Phases of deregulation

This week the Illinois Commerce Commission approved Commonwealth Edison’s and Ameren Illinois’ plans for phasing in higher electricity rates, which have been frozen for nearly 10 years by a state law that expires in about a week. Essentially, residential customers, small businesses and municipalities will get to decide whether a) they want to pay the full increase each month come January 2 or b) pay smaller increases over three years with a balloon interest payment at the end. Businesses and other major electricity users not eligible for the phase-in will have to pay even higher increases or find another power supplier.

Lt. Gov. Pat Quinn doesn’t like the phase-in plans. “They’re trying to put perfume on a skunk,” he said Wednesday in a phone interview. “The concept of requiring customers to pay interest down the road — we’re going to end up having payday loan stores right next to the electric company.”

He supports legislation that has the backing of House Speaker Michael Madigan that calls for a three-year rate freeze, but the measure failed the House last month. Madigan said he expected it to gain approval in January. Yet, it’s unlikely a rate freeze would gain necessary approval in the Senate.

That means ComEd and Ameren will have to adjust to paying more for buying and distributing electricity. And customers, especially residents and businesses who use Ameren’s electricity, will have to adjust to increased monthly rates.

The Illinois Commerce Commission got to this point by trying to strike a balance between allowing utilities to collect the money they need to survive and protecting consumers from high prices and unreliable service, according to Kevin Wright, one of the five commissioners. He spoke during Wednesday’s public utility hearing in Chicago that was heard over teleconference in Springfield.

Commissioner Erin O’Connell-Diaz agreed. “It’s not a 100 percent win for everyone,” she said. “I think in these types of situations, everyone should walk away a little unhappy.”

But the tough decisions aren’t over. Come spring 2008, the commission will have to coordinate another process so utilities can start buying a three-year power supply every year, according to Harry Stoller, director of the commission’s energy division.

While the commission staff investigates the next phase of this new system, the question remains whether the process will actually spur competition and increase consumer choice. In fact, Stoller said one who speaks of a deregulated electricity system speaks of a “fictional state of affairs that will never be reached.”

Crossfire

Shots are being fired across the battlefield prior to legislators returning to Springfield. Senate President Emil Jones Jr. sent his own memo defending legislation that would phase in electricity rate increases in January. His fact sheet rejects House Speaker Michael Madigan’s interpretation of House Bill 2197 (see previous blog 12/13/06). Jones denies the phase-in proposal would be bad for consumers. Instead, he says, the plan would encourage competition, include Illinois Commerce Commission oversight, protect consumers from having to pay interest on the deferred amounts, and create a revenue source for utilities to repay the bonds that would cover ongoing costs or reduce debt.

Watch Illinois Issues magazine for more context.

More electrifying debate

House Speaker Michael Madigan is governing by letter, again. This time, he’s lobbying against a proposal to phase in electricity rate increases scheduled to start in January. It’s not just any proposal. It’s one supported by Senate President Emil Jones Jr. and House Minority Leader Tom Cross, as well as Commonwealth Edison, the company serving most northern Illinois customers.

In a letter starting, “Dear Reporter,” Madigan says he intends to continue trying to pass legislation that “protects consumers and allows the electric monopolies serving Illinois to earn fair profits.” His emphasis on “fair” is consistent with his veto session comments that he takes the utilities’ warnings of financial ruin “with a grain of salt.”

Madigan then attached a memo (1 and 2) to all House and Senate members with some details that can be summarized by this argument: If signed into law, the phase-in proposal approved by the Senate would actually be a better deal for utilities and worse deal for consumers than if the General Assembly took no action and let the Illinois Commerce Commission decide how the new rates would be carried out. “The bill has been presented as a compromise measure and a better deal for consumers,” he wrote. “It is neither.”

Something’s not adding up here. While ComEd supported the phase-in approved by the Senate, Ameren Illinois CEO Scott Cissel opposed it and said the company prefers the proposals filed with the Illinois Commerce Commission.

The company still opposes House Bill 2197, according to spokesman Leigh Morris. He didn’t know of Madigan’s memo and letters Wednesday night but said the company didn’t believe the Senate version of a phase-in would be a good deal for Ameren customers. In fact, he said the company filed a new proposal with the ICC that would 1) allow the company to charge a “carrying fee” associated with the phase in; 2) allow customers to opt into a phase-in plan, which would carry a 3.25 percent interest rate; 3) allow schools, municipalities and small businesses to opt in; 4) allow the utilities to opt out of the plan if the credit rating slipped to junk bond status; and 5) designate $15 million of non-consumer costs to energy assistance and renewable energy programs.

Ameren asked the commission to review the newest proposal before the end of the year. Lawmakers are scheduled to reconvene in Springfield a week later, when they’ll rehash the debate, again.

To me, the biggest question in this complicated, easily skewed debate remains: What power should the ICC have in regulating electricity rates?

Universal health care?

A plan to mandate health insurance for all Illinois residents, and, yes, that means a mandate on businesses to offer health benefits to employees, is sure to catch attention in the upcoming legislative session. Today’s stories (here and here) talk about a plan the state’s Adequate Health Care Task Force came up with to address a growing problem — the cost of caring for the uninsured.

You can read more details (scroll to the bottom on the page) in documents prepared for the task force’s December 7 meeting, but to gain even more context, check Illinois Issues’ June feature, “Alternative medicine.” Massachusetts enacted a similar law this summer, but that plan might not be very easy to translate to Illinois’ political and business climate. The 95th General Assembly would have to find a balance between businesses, hospitals, insurance industries and private citizens, not to mention public aid dollars.

Watch Illinois Issues for more anlysis in the next few months.

Waiting games

Gov. Rod Blagojevich got one step closer to enacting a recent campaign promise, but his administration still hasn't fulfilled two promises he made a year ago. Services for college students and veterans are waiting to be paid, as a result.

The Senate approved a $1 minimum wage increase 33 to 21 with 3 voting present. The measure would increase the minimum wage to $7.50, 25 cents more than a federal increase being debated in Congress. If approved by the Illinois House, the state minimum wage also would be to inflation from then on.

House approval is not a guarantee. House Speaker Michael Madigan said Tuesday afternoon that he hadn’t seen the bill, yet. “I’ve always supported increases in minimum wage. I’ve got a 35-year record of supporting those increases. I’m simply saying that we’re not certain what the proposal is.”

One sticky point in the Senate debate focused on whether businesses would still have the ability to pay part-time workers younger than 18 less than the minimum wage (50 cents less). Under Sen. Kimberly Lightford’s measure, all workers of all ages would be guaranteed $7.50.

While a minimum wage came closer to an increase, the governor’s first-term promises of giving college tuition grants and veterans health-care services are under scrutiny.

College tuition credits
Earlier Wednesday, a joint House committee heard from Michael Luke of the Illinois attorney general’s office about the sale of the state’s student loan portfolio. While the attorney general’s office was studying whether the Illinois Student Assistance Commission needed legislative approval to sell all of the nearly $4 billion asset, Luke said the commission’s staff and the governor’s legal staff were uncooperative in providing information.

That caused the attorney general’s office to issue an opinion based on limited information.

That drew criticism from some Republican committee members and raised questions about the governor’s new MAP Plus program. Last spring, the General Assembly designated $34.4 million to offer $250 a semester to students from middle-income families, but the commission does not yet have the money to pay for the new program and other initiatives contingent on the sale of the student loan portfolio. Commission chairman Donald McNeil said the process of selling, refinancing or partnering with private companies is two months behind, but the commission is confident the money will be there when it comes time to reimburse the 40 institutions that already credited the $250 credits to eligible students.

Veterans’ Cash
At the same time across the street, the Department of Veterans’ Affairs director received an earful about the delay of distributing $3 million made from a scratch-off lottery game. Programs for veterans, including $125,000 needed to open a shelter for homeless veterans, have been waiting. (I had to listen to a recording of the committee hearing because this was all happening simultaneously.)

The governor’s program to provide health care to some Illinois veterans is underused, so far. Rep. Linda Chapa LaVia, an Aurora Democrat and military veteran, said only 14 veterans were enrolled in the governor’s Veterans’ Care program. She also said the department has not yet defined how it would split up the $3 million generated by Lt. Gov. Pat Quinn’s scratch-off lottery game, Veterans’ Cash. It’s supposed to help the state provide services for post-traumatic stress disorder, homelessness, long-term medical care and short-term medical care.

The Midwest Shelter for Homeless Veterans in Lombard, for example, is $90,000 short of the amount needed to open its doors, said Bob Adams, co-chair of the shelter’s board of directors. His co-chair, Dirk Enger, said, “The biggest problem is a lack of communication. Somewhere the ball has been dropped.”

Department of Veterans’ Affairs Director Roy Dolgos said his staff has been working closely with the legislative Joint Committee on Administrative Rules since August to draft rules for the governor's program and for distributing the money, but it’s taken so long because the process is new to the department and that they didn't want to mess it up.

More to come
The 94th General Assembly’s veto session has spread between downtown Springfield and the state Capitol a few blocks away because of renovations being done in the House and Senate chambers. Action will continue Thursday and then break for Thanksgiving before reconvening November 28. Still hanging out there are 1) a three-year freeze on electricity rates and 2) a pay raise for Illinois senators.

What this means

A lot of analysis will be kicked around as we try to understand what the November 7 election results mean for the future of this state, but here’s a starting point:

• Democrats swept the constitutional offices and will maintain majorities in the Illinois House and Senate, but Senate Majority Leader Emil Jones Jr. might have taken the cake. His 31 Democrats and one Independent-turned-Democrat could have gained enough seats to secure a “super majority” of 36, the number of votes needed to override the governor’s vetoes and to approve some major items, such as the long-awaited school and road construction plans. But that doesn’t mean those major items will fly through the House, which is unlikely to gain enough seats to secure a three-fifths majority.

• Update: Key state legislative races that we covered in September proved to be tight. In the northwest suburbs of Chicago, Democrat Fred Crespo has a lead over incumbent Terry Parke, a Hoffman Estates Republican who has served the area for more than two decades. Not all precincts had reported the last I checked. Downstate around Clinton, Marion and Jefferson counties, Democratic incumbent Kurt Granberg of Carlyle could edge out his repeat Republican opponent, John Cavaletto of Salem. But the race has yet to be called, with the latest results showing Granberg with 50 percent to Cavaletto’s 49 percent. That’s a difference of about 100 votes.

• A county-by-county map of unofficial AP results of the Illinois governors' race shows Republican Judy Baar Topinka won counties spanning the middle third of the state, while Blagojevich won many counties in deep southern and some western Illinois. He swept Lake, Cook and Will counties lining Lake Michigan. Green Party candidate Rich Whitney secured 10 percent of the vote statewide, ranging from 4 percent in counties surrounding St. Louis (he received 5 percent in many western Illinois counties) to 25 percent in Jackson County, where he lives in Carbondale. He received double digits in many central Illinois counties, but not as many in deep southern Illinois.

New term, same quotes

Gov. Rod Blagojevich’s speech, as seen live on the Web, sounded like many other speeches I’ve heard him give. He recited his favorite anecdotes, right down to being the son of an immigrant steelworker. He said the guiding principle of his administration is getting things done for people and trying to make sure things are better for the next generation.

He even repeated the same quote from his Monday campaign stop at Springfield’s airport. He cited the Rudyard Kipling poem, “If,” in the closing stanza. “If you can talk with crowds and keep your virtue, or walk with kings, nor lose the common touch, if neither foes nor loving friends can hurt you, if all men count with you, but none too much. If you can fill the unforgiving minute with 60 seconds’ worth of distance run, yours is the earth and everything that’s in it, and which is more you’ll be a man, my son.”

The only difference is that Monday, he asked his supporters to give him one more minute so he could continue to build on progress. Now he’s got four more years. We’ll be watching for that progress every minute he's in office.

Blame it on the money

Former Gov. Jim Edgar, who can speak as a Republican Party member as well as a political analyst, said Gov. Rod Blagojevich won by having the advantage of more campaign money.

“To put on a successful campaign, we’re going to have to have adequate resources, not just a good candidate. I thought Judy Baar Topinka was a good candidate, but she didn’t have the financial help she needed.”

He said he was disappointed with the fund-raising from national and past Topinka supporters, which contributed to her delayed response to negative ads aired by the governor’s camp.

By Edgar’s count, Blagojevich outspent Topinka 5-to-1 and ran negative commercials, and unfortunately, many people rely on them for candidate information. “You can look at the numbers, and, I know people don’t like negative commercials, but when [Blagojevich] went negative on Judy, that changed the outlook of this election.”

In short, he said by defining Topinka as “George Ryan’s treasurer” — even though she’s a three-term, independently elected constitutional officer — Blagojevich inoculated himself from the potentially damaging news stories about an ongoing federal investigation into his administration’s hiring and contracting practices.

"That's the way it goes"

Topinka, characteristic coffee cup in hand, addressed her supporters with a hoarse voice as she congratulated incumbent Gov. Rod Blagojevich for his win. “That’s the way it goes. God bless him.”

Flanked by her son Joe, she said she ran her campaign the right way. “How many people can say they’ve been in politics for 26 years and have nothing but wonderful things to show for it? I mean, it’s just great.”

In true Judy Baar Topinka style, she continued to joke about everything from her coffee cup to her two dogs. But then she got a little sentimental. “You know I’ve loved every minute of it, even the tough times. I’ve really tried to serve honorably. I think there’s something to be said for honor, and integrity and sticking up for what you believe in. And whatever you can say about campaigns, we did it the right way. And it was honorable.”

She left the stage and the room, and security guards escorted her out of sight. Comments from Gov. Jim Edgar to come.

Topinka's coming

Just as I was going to post my last entry, I heard that Topinka's on her way down. I'll report back as soon as she speaks.

What I was going to say:
While more precincts are reporting vote returns, not many more people have shown up at Topinka’s election-night party. One that stuck out was Ron Gidwitz, Topinka’s opponent in the March primary. He now supports Topinka.

A more developing story comes from Carbondale, where there’s likely a happy Green Party candidate for governor, Rich Whitney. One of his campers, Jessica Bradshaw, has been blogging and expressing her excitement as Whitney’s percentages reach double digits in some counties. Unofficial results, such as those reported by CBS 2, show Whitney with 10 percent with 4,514 of 11,692 precincts reporting. That’s more than the required percentage to relax the requirements for future Green Party candidates to get on the ballet.

Gov. Rod Blagojevich’s election-night headquarters has been covered by University of Illinois at Springfield’s WUIS, which reports the governor could appear within the hour.

Birkett's response

People are starting to trickle into the ballroom, and Topinka’s campaign staffers have been buzzing back and forth between the basement and upstairs.Topinka hasn’t yet been sighted.

Joe Birkett, Topinka’s running mate and candidate for lieutenant governor, came in for a brief statement. Surrounded by reporters, he said it’s way too early and irresponsible to call the race based on exit polls before some polls — Kane County — haven’t even closed. He said it could discourage people who haven’t voted from driving to cast their ballots.

His statements echoed a press release received through e-mail. In it, campaign spokesman John McGovern said, “Recent history has shown that exit polls are not always accurate. An early call of any election depresses voter turnout and disenfranchises voters. That is unfortunate for the democratic process.”

Topinka's first response

As expected, reporters crowded Judy Baar Topinka’s campaign spokesman, John McGovern, shortly after 7:30 p.m. And as expected, he said the campaign had no official comment, yet. But he did say the campaign feels Topinka finished very strongly, despite the “unprecedented” amount of money spent on negative advertising that “dumbed down the discourse of this election.”

At that point, the crowd of reporters had grown and consumed the back hallway as they tried to hear McGovern’s statement. All he said was that the campaign was working to get a more comprehensive response.

Winner already?

Here I am, ready to cover exciting election results from Judy Baar Topinka’s camp at the Swissotel-Chicago, and what happens as soon as I prepare to write my first blog? ABC 7 and CBS 2 in Chicago report Gov. Rod Blagojevich wins reelection over Topinka.

Most polls closed only minutes before at 7 p.m., save Kane County polls that the Daily Herald reported opened more than an hour late.

Topinka’s campaigners and staffers are on their cell phones. There’s still a lot of ballot counting and confirming that has to be done. And it will still be interesting to find out how vote returns panned out across the state. Stay tuned.

Election night

I will be live blogging from Republican Judy Baar Topinka’s Election Night Party in Chicago Tuesday. You’re welcome to join me as I observe the colorful scenes of Topinka’s campaign and follow online vote returns of races throughout the state.

Here’s to the last day of 2006 General Election campaign ads!

Breathe

Many journalists held their breaths today as they waited to hear how close a federal investigation of state contracting schemes would come to Gov. Rod Blagojevich. In a Chicago federal court building this afternoon, one of the governor’s appointees, Stuart Levine, pleaded guilty to mail fraud and money laundering.

Levine, a significant GOP fund-raiser, was appointed by former Gov. George Ryan to sit on two regulatory boards, the Teachers Retirement System, which pays the pensions of teachers outside of Chicago, and the Health Facilities Planning Board, which oversees construction projects of hospitals and other medical buildings. He was originally appointed to the planning board during Gov. Jim Edgar’s Administration and was reappointed by Ryan, then Blagojevich.

Levine’s plea agreement lays out details of an intricate scheme described in the indictment of Levine and Antoin “Tony” Rezko, Blagojevich's political advisor (see more on our news page). Levine worked with at least five others in schemes between 2001 and 2004.

The details are many, but, alas, reporters see only a slew of unnamed individuals — A through L and investment firms 1 through 9. By using code names, prosecutors haven’t yet tipped their hands on how close the schemes come to the governor’s inner circle.

Levine has been cooperating with the feds for months, which could reduce his sentence, and he won’t be sentenced until the ongoing investigation concludes.

There are a lot of people involved, and a lot more details will rain down before it’s all over. In short, reporters aren’t the only ones holding their breaths this fall.

For better or for worse

Technology has changed elections. Anyone with a high-speed Internet connection has access to a lot of information about political candidates. While broadband hasn’t been equally available in rural and urban areas, campaign organizers realize they can reach a new and younger crowd by using Web sites viewed by the Internet savvy.

For instance, Congressman John Shimkus posted his profile on Facebook, a “social directory” where friends share information with each other. But you would have to create a Facebook account to view his full profile that includes his contact information, educational and work information, interests and favorite music, upcoming events and a list of other people he accepts as “friends” in his network.

Barack Obama has a blog that links to his Facebook profile and to his video appearances, such as his CNN interview on “The Situation Room” posted on YouTube, another Web site that enables people to post and watch their own videos.

And there are many more political ads on YouTube, whether they were posted by the official campaign or by someone else. A search for Judy Baar Topinka or Rod Blagojevich each produce about three dozen links to TV ads and other related videos, some of which could be Joe Schmo’s personal commentary. And, like any Internet search, you may also get some other stuff not directly related to your inquiry and not exactly in good taste.

And buyer beware, politicians’ ads tend to spin the facts in their favor. Case in point, Blagojevich’s recent ad accuses Topinka, three-term state treasurer, of being connected to the last administration’s corruption because she was “George Ryan’s treasurer.” As recently said by Charlie Wheeler, director of the Public Affairs Reporting program at the University of Illinois at Springfield, the treasurer has no more to do with the legislative process than a Statehouse janitor does. And isn’t Topinka also Blagojevich’s treasurer?

But if a voter still wants to see what is being produced across the state, a person in northern Illinois can look up political ads being aired in the relatively hot state senate race in east central Illinois to replace Republican Sen. Rick Winkle. A commercial for Republican Judy Myers is posted targeting Democrat Michael Frerichs. He also posted his own TV ad on his Web site.

For those who are interested in how Illinois races compare to races in other states, there’s a new national resource online in the form of a daily blog. Most of Illinois’ political insiders know of Rich Miller’s Capitol Fax Blog, but it now has been added to The Hotline Political Network. While the site has room to grow, it’s designed to feature bloggers who are the unofficial sources for insider news and analysis from their respective states.

Obama mania

You couldn’t miss seeing Barack Obama’s face if you tried this week. He’s promoting his new book, The Audacity of Hope, landing him on the covers of Time, Men’s Vogue and Sojourners Christian magazine. And he was interviewed on the “Oprah Winfrey Show,” NBC’s “Today” show, and will appear tonight on CNN’s “Larry King Live.”

His media blitz crosses state lines. Two newspaper reporters for Lee Enterprises — Kurt Erickson in Springfield and our former Statehouse bureau chief, Patrick Guinane, who now works in Indianapolis — co-wrote an article about Obama Monday. While Obama campaigned in Indianapolis, his colleague, U.S. Sen. Dick Durbin, another Illinois Democrat, encouraged the junior senator to run for president in 2008. Durbin had stopped in Springfield to campaign for state treasurer candidate Alexi Giannoulias, but his thoughts on Obama dominated a few minutes of questioning.

This is all on the heels of numerous reporters following Obama’s every move in Africa and his campaign stops in Iowa last month. (A politician’s trip to Iowa typically breeds a presidential nomination). It’s all quite unbelievable. But out of all the media coverage, one quote sticks out.

Joe Kline’s Time article draws particular attention because it hints that Obama no longer rules out a run for president in 2008. Here’s an excerpt from when Kline asks whether Obama would consider a presidential bid after November 7: “‘When the election is over and my book tour is done, I will think about how I can be most useful to the country and how I can reconcile that with being a good dad and a good husband,’ he says carefully, and then adds, ‘I haven’t completely decided or unraveled that puzzle yet.’”

Kline picked up on Obama’s journey in piecing together that puzzle. He counts about 50 times Obama uses “on the other hand” in his new book. Voters may appreciate how on-the-other-hands show thought and consideration of opposing viewpoints, but Kline suggests voters might want to consider whether they would feel comfortable voting for a presidential candidate who teetered with on-the-other-hands before and after the election.

Obama is 45 years old. He has spent less than two years representing Illinois in the U.S. Senate. Yet, vocal supporters say his inexperience matters less than his ability to engage and unite a diverse electorate that’s yearning for a genuine leader.

In the Capitol press room Monday, Durbin said the time is now. “Those people who are arguing, ‘Well, wait four more years,’ do you think 2,000 more votes cast in the United States Senate are going to make you a better candidate for president? I’m not sure they will.”

Asked why he thinks Obama is the right person for the job, Durbin said, “I have found him to be approachable and very intelligent and trying to find ways to solve problems in practical terms. And I think people like that. They want to move beyond the mendacity of our current political scene and try to find someone who is going to reach out to the other side of the aisle and unite our country and unite the political scene to solve some problems. He has a way about him, and you know it if you’ve covered him and seen him. You just know that his style is a very engaging and comfortable style.”

He added that other senators were “dazzled” by Obama, who had already been launched into stardom by his keynote address at the 2004 Democratic National Convention before he was even elected. Yet, Obama didn’t fall into the “small boat full of titanic egos” that makes up the U.S. Senate, Durbin said, and the momentum behind Obama 2008 has continued to grow before it’s even started.

Rezko repercussions

In the aftermath of a long-rumored federal indictment of Antoin “Tony” Rezko this week (see our Illinois Issues news item), Gov. Rod Blagojevich is being asked to answer questions about his chief fundraiser, advisor and friend.

Federal prosecutors announced Rezko’s two indictments (see 1 and 2) Wednesday afternoon, detailing pay-to-pay schemes with at least five others who allegedly used their positions on public boards to pressure investment firms into paying illegal fees and making political contributions.

The governor responded in a press conference Wednesday night, streamed live on the Internet. Blagojevich said, “On a personal level, what is so disappointing to me and so surprising to me is that he would engage in a criminal conspiracy to personally enrich himself, and do that behind our backs and then repeatedly deceive us, deceive me, lie to us and reassure us that the rumors about him weren’t true.” He also said he would donate about $60,000 to $70,000 of Rezko’s direct campaign contributions to charity.

Meanwhile, candidates for Illinois' legislative seats and statewide offices are jumping at the chance to claim their righteousness this election season.

The Republican gubernatorial candidate, three-term state Treasurer Judy Baar Topinka, stopped by the Capitol Thursday with her running mate, DuPage County state’s attorney Joe Birkett, to say the governor should answer questions about the gifts he received from Rezko. She also touted her ethics plan.

“Things do not have to be this way,” Topinka said. “We can have good, honest government in Illinois. There’s no reason why Illinois has to be different from other states on that front. I just want to be a governor who will do a good job and do the right thing.”

Power play

Storyline The same day Gov. Rod Blagojevich walked in Chicago’s Columbus Day parade, a state House committee met for nearly six hours in Springfield and approved a measure to freeze electricity rates in Illinois for three years despite warnings that the state’s two largest utilities could face bankruptcy.

Background Rates have been frozen for a decade due to the 1997 state law that was intended to make the electric industry more competitive in buying electricity and distributing the energy to consumers at a fair price. Competition didn’t quite develop as expected, so the Illinois Commerce Commission and the utilities came up with a type of auction in which more than 20 companies bid to supply energy. The September auction resulted in a projected 22 percent rate increase, or about $13 more per month, for Commonwealth Edison’s residential customers in northern Illinois. Ameren’s residential customers south of Interstate-80 could expect a 45 percent to 55 percent rate increase, costing them about $25 to $35 more per month. Commercial and industrial customers could pay even more. House Speaker Michael Madigan urged the governor to call a special legislative session to approve a rate freeze.

SCENE 1 A last-minute rally of Commonwealth Edison employees formed Monday morning in the Capitol rotunda, kicking off a long day of seemingly staged events. The employees wore white T-shirts that said, “be emPOWERed” and held signs that read, “Keep the lights on with reliable power.”

SCENE 2 Two consecutive press conferences polarized the issue. First, a group called CORE, for Consumers Organized for Reliable Electricity, represented the utility industry and business interests. The group warned that ComEd customers, particularly those in low-income communities, would be negatively affected by a three-year rate freeze because utility companies would have to buy electricity at a lower price than they could pass on to customers, which utilities say would result in bankruptcy and an unstable electricity supply.
Then a group called CUB, the Citizens Utility Board, joined AARP and Lt. Gov. Pat Quinn to argue on behalf of residential customers. “The consumers of Illinois are not going to be fooled by powerful utility companies with scores of lobbyists and corporate executives who are paid more than King Midas and will get even more money if this so-called rate increase is allowed to proceed,” Quinn said. “This is really an epic battle in democracy in the Land of Lincoln.”

SCENE 3 The ComEd employees chanted “reliable power” as soon as the House Electric Utility Oversight Committee convened in the Capitol. Here’s a summary of nearly six hours of debate.
- The Illinois Attorney General’s Office said the utility companies would still make a profit if rates remained frozen, and the energy auction did not achieve the intent of the 1997 law to spur competition.
- Republican Rep. Ron Stephens of Greenville alleged the committee hearing was only called for the political benefit of two vulnerable Democrats up for reelection, Rep. Bob Flider of Mount Zion and Rep. Mike Smith of Canton, both substitutes on the committee Monday. Stephens voted present when the rate freeze proposal was called to a vote.
- ComEd Chief Executive Officer Frank Clark said the company’s $7.8 million in costs would not be recovered by $6.4 million in revenue if the rate freeze took effect. He said a rate freeze also would shatter the stability of the supply of electricity in Illinois.
- Ameren Illinois utilities president Scott Cisel said a rate freeze could cost his company $1 billion more per year than it would receive in revenue. The trickling down effect would start with an immediate layoff of 700 employees and all contractors, as well as delayed connections and customer service.
- Martin Cohen, Blagojevich’s director of consumer affairs, said the governor opposed the auction from the beginning because the 1997 law is ambiguous about how the Illinois Commerce Commission can restructure the way utilities buy and distribute electricity. Cohen said the word “auction” never appears in hundreds of pages of the 1997 law. (Cohen also is the former executive director of the Citizens Utility Board and Blagojevich’s first pick for chair of the Illinois Commerce Commission, which was denied by the Senate.)

SCENE 4 By a vote of 9 yes, 4 no and 1 present, the committee approved the measure to freeze electricity rates for at least three more years. It would need approval by both the House and Senate before January 1 to stop projected rate hikes from taking effect.

Finale After the long day, Speaker Madigan granted a rare five minutes to answer about a dozen questions from the press. “There’s solid evidence coming out of the committee that there’s bipartisan support for this, where both Democrats and Republicans in the committee voting for the extension of the rate freeze,” Madigan said. “And so I think the governor ought to take note of what happened in the committee today. He ought to call the special session.”

One potential hang up could be Senate President Emil Jones Jr.
Madigan: “I’ve talked to Sen. Jones, but I don’t have any commitments from Sen. Jones.”

Ag wish list

The recent E.coli outbreak in spinach and last year’s string of hurricanes indicates our vulnerability to disease and disaster. Now states want the federal government to better address food safety standards and preparedness. Illinois and other farm states also want the feds to help farmers grow more fruits and vegetables, fund research and development of renewable fuels and create a standard disaster response program. Illinois’ Department of Agriculture Director Chuck Hartke this week provided a taste of Illinois’ wish list for agriculture, including the alternative crops we discuss in-depth in our October issue (due out the first week of October). Hartke recently attended a weeklong meeting of the National Association of State Departments of Agriculture in Norfolk, Va. Here are a few talking points:

Ethanol “Ethanol is just exploding in the Midwest, especially those states that produce corn and soybeans,” Hartke said. Illinois has six ethanol plants online, one more coming soon. There also are another 50 or so plants in various stages of development, from studying the feasibility to filing their permits to build. While Hartke said not all of the “wannabes” will work out, he gave an optimistic outlook: “Within two years, we’ll be producing 2.8 billion gallons of ethanol and utilizing 1 billion bushels of Illinois corn, which is half of what we have.”

At the same time, Illinois has dipped from No. 1 to No. 3 in the gallons of ethanol produced a year. But there’s a reason for that. Hartke said Iowa, Nebraska, North Dakota and South Dakota saw the light a year-and-a-half ago and went gung ho to develop ethanol plants while the market was hot and the corn was cheap. They’re also big cattle states, meaning they can feed a lot of animals with their corn. Illinois, on the other hand, has more corn and fewer cattle. That means farmers have to spend more money and energy to dry the grain before they can send it down the Mississippi River to other states or countries. “I don’t think we’re behind the eight ball,” Hartke said. “We have a lot more corn, and at some point in time, we will be able to produce more corn than those plants are willing to buy and pay for.”

Biomass While corn ethanol benefits Illinois’ economy and environment, it’s not the magic bullet. “We know that if you took all the corn and we planted every acre of corn in the United States, we would not have enough to be energy independent,” Hartke said. “And so we’re going to have to look at other sources that would produce more ethanol per acre and still conserve our soil and our land as we now know it.” That includes experimenting with more switchgrass, miscanthus and other plants that form biomass, which can turn into clean-burning, renewable fuel. “We know it’s a possibility. We can do it in the labs, but the technology and the enzymes for mass production of that is just not there yet.” That’s where the federal government’s research and development would come in. Read more in our October issue.

Farm Bill Congress is considering an extension of the Farm Bill beyond 2007. Hartke said he supported an extension in Illinois, at least. A wish list could include more assistance for conservation programs, standard disaster insurance coverage for all crops and support for young farmers to get into the agriculture business.

Pension promises

In a rare move, members of a congressional subcommittee came to the Illinois Capitol Wednesday to learn about the security of the state’s public employee pensions.

The backdrop to the hearing was President George Bush’s decision to sign the Pension Protection Act of 2006, an attempt to halt the nationwide problem of unfulfilled pension promises in the private sector. U.S. Republican Reps. Judy Biggert of Hinsdale and John Kline of Minnesota conducted a hearing for the U.S. House Subcommittee on Employer-Employee Relations. They listened to Illinois officials paint a pretty rosy picture of chronically underfunded pension systems.

Biggert said the hearing was conducted because the public sector is just as troubled as the private sector. In her written testimony, she said four out of five public pension systems in the nation are underfunded collectively by hundreds of billions of dollars. Worst of all is Illinois.

“I’m troubled to say that my home state of Illinois manages a plan for its workers and retirees that is underfunded by $38 billion, making it the worst-funded state pension plan in the nation,” she said.

Interestingly, Biggert served in the Illinois House in 1995 when the legislature passed a law to put Illinois on a gradual track to fully fund the five pension systems by 2045.

Things changed under Gov. Rod Blagojevich’s Administration when the General Assembly allowed the governor to float $10 billion in pension obligation bonds and pay the required amount in 2003 and 2004. Then they yanked $2.3 billion in state contributions in fiscal years ’06 and ’07. (See more details in the August 2006 report of the legislative Commission on Government Forecasting and Accountability.)

John Filan, Blagojevich’s budget director, called the 1995 law a “conscious plan to underfund the pensions for 40 years.”

“What everyone is ignoring is we’re ahead of their funding schedule,” Filan said after the hearing. “If we followed the 1995 funding schedule to a penny, we’d be far worse off. We are 60 percent funded. They wanted 52 percent funded. It’s simple arithmetic.”

Simple arithmetic? Hardly. But he was right when he said the state has had the same problem for 30 years, which is why he thought the timing of this congressional hearing was particularly interesting.

“I think it is more than coincidental, all the sudden, out of the blue, after many years, there’s this hearing in the middle of an election, right here in Springfield. It is what it is. It’s an obvious question that you’re asking. I think the timing is interesting.”

Biggert said there were no political motivations with this hearing. She also said Wednesday’s testimony showed some people don’t think there’s a problem in Illinois and that it is her committee’s job to sort that out and look at other states. While she said the last resort would be the federal government stepping in to regulate the states’ pension systems, it is time to consider whether the new federal standards for the private sector could also apply to the public sector. (See a breakdown of the new federal law on this fact sheet.)

Valuable toll roads

What’s the difference between $1 billion and $24 billion? A lot, considering Gov. Rod Blagojevich wants to put that cash into public education and other services if he wins re-election.

The governor proposed to raise that cash by leasing part or all of the Illinois Tollway system to private investors. The estimated value of such a lease was presented at a public hearing Tuesday.

The state’s bipartisan legislative Commission on Government Forecasting and Accountability paid Credit Suisse investment banking firm $30,000 to analyze the value of the state tollway system and how the state could maximize that value.

Sen. Jeff Schoenberg, an Evanston Democrat and co-chairman of the commission, said last week that the decision to lease the tollway “should not be decided by a handful of investment bankers in Armani suits.”

That’s partially why Credit Suisse’s analysis, presented to the commission in Glen Ellyn, was broadcast live on the Internet Tuesday (I hope to create a link if the commission posts it on its Web site soon).

“Don’t think of it as Geraldo Rivera,” Schoenberg joked in the Capitol last week (at one of seven Senate committee hearings on public-private partnerships). “We have decided to weigh in on the side of greater transparency.”

The Credit Suisse estimate counts Illinois’ four toll highways — 274 miles’ worth — as well as the fiber optic network beneath it and the buildings on it.

But the estimate depends on many factors, some the state can control and some it cannot. One of the most volatile is the interest rate on borrowing by potential investors. “Time begins to matter here,” said Steve Doll, director of Credit Suisse. “If interest rates continue to rise, the value of the system could deteriorate with time.”

Other factors were not detailed in the estimate. Among them were possible labor agreements between the state and a private investor that could impact the investor’s confidence in the deal.

Interested companies might also come up with different numbers based on their own assumptions, such as how much traffic will increase over the next 75 years. Credit Suisse calculated that if traffic grows 1.5 percent annually, “the range of difference goes from a system value of $8.3 billion to $15.4 billion,” Doll said.

The potential value could also drastically change depending on the length of the agreement. Twenty-five years is too short for investors to realize a profit, while 75-year leases are more appealing to investors, Doll said.

In short, the tiniest change in any lease agreement could mean billions for the state.

Rep. Terry Parke, a Hoffman Estates Republican and co-chairman of the commission, said the numbers presented Tuesday sounded great, but they start to dwindle when the state considers requests from special interest groups.

Schoenberg got an earful a week ago from AFSCME Illinois Council 31, Business Leaders for Transportation in the Chicago area, the Mid-West Truckers Association, the Transportation for Illinois Coalition, and the Laborers International Union of North America Midwest Region. Each offered wish lists for safeguarding wages, benefits, retirement and training of current tollway employees. They also urged caution in deciding how the extra state revenue would be spent.

Schoenberg voiced his own wish list for any extra revenue. He said it should be set aside as a cushion for taxpayers if toll rates increase, with the rest spent on transportation and paying down the state’s unfunded pension liabilities for public employees.

But the governor and the General Assembly first have to decide whether leasing the tollway system would be good public policy for the people who drive on it. We could see as soon as this fall’s legislative session whether they’ll crack under pressure to get that big influx of cash before interest rates rise.

NOTE I’m officially back! We’ve taken a month-long blogging break. Summer has been busy, but fruitful.

FOIA facts

Illinois Attorney General Lisa Madigan’s office is looking into whether the governor’s office is responding appropriately to requests under the Freedom of Information Act, according to Cara Smith, the attorney general’s policy director and interim spokeswoman.

Early July headlines let it be known numerous state agencies received federal subpoenas for an investigation into hiring and contracting practices of Gov. Rod Blagojevich’s administration.

If anyone asks to see those subpoenas under FOIA, the state law does protect some records related to law enforcement if – emphasize “if” – disclosure would interfere with litigation or an ongoing criminal investigation. (See more “ifs” that qualify for exemptions on this FOIA fact sheet.)

Smith said 100 percent of the burden is on the public body, in this case the governor’s office, to spell out the legal basis for denying a request. They’d have to cite a specific provision within the act that protects the requested info from being released.

But the law also allows for part of the request to be granted. If releasing certain details could interfere with the investigation, the administration could still grant a copy with those items blacked out (or redacted, in legalese).

Again, the governor’s office would have to show that disclosing the blocked out portion would interfere with an ongoing investigation, said Don Craven, a Springfield attorney who concentrates on media law (and who represents 18 former Department of Transportation employees who filed suit in Sangamon County against the administration).

“I’m not willing to concede that the entire subpoena is not subject to disclosure under FOIA,” Craven said. “Knowing there are 17 subpoenas to the governor’s office is not going to interfere with anything.” (He said he pulled the No. 17 out of thin air as an example.)

“Even if they black out the details of what [the requestor is] asking for, they can produce the top half of the subpoena,” he said. Another such detail could be the date the subpoena was issued.

“If the governor is doing all that he can do, show us,” Craven said.

When in Rome

Or in this case, “When in Sparta.” Democratic Gov. Rod Blagojevich said Thursday the media like to polarize the state on issues. That was shortly after he highlighted the cultural differences between northern and southern Illinoisans, shooting basketball hoops in Chicago versus shooting quail in Sparta.

The Governor joined other state and local politicians in cutting the ribbon of a huge, $50-million World Shooting & Recreation Complex in Randolph County (the state’s share of the cost was $29 million, explaining why $29 million appears on all state press releases). The 1,600-acre complex was built on an old coalmine and boasts of trap fields, sporting clay courses, all terrain vehicle demonstration areas, archery courses and exhibition center with restaurant.

The theme of the complex was best stated by Sparta Mayor Randy Bertetto: It’s been a road long traveled. The effort started more than five years ago under Republican Gov. George Ryan’s administration and hit one GOP senator called “a bump” – a transition into a Democratic administration.

Republican Sen. Dave Luechtefeld of Okawville said the credit of ensuring the shooting complex remained a priority goes to Joel Brunsvold, retired director of the state Department of Natural Resources and 20-year member of the Illinois House. (He chaired the Illinois Legislative Sportsmen’s Caucus and the Illinois Democratic Sportsmen’s Alliance – Blagojevich joked that Brunsvold wore his nickname of “Gunsvold” as if it were a badge of honor.)

“It’s a little bit political in Illinois,” Brunsvold said during the ceremony. “When you get $29 million in bonds like this, there has to be a little blood [shed], a little yelling and screaming. Everybody had to get their piece of flesh.”

Everyone seemed pleased Thursday, patting each other on the back. Rep. Dan Reitz, a Steeleville Democrat, thanked fellow Democratic Reps. Brandon Phelps of Norris City, Tom Holbrook of Belleville, John Bradley of Marion and Democratic Sen. Gary Forby of Benton for their lobbying. And, Reitz said, he “definitely” needed to thank the governor.

Blagojevich said he has supported building the complex since before he became governor. From an economic development standpoint and out of respect for the cultural and traditional sport, it was good for the state. He compared it to why the Legislature approved using taxpayer dollars to renovate Soldier Field for the Chicago Bears and the former Comiskey Park for the Chicago White Sox. “Why would it be different then when you pursue a legitimate sport down here in southern Illinois?” Blagojevich said.

Some eyebrows rose, considering his stance on gun control. The governor’s State of the State speech in February highlighted his effort to ban assault weapons after a federal ban expired in 2004. Thirteen years earlier, the governor tried to increase the fee for FOID cardholders as a way to raise money for other services. Thursday, Blagojevich said the FOID card effort was “worse than youthful discretion.”

“I’ll be damned if we raise your FOID card, I’ll tell you that,” the governor said Thursday, repeating his pledge not to raise income or sales taxes if re-elected in November. Citing his own campaign commercial, he added, “I’m a little bit older, wiser and prouder today.”

The governor acknowledged regional differences, repeating his favorite anecdote about his immigrant father settling in Chicago and working as a steelworker. He grew up “shooting hoops” rather than shooting guns. “It’s a little bit different down here,” Blagojevich said. “A guy in my neighborhood who has a gun, that's a ‘gang banger,’ and he ain’t hunting deer or quail. That guy’s up to no good.”

He said if his dad would have settled in southern Illinois and worked as a coal miner, he would have grown up shooting quail just like “you all” (many standing audience members were Polo-shirted state and local government workers).

After the ceremony, Blagojevich said he hasn’t flip-flopped on gun control issues. “I think people get it. I think people recognize there’s a big difference between respecting and supporting the rights of law-abiding citizens to be hunters, to pursue their sport, whether it be trap shooting or skeet shooting or target practice, and whether or not gang bangers who are criminals ought to have assault weapons and AK-47s.”

Also after the ceremony, Luechtefeld said, “I think people know where the governor stands on gun issues. The groups that do care, we’ll let them know how strongly he is against guns. I’m just happy he was willing to support this project, and I think he made the decision that, politically, this was good to support. And that’s what he did.”

Headlines are good

Gov. Rod Blagojevich said Thursday afternoon that the recent headlines about investigations into state hiring practices are a good thing. “I think the headlines are great,” he said after cutting the ribbon of the new, $50-million World Shooting & Recreation complex in rural Sparta (more on this later). “I think what they suggest is that this is an administration that doesn’t tolerate wrongdoing. That it is, in fact, a different day in state government, that we have an inspector general that we created that didn’t exist before I was governor.”

In 2003, Blagojevich signed a measure creating an independent, nonpartisan inspector general for each constitutional officer, minus the lieutenant governor. The IG is intended to investigate whether employees or state contractors are violating ethics laws or involved in improper campaign financing, said David Morrison, deputy director of the Illinois Campaign for Political Reform. The IG would file complaints, investigate and recommend action against the violating employee or contractor. The more severe violations would be referred to the attorney general, then to an ethics commission for review.

What the law didn’t do was allow the IGs to tell anyone what they were investigating, nor did it require their reports to be public documents. Morrison said the Campaign for Political Reform argued there ought to be detailed, public reports when the inspectors figured out something was wrong. “We got shot down,” he said. “They were concerned about employees’ privacy rights. They didn’t want false complaints or complaints that didn’t amount to anything to become a public blemish to anyone.”

So far, Morrison said he knows of more than 3,300 complaints filed by the governor’s IG. (Some context: The governor’s office employs more than 57,000 people.) Morrison said of those 3,300 complaints, about 1,000 have been investigated, 700 have been closed and only one has been referred to the attorney general’s office. “There’s a whole lot going on," Morrison said. "We’re just not ever going to see it the way it’s structured now, unless it’s leaked.”

Disclosing the reports, he said, could let the public know whether the inspector generals are doing their jobs or whether they’re dismissing some complaints for legitimate reasons. He added more disclosure could spell out what behavior is OK and what behavior is not, reaffirming what good government looks like. “We have no reason to think that what they’re doing is inherently wrong,” he said, “but we have no reason to think what they’re doing is right.”

Going private, or not?

Gov. Rod Blagojevich is on the record saying he has no intentions of selling the state’s tollway system, a multibillion dollar idea Chicago and Indiana already pursued. At the same time, the state’s Commission on Government Forecasting and Accountability hired Credit Suisse (see links on the left) consulting firm to study the value of the Illinois Tollway. Sen. Jeff Schoenberg also scheduled four Senate committee hearings this summer, the next to be held in Springfield August 15. (You can listen to the May 26 and 31 meetings by clicking on the MP3 files to the left.)

While the governor says he has no intentions of selling the tollway, he has proposed selling another state asset, the Illinois Lottery, as a way to boost education funding (see my May 23 blog).

Want more context? Indiana reporter Pat Guinane explored the “Public to Private” trend in the June Illinois Issues. Charlie Wheeler will give another perspective, whether it’s fiscally responsible, in his column for the July/August issue.

Going public

Check out the House Democrats' Web site, and you’ll see three interesting links, all suggesting an emerging trend as House Speaker Michael Madigan releases information to the public in his own, interesting way. He’s usually rather tight-lipped when approached by reporters, but in the last few weeks, he’s written letters that he's also passed out to the press and posted on the Web site.

The newest post publishes the FY07 memorandums of understanding. MOUs basically formalize state money designated for so-called member initiatives, which are pet projects asked for by legislators. The memos are rather vague and don’t name any lawmakers, but they do give a dollar amount. Some initiatives fund pretty important services. For example, Rep. Larry McKeon, a Chicago Democrat, asked for $250,000 for the AIDS Foundation of Chicago to help pay for medications for low-income residents living with HIV and viral hepatitis, which is not currently covered by the state-federal AIDS Drug Assistance Programs. Other member initiatives may be a little more politically charged.

Recall the end of the spring session (see my May 2 blog), when the Latino Caucus gained leverage in budget negotiations by saying members would reject the budget unless their projects were funded. One example is $150,000 for Holy Cross Immaculate Heart of Mary Church for teen pregnancy programs.

In any case, funding everything from after-school programs to street improvements in Chicago’s 13th Ward (of which Speaker Madigan is the Democratic Committeeman) can’t hurt in an election year.

One more note: Construction projects account for the largest dollar amounts, most going to select Chicago colleges:
- Northwestern University: $8 million to finish building a new floor for regenerative medicine in the Robert H. Lurie Medical Research Center.
- DePaul University: $9 million to help build a new science center at the Lincoln Park campus.
- Loyola University Chicago: $8 million for “redevelopment” of the Mundelein Center Skyscraper Building.
- Harry S. Truman College: about $13.4 million to start construction on a new student services center, including a parking structure. “It’s not a done deal, yet,” said Truman spokesman Clifton Daniel. “We’re hopeful. We’re maybe even a little bit excited, but we’re still trying to work out where all the rest of the money is coming from.”

Horse subsidy hurdle

A few days after Gov. Rod Blagojevich signed a measure into law intending to help the state’s horse racing industry, the measure hit a hurdle. Chicago-area casinos filed a lawsuit in Will County Circuit Court arguing the new act is unconstitutional.

The act imposes a 3 percent tax on the profits of four riverboats: Empress Casino and Harrah’s Casino in Joliet, Hollywood Casino in Aurora and Grand Victoria Casino in Elgin. An estimated $36 million would go into a new “Horse-Racing Equity Trust Fund” to help improve and market the racetracks.

The complaint is filed against the Illinois Racing Board, which would administer the fund, and state Treasurer Judy Baar Topinka, who would transfer the money. The boats said they will pay the tax, but the complaint requests the money be held until the court rules whether the act is constitutional.

The casino companies gave three reasons they believe the act violates the state constitution: 1) Taxing one private industry to subsidize another ailing competing industry doesn’t count as using tax dollars for public purposes. 2) The tax is unfair because it only applies to four Chicago-area riverboats, not five others operating downstate. 3) The legislation was written to benefit particular racetrack owners with no legitimate state purpose.

Of course, the Illinois Casino Gaming Association supports the challenge. Executive Director Tom Swoik said he hasn't read the complaint, yet, but he believes the lawsuit sets a precedent and is symptomatic of a broader problem. “One of the reasons it was filed was because of the inequities the business community has in this state,” he said, adding some of the business fees the governor imposed earlier are still stuck in court.

Rep. Ruth Munson, an Elgin Republican who represents the district including the Grand Vic., said that’s exactly why she was one of the 37 reps who voted against the bill before it was sent to the governor. “What we’re saying to businesses is, if you’re very successful in the state of Illinois, we’re going to penalize you. And we’re going to give [the money] to a less successful industry, your competitor,” she said. And she warned the act would take profits away from the Grand Victoria Foundation, which wouldn't be able to donate as much to local not-for-profits.

Rep. Bob Molaro, the Chicago Democrat who sponsored the measure in the House, called from outside his doctor’s office after getting knee surgery this week. He said the lawsuit was expected, but what is unexpected is that the judges will overturn the legislation. First, he said the legislature already voted to impose a graduated wagering tax on riverboats, which is based on the casinos’ total income minus the amount they give out to winners. “Obviously, places like Elgin are paying a heck of lot more tax than places like Rock Island,” he said.

Second, Molaro said he expects the courts to take a narrow look at the issue. “[Judges] don’t get into what the business climate of the state should be,” he said. “That’s for the legislature to decide, not the courts.”

Side note Waiting for his doctor’s appointment, Molaro gave me some humble advice: “Don’t get old.”

Major education proposal

The governor announced a new, $6-billion education plan that could be paid for by selling or leasing the Illinois Lottery. The $10 billion in Lottery revenue could allow $4 billion for extra school spending over the next four years. By the governor's estimate, the remaining $6 billion could be saved and invested, earning interest that would ensure the state maintained its current contribution to education, about $650 million a year until 2025. About $1 billion would be invested in the first year. Randy Dunn, state superintendent, categorized the spending:

What it would do
1. School funding
- Increase the foundation level, the minimum amount schools spend on each student. The level for fiscal year 2007 that starts July 1 is $5,364, about $1,000 short of the amount recommended by the state’s Education Funding Advisory Board. Dunn said the new influx of cash could ensure, roughly, another $200 per student, still below the $6,405 recommendation.
- Increase special education funding and fully fund the mandated categoricals, which are targeted programs for specific groups of students

2. Schools’ physical structure
- Allot $1.5 billion for school construction projects, starting with projects on the five-year waiting list. Any money left over could relieve fast-growing districts or really outdated schools.
- Create “identity schools” that focus for example on arts, technology or agriculture
- Help school districts consolidate for efficiency and continuity in curriculum (it would give incentives to help school districts lower property taxes and form unit districts, and it would give “seed money” to districts so they don’t have to wait a year for state aid). Dunn said consolidating could be an alternative to the state taking over a struggling district.

3. Teacher quality
- Use performance-based pay for teachers who show progress in their students’ achievement (it could go beyond student test scores, Dunn said)
- Expand mentoring programs for teachers and administrators
- Give incentives for colleges that produce teachers

4. Learning materials
- Replace old textbooks, starting with the neediest schools
- Upgrade technology (including high-speed Internet access)
- Increase funding for school libraries
- Revive efforts to offer vocational education

5. Learning time
- Dedicate an additional $60 million for preschool and expanding all-day kindergarten
- Extend the school year for underperforming districts, allowing them to go from the current 180-day year to a 210-day year (intended to help prevent at-risk students from failing).
- Encourage parental involvement and tutoring programs

It would also create a long-term planning council.

What they said
Gov. Rod Blagojevich, a Chicago Democrat, said this plan would reverse 26 years of underfunding of schools and misplaced priorities. He called the plan historic, ambitious and a fundamental change in the way we fund our schools.

Senate President Emil Jones, another Chicago Democrat, supported the program and said Sen. Kimberly Lightford will hold public hearings to work out the details throughout the summer.

Sen. James Meeks is the Chicago Independent who tabled his idea to run for governor if Blagojevich didn’t come out with more education funding. He said he liked this plan because it increased accountability. He added that when he looked the governor straight in the eye and asked him whether all parts of the plan will unfold, Blagojevich told him, “I can’t do ‘em if I’m not re-elected.” Meeks said he got the hint and will ensure Blagojevich gets reelected so the “bold and ambitious plans” can win legislative approval.

Superintendent Dunn said, “The governor really has been the architect of this, based upon the (research) from us.” Regarding the foundation level, Dunn said this plan would do more than what the Education Funding Advisory Board wanted. He said rather than dumping money into general state aid, this approach would put money into more specific uses that have shown to improve student achievement. As far as what would happen after the first four years, Dunn said, “We can debate about the word 'permanent,' but things are only permanent as a given election cycle. And you don't know where things will go.” He added, “We've got to start making progress on these initiatives.” If the plan fails legislative approval? “We're going to see more of the same,” he said, and there’s “no real impetus” for change.

What’s next
There is no set plan for many of the proposals. They will have to be discussed in public hearings throughout the summer before being introduced as legislation in the fall veto session, scheduled to start November 14 (after elections).

You can listen here.
You can download a PowerPoint presentation here.

Expect some different perspectives in the following days.

More background

Last week I said most state positions are supposed to be protected from political influence, but the courts have ruled that some jobs, such as a governor’s spokesperson, can be based on party affiliation. For those of you who want a little more legal background, here’s some food for thought:

In 1990, the U.S. Supreme Court ruled in Rutan et al v. Republican Party of Illinois et al that hiring decisions involving low-level public employees may NOT be based on party affiliation or support. The suit dates back to November 1980, when then-Gov. James Thompson proclaimed a hiring freeze. No one was to be hired, fired or promoted without permission from the governor’s office. They looked at everything from whether the person voted in Republican primaries to whether the person had donated to or had the backing of the GOP. Five employees said politics impacted their employment. One was Cynthia Rutan, a rehabilitation counselor who said she had been denied promotions because she hadn’t worked for the Republican Party.

The court said the governor’s office crossed the line and violated the employees’ First Amendment rights. Referring to a 1976 case, Elrod v. Burns, the court said, “Political parties have already survived the substantial decline in patronage employment practices in this century,” and, “Second, patronage decidedly impairs the elective process by discouraging free political expression by public employees.”

In Elrod, Cook County Republicans holding jobs that were not protected by the state’s civil service code claimed they were fired when a Democratic sheriff came into office, which they said violated their rights under the First and Fourteenth Amendments. The state Supreme Court agreed.

The line of protection (saying you cannot hire, fire or promote based on political allegiance) seems to be moving lower and lower on the state’s staff list. Read more about patronage rulings at Illinois Issues’ Retrospective.

More stressors

This week has got to be a long one for the governor’s office, but the stressors likely started back in November when Gov. Rod Blagojevich’s administration was littered with federal subpoenas regarding its hiring practices. This week’s string of media reports (see here and here) has potentially poked deeper holes in the administration’s carefully construed public perception protection plan. The articles about his administration keeping a list of people who were referred to state jobs by political insiders can be confusing, so let’s consider some of the basics.

The governor’s administration is subject to a personnel code that spells out rules for hiring practices. Civil service jobs make up most of the positions, and there are 28 exceptions to the rules (scroll down to section 4c to see the exemptions). For example, Daniel Stralka, executive director of the Illinois Civil Service Commission, says university jobs are exempt because universities have their own set of rules. Similarly, private secretaries for agency directors are exempt from having to take an exam, one of the steps to ensure state employees are qualified for their positions (scroll down to section 4d in the personnel code for partial exemptions).

David Morrison, deputy director of the Illinois Campaign for Political Reform helped explain the distinction between jobs that are exempt and jobs that are not. “The rule of thumb would be if you’re in a front-line, [policy] implementing position, then you want to be protected from political influence,” he said. “If you’re in a position where you would be seen as speaking on behalf of a political person, then there’s more of a reason for [you] to be affiliated with the political person.”

He said the courts have exempted people who represent public officials, such as a spokesperson. “Courts have said it’s logical that [a state officer] would want to hire someone who knew them, who wasn’t necessarily a civil servant or who scored highest on the exams, but was trusted to do the right thing,” Morrison said.

As far as political insiders recommending their friends or family members for state jobs, Stralka noted the words “employee sponsors” never appear in the personnel code. Federal prosecutors might have more to say about that one sooner rather than later.

Want more background? The Illinois Campaign for Political Reform offers more information about the cost of political corruption and what to do about it.

Pay to Play?
Another “pay to play” allegation is scheduled to come Friday morning, when a national group, called Consejo de Latinos Unidos (Council of United Latinos), holds a press conference in the state Capitol. The group intends to outline allegations that the Illinois Hospital Association has traded political favors with the governor’s office and the Illinois Department of Revenue. K.B. Forbes, executive director of Consejo de Latinos Unidos, said the Illinois Hospital Association’s $250,000 in campaign donations over the last two years were “greasing the governor to get political favors out of him.” (Although, the Illinois Hospital Association had donated to people of both parties. You can check donations at the Illinois State Board of Election’s Campaign Disclosure site.) Forbes said his group battles hospital price gauging. He connected political favors, such as ensuring not-for-profit hospitals have tax-exempt status, with civil rights abuses that mostly impact Latinos and other minorities, who are more likely to lack health insurance.

The Illinois Hospital Association said there is no connection whatsoever between campaign donations and political favors. “Obviously, we think that’s ridiculous, unfounded,” said spokesman Danny Chun. “We have a long history of supporting candidates who support the goal of universal and continuous access to health care coverage.”

He also disregarded the allegation that not-for-profit hospitals abuse minorities’ civil rights. “Hospitals in Illinois are the healthcare safety net for the uninsured,” Chun said. “You walk into a hospital anywhere in this state, you will be treated regardless of your ability to pay, your insurance status, [or] your ethnic background.”

Buckle up

State legislators will soon start talking about another way to bring fast cash to Illinois - privatizing the state's tollways. Indiana lawmakers approved the idea this spring.

State Sen. Jeff Schoenberg, an Evanston Democrat, said the Senate Appropriations II Committee will hold four hearings this summer:
1. Chicago, 9:30 a.m. Wednesday, May 31
2. Will County, June 13
3. Springfield, August 15
4. Chicago, September 13

More to come from Illinois Issues soon.

Pick your poison

Chicago politicians have had a tough week battling public perception, and it’s only Monday.

Gov. Rod Blagojevich’s main re-election platform made the spotlight again when the Sun-Times reported the state’s new All Kids health insurance program awarded a major contract to McKesson Health Solutions. The company is reportedly represented by a Chicago lobbying firm, Advanced Practical Solutions, led by Blagojevich’s top political fund-raiser, Milan Petrovic.

The Associated Press updated readers about the state’s lapse in more than 200 leases, something Illinois Issues wrote about in November 2005. The news is not just that the state is wasting millions of dollars while it decides which contracts to renew, but AP’s analysis also says Central Management Services has renewed more leases with landlords who have contributed to Democratic candidates than with landlords who have contributed to Republican candidates. CMS denies any political favoritism.

Monday also marked the first day of the corruption trial of Chicago City Council’s hiring practices, which prosecutors allege have benefited Mayor Richard Daley’s political operations, according to the Chicago Tribune.

State employees fired

Two state employees have been fired after a year-long investigation into the hiring practices of the state’s main administrative agency, Central Management Services. The agency director, Dawn DeFraties, and her deputy, Michael Casey, were fired for allegedly fudging 28 applications for civil service jobs. That made the applicants more likely to be hired even if they weren’t qualified. Not all of the 28 people were hired, according to a governor’s spokeswoman, Abby Ottenhoff.

In a Chicago press conference Monday, John Harris, the governor’s chief of staff, and Bill Quinlan, chief counsel to the governor, said the investigation started when the state brought in a consultant to help streamline operations. The consultant reported several irregularities, which made their way up to the state’s independent inspector general.

The governor’s office also hired a law firm to take a broader look at the entire hiring process, which is ongoing, Ottenhoff said.

Findings were turned over to the U.S. Attorney’s office, with investigations still pending. “There could be potential criminal activity, which is for the attorney general’s office to decide,” Quinlan said.

Both employees have appealed.

School's out for summer

The Senate approved next year’s state budget at about 10 p.m. Thursday.

Leading up to the vote, Senate Republicans echoed the concerns heard in House debate one day prior. They cited record-high pension liabilities, Medicaid backlogs and fund diversions as reasons this budget would doom the state for year’s to come. They also said it’s a Democratic budget because it passed without one Republican vote.

Democrats defended the budget saying it's good for middle-class families and those who are left behind by federal programs, such as veterans. They also said this budget and another supporting measure will help doctors, pharmacists and long-term care facilities get reimbursed from the state quicker for caring for Medicaid patients. That’s true, but the best-case scenario would only reduce the payment cycle to an average of 55 days. Not too comforting for people waiting for thousands of dollars to pay their own bills.

In any case, both chambers adjourned until November 14 and wished everyone a happy, six-month summer.

Interesting 45 minutes

There was a lot of hurry up and wait in the Capitol Thursday, as lawmakers tried to smooth out wrinkles in the pending budget. But one 45-minute scene from the Senate chambers was particularly telling about the whacky day, which got even better shortly before 5 p.m. when the House adjourned for the summer.

Picture this: Around 3 p.m., students sat in the Senate gallery overlooking the Senate floor. The words they heard probably didn’t mean much to them, and the people they saw buzz below probably didn’t seem peculiar to them. Little did they know …

What they heard: They heard the words, “horse racing,” “tax,” “river boats,” and “10th license.” All of that had to do with a bill involved in tying up the budget. What the senators were voting on – and ultimately passed – was to shave off 3 percent of casino profits to help the struggling horse racing industry stay afloat (horse tracks were supposed to get 15 percent of the gross profits of the state’s 10th casino, but that 10th license has been tied up in legal battles and sitting dormant). The newest measure took three tries to get approved by the House, and it allegedly only passed in the Senate this time around because a late amendment added a two-year sunset. The Democratic lawmakers who opposed the 3 percent tax said any excess casino profits should go into the state’s main checkbook, not be used to help a private, ailing industry. The opposition also didn’t like that the horse tracks would stand to further profit from casinos when a dormant, 10th riverboat license escaped from legal peril. The House later passed the same version of the bill, sending it to the governor.

What they saw: This is where it gets even more indicative of a budget agreement and the end of session. In the midst of the horse racing debate, Latino Caucus members huddled, a few here, a few there. What was telling was that one member, Sen. Miguel del Valle, was not on the floor. He was reportedly in the governor’s office negotiating a few sticky points in the budget. As we told you before, the Latino Caucus (mostly the Senate members) was unhappy with the budget and had enough votes to prevent the budget from passing. Then House Speaker Michael Madigan appeared (he leads the House chamber, not the Senate). Madigan worked his way around the Senate chamber and talked to a few Latino Caucus members along with some others. He listened to them, nodded, and patted some on the back before moving on to the next person. He left, but not before Sen. Minority Leader Frank Watson stood in line to talk to the speaker. That would have been one of the only times he truly met with the speaker face to face during budget talks. Neither he nor House Minority Leader Tom Cross has been invited to the closed-door meetings with Democratic leaders and the governor.

Little did the students in the balcony realize that they were watching the highly anticipated closing moments of the spring session. They unknowingly saw energy build around how the state makes money, shifts money and negotiates how to spend that money. Welcome to government and politics in Illinois, kids.

The Senate could vote on the budget tonight. Stay tuned.

House passes budget

Rep. Edward Acevedo pushed the “yes” button along with every the other House Democrat to pass next year’s budget – without their Republican counterparts. Last night, Acevedo said a lot could change and needed to change before 8 a.m. for him to support the budget. Apparently, that happened. The Chicago Democrat said he and the Latino Caucus met with the governor's office late Tuesday night to ensure the budget contained money for community-based programs, such as the Coalition for Immigrant and Refugee Rights. He said the programs made the cut, allowing him to vote "yes" and send the budget to the Senate.

Here's a recap of some programs that would benefit from about $55 billion in spending:
- Education: universal preschool, college tuition grants, and nurses' scholarships
- Corrections: more prison guards, methamphetamine addiction treatment centers and state police cars
- Health care: veterans' and children's health insurance, and some (emphasize some) Medicaid bill relief
- Environment: water conservation and renewable fuels
- Other: telecommunications (see "The new digital divide" in Illinois Issues May issue) and minority jobs

The state will partially pay for the programs by banking on higher-than-expected tax revenues, sweeping hundreds of dedicated funds, taxing some more businesses, phasing out some tax credits and programs, reducing state employee headcount and attracting more federal matching dollars.

The four-hour-plus “debate” allowed Republicans to object to and question numerous parts of the budget, which they said will result in the following:
- A more than $1 billion shortfall in the amount the state should pay into public pension systems
- A nearly $2 billion backlog of Medicaid payments
- More than $1 billion increase in spending. Of that spending, they calculated $800 million would be dedicated to “mysterious” pork projects and $1.6 billion obligated to pay debt.

To point out the budget’s shortsightedness, House Minority Leader Tom Cross of Oswego cited Illinois’ poor financial rating. He also said the pork-laden budget spelled out that this is election year. Rep. Dave Winters, a Shirland Republican, called the budget shameless and “a champagne and caviar budget.” Republicans repeatedly said they had not been invited to any budget negotiations since February, shedding themselves of any blame for obstructing the process.

Rep. Gary Hannig, the chief Democrat budget negotiator, closed the debate by acknowledging two criticisms: “You're spending a whole lot of money that you don't have … Then you're not spending enough on schools, prisons and social services.” He said because arguments fall on both sides, the budget negotiators succeeded in striking a compromise. “We found just that level of funding that actually makes this budget work.”

Update: The Senate is expected to vote on the budget Thursday. Stay tuned.

Not all on board

The Latino caucus would push the “no” button if the budget were called for a vote as it stood Tuesday evening. Democratic Rep. Edward Acevedo told me the budget proposal lacks money for community-based programs that are important to his Chicago constituents. He’s not totally on board with the tuition tax credit agreement, either.

Instead of offering $1,000 tuition tax credits for college students who receive good grades, the compromise would allow middle-income families (those who make less than $200,000 a year) to receive a one-year, $500 grant to pay for students’ tuition and fees. The money to pay for the program is contingent on the sale of student loans currently held by the Illinois Student Assistance Commission.

Acevedo said although other education items on his wish list were worked out, he’s watching out for the City of Chicago in the current tuition compromise. As is, he says, “You’re helping the middle class, you’re helping the poor, you’re helping the rich because it doesn’t say you have to make a certain amount of income. Anybody can get that tax credit. We’re more inclined to vote for something that will help low-income families instead of families across the board.”

The House could take a vote on the budget Wednesday morning. You can take a closer look at some separate budget pieces in the following links:
- The education budget
- The finance budget, which includes a list of fund sweeps (one of the major revenue sources for the rest of the spending programs)
- The human services budget

Not all on board

The Latino caucus would push the “no” button if the budget were called for a vote on the House floor as proposed Monday. Democratic Rep. Edward Acevedo told me the budget proposal lacks money for community-based programs that are important to his Chicago constituents. He’s not totally on board with the tuition tax credit agreement, either.

Instead of offering $1,000 tuition tax credits for college students who receive good grades, the compromise would allow middle-income families (those who make less than $200,000 a year) to receive a one-year, $500 grant to pay for students’ tuition and fees. The money to pay for the program is contingent on the sale of student loans currently held by the Illinois Student Assistance Commission.

Acevedo said although other education items on his wish list were worked out, he’s watching out for the city of Chicago in the current tuition compromise. As is, he says, “You’re helping the middle class, you’re helping the poor, you’re helping the rich because it doesn’t say you have to make a certain amount of income. Anybody can get that tax credit. We’re more inclined to vote for something that will help low-income families instead of families across the board.”

The House could take a vote on the budget Wednesday morning. You can take a closer look at some of the separate budget pieces by looking at the following:
- The education budget
- The finance budget with list of fund sweeps (Scroll down to page 61 to see the start of the special fund transfers, one of the major revenue sources for the rest of the spending programs)
- The human services budget