Madigan’s millions: How the speaker sells his sway

Madigan’s millions: How the speaker sells his sway

The speaker’s law firm makes millions in the clout-heavy game of Cook County property tax appeals.

Property taxes are crushing Illinois homeowners.

Grandparents are losing childhood homes. Middle-class families are being squeezed out of their neighborhoods. And too many people pay more in property taxes than they spend on their mortgage.

State lawmakers have done nothing to address the property tax problem. But while Illinoisans struggle, the state’s most powerful politician profits.

From 2008 to June 2016, House Speaker Mike Madigan’s property-tax law firm, Madigan & Getzendanner, lowered its clients’ property-tax bills by at least $70 million, according to documents obtained from the Cook County Treasurer through a Freedom of Information Act request.

In general, the treasurer’s office distributes property tax refunds when a property owner files an appeal, but pays his or her property tax bill while waiting for officials reach a final decision. If the appeal is successful, the property tax bill is reduced retroactively and the treasurer’s office sends a check to make up the difference.

This analysis does not include cases where Madigan’s law firm filed a successful appeal before a client paid his or her property tax bill. Documents from the Cook County Board of Review indicate such cases constitute a majority of the reductions won by Madigan & Getzendanner lawyers since 2008.

Madigan’s clientele includes many of the city’s biggest developers, as well as major corporate players such as Hyatt Equities LLC (for whom Madigan’s firm earned more than $1.4 million in property-tax refunds since 2008, according to documents from the treasurer’s office), the Chicago Board Options Exchange ($1.4 million) and Bank of America ($800,000).

The man in charge of the property valuations so crucial to Madigan’s business is Joe Berrios, the Cook County assessor (a position he attained in 2010 with the help of Madigan’s political workers). Madigan, in turn, is crucial to Berrios’ side gig as a Springfield lobbyist. Berrios also serves as the Cook County Democratic Party chairman.

The setup reeks of cronyism. It doesn’t help that Madigan has never fully disclosed his sources of income.

But the House speaker gave a clue regarding his earnings in 2015, when a reporter asked him whether he’d be subject to a proposed millionaire’s tax.

“Do I make a million dollars in a year? … In a good year I would be subject to this [tax],” he said.

Every dollar Madigan earns back for his corporate clients makes someone else’s property-tax bill go up. It falls on the shoulders of Cook County residents not savvy enough to hire a politically connected law firm to appeal their property taxes, or who refuse to play the game altogether.

As the most powerful lawmaker in Illinois, Madigan should be fighting to address the most pressing tax issue for the state’s middle class. Instead, he spends his time cashing in on a broken system.

When questioned about the conflict of interest, Madigan tends to double down. “I go to great lengths to make certain there is a clear division between my law practice and my actions as a public official,” he said in 2015.

Madigan spokesman Steve Brown echoed his boss when questioned as part of a recent Reuters investigation into Madigan & Getzendanner.

“None of his actions as an attorney, a member of the House of Representatives or speaker have been inappropriate, violative of any law or ethical rule or against his own personal code of conduct, which goes beyond the law or legal requirement,” Brown said.

The speaker’s track record tells a far different story.

Conflicts of interest

“You’ve heard of double-dipping,” then-Chicago Mayor Jane Byrne told the Chicago Tribune in 1979. “He was triple-dipping,” she said of Madigan. He was working as a well-compensated attorney for two of Chicago’s largest pension funds while also serving as a state lawmaker and Democratic committeeman.

When the Illinois General Assembly passed a $60 million bailout for McCormick Place in 1985, many called into question Madigan’s relationship with a team of clout-heavy developers who did extensive construction work for the convention center. Madigan swore his law firm’s past work for the developer’s principals would “in no way bear upon my considered judgment on the merits of the bill at hand.”

Starting to see a pattern?

In 1989, after parlaying his legal work into a stint as a Chicago City Council lobbyist, Madigan persuaded aldermen to give one of his clients a 30-year extension on a lease of the Hilton Hotel at O’Hare Airport. The Tribune editorial board described the deal as “one of the more extraordinary, brazen giveaways ever proposed in the city’s history.” Madigan’s law firm received $85,000 for the lobbying work, or $164,000 in today’s dollars. He also got paid to represent the client when the city sued to get rid of the contract.

If you think Madigan has put this sort of behavior behind him, you’d be wrong.

In 2014, the Sun-Times found Madigan’s law firm saved a group including Mesirow Financial Services more than $1.7 million in property taxes. That company employs Madigan’s son and manages state pension funds.

Reuters found that at least six financial institutions with ties to Illinois pension systems were clients of Madigan & Getzendanner last year. Together, they donated more than $100,000 to the speaker or his daughter, Attorney General Lisa Madigan, since 2000.

Madigan lacks just as much respect for Illinoisans who expect honest public service as he lacks solutions for the state’s property-tax crisis

If history is any judge, Madigan’s political career is built not on bold ideas, but the betterment of his own bottom line.

A solution to the property tax problem

Illinois’ elected officials should be barred from practicing property tax law. This is a commonsense ethics reform that would bring greater integrity to the property tax system. By cashing in on political connections, Madigan’s law firm and others like it have eroded trust in state and local government for decades.

More importantly, lawmakers should be taking bold action to address the nation’s highest property taxes.

As part of “Budget Solutions 2018,” the Illinois Policy Institute is proposing comprehensive property tax reform that includes a five-year freeze, curbs wasteful spending habits at the local level, and provides local governments relief from costly state mandates.

This stands in sharp contrast to the weak-tea reform proposed as part of the Illinois Senate’s “grand bargain.” The Senate proposal offers a two-year property tax freeze, but doesn’t offer any substantial reforms that would put an end to punishingly high property tax bills in the long term. The Senate plan is also tied to a multibillion-dollar income tax increase, while the Institute’s plan balances the budget without tax hikes.

Perhaps most importantly, Senate Bill 13 does nothing to ensure local governments do not immediately take more money from residents in the form of other tax or fee hikes. Nor does SB 13 prevent property taxes from rising rapidly after the two-year freeze.

The Institute’s plan addresses both of these concerns by requiring a referendum whenever local governments want to raise taxes or fees, and tying any future increase in property taxes to the growth in the state’s median income.

Illinois taxpayers deserve security in their homes. They shouldn’t be dreading the next big hike in their property tax bill.

But whether Madigan is on board with the any form of property tax relief remains to be seen. For now, he’ll continue to make money on the status quo.

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