Friday, October 31, 2008

Money matters

The ongoing federal probe into alleged pay-to-play politics in Illinois demonstrates attempts to influence state business by donating to political campaigns. But the Illinois Campaign for Political Reform released another round of campaign contribution totals this week that seem to reinforce the fact that money drives politics behind the scenes, as well.

The Illinois Senate Democrats will pick a replacement for Senate President Emil Jones Jr., who retires in January. Since Jones announced his retirement, a lengthy list of candidates has started campaigning to replace him. The caucus will need 30 votes to select a new president. Watch for more about the candidates in the November edition of Illinois Issues magazine. UPDATE: Here's the story.

One way those candidates are trying to differentiate themselves is through cash. The more money they can raise for their political campaigns, the more they appear capable of strengthening an already extraordinarily big Democratic Caucus (of 59 total senators, 37 belong to the Senate Democratic Caucus).

According to two nonpartisan think tanks, the Illinois Campaign for Political Reform in Chicago and the Sunshine Project in Springfield, Senate presidential candidates have doled out more than $1 million to their party candidates and incumbents.

The top two givers are Sen. James Clayborne of Belleville and Sen. John Cullerton of Chicago, two who repeatedly have been mentioned as front-runners in the race to replace Jones.

Clayborne has given $418,000 to other Senate Democrats, while Cullerton has doled out $336,000. According to the Campaign for Political Reform, Clayborne has transferred money from his own political committee, Friends of Clayborne. Top donors to that fund include the Illinois Education Association, AT&T and Ameren Corp.

Cullerton has used money from his committee, Citizens for John Cullerton, but he also formed a new committee, the Senate Democratic Victory Fund. Top donors to both funds include Chicago Wolves chairman Don Levin; Sen. Heather Steans of Chicago, her husband Leo Smith and her parents; and the Illinois Hospital Association. We’ll talk more about the Democrats who are receiving these funds in another blog.

Political insiders are used to Jones raising that much money or more ($3.6 million in 2006), but when these new candidates aren’t even president yet and are raising those amounts, the totals are striking. But it’s also part of the legislative process in Illinois.

“The leader is supposed to help raise a lot of money, and that’s part of their job,” says David Morrison, assistant director of the Illinois Campaign for Political Reform. “Part of what Cullerton and Clayborne are doing here is showing that they can shoulder that kind of burden, [that] they help their colleagues in that regard.”

Yet, this is one time when Morrison — ironically for a campaign finance reformer — says it’s not all about money. This internal election is about context. So even though these numbers look big, there are many other factors that are in play for whom the next Senate president will be.

  • Jones’ retirement: It means the person whom businesses donated to in the past is no longer the person who will funnel the funds to other Democratic members. Without knowing who will serve as the hub for accepting donations and funneling them to other Democrats, donors have to take their chances.
  • The Obama factor: It translates into record numbers of Democrats who will come out to vote for U.S. Sen. Barack Obama for U.S. president and who likely will continue voting Democratic down most of the ticket. Democrats are expected to have a good year, so money in some ways is less important this year than it was in 2004 and 2006, when Jones was trying to build on a majority of seats in the chamber.
  • Personality: Then there’s a question of which qualities that Senate Democrats want in their next leader. The most common characteristic cited is someone who can compromise and refresh the atmosphere in the Capitol, thereby breaking the stalemate of Gov. Rod Blagojevich and his ally Jones against House Speaker Michael Madigan.

But the money is still important. It’s not just who is giving, but why are they giving? Morrison says it’s hard to tell if the Senate presidential candidates are attracting new donors, getting increased donations from patron donors or if it’s a combination. It’ll be easier to tell when the next detailed campaign finance reports are due in January. One thing is for sure, he says: “There’s a lot of money flowing around.”

Happy Halloween

Some comic relief for Dave Blanchette. It's been a rough week in state government.

Thursday, October 30, 2008

Operation Board Game snags another piece

The U.S. attorney’s office in Northern Illinois is advancing its way around Gov. Rod Blagojevich’s inner circle, and Thursday’s indictment of GOP political bigwig William Cellini could be just another attempt to recruit one more person to testify against the governor, says Kent Redfield, political scientist with the University of Illinois at Springfield.

U.S. Attorney Patrick Fitzgerald indicted Cellini today on four charges of federal corruption. The 21-page indictment spells out a classic pay-to-play scheme of trading political campaign cash for state business. But Cellini’s attorney, Dan Webb of Winston & Strawn in Chicago, already combats the charges as “unfair and unjust” and based on shaky evidence.

The feds allege that Cellini was one of many people who conspired to rig state boards to hire investment firms that would, among other financial benefits, donate to the political campaign of Public Official A, previously identified as Blagojevich. The scheme allegedly happened between spring 2003 and summer 2005. Other conspirators already charged include Blagojevich insider Tony Rezko, former state board member Stuart Levine, attorneys Joseph Cari and Steven Loren and construction contractor Jacob Kiferbaum. Cellini’s indictment lists two more: Co-Conspirator A and a Teachers Retirement System Staffer A, yet to officially be identified. Co-Conspirator A is widely thought to be Christopher Kelly, who already was indicted on separate charges of tax fraud.

Cellini’s indictment alleges that he participated in a scheme to pressure Chicago businessman Thomas Rosenberg to give money to Blagojevich’s political campaign. The alleged ultimatum was that Rosenberg’s company, Capri Capital, had to raise money or donate to Blagojevich’s political fund to get a $220 million business deal with the Teachers’ Retirement System. The system oversees and handles investments for public pensions of teachers and administrators outside of Chicago. Private investment firms handle TRS assets. Through a statement, TRS administrators declined to comment but said the staff will “continue to uphold their fiduciary duty to our participants.”

According to Cellini’s indictment, the schemers decided it was too risky to continue pressuring Rosenberg when he threatened to go to authorities. But after that, Cellini, Rezko and others “discussed the possibility of removing the U.S. attorney for the Northern District of Illinois in an effort to stop any investigations into the co-conspirators and others,” according to the indictment.

Webb’s statement describes Cellini as “completely innocent of these charges, and he will fight this case because he has done absolutely nothing wrong.” It highlights the point that while a grand jury found Rezko guilty of 16 counts of corruption, they found him not guilty on one of the most serious charges of attempted extortion, relating to the charges involving Rosenberg. It states that Rosenberg testified in Rezko’s trial that “Bill Cellini never asked him for any money and that Rosenberg never paid any money to Cellini or anyone else.”

Redfield says if the assumption is that the U.S. attorney’s ultimate goal is to get all the way to Blagojevich, indicting Cellini makes sense. But there's no guarantee it'll work.

“At this point, Cellini thinks that this is not a slam dunk,” says Redfield. “And he’s willing to be indicted rather than to cooperate.”

And if the federal grand jury agrees with prosecutors’ assessment of Cellini’s involvement in the scheme, why would a successful, wealthy political insider at all levels of government work to secure funds on behalf of Blagojevich, a Democratic governor? Redfield says it’s all about power. “I don’t think it was so much about fighting for the governor as it was about power in the board and playing the game. He was as mover and shaker when [Jim] Thompson, [Jim] Edgar and [George] Ryan were governors. That’s what he knows and what he does … Power is addictive.”

Wednesday, October 29, 2008

A new direction

Mike Lawrence, director of the Paul Simon Public Policy Institute at Southern Illinois University Carbondale, is retiring from the institute November 1. He started in 1994 as associate director and became director in 2004, shortly after the unexpected death of former U.S. Sen. Paul Simon.

"You can’t really replace in some senses either Paul Simon or Mike Lawrence, but we’ve got to find someone who will carry on. And we have some very capable, accomplished people in the pool," says John Jackson, political science professor at the university and head of the search committee to replace Lawrence.

An interim director will be announced shortly, and the search committee expects to publish the top three candidates some time in November. A new director may not start until January, according to Jackson.

The new director will take over as the economic downturn continues to manifest itself in new ways. Lawrence told us in the spring that one reason he felt comfortable retiring is because Simon's goal of building a $10 million endowment had been accomplished and then some. But Jackson says just as universities throughout the state are experiencing lower returns on their investments, so too is SIUC. “The endowment is fine," Jackson says. "It’s the income off the endowment that’s not quite what it had been. So right now, we have what we hope is a short-term cash flow problem. Not huge, but it’s a headache for us.”

While Lawrence is packing his books into boxes, the university will continue to benefit from the stamp that Lawrence put on the institute and its agenda, Jackson adds. "He’s focused us more on Illinois issues, Illinois concerns, and I think that has been his forte because that’s where his network and his contacts were."

Before spending a decade with the Edgar Administration, Lawrence spent 25 years as a journalist, including 20 years with Lee Enterprises and its Statehouse bureau that he helped start and another year as Statehouse bureau chief for the Chicago Sun-Times. He plans to return to writing political commentaries, which he has said he stopped after being pressured to do so in the interest of the institute and of the university. He remains vice chair of the Illinois Issues Advisory Board.

We wish him the best of luck and look forward to seeing his byline again.

Monday, October 27, 2008

Are pensions safe in a Con-Con?

Illinois voters have eight days to decide whether they want the state to call a constitutional convention. For those who want to know the pros, cons or the logistics, look at Illinois Issues magazine, which has published numerous articles in print and online throughout the past year (see the list below). But one specific question burning in the minds of many current state employees, a.k.a. voters, is whether a convention would rip away their pensions and retiree health benefits.

In fact, that fear will lead many of those employees to vote “no” on the referendum. People on both sides of the Con-Con debate agree that the state’s obligations to its existing employees, particularly those who are not fully vested in the pension system, is open to interpretation.

It’s generally agreed that the state’s future public employees would be vulnerable to change. Potential reforms include increasing the retirement age before a person could tap into his or her benefits, limiting automatic yearly pension increases and increasing the employee contribution rate by at least 1 percent. Again, these are for new hires only. See more here from a 2005 report by the Governor’s Pension Commission.

Existing employees are different. On one hand, courts have ruled — and the Illinois Constitution of 1970 declares — pensions are contractual relationships between the state and its employees. The state Constitution, Article 13, Section 5, reads:

Membership in any pension or retirement system of the state, any unit of local government or school district, or any agency of instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.

Even if the state charter changed, legal challenges likely would cite protection under the U.S. Constitution, Article 1, Section 10 (scroll down to see “Section 10”) that says states cannot breach contracts, including pension obligations.

Elena Kezelis, former chief counsel for then-Gov. Jim Edgar, says she interprets the Constitution as protecting those who are fully vested in the pension system as having unalterable rights. She points to the back of the state Constitution, where a “savings clause” would protect every contract in place if a new document were approved. If another convention were called and pension benefits were revised, then she says that provision would grandfather in the existing pension contracts. Prudent drafters would include that kind of language again, she says.

The question is, she says, how delegates and how courts would define the point at which current state employees are vested into a contractual right that cannot be taken away from them.

Bruno Behrend, co-founder of the Illinois Citizens Coalition that supports a constitutional convention, says he agrees with the same interpretation: Pension benefits of vested employees could not be taken away. And he says he doesn’t think delegates would erase that constitutional guarantee because the goal of a convention would be to draft a new constitution that would win voter approval. Taking away benefits that have been promised to existing employees wouldn’t go over so well with voters, he says. Instead, he supports pension reforms aimed at making the state more accountable in chipping away at some $100 billion in pension debt.

One main force behind a campaign to oppose a convention disagrees with the interpretation that the pensions of active public employees are safe. Among the reasons the Illinois Federation of Teachers union opposes a convention is that there's no telling what would happen, according Steve Preckwinkle, IFT's political director. “Our belief is that if Article 13, Section 5 of the Constitution were to be either eliminated or modified in certain ways that the pension security of active government employees throughout the state at all levels of government could be jeopardized.”

The IFT also is the top donor to a statewide campaign to defeat the November 4 referendum. It and affiliate members have contributed $300,000 to the Alliance to Protect the Illinois Constitution, according to the Illinois Campaign for Political Reform, a Chicago-based think tank that keeps track of campaign contributions. The second top donor is the Illinois Education Association, donating $225,000.

Ann Lousin, who opposes a convention, says pension reforms are a “perfect example of how a lack of political will on the part of officeholders can lead to a constitutional crisis.”

She is a former research assistant for the 1970 Con-Con, a former parliamentarian for the House in the 1970s, a former chair of the Illinois State Civil Service Commission and a current law professor at John Marshall Law School in Chicago. In a recent paper for the Social Science Research Network, Lousin points out that the intent of the 1970 Constitution, Article 13, Section 5, is unknown and that there’s little legislative or court record on the subject. She says case law from the New York Constitution of 1938, upon which the Illinois section is based, suggests that the contractual guarantee applies only to the pension, not to such companion benefits as health care. And, she says, because legislators lack political will, they fail to fully fund the five state pension systems. That will result in dire consequences in the not too distant future. “By most estimates, the crisis will come by 2020 or 2025 when an Illinois pensioner will not receive a pension check.”

It's easy to assume that with or without another constitutional convention, public employee pensions are at risk in the future.

If you want more information about a constitutional convention, consider these stories that have published on this blog or in Illinois Issues magazine in the past year:
  • The language of the referendum resulted in the blue piece of paper voters will get on Election Day.
  • How a 2010 convention could differ from the 1970 convention
  • Pros and cons of a convention: Q&A with Lt. Gov. Pat Quinn and Dawn Clark Netsch
  • Con-Con basics (PowerPoint presentation)
  • Q&A with a 1970 delegate (print only; See Illinois Issues, January 2008, page 13)
  • Separation of powers between the executive and legislative branches (print only; See Illinois Issues, January 2008, page 19)
  • The revenue article and tax reforms (print only; See Illinois Issues, February 2008, page 27)

Wednesday, October 08, 2008

Only half way there ...

... With a long way to go.

Gov. Rod Blagojevich approved a way to restore money that was cut from the state budget earlier this year, but human service providers, state parks and historic sites and hundreds of state employees are still in limbo.

Blagojevich signed into law a deal between the House and the Senate that authorizes the governor to transfer about $221 million from special dedicated funds that have “excess” money. (For example, a plumbing licensure fund has about $750,000 available from fees paid by people applying for a plumbing license.) The transferred money would go into a new fund, called the FY09 Budget Relief Fund, which serves as a lockbox that can only be used to restore money to human services, state parks and historic sites and constitutional officers who had to lay off employees or require paid days off.

But that's only half the solution. The other half is an appropriations bill, SB 1103, which authorizes the comptroller to write the checks. Without spending authority, the “fund sweeps” money just sits there.

The governor's office issued this statement: “The governor did sign the funds sweep bill, but the budget office and agencies have expressed concern over certain funds that are included in the bill. With that in mind, there is no certainty at this time how much money will actually be available and, thus, it would be preliminary to say how far this money will go.”

Rep. Gary Hanning, a Litchfield Democrat and House member who negotiated the deal, said the bill was in the public domain in the House for a week, and it sat in the Senate for two weeks. Democrats and Republicans of both chambers had an opportunity to voice concerns and ask for changes, some of which were accommodated before they sent it to the governor.

“All through that period of time, the governor and his people sat silently by and never weighed in one way or the other, so we assumed that they were OK with this bill,” Hannig said.

The governor's office offered another statement that his office made its concerns known in September, and the rest is up to the controller to decide which funds can be moved over.

Carol Knowles, spokeswoman for Comptroller Dan Hynes, said the measure, which the governor signed into law without changes, spells out which funds to sweep, how much to sweep and when to sweep. “There is no ambiguity what the law states,” she said. The transfers should be completed within the next day.

But even if the governor signs the spending bill without making any changes, he's not compelled to actually spend the money. To do that, he would have to send a voucher over to the state comptroller, who would then write the check. “He could sign the bill, but if he doesn't send over the vouchers, the comptroller still can't issue a check,” Hannig said.

The governor has until the first week of December to act on the spending bill. It could come up in the annual fall session — if there even is a “veto” session (because the House and Senate already acted on all but a few of the governor's various vetoes last month).

One more note: Before this mess started, the governor sought authority to transfer about $530 million (scroll down) from special funds. But his proposal would have let him sweep the money at any time in any amount up to about $530 million, Hannig said. The House changed the proposal to limit the spending to $221 million and to identify which funds could be swept and what the money could be spent on.

Tuesday, October 07, 2008

Big Ten Battleground

In honor of the second presidential debate tonight, take a look at this Big Ten Battle Ground Poll. It surveyed 600 residents of eight Midwestern states in the Big Ten Conference last month, and it’ll do another round in about two weeks. Other than Illinois, U.S. Sen. Barack Obama’s home turf, six states were statistically tied between Obama and his Republican opponent, Arizona Sen. John McCain. Indiana was the only state that leaned toward McCain.

But that was three weeks ago. Things have changed in Obama’s favor, says Brian Gaines, political science professor with the Institute of Government and Public Affairs at the University of Illinois at Urbana-Champaign. Gaines is participating in the polling project with professors from seven other universities.

“In the last three weeks, there has been a pretty clear swing to Obama almost everywhere,” he says.

It comes down to economics. In tough times, voters tend to look to Democrats to get them out of it, he says. And the recent financial crisis that put Washington, D.C., on the hot seat put Obama in the driver’s seat.

Now, most Midwestern states are Obama’s to lose. But it’s not a shoo-in. The September results show that Obama had an advantage among Midwestern women, with double-digit leads over McCain in Iowa, Illinois, Michigan, Ohio and Pennsylvania. McCain led in five states among Catholic voters, with large margins in Michigan, Ohio and Pennsylvania.

Economic pessimism and widespread angst that the country is going in the wrong direction resonates with white- and blue-collar voters. White-collar tended to lean to McCain, while more blue-collar participants said they supported Obama. The exception was Ohio, where analysts said Obama has to stem the deflection of Democrats who helped U.S. Sen. Hillary Clinton win that state's Democratic primary.

While Ken Goldstein, co-director of the polling project and political science professor at the University of Wisconsin – Madison, said debates don’t normally get much credence in election results, Obama’s newness on the national scene gives voters the opportunity to see whether he lives up to the presidential image. Watch the video of the analysis here. The consensus was that these debates could be a huge factor in this election.

New Big Ten survey results will be available October 23.

Monday, October 06, 2008

Blue notes

Voters can expect to receive a controversial blue piece of paper with their ballots next month. They also can expect to see special notices posted in the voting booths, absentee ballots, newspapers and on Web sites.

That is, unless things change -- again -- in the legal debate about a mandatory referendum asking voters whether Illinois should convene another constitutional convention to open the state charter.

As of today's court order, that blue notice will explain that the referendum contains what a Cook County judge deemed “inaccurate” and “misleading” information that a person who skips the question on the ballot counts as a “no” vote.

The Chicago Bar Association, Lt. Gov. Pat Quinn and other proponents of the commonly called Con-Con filed suit in Cook County also argued that the explanation of the November 4 referendum -- written by a committee of legislators and certified by state election officials and the secretary of state -- was biased against a convention because it included the fact that the 1988 referendum failed by a 3-1 margin.

Cook County Circuit Court Judge Nathaniel Howse Jr. ruled in their favor and, after multiple, day-long meetings with both sides, ordered local authorities to hand out and post notices to tell voters to disregard the inaccurate sentence.

David Orr, Cook County clerk, said it could have been worse, but the “mistake” is making it very difficult for everyone else in the state as elections near.

“That's life when it comes to elections, but it couldn't have come at a worse time for us in terms of preparations,” Orr said. “But at this point, I think it's done.”

Maybe not, Con-Con supporters said.

Bruno Behrend, cofounder of the Illinois Citizens Coalition that supports the call for a convention and who is involved in the case, said he's not satisfied.

“We just ask people to try and do the intellectual exercise: Read this language on the ballot, understand that it's wrong, and try to craft an order that ameliorates it. No matter what your view on the outcome of the election, you can't.”

He says the proponents could try one more time to rectify the situation through an appeal, asking the judge to require election authorities to print an entirely separate ballot for the Con-Con referendum. He says they acknowledge the cost, although undetermined.

“The only justification we can really say is, 'What is the cost of an unfair election?'” Bruno said.

We'll learn more Tuesday. In the meantime, check out these resources from Illinois Issues magazine about a constitutional convention:

And one comprehensive resource is from the state's Legislative Research Unit.