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  #771  
Old 06-13-2018, 03:50 PM
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http://www.wirepoints.com/400-millio...ints-original/

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$400 million for AFSCME back-pay would crush lawmakers' "balanced" budget claims – Wirepoints Original
Spoiler:
The latest news about the state’s biggest employee union, AFSCME, could upend Springfield’s celebration of a “balanced” budget in 2019.

According to INN, AFSCME has won yet another legal battle in an attempt to get $412 million in unpaid raises, called step increases, paid to state workers. And if that comes to fruition, lawmakers can expect more critiques of their “balanced” budget claims.

That 2019 budget already relies on iffy savings including a pension buyout, the sale of the Thompson Center and fund sweeps from other accounts – not to mention it significantly underfunds the state’s true pension payment – so it was never truly balanced to begin with. A ruling for AFSCME can only make things worse.

The state and AFSCME haven’t had a labor contract in place since the last one expired in June 2015. Since then, AFSCME salaries have been frozen. But the latest ruling by the Illinois Labor Relations Board (ILRB) means the state will likely have to honor the step increases – built-in automatic increases over and above normal pay raises – that were in place in the previous contract.

Ironically, that means many AFSCME workers could see pay increases even if their union won’t agree to a contract. And if they get their way, it will be expensive.

The step increases alone will cost the state – and taxpayers – $412 million in total. That’s the cost to make up for the lost step increases since July 2015 through 2019, the soonest Illinoisans might expect a new state contract with AFSCME. (It’s unlikely the union will reach any sort of deal with Gov. Bruce Rauner before the general election.)

That repayment will knock another hole the 2019 budget. The budget wasn’t balanced before, but adding another $400 million in spending will demolish any politician’s claims that revenues will match expenditures next year.



The generous benefits of state workers

The state’s struggle with AFSCME runs counter to what been negotiated with 19 other labor unions in Illinois. The other, smaller unions agreed to salary freezes and other concessions in light of Illinois’ financial difficulties.

Not AFSCME. The union’s original demands included worker salary raises ranging from 11.5 to 29 percent, a 37.5-hour workweek, five weeks of vacation and enhanced health care coverage.

Their additional demands are extreme considering what they’ve gotten in the past. State AFSCME worker salaries grew more than 40 percent between 2005 and 2015, the last year the union had a contract with the state. Meanwhile, the earnings of ordinary Illinoisans grew only 11 percent, half the rate of inflation.



In fact, Illinois state workers are the 2nd-highest paid in the nation after you adjust for cost-of-living, based on the most recent numbers available from the Bureau of Economic Analysis.



Taxpayers also pick up most of state workers’ health care costs. And in retirement, career state workers get free health insurance and will average over $1.6 million in lifetime pension benefits – on top of Social Security.

In all, our previous work shows the average state worker receives nearly $110,000 in total compensation.

Politicians’ budget fail

The whole situation with AFSCME’s back-pay shows just how little Illinois politicians care about responsible budgeting.

Many of same lawmakers who call the budget balanced also support AFSCME’s back-pay demands. And they know the final order to pay out those raises is likely to happen in 2019. Yet they didn’t set aside $400 million to actually pay for the built-up raises if the union got its way.

To pay AFSCME, the legislature will have to cut money that other departments and social services were expecting to receive. Or more likely, they’ll borrow money, increasing costs on Illinoisans. Or they could even put off actually paying AFSCME workers for years, like they did as result of the 2011 state worker dispute.

This is a raw deal for ordinary Illinoisans. The 2019 budget is just another agreement between politicians that disrespects the ordinary residents of this state. Now the AFSCME ruling is likely to add insult to injury – driving up state costs that struggling taxpayers can’t afford.
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  #772  
Old 06-14-2018, 10:22 AM
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Interesting. Much wrt the step increases decision would depend on the precise contract language.

When school districts were freezing budgets and/or teachers were working without contracts, treatment of step increases varied. There's the whole pay scale that spells out that a teacher with a bachelors degree & no teaching experience makes X and a teacher with a bachelors & 1 year of experience makes 1.02X and so on & so forth. The whole table will typically increase every year or two. But at the same time teachers are gaining experience and so they're also moving to a better paying place on the pay scale.

If no new contract is passed, sometimes the step increases freeze as well and teachers just continue to make whatever they'd been making the prior year. Also teachers who get more education (like completing a masters program) don't get moved to the higher education column of the chart... they keep getting paid as though they didn't have the masters degree.

But sometimes the union will get the district to agree that if no new contract is agreed to, teachers continue to get any step increases & education increases that they would have been entitled to under the final salary schedule in the contract while they are negotiating a new contract (a process that can take anywhere from a month to 5 years).

If the court is siding with the union employees in this case it's not clear if they're doing just because it seems like the right thing to do or because there is specific contract language backing the union members' claims to higher pay.

Education may not be a factor for this particular union, but the years of experience is.

Interesting to see how this shakes out.
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Old 06-14-2018, 11:53 AM
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When school districts were freezing budgets and/or teachers were working without contracts, treatment of step increases varied. There's the whole pay scale that spells out that a teacher with a bachelors degree & no teaching experience makes X and a teacher with a bachelors & 1 year of experience makes 1.02X and so on & so forth. The whole table will typically increase every year or two. But at the same time teachers are gaining experience and so they're also moving to a better paying place on the pay scale.
AFSCME doesn't represent the teachers though, that is a different union.
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Old 06-14-2018, 01:38 PM
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AFSCME doesn't represent the teachers though, that is a different union.
Correct, but I think it's the same basic principal. I was speaking from a teacher's perspective because that's what I'm most familiar with (only union I've ever been a member of). But I think the step increases are pretty common to most union pay scales.

And they're not always annual. The federal government's steps are every two years, for example. But they're based on your tenure one way or another.
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Old Yesterday, 05:56 PM
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https://spectator.org/think-way-outs...-mess/#new_tab

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Think Way Outside the Box to Clean Up Illinois’ Fiscal Mess
A state this broke has nothing to lose.

Spoiler:
Springfield lawmakers are crowing in self-congratulations over the passage of the state’s first budget in two years. The budget leaves unpaid a $6 billion stack of bills and does absolutely nothing to address the $130 billion in unfunded pension obligations.

Illinois faces the greatest budget crisis in its 200-year history. When Illinois became the 21st state in the union on August 26, 1818, our founding fathers couldn’t have imagined that a $136 billion deficit would threaten the state with insolvency down the road in 2018. Unlike today’s lawmakers, Illinois’ founding fathers couldn’t have even imagined billions.

The fact that a budget deal was reached in an election year is remarkable. Debate about budgetary matters in an election year is almost comical (that is, if it weren’t so terribly serious). Potential solutions dissolve into threadbare political platitudes, with Republicans urging deep cuts across the board, and Democrats calling for steep tax increases to stave off economic ruin. And, then there is the gutless non-solution of issuing bonds to borrow sufficient operating funds to balance the budget, kicking the economic crisis down the road for future generations to grapple with at even more dire, unsustainable levels.

Illinois has been at this game of a deadbeat state government that doesn’t pay its bills for at least a decade or more. It’s an issue that knows no political ownership. Republican and Democratic administrations alike have played dangerous games with the state’s fiscal stability.

What to do about this continuing fiscal gridlock. Management consultants would quickly suggest, in MBA-speak, that it’s time for the State of Illinois to “think outside the box.” The time for innovative new ideas to resolve this huge mess is long overdue. So, here, “from way outside the box,” are a few simple ideas that might be considered (or at least might generate some meaningful debate over realistic solutions to our economic peril).

Buy Some Powerball Tickets

The State of Illinois is knee-deep in the gambling business. It runs the State Lottery and licenses numerous casinos across the state. What started as a “riverboat” casino solution for localized areas of high unemployment has become a full-blown commitment to gambling. So, the State receives millions in revenues from the lottery and the taxes on casinos that go to fund education and other vital programs.

But, beside running gambling operations, the State should also participate in a game of chance or two. Why not have the Illinois Treasurer buy a couple thousand dollars of lottery tickets in the Powerball Lottery next time it reaches a prize level of over $400 million? That would be a better return on an investment of tax payer dollars than virtually any other state program could claim. Sure, it may take a few tries to hit the jackpot, but, as they say, “You can’t win if you don’t play!!”

A Blockbuster Box Office Hit to Bail Out the State?

The State should buy the movie rights to “The Blagojevich Story.” It’s sure to be a box office success.

Illinois is already a big player in feature film production, including The Blues Brothers,The Fugitive, Risky Business, A League of Their Own, and more recently Transformers 3, which converted Chicago streets into a war zone complete with overturned cars and spectacular pyrotechnics. However, the State raked in only $20 million from the production of Transformers 3.

Illinois should move from being a stage set for feature films to producing them. “The Blago Story” will be a box office blockbuster that could exceed the combined box office records of Titanic and Avatar of $1.8 and $2.7 billion respectively.

Just imagine the nationwide appeal of the inside story of our rogue governor who staged a national “I am innocent” campaign on every daytime and nighttime talk show and prime time network TV program that would have him, including performing as a contestant on Donald Trump’s reality series Celebrity Apprentice.

He’s pre-sold his own story, now it’s time for Illinois to take advantage of his marketing program by picking up the movie rights and cashing in on the sordid story. To reduce production cost, maybe the State could negotiate a work-release deal for Blago to trade in his orange prison jump suit for one of his Armani suits to play himself in the movie. Or, maybe President Trump will commute his sentence and spring him early to pursue his acting career.

Certainly, he has perfected his acting skills over his tenure in office and at the criminal defense table. Wonder if a convicted felon/former governor has ever won an Academy Award? Now, that would be a distinction Blago could be very proud of (you might even call if “F—— Golden!”).

Ask Bill Gates and Warren Buffett to Throw a Billion or Two Illinois’ Way

Bill Gates and Warren Buffett have called for the world’s billionaires to give away half of their fortunes to good causes. Their bold initiative, named the “Giving Pledge,” calls on everyone on the Forbes 400 Americans billionaire list to pledge half of their net worth — either now or at their death. Their hope is that if everyone on the list agrees, the plan could raise a whopping $600 billion.

Now, I know Buffett is a proud Nebraskan who may feel a tug or two to lean toward Cornhusker charities, and Gates hails from Washington state and probably will be lobbied heavily to favor interests closer to home.

But, a really strong argument can be made that the Land of Lincoln would be an ideal beneficiary of some of these billionaires’ philanthropy, even if it came only from those here in Illinois, like the Pritzkers, Wrigleys, Winfrey, and others.

The Governor should form a “Giving Pledge” Task Force to actively lobby for a few billions to save our teachers and vital social services and bail Illinois out of its looming fiscal disaster.

Time for a Fire Sale of State Assets

Hard times call for hard decisions. The State has valuable assets that could be sold to close the crippling deficit. Taking a cue from the budgetary gymnastics of former Mayor Richard M. Daley, the State could sell the Thompson State of Illinois building in Chicago for a pretty penny (hundreds of millions), enter into a long term lease for the State toll road system, or sell it outright, and sell the entire fleet of State aircraft (whose frivolous mission is shuttling the governor and legislative leaders the 150 miles between Chicago and Springfield, a trip more efficiently made by car).

The 99-year lease of the Skyway brought the City a windfall of $1.8 billion, and the Indiana Toll Road was sold for a whopping $3.8 billion, so a similar deal for the Illinois toll road system should fetch north of $30 billion or so. That deal could go a long way toward restoring some fiscal sanity in Illinois, maybe someday moving us toward a surplus (a “rainy day” fund like the one our red neighbor state to the east, Indiana, has enjoyed for years).

Sell Naming Rights To Illinois Icons

Reaction to the deal renaming the White Sox ballpark Guaranteed Rate Field was predictably swift, full of jokes, and lit up the Twitterverse. Sox fans and sports commentators alike ridiculed the 13-year naming rights agreement, which is worth $25 million.

Of course, sports venues across the country have sold naming rights as a source of continuing revenue. Today, there are precious few ballparks or arenas that don’t carry a corporate name and logo.

As ludicrous as the new name for the ballpark is, the deal might serve as a model for future naming rights deals that could bring new revenue to cash-strapped Illinois. Selling naming rights for a variety of iconic state properties may hold great promise for generating a new and valuable revenue stream. Just consider some of the lucrative deals that could be struck.

The Thompson Center in the Chicago Loop could be renamed the McDonald’s Center and feature the trademark Golden Arches near the entrance. This would be an extremely attractive and valuable naming rights deal for the iconic 1.2 million square foot state office building with the 16-story, all-glass atrium and concourse.

The Illinois toll road system would be another prime target for naming rights with an automotive theme. The Kennedy might be renamed the Allstate Expressway, the Ike could become the NAPA Auto Parts Highway, the Dan Ryan could be labeled Midas Way, and the Edens might be renamed the BMW Expressway. Surely, those companies would all fork over big bucks for that kind of 24/7 visibility on the ubiquitous traffic reports.

The Capitol Building in Springfield would be another option for naming rights revenue. The stately building should be a prime property for some marketing wizards to seize on for increased visibility in the marketplace.

Given the history of the Illinois General Assembly and the politicians who work there and their obsessive focus on “pork,” there should be a number of meat industry contenders for naming rights honors. Most likely, Smithfield Foods, the country’s largest pork producer, would pay big bucks for the golden opportunity to paste its name on the Capitol together with a huge stylized image of a pig. Truly, a match made in heaven.

The Governor’s Mansion, aka the Executive Mansion, might also attract a variety of companies looking for naming rights opportunities. This historic site built in 1855 and renovated several times over the years would be an ideal target for the right company. Just imagine the Executive Mansion by Macy’s, or the Target Governor’s Mansion. No doubt, the naming rights revenue would make a substantial contribution to the state’s fiscal mess.

Illinois’ 73 state parks, wilderness areas, national forests, nature preserves, and wildlife refuges would be ideal for corporate naming rights. Imagine the LL Bean Starved Rock State Park. Or, maybe there could be a package deal for all the parks and preserves under the naming rights label of the REI Illinois State Parks. That could be a lucrative package and a win-win for both parties.

No doubt, there will be those who will vigorously object to this naming rights program. They will argue that allowing corporate names to be slapped on venerable state properties would be demeaning and depreciate the historical importance of those Illinois icons. They’ll say the naming rights program is a desperate plan that is totally unnecessary and embarrassing.

Well, the state is in dire fiscal distress. Desperate times call for desperate solutions. So, opening the door for naming rights revenues offers another new opportunity for the state to try to fix the budgetary disarray that has been created by decades of gross mismanagement, corruption, and neglect. To be sure, it won’t fix the problem overnight, but it would be a start (which is much more than we have right now).

Brand Endorsement Revenue Stream

Professional sports franchises nationwide, including the Cubs, Sox, Bulls, Blackhawks, and Bears, sell brand endorsement deals for millions every year, most of them on multi-year “corporate partnerships.” The Cubs’ official beer, official hot dog, even the Cubs’ “Official Water Efficiency Partner,” Sloan Valve, which supplies most of the toilets, faucets and, yes, even the trough urinals in Wrigley Field’s restrooms serve as excellent examples.

That model could bring a fortune in new revenues to the beleaguered State of Illinois. Imagine what Coke or Pepsi might pay in a multi-year contract to be “the official soft drink of the Land of Lincoln.” Or Verizon as the official cell phone network of Illinois, or maybe State Farm as the official insurance carrier of Illinois, always the “good neighbor.”

The “corporate partnership” possibilities are limitless. For a state in search of new revenue sources, this one would be “Golden” indeed.


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Old Today, 10:30 AM
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more on the step increases

https://www.usnews.com/news/best-sta...reases#new_tab

Quote:
Illinois Board Moves Forward With Employee Step Increases
The Illinois Labor Relations Board is moving forward with giving step increases to unionized state workers.

Spoiler:
SPRINGFIELD, Ill. (AP) — The Illinois Labor Relations Board is moving forward with certain salary increases for unionized state workers.

About 15,000 union members are eligible for the step increases, which are automatic raises workers receive sometime during the first decade of their careers.

The board rejected a request from Gov. Bruce Rauner's administration to hold another hearing about the issue before money is paid out, the State Journal-Register reported . The American Federation of State, County and Municipal Employees called the administration's move a stalling tactic.

"Our union will keep doing everything possible to make sure that employees are placed on the correct step and made whole for the increases they've been denied," AFSCME Council 31 Executive Director Roberta Lynch said in a statement.

The Rauner administration stopped awarding step increases in 2015 after the state's contract with the union expired. The courts ruled that the old contract's terms still applied while a new one is being negotiated.

The board has sent the issue to a compliance officer to determine how much employees should receive, according to the union. AFSCME spokesman Anders Lindall said the step increases are estimated to cost $415 million.

The board will formally make its referral next month. The union will then have to file a petition to create a plan for the payments. The compliance officer will have 75 days to respond to the proposal.

Rauner spokeswoman Rachel Bold said the board's next steps "will help determine how we will proceed."
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Old Today, 10:57 AM
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HARVEY, ILLINOIS

https://fixedincome.fidelity.com/ftg..._110.1#new_tab

Quote:
Harvey settlement complicated by prospect of changes to Illinois intercept law

Spoiler:
CHICAGO — Concern that future changes to Illinois’ pension payment intercept law could interfere with a settlement remains a sticking point in negotiations among the city of Harvey, its public safety pension funds, and revenue bondholders.

A global settlement that would allow Harvey and its police and firefighters’ pension funds to divide up the city’s share of revenues subject to state diversion to cover overdue contributions is “moving along,” firefighters’ fund lawyer Andrew Schwartz, of Schwartz & Kanyock LLC, told Cook County Circuit Court Judge Raymond Mitchell Wednesday.

“The parties have agreed in principle,” Harvey’s lawyer Bob Fioretti, of Fioretti Roth LLC, said at the hearing.

The city would keep 65% of the diverted revenue while the police fund would receive 25% and the firefighters' fund 10%. The city’s share of state sales pledged to holders of $6 million of city issued revenue bonds will continue to flow directly to the trustee, Amalgamated Bank of Chicago. It will likely remit much of the revenue to the city as home rule sales and other tax collections are expected to cover the roughly $650,000 annual debt service.

The settlement will require that the city stay up-to-date on contributions to a third fund, the statewide Illinois Municipal Retirement Fund which covers general employees, in order to prevent the IMRF from filing claims on overdue contributions that could interfere with the settlement’s terms.

Harvey was the first municipality stung by a 2011 public safety pension law that included a revenue intercept mechanism. The comptroller earlier this year put in place a diversion process and the police pension fund submitted a $7 million claim; the firefighters' fund followed with a $12 million claim. The city initially challenged the diversion through litigation but since has been focused on a settlement.

In reviewing the various articles of the pension code, the comptroller’s office recently concluded that the intercept rules extend to the IMRF. The well-funded statewide fund had been intercepting Harvey and other municipalities’ revenues under a provision that allows it — as a “state agency” — to garnish one revenue stream. The new intercept impacts a wider array of motor fuel, gambling, sales, income and property tax-related revenues.

Comptroller Susana Mendoza has already diverted $2.3 million from Harvey’s roughly $7 million of annual revenue that flows through the state. Harvey, without those funds, laid off public safety staff.

The parties recently agreed to an interim settlement that distributed those funds among the city, the public safety funds, and the bondholders with a provision that also called for IMRF to be paid any overdue amount. That figure turned out to be about $200.

A primary sticking point to a permanent settlement is how to address any future change in the 2011 statute although the various parties said they believe it can be resolved.

“We want the certainty of knowing the claim will be paid,” Schwartz said. “The comptroller wants to be only bound by what the law says” now or later.

“We are going to have to determine whether to bind ourselves to the agreement,” said Jason Kanter, of Illinois Attorney General Lisa Madigan’s office, which represents the comptroller, adding that the comptroller wants to enforce whatever law is in place.

If the comptroller’s office determines it can’t legally agree to uphold the revenue distribution plan should the statute change, the city could direct the Illinois Department of Revenue to send the revenues directly to the parties to the agreement. The various stakeholders said in court they were awaiting a decision on that front from the Revenue Department.

A bill that was active this year in the legislature would have pushed off enforcement until fiscal 2020 and then phased in a rise in the level of revenue that can be diverted over four years with 25% of the overdue amount intercepted in the first year rising to 100% by 2023.

“It’s unfair for the public safety of the people of Harvey to be put at stake because of a state law that requires much more than the municipality can handle,” Sen. Napoleon Harris III said in a statement on his proposed legislation. “I am going to continue working on this issue because I want to ensure that the people of Harvey aren’t being penalized for living in a poor community.”

The General Assembly’s session has ended without action but many following the issue believe that the widespread attention on the diversion mechanism will eventually lead to legislative modifications.


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Old Today, 11:50 AM
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The courts ruled that the old contract's terms still applied while a new one is being negotiated.
That seems like a precedent-setting decision that could have wide implications.
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