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State retirees who now receive premium-free state health insurance would have to start paying for their coverage under a bill that cleared the Illinois House Wednesday.

The House vote was 74-43. The bill now goes to the Senate.

Many retired state and university workers, lawmakers and judges now pay no health premiums. Senate Bill 1313 would also apply to a small number of retired teachers. Most retired teachers are in a separate health insurance plan for which they pay premiums, although Gov. Pat Quinn wants to end a state subsidy to that program.

House Speaker Michael Madigan, D-Chicago, who sponsored the bill, said requiring retirees to pay health premiums is a small part of the painful budget decisions lawmakers will have to make this year.

“We are being called upon to administer some real tough medicine all through this session,” Madigan said. “If we can’t do this bill, what are we going to be able to do (on the others)? This is one small part of it.”

Madigan said retiree health insurance costs the state $800 million a year, and 90 percent of retirees pay no premiums for their own coverage. Retirees do pay for dependent coverage, co-payments and other out-of-pocket expenses.

In general, state retirees are eligible for premium-free health insurance after 20 years of service. Madigan said no other state offers a benefit like Illinois’.

Area reps vote no

All but one of the Springfield area’s representatives voted against the bill, including Raymond Poe, R-Springfield, Rich Brauer, R-Petersburg, Jim Watson, R-Jacksonville, Wayne Rosenthal, R-Morrisonville, and Bill Mitchell, R-Forsyth. Rep. Jil Tracy, R-Quincy, voted in favor of it.

Poe said he might have been able to support the change if the bill detailed how much employees would have to pay. Poe said he’s heard from retirees who understand premium payments might be necessary, but are worried about the amount.

“You’re betting blind,” Poe said. “Why didn’t we see the numbers? If it was fair, I probably could have voted for it.”

The bill provides that the Department of Central Management Services would determine retiree premiums each year. Lawmakers on the Joint Committee on Administrative Rules would review the rates and could overrule them.

In a letter to House Minority Leader Tom Cross, R-Oswego, CMS director Malcolm Weems wrote that retiree premiums would be based on a retiree’s pension benefits. Those with higher pensions would pay more for health coverage, he wrote.

The letter also said retirees eligible for Medicare “will pay significantly less than those (generally younger and still working) who are not.” Retirees eligible for Medicare – generally those 65 and older – cost the state insurance plan much less than those who are not, Weems said.

Cost squeeze

Cross said continually rising costs for employee benefits will squeeze out the state’s ability to pay for basic services like education, he said.

“For years, the state has made commitments it cannot keep,” Cross said. “This represents a long overdue assessment of retiree health insurance. It is no longer something we can give people for free.”

Rep. Mike Bost, R-Murphysboro, agreed.

“We’re up against the wall now,” Bost said. “If we don’t start becoming very sensible with the operations of the state, we may have to cut services to the mentally ill or those who are physically disabled because certain ones throughout the state who have a large pension don’t want to fund part of their health care.”

Rep. Frank Mautino, D-Spring Valley, said thousands of people left state government under early retirement incentives believing the health insurance benefit would remain as it was and that it was a contractual right. He voted against Madigan’s bill.

Rep. Jim Sacia, R-Pecatonica, said he is concerned about whether retirees will be able to pay the new premiums.

“The easiest thing in the world is to go after retirees,” Sacia said, before voting in favor of the bill.

Source:  The State Journal Register - The Oldest Newspaper in Illinois

WASHINGTON — Moving to protect the Pentagon, Republicans controlling the House are pressing for cuts to food stamps, health care and pensions for federal workers as an alternative to an automatic 10 percent cut to the military next year.

The proposed cuts in a measure scheduled for a vote Friday afternoon are but a fraction of those called for in the broader, nonbinding budget plan that passed the House in March. They are aimed less at taming trillion dollar-plus deficits than at blocking indiscriminate cuts to the Pentagon and domestic agencies coming in January.

The automatic spending cuts, totaling $98 billion next year, according to a new estimate, are punishment for the failure of last year’s deficit-reduction “supercommittee” to strike a deal. Lawmakers in both parties want to avoid the automatic cuts, but Democrats are strongly opposed to the GOP approach, which slices more than $300 billion from domestic programs over the coming decade while preventing the Pentagon from absorbing a $55 billion blow to its budget next year.

The automatic cuts would strike domestic programs as well, including a 2 percentage point cut from Medicare payments to health care providers and a $16 billion cut in farm subsidies over a decade. The GOP measure would leave those cuts in place.

The butter-for-guns swap faces a veto threat from the White House and rejection by Democrats who control the Senate, who argue the GOP measure unfairly hits the middle class and the poor. Democrats are making it plain they expect any effort to turn off automatic spending cuts to include additional taxes. The resulting deadlock is highly unlikely to be resolved before Election Day.

The measure includes changes to the food stamp program that would remove almost 2 million recipients through tighter enforcement of eligibility rules and would cut back a 2009 benefit increase, costing a family of four $57 a month. Federal workers would have to contribute 5 percentage points more of their pay toward pension plans that are more generous than most private sector workers receive.

Fully 25 percent of the cuts come from programs that benefit the poor, while cuts to President Barack Obama’s health care plan affect those with modest incomes. A cut to the Social Services Block Grants, which Republicans say duplicates other programs, would hit programs like Meals on Wheels for the elderly, child care and child abuse prevention. Another provision opposed by most Democrats would deny illegal immigrants tax refunds from the $1,000-per-child tax credit.

“They are protecting the massive Pentagon budget with all its waste … and finding even deeper cuts in programs that benefit the people of this country,” said liberal Rep. Jim McGovern, D-Mass. “This bill before us would create a government where there is no conscience; where the wealthy and well-connected are protected and enriched — and the middle class, the poor, and the vulnerable are essentially forgotten.”

But Republicans noted that much of the food stamp savings came from tightening eligibility loopholes and that the savings equal just 4 percent of the program’s budget. Democrats noted that the cuts would also take away free school lunches for 280,000 children.

Senate Majority Leader Harry Reid, D-Nev., stepped off the sidelines Wednesday with a forceful speech promising to leave the automatic cuts in place until Republicans show more flexibility on cutting the budget deficit through a mix of new revenues and spending cuts.

“Republicans refused to be reasonable. They refused to raise even a penny of new revenue or ask millionaires to contribute their fair share to help reduce our deficit and our debt,” Reid said. “It is their intransigence — their refusal to compromise — that leaves us facing the threat of” automatic cuts.

The White House veto threat arrived just a few hours later.

“The bill relies entirely on spending cuts that impose a particular burden on the middle class and the most vulnerable among us, while doing nothing to raise revenue from the most affluent,” a White House statement said.

But two top Republicans, House Armed Services Committee Chairman Howard “Buck” McKeon of California and Budget Committee Chairman Paul Ryan of Wisconsin, countered Wednesday with an editorial on RealClearPolitics.com that warned of the “crippling effect” the automatic cuts would have on the military, including troop cuts and gains made against terrorism.

The Congressional Budget Office issued a new analysis on the GOP measure as well, declaring the measure would cut the deficit by as much as $238 billion over the coming decade. But deficits for next year would actually increase by about $28 billion, depending on when the measure could be enacted.

Source:  The Washington Post

Mayor Rahm Emanuel’s administration pulled the plug Tuesday on the only NATO protest planned for a workday in the Loop business district, revoking permission for a May 18 Daley Plaza rally barely a week before world leaders are to arrive in Chicago.

The National Nurses United group that planned the demonstration and other protest groups called the move a violation of free speech and said it fits a pattern of City Hall trying to marginalize demonstrations against the May 20-21 gathering.

“If the nurses are a threat to Rahm Emanuel, then heaven help the U.S.,” said RoseAnn DeMoro, executive director of National Nurses United. “He’s been trying to move us into an obscure forum.”

In a May 8 letter to the nurses group, the city said the group’s midday parade along Michigan Avenue downtown can go on as planned with one major difference — instead of ending with a rally in the heart of the Loop, participants must swing east and gather in Grant Park for their rally.

The city said it needed to move the rally because organizers promoted the event so much that it was likely to exceed the group’s attendance estimate of 1,000 people. The city also noted that the group had added an appearance by singer Tom Morello, former guitarist for Rage Against the Machine.

“The addition to your event of a performance by a popular, nationally known musician who regularly draws large crowds under similar circumstances, along with the active recruitment of other organizations to join in your event, will likely increase the number of participants in your event far beyond the number estimated on your application,” wrote Mike Simon, assistant commissioner of the city’s Department of Transportation.

A larger crowd on a workday in the Loop could strain city resources, administration officials said, citing aggravating factors including the Crosstown Series pitting the White Sox against the Cubs several miles away in Wrigley Field.

“You’re talking about a downtown area on a workday,” said Roderick Drew, spokesman for the city Law Department.

In the letter, the city said the group’s attempts to promote the rally meant it could exceed the maximum capacity of Daley Plaza, which the city said is 5,000 people.

It was the second NATO-related protest moved out of Daley Plaza since President Barack Obama announced that the G-8 economic summit, originally scheduled to run back-to-back with NATO in Chicago, was being moved to Camp David, Md.

The nurses association had held the permit for the rally since February, and the group put out a news release April 20 announcing the addition of Morello, who has long performed with left-wing polemic rock groups.

The city had approached the nurses group about the changes but did not act until Tuesday. The group consulted the American Civil Liberties Union about challenging the move in court but has not made a decision. But they planned to protest the move at City Hall at noon Wednesday, said Chuck Idelson, a spokesman for the California-based group.

Protest organizers argue that the city is discriminating against the demonstration because the mayor doesn’t like the message of the nurses march. National Nurses United is specifically advocating for a transaction tax on Wall Street deals.

Protesters point to other rallies in the recent past that have been allowed to crowd thousands of people into the confined spaces of downtown streets.

“The city has accommodated many overflow crowds there. It’s infuriating,” said Andy Thayer, organizer of a May 20 anti-war protest that was originally scheduled for Daley Plaza on May 19, the first day of the G-8 meeting.

But when Thayer applied to have the same rally for an estimated 5,000 people a day later, the city balked and cited similar reasons to push the demonstration to Grant Park.

An April 2011 union rally in support of Wisconsin workers was allowed to use Daley Plaza even though it overflowed the plaza and surrounding streets, according to a Tribune account of the event. Likewise, a 2010 May Day march attended by an estimated 8,000 people was allowed to end at the plaza.

When the Blackhawks won the Stanley Cup in 2010, the city permitted a workday parade through the streets of the Loop that drew a sea of humanity that officials estimated to be as many as 2 million people. In 2009, the city allowed Oprah Winfrey to shut down North Michigan Avenue for 21/2 days in order to film her TV show before 20,000 people standing in the street for a program that included a live performance by the Black Eyed Peas.

Morello, who grew up in north suburban Libertyville, said he’s used to government agencies taking a confrontational tack with causes he supports.

“It’s interesting to be blacklisted in my own hometown,” Morello joked. “At the same time it’s not going to stop anything we do, the number of people who come out in the streets … or the songs I’m going to play.”

On Tuesday night, city and host committee officials wrapped up their series of pre-NATO community briefings meant to reassure residents that the summit and demonstrations will cause only minor inconveniences to their routines.

Despite myriad road closings, a security perimeter and other restrictions prompted by dozens of heavily guarded motorcades rolling through the city, the Secret Service’s Frank Benedetto said life would be “as close to normal as possible.”

Police Superintendent Garry McCarthy told Loop business leaders at the meeting that the police response to any NATO demonstrations “will be very fluid and agile.”

After the meeting, he said the department was involved in discussions about the nurses permit change but declined to discuss details.

“There’s a whole bunch of issues that surround it,” McCarthy said. “It has to do with transportation and a hundred other things.”

Source:  The Chicago Tribune

The U.S. Postal Service said Wednesday it is abandoning plans to close thousands of post offices and instead will drastically reduce hours at most of its rural outposts, a change that will affect about a third of the country’s retail mail network.

Postal officials, bowing to community and congressional pressure to keep rural service afloat as the debt-ridden agency cuts costs, said they will offer early retirement incentives to tens of thousands of postmasters. The result will be a dramatic change for customers: Window hours will drop from the current eight to as few as two a day.

Postmaster General Patrick R. Donahoe said the latest plan will save $500 million a year in labor costs, up from an estimated $200 million he said almost a year ago would be saved by closing 3,700 post offices in rural, suburban and urban areas.

“When we announced those closures, what people said to us was, ‘Keep our post office open,’” Donahoe said at a briefing on the plan. “As we sat and talked to people, we learned a lot. We have to have shorter hours. But if we can shrink the labor cost, we can keep the buildings open.”

“When we announced those closures, what people said to us was, ‘Keep our post office open,’” Donahoe said at a briefing on the plan. “As we sat and talked to people, we learned a lot. We have to have shorter hours. But if we can shrink the labor cost, we can keep the buildings open.”

Customers still will have all-day access to their mailboxes in post office lobbies.

The latest cost-cutting strategy does not come close to filling the Postal Service’s multi-billion dollar shortfall. Financial results for the first quarter of 2012 are due Thursday, and the financial hemorrhaging is expected to continue.

In addition to closing post offices, officials have proposed consolidating about 250 mail processing centers; eliminating Saturday delivery; slowing delivery; exploring new lines of business that are now prohibited and reducing workers’ benefits. Donahoe said Wednesday the agency plans to move forward with plans to close the mail-processing facilities.

Others plans are in limbo while Congress debates how to step in.

The Senate passed legislation that would give the agency $11 billion it overpaid into one of its pension funds, among other changes. Senators restricted the closure of post offices, bowing to concerns of rural lawmakers who vigorously fought plans to close offices in their districts.

The House has not acted on its version of the bill, which demands more cost savings.

In a statement, Rep. Darrell Issa (R-Calif.) the House bill’s sponsor, said postal officials need to make deeper cuts to the post office network and look beyond rural post offices to suburban and urban ones.

“The smallest 10,000 post offices collectively cost USPS less than $600 million dollars to operate each year,” Issa, chairman of the House Oversight and Government Reform Committee, said in a statement.

“That is less than one-eighth of the $5 billion USPS spends each year to operate its network of 32,000 post offices. To achieve real savings creating long-term solvency, the Postal Service needs to focus on consolidation in more populated areas where the greatest opportunities for cost reduction exist.”

Source:  The Washington Post

Mayor Rahm Emanuel on Tuesday proposed raising the retirement age by five years for city employees, increasing employees’ pension contributions by 1 percent a year over the next five years and suspending yearly cost-of-living adjustments for retirees for 10 years to help solve the city’s $20 billion pension crisis.

Emanuel delivered the bitter pill that union leaders have long anticipated during testimony in Springfield before the Illinois House Personnel and Pension Committee.

Emanuel warned legislators that city property taxes could soar by 150 percent and that class sizes at Chicago’s schools would jump to 55 students, on average, unless they pass pension reforms.

“Our taxpayers can’t afford to choose between pensions and police officers, pensions or paved streets or pensions and public health,” he told lawmakers. “Without pension reform, we’ll be forced to mortgage our children’s future to pay for our past.”

It was the mayor’s first trip to the state capitol, and he was greeted like a rock star — a far cry from the cold shoulder he’s getting from union leaders representing city employees. Retiring state Rep. Karen May (D-Highland Park) took a picture of him with her cell phone as he was getting ready to testify.

Emanuel painted the options on pensions in stark terms.   The changes that the mayor outlined to reduce the city’s unfunded pension liability by a projected 40 percent mirror the reforms proposed by Gov. Pat Quinn to solve the state’s pension crisis. But Emanuel’s changes go even further.

Emanuel’s “roadmap to retirement security” calls for:

◆ A 1 percent yearly increase in employee contributions for five years. That would bring the average contribution level a city employee has withheld for his or her pension to 14 percent, city Chief Financial Officer Lois Scott said.

◆ A five-year increase in the retirement age — raising it to 67 for most civilian workers and to 60 for police and fire department workers.

◆ Suspending the annual cost-of-living increase in pension benefits for retirees for now “to stop the bleeding” — a “pause,” he called it, that would remain in place for 10 years under Emanuel’s plan. Emanuel noted that a city employee who retired in 1995 with an annual pension of $60,000 now collects $100,000 a year, thanks to those automatic increases. Over the past 10 years, those benefits have grown at a rate “30 percent faster than inflation,” the mayor said.

◆ Offering newly hired city employees a “choice” between a defined benefits plan and the 401-K plans favored by private industry. Union leaders have long opposed a two-tier approach on grounds that it would create a caste system among rank-and-file members.

◆ No additional contribution from Chicago taxpayers until pension reforms are enacted.

The pension framework Emanuel presented drew joint praise from House Speaker Michael Madigan (D-Chicago) and House Minority Leader Tom Cross (R-Oswego), demonstrating the narrowing if not closed legislative opening that exists for unions to scuttle this plan or the broader pension scale-back Quinn has proposed for the state workforce and downstate and suburban teachers.

“When you’re talking about the concept of pension reform, I like his concept,” Cross said, singling out Emanuel’s bid to halt 3-percent annual retiree cost-of-living increases for the next decade.

“That’s the real pressure point for pensions. It’s what happens in Illinois. If you’re in retirement for 20 to 25 years, you’ll double your pension because of the compounding nature of it,” Cross said. “You can’t sustain it.”

Madigan told reporters that Emanuel’s pan and his presence in Springfield was “helpful on pension reform across the board.”

“I think he delivered his message that the city pension systems need to be reviewed,” the speaker said. “They need to be examined. They’re not financially sustainable as they’re currently constituted. It’s very similar to what we’re doing here at the state level with the state pension systems.”

But labor leaders reacted angrily to the mayor’s proposals and to the secrecy that preceded the announcement.

By far the harshest reaction came from Henry Bayer, executive director of AFSCME Council 31. In a prepared statement, Bayer accused Emanuel of painting a “distorted picture” that omitted important facts.

City employees earn “modest pensions” — just $31,000 for the average member of the Municipal Employees Pension and Benefits Fund — and are not eligible for Social Security benefits. They have also “contributed faithfully” toward those pensions at a rate of eight percent of every paycheck.

“Mayor Emanuel is wrong to propose that city employees and retirees should now be forced to bear the lion’s share of the burden for fixing a system damaged by shortsighted politicians and reckless Wall Street speculators,” Bayer said.

Bayer argued the mayor’s roadmap would lead to “economic insecurity” for city retirees.

“It would significantly reduce benefits and increase costs to employees. While every Social Security beneficiary receives period cost-of-living adjustments, the mayor’s plan would completely eliminate any such adjustments for city retirees for the next decade. This approach is unfair to retirees and it is a violation of the state’s constitution, guaranteed to trigger costly litigation,” he said.

“The unions representing city employees have repeatedly conveyed to the mayor our willingness to work constructively to solve the pension funding problem. Yet, he has never once met with us to hear our view or put forward the suggestions he unveiled today.”

Fraternal Order of Police President Mike Shields noted Chicago police officers have only a 1.5 percent annual cost of living increase when they retire. The mayor “should have considered the Illinois Constitution and also the fact that this is a contract between the employee and the employer. The courts will concur. You can’t reduce or diminish a retirement benefit. It’s not fair. But it’s also expected when dealing with this current mayor’s administration.”

Shields accused the mayor of “trying to scare” city employees and taxpayers with “doom-and-gloom” scenarios that pit the two groups against each other.

“He’s failing to tell the property taxpayer that other sources of revenue can be used outside of property taxes to pay pension costs,” Shields said. “We’ve been asking aldermen to look into applying some of the money from speed cameras. There’s legislation to use casino money to pay into pension funds. There’s also the sale of Midway Airport, [which could be revived and] deliver 49 percent of the pension fund. I’ve even proposed to the city that Midway as an asset should be booked to the pension funds as opposed to the city.”

Tom Ryan, president of the Chicago Firefighters Union Local 2, refused to comment on specifics of the mayor’s proposal, noting they have not been shared with union leaders in Chicago. But Ryan sure sounded like he was bracing for a fight.

“This is all gonna boil down to constitutionality — whether asking for increased contributions or decreasing benefits is even constitutional,” Ryan said.

He added, “You have to understand something. Firefighters and police officers did not cause this problem. This problem was caused by the city not properly funding these pension funds since their inception.”

With few exceptions, organized labor gave Emanuel’s mayoral campaign the cold shoulder, in part, because they feared he would mess with their retirement benefits. The mayor has since tried to collaborate with organized labor.

Asked Tuesday whether the mayor’s pension solutions would undermine those bridge-building efforts, Ryan said, “This is a contentious issue. You’re talking about people’s retirement. People are very touchy when you’re talking about their sole source of income.”

Chicago aldermen, whose lucrative pensions have drawn unflattering attention recently, reacted coolly to the mayor’s proposals.

“I do like the [401-k] idea in regards to the new hires. I’m not so pleased with the [increased] age limit. I’m not so pleased with freezing our COLA. But if that’s what it takes in order for us to become whole, then we’ll all have to swallow the bitter pill,” said Budget Committee Chairman Carrie Austin (34th).

As for the five percent increase in employee contributions, Austin said, “Maybe I can pay more into it. Maybe somebody else couldn’t. For those employees who are already scrimping, I don’t want to impose something like that upon them.”

Austin acknowledged that setting up a two-tiered pension system for new and old employees has the potential to divide the city workforce. But, she said, “It also has the potential of being a disaster if we don’t do something … . If the fund isn’t strengthened, what’s gonna happen? It’s gonna crash. Then, we won’t have a darned thing.”

Ald. Tim Cullerton (38th) is a former deputy building commissioner and a 42-year veteran of the International Brotherhood of Electrical Workers (IBEW) Local 134. He noted that his great-grandfather was a “charter member” of IBEW in 1900.

Cullerton said the mayor’s proposal for a 10-year freeze on cost-of-living increases “might work,” but only for retirees at “certain income” levels.

“It might not work for people who … are just scraping to get by. But people who have comfortable pensions and certainly people who have multiple pensions should pay some type of a windfall,” said the 63-year-old Cullerton, who is already collecting a city pension after 33 years with the Department of Buildings.

As for the five percent increase in employee contributions, Cullerton said, “It would have to be proven that it’s necessary to save the system. If it’s necessary … so that you’ll have a pension when you retire, most reasonable people would have to begrudgingly pay it.”

Laurence Msall, president of the Civic Federation, applauded the mayor for going further than Quinn did to help solve the city’s pension crisis by suspending the annual cost-of-living increase for retirees.

“Actuaries have indicted that the 3 percent increase — not indexed to inflation, but compounding automatically — is responsible for almost one-third of the unfunded cost of these benefit programs,” Msall said. “At a time when city employees are being asked to do more with less and taxpayers are being asked to maintain tax payments while their housing values decline, asking retirees to forego an automatic increase is a reasonable and fair approach.”

Msall said he recognized that the retiree changes and the increase in employee contributions are likely to go over like a lead balloon with union leaders.

But he said, “The issue for the employees is: Would they rather have a lower benefit going forward that the city can afford to fund that’s likely to be there, or would they rather maintain the existing system, which is grossly underfunded and is poised to run out of money within 10 to 20 years? Face reality. This isn’t politics. This is math. It’s a financial crisis that threatens the financial solvency of the city of Chicago.”

Source:  The Chicago Sun-Times

Source:  The State Journal Register - The Oldest Newspaper in Illinois

(Updates with comptroller’s comments in ninth paragraph.)

Jan. 6 (Bloomberg) — Illinois had its general-obligation bond rating reduced by Moody’s Investors Service to A2 from A1, making it the company’s lowest-graded U.S. state.

The downgrade to the sixth-highest level came after a legislative session that “took no steps to implement lasting solutions to its severe pension under-funding or to its chronic bill payment delays,” Moody’s said in a report. Illinois, it said, has “weak management practices.”

Moody’s revised its outlook on the debt to stable from negative, citing the state’s power over revenue and spending, and laws that establish the priority of payment for general- obligation bonds. The downgrade affects $32 billion of debt, according to the statement.

“Although the state has taken positive steps toward fiscal stability, swift bipartisan action to implement further cost reductions and reforms in the upcoming legislative session are needed to stabilize the budget,” Kelly Kraft, a spokeswoman for Democratic Governor Pat Quinn, said in a statement.

The state’s unfunded pension liability in 2010 was $85 billion, and the system has assets to pay 45 percent of promised benefits, according to a study by Bloomberg Rankings. It is the lowest so-called funded ratio of any U.S. state.

‘Calculated Decision’

Last January, Illinois lawmakers approved record increases in personal and corporate-income taxes, generating about $7 billion in annual income. On Dec. 13, they approved breaks for CME Group Inc., which operates the Chicago Mercantile Exchange and Board of Trade; Chicago Board Options Exchange; and Sears Holdings Corp. after threats the companies might leave.

“The state had to make a calculated decision with respect to certain large employers,” Ted Hampton, a senior analyst at Moody’s who co-authored the report, said in a telephone interview. “Imposing tax increases is politically difficult.”

The higher levies addressed about half Illinois’s projected deficit. The state has about $7 billion in unpaid bills, and lawmakers rejected Quinn’s proposal in May to borrow to pay them. Quinn is to present his fiscal 2013 budget Feb. 22.

“Illinois leaders have a responsibility to hear the message being sent,” Republican Comptroller Judy Baar Topinka said in a statement. “The only way out of this mess is to keep cutting spending, provide for a better business climate and, for once, let growth outpace spending. ”

Looking to Sell

An Illinois general-obligation bond maturing in January 2015 traded yesterday at an average yield of 2.07 percent, according to Municipal Securities Rulemaking Board data compiled by Bloomberg. Similarly rated general-obligation debt maturing in three years yielded 1.44 percent, according to a Bloomberg Fair Value index.

Illinois, the fifth-most-populous U.S. state, plans to sell $800 million in taxable and tax-exempt general-obligation bonds as soon as Jan. 11. With the downgrade, Moody’s rates Illinois one step lower than California, at A1.

“There is no fear of the state missing a bond payment,” Topinka said in her statement. “The first payment we make each month is to our bondholders.”

Illinois still has an A+ rating from Standard & Poor’s, its fifth-highest. That’s two grades better than California, at A-.

S&P affirmed its rating, citing the “deep and diverse” Illinois economy that’s anchored by Chicago, the third-largest U.S. city, according to a statement.

Source: Bloomberg BusinessWeek

Updated with President Obama comments, Daley to co-chair re-elect….

NASHUA, NH–White House chief of staff Bill Daley is resigning, President Obama announced on Monday, departing earlier than expected after a rocky tenure. Daley will be replaced by Budget Director Jack Lew. He will become a co-chair of Obama’s 2012 re-election campaign, based in Chicago.

President Obama discussed the move flanked by Daley and Lew, not taking questions after brief comments. Obama said he originally did not accept Daley’s resignation. Daley’s departure comes a day before Obama returns home to Chicago for three fund-raising events.

Obama said Daley was leaving for reasons that seem very vague: to return to Chicago and to spend more time with his family, especially his grandchildren.

“I didn’t accept Bill’s decision right away. In fact, I asked him to take a couple of days to make sure that he was sure about this. But in the end, the pull of the hometown we both love — a city that’s been synonymous with the Daley family for generations — was too great. Bill told me that he wanted to spend more time with his family, especially his grandchildren, and he felt it was the right decision.”

“…I plan to continue to seek Bill’s advice and counsel in the years to come,” Obama said.

Daley will become a co-chair of Obama’s 2012 re-election campaign, based in Chicago.

“He’s got a ton of political experience, knowledge and contacts and we look forward to leveraging those assets and working closely together to re-elect the President this year,” a member of the Obama team told the Chicago Sun-Times.

In his resignation letter, dated Jan. 3, Daley wrote to Obama, “I have been honored to be a small part of your administration. It is time for me to go back to the city I love.”

Daley, a former Commerce Secretary and brother of former Mayor Richard Daley, followed Chicago Mayor Rahm Emanuel in the job last year, but seemed mismatched for the position as the political and governmental situations changed. Daley was not close to Obama and the two did not share much in common except political strategist David Axelrod and Emanuel.

Last year, Daley told NBC5 Chicago that he was going to stay only through the end of Obama’s first term. Last year, Daley was put in an uncomfortable position within the White House after much sniping and infighting–he was demoted from running day-to-day operations, turning them over to Pete Rouse, who served as interim chief after Emanuel left.

Daley, a former Chase Bank executive, was hired in part to be a bridge between the White House,the business community and the Republicans in Congress–a job that soon ceased to exist as relations continued to fray–especially with Republicans– and eventually snap all together.

The beginning of the end for Daley started in October, in an interview he gave to to Politico’s Roger Simon where he blamed congressional Democrats–as well as Republicans–for the deadlocks.

“On the domestic side, both Democrats and Republicans have really made it very difficult for the president to be anything like a chief executive,” Daley said. “This has led to a kind of frustration.”

At that point, Daley barely had a relationship with Senate Majority Leader Harry Reid (D-Nv.) and by November, his position was reconfigured with Rouse taking on the day-to-day role.

Daley “retains obviously all of his authority and ultimate responsibility for the White House operations and White House staff,” White House press secretary Jay Carney said at an early November briefing. “… It’s less about transferring duties than it is about adding responsibilities without subtracting any from anybody else.

Daley was tapped by Obama in January, 2010 and started a few weeks later.

Obama, in naming Daley said then, “Few Americans can boast the breadth of experience that Bill brings to this job. He served as a member of President Clinton’s Cabinet, as Commerce secretary . . . He’s led major corporations. He possesses a deep understanding of how jobs are created and how to grow our economy. And, needless to say, Bill also has a smidgen of awareness of how our system of government and politics works. You might say it is a genetic trait.”

Daley returned to Washington from the banking world, the Midwest chief for J.P. Morgan Chase since 2004, before that president of SBC. He’s also run Chicago’s Amalgamated Bank and as a partner at the law firm of Mayer Brown, handled government relations, with his close relationship to the late Rep. Dan Rostenkowski very helpful. Obama White House policy will call for Daley to recuse himself from any J.P. Morgan matter for two years.

One of Daley’s major accomplishments was as “NAFTA Czar,” winning congressional approval for then-President Clinton of the North American Free Trade Agreement — with a big assist from Emanuel. Clinton named Daley to the Fannie Mae board and in his second term made Daley his Commerce secretary, where Daley performed for the first time on a global stage.

Vice President Gore drafted Daley to take over his troubled 2000 presidential bid. By that time Daley had advised the 1988 Biden presidential campaign and Vice President Mondale’s 1984 bid.

In October, Daley said his best day on the job was the Sunday when Osama bin Laden was killed by U.S. forces. The worse day was when negotiations failed for a deal to raise the debt ceiling.

Chicago community organizer has roots and clout dating to 1960s but current issues hang over his multimillion-dollar empire

The Rev. Leon Finney Jr. is a noted community organizer on Chicago’s South Side, and some of his related multimillion-dollar business operations are under scrutiny. (Abel Uribe, Chicago Tribune / December 9, 2011)

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The Rev. Leon Finney Jr. built a name for himself in the 1960s by fighting slumlords and helping to save his Woodlawn community from being swallowed by the University of Chicago.

The community group he came to lead, The Woodlawn Organization, became a national model as Finney built a network of social programs and gained control of millions of dollars in publicly funded development.

But now Finney’s business dealings are being questioned on a number of fronts.

Federal housing authorities are investigating allegations that the Gary Housing Authority was overbilled by $850,000 for payroll expenses related to public housing projects managed by the Woodlawn Community Development Corp., where Finney is chief executive.

A federal lawsuit filed by Finney’s former chief financial officer alleges a host of financial improprieties, from ghost payrolling to the use of government money for Finney’s private pursuits, including a family-owned restaurant.

In addition, government-mandated audits, court records and other documents obtained by the Tribune show:

•A federal housing consultant lived in a Woodlawn apartment owned by a company run by Finney while in charge of monitoring property management contract awards in Gary. During that time several contracts went to the Woodlawn Development Corp. Court records show the consultant failed to pay $17,000 in rent on the apartment.

•In several instances, government subsidies awarded to one low-income housing development were used to pay the utility bills and other expenses of unrelated properties, a violation of federal rules governing those funds.

•The Woodlawn Organization, headed by Finney’s wife, Georgette Greenlee Finney, spent $132,000 to lease office space from a real estate company owned by Finney, a 2008 audit shows.

Finney, 73, declined to comment on the Gary investigation, as well as most of the allegations made in the federal lawsuit filed by his former chief financial officer, Virgil Savage. His attorney, Devlin Schoop, also declined to comment.

However, Finney acknowledged financial problems at The Woodlawn Organization and its network of nonprofits and property management companies, which have been sued for a host of unpaid bills.

That has led to a scramble to “keep it all together” by shifting money from one organization’s bank account to another’s in an effort to pay bills, Finney said.

Finney’s network of organizations and companies runs seven social services programs and manages or owns roughly 5,000 subsidized apartments in Illinois and northwest Indiana.

“When you have no stockholders to go to get an additional capital infusion, in an effort to try to keep it all working, in instances you borrow from one property to another in order to keep the whole working and you hope that in the interim you can pay it back,” he said.

But, Finney insisted, “No money has gone into my pocket or anybody’s pocket.”

Attorneys with the Gary Housing Authority confirmed the agency is cooperating with an investigation by the federal department of Housing and Urban Development. HUD officials declined to comment.

Gary housing officials said the investigation is largely based on allegations made by Savage, who in 2010 was fired as chief financial officer for The Woodlawn Organization and its affiliated entities after about 2 1/2 years.

In his lawsuit, filed last winter, Savage, 53, claims he was fired shortly after he sent an internal memo to the organization’s board members that accused Finney of using money budgeted for federally subsidized properties for his personal benefit and to pay employees of Finney’s church.

“That’s when our relationship began to sour,” Savage said.

Source: Chicago Tribune

WASHINGTON (AP) — A burst of hiring in December pushed the unemployment rate to its lowest level in nearly three years, giving the economy a boost at the end of 2011.

The Labor Department said Friday that employers added a net 200,000 jobs last month and the unemployment rate fell to 8.5 percent, the lowest since February 2009. The rate has dropped for four straight months.

The hiring gains cap a six-month stretch in which the economy generated 100,000 jobs or more in each month. That hasn’t happened since April 2006.

“There is no question that today’s employment report is a positive and there is also no question that the pace of job growth has accelerated of late,” said Dan Greenhaus, an analyst at BTIG LLC, a brokerage firm

A better job market is a positive sign for President Barack Obama, who is bound to face voters with the highest unemployment rate of any sitting president since World War II. Unemployment was 7.8 percent when Obama took office in January 2009.

Still, the level may matter less to his re-election chances if the rate continues to fall. History suggests that presidents’ re-election prospects hinge less on the unemployment rate itself than on the rate’s direction during the year or two before Election Day.

For all of 2011, the economy added 1.6 million jobs, better than the 940,000 added in 2010. The unemployment rate averaged 8.9 percent last year, down from 9.6 percent the previous year.

Economists forecast that the job gains will top 2.1 million this year.

The December report painted a picture of a broadly improving job market. Average hourly pay rose, providing consumers with more income to spend. The average work week lengthened, a sign that business is picking up and companies may soon need more workers.

And hiring increased across most major industries.

Manufacturing added 23,000 jobs, as did the health care industry. Transportation and warehousing added 50,000 jobs. Retailers added 28,000 jobs. Even the beleaguered construction industry added 17,000 workers.

Economists cautioned that some of the gains reflected temporary hiring for the holiday season. The government adjusts the figures to account for those seasonal factors, but doesn’t always fully account for them.

The gains in transportation and warehousing, for example, reflected a strong increase in hiring for couriers and messengers. That could stem from a big jump in online shopping over the holidays, the department said.

The nation’s work force, which includes both people working and those searching for jobs, shrank slightly last months and is little changed from this spring. That’s a concern because a strengthening job market normally draws more applicants.

The work force has declined by about 160,000 over the past two months, one reason the unemployment rate has fallen.

“You have to take that unemployment rate decline with a grain of salt when you look at the declines in the labor force,” said Marisa DiNatale, an economist at Moody’s Analytics.

The government only counts people as unemployed if they are actively searching for jobs. Discouraged workers who have given up on looking are not included in the rate.

And some of those who are counted as employed are working part time, but want full-time work.

When including those groups, the broader “underemployment” rate was 15.2 percent. That’s down from 15.6 percent the previous month, but still high. The figure has dropped for three straight months.

And the job market has a long way to go to recover from the Great Recession. The nation has 6 million fewer jobs that it did in December 2007, when the recession began.

More jobs and higher pay are crucial to helping the economy grow. They could enable shoppers to increase spending, which fuels 70 percent of economic activity.

The economy likely grew at an annual rate of above 3 percent, a healthy pace.

A more robust hiring market coincides with other positive data that show the economy ended the year with some momentum.

Weekly applications for unemployment benefits have fallen to levels last seen more than three years ago. Holiday sales were solid. And November and December were the strongest months of 2011 for U.S. auto sales.

Many businesses say they are ready to step up hiring in early 2012 after seeing stronger consumer confidence and greater demand for their products.

Source: The State Journal Register - The Oldest Newspaper in Illinois