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It’s the next governor’s problem

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Illinois

* Scott Reeder’s latest column makes an excellent point about the new contract that was just agreed to by Gov. Blagojevich and AFSCME….

The 37,000 state employees who belong to the AFSCME will take $175 million in health care benefit concessions – for just the first two years of the four-year contract. […]

The governor also agreed to give workers pay raises — with the largest raises coming in the second two years of the contract. The pay raises will cost Illinois taxpayers $83 million during the first two years, but almost twice as much during the second two years — $162 million […]

AFSCME spokesman Anders Lindall would only say, “It was very important to the administration that all of the concessions be in the first two years of the contract.”

In other words, he’s taking all the financial benefits in the first two years and putting off much of the financial pain in the second two years.

Much of the burden for those second two years will be the next governor’s problem.

* And this isn’t the first time he’s done this…

In 2003, Blagojevich sold $10 billion in pension bonds — with a repayment schedule that included interest-only payments for the first five years. There is a term for many homeowners who took out loans like this — foreclosed.

The governor used $7.3 billion of the bond sale to “refinance” pension debt and the remainder — $2.7 billion — to pay for ongoing programs.

That’s the equivalent of an 85-year-old man getting his kids and grandkids to co-sign a $200,000 mortgage for a $150,000 house. The foolish octogenarian could take the remaining $50,000 to Las Vegas.

posted by Rich Miller
Tuesday, Sep 16, 08 @ 10:45 am

Comments

Whoever runs for governor to replace Blagojevich better expect to face nothing but disasters. They should be as transparent as possible with voters and legislators and get as much honeymoon with them as possible. The more voters understand the disasters we face, the more time the next governor will get to address them.

California had been kind to Arnold, knowing that he faced superhuman obstacles, and Illinois will be kind to the next governor if the next governor is as above-board has possible.

Comment by VanillaMan Tuesday, Sep 16, 08 @ 10:53 am
We can’t blame the state workers for asking for and getting a pay hike. While the Gov, Congress and Senate added new programs, many times to their work load and gave themselves and cronies raises, the state workers were given nothing. Yes, I’ve seen some lazy workers but, most state workers are doing a good job and not being recognized for their efforts.
Also, Rod set the repayment schedule without getting a nod from both Mike and Emil. I guess they all figured it would be the problem of the next administration, congress and senate.

Comment by eek Tuesday, Sep 16, 08 @ 11:00 am
So force layoffs and furloughs…but at the sametime give pay raises? In 2012 afscme will just want more money and more benefits from the taxpayers. These are tough times for everyone and the Gov should have stood his ground and said NO! If they want the great benefits and paychecks…then go to the private sector.

Comment by scoot Tuesday, Sep 16, 08 @ 11:12 am
But isn’t Blago intending to run again? Perhaps he’s forgotten where (or even THAT) he planted all these ticking fiscal time bombs.

Comment by Secret Square Tuesday, Sep 16, 08 @ 11:15 am
The bond issue is a great one…There is a case coming up in “operation board games” with one of the key players in the bond issuance- Hurtgen- who was with now defunct Bear Stearns.

I don’t know if they will ever get to the bottom of the “fees” that were paid out of that Bond issuance but approx $400,000 went to a Rezko account.

Comment by GofGlenview Tuesday, Sep 16, 08 @ 11:24 am
OK, this may be a bit of a dumb question but if anyone wants to tackle it…

Blago says (or at least strongly hints) that he intends to run again and he’s raising funds like there’s no tomorrow. What happens to that money if he changes his mind and backs out? Could he still use it for his legal defense in the event of an indictment?

I am trying to figure out what, if any, possible motivation he could have for leaving all these fiscal messes behind for the next governor to clean up, then deciding he wants to be the “next governor” after all.

Comment by Secret Square Tuesday, Sep 16, 08 @ 11:31 am
Regardless of whether he runs again or not, the way the AFSCME contract is written the the costs are realized until after the election. That means that he doesn’t have to make the tough choices on finding new revenues or making cuts to pay for the raises before his name appears on the ballot.

Comment by Scott Reeder Tuesday, Sep 16, 08 @ 11:46 am
Thanks, Scott! I suppose Thompson’s four-term record will be safe for the foreseeable future

Comment by Secret Square Tuesday, Sep 16, 08 @ 12:22 pm
$10 billion dollar loans with the repayment date set after he is gone

Pay raises to escalate after he is gone

Parks reduced to weed fields that will need to be restored after he is gone

Social service agencies that have been decimated under his control that will need to remade into effective entities - yes, after he is gone

Yep, that’s testicular virility alright. The problem for him is that his modus operandi has brought him nothing but disgust. The next governor will indeed be the hero/heroine for returning sanity to the governor’s office.

Can’t wait for “after he is gone”.

Comment by See Ya Tuesday, Sep 16, 08 @ 12:24 pm
The great news is that he is thinking he will be gone - YAHOO!!!!!!!!

Comment by Collar faithless Tuesday, Sep 16, 08 @ 2:11 pm
Heh, does this mean he’s leaning towards not running for a third term. Keeping himself superficially off the hook.

Comment by Levois Tuesday, Sep 16, 08 @ 2:44 pm
No different to Leasing the Lottery to get all the money up front, with NOTHING on the back end.

Comment by He Makes Ryan Look Like a Saint Tuesday, Sep 16, 08 @ 3:50 pm
Me thinks some might be making the wrong assumption. Remember his borrowing on the pension and not making the pension payments were done before he thought he could become a senator, etc.
My opinion is that while those options are open to him he will still steer the legislature, mainly the House into a tax increase, which will fund all of the cuts, the CTA, and of course his pet projects. He has extended the closures to the end of November. The Senate will be back in session, the ethics bill will be dead, and the back and forth can continue with pressure on legislators to fix all of it with a tax increase. He will protest but will eventually have his arm twisted? to sign.

Comment by Irish Tuesday, Sep 16, 08 @ 4:04 pm
As a merit-comp career IDOT employee I am doing my part to help out. No pay raises, 100% pension contribution, unpaid overtime, etc. Baloneyvich and Hoffman are giving the high paying jobs to their cronies.

Comment by David Tuesday, Sep 16, 08 @ 5:00 pm
Kudos to Scott on another well-written and thought-provoking piece.

The “what,me worry” stunt Blago pulled that was probably the most expensive and that frosted AA’s er, ah, whiskers the most was the excuse served up for cutting the pensions. “With all these ‘reforms’ we’re going to save a kajillion bananas over the next 50 years. It’s only right that we ‘proportionally save’ and grab some cash NOW (instead of waiting to see if money is actually saved)for all my ego boosting new programs.

Worst.Governor.Ever.

Comment by Arthur Andersen Tuesday, Sep 16, 08 @ 5:58 pm
A lot of us state employees didn’t know how the contract ended up being written. We are taxpayers just like everyone else, and the current Governor hasn’t been good to anyone in this state, as far as I’m concerned. Having worked now under 3 different Governors, this is by far the worst run system I have ever seen.

Employees want a fair pay raise like private sector people do. We just can’t ask for one on an annual basis. It’s set for us. The majority of us have been busting butt since before Ryan left thanks to early retirement and not filling positions.

I can only hope Blago tries to run again and see how badly he’s treated when he gets beat in the primary. He has completely messed up this state. We, as a state, will be paying for his mistakes for years to come.

Comment by Wickedred Tuesday, Sep 16, 08 @ 6:02 pm
afscme stikes again !! they’re so opppressed and griping all the while that they have to pay-up a little….while the rest of merit comp and salary grades get it once again. no raises, COLA and the potential for lay-off, furlough or unpaid days to pay for it and the rest of the states messes. gee thanks blago !!

Comment by anon Tuesday, Sep 16, 08 @ 7:55 pm
Wasn’t the just expired contract also back loaded in the last 2 years as far as raises go? I believe it was.

Comment by State worker w/ an MBA Tuesday, Sep 16, 08 @ 8:06 pm
As an AFSCME member, I’m not against merit comp getting their raises, but union members have a contract for a reason. Don’t blame us for bargaining for one. We weren’t the ones who created the mess the state is in, that would be those elected into office in Springfield. That is where all our ire should be directed.

And I’d be more than happy to let merit comp share some of the overtime we’ve been working for the past 6 years. Better yet, let Blago and his buds walk in any of our shoes for a few days.

Stop the fighting of the working people of the state. Merit comp, private sector affected by state cuts, etc.. We all pay for the mistakes that the few make.

Comment by Wickedred Tuesday, Sep 16, 08 @ 8:52 pm
More money for Blagojevich’s pals.

Comment by iMAGINE Tuesday, Sep 16, 08 @ 10:03 pm
If Blago runs for and wins a third term, and the odds are excellent for such a win, then he has demonstrated that he can do anything he wants and Illinois taxpayers will accept it–including an income tax increase, even a huge income tax increase.

If he loses, it’s his successor’s problem. No doubt the approach of a new governor will be to excoriate Blago and then tell Illinois citizens that, sorry, we’ll just have to eat a hefty income tax increase in order to pay for his (and our) sins. Taxpayers, based on past and recent history (in Cook County, for example) will cough up without too much protest. You live in Illinois, you love to get taxed.

A win-win for our Blago and our lavishly paid state government ranks as well.

Comment by Cassandra Wednesday, Sep 17, 08 @ 4:15 am
Seems funny how they reached an agreement so quickly when those involved from the locals perspective said it was moving slow….then virtually the next day about 450 + got the notice of lay-off…or was it “trade-off” ?? As to the poor conditions..& OT I’ve seen them lining up for OT at 1 1/2 times per hour. I think they rushed to a contract seeing the writing on the wall in cut-backs & lay-offs & threw the “bretheren”, at least some under the bus to keep their “propriatary jobs”. I guess M

Comment by anonny Thursday, Sep 18, 08 @ 6:31 am
I bet they would like to see merit-comp employees take some OT. They {MC}get nothing for it $$ wise except EE time, earned equivilant, capped at 120 hours a year & loose it if they don’t use it. Fact is alot of these jobs well in exceed the going rate for work provided & though folks out to make a living…these guys are hauling it in ! Check around, even in the private sector job for job ?? 82 mil in the first two years & double that in the last two of this contract. Where’s that dough going to come from?? They can’t lay everyone off, furlough & keep failing to pay up. Maybe close some more state parks or something. Can you say “right to work state” ??? Afscme is getting out of control & these people better wake up before they price themselves out of business.

Comment by concerned tax payer Thursday, Sep 18, 08 @ 5:58 pm