Tag Archives: bankrupt

Get Used to Hearing About the State Budget Crisis Task Force Illinois Report

You’ll be hearing a lot about the State Budget Crisis Task Force Illinois Report – unveiled at a press conference in Chicago on Wednesday – in the days, weeks, months and (we suspect) years to come. Chicago Magazine notes that there are “a few quiet, genteel hints in the theses nailed to the state’s door.”  Like maybe considering making services subject to sales tax, re-examining the income tax system and reducing the state’s 7,000 government bodies.

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Gas Prices Rising

In Chicago, motorists are paying $4.31 a gallon, according to the AAA. That’s a whopping 48 cents more than the national average at $3.83 a gallon. At these prices, motorists in Chicago are paying a staggering 80.2 cents per gallon in taxes, or nearly 20%. The graphic below shows the breakdown of the various federal, state and local taxes on gas:

Illinois’ State Debt Problem

Reboot Our Finances – Year upon year, deal-cutters in the General Assembly collect fat donations from gambling interests and dutifully write legislation to massively expand the industry’s reach in Illinois communities.

The sponsors promise that massive expansion will bring vast new revenue to Springfield. They don’t boast, though, about how they buy the votes for passage by earmarking a huge share of that revenue for their fellow legislators’ pet causes and projects. Most dangerously, the sponsors punctuate thick expansion bills with sneaky ethical loopholes.

Gov. Quinn told the deal-cutters — once more — that he will not let them sell out the integrity of the state. His bottom line: “My two predecessors, who are in jail, did not focus on ethics.”

Illinois today is right where it ought to be: A bad bill wears a veto stamp. And, to borrow a phrase, smarter minds now are free to “start over!”

Quote of the Day – “We’re not going to have loopholes for mobsters in Illinois.” – Gov. Pat Quinn (D-Illinois) on his veto of the gambling expansion bill.

Reboot Our Schools – The Chicago Teachers Union plans to file a 10-day strike notice later today, meaning a teacher walkout could begin after the majority of the city’s students finish their first week of school, sources said.

The union and CPS have been in talks for months but have failed to reach agreement on a number of matters, among them salary, pay hikes based on experience, a re-hiring policy for teachers who’ve been laid off and job evaluations.

Our children belong in the classroom, not the streets. We extended the school day so that ours is not the shortest day in the country anymore. The CPS raised property taxes, cut costs and drained all its cash reserves just to make ends meet this year. The money they had set aside for salary raises was used to hire 477 additional teachers to fill the longer school day instead.

Stat of the Day – Illinois has the 5th highest debt in the nation, according to State Budget Solutions’ State Debt Report 2012. Our total outstanding debt is now $271 billion, or $21,000 per Illinois resident – over 70% of which comes from Illinois’ unfunded pension liability.

 

Reboot Our Transparency – Two boards appointed by Mayor Emanuel took steps to tighten city ethics rules and enforcement. An ethics reform task force appointed by Emanuel released its second report, making 21 new recommendations designed to ensure greater compliance with city ethics and campaign finance rules. Meanwhile, a controversial board set up to lure private investment for public works agreed to fall under the jurisdiction of the city inspector general.

Among the ethics reform task force recommendations were proposals to broaden the definition of lobbyist to include agents for nonprofit organizations and allow anonymous complaints to be filed against aldermen and their staffs.  It also recommended making the city Law Department the prosecutor of alleged ethics rules violations and campaign finance infractions. And it suggested that the Board of Ethics determine if violations have occurred and mete out sanctions.

Quote of the Day

“If we come to the end, and it’s a choice between a ridiculous settlement and a strike, we would take a strike. People went into negotiations with Daley knowing he was allergic to strikes. He wound up giving a ton in the end. This mayor can’t cave. It’s what he ran on. The kids will have a longer day, and he’s not gonna bankrupt the system to get it. The only way to do that is to have a more sane contract. He sees this deal as fundamental to that.” – A confidential source close to Mayor Rahm Emanuel (D-Chicago) on contract negotiations between the CPS and CTU.

Heckle No More: Unions Stand to Lose the Most Should Illinois Pension Reforms Fail

Last week, Gov. Pat Quinn visited striking workers at the Caterpillar plant in Joliet to offer both his moral and financial support (the latter coming in a $10,000 check from Quinn’s campaign fund for the 780 strikers’ food fund). “”When people are united they can’t be defeated,” Quinn told members of the International Association of Machinists and Aerospace Workers, who had been on strike since May.

Now fast-forward a week to Governor’s Day at the Illinois State Fair. Again, there was a meeting of Quinn and organized labor, but this time there were no words of solidarity or checks being written. Instead, members of public sector unions in Illinois showed up in force to boo and heckle the man they endorsed for governor in 2010. The difference in tone in Quinn’s recent public interactions with private- and public-sector unions says a lot about the political sensitivities of the biggest fiscal issue now facing Illinois: reform of public pensions.

Quinn earned the scorn of AFSCME, the AFL-CIO, the Illinois Education Association and other public-sector unions because he’s pushing for a comprehensive reform of all of the state’s pension systems. (His attempt to close some state prisons hasn’t helped either, nor did his attempted curtailment of union raises for state employees when he said the state didn’t have the money.) Really, though, the unions have given Illinois politicians little choice but to accept their enmity or ignore the stark reality of the pension problem. The unions have adopted a position that the state broke its promise to public employees and the only solution is to make good on that promise by replacing all the money the state should have put into the pension systems over the years.

The problem is, that’s impossible. There’s no way to devise any system that raises $83 billion (a figure continually growing) on a schedule that won’t also starve the essential functions of state government. What’s more, the pension problem didn’t reach the brink of disaster solely because the state didn’t make its payments. And what the unions fail to address is that their members are the ones who stand to lose the most if the current system is not changed. It’s the current teachers, state employees and other public-sector workers who will suffer if the state retirement systems are insolvent a few decades down the road, as is predicted to happen under the current formula.

You can’t argue that the workers who have faithfully paid their fair share into their retirement funds all these years aren’t getting unfair treatment here, contractually speaking. But, realistically speaking, the state made promises it simply can’t keep. It didn’t help that the economy collapsed twice in a seven-year period in the last decade. You also can’t argue that, compared to workers in the private sector, the public employees covered by Illinois’ five pension systems won’t still have a very good package of pension and retirement benefits even after reform. (This last point is not lost on private sector workers, who saw their state income tax increased by two-thirds in 2011 and then learned that all of the new tax money would go toward paying the state’s pension obligations.)

The unions who now appear poised to run Pat Quinn out of office at the next available opportunity should acknowledge that, without reform, their members’ futures are at risk. Politicians, like Quinn, who for so long actively courted the support of these unions should learn from Wednesday’s Governor’s Day heckling session that perhaps public union support isn’t the prize it once was.

 

Let’s follow up the talk with action and get rebooting. Have you signed up for our daily email?

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