Illinois General Assembly

Flee Chicago By The End Of 2015?

April 7, 2015.

That’s the date of the next Municipal Runoff and Supplementary Aldermanic Election in the wake of the February 24, 2015, Municipal General Election in the city of Chicago, Illinois.

And that would be the ideal deadline for moving out of the “Windy City” if I still lived there due to the likelihood of fees, fines, and taxes being hiked (even more than they already have) shortly thereafter, along with additional government “belt-tightening.”

If not April 7, definitely by the end of the year. Hal Dardick reported on the Chicago Tribune website right before the weekend:

Mayor Rahm Emanuel and aldermen won’t grapple this fall with the financial reckoning the city faces over its underfunded police and fire pension systems, budget officials acknowledged Thursday.

Instead, the Emanuel administration plans to take advantage of a state law that gives it until December 2015 to decide to make changes to its property tax levy. For years, both the current and former mayor have been saying property taxes would have to be hiked or services drastically cut to come up with the extra $550 million.

By the end of next year, the February city elections and any potential April runoffs will be history. Delaying a decision also will buy the city more time to get the General Assembly to enact pension changes that could significantly reduce the required payments to the two retirement funds..

(Editor’s note: Bold added for emphasis)

Fine. So the Illinois General Assembly votes to allow the City of Chicago to “kick the can down the road” on its pension fund payments. The well-publicized crisis isn’t going anywhere, as the public sector retirees are still owed their money.

(Editor’s note: Check out this graphic on the Tribune website showing Chicago’s pension debt rank compared to the 25 largest U.S. cities and Puerto Rico. It’s disturbing.)

And how about that “Sword of Damocles” hanging over the city’s head in the form of long-term debt it’s on the hook for? Fran Spielman reported on the Chicago Sun-Times website on July 26, 2013:

The new round of borrowing brings Chicago’s total long-term debt to nearly $29 billion. That’s $10,780 for every one of the city’s nearly 2.69 million residents. More than a decade ago, the debt load was $9.6 billion or $3,338 per resident.

(Editor’s note: Bold added for emphasis)

Remember- those figures were from a year ago. Updated numbers should be out shortly.

Yep. If I hadn’t departed the city like I did last year, I’d be making plans to leave Chicago by the end of 2015 at the latest.

But that’s me. I understand individual circumstances vary, and there are residents who can’t leave or choose not to.

Despite what others may think, I have an idea this group can still weather the coming storm if they’re really up to the task. I’m guessing it will be somewhat harder though residing in a city already burdened with significant financial problems when challenging times arrive.

More about this in future posts…

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Dardick, Hal. “Chicago’s day of reckoning over pensions delayed.” Chicago Tribune. 1 Aug. 2014. (http://www.chicagotribune.com/news/watchdog/ct-rahm-emanuel-budget-hole-met-0801-20140801-story.html). 5 Aug. 2014.

Spielman, Fran. “City of Chicago’s cash cushion plummets, debt triples, arrests drop, water use rises.” Chicago Sun-Times. 26 July 2013. (http://www.suntimes.com/21552920-761/city-by-the-numbers-cash-cushion-plummets-debt-triples-arrests-drop-water-use-rises.html). 5 Aug. 2014.

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Illinois Governor Pushes Ban On ‘Assault Weapons,’ ‘High-Capacity’ Ammo Magazines

As Democratic lawmakers can’t figure out why shootings and murders have erupted with renewed vigor in Chicago this summer (hints: bare-bones Chicago Police Department, gun-related laws already on the books but not enforced, and shooters not going to jail or for too short a stint), they’ve resorted to pushing more gun “control” laws on law-abiding constituents who have had nothing to do with the outbreak in violence. From a press release on the Illinois Government News Network website Sunday:

Governor Quinn Fights for Stronger Gun Laws Across Illinois
Congresswoman Kelly Joins Governor to Urge General Assembly to Pass Illinois Public Safety Act and Take a Stand Against the Violence

CHICAGO – Governor Pat Quinn, joined by Congresswoman Robin Kelly, today visited the site a recent fatal shooting in Chicago’s Morgan Park neighborhood to urge legislators to stand with families and communities and take action against gun violence. The Governor pushed passage of the Illinois Public Safety Act, legislation that would ban the sale or delivery of assault weapons and high capacity ammunition magazines in Illinois and require background checks for the transfer of guns. Today’s action is part of Governor Quinn’s agenda to make Illinois neighborhoods safer.

“The recent epidemic of violence in Chicago is unacceptable and we must join together to fight back,” Governor Quinn said. “Public safety is government’s foremost mission and Illinois should not wait any longer to act. There are too many victims of a war being waged on our streets, a war fueled in part by the availability of deadly, military-style assault weapons that have no purpose other than killing.

“We must work together to protect the lives of those we love and stop what’s happening in our communities. I urge the Illinois General Assembly to take a stand and pass this legislation that will save lives and protect communities.”

The Governor today was joined by Congresswoman Robin Kelly who recently released the Kelly Report on Gun Violence in America, the first-ever Congressional analysis of the nation’s gun violence epidemic that offers a blueprint for ending the crisis.

Senate Bill 3659 – the Illinois Public Safety Act – was introduced during the recent spring Legislative session by State Senator Dan Kotowski (D-Park Ridge) and supported by Governor Quinn. It bans the possession, delivery, sale and purchase of assault weapons, large capacity ammunition feeding devices such as magazines or clips, and .50 caliber rifles and cartridges in Illinois. Valid Firearms Owners Identification Card (FOID) holders who possess any of these devices at the time the law is enacted would be allowed to keep them, but could not transfer or sell them except to a family member. The legislation also requires background checks for the transfer of firearms except to a family member or at a gun show…

(Editor’s note: Bold added for emphasis)

Of course, the bad guys won’t obey what’s stipulated in the Illinois Public Safety Act if it becomes law. But here’s what’s really messed-up about the bans the Democrats are pushing.

According to Federal Bureau of Investigation statistics, so-called “assault weapons” and .50 caliber rifles are rarely used in crimes- particularly murders- around the state of Illinois.

From Table 20, “Murder by State, Types of Weapons, 2012” on the FBI’s “Crime in the U.S. 2012” web page (last year I could find pertinent data available for):

Illinois (“limited supplemental homicide data were received”)
Total murders (“Total number of murders for which supplemental homicide data were received”): 509
Total firearms: 439
• Handguns: 429
• Rifles: 4
• Shotguns: 2
• Firearms (type unknown): 4

439 firearm-related murders in Illinois in 2012. With a rifle (type unknown) definitely used in only 4 of those homicides.

Ban “assault weapons” and .50 caliber rifles. Yeah, that will solve the rampant violence.

Something tells me these Democratic politicians are trying to dupe voters into thinking they can end the ongoing carnage in this election year with such legislation.

Not going to happen, as the so-called Illinois Public Safety Act doesn’t even come close to getting to the root of the problem.

See “hints” above.

You can read that entire press release on the IGNN website here. And that 2012 FBI report table here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Chicago’s Monthly Phone Tax To Rise 56 Percent?

New and higher fees, fines, and taxes. Less government services.

That’s what Chicagoans should expect going forward considering the city’s fiscal health and who’s running the show.

Fran Spielman reported on the Chicago Sun-Times website last night:

After playing cat-and-mouse for days, Mayor Rahm Emanuel’s administration came clean Thursday: Chicago wants to raise the monthly fee tacked on to hardline telephone and cell phone bills by 56 percent — to $3.90…

(Editor’s note: “After playing cat-and-mouse for days, Mayor Rahm Emanuel’s administration came clean Thursday…” Beautifully worded; bold added for emphasis.)

Spielman continued:

Instead of simply asking the General Assembly to renew a $2.50-a-month surcharge due to expire July 1, cash-strapped Chicago is seizing the opportunity to get more money — by asking state lawmakers to raise the cap to “the highest monthly wireline surcharge imposed by any county or municipality” in Illinois.

The highest monthly telephone tax around the state is the $3.90 imposed in Putnam County. Under the bill Emanuel is hoping to push through in the waning days of the Legislature’s spring session, Chicago would be empowered to match that $3.90 — and go higher if any other city or town goes first.

The new and higher tax would apply to both cell phone bills and wireline phones, according to a summary sheet of the legislation distributed by City Hall. The bill would also empower the city raise the fee imposed on prepaid cell phones from the current “seven percent of the transaction amount” to nine percent…

According to Spielman, a 56 percent increase in the monthly phone tax would generate an additional $50.4 million for the City’s coffers.

John Byrne, Monique Garcia, and Ray Long added on the Chicago Tribune website Thursday:

Emanuel’s late push for a measure that would allow the City Council to raise 911 fees by as much as $1.40, which could bring the monthly charge on landline and cell phone bills to $3.90 a month, cleared its first hurdle in the Senate.

Senate President John Cullerton, D-Chicago, said the increase was needed because the current $2.50 fee isn’t raising enough money to pay for operating the city’s emergency response center, forcing the Emanuel administration to dip into other pots of money to keep it running. How much more the fee hike would bring in depends on whether aldermen vote to increase the fee and to what level.

The city collected about $90 million last year through the current $2.50-per-month phone fee, Emanuel spokeswoman Kelley Quinn said. This year’s budget for the Office of Emergency Management and Communications is $123 million. Quinn did not directly answer whether the mayor wants to raise the 911 fee to an amount that will bring in more revenue than the city needs to cover the OEMC budget or how the city would use any extra revenue

Let’s see. Assuming the City of Chicago collects the same amount ($90 million) as last year from their monthly phone tax, adding the projected $50.4 million from a 56 percent hike totals just over $140 million. That’s enough to pay for OEMC operations plus tax- although something tells me that’s probably not where all the money would be steered to.

(Editor’s note: Bold added for emphasis)

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Spielman, Fran. “Emanuel seeks 56 percent hike in telephone tax.” Chicago Sun-Times. 29 May 2014. (http://politics.suntimes.com/article/chicago/emanuel-seeks-56-percent-hike-telephone-tax/thu-05292014-434pm). 30 May 2014.

Byrne, John, Garcia, Monique and Long, Ray. “Emanuel makes late push to raise 911 fees paid by those own landlines, cell phones.” Chicago Tribune. 29 May 2014. (http://www.chicagotribune.com/news/politics/clout/chi-emanuel-makes-late-push-to-raise-911-fees-paid-by-those-own-landlines-cell-phones-20140529,0,6958184.story). 30 May 2014.

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Illinois Millionaire Tax Halted For Now

Remember that “millionaire tax” Illinois House Speaker Michael Madigan (D-Chicago) had been pushing which would have affected an estimated 13,000 or so millionaires residing in the state?

It’s toast for now.

Doug Finke reported on The State Journal-Register (Springfield) website yesterday afternoon:

House Speaker Michael Madigan has pulled the plug on his proposed constitutional amendment to impose a surcharge on incomes over $1 million a year.

The Chicago Democrat made the move Wednesday after it became obvious the amendment couldn’t muster the 71 votes it needed in the House to pass.

Although Democrats hold 71 seats in the House, not all of them were on board with the amendment…

(Editor’s note: Bold added for emphasis)

Despite the setback, many Illinois Democrats in office will tell their supporters that they at least tried to “spread the wealth around” more in moving the legislation this far.

As the economic climate deteriorates nationally, I expect to see even more of these targeted income tax hikes being proposed- along with its reintroduction in “Madiganistan.”

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Finke, Doug. “Madigan dropping plan to tax Illinois millionaires.” The State Journal-Register. 9 Apr. 2014. (http://www.sj-r.com/article/20140409/NEWS/140409326/-1/json). 10 Apr. 2014.

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Chicago Public Pension Crisis Latest

Last Tuesday, I blogged about Chicago Mayor Rahm Emanuel’s attempt to address some of the City’s public pension woes via larger contributions by City employees and $50 million tax increases for five straight years- beginning next year and continuing through 2019- for Chicago property owners.

There’s been a lot of chatter regarding this proposal and other pension “reform” activity today. Karen Pierog reported on the Reuters website:

Legislation to ease funding shortfalls in two of Chicago’s four retirement systems is a modestly positive credit step but not a permanent fix, Moody’s Investors Service said on Monday

Moody’s said that if enacted into law, the measure would immediately reduce the unfunded liabilities in the two funds.

“However, we expect that the (liability) would then escalate for a number of years before declining. Accrued liabilities would exceed plan assets for years to come, and if annual investment returns fall short of the assumed 7.5 percent, the risk of plan insolvency may well reappear,” the credit rating agency said in a report…

After breezing through an Illinois House committee on April 2, the bill has stalled. Moody’s said that even if the bill makes it out of the legislature, Governor Pat Quinn must sign it. The law would then face potential challenges to its legality under the Illinois constitution, which prohibits the impairment of retirement benefits for public sector workers…

(Editor’s note: Bold added for emphasis)

So will the Illinois Governor and fellow Chicago Democrat sign off on Mayor Emanuel’s proposed legislation?

John Byrne and Monique Garcia reported on the Chicago Tribune website this afternoon:

Gov. Pat Quinn today came out against Mayor Rahm Emanuel’s plan to raise Chicago property taxes and cut retirement benefits as a way to shore up some of Chicago’s government worker pension systems.

The re-election seeking Democratic governor called the bill floating around Springfield “a sketch” that “kept changing by the hour” and blasted the property tax as a “lousy tax” because it is not based on the ability to pay…

“I don’t think that’s a good way to go,” Quinn said of hiking property taxes. “And I say it today and I’ll say it tomorrow, they’ve got to come up with a much better comprehensive approach to deal with this issue. But if they just think they are going to gouge property tax owners, no can do. We’re not going to go that way.”

(Editor’s note: Bold added for emphasis)

Now, as I pointed out in last week’s post about Chicago’s public pension crisis:

There’s still a state-required $600 million contribution due next year from the City to stabilize police and fire pension funds that this proposed property tax hike doesn’t address and has to be dealt with…

(Editor’s note: Bold added for emphasis)

Plus, I read the following this morning by Chacour Koop on the website of The State Journal-Register (Springfield):

After addressing Illinois’ own employee pension crisis, lawmakers now face an equally challenging task with the state’s cities, as mayors demand help with underfunded police and firefighter pensions before the growing cost “chokes” budgets and forces local tax increases.

The nine largest cities in Illinois after Chicago have a combined $1.5 billion in unfunded debt to public safety workers’ pension systems. Police and fire retirement funds for cities statewide have an average of just 55 percent of the money needed to meet current obligations to workers and retirees…

The problems — a history of underfunding, the expansion of job benefits and the prospect of crushing future payments — mirror those that Chicago Mayor Rahm Emanuel warned about when he asked the legislature for relief last week.

In 2016, state law requires cities to make required contribution increases — in some cases, more than an additional $1 million annually — so they’ll reach 90 percent funding by 2040. If they don’t, the state will begin doing it for them, diverting grant money now used by cities elsewhere directly into the pension funds…

(Editor’s note: Bold added for emphasis)

Just like the Illinois General Assembly- dominated by Democrats- barely passed legislation on December 3, 2013, that was touted as a “fix” for the state’s $100 billion public pension crisis (it isn’t), something tells me an accommodation may be reached with fellow Democrats running the City of Chicago so they don’t have to pay the full amount of the state-required $600 million contribution due next year to stabilize police and fire pension funds.

That goes for those large Illinois communities as well.

Watch all the back-patting go on should that “fix” materialize as well.

And the inevitable “blowback” down the road.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

UPDATE: From Fran Spielman over on the Chicago Sun-Times website early Tuesday morning:

Mayor Rahm Emanuel and House Speaker Michael Madigan Monday stripped out controversial language from city pension legislation that had authorized the City Council to impose a property-tax hike, putting the stalled measure back on the fast-track at the state Capitol.

Madigan, D-Chicago, filed an amendment to Senate Bill 1922 after the House adjourned Monday without taking any action on the stalled legislation. Sources now expect the legislation to be voted upon as early as Tuesday.

(Editor’s note: Bold added for emphasis)

Sources:

Pierog, Karen. “UPDATE 1-Proposed Chicago pension changes positive step but no fix -Moody’s.” Reuters. 7 Apr. 2014. (http://www.reuters.com/article/2014/04/07/usa-chicago-moodys-idUSL2N0MZ1AP20140407). 7 Apr. 2014.

Byrne, John and Garcia, Monique. “Quinn blasts Emanuel’s property tax hike for pensions.” Chicago Tribune. 7 Apr. 2014. (http://www.chicagotribune.com/news/politics/clout/chi-quinn-blasts-emanuels-property-tax-hike-for-pensions-20140407,0,5432729.story). 7 Apr. 2014.

Koop, Chacour. “Illinois’ next pension issue: Police, firefighter funds.” Associated Press. 6 Apr. 2014. (http://www.sj-r.com/article/20140406/NEWS/140409562/-1/json/?tag=1). 7 Apr. 2014.

Spielman, Fran. “Analysis: Rahm’s pension bill revisions solve—and create—problems.” Chicago Sun-Times. 8 Apr. 2014. (http://politics.suntimes.com/article/chicago/analysis-rahm%E2%80%99s-pension-bill-revisions-solve%E2%80%94and-create%E2%80%94problems/mon-04072014-728pm). 8 Apr. 2014.

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Illinois Millionaire Tax Moves Out Of Committee, Goes To House For Vote

This Monday, I blogged about Illinois House Speaker Michael Madigan (D-Chicago) pushing for an income tax hike on the estimated 13,000 or so millionaires residing in the state.

The proposed legislation is making progress in the Democrat-controlled Illinois General Assembly. Doug Finke reported on The State Journal-Register (Springfield) website last night:

An Illinois House committee Thursday signed off on a measure that would allow voters to decide if millionaires should pay more in state income taxes…

The committee voted along party lines to approve the proposed constitutional amendment by House Speaker Michael Madigan, D-Chicago, that would impose a 3 percent surtax on incomes above $1 million. Income up to $1 million would continue to be taxed at the state’s personal income tax rate, currently set at 5 percent…

The proposed amendment now goes to the full House, which must approve it by a three-fifths vote. The Senate will then have to approve it by the same margin for the issue to appear on the November ballot

(Editor’s note: Bold added for emphasis)

Opponents of the tax hike claim it not only unfairly penalizes successful residents of the state, but hurts everyone else in that it may drive away wealth from Illinois.

Speaker Madigan’s response? He was quoted by the Chicago Tribune last Friday as saying:

Well, if they’re in Illinois today, they’re probably so much in love with Illinois that they’re not going to leave.

Eye-roll please…

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Finke, Doug. “Millionaire tax amendment advances to House; progressive income tax rejected.” The State Journal-Register. 27 Mar. 2014. (http://www.sj-r.com/article/20140327/NEWS/140329457/-1/json/?tag=2). 28 Mar. 2014.

Garcia, Monique, Long, Ray, and Zurich, Maura. “Illinois Democrats go all-in on class warfare theme.” Chicago Tribune. 21 Mar. 2014. (http://articles.chicagotribune.com/2014-03-21/news/chi-speaker-madigan-proposes-asking-voters-to-raise-taxes-on-wealthy-20140320_1_tax-hike-bruce-rauner-income). 24 Mar. 2014.

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Statewide Gun Registration, Ammo ‘Control’ Bill Introduced In Illinois

The following Illinois gun/ammo “control” legislation made headlines in February, but it’s making the rounds again this week (probably due to its outrageousness?). From a press release on the website of Illinois State Representative Kelly Cassidy (D-Chicago):

CHICAGO, IL – State Rep. Kelly Cassidy (D-Chicago) introduced a bill requiring the registration of firearms in the State of Illinois.

“We’ve dealt for too long with gun violence in our neighborhoods, most often perpetrated by individuals who acquired the firearm through illicit means,” Cassidy said. “Registration is a common sense policy that ties the weapon to its buyer, preventing the types of straw purchasing that put guns into criminals hands. According to a University of Chicago Crime Lab Report, 45% of firearms used in crimes in our state were purchased legally in Illinois and then illegally transferred. Registration creates a safeguard against these transfers and significantly hinders the ability for criminals to acquire firearms.”

HB 4715, the Firearms Registration Act, would require registration of firearms upon purchase, and for firearms owned at the time of passage. The registration process would include a background check, and transfer to an individual without complying with registration would be a Class 2 felony…

Not only is Illinois House Bill 4715 calling for a gun registry, but also ammunition “control” as well. From the bill’s status page on the Illinois General Assembly website:

Creates the Firearms Registration Act. Provides that every person in the State must register each firearm he or she owns or possesses in accordance with the Act. Provides that a person shall not purchase or possess ammunition within this State without having first obtained a registration certificate identifying a firearm that is suitable for use with that ammunition, or a receipt demonstrating that the person has applied to register a suitable firearm under the Act and that the application is pending

(Editor’s note: Italics added for emphasis)

Since February 5, the bill has been with the House Rules Committee.

My guess is that it will emerge shortly after the next high-profile mass shooting.

You can view the current status of Illinois HB 4715 on the Illinois General Assembly here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Moody’s Downgrades Chicago’s Credit Rating Again, Issues Negative Outlook

Just as I was about to blog about prepping tonight I observed the following splashed on the homepage of the Chicago Tribune website:

Chicago credit rating takes major hit

Chicago’s financial standing took a hit Tuesday when a major bond rating agency once again downgraded the city’s credit worthiness…

No surprise there, all things considered. No real effort has been made to tackle Chicago’s financial woes, which led to bond credit rating giant Moody’s Investor Service downgrading the City of Chicago’s general obligation (GO) and sales tax ratings to A3 from Aa3, water and sewer senior lien revenue ratings to A1 from Aa2, and water and sewer second lien revenue ratings to A2 from Aa3 back on July 17, 2013.

After seeing that headline, I decided to head over to Moody’s Investors Service website to check out the latest “Ratings News,” where the following was posted:

Rating Action: Moody’s downgrades Chicago, IL to Baa1 from A3, affecting $8.3 billion of GO and sales tax debt…

Also downgrades water and sewer senior lien revenue bonds to A2 from A1 and second lien revenue bonds to A3 from A2, affecting $3.3 billion of debt; outlook negative for all ratings…

According to Moody’s, “Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.”

Their Global Credit Research unit added:

The Baa1 rating on Chicago’s GO debt reflects the city’s massive and growing unfunded pension liabilities, which threaten the city’s fiscal solvency absent major revenue and other budgetary adjustments adopted in the near term and sustained for years to come. The size of Chicago’s unfunded pension liabilities makes it an extreme outlier, as indicated by the city’s fiscal 2012 adjusted net pension liability (ANPL) of 8.0 times operating revenue, which is the highest of any rated US local government. While the Illinois General Assembly’s recent passage of pension reforms for the State of Illinois (A3 negative) and the Chicago Park District (CPD) (A1 negative) suggests that reforms may soon be forthcoming for Chicago, we expect that any cost savings of such reforms will not alleviate the need for substantial new revenue and fiscal adjustments in order to meet the city’s long-deferred pension funding needs. We expect that the city’s pension contributions will continue to fall below those based on actuarial standards. The city’s slowly-amortizing debt levels are also large and growing. The Baa1 rating also incorporates credit strengths including Chicago’s large tax base that sits at the center of one of the nation’s most diverse regional economies and the city’s broad legal authority to raise revenue…

You can read the entire Moody’s piece about the downgrade on their website here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Illinois Gun Owners To March, Lobby In State Capital Tomorrow

Wendesday, March 5, is Illinois Gun Owner Lobby Day, or IGOLD. From the Illinois State Rifle Association website this morning:

All Illinois gun owners are invited to join in Illinois Gun Owners Lobby Day (IGOLD) in Springfield in 2014. This is an annual event where everyone goes to lobby` their representatives in the Illinois House and Senate. IGOLD is sponsored by ISRA and IllinoisCarry.com. Other participating organizations are, Guns Save Life, Sangamon County Rifle Association, and the McHenry County Right To Carry Association. Get your local organization involved as well!

We will meet at the Prairie Capital Convention Center – Doors open at 10:45 with the program set to begin at 11:30 am. We will have a legislative briefing, then we will all march to the Capitol Building to locate and talk with our representatives.

Please join us for Illinois Gun Owner Lobby Day, you won’t regret going…

More information on tomorrow’s event is located on the ISRA website here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Growing Illinois Fiscal Fiasco Makes Wisconsin Relocation More Attractive

Regular readers of Survival And Prosperity may recall me blogging from time to time that as things stand, Wisconsin- not Illinois- looks to be my primary state of residence down the road. For example, I wrote back on January 29 of last year:

By the time I started this blog back in November 2010, I already had a pretty good idea I’d eventually be leaving the city of Chicago to reside someplace else. And every once in a while, I’d query the “best places” to live in America- should TSHTF or not. While the area of southeastern Wisconsin I’m looking at moving to in a few years is probably not “ideal” (even less so the suburbs of Chicago) from a prepper’s perspective, practitioners of modern survivalism would probably see more positives than negatives with the location. Keeping in mind that not only do I envision a certain lifestyle for myself down the road, but I also think I have a pretty good idea of what will be required to “survive and prosper” in America in the coming years, this part of the Midwest really appears to be a nice fit not only for me but my girlfriend as well. Here’s hoping it is…

Sure, certain Wisconsin taxes tend to be higher than in the “Land of Lincoln.” But at least it’s not a fiscal basket case, where I can envision Illinois one day leapfrogging our neighbors to the north when it comes to levels of revenue collection.

Chicago Tribune columnist Dennis Byrne reminded the paper’s readers just how precarious our financial situation has gotten here in Illinois… in addition to suggesting a state we might want to consider emulating. He wrote on the Tribune website on January 28:

Illinois is a stinking mess.

A steaming heap of suffocating debt, endless greed, blind self-interest and numbing incompetence. How we’ve been able to survive this long without plunging into the abyss is beyond me, and all reason.

No need here to document all of the state’s failures. Way behind on its bills. The nation’s worst credit rating. Higher unemployment than the nation. Business wanting to scram, fed up with an unfriendly entrepreneurial climate. Crushing pension obligations so far into the future that no one alive today, even if they ponied up every cent they made (after taxes, of course), will ever see the end of it.

Illinois is run by a self-renewing, power-hungry, piggish oligarchy so impervious to change (I hesitate to use the word reform, because true reform is as rare in Illinois as is the sight of Pike’s Peak) that it makes feudalism look good.

Don’t try to argue that a recent package of minor changes to the public employees’ pension system, grudgingly enacted by the serfs in the state legislature, is reform. Even if it were, it’s going nowhere because it will be dead on arrival in Illinois’ courts. That’s because the hoggish public employee unions were able, at the last minute, to ram into the state constitution a provision that guarantees their cupidity will be fed, well, forever.

What makes it all so vexing is how close the answer to our problems is: Wisconsin.

While Illinois is circling the drain, Wisconsin has saved itself from a similar fate and, in the aftermath of the longest-lasting recession since Amelia Earhart became the first woman to fly solo across the Atlantic Ocean, is actually doing OK, if not prospering…

“Prospering.”

It’s been a long time since I’ve heard/seen that word associated with Illinois.

Which is too bad, because I really do love this state and my fellow Illinoisans.

But seeing as my goal remains not only to survive but prosper as the times become more tumultuous, Byrne’s observation further convinces me my future still lies up north.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Byrne, Dennis. “Illinois Should Look To Wisconsin.” Chicago Tribune. 28 Jan. 2014. (http://www.chicagotribune.com/site/ct-oped-byrne-0128-20140128,0,5528813.column). 3 Feb. 2014.

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Thoughts On Illinois State Lawmakers Passing Public Pension ‘Fix’

The Illinois General Assembly barely passed legislation yesterday that’s been touted to “fix” the state’s $100 billion public pension crisis.

Illinois Governor Pat Quinn, who has promised to sign SB0001, declared in a press release Tuesday:

Since I took the oath of office, I’ve pushed relentlessly for a comprehensive pension reform solution that would erase a $100 billion liability and restore fiscal stability to Illinois.

Today, we have won. The people of Illinois have won.

Not so fast, big guy.

First off, as I blogged yesterday, the Wall Street Journal recently picked apart the legislative “fix,” and concluded not only was it “fake” but:

Even under the most optimistic forecasts, these nips and tucks would only slim the state’s pension liability down to $80 billion- which is where it was after Governor Quinn signed de minimis fixes in spring 2010 to get him past that year’s election…

Second, this legislation is almost certainly headed to court, as in the Illinois Supreme Court. As I noted on December 1, a provision of the 1970 Illinois Constitution defines public pension benefits as “an enforceable contractual relationship” that “shall not be diminished or impaired.”

Even the top-ranking Democrat in the Illinois Senate wonders if SB0001 can pass legal muster. Ray Long and Monique Garcia reported on the Chicago Tribune website this morning:

Senate President John Cullerton, whose earlier union-backed plan to curb pension spending was stymied by House Speaker Michael Madigan, said he remained concerned that the package passed by lawmakers violated a state constitutional ban on diminishing or impairing public pension benefits.

Cullerton, whose Senate Democrats had been viewed as closer to the unions than Madigan’s House majority, said he viewed it important to get something before the courts to decide whether the approach is legal.

“I think the bill has serious constitutional problems, I’ve made that clear from the start, but now it’s in front of the court and they can decide,” Cullerton said.

And decide they will, meaning this supposed “fix” for the state’s public pension crisis might eventually amount to nothing.

I thought Mark Brown of the Chicago Sun-Times summed it all up well. Brown wrote on the Sun-Times website yesterday afternoon from Springfield:

Oh, how I wish I could tell you that the long fight to fix Illinois’ grossly underfunded public pension plans was at an end with Tuesday’s historic votes by the state Legislature.

But that wouldn’t be true.

First, there will be a court challenge — or more likely challenges — brought by state workers, teachers and their retirees, along with the unions that represent them.

And before those cases can even work their way through the system, state lawmakers will have to decide in early 2014 how they are going to handle Chicago’s pension problems — beginning with those of city teachers.

Other local officials, including Cook County Board President Toni Preckwinkle are clamoring for pension relief as well, which will combine with Mayor Rahm Emanuel’s priorities to keep the issue on the front burner.

If the courts strike down the pension reform plan approved Tuesday on narrow votes by both chambers, or even if they rule out parts of it, we could be back here within a year or two to start over.

(Editor’s note: Italics added for emphasis)

What transpired Tuesday in the Illinois General Assembly might be a first step in “fixing” the state’s public pension crisis, but much more work and sacrifice will eventually be required to arrive at a real solution.

Question is, is the will even there among Illinoisans and their elected state officials to do this?

I kind of doubt it.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Garcia, Monique and Long, Ray. “Unions vow legal fight as lawmakers OK pension overhaul.” Chicago Tribune. 4 Dec. 2013. (http://www.chicagotribune.com/news/chi-illinois-pension-vote-20131203,0,5070497.story). 4 Dec. 2013.

Brown, Mike. “Brown: State’s financial problems far from over.” Chicago Sun-Times. 3 Dec. 2013. (http://www.suntimes.com/24156150-761/brown-states-financial-problems-far-from-over.html). 4 Dec. 2013.

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WSJ Calls Proposed ‘Fix’ To Illinois Public Pension Crisis ‘Fake’

Today’s the day Illinois lawmakers may vote on SB0001 to “fix” the state’s $100 billion public pension crisis.

But according to the Wall Street Journal last night, the whole thing’s a “fake.”

From the WSJ website Monday evening:

Illinois’s Fake Pension Fix

Democrats in Illinois have dug a $100 billion pension hole, and now they want Republicans to rescue them by voting for a plan that would merely delay the fiscal reckoning while helping to re-elect Governor Pat Quinn. The cuckolded GOP seems happy to oblige on this quarter-baked reform.

Legislative leaders plan to vote Tuesday on a bill that Mr. Quinn hails as a great achievement. But the plan merely tinkers around the edges to save a fanciful $155 billion over 30 years, shaves the state’s unfunded liability by at most 20%, and does nothing for Chicago’s $20 billion pension hole.

Most of the putative savings would come from trimming benefits for younger workers. The retirement age for current workers would increase on a graduated scale by four months for 45-year-olds to five years for those 30 and under. Teachers now in their 20s would have to wait until the ripe, old age of 60 to retire, but they’d still draw pensions worth 75% of their final salary.

Salaries for calculating pensions would also be capped at $109,971, which would increase over time with inflation. Yet Democrats cracked this ceiling by grandfathering in pensions for workers whose salaries currently top or will exceed the cap due to raises in collective-bargaining agreements.

Democrats are also offering defined-contribution plans as a sop to Republicans who are desperate to dress up this turkey of a deal. These plans would only be available to 5% of workers hired before 2011. Why only 5%? Because if too many workers opt out of the traditional pension, there might not be enough new workers to fund the overpromises Democrats have made to current pensioners.

At private companies, such 401(k)-style plans are private property that workers keep if they move to a new job. But the Illinois version gives the state control over the new defined-contribution plans and lets the legislature raid the individual accounts at anytime. That’s a scam, not a reform.

Even under the most optimistic forecasts, these nips and tucks would only slim the state’s pension liability down to $80 billion— which is where it was after Governor Quinn signed de minimis fixes in spring 2010 to get him past that year’s election…

(Editor’s note: Italics added for emphasis)

“Would only slim the state’s pension liability down to $80 billion.”

Sounds like this legislation would only “kick the can down the road” as the public pension crisis is concerned- once again.

I shouldn’t be surprised to read any of this.

After all, it’s what Illinois state legislators have been doing for quite some time now on this issue.

At the end of the day- including today, if a pension “fix” is signed into law- it looks as if public sector retirees participating in these particular pensions are the ones who will be most screwed.

Illinois taxpayers won’t be far behind.

Consider what Kenneth Griffin, the richest Chicagoan and Illinoisan who’s also CEO of the global financial institution Citadel Group, had to say in a Chicago Tribune piece on November 29:

The bitter truth is that our politicians have sold government employees a fraudulent bill of goods. Absent extraordinary economic growth, our state is going to collapse under the weight of generous pension promises made by union leaders and politicians. And with each passing day, the $100 billion gap between what has been promised and what is provided for grows by roughly $5 million.

Here is where this story will inevitably end: Our state is going to be forced to break its promises to our government employees and retirees. They will receive less than they bargained for. Our state’s taxpayers will see the 67 percent “temporary” tax increase converted into a permanent tax increase. And soon we will hear that even further tax increases are needed to meet our obligations. This is the price we are all going to pay for sending the wrong leaders to Springfield for too many years.

I don’t think shaving $20 billion off that total will change Griffin’s prognosis much.

An $80 billion public pension funding gap.

Wonder if that will fake out the credit rating agencies?

Something tells me it won’t, and rewinding the clock only three-and-a-half years will still leave us with an ongoing public pension crisis.

The Wall Street Journal did a nice job picking apart the proposed “fix.” You can read the entire article on the WSJ website here or on the Illinois Policy Institute’s website here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Griffin, Kenneth. “Guaranteeing financial ruin in Illinois.” Chicago Tribune. 29 Nov. 2013. (http://articles.chicagotribune.com/2013-11-29/site/ct-illinois-pension-reform-financia-ruin-1129-20131129_1_tax-increase-state-income-tax-bill). 3 Dec. 2013.

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Why Illinois Lawmakers Chose Tuesday To Possibly ‘Fix’ The State’s Public Pension Crisis

Yesterday, I blogged about Illinois lawmakers possibly voting on legislation Tuesday to “fix” the state’s $100 billion public pension crisis.

Why did the Democratic leadership in the Illinois General Assembly- in concert with Republican leaders- decide tomorrow might be a good time to tackle this problem?

From an editorial that appeared on the Chicago Tribune website this morning:

This week Illinois lawmakers may reform the nation’s worst-funded state pension system. After Monday’s deadline for candidates to file petitions for the March 2014 Illinois primary, incumbents might vote for a pension bill, secure that angry public employee unions no longer could recruit candidates to challenge them.

(Editor’s note: Italics added for emphasis)

I’m guessing these particular unions are pretty angry right now, seeing that the political party they’ve traditionally bedded down with looks to be turning its back on them.

Perhaps we’ll have a better idea if that’s really the case tomorrow.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

“Editorial: The Illinois reckoning.” Chicago Tribune. 2 Dec. 2013. (http://www.chicagotribune.com/news/opinion/editorials/ct-illinois-election-edit-1202-20131202,0,210180.story). 2 Dec. 2013.

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Illinois State Lawmakers To ‘Fix’ $100 Billion Public Pension Crisis Tuesday?

Tuesday looks to be an important day for the future of Illinois.

State lawmakers may vote on legislation to “fix” a well-publicized $100 billion public pension crisis. Rick Pearson and Bob Secter wrote on the Chicago Tribune website yesterday:

Illinois lawmakers return to Springfield on Tuesday to consider an agreement struck by legislative leaders that aims to fix the state’s massive government worker pension as Senate Democrats have become the focal point for intensive lobbying efforts…

The pension vote is shaping up to be one of the most important votes of lawmakers’ careers, with senators and representatives forced to decide which is better for their political self-interest: Backing up their powerful leaders or siding with the re-election might of public employee unions.

At stake is Illinois’ $100 billion pension shortfall that affects teachers outside Chicago, public university employees and state government workers. The worst-in-the-nation deficit is gobbling up tax money that otherwise could go to education and other programs, and has resulted in Illinois holding the lowest credit rating among the states. Illinois’ pension problem also is being blamed in part for the state’s struggling economy and high unemployment.

The agreement leaders reached the day before Thanksgiving aims at saving the state $160 billon over 30 years to get the pension systems fully funded, largely by limiting annual cost-of-living increases and raising the retirement age while also requiring the state to put its share of money into the system.

Not surprisingly, beneficiaries of the current setup aren’t too happy with these rapidly-unfolding developments. Francine Knowles reported on the Chicago Sun-Times website yesterday:

Details of the pension deal reached by four House and Senate leaders and headed for a vote this week have supporters and critics in full-court press mode.

Union leaders, who are blasting the agreement, say their members will bombard lawmakers Monday, urging them to kill the proposed bill that could ultimately slash $160 billion from the state’s future pension liabilities and improve Illinois’ damaged creditworthiness.

Opponents of the yet-to-be-seen legislation will argue that it’s unconstitutional, among other things. Pearson and Secter added:

Any final package approved by the legislature and governor faces an almost certain legal challenge. Critics will go into court armed with a provision of the 1970 Illinois Constitution that defines pension benefits as “an enforceable contractual relationship” that “shall not be diminished or impaired.”

I’m not sure what to make of all this yet, except that the present course the State is on concerning public sector pensions is unsustainable (costing taxpayers $5 million a day as I noted back on October 21) and that any legislation passed will probably end up being legally contested.

More Wednesday…

Sources:

Pearson, Rick and Secter, Bob. “Senate Democrats under the gun on proposed pension fix.” Chicago Tribune. 30 Nov. 2013. (http://www.chicagotribune.com/news/local/ct-illinois-pension-reform-met-1201-20131201,0,7850446.story). 1 Dec. 2013.

Knowles, Francine. “Pension deal faces pushback from unions; backers pursue votes.” Chicago Sun-Times. 30 Nov. 2013. (http://www.suntimes.com/24073242-761/pension-deal-faces-pushback-from-unions-backers-pursue-votes.html). 1 Dec. 2013.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Illinois Public Sector ‘Double-Dipping’ Targeted

“Double-dipping.” When public sector public employees draw a public paycheck while at the same time drawing a public pension.

Back when I as a civil servant, not only did I see this taking place, but suspected the arrangement would come under fire one of these days.

As Main Street’s finances eroded significantly after the economic crisis reared its ugly head five years ago, more grumbling was heard over the practice. I blogged back on April 4, 2011:

An employment arrangement I witnessed during my days as a civil servant is coming under increased fire these days. Bloomberg’s David Mildenberg wrote on March 29:

With U.S. unemployment averaging 8.9 percent, so-called double-dipping by tens of thousands of government workers nationwide is drawing increasing scrutiny.

Lawmakers from coast to coast are taking steps to curb the practice as states face combined deficits projected at $112 billion and unfunded pension liabilities of as much as $3 trillion.

Arkansas banned double-dipping by state workers last month, while bills to curb it are pending before lawmakers in Olympia, Washington, and Trenton, New Jersey.

And then there’s Illinois, where double-dipping is still permitted in a state saddled with a nearly $100 billion unfunded public pension liability.

Perhaps for not much longer though.

Enter Illinois State Representative Jack D. Franks (D-Woodstock). Representative Franks has introduced Illinois House Bill 3760, the “Retirement Means Retirement Act,” on November 14. Natasha Korecki reported on the Chicago Sun-Times website today:

[Representative Franks] says the legislation would address anyone — from state lawmakers to school superintendents to those in law enforcement who retire from one public job because they’ve maxed out on their pension, then take another public job as they begin to draw pension benefits.

Franks pointed to school superintendents and police chiefs who retire on a Friday only to return the following Monday with a new title, new salary — and drawing a pension— all while staying in the same office.

“I see a lot of people who retire and just end up in another government job shortly thereafter,” Franks told the Sun-Times. “That’s not what this system was designed for, but it’s a major loophole that they’re able to exploit… We’re going after the abusers — and we know who we’re talking about. Some of these guys make more than the president in retirement.”

Supporters of “double-dipping” argue that someone has to be hired to fill the job opening, so it might as well be the best qualified candidate applying for the position- which in many cases is the new retiree.

Reading over the proposed legislation, “double-dipping” looks to be prohibited only going forward. Illinois public sector retirees who are already participating in such an arrangement appear to be safe.

For now, at least.

You can find out more about Illinois House Bill 3670 on the Illinois General Assembly website here.

Source:

Korecki, Natasha. “Public pension and salary ‘double-dippers’ targeted in new bill.” Chicago Sun-Times. 19 Nov. 2013. (http://www.suntimes.com/23845706-761/public-pension-and-salary-double-dippers-targeted-in-new-bill.html). 19 Nov. 2013.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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