Municipalities’ New Frontier: Ending Local Debt Disaster

“When written in Chinese, the word “crisis” is composed of two characters-one represents danger, and the other represents opportunity.”  — President John F. Kennedy

JFK’s quote is an older and classier version of Chicago Mayor Rahm Emanuel’s oft-repeated admonition to “never let a serious crisis go to waste” but the sentiment still applies today, especially when we’re assessing the financial dangers and opportunities sweeping over this area’s suburbs, towns and small cities.

A recent Better Government Association investigation found many Northern Illinois municipalities are buckling under the weight of a whopping public debt that threatens to forever alter the very standard of living that traditionally makes many hometowns desirable places to live, work and raise families.

We know that Chicago and Cook County have debt burdens but the raw numbers for our suburbs are also terrifying: Taxpayers are on the hook for a mind-blowing $140 billion in debt, or an average $35,774 per household in Cook County suburbs, according to Cook County Treasurer Maria Pappas.

Scary as these figures are, municipalities can take corrective action to lighten their debt loads and save these hometowns from financial collapse. Consider:

Cutting needless government. Muni leaders, and the voters, should support getting rid of unnecessary government entities that collect taxpayers’ money but offer too little in return. One example: The BGA has long favored dumping irrelevant townships, especially those in northern Cook County, which horde taxes, spend too much and provide little value to residents. Already, Evanston leaders are looking to drop its namesake township and save at least $400,000. With a record-breaking 2,000-plus government units in Cook County alone, there are plenty of candidates for the ash heap of history. Time, and money, is wasting.

Merging, consolidating or outsourcing. Tough financial times cry out for smart reorganization and cost cutting. Dump outmoded or unneeded departments or functions while outsourcing other in-house jobs in an honest and transparent manner—one that sidesteps the pitfalls of the much-hated Chicago parking meter deal. Furthermore, municipalities must aggressively seek to save money via appropriate cross-border mergers and shared services with other nearby towns or surrounding counties, including the option of forming new fire and police protection districts. Nothing should be overlooked or considered taboo.

Selling assets. Every suburb, village or town has a spare building, patch of land or garage that can be sold, hopefully at a premium, to private investors and used to pay down debt. Yes, spinning off these assets is tricky business. But in an era of mounting public obligations, unloading some public assets must be seriously explored.

Making a debt plan. The BGA policy unit found very few municipalities have a formal debt policy–an official guideline for making decisions about taking on more debt. A    policy can force municipalities to face some hard realities about the perils of too much spending and not enough thrift. Of course, a debt policy is only as good as the decision makers following it but having one is a best practice worth implementing.

Cleaning up local public pensions. With astonishing regularity, the BGA has uncovered suburbs and towns abusing the public pension system. Some examples: Double dipping, where employees get multiple pensions while working for the same employer; Pension-spiking, where end-of-career raises boost pension payments for life; Pension “tacking”, which allows outside consultants and contractors to improperly join public pension rolls even though they were not actual employees. It’s time for all municipalities to honestly re-examine their pension practices and end these costly and wasteful abuses.

Yes, the elephant in every City Hall is the multi-billions of dollars in public pension liabilities, which can be traced to the state’s decades–old mismanagement, inattention and lack of political will. Those liabilities are growing like a fungus for nearly every suburb, town and small city.

It’s a giant problem that must be remedied or we’re all in deep trouble.

In the interim, however, municipalities would profit from JFK’s advice — recognize the danger of this local debt crisis and use it as an opportunity to regain control of their finances and fate.

 Robert Reed is the BGA’s director of programming and investigations. Contact him at rreed@bettergov.org. Follow him on Twitter @bobreedbga.

Scholarship Scam Might Finally be Killed

Commentary

This Op-Ed also appeared in the Chicago Sun-Times.

BGA’s policy arm is calling for an end to legislative scholarships because we believe they’re beyond repair or reform.

In recent months, the Better Government Association and various media outlets have chronicled the misuse and abuse of Illinois’ long-standing legislative scholarship program, a perk that allows lawmakers to give two college students tuition-free access to a state university each year.

Based on these investigations, the BGA’s policy arm is calling for an end to the scholarships because we believe they’re beyond repair or reform.

Meanwhile, the government watchdog that should be policing the program on behalf of the taxpayers claims he can’t do much because his hands are tied — a claim the BGA finds hard to believe.

On Wednesday, a bill to abolish the scholarship program passed with an overwhelming majority in the House. We urge the Senate to take quick action next, sending the bill to Gov. Pat Quinn’s desk to be signed into law.

There is only one rule for handing out these scholarships: the recipients must live in the lawmaker’s district. But history shows that legislators repeatedly violate this obligation without fear of any legal consequences or sanctions from the General Assembly.

The most recent examples: The BGA reported that state Rep. Monique Davis gave scholarships to 10 recipients who live outside her district, and a Chicago Sun-Times report indicates that state Sen. Annazette Collins did the same thing for 10 geographically challenged students.

When it’s alleged that lawmakers fail to observe the law, it stands to reason that some sort of formal investigation should seek to determine guilt or innocence, and have the power to impose a sanction or consequence.

But for years, nothing has been done.

In fact, Thomas J. Homer, the Illinois Legislative Inspector General — the entity with the jurisdiction to investigate any alleged wrongdoing by members of the General Assembly — confirms that his office did not conduct a single investigation related to legislative scholarships until last fall.

Homer points to several factors that crimp his ability to investigate lawmakers, including a statute of limitations that prevents him from looking into allegations of wrongdoing that occurred more than a year before the complaint is filed, unless there’s a cover-up involved. And before 2010, Homer’s office was prohibited from initiating its own investigations and had to rely on complaints from third parties.

Efforts of the Legislative Inspector General to pursue violations of the law have proven to be woefully inadequate — or nonexistent — despite the firestorm of controversy surrounding it. Since 2010, there have been at least seven reports of legislative scholarship abuse, and not a single investigation with a suggested remedial action has come out of the Office of the Legislative Inspector General.

In principle, those who misused the program and ignored the law should be disciplined. Moreover, if this program had been more closely guarded, it arguably could have been a success instead of a glaring example of abuse of power.

But it’s too late for that type of thinking.

Gov. Quinn, who supports eliminating the scholarship program, recently called on the “Legislature and its leadership to move forward” and “put a bill on [his] desk.”

He even coined a phrase: “Don’t mend it. End it.”

It’s time to put that sentiment into action and scuttle this program.

Emily Miller is the BGA’s policy and government relations coordinator. She can be reached at (312) 821-9034 or at emiller@bettergov.org.

As Time and Cash Run Out, Pols Must Launch Pension Rescue

By Robert Reed
This Think Tank post was also published as an OpEd on Friday, Feb. 3, 2012 in the Chicago Sun-Times. Robert is the BGA’s director of programming and investigations. Contact him at rreed@bettergov.org. Follow him on Twitter @RReedBGA.

Long after the state’s public pension alarm began to blare, Illinois’ leadership is finally roused and ready to answer the call.

Maybe.

This year, we’ll see how determined our leaders are as they launch various efforts to comprehensively fix a benefit system that’s teetering on financial ruin and may ultimately plummet the state government into insolvency.

The Better Government Association welcomes the reform effort and is also encouraged by recent crackdowns on individual pension abuses that have been uncovered in exposes by the BGA and media outlets. But this problem goes beyond such isolated repairs and it’s high time our leaders toughen up and hammer out systemic remedies.

Democratic and Republican powerhouses are ramping up for this legislative session:

• Having avoided aggressive pension reform for most of his tenure, Democratic Gov. Pat Quinn says he’s raring to go. Recently, Quinn forged a bi-partisan working group of lawmakers and others to embark on a comprehensive examination of the state pension crisis. Quinn’s goal: Prescribe remedies that the governor says can be accomplished in a “fair and constitutional manner.”’
• Meanwhile, the powerful Democratic House Speaker Michael J. Madigan is interested in the way state pensions invest retirees’ money. He’s convened a special House committee to examine the major funds’ financial strategies. Madigan’s goal: Determine how decisions are being made and how much risk these portfolios carry, especially in today’s choppy economic seas.
• Across the aisle, Republican House Minority Leader Tom Cross (who is chairing the special House panel on investments) is also again gearing up proposed legislation that would alter benefit structure for current state workers. Cross’ goal: Pass a law that protects worker benefits already accrued but reduce them going forward either by having employees pay more into a defined plan like a pension or opt for a defined contribution plan, such as a 401 (k).

It’s encouraging to see state chieftains address the larger pension issues and take a wider view.

That direction is a welcome departure from the recent past when the crisis has been ignored or when lawmakers settle for passing important but incremental reforms, usually after the BGA and media reports uncover embarrassing abuses of the current system that make taxpayers’ blood boil.

For example, lawmakers last session outlawed the egregious practice that allowed two education lobbyists, who were each substitute teachers for merely one day, to become eligible for hefty public pension payouts.

While such repairs provide momentary relief, they are not the real answer to this systemic quandary. We need solutions that match the size and scope of this enormous crisis.

Obviously, it’s a huge challenge and the BGA doesn’t profess to have all the answers.

But here are some issues the BGA would like to see addressed in the upcoming session: Suspending or limiting cost of living adjustments; capping the amount of money a retiree receives (as is done in the private sector) no matter how many public pension plans they have been in; prohibiting “back-loading” or “spiking” by ending the suspicious practice of state employees getting last-minute promotions or salary increases which translate into heftier pension payouts; and consider phasing out defined pensions for defined contribution plans, like a 401 (k).

The BGA knows there are stormy debates ahead especially whether any changes to the state pension rules for current workers is legal under the Illinois Constitution.

Moreover, organized labor can rightly argue that the state caused this massive shortfall by not keeping its word and properly funding its pension plans.

Yet despite the fiscal complexity and political reality that dogs this controversial issue, we are on the verge of disaster.

It’s time to stop stalling. The alarm bell is clanging and our state leaders must confront this emergency before it’s too late.

BGA’s Bob Reed Talks Blago on WBBM’s At Issue with Craig Dellimore

>> CLICK HERE TO LISTEN

BGA Members to Quinn: Get the Facts Before You Ante Up

When lawmakers hear directly from constituents through faxes, emails and phone calls, they understand the issues that really matter to the people they represent. The BGA’s e-advocacy tool connects our members and followers directly to lawmakers to make sure better government is always on the agenda.

Flickr--Zdenko Zivkovic

Lawmakers passed a sweeping gambling expansion, and the Governor has to decide whether to sign it. But no current data on the economic impact of the proposal exists.

Today we’re calling on BGA members and followers to urge Governor Quinn to get all the facts before he signs the bill.

Lawmakers recently approved a massive gambling expansion that includes a city-owned casino in Chicago, new casinos in four other locations and slot machines in airports and racetracks. Supporters are hoping Governor Pat Quinn will sign the measure when it lands on his desk.

>> The Better Government Association says not so fast.

We don’t oppose gambling or a Chicago casino per se, but no data exists to show what economic impact this bill will have in communities across the state, or how the City of Chicago would grapple with being the only city in the state to own a casino.

>> We need Governor Quinn to form a task force that will issue a report with an accurate projection of jobs, revenues, economic and social costs that go along with a gaming expansion.

The task force should also take a look at the oversight laid out in the bill, and make sure the public is adequately shielded from the criminal activity that invariably accompanies gambling

Without satisfactory answers to these questions the governor should do whatever is necessary to keep this bill from becoming law.

>> Click here to urge the Governor to demand all the facts before he signs the gambling expansion.

Country Club Hills should tee up some reforms

Credit card expenses and government salaries in south suburban Country Club Hills seem to be—and we’re putting it mildly—out of control.

This isn’t some oil-rich Middle East monarchy we’re talking about. Country Club Hills is a nice middle-class town where municipal debt is around $50 million and family income is typically below $60,000 a year.

It’s not the kind of place where the mayor and city manager—in addition to receiving six-figure salaries, and other perks—should be dropping $80,000 on food and drinks in a single year, using taxpayer-funded credit cards.

So aside from griping, what should we do about it?

For starters, in the opinion of the Better Government Association, city officials need to talk this out more—in a public, open meeting.

In so doing, the Country Club Hills mayor and aldermen (who recently forced more than a dozen job cuts, against the mayor’s wishes) should consider:

• Eliminating all municipal credit cards and changing to a reimbursement system. In other words, you want to buy something? You pay for it, then get it reimbursed if it’s a legitimate expense. That’s how much of the business community operates. (The City Council recently voted to yank away some credit cards, but left the mayor with his.)
• Stripping away all expense accounts for city officials. From what we can tell, the accounts that exist now are loosely monitored, and some expenditures don’t seem to have much if any value to the community. A clothing allowance? Please.
• Instituting some controls on spending. Should taxpayers really be paying for booze on lake cruises, and chicken at Hooters?
• Revisiting mayoral and aldermanic salaries and perks, which, by almost anyone’s standards, are overly generous.

Country Club Hills just went through a tough election in April, when the balance of power started shifting away from the mayor to the City Council, so we recognize that our proposed reforms could be politicized. But as a non-partisan civic group, that’s not our intent.

Even so, we’re hearing about other potential problems in this city of about 16,000, so we plan to keep our eyes on the community, and offer other suggestions as needed.

The bottom-line is this: residents, not politicians, should come first.

Chicago Tribune Editorial: ‘Does Citizen Daley deserve a security detail?’

By Andy Shaw, BGA President & CEO

The following editorial by BGA President & CEO Andy Shaw appeared in the May 13 Chicago Tribune—read it here.

Mayor Richard Daley’s request for a security detail after he leaves office creates a golden opportunity for Mayor-elect Rahm Emanuel to demonstrate his approach to solving a problem that has fiscal, civic and public safety components.

Throw in the political and human dimensions for good measure and what you have is a microcosm of virtually every daunting challenge Emanuel will face in the coming months.

The security issue goes beyond Daley. Other recipients include the incoming mayor, the city clerk and treasurer; Ald. Ed Burke, chairman of the Finance Committee; and anyone else on an “as needed” basis.

Questions that have to be answered include:

BGA Policy Guru Emily Miller Talks FOIA Protection and Township Reform on Outside the Loop

The Better Government Association’s policy guru, Emily Miller, talked with Outside the Loop’s Mike Stephen about BGA’s top legislative priorities for the current session—protecting the Illinois Freedom of Information Act, and reforming township government.

>> TO LISTEN
CLICK HERE

Kennedy Challenges BGA on Police Protection for Politicians

By Andy Shaw, BGA President & CEO

Christopher G. Kennedy (Photo/Facebook)

The following commentary was published this weekend in the Chicago Sun-Times. >> Click here to read Chris Kennedy’s letter to me about police bodyguard details for politicians.

Christopher Kennedy, president of the Merchandise Mart and U. of I. board chairman, is one of Chicago’s most prominent business and civic leaders. He also grew up with the unimaginable scars of two horrific family tragedies: The assassinations of his uncle, President John F. Kennedy, in 1963, and his father, Robert, during the 1968 Presidential campaign. Few people have a closer connection to the existential dangers of public service in the emotional and sometimes irrational world of politics and public service. So when Chris wrote me recently to weigh in on the controversy over the police bodyguard detail that’s been protecting Chicago alderman and Finance Committee chairman Ed Burke for several decades, I paid close attention.

“Now is the wrong time to decrease protection for public servants,” Kennedy wrote. “It is a time of budget cuts, layoffs, vendor consolidation and cuts to all services, all of which are enormously disruptive to people’s lives. These victims of the recession in general and government cuts in particular sometimes mischannel the anger caused by such disruption. At these times an elected official like Alderman Burke—who has long tenure, a committee chairmanship and a high-profile—is a potential focus for misplaced anger, hatred and revenge.”

The letter arrived a few days before a news report that one of Burke’s southwest side constituents had been arrested for leaving a threatening phone message at Burke’s ward office.

Let me put this in context: The Better Government Association filed a lawsuit against the Chicago Police Department earlier this year because CPD refused to provide us with financial and manpower details of Burke’s security detail. We’re not advocating for or against his police protection, and we’re not trying to jeopardize his safety, but we do believe the public has a right to know how many officers are assigned to the detail, and how much it costs taxpayers. We don’t need a day-by-day security breakdown—how many cops in how many cars—but we do believe that annualized statistics will give the public a sense of how police are being deployed and tax dollars spent at a time when both are in short supply.

CPD has refused to provide the information, despite repeated Freedom of Information Act requests, claiming it’s a private security matter, but we respectfully disagree. Annualized data won’t endanger Burke, but it will make it easier to decide if one of Chicago’s 50 aldermen deserves a 24-7 bodyguard detail wherever he goes.

Chris Kennedy seems to agree with the transparency argument, writing that “the FOIA process has provided a pretty good vehicle for increasing the amount of disclosure and transparency and as such is a good tool for the BGA.” He adds that “pursuing information is a worthy goal” before adding his personal view of the Burke situation.

Burke’s security detail has been a hot-button issue for years—the late mayor Harold Washington tried to scale it back in the 1980′s, when he and Burke were engaged in the pitched political battle known as “Council Wars.” Burke won the security showdown in 1986 when a Cook County judge blocked Washington’s cutback effort, and Mayor Daley, who has his own bodyguard detail, has never challenged Burke on the security issue. Mayor-elect Rahm Emanuel said publicly the Burke detail is probably unsupportable at a time when taxpayers and city workers are being asked to sacrifice, but Emanuel hasn’t said anything about downsizing his own security or reviewing the police protection the city clerk and treasurer receive.

As for the man who threatened Burke, he apologized, blaming the phone call on his medical problems, which include AIDS, depression and the abuse of both alcohol and prescription drugs. “I’ve never been in trouble with the law,” Timothy Hercog said. “I’m not a violent person. I’ve never hurt anyone.”

In his letter to me, Chris Kennedy says “one of the great byproducts of a strong BGA is the potential to lure high-quality candidates back into government service. Somehow we need to strike the right balance between cost-cutting and personal safety.”

We couldn’t agree more. We’re simply arguing for transparency—our right to know the basics so the right decisions can be made. As revered Supreme Court Justice Louis Brandeis said in 1913, “sunshine is the best disinfectant.” That’s still true nearly a century later, as we celebrate “Sunshine Week,” which recognizes the first step in assessing the performance of government is transparency. You can’t assess what you can’t see.

Chris Kennedy makes a strong case for protecting some elected officials. So in the spirit of Brandeis, transparency and “Sunshine Week,” CPD should release relevant information about the present so we can make an informed decision about the future.

Last Word on ’11 Mayoral Election

By Andy Shaw, BGA President & CEO

Photo courtesy Paul Newton/The Southern

Went to hair stylist extraordinaire Jeananne for a trim on Election Day so I’d look presentable for TV analysis that night. She’s a Mount Greenwood girl whose dad was a fireman so it’s no surprise that she liked Gery Chico in the Chicago mayor’s race. That’s the demographic. But she hadn’t voted that day and didn’t plan to. Forgot to register at her new address and couldn’t get enough time off work to make it back to her polling place. So Gery lost that vote. It didn’t affect the outcome, but it did send a message about a missing piece of this messy political system we call democracy.

The turnout in Chicago on February 22, the first contested mayor’s race in two decades in a city mired in multiple crises, was just over 40 percent. By way of comparison, 80 percent of the city’s voters raced to the polls for 1983′s historic election of Chicago’s first African-American mayor, Harold Washington.

You’ve seen and heard all the explanations for the abysmally low turnout in this latest “important and historic” election. The media created a sense of inevitability for Rahm Emanuel, so there was no suspense. He had enough money for endless TV ads highlighting super-star supporters like President Obama and former President Clinton. The black community never warmed up to gaffe-prone “consensus” candidate Carol Moseley Braun. Chico and Miguel del Valle split up the Latino vote. And the February weather was cold and snowy. Back in 1983 there was “real” history unfolding in front of us as Washington, a journeyman congressman and long shot underdog at the outset, built a once-in-a-lifetime “movement” that included most of the city’s Blacks, Latinos and progressive whites—just enough voters to defeat incumbent mayor Jane Byrne and then state’s attorney Richard M. Daley.

Tahrir Square, Egypt (Jonathan Rashad/Flickr)

The elections were, in fact, very different, even though both were labeled “historic.” 1983 was obviously more exciting. But not more important. And that’s why the relatively low turnout on February 22 is so disappointing. We’ve been riveted for a month by the unbelievably dramatic stories about the democratic push that is sweeping across much of the Arab world like a California wildfire—from Tunisia to Egypt to Yemen to Libya and beyond. Hundreds of thousands of people, oppressed for decades by authoritarian regimes, risking their lives by marching and demonstrating. The spirit of colonial America circa 1776 prevails as rulers step down and puppet governments pledge to unbuckle the political straight jackets so their people can breathe in the sweet scent of freedom and democracy—scents we’ve been inhaling for more than two centuries.

Government in the United States is in crisis at all levels. Massive budget deficits, bloated bureaucracies and unsustainable retiree health and pension obligations. Not enough cops on the streets, good teachers in the schools, efficient services or best practices to mimic. All of this applies to Chicago and should have been motivation enough for a big voter-turnout, regardless of the mitigating circumstances.

But only four out of every 10 registered voters made it out to the polls. Maybe that means that only four out of every 10 Chicagoans earned the right to gripe if they don’t like the way Rahm Emanuel goes about cleaning up the mess.

Emanuel said the “election was about reform,” and he’s made a lot of encouraging promises. The BGA will be watching closely, shining a bright light on his government and holding him accountable. And so will the hundreds of “citizen watchdogs” we’ve been training in sessions around the city and suburbs. We headed out to Joliet for a training session this week, with a follow-up one next week. Fifty motivated people who care about their government showed up. They understand, like we do, that our hard-earned tax dollars have to be spent on us, not the politicians. They will be watching the Joliet mayor and city council and the Will County board. But it’s likely they’ll also be paying close attention to Chicago because it’s the big dog in the eyes of the media, and with a high-profile, one-name mayor-elect, the stories will be irresistible—or at least unavoidable.

Jeananne will be watching the same stories. And when it comes time to grade Emanuel’s performance in a re-election campaign, if there is one, she’ll hopefully be registered to vote in her new neighborhood so she can weigh in on the job he’s done. That’ll mean she understands her obligation as an engaged citizen.

We need an army of engaged citizens to advocate for better government alongside reform groups like the BGA. Better government is a right and a responsibility, and we can make it a reality if we’re all in this together. That’s the dizzying dance of democracy. And the ticket to the dance floor is a receipt from the polling place on election day.

Protesting in Egypt (lucy like whoa/Flickr)