the same amount of time.
* Sen. Tom Cullerton has announced that he’s running for Congress. From a press release…
After spending the last weeks exploring a run for Congress, State Senator Tom Cullerton (D-Villa Park) announced today that he is formally running for the 8th Congressional seat being vacated by Congresswoman Tammy Duckworth, who is running for U.S. Senate.
“Congress is a millionaires club. I want to change that by bringing my blue-collar work ethic and common sense solutions to Congress. I know what it is like to wake up, punch a time clock and put in an honest day’s work, “ Senator Cullerton said. “I believe everyone deserves a good job that allows them to get up each day and put in a hard day’s work. I believe that if you work hard every day, you deserve a good wage that provides for your family and the ability to retire with dignity. “
As a military veteran, Tom has made veterans and their families a cornerstone of his first term in the Illinois Senate, including sponsoring legislation that created Illinois’s first Suicide-Prevention Task Force for Veterans. As a proud Union member and former Hostess Route Salesman, Tom believes that working families need to come first and believes that Congress should increase the minimum wage.
* He’ll be up against Raja Krishnamoorthi in the Democratic primary to replace US Senate candidate Tammy Duckworth. From a Krishnamoorthi fundraising email today…
Democratic leaders are lining up to endorse Raja!
Here are just a few Democratic leaders who are backing Raja’s campaign for Congress:
State Senator David Koehler
Former State Rep. Paul Froehlich
Beth Siela Marcin, President of the Greater Palatine Area Democrats
OPEIU Local 45
And many others!
We’re building a strong grassroots campaign — and we want you there from the very beginning.
* Sen. Mike Noland is another possible candidate…
Have you been keeping tabs on Congress?
Well, I have. And I am tired of standing by while the House Republicans try to carry out their arcane Tea Party agenda.
This is what the Republican Congress has done so far this week:
Passed a ban on abortions after 20 weeks. This bill put an extreme agenda ahead of protecting the health of women.
Delayed a long term funding plan for the Highway Trust Fund. As our infrastructure continues to crumble, Republicans want to play politics with funding improvements and creating jobs.
Issued more subpoenas for its kangaroo court regarding Benghazi. As they continue their witch-hunt against Hillary Clinton, the United States faces real challenges abroad.
When I am elected to Congress I will stand up to these Republicans who are dead set on imposing their backwards thinking on the rest of America.
If you ready to help elect another progressive who will fight for a better tomorrow, I ask you to join our campaign today. If you’ve saved your payment information with ActBlue Express, your donation will go through immediately:
— Most talks are being held by special working groups, but the meeting times, locations and topics are secret. Lawmakers involved say Rauner’s staff has demanded they don’t reveal what was discussed.
— Rauner has so far refused to let anyone see copies of legislation outlining his desired reforms, though he has publicly assured reporters the legislation exists, and more information is coming soon. On top of that, his legal staff has rejected freedom of information requests seeking the information.
— Rauner’s staff has consistently taken more than one month to provide copies of his non-public schedule in response to requests from The Associated Press. Those documents, once provided, are redacted — making it impossible to see who’s attending “legislative briefings” and other meetings with the governor, and therefore who may be influencing his policy decisions… Responding to AP requests, Rauner’s office has so far provided only the governor’s schedules for January through March. AP is appealing to the attorney general’s public access counselor because the schedules that have been provided have redacted portions that appear to include the names of people with whom Rauner met or spoke.
“I don’t think I could be more transparent,” he said Thursday. “I’ve laid out everything we’re working on and why. I think we couldn’t be more crystal clear from our point of view. … I believe we’ll be able to come forward with a lot of detail in the not too distant future. “
* I posted on the ScribbleLive feed earlier this week that Madigan had started advancing this legislation. From a press release…
Encouraged by November’s referendum results showing widespread, statewide support, House Speaker Michael J. Madigan said the full House will vote next week on a constitutional amendment to increase state funding for elementary schools and high schools through an income tax surcharge on millionaires.
“I’ve believed for a long time that Illinois schools need and deserve greater resources to help give students the best education possible, and that more needs to be done,” Madigan said. “January’s income tax rollback is putting greater pressure on schools’ finances and the state’s ability to increase funding for schools. Once enacted, this measure would bring needed relief for students and schools.”
Madigan’s proposal provides for an additional 3 percent surcharge on incomes over $1 million. Based on a five-year average of taxable income over $1 million, Madigan’s measure would generate an estimated $1 billion in additional funding each year. The additional revenue would be earmarked exclusively for elementary schools and high schools throughout Illinois and would be distributed on a per-pupil basis.
Millionaires affected by the surcharge would pay the current individual income tax rate of 3.75 percent on income under $1 million and pay 6.75 percent on income over $1 million.
Illinois voters voiced broad support for Madigan’s measure, contained in House Joint Resolution Constitutional Amendment 26, through a referendum in November’s general election. Statewide, nearly 64 percent of all those voting on the surcharge supported it. More than 40 counties supported the referendum with at least 60 percent of the vote, and 100 counties supported the measure with at least 50 percent of the vote.
In light of the budget challenges Illinois faces in the coming years, Madigan said the funding would help schools provide needed programs and avoid teacher layoffs while lessening the need for local property tax increases.
“This measure deserves legislators’ approval. The majority of Illinois voters made a clear statement in November that they support this idea, whether they live in Cook County, DuPage County, Jackson County or Montgomery County. Budget decisions have been very difficult in recent years, and they’re only going to get tougher with the rollback of the tax increase. While the surcharge proposal is not a complete solution to our education funding challenges, opposition to this legislation ensures property taxes at the local level will be increased.”
* Twenty years ago, the General Assembly (then in GOP hands) and Gov. Jim Edgar gave Mayor Daley a gift. Buried deep within a big school reform bill which gave Daley pretty much complete control of the school system was a nice little sweetener that keeps on “giving” to this very day. From a press release…
The Chicago Teachers’ Pension Fund (CTPF), the Retired Teachers Association of Chicago (RTAC), the Chicago Principals and Administrators Association (CPAA), and the Chicago Teachers Union (CTU) announced their support for House Bill 3695, a measure which reinstates the pension tax levy diverted from CTPF in 1995. […]
The proposal reestablishes a specific tax levy for contributions to CTPF beginning in Fiscal Year 2016. In 1995, legislation diverted the CTPF tax levy into the CPS operating budget, giving CPS administrators control over pension contributions. CPS then deferred their contributions from 1996 to 2005. As a result, CTPF lost $2 billion in revenue. CPS again deferred contributions from 2010 to 2013 and cost the fund another $1.2 billion. In total, CTPF has foregone more than $3.2 billion in funding.
The bill restores the tax levy, equal to 0.26% of all taxable property within the Chicago Public Schools district, and would generate approximately $160 to $180 million in 2016. The bill does not increase taxes, but reduces the CPS levy from 3.07% to 2.81% to fund pensions. The 0.26% of tax levied each year will be deposited directly with CTPF.
And, yet, $3.2 billion in diversions later, nobody has ever bothered to repeal it. Indeed, it was apparently renewed four years after it first passed - under a Democratic House while Rep. Currie was Majority Leader.
* Earlier this week, I asked if you could help transport some rescued puppies from Missouri to points north. The response was strong. From Teri DeGrado in comments…
I am so excited! I just heard from Judy that she has many emails from folks offering to help. Thank you so much!! For the first time I can remember, we may actually have more drivers than we need.
But have no fear! There will be another transport in two weeks, so let Judy know if you want to be informed of future transports. We are almost always looking for drivers in northern Missouri/southern Illinois and southern Illinois over into Iowa.
If you couldn’t help this weekend, but would like to volunteer for a future caravan, contact Judy Kirkpatrick at: TomandJudy3015@att.net.
* More from Teri…
A little background, these transports run every two weeks (excluding Holiday weekends) to bring shelter dogs and puppies (with the occasional cat) up from high kill shelters in southern Missouri. These shelters still use gas chambers to euthanize dogs. Several rescuers work tirelessly to get those dogs up here where they are vetted and eventually find their forever homes.
…Adding… Oops. I didn’t notice that Michael had the scoop…
Sneed hears Urban League President and CEO Andrea Zopp, whose resume reads like a corporate bible, is all in.
• Translation: Top Sneed sources claim Zopp plans to run against Sen. Mark Kirk, R-Ill., and will make the announcement shortly.
On April 1, Sneed reported Zopp was mulling over such a run and encouraged to do so by former White House Chief of Staff Bill Daley, the brother and son of former Chicago mayors.
“She [Zopp] is now making phone calls, she is not waiting any longer,” a source said. “She feels the time is right now.”
Top Dem leaders, concerned about an absence of African-Americans on the Illinois Dem ticket — besides perennial candidate Illinois Secretary of State Jesse White — were urging Zopp, whose nickname is Andy, to run.
* Oh, and by the way, check out the NRSC’s bizarre new slogan about Duckworth…
Sen. Mark Kirk said Friday that he’d rather take on Urban League President and CEO Andrea Zopp in the general election than U.S. Rep. Tammy Duckworth.
“Zopp is an easier candidate for me to defeat … Because she’s not as well known,” Kirk said Friday, before participating in a lunchtime event with the Chicago Council on Global Affairs downtown.
“Tammy is a war hero. She has a great story to tell because she’s given a lot to this country . . . ” Kirk said. Duckworth lost both her legs when her helicopter was shot down over Iraq.
*** UPDATE 2 *** Press release…
“Tammy Duckworth is a partisan voice who sides with Washington insiders and powerbrokers, not the independent-minded people of Illinois. The inability to clear her path in the US Senate primary demonstrates a massive failure by her Washington friends. Mark Kirk is the person Illinois needs in the nation’s capital as he works across the aisle to get things done that benefit all of us,” said Nick Klitzing, Executive Director of the Illinois Republican Party.
Friday, May 15, 2015 - Posted by Advertising Department
[The following is a paid advertisement.]
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The Illinois Department of Transportation released its annual five-year report Thursday, saying the department continues to fall behind on maintaining the state’s roads.
IDOT issued the report as part of an announced $8.4 billion, six-year construction program. The report says funding will likely remain flat for any future projects without some kind of capital bill.
“While this latest multiyear program will have a positive impact on many of our communities, it also underscores the urgency to find a long-term, sustainable solution for our infrastructure needs,” acting Illinois Transportation Secretary Randy Blankenhorn said in a prepared statement.
The report says 83 percent of the state’s highways and 93 percent of its bridges are in “acceptable condition” today. That number will drop to 62 percent for highways and 86 percent for bridges by 2021 at current funding levels. […]
The multiyear program IDOT announced includes $1.85 billion in projects for the fiscal year beginning in July.
In addition to a budget deficit of as much as $6 billion in the coming year, several factors crimp road spending. A $31 billion capital-construction plan which buoyed road work ended last year. The state’s road fund collects money from vehicle registrations — stagnant for the last decade at about $1.3 billion annually — and a motor fuel tax which, with falling gas prices, dropped about $100 million in the past two years from a 2004 high of just under $600 million.
What’s more, to erase a deficit in the current budget left when a temporary income-tax increase was allowed to roll back in January at incoming governor Rauner’s insistence, the [legislature] and Rauner agreed to take more than $350 million from accounts devoted to road-building [Emphasis added]
So, instead of $1.85 billion in spending next fiscal year, IDOT could’ve spent $2.2 billion - almost 20 percent more - if the Road Fund hadn’t been swept - not to mention the other $150 million swept from various state construction accounts.
A report from the state auditor’s office has found more than $321,000 was paid for services to dead people through a program in the Illinois Department of Aging. […]
The audit released Thursday from the Illinois Office of the Auditor General says the funds went for senior citizen services in the department’s Community Care Program last year. It also says another $38,000 was paid for services to incarcerated people.
OK, this is a serious story and somebody could be in big trouble, but check out this last line…
Auditors recommend stricter controls be placed on the program to prevent dead or imprisoned people from receiving services in the future.
Somehow, I’m thinking that the dead and the jailed didn’t actually receive any services.
Gov. Bruce Rauner’s desires to have right-to-work in Illinois went down in flames in the House on Thursday, gaining zero yes votes in a fiery debate Democrats aimed squarely at the governor.
The vote tally was 0 yes votes, 72 no votes and 37 voting present, offering a blistering rebuke to Rauner’s anti-union agenda.
Republicans were ordered to vote “Present.” So “zero yes votes” was completely expected. They were also ordered to stay away from the merits of the bill, which is why nobody rose to speak in favor.
Republicans, as they did in a vote on a portion of Rauner’s budget plan last week, once again objected to Democrats staging the symbolic vote, and with all but one member voted “present” on the bills. The “present” votes, in place of “no” votes — allowed Republicans to avoid taking a stand on the politically-sensitive issue.
“This isn’t about right to work,” Republican state Rep. Bill Mitchell, of Forsyth said. “It’s about dividing people and it’s not fair.”
Only GOP state Rep. Raymond Poe of Springfield, the state capital where many unionized government workers live, voted against the plan.
Poe did vote “No,” but a handful of Republicans took a walk yesterday and didn’t vote either way: Anthony, Cabello, Fortner, David Harris, McAuliffe, McSweeney and Bill Mitchell. Those were the cracks in the Rauner armor.
But some Republicans are gonna get some real grief from unions for their “Present” votes yesterday.
Republicans called the ordeal a political stunt. They said Democrats weren’t taking the idea seriously, noting that the language in the bill was not written or reviewed by the Rauner administration.
“People are watching us and they’re demanding results in Springfield that are going to put people back to work,” said House Republican leader Jim Durkin. “This governor was not elected with just Republican votes, he was elected with Democrat votes, independent votes, who told him to come to Springfield and fix the problems that we have.”
The governor has been traveling the state giving speeches almost every day for six months bashing unions, and yet his House leader calls yesterday’s vote a political stunt?
Please.
* Several Republicans also bashed the Democrats yesterday for being “divisive.”
Really?
For months, the governor has cynically attempted to turn the non-unionized have-little’s in this state against the unionized have-some’s while simultaneously catering to the grotesque self-interest of the have-it-all’s.
That’s not infinitely more divisive than a little floor debate?
Rep. Ron Sandack, R-Downers Grove, generated a chorus of boos when he said Democrats were just staging the event to produce videos for their next campaigns.
“The idea you are standing up for the working man is an embarrassment,” Sandack said. “You’re for no one but yourselves.”
District E’s Dan Neal said he supported working on creating equitable pensions and improving workers’ compensation issues, among other things, but he didn’t support the entire resolution.
“(Rauner has) really put this forth to us as: Take it or leave it; it’s all or nothing,” Neal said. “I don’t think we’re subject to that kind of dictation. I think we should look at this as what should be supported.”
Clukey, however, questioned when Rauner demanded that the resolution considered without any revisions, pointing out that other local governments had. Neal said he talked with a governor’s office representative who said county members could add an addendum but not change the language.
Control freaks.
*** UPDATE *** From the governor’s office…
Good morning, Rich!
Moultrie County and Arthur both passed the Turnaround Resolution.
* Buried at the very bottom of this Tribune story is something I told subscribers about on Tuesday…
Rauner is hoping to put forth a united front heading into the final, frenzied days of session. The governor, whose campaign fund held more than $20.5 million to help supportive Republicans and potentially punish obstinate legislators, made the unorthodox move of doling out $400,000 to GOP lawmakers this week, a Rauner aide said.
The donations to the Republican legislators, who are a minority to the overwhelming Democratic majority that controls the House and Senate, included $10,000 to Senate Republican leader Christine Radogno of Lemont.
“We are encouraging the Republicans to stay strong together,” Rauner told reporters Thursday without mentioning his campaign donations to members of the Republican caucuses. “To have more influence in the process we need to stay unified, and that’s a message I’ve been saying that for the entire process and that’s important.”
Madigan spokesman Steve Brown said the massive donations seem “a bit contradictory” since Rauner railed during the campaign about what he considered to be corrupt fundraising practices and has sought to ban political donations from some interest groups.
“He is a special interest,” Brown said of the governor. “It confuses the average person who thinks he’s about changing the whole environment, when he’s engaged in the very same activity.”
If some big votes were coming up on any topic and any leader or interest group dumped $400,000 on every legislator of a single party, I highly doubt it would be at the bottom of a story.
New representative Carol Ammons (D-Champaign) insinuated the Republicans had been bought by donations from political action committees including one on behalf of the new governor.
“Whether we will be able to represent the rest of us that don’t make it into the one percent, don’t cash that check,” Ammons said.
* Rep. Lou Lang also whacked the Republicans for the governor’s contributions during yesterday’s “right to work” floor debate. Relevant comments start at the 2:50 mark…
Working to bring closed-door discussions on important issues into the open, House Speaker Michael J. Madigan on Thursday announced the House will vote next week on proposals to change laws dealing with the civil justice system and assistance received by injured workers.
“Changes to the assistance received by those injured on the job and putting a constitutional limit on lawsuit judgments are at the top of the governor’s agenda, and they have a direct impact on the financial security of middle-class families and the victims of horrible tragedies due to the negligence of others,” Madigan said. “Changes to laws that impact so many Illinois families deserve serious and open discussions.”
Madigan said the House will vote on the issues on Thursday, May 21. Madigan’s announcement follows two full House hearings on the issues of assistance received by workers injured while on the job through no fault of their own and Illinois’ civil justice system and the protections it provides to victims and their families.
“We’ve had two thorough and informative hearings in the full House on both these issues, and legislators had a great opportunity to listen to the stories of real Illinois families, their experiences with Illinois’ workers’ compensation and civil justice systems compared to the systems in other states, and how their lives have been impacted,” Madigan said. “If the governor is serious about the changes he is proposing, the right thing to do now is for us to bring these issues into the open and have a constructive and open discussion, vote and see what steps need to be taken from there.”
Madigan pointed out the Legislature’s scheduled adjournment of May 31 is nearing. Madigan again encouraged the governor to file his legislation in anticipation of the votes next week.
Thursday, May 14, 2015 - Posted by Advertising Department
[The following is a paid advertisement.]
In 2011 the Workers’ Compensation “Reform” package was signed into law, aimed at lowering costs for employers in Illinois. These changes have had a negative effect on workers in Illinois and their ability to receive fair and reasonable compensation when they are injured on the job and have not resulted in insurance premium reductions for employers in Illinois, even though workers’ compensation costs have undeniably come down.
The National Academy of Social Insurance reports workers’ compensation is the second most profitable line of insurance after auto insurance. Over 300 insurance companies compete for and write workers’ compensation insurance in Illinois, more than just about any other state in the country. If Illinois is so unprofitable, why are these insurance companies climbing over one another to sell insurance here? It may be because insurance companies in Illinois are essentially unregulated when it comes to setting insurance premiums.
Decreased benefits for injured workers, medical reimbursements plummeting, claims falling, and reduced costs have all resulted in big profits for the insurance industry. This is the real result of the 2011 workers’ compensation reform.
Any further changes in workers’ compensation laws should instead look to promote insurance premium transparency and oversight – not further sacrifices by the injured worker.
For more information on workers’ compensation, click here.
While government union executives like to complain about the state shorting past pension payments (in some instances to maintain or grow the workforce unions could skim dues off of), just 40% of the unfunded liability can be attributed to a lack of funding. More generous benefits, actuarial miscalculations and lackluster investment returns account for most of the problem.
It’s not like taxpayers have not already paid their fair share. According to an analysis… “While government worker contributions to Illinois’ five pension systems have increased by 75 percent since 1998, taxpayer contributions have increased by 427 percent over the same period. In 2012 alone, Illinois taxpayers contributed $3.5 billion more to the pension systems than state workers did.”
Yeah, well, when the state doesn’t make its payments and the employees do, the state’s payments are gonna rise a whole lot more than the workers’ payments when the state tries to catch up.
Anybody wanna guess which organization produced all three of the above paragraphs?
Thursday, May 14, 2015 - Posted by Advertising Department
[The following is a paid advertisement.]
Over 60 organizations representing a broad coalition of business, labor, conservation and civic organizations from across Illinois and around the country signed an open letter to voice their support for the Illinois Low Carbon Portfolio Standard (LCPS) (HB 3293/SB 1585), currently being considered by the Illinois General Assembly.
Signatories include the Chicago Urban League, Exelon, GE Hitachi, IBEW Local 15, Illinois AFL-CIO, Illinois Clean Energy Coalition, Illinois Hispanic Chamber of Commerce, Illinois Pipe Trades Association, Sargent & Lundy and United Scrap. Their support comes on the heels of a rally in the state capitol last week that drew nearly 600 Illinoisans who delivered a petition with over 10,000 signatures urging state lawmakers to enact the legislation.
“Illinois’ nuclear facilities provide tremendous economic, reliability and environmental benefits to the state and the region,” said John Grimes, vice president of GE Hitachi Nuclear Energy. “The Low Carbon Portfolio Standard is the only legislation that properly values these plants. We urge the General Assembly to vote yes on this important bill.”
Illinois’ six nuclear energy facilities generate nearly half of the state’s electricity and 90 percent of Illinois’ low-carbon electricity. However, three of these plants have been losing significant amounts of money each year and may soon close without legislative action. If these plants close early, it will cost the state an estimated $1.8 billion per year in economic activity, 8,000 jobs and up to $500 million per year in higher electric costs statewide, according to a State of Illinois report.
* Gov. Bruce Rauner told Statehouse reporters today that he and the legislative leaders are “feverishly endeavoring” to come up with a viable pension reform solution. He also said they might pursue “several options simultaneously” and send them all to the courts. He laughed off a question about the Illinois Policy Institute’s idea to fire all state workers and put them in a new pension plan. Rauner said he will “negotiate in good faith” with the unions.
He also spoke a bit about “right to work,” blaming “special interest groups” for opposing his changes. He encouraged Republican lawmakers to “stay unified” with his program.
* “We have taken a number of things off the table,” Rauner said about his “Turnaround Agenda,” but wouldn’t say what those things were. He also dodged a question about a potential income tax hike.
And despite all the secret “working group” meetings, Rauner claimed he was being totally transparent, and essentially blamed the secrecy on the General Assembly, which is, sorry to say, a total crock.
Thursday, May 14, 2015 - Posted by Advertising Department
[The following is a paid advertisement.]
Maybe Exelon should bail out CPS and the City of Chicago instead of demanding a $1.6 BILLION subsidy form struggling family, business and government ratepayers.
“A plan to financially reward Exelon Corp. for producing no-carbon energy and potentially save three Illinois nuclear plants from closure would cost ratepayers $1.6 billion over five years and strain budgets for financially strapped businesses and municipal governments, a study released Tuesday found.” - Associated Press, 4/21/15
We simply can’t afford to pad the pockets of Exelon shareholders while governments from Chicago to Cairo are in such dire straits. Businesses and governments can learn how much the bailout would cost them at www.noexelonbailout.com/calculator.
Just say no to the Exelon bailout. Vote no on SB1585/HB3293.
BEST Coalition is a 501C4 nonprofit group of dozens of business, consumer and government groups, as well as large and small businesses. Visit www.noexelonbailout.com.
BIG, SCARY NUMBERS: Chicago’s unfunded liability from four pension funds is $20 billion and growing, hitting every city resident with an obligation of about $7,400. Detroit’s, whose population of about 689,000 is roughly a quarter of Chicago’s, had a retirement funding gap of $3.5 billion, meaning each resident was liable for $5,100.
For one thing, Chicagoans can afford more than broke, under-educated Detroit residents…
Detroit: Median household income, 2009-2013 $26,325 Chicago: Median household income, 2009-2013 $47,270
Detroit: Median value of owner-occupied housing units, 2009-2013 $50,400 Chicago: Median value of owner-occupied housing units, 2009-2013 $233,200
Detroit: Bachelor’s degree or higher, percent of persons age 25+, 2009-2013 12.7% Chicago: Bachelor’s degree or higher, percent of persons age 25+, 2009-2013 34.2%
Detroit’s economy has been Iraq-style devastated for years.
Also, that unfunded liability is longterm debt unless all employees decide to retire tomorrow, which they won’t. The city absolutely must start paying down its debts, but it doesn’t have to do that all at once. It ain’t gonna be easy, there’s much pain ahead, but the screamers need to calm the heck down a bit.
HOSTILE COURT: When Detroit filed for Chapter 9 in July 2013, a federal bankruptcy judge exerted his considerable powers and decreed that everyone—taxpayers, employees, bondholders and creditors alike—would get a haircut to settle the crisis. When the Illinois Supreme Court ruled on May 8, it said the state couldn’t cut pension benefits as part of a solution to restructure the state retirement system.
False equivalency. A state court is not a federal bankruptcy court. And this situation clearly hasn’t had a chance to play itself out yet. I mean, it’s been less than a week since the Supremes ruled. If you want to jump out your window, be my guest. I think you’re a fool, but go right ahead.
POLITICAL PARALYSIS: Just as Detroit slid into bankruptcy after decades of economic and actuarial warnings, Chicago politicians have watched the train wreck rumble toward them for more than a decade. During that time, they skipped pension payments and paid scant attention to the financial damage being done. In 10 years starting in 2002, the city increased its bonded debt by 84 percent, according to the Civic Federation, which tracks city finances. That added more than $1,300 to the tab of every Chicago resident.
There’s no doubt that Chicago has been paralyzed with the tax fear and that Daley and Emanuel over-borrowed. There’s also no doubt that Detroit’s economic problems have been far, far worse than Chicago’s. They couldn’t even afford to buy firefighters any equipment. The place had been a bombed-out ruin forever before it declared bankruptcy.
NO BAILOUT: Detroit’s bankruptcy filing allowed it to restructure its debt, officially snuffing out $7 billion of it by cutting pensions and payments to creditors. In Illinois, the nation’s lowest-rated state, with unfunded pension obligations of $111 billion, Rauner had a blunt message last week in an unprecedented address to Chicago’s City Council: The city will get no state bailout.
It’s simply too early to tell if Gov. Rauner’s threat is real. We’ll probably know in a few weeks. There’s a whole lot of horse-trading ahead.
DENIAL: After years of denial, Detroit officials finally, if grudgingly, agreed to major surgery. At least for now, Chicago’s Emanuel is sticking to his view that the Illinois Supreme Court’s rejection of a state pension reform law doesn’t apply to the city. “That reform is not affected by today’s ruling, as we believe our plan fully complies with the State constitution because it fundamentally preserves and protects worker pensions,” he said in a statement on May 8.
Again, we need to let it play out a bit before rushing to screaming judgements.
* I want to make it crystal clear that I’m not attempting to downplay Chicago’s very real, very serious, even dire problems. The city is in a world of bigtime hurt. But it’s a Tier One city, not some backwater dumping ground. People have been saying Chicago would become another Detroit since at least the days when Harold Washington first ran for mayor. Know what happened? He raised taxes after years of avoidance by Richard J. Daley and his machine successors and the city eventually took off like a rocket. Emanuel tried to follow the Daley path after succeeding yet another Daley. It’s a failed strategy, and it has truly endangered the city’s fiscal and economic health. Taxes will have to rise so much that some people will leave. But it’s gonna take a whole lot more than that to make Chicago into Detroit.
Even before the triple-whammy to Chicago’s finances, Gov. Bruce Rauner was using the b-word, as in bankruptcy, particularly for CPS. That’s a status from which Detroit recently emerged.
Emanuel said Wednesday it would be “irresponsible and reckless to do that” as a first option. But, for the first time, he did not entirely rule out the possibility of bankruptcy. That would free the city and CPS to do things it would not otherwise be permitted to do while unions would lose their leverage.
“It exists. It can happen. [But] rushing there means you haven’t gone to your partners in labor and said, `Do you want to be part of the solution?’ ” Emanuel said.
Pressed on whether a post-election property tax increase was inevitable to solve the combined, $30 billion pension crisis at the city and the public schools, Emanuel insisted once again that raising property taxes was the “last option, not the first option.”
He maintained that the jackpot of revenue from a city-owned Chicago casino would be enough to save police and fire pension funds and that an end to the “double-taxation” of city residents for teacher pensions in Chicago and across the state would go a long way toward solving the $9.5 billion pension liability at CPS.
If the General Assembly and the governor can’t help sort this mess out, then it’s time to start worrying. Otherwise, we need some clear, calm heads around here for a change.
A lawsuit by unions and retirees challenging Mayor Rahm Emanuel’s changes to city pension funds ultimately will be decided by the Illinois Supreme Court when all is said and done, a Cook County judge said Wednesday.
To that end, Associate Judge Rita Novak set a July 9 hearing in the lawsuit centering on a state law the mayor pushed through to cut costs in an attempt to shore up the city laborers and municipal workers pension funds.
Gov. Bruce Rauner is sticking to his plan to reduce retirement benefits for government workers, even after a recent Illinois Supreme Court ruling severely limited options for cutting state pension costs, administration officials said Wednesday.
That position was relayed as the Republican governor dispatched a lawyer and policy adviser to a House committee to discuss the approach on pensions months after Rauner floated it. While no legislation has been filed, the new governor has talked broadly about moving all current workers to a less generous benefit package beginning in July. Upon retirement, those workers would collect two pensions — one from the more generous plan in place now, and a second from the less generous benefits accrued after July. […]
“We continue to believe that the governor’s proposal … is constitutional under the current constitution even after the Supreme Court’s ruling that came out Friday,” [Rauner administration attorney Kim Fowler] said.
The Rauner team’s view is that the court was unclear about whether future benefits have the same protections as those benefits already earned. “We don’t think the court clearly answered what benefits are protected,” Fowler said.
C’mon. The Supremes were abundantly clear. Do we have to go over this yet again?…
Under article XIII, section 5, members of pension plans subject to its provisions have a legally enforceable right to receive the benefits they have been promised… The protections afforded to such benefits by article XIII, section 5 attach once an individual first embarks upon employment in a position covered by a public retirement system, not when the employee ultimately retires… Accordingly, once an individual begins work and becomes a member of a public retirement system, any subsequent changes to the Pension Code that would diminish the benefits conferred by membership in the retirement system cannot be applied to that individual.
Some Democrats on the committee said they disagreed. Rep. Scott Drury, D-Highwood, said that once an employee joins a pension system, they are locked into its benefits.
“We can increase the benefits, but once we do that, we can’t take it away,” Drury said. “The court poked a lot of holes in what we did. I think (Rauner’s plan) needs to be set aside because it’s just not realistic anymore. The holding is not nearly as ambiguous as you are making it out to be.”
Rep. Mike Zalewski, D-Riverside, expressed a similar view.
“There’s no reading of that decision that squares with your testimony here today,” he said. “Benefits are benefits under this law, and there’s nothing we can do to alter them. This false distinction between benefits earned and future benefits earned is not realistic.”
Republicans said they think the governor’s plan will work. Rep. Tom Morrison, R-Palatine, said he has had teachers in his district tell him they can accept Rauner’s plan because they know that pension costs are cutting into other state services, including education.
Rep. Carol Sente, D-Vernon Hills, said she liked Rauner’s proposal to amend the constitution to change the wording of the pension clause — although that couldn’t be voted on until November 2016 at the earliest — but that “I feel the ruling was very clear and I do feel that the items in this proposal are not constitutional and would fall to the same ends.”
“I do feel that a decision has been made and we’re going down the same path in a slightly different way,” she said.
“I think its absolutely fantastic,” state Rep. Jeanne Ives, R-Wheaton, said of the proposal.
The partisan split suggested attempts to rein in state pension problems will remain a major headache as lawmakers work toward a scheduled May 31 adjournment date.
“I feel like its groundhog day,” said state Rep. Elaine Nekritz, D-Northbrook.
The committee seemed less chilly to the governor’s desire for a constitutional amendment ballot question in time for the 2016 general election.
Fowler said the proposed amendment language would make clear that benefits already accrued under the law in effect during a period of service must be protected. With that said, the amendment also would make clear the General Assembly and governor have the right to alter pension statutes through new legislation, she said.
A three-fifths vote of each chamber of the Legislature could place a constitutional amendment question on the 2016 general election ballot. To be enacted it would also need approval by three-fifths of voting on the question or a majority of those voting in the election.
* Meanwhile, the News-Gazette editorialized about pension reform today, and added this little nugget…
[Senate President John] Cullerton’s planned legislation is not the only solution he’s put forward. Months ago, he suggested another approach.
It’s unclear if he was serious. But if he wasn’t then, he and others may be now because it could be the only way to hold the semblance of a line on pension costs.
Cullerton suggested the state refuse to agree to any future pay increases for state employees. If the state can’t take control of pension costs on the benefits end, perhaps it can through salary freezes.
Such a freeze would have to last several years to have a significant impact.
U.S. Sen. Mark Kirk is touting his recovery from a debilitating stroke in the first television ads of his 2016 re-election bid.
The Illinois Republican launched the ads Thursday in Chicago and the Champaign area.
The early ad buy — which his campaign says cost more than $320,000 — is a sign of how competitive the race is expected to be.
* The press release…
“Courage”, the first television ad of the 2016 U.S. Senate election in Illinois chronicles Senator Mark Kirk’s unending determination to fight for Illinois families in the Senate. The over $320,000 advertisement flight starts airing today on broadcast and cable networks in the Chicago and Champaign media markets.
“Because we all have our own steps to climb, Kirk in spite of his stroke, is driven to fight for Illinois families in the Unites States Senate. Senator Kirk’s independent voice in the midst of partisan gridlock is a source of pride for Illinois. Senator Kirk has climbed the steps of the Capitol for fellow stroke survivors, veterans and everyone in Illinois working to overcome a challenge in their own life. He goes to work for them,” said Kevin Artl, campaign manager for Kirk for Senate.
· In 2010, Senator Kirk won President Obama’s Illinois Senate Seat defeating former Illinois Treasurer Alexi Giannoulias in one of the closest elections in the nation.
· Despite suffering a major stroke in 2012, Senator Kirk returned to work just a year later and capped off his inspiring recovery by climbing the U.S. Capitol steps surrounded by a collection of bipartisan Congressional leaders.
· In 2015, Senator Kirk, a veteran of the U.S. Navy, created the group ‘Kirk’s Battle Buddies’, to offer encouragement, support, and counseling to fellow stroke survivors and veterans. ‘Kirk’s Battle Buddies’ participated in stair climbs at the John Hancock Center and Presidential Towers with more climbs scheduled this year.
Described in press accounts and by political pundits as a “moderate” and “independent”, Senator Kirk’s record has matched the description as he has often voted against party lines to support measures important to Illinois voters, including his work to protect the Great Lakes from pollution and contaminants, his support for marriage equality as a means to end discrimination and his votes for rigid background checks for gun purchases to prevent gang members from gaining access to firearms.
During previous elections when Kirk ran in a presidential year, Kirk has outperformed the Republican presidential candidate by an average of 12 points, demonstrating strong crossover appeal to independent voters and reform-minded democrats.
The Illinois House is planning a vote on Republican Gov. Bruce Rauner’s proposal that would allow local governments to permit workers to opt out of unions.
Democratic Speaker Michael J. Madigan’s office says Thursday’s vote is planned even though the governor hasn’t filed a bill with the Legislature.
Rauner has spent recent months pitching city councils and business groups on the idea of local “empowerment zones.” The zones would allow voters to make union membership voluntary, rather than mandatory, at unionized workplaces in their communities.
“Our message has been to House members that this is a very serious vote, we want to see a solid “no” vote,” said Illinois AFL-CIO president Michael T. Carrigan who represents the We Are One coalition of public unions in Illinois. Last week, House Republicans voted “present” when Madigan surprised them by putting Rauner’s social service cuts language into a bill and calling it for a vote. On Thursday, he’s expected to do the same with right to work, which is designed to undercut unions’ power.
“We’re not looking for “present” votes. Present votes are not acceptable,” Carrigan told the Chicago Sun-Times. “If there are too many absences by House members, we will look at their absences with suspicious eyes. No. It’s time to find out where an elected legislator, an elected person is on this subject.”
Sources say the governor’s office has been working behind the scenes to influence the Republican House caucus.
In recent weeks, in what is viewed as an attempted show of force by the governor, Rauner has moved hundreds of thousands of dollars into various campaign committees. That is on top of the $20 million already in Rauner’s campaign committee and millions more in a Turnaround Committee that says part of its mission is to “oppose those who stand in the way” of Rauner’s “bold and needed reforms.”
Even Republican lawmakers privately say they hope that a public vote will allow legislators to move forward on issues such as the budget and how to fund pensions.
Subscribers were told about Carrigan’s demands two days ago, and learned much more about the governor’s campaign contributions that same day, plus a behind the scenes account of the governor’s lobbying this morning.
