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The big idea behind Chicago Newsroom is that we assemble a small group of involved, knowledgeable people around the table and we yak about the week’s local news. Most often we tap journalists, but you’ll also find historians, political activists, academicians and newsmakers in the mix, too.

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CN May 28, 2015

 

It all just seems so hopeless. Unfunded pensions are everywhere. A billion dollar hole here, a half-billion one there.  A hundred-billion shortfall in Springfield.  Junk bond ratings. There doesn’t seem any way out of it without giving up hard-earned pensions, imposing draconian tax increases or just declaring bankruptcy and trying to start over.

But all is not lost. There are rational approaches that, while difficult, can help us find a logical pathway out of this mess if we’re all willing to be adults about it and accept some pain in return for future calm.

That seems to be the message from Ralph Martire, Executive Director of the Center for Tax and Budget Accountability. He’s been on the show before and we invited him back because we needed an antidote to all of the fiscal doom and gloom.

So, first things first. What’s all the noise about Moody’s and junk bond ratings?

“A number of the debt instruments that the City got into in the early 2000’s under Mayor Daley,” Martire begins, “Were variable rate debt instruments that were supported by letters of credit by banks that basically said if your bond rating status dips below a certain level, into junk area, (which, of course, will never happen) – once that happens it triggers a “call” on the letter of credit, so the letter of credit gets funded, the bond holders get paid, and the City then has to reimburse the banks.”

That’s why Mayor Emanuel this week had to seek refinancing of that debt, and while he succeeded, the financing costs were about an extra $70 million.

In a way, the City was just as vulnerable as innocent homeowners who fell for adjustable-rate mortgages. The “experts” were pushing these flawed products, and the City’s financial people went for them, too.

“At the time everyone was saying, why doesn’t the City take advantage of these things?” Martine explains. “You could lower your current interest rates. It’s very funny, the short memory the talking heads have about positions that they encouraged the City to take. So at the time it was very much supported by the private sector, saying you’re gonna save the taxpayer money. And no one ever believed that the City of Chicago would drop to junk bond status. Well, reality is a brutal thing.”

And the rating houses were justified in their lowering of the ratings, Martire says.

“The bond rating went down for good reasons. There never has been a rational plan at the City level to deal with its unfunded liability, particularly with their fire and police pension systems, and in fact the City’s unfunded liability for its police and fire pension systems is actually harder to resolve than the State’s unfunded liability…first and foremost, the City of Chicago has far fewer revenue tools in the kit to resolve its liabilities than the State does. The State has far broader taxing authority and can do many more things.”

So, says Martire, the City is looking at a very significant crunch on its revenues. “Everyone now knows that the balloon payment due this year on the pension systems is north of $550 million more than what went to the pension systems last year.  When you consider the City’s general operating budget is only about 3.2 billion, finding another $550 million just out of the blue is a significant challenge, especially when the City’s running a deficit north of $300 million already.”

But that doesn’t mean the City was exactly prompt about confronting the issue.

“The City’s known about it – Mayor Emanuel’s known about it – since he’s taken office. This bump in funding s part of a 2010 law. It’s been on the books since he’s been Mayor. No incremental steps have been taken to get the taxpayers used to paying a little bit more to fund these obligations.”

What Martire proposes, and some political leaders seem to be paying attention, is a dose of very tough medicine. But it’s process that eases with time. Mayor Emanuel has proposed ramping up the payments needed to make solvent the police and fire pension systems. Martine agrees, but foresees a differently-shaped ramp.

“If you’re gonna have a ramp at all it has to be very short – two or three years to get to a level dollar.” he explains. “And then that level dollar has to be consistently funded, and it needs to be a mandatory payment that they can’t cheat. Now that could extend beyond the current payment period because frankly the significant size of the debt load the City’s carrying toward its pension systems is gonna require the re-financing to go out a few more years.”

If Rahm Emanuel adopts, and passes into law, a plan something like this, says Martire, “The emanuel administration would be pursuing good public policy.”

So, how would it work?

“The ramp has to be very short to get to this level dollar amount.” he tells us. “The level dollar amount has to be set so that it is sufficient to grow the funded ratio of the systems every single year, and to grow that funded ratio while accounting for the system’s obligation to pay benefits to both current and future retirees during the payment period. And it has to grow that funded ratio significantly enough so that the systems get healthy sometime in the next 40 to 50 years.”

Sounds pretty good, right? Well, there’s always some bad news…

“We’ve run some tentative numbers on this, and we think that the level dollar amount needed to get these systems to healthy is north of  $450 million a year. So they need significant revenue. And they need to have a rational plan for getting to that revenue, and the payment obligation has to be absolute with no ability for future administrations to renege on it.”

And remember, it has to reach full funding in 2 to 3 years.

“The problem with the plan as it is now is it doesn’t just ramp up next year. It ramps up the next year and the year after that. It’s one of these “ski-slope-looking” repayment plans. Well, you’re never gonna fund that. It’s irrational to think you will, and tax systems don’t operate that way.”

What Martire proposes is a fixed payment that (albeit large) remains stable for 30 or 40 years, just like a home mortgage.

“Because it’s no longer ramping up, because it’s flat, after inflation, in real terms, it becomes a diminishing obligation. So it’s very difficult to get to in the first 3 or 4 years, and probably difficult to fund for 4 or 5 or 6. But by year 7, 8 and 9, and down the road, it becomes something that the fiscal system can handle.”

The Mayor has proposed building a land-based casino, and funneling the proceeds into this pension fund. Nobody seems to believe that its revenues will come anywhere close to $450 million annually, though. But, says Martire, that’s no reason not to do it.

“Whatever it’s gonna generate, it’s gonna generate, and that will be a plus.  But in the interim you need a solid revenue strategy…then if the casinos come on line, you could reduce your current tax levies that have gone to fund the pensions to accommodate this money coming in from the casinos or divert that revenue to funding current services.”

So there’s at least a rational path that could lead to a solution for the police and fire pensions. But what about that billion-plus hole in the upcoming CPS budget, and the related massive shortfall in the Teachers Pension fund?

“Two things you have to understand about the Teacher’s Pension fund,” asserts Martire. “Number one, when the City of Chicago got control over the pension fund from the State as part of the deal for giving Mayor Daley control over the CPS Board, the systems were 90 to 100 percent funded. And in fact, they got north of 100% funded in the early 2000s, and the intentional policy decision was made to stop funding them. So literally the contribution from CPS – from the City – went down to zero. It flattened out, and then they magically got an unfunded liability. I don’t know why this surprised anyone. It was an intentional policy decision. So I think someone needs to step to the plate and say that was a bad decision. And we need to make amends for that and fix it.”

But it’s not just the bad-old City that’s to blame for the mess.

“Second, I think if you look at one of the driving reasons policymakers made that decision was to put more money into current operations – funding the delivery of  education to children in the City of Chicago. And the reason they were looking for new revenue to do that is that the State was dropping the ball on funding schools. So a real reason that contributed to the decision-makers’ under-funding their pensions was the lack of adequate financing from the State. So you can’t really resolve the City of Chicago’s unfunded liability for its teachers without the State really stepping  up to the plate with enhanced revenue and enhanced investments. And the State should, because the State is very much complicit in the policy decision to under-fund the pensions by its under-funding pf operational costs for schools.”

So, new taxes will be needed. “New revenue” is the more politically acceptable term, we should acknowledge. And if you’re looking to the taxpayer for that “revenue”, remember that, as Martire said, the state has more taxing options than the city. And one creative idea, tacitly accepted by even the Governor, is the “modernization” of sales taxes to include some additional consumer-service taxes.

“You can’t ignore the largest and fastest-growing segment of the Illinois economy with your tax system and expect that your revenue will be adequate to balance your budget from year to year,” he explains. And that’s precisely what our current policy on the sales tax does. So our sales tax, of the 45 states with a sales tax, is the 45th most narrow. We only include 5 class categories of services. There are 168 you could go after. We go after 5.”

“What we focus our sales tax on is pretty much the sale of products – hard physical things you can touch. That doesn’t work, because right now, in our economy, the sale of products is only roughly 17% of all economic activity. And what we don’t tax – services – are 72% of the economy.”

We asked Martire abut the often-discussed “Transaction Tax”. The CTU and others have frequently raised the idea of a penny-or-so tax on every transaction at Chicago’s stock exchanges. Proponents say it could raise billions a year, and opponents say it will drive out of Chicago’s central business district one of the most thriving and energetic economic engines it has.  Turns out, Martire doesn’t think much of the idea, either.

It’s got no political viability whatever,” he claims. “It would be very difficult to enforce. It would be great policy at the federal level. And the federal government really ought to look at that. But you’re diverting attention from the primary areas people should devote their time and efforts to. Those are the main taxes that feed state governments across the nation, the income and sales taxes. And our income and sales tax policies are very poor. If we fixed them, if we modernized them, if we made them work in the current economy, we wouldn’t need to even discuss a financial transactions tax.”

Also making the tax almost impossible to consider, he says, is the fact that no other state has one.

So,in 30 minutes, Ralph Martire makes the argument that there is a “rational” way out of this mess. And before you throw up your hands to exclaim that the Illinois political class will never settle anything, Martire begs to differ. “There are a number of elected officials who are very tired of going from crisis to crisis. And that’s no way to govern,” He says.

“We’ve run the numbers,” he proclaims. “The math works. It’s just the political will to make the tax policy reforms and the re-amortization of the pension debt law.”

 

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CN May 21, 2015

 

The situation in Springfield looks dire. There’s at least four billion less coming in next year due to the reduction in the income tax that just went into effect, and billions more due to help plug the various pension obligations and debts. So is this the worst it’s ever been?

Not really, says Chicago Tribune Editorial Board member Kristen McQueary.  It’s actually just State of Illinois politics.

“Every year, regardless of who’s in the governor’s office, whether it’s a Democrat or Republican, this is crunch time in Springfield. This is the sausage-making part. It’s always chaotic. So it doesn’t surprise me that they’re talking about possibly an overtime session, staying past the May 31 date. They’re trying to cobble together a budget, which would be an improvement over last year, which was to leave on May 31 with a budget that only paid for half of the year.

So what is going on? Roosevelt University professor and City Club Chairman Paul Green, who has covered Springfield since before Jim Thompson, says they’re all in a bit of a jam.

“Right now they’re jabbing each other, poking for holes,” he tells us. “The reality of it is, it is so enormous, there’s no way you could cut your way out of this, there’s no way you could revenue your way out of this. So they’re playing games. Sooner or later, someone’s gonna have to make a decision.  I’m just guessing, because you could spend a whole lifetime and never come close to figuring out Madigan’s moves, but neither one wants to go first. So to me it’s a giant game of chicken. Who blinks first? And I think that, unlike last year, there’s no way they can put together a BS budget like they did last year…they may have to blink together.”

But MCQueary, whose ed board can pretty reliably be counted on to be anti-tax, says new taxes are coming. “Financially we’re in a hole,” she explains. “There’s no doubt about that. I think at some point Rauner is going to have to look at maybe expanding the sales tax – that’s something he did not shut the door to as a candidate – and there are lots of fiscal conservatives who think that’s a smart way to raise revenue. But he wants reforms. He wants further worker’s compensation reform. He wants further tort reform. And if the Democrats don’t give him a little of that, then he says he’s just gonna keep them in Springfield beyond May 31.”

Of course, the legislators today are faced with something quite new: the clear mandate from the Illinois Supreme Court that pensions may not be abridged. When that factor is added to the generally miserable fiscal condition, it gets complicated.

“You go back to the great Depression,” Green asserts. “The City was in terrible shape, so was the State. And I think today is equally bad as the great Depression. The big difference today is the P word. Pensions. That was not an issue back then.”

“The thing that bothers me the most,” he continues, “And for the record I have a State pension, is that people who have their pensions now don’t give a damn about the kids and the young people who are going to have nothing left. They’re gonna soak up all that money…the City pensions are gonna be gone. There’ll be nothing there for the people who are working putting the money in. Remember, this is nothing but a ponzi scheme. Young people put money into the pensions so old people can get their pension benefits and then the next generation gets the benefits. Well, they’re gonna spend the money down to zero. Then what do you have? Everybody gets shafted. But as long as there’s a nickel in the till – I want my share, I don’t give an inch. I think it’s absolutely madness.”

So should the unions come to the table and give back some benefits, we ask him?

“Absolutely.”

“If the unions, back in 2000, 2002, were willing to give a little bit on raising retirement age,” McQueary adds, “I argue that the law that the Supreme Court threw out as unconstitutional, the unions got everyone riled up  that – we’re taking away your pensions, we’re stealing your pensions – that bill was a minor curbing of the growth of your pension. It still included annual raises. It made you work a little longer, which is logical because people are living longer, it froze some of the COLAs for a couple of years. It was a very reasonable compromise, and still everybody dug in and said no.”

But, we ask, isn’t the root cause of this madness the continual insistence of state and local governments to issue pension “holidays”, the result of which is a long-term, chronic under-funding of the system? Isn’t it true, we ask Mr. Green, that if Illinois had legally and adequately  funded their portions of these instruments, that we wouldn’t be having this discussion today?

“It’s irrelevant what happened fifty years ago,” he retorts. “If the captain would have just steered the ship a little differently, we wouldn’t have hit the iceberg. We’ve hit the iceberg. It’s over. So what are we gonna do now and into the future? The reality is there have to be tremendous concessions from everybody. The pensioner. The taxpayers. And let’s not let the taxpayers off the hook. One of the reasons that they delayed, was they didn’t want to put money into pensions instead of into services because in the next primary someone would say – you know what that guy did, those public employees got the money instead of schools.”

So there’s agreement that this will be a lengthy, onerous debate. But Green says he’s pretty sure he can predict how it’ll end.

“I think if this is gonna be settled it’ll be settled in two hours in a closed room. With the players.”

Police Superintendent Garry McCarthy was a recent City Club speaker. He tended to focus mainly on the Department’s accomplishments, and principally these revolve around reductions in crime. But his numbers are controversial, says McQueary.

“The crime stats issue does make the police department look less credible, and the superintendent,” she explains. “It’s been pretty obvious if you’ve been following the Chicago Magazine articles, (here and here) and even Joe Ferguson, the City’s Inspector General audited some of the crime stats and found that they’re wiggling the numbers.”

But the Superintendent also spoke about the complex social issues that challenge the department. He claimed that he has a renewed commitment to community policing, and to reducing the numbers of young arrestees sitting at Cook County Jail. McQueary thinks it’s laudable effort.

“His office is meeting regularly with States Attorney Anita Alvarez, Toni Preckwinkle’s office, Tim Evans, Sheriff Tom Dart, because it’s not just jail overcrowding, it’s the unjust nature of keeping people behind bars who haven’t even had their day in court. They’re people who’ve been arrested, but their cases haven’t been adjudicated. So I have to say, they all deserve credit for trying to get through that backlog and do a better job of getting people out on electronic monitoring who are non-violent offenders.”

“He’s trying to balance the need to maintain order in this city with  problems that the police officers cannot, by themselves, solve,” Green adds. “Police officers, teachers (and) social workers. Those people that are sort of the DMZ between the people doing bad things and the people doing good things. And the police officers aren’t paid enough, aren’t trained enough. They aren’t psychologists and sociologists.”

 

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CN May 14, 2015

 

The Illinois house today voted 72-0 (with 37 Republicans voting “present”) against a proposal Governor Rauner’s been promoting to create so-called opportunity zones in Illinois – zones where union membership would be optional, along with the payment of union dues.

The proposal didn’t impress Sun-Times columnist and Channel 7 commentator Laura Washington. It would’t do much, even if it passed, to fill up the State’s empty cash drawer, but it’s been occupying a lot of the Governor’s time, she says.

“There’s been a lot of consternation in Springfield by lawmakers who say – wait a minute, he was supposed to be this fiscal genius,” she tells us. “He was a CEO who’s so successful, he’s gonna come in and solve all our problems. And where is he? He’s going on tour, and talking about stuff that’s not gonna do anything to balance the ledger.”

For a few weeks, it appeared that Mike Madigan, the enigmatic Democratic House Speaker and legendary power broker, might be able to get along with his new Republican Governor.

“It seemed like it was going pretty well,” says Sun-Times political reporter Natasha Korecki.  “They came up with this $1.4 billion agreement to fill last year’s budget. Everyone said, wow, let’s see more of this. They got together, and then a couple of weeks later, Governor Rauner’s team on Good Friday cut $26 million in social services – after Mike Madigan on the House floor said, autism won’t be cut. Social services won’t be cut.  We saved this, this and this. So it just crumbled…and ever since that point, you’ve seen this complete downward trajectory between the two of them.”

“I think what it shows is Rauner’s lack of political experience, which is something we should have expected,” adds Washington. “Yes, he’s a very successful businessman, yes, he’s created companies, but he had no, zero, zilch political experience coming in here. And if you want to come in and run a state like Illinois, that puts you in a world of hurt if you don’t have that kind of experience.”

Mayor Emanuel hasn’t been able to come up with much in the way of big solutions either. His attempt to negotiate some concessions from City labor unions has been shot down by the Illinois Supreme Court, so he’s essentially back at the starting line four years after assuming office.

“He’s trying to put the onus of solving the problem on the folks who are not responsible for it – the unions in particular,” Washington explains. “He says over and over, the unions need to come to the table. I’m willing to work with them, we have a dire situation here, so it’s up to you to solve the problem. In an interview this weekend he wouldn’t even rule out bankruptcy for the City. I don’t believe for a minute that this man wants to see the City go bankrupt on his watch. But this is this sort of doomsday rhetoric to try to pressure the folks on the other side of the table.”

“Even if they come to the table and they do negotiate and give some concessions, it’s still not enough,” Korecki adds. “He has to raise taxes, and I think everyone knew that during the election.”

And both panelists agree that with increased competition and the development time-line, a casino wouldn’t bring in nearly as much money as it’s supporters claim. “That was his answer during the campaign, says Korecki. “Well, I’m gonna have a casino. But even if it happens, it’s not gonna solve the problem.”

In any case, the bond-rating agencies have all down-graded Chicago, in Moody’s case, to junk status (But, ironically, not Illinois.) Yet, with full knowledge that a finanical armageddon was approaching, the Legislature and incoming governor allowed the temporary income tax increase to expire.

“So now we’re in a much bigger hole,” Korecki asserts. “We’re seeing all kinds of studies showing that residential property taxes in the City are among the lowest. We have a flat state income tax. We’re among the few states with a flat tax. There’s all kinds of structural issues with how we tax in the state, and it’s caught up to us. Besides the big pension issues we’ve talked about forever – politicians borrowing from the funds, not making payments, getting pension holidays, and that’s been going on for decades. Now you have the Supreme Court saying – you have to pay up. You can’t keep doing this, you can’t find a way around it. Pay.”

Spike Lee made news today, appearing with Father Pfleger to assure Chicago that he would, indeed, be here this summer to film “Chiraq”. It’s a controversial project, because Aldermen such as Will Burns a a number of prominent political leaders and commentators have said it will harm Chicago’s image and possibly suppress tourism. Washington’s not having any of it.

“What I like is Spike Lee’s angle on black-on-black crime,” she claims. “Because I think that’s something that’s been under-reported and hasn’t been discussed enough. This is not about outsiders coming in and destroying our communities. We, in many ways, African Americans are hurting our own communities with the violence, and I think that’s what Spike Lee wants to focus on.”

And we close with  some talk about the Obama Library. It’s a good thing, all agree. But we ask if maybe it’s time to acknowledge that, no matter what, the Obamas won’t be coming back to Chicago. Nobody’s going to catch them eating omelets at Velois.

“We don’t see them even showing up at their house,” Washington explains. “They come to Chicago frequently now and they don’t even go to their house. I think they’re gone, and I understand that. They’ve got children who have to finish their education and who they want to be stable for the next several years. And then, you know, New York is the place to be if you want to be an international, or even a national player. And the Foundation has to have some roots in New York, because that’s grand central for  the philanthropic world.”

Oh, and Laura Washington does not think that Michelle will ever get into politics.

 

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CN May 7, 2015

 

Mayor Emanuel thanked a lot of people for helping bring about the Jon Burge torture settlement yesterday at City Council. But he didn’t get around to thanking the guy who, perhaps more than anyone, drove the legal battle and devoted three decades of his life to making the settlement happen. That would be Flint Taylor, who we were honored to have on today’s show.

If you have any interest in this remarkable case, please check out Taylor’s concise, fairly breathtaking verbal timeline of the Burge torture operation beginning in August, 1972 – just, as he says, a few weeks after Burge became a CPD detective.

Also hear Taylor’s description of Deep Badge, the credible insider who leaked critical information to Taylor and helped lead the way to some of Burge’s first victims. Deep Badge, who was never identified even to Taylor, played a major role in breaking the case open in its earliest days.

On this show, we also discuss the new revelations from The Guardian about  a different, but also disturbing level of abuse it claims is going on at the Homan Square facility.  The paper has done more than a dozen stories on the allegedly unconstitutional operations at Homan, and has identified a large number of credible witnesses who detail their unconstitutional interrogations and detentions at the facility.

The Beachwood Reporter’s Steve Rhodes tells us about his concerns that the Chicago media has been reluctant to take on Homan Square or do do any independent investigative work to build on (or discredit) the Guardian stories. He draws a comparison to the early days of Burge, when the Reader’s John Conroy continually wrote about it, but no other reporters would touch the story.

We ask both Rhodes and Taylor whether it might be fair to draw some sort of parallel between Burge and today’s Homan Square, and both say yes.

It’s all on today’s Chicago Newsroom.

 

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CN April 30, 2015

 

“We have had for decades in Illinois a consensus from both parties that what they want from state government is health care, human services, education and public safety,” explains Shriver Center President John Bouman on today’s show. “In fact  over 90 cents on the dollar of discretionary spending in the state budget, that’s exactly what it goes for. So if you’re gonna cut your way out of a budget crisis that’s what you have to  cut.”

But, says Bouman, for decades Illinois has never been able to raise the money to pay for the things it promises. “We’ve had a revenue problem in this state for decades,” he explains. “The recession turned it into a train wreck. And that’s why four years ago the General Assembly passed a temporary income tax increase. Without that, we would now be about thirty billion dollars in deficit…this is not a spending crisis. It’s a revenue crisis.”

Governor Rauner is faced with two significant problems. In one case, the current fiscal year is about four billion dollars short of the budget Pat Quinn left for him, and he also has to develop his own budget for next year that reflects his own priorities.

Why is this year  so out of balance? Because  a temporary increase in the state income tax, enacted for years ago, was automatically reduced this year unless the Legislature reinstated it, and it didn’t. The new anti-tax Governor didn’t want it and instead he made drastic spending reductions. Those reductions included  $1.5 billion in medicaid cuts, 128 million in cuts to the RTA and CTA, and $385 million in cuts to higher education. And numerous cuts to small social service programs.

“These are services that affect the needy,” says the Tribune’s Lolly Bowean. “Sometimes we push away that idea by thinking, well, Im a working person, therefore I’m not needy. But low-income residents come in all shapes and sizes. They’re the retired who are on limited incomes, they are people who are disabled, they are homeless teenagers who find themselves in crisis, so the money that’s being cut comes back home to us when you see that your grandmother can’t take an ambulance to the hospital or that the Pace bus that used to cost three dollars now costs four. So these programs, although they may not feel like they’re being directly used by the middle-class, all of us are touched in some way”

And the situation’s made worse, says Glenn Reedus, who heads DePriest Voters’ Chronicles, because of population shifts.

“You’ve got people leaving Chicago,” he explains, “so you’ve got fewer people trying to fill the pot, and what had been coming in is no longer there, so it’s an impossible situation.”

The battle that’s just getting under way right now, though, isn’t over these immediate cuts the Governor has made to balance the current budget. This big fight is over Rauner’s first budget of his own, the one that takes effect later this year. And it’s going to get interesting.

“I think he knows that there has to be significant revenue,” Bouman speculates. “I think he’s trying to win these business reforms and to make some cuts to protect his right flank. And he needs Republican votes…I don’t think the leaders of the House and Senate are going to be able to get Democratic majorities for the kind  of budget that it looks like is shaping up here, and the Republicans are going to have to vote for some revenue.

 

Among Governor Rauner’s supporters, it’s commonly stated that Illinois is a high-tax state, and that taxes suppress business activity and therefore job creation. But Bouman doesn’t see it that way.

“We’re not talking about the People’s Republic here,” he tells us. “Illinois currently, with the 5% income tax, was around 30th in taxing its people among the 50 states, so with the roll-back we’re back in the bottom third, and we’re not a high-spending state. Three-quarters of the states spend more (as a percentage of residents’ income) on state government than we do. So we’re not talking about putting Illinois in some extreme situation. We’re just talking about being grown-ups and realizing we have to pay for the things we want from state government.”

As to the debate about business climate and whether Illinois is or isn’t business-friendly, Bouman says it’s a bit more nuanced than that.

“There’s a lot of false claims about the relationship between state and local taxes and decisions about business location. It’s a factor, but it’s like, tenth on a list of twelve. More important are the things that you actually need from state government like transportation systems, a good, educated workforce, amenities, a good health system. And, let’s face it, a market.”

And, just to be clear, none of this debate has anything to do with the hundred-or-so billion dollars in shortfall in the pension plans. That’s a whole different discussion.

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CN April 23, 2015

 

Stop the presses.

Flint Taylor, the prominent human-rights attorney who has for decades dogged former Commander Jon Burge for torture of prisoners at his South Side police district, had kind words for a Chicago Mayor today. After negotiating with Mayor Emanuel’s team, there was an agreement that Taylor called “historic.” The surviving victims of Burge’s abuse could be given a cash payment, along with a package of “reliefs”. Those include free education at City Colleges, the history of this torture scandal to be taught in the public schools in 8th and 10th grade, psychological care for survivors, a memorial, and a full public apology. “All those things are quite significant, and unusual,” he tells us.

Taylor said the negotiating teams “met five or six, seven times, not only with the Corporation Counsel himself, Steve Patton, but with important people from various parts of the Mayor’s administration. And during that process, I think we came into it skeptical, and we came out of it feeling, yes, at least around that table, there was some real belief that reparations was the human-rights thing to do.”

The package comes before the City Council on May 6.

If you’ve been following the two unrelated high-profile police-killing stories this week, you could be forgiven for confusing some of the details. There’s an unnamed officer who, video evidence seems to show, killed LaQuon McDonald on the southwest side with sixteen bullets. It turns out that McDonald was unarmed. And  there’s Rekia Boyd, who was shot and killed by off-duty officer Dante Servin, who, from his car, fired at a crowd of unruly partygoers outside his house when someone in the group, he claims, threatened him with a gun. The “gun” turned out to be a cell phone. Servin was acquitted this week in a remarkable ruling from a Cook County judge who felt that the charges levied against the officer by the Sate’s Attorney were inadequate and he therefore had no choice but to acquit.

Both of these high-profile cases will have implications for the Police and the Mayor’s office for a long time to come, especially because both involve high-numbers cash settlements with the victims’ families. If you’d like a crystal clear understanding of these cases, listen to WBEZ’s Chip Mitchell at the top of this show. Chip understands, and articulates, the detail in an easy-to understand way, and it’s worth watching.

By the way, Mitchell says we haven’t necessarily heard the last of the Servin case. “Servin’s not entirely off the hook,” he explains. “The Independent Police Review Authority is back on the case now, since the criminal case has been disposed of. So it’s possible he could face administrative charges which could threaten his job, even if he does’t end up in prison.”

And in the McDonald Case, there’s a dashboard video of the killing, recorded by one of the squad cars that responded to the call for assistance. But the police, the Mayor’s office, and reportedly the victim’s family all have insisted that the video not be made public. In addition, the City has not named the offending police officer.

“There have been two reasons put forward by the city officials  for why this dashboard video has been kept under wraps,” says Mitchell. “This is from Mayor Emanuel himself. He called it ‘central to the investigation.’ There’s an investigation involving both local and federal authorities and the FBI is leading it. And second, this comes from Steve Patton – he heads the City’s law department – the City’s contract with the police union, the Fraternal Order of Police, prohibits naming the officer.”

And finally, a class-action suit filed this week by six Chicagoans claims that African-Americans were unfairly targeted in the City’s recently-revealed stop-and-frisk program. “We’re talking four times as many here as in New York,” Taylor says, in reference to a similar, but we now know to be smaller, program there. According to the ACLU, in just four months last year, about a quarter-million stops were made here in Chicago, none of which resulted in arrests, but could have involved searches and other police procedures. Of those approximately 250,000 stops, 182,048 involved African Americans.

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CN April 16, 2015

 

Sarah Karp and Catalyst broke a big story back on July 30, 2013. It took a while, but today, as a result of that story, the FBI is investigating a north suburban company and the CEO of Chicago Public Schools, Barbara Byrd-Bennett.

Why?

It all began at the end of that week’s regular school board meeting, when loads of anonymous issues are crammed into one nebulous action, usually enacted with a unanimous vote. This meeting was no different, but Karp was able to discern that, buried among the routine promotions, transfers and purchases was a pretty big contract. A $20 million contract for which there had been no competitive bidding.

“CPS has not given a no-bid contract that big in at least the five years prior to letting this contract,” Karp tells us. “So in just going through the Board reports it sort of raised an eyebrow – it’s a lot of money, why would you do that? What it turns out to be is a for-profit company located in Wilmette that originally provided training for aspiring superintendents.”

And CEO Barbara Byrd-Bennett used to work for them.

That company is called the SUPES Academy. It was run by two individuals, and its stated mission is to help train principals and other higher-up officials in school systems. They function by hiring similar officials from around the county to hold seminars and offer mentoring to less-experienced or struggling school personnel.

Shortly after CPS signed the contract, the seminars began. The first, Karp says, was an unanticipated  mandatory meeting for principals in the middle of July.

“The principals, immediately they were upset about it,” she says. “The thing they really complained about was that the trainers from outside often didn’t  know Chicago well, that often the sessions weren’t specific as to what they needed on a day-to-day basis, that they were supposed to each be given a mentor, and some of their mentors were superintendents who had their own jobs, and  so would just, you know, text them every now and then or email them – hey, how’s it going? Not exactly that close mentor relationship. So principals were saying, y’know, we would really like some professional development. It’s a very difficult job.”

One of the still-unexplained mysteries is why CPS decided to let a “sole-source” contract for something so readily available in this market. Sole-source, or no-bid contracts are usually reserved for purchasing items, such as proprietary software or specific equipment, that can only be obtained from one vendor. Chicago has no shortage of universities and companies offering professional development. And there was no questioning of the action as it passed through the Board meeting.

“They did it in the summer,” Karp explains. “Two weeks after they closed fifty schools. A lot of people did not pay attention…a lot of people were just burnt out. And I think that if you’re gonna try and put something like this in place that might smell a little bit funny, it was actually a pretty good moment to do so. Also, we have an appointed school board. (Bennett) is appointed, there was little discussion and it was passed by unanimous vote. This was just something that immediately smelled funny to me.”

So Karp and Catalyst started to dig.

“After a pretty long FOIA fight, I was able to get the list of people who are supposedly mentoring Chicago Public High School principals and doing the trainings,” she tells us. “And these are superintendents all across the country. And they’re coming to Chicago, maybe for an afternoon or a weekend and they’re getting paid – this is a private organization, so I don’t know exactly how much they’re getting paid – I’ve been told it’s in the thousands of dollars. And if you look at some of their names, their school districts have contracts with SUPES.”

She wrote about one superintendent from Baltimore County who did work in Chicago. “The ethics panel in Baltimore County sanctioned him and made him pay back the money because they said – well, you can’t be working for a place that has a contract with us.”

Barbara Byrd-Bemmet’s contract ends in a couple of months, and the Sun-Times has reported that City Hall sources say the contract won’t be renewed unless she gets out from under this investigation with a clear record.

Over the past several months, the Mayor and Byrd-Bennet have been very public about their claims that the dropout rate at CPS is declining, and the graduation rates are spiking upward. Now we know at least one way in which more CPS students have been graduating. They’re passing through so-called “alternative schools”. Alternative schools have been around for decades, offering specific services for troubled kids.

“They re-enroll dropouts,” Karp says. “They provide a second chance for dropouts.”

But suddenly there are many, many more of these “schools”.

“Under Barbara Byrd Bennett, last year they sort of quietly, again, without much fanfare, decided to bring in all these little alternative schools. Now they call them options schools. Thy’re for-profit, and most of them are computer-based. So it’s basically kids going in on computers and being able to pass classes very quickly.”

In essence, these establishments put kids in front of laptops and serve them proprietary software that replicates the normal high school experience, but in a radically compressed time-frame.

“One week, two weeks, some kids a month, to rack up a credit,” she says. “Most years, kids can get between four and six credits in high school. But we found kids who, in two months they ascended from freshman year to sophomore year.”

And it took some fancy footwork to get these “schools” into a position where their credits could legally be counted toward graduation. “In Illinois, you cannot have a for-profit school,” Karp explains. “It’s against the law. So they had to set them up as units of one of the divisions of CPS. So they’re getting contracted in the same way we’d contract someone to clean the bathrooms. So they’re not schools, technically.”

One of the most remarkable aspects about these schools is the fact that, when their students graduate, they are counted as graduates of their former high school, thereby bumping up the graduation rates of many CPS high schools.

“By the way, the State, when they look at who graduated and they do graduation rates, they do not count kids who get alternative diplomas,” explains Karp. “These kids are getting counted. Chicago Public Schools is figuring out how to count them.”

There are lots of “alternative schools” popping up across the city, some as small and anonymous as a single store-front in a strip mall. And their quality, Karp says, is variable. Catalyst looked into the operations of several.

“One of the most questionable was Magic Johnson Bridgescape, where kids can pass these classes pretty quickly. On the day our story came out, suddenly Rahm Emanuel got $250,000 (from Magic Johnson as a campaign contribution.) Magic Johnson is getting paid to basically brand those schools. He’s getting paid, I think, hundreds of thousands of dollars per school. And the big problem with this is, if it’s just putting a few kids in front of a computer for a few hours, that’s a very inexpensive proposition.” Karp says the critics are starting to ask tough questions. “Why are we spending the exact same amount of  money on that kid, and giving it to a for-profit organization that, we could be doing that ourselves?’

“The Magic Johnson Bridgescape (schools), they’re run by Edison Learning,” she explains.”They are paying, through their budget, four hundred thousand dollars per campus – the campuses have about 200 kids – to Edison Learning to use their software. Now, that’s like two thousand dollars per kid to log on. That’s a lot of money.”

Investigations are continuing, as reporters like to say. And here at Chicago Newsroom , we like to celebrate good reporting.

You can see Sarah Karp’s original reporting on SUPES here. And the joint reporting by Catalyst and Becky Vevea/WBEZ on alternative schools is here and here.

 

 

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CN April 9, 2015

 

Rahm Emanuel had a ground game after all.  At least for the runoff. He saw how it worked out for him in the February general election, not having one, and he apparently didn’t like what he saw.

In fact, now that he’s won a decisive victory, it’s becoming clear that he had, through a network of surrogates, thousands and thousands of workers knocking on doors. And his numbers were impressive.

Early indications, although these numbers are always educated guesses, show Emanuel with 61% of the white vote, 57% of the black vote, and despite Chuy Garcia’s strong showing in most Latino wards, 39% of the Hispanic vote.

“Mayor Emanuel in February relied on the existing ward organizations and thought that they would be able to come through for him,” explains NPR Chicago correspondent David Schaper. “What I think he maybe failed to take into account is, while Mayor Daley did that as well, Mayor Daley ran those organizations. His organization ran those organizations. And in fact, its really the machinery that elected Rahm Emanuel to his congressional seat.”

Emanuel has always been given credit as a gifted political tactician. And, according to Schaper, Emanuel learned a lesson in February.

“Rahm had taken a much more hands-off approach,” Schaper asserts. “He ran the February campaign as he has done for congressional campaigns around the country – more of an air war on television, talking points, trying to win the day in the newspapers, trying to win the news coverage.”

Hal Dardick, City Hall reporter for the Chicago Tribune, says there was another factor in Emanuel’s lackluster performance in the earlier election.

“I think the great irony is that when he did first get elected to Congress he had the Doanld Tomczak army from the water department out there,” he explains. “And that was a real, true patronage army…all those things were dismantled by court cases, as we know. And the Mayor managed to get out from under the Shakman Decree by taking all the steps you’re supposed to,  to get rid of patronage. So the irony is he killed off, in a lot of ways – and this is a good thing- this patronage culture at City Hall, so he had to find another way to create ground troops.”

But let’s not forget the money.

“The money does talk,” says Schaper. “And when you have a four or five-to-one spending advantage, especially in the tens of millions of dollars, it is a huge mountain to climb.”

And just having the money to buy lots of commercials isn’t in itself, enough. Emanuel’s spots had an important secondary function. “There was an undercurrent message in all those commercials, too,” says Dardick. “Yea, I may not be likable. I may be an unpleasant guy, but I’m the unpleasant guy that you need.”

At this writing, it’s still too early to tell what’s happening in four very important ward races. And the money the mayor’s allies spent to support favorable aldermen and defeat his adversaries didn’t always do the job.

“You had Chicago Forward, this new Super-PAC, out there working separately from the mayor but on the mayor’s behalf to elect the mayor and allies of his in the city council,” Dardick explains.”And when all was said and done, a number of mayoral allies, six or seven, in the end will have lost. And the progressive caucus will not have a majority by any  means, but where they went into this race with seven members they may emerge with as many as fourteen. And these are people who are highly critical of the mayor, so you may see a slightly different dynamic on the city council.

Both reporters speculate that, as a third day dawns with several key Aldermen still in limbo, and a number of staunch allies – even with 100% voting records – being defeated, there are aldermen who must be asking – wow. I’ve been this loyal backer of the mayor for four years, and where did it get me?

And what of that suddenly expanded Progressive Caucus? Will it have actual power? Will it begin to set, or at least adjust, the agenda?

“I’m not convinced that they’re all on the same page on a lot of issues,” Schaper speculates. “So it’ll be interesting to see how it forms and coalesces, and to see what kind of committee assignments certain people get. I can’t imagine that this is gonna lead the mayor to all of a sudden invite Scott Waguespack to his budget meetings and his strategy sessions for Council meetings.”

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CN April 2, 2015 Part 2

Mick  Dumke and Ben Joravsky of the Reader are joined by special guest Cliff Kelley, the Governor of Talk Radio (and afternoon host on WVON) for our final wrap-up discussion before election day.  We also talk ward politics, this week in 16, 21 and 29.

Some general themes: Bob Fioretti threw away his accomplishments as a thoughtful opposition leader for $80k. There’s no evidence that aldermen who battle with the mayor get worse services in their wards as punishment. And former Alderman Cliff Kelley believes the Council could be cut immediately to 25 wards and that it would make aldermen more independent, not less.

Quick snapshots on the election: Garcia would beat Emanuel easily if he’d had money early on and a slightly longer head-start. Not enough attention has been paid to issues like police stop-and-frisk in African-American neighborhoods. And the polls, especially the Trib poll, are under-counting Latinos. One panelist says Rahm wins, two say it’s a Chuy upset.

Then, from Ben Joravsky, the most radical reform idea of all: Since the garbage grid system seems to have been one of Mayor Emanuel’s big successes, making services more efficient and less costly, let’s just adopt the grid as our new ward boundaries. Look at that map – it’s compact and contiguous!

Screenshot 2015-04-04 08.48.57

Joravsky says that he’s never seen proof that minority aldermen represent minority constituents any more effectively, etc. So maybe we don’t need to draw gerrymandered wards any more.

Three of Chicago’s most passionate political animals, all at one table.

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CN April 2, part 1

It’s just days before the election results roll in and we know whether the people have elected Rahm or Chuy.

So it’s only natural that, among political animals, attention turns to last-minute polls. And to early voting patterns.  Polls have shown Mayor Emanuel gaining significantly in wards with majorities of white registered voters, and, coincidentally, many of those same wards have shown a doubling of early voters since the February general election. What does it mean?

Syvia Puente, Executive Director of the Latino Policy Forum, thinks  – not all that much.

“People are just going to be gone for spring break, so they’re just getting in their voting early,” she predicts. “So I think it means that turnout will be less next Tuesday, the day of the election. People are just shifting their priorities around for when they vote.”

Nevertheless, more than 20,000 new voters have registered before today, and while that’s not a huge number, it’s enough to have real impact in a close election. The question is, which side registered them?

It’s been pointed out that the Mayor is running with such fervor that he doesn’t look like a candidate who is confident that the polls are right and he’s got a fifteen-point lead.

“He’s certainly sweating more than he’s had to before,” explains Sun-Times columnist Neil Steinberg. “But I would argue that he’s campaigning really hard. And that’s classic Rahm Emanuel. He always does that.”

“He came on four years ago,” Steinberg continues. “We were in a looming financial disaster, which is still very much with us. However it’s not a disaster that the mayor can fix. It’s against the law for him to fix this problem. The pension issue is just a time-bomb that will destroy Chicago.There’s no question about that.”

Emanuel has been criticized for offering as his most salient plan for pension funding a bill that requires State, and possibly Illinois Supreme Court approval. Steinberg say Emanuel’s options are limited. “Mike Madigan is going to have to solve this,” he explains. “Because  he’s the one with the power to do it. For some unfathomable reason, I would never guess why. Either that or you have to leave it up to God and say no one can solve it.”

Nevertheless, lots of Chicagoans have decided they’re going with Garcia.  And that number might be larger than had originally been thought. Last week, Puente’s Latino Policy Forum commissioned a poll, and because it was built from the ground up as a Latino-orientd poll, it revealed some different voting patterns.

“The poll was conducted bilingually, in whatever language preference the person answered the phone,” she explains.  If they answered “bueno”, the interview began in Spanish. If “hello”, it was English.

“In this poll, it showed that 46% responded in Spanish. And I don’t think any other poll around town has been able to use that methodology…so it really calls into question the veracity and the accuracy of the other polls that are out there.”

And the LPF-sponsored poll showed a clear preference for Garcia in majority-Hispanic wards, Puente tells us.

“What our polls showed is that about 61% of Latinos said they were favoring Chuy. 18% said they were favoring Rahm…but what surprised me is that 20% of the Latino voters surveyed said they were undecided.”

With 40% of respondents not expressing a preference for Garcia, it could indicate that Emanuel is stronger than he appears, since some number of the undecideds may simply be afraid to admit their Rahm preference to an obviously Latino polling firm. But, as everyone at the table agreed, we’re going to know the answer in just a couple of days.

When you have pretty much all of the money, you can define your opponent. By almost all accounts, Team Emauel has done a good job of defining Garcia, and Puente says Garcia is being victimized by it.

“What I’m still having trouble understanding is, I think Garcia has laid out a plan. I think it hasn’t been as well received for what’s in it,” she says. “But we have a mayor who’s been in office for four years, and we’re on the brink of fiscal bankruptcy. Now, he’s saying it’s a 30-year mess that’s been accumulating, and yes, that’s true. But this year we had to borrow two months into next year’s CPS budget to balance this year’s budget. That’s all on this mayor.”

One of my frustrations in reading the papers is that there’ll be three paragraphs on how Garcia doesn’t have a plan,” she continues, “and then two sentences on, well, Rahm really hasn’t given much detail either. So I think that speaks to the broader bias of our newspapers lecturing us on who should be the next mayor, and that they’re not giving equal time or equal critique to each of the candidates.”

But Steinberg is forceful in his defense of Emanuel.

“We needed to close fifty schools and Rahm did it,” he asserts. “If you watched Chicagoland, with Fenger High School, you’ve got 400 kids in a 1600-kid school…because the City’s hollowed out, and because any parent who has any sort of resources either takes them to the suburbs or sends them to a private school because sending their kids to the Chicago Public Schools is a form of child abuse in some places.”

“What we’re doing is a narrative for a public policy solution that we came up with 20 years ago when our schools really were a mess,” Puente counters. “We said, OK, now we’ve gotta start to create charters. That was a policy solution twenty years ago. Moving up now, I think what we’ve seen is charters have in some ways facilitated a disinvestment in our neighborhood schools. And now we’ve got to right the policy ship”

Despite his prediction  that Emanuel will win, Steinberg says there would be benefits to a Garcia incumbency.

“If you look at the arc of numbers in America, Latinos are rising in power, in influence, and are a much larger factor in America,” he asserts. “And if Chuy Garcia becoming the Mayor of Chicago can be part of that story, I don’t think there’s anybody who cares about the city who’d think that’s a bad thing. The problems we’re facing are not some magic thing that Rahm Emanuel has figured out, obviously. On the other hand, if you look at power in Chicago and if I had to bet the house, I’d bet that Rahm wins on Tuesday.”

And what’s Puente’s prediction?

“It is spring break. There’s gonna be tens of thousand of teachers who are gonna be out of school, and a lot of Rahm’s base is gonna be away on spring break,” she claims. “I do think there’s a lot of enthusiasm, Chicago has people coming in from all around the country to work on the election for what it’s beginning to symbolize. But we all know the Mayor is very astute. He’s put in tremendous resources, and I think we’re not going to know.”

 

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