CN August 13, 2015

Posted on August 13, 2015 by Ken

 

Wanna hear some good news about Illinois? While America whines that President Obama’s new air quality standards are way too stringent and nobody can achieve them, our little State will probably meet, and possibly exceed them pretty quickly.

How? Well, as the Tribune’s Michael Hawthorne tells us, its a mix of (gasp) nuclear power, (yikes) fracking, a pretty aggressive wind power program and a bunch of closed, or soon to be closed, coal-fired clunker plants. And, dear viewer, all those LED bulbs and energy-efficient air conditioners you’ve been buying.

Coal-fired plants are being retrofitted to burn natural gas, which is suddenly abundant due to the fracking boom.

“It burns…it emits a lot less mercury, a lot less smog and soot-forming pollutants,” Hawthorne explains. “And also it emits about half the heat-trapping carbon dioxide. There’s some other issues obviously with fracking, but just in terms of when it’s burned for electric generation it’s a heck of a lot cleaner than coal and right now it’s a lot cheaper.”

Of course, as we’ve discussed previously on Chicago Newsroom, the fracking process itself creates huge amounts of greenhouse gas, and its opponents have found abundant evidence that it seriously pollutes our water.

The President’s new rules acknowledge that market forces are already helping clean the air through reductions in coal burning and huge efficiencies at the consumer level, but as Hawthorne points out, regulation often has the effect of laying down the challenge to more progressive parts of the regulated industries.

“And we’ve seen this time and time again,” he explains. “A rule is put in place that says okay polluting industry, you have to do something and we’re going to set a target for you or we’re going to set a deadline. The regulated industry, the polluting industry complains saying, “Oh my God, we can’t do this, we can’t do this.” And then what ends up happening is we have really smart engineers at a lot of these companies and they figure out a way not only to meet the target, but ultimately to do it in a very much less expensive way, so that’s what we’ve seeing with these light bulbs. You know it wasn’t too long ago that they were $30 a pop.”

It’s ironic that Illinois is in a fairly solid position on clean air improvements. Because of its nuclear fleet, and the fact that it sold all its coal plants years ago, ComEd and its parent Exelon find themselves positioned as a green leader, at least in terms of carbon-dioxide emissions.

“You know they’ve been in Springfield saying they need essentially some kind of give-away from the rate payers of the entire state,” Hawthorne tells us, “Or otherwise they’re going to be shutting down a few of their older nuclear plants or their smaller nuclear plants. Essentially what’s happening right now is at night sometimes the way the electric markets work, at night sometimes these nuclear plants that are constantly running are essentially getting negative prices for their electricity, because at night wind and other things are going full tilt. They are putting a lot of electricity onto the grid and so ComEd is not making money on those plants.”

But here’s a remarkable statistic about the position of electric generation in Illinois today. One company, if it were to convert its plants to gas, could carry Illinois to the finish line on Obama’s targets.

“There’s this company NRG that bought a lot of the old ComEd coal plants,” says Hawthorne. “They’re planning to turn a big plant out in Joliet to natural gas. That right there will get us a long way toward meeting that reduction target in the climate rules. And if a couple of other plants shut down or shut down some of the more inefficient units we’re probably there by the middle of the next decade or early part of the next decade.

Michael Hawthorne wrote a series of provocative articles for the Tribune about the possible role lead poisoning has played in Chicago’s incessant violence. A recent study had some very instructive findings for policymakers in Chicago.

“Well, I came at it initially because I’m interested in why we keep having this violence problem in our poorest neighborhoods. 2012 was an incredibly violent year here in Chicago, with national headlines for the uptick in murders. And there’s a lot of compelling research that links lead exposure early in life with first problems in school and then later a life of crime and especially violent crime. There’s a really interesting study in Cincinnati where they’ve been following people since the late 70s.

“And if you were poisoned by lead as a child, even small amounts of lead, much smaller than what we were talking about when this was a big issue in Chicago in the 1970s and 60s, very small amounts of that can permanently alter the chemistry of the brain or the makeup of the brain, and especially in areas that deal with executive functions like judgment and emotional control.

“And so you have a situation where kids end up doing very poorly in school in part because of what’s happened to their brain early in life through no fault of their own. And then in the case of these kids that were followed and now adults in Cincinnati they are more likely to be in prison and have committed violent crimes later in life. And I got to thinking, could this lead problem, this historic lead problem that we’ve had here in Chicago because we have a lot of older housing, pre-1978 when lead paint was banned in this country. Could that be part of what’s going on?

You can read his articles HERE and HERE. 

And you can read a full transcript of today’s show here:  CN audio 081315

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CN Aug 6, 2015

Posted on August 6, 2015 by Ken

Chicago has 22 police districts, each with its own police station and commander. But but there’s evidence that police brass believe they need at least one additional place – one that doesn’t appear on the City’s official directory of police stations. It does appear on Google maps, though, as the Chicago Police Department Evidence and Recovered Property Section. But back in February the very well-respected Guardian Newspaper said this facility, at Homan Square, was more than that. That it was also a place where the CPD could “disappear” arrestees for hours at a time, presumably for questioning, and free from such legal niceties as Miranda rights and lawyer representation.

The police denied this, of course, so the Guardian sued, and the results of that litigation just dropped yesterday in a new article. The important numbers – at least 3,540 people have been held there since the place opened for business, apparently in 2004, and fully 2/3 of that activity has happened since Rahm Emanuel became Mayor and appointed Garry McCarthy as his police chief. And it’s important to note that these more than 3,000 people, 80% of them black, are those who ended up getting charged with something. At this point we have no way of knowing how many people have been taken there, interrogated and released.

In media interviews, one of the Guardian’s reporters said he was tipped to the existence of this place by the head of the Chicago Justice Project, Tracy Siska.

Tracy Siska is our sole guest on the program today.

You can watch the show above for the entire conversation, including Sitka’s takes on IPRA (400 police shootings, only one found unjustified), and on the recent advice to African Americans to “comply now, contest later”.  The problem with that, Siska says, is that “in reality though, there is no ‘contest’.”

Transcript:   CN audio 080615 show #104

And here’s the original Guardian story.

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CN July 30, 2015

Posted on July 31, 2015 by Ken

Is this the new reality? We just pass three and four-week state budgets, because we have to have something, but we can’t agree on anything.

The City’s Comprehensive Annual Financial Report is out, and it shows unfunded holes possibly topping $700 million for next fiscal year. How to plug it? Garbage collection fees. Taxes on sugary drinks. Of course, property and sales taxes. And that’s just the City side of your tax bill. The County’s already dipping in for more, and just wait’ll you see how much the CPS is gonna ding you in the next few months. It’s a huge problem, and, as we’ve said before, not a problem that can be resolved by simply cutting assets and services.

Joining us this week to share their observations after covering Wednesday’s City Council meeting are WTTW’s Hunter Clauss and Aldertrack’s Claudia Morell.

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CN July 23, 2015

Posted on July 23, 2015 by Ken

 

Blaine Elementary principal Troy LaRaviere is our sole guest this week.

School budgets, charter schools,educational achievement and lots more.

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CN July 16, 2015

Posted on July 16, 2015 by Ken

 

George Schmidt is “mildly” optimistic about the new management team of Forrest Claypool and Frank Clark at Chicago Public School.

And that’s saying something, because the Editor of Substance News, consultant to the CTU and all-around 25-year public-schools gadfly doesn’t have anything nice to say about the old team. In fact, he says of outgoing Board President David Vitale: “He should be indicted.”

Claypool, Schmidt acknowledges, knows Chicago well, and as a three-time mayoral Chief of Staff, head of both the CTA and Park District, he has as much experience in Chicago government as anyone.

“He’s not gonna get a honeymoon and he knows it, but he’s probably one of the few people in this town who can say – I don’t need the honeymoon.” he says.

Already critics are saying that Claypool has no experience in education, and that the CEO should be an educator.

But Schmidt says the system has a separate education chief, and that person can be influential.

“Since we got mayoral control in 1995 there always has been the position of Chief Education Officer,” he explains. “So as long as we’re gonna maintain the myth that we need a Chief Executive Officer instead of a Superintendent of Schools, then the first thing they should do is bring in somebody who really does know education, and is gonna be given the power with the full blessing of the CEO…so I think it’s do-able up to when we get an elected school board and go back to having a Superintendent and end this massive 20-year-old fiction.”

Should this Chief Education Officer be from Chicago, or can this executive come from anywhere?

“You need somebody who doesn’t need a GPS to get from Bogan to Bowen High Schools,” he claims. “Forrest Claypool knows Chicago. He knows Chicago from the parks, from the CTA. You need somebody who actually knows this system, and these places and these people. You can’t bring in somebody from Colorado like they did last time…it was an insult to everybody in Chicago and it was wrong in terms of any serious way of running the organization.”

Do these appointments, which seem to signal a different direction from the Mayor, indicate that he wants to see things done differently? Schmidt says he’ll be watching for a couple of new initiatives.

“One is to see how the new Board and the new CEO handle the Chicago Teachers’ contract negotiations,” he tells us. “The hundred million dollars it would have taken to bring the contract in before June 30 under the old contract, for an extra year, is a small percentage of the five to six, to seven billion dollar budget (depending on whether you include capital). So when Rahm and Vitale said no, it’s not there, we can’t reasonably foresee going for it, they told the union it’s a showdown. That really was a bad idea.”

Second will be watching to see whether the new CEO recognizes the need for more funding.

“CPS needs more revenue,” he states emphatically. “And the revenue has to begin to come from an increase in the local property taxes. It’s that simple.”

And, for his part, he’ll continue to attend every Board meeting, he says, and point out every nickel of waste he can find in the budget.

“The Tribune on July 15 did  great job. They pointed out that the couple of million dollars that was being wasted on the money they’re gonna lose on these variable-rate bond deals – could’ve paid for the elementary school sports coaches.”

Schmidt also calls on Claypool to reconsider the method by which school budgets are formulated, and to “overcome this crazy so-called student-based budgeting that’s basically strangled the real schools and poured the money into the charters.”

In case you’ve been wondering how CPS could, as has been widely reported in the past few days, take tens of millions of dollars from dozens of schools like Lane, Julian, GagePark and Marshall and give millions and millions to charter schools, you’re watching student-based budgeting in action.

“It’s a fiction,” Schmidt says. “It’s a talking point. Student-based budgeting means we’re not gonna budget for the staff we need. We’re not gonna budget for the programs we want. We’re gonna budget based on the narrowest formula to restrict the ability of principals to select the staff and have the programs they want.”

Schmidt says Claypool and Clark must find a different budget mechanism.

“Budgeting for schools should never be student-based,” he asserts. “It should be program-based. It should be people-based partly on the input from the community when we have local school councils.”

For years, he says, the system has been biased strongly in favor of charters.

“Every time they made a decision to put a charter school in an area that didn’t want one, and then subsidized the charter school with an enhancement of revenue, and then gave the charter schools the green light to get all of the privatization revenue…every time they made that decision, it’s part of the project of privatizing as much as possible and also trying to suck away students from the – I call them the real public schools.”

And the pro-charter bias started a long time ago, he explains.

“The formula was set at the beginning of Noble and it hasn’t changed,” he tells us. “The formula is, if you’re a charter, you maximize your numbers up through October, November, whenever the Board asks for your final count and gives you the money. Then you make sure your criteria enable you to kick out the kids you don’t want in January. So if you look in October and April and see how many kids the school has, they’ve reduced it. So it’s a trick that Noble started with their first campus…and it’s been perfected by all the rest of the charters.

“So you will find in every high school around the city…these kids who are refugees from the charters,” he claims. “They were kicked out because they didn’t get enough points …or they didn’t cuff their Dockers or whatever the rule was, so the kid suddenly ends up in Steinmetz or North-Grand or Kelvyn Park or Wells. The blowback on this is, not only are these schools being cut now, but they’re gonna receive the kids that need a public education in the second semester, and it’s gonna be based on dollars they’re not gonna be given, because the Board will not increase the dollars.”

Frank Clark, former CEO of ComEd and a member of numerous boards governing private companies and non-profit enterprises, will have the opportunity to take the Board of Education in some new directions if he thinks it’s appropriate. And George Schmidt says Clark has the credentials. He recalls the long evenings a few years ago when Clark chaired the commission that took public testimony about the closing of what turned out to be 49 schools.

“I watched Mr. Clark chair those meetings on the school closings,” Schmidt remembers. “The man knows how to take the heat. And it wasn’t like we always agreed with him, certainly, about what he was doing.”

“He was at these tumultuous meetings,” he continues. There was one meeting with a thousand people, and the man sat there and listened. And that’s an important skill if you’re gonna work in a democracy.”

Clearly, the Substance founder and long-time union activist sees an opportunity to turn the corner on what he considers a deeply-flawed past administration.

“Vitale and (Vice President Jesse) Ruiz have been almost criminally complicit in an attack on the public schools and a massive privatization. It’s that simple. That’s their tenure. That’s the verdict.”

And now all eyes turn to Forrest Claypool. Schmidt see it as a great opportunity.

“Forrest Claypool can come in and air out the room and let people know that he’s serious about this.”

 

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CN July 9, 2015

Posted on July 9, 2015 by Ken

 

There’s a provocative article in the latest In These Times that should be mandatory reading for everyone concerned about the pension/budget crisis that’s gripping Illinois.

It’s titled Why Chicago Won’t go Bankrupt, and Detroit Didn’t Have To. It’s written by Saqib Bhatti of the Roosevelt Institution, and he was our guest on today’s program.

Bhatti echoes the theme that has been heard often on Chicago Newsroom – that more than anything else, we have a revenue problem. That for decades municipal governments have been starved of tax increases that keep up with the rising cost of providing desirable services, and that, forced to decide between dropping services and going into debt, they have most often chosen borrowing, to the delight of the financial sector.

“The banks played a huge role in the bankruptcy in Detroit, Bhatti explains. ” What it speaks to is the issue that, you need to figure out a way to raise revenue and you’re unable to do it. So the banks come peddling you a deal, saying, hey – we see that you’re hard-up for cash. Here’s a deal you can do. Much the same way that they targeted cash-strapped homeowners. They sold them mortgages that theoretically were great deals but their hidden risk and hidden costs were really complex, and often designed to fail. And Detroit got basically the municipal version of those sub-prime mortgages.”

And the result was predictable.

“Down the line those deals backfired in a really big way,” he reports.”They ended up costing billions more than they should have. The interest-rate swaps in particular blew up fantastically. The City ended up … paying hundreds of millions in fees on the swaps.”

It’s widely accepted that Mayor Daley obligated the City to a large number of these questionable financial arrangements, and that he left a pile of them for Rahm Emanuel to deal with. Has the Mayor succeeded in cleaning up a significant portion of these obligations?

No, Bhatti asserts. “He’s done more kicking the can down the road. More of the short-term fixes. Gimmicks like red-light cameras and speeding cameras to balance the budget. He hasn’t done the difficult thing which needs to be done – figure out how to raise progressive revenue in this city…but he’s not willing to do that because progressive revenue means making rich people pay their fair share instead of pushing all the burden onto those who can least afford it.”

Beat addresses in his article a perverse cycle in which the wealthiest forces in our society profit from the general misery.

“Municipal bonds are tax exempt, which means they tend to pay lower interest rates,” he explains. And because that’s the case, major institutional investors tend not to invest in a big way in municipal bonds.”

“We’ve created this system in which they create a crisis and then they profit off of it,” he explains.  “The privatizer, the wealthy, the Wall Street banks, they’re the ones who are not paying their fair share in taxes…they’re lobbying to keep taxes down, and that’s what creates the crisis and allows them to come in with their solutions… They say the government is the problem not the solution, but really, they love government. They just love to be able to take over government. They love government cash. They don’t really want small government.”

 

As we all know, pensions are being blamed for creating this mess, But Bhatti doesn’t buy it.  Before a decade of pension holidays, he says, most pension systems were solvent. But more importantly, they are a moral and legal commitment to the work force.

“Pensions are actually deferred wages,” he asserts. “As you’re working, the same way your employer might pay into your 401-K in the private sector, or pay Social Security taxes for you, they’re supposed to do that with every single paycheck. The State, the City, the school systems, they’re supposed to do that, too, and in their case it goes into the pensions. But in years with budget crises, instead of finding ways to raise taxes, you have the mayor or the legislature saying this year we’re just not gonna pay. We’re gonna take a pension holiday. So pensions are actually wages for work they’ve already done. And they don’t want to pay it.  Instead they say the problem is that you have too many pensions, even though most pensioners don’t get Social Security and they’ve had modest salaries all their lives.”

And the unfortunate result is that constituencies that might have normally been allies become enemies.

“You have this thing where pensions become the easy scapegoat so that you can pit workers against the community that they serve, and when you have workers pitted against the broader community, the people at the top are off the hook,” he says.

Detroit was forced into bankruptcy. As you’ll see if you watch the first five minutes of this discussion, (it’s a bit complicated), Detroit was only about $200 million behind in its payments. A lot of money, but something that could have been overcome. But the Republican Governor and Legislature scapegoated the City, he says, because they really wanted to bust the pension system, and bankruptcy was the only legal way to do it. Can this happen in Illinois?

“Currently municipalities in Illinois cannot file bankruptcy,” Bhatti explains. “Under the federal bankruptcy code, municipalities, school districts and public agencies can file bankruptcy only if the states authorize them. 26 states including Illinois do not authorize it. So there’s a bill in the Legislature to change that…Rauner’s been touting it as part of his turnaround agenda. He’s created a situation where he’s trying to entice municipal officials to support it, and part of how he’s doing that is by cutting State aid to them.”

In fact, his proposal is to cut by half the amount of revenue the State shares with cities and towns. The hardship this places on smaller towns is intense. Here’s how Bhatti described it in In These Times:

“Like state officials did to Detroit, Rauner inflicted financial hardship on cities and then dangled bankruptcy in front of them as the solution.”

So what does Bhatti recommend at this critical point?

“We need progressive revenue solutions in this state. So we need to pass a millionaire’s tax. We need to restore the higher corporate tax rate that just sun-setted. we need to start looking at a financial transaction tax that taxes transactions at the exchanges on LaSalle Street. We need to start looking at other options like taking some of these bad deals the City entered into like interest rate swaps, and actually suing the banks to get that money back.”

 

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CN July 2, 2015

Posted on July 6, 2015 by Ken

 

How do you define corruption? Is it Governor Ryan soliciting cash birthday presents from his workers, or a gaggle of aldermen carving up the City Council ward boundaries to make sure everyone can get re-elected forever?

The authors of Corrupt Illinois say both are corruption. But some activities, like gerrymandering, have long-term corrosive effects on our politics.

Tom Gradel and Dick Simpson join us this week to talk about their new book, which chronicles corrupt activities and corrupt people for almost 200 years in Illinois. It isn’t pretty.

For example, suburban mayors, police chiefs and council members.

“We think of it as the evil city that’s corrupt with the nice, clean suburbs, explains Simpson. “But that’s simply not true. We found nearly 200 cases of suburban officials who are corrupt and have been convicted by the federal government in 60 different suburbs. The suburbs seem to by vying to see how many they can increase that number to.”

And Simpson has a suggestion. “We need to create suburban inspectors general,” he asserts.

By the way, corruption in Illinois didn’t start with Rod Blagojevich and the Golden Senate Seat. Simpson and Gradel take us all the way back to the beginning.

“We did two important votes, in 1833 and again in 1837,” Simpson explains. “When we did the first vote to incorporate Chicago as a town, they cast their votes to, yes, incorporate. They were meeting in a tavern, which was very appropriate to Chicago (but it was a hotel tavern) and so when they counted the votes, they got more votes than there were citizens in the town. And then when they elected the aldermen and the trustees, they found that a number of people who voted weren’t eligible to vote. So ghost voting started in 1833 in the City of Chicago.”

And if you were appalled by the SUPES contract fiasco, how about this?

“In 1869, City Hall was a  wooden structure, so it needed a paint job, just like any wooden house does,” Simpson tells us. “It was a big building. So they hired someone for $127,000 to paint City Hall. They hired this contractor. He doesn’t use paint. He used whitewash. A couple of rainstorms later it’s obvious to everyone. So they indicted fourteen aldermen and county commissioners. They convicted four of them, sent them to jail, and most of the others lost their election in 1871. We have been corrupt since we were a territory.” We probably don’t need to remind you that $127,000 was a LOT of money in 1867.

We asked Gradel whether the apparent sexual misconduct by former House Speaker Denny Hastert counts as corruption.  Yes, he says, but adds that Hastert was not without his own allegations of straight-out fiscal corruption.

“He passed a bill that gave $207 million to Prairie Parkway. the Parkway cut right next to the land which he sold, and he made a $2 million profit. Sold it for $3 million, made $2 million off of it. And his ownership in that was hidden when the law was passed. It wasn’t until afterwards that people found out he owned that property,” he says.

Corrupt Illinois is a remarkable compendium of stories about corrupt people and their misdeeds. Elected officials and public servants of all ranks are listed, and it can be fascinating to go back into recent history to refresh your memory. A good example: Dan Rostenkowski. What did he do again, steal some postage stamps?  So he went down for a few bucks in stamps?

“It was $50,000 to be exact,” says Gradel. Rosty would be given thousands of stamps, and he’d return them to the post office and pocket the money.

“But he also did a number of other things,” says Gradel. “He had people on the federal payroll who were cleaning his house. There’s testimony that people who worked for him on the federal payroll were made to kick back money.”

Many of us have deep concerns about the corrupting influence of big money on political campaigns.  But here again, Simpson says it’s really nothing  new.

“Al Capone left Chicago to go to Cicero when Big Bill Thompson was out of office for four years. He wanted Big Bill to come back, so he provided large campaign donations. He also provided election day workers,” says Simpson. Big Bill won.

But although the thread of corruption snakes through our entire history, the digital age is changing the way corruption occurs. Changing, but not reducing it. For example:

“The police have changed their pattern. They no longer take bribes from the mob to the police superintendent or the commander. Now the bribes are more retail. They’re direct from the street gangs to the local beat cop or to the special units that get assigned to drugs and to gangs,” Simpson says.

The delivery system for boodle and payoffs is no longer the bag man. It’s the contract. The authors recall a newspaper editorial that sums it up most effectively.

“Corruption was written as thievery between the lines of the contracts,” it said. Says Gradel: “Contracts have more than conflicts of interests. They have outright stealing.”

 

 

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CN June 25, 2015

Posted on June 25, 2015 by Ken

At last night’s CPS meeting, the Board voted to borrow more than a billion dollars to keep the schools operating another year. But about 24 hours earlier pretty much nobody knew this was the plan. How did this happen?

“I don’t know,” says Sun-Times education reporter Lauren FitzPatrick.”In the sense that it was not discussed. It looks like it’s two chunks of borrowing – $200 million, andsome $935 million. But the Board of Education didn’t say a word about it other than to cast a unanimous vote at the end of the meeting to approve both pieces of borrowing.”

“Not even roll-call vote,” adds Sarah Karp, now an investigative reporter with the Better Government Association.

Despite Interim CEO Jesse Ruiz’s vow that he’d run a more transparent operation, there was no public involvement of any kind before the vote for this massive borrowing. “They did discuss a couple of other big items on the agenda,” says Fitzpatrick, “So I was waiting for the money people to come out and talk about the borrowing, but it just never happened.”

Any discussion that did occur at the Board level happened in a back room outside the public view. A day later there still aren’t any more details about the loan – how it will be structured, when it will take effect, or when the first checks will arrive. “There’s no real reason I can see why they would discuss this is executive session,” asserts Karp. “This is not real estate, or personnel…the public would like to know a little more about this. My grandkids are going to be paying for it.”

When we taped our discussion this morning there was optimism in the air that a new one-year placeholder contract was about to be drawn up between CPS and the CTU. But that was dashed a few hours later when the CTU published a statement that talks had broken off.

We asked how this deal would have been different from a one-year contract extension (provided for in the old, expiring contract) that both sides rejected at different times over the past few months.

“From the sound of it, this one-year deal that’s being talked about right now would not have included a pay raise,” explains Catalyst Chicago reporter Melissa Sanchez. “The previous one-year deal would have, if they had extended the contract. What they’re getting at the moment is that CPS has backed off of their desire to stop paying the seven percent of the nine-percent pension pickup. That’s what we’re hearing. So for the union, they’re at a standstill. They’re not losing. And it gives them time to rally their troops.”

Earlier this week, Mayor Emanuel said he had requested from Springfield a 40-day extension on the payment of about $635 million into the Chicago Teachers Pension Fund. But when the bill came before the House it fell well short of passage. It was mysterious. “Clearly CPS thought this was going to happen,’ explains Fitzpatrick, “because Jesse Ruiz, somebody packed him up into a car and he appeared before committees and the full House, and he was there to make his case and turned up in person. I can’t believe that if he thought this wasn’t going to happen, he’d have taken the time to go.”

It was widely believed that all the legislative leaders, the Governor, the Mayor and CPS were on board, and that the union and the pension fund were not in opposition. It seemed relatively non-controversial.

“The idea of the delay is that tax money will be coming in, in August,” says FitzPatrick, “which is not in their pockets now. And if they could have forty days then they would be able to make the full pension payment as opposed to no payment or even a partial payment which was getting batted around for a while.”

So what happened?

“I’ll tell you the gossip I’ve heard, which is unconfirmed, that  the Republicans were about to be able to take credit for solving the CPS problem. So if the deal, which was supposed to be a done deal, got pushed off, here comes Mike Madigan to the rescue a week later – and he gets to save the day, instead of the Republicans that were willing to cross the aisle in support of the 40-day delay.”

Some good news this week, though, was Governor Rauner’s announcement that he planned to sign that portion of the State budget that funds the schools. So, although almost everything else is still being debated, schools now know the size of the checks they’ll be receiving from Springfield in August.

And finally, the Ernst and Young report. It was commissioned by CPS presumably to show the public just how bad things are.

“While we’ve all been waiting for the latest trick, they came in and said, there kind of aren’t any,” FitzPatrick tells us. I think it’s page 24 of the report that lists all of the things that will pretty much all be needed to pull this off this year. Some are taxes, some is help from Springfield, some is classroom cuts. One of the other points that the report tried to make is that solving this problem can’t just come from CPS alone. That there are all these other people who are gonna have to sign off on a lot of these proposals to pull them off too. The State, the City Council, retirees, unions – CPS cannot get out of this on its own, Ernst and Young was paid to say.”

The CTU has said, and often repeated, that the financial mess was created by CPS, and that it’s “broke on purpose”. We ask if that’s a credible claim.

“I don’t think that they ever intended to go broke or spend themselves into oblivion,” Fitzpatrick explains. “But I think the union would argue that it’s a cute way of saying that they’re not acting as though they’re actually in financial crisis – that they’re spending on big-ticket items and things that are not working, like the Aramark contract for example, the SUPES contract, which has blown up in their faces, they continue to open new schools. They’re not acting like they’re broke, and that they’re digging themselves in even deeper.”

And after last night’s vote, about 1.1 billion dollars deeper.

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CN June 18, 2015

Posted on June 18, 2015 by Ken

 

So when was the first time you heard the term “Scoop and Toss”? You’re probably aware by now that the City’s apparently been scooping and tossing for years, but can you actually define the process? The Tribune’s Hal Dardick can, and it isn’t pretty.

“Scoop and Toss is where you you have debt coming due. You have the final interest and capital payments, but at this point it’s mostly interest because it was backloaded – on your long-term debt. Your previous 20-30 year bonds. It’s coming due, and because you don’t have the money to pay it with the current revenue coming in, you say, guess what? We’ll take out another loan and pay off the old loan. You scoop up the debt and you toss it into the future.”

At yesterday’s City Council meeting, Mayor Emanuel sought, and obtained, authority to enter into 1.1 billion in new debt, adding to the mountains of existing debt the City already has.  But a lot of it is kind of like refinancing  your lousy high-interest home mortgage.

“The biggest chunk of it,” explains Dardick, “$338 million, is to finish off the restructuring of variable-rate debt to fixed-rate debt to please the markets that, as we know – one major agency downgraded the city’s credit worthiness to junk status recently. So the Mayor’s trying to soothe the markets by doing that.  And it’s a sound move that everybody’s in favor of.”

But that’s only about a third of the loan.

“The Mayor was trying to emphasize that part of it,” Dardick explains, “but then there are also some of the old bad practices that got us into trouble in the first place included.” And one of them is $171 million dollars in the aforementioned “scoop and toss”.

So if scoop and toss is so bad, why do it then?

“Because you have no choice,’ he says. “Because you don’t have the money otherwise to pay for it. …It’s old bonds. Old fixed-rate bonds. They have a certain amount of money to pay debt, but it’s already used up. There is no more room.”

“And the other thing they’re doing – it’s also $170 million dollars – they’re taking out $170 million to pay the first two year’s interest on this loan. Because they don’t have that money, either.”

Both Dardick and panelist Ted Cox from DNAInfoChicago confirm that, yes, you read that correctly. The City doesn’t have enough money to pay the first two years of this huge loan, so it’s borrowing $170 million more, and will use that money to pay off the first two years’ interest on the loan.

“To be fair,” asserts Dardick, “I think the the Mayor deserves some credit. He’s trying to reduce these practices, and believe it or not, he is doing less of this sort of thing than had been done in the past, and he’s trying to slowly phase it out. He was dealt a very bad hand. But it’s just a sign of the horrible shape that this city is in financially. And there’s a lot more to come in terms of taxes and cuts.”

Ted Cox continues with the cataloging of the various portions of this massive loan.

“They had privatized the (Millennium) garages, and part of that agreement was that there’d be no competition with the garages. Then Jeannie Gang is building the Aqua Tower and they said they needed a parking garage, and Daley said, – go ahead”

Lawsuts ensued, followed by arbitration, and even an attempt to override the arbitration. But in the end, the courts said the new managers of the Millennium garages had been harmed by the Aqua Tower garage- to the tune of more than $60 million – and the City had to pay. Again, it didn’t have the money.

“And the thing about that is the city should have a certain amount of revenue on hand to deal with issues like this,” Dardick tells us. “That’s considered by the analysts as an annual expense and instead they’re taking thirty years to pay it off.”

The City faces a crushing deadline in just twelve days. CPS is required to make a pension payment of more than $600 million, and there’s no indication that the money will be there.  The Mayor says the State has the primary responsibility for funding the schools, and it’s derelict. The Governor and the legislative leaders are at odds. If they don’t come to a resolution, the state may begin shutting down on July 1.  Governor Rauner has reverted to campaign mode, partnering with his fellow billionaire friend Sam Zell to fund a new PAC that’s firing up TV commercials around the state blaming everything on Democrats Mike Madigan and John Cullerton. It’s a new kind of politics never before seen in Illinois.

“We do have to ask, though, what kind of an effect this is having on democracy, this campaign by checkbook, which – this is just an extension of the campaign in November,” Cox opines. “There are a lot of people who believe that Rahm won the election because he outspent Chuy Garcia by millions of dollars, ditto Rauner and Quinn – although Quinn had his own issues. This is now continuing (campaigning) into he actual act of governing.”

The Mayor has said he wants the City budget released to the public a month early, to allow all interested parties to make suggestions for cuts and new revenues, according to Cox.

“Rahm did say that any ideas had to be ‘implementable’. That was like a clear signal to the progressive sorts who’ve said we want a LaSalle Street tax, or a commuter tax or a change in the state income tax, all of which would require action, again, back in Springfield, where nothing ever gets done.”

But one idea that’s been floated for months and so far hasn’t been seriously considered in Springfield is expansion of the sales tax to include certain categories of services, such as hair cutting.

“The governor’s in favor of it,” says Dardick. “The Mayor’s in favor of it. There’s a strong argument for it. Thirty years ago, the sales tax applied to fifty percent of the economy, today it only applies to twenty. Most other states are doing it. It would help both the state and the city, and the suburbs and the downstate communities that are in similar pension crises but just don’t get a lot of attention.”

And we end with our conversation about the Stanley Cup that actually began the show.

“I was wondering last night,’ Ted Cox mused, “where would we be if Bill Wirtz were still alive? I don’t know, but there’s no doubt about it,  that things have turned out better.”

He’s referring to son Rocky’s decision to make Hawks games more accessible on TV, thereby raising the team’s public profile.

“Going back to baseball, even Bill Veck missed out on the importance of free TV,” says Cox. “And a do-nothing owner like Phil Wrigley said, go ahead, put it on TV, who cares? And it turned out to be, long-term, the wise move.”

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CN Jun 11, 2015

Posted on June 12, 2015 by Ken

What we’re seeing in Springfield right now could be a level of intellectual virtuosity unmatched in the modern age, as three unrivaled masters jockey  for the dominance of a political philosophy. Of course, it might not be.

When Governor Rauner takes to the road to campaign for his reform agenda – loosely encompassing right-to-work zones, a property tax freeze, reductions in the coverage of Worker’s Compensation plans, redistricting the State and enacting term-limits – he’s not in Springfield negotiating these issues with his rivals. Is that smart or not smart?

“That’s been an interesting theme over the past few months,” explains Tribune reporter Kim Geiger, who’s been covering the Governor’s road show. “He came out in February. He laid out his agenda. He said – this is what I want. Initially it was this really long list with all of these bullet points, dozens and dozens of them. Then he hit the road, and went to try and sell this plan to local voters around the state. He was on the road for a few months. He kind of stopped that in May when the Legislature started moving pieces of his agenda and knocking down pieces one-by-one. And now that we’ve passed the May 31 deadline he’s back on the road and he’s pushing the agenda again.”

But now there’s a political twist. “This time he’s much more forcefully going after Mike Madigan and John Cullerton, trying to lay the blame for this budget problem on the two of them.”

It’s not easy being an opposite-party Governor facing veto-proof majorities in both chambers.  WBEZ’s political reporter Tony Arnold says, in a way, Rauner doesn’t have many choices. “The way he’s doing it is campaign style, because it’s not like he can go to the Legislature to get them to pass these things.”

“He narrowed down all his bullet points to about five things,” Geiger explains. “And the five things happen to be things that really target the key Democratic power bases, right? Organized labor. Trial lawyers, the ability of Democrats to hold power by drawing maps. And term limits. He’s going after the guys who’ve been there for decades.”

So Illinois is already behind schedule in passing a budget, and there are no clear signs that a budget’s coming soon. And with the sharp division between the Governor and the Legislative leaders, Rauner has to resort to theater to get his points across.

“The General Assembly, their core purpose is to pass a budget,” says Geiger. “So it makes sense. Mike Madigan is saying – Rauner’s operating from the extreme – by attaching all these non-budget issues to the budget. But really – the budget is where he has leverage. Once you get a budget deal, what’s he gonna do? Go to the Democrats and say – now I would like all these other things? That’s not gonna happen.”

We ask the panel if the Governor is being out-maneuvered by Madigan and Cullerton. Arnold says, not necessarily.

“He hired quite a few people who’d actually been around Springfield a very long time. His Chief of Staff, his Budget Director. He’s also contracted with people not from Illinois at all. One of the budget hawks that he’s hired has gone through several states talking about how to make cuts in a way that balances your budget. So he’s done this combination of people who’ve been around, mostly the Republican Party for several years.

Arnold says that the Democrats have their own challenge – keeping the legislature focused on the need for additional revenue. “If you get into the nuance, which is what the Democrats are trying to do, it’s, well, if you want to keep your school doors open, we have to talk about property taxes. They’re tied together.”

And if we ever get through this budget process, something entirely new will  begin.

“You’re gonna see what Rauner’s starting to do,” explained Geiger, “which is target very specific Democratic Representatives. People are going to have to get more used to who their Democratic State rep is in next year’s campaign. It’s a year away, but I think people are gonna be hearing more about who their State Rep is, in an effort by the Republicans to try to take down Mike Madigan. Sometimes the threat is more powerful than the money itself, just having it looming there over their heads.”

So the 2016 campaign should be getting under way in about three or four weeks.

 

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