Latest Post | Last 10 Posts | Archives
Previous Post: Reform report - Read it all, watch the video *** UPDATED x1 ***
Next Post: Caption contest!
Posted in:
*** UPDATE 3 *** An e-mail to me from Ms. Ridgway of the governor’s press office…
It is the Governor’s intention that transit projects will get started this construction season.
Construction season ends in, what, November?
*** UPDATE 2 *** Greg Hinz at Crain’s has shared the original e-mail response he received from Katie Ridgway of the governor’s PR staff…
With a statewide unemployment rate of 9.1%, the Governor, working with the General Assembly, believed it was crucial to pass Jump Start Capital Plan to get shovel ready road projects going in May so we can start putting people back to work. The Jump Start Capital Plan relies on dollars from the Road Fund to support $640 million in road projects.
The funding source for the bonding to support $1 billion in transit projects is GRF; we are working with the General Assembly to pass revenue enhancements to support the GRF spending on the bonds. The purpose for including transit in the Jump Start Capital Plan was to allow transit agencies time to take action necessary to get projects into the “ready to go” phase. [emphasis added]
They are not working with the GA on passing revenue enhancements for transit. Nobody in the GA was ever told about this.
*** UPDATE *** The governor’s office is claiming that the Crain’s story which this post is based on is all just a misunderstanding. Here are some notes from a conversation with a top dog…
Out of context. There’s a significant cash flow problem right now so there’s no money at this moment for the bonding. We’re not trying to impose a new condition.
We’re trying to pay off Medicaid bills by end of May. We don’t have any intention to not issue the bonds. If governor’s budget passes, it puts more money into GRF because of the income tax hike. We have no intention of stalling or withholding any money. It’s a matter of economics. Easier with an income tax hike, but it’s not a condition.
[ *** End of Update *** ]
* Gov. Quinn is apparently reneging on a promise to pay for transit fixes…
What’s happened is that, after signing a bill on April 3 to issue $3 billion for bonds for roads and public transit work, Mr. Quinn’s office has agreed to release money only for roads.
The $1-billion portion that was supposed to go for new buses, train repairs and related items will have to wait, at least for now, flabbergasted transit leaders were told in a meeting with Jack Lavin, Mr. Quinn’s chief operating officer. […]
But the transit work is different, according to the governor’s office. It requires the Legislature to pass “revenue enhancements” to pay off the bonds, and that has not yet occurred, the spokeswoman says. The transit agencies can use the time to get their projects shovel ready, she says.
That’s just not true.
The transit bonding was supposed to be funded by GRF. There was nothing said about any revenue enhancements for that portion of the transit bill. Period.
“The agreement that passed was based on a $28-billion revenue stream that already exists,” said [House Speaker Michael Madigan’s spokesman], referring to the state’s General Revenue Funds, which were supposed to finance the transit bonds. “There was an agreement between the administration and the Legislature to pass this capital plan.”
I’d venture a guess that the bond houses weren’t all that thrilled with the idea of using a bombed-out General Revenue Fund to pay off these bonds. But, again, there was nothing said whatsoever about funding the transit program with any sort of revenue increase.
I’m sure Mayor Daley will also be pleased as punch.
This is an absolutely horrible way to start off the budget negotiations.
…Adding… Wordslinger notes in comments…
Actually, the bond houses like this single revenue source the best. It’s a General Obligation bond, basically; the GRF produces many times the coverage needed for debt service
True. In retrospect, this looks more like a budget office walk-back, which is what happened all the freaking time under Blagojevich. Not good at all.
posted by Rich Miller
Tuesday, Apr 28, 09 @ 2:56 pm
Sorry, comments are closed at this time.
Previous Post: Reform report - Read it all, watch the video *** UPDATED x1 ***
Next Post: Caption contest!
WordPress Mobile Edition available at alexking.org.
powered by WordPress.
Also going to play well with Metra riders…
Comment by OneMan Tuesday, Apr 28, 09 @ 2:59 pm
Round up the ghost of gubernatorial promises broken. It’s the well-coiffed one.
Comment by David Ormsby Tuesday, Apr 28, 09 @ 3:06 pm
Blagoof Lives!
Comment by 2ConfusedCrew Tuesday, Apr 28, 09 @ 3:09 pm
Could the transit bonds be repaid with the proceeds from recission of seniors-ride-for-free? Just a thought, and the gov did say he had some “tough choices”.
Comment by Six Degrees of Separation Tuesday, Apr 28, 09 @ 3:11 pm
Well, there goes Quinn down the khazi. Talk about demented.
I think I see what he’s trying to do; he’s trying to get the very recalcitrant legislature to cooperate on his tax policy. But springing this on them is a very strange way of doing it. I figure more gridlock this year, and hope the Republicans run a state of adults for the governor’s office and legislature next year.
Perhaps President Obama and Rahm Emanuel may find themselves having to make a point with some “tough love” of their home state, steering matching funds for projects elsewhere until we grow up.
Comment by Angry Chicagoan Tuesday, Apr 28, 09 @ 3:18 pm
Unfortunately, being ‘honest’ doesn’t automatically translate into being ’smart’. He’s started making a lot of false steps; including keeping WAY too many blago’s cronies around.
Comment by sal-says Tuesday, Apr 28, 09 @ 3:23 pm
Hold on to your hats. Here we go again!
Comment by Don't Worry, Be Happy Tuesday, Apr 28, 09 @ 3:24 pm
How many transit projects are currently shovel-ready? Where and for how much?
Comment by soccermom Tuesday, Apr 28, 09 @ 3:25 pm
Many thought Blagoof II was being honest when there was an agreement to do the Phase 1 Capital Plan.
Comment by 2ConfusedCrew Tuesday, Apr 28, 09 @ 3:27 pm
Upon further review BlagoofJr looks better
Comment by 2ConfusedCrew Tuesday, Apr 28, 09 @ 3:28 pm
–I’d venture a guess that the bond houses weren’t all that thrilled with the idea of using a bombed-out General Revenue Fund to pay off these bonds.–
Actually, the bond houses like this single revenue source the best. It’s a General Obligation bond, basically; the GRF produces many times the coverage needed for debt service on a $3 billion bond issue.
The way GO bond agreements are written, the issuer pledges to use all the revenue streams of the GRF to pay debt service on the bonds first; everybody else — schools, general assistance, operations — get in line.
The flip side is that you have to wall that money off when budgeting; unlike with vendors, you can’t play games and make your debt payments late. That can trigger all sorts of nasty accelerators and penalties in a standard agreement, plus make your name mud in the market for years to come.
I’m wondering if the budget folks did some recalculating and discovered they had over-pledged the GRF in their current proposal.
Comment by wordslinger Tuesday, Apr 28, 09 @ 3:31 pm
wordslinger, I defer. Good points.
Comment by Rich Miller Tuesday, Apr 28, 09 @ 3:48 pm
-I’m wondering if the budget folks did some recalculating and discovered they had over-pledged the GRF in their current proposal. -
That’s giving them too much credit — an honest mistake? Please. The coverage is there, wordslinger, as you yourself said. I hate to say it, but I’m afraid this is the same old Blagojevich-style budget negotiation, and when it comes to bonds, you-know-who is likely behind it. Being elected from Chicago, the leaders and the Mayor care more about transit than the state as a whole, so the leverage a Governor gets from holding up transit is obvious. But I had hoped Gov. Quinn would stick to his agreements rather than weasel out of them the way the old administration did it.
Comment by Beans Tuesday, Apr 28, 09 @ 4:18 pm
Or does this mean the revenue estimates are dropping precipitously as the budget negotiations move forward?
Comment by soccermom Tuesday, Apr 28, 09 @ 4:22 pm
Do they really think anyone is going to buy this? The Governor’s office is dying to find a way to play hardball by asserting themselves in attempt to make themselves relevant. However, their intentions on witholding the money are transparent and will backfire.
The reason no one would do a capital bill under Blago is no one could trust him to spend the money as dedicated. This is is not going to help restore trust in the executive branch. We may look back at this move later and realize that this was the death of a capital bill for 2009.
Comment by JohnnyC Tuesday, Apr 28, 09 @ 4:36 pm
right, but if GRF is already running on empty, perhaps it makes sense that they thought extra revenue was needed? Beans has a point. Bond houses may like GRF because it will cover the payments, but if the state is already in such dire conditions additional revenues may be needed.
Comment by this old hack Tuesday, Apr 28, 09 @ 5:13 pm
–There’s a significant cash flow problem right now so there’s no money at this moment for the bonding.–
Umm… no. Bond payments can be deferred months or years into the future. That’s kinda (actually exactly) the point of issuing a bond. Whoever told you that doesn’t know what they’re talking about, or was trying to kick up dust.
I suspect that when the dust settles we’ll find out that they were trying to use transit for leverage to pass a tax increase. But it blew up because Hinz and Miller understand this stuff. Try something else Pat.
Comment by Beans Tuesday, Apr 28, 09 @ 5:13 pm
New boss same as the old boss, we are doomed.
Comment by Jacksonville Tuesday, Apr 28, 09 @ 5:48 pm
RE: Update 2 & Update 3:
Morons. Even Blago had better spin.
Comment by sal-says Tuesday, Apr 28, 09 @ 6:12 pm
Lavin has to go. Period. He is not helping PQ out at all. Also- get rid of whoever is running GOMB and change the name back to BoB….
Comment by DuPage Dave Tuesday, Apr 28, 09 @ 7:11 pm
Granberg gets pension for brief job
April 24, 2009 11:18 am
— By TESA CULLI
tesa.culli@register-news.com
SPRINGFIELD — Former State Representative Kurt Granberg will receive a full pension after the Illinois Pension Review Board voted 3 to 2 along party lines to pay a pension increase for the 21 days he served as director of the Department of Natural Resources.
“The Democrats have rewarded Governor Blagojevich’s scandal appointee with an additional $40,000 a year for the rest of his life,†State Senator John O. Jones (R-Mt. Vernon) stated. “Mr. Granberg spent a little more than 20 days as head of the Department of Natural Resources and will receive more money than many of the families in the 54th District make.â€
Granberg, who served as state representative for the 107th District, didn’t run for re-election in November, and resigned from his position a week before the end of the session and House vote on the impeachment of Blagojevich. A week later, Blagojevich announced Granberg’s appointment to lead IDNR, a position Granberg said at the time he had been waiting months to receive.
Not only was Granberg’s appointment criticized, but an increase in pay for Granberg was approved by Blagojevich to $133,000 — which resulted in a $43,000 increase in Granberg’s state pension. The legislative pension prior to the IDNR elevation would have been $73,000.
Shortly after his elevation to governor, Pat Quinn fired Granberg, a lawyer from Carlyle who served as state representative for this district since 1987. Quinn stated he questioned Granberg’s appointment, his salary, and believed someone with more experience in conservation and natural resources was needed in the IDNR position.
The two Republicans which serve on the Illinois Pension Review Board voted against allowing Granberg to keep the elevated pension.
“Illinois citizens deserve honest and honorable public servants,†Brady stated.
“Mr. Granberg should have rejected the additional $40,000.â€
Jones said he was very disappointed in the decision by the committee, which is made up of eight members of the House and Senate — of which three were absent for the vote.
“The vote by the pension board, which we do not agree with, shows the Illinois public one thing, that corruption and dishonesty will be rewarded,†Jones said. “Illinois taxpayers are now on the hook for $133,000 a year for the remainder of Mr. Granberg’s life.â€
Copyright © 1999-2008 cnhi, inc.
Comment by State Worker W/ an MBA Tuesday, Apr 28, 09 @ 8:00 pm
The administration’s position is nonsense, and I’m sure they know it.
As Beans pointed out, if the administration is worried about debt service payments from GRF in FY 2010, they can roll the first payments into the cost of issuance of the bonds, putting off any current revenue payments into FY 2011 or beyond. It happens all the time in muni finance.
Personally, I don’t believe the semi-annual juice on a $3 billion, 30-year, or even 10-year, bond would be a budget breaker by any means. But there are ways to conserve cash up front until revenues pick up if need be.
This is disturbing. Isn’t this the “little capital plan,” to leverage federal money on the table for shovel-ready projects this construction season? It’s almost May. Isn’t the bigger capital plan to come later?
We’re in the worst economy since The Depression. The economy shrank 4.5% last quarter, 6% the quarter before that. Unemployment is over 9% statewide. In pockets of the state, unemployment is pushing 15%. Mind you, these aren’t people who opted out of the above-ground economy. These are tens of thousands of people who were working recently and are ready to go back to work right now.
You hold off an capital projects for when times are bad to put people to work. Well, we’ve held off on capital projects. Times certainly are bad. And people need the work. What’s the problem?
In this environment, with complete control of state government, if the Democratic Party can’t get it together for a Mickey Mouse jobs bill for needed projects, then they really stand for nothing. They might as well pack it in and leave it to the GOP and Greenies.
Comment by wordslinger Tuesday, Apr 28, 09 @ 8:41 pm
Time for PQ to change positions again, this time on his undying support for the Blago free rides.
Comment by Bobs yer Tuesday, Apr 28, 09 @ 9:37 pm
quinn is not going to make it. stop trying to make him into something he is not. give him some $100k job and move on. Illinois has a great river, a great city, farmers who are the best, and workers who know how to produce….and a history that is america at its best and at its worst….go for it.
Comment by disgusted Tuesday, Apr 28, 09 @ 9:48 pm
Beans, I agree with you that they were trying to be cute instead of smart here, but I don’t know if I agree on the other piece of your post.
Unless they wrote specific language into the capital bill (and old AA is too lazy at this time of day to look it up) the debt service has to be level pay, meaning no deferrals, backloading, or zero coupon bonds. Ironically, this legislation was passed in 2004 after the GA started reading the pension bond law which had passed the previous year and which was/is heavily backloaded.
Comment by Arthur Andersen Tuesday, Apr 28, 09 @ 11:16 pm
Here’s another little factoid on the mini-cap that most have overlooked.
The bonds are 20-years. Nearly all the highway projects funded by the bonds are simple asphalt resurfacings, which tend to last about 10 years at best. The last 10 years of debt service, we will be paying for something that has already worn out…kinda like being upside down on that car loan for the old beater.
Comment by Six Degrees of Separation Tuesday, Apr 28, 09 @ 11:37 pm
How many transit projects are currently shovel-ready? Where and for how much?
One can always buy new buses for the fleet, for a hundred thousand+ a pop. Track repairs, things like that. It’s the big capital projects like reconstructions that take years of planning and design, that are difficult to be shovel-ready at the snap of a finger.
Comment by Six Degrees of Separation Tuesday, Apr 28, 09 @ 11:43 pm
Perhaps President Obama and Rahm Emanuel may find themselves having to make a point with some “tough love” of their home state, steering matching funds for projects elsewhere until we grow up.
This punishment, after IL is currently #1 of all state in the US in getting highway stimulus projects to construction letting (in both # of projects and dollar value)? I don’t think so.
Comment by Six Degrees of Separation Tuesday, Apr 28, 09 @ 11:46 pm
Blago lite
Comment by Ghost Wednesday, Apr 29, 09 @ 8:03 am
Do any of the revenue enhancements even generate new money before Jan. 1?
Meanwhile, Quinn has yet to release funding for all of the Illinois FIRST projects that Rod put a brick on.
C’mon Pat ~ Illinois is rooting for ya ~ but the honeymoon is quickly ending.
Comment by Yellow Dog Democrat Wednesday, Apr 29, 09 @ 8:19 am