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Rauner pushes hard for transportation stopgap

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Illinois

Gov. Bruce Rauner on Wednesday tried to up the pressure on lawmakers to pass a stopgap budget, this time warning that state road projects will grind to a halt next month without one.

At a Statehouse news conference, Rauner’s transportation secretary, Randy Blankenhorn, said work will have to stop on the projects after July 1, the start of the fiscal year, if lawmakers don’t approve spending authority to keep them going.

“We’re on the brink of what was once unthinkable, the suspension of the Illinois Department of Transportation’s construction program,” Blankenhorn said. “Without stopgap funding proposed by the governor, we are on a collision course with having to shut down road projects throughout the state in a few short weeks.”

Blankenhorn said the state has more than 800 active projects at this time worth about $2 billion. He said about 25,000 workers are employed on the projects, which this summer include work on Interstate 55 both north and south of Springfield, as well as on Interstate 72 west of town. Improvements underway on North Grand Avenue and from Moffat Street to Koke Mill Road would also be halted.

* But John Penn, the Vice President and Midwest Regional Manager of the Laborers’ International Union of North America, begs to differ…

“Governor Rauner’s call for a temporary budget to keep vital road and bridge construction projects funded is misleading. We must keep in mind that the only reason there is talk of a ‘stopgap’ budget today is because Governor Rauner will not sign a fully-funded, yearlong budget unless legislators agree to cut the pay of the very construction workers he claims to want to keep employed, among other anti-worker, anti-middle class proposals on his agenda.

“If the Governor were to drop his insistence on cutting the pay and rights of hard working Illinoisans before passing a full budget, a stopgap budget would be completely unnecessary.”

OK, I get that, but a stopgap is better than nothing, and that’s what we’ll get if we wait for the governor to drop his Turnaround Agenda demands.

* Meanwhile…

Illinois will sell $550 million of bonds on Thursday but lacks authority from the state legislature to spend all of the proceeds due to an ongoing budget impasse.

“The General Assembly needs to grant appropriation authority to fully expend the proceeds from the bond sale, although existing FY16 appropriations could be used to expend a portion of them,” Catherine Kelly, a spokeswoman for Governor Bruce Rauner, said on Wednesday.

Her statement followed a news conference earlier on Wednesday with the Republican governor and his transportation department head, who warned of the imminent shutdown of hundreds of construction projects if the Democrat-controlled legislature does not approve Rauner’s temporary budget plan. […]

The odd timing of the announcement on the eve of the state bond sale handed Rauner’s Democratic rivals in the state legislature fodder to question the first-term governor’s actions.

“We’re hoping none of his activities or staff work is going to drive up borrowing costs like it did for the Chicago Public Schools in February,” said Steve Brown, spokesman for Democratic House Speaker Michael Madigan.

I don’t think the timing is really that odd. It’s June 16th. The end of the fiscal year is in two weeks. Without appropriations and re-appropriations, much of the money can’t be spent. That’s not odd. It’s the Constitution.

posted by Rich Miller
Thursday, Jun 16, 16 @ 10:10 am

Comments

Those construction companies are big donors. A special fund just to pay the Gov supporters, while a bill tomoay social services sits unsigned. cant say a stop gap is better then none. I would argue its better no one gets paid until we take care of the most defenseless amongst us and fund our social services

Comment by Ghost Thursday, Jun 16, 16 @ 10:15 am
It seems Mr Penn is saying, “You started this tough guy, now let’s go to the mat”. Have a decisive and bloody battle to end the war.

Comment by Anonymous Thursday, Jun 16, 16 @ 10:17 am
2 years, 6 months and 27 days until all of this can begin to get settled with a new governor

Comment by DHSJim Thursday, Jun 16, 16 @ 10:19 am
Targeted message to the folks as counter-leverage action. Ordinary folks drive on roads, could care less about social services. The propaganda is strong with this crew.

Comment by Norseman Thursday, Jun 16, 16 @ 10:23 am
Contractors need to know what is going to happen after July 1. If work is going to shut down, they need to schedule work and prepare sites to be safe for the traveling public.

The sound bite this morning was 26k workers would be out of work if highway construction stops. Just think, 26k more people on unemployment.

Comment by Huh? Thursday, Jun 16, 16 @ 10:27 am
Only Governor Moneybags and His “Heroic” Superstars would proceed with an expensive bond sale to get money they can’t spend. #SuperstarManagement

Comment by Precinct Captain Thursday, Jun 16, 16 @ 10:28 am
If the GA releases any hostages, it will be a clean road bill without poison pills, with only federal match construction funds, no operations funds, and the GA will count on the Governor’s road building donors to arm twist him into signing it.

Comment by RNUG Thursday, Jun 16, 16 @ 10:30 am
YOU get what you asked for ” Shut it down “!

Comment by State Worker Thursday, Jun 16, 16 @ 10:32 am
I commend Mr. Penn for not selling out for “jobs!” carrot. The “jobs!” cry is now being made a component of a bust-out strategy and Mr. Penn has the integrity to call the Gov out on this.

Comment by Qui Tam Thursday, Jun 16, 16 @ 10:34 am
Watching the presser yesterday with the “heroic” cabinet members, only had me doing Mad Libs with their words. The social service providers have been saying this for months, and their employees and clients are just as important as road or capital projects. They just don’t have as much political pull.

Cabinet heads- welcome to the PAIN!

Comment by Anon221 Thursday, Jun 16, 16 @ 10:38 am
==“If the Governor were to drop his insistence on cutting the pay and rights of hard working Illinoisans before passing a full budget, a stopgap budget would be completely unnecessary.”==

He wants all union workers gone. He wants to contract out your jobs to the private sector - lower wages and little if any benefits.

Comment by Mama Thursday, Jun 16, 16 @ 10:52 am
No roads? How will the Governor get around the state campaigning? Can we also kill off his air travel? Maybe if he is stuck in Springfield he might do some governing for a change.

Comment by A Jack Thursday, Jun 16, 16 @ 10:54 am
–Illinois will sell $550 million of bonds on Thursday but lacks authority from the state legislature to spend all of the proceeds due to an ongoing budget impasse.–

That’s different.

Any bond counsel out there? Could the lack of spending authority at the time of sale have any impact on the bonds’ tax-exempt status?

In general, tax-exemption requires a public purpose for the proceeds.

At the time of the sale this morning, there was no authorized public purpose at all for much of the proceeds.

The GOMB summary on the bond sale doesn’t mention that fact.

It does, however, have nice things to say about Quinn and the GA reducing the backlog of bills prior to Rauner taking office.

–Illinois reduced its General Funds Budget Basis Accounts Payable in FY 2015 by $538 million to
$3.521 billion, the third successive year of reduction
 General Funds “Section 25” bills – essentially current year bills that are paid for with future year appropriations – decreased in FY 2013, FY 2014, and FY 2015–

http://www.illinois.gov/gov/budget/capitalmarkets/Documents/Presentations/June%202016%20Summary%20of%20Ratings%20Presentation.pdf

Comment by wordslinger Thursday, Jun 16, 16 @ 10:56 am
- Norseman @ 10:23 am: -
+1

Comment by Mama Thursday, Jun 16, 16 @ 10:57 am
- RNUG @ 10:30 am: -
“If the GA releases any hostages, it will be a clean road bill without poison pills, with only federal match construction funds, no operations funds, and the GA will count on the Governor’s road building donors to arm twist him into signing it.”

RNUG, how can you have a working road crew without operations funds?

Comment by Mama Thursday, Jun 16, 16 @ 10:59 am
Where was this urgency when Lutheran Social Services started laying people off, turning away the needy? Where was this cry when seniors stopped getting their Meals on Wheels? Where was this cry when an Urbana woman finally got up the courage to go to the Rape Crisis center and found the door locked?

Now?!? Now that contractors with enough money and influence might be affected, we have an emergency? Join with higher ed and social services to have a real impact, economically and socially. Construction contractors should absolutely turn up the heat, but do it the right way, together with the others’ affected.

Comment by illini97 Thursday, Jun 16, 16 @ 11:00 am
Mr Penn sure doesn’t sound like a greedy Union Boss. He sounds like a principled human being that realizes we are all in this together.

Comment by Triple fat Thursday, Jun 16, 16 @ 11:02 am
“how can you have a working road crew without operations funds?”

IDOT essentially has 2 budgets, a capital budget to pay for the summer construction season (think contractors building bridges or resurfacing roads) and an operating budget to pay for the regular day to day work of the department (think mowing or keeping the lights on).

Last year, the capital bill was passed before the end of the fiscal year. The operations budget was passed last fall. Presently, IDOT doesn’t have either one.

Comment by Huh? Thursday, Jun 16, 16 @ 11:24 am
Well they could use the bond money to pay down the pension debt….. If they can’t spend it on anything else.

Comment by A Jack Thursday, Jun 16, 16 @ 11:27 am
Didn’t the Guvnah bring out his righteous indignation when Quinn approved a budget knowing they would need more anyway? A stopgap by any other name….

I find enjoyment in the ironic parallels.

Comment by Union Man Thursday, Jun 16, 16 @ 11:39 am
–Well they could use the bond money to pay down the pension debt…–

Not with these tax-exempt bond proceeds. Pension obligation bonds are taxable.

The federales are awfully tight on what qualifies for tax exemption.

That’s why I’m interested in the lack of spending authority.

How do you sell tax-exempt bonds without authorization for a tax-exempt purpose? Where are they going to park that money? Better not try fund transfers or arbitrage.

How long does the tax-exemption status hold up without an authorized public purpose?

Eventually, if it gets to that, the IRS will want to know why they are exempting from taxation income to holders of bonds in which the proceeds have not gone toward a qualified tax-exempt purpose.

Comment by wordslinger Thursday, Jun 16, 16 @ 12:15 pm
A Jack - Thursday, Jun 16, 16 @ 11:27 am:

Well they could use the bond money to pay down the pension debt….. If they can’t spend it on anything else.

Borrow money to pay off debt. A Jack, are you a member of the GA? That’s how State budgets are made.

Comment by Just passin' through Thursday, Jun 16, 16 @ 12:19 pm
From a tactical side, I have been shocked that Rauner hasn’t used this strategy with greater emphasis. The great Labor divide. Public service versus the trade unions. Old Blue understands there really is no loyalty when it comes to these distinctly different entities. Now, the union hierarchy may claim solidarity, but we all know, rank and file actions speal louder than words(or rallies). Hence the 2 out of 5 ratio. I am not advocating this, just thinking about strategy and counter strategy.

Comment by blue dog dem Thursday, Jun 16, 16 @ 12:27 pm
No fix for this until the MAP grants and social service needs are taken care of first. This situation is a disgrace.

Comment by Angry Chicagoan Thursday, Jun 16, 16 @ 12:34 pm
Wordslinger,the IRS requires the proceeds to be spent within 3 years.

Comment by Juice Thursday, Jun 16, 16 @ 12:35 pm
-Mama-

In this case, operations refers to funding the administrative overhead of IDOT …

Comment by RNUG Thursday, Jun 16, 16 @ 12:52 pm
Juvy, thanks.

Still, without any authorization prior to sale, I’m still a little intrigued, on disclosure or lack thereof if nothing else.

Comment by wordslinger Thursday, Jun 16, 16 @ 2:41 pm