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Friday, Jun 2, 2017 - Posted by Rich Miller

* From a reader…

Hi Rich,

The below link is to a music video featuring Assistant Secretary of the Senate Scott Kaiser. The band, Nick Bafino and the Innocents, opened for Boston at the PCCC and is playing this Friday at the Legacy of Giving music festival in Springfield. I somehow happened upon this and was surprised the video had not been more widely circulated.

Scott isn’t in the band, but he was in the video, which, by the way, was not filmed during state time. They did it on a Saturday. How he’s managed to keep this a secret for so long is beyond me.

* Anyway, it’s not really the sort of music I usually feature here, but we all love Scott Kaiser, so here you go

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Friday, Jun 2, 2017 - Posted by Rich Miller

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Rauner defends former DCFS director, DGA pounces

Friday, Jun 2, 2017 - Posted by Rich Miller

* From this morning’s WBEZ interview

WBEZ: So, speaking of social services, I want to talk a little bit about the Department of Children and Family Services, DCFS. Two and a half years ago, you brought in George Sheldon, who we had on this show. I believe you called him an all-star. He resigned this week amid controversy, some having to do with contracts benefitting associates, was he the wrong guy for this job?

GOVERNOR BRUCE RAUNER: Well, first of all, let me say we need to provide the proper support for our most vulnerable children. We have so many children growing up in abject poverty, it breaks my heart. And many of them come from broken families with abusive adults in the household. Very important that we do everything we can to support our vulnerable children. It’s very difficult work, very challenging and unfortunately our Department of Children and Family Services has been a failing bureaucracy with unmanageable work rules and contracts and restrictions in terms of law of what they can and can’t do that ties their hands, it’s a very broken system. George came in, he was a star in the Obama administration, he’s a Democrat, he was a star in the Florida government. I believe he did everything he could, he was heavily recruited, I did not ask him to leave or force him out, he accepted another position. He was extremely frustrated trying to make changes. There are investigations ongoing right now, I support those. We are trying to understand exactly what’s been happening down at the levels of the department of children and family services, we need to make all the improvements we can, we need to help our most vulnerable kids.

WBEZ: What about the reports that DCFS was giving gift cards to employees to close out cases, are you investigating what’s wrong with that?

RAUNER: We are investigating everything. Everything at every level.

WBEZ: So again, was he the wrong guy for the job?

RAUNER: Well, we’ve got to fix the system. George was here for two years, and he tried to fix it. And we just we can never give up. We’ve got to bring talented people in who are going to improve our systems to help our most vulnerable kids. It’s the most important work we can do.

That transcript was provided by the Democratic Governors Association.

* From the DGA…

On his appointment in 2015, Governor Bruce Rauner said George Sheldon was the “best of the best.” A year later, Rauner repeatedly praised Sheldon’s work for leading an “impressive transformation” at the agency.

But Sheldon’s record tells a different story. Sheldon’s agency came under investigation for crony hires and handing out contracts to friends, and most recently it was discovered that DCFS “awarded” $100 gift cards to DCFS investigators that “closed the most cases in a month.” In the case of Semaj Crosby, DCFS personnel had contact with her family 16 times last year but the state still allowed Crosby to remain in the home.

“Bruce Rauner needs to come clean on why the Department of Children and Family Services was mismanaged on his watch,” said DGA Illinois Communications Director Sam Salustro. “But today, Governor Rauner chose to bury his head in the sand and defend his hand-picked appointee, George Sheldon. Bruce Rauner has to own his administration’s failures, and explain why he did not act to remove George Sheldon or intervene in the department.”

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*** UPDATED x1 *** Agreement reached with IDOC nurses, so Rauner vetoes bill

Friday, Jun 2, 2017 - Posted by Rich Miller

* Press release…

Governor Bruce Rauner today vetoed Senate Bill 19 due to an agreement between the Department of Corrections and the Illinois Nurses Association. As a result of good faith negotiations, both sides reached an agreement on an alternative to subcontracting that was fair to taxpayers and state employees.

Governor Rauner wrote in his veto message:

“Since the passage of Senate Bill 19 by the General Assembly, our Administration has negotiated a new contract with the Illinois Nurses Association and addressed these concerns. The agreement allows the Department to achieve the necessary fiscal and operational objectives without resorting to contracting with outside vendors. The agreement represents what is possible when all parties work together.”

The governor was getting a lot of heat from Republican legislators to settle this matter with the prison nurse.

The full veto message is here.

*** UPDATE ***  Press release…

Senator Andy Manar, a Bunker Hill Democrat and supporter of collective bargaining rights, reacted this afternoon to word that Gov. Bruce Rauner vetoed a measure that would have protected the jobs of unionized state prison nurses:

“Gov. Rauner went back to the table to with these nurses and renegotiated their contract because of pressure from lawmakers on both sides of the aisle. Had it not been for that, he would have embraced this as yet another opportunity to thumb his nose at unions and working families,” Manar said.

“Since it was so easy for him to return to the table and reopen negotiations with the prison nurses, perhaps he can find it within himself to return to the table with AFSCME and do the same. As Gov. Rauner acknowledged in his veto message, an agreement is indeed possible when all parties work together.”

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Illinois isn’t supposed to buy its own bonds

Friday, Jun 2, 2017 - Posted by Rich Miller

* From the comptroller…

Illinois’ credit rating has fallen so low that the state is too risky an investment for even itself, Comptroller Susana Mendoza and Treasurer Michael Frerichs announced Friday.

The State Treasurer’s guidelines say the state should not invest in bonds with anything less than an A-minus rating. See guideline 5.0 (k) http://illinoistreasurer.gov/TWOCMS/media/doc/State%20Portfolio%20–%20Investment%20Policy_FINAL.pdf

Moody’s and Standard & Poor’s both lowered the state’s credit rating to one level above junk-bond status Thursday after the Governor and the legislature failed to reach agreement on a budget before the scheduled end of the session. This is the lowest Illinois’ bonds have been rated in the state’s 44-year history of bond ratings. The Fiscal Year ends June 30 and the agencies warn more downgrades could happen then if the impasse continues.

That means higher costs to taxpayers; more difficulty raising funds for Illinois’ most basic needs; and further cuts in services for the state’s educational institutions and its most vulnerable residents. Rating agencies and business groups are urging Governor Rauner to stop holding the budget hostage to his pet projects and negotiate a balanced budget in good faith with legislative leaders.

That point when the treasurer was supposed to stop buying Illinois bonds was actually reached a year ago in June of 2016 when S&P dropped Illinois’ rating to BBB-plus.

But, better late than never, I suppose.

  4 Comments      


Question of the day

Friday, Jun 2, 2017 - Posted by Rich Miller

* Do you have any summer plans?

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Crain’s: “We’re in this mess because of Mike Madigan”

Friday, Jun 2, 2017 - Posted by Rich Miller

* Crain’s Chicago Business editorial

Gov. Bruce Rauner bears his share of the blame for this ridiculous impasse. He’s held up the budget process by demanding reforms that are only tangentially related to the business of determining how much our government costs and finding ways to pay for it. And the proposed fiscal 2018 budget he offered earlier this year was at least $4.6 billion out of whack, according to the Civic Federation’s math. When the time comes to ask whether Illinois is better off under four years of Rauner’s leadership, we know what the answer will be.

But let’s not mince words: The one person who could have passed a spending bill by May 31 and sent it to the governor’s desk is Madigan. The Democratic-controlled Senate, with President John Cullerton, did its job, passing a plan that included tax hikes that, while unpalatable, are a key part of the tough medicine that all sides—including the governor—acknowledge is necessary to bring Illinois back into fiscal health. And yet, the Democratic-controlled House, which Madigan runs like a Middle Eastern strongman, let the budget deadline come and go without doing anything.

Why? It’s simple: Madigan put his own interests before the interests of the state. A vote for a bill that would hike taxes could endanger some members of his delegation in the next election, especially downstate. And if enough of those House seats flip from blue to red, Madigan loses his spot as speaker of the House. The whole state suffers, in other words, so Madigan can keep his job.

This is the reality every Illinoisan must live with until Madigan is voted out of power. With our unpaid bills approaching $16 billion, a general funds deficit beyond $10 billion, borrowing costs skyrocketing as ratings agencies downgrade us to banana-republic levels, and unfunded pension obligations north of $130 billion, Madigan’s one-man job-security plan is too damned expensive.

* Greg Hinz

I put Rauner first because, much as he wants to rail about how Illinois took a wrong turn under GOP predecessors Jim Thompson, Jim Edgar and George Ryan, Rauner has underperformed all of them.

Sure, Illinois needs structural reform. Chris Kennedy was right the other day in his theory about the tyranny of the property tax lawyers. But Rauner came in with an agenda as long as your leg: anti-union measures, tort reform, term limits, merit selection of judges, a property tax freeze, workers’ compensation changes, etc. In the last few weeks, he’s finally whittled that down to a manageable few. But the pattern of overreaching was set.

Rauner compounded that by highly personalizing his fight with Senate President John Cullerton and especially Madigan, throwing around terms like “corrupt.” That’s no way to get to a deal. Nor is running robocalls targeting Democratic lawmakers in the very days leading up to the May 31 budget deadline.

When Senate GOP leader Christine Radogno finally had enough earlier this year and tried to craft her own budget deal with Cullerton, she got sandbagged. Rauner pulled votes off their “grand bargain,” rather than trying to force Madigan’s hand and split the House Democratic caucus. The result: a potential “negative credit spiral,” as Standard & Poor’s put it yesterday, when it downgraded the state’s credit rating, again. Or as Civic Federation President Laurence Msall says, “As the chief executive, the governor has the prime responsibility for running the state.”

* Related…

* Where is Emanuel in the budget fight?

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“The most intentionally vicious act ever committed by this state government on its own people”

Friday, Jun 2, 2017 - Posted by Rich Miller

* Crain’s Chicago Business has again posted my column online early. Here’s an excerpt

The impasse is the most intentionally vicious act ever committed by this state government on its own people. Period.

It is far worse than the damage done by decades of mismanagement that piled up gigantic pension debts because that wasn’t purposely malicious. It was just plain God-awful stupid, ignorant and short-sighted.

Click here and read the rest before commenting, please.

  46 Comments      


Uber is decimating the Chicago cab industry

Friday, Jun 2, 2017 - Posted by Rich Miller

* A recent NY Magazine feature on Uber discusses the company’s ambition to become a monopoly, which the author concludes is unlikely

To explain its massive losses, Uber and its investors have often cited Amazon, which didn’t turn a year-end profit for ten years as it built out an infrastructure that made the selling of more and more books — and eventually, of everything — cheaper and more efficient the larger it got. But Amazon’s biggest-ever loss was $1.4 billion, half of Uber’s 2016 deficit, and Jeff Bezos responded by cutting 15 percent of his workforce. Plus, Uber’s economics barely resemble Amazon’s. The taxi business doesn’t scale in the same way, and while Uber’s technology is sophisticated, the barriers to entry are relatively low, and Uber has had to fend off various competitors. So far as Horan could tell, there was only one possible path for Uber to meet that $68 billion valuation: eliminate competition.

Uber’s potential aspirations toward monopoly are a sensitive matter — in discussing how Uber Pool became more efficient the more people used it, McClendon referred to Uber’s ideal state as a “monopoly,” before correcting himself to call it “not a monopoly, but a heavily used service” — and while every company dreams of owning its entire market, the question of whether Uber can do so has become murky.

* Duncan Black, an economist by training and a frequent Uber critic from the left, sums it up this way

Uber’s fortunes depend on it being a monopoly (multiple local monopolies), which it has no realistic path to achieving.

Which brings me back to my original point, made years ago, that whatever the problem with local cab regulation, there is a reason the market depends on rate regulation and supply restriction.

* But

Chicago cabdrivers struggling to survive in the Uber era are fighting a losing battle, with 40 percent of all medallions “inactive” and hundreds more either in foreclosure or headed there, a new study shows.

The American Federation of State, County and Municipal Employees Local 2500 represents hundreds of cabdrivers and is continuing to organize the others.

To bolster its case, the union asked statistician James Bradach of Nonprofit Data and Applications to analyze countless pieces of information disjointedly made available in on the city’s data portal.

His report, “Run Off the Road: Chicago’s Taxi Medallion Foreclosure Crisis,” shows a surge in medallion foreclosures and a precipitous drop in both taxicab trips and driver income in the three years since City Hall created an unlevel regulatory playing field between taxis and ride-hailing.

The study’s findings include:

    227,033 ride-hailing vehicles registered with the city as of April competing with 6,999 taxi medallions.
    The number of “monthly taxi trips” on the streets of Chicago has dropped by 52 percent over the last three years — from 2.3 million to 1.1 million.
    774 medallions have been “surrendered to the city at some point,” with 579 more receiving foreclosure notices and 107 lawsuits filed since October.
    2,940 taxis or 42 percent of the city’s 6,999 taxi medallions were classified as “inactive” in March after having failed to pick up a single passenger in the previous month. That means those licenses face “imminent foreclosure in the coming months,” the study says. In March, 2014, 16 percent of medallions were inactive.
    Average monthly gross income for every one of the city’s active taxicab medallions has fallen over the last three years — from $5,276 to $3,206.
    Cabdrivers who were eking out a $19,000 annual living after expenses in 2013 are now operating $4,000 in the red. That’s because their $44,000 in annual expenses have remained the same while business has plummeted.

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*** UPDATED x1 *** Noland files suit over legislative furloughs and COLA

Friday, Jun 2, 2017 - Posted by Rich Miller

* Crain’s

A former state senator from Elgin is suing for back pay, alleging the General Assembly violated the Illinois Constitution by forcing furloughs and eliminating cost-of-living adjustments for legislators.

Michael Noland, a Democrat who retired in January after losing a race for Congress, says in the lawsuit that the state constitution prohibits such mid-term salary adjustments.

The complaint, filed yesterday in Cook County, didn’t specify how much Noland lost as a result of eight bills passed between 2009 and 2016 that eliminated COLAs and five bills during the same period that mandated 36 furlough days.

Noland could not be immediately reached for comment. Michael Scotti, a private-practice attorney in Chicago representing Noland and a special assistant attorney general for the state, declined to comment. He said Noland would issue a statement later today.

I think he’s right on the constitutional issue, but I hope for his sake that he never plans on running for office ever again. But if he prevails, it sure wouldn’t hurt a lobbying career. I’m not at all saying he’s planning such a thing, mind you (he never registered with the state), I’m just sayin…

*** UPDATE ***  Monique

Noland in 2012 voted in favor of at least one of the bills to cut out pay raises. That measure passed the Senate without opposition, and Noland was quoted as supporting the legislation in a statement posed on the Illinois Senate Democrats website.

“We need structural tax reform to properly fund our most important priorities — like education, health care and the ongoing need for infrastructure,” Noland said at the time. “Until we do this, the least we can do is cut our own pay again. I know most working families in Illinois are not seeing raises this year, so we shouldn’t either.”

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*** UPDATED x1 *** “Focus, Amanda. Focus.”

Friday, Jun 2, 2017 - Posted by Rich Miller

* Heh…


They really don’t do Rauner’s responses justice. The governor actually said the word “focus” in response to the Trump questions ten times.

The full interview is here. The Trump stuff starts at the 7:30 mark.

*** UPDATE ***  The Pritzker campaign isolated the clip…


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Rauner says Illinois is on “a good path to change the system”

Friday, Jun 2, 2017 - Posted by Rich Miller

* From Gov. Rauner’s WBEZ interview today

TONY SARABIA: OK, before I let you go, just a last question. And we hear a lot of this from listeners often when we have you on the show, that they’re hearing the same points and answers and I’m wondering what have you said today that was different than you have said in the past?

GOV. BRUCE RAUNER: Well Tony, when we’re on a path, a good path to change the system, there’s no reason for different answers.

Whoa.

* More from the governor

You know, I have people come up to me every day, Democrats and Republicans who identify themselves as such, Democrats come to me and say ‘Governor, stay strong, you’re on the right track.’

I had an elderly woman come up to me recently, she grabbed me by the arm and she had a little, kind of teary eyed, and she looked at me and she said, ‘Please, governor, you’re our last hope. Don’t give up. Stay the course. We’ve got to change our system.’

Discuss.

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A nice early Christmas gift

Friday, Jun 2, 2017 - Posted by Rich Miller

* The Chicago Tribune gave Gov. Bruce Rauner’s campaign a gift today with this front page headline

You can probably bet that headline will make an appearance in a Rauner TV ad if this impasse is never resolved. “He’s fightin’ those tax-hikin’ Democrats with everything he has!” or something.

* The story itself is pretty good, however

As the final hours of the spring session ticked down, Republican Gov. Bruce Rauner railed against Democrats for failing to send him a budget and for letting the state government stalemate spill into its 24th month.

The public scolding came after Rauner had spent time working to ensure that a Democrat-led attempt to pass a spending plan with multiple tax increases never made it to his desk. […]

That the governor made a point of getting out in front of the Democrats’ budget efforts illustrates the tricky politics at play in the stalemate. While Rauner’s reelection strategy hinges on branding Democrats as tax-happy, he might have had difficulty explaining to voters why he vetoed a budget that would raise taxes but also would have ended an impasse that’s diminished the state’s financial standing, decimated social services and starved universities. […]

Getting to that point in negotiations with Democrats has proved elusive, however. The governor already has put $50 million of his own money into his re-election bid and given millions more to the Illinois Republican Party, which has been plastering Democratic districts with attack ads.

Asked about those ads, which ran during the make-or-break final month of the session, Rauner said, “I don’t know, I mean, whatever. I spend no time thinking about the politics. That’s separate and I don’t spend time on it.”

…Adding… Wordslinger in comments…

Who’s making those spots and writing those checks? His stuntman?

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Protected: *** UPDATED x1 *** SUBSCRIBERS ONLY - This just in…

Friday, Jun 2, 2017 - Posted by Rich Miller

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Crack in the armor

Friday, Jun 2, 2017 - Posted by Rich Miller

* Senate President John Cullerton on WBEZ this morning

I tell you what, when the Republicans in the House realize they’re going down with the ship, they should stand up, work with the speaker, work with us and the Republicans over in the Senate… Some of the worst criticisms of the governor I’ve heard have come from the Republicans.

That would require the House Speaker to actually want a deal. So far, it doesn’t look that way to me.

* From WLS AM

Cullerton says the key is Republicans in the House.

“You know what, if there’s enough people to stand up on their hind legs over there and say, you know what governor, you’re mismanaging the government, we’re having disastrous results here, we need to do a deal with the Democrats and we’ll get the compromises you had originally agreed to. We’ll pass your original budget with your original tax rate and then it doesn’t make any difference what the governor says because they could override him and we could override him,” Cullerton said.

* But there was one development that went mostly unnoticed. Here’s a Public Radio story by Tom Lisi entitled “Republican Lawmakers Defy Rauner on 911 Services”

The Illinois General Assembly voted to increase a fee on cell phone bills in order to fund 911 services. It was a rare example of Republican lawmakers defying the Rauner administration.

Negotiators involved in the legislation say the governor tried to pull Republican support because Rauner did not want Mayor Rahm Emanuel to get a win.

But GOP lawmakers ended up voting for the measure, which includes a cell phone fee increase in Chicago.

State Rep. Chad Hays, R-Catlin, says the attempt to fortify 911 service centers was going to fail because of “peripheral” reasons.

“And I suggested that I was not going to go home and tell the people in my community that when they dial 911, on the other end of the line it says, ‘Sorry this line has been disconnected,’ because the governor and the mayor of Chicago are in a wrestling match about something peripheral,” Hays said.

The governor simply did not want to give any more money to Chicago until the impasse was resolved and he had a hard brick on the legislation. But Republicans in both chambers ended up voting for the bill. 34 House Republicans voted for it and all but 3 Senators voted for the bill and Senate GOP Leader Radogno even added herself as a hyphenated co-sponsor on Wednesday.

* The lesson here is the governor can be beaten if the House Democrats decide to work with the House Republicans and come up with a real plan that individual Republicans can feel comfortable supporting.

* Related…

* Chicago phone tax could rise by 28 percent to save pension fund

* State lawmakers vote to hang up on landline phones

  33 Comments      


The high price of deliberate inaction

Friday, Jun 2, 2017 - Posted by Rich Miller

* From a Sun-Times editorial entitled “By the numbers: The price and pain of no budget in Illinois”

180,000: Number of unpaid [state] bills in Illinois as of Wednesday.

$14.5 billion: Dollar damage of those unpaid bills. The backlog has tripled since 2015 and, at this pace, will reach $28 billion by 2021. At that time, it will consume 80 percent of the state’s budget.

7 months: Average wait for a bill to be paid by the state. Illinois is now paying bills for October 2016.

9 to 12 percent: The high interest rate Illinois must pay, by law, on overdue bills.

$800 million: Interest due on the state’s unpaid bills.

6: Number of credit rating downgrades Illinois has incurred since the budgeting impasse began. Illinois now has the worst credit rating of any state in the country. Illinois is in danger of plunging into junk bond status. [It’s now 8.]

$952 million: Money Illinois has promised but failed to pay to human service agencies over the last two years, short-changing care for the disabled, the poor and the elderly.

69: Percentage of social service agencies that have received no or only partial payment from the state in fiscal year 2017. This compares to 35 percent last fiscal year.

46: Percentage of agencies that have cut back on the number of clients they serve.

25: Percentage of agencies that have eliminated entire programs, such as for training for the unemployed and assistance to the elderly.

19: Percentage of agencies that have laid off staff because of delays and cuts in state funding.

57,000 cops: Their police training classes, across the state, were canceled.

$4. 6 billion: Amount the state is behind in paying health insurance claims for employees and retirees. Doctors and dentists, who say the delayed payments threaten to put them out of business, are demanding that patients pay upfront.

80 percent: Reduced funding, based on 2015 levels, that public universities have received under the last stop-gap state budget.

6: In April, S&P Global Ratings downgraded the creditworthiness of six state universities — The University of Illinois in Champaign-Urbana, Northeastern Illinois University, Eastern Illinois University, Southern Illinois University, Western Illinois University and Governor’s State University.

180 employees: Number Northeastern University announced it will lay off this summer because of a $10.8 million shortfall in state funding.

40 percent: Proportion of employees laid off at Chicago State University in 2016, to a significant degree because of reduced and inconsistent state funding.

16,461 students: They all left Illinois to go to college someplace else in 2015, while only 2,117 out-of-state students came to Illinois. University administrators say the exodus continues and can be blamed in part on university funding uncertainties, and the accompanying hit to the reputation of the state’s universities.

1,000 students: They failed to return to college for a second semester last year because grant funding for low-income students was frozen. Another 124,000 students stiffed by the state on their Monetary Assistance Program grants managed to remain in school only because the university or college fronted them the money, hoping the state would be good for it eventually.

4.7 percent: That’s the unemployment rate in Illinois, higher than in all its Midwestern neighbors except Kentucky. Business leaders have stressed to the Sun-Times Editorial Board repeatedly that while they’d love to see lower taxes and a loosening of regulations, what they require above all is governmental and taxation stability and predictability.

6: Number of Illinois small business development centers that closed for lack of funding in the last two years. Seven remain.

$850 million: This is what Illinois owes public schools across the state for “categorical” programs such as special education, transportation, bilingual services and early childhood education. The state did not make its September 2016 quarterly payment until April of this year. When will the December and March payments be made? Nobody knows.

$454.8 million: That’s what the state owes Chicago area’s Regional Transportation Authority, forcing the RTA to borrow to keep trains and buses running. The cost of this short-term borrowing is $950,919. Remember that when fares go up.

37,508 people: They all moved out of Illinois in 2016, the most residents lost by any state. It was Illinois’ third straight year of population decline. Leading the decline — for the third year in a row — was the City of Chicago, which lost 8,638 residents from 2015 to 2016. Of the 10 largest cities in the country, Chicago was the only one to see a drop in population.

  26 Comments      


Republicans say Pritzker’s new slogan similar to Blagojevich’s

Friday, Jun 2, 2017 - Posted by Rich Miller

* From the ILGOP…

Hey Rich,

To your post about the Pritzker ad. JB’s slogan at the end is “Fighting for what’s right, getting things done.” That’s eerily similar to Rod Blagojevich’s 2006 slogan, “Getting things done for people.”

* E-mail attachment…

In case you missed it, the new TV ad is here.

  36 Comments      


Drury gets primary opponent

Friday, Jun 2, 2017 - Posted by Rich Miller

* I told subscribers about this several weeks ago

Deerfield attorney Bob Morgan announced Thursday that he’s running as a Democrat for the Illinois House seat now held by State Rep. Scott Drury (D-Highwood). […]

“It’s been more than 700 days without a budget and it’s time for someone to stand up for the values of our community, make changes and begin fixing the problem,” said Morgan, a health care policy attorney.

Drury has claimed that he’s exploring a run for governor. He wouldn’t say whether he’d yet made up his mind.

* More

“In a recent conversation with Bob Morgan, I was very disappointed to learn that he is open to voting for Mike Madigan to be the speaker of the House,” Drury said. “The last thing the 58th District needs is to go backwards.”

Morgan said he made no mention of Madigan during their brief conversation.

“I told him I would support a Democrat for speaker who shared my progressive values,” Morgan said.

Go read the rest.

…Adding… It’s not all listed online yet, but the Morgan campaign claims it has raised $30K so far and hopes to raise a total of $50K this quarter.

  22 Comments      


*** UPDATED x1 *** Rauner now claims he favors Manar’s education funding bill

Friday, Jun 2, 2017 - Posted by Rich Miller

* Appearing on WBEZ again today, Gov. Rauner talked about education funding reform legislation

A good Democrat bill got introduced in the Senate and a good Republican bill got introduced in the Senate. I support either of those bills. They were good bills.

The governor went on to call the House’s version, which ended up passing, a Chicago bailout.

* But let’s go back to when Democratic Sen. Andy Manar passed his own version out of the Senate…

The Rauner Administration released the following statement regarding the Senate’s passage of SB1. The following is attributable to Illinois Secretary of Education Beth Purvis

“This bill is not consistent with the framework of the bipartisan, bicameral School Funding Commission. Senator Manar abandoned our bipartisan process, departing from agreements already finalized in the commission and forcing a Chicago bailout at the expense of every other school district in the state, some of which are in worse financial straits than CPS.”

As a result, not a single Senate Republican voted for the bill.

* Rauner also told WTTW yesterday that he could support Manar’s bill “with very minor tweaks.” But Purvis’s May 17th statement belies that comment.

He’s rewriting history and he’s getting away with it.

*** UPDATE ***  From the governor’s office…

The governor was referring to Andy Manar’s SB 1, Senate Amendment 3 which he believes can be the basis to a compromise. The governor believes that there is a good place for compromise between Sen. Barickman’s SB 1124 and Sen. Manar’s SB1, Senate Amendment 3. The governor also believes that the conversations that were occurring between House Republicans and Will Davis just hours prior to floor Amendment 1 being filed could lead to a school funding formula with reforms that everyone could celebrate.

  30 Comments      


Rauner asked about possible special session

Friday, Jun 2, 2017 - Posted by Rich Miller

* Amanda Vinicky asked Gov. Bruce Rauner about the possibility that he’ll bring legislators back to Springfield for a special session

“If they won’t come back, if they refuse to come back, we may have to resort to a special session.”

Timeline?

“Well, it’s pretty soon. It’s not very long we’ll decide.”

Do you think he should do it?

  35 Comments      


*** UPDATED x1 - Pritzker response *** Today’s quotable

Friday, Jun 2, 2017 - Posted by Rich Miller

* From CBS 2 Political Reporter Derrick Blakley

Just one day after Illinois lawmakers left Springfield without approving a budget, Rauner’s spirits are still up. But Illinois debt ratings are down – again.

“I wouldn’t be surprised if there’s more ratings downgrades, there should be, because the majority in the General assembly won’t get a balanced budget and they won’t get changes to keep it balanced,” the Republican governor says.

*** UPDATE ***  Pritzker campaign response…

To be clear, further downgrades will lower the Illinois bond rating to junk status. This will do irrevocable harm to the state, which Rauner’s ‘wait and see’ approach is unlikely to fix.

This flippant response came in an interview with CBS Chicago, one of the many interviews Rauner sat for yesterday as part of his ‘I failed to pass a budget again’ media tour. The station noted that Rauner’s “spirits are still up” 702 days into a devastating crisis in the state he is supposed to lead.

“Illinoisans aren’t surprised that Bruce Rauner failed to pass a budget. They aren’t surprised he can’t figure out how to lead this state. And they aren’t surprised he can’t be bothered to do the job he was elected to do,” said Pritzker campaign spokeswoman Jordan Abudayyeh. “After 700 days of Bruce Rauner driving this state into the ground, this is sadly what Illinois families have come to expect. Bruce Rauner is a failed governor and he shouldn’t be surprised when he is voted out of office next November.”

  49 Comments      


Democratic candidates weigh in on Pritzker/Blagojevich story

Thursday, Jun 1, 2017 - Posted by Rich Miller

* In case you need to refresh your memory, the Chicago Tribune story is here. From the Chris Kennedy campaign…

The tapes speak for themselves.

* Sen. Daniel Biss’ campaign…

Including JB’s $230,000 property tax scheme, this is part of a disturbing pattern that JB is using the same rigged game that the rich and well-connected have played to benefit themselves at the expense of the rest of us

* Ameya Pawar’s campaign…

“This is what billionaires and political insiders do and people across the state are tired of politics as usual. Ameya Pawar’s record of beating the Chicago machine and passing legislation on behalf of working families represents a break from the status quo. If elected governor, Ameya will be a voice for the millions of Illinois families who have been left behind to fight over scraps.”

I haven’t heard back from Bob Daiber.

Rate ‘em.

  40 Comments      


*** UPDATED x3 - Frerichs responds - Mendoza responds *** Moody’s also downgrades Illinois credit rating

Thursday, Jun 1, 2017 - Posted by Rich Miller

*** UPDATE 1 ***  Comptroller Mendoza…

On our 701st day without a budget, two more bond rating agencies gave Illinois the 7th and 8th credit downgrades since Gov. Rauner took office 2 ½ years ago. Before he took office, Illinois had been paying its backlog of bills down. It got down to less than $5 billion. In just two years of his failed leadership, he has about tripled that stack of unpaid bills to $14.5 billion and growing. Both Standard & Poor’s and Moody’s dropped the state to one grade above junk status Thursday.

While all sides could try harder to compromise toward a budget solution as the General Assembly has with every previous governor, business groups and independent third parties put the blame for Illinois’ crisis mainly on Governor Rauner. Standard & Poor’s said in its last assessment: “Illinois’ fiscal crisis is, in our view, a man-made byproduct of policy ultimatums placed on the state budget process.” In other words, Governor Rauner has created and now owns this crisis.

In the meantime, our office will continue triaging how to make payments to Illinois’ struggling schools, nursing homes, hospice centers and aging facilities from a near-empty bank account. We’re about to reach the breaking point at which court-ordered payments will exceed the state’s revenues. Illinois’ sick, elderly, young, and most vulnerable are paying the price. This crisis is untenable, unconscionable, and unnecessary. It’s time that the Governor stop campaigning and take responsibility for his failures and fulfill his constitutional mandate to introduce a balanced budget.

*** UPDATE 2 *** Treasurer Frerichs…

“Two credit downgrades in 24 hours further underscores the need for a full, balanced budget,” Frerichs said. “My warnings were ignored and credit agencies have responded. We need a bipartisan budget now to end this crisis.”

*** UPDATE 3 *** Illinois Working Together Campaign Director Jake Lewis…

“In light of today’s downgrades, the seventh and eighth downgrades of Gov. Bruce Rauner’s tenure, we are reminded of Rauner’s June 3, 2013 tweet:


Ouch.

[ *** End Of Updates *** ]

* Like the S&P downgrade earlier today, this new rating is just a single notch above junk bond status…


* Press release…

Moody’s Investors Service has lowered the rating on the State of Illinois’ general obligation (GO) bonds to Baa3 from Baa2, amid a prolonged political impasse that has prevented progress on a growing pension deficit and an increasing backlog of unpaid bills. With this action, ratings of several state debt types linked to the GO rating also were lowered: Build Illinois Bonds backed by sales tax revenues, to Baa3 from Baa2; the Metropolitan Pier & Exposition Authority’s McCormick Place project bonds, to Ba1 from Baa3; and the state’s Civic Center program bonds, also to Ba1 from Baa3. Debt outstanding for all affected securities totals about $31.5 billion, but not all outstanding Build Illinois and Metropolitan Pier issues are rated by Moody’s. The outlook applicable to the state and these associated credits remains negative.

Legislative gridlock has sidetracked efforts not only to address pension needs but also to achieve fiscal balance, allowing a backlog of bills to approach $15 billion, or about 40% of the state’s operating budget. During the past year of fruitless negotiations and partisan wrangling, fundamental credit challenges have intensified enough to warrant a downgrade, regardless of whether a fiscal compromise is reached in an extended session. As the regular legislative session elapsed, political barriers to progress appeared to harden, indicating both the severity of the state’s challenges and the political difficulty of advocating their solutions. Extending the impasse, and the state’s embedded operating deficit of at least $5 billion (or 15% of general fund revenue) would signal further pressure on the state’s credit position. But the state’s credit could stabilize at the current level in the event of a political consensus that more closely aligns revenues and spending, without relying on unsustainable fiscal measures.

The downgrade to Baa3 for Illinois’ GO bonds is consistent with the state’s intensifying pressure from pension liabilities; by our calculation, the state’s unfunded pension liability (Moody’s adjusted net pension liability, or ANPL) for its five major plans in aggregate grew 25% in the year ended June 30, 2016, to $251 billion. The current rating also acknowledges intrinsic credit strengths, primarily the state’s sovereign powers over revenue and spending; a diverse and strong economic base with the long-term economic potential to provide for its liabilities, and statutory protections for bondholders, primarily requirements for monthly transfers in advance of semiannual debt service payment dates. During the past decade, the state’s governance framework has allowed practices that greatly offset these strengths. After eight downgrades in as many years, Illinois’ rating is an outlier among states, most of which are rated at least eight notches higher. The rating on the Build Illinois sales-tax revenue bonds is capped at the GO rating because of lack of sufficient segregation of pledged revenues from the state’s operating needs. The Met Pier and Civic Center program bonds are both rated a notch below the state GO bonds, because of the need for annual legislative appropriation of payments.

Rating Outlook

The state’s negative outlook is consistent with its potential for additional credit weakening because of a continuing political impasse that has left Illinois increasingly vulnerable to adverse revenue trends and severely underfunded retiree benefit plans.

Factors that Could Lead to an Upgrade

    Implementation of a realistic plan to provide long-term funding for pension obligations

    Progress in reducing payment backlog and adoption of legal framework to prevent renewed build-up of unpaid bills

    Enactment of recurring fiscal measures that support expectation of sustainable, structural balance

Factors that Could Lead to a Downgrade

    Continued increases in unfunded pension liabilities and indications of unwillingness to allocate sufficient resources to retiree benefits

    Persistent and growing structural imbalance that pressures liquidity and increases payment backlog or bonded debt burden

    Court rulings that increase the volume of payment obligations that are legally prioritized

    Difficulty managing impact of any other adverse negative events, such as an unexpected economic downturn or reduction of federal Medicaid funding

    Failure to enact legislation providing for timely payment of subject-to-appropriation debt

* Let’s revisit

The governor said negotiations stalled over term limits, local government consolidation, workers’ compensation and a property tax freeze.

None of which were mentioned by Moody’s, of course.

  61 Comments      


Question of the day

Thursday, Jun 1, 2017 - Posted by Rich Miller

* If you’ve been to the Statehouse this week, you may have noticed that former Gov. Pat Quinn’s portrait is missing, even though it was unveiled back on May 8th…

* Several people asked me if I knew what was going on, so I reached out to Quinn’s people…

The artist thought some of the brushwork looked off in the light of the Capitol and is revising.

Let’s lighten things up a little.

* The Question: What “really” happened to the Quinn portrait? Put on your finest tinfoil hats and get to it.

  78 Comments      


In response to budget meltdown, Pritzker airs new ad, Biss slams Madigan and Rauner

Thursday, Jun 1, 2017 - Posted by Rich Miller

* JB Pritzker launched a new TV ad in response to yesterday’s debacle

* Transcript…

What’s happening in Springfield is offensive to our values and to who we are as a state, and Bruce Rauner blames everyone but himself. The failure to pass a budget isn’t just about numbers. It’s creating real damage to people across Illinois especially those most vulnerable in our society. Thousands of women and children seeking refuge from violence are finding shelters either closed or with less availability than they once had. Substance abuse programs are at risk in the middle of an opioid and meth epidemic that’s ripping apart families and communities. Home care for seniors is in jeopardy. Access to mental healthcare is under siege. And with Donald Trump in the White House, now more than ever, we need leadership in our state that’s committed to fighting for the people of Illinois. None of us can afford to sit on the sidelines. We have to fight for what we believe in. That’s why I’m running for governor.

Narrator: JB Pritzker. Democrat for governor. Fighting for what’s right. Getting things done.

* Sen. Daniel Biss’ press release was pretty harsh…

“Politics have gotten in the way of progress for the people of Illinois. Neither Governor Rauner nor Speaker Madigan have showed a sincere desire to keep our schools open, to pay our bills on time, or to make sure the safety net stays in place.

That’s why I’m calling on Governor Rauner and Speaker Madigan to do something they’ve refused to do — sit down with each other, face to face, and hammer out a compromise. They need to do their job and end the pain they’ve caused. If they can’t, it’s more evidence that it’s time to replace both.​”

* Chris Kennedy…

After more than 700 days without a budget, Bruce Rauner has turned a budget crisis into an economic catastrophe for Illinois. The situation that we are now in is the economic equivalent of circling the drain. Financial analysts are threatening that Illinois’s financial situation is approaching rock bottom. That’s what’s become of our state under Bruce Rauner. We need to demand accountability and reject a rigged system. Illinois needs a budget that reflects our values as a state and gives businesses and residents confidence that state government is financially stable and predictable. If I’m elected governor and I don’t balance the budget, I won’t run again, nor should I. That’s the level of accountability and honesty we need to show the people of Illinois.

* Ameya Pawar fundraising e-mail…

Today is the last scheduled day of the legislative session, and it appears there will again be no spending plan before lawmakers adjourn for the summer, leaving schools, universities and social service providers without many answers.

Gov. Bruce Rauner has failed to do the most basic function of a governor for two years in a row. With no budget on the horizon, Illinois is on the cusp of a third straight year in fiscal limbo while more and more businesses and families flee the state in search of stability.

This is how a billionaire plutocrat governs - pitting people against each other and leaving working families with scraps.

All Gov. Rauner is focused on is how to buy another election. While Ameya’s big money opponents crowd the airwaves and raise eight figure checks that could fund a small town’s budget, we’re running a people-powered campaign. And, thanks to supporters like you, we’re gaining momentum every day.

  28 Comments      


Where we go from here

Thursday, Jun 1, 2017 - Posted by Rich Miller

* Sun-Times

State Rep. Greg Harris, D-Chicago, whom Madigan appointed as a chief budget negotiator, will hold public hearings, with the first scheduled for June 8 in Chicago.

“Our plan is for the House, Democrats and Republicans, to work through the month of June, [to] continue to work on budget-making, working on a balanced budget,” Madigan said. “We will invite and will expect participation by all members of the House.”

The governor has called these hearings “shams.”

* But

The budget plan at hand, borne of months of bipartisan Senate negotiations, called for spending $37.3 billion fueled by $5.4 billion in tax increases. But Madigan said his members got skittish after watching a fickle Rauner during the Senate talks, allegedly often changing his mind on individual parts and pulling GOP members off votes while maintaining he was hands-off.

“Some of our people are concerned, having observed how the governor worked with the Senate Democrats, where he would negotiate, then back away, negotiate, back away,” Madigan said. “They just don’t have a high level of confidence in the way the governor has conducted himself.”

* Rep. Greg Harris

“A lot of folks have watched what has happened in the Senate, where they thought they had reached an agreement, and at the end of that agreement they found out the governor was pulling votes off the bill, and then attacking the very people who had worked on the compromise, voting for things he had previously supported.”

* Also

House Minority Leader Jim Durkin says it’s a pattern: Democrats can proclaim victory by passing a measure in one chamber, only for it to be ignored in the other – meaning it has no chance of becoming law.

Other measures that were part of the “grand bargain” are going to the governor’s desk, including bills that make it easier for local governments to consolidate (Senate Bill 3), that loosen state purchasing rules (Senate Bill 8) , and one that would make way for Rauner to sell the James R. Thompson Center (Senate Bill 886), the seat of government in downtown Chicago.

“Despite all of these things along the way, where the governor was fighting us, where he was saying things to make us stop, promoting ideas that just aren’t accurate, or even putting out half-truths, I would go as far to say as lies about what we’ve done in the Senate. We acted responsibly,” Sen. Andy Manar, D-Bunker Hill, said.

* And

The governor said negotiations stalled over term limits, local government consolidation, workers’ compensation and a property tax freeze.

“They know darn well where we are apart, what we need to do to cut, what we need to do to reform the system. The majority in the House knows darn well what needs to be done. They’re not doing it,” the governor said.

Rauner — who faces re-election next year — called reforms he wants to grow more jobs, as well as the property-tax freeze, “not partisan” and necessary. And he urged lawmakers to stay in Springfield and continue to negotiate on a budget deal.

* More

Gov. Rauner: “I am going to demand that the Democratic majority [going forward] be here in Springfield and negotiate a compromise- a truly balanced budget with changes to fix our system…We could have and should have done this two years ago. You can’t find anyone in the State of Illinois who won’t say: ”We need property tax relief, our property taxes are too darned high.” Democrats in this state feel it just as passionately as Republicans…”

But he wouldn’t answer a question about whether he will call them back into town for a special session.

  30 Comments      


The disgusting price of deliberate inaction

Thursday, Jun 1, 2017 - Posted by Rich Miller

* Phil Luciano writes about some desperate parents who are seriously considering turning their adopted daughter over to the state

The couple knew the girl faced challenges, as she’d suffered neglect and abuse in former homes. For instance, she has reactive attachment disorder, where a lack of parental love and care renders a child with bonding difficulties.

“We tried our best to take care of her,” the mom says. “But we had lots of bumps in the road.”

The girl turned out to have other disorders, including psychoses that make her see hallucinations and hear voices. She’d steal from siblings and run away from home. Three times, the couple took the girl to mental health facilities. But the problems seemed to worsen.

She has been diagnosed as suicidal. “She will bang her head against a concrete wall, trying to give herself a concussion,” the mom says.

And she has been diagnosed as homicidal. “She has talked about killing me and how she would kill me,” the mom says.

So, last year the couple contacted The Baby Fold, a human-services agency in Normal that helps more than 1,000 children. Its services include residential treatment for children with severe mental and emotional challenges. It’s the only such treatment center in central Illinois, one of only two outside of a handful in Chicago and northern Illinois.

At The Baby Fold, the Washington girl (now 12) is under supervision 24-7, usually by two staffers — a level of care impossible at her home. Under treatment, the girl has been improving, with fewer outbursts. In fact, during visits, she gets along well with her adoptive mom.

As we’ve already discussed, The Baby Fold is closing its residential treatment center in a month because of the lack of a state budget.

* And so the mom is facing a huge crisis

She can’t afford the $200-plus per day her daughter needs for inpatient care and supervision. But the mom knows that if she signs the girl back over to the state, DCFS would have to cover the cost of moving her to a new treatment center. Nonetheless, such a move could mean the mom would never see her daughter again.

Think about that quandary. What would you do?

  26 Comments      


Today’s number: 1500

Thursday, Jun 1, 2017 - Posted by Rich Miller

* The higher education job-loss tally




* And that doesn’t include community colleges and this

WIU President Jack Thomas announced via email that the “University is delaying contract renewal notices to non-tenure track faculty (Unit B). This notice delays a decision on staffing levels for the Fall 2017 semester.” The 118 employees are being notified in writing.

The President explained, “Due to the unprecedented state budget impasse, Western Illinois University continues to consider fiscal adjustments.”

  43 Comments      


Trib reporter denies Pritzker story was a Rauner leak

Thursday, Jun 1, 2017 - Posted by Rich Miller

* If you click here and watch this video, you’ll see JB Pritzker blame the Tribune’s Blagojevich story yesterday on Gov. Rauner’s campaign…

When I decided to run for governor, it was clear to me that Gov. Rauner and the GOP had nothing except the kitchen sink that they wanted to throw at the Democrats and particularly at me because Bruce Rauner’s afraid to run against me.

And, so, this is a nine-year-old tape that they are leaking in an attempt to distract from the fact that 700 days into this administration, into this failure of a budget, this governor has done nothing for the people of the state of Illinois.

He’s chosen to do this on the 700th day. A day when at the end of session it looks like we won’t get a budget for yet another year. So, Bruce Rauner having failed, the GOP having failed, this is their massive attempt to distract.

Pritzker said more about that later in the same media availability and then said much the same thing during another avail he had last night. Click here for that one

It’s clear that Bruce Rauner and the GOP have nothing to run on, and so they are simply attacking… I knew when I decided to run for governor that they were going to throw the kitchen sink, that they were going to try to take down all the Democrats, particularly me because I think they’re mostly afraid of running against me in the general election. […]

So, what are they gonna run on? They can only run on trashing Democrats and introducing this idea of a nine-year-old leaked tape and attacking me.

* But the Tribune’s Jeff Coen was on WBEZ this morning and was asked about his source

We don’t ever talk about sourcing on these kinds of issues. I know the [Pritzker] campaign threw out a Bruce Rauner allegation. That’s not correct. I can say that. […]

This is Tribune reporting going back over … We have had routes for information on this case. I mean for me personally I’ve been protecting sources on this case back to 2006.

* Audio

* I asked the Pritzker campaign if they still stood by the allegations that this story was leaked by Rauner and/or the GOP to “distract” people…

“This is a continuation of attacks Bruce Rauner and the ILGOP have already made and the leak happened to coincide with the 700th day of session, where the governor failed to pass a budget for a third year.”

So, they tightened it up a bunch and dropped the direct connection allegation.

* The Pritzker campaign does appear to have some legit beefs about the way this story was reported out. They say they were only given an hour to respond to the story and weren’t told that tapes even existed. The Tribune reporters, the campaign claims, wouldn’t even read them any excerpts from the Blagojevich conversations, which is why the campaign’s first response seemed so oddly off-topic.

The question remains as well whether a federal judge’s order sealing these tapes was somehow violated. Remember, this was a huge issue back in the day. Blagojevich kept demanding that the judge “Release the tapes!” and the judge wouldn’t do it. This was a private conversation that didn’t result in any charges or even any testimony and yet it’s now public.

Campaign opposition researcher Will Caskey said this in comments yesterday

I’m working in the gov primary for another candidate and am disgusted by this entire story. Nonpublic incidental collection should never be used for anything other than its intended purpose; that’s the entire reason the FBI is allowed to wiretap suspects. […]

This is the second time incidental collection from the Blagojevich trial has been used to embarrass a political target outside the investigation. People should be fired over this, and it’s disgusting nothing will happen.

  56 Comments      


*** UPDATED x4 - Biss blames Madigan, Rauner - Civic Committee responds - Pritzker responds - Rauner admin: “Madigan’s majority owns this downgrade” *** S&P lowers Illinois GO bond rating to one step above junk - McPier, ISFA hit junk status

Thursday, Jun 1, 2017 - Posted by Rich Miller

*** UPDATE 1 ***  Tribune

The governor also held Democrats responsible for Thursday’s rating cut.

“Madigan’s majority owns this downgrade because they didn’t even attempt to pass a balanced budget, get our pension liability under control, and other changes that would put Illinois on better financial footing,” said Eleni Demertzis, a spokeswoman for Rauner. “The governor will continue working toward a truly balanced budget with changes to our system to grow jobs and provide real and lasting property tax relief.”

“Her comment is typical Rauner incompetence, and that’s too bad,” said Steve Brown, a spokesman for Madigan.

*** UPDATE 2 *** Pritzker campaign…

“A day after Bruce Rauner once again failed to produce a budget, the Illinois economy is already feeling the devastating impacts,” said JB Pritzker. “Under Bruce Rauner’s failed leadership, Illinois’ general obligation debt is now a step away from junk, the lowest ever for a U.S State. What we’re seeing is a state economy in shambles as state debt skyrockets and Bruce Rauner stumbles past 700 days without a budget. This will have long term ramifications for the economy of our state and it will take years to clean up Rauner’s mess. We need a governor who understands how to get results in Springfield and it is clear that Bruce Rauner will never be up to the job.”

*** UPDATE 3 *** Kelly Welsh, President, Civic Committee of The Commercial Club of Chicago…

“The failure of Illinois leaders to pass a budget has – as predicted – resulted in immediate action to downgrade state bonds. Once again, the State of Illinois debt backlog increases and taxpayers are on the hook for hundreds of millions of dollars in unnecessary debt payments, while schools and universities are put at risk and our communities suffer from deteriorating social services. With “Bringing Illinois Back,” the Civic Committee provided a sensible framework for resolving this fiscal crisis, which required change and compromise from our government leaders in Springfield. Their failure to act is inflicting serious damage on our state.”

*** UPDATE 4 *** Sen. Daniel Biss…

“Infuriating. Wall Street banks will now get even more of our tax dollars because Rauner and Madigan have failed again on the budget.”

[ *** End Of Updates *** ]

* Bloomberg

Illinois had its bond rating cut to a step above junk by S&P Global Ratings because of the long-running political stalemate over the budget that’s kept the state from dealing with its chronic deficits.

The company warned that the rating could be cut again, which would make Illinois the first state since at least 1970 with a below investment grade. S&P said debt backed by state appropriations, including those issued by its sports authority, were cut to BB+, one step into junk.

“The rating actions largely reflect the severe deterioration of Illinois’ fiscal condition, a byproduct of its stalemated budget negotiations, now approaching the start of a third fiscal year,” S&P analyst Gabriel Petek said in a statement. “The unrelenting political brinkmanship now poses a threat to the timely payment of the state’s core priority payments.”

* Press release

S&P Global Ratings lowered its rating on Illinois’ general obligation (GO) bonds to ‘BBB-’ from ‘BBB’. We also lowered our ratings to ‘BB+’ from ‘BBB-’ on the state’s appropriation debt, including bonds issued by the Illinois Sports Facility Authority and the Metropolitan Pier & Exposition Authority. Finally, we lowered to ‘BB-’ from ‘BB’ our ratings on the state’s moral obligation-backed debt. The ratings are on CreditWatch with negative implications.

“The rating actions largely reflect the severe deterioration of Illinois’ fiscal condition, a byproduct of its stalemated budget negotiations, now approaching the start of a third fiscal year,” said S&P Global Ratings credit analyst Gabriel Petek. “We placed the ratings on CreditWatch with negative implications because, in our view, the unrelenting political brinkmanship now poses a threat to the timely payment of the state’s core priority payments.”

We also believe that Illinois is now at risk of entering a negative credit spiral, where downgraded credit ratings would trigger contingent demands on state liquidity, further exacerbating its fiscal distress. Although CreditWatch typically has a 90-day time horizon, we anticipate resolving Illinois’ placement around the start of its 2018 fiscal year, which begins on July 1. If lawmakers fail to reach agreement on a budget with provisions designed to reduce the state’s structural deficit, it’s likely we will again lower the ratings. In our view, the ongoing budget impasse has increased the nonpayment risk associated with Illinois’ obligations that require a budget appropriation before they can be funded. We now view these payment obligations as having speculative-grade characteristics.

The ‘BBB-’ GO rating reflects our view of the state’s:

    • Large and growing structural budget deficit now projected to top $7 billion (18% of expenditures) in fiscal 2018;
    • Unpaid bills that have mushroomed to the equivalent of more than one-third of annual general funds’ expenditures;
    • Elevated fixed costs and depleted budget reserves, the combination of which renders the state vulnerable to even more fiscal pressure when the economy enters a slowdown;
    • Exposure to stepped-up interest costs related to variable-rate debt and swap termination payments tied to rating triggers;
    • Distressed pension funding levels that will require substantial contribution increases in the coming years; and
    • Inability to deliver adequate and timely funding for various important public services and institutions as a consequence of dysfunctional budget politics.

Partially offsetting these weaknesses is our view of:

    • Well-established priority of payment for GO debt service established by statute;
    • Ability to adjust certain cash disbursements to stabilize cash flow and to access substantial amounts of cash reserves on deposit in other funds for debt service, if needed, and for operations if authorized by statute;
    • Deep and diverse economic base anchored by the Chicago metropolitan statistical area, though with a growth outlook that is expected to trail the nation’s through the next five years;
    • Above-average income levels; and
    • Substantial ability to adjust revenues, expenditures, and disbursements–albeit with a current lack of agreement on how to do so.

* Meanwhile

S&P Global Ratings lowered to ‘AA-’ from ‘AAA’ its rating on Illinois’ Build Illinois sales tax revenue bonds. The rating is on CreditWatch with negative implications.

“The rating actions reflect our view that, with the negative pressure on the state’s creditworthiness intensifying, the risk of interference with the flow of revenues pledged to the repayment of its Build Illinois sales tax bonds has increased,” said S&P Global Ratings credit analyst Gabriel Petek. “The CreditWatch placement reflects the likelihood that we would lower the rating further if the state’s general obligation rating were downgraded again.”

Our views are balanced against the fact that debt service, at about $325 million in fiscal 2017 and declining thereafter, is equivalent to less than 10% of the state’s structural budget deficit in its general funds. We continue to believe the state will adhere to legal provisions that insulate debt service on the bonds from its budget impasse. However, we believe the risk of a disruption is somewhat greater with the state’s overall fiscal condition experiencing more acute levels of distress.

  60 Comments      


Where we are, in a nutshell

Thursday, Jun 1, 2017 - Posted by Rich Miller

* Monique Garcia, Kim Geiger and Haley BeMiller

The blame game quickly commenced. House Speaker Michael Madigan said Democrats will continue to work throughout June to “close the Rauner budget deficit.” House Democrats want to work “cooperatively” with Rauner, Madigan said, but many “just don’t have a high level confidence in how the governor has conducted himself.”

Rauner had vowed to veto a Democratic budget that included an income tax hike and sales tax expansion, but he nonetheless classified the House’s inaction on a spending plan as a “complete dereliction of duty by the majority in the General Assembly.”

“Please, members of the General Assembly in the majority, do not travel around the state holding sham hearings about a balanced budget,” Rauner said. “Don’t go through a process of just trying to create phony headlines around the state.”

Madigan’s decision not to hold budget votes Wednesday held some political benefits as he tries to protect a Democratic majority that’s kept him in power for all but two of the last 34 years.

Not only was Madigan able to sidestep the immediate pressure from some of his House Democrats to vote for a tax increase, but going into overtime also pushes GOP lawmakers to join in a solution or split the blame for the continued stalemate. That’s because starting Thursday, passing a budget will require at least some Republican votes to reach the three-fifths benchmark now required.

A House Speaker who has never really worked cooperatively with this governor claiming he has, and a governor who can’t cut a deal blames others for his inabilities. Not to mention a guy who constantly travels around the state ginning up phony headlines browbeating others for doing the same.

And now we wait for whatever happens next.

  43 Comments      


*** UPDATED x1 - Rauner says he’ll veto *** Hold put on education funding reform bill

Thursday, Jun 1, 2017 - Posted by Rich Miller

* SJ-R

Illinois lawmakers late Wednesday approved a school funding reform measure, the first significant overhaul of the state’s system of funding public schools in decades.

The Senate gave final approval to Senate Bill 1 by a 35-22 vote. The House approved the bill earlier in the evening.

The legislation can now be sent to Gov. Bruce Rauner, where it faces an uncertain future. Republican lawmakers complained that the bill was changed in the House at the last minute to give hundreds of millions of dollars in additional money to Chicago schools.

The bill was the culmination of years of negotiating by Sen. Andy Manar, D-Bunker Hill. His goal was to change the school funding formula so that more state money is directed at the neediest school districts.

The General Assembly’s website has been down this morning, but the Senate Democrats filed a motion to reconsider the vote last night after SB 1 passed.

* I asked what the hold was about, and here’s their texted response…

Slow down the process and dial down the rhetoric in hopes of getting it signed by the governor who promised to overhaul state education funding.

I was also told that the hold would last only up to 30 days. ADDING: There was a miscommunication. The hold stops the 30-day clock to send legislation to the governor. It can be held indefinitely. I thought that was what was going on, but it was a late night and an early, hectic morning. Sorry.

*** UPDATE ***  Sun-Times

Governor Bruce Rauner said Thursday that he would not sign an education funding reform bill that passed both houses of the Illinois General Assembly Wednesday night just before the legislative session ended. […]

“In its current form, absolutely not,” Rauner told the Chicago Sun-Times. “The amendment on there really amounts to an unfair-to-Illinois-taxpayers bailout of CPS.” […]

Rauner, however, said bills drafted by State Sen. Andy Manar, D-Bunker Hill, and Sen. Jason Barickman, R-Bloomington, should be used as a “base for a deal.”

“We were going down that road but then the majority in the House kind of hijacked the process, added a big addendum, a big amendment onto Manar’s bill with massive more financing for Chicago Public Schools. That’s not fair for the statewide taxpayers. So we’ve got to get that out,” Rauner said. “Within the context of the bills I think coming up with a balance that works for everybody and gets more resources for Chicago Public Schools, I’m supportive of that. So hopefully we can keep working to get it done.”

* I asked Senate President Cullerton’s spokesman for a response…

This is the kind of premature rejection from the governor we’re hoping to avoid. Hopefully, cooler heads will prevail.

  15 Comments      


“Team Rauner will never give up on this fight for reform”

Thursday, Jun 1, 2017 - Posted by Rich Miller

* A Rauner campaign e-mail sent out last night entitled “What happened today”…

Today, Illinois Democrats made clear that their partisan agenda is more important than the future of our state.

Despite being given the opportunity to set our state on the right path, Democrats in the Illinois House and Senate refused to pass a balanced budget with real lasting property tax relief.

A 32% tax increase without real reform is not the answer. Illinois already has the highest property taxes in America. We have the 5th highest tax burden in the country.

I am writing to you tonight to make something explicitly clear to our supporters and our opponents: Team Rauner will never give up on this fight for reform.

Challenge the Democrats directly by committing to reform instead: sign our reform petition here.

Democrats sent a strong message to Illinois families this evening: they are willing to push our state further into debt and destruction just to continue the corrupt, self-serving agendas of Speaker Madigan and the Chicago Machine.

Illinois deserves so much better. If you agree, pledge your commitment here.

Choosing reform over the status quo is not easy, but with your help - we will bring back Illinois.

Your support is more important now than ever before.
[Signed]
Bruce Rauner

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Thursday, Jun 1, 2017 - Posted by Rich Miller

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