Archive for February, 2008
February 29th, 2008
The New York Times editorial page recently took note of New Jersey’s fiscal crisis, and in doing so issued this warning to other states:
It is hard to remember when any governor used the sort of desperate language that New Jersey Gov. Jon Corzine chose this week to describe his state’s fiscal crisis. His words should be a sober warning to other states to get their fiscal houses in order before they face a crisis of Trenton’s magnitude.
The editorial went on to describe what it called a “self-destructive gimmick”:
… the state seriously underfunded its pension plan and used the money to pay for current spending programs.
And it concluded:
The Garden State’s woes should serve as a warning to other states, whose lawmakers might be inclined to use budget gimmickry to deal with shortfalls in revenue and get through immediate fiscal troubles. As New Jerseyans are learning the hard way, that is likely to lead to much bigger trouble in the years ahead.
Illinois should take note. As far as I can tell, this state is the capital of “budget gimmickry.”
Illinois for decades blew off its public pension systems, and future taxpayers will pay — big time. Believe it or not, state leaders didn’t even have a long-term plan for paying down pension debt until 1995, when they finally got around to instituting one.
No longer would the state take a “pay as you go” approach to financing public pensions — putting aside just enough each year to cover annual pension and benefit payments to retirees. Instead, the state would, once and for all, start putting aside enough money each year to cover long-term pension liability.
And by putting more money away into its public pension funds, those funds would ultimately earn enough interest — dollars going back into the funds — that the state’s annual obligation would become minimal.
Or at least that was the idea behind the 1995 plan, which established in Illinois law a formula under which the state would get its pension systems 90 percent funded by 2045 — over 50 years.
But state leaders just can’t help themselves from putting off those payments each year in order to free up cash for all their favorite projects. In 2005, they took their policy of procrastination all the way by wholesale restructuring the 50-year plan. Rod and the gang called their move a “pension holiday.”
Then there was that clever pension maneuver during Rod’s first year in office, 2003. The state borrowed $10 billion to bolster the pension systems. But rather than dumping the entire $10 billion straight into the pension funds, the state skimmed more than $2 billion off the top and used those dollars to offset the state’s mandatory annual pension contribution.
In doing so, Rod and the gang freed up more than $2 billion they could spend on other stuff.
How cool is that! Pretty cool if you’re Rod, and you’re eager to spend some taxpayer money. Not so cool, if you’re a future taxpayer.
As I explained at the time, in a previous job:
Imagine getting a home equity loan for $100,000, spending $27,000 of it on a new car and investing the rest — then counting on the interest earned to cover the interest paid, as well as the cost of the car. That’s the essence of Gov. Rod Blagojevich’s $10 billion pension bonding plan, which became law in April.
This isn’t a new idea. Buying and selling in separate financial markets in order to profit from the difference in rates is called an arbitrage. It’s commonly used by banks, which invest their customers’ money for a higher rate of return than they pay on, say, checking or savings accounts. …
But counting on the performance of any investment is risky. When the market slumps, as it did during the last two years, an arbitrage can fail; there’s a chance the rate of return on the investment could be less than the cost of the loan. Pension bonding plans can put governments on the hook for additional, unforeseen contributions to their systems — while they continue to pay the debt service on the bonds.
This state’s pension bonding plan, which doubles the state’s total bonded indebtedness and constitutes the largest such scheme to date, is no exception to the rule. And there’s an additional twist that heightens the risk. Rather than realize gains as they occur, the administration is realizing, and spending, the projected 30-year gain in the first year of the plan. Like the homeowner who spent 27 percent of an equity loan for a car, the plan dictates that some 27 percent of the bond proceeds be spent immediately.
What’s the bottom line? The state is in lousy shape financially, particularly with regard to pensions. As the state comptroller noted in a recent report:
The funding level of the state’s five retirement
systems remains among the nation’s lowest.
The five state systems — the State Employees’
Retirement System (SERS), the State Universities
Retirement System (SURS), the Teachers’ Retirement
System (for teachers outside of Chicago –
TRS), Judges’ Retirement System (JRS), and General
Assembly Retirement System (GARS) – were
funded at a 62.6% ratio at the end of fiscal year
2007 (assets vs. liabilities). Even with the infusion
of the $10 billion pension funding bond proceeds
into the system in July 2003, the funded
ratio has failed to reach the highs seen prior to the
last recession, where the systems’ funded ratio
reached 74.7%.
UPDATE 1
The Legislature’s fiscal forecasting agency has compiled a chart showing the state’s future pension liability and how it changes based on the payments made each year. I posted it here.
February 28th, 2008
Sen. Todd Sieben, R-Geneseo, today said he intends to resign, and in effect retire from the Illinois Senate, on March 6.
In late January, Sieben said he planned to retire after the Feb. 5 primary to help pave the way for fellow Republican Tim Bivins, a retired Lee County sheriff.
Republican Bivins would therefore enter the Nov. 4 general election as the incumbent, potentially giving him a significant edge over Democrat Marty Mulcahey.
Since the Senate seat is held by a Republican, the district’s GOP chairmen get to pick Sieben’s successor. The district covers much of northwestern Illinois, stretching from western Winnebago County through Freeport to Galena and south to Geneseo. …
Mulcahey said the move smacks of insider, old-school politics — an attitude he claims he would counter as a legislator. …
The Senate district leans strongly Republican, so this development seems like bad news for Mulcahey. It’s largely rural with scattered urban pockets. In the 2004 presidential race, George W. Bush won 56.2 percent of the vote. Democrat John Kerry won just 43.8 percent.
Sieben has had a 30-year career in politics, where he served in the Senate for 16 years. He also spent three terms in House. He is assistant Republican Senate leader.
UPDATE 1
Senators honored Sieben on the chamber’s floor today, as he presented his final bill as a senator.
No one seemed to really care about the contents of the bill during the debate. Instead, one after another, senators on both sides of the aisle spoke fondly of the retiring Republican.
“You exemplify what it really means to be a statesman,” said Sen. Jacqueline Collins, D-Chicago.
Sen. Kimberly Lightford, D-Maywood, was one of several lawmakers who said they considered Sieben a mentor, particularly when they were freshman senators.
“I don’t have any opposition to the bill, but I do have opposition to Sen. Sieben leaving us,” Lightford said. “I appreciate all the support you have given us over the years, and like you say, you watched me grow here.”
Sen. Brad Burzynski, R-Clare, joked with Sieben about the possibility of him staying in the Senate longer.
“If this bill goes down in defeat today, will you stay in the General Assembly long enough to pass it?” Burzynski asked.
In response, Sieben said:
“That decision has been a challenging one since last August, but this will be my last effort for sure so I hope the (voting) board doesn’t go too red too long,” he said.
As Sen. Rickey Hendon, D-Chicago, opened voting, more than two dozen legislators voted against the bill.
Then slowly a few legislators changed their ‘No’ votes to ‘Yes,’ and suddenly in snowball-like fashion, the ‘No’-voting senators flipped their votes as well.
As Hendon called for the last votes to be cast, the Senate fell silent, watching the board’s final two ‘No’ votes.
Burzynski, as if toying with the idea of pursuading Sieben to stick around, finally flipped his ‘No’ vote to ‘Yes.’ The Senate erupted in cheers, and Sieben, triumphantly throwing his fist in the air, ended his legislative career with his final bill passing, 51-0.
February 28th, 2008
Gov. Rod Blagojevich’s proposal to raze Cole Hall brought a lot of heat today from newspaper editorial boards and columnists around the state.
Many believe it is too early to entertain the $40 million idea to demolish Northern Illinois University’s Cole Hall, where a shooter killed five students and himself on Feb. 14. In its place, the governor wants to construct a new building named Memorial Hall.
Here is our story for background.
But as a Northern Star columnist points out, NIU, like every other university, has other infrastructure needs in far worse disrepair than Cole Hall.
NIU has an immediate need in determining the future of Cole Hall, but NIU also has needs that have existed and seemingly been ignored in Springfield for years.
The Stevens Building has needed money for renovation for nearly 10 years now, as President Peters attested to in a Northern Star story nearly one year ago.
The AP found mixed reaction from NIU students.
On one of our other blogs, we have invited your comments as well here. So far, you disagree, some vehemently so, that tearing down Cole Hall is fiscally irresponsible.
Those comments are not too far from the rest of the state’s columnists and editorial boards.
Our own Chuck Sweeny summed it up nicely today:
Do I have to explain how this would set a dangerous precedent? There are state university buildings all over Illinois, many of them older than Cole Hall, that need to be replaced. Others need extensive remodeling to bring them to 21st-century standards.
The governor and NIU leaders should not trivialize the massacre of students by using the traumatic event to lay a guilt trip on the General Assembly to fund a new building with $40 million the state doesn’t have.
The Chicago Tribune’s editorial board wants to slow the runaway train, too:
At the moment, Cole Hall speaks of trauma, madness and life’s fragility. But it could also be transformed into a reminder of resilience, that precious human trait.
The Daily Herald raises some important questions about the razing:
What are the survivors’ wishes? What do the families want? What do the students and faculty and alumni think would be meaningful?
NIU alumnus and Chicago Sun-Times columnist Phil Kadner joins the dissent:
Cole Hall should stand as a reminder that terrible tragedies can be overcome.
Students should continue to learn there as a tribute to those who, through no choice of their own, no longer can. …
Tear it down and all the bad things inside will go away, he implies.
Well, a new building would always remind me of a very expensive publicity stunt.
February 28th, 2008
The governor’s news release:
Governor Rod R. Blagojevich today named Illinois Department of Agriculture Assistant Director Tom Jennings as Acting Director of the agency. The Governor accepted the resignation of Charles “Chuck” Hartke, Director of the Illinois Department of Agriculture since 2003. Effective Monday, Jennings will take over the Director’s responsibilities for the Department of Agriculture.
“I want to thank Chuck for all of his hard work at the Department of Agriculture over the last five years,” said Governor Blagojevich. “As a family farmer and longtime state legislator, he brought unique experience and enthusiasm to the post. I wish him and his wife, Kathy, the best.”
Under Hartke’s leadership the Department of Agriculture has received federal funds to fight to keep emerald ash borer out of Illinois, created a statewide veterinary emergency response team that strengthens Illinois’ ability to contain animal disease outbreaks and increased sponsorship of the Illinois State Fair by 25 percent since 2003. Before becoming the Director for the Department of Agriculture, Hartke served in the Illinois House of Representatives and held a seat on the House Agriculture Committee, from 1985 until 2003.
The SJ-R has more on Hartke’s departure.
Chuck Hartke, who spent more than 18 years in the Illinois House before getting his dream job as director of the Illinois Department of Agriculture in 2003, is stepping down from that post.
Illinois Department of Agriculture Director Charles Hartke will be retiring from his position. In part, it’s to spend more time with his ailing wife, he said, and in part because it’s time.
February 27th, 2008
Sen. Dave Syverson, R-Rockford, objected to plans to replace Cole Hall with Memorial Hall in a press release:
Syverson supports honoring NIU victims, questions whether new building is right approach
FOR IMMEDIATE RELEASE
February 27, 2008/bc
SPRINGFIELD, IL – State Sen. Dave Syverson (R-Rockford) agrees the victims of the Northern Illinois University (NIU) shooting should be honored in a respectful way, however he questions whether demolishing Cole Hall and constructing a new facility is the right approach.
“I think everyone agrees a tragedy of this magnitude should be recognized in some way,” Syverson said. “But razing Cole Hall and constructing a new building isn’t necessarily the right approach. It will likely be a major financial commitment in the tens of millions of dollars at a time our state budget is facing a $1 billion budget deficit. I believe we can honor the victims of this tragedy, and do it in a fiscally responsible way.”
One possibility, Syverson suggested, is the creation of scholarships in the names of the shooting victims that could be developed through private partnerships – scholarships that could last for perpetuity. Another option would be to rename Cole Hall “Memorial Hall” – the name of the proposed new building – and to create an appropriate memorial in or around the current facility.
“I am 100 percent behind paying tribute to the victims, and helping NIU move past this tragic event,” Syverson reiterated. “But let’s not rush into anything. We should take an appropriate amount of time to come up with something that balances the need for remembrance with the need to ensure our state budget remains fiscally sound.”
Syverson also noted the proposed new building comes at a time tuition costs have skyrocketed in Illinois, rising by 50 percent in a few short years. He says part of the reason is the lack of a commitment by state leaders in funding higher education.
“We need to be thinking about how we can better help college students, not just at Northern Illinois University, but around our state,” Syverson said. “Tuition is rising at alarming levels, and families are struggling to put their students through college. Let’s look at ways of alleviating this burden – and perhaps the funding being proposed for this new building could be used for that purpose.”
February 27th, 2008
Gov. Rod Blagojevich today urged the General Assembly to give Northern Illinois University $40 million to help replace Cole Hall, where the Feb. 14 deadly shooting took place.
Earlier today, the governor and NIU officials announced the plan to demolish Cole Hall and replace it with a new, state-of-the-art building named Memorial Hall.
It is still unclear how much the total project would cost, but the governor, flanked by Rep. Robert Pritchard and Sen. Brad Burzynski, said in his news release that the state should give NIU $40 million to help rebuild. The governor’s spokeswoman could not be reached for comment.
Pritchard and Burzynski agreed to sponsor the legislation to get the money, to “cover the cost of building Memorial Hall,” according to the release.
Also according to the release, university officials decided against re-oepening Cole Hall, and drew up the plan to demolish and construct a new building, which would take about two years.
Portions of the news release are below:
DEKALB – To honor the victims and help the student body move forward, Governor Rod R. Blagojevich joined NIU President John G. Peters, legislators and students today at Northern Illinois University (NIU) to announce new plans for Cole Hall, the scene of the tragic shooting that claimed the lives of five students and injured 17 more. Gov. Blagojevich said that he will introduce emergency funding legislation and work with state Sen. J. Bradley Burzynski (R-Sycamore) and state Rep. Robert Pritchard (R-Sycamore) to provide the University with $40 million for the project. Cole Hall will be demolished and replaced with a state-of-the-art classroom building to be named “Memorial Hall”.
…
Memorial Hall will be a modern facility designed to accommodate the needs of today’s students. The new building will be approximately 40 percent larger than Cole Hall and will contain up to ten classrooms of varying sizes, three smart classroom auditoriums with capacity seating of approximately 250 each, instructional and media production computer labs, and additional office, storage and support space. The new building will be centrally located on campus in near proximity or in the same proximity as Cole Hall. Cole Hall is slated for demolition this Spring. The new building is expected to open in late 2010 or early 2011.
…
Built in 1968, Cole Hall has been a staple for NIU’s academic programs and large general classes. The building houses the campus’ larges lecture halls, which are in great demand given the university’s rapid student growth. In addition to the auditoriums, Cole Hall houses Anthropology and Journalism space in the basement level. …
UPDATE 1
Sen. Brad Burzynski said the entire cost of the project will be $40 million.
Also earlier, he said the NIU administration brought the plan to the state, after consulting with other universities that had endured similar tragedies, such as Virginia Tech.
February 27th, 2008
Gov. Rod Blagojevich’s schedule:
**Governor’s Public Schedule**
For TODAY, Wednesday, February 27, 2008
DEKALB – Governor Rod R. Blagojevich will join NIU President John G. Peters, local legislators and students today at Northern Illinois University (NIU) to announce state funding that will enable the university to demolish Cole Hall, the scene of the tragic shooting that claimed the lives of five students and injured 17 more, and replace it with a state-of-the-art general classroom building to be named “Memorial Hall”.
WHO:
Governor Rod R. Blagojevich
NIU President John G. Peters
Jarvis K. Purnell, President, NIU Student Association
State Senator Bradley Burzynski
State Representative Robert Pritchard
WHAT:
Gov. Blagojevich and NIU announce plans for Cole Hall.
WHEN: 1:00 p.m.
WHERE: In front of Cole Hall
(Cole Hall is located in the center of campus, near the visitor parking lot on Carroll Avenue)
Northern Illinois University
DeKalb, IL 60115
UPDATE 1
There’s no question the governor’s announcement will tug at the heart strings of thousands around this state, and perhaps even the nation. It doesn’t get much more dramatic that destroying the building in which evil occurred.
But questions remain about how exactly Blagojevich will pull this off.
As you may know, seemingly every infrastructure project that’s worth doing in this state is contingent on passage of a capital plan. So the first question is: Will funding for this project depend on passage of a capital plan?
If the answer to that question is yes, the next question is: Is it fair to get everybody all excited about the prospect of a “Memorial Hall” in place of the shooting site when there is no capital plan and it’s not clear when the state might actually have one?
If this building project would not depend on a capital plan, then where exactly is the money coming from? And what bills will the state not be able to pay so that it may replace the building?
UPDATE 2
This doesn’t pertain directly to NIU or Cole Hall, but it certainly will be forefront on the minds of reporters covering the governor’s appearance today: Will Blagojevich finally acknowledge that he is “Public Official A,” a central figure in a federal corruption probe, now that a judge has outed him?
Yes, I know that may seem insensitive to mention that. But the fact is that Blagojevich went into hiding yesterday, the day after the “Public Official A” revelation, and his aides refused to answer questions about it. His visit today to NIU will mark his first public appearance since it became official that Blagojevich is “Public Official A.”
Frankly, knowing Blagojevich’s consistent track record (he and his staff work extra hard, after each of his crises, to deflect the public’s attention elsewhere), I must wonder whether his staff cooked up this event on the fly to deliberately cause a diversion from a growing media focus on the federal probe.
In any case, Blagojevich is taking a risk today. He and his staff may think that they can keep the media’s attention focused on NIU and Cole Hall. But it’s hard to imagine that questions — if Blagojevich’s staff even allows them — will turn to the federal probe before the public appearance is over. That could lead to lots of shouting by both reporters and the governor’s staff. And that, in turn, could put NIU President Peters and hundreds of mourning, everyday people in an especially awkward spot.
UPDATE 3 by AZ
The proposed demolition of Cole Hall and construction of Memorial Hall will not depend on a capital plan, lawmakers say, and that’s good news for NIU. As noted above, it’s not clear when the Legislature will ever agree on the massive construction proposal.
Sen. Brad Burzynski and Rep. Robert Pritchard said they are drafting emergency legislation that will deal specifically with the building’s construction, which could take two years to build. There would be two bills: one to authorize the sale of bonds to pay for the project and one to give NIU the authority to spend the money.
It takes a three-fifths majority in both chambers of the Legislature to authorize bonding. The lawmakers said it was not clear on Wednesday morning where the state would find the money to pay off the bonds.
Burzynski said the money to pay off the loan would probably come from the state’s general fund, but because the legislation is not drafted yet details are still unclear. The general fund is the state’s central account for operating expenses.
“I’m confident we will be able to find a revenue stream to pay for these particular bonds,” said Burzynski, R-Clare.
And if he can’t find the money in the state’s coffers?
“We will cross that bridge when we get there,” he said.
Pritchard, R-Sycamore, said he doesn’t believe the logjam in Springfield will be a problem.
“We can’t allow government just to shut down because of personalities or lack of leadership or whatever other adjectives you want to say,” Pritchard said. “We have to address the needs of the citizens of Illinois.”
Before the shooting, every NIU undergraduate had a class in Cole Hall, which was built in 1968. Prtichard said about 150 classes were held each week in the building, including several large lectures.
Pritchard said university officials have moved Cole Hall classes into other buildings, but may build temporary structures until the new building is finished.
Sadly, the university has several other schools to look for examples of how to deal with a building where a deadly shooting occurred. Fellow Register Star reporters looked at this issue here.
Pritchard and Burzynski said the university is still computing the cost of razing and constructing a new building. The NIU public affairs office could not be reached.
Pritchard said the new building likely will be modeled after NIU’s new College of Business building, Barsema Hall, which is pictured here.
UPDATE 4
Sen. Burzynski said he believes the idea to replace Cole Hall originated with NIU officials, and not with the Blagojevich administration.
February 27th, 2008
There’s the government you learn about in grade school. And there’s the government at work in Springfield.
Occasionally, they’re one in the same. More often than not these days, they have little in common.
On Tuesday, a special committee of lawmakers met to vote on whether to make Gov. Rod Blagojevich’s latest health care plan permanent. The governor sent surrogates to present his position. The committee members asked questions. Then they voted on the plan.
That’s where the scene on Tuesday in Springfield ceased to resemble the government you learned about in grade school — an institution where level-headed individuals give and take over policy, ultimately reaching a compromise that’s somewhere in the ballpark of the public’s best interest.
But then, that’s the climate in Springfield. There is little give and take resulting in compromise. Few of the elected officials around here seem to have meaningful public dialogue. The days of work tend to end in gridlock, not any particular advance in policy.
The governor’s surrogates did present his plan to the Joint Committee of Administrative Rules, which reviews rules proposed by the governor’s agencies. This, oddly enough, prompted the first bout of confusion among committee members.
You see, the governor previously declared that the committee has no authority to block his administrative rules, even though state law says the committee does have that power. After the committee voted in November to reject his health care plan, which he couched in an “emergency” rule, he said he would go ahead with it anyway.
His administration is now in court defending a lawsuit brought by a suburban attorney who says the governor violated the law by ignoring the committee’s defeat of his plan.
But Blagojevich’s aides nonetheless appeared before the same committee on Tuesday and asked members to approve a permanent version of the “emergency” rules they already rejected. Here’s an exchange between committee member Lou Lang and officials with the governor’s Department of Healthcare and Family Services including Barry Maram, the department’s director, and Tamara Hoffman, its chief of staff:
Rep. Lou Lang: Did you say 3,200 people have been added to the program?
Agency Official: 3,300
Lang: 3,300 people have been added to the program. And from what day till today were people added to the program?
Agency Official: Dec. 1 was when we started coverage.
Lang: And what day was it that JCAR told you folks that we didn’t approve of this emergency rule? Right around (Dec. 1), give or take?
Hoffman: It was before that.
Lang: Under what guideline, rule or hutzpah, does the department decide, on its own, when you come to JCAR for approval and they don’t give it to you that you sign people up for a program that we told you you shouldn’t have?
Hoffman: We believe that we have the authority to do so.
Lang: So why would you come to JCAR in the first place? Why are you here?
Hoffman: Because we are going through the process.
Lang: You are going through a process that you don’t believe in?
Maram: I think what we are trying to discuss here is the fact that these families…
Lang (interrupting): No, this is not a question about the families. This is a question about the process. I’m going to ask the question again. … Under what hutzpah do you come to this body, and ask us to approve a rule that we already rejected when you had the unmitigated gall to put 3,300 people on a program that you asked us to approve that we didn’t approve. Why are we here?
Hoffman: To have an open forum to hear comment to participate to try to make sure that what we are implementing … concerns.
Lang: So if JCAR had said yes, that would have been a really good thing, but since we said no, it doesn’t really matter what the hell we say here in JCAR.
Hoffman: That’s not what I am saying, Representative, and actually you are talking about the emergency rule, and we are here today to talk about the second notice on the…
Lang (interrupting): And in the meantime, when you are rejected on the emergency rule, you went ahead and put 3,300 people on a program where the emergency rule was rejected. … Do we have an answer to why you have blithely ignored what we have said to you over this period of time?
Hoffman: We don’t believe that we have …
Lang: You didn’t answer my question. … Well I want an answer from somebody as to why 3,300 people were added to a program that we told you you could not have.
Hoffman: We believe that we have the authority to do so.
Lang: Then let me ask the second question again. Why did you come here at all?
Hoffman: We are prepared to be here in front of this group.
Lang: You are prepared to be here in front of this group. You will accept a good answer but not a bad one, is that correct?
Hoffman: We are prepared to discuss and respond to questions.
Lang: Fine, thank you.
Blagojevich’s chief policy objective is universal health care. Last year his efforts consumed the entire legislative session, and they helped create today’s logjam. Additional background on this story is here, here and here.
This logjam, in part, was created by Blagojevich’s apparent inability to concede defeat. In today’s committee, the bipartisan panel of lawmakers had a choice to make.
a) Convince 8 of the 12 members to stop the governor from administering a program that never received legislative approval, with questions about how it would be funded and how much money it would cost.
b) Let the program pass through for the sake of working families who desperately need healthcare.
Few lawmakers do not want to see everyone have access to health care and be able to have health care insurance coverage. Blagojevich, somewhat skillfully, has put lawmakers in a tough position, because a legislator who votes to preserve procedure, in this case, casts a vote against health care.
The committee on Tuesday rejected the governor’s plan.
It is hard to imagine how lawmakers and the governor will be able to have a real conversation when dialogue is this unproductive.
UPDATE 1
The SJ-R has a news story:
For the second time since last fall, a legislative panel threw a wrench Tuesday into Gov. Rod Blagojevich’s plan to expand health-care access to 147,000 Illinoisans — an initiative he enacted even though lawmakers never approved it.
Later Tuesday, two Democratic members of the Illinois House unveiled legislation that they said would accomplish what the Democratic governor has said he wants to do by making more people eligible for the Family Care program. The legislation is House Bill 6297, sponsored by Reps. David Miller of Lynwood and John Fritchey of Chicago.
The developments were the latest in a months-long skirmish between the Blagojevich administration and the Joint Committee on Administrative Rules, a bipartisan panel consisting of 12 state senators and representatives. Miller and Fritchey serve on JCAR.
February 26th, 2008
The wide-ranging federal probe of public corruption in state government creeped closer to Gov. Rod Blagojevich on Monday. Officially, that is, though not technically.
It’s been clear for months the feds were eyeing Blagojevich as a central character in their probe. But Blagojevich had previously been identified only by the pseudonym “Public Official A.” The feds did not identify him by name. On Monday, U.S. District Judge Amy St. Eve removed any doubt about the official’s identity. She identified the governor by name.
In a nine-page order pertaining to evidence the feds plan to offer in the upcoming corruption trial of Tony Rezko, a former top fundraiser and adviser for Blagojevich, St. Eve revealed that Blagojevich is one in the same as ”Public Official A.” News coverage is here, here, here, and here.
What exactly did the governor do wrong? First things first, the feds have not charged Blagojevich with a crime.
However, they have charged and/or are investigating a number of Blagojevich insiders. Next week, Rezko begins trial on charges that he used his insider clout to attempt to extort kickbacks from firms seeking business with the state. Blagojevich — previously as “Public Official A” and now by name — has repeatedly surfaced in pre-trial exchanges between the feds and Rezko’s defense team. The charges against Rezko are here and here.
In one instance detailed by the feds, Blagojevich’s campaign fund stood to gain a $1.5 million donation that Rezko and Stuart Levine, another insider cooperating with the feds, allegedly tried to extort from an investment firm. Thomas Rosenberg, also a Hollywood producer, represented that firm, which sought to invest assets held by the Illinois Teachers Retirement System. Rezko and Levine allegedly claimed they could steer investments in exchange for kickbacks.
From Judge St. Eve’s order:
In early 2004, the staff of the TRS Board had recommended that the Board allocate available funds for real estate investments among the existing TRS real estate managers, including a $220 million investment with Capri Capital. Through Levine’s arrangement, the TRS Board postponed the allocation to Capri Capital. Levine and Rezko allegedly then agreed to approach Rosenberg through an intermediary to either make a $1.5 million donation to Governor Blagojevich or pay Levine an approximate $2 million fee in order to obtain the $220 allocation. In approximately May 2004, that intermediary approached Rosenberg and informed him of Levine and Rezko’s demand. Rosenberg responded that he would not be extorted, and he thereafter threatened to inform law enforcement. Given the threat, Levine and others agreed that Capri Capital would receive the $220 million without any fees or political donations, but it would not receive any further business from the State of Illinois, including TRS. The TRS Board subsequently approved the $220 allocation to Capri Capital.
The feds alleged the same scheme in December, when they filed a document called a proffer setting forth their evidence against Rezko. The proffer used pseudonyms to describe Blagojevich and other officials:
Investment Firm 7 was a real estate investment management firm that had a long-standing relationship with TRS. In February 2004, Investment Firm 7 was supposed to receive $220 million from TRS to manage. Levine acted to stall the allocation, and planned with Rezko to approach Individual J, a principal of Investment Firm 7, with a choice: if Individual J wanted to get the $220 million for Investment Firm 7, he was either going to have to make a $1.5 million donation to Public Official A or pay Levine a 1 % fee (which would be shared with Rezko). Rezko and Levine enlisted Co-Schemer A’s help to demonstrate to Individual J that he needed Levine’s help to get the $220 million. In the course of Co-Schemer A’s efforts to prepare Individual J for Levine’s approach, Individual J realized that he was going to be extorted and threatened to expose the scheme. In light of this threat, Levine, Rezko, Co-Schemer B, and Co-Schemer A spoke on May 10 and decided that Individual J would get his $220 million without being asked for any contribution, but that Individual J would never again get any money from the state of Illinois. Investment Firm 7 did in fact receive a $220 million allocation at the May 2004 TRS Board meeting.
Rezko masterfully ingratiated himself with powerful Chicago pols. As you probably heard from national news coverage, Rezko also was a longtime supporter of Barack Obama, the community organizer turned state lawmaker turned U.S. senator turned presidential contender. More background on Rezko/Obama is here. For the identities of nearly all the characters in the upcoming Rezko trial, go here. (Separately, the feds have indicted Chris Kelly, another former top fundraiser and adviser for the governor.)
Blagojevich and his aides have steadfastly denied he is “Public Official A.” In December, when the feds described their evidence against Rezko in a document called a proffer, Blagojevich spokeswoman Abby Ottenhoff had this to say to the Associated Press:
“No such conversation ever occurred. This administration does not do business that way.”
Ottenhoff added:
“Based on the description in the filing, it is not the governor.”
Only, as the AP noted in its story at the time, the “description” in the proffer pointed directly at the governor — not away from him. In one scene, the proffer describes a plane ride to New York after “Public Official A” reappointed Levine to the Illinois Health Facilities Planning Board in the fall of 2003.
After Levine was reappointed, he shared a private plane ride from New York to Chicago with Public Official A and Co-Schemer B. Levine, Public Official A, and Co-Schemer B were the only passengers on the flight. At the beginning of the flight, Levine thanked Public Official A for reappointing him to the Planning Board. Public Official A responded that Levine should only talk with “Tony” [Rezko] or [Co-Schemer B] about the board, “but you stick with us and you will do very well for yourself.”
The fact is that Blagojevich reappointed Levine to the board. If you accept this fact, then “Public Official A” can’t be anybody other than Blagojevich.
Again, the feds have not charged Blagojevich with a crime. Moreover, the feds generally proceed upward in public corruption cases from lower-ranking players to the powers that be. They grab the little guys and squeeze until the little guys give up the big guys. Therefore, the direction of the probe likely will be affected by whether the feds win at trial against Rezko. The outcome of the case against Chris Kelly also may help determine whether the feds charge the governor.
Nonetheless, there is plenty of speculation about whether the governor’s indictment is imminent. Charlie Wheeler, a retired Chicago Sun-Times reporter who heads the public affairs reporting program at the University of Illinois at Springfield, recently analyzed the proffer and concluded that Blagojevich’s indictment “seems a certainty, based on what prosecutors say they will prove in the Rezko trial.”
That, Wheeler said, is the proffer’s “logical conclusion.”
UPDATE 1
The Cap Fax Blog notes the feds don’t have an open and shut case against Rezko. There may well be some holes.
February 25th, 2008
Hillary Clinton is beginning to look desperate.If she isn’t desperate, she is doing a good job of fooling us.
Over the weekend, Clinton made a few campaign stops through Rhode Island and Ohio. Now I’m sure she said many newsworthy things during her time there, but her decision to “go negative” is what made it on the newscasts.
Here are the two clips.
After a rally at Cincinnati State Technical and Community College in Ohio:
In Providence, R.I. (and try not to laugh at CNN’s new label for the presidential campaign — Ballot Bowl ‘08):
The line, “Go hard or go home,” comes to mind after watching the videos. In campaigns, the rule of thumb is if a candidate decides to go negative in a campaign, go very negative. Well, in one respect, she’s successfully become very negative.
Clinton has consistently used some of these tactics throughout the campaign, and Obama responded to this in the last debate.
But how much will this strategy help her as the Democratic nomination lurches toward Texas and Ohio? These states have a lot of delegates, and overwhelming wins would help Obama pull further away or allow Clinton gain some much needed ground. According to CNN, Obama leads the pledged delegate race 1,166 to Clinton’s 1,026.
Ohio, Texas, Rhode Island and Vermont will hold the next primaries on March 4.
Previous Posts
