STUMP » Articles » The Undeniable Corruption of Chicago and Illinois: Effects on Public Finance, part 1 » 28 January 2019, 05:35

I have not been writing about the arrest of Alderman Ed Burke of Chicago, the revelations of a retiring Alderman, Danny Solis, having been the person to wear a wire (possibly to escape his own comeuppance by the hands of the feds?), etc. This is generally not the sort of thing I write about.

But I do write about money, especially public finance. And Burke definitely had his fingers in a bunch of pies. And it seems many other people have been, as well.

This can get unwieldy rapidly, so let me focus on a couple items today: the alderman wearing a wire (Solis), restrictions on aldermanic jobs, and Ed Burke’s brother Danny.

THE INNOCENT HAVE NOTHING TO FEAR

Of course, the title I have there is a lie. The innocent have plenty to fear.

But somehow, I don’t think that’s what’s happening with the Chicago Aldermen:

A mixture of surprise, anger and disappointment from City Council members Wednesday in the wake of a Chicago Sun-Times report stating longtime Ald. Danny Solis wore a wire to assist the federal investigation into Ald. Ed Burke.

The story sent shock waves through Wednesday’s City Council meeting, at which Solis was noticeably absent. The 25th Ward alderman, who is not seeking re-election, is reported to have recorded more than a dozen conversations with Burke over the last two years. Like Burke, Solis has been a powerful, longtime alderman. He is the former head of the Hispanic Democratic organization and longtime chair of City Council’s Zoning Committee.

….
“And anything that Ald. Solis recorded, if he did, isn’t going to make any difference,” Burke said. “If he did (record me), I don’t know.”

When asked if he would drop out of his aldermanic race, Burke responded: “Not only am I running, I’m going to win.”

Some of Burke and Solis’ colleagues expressed dismay the report, suggesting Solis stabbed his fellow council members in the back. Ald. Carrie Austin shook her head and said, “You just don’t do that,” as if there was some unwritten code of silence between aldermen. Others expressed confidence that, while they might be caught on recordings, they haven’t done anything wrong.

Putting the nicest face possible on it, people say things face-to-face that they don’t want recorded because, get this, they may be talking about somebody else and don’t want that somebody else to hear what they said. That requires no illegality at all. Innocent people being recorded do have every right to feel betrayed.

However.

This is Chicago. And the people being recorded are in their office as public officials. They can have secret conversations, but this is not a personal trust being betrayed. They should expect people looking over their shoulders when working in the “public trust”.

I deem that the expectations that no one is watching (except us chickens) provides a spur for corruption. It can start with a regular old political tit-for-tat… and then morph into something else entirely.

RESTRICTING ALDERMANIC OUTSIDE JOBS

News of the report came, coincidentally, as City Council took up the topic of ethics reform, with the mayor and several aldermen introducing various proposals. Mayor Rahm Emanuel proposed strengthening the rules allowing aldermen to recuse themselves from votes because of possible conflicts of interest; and a ban on aldermen working for any entity that could be a party to any legal conflict with the city (i.e., a ban on serving as a property tax lawyer).

That such rules were not already in place… well.

When asked why he stopped short of a full ban on outside employment, Emanuel brought up the example of Ald. Tom Tunney, who owns the restaurant Ann Sather.

“Some people will talk about outright ban,” Emanuel said. “I think the changes I’m proposing will give us diversity with people of different backgrounds and different walks of life.”

That is fair enough, because not everybody is wealthy enough to subsist in Chicago on an Alderman’s pay. Back in 2015, the salaries of the aldermen were over $100,000. Evidently there are variations in salary due to choices whether to take pay raises or not. The lowest-paid one, Will Burns, had an aldermanic salary of $108K. Fine, outside jobs are okay.

But isn’t it interesting how many of them have jobs/connections they get money for, that have connections to government? Are there no jobs for them that aren’t government-related?

I ask you, Mike Madigan — yes, Illinois legislature, not Chicago alderman, but his practice has to do with arguing with the government re: property tax bills. Seems he should either decide to be in government or make money off arguing with government… not both.

DON’T CRY FOR BROTHER DANNY

Which reminds me, Ed Burke’s brother Danny was hoisted on his kiester last election. He had been in the Illinois state legislature (seriously – Madigans, Burkes, Solises… seems to me it gets piggy if you have multiple family members playing in politics. Yes, I’m looking at you Bushes, Clintons, Kennedys, Cuomos, too… Get an honest job.)

But don’t worry about brother Danny. He’s got a sweet pension (for now).

Former Democratic state Rep. Daniel Burke was unceremoniously tossed out of office last year by the residents of his increasingly Hispanic Chicago district.

But not to worry; Burke, like many politicians in Illinois, is enjoying a soft landing on a big pile of cash — courtesy of Chicago and Illinois taxpayers.

Burke is just the latest politician to enjoy what can only be described as incredibly generous pension largesse.

It’s just another sad example of how the political class takes care of itself. It ought to outrage every citizen in this state, because Burke’s pension is both excessive and unaffordable.

…
The 67-year-old Burke served in the Illinois House for nearly 30 years, one of House Speaker Michael Madigan’s close associates. In addition to that supposedly full-time job, Burke had another supposedly full-time job as a deputy city clerk. He held the clerk’s position for roughly 25 years before retiring at age 52 with an annual pension of $58,000.

Okay, let’s stop right there. WHILE ON THE LEGISLATURE, he had a Chicago city job. This is absurd. People bitch about double-dipping (receiving a pension while continue working for the entity one is receiving a pension from), but this is nuts. Two government jobs at the same time? Pick one. Yes, one was elective and the other one wasn’t. I don’t care. Pick one government job and that’s it.

Oh, and he retired with a pension from MEABF (I’m guessing), at age 52. MEABF is the pension fund I projected running out of funds in the near future. I guess it’s great that he got at least 15 years of payment for his 25 years of work.

Back to this piece:

Thanks to cost-of-living increases, Burke’s city pension now stands at $86,000, according to news reports.

Okay, let me do that calculation – that’s a cumulative increase of 48%. If I assume 15 years of increases, that’s a 2.6% per year increase, which doesn’t sound too bad on an annual basis, does it? But see how rapidly that adds up for a fund that really can’t afford it.

Burke was paid a legislative salary of roughly $85,000 a year. He stands to collect a starting legislative pension of roughly $73,000.

For those keeping score, his two pensions add up to $159,000 — for now.

But thanks to some pension shenanigans written into law by former Senate President Emil Jones, Burke and others who have served more than 20 years in the Legislature will get even more.

Why.

via GIPHY

Just… how does one justify that, other than you’re giving goodies to one’s pals.

The legislative change essentially lifted the practice of basing a legislative pension on a 20-year limit. Now it just continues to go up.

So Burke’s current legislative pension will jump from $73,000 to $92,000 in 2020.

That is a 26% increase. IN ONE YEAR.

(and we’re all sitting around waiting for the next recession and huge market drop…)

Here’s something else to consider: Burke’s legislative pension of $92,000 in 2020 will exceed his $85,000 legislative salary in 2018.

It’s a sweet deal that keeps getting sweeter — Burke can count on annual pension increases of 3 percent a year. He’ll be up to $200,000-plus a year in no time.

So here’s the deal with legislative pensons: they are the worst-funded for Illinois, among the state pension systems.

It’s so small, that it’s not even in the Public Pensions database, but I did look at it some years ago.

Back in 2015, I noted the funded ratio was 14%.

Is it any wonder?

REAL RULE: WE’LL GET OURS DEFINITELY; YOU’LL GET YOURS MAYBE

Thing is, GARS is eensy-teensy compared to all the other state pension funds, and eensy-teensy compared to even the Chicago funds.

They had fewer than 300 members in the pension. That’s including actives, separated but vested, and retirees. The smallest located-in-Illinois pension in the database has almost 27,000 participants. (That’s Chicago Police)

Chicago MEABF has almost 74,000 participants.

So, if GARS should ever run out of money, we can be sure the Illinois legislature will just run it on a pay-as-it-goes basis, because paying out pensions to 300 people is far from breaking the bank in Illinois. They can “afford” it easily, and the people voting on those bennies for themselves and their former colleagues will feel not a twinge of guilt… while those much bigger pensions run out of money as well. Will those be made whole? Can they even manage to run it pay-go?

What will happen with MEABF when the money runs out? Well, maybe the people will continue to get their pensions. For a while.

But I am sure that the people making the rules will always make sure they and theirs will be taken care of first.

And maybe others will get what’s left over.

Because it seems to me that neither Chicago nor Illinois lawmakers and executives have felt like there is someone looking over their shoulders, that they will ever be held accountable for the financially ruinous decisions they make.

It would be better if all of them acted as if they were surrounded by people wearing wires… and really, given current smartphone (and smartwatch) tech, they really should have been assuming as such all this time.

Next time, I’m going to look at the Workers Comp program in Chicago, which Burke controlled (why) and which just got relinquished to a more appropriate authority.