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* Mayor Daley is not pleased at all with the pension reform bill and is cranking up the rhetoric against Gov. Pat Quinn…
Much of the Chicago City Council sent a letter to Gov. Pat Quinn [yesterday] urging him not to sign a pension reform bill passed by the General Assembly as Mayor Richard Daley again lambasted the plan.
Daley has been publicly attacking the bill at every opportunity over the past week, saying it would lead to the biggest property tax increase in Chicago history.
Daley said he doesn’t know whether Quinn will listen to Chicago officials’ pleas not to sign the legislation, but he said he and Quinn have different views on raising taxes.
“(Quinn) wants to tax people. What can I do?” Daley said.
Ouch. More…
“This is the highest real estate tax increase in the history of Chicago, and that’s only for fire and police,” Daley said. “If you put the other unions in there, it’s about $1.2 billion in one year. … This will really hit the people. How are you gonna sell your home even if you’re retired? Who would want to buy your home? Buyer beware.”
* Daley even briefly held out the possibility of a pension fund bankruptcy…
“I’m one who believes that pension funds can go bankrupt and then you reorganize, and that’s the hardest thing to say,” Daley said during a panel with other mayors at the Global Metro Summit.
Talking to reporters afterward, Daley said he simply wanted to paint a worst-case scenario if public employees don’t agree to contribute more to help pay for their pensions.
“And in that sense, (bankruptcy is) the end result of something that would take place, but we should not get to that position,” the mayor said.
Asked about using the term “bankruptcy,” Daley said: “Yeah, well, yeah, just in the sense that it comes to financial crisis, you don’t want to get to that. What we’re saying there are solutions prior to that.”
* Here is what this is really all about…
The problem with the reform bill, according to Daley, is the steep increase in mandated municipal contributions to pension funds, beginning in 2015. The bill further mandates that those contributions be paid for via the property tax.
Actually, the bill itself does not mandate that the contributions be paid for via the property tax.
I just got off the phone with Sen. Terry Link, one of the chief sponsors, who says that some staff experts are saying that existing law may actually mandate this be paid for by property taxes. If so, Link says he and the Senate President would be willing to include language in the trailer bill to change this requirement. The trailer bill will also move that 2015 start date to probably 2020.
Maybe now things can quiet down a bit, but don’t hold your breath.
* I don’t spend much time at the Capitol when the General Assembly isn’t in session, but when they returned to town after the election I noticed lots of paint peeling off the walls inside the 3rd Floor dome. Apparently, it’s going to cost the state big bucks to fix…
Fixing peeling paint inside the Capitol dome is going to cost the state more than $137,000. […]
The peeling paint was discovered last summer on part of the interior dome above the Capitol’s third floor. The paint, which is peeling in about a half-dozen spots, is easily visible to the naked eye.
Although the area where the paint is peeling appears to be constructed of stone blocks, it is actually plaster painted to look like stone. […]
Paint on that part of the dome has been subject to peeling before, the last time in 2005. State officials believe high heat and humidity in that part of the building caused the paint to peel. The entire dome acts as a sort of natural chimney in the building.
They’re using a different paint now, so maybe this won’t happen again. I sure hope not. It looks very bad, and the cost is just huge.
* The prison underwear shortage isn’t necessarily the state budget’s fault, but it’s pretty darned weird and it’s causing problems and forcing the state to pay more money…
State prison officials have averted a potential crisis behind bars: A shortage of undies for inmates.
As part of a supply problem rooted in a global surge in cotton prices, the company hired to supply the material for boxer shorts worn by prisoners refused to deliver because it couldn’t make money on its contract.
Facing the prospect of having inmates with no skivvies, state officials this week hired another company to supply the cloth. The new contract is worth $183,800, which is an estimated $50,000 more than what the state had originally planned to spend, according to documents.
An official at the Florida-based company that pulled out of its contract says Illinois isn’t alone.
Robin Resnick, vice president of sales for J, Weinstein & Sons, said the firm has told other states where it does business that the rapid rise in cotton prices means they won’t deliver at prices agreed to in previous years.
Sheesh.
* Related…
* Tax Hike Could Come Sooner Rather Than Later
* Online budget reports to keep taxpayers informed
* State Fails In Its Support For Higher Ed
* Familiar names on pension watch list for DuPage
* Big hurt on the way as Chicago’s pension math comes up short
* State Senator Jones Says Little Progress Made on Illinois Debt, Other Issues
posted by Rich Miller
Thursday, Dec 9, 10 @ 10:57 am
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Wasn’t the sale of the parking meters supposed to be shoring up the pensions, but then Daley squandered the money? And he’s the one who’s mad?
Comment by lakeview Thursday, Dec 9, 10 @ 11:09 am
Hizzoner has talked often about pressing the ‘restart button’. Perhaps this is the trigger.
Comment by Statesman Thursday, Dec 9, 10 @ 11:12 am
Gee, I’m sure the newly elected Governor is absolutley terrified of our lame duck Mayor and his rubber stamps. Maybe to make up for the pension shortfall, the new Mayor may have to cut some hacks.
Comment by Phineas J. Whoopee Thursday, Dec 9, 10 @ 11:13 am
St Rep Keith Farnham’s campaign ads in the last election touted the fact that he was a painter, not a politician. Maybe Speaker Madigan should assign him to repaint.
Comment by WRMNpolitics Thursday, Dec 9, 10 @ 11:14 am
Regarding Daley’s comments on Quinn, I think I just heard Quinn say “he’s yesterday’s tomatoes.”
Of course, Daley would never raise property taxes. He just sells long-term performing assets for chicken feed to fund today’s expenses. Or hides away property tax growth in slush, I mean TIF, funds controlled solely by him.
Spare us the lectures on fiscal responsibility, please.
Daley’s right about one thing: unlike the state, municipalities can seek bankruptcy protection. And who knows what relief a federal judge would give regarding pensions. Just ask the employees of United Airlines.
Comment by wordslinger Thursday, Dec 9, 10 @ 11:15 am
I’m not sure I understand the Mayor’s point that bleeding the pension funds into bankruptcy or insolvency would be a good thing. I don’t understand his rationale, or at least it’s not clear.
Comment by Scooby Thursday, Dec 9, 10 @ 11:16 am
At the national level, the WH has expended a great deal of effort, and perhaps political support, on a proposal which extends the Bush tax cuts for the middle class and reduces payroll taxes for that same group. The thinking seems to be that the middle class is the key to economic recovery and that we can’t handle any tax increases right now in a still-uncertain economy.
In fact, we need tax cuts (the payroll tax).
At the state level, our newly elected Democratic governor wants to….raise state income taxes permanently in exchange for some trust me budget cuts (maybe-so far, it’s not that clear what has been cut). Because Illinois has a flat tax, the same middle class that the WH is trying to protect will feel the brunt of Quinn’s income tax increase. Except for middle class retirees of course. They won’t feel anything if they are living on defined benefit pensions. Quinn has no plans to change that.
So it’s confusing for us middle class working folks. Who are we?. Are we economically fragile in a world economy which is dependent on our recovery. Or are we economically robust and ready to fork over billions each year to a state government which, let’s face it, has hardly reformed in recent years.
Comment by cassandra Thursday, Dec 9, 10 @ 11:27 am
@wordslinger:
Good points, except bankruptcy for Chicago comes with other headaches.
For one thing, a federal judge could force cuts in other areas, like the patronage farm commonly known as Middle Management.
The next mayor has three choices:
1) Become known as the guy who through in the towel and declared bankruptcy;
2) Raise taxes;
3) Cut wasteful spending.
I’d wager it’ll be a combination of 2 & 3.
Comment by Yellow Dog Democrat Thursday, Dec 9, 10 @ 11:28 am
I’d like to know which seven aldermen refused to sign the letter.
Comment by Yellow Dog Democrat Thursday, Dec 9, 10 @ 11:29 am
=== This is the highest real estate tax increase in the history of Chicago, and that’s only for fire and police ===
Its worth noting that Mayor Daley is the CURRENT record-holder for the largest property tax hike in the history of Chicago, which preserved spending for flower boxes.
Comment by Yellow Dog Democrat Thursday, Dec 9, 10 @ 11:33 am
“An official at the Florida-based company that pulled out of its contract says Illinois isn’t alone.”
Is there any way to find out how much of our state tax dollars go to out of state vendors? Do in state vendors who are putting a big chunk of their earnings back into the Illinois economy and back into state revenues receive any kind of weighted preferences or does only the bottom line count?
Comment by vole Thursday, Dec 9, 10 @ 11:33 am
there is wasteful spending and then there are basic functions of government that need to be funded. I am the first to shoot down wasteful spending but paint for the walls of the statehouse is something that has to be done.
I am also not big on vole’s out of state vendor comment or the buy american comment, taxpayers shouldn’t have to pay extra for some dumb legislator who wants to wrap themselves in the state flag to boost some local business. If they want the contract they should be more competitive.
Daley, HAH.
Comment by shore Thursday, Dec 9, 10 @ 11:44 am
“I am also not big on vole’s out of state vendor comment or the buy american comment, taxpayers shouldn’t have to pay extra for some dumb legislator who wants to wrap themselves in the state flag to boost some local business.”
Shore, say a local contractor bids 10% higher on his bid than a Florida contractor, but he and the business, his suppliers, and his employees are probably probably much more than that back into sales, property and income taxes. You don’t think that should factor into how bids are considered or weighted? This ain’t waving the freaking flag buddy. This is just simple economics.
Comment by vole Thursday, Dec 9, 10 @ 11:58 am
So how are the pensions going to be paid out if they are not funded by tax dollars?
Do we wait for the time to default and declare bankruptcy, depriving the pensioners of the money they thought they had earned? Actuarial processes are pretty good at predicting how much money is needed.
Start proper funding the plans properly now. Stop with the risky investments, If the benefits are too rich, pare them down. Regardless of how you cut it, most of the pension benefits come from the taxpayers. Don’t kick the can down the road for another decade.
Of course as they say, when the going gets tough, the tough get going… I wonder if thats why Mayor D is leaving…..
Comment by Plutocrat03 Thursday, Dec 9, 10 @ 11:59 am
“probably probably” = probably putting
Comment by vole Thursday, Dec 9, 10 @ 12:00 pm
–Good points, except bankruptcy for Chicago comes with other headaches.–
Believe me, I’m not recommending it, nor do I think Chicago is anywhere near it. I think Daley will be spouting off on virtually everything and everyone until the next mayor is sworn in. The next morning, he’ll miss the cameras.
Comment by wordslinger Thursday, Dec 9, 10 @ 12:12 pm
Does anyone know if Chicago has skipped pension payments the way the state has?
If so, Daley has no one to blame but himself.
Comment by s.t. Thursday, Dec 9, 10 @ 12:21 pm
s.t., the problem is different for Chicago. The city isn’t using any actuarial basis at all to make pension payments. I know, it sounds crazy, and it is. But that’s what led to this mess.
Comment by Rich Miller Thursday, Dec 9, 10 @ 12:23 pm
Is Quinn going to do to/for the state the same thing he is doing to Chicago? Funding pensions is not the kind of thing that gets you votes. Not as exciting as ribbon cutting at some Ford plant or signing legislation to help seniors or children get free rides/medical care/etc.
But, keep voting for them, folks! Somehow, it’ll all work out - won’t it? You’all get the government you deserve.
Daley is leaving - bring on the Rahminator. He’s got a plan that’ll solve it all. For me, I ain’t holding my breath on any of this nonsense. Altho I don’t live in Chicago, that economic engine pulls us all up or drags us down. If you don’t live in the city you don’t have a say but it affects us all. Don’t plan on making big changes come the next election, either. We’ll likely just see more of the same given the voting proclivities of the electorate. Lambs to the slaughter. Baaah.
Comment by Anonymous Thursday, Dec 9, 10 @ 12:32 pm
Sorry, that last post (anonymous @12:32 pm) is mine. Keep losing my nickname.
Comment by dupage dan Thursday, Dec 9, 10 @ 12:33 pm
How are J, Weinstein & Sons not in breach of contract? Obnoxious.
Comment by S Thursday, Dec 9, 10 @ 12:35 pm
Unless it has changed, Illinois vendors get a preference against vendors from other states who give preference to their own in-state vendors
Comment by steve schnorf Thursday, Dec 9, 10 @ 12:39 pm
@dupage dan -
I’ve yet to see anything from Rahm’s campaign indicating he has any plan whatsoever to fix the city budget. If he has a plan, I haven’t seen it yet.
Frankly, I’m surprised none of his opponents have mentioned his vote to bail out Wall Street instead of Main Street, or in our case, Western Avenue.
THAT cannot poll well, especially since it allows you to make repeated mention of all the money he made at Freddie Mac and on Wall Street.
Comment by Yellow Dog Democrat Thursday, Dec 9, 10 @ 12:44 pm
If Mayor Daly is truly worried about property tax increases due to pensions, perhaps he should post all individual city government retiree pensions on a website, alongwith $$$ paid in by the recipient, age at retirement, total payout through projected lifespan, expected increases and healthcare benefits. If that doesn’t wake the zombies voters up, I say raise the property taxes to conficatory levels.
Comment by Cook County Commoner Thursday, Dec 9, 10 @ 1:10 pm
If any writer to this blog believes Daley is a lame duck…think again. Power and control are the name of the game, he still has and will have both even if he no longer occupies the 5th floor. Now, for you viewing pleasure - the machine!
Comment by GetOverIt Thursday, Dec 9, 10 @ 1:12 pm
–If any writer to this blog believes Daley is a lame duck…think again. Power and control are the name of the game, he still has and will have both even if he no longer occupies the 5th floor.–
How? His charm and good looks? Is he bringing the power to award contracts, direct city services, appoint aldermanic vacancies and TIF funds with him?
Comment by wordslinger Thursday, Dec 9, 10 @ 1:17 pm
===Power and control are the name of the game===
And he will have none come May, unless you can prove to me otherwise. What control will he have? Over whom? He’s a lame duck. And it shows.
Comment by Rich Miller Thursday, Dec 9, 10 @ 1:29 pm
Ditto what Rich says.
Springfield is ignoring him.
In the old days, they wouldn’t have even contemplated a pension bill in Springfield without Daley’s blessing. Now, they give him the bird.
I’ve argued that Daley’s relevance all started to wane with Patrick Fitzgerald…take away the patronage army and Daley’s power is greatly diminished.
Comment by Yellow Dog Democrat Thursday, Dec 9, 10 @ 1:55 pm
To wordslinger’s dismissal of RD’s future power, I say HA!
I my neck of the woods, there are two retired ‘bosses in their minds’ who are cowed to and are blessed with ‘incentives’ even though they are no longer in office. Those who do not kiss their rings have a surprisingly difficult path to get their developments through. Not a third world country, but Illinois.
I agree that the shadow of the current administration will loom large for quite a while.
Comment by Plutocrat03 Thursday, Dec 9, 10 @ 2:07 pm
–I my neck of the woods, there are two retired ‘bosses in their minds’ who are cowed to and are blessed with ‘incentives’ even though they are no longer in office.–
Where is that, and what’s the source of their power? You think a retired Daley — with no organization, no ability to make anyone money, but just a brand, if not a Cult of Personality — can pull it off? Sell it, brother.
Comment by wordslinger Thursday, Dec 9, 10 @ 2:22 pm
Yellow Dog Democrat is basically correct, the City of Chicago needs to increase property taxes to pay its employees. It also needs to layoff police and fire personnel as unpopular at that might be. Chicago currently has more police than does LA. Los Angeles Police Department which has just over 10,000 officers and more than 3,000 civilian staff, covering an area of 498 square miles with a population of more than 3.8 million people. Chicago has has over 12,500 sworn officers and over 1,925 other employees. Chicago has a population of about 2.8 million and about about 230 square miles miles in size.
As a resident of Chicago who benefits from our city’s extremely low property taxes I find it morally repugnant that we will not pay our fair share to support the police and fire pensions. As I have pointed out before on this blog the city of Chicago pays among the lowest property taxes in northern Illinois. The town with the highest composite tax rate in Cook County is Ford Heights, at 20.595%. The second highest rate is in Riverdale at 17.032%. The lowest rate is Northfield, at 4.461%. The second lowest rate is the City of Chicago at 4.627%. (These rates come from Cook County Clerk David Orr’s office which only yesterday released the 2009 Cook county Tax Rates Report.)
In terms of property taxes the rates I pay on a second home in a central Wisconsin town of 1,100 are three times higher than what I pay on a one family home on the north side of Chicago which is three block west of Lake Michigan. We are not in any way paying up now. As for the Mayor’s comment about a property tax increase: “This will really hit the people. How are you gonna sell your home even if you’re retired? Who would want to buy your home? Buyer beware,” any problem those of us in Chicago have with selling our homes are not based on property tax calculations. They are based on sellers holding out for higher prices than the current market will allow for.
Comment by Rod Thursday, Dec 9, 10 @ 2:25 pm
The Capitol Building is magnificent and needs to be maintained even in the worst of times.
Having said that, the Governor’s Mansion should have an appointment with a bulldozer. Who needs it?
I’ll get on my soapbox, once again, and recommend that everyone travel to Nashville and check out Bicentennial Park down the hill from their capitol. The Illinois bicentennial is coming up, and the mansion is a perfect location for a beautiful, educational park at a grossly underused site.
Comment by wordslinger Thursday, Dec 9, 10 @ 2:51 pm
@Rich
You’re kidding right? The minute either Chico or Emmanuel start aiming there canons at the Mayor (beyond the Chico gaf regarding education - a mistake he will never make again)I will believe Daley has neither power or control.
If this thing works out the way I think it will, we will have Daley (Emmanuel) v. Burke (Daley) part deux…
Comment by GetOverIt Thursday, Dec 9, 10 @ 3:34 pm
GetOverIt, I’m talking after May.
Comment by Rich Miller Thursday, Dec 9, 10 @ 3:37 pm
Peeling paint in the capitol building is getting fixed when they have the health hazard of the Stratton Building still standing? I know it will cost more to fix than to bulldoze and rebuild. Find the money. The condition (mold, asbestos, etc.) in the Stratton is harming the health of the occupants, but yeah, might as well address peeling paint first. Incredible.
Comment by Really? Thursday, Dec 9, 10 @ 3:39 pm
Rich - I understand. Notwithanding my understanding, my crystal ball says…”let’s see how it shakes out.” I just don’t believe the power and control over the infrastructure will just vanish…but I concede it is much to soon to tell. I table my assertion until post-May 2011.
Comment by GetOverIt Thursday, Dec 9, 10 @ 3:49 pm
@Rod -
Chicago has FEWER police officers per square mile than NYC, and given the violence in Chicago, I don’t think you can argue that we have too many officers. Maybe that the ones that we do have could be better deployed.
As for laying of firefighters? Are you nuts?? Ever hear of 9/11?
There are plenty of places to make cuts - middle management, no-bid contracts, the Law Department - without gutting frontline services.
In fact, my guess is the first act of the next mayor will be to cancel all no-bid contracts with Daley’s friends and re-let them to his or her friends for less money, and firing all of Daley’s patronage pals and replacing them with his or her pals for less money.
Comment by Yellow Dog Democrat Thursday, Dec 9, 10 @ 4:19 pm
Chicagoans enjoy some of the state’s lowest property taxes. So why are they moaning and groaning all the time about property taxes? Most suburbanites would pay less if their homes were located in the City.
Comment by reformer Thursday, Dec 9, 10 @ 5:33 pm
Chicago has more fire fighters than other cities of comparable size, it’s true. However, it also has an experience of pretty much burning to the ground once and also a couple other major fire experiences like Our Lady of Angels and the Iroquois Theatre. In that context, it could be having a few more firefighters than other cities is understandable.
Comment by cermak_rd Thursday, Dec 9, 10 @ 5:56 pm
–Chicago has more fire fighters than other cities of comparable size, it’s true. However, it also has an experience of pretty much burning to the ground once and also a couple other major fire experiences like Our Lady of Angels and the Iroquois Theatre–
LOL.
I’m a history buff, dude, but that’s a real stretch.
There’s nothing unique about Chicago today that requires more fire safety (and believe it or not, firefighters don’t have to be white or Irish, either; notify the union).
Since the Great Fire, Chicago has been the safest fireproof city on the planet. Did you notice the bricks in the neighborhoods? That wasn’t cheap, to build them that way 120 years ago. But those bungalows will outlast the Pyramids.
Comment by wordslinger Thursday, Dec 9, 10 @ 6:24 pm
Speaking of real estate taxes… I don’t know know what Chicago does with the real estate tax money it collects, but in Springfield our outgoing mayor has been telling us for the last couple years that almost 100% of what Springfield collects in property taxes goes for police and fire pensions. Nothing against police and fire, but that 100% seems insanely high.
Comment by Cheswick Thursday, Dec 9, 10 @ 7:10 pm
Did anyone read the link to the Jim Tobin story? He says state employees should start paying into Social Security (they already do except for the Troopers) and should contribute to their pensions (they already do). As wildly inaccurate as that was, is it possible he’s the Chicago Tribune’s expert source on public pensions?
Comment by Smitty Irving Thursday, Dec 9, 10 @ 10:15 pm
Daley skipped the city pension payment to the pension funds, Daleys son and nephew got sweetheart deals to manage and invest city pension money which resulted in a negative return (lost money). Its daleys fault. Maybe another look at the parking meter deal to insiders is whats needed. the city took a billion dollars less than face value according to the IG.
Comment by fed up Thursday, Dec 9, 10 @ 10:48 pm
Cheswick look at your property tax bill it tells you right on it where the money goes. Ive only been there a few times but I remember schools and parks and librarys, maybe some sewers
Comment by fed up Thursday, Dec 9, 10 @ 10:51 pm