Governor Rauner Grabs the Reins with Executive Orders

It remains to be seen how well Governor Rauner will be able to work with the General Assembly. Illinois' moribund fiscal condition is in need of a course correction, and that won't happen without a series of politically tough votes. Republicans and Democrats will have to cooperate by putting votes on difficult legislation, and Governor Rauner will probably need to be the fulcrum between both parties to make it happen. 

In the meantime, the Governor is using his Executive Order authority to begin shaping policy where he can act alone. He has thus far signed the following three Executive Orders:

Executive Order to Address the State's Fiscal Crisis
This Order directs the state agencies to identify and halt non-essential spending. This includes contracts and grants, with certain allowable exceptions. It also forbids any expenditures tied to supplemental funding. Vehicle purchases and out-of-state travel are also prohibited unless authorized following a review. In-state travel by state agency personnel is restricted and subject to approval. Surplus property must be identified and sold at auction and agencies are encouraged to adopt energy conservation practices to cut costs. 

Per David Ormsby at the Illinois Observer, the Director of the Governor's Office of Management and Budget has issued compliance guidelines for determining appropriate versus prohibited spending with respect to this Executive Order.

Executive Order to Ensure Ethical and Responsive Government
This Order imposes a one-year revolving door ban on lobbying state agencies, restricts gifts to state employees, requires state employees to file a statement of economic interest, and instructs the Governor's Office of Management and Budget (GOMB) to review employment contracts. This includes employment contracts entered into by units of local government, universities, boards, and commissions.

Executive Order Requiring Transparency Within State and Local Government 
This Order requires the posting of all political hires on the Illinois Transparency and Accountability Portal (ITAP) operated by the Department of Central Management Services (CMS). The Order also calls on the state to assist local governments in complying with the employment postings required under the ITAP law (this law was approved a few years ago, but implementation of the system was delayed for some time).

These are important reforms that set a new tone for the state bureaucracy while sending a signal to outside observers that things are changing in Illinois government. The Executive Orders are also a good way to build some momentum toward the ominous negotiations and votes that will be required for the more consequential and structural reforms that lay ahead. 

Rauner Administration Begins to Take Shape

Governor-elect Bruce Rauner will assume office tomorrow and several of his top staff and agency appointments were announced on Saturday. You can view a list of his key staff here and some of his agency/board appointments here.

At least two of his picks have been praised by Democrats: 

Governor-elect Rauner's choice to Chair the Illinois State Board of Education, pastor and former State Senator James Meeks, appears to be consuming most of the press coverage oxygen. Reverend Meeks is an African-American pastor of one of the largest churches in the state, a Rauner supporter, and a well-known advocate for overhauling the public education system. The appointment appears to be raising some eyebrows:

He may be a well-known church leader on the Southside, but that doesn't merit questioning the pick on those grounds. Nor are his views concerning same-sex marriage pertinent to his new job:

Same-sex marriage is the law in Illinois and it's not like former-Senator Meeks is going to use his new position to undermine the law. Governor-elect Rauner has shown no indication that he wants to ignite big debates over social issues. In this respect he's more Mark Kirk than Pat Buchanan. 

Meeks has a public record on education reform and it can't be assumed that he desires to push an agenda that would blur the lines between church and state within the public education system. Nor would I expect that he would tamper with the curriculum to advance his personal viewpoints. 

What is most germane is his reputation as an outspoken critic of Illinois' public school system and the funding inequities believed to financially disadvantage some school districts relative to others. He also supports charter schools, long-derided by teachers' unions. The funding plan supported by former-Senator Meeks is a more appropriate consideration about what his appointment could portend, as indicated by the tweet below:

If there's any doubt about his education-reform bona fides and desire to buck the public education system, this next tweet should cast them aside and provide an indication of why Meeks, in addition to the bipartisan nature of the appointment, was an attractive choice for Governor-elect Rauner and why he may come under attack:

What is Chicago Teacher Solidarity? From it's website:

A diverse coalition of local community organizations, labor activists, parents and students who support the Chicago Teachers Union in their fight for quality education.

There you have it. Meeks is a threat to the status quo, whose defenders will attempt to undermine him every step of the way.

How Bad is Illinois' Pension and Retiree Health Care Funding Problem?

It's pretty bad. I wanted to use this post to call attention to the state's retirement funding albatross, as well as the funding obligations that are essentially an anchor strapped to Illinois' cities, villages, and towns. The common denominator, of course, is the Illinois taxpayer.

First, let's look at the state's funding problem courtesy of a report prepared by J.P. Morgan that was published last June. The purpose of the report was to evaluate the ability of states to finance the pension and health insurance obligations owed to government employees. I lifted a couple of charts from the report that tell the essential story.

Let's start with a look at where Illinois' ranks among the states with respect to the funded ratio of its pension systems:

Illinois has the worst-funded pension system among the states. But that's not a surprise. We knew that. This next chart is the real eye-opener. Keep in mind that it combines both pension and retiree health care costs to derive the percentage of state revenues required to properly service debt:

The blue bars represent what the states are presently paying, expressed as a percentage of total state revenue, to fund their annual pension obligations. The orange bars depict what they should actually be paying based on what J.P. Morgan identifies as sound actuarial practices (referenced in the graph). Based upon this analysis, Illinois would need to allocate about 40% of total revenue collections per year to properly fund pension and retiree health care costs. 

This type of financial commitment would necessitate a huge tax increase on Illinois residents, exceedingly painful budget cuts, or a combination of both options. That's why it's so imperative to meaningfully reduce the long-term funding obligations presented by Illinois defined benefit pension plans.  

Public employee unions oppose these reductions and, so far, a circuit court judge has sided with their arguments against the reductions within SB 1.  A lawsuit has recently been filed to negate reforms enacted to address the rising costs confronting Chicago's Municipal Employees' Annuity and Benefit Fund. The Illinois State Supreme Court has already ruled that requiring state retirees to pay premiums toward their health insurance benefits is unconstitutional. 

The courts seem to be affirming that the Illinois Constitution essentially establishes a financial fantasy land for public employees.

The mantra of public employee unions is that the present benefits were promised and shouldn't be reduced. This, of course, is code for "just increase taxes on Illinoisans." Is it realistic to think that Illinois will tax its way out of these financial problems? No way.  Revenue enhancements might be part of a solution, but so will spending cuts and, hopefully, sensible pension reforms. 

And we ought not forget that Illinois cities, villages, and towns are facing a pension crisis of their own. The Illinois Policy Institute (IPI) published an analysis that used ten metrics to evaluate the financial condition of municipal pension plans. Each city was provided a cumulative score along with a risk designation. Here are the "top 20" cities per the IPI analysis:

The IPI analysis includes a rank for other Illinois cites as well. Probably the most significant finding in the study is that only three cities were considered to be in "critical" condition in 2003. This number grew to seventeen by 2012. Illinois cities are continuing to slide into the pension funding danger zone. 

Illinois has significant legacy costs that must be addressed. Governor-elect Rauner knows this and wants to move aggressively to restore Illinois' finances and place the state on a sound financial footing. The biggest hurdle that could upend a long-term solution is politics. The Illinois General Assembly will either rise to the occasion,  or content itself with simply managing Illinois' decline. 

Video: Bruce Rauner Addresses BGA Event

I attended the "Bruce, Budget Blues, and BGA" luncheon hosted by the Better Government Association on Tuesday. The event featured a presentation by Governor-elect Bruce Rauner and was held at the Sangamo Club in downtown Springfield. 

I was able to record the "Q and A" portion at the end, which begins with BGA Executive Director Andy Shaw asking Governor-elect Rauner for his thoughts on the vacancy in the Comptroller's Office and then goes on to cover several other issues. The video is 20 minutes long.

(Dis)appointments

Those hoping for a smooth transition from Governor Quinn to Governor Rauner were resoundingly disabused of that hope when Governor Quinn opted to make 51 appointments to boards and commissions on his way out the door. 

That incumbent Governors have the power to make these appointments is beyond dispute. They are, after all, empowered to appoint qualified individuals to open positions. But this is a case where the question of "should Governor Quinn make the appointments" should have taken precedence over "can Governor Quinn make the appointments." 

At issue is that the term of many of these appointees will extend beyond the conclusion of a Rauner first term. In the interest of clean government that respects the outcome of elections and the orderly transfer of power, these appointments should belong to Governor-elect Rauner. Instead, the well has been poisoned with the perception that the outgoing administration is simply looking to reward friends and allies while tying the hands of the incoming administration where possible.

These kinds of appointments are not a shocking development. Last minute appointments have been a part of American politics since, in what became known as the "midnight appointments," outgoing President John Adams attempted to entrench his Federalist views by using his last day in office to appoint numerous Federalist judges. Needless to say, incoming President Thomas Jefferson was not very happy about it. 

Historical practice aside, these types of appointments will always be disappointing for those of us on both sides of the aisle that desperately want to see our government shed past practices and take the high road.

Honoring Comptroller Judy Baar Topinka

Illinois lost an irrepressible political figure with the passing of Comptroller Judy Baar Topinka on Wednesday. When I think about Comptroller Topinka, I automatically think about her straight-talking, no-nonsense, "here I am take me or leave me" persona. The Tribune editorial appropriately captured this dimension of her personality in the following paragraphs:

The straight-shooting ex-newspaper reporter never lost her penchant for directness, a lost art in the modern frenzy of carefully messaged politics. You couldn’t “message” Judy, “package” Judy, “image” Judy. 

More than a decade ago, when then-Gov. George Ryan and legislative leaders considered short-term borrowing to close a budget gap, she rejected the idea: “You just can’t spend like a bunch of drunken sailors.” 

When she ran for governor in 2006, she referred to her primary opponents as “morons.”

When she ran for comptroller in 2010, she described the post as “a watchdog, whistle-blowing, calling-out kind of job” and added, “I'm perfect for that.”

Indeed she was. And that was Judy Baar Topinka. I wish her family and friends comfort as they grieve her passing. The Illinois political scene has lost a true, straight-talking trailblazer. We need more like her.

Picture from Chicago Tribune.

Minimum Wage Increase Stalled

Legislation to increase the minimum wage was upended when it became apparent that the House didn't have the necessary votes to advance a bill. Some contend that the passage of an ordinance increasing the minimum wage to $13 in Chicago undermined support for a statewide minimum wage bill among Chicago legislators who, for political reasons, didn't want to vote for an increase that would be less than the $13 Chicago wage.  

Still, supporters of a statewide minimum wage increase definitely made themselves heard at the Statehouse today with chants of "raise the wage." 

These kinds of rallies are valuable in that they make activists feel engaged, but they rarely affect the ultimate outcome of legislation. And that ended up being the case here.

Still, the Senate decided to move forward with a bill to increase the minimum wage to $11 an hour in what is best described as a largely symbolic gesture considering that the House had already adjourned "Sine Die."  This means that the House will not reconvene until the 99th General Assembly is sworn into office and is therefore unable to vote on HB 4733. An exception would be if the House convened a special session, but that's unlikely to occur. 

In addition to increasing the minimum wage, HB 4733 included a home rule preemption to prevent Chicago from increasing its minimum wage above $13 an hour. 

HB 4733, which passed 39-18-1, was sponsored by Senator Kimberly Lightford (D-Westchester). Senator Lightford has worked tirelessly on this issue for quite some time and was obviously pleased to pass the bill out of the Senate. 

The only problem was that it had no place to go.