Governor Rauner asks cash-strapped state to consider selling or leasing Chicago office building. The governor pointed out that ongoing and deferred maintenance costs of the James R. Thompson Center, Illinois’ principal downtown Chicago office structure, make it a highly expensive place to house State workers; deferred maintenance costs could soon require State taxpayers to invest up to $100 million in the aging building to allow it to continue to operate.
Under an alternate path, which Rauner this week urged the State to follow, Illinois will offer the building’s real estate site up for sale. The developer who buys the site could rehabilitate the structure, or could tear down the structure and construct a modern office building in its place. HB 4313, introduced by House Republican Leader Jim Durkin on Wednesday, October 14, would implement this proposed property sale.
Experts in downtown real estate responded to Rauner’s announcement by calling the office complex’s LaSalle Street site an underused resource. The structure, which opened for State use in 1985, has been allowed to run down over its three decades of activity. Meanwhile, adjacent Loop sites are thriving as locations for high-end office, hospitality, retail and residential use. Reorientation of the building’s “footprint” toward 21st-century architectural use could increase local property tax revenues by adding the land parcel to Chicago assessment rolls. Advocates noted that construction of a new building on the site would also create highly paid construction jobs.
FY16 Budget – Higher Education
Eastern Illinois University (EIU), other State universities talk about the lack of a State budget. Illinois is legally barred, in the absence of an approved budget, from paying out a wide variety of monies that are supposed to be transferred to different entities to perform a wide variety of professions and tasks. Sixty-one of these entities are institutions of higher education – 12 state universities and 49 community colleges – and this month their spokespersons are telling State lawmakers and the press of some of the sacrifices being made.
Eastern Illinois University (EIU) is one of the State universities facing a serious budget crunch. The teaching university is relatively oriented toward State aid and tuition payments, and enjoys less support from research grants, endowments, and other ancillary resources then some other institutions of higher education. EIU’s management has reduced its position headcount by 159 workers, generating $12 million in annual savings, but further action is necessary to avoid a cash crunch. University president David Glassman is urging the General Assembly to take action and warning that spring semester operations could be threatened.
Chicago Public Schools
Former Chicago schools chief Byrd-Bennett pleads guilty. At issue is the backstory behind $23 million in contractual services bought, during Byrd-Bennett’s term as school CEO, by Chicago Public Schools from private business firms led by the SUPES Academy. Prosecutors say Byrd-Bennett participated in paper and electronic communications with SUPES and other firms in which the schools chief was slated to get a kickback for these contacts after leaving office. The guilty plea, part of a plea bargain agreement between prosecutors and Byrd-Bennett’s lawyers, was to a charge of mail fraud/wire fraud connected with these communications.
Although Byrd-Bennett’s lawyers are now working with the U.S. attorney’s office, the charge against her could still lead to a sentence of up to 7½ years in federal prison. The felony fraud charges she had faced prior to the plea deal could have led to a sentence of as much as 20 years of incarceration. Questions are now being asked relative to oversight that the office of Chicago’s Mayor Rahm Emanuel was supposed to have had over the contracts between Chicago Public Schools and SUPES Academy and other implicated firms. In addition, the troubled big-city school system continues to face an annual operating deficit of more than one billion dollars.
Week in Review for 10/12/15 – 10/16/15
Illinois State Lottery
More prizewinners join the IOU club. In a previous announcement, the Illinois State Lottery has admitted that due to the State’s lack of a budget, they have ceased to make immediate cash payouts on winning number combinations greater than $25,000. The budget stalemate continues, and this week the Lottery lowered the IOU cutoff to $600. Any winner of an Illinois number combination bearing a prize of $601 or greater will be given a paper promise to pay, and will be paid as soon as the state gaming agency is granted the legal authority to make the payment. The Lottery’s announcement was made on Wednesday, October 14.
Litigation, which seeks class-action status, has been filed against the State Lottery. The plaintiffs demand immediate payment of the prizes due them. Lotteries are operated by 44 U.S. states (all but Alabama, Alaska, Hawaii, Mississippi, Nevada, and Utah), and prizewinners are being paid on time in 43 of them.
Lucas Museum of Narrative Art – Chicago
Long-term rights granted to build Lucas Museum of Narrative Art. The future lakefront facility will be built on Chicago Park District landfill property south of Soldier Field. Currently used as a surface parking lot, the footprint will become a stainless-metal-clad focus for narrative art. The Lucas Museum of Narrative Art was granted a long-term leasehold interest in the land parcel on Wednesday, October 14.
Currently in the planning process, the $700 million Lucas Museum is expected to be completed in 2018. Filmmaker George Lucas has collected works by N.C. Wyeth, Maxfield Parrish, Norman Rockwell, and many producers of narrative visual and moving images. The museum will be built on land originally reclaimed from Lake Michigan, stabilized with landfill, and used for the Century of Progress World’s Fair in 1933-1934.
Pension – Comptroller Warning
Comptroller Munger warns that November $560 million pension payment won’t be made. Munger’s warning was issued on Wednesday, October 14. Without a budget in place, Illinois is not legally authorized to make payments representing FY16 fiscal actions that the State would normally be expected to make. In many cases, these payments continue to be made because approximately 14 separate court orders, continuing appropriations, and consent decrees are deemed to present themselves as adequate substitutes for the lack of explicit appropriation authority.
Comptroller Munger’s statement had been expected, as the automatic payment of money into State-managed pension funds (including pension funds relied upon by retired teachers) in the absence of a State budget is not protected by any of these elements of fiscal-judicial policy. However, pension payments out of the same funds are protected by court orders and case laws. The comptroller stated that payments to retired pension beneficiaries will be made on schedule, but by selling pension fund assets and utilizing investment capital. Critics note that Illinois carried out pension disinvestment decisions in prior years, such as the notorious Blagojevich “pension holidays.”
Munger indicated that the State continues to face (and continues to try to pay) many bills required by court order and her count shows that taxpayers now owe $6.9 billion in unpaid bills outstanding. This number is expected to increase to $8.5 billion by the end of December. A key component of the State’s swelling liabilities is its continuing responsibility for a wide variety of medical costs incurred by residents eligible for Medicaid-financed public health care. Health care continues to grow as a percentage of the public-sector expenses of both Illinois and the United States as a whole, and Medicaid is one area where State of Illinois spending continues by court order.
Public Utilities
ComEd calls for Illinois to take “smart thermostat” lead. In an announcement on Thursday, October 8, ComEd announced a partnership with Chicago-area natural gas supply utilities such as Peoples Gas and with the federal Environmental Protection Agency (USEPA). The joint effort is aimed at stimulating the installation of one million “smart” thermostats into ComEd service area private homes by 2020.
Homeowners within the 3.8-million-customer ComEd service area will be urged to junk their electromechanical thermostats and replace them with software-armed thermostats. The newly-tuned instruments will be programmed to reduce energy demand at times when a residence is unoccupied or during hours of outdoor ambient heating and cooling. For utility suppliers such as Com Ed, the incentive is to create an energy infrastructure that smooths over potential spikes in demand for natural gas and electricity.
Federal government investigates spike in downstate wholesale power prices. Under current law, the firms that deliver electricity to most Illinois homes and bill the customer monthly are often not the firms that generate much of the electricity delivered. Deregulation of the electricity market in Illinois has decoupled owners of electrical-power generating plants from the delivery firms, which are often (although not always) the firms that own the wires that actually deliver electricity on residential streets. This deregulation has increased competition between electrical delivery firms and has increased choices offered to many Illinois consumers, but it has also altered the wholesale market that governs how electricity is priced when it is transferred from a generating plant to a transmission network.
A “spike” earlier this year in the price paid for wholesale electricity in downstate Illinois has led to action this month by the Federal Energy Regulatory Commission. Customers of widely-used Downstate utility Ameren noticed in June that their bills were reflecting an increase of 31% in the wholesale price charged by Midcontinent Independent System Operator (MISO Energy), the local regional electrical grid operator. This price increase was promptly passed along to Illinois customers of Ameren and other smaller electrical retailers.
The federal commission told reporters they planned to look at the role of Texas-based Dynegy, the holding company (separate from Ameren) that operates many of the coal-fired and other power plants that form the backbone of the power-supply network on which MISO Energy, Ameren, and other grip operators and power retailers depend.
State Government – Chief Information Officer
CIO discusses Internet security, other systemic problems. Speaking on Saturday, October 10 at the Illinois Institute of technology (IIT), Illinois CIO Hardik Bhatt stated the State is facing what he called “security vulnerabilities.” Chief topics of conversation among computer security professionals worldwide are recent outbursts of mass identity theft and malicious evasions of firewalls in many countries, including the U.S. Many units of the American public sector, including the U.S. government, have been victimized by hacking activities.
In addition to security enhancements, Bhatt assured listeners that the State has begun to work on serious barriers to productivity created by, or associated with, the obsolete electronic systems used by many agencies throughout the public sector. For example, some systems required for data entry by State workers and contractors in active field use are not yet configured for mobile applications.
Bhatt admitted that many agencies have been allowed to create data entry and data-storage systems that are incompatible with each other. In one case, an investigation found that the relevant software had been written in 1974.
Autumn in Illinois
Chicago Cubs beat Cardinals, advance to National League Championship Series. The fourth and deciding game of the National League Division Series (NLDS) was played at Wrigley Field in Chicago on Tuesday, October 13. As the trees were turning red, the National League Central Division was turning blue. Longtime “I-55” rivals, the Chicago Cubs and St. Louis Cardinals had never previously met in the MLB playoffs. Landmarks of this first-time post-season series were six home runs blasted by Cubs bats in NLDS Game 3, also in Chicago. Statisticians noted this was a record for a single team in a playoff or World Series game.
The Chicago Cubs will take on the New York Mets in the National League Championship Series (NLCS), set to begin Saturday in New York. The winner will advance to the World Series. Many fans have noted that the film “Back to the Future Part II,” released in 1989, predicted the Cubs would win the World Series in 2015.
Annual peak season for deer-related car incidents. Thousands of motor vehicle crashes involving deer take place on Illinois roads every year. The Illinois Department of Transportation (IDOT) logged 15,356 such incidents in 2014, and many additional deer collisions are not officially tabulated. IDOT reports that nearly 50% of these deer incidents happen in the three months of October, November, and December. Nightfall increases the risks, with 80% of deer crashes taking place on rural roads at night or twilight.
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