QUOTE OF THE DAY
Greg Hinz: Lawmakers whiff on pension reform in spring session
For those who believe that state and local governments are drowning in pension debt, Illinois lawmakers offered the barest of lifesavers in their just-ended spring session. And the modest progress that was made may yet be spiked by Gov. Pat Quinn.
Among big losers in the session were Mayor Rahm Emanuel, Cook County Board President Toni Preckwinkle and a coalition of suburban and downstate communities. All face rapidly widening fiscal woes because of the pension shortfall, but all got stiffed by the General Assembly to one degree or another as lawmakers failed to approve their requests to restructure cash-short plans with a combination of reduced benefits and increased public contributions.
Mr. Emanuel did get one key bill through. But Mr. Quinn has strongly hinted he will veto it before the June 9 deadline, and if he does, Mr. Emanuel will have risked proposing a property tax increase and face a $600 million-plus fiscal cliff going into his own re-election campaign.
Chicago Tribune: SEC hits UNO on charter school deal
The U.S. Securities and Exchange Commission on Monday filed a complaint against the United Neighborhood Organization, saying the powerful Chicago charter school operator defrauded investors in a $37.5 million bond offering by misleading them about conflicts of interest in giving construction contracts to companies run by relatives of an UNO official.
UNO will settle the SEC charges by agreeing to improve its internal procedures and training, including the appointment of an independent monitor, according to an SEC news release. The UNO charter school network could not immediately be reached to respond to the SEC charges. According to the SEC release, UNO neither admitted nor denied the charges in the settlement.
According to the SEC’s complaint, UNO breached the conflict-of-interest provision as it entered the construction phases of the school project in 2011 and 2012. UNO gave contracts to two companies owned by brothers of its chief operating officer. UNO agreed to pay one company approximately $11 million to supply and install windows and the other company approximately $1.9 million to serve as an owner’s representative during construction, according to the SEC release.
CBS Chicago: Confidential Records Left Behind After Mental Health Centers Closed
Gov. Pat Quinn’s administration closed three health facilities in 2012 but left behind tractors and a forklift, an unidentified medical specimen and boxes full of confidential patient and employee records, an audit released Thursday said.
The Department of Human Services also failed to properly announce the closures — another state agency even delivered $1,000 worth of bread and juice to one facility a month after it closed, according to the report by Auditor General William Holland.
Quinn closed mental health centers in Tinley Park and Rockford and a developmental center in Jacksonville to save money and change client care to community-based settings. But shutdowns were so shoddy, 10 percent of Tinley Park’s inventory and 9 percent of the inventory at Singer Mental Health Center in Rockford — worth over $200,000 — was lost, from a $300 video game system to a $29,000 refrigerated van.
Reuters: Nervous about borrowing, U.S. states and cities alter municipal bond landscape
U.S. cities and states are leery of borrowing more money despite near-record low interest rates, forcing bond funds to scour for investments and boosting returns on existing debt.
The drought in issuance is also slowing city and state capital projects and threatens to disrupt the summer high season for bond buying.
So far this year, sales are running 25.4 percent below the same period in 2013, according to preliminary Thomson Reuters data. May’s issuance, $22.41 billion of bonds sold in 907 deals, was the lowest for the month in three years and the smallest since January, when only $18.17 billion in bonds came to market.
Wall Street Journal: Factory-Job Rebound Produces Winners, Losers
The U.S. has added about 650,000 factory jobs since their numbers rebounded after the recession, putting manufacturing workers at 12.1 million and reversing a long decline in such jobs. But uneven growth has created regional disparities in the nation’s overall economic recovery.
Mobile County is among the winners.
Shipbuilder Austal Ltd. ASB.AU +2.67% ‘s facility here is busy seven days a week as workers piece together enormous aluminum sheets in a space the size of 13 football fields. It has added thousands of jobs since 2008 and plans more, thanks to huge U.S. Navy contracts.
Wall Street Journal: In Search of Gladstonian Republicans
Few political parties have been better at reinventing themselves than the Republicans. But at the moment, when it comes to ideas, they are in a funk. American conservatives certainly know what they are against—most notably ObamaCare—but cannot agree on what they are for. The recent primaries only re-emphasized the gulf between the party’s big business and tea party wings. Thanks to President Obama’s weakness, the party might claw back the Senate this year, but, without a positive message, without a big idea, disaster beckons, yet again, in the presidential race in 2016.
Well, gather around Mitch McConnell and John Boehner (and Jeb Bush, Marco Rubio and Scott Walker ), and listen to what will strike you as a fairy tale. Imagine that the world’s superpower reduces the size of government by a quarter over the next 30 years, even as its population grows by 50%. Imagine further that the superpower performs this miracle while dramatically increasing both the quality of public services and the nation’s diplomatic clout. And imagine that the Republican Party leads this great revolution while uniting its manifold factions behind one of its favorite words: liberty.
Impossible? That is exactly what Britain, then the world’s superpower and pioneer of the new economy, did in the 19th century. Gross revenue from taxation fell from just under £80 million in 1816 to well under £60 million in 1846, even as the population surged and the government helped build schools, hospitals, sewers and the world’s first police force. The Victorians paid for these useful new services by getting rid of what they called “Old Corruption” (and we would call cronyism) and by exploiting the new technology of the day, like the railway. For these liberal reformers were the allies of the new commercial classes who were creating the industries that were transforming the world.
Chicago Tribune: Emanuel defends 911 tax hike plan
As Mayor Rahm Emanuel waits for Gov. Pat Quinn’s decision on a measure that would partially fix the finances of city worker pension funds, the mayor isn’t saying whether a 911 fee increase on phone bills would allow him to avoid a property tax hike.
The governor faces a deadline of next Monday to sign or veto the pension bill Emanuel pushed through the General Assembly in April. The measure aims to shore up two city pension funds covering thousands of former city workers and laborers by cutting future benefits and requiring employees to pay more toward their retirements. The bill also requires the city to contribute $250 million more toward the pension funds over five years.
Emanuel has talked about raising property taxes to come up with the city’s share, but that puts Quinn in a tight spot. The Democratic governor is running for re-election against anti-tax Republican challenger Bruce Rauner.
CARTOON OF THE DAY
