Wednesday, December 19, 2007

“Promises with a price”

We knew it was bad, but we have one more study that says it’s really bad. The Pew Center on the States published a report comparing all 50 states that says, “Illinois has double the trouble.” This state has one of the poorest-funded pension systems in the country, and it repeatedly fails to set aside enough money to pay for public employee pensions. The second whammy is that Illinois also has failed to put aside money for health care benefits promised to state retirees. The Civic Committee of the Commercial Club of Chicago estimates that price tag reaches $48 billion. (I wrote about the long-term cost of retiree health benefits in April 2007.)

Here’s the Pew Foundation’s fact sheet for Illinois.

It’ll only get worse because of rising health care costs and increasing numbers of state retirees, which was the subject of the Illinois comptroller’s January Fiscal Focus.

Oddly enough, the Illinois House approved a non-binding resolution six months ago that urges Illinois to resolve pension reform and debt before the legislative session adjourns for good in 2007. Well, the session never adjourned, so I guess they don’t have to solve anything this year.

Tuesday, December 18, 2007

Mattoon wins: Too good to be true?

The energy industry selected Mattoon in east Central Illinois to host the more than $1 billion project billed as the “world’s first near-zero-emissions coal-fired power plant,” but the feds have yet to sign on to the project that they’re supposed to fund.

FutureGen, as it’s called, is expected to receive international attention for the first-of-its-kind technology to research a cleaner source of energy while capturing harmful carbon dioxide emissions underground. The hundreds of jobs created would also be a huge economic boon for the region and the state. But the project’s future remained in question Tuesday because the U.S. Department of Energy hadn’t yet issued its final decision, which is necessary. And the department issued a statement saying the project already is over budget. More information won’t be available until next month.

Energy Department officials did not attend the press conference (seen live on the Internet) held in Washington, D.C., by the FutureGen Alliance, a nonprofit group of energy companies that’s in a public-private partnership with the feds. The Alliance announced Mattoon as the winner despite federal wishes to hold off on the announcement.

The Energy Department’s absence speaks volumes considering the government (a.k.a. taxpayers) is slated to foot most of the bill: 74 percent compared to the industry’s 26 percent. A November report includes a section about what would happen if the feds didn’t share the burden. “In the absence of DOE funding (the No-Action Alternative), the Alliance may still elect to construct and operate the proposed power plant if it can obtain the additional funding and required permits. However, in the absence of DOE participation, it is unlikely the FutureGen Project would be implemented.” The report later adds, “The No-Action Alternative is considered a ‘No-Build’ Alternative.” [Emphasis added]

FutureGen Alliance officials said during the press conference that politics did not come into play, but skeptics have wondered from the beginning whether President George W. Bush’s home state of Texas would win the bid. Texas is the other state with two cities on the short list for the FutureGen project. Tuscola in east central Illinois also was in the running but wasn’t selected by the Alliance.

The Alliance board unanimously selected Mattoon, population 18,000, after a rigorous process of comparing more than 100 criteria because the town “offered the best chance of success for this project,” said Lucy Swartz, head of the site selection process. “The site is move-in ready, and that was very important for the Alliance to reduce any risks that might be involved with acquiring the land.” It was also chosen for its secure and adequate water supply, its geology that would allow safe storage of carbon dioxide 8,000 feet underground and its location in 444 acres of rural land with a place to inject the gas emissions. The property tax benefits and community support also helped.

The problem is that costs have risen from an estimated $904 million in 2004 to $1.75 billion in 2007.

Construction on the plant would start in 2009, and it wouldn’t be operational until 2012, but the timeline has adjusted a few times. Once in full swing, the plant would be able to power about 150,000 average homes, according to the Alliance’s site.

Friday, December 14, 2007

Back and forth

As frustration over the continued tit-for-tat between the governor and the speaker festers, the public has the added question of whether they can trust the governor and the General Assembly to build new casinos or riverboats without scandal. And can they trust them to distribute the revenue to public services in a fair way? So far, not so good.

House Speaker Michael Madigan tried to cancel session scheduled for Monday and Tuesday, but lawmakers could be called back to Springfield the week before Christmas anyway even if there's no gaming or mass transit plan to advance.

The speaker said in a letter to lawmakers, "In light of certain subsequent developments this week, the legislative process will be better served by holding session on these topics at a later date." Without naming Chris Kelly's federal indictment on tax fraud and illegal gambling announced Thursday, Madigan said in the letter, "The current environment underscores the critical need to create a genuinely independent Illinois Gaming Board," which was supposed to be talked about in Monday's session.

A few minutes after Madigan's letter became public, Gov. Rod Blagojevich's office released this statement: "Sadly, it's not surprising that Speaker Madigan would, at the last minute, cancel a scheduled session to consider a plan to fund the [Chicago Transit Authority]. That unfortunately has been more the rule than the exception over the last three months." The statement also indicates the governor could call a special session for next week. Spokeswoman Abby Ottenhoff said in a follow-up e-mail that the governor's office expects to talk to legislative leaders over the weekend and will be in a better position to talk about timing on Monday.

Thursday, December 13, 2007

Inner circle

A federal investigation stung another member of Gov. Rod Blagojevich’s inner circle without mentioning the governor. Christopher Kelly, the governor’s close friend, former campaign manager and early advisor on gaming issues, was federally indicted for tax fraud by allegedly hiding more than $1 million of income over five years. The indictment says he used corporate funds from his roofing and consulting firms to pay illegal gambling debt and bookies.

The governor issued a statement: “Chris Kelly is my friend. I am saddened to hear these allegations about Chris's personal life. I know the pain it must be causing him and his family. My thoughts and my prayers are with them during this difficult time. In fairness to Chris, I believe it is important to let the legal process play out and not rush to judgment.”

Kelly’s indictment was coupled with an expansion of a separate investigation that indicted Antoin “Tony” Rezko, Blagojevich fundraiser and businessman, in October 2006. Rezko pleaded not guilty to allegations that he received kickbacks and illegal fees from investment firms seeking business with the state.

Pay now or later?

State Comptroller Dan Hynes wrote a letter to the editor that published in Springfield’s State Journal-Register that continues his effort to force conversation about the state’s delayed Medicaid bills. The topic is old, yet there could be an increased interest, some say urgency, to fix the problem in light of Gov. Rod Blagojevich’s recent statements that he’ll continue to push to expand a state health care program to 147,000 people without legislative approval.

Another 147,000 people in a Medicaid program means more bills to pay and, without adequate cash coming in to pay those bills, more debt. The comptroller’s point for rekindling the debate relates to “Section 25” of the State Finance Act (scroll down to the bottom to “fiscal year limitations”). State agencies are allowed to — and often do — defer medical bills until they can pay them with next year’s revenues. And they don’t have to notify the General Assembly to do so. The comptroller’s letter to the editor says, “In essence, then, the General Assembly has given the governor a blank check for health care spending.”

Hynes adds that the “loophole” also misrepresents the state’s current fiscal condition. His office says currently, Medicaid bills aren’t as backlogged as they have been, but the backlog exceeded $2 billion two years ago according to a March report. (You can see a here chart dating back to 1990.) Health care providers are currently waiting an average of two months for payment from the Department of Healthcare and Family Services. The agency can make expedited payments to doctors and hospitals that care for a lot of Medicaid patients, but everyone else has to wait as a result, says Carol Knowles, the comptroller’s spokeswoman. Because of Section 25, there’s no limit to how long agencies can hold their medical bills (other types of bills have to be paid by August 31 each year).

The comptroller wants to eliminate that. “For years I have urged the elimination of the Section 25 loophole, arguing that its existence allows state leaders to deny the true costs of state-provided health care and to sidestep requirements that the state maintain a balanced budget,” Hynes says in his letter.

He drafted legislation last spring that would have tightened the Section 25 rule and required the state to pay medical bills within four months of the new fiscal year. The October 31 deadline would give a little leeway in case of a cash flow problem or a complicated billing process at the end of the previous fiscal year.

Democratic Rep. Will Davis of Homewood sponsored the measure and says the objective was to try to avoid constantly carrying a deficit. Despite gaining bipartisan support, it went nowhere. Davis says the measure was still a legitimate effort and important issue for his community, where some providers care for mostly Medicaid patients. “Some people have tried to make it be a political issue between [the comptroller] and the governor. I really don’t think it’s political. It has a definite impact on my community and how people are being served in my community.”

Sen. Christine Radogno, a Lemont Republican and Deputy Minority Leader, says there’s consensus that Section 25 gives too much flexibility to the administration and that it should be tightened. Senate Republicans also sponsored a package of measures dealing with fiscal responsibility even before the governor’s recent actions to advance his health care plan without legislative approval. Radogno says she’ll try again but realizes it could share the same fate as a lot of good government and ethics measures. “None of that kind of stuff is moving.”

It also would be super hard to eliminate Section 25 for two reasons: One, the first year could actually cost a lot of money and time for state agencies that have to process their medical bills by a certain date if they don’t have enough cash. The Department of Healthcare and Family Services, for instance, said in a fiscal note to the General Assembly that an unintended consequence could be that cash-flow problems in the agency could require medical providers to file a claim with the state’s Court of Claims. And two, lawmakers would have to have the political will to end the practice of deferring bills. As it stands, if they push off $2 billion of bills into the future, that frees up $2 billion they can spend now on initiatives in their districts.

“It helps them avoid the tough decisions,” Knowles says. “The first year of undertaking a change like this would be very painful and difficult for the state, but the consequences of not doing are much greater.”

Monday, December 10, 2007

The chips may fall, but ...

The Illinois House will convene in Springfield next Monday to debate a major gaming proposal announced in Chicago this morning. Two new casinos, one in Chicago and one elsewhere in the state, could unlock months of political stalemates, according to sponsors Reps. Lou Lang of Skokie and Bob Molaro of Chicago (I heard their press conference on the Internet through Capitol Fax). Or, that same plan could be a dud if it isn’t quickly followed up by separate but related plans to fund road and school construction projects and mass transit and education subsidies.

House Speaker Michael Madigan wrote a letter to legislators and labeled the gaming plan as a “compromise,” but even if all four legislative leaders and the governor agreed on the latest version, there’s a whole lot of back-and-forth that needs to happen before they agree on ways to distribute that money. It’s generally agreed that revenue will be split, with the largest chunk paying for road and school construction projects and the rest for increased education spending. However, Lang said they still have to decide whether the governor or the legislative leaders will have discretion in which projects get funded. And considering trust hasn’t been strong this year, that decision could take a while. In a phone conversation Monday, Lang said, “[The leaders] have yet to come to members and say, ‘Hey, we’re going to get a capital bill. You get X. Where’s your list?’ None of those things have happened yet.”

While Republicans will have this week to suggest tweaks to the gaming legislation, Lang said he’s “very confident” that this proposal or something like it will pass the House. Whether the Senate could support it is unknown. Cindy Davidsmeyer, spokeswoman for Senate President Emil Jones Jr., said in an e-mail that the leadership could support some issues but that it needs to see the actual language before moving forward. She also said session next week is possible, but nothing’s set in stone.

Major parts of the gaming plan include reissuing a legally challenged “10th license” that was previously marked for Rosemont. The plan also would create an 11th license. Chicago would get one of them to build a land-based casino owned by the city and operated by a private investor. All casinos in the state would be governed by a completely new, independent Gaming Board, Racing Board and Director of Gaming Enforcement. They’d work with ethics officers to oversee the bidding process for the two new licenses and manage the nine existing licenses.

Other details include:
- The owners of the two new licenses would have to open 25 percent of their ownership to minorities and women for as little as $5,000.
- The nine existing riverboats would gain a total of 3,500 new positions for a fee.
- The five racetracks would pay a fee to add slot machines.
- The Illinois Gaming Board would have to dedicate $5 million for compulsive gaming programs and kiosks.

If you’re curious about the pros and cons of legalized gambling and about what other states do with the money, check out the analysis provided by the National Conference of State Legislatures.

Friday, December 07, 2007


Flags will be at half-staff today, the 66th anniversary of the attack on Pearl Harbor. It always hits home. I spent more than a year of my undergraduate studies interviewing World War II veterans for a marketing research book for the University of Illinois Food and Brand Lab (then in Champaign-Urbana, now at Cornell University in New York). I spent about two hours interviewing each veteran, typically in his 80s. It was heartbreaking to see them cry when they talked about the number of friends they lost while overseas, and they never really told you all the details of the things they went through. It was difficult to see the widows and widowers sit in their homes, remembering those details and being surrounded by black-and-white pictures of the time.

What feels even worse is to consider statistics about the number of veterans who don’t even have homes. The U.S. Department of Veterans Affairs reports that about one third of the nation’s homeless are veterans. That’s at least 195,000 people on any given night. About 45 percent of them have a form of mental illness. Many more also suffer from substance abuse.

The federal VA system has numerous initiatives to address homeless veterans. In Illinois, the Veterans Cash scratch-off lottery game does generate about $3 million a year, some of which helps pay for homeless initiatives. But many veterans either feel ashamed to ask for help or don’t know they qualify for the programs or benefits.

The need will only grow as more men and women come home from serving in Iraq and Afghanistan. For example, the need has already affected the state’s program G-I Loan for Heroes that administers low-interest mortgages and helps with down payments for veterans. The Illinois Housing Development Authority says 275 veterans have applied, leading the administration to double the available money from $15 million to $30 million since it started. And according to Tammy Duckworth, director of the Illinois Department of Veterans’ Affairs, there’s potential to secure another $15 million.

“This program would not be as wildly successful as it is if there was not a desperate need among our veterans of that age group, those young guys coming home, the 20- to 40-year-olds,” Duckworth said at a Springfield policy luncheon last month. “I just think it’s ironic that the people who fought and were willing to lay down their lives for other people to pursue their American dreams are the ones who are having some of the toughest time accessing their American dreams for themselves and for their family members.”

Here’s more from the National Alliance to End Homelessness.