“METRA…THE WAY TO REALLY (MAKE PEOPLE WANT TO) FLY”

7/18/13

That Metra, the commuter rail system that serves the greater Chicagoland area, is turning out to be a snake pit of corruption should surprise no one who is not as naïve as its former chairman, Alex Clifford.  (See my 7/16/13 post, WE ARE SHOCKED…SHOCKED!...TO LEARN OF POLITICAL INFLUENCE AT METRA and the posts to which it will refer you.)  However, Mr. Clifford’s testimony before the board of the Regional Transportation Authority (“RTA”), which, er, “oversees” Metra, continues to rivet those of us who follow, and pay for, the shenanigans of Metra and its kindred entities.  What is drawing the most attention, and perhaps deservedly so, is Mr. Clifford’s contention that Illinois House Speaker, Democratic Chairman, and former first dad-in-waiting Mike Madigan displayed “an ethical and moral character flaw” in trying to indirectly muscle Mr. Clifford into increasing the pay of one of Mr. Madigan’s minions and hiring another hanger-on. 

A minor point of digression here; is it my imagination, or does Mr. Madigan bear more than a passing resemblance to the current, aging Clint Eastwood?

The “ethical and moral flaw” comment provides plenty of grist for another mill on the moral outlook of people operating in a world of evolving ethics who continue to do what they were brought up to believe was morally acceptable.   Further, those of us who have followed Chicago politics for a long time are, or ought to be, dumbstruck by the thought that what not that long ago would have been considered Mr. Madigan’s going to bat for a loyal political soldier has generated such handwringing, if not outright vitriol.   Not even Mr. Clifford is contending that Mr. Madigan did anything illegal, even by today’s standards.  Yet people are calling for Mr. Madigan’s head in l’affaire Metra.   Good luck with that one.   I’m not defending Mr. Madigan here; times have indeed changed.  But Richard J. Daley must be rolling over in his grave, or expressing shock to the legions of precinct captains in the sky.  I can almost hear the old man now…

“What kind of world do we live in when a nice neighborhood guy like young Mikey Madigan can’t help out a neighbor and a friend  who’s trying to feed his family?  Saints preserve us!”

A further point on this particular digression…

The real scandal within the scandal surrounding Mr. Madigan’s efforts to get his minion Pat Ward a pay increase is the near brobdingnagian amounts of spondulicks Mr. Ward provided to campaign funds controlled by Mike Madigan and/or supporting Lisa Madigan’s erstwhile bids for higher office.   Reportedly, Mr. Ward has donated north of $15,000 to such causes.   That might not sound like a lot of money in the world of modern political pay to play, but Mr. Ward’s salary at Metra was only $57,000.  Even spread out over several years, $15,000 is a lot of dough for a guy making that kind of money to be giving away.  One doesn’t have to be overly cynical to look at this arrangement as a too thinly veiled kickback scheme.   While I haven’t read or heard anyone else bringing this up, perhaps people jaded by years of considering such things just assumed such a scheme was in place and, indeed, is usually in place with public employment in and around the city of Chicago.

Digressions aside, one of the items that jumped out at me as I read of this sad yet tantalizing affair is the $200,000 contract Metra, under then CEO Phil Pagano, awarded to the Target Group.  Target is owned by Joe Williams, who is a partner of Metra Board member Larry Huggins in a separate real estate development company. The Target Group received the $200,000, according to the Chicago Tribune, to “recruit minority bidders for the Englewood flyover” (emphasis mine), a $93 million railroad bridge on the south side.  According to the Chicago Sun-Times, the Target contract was to “certify African-American contractors to work” (emphasis mine) on the flyover.

I certainly hope that the Sun-Times is right and that Target was hired to certify, rather than recruit, minority contractors.   Why in the world would you have to recruit minority bidders on contracts set aside for minorities?  It would seem that if Metra is setting aside contract money specifically for minority contractors, and one were an ambitious minority contractor who was always on the outlook for more business, one wouldn’t have to be recruited to take the government’s money.   If contractors had to actually be recruited, persuaded, or cajoled into taking the work, perhaps those contractors are not the people who should be doing the work.  Wouldn’t the taxpayers be better served by contractors, minority or otherwise, who would actually make the effort to seek the work than by contractors who had to be talked into it?   Not that long ago, such logic would be considered common sense…but our country has gone crazy over the last 20 or 30 or so years.

Certifying, rather than recruiting, minority contracts makes sense, especially in Chicago in which politically connected white guys have for years set up phony minority front companies in order to win contracts set aside for blacks, women, Hispanics, etc.   Certification, therefore, is important, though one wonders why it can’t be done for less than $200 grand.  In this case, the work must have been particularly onerous, because the project ran $70 grand over budget and, according to Mr. Clifford, he was harassed by Mr. Huggins with calls asking why the checks were late.

The “certification” vs. “recruitment” debate is, in all likelihood, moot because the $200,000, rather than being for either minority certification or recruitment, was probably just another instance in which politically connected people were paid taxpayer money to do little if anything.  So it goes in these parts.   The same could be said for the $50,000 that Metra was supposed to pay to the National Black Chamber of Commerce to “monitor” a memorandum of understanding regarding black subcontracting on the Flyover, money that Mr. Clifford ultimately nixed by demanding approval by entire board.  Not even the lackey laden but shame bereft Metra Board would go along with such a scam.

All these shenanigans at Metra are very entertaining, but the entertainment our pols provide has long passed the point at which it got too expensive.   People are fed up.  Talk among people who have spent their whole lives here now often turns to places to which we would move.   That’s too bad; other than the machinations of our pols, Chicago and its environs is a terrific place in which to live.

See my two books, The Chairman, A Novel of Big City Politics and The Chairman’s Challenge, A Continuing Novel of Big City Politics, for further illumination on how things work in Chicago and Illinois politics. 

MIKE MADIGAN’S PENSION REFORM PLAN: “THE BEST THAT (WE) CAN HOPE FOR IS TO DIE IN (OUR) SLEEP.”

5/2/13

Illinois House Speaker Mike Madigan has come up with a plan for reforming the states broke, and broken, public employee pension system.   The plan, which is a refinement and tweaking of a couple earlier House plans, attacks the pension problem on a number of fronts.  In broad terms, the plan

--increases retirement ages for younger state employees and provides incentive for older employees to delay retirement by postponing cost of living (“COLA”) increases in pensions until an employee is 67 years old or has been retired for five years, whichever comes first.

--increases employee contributions to their pensions starting July 1.  (Good luck with that date.)

--limits the amount of an employee’s pension subject to COLA adjustments to an amount determined by multiplying the employee’s years of service by $1,000.   So an employee who worked for the state for 15 years would have only $15,000 of his pension subject to COLA adjustments.  COLA adjustments would not be compounded.  The latter point is far larger than it appears at first glance.

 

--covers four of the five state pension funds; only the judges’ plan is excluded.

--includes various funding guarantees and schedules.

Further, the plan, at least for now, excludes a prior provision that would require suburban and downstate school districts to eventually fund their own pension plans rather than have the state pick up their tab, as it does now.   The excluded provision was a non-starter for the Republicans who, in most other contexts, like to talk about being fiscally responsible and not expecting handouts.  With the requirement that the suburban and downstate districts pay their own way dropped, the GOP leadership in the House is fully on board with the Speaker’s plan.

With the support of Speaker Madigan and House Minority Leader Tom Cross (R., Oswego), the plan sailed though committee by a 9-1 margin and is a lock to pass the House.  Prospects in the Senate are not as hopeful, however; Senate President John Cullerton is working on his own plan with the help of public employee union leaders who are apoplectic over Mr. Madigan’s plan.   Further, any plan must pass Illinois Constitutional muster; the Illinois constitution states that public pension benefits cannot be “diminished or impaired” and the lawyers are going to have a field day, and a big payday, with this one.

The politics of the situation are, as are all Illinois politics, interesting. 

First, Senate President Cullerton, in one of his rare disagreements with, or failure to pay obeisance to, Speaker Madigan, appears genuinely miffed at talk that, with the Speaker and, to a far lesser extent, the Republican leadership, behind it, the Madigan plan is inevitable.   As Mr. Cullerton said yesterday

“The fact that the president of the Senate and the unions are putting their full weight behind something means something in this building, too.”

Could this be the start of a genuine feud between the Speaker and the Senate President, with the public employee unions siding with the President?   Probably not; neither the unions nor Mr. Cullerton have the power, or the intestinal fortitude, to stand up to the Speaker.   This thing should cool down and the Senate will end up passing the Madigan plan or something very similar to it.

Second, as I mentioned before, the bill must pass Constitutional muster and the unions will fight it tooth and nail in the courts, as they are doing in the legislature and on the airwaves.   But this is Illinois and (Surprise!) we have perhaps the most politicized court system, and Supreme Court, in the country.   While there are plenty of good judges at all levels in this state, one doesn’t get on the bench here by being a legal scholar or even a good lawyer; in most cases, one gets to put on judicial robes because one has curried sufficient favor with the powers-that-be.  (See my 2/5/13 post HOW DID CYNTHIA BRIM GET ON THE BENCH…AND STAY THERE FOR NEARLY TWENTY YEARS?)  While one would think that such an august institution would be the exception to this rule, this is Illinois, so the Supreme Court is at least as politicized, and obedient to, or at least cognizant of, the state’s powers that be as the lower courts.   Mike Madigan, who is also Chairman of the Illinois Democratic Party, is clearly one of the powers that be.  He may not have as much power as Alderman Ed Burke in the judicial domain, but Mr. Madigan still makes and breaks many aspiring judges and generally works well with Mr. Burke…though this case may be an exception to the latter due to Mr. Burke’s strong union ties.   While predicting the outcomes of court cases is as problematical as predicting election outcomes or stock prices, one suspects that a Madigan plan will make it through the courts.   But don’t hold me to that.

Third, the public employee unions are, to put it mildly, infuriated with Mike Madigan over this plan.  Illinois Federation of Teachers President Dan Montgomery has called the plan a “gut punch,” and yours truly thinks Mr. Montgomery was being polite, or at least circumspect, by using that particular portion of the anatomy in his description of where the bill and, by extension, Mr. Madigan, directs its/his fist...or foot.  

Will the public employee unions take out their anger, especially if this thing is passed, on Attorney General Lisa Madigan, who is just about certain to challenge Governor Pat Quinn (no relation) in the 2014 Democratic primary for governor?   If they do, where do they go?  To Pat Quinn, who has been working for something like this plan for at least the last year?   Could this be an opening for Bill Daley, who also is pondering a run for governor?   Unless Mr. Daley is completely mercenary, one suspects not; Mr. Daley’s theme, his entire reason for running, is that he is the one who can bring fiscal sanity back to Illinois.  Backing the public employee unions in this case will not help that image.  Could the public employees go with the Republicans?   Though with the sorry batch of GOPers we have in this state, anything is possible, one can’t see even ultimate insider, collaborator, and go along, get along guy Kirk Dillard siding with the unions here, let alone someone like Bill Brady or someone even more conservative.

It looks like the unions have nowhere to go to vent their anger against the Speaker here…and Mr. Madigan knows it.

Not quite as interesting, but more important, are the strengths and weaknesses of the plan from a financial standpoint.

Yes, this is a big step in the direction of alleviating our pension funding problems; one might even call the steps Mr. Madigan is proposing draconian, especially in the context of the political realities of this state.   But even this plan only eliminates about a third of our $100 billion unfunded pension liability.   The plan does, however, promise to fully fund the four pension plans involved…by 2045, when most of the players involved, and yours truly, should be long gone.   And even that distant full funding date will be met largely due to promised $1 billion annual contributions by the state…starting in 2020 (when most of the players and yours truly will hopefully still be around) and continuing until the plans are fully funded.  

Since when have Illinois politicians, or politicians anywhere, lived up to their promises, especially to promises made in the relatively, or absolutely, distant past?   One of the many reasons that public pensions in Illinois are in such trouble is the failure of the state to make its previously promised pension contributions, contributions that it had neither the capability nor the intent to make.   Why should it be any different this time?  

Predictions are difficult, but this one is one of the easier prognostications to make:   Since full funding of our public pension plans requires politicians to keep their promises, we are not going to fully fund our pension plans…not even in 2045.   We are still going to be deeply in the red and headed toward bankruptcy.

Mr. Madigan’s plan is a step in the right direction.  He is to be lauded for formulating and/or championing the plan.  Either that or we should wonder what is really going on in that most sophisticated of political brains and ask ourselves what Mr. Madigan is really up to.   But assuming that the Speaker is sincere and this plan is legitimate, it still seems to involve a lot of pain, political and otherwise, for not enough progress.  It is, however, the best we can do at this juncture, or so it appears.

See my two books, The Chairman, A Novel of Big City Politics and The Chairman’s Challenge, A Continuing Novel of Big City Politics, for further illumination on how things work in Chicago and Illinois politics.