End and Means: Never is it Safe to Say 'I've Seen it All' in Illinois

Sep 1, 2013

Charles N. Wheeler III
Credit WUIS/Illinois Issues
After watching Illinois government and politics for more than 40 years, one might reasonably assume that he or she has seen it all.

One — or at least this one — would be wrong.

On returning home from the Wisconsin Northwoods, I discovered not one but two new cases that stretch the limits of belief — one an unprecedented abuse of gubernatorial power, the other an amazing display of legal treachery.

The first, of course, was Gov. Pat Quinn’s outright veto of legislative salaries for the budget year that began on July 1, after the legislature missed an arbitrary July 9 deadline he set for action on so-called pension reform. Quinn explained that lawmakers shouldn’t be paid until they approved unspecified changes to retirement systems generally thought to mean massive cuts in future benefits for public workers, though no one seems quite sure what specific changes Quinn wants.

Not even his predecessor, the disgraced Rod Blagojevich, thought to pull off such an outrageous stunt, perhaps because unlike Quinn, Blagojevich actually had allies in the legislature, including Senate President Emil Jones, a Democrat from Chicago, for most of his tenure.

Some hailed the veto as a stroke of political genius that would prove immensely popular with rank-and-file Illinoisans, who polls suggest hold the General Assembly in even lower regard than the governor.

More thoughtful folks wondered what sort of horrible precedent the veto could set, or what type of budgetary war might ensue. Could a future governor wipe out paychecks for lawmakers who refused to pass his or her particular pet initiative, whatever that might be? Might a future legislature simply refuse to appropriate any money for the governor’s salary? Neither scenario would seem particularly helpful in promoting thoughtful governance.

Senate President John Cullerton and House Speaker Michael Madigan, both Chicago Democrats, sued in Cook County Circuit Court, asking the court to nullify Quinn’s veto as a violation of the Illinois Constitution’s separation of powers provision, or in the alternative, to order state Comptroller Judy Baar Topinka to issue paychecks as state statutes require, even without an appropriation in place.

“If the Governor’s actions are sustained,” the suit argued, “there will be no limit to the oppression the Governor could assert over members of the Legislative Branch, irrevocably altering the separation of powers so carefully crafted by the framers of the Illinois Constitution of 1970.”

Besides being dangerously toxic to any hope of amicable governance, the governor’s veto was inherently dishonest, predicated on a couple of huge falsehoods: The first that lawmakers were not doing anything; and the second that July 9 was a magic date.

In fact, even as Quinn was preening for the TV cameras, a joint House-Senate conference committee was working to resolve legitimate differences about what changes to recommend for the retirement systems covering downstate public school teachers, university employees, state workers and legislators and top executive branch officials. Moreover, the committee wisely sought actuarial valuations for each proposed change, a time-consuming process.

In addition, passage of a new plan by July 9 would have required three-fifths majorities in both chambers to become effective before next June 1. On the other hand, the same plan voted on after January 1 could become effective at once with simple majorities, under the Constitution’s effective date provision.

At the same time, the governor’s reckless veto posed an immediate threat to state government because the legislative salary lines were tucked away in a 250-page budget bill that authorized spending more than $1.2 billion for statewide elected officials, the legislative and the judicial branches, and more than a dozen state agencies, starting July 1. Quinn held the measure — HB 214 — until his veto was filed on July 10, so that for the first week and a half of the budget year, none of the affected entities had legal authority to spend a dime. That raises myriad questions about how state government was able to function, which ultimately could involve court decisions and audit findings.

Perhaps one should not have been that surprised, though, to see Gov. Quinn revert to Populist Pat, the rabble-rousing government outsider, a persona that has served him well in the past, but one not particularly conducive to making government work.

On the other hand, the amazement was understandable to find out that Ty Fahner, president of the Civic Committee of the Commercial Club of Chicago, was claiming that he and his cohorts had been urging Wall Street agencies to downgrade the state’s credit ratings as a way to pressure lawmakers to slash pension benefits for current and retired public employees.

The story was broken in late July by Rich Miller on his capitolfax.com blog site, a must-read for anyone interested in what’s happening in state government and politics. Miller posted an Illinois Channel video of a Union League Club luncheon last March, at which Fahner said he and some of his Civic Committee colleagues contacted the rating agencies, saying, “How in the hell can you guys do this [maintain the state’s existing credit rating]? You are an enabler to let the state continue.”

Miller’s report drew calls for investigation from We Are One Illinois, a labor coalition working to protect public employee pensions but was ignored by virtually all the major media, save Illinois Public Radio.

Two weeks later, Fahner emailed Miller to say that he “misspoke,” and that no one connected with the Civic Committee had contacted the ratings agencies. 

Still, the video speaks for itself — or rather, in it, Fahner speaks for himself. So was he lying to the luncheon audience? Maybe ... after all, why would a group of self-styled civic leaders try to drive down the state’s credit, resulting in higher interest rates that would end up costing taxpayers more to borrow money?

One plausible explanation: Unless pension benefits are gutted, Illinois might be forced to revamp its revenue structure to pay for them, including adopting the graduated income tax that tax reformers have long advocated. That would cost the generally well-heeled Commercial Club members big bucks, depending on the rate structure adopted. For example, using Wisconsin’s current graduated income tax with a 7.75 percent top marginal rate, someone with $1 million in taxable income would owe roughly $74,500, compared to $50,000 at Illinois’ flat rate.

A more sinister motive also suggests itself — forcing Illinois to pay higher interest rates to borrow, despite virtually no chance of default, means higher returns for those buying Illinois bonds, no doubt including some Civic Committee fat cats. Market manipulation, anyone?

What morphed the story from simply “amazing” at what the super-rich might do to protect or enhance their fortunes to the higher level of “unbelievable,” though, is the fact that Fahner also is a current partner and former chairman of Mayer Brown, the Chicago law firm that two years ago won a lucrative contract to serve as the state’s bond counsel.

So in essence, a partner of the law firm advising Illinois on its borrowing — for which it’s already been paid more than $1 million in fees and expenses — was simultaneously stabbing the state in the back by trying to crash its credit rating. 

Breath-taking perfidy, even for Illinois, but also a good reminder that one should never, ever say, “Now I’ve seen it all!”

Charles N. Wheeler III is director of the Public Affairs Reporting program at the University of Illinois Springfield. 

Illinois Issues, September 2013