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Pritzker announced Monday that he was forming a task force to study the possibility of transferring state assets to the pension system, but Hynes’ speech Thursday offered a more detailed glimpse into what the administration is, and isn’t, considering.
When asked by an audience member what kinds of assets they were considering to sell, Hynes jokingly said, “Don’t say tollway; don’t say tollway; don’t say tollway.”
“I joke about the tollway, but like that’s what everyone’s going to think,” Hynes said, according to a video of the event that was posted online. “And you have the Lottery. Any kind of cash-generating asset is a logical place to think of. But it’s not that simple. Those are actually complex because there are bonds attached to it. There are stakeholders.”
More likely, he said, the administration would look at some of its office buildings and other real estate.
“The state of Illinois in 2000 had 80,000 employees. Today, we have 60,000 employees,” Hynes said. “So not only does that contribute to the whole unfunded problem because we have fewer people paying into the pension system, but from a capacity and utilization of our properties standpoint, it begs the question: What are we doing with this excess space? Has it been looked at? Have we consolidated office space? Have we sold buildings of the state that we don’t need? And that’s what we’re going to be looking at.”
* As Hynes said, it would take quite a while to sell the Tollway, but there is a history to look back on…
At the time [2006], it was estimated privatization of the tollway could generate as much as $24 billion for the state. Such a figure, even at the 2006 estimate, represents nearly 18 percent of the state’s current unfunded pension liability of about $134 billion.
The estimate, provided by Credit Suisse, said the lease or sale value would depend on such issues as raising toll rates. The finance firm said the state could raise $23.8 billion if it leased the tollway for 75 years, increased tolls by 50 percent every 20 years, and also hiked tolls 3 percent in all other years of the lease. […]
Privatization of the tollway system also could carry political ramifications. Much of the tollway is located in suburbs that have leaned Republican until recently, as well as in more rural GOP areas. When Blagojevich introduced the issue, Republican leaders warned him of the potential backlash from suburban drivers who might have little protection from seeing tolls boosted by a private operator.
Additionally, the 2008 privatization of Chicago’s parking meters by Daley for $1.15 billion, which the mayor rapidly spent down as parking rates escalated, has created negative public attitudes toward the leasing or selling of major public assets in the region.
posted by Rich Miller
Friday, Feb 15, 19 @ 10:36 am
Sorry, comments are closed at this time.
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As stated above the parking meter fiasco has poisoned the well for this type of privatization of public assets. Hard to believe enough people (and pols) will have forgotten that by now to even consider selling the tollway.
Comment by Responsa Friday, Feb 15, 19 @ 10:43 am
It’s worth a look, but I have to wait for the plan to form an opinion.
I mean, it was obvious they were thinking tollway when they started talking “assets.”
At least they’re not talking about selling assets for an Olympics pipe dream, then just frittering away one-time revenues on ongoing operations, like Daley did.
Comment by wordslinger Friday, Feb 15, 19 @ 10:45 am
We need to stop hearing that the pension fund needs to be 100% fully funded. It cant be underfunded, but it also doesn’t need to be 100% funded.
Comment by VanillaMan Friday, Feb 15, 19 @ 10:46 am
= What are we doing with this excess space? Has it been looked at? Have we consolidated office space? Have we sold buildings of the state that we don’t need? =
The state has indeed shrunk its footprint since 2002, but there could be further opportunities to reduce leased space and possibly sell some buildings - not just the Thompson Center, but some regional office buildings as well.
Comment by cover Friday, Feb 15, 19 @ 10:48 am
Good Lord no. The tollways generate funds. Selling them would be dumber than Daley selling 75 years of parking meter revenue for some magic beans.
Comment by Joe Biden Was Here Friday, Feb 15, 19 @ 10:48 am
Let’s see the details, but keep in mind that these tollways were built and paid for by mostly suburbanites. Now, you’re going to sell that asset and use it to cure the ills of the entire state? Between Chicago and downstate legislators, you can probably build a coalition to get this passed, but it’s going to create problems for suburban legislators when their constituents find out.
Why not privatize the entire interstate system, allow tolling statewide, and use the proceeds to fund pensions? More fair, bigger impact, more politically palatable.
Comment by Anon Friday, Feb 15, 19 @ 10:48 am
Sure why not. We could sell it to Laz. Who wouldn’t want to pay $20 to drive to Woodfield?
Comment by Da Big Bad Wolf Friday, Feb 15, 19 @ 10:51 am
If you get the right deal it is a large asset worth selling/leasing off. But again, it would have to be the right deal.
Comment by OneMan Friday, Feb 15, 19 @ 10:52 am
With this logic they should have video gaming be run by the pension system.
If this happens I wonder how downstate will feel. Taxing suburban commuters to help pay for pensions of state employees. Majority of who work downstate.
Comment by Almost the weekend Friday, Feb 15, 19 @ 10:54 am
If the tollways generate $X per year, and on the basis of that, some private company is willing to pay $Y for them, why is that better than simply devoting the $X per year to the pensions? The answer suggested by the parking meter fiasco is that a private company, by greater ruthlessness, would generate more than $x per year. But then why not have the tollways more ruthlessly run and priced, and generate that larger sum for the pensions? Unless you’re planning to spend it all at once (which you definitely should not), there’s no inherent advantage to getting the lump sum rather than the annual income. —Am I missing something? (Perhaps that underpricing the asset leaves room for the private company to make big gains, and thus for corruption?)
Comment by UIC Guy Friday, Feb 15, 19 @ 10:55 am
Have we tried offices in Springfield where the state capitol is instead of Chicago. Rent and cost of living is much cheaper.
Comment by the Patriot Friday, Feb 15, 19 @ 10:56 am
Of all the buildings in Springfield the State occupies, they own very few of them. There’s the Capitol, and other buildings in the Capitol Complex, but other agencies, divisions, etc. spread all over town are in leased space. Selling them wouldn’t be an option. Then there’s the JRT Center in Chicago, but there isn’t a long line of people wanting that one. Back to the tollways.
Comment by Behind the Scenes Friday, Feb 15, 19 @ 10:58 am
$20B is probably too little to sell the Tollway for, given the political ramifications. You’d be better raising tolls a bit (say by 50 cents) and actually trying to make the Tollway into a revenue generator, which it is not at present, but even that gets political backlash. Now, $50-100B might get you a different answer.
It makes total sense to put the proceeds from sales of any surplus state assets, such as buildings, into the pension funds from now on, rather than GRF (although that is a bit of a shell game). But I’d rather see the state out of all rental space prior to selling state buildings for “market value”, which tends to benefit a few insiders.
Comment by Jibba Friday, Feb 15, 19 @ 11:00 am
–Then there’s the JRT Center in Chicago, but there isn’t a long line of people wanting that one.–
Not the building, but that’s prime real estate, forever.
Comment by wordslinger Friday, Feb 15, 19 @ 11:03 am
Sure, go for it. But toll all the interstate highways in Illinois, starting South of I80, and sell them. /snark/
Comment by wondering Friday, Feb 15, 19 @ 11:07 am
Juba- the enacting legislation for the tollway would have to be changed to allow money collected as tolls to be used elsewhere. This would also face an immediate lawsuit ala what is happening in Indiana. Trucking groups are suing Indiana claiming that they are not benefiting tolls collected that is spent elsewhere in Indiana.
Comment by Huh? Friday, Feb 15, 19 @ 11:08 am
In addition to other points raised by others, I’m concerned that, as Hynes said, fewer state employees are paying into the system. So what’s essentially a one-time injection of funds doesn’t provide a permanent solution to the underfunding problem.
Comment by Father Ted Friday, Feb 15, 19 @ 11:13 am
“So not only does that contribute to the whole unfunded problem because we have fewer people paying into the pension system…”
Hiring someone at full salary and benefits so we can take 5-10% of their salary and deposit it into a pension fund is horrible financial reasoning. Thinking you should spend $50,000 so someone else can deposit $5,000 is how massive debts are built.
There’s a term for relying on new investors to pay off current investors. #HynesMath
Comment by City Zen Friday, Feb 15, 19 @ 11:16 am
Anon10:48am “Why not privatize the entire interstate system, allow tolling statewide, and use the proceeds to fund pensions? More fair, bigger impact, more politically palatable.”
Maybe, but it would go against at least the spirit, not sure about the writing, of the infrastructure lockbox amendment. Making all interstates toll roads would be better for a goal like having more money to go to state routes that aren’t interstates.
Comment by 62656 Friday, Feb 15, 19 @ 11:24 am
== Have we consolidated office space? ==
State has been doing that for years; I know one of the people involved.
Comment by RNUG Friday, Feb 15, 19 @ 11:32 am
== Why not privatize the entire interstate system ==
Better run that past the Feds first; they paid to build them.
Comment by RNUG Friday, Feb 15, 19 @ 11:33 am
== Why not privatize the entire interstate system ==
Current toll roads in the Interstate Highway System were built by states and rolled into the free system way back when.
https://www.fhwa.dot.gov/infrastructure/tollroad.cfm
Comment by wordslinger Friday, Feb 15, 19 @ 11:39 am
Do not sell the tollway. They are the only roads that actually are nice.
A private company will increase prices and suburbanites will be paying more for the luxury of driving on a road we pay for with a fee. Not including we are already losing money on the 60/40 split of how road money gets split between downstate and here.
How much more is Illinois going to make suburbia pay? We already eclipse everyone on property taxes, we pay direct fees for the tollway, we receive far less than anywhere else in the state on our dollar return in what we pay in income tax, the new mayors want to charge a suburban commuter tax on doing business in the city.
Where does it end?
Comment by Dupage Bard Friday, Feb 15, 19 @ 11:40 am
Hey DuPage,
where does it end, you ask?
It never ends. in fact, it’s just beginning. hang on tight.
Comment by jim Friday, Feb 15, 19 @ 11:45 am
City Zen — he’s not suggesting that we start hiring people to pay into the pension funds. He’s explaining that the reduced headcount has a couple of negative impacts — the cost of unnecessary space, and the reduction in new employee inputs to the funds. That’s just the reality. Is math.
Comment by Soccermom Friday, Feb 15, 19 @ 11:45 am
=Where does it end?=
with the green new deal of course. Toll roads will be obsolete in 12 years when we are all taking trains to work everyday, duhhhh
Comment by Iggy Friday, Feb 15, 19 @ 11:48 am
Transferring Tollway ownership to the pension systems could work if the pension systems’ only use it as an asset on their books — not as a revenue generator. Any revenue generated by tolls needs to go to maintaining the roads.
Makes more sense to transfer ownership of the Thompson Center (and other downtown properties owned by the state) to the pension funds and let the pension systems benefit from the profits generated by the redevelopment and subsequent revenue streams from owning the new buildings.
Comment by BC Friday, Feb 15, 19 @ 11:50 am
Mind you I love Australians as a people and have many Aussie friends. That said, I do NOT want them, nor the Ontario Teachers / Muni Employees pensions, nor any investment-driven entity leasing ISHTA assets. Our tollways are some of the best maintained (professional opinion) in the country. Lessees will be always tempted to scrimp on maintenance to ensure their RoI. Cintra-Macquarie had already to cut back on maintenance on the Indiana Toll Road, using the “justification” the the bulk of the road had been repaved just prior to the their buying the lease. Roads, especially those in our regular freeze-thaw climate aren’t “done” when you repave them. Crack-sealing needs to begin the following spring. Now, if the five pension systems want to buy bonds, I’m all for that.
Comment by Proud Sucker Friday, Feb 15, 19 @ 11:51 am
Where’s he getting that 60,000 state worker number from?
I’m throwing up a red flag.
I don’t know of any agency that is anywhere near full strength.
Where did he get this number and is it verified?
Comment by Honeybear Friday, Feb 15, 19 @ 11:53 am
Sure, go for it. But toll all the interstate highways in Illinois, starting South of I80, and sell them. /snark
Comment by Anonymous Friday, Feb 15, 19 @ 11:55 am
Worked so well for the lottery.
You don’t sell all your long term capital producing assets to pay short term debt. You eventually run out of capital producing assets.
How about we stop passing dumb laws and increasing government spending. Lets just start there.
Comment by the Patriot Friday, Feb 15, 19 @ 11:58 am
If the Tollway appraises for $50 Billion and ownership is divided among the pension systems, then the Tollway needs to generate $4 Billion profit per year for the pension systems to achieve an 8% return. Of course, there are significant legal and political hurdles to overcome.
Comment by Grandpa2 Friday, Feb 15, 19 @ 11:59 am
Right don’t sell it transfer ownership.
Comment by Not a Billionaire Friday, Feb 15, 19 @ 12:00 pm
Sorry, the above was me and I hadn’t finished my thought.
The federal government has a few pilot programs that will allow the conversion of an existing free interstate lane to a tolled lane, but a massive conversion of the IL interstate system to tolling would probably require an act of Congress. Many transportation experts say it’s only a matter of time, given construction costs and the flexibility needed to address infrastructure.
https://www.fhwa.dot.gov/ipd/fact_sheets/tolling_programs.aspx
Comment by Six Degrees of Separation Friday, Feb 15, 19 @ 12:00 pm
Rather than selling the Tollway to a private entity, transfer ownership to the State Employees Retirement System (SRRS). That way the assest remains with the State and the pension system has its own revenue generating asset
Comment by Frank Ambrose Friday, Feb 15, 19 @ 12:02 pm
Okay, so I did some work. On the Illinois.accountability.org website it’s got 59,517 entries which is I think where he got the number.
But…..
This includes people who are on Personal Services Contracts and Hourly/Seasonal folks who may or may not be eligible for pensions.
Thus
I’d like to know the
Actual Number of Pension eligible
state employees.
It sure isn’t 60,000
and knowing the right number is
Super Important
If we want to pursue the right strategy
Right?
Comment by Honeybear Friday, Feb 15, 19 @ 12:03 pm
We could toll 39 the rest of 88 and 72 because they are not original interstates. We got approval from the feds for the Elgin Ohare. It’s was paid for by mostly state but there might have been federal money in its contruction. I don’t think anyone has gotten approval to toll an original free interstate.
Comment by Not a Billionaire Friday, Feb 15, 19 @ 12:04 pm
Oh and to the post.
Privatization
to me
as a unionist.
is always
a bad decision.
Comment by Honeybear Friday, Feb 15, 19 @ 12:04 pm
I say do it, tomorrow. The ensuing disaster would be fun for the “privatizers” to face and explain.
Comment by JS Mill Friday, Feb 15, 19 @ 12:06 pm
===Rather than selling the Tollway to a private entity, transfer ownership to the State Employees Retirement System (SRRS). That way the assest remains with the State and the pension system has its own revenue generating asset===
Right now, the Tollway is basically “revenue-neutral”. Making it an asset generator would require raising tolls without providing a benefit to the users, but to the state as a whole, and then the argument that suburbanites are subsidizing Chicago and downstate. Not to mention dashing the hopes of CMAP, who someday hopes to partially fund public transit with excess revenues from a tolled expressway system.
Comment by Six Degrees of Separation Friday, Feb 15, 19 @ 12:10 pm
Sounds good, eliminate crony/patronage hiring, get the 1700 plus employees of the Tollway out of the pension system and raise a bunch of cash.
https://www.wifr.com/home/headlines/Illinois_Tollway_Salaries_and_Pensions_128329543.html
Comment by Donnie Elgin Friday, Feb 15, 19 @ 12:15 pm
Ask the bondholders. Their opinion is probably the only one that counts.
Comment by NoGifts Friday, Feb 15, 19 @ 12:19 pm
“What are we doing with this excess space? Has it been looked at? Have we consolidated office space?”
If you’ve followed the career of Ed Bedore on the Procurement Policy Board (through the end of the Quinn era), the answer is yes, particularly in leased office space.
Comment by Anyone Remember Friday, Feb 15, 19 @ 12:27 pm
The reason the parking meter deal made sense for the investors was that they, and not the city, had the will to charge market rates for parking in Chicago. It only made sense if the new operator could jack up the rates.
A tollway sale or lease would require a similar approach if we wanted to maximize the upfront payments. However, I think most would agree that repaying the pension debt on the backs of tollway users would be disastrously unfair.
Comment by 47th Ward Friday, Feb 15, 19 @ 12:38 pm
Out the Universirty of Illinois in SURs. They don’t seem that interested in Illinois. We might as well.make some money off them.
Comment by Not a Billionaire Friday, Feb 15, 19 @ 12:44 pm
We have a number of state parks that could either be sold to private developers or local park districts and no one would miss them.
Comment by Juvenal Friday, Feb 15, 19 @ 12:49 pm
I can hear it now…
The GARS Tollway is backed up from the SERS interchange to the TRS tollbooth due to an earlier crash at the SURS Oasis.
Comment by City Zen Friday, Feb 15, 19 @ 12:52 pm
CZ with the mic drop. lol. Excellent stuff.
Comment by Demoralized Friday, Feb 15, 19 @ 1:26 pm
We only have 144000 acres of state parks. I doubt they would go for much. And we need a few sort of natural areas.
Comment by Not a Billionaire Friday, Feb 15, 19 @ 1:27 pm
Privatizing public assets like this is a bad idea. If we need more money to come out of the Tollway, raise the tolls. Don’t sell to a private company only for the benefits of the toll increases to go to a private company.
Comment by A Young Person Friday, Feb 15, 19 @ 1:29 pm
I’m holding out for the “RNUG Oasis”, to honor the guy who should’ve been listened to more by the powers-that-be.
Comment by Six Degrees of Separation Friday, Feb 15, 19 @ 1:35 pm
Sell the tollway for the right price seems smart. The state has proven it can’t affectively manage it.
Comment by Anonymous Friday, Feb 15, 19 @ 1:38 pm
“The state of Illinois in 2000 had 80,000 employees. Today, we have 60,000 employees,” Hynes said”
Somehow the Civic Committee and IPI never mention this matter.
Comment by Nonbeleiver Friday, Feb 15, 19 @ 2:03 pm
I have trouble seeing a scenario where selling the tollway becomes a good option for a Democratic governor. Too many bad and exceedingly expensive experiences from which to learn.
Comment by Chicago Cynic Friday, Feb 15, 19 @ 2:12 pm
== the “RNUG Oasis” ==
It better serve Pepsi …
Comment by RNUG Friday, Feb 15, 19 @ 2:15 pm
6 degrees - I agree the tollway currently is revenue neutral, but I believe that is dud to the fact the Tollway Authority has not had to implement the “due mord with less” mandate the rest of the State Agencies have had to deal with. The tollway, properly managed with a focus with generating a revenue stream to SERS is feasible. Where would the Chicago Pension System be today if the parking meter ownership had been transfered to it? It would be way better off than it is now and the “People of Chicago” would still own it.
Comment by Frank Ambrose Friday, Feb 15, 19 @ 2:17 pm
Can the Tollway assets be used for pensions or does lock box amendment, approved by the voters to protect transportation funds, prohibit this?
Comment by {Sigh} Friday, Feb 15, 19 @ 2:38 pm
The lockbox amendment won’t allow the state to sell the Tollway or any transportation assets - unless the proceeds are put right back into a transportation related expense. Next!
Comment by Bored Chairman Friday, Feb 15, 19 @ 2:50 pm
This is a horrible idea. Privatizing a governmental entity that has a monopoly never works out well for anyone. Wanna solve the $320B pension crisis? You can:
1) pass a constitutional amendment and slash benefits,
2) amend the tax code and create a statewide property tax (an added assessment) on crop land,
3) create a State run ISP by running fiber optic cables the “last mile” or 4/5G, and compete with Comcast and others.
4) federal bailout
Cuts and/or increase in revenue aren’t going to solve anything, even over 30 years. After all, how much progress was made in the past 30 Years since the pension ramp was created? None.
Negative progress. It’s worse now.
Comment by Merica Friday, Feb 15, 19 @ 3:11 pm
Maybe if we privatize Metra it might actually run on time.
Comment by supplied_demand Friday, Feb 15, 19 @ 3:56 pm
===The state has proven it can’t affectively manage it.===
The state is somewhat hands-off with its tollway management, and yet it is one of the few state agencies that pays for itself and is without a doubt in the best position of the northeast IL transportation agencies. IDOT District 1, Pace, the CTA and Metra would love to be mismanaged so well that they had no pressing unfunded capital needs. There is always room for improvement, but the Tollway isn’t anywhere close to the biggest problem out there.
Comment by Six Degrees of Separation Friday, Feb 15, 19 @ 3:58 pm
===Maybe if we privatize Metra it might actually run on time.===
Metra pays the BNSF to run its trains on that line, and it receives some of the most service complaints.
Comment by Six Degrees of Separation Friday, Feb 15, 19 @ 4:01 pm
Yes Frank Ambrose.
Comment by Not a Billionaire Friday, Feb 15, 19 @ 4:13 pm