Pritzker plans for Illinois require pension overhaul

In one of the most expensive gubernatorial elections in the nation, exceeding the one in California with Jerry Brown, with $90 million in TV and radio ads alone; the 53-year-old billionaire, who also spent a cool $171.5 million of his own money, says that he is glad that the one-term outgoing Republican incumbent Bruce Rauner is leaving, and supports plans to legalize recreational marijuana, to bring in much needed monies to the depleted coffers of Illinois.

Beset by a nearly two year absence of a state budget, the state accumulated more than $14 billion dollars in unpaid bills, and sent incoming freshmen to out of state colleges, rather than face diminished resources at Illinois public universities; social service budgets were slashed, and some forced to close, or severely limit the services they provided.

If cotton was once King, in the American South, then pot may rule in the land of Lincoln, as the governor-elect struggles to find ways to erase the red ink, mostly attributable to pension obligations that were often sidelined in the past, or had their funds diverted to other needs.

Pritzker says that he expects profits to be between $700 million to $1 billion a year.

The idea is not new; in March of this year, state Rep. Kelly Cassidy introduced the idea and said, in part, that she believed that given the current financial situation in Illinois, the legalization and taxation of marijuana “could help fill the much needed revenue gaps in our budget. In Colorado, marijuana sales generated about $70 million in revenue during the first year of legalization.”

“The fact of the matter is that marijuana is being bought and sold throughout the state right now, unregulated and untaxed,” Cassidy said.

The specter of unfunded liabilities --- more than $129 billion remains - is another factor that affects ratings by the bond rating agencies. Balancing that with an operating deficit of $6 billion requires more than both the State Assembly, and any governor, may be able to do.

Joining Cassidy on the Senate side was State Sen. Heather Steans (D-Chicago) who has also proposed legalization of cannabis. She, in turn said, “Right now, all the money being spent on marijuana is going into the pockets of criminals and cartels,” And, she also added: “In a regulated system, the money would go into the cash registers of licensed, tax paying businesses. [where] It would generate hundreds of millions of dollars per year in new revenue for our state. Prohibition is a financial hole in the ground, and we should stop throwing taxpayer dollars into it.”

In a recent interview with local media, Pritzker assured them, that there would be a budget during the next cycle in 2019.

Earlier this year, we noted that a “closer look at the details showed more than one sword of Damocles hanging over the heads of the governor and the legislature. As Bloomberg News reported in February: “$2.3 billion of deficit spending in the form of unappropriated liabilities held at state agencies as of Dec. 31; $8.4 billion of unpaid bills as of Feb. 7; $1.03 billion of late-payment interest fees incurred as of Dec. 31, 2017 (Note: At least $143m has been paid); and, a $1.7 billion general fund deficit, according to the governor’s office of management and budget.”

One idea that Pritzker has floated is a pension obligation bond, going against the accepted grain of not loaning money to pay off loans, but the governor-elect has said that he might be able to parse the interest rates to save money.

Giving some assurance that he will address his issue is his economic transition team consisting of former state comptroller Dan Hynes, Civic Federation president, Laurence Msall, and the esteemed Center for Tax and Budget Accountability head, Ralph Martire.

Harnessing this star power is essential to remove the muck and mire of Illinois state finances to avoid, what many are saying was the sty in the eye to the loss of Chicago’s bid for Amazon HQ2 transition to the East Coast, the imperiled financial state and the unfunded pension liabilities of Illinois being a major factor, although the mayor, Rahm Emanuel, has been reluctant to say so.

This also places education and health behind the largest financial elephant in the room., despite recent changes in funding, to avoid what had been the lowest per pupil funding in the nation for low income students, further compromised by racial inequity.

Despite the strong employment outlook, wages have not kept pace, and Pritzker says that this is also a priority, yet as we have shown, there are a number of factors that he may have overlooked: the big companies like Amazon that “freeze” wages, inflation that is nibbling away at wages.  And, as The Economist noted this June,” inflation is eating up pay increases and that real—that is, inflation-adjusted—wages are therefore stagnant. Real wages in America and the euro zone, for example, are growing more slowly even as the world economy, and headline pay, have both picked up.”

As the Fed keeps an eagle eye on US inflation, wage growth may be out of his hands.

Crain’s Chicago Business focused on one area ripe for reform, and that is Medicaid determination -- or redetermination: “The way we determine Medicaid eligibility each year is “arcane,” said Barbara Otto, CEO of Smart Policy Works. Letters are mailed to beneficiaries and if they don’t answer within 90 days, they lose coverage.

“It disrupts the marketplace,” Otto said. “I’m supportive of having program integrity, but the way we’re doing it isn’t working. . . .It’s easier to cut people off Medicaid in the state of Illinois than it is to keep them on Medicaid in the state of Illinois. What’s wrong with that picture?”

Taking these key areas into consideration, it’s going to be a busy opening for Pritzker, and the traditional honeymoon for a new lawmaker, does not seem like an option.

New lawmakers show diversity and fresh faces

Tuesday’s midterm election proved the pollsters correct, for once, said many, and gave the House to the Democrats, but it also gave a number of firsts, one being a huge voter turnout among the young, and secondly a handful of women that were minority women, of color, and of religion. And, one outlier in the form of the unresolved gubernatorial election in Georgia, where Stacy Abrams, is less than a sliver away from a recount, and in a state where voter suppression ruled, and where her opponent, as secretary, of state that there were 25,000 ballots that had not been counted.

One big surprise was the defeat of Joe Donnelly, in Indiana to Mike Braun, 43.4 to 52.6, for the Senate, considering that he was one of the most conservative Democrats on the HIll; and Ted Cruz fending off a very strong lead from Beto O’Rourke  and the recount in the Florida Senate, where Tallahassee Mayor Andrew Gillum was defeated by DeSantis in an election that was marred by racial animus, with a razor thin victory for Desantis with 49.6 versus, 49.2 for Gillum.

Adding to the mix was the victory on the Cook County Board of Commissioners for an openly gay man, Kevin Morrison, formerly a full-time field organizer for Hillary Clinton, and who seemed to have learned from that experience by knocking on doors, and emphasizing “bread and butter” issues such as health care, and property taxes strategically reached out to working class people.

Kevin Morrison

Welcome news for many was the defeat of Wisconsin Gov. Scott Walker, the union busting arch conservative who lost to Tony Evers, by 31,000 votes, and who scaled back Obama era environmental protections.

While veteran lawmaker Nancy Pelosi is poised to resume her role as Speaker of the House, there is also the calls for impeachment by the party’s radical left, and those on the right that want to see democratic governance, and that now faces the absence of Jeff Sessions as attorney general, and an acting AG that says he will not recuse himself from the Mueller investigation, and which is going to give a real push to any moderate efforts that Pelosi may want and to maneuver with a president that does not want to play fair, at all.

While the appearance of malfeasance on the part of Trump can be debated, its apparent that, as with former FBI director, James Comey, that Trump is afraid of the findings of the Russian collusion with he and his family. But, the road to perdition may not happen, with many of his supporters backing him, to the point of insulation, despite the findings of the special investigation.

The turnout by youth also will galvanize the need for gun control, always a hot button issue, with seemingly monthly mass shootings, and the need for health care that most exit polls showed to be of great concern, and that was promulgated by the Democrats.

Women seem to have been galvanized by the Women's March and the #MeToo movement have surged ahead, and in unexpected places such as Illinois, where in the 14th Congressional District, a largely white suburban area, with DeKalb, Du Page, and Lake County, as part elected a 32-year-old black woman Lauren Underwood, who defeated a four-term Republican incumbent, Randy Hultgren, showing not only a step toward racial inclusiveness, but that the profile of women elected officials is younger, browner, and blacker than previously thought possible.

Alexandria Ocasio-Cortez sailed in New York, after her supreme primary victory, as the youngest woman ever elected to Congress. And, in another victory for women of color, Jahana Hayes was elected as the first black women representing Connecticut in the House.

Alexandria Ocasio-Cortez

Close behind were Veronica Escobar and Sylvia Garcia as the first Latina women to represent Texas in Congress.

Making another historic inroad were Palestinian-American Rashida Tlaib, and Ilhan Omar, a Somali-American as the first Muslim woman elected to Congress, representing Michigan and Minnesota respectively.

While some observers and voters are wary of a divided Congress, this is not an expression of defeat, but more of a battle, say some, and a return to those lessons taught in civics classes across America.  And, Pelosi put it well, when she said, “Today is more than about Democrats and Republicans. It is about restoring the Constitution’s checks and balances to the Trump administration.”

There will be cries for impeachment of Trump, and incoming House Judiciary chairman, Jerry Nadler, said last year: “If you are actually going to remove a president from office, you are in effect nullifying the last election. Certainly the people who voted for him will think you’re nullifying the election. It’s OK to do that. It may be necessary to do that—as long as you have persuaded a sufficient fraction of the president’s former supporters, the people who voted for him, that you have to, that it’s necessary.”

For those that expected the millennials to stay at home, there was a big surprise: In Chicago alone, for those aged 25 to 34, there were 162,000 voters from their ranks, just behind those from 55 to 64, with 142,000 votes reported the Chicago Board of Election Commissioners.

The real clincher was the 18 to 29 year-olds whose votes exceeded 31 percent, the highest in the 25 years of midterm history.

“According to TargetSmart, a political data analysis firm, early voting among 18- to 29-year-olds escalated with a 188 percent increase from 2014. States with particularly close races had an even more intense increase in youth voters in comparison to the 2014 election, with a fivefold increase in states like Texas and Nevada,” reported The Daily Northwestern, the student newspaper at Northwestern University.

Co-president of Northwestern College Democrats Claire Bugos, noted that, “The Marjory Stoneman Douglas students led a revolt against the gun laws we have in this country,” and, “I think that we’ve seen those pockets of youth discontent throughout the presidency. Young people see the midterms as a way to easily have a say in their government, and they’re taking advantage of that.”

In the days, and weeks, ahead, final vote tallies will be had, and then the real work of legislating will begin anew with new faces, as they tackle the challenges of a divided country.