Illinois Government Consultants Incorporated

Packed trains and some confusion among commuters were reported this morning on Metra’s Union Pacific North Line, where work began on an eight-year, $185 million project to rebuild 22 bridges and replace the Ravenswood station.

Metra is running a revised schedule because trains share a single track in the construction zone around the Ravenswood station.

The agency made some last-minute changes to its schedules after fielding complaints from riders at three meetings.

Metra added stops near New Trier High School and in Wilmette and backed away from a plan to move the busy Ravenswood station north of Lawrence Avenue from its current location south of the street.

Metra said moving the station would have been a matter of several hundred feet, but residents said the station was best suited to the industrial area where it currently sits. They feared an increase in noise and a decrease in property values.
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Source: The Chicago Tribune

Gov. Pat Quinn’s chief of staff has resigned amid questions about whether he used his state account for political e-mails in possible violation of a state ethics law.

Jerry Stermer’s resignation Sunday came after the Chicago Sun-Times asked questions about an investigation of three politically oriented correspondences sent from his government e-mail account.

Stermer says he resigned because he didn’t want to have findings against him by former Executive Inspector General James Wright overshadow the work done by Quinn, who’s in a difficult election battle against Republican Bill Brady.

Quinn removed Wright on Aug. 13, the same day the governor was briefed about Wright’s findings.

A confidential report written by Wright and obtained by the Sun-Times indicates that Wright encouraged Illinois’ attorney general to file a complaint against Stermer before the state Executive Ethics Commission.
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Source: The State Journal Register - The Oldest newspaper in Illinois

Housing will eventually recover from its great swoon. But many real estate experts now believe that home ownership will never again yield rewards like those enjoyed in the second half of the 20th century, when houses not only provided shelter but also a plump nest egg.

The wealth generated by housing in those decades, particularly on the coasts, did more than assure the owners a comfortable retirement. It powered the economy, paying for the education of children and grandchildren, keeping the cruise ships and golf courses full and the restaurants humming.

More than likely, that era is gone for good.

“There is no iron law that real estate must appreciate,” said Stan Humphries, chief economist for the real estate site Zillow. “All those theories advanced during the boom about why housing is special — that more people are choosing to spend more on housing, that more people are moving to the coasts, that we were running out of usable land — didn’t hold up.”

Instead, Mr. Humphries and other economists say, housing values will only keep up with inflation. A home will return the money an owner puts in each month, but will not multiply the investment.

Dean Baker, co-director of the Center for Economic and Policy Research, estimates that it will take 20 years to recoup the $6 trillion of housing wealth that has been lost since 2005. After adjusting for inflation, values will never catch up.

“People shouldn’t look at a home as a way to make money because it won’t,” Mr. Baker said.

If the long term is grim, the short term is grimmer. Housing experts are bracing themselves for Tuesday, when the sales figures for July will be released. The data is expected to show a drop of as much as 20 percent from last year.

The supply of homes sitting on the market might rise to as much as 12 months, about twice the level of a healthy market. That would push down prices as all those sellers compete to secure a buyer, adding to a slide that has already chopped off as much as 30 percent in home values.

Set against this dismal present and a bleak future, buying a home is a willful act of optimism. That explains why Adam and Allison Lyons are waiting to close on a $417,500 house in Deerfield, Ill.

“We’re trying not to think too far ahead,” said Ms. Lyons, 35, an information technology manager.

The couple’s first venture into real estate came in 2003 when they bought a condo in a 17-unit building under construction in Chicago. By the time they moved in two years later, it was already worth $50,000 more than they had paid. “We were thinking, great!” said Mr. Lyons, 34.

That quick appreciation started them on the same track as their parents, who watched the value of their houses ascend for decades. The real estate crash interrupted that pleasant dream. The couple cannot sell their condo. Unwillingly, they are becoming landlords.

“I don’t think we’re ever going to see the prosperity our parents did, but I don’t think it’s all doom and gloom either,” said Mr. Lyons, a manager at I.B.M. “At some point, you just have to say what the heck and go for it.”

Other buyers have grand and even grander expectations.

In an annual survey conducted by the economists Robert J. Shiller and Karl E. Case, hundreds of new owners in four communities — Alameda County near San Francisco, Boston, Orange County south of Los Angeles, and Milwaukee — once again said they believed prices would rise about 10 percent a year for the next decade.

With minor swings in sentiment, the latest results reflect what new buyers always seem to feel. At the boom’s peak in 2005, they said prices would go up. When the market was sliding in 2008, they still said prices would go up.

“People think it’s a law of nature,” said Mr. Shiller, who teaches at Yale.

For the first half of the 20th century, he said, expectations followed the opposite path. Houses were seen the way cars are now: as a consumer durable that the buyer eventually used up.

The notion of housing as an investment first began to blossom after World War II, when the nesting urges of returning soldiers created a construction boom. Demand was stoked as their bumper crop of children grew up and bought places of their own. The inflation of the 1970s, which increased the value of hard assets, and liberal tax policies both helped make housing a good bet. So did the long decline in mortgage rates from the early 1980s.

Despite all these tailwinds, prices rose modestly for much of the period. Real home prices increased 1.1 percent a year after inflation, according to Mr. Shiller’s research.

By the late 1990s, however, the rate was 4 percent a year. Happy homeowners were taking about $100 billion a year out of their houses, which paid for a lot of good times.

“The experience we had from the late 1970s to the late 1990s was an aberration,” said Barry Ritholtz of the equity research firm Fusion IQ. “People shouldn’t be holding their breath waiting for it to happen again.”

Not everyone views the notion of real appreciation in real estate as a lost cause.

Bob Walters, chief economist of the online mortgage firm Quicken, acknowledges that the recent collapse will create a “mind scar” just as the Great Depression did. But he argues that housing remains unique.

“You have to live somewhere,” he said. “In three or four years, people will resume a normal course, and home values will continue to increase.”

All homes are different, and some neighborhoods and regions will rebound more quickly. On the other hand, areas where there was intense overbuilding, like Arizona, will be extremely slow to show any sign of renewal.

“It’s entirely likely that markets like Arizona will not recover even in the 15- to 20-year time frame,” said Mr. Humphries of Zillow. “The demand doesn’t exist.”

Owners in those foreclosure-plagued areas consider themselves lucky if they are still solvent. But that does not prevent the occasional regret that a life-changing sum of money was so briefly within their grasp.

Robert Austin, a Phoenix lawyer, paid $200,000 for his home in 2000. Five years later, his neighbors listed a similar home for $500,000.

Freedom beckoned. “I thought, when my daughter gets out of school, I can sell the house and buy a boat and sail around the world,” said Mr. Austin, 56.

His home is now worth about what he paid for it. As for that cruise, “it may be a while,” Mr. Austin said. Showing the hopefulness that is apparently innate to homeowners, he added: “But I won’t rule it out forever.”
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Source: The New York Times

Ald. Ginger Rugai (19th) said Wednesday she would not seek re-election, becoming the fourth of the City Council’s 17 women to retire from politics in a difficult year for incumbents.

Rugai insisted that her decision to retire had nothing to do with the anti-incumbent tidal wave sweeping the nation or the local political backlash that followed the 75-year, $1.15 billion lease that privatized Chicago parking meters.

She expressed confidence that she would have won a sixth term, but simply decided that it was time to move on.

“I’ve served the community now for almost 36 years — 20 of those as alderman. I’ve always known when it’s time to make a change,’’ said Rugai, a breast cancer survivor.

“I feel good about it. I’m not sick. I’m not too old. I still have a lot of energy. I’m not afraid of a campaign,’’ the 64-year-old Rugai said. Beverly and Morgan Park residents “know I’m a fighter and they know I’m a survivor. There’s no smoke and mirrors in regard to this. It’s just trusting my instincts that it’s time for me to move on and look to a new challenge. And it’s good for the ward to have a new life as well.’’

Rugai is a political protégé of former State Sen. Jeremiah Joyce, one of Mayor Daley’s closest friends in politics. She was a legislative aide to Joyce.

A former assistant director of the Beverly Area Planning Association, she was appointed by the mayor in 1990 after then-Ald. Michael Sheahan (19th) was elected Cook County sheriff.

She went on to win five terms before telling members of the 19th Ward Democratic Organization this week that she would support Committeeman Matt O’Shea as her replacement.

O’Shea said his priority is to deliver city services at a time of severe budget cutbacks that are almost certain to get worse as the city copes with a record $654.7 million shortfall.

“We’re in tough times with a shortage of manpower. Everything is taking longer — from recycling to street light repairs and tree trims,’’ said O’Shea, 41.

“We’re still feeling the effect of the summer storms that left hundreds of flooded basements. We just have to work that much harder to stay on top of things, work with the 311 system and explain to residents that it’s gonna take longer to get things done, but we’re working on them.’’

Rugai is the fourth woman in recent weeks to announce her decision to retire from politics, joining Aldermen Vi Daley (43rd), Helen Shiller (46th) and Mary Ann Smith (48th). Ald. Toni Preckwinkle (4th) will also be leaving the City Council if she is elected County Board president.

That could put a significant dent in the City Council’s 17-member female bloc. But Rugai, the Council’s third-longest serving woman, said, “There were fewer women when I entered 20 years ago and the ranks have grown. I imagine they will continue to grow. Women are great at details.’’

The Chicago Sun-Times reported earlier this month that political retirements, promotions and mayoral ambitions could cost the City Council nearly one-third of its 50 members. And that’s not counting incumbent aldermen who could be tossed out by the voters.
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Source: The Chicago Sun-Times

A new federally funded health insurance program for people with pre-existing conditions will begin accepting applicants today.

Enrollment in the Illinois Pre-Existing Condition Insurance Plan starts at 10 a.m. The program, part of federal health-care reform, is open to Illinois residents with chronic conditions who have been uninsured for at least six months. Illinois will receive $196 million from the federal government to provide coverage until Jan. 1, 2014, the date insurers will no longer be allowed to deny coverage based on a pre-existing condition.

State officials estimate that 4,000 to 6,000 people will receive insurance through the temporary high-risk pool.

Coverage starts Sept. 1. The plan will be administered by Urbana-based Health Alliance Medical Plans. To apply, call (877) 210-9167 or visit Insurance.Illinois.gov/IPXP.
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Source: The Chicago Sun-Times

Illinois has borrowed more than $2.2 billion from the federal government since July 2009 to pay unemployment benefits.

The good news is the state has not had to borrow since April, and the loan is interest-free for now.

“We really do access it as needed. It’s a day-to-day decision, five days a week,” Illinois Department of Employment Security spokesman Greg Rivara said Thursday.

Illinois has plenty of borrowing company. According to the National Conference of State Legislatures, 31 states and the Virgin Islands had borrowed $38.7 billion to pay jobless claims as of this week.

Several states exceeded Illinois borrowing, topped by California at nearly $7.5 billion.

Unemployment trust funds are paid for through withholding taxes on employers, but Rivara said there have been minimal rate changes up to now in Illinois because rates are based on a three-year payment history.

The system is designed to ease rates during a down economy, when claims are high, and for rates to rise in good times to rebuild the fund, he said. Rates for 2010 are lower than those in 2007, while the taxable wage-base is higher.

Interest free, for now

The federal government suspended interest on loans to states for jobless benefits as part of the national stimulus legislation, but that exemption is scheduled to expire in January barring a congressional extension.

Several states, including most recently Pennsylvania, already are struggling with ways to build unemployment trust funds. But the basic options — raise rates on employers or cut benefits in an already-struggling economy — are a tough political sell, said Marc Katz, congressional and public affairs director for the National Association of Workforce Agencies in Washington, D.C.

“In terms of escalating taxes, this is going to be an issue that’s getting a lot of attention. … It’s going to be a major issue with state legislatures,” said Katz.

Katz said a variety of proposals are pending in Congress, including simply forgiving the state debts because of the severity of the recession. But he said the federal government has its own financial issues.

“It’s unclear what will happen because there’s also intense focus on the (federal) deficit,” said Katz.

Not unprecedented

Illinois resorted to borrowing during a recession in the early 1980s, when at one point the unemployment trust fund was $2.3 billion in the red. The borrowing also resulted in a series of reforms in 2003 that set up the current system.

The same trend occurred in 2009, said Rivara.

“We were in positive territory when 2009 started, and we were in negative territory when 2009 ended,” he said.

The balance has since rebounded to about $481 million, though Rivara said that is primarily because employers pay the bulk of withholding taxes in spring and summer. The state could be forced to borrow again, he said.

Illinois has not yet begun to repay the federal loan, and Rivara said the state could pay as much as 4 percent interest on the balance if the interest exemption expires in January. He said states also could be penalized in other ways, including federal incentives for business, if the money is owed for more than two years.
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Source: The State Journal Register - The Oldest Newspaper in Illinois

The director of the nonpartisan Congressional Budget Office said on Thursday that permanently extending tax cuts put in place under President George W. Bush would provide a “considerable” economic boost over the next several years but would result in substantial increases in the federal deficit, placing the country in a precarious fiscal situation by 2020.

In offering this assessment, Douglas Elmendorf underscored the difficult choice facing lawmakers as they debate whether to extend any or all of the tax breaks, which are scheduled to expire at the end of the year.

The CBO’s analysis was part of a broader report released Thursday in which the agency projected that the federal government’s budget deficit for this year would be $1.34 trillion. The figure is slightly below last year’s total, but the CBO warned that policymakers face “daunting” challenges in the years ahead in trying to return the country to fiscal sustainability.

Concerns about the federal deficit have been figuring prominently in congressional debates over whether to spend more money on programs to stimulate the economy and to help the unemployed, as well as over the Bush-era tax cuts.

The CBO examined the impact if most of those cuts are extended. This scenario assumed that the breaks for higher-income taxpayers would expire.

“Under that . . . scenario, economic growth would be stronger next year; unemployment would be lower next year,” Elmendorf said. But he added that “over time, that extra borrowing — and it’s a good deal of extra borrowing — would have negative consequences on the economy.”

Republicans and many representatives of business have pushed for a permanent extension of all the tax cuts, arguing this would jump-start economic growth. They warn that allowing taxes to rise could stifle the recovery.

The Obama administration and Democratic leaders in Congress are seeking to extend tax cuts for Americans earning less than $250,000 a year, while letting expire some of those for wealthier individuals. Democrats say this would help stimulate the economy and cost the government less than if all cuts were extended.

The CBO’s baseline scenario assumes that the Bush-era tax breaks will expire, as current law provides. In that case, next year’s deficit would fall to $1.07 trillion, or 7 percent of the country’s total economic output, or gross domestic product, according to agency estimates. By 2012, the deficit would shrink to $665 billion, or 4.2 percent of GDP.

Agency analysts also projected that public debt would rise from 53 percent of GDP last year to almost 70 percent of GDP by 2020, a figure unmatched since the 1950s.

“It is an extraordinarily high level of debt by the experience of this country over the past 65 years,” Elmendorf said. “Of course, it is also an extraordinarily difficult economic situation in which we find ourselves.”

President Obama created a bipartisan commission this year to address the nation’s soaring debt. Members are considering a wide range of measures, from cuts in Medicare and Social Security to reform of the tax system. Obama has asked the group to make recommendations by Dec. 1.

On a positive note, the CBO lowered by $50 billion the estimated cost of the government’s bank bailout program, known as the Troubled Assets Relief Program. The CBO said the change was in part due to improved market conditions and a provision in the recently approved financial overhaul bill that reduced the program’s spending authority.
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Source: The Washngton Post

Don’t worry if you see explosions, smoke and fireballs in the Loop this weekend — it’s not a new crime wave, it’s the latest installment of Hollywood in Chicago.

“Transformers 3″ is scheduled for more filming this weekend, closing off streets and bridges in the Loop, according to a notice from the City of Chicago.

West Van Buren Street between South Wacker Drive and South Canal Street will be closed from 6 a.m. to 3 p.m. on Friday. The LaSalle Street Bridge also will be closed on Friday between West Wacker Drive and West Kinzie Street from noon to 10 p.m.

Additionally, the city said helicopters will fly at low altitude from 8 a.m. to 9 p.m. on Saturday, in order to take aerial shots over the Chicago River. These flights will close the bridges at North Michigan Avenue, North Wabash Avenue, North State Street and North Dearborn Street for 15-minute intervals.

Chicago fire and police personnel will be on hand to monitor pyrotechnics, including simulated gunfire, smoke, fireballs and explosions.

The third installment of the “Transformers” series began its Chicago filming in early July, occasionally closing various downtown streets and drawing sizeable crowds to catch a glimpse of the action.
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Source: The Chicago Tribune

The Illinois State Board of Education says the state’s average ACT score ranks highest nationally for states that test more than 90 percent of their students.

Seven other states have more than 90 percent of their students taking the test.

ISBE said in a news release Wednesday that Illinois’ 2010 composite score on the ACT is 20.7. That’s slightly lower than the 2009 score of 20.8.

But ISBE says Illinois student scores have improved over the past five years on the standardized test. The exam is given to high school students who plan to attend college.

The national average of 21.1 has stayed about the same since 2006.

Nearly 150,000 students took the test in Illinois for 2010.

Illinois requires all 11th graders to take the test.
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Source: The State Journal Register - The Oldest Newspaper in Illinois

Equity investors on Wall Street found bad news staring them in the face again Thursday.

Disappointing reports about the job market and a regional slowdown in manufacturing reminded traders that the economic recovery was beginning to slow and that the job market would continue to be weak because of it.

Shares on Wall Street were down more than 1.5 percent in afternoon trading after the Department of Labor said that initial claims for unemployment insurance rose last week to a seasonally adjusted half a million people, the first time since November that they have reached that level. The jobless claims climbed by 12,000 to 500,000 from the previous week’s revised 488,000.

Wall Street analysts had expected the seasonally adjusted claims to drop.

“The whole lack of improvement and further rise in claims coincides with the concerns about production and growth in the economy,” Steven C. Wieting, an economist for Citigroup, said.

The unemployment report was the first of a one-two punch for investors on Thursday morning.

In addition, the Federal Reserve Bank of Philadelphia’s monthly indexshowed that manufacturing in the mid-Atlantic states shrank this month. The index fell to minus 7.7 points in August — its lowest level since July 2009 — from last month’s 5.1 points.

The two reports were enough to topple trading from the outset, reversing the upward trend of the last two days when the market rose 1.1 percent.

“On a day when there is light volume, and most of the big earnings are already gone, you tend to focus back on the economic fundamentals and these numbers certainly were simply not good numbers,” a market strategist for Prudential Financial, Quincy Krosby, said. “We need to see these numbers turn in the other direction.”

By early afternoon, the Dow Jones industrial average fell 158.56 points, or 1.5 percent. The broader Standard & Poor’s 500-stock index fell 19.28 points, or 1.85 percent, while the Nasdaq fell 37.49 or 1.7 percent.

In Europe, the FTSE 100 in London ended the day down 91.58 points, or 1.73 percent, while the DAX in Frankfurt declined 111.18 points, or 1.8 percent. The CAC 40 in Paris was 75.53 points, or 2.1 percent, lower.

“If we can get through the summer doldrums and see activity pick up it is going to help put a floor on the market,” Ms. Krosby said. “But if the economic numbers continue to disappoint investors are going to be nervous about where we are headed.”

Bond prices rose as yields dropped. The yield on the 10-year Treasury note fell to 2.58 percent from 2.63 percent late Wednesday.

“The uptick in jobless claims which was fairly severe and the amount of receiving in interest swaps ended most of the overnight sell-off in the bond market,” said Tom di Galoma, head of United States rates trading at Guggenheim Securities.

The disappointing economic reports followed the trend in which relatively weak data has confirmed a slow recovery. Corporate news or reports on second quarter results have often struggled to overcome any negative downturn on the overall market.

On Thursday, the chip maker Intel said that it was acquiring McAfee in a deal valued at $7.68 billion, with Intel paying $48 a share in cash, a 60 percent premium over McAfee’s Wednesday closing price of $29.93.

Shares in McAfee, the maker of antivirus software, were up 57 percent on Thursday; Intel’s were down 3.6 percent.

The Department of Labor claims report was the latest to offer a discouraging view that the job market in the United States was struggling, and again it revived sentiment that the underlying trend in the economy is one of a sluggish recovery.

Earlier this month, the department said that the nation lost 131,000 jobs in July, and that June was far weaker than previously indicated. While private employers added 71,000 jobs, those figures were overtaken by the 143,000 layoffs as the Census finished its work. The unemployment rate remained at 9.5 percent in July, mostly because of people giving up the search for work. Overall, the economy has lost more than eight million jobs during the recession.

The concern among economists is that the unemployment rate will rise if the economy weakens. The economy grew at a 3.7 percent annual rate in the first quarter and 2.4 percent in the second. But new trade deficit and other economic data this month has pointed to the potential for gross domestic product to be revised down from the 2.4 percent to between 1 and 1.5 percent.

“And the auto industry failed to shut down seasonally in early July,” Mr. Wieting said.

“In the July 10 week, we hit the lowest claims level of the year,” he added, or about 427,000. “It may be partly the payback for that.”

Several states were particularly hard hit by a rise in claims. California showed an increase of 4,393 because of layoffs in the service industry. Indiana showed a rise of 1,999 because automotive and manufacturing workers were let go.

“That people are filing for the first time is the bad news,” said Joshua Shapiro, chief United States economist for MFR Inc.

A private research group, the Conference Board, said its index of leading economic figures rose 0.1 percent last month to 109.8. That was a reversal of a 0.3 percent drop in June, and a 0.5 percent increase in May.

Economists polled by Thomson Reuters had expected a gain of 0.2 percent.
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Source: The New York Times