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Be wary of confident promises for painless pension reform
Other
Monday, September 16, 2019  |   Commentary  |   By Brett Rowland | The Center Square
Pensions (70) Steans, Heather--State Senate, 7

State Sen. Heather Steans knows how to get things done in Springfield, but her confidence that Illinois’ pension crisis is a “solvable problem” is worrisome given the ideas Democrats have floated.

That’s even more so given the lack of urgency in the Democrat-controlled General Assembly to address the many other smaller matters that have contributed to the state’s growing pension problem.

Steans, D-Chicago, ably proved what she can do during the spring legislative session. She helped lead the successful effort to pass a bill to legalize the recreational use of cannabis in Illinois. That’s no small feat. But the state’s massively underfunded pension systems is a full-on crisis. Solving that will take courage that lawmakers so far have shown they don’t have.

“I do believe it’s a solvable problem,” Steans said during a panel discussion hosted by the City Club of Chicago on Monday.

But she and other Democrats have failed to come up with proposals that would actually make the situation better. On Monday, Steans suggested raising additional money for pensions, the “consideration model,” changing amortization schedules for the state’s pension funds, and consolidation of local pension funds for police officers and firefighters.

The “consideration model” would offer public employees either raise-based pensions or automatic annual increases. It would be one or the other, not both.

Some type of structured consolidation plan, which has the support of the Illinois Municipal League, could help municipalities cope with their unfunded pension liabilities, but it won’t be nearly enough to solve the problem for those systems or the state’s five major pension systems.

The so-called “consideration model” is likely to face legal challenges, and the Illinois Supreme Court has made it clear that promised pension benefits can’t be diminished. So that’s a non-starter.

Raising more money for the state’s pension funds would help, but it won’t be easy and it comes with major risks, including higher taxes that could lead to further population losses in Illinois. This spring, state lawmakers raised taxes and fees on everything from gasoline and video gambling to vehicle registration and cigarettes. The General Assembly also is asking voters to change the constitution to allow for a graduated income tax just two years after permanently raising the state’s flat income tax. Taxpayers are fleeing the state in droves because of high taxes and lawmakers dare raise them more?

Worse, Democrats are unwilling to put up a constitutional amendment to repeal the state’s pension-protection clause, the one measure that actually could make a dent in the state’s pension problem.

As Steans pointed out, pension costs already are squeezing out funding for other services. She said Monday that the state spent about 6 percent of its general revenue on pensions a decade ago. When interest is included, pension payments now account for more than a quarter of the state’s general revenue.

Credit-rating agencies have repeatedly warned that extending the pension ramp or borrowing money to pay pension debts could lead to further downgrades for the state’s credit rating, which is one notch above junk status and the worst of any state in the nation.

Saying a crisis is solvable and actually solving it are two different things. And the Democrats existing ideas barely scratch the surface. Steans should follow Chicago Mayor Lori Lightfoot’s lead and call for a change to the constitution to end the pension-protection clause. Maybe she can get other Democratic lawmakers to follow suit.


State income tax in Illinois amounts to 19% of total taxes collected
Other
Monday, September 16, 2019  |   Article  |   The Center Square
Taxes, income (86)
Illinois finished 35th in a new study by the Tax Foundation that ranks how dependent states are on individual income taxes.

State income tax collections in Illinois amount to 19 percent of the total state and local levies collected, based on numbers from fiscal-year 2016, the most recent year for which data is available.

Nationwide, the average state reliance on individual income tax revenues is 23.5 percent, according to the Tax Foundation’s analysis. Seven states – Alaska, Florida, South Dakota, Wyoming, Nevada, Texas and Washington – levy no state income taxes, while New Hampshire and Tennessee tax only interest and dividend income, not workers’ wages, the study said.

Income taxes have a more negative effect on economic growth than sales and property taxes, according to the Tax Foundation. That’s because income taxes rely on wages and savings, while consumption taxes fall on consumer spending rather than earnings, the study said.

---

Which States Depend Most on Income Taxes?

Rank

State

Income Tax as a % of State and Local Taxes

1

Oregon

41.7%

2

Maryland

37.8%

3

California

33.8%

4

Kentucky

33.3%

5

New York

32.7%

6

Massachusetts

32.7%

7

Minnesota

31.9%

8

Virginia

31.9%

9

North Carolina

30.3%

10

Montana

29.7%

11

Utah

29.6%

12

Connecticut

29.2%

13

Missouri

28.6%

14

Georgia

27.7%

15

Wisconsin

27.1%

16

Pennsylvania

26.2%

17

Delaware

25.8%

18

West Virginia

25.8%

19

Idaho

25.8%

20

Ohio

25.6%

21

Indiana

25.5%

22

Colorado

25.4%

23

Michigan

24.2%

24

Iowa

23.9%

25

Arkansas

23.5%

26

Alabama

23.2%

27

Nebraska

23.1%

28

Hawaii

22.9%

29

South Carolina

22.7%

30

Maine

22.4%

31

New Jersey

22.2%

32

Oklahoma

22.1%

33

Rhode Island

21%

34

Vermont

19.8%

35

Illinois

19%

36

New Mexico

17.4%

37

Kansas

17.1%

38

Mississippi

16.7%

39

Arizona

16%

40

Louisiana

15.7%

41

North Dakota

7%

42

Tennessee

1.5%

43

New Hampshire

1.4%

44 (tie)

Washington

0%

44 (tie)

Nevada

0%

44 (tie)

Alaska

0%

44 (tie)

Wyoming

0%

44 (tie)

Texas

0%

44 (tie)

Florida

0%

44 (tie)

South Dakota

0%

Source: Tax Foundation

 


Will Chicago Be the Largest U.S. City to Declare Bankruptcy?
Other
Monday, September 16, 2019  |   Article  |   By Rick Moran - PJ Media
Budgets--Local , Chicago Mayor (16) , Chicago (16)
The city of Chicago is in dire fiscal and financial straits with an almost billion dollar budget deficit, bonds rated at junk status or below, numerous extremely costly legal judgments, a shrinking tax base, and unfunded public pension liabilities to the tune of an astonishing $42 billion.

Other than that, it's a great place to live.

The state of Illinois has its own financial troubles, so the city can expect little or no help there. And good luck getting a federal bailout through the GOP Senate and signed by a president who's been called a "racist" by the mayor.

The shrinking tax base is clear proof that citizens are already over taxed. And since it's Democrats in charge, there won't be much cutting of city services.

The only option for Mayor Lori Lightfoot and the city council is restructuring the city's massive debts. In other words: bankruptcy.

RealClear Politics:

The city needs to lower taxes to start growing again, but lower taxes would mean Chicago can no longer service its debts.  Federal law offers a procedure for reducing those debts by commencing a case in bankruptcy court.  A bankruptcy judge has the power under federal law to reduce the city’s liabilities, change its pensions, reorganize its functions into a more efficient ongoing structure and eliminate some of its debts — but the judge does not have the authority to raise your taxes.

Bankruptcy is a painful process because it forces creditors who facilitated the city’s failure to take a loss: bond holders, such as hedge funds, Wall Street bankers that sold the bonds and the people who are waiting to be paid for goods and services sold to Chicago, including past and current municipal employees.  (The city can and will still be able to offer generous pension benefits to its workers, but perhaps with a cap limiting pensions of well more than $100,000 and without the automatic 3% COLA; the exact terms of any new deal would be hammered out in negotiations under the auspices of the court.)

There are several problems with this plan. Good luck getting unions to agree to any change in the way pensions are figured. Former Illinois Governor Bruce Rauner tried for 3 years to find a way to get the public unions in the state to make some tiny reforms and he was blown out of office.

Besides, it doesn't matter what the bankruptcy judge will say or do. There is going to be pain. Just ask the citizens of Detroit who endured the process in 2013. It wasn't pretty.

Indeed, there simply isn't an alternative:

This is Lightfoot’s moment: She didn’t make this crisis, but if she seeks higher taxes and less services instead of reform, Chicago’s population and property values will continue to bleed out.  A bankruptcy restructuring is in Chicago’s future; it’s immoral to wait until empty buildings fill the downtown instead of cranes, and property values for “remainers” fall further toward zero.

Unfortunately, Lightfoot can’t make this happen on her own.  Under federal law, the state must first authorize bankruptcy filings by municipalities before the city can avail itself of this procedure to restructure its debts.

Instead of lobbying Springfield to ask residents of other towns to pay Chicago’s debts, she needs Gov. Pritzker and the legislature to grant permission for the city to pursue a prudent financial reorganization and debt reduction through a federal bankruptcy procedure.

One thing is certain: a filing of bankruptcy will totally eliminate the leverage of machine politicians to bilk the public. The machine has been in decline for at least 3 decades, but remnants of the old Daley coalition survived. But there's no hiding anymore. The machine has to go if the city is to recover and thrive again.

From my 40-year observations of the Chicago political scene, I have my doubts whether Mayor Lightfoot could do what needs to be done. The powers that be are just too entrenched. It's not only politicians, it's bloodsucking businessmen, organized crime, and now street gangs who also get a cut of the action. This is the way the "City that works" has worked for more than 90 years.

Since the days of Big Bill Thompson, Chicago has been a cesspool of graft and corruption. Can waving the magic wand of bankruptcy cure the city of almost 100 years of amoral governance?

Don't bet the farm on it.


Lawmaker’s private struggles help guide his work in public office
Chicago Sun Times
Monday, September 16, 2019  |   Article  |   Mark Brown
Drugs (32) , Mental Health (64) Harris, Gregory--State House, 13

‘Alcohol was pretty much my drug of choice, but I certainly did enough other things as they came along, like a lot of other people,’ said state Rep. Greg Harris, now clean and sober for 19 years.

Illinois House Majority Leader Greg Harris sat down with me Friday to discuss substance abuse, addiction and mental health treatment — just some of the many social issues the Chicago Democrat has ably championed during a 13-year legislative career.

 

They also happen to be subjects of a very personal nature to Harris, whose own battles with alcohol and drugs are a main reason he will be honored next week by the Gateway Foundation, the nation’s largest nonprofit addiction treatment facility.

 

“Alcohol was pretty much my drug of choice, but I certainly did enough other things as they came along, like a lot of other people,” Harris told me.

 

“And what started out as something fun and social got worse and darker as the years went by to the point that I wasn’t even able to stay permanently housed, went through a bunch of different treatment programs, psych hospitalizations, suicide attempts, in and out of recovery for years and years and years.”

 

Even now after 19 years being clean and sober, Harris, 63, seems as much aware of his fragility as his strength.

 

“I consider it something that every day is like a new start,” he said. “I’m still very involved every single week in a program of recovery.”

 

I regard Harris as one of the state’s most all-around squared-away lawmakers, which make his struggles something of a surprise — although he’s occasionally mentioned them publicly.

 

Perhaps best known as sponsor of the state law legalizing gay marriage, Harris is routinely entrusted to handle many of the stickiest issues facing lawmakers. He ascended to the House Democrats’ second-ranking leadership post in January.

 

“Do not assume that what you look at on the outside is what’s going on on the inside with people. Just don’t do that,” Harris cautioned. “I know all kinds of people. We suit up and we show up every day with a game face on, and that doesn’t mean you’re not dealing with depression or anxiety, or that you’re not one drink or drug away from going back into a hellhole.”

 

Harris, who is openly gay, said these are issues he’s struggled with most of his adult life and probably even in his youth.

 

“It’s not uncommon for LGBT people to go through these things because of having to live in the closet and being marginalized and whatnot growing up,” he said.

 

Harris, born in Denver, moved to Chicago in 1977. By the 1980s, he had a top job with a trade association for the home furnishings industry.

 

He also had a bad substance abuse problem, which only got worse in 1988 when he learned he was HIV-positive.

 

“Then it was just off to the races,” Harris said.

 

By 1990 he was diagnosed with AIDS, and soon afterward developed one of the opportunistic infections that in those days usually led to death.

 

“My doctor at the time said there’s like a 5 percent survival rate. You’ve likely got just a matter of months left. You should wrap up all your affairs,” Harris recalled.

 

“Obviously, that didn’t happen,” he said.

 

During that time, Harris enjoyed his first extended period of sobriety, lasting about seven years. He still remembers the day it came crashing down.

 

“I thought, I’m just going to have a glass of wine with my dinner. I’ll be fine. Boom. Within two weeks, it was as bad as it had ever been. And it took me a couple of years after that to get back to where I am now,” Harris said.

 

Where he is now is cautious, uncomfortable talking about himself and about me holding him up as somebody more than he is.

 

“I do the bare minimum I can get by with, every week, to keep myself centered and in a safe spot. And so far, for 19 years, that’s worked,” he said.

 

I regard him as an inspiration, someone who has overcome his personal demons to do a lot of good — making sure there is state support for groups like Gateway to help the next person trying to get out of a hellhole.


Judges in North Carolina barred gerrymandering. Why not judges in Illinois?
Chicago Tribune
Monday, September 16, 2019  |   Editorial  |   Editorial Board
Redistricting (78)

In June, the U.S. Supreme Court disappointed Americans who yearn for an end to partisan gerrymandering — the drawing of legislative and congressional district lines to favor the party in power. The court admitted that these maps “are incompatible with democratic principles.” But it said it had no right to interfere.

 

The decision seemed to close off judicial remedies for a problem that politicians are not likely to solve — because they don’t see it as a problem. But a state court in North Carolina has given new hope that elections can be made to enhance the interests of voters rather than the self-serving priorities of the pols.

 

This decision has some relevance to Illinois, where Democrats in Springfield have gone to great lengths to keep themselves in power. In 2018, Democrats got 61% of the votes in U.S. House races but 72% of the seats. Often, the loaded dice mean there is no game at all. Of 39 state senators up for election, 20 had no opponent.

 

North Carolina had a similar map, but designed to bolster Republicans. They hold 10 of 13 congressional seats thanks to a map that a GOP lawmaker confessed was the best he could do — “because I don’t believe it’s possible to draw a map with 11 Republicans and two Democrats.”

 

After the U.S. Supreme Court upheld the state’s gerrymander, the public interest group Common Cause North Carolina decided to challenge it under the state constitution. A three-judge panel has ruled the map unconstitutional.

 

 “The free elections clause of the North Carolina constitution guarantees that all elections must be conducted freely and honestly to ascertain, fairly and truthfully, the will of the people,” said the court. Under this map, “voters are not freely choosing their representatives. Rather, representatives are choosing their voters."

What does this decision have to do with Illinois? Well, the relevant section of the North Carolina constitution says, in its entirety, “All elections shall be free.” The Illinois Constitution is almost as concise: “All elections shall be free and equal.”

 

The reasoning of the North Carolina court is that the guarantee is incompatible with redistricting plans that “evince a fundamental distrust of voters by serving the self-interest of political parties over the public good.”

 

What’s true in North Carolina happens to be true in Illinois.

 

In 2016, the Illinois Supreme Court tossed out a ballot initiative to amend the state constitution to assign reapportionment — which will take place after the 2020 census — to an independent commission. In his campaign for governor, J.B. Pritzker said he would support an end to gerrymandering. But the General Assembly has shown no interest in that heresy.

 

But maybe Illinois courts could provide relief. Just because a North Carolina court read its constitution to bar gerrymanders, of course, doesn’t mean Illinois judges would do the same with theirs. But it could open their minds to the possibility. The U.S. Supreme Court’s prior decision wouldn’t be a hindrance because the high court doesn’t have jurisdiction over a state law that adheres to a state constitution.

 

The reasoning of the North Carolina court ought to be grounds for some interested group to force Illinois courts to confront the question of how the Illinois Constitution’s mandate for “free and equal” elections can possibly be reconciled with a system that rigs outcomes and deprives some voters of an equal say.

 

Politicians have no interest in allowing what the Illinois Constitution demands. Why should judges let them have the final say?


Illinois attorney general rejects reported settlement with OxyContin maker, files suit against 16 other opioid manufacturers
Decatur Herald Review
Monday, September 16, 2019  |   Article  |   Jerry Nowicki - Capitol News Illinois
Attorney General (6) , Prescriptions drugs (81)

Illinois Attorney General Kwame Raoul this week said he would reject a settlement agreement with opioid manufacturer Purdue Pharma under its reported current terms and announced a lawsuit against several other opioid manufacturers.

 

In April, Raoul’s office filed a lawsuit against Purdue Pharma, the manufacturer of the opioid OxyContin and defendant in thousands of other lawsuits from local municipalities and states affected by the opioid epidemic.

 

Raoul’s suit alleged the company “dispatched sales representatives to Illinois hundreds of thousands of times” between 2008 and 2017, and “funded third-party publications under the guise of educational materials to promote opioids and downplay their risks.”

 

Raoul alleged these tactics more than tripled prescriptions of Purdue’s opioids in Illinois. In a news release, he pointed to Illinois Department of Public Health statistics that showed more than 2,000 Illinoisans were killed by opioid overdoses in 2017. IDPH also reported instances of babies born with neonatal abstinence syndrome, which can be caused by opioid exposure, increased by 64 percent from 2011 to 2017.

 

In August, Raoul expanded the suit against Purdue to include members of the Sackler family, which founded and operates Purdue Pharma.

 

“The Sackler family knowingly misled the public and continued pushing Purdue’s addictive opioids without care or consideration of the death and destruction their product caused,” Raoul said in a statement Wednesday.

 

Raoul’s statement was in response to media reports that detailed a tentative settlement between Purdue and thousands of municipal governments and more than 20 states.

 

The New York Times reported the deal, for which final details are still being negotiated, would compel Purdue to file for Chapter 11 bankruptcy and dissolve. A new company

would be formed that could continue selling OxyContin and other medicines, but its profits would be used to pay the plaintiffs in the suit, which was reported to be worth $12 billion.

 

Purdue would also be required to donate drugs for addiction and overdose treatment, and the Sackler family would donate $3 billion in cash over seven years but would not be forced to admit any wrongdoing.

 

Raoul, however, was among at least 20 attorneys general who told NBC News they had not agreed to the deal.

 

“My office is prepared to hold the Sacklers accountable, regardless of whether or not Purdue declares bankruptcy, and I am pleased that a majority of states will continue to fight,” he said in a statement.

 

According to the news release, Raoul’s expanded suit asks the court to “prohibit Purdue and the Sacklers’ deceptive conduct” to ensure “it does not happen again in the future,” and to assess penalties against the defendants. Raoul is also asking the court to require the defendants to pay to help remediate the opioid problem and forfeit profits resulting from the alleged misconduct.

 

“I reject in the strongest terms, any agreement that does not adequately hold the Sackler family accountable for the irreparable harm their actions caused to families in Illinois and across the country,” Raoul said in the statement. “My office expanded our lawsuit against Purdue Pharma to include the Sacklers because as the family behind Purdue, their ruthless pursuit of profits destroyed other families and communities throughout Illinois and the nation.”

 

Raoul filed a similar lawsuit Tuesday against 16 other opioid manufacturers, alleging they “carried out unfair and deceptive marketing campaigns that prioritized profits over public health.”

 

The companies’ actions, Raoul’s office said in a news release, “resulted in unprecedented levels of opioid prescribing, while the distributors irresponsibly flooded Illinois with opioids, failing in their role as gatekeepers in preventing the diversion of opioids.”

 

Raoul’s lawsuit seeks similar results as the one against Purdue: to “abate and remedy the statewide public nuisance,” prohibit the manufacturers’ and distributors’ “deceptive and unfair conduct” and force penalties on the companies.

 

The companies named in the suit are Johnson & Johnson; Janssen Pharmaceuticals Inc.; Ortho-McNeil-Janssen Pharmaceuticals Inc.; Janssen Pharmaceuticals Inc.; Endo Health Solutions Inc.; Endo Pharmaceuticals Inc.; Teva Pharmaceutical Industries Limited; Teva Pharmaceuticals USA Inc.; Cephalon Inc.; Allergan Finance LLC; Actavis Pharma Inc.; Actavis LLC; Watson Laboratories Inc.; McKesson Corporation; Cardinal Health Inc.; and AmerisourceBergen Drug Corporation.


Pritzker tells agencies to prepare for cuts
Quad City Times
Monday, September 16, 2019  |   Article  |   Rich Miller
Budget--State (8) , Pritzker, J.B.

The governor's top budget people sent a memo last week to agency directors giving them a head's up about what will be required in their annual budget request submissions. They are not easy-peasy asks.

 

This fiscal year's budget was originally supposed to be austere, but then a $1.5 billion flood of unexpected revenue poured in during April and eliminated the need for drastic cuts. Even so, as the recent memo from Deputy Gov. Dan Hynes and Budget Director Alexis Sturm pointed out, billions of dollars in unpaid bills leftover from Bruce Rauner's administration still need to be addressed. Left unsaid was any mention of a possible national recession in the coming year - which some economists have been warning about for months and which could cause serious problems for a state budget that is so precariously "balanced."

 

Anyway, the memo includes three directives. The first is that the agencies give the budget office an "actionable scenario" which includes a 6.5 percent cut in their operations during the upcoming fiscal year "across all appropriated funds."

 

Gov. J.B. Pritzker ordered much the same thing earlier this year before the April revenue surprise. A bipartisan group of legislators was also working on cuts in the House, but the

April cash bump made those cuts unpalatable to enough Democrats that the effort was abandoned.

 

Not all agencies will be able to come up with the full amount of cuts. The cash-strapped Department of Children and Family Services springs immediately to mind. Cutting that budget could endanger vulnerable kids at a time when Pritzker has been trying to hire new staff to prevent more tragedies.

 

But even if some or most of the cuts are never implemented, the exercise at least gets agency directors thinking about ways to save money. Despite that April revenue surprise, costs for next fiscal year will definitely go up and, barring another surprise gift from the revenue gods, will very likely outstrip the available cash to pay for them. It's simply better management to have cost-cutting plans at the ready rather than leave it up to the General Assembly to find ways to reduce spending during a potential crisis.

 

Next fiscal year starts on July 1. Pritzker is hoping voters will approve a constitutional amendment four months later in November that would allow for a graduated tax system. If that happens, tax hikes on upper-income earners would automatically take effect and generate over $3 billion a year in revenues. He cannot legally build that money into his proposed budget, but if voters reject the change, you can bet there will be serious budgetary stress.

 

The second directive in the memo is to reduce statutorily created boards and commissions under their purviews to allow the governor to reduce them overall by 10 percent in the upcoming budget. Some commissions haven't met in years. But this is more about show business than actual savings. If a commission hasn't met, it's unlikely that shutting it down would save much money. Rauner, by the way, closed several boards and commissions.

 

And the third directive is to identify "at least two significant efficiency and savings ideas for consideration in the fiscal year 2021 budget." Those could include things like eliminating or consolidating duplicative programs, reducing funding for underutilized or inefficient services and improvements in service delivery to streamline costs.

 

Pritzker was criticized last February for not proposing any significant cuts during his budget address. So, he's apparently looking for some splashy savings that he can highlight next year. And lots of folks will want to see evidence that the governor is at least trying to save money before agreeing to give the government even more to spend.

 

And, as noted above, the state absolutely needs to finish paying down its bill backlog, particularly if the economy turns sour and revenues dry up. As of last Friday, the backlog stood at $6.61 billion. This needs to be fixed even if the economy continues to hum along. The state's social service provider and private vendor systems were horribly damaged during the previous administration and they are nowhere near back to normal.

 

Forcing providers and vendors to wait endless months to be paid hurts their operations and undermines the state's ability to retain them and recruit new groups and companies. Paying down the backlog to get the state back to a four-week payment cycle would also help the state's much-maligned credit rating. But cutting their funding going forward won't help providers and vendors, either. This process has to be a careful balancing act to work.


In era of legal pot, can police search cars based on odor?
Washington Times
Monday, September 16, 2019  |   Article  |   By MICHAEL RUBINKAM - Associated Press
Drugs (32) , DUI (80a) , Legal System (27) , Recreational Marijuana
Sniff and search is no longer the default for police in some of the 33 states that have legalized marijuana.