STUMP » Articles » Chicago (and Illinois) Watch: Shenanigans! Shenanigans for Everybody! » 9 July 2015, 01:47

Where Stu & MP spout off about everything.

Chicago (and Illinois) Watch: Shenanigans! Shenanigans for Everybody!  


9 July 2015, 01:47

While I get ready for today’s public hearing on Public Pensions actuarial practice, I’m purging my tabs of all the Chicago material I’ve been holding onto.

=cracks knuckles=

Let’s hit it.


Is it just me, or is Chicago getting a bit desperate?

Chicago just added a 9% tax to Netflix subscriptions

A ruling by Chicago’s Department of Finance allows the city to add an extra nine percent tax onto “electronically delivered amusements” and “nonpossessory computer leases.”

In an odd combination, buying a subscription to streaming media, such as Netflix or Spotify, would qualify, as would using a cloud computing platform, such as Amazon Web Services. Each would be subject to 9% tax; Chicago is the first major American city to levy a tax on either streaming services or cloud computing services.

This isn’t an actual new tax, rather an expanded definition of the city’s already-existing nine percent amusement tax. The Chicago Sun-Times reports the tax will net an additional $12 million a year.

Ooooh, that’s a big assumption.

Oh wait, they’re starting to run into issues.

Confusion is driving widespread anger over last week’s quiet enactment of a “cloud tax” in Chicago, said Harper Reed, technologist and CEO of mobile commerce startup Modest.

“We need clarity on what it actually means, what it actually means for all of us,” Reed said. “What, as businesses, we can expect?”

The cloud tax is actually an extension of two existing taxes, the city amusement tax and the city personal property lease transaction tax, to cover streaming entertainment as well as cloud-based services.

“That lack of clarity is bad for Chicago, and basically it says that although the mayor or everyone is pro-business, that they’re only there when it’s fun to take photos,” Reed said.

It’s all about the “nonpossessory computer lease”

In plain English, this means remotely accessing information or services from a computer you don’t own. A 1989 case ruled that the city of Chicago could tax transactions on LexisNexis, which was then used on dedicated terminals connected to a remote mainframe. The tax applied to the time using the database, not the terminal.

The city is now expanding its interpretation of that ruling to include access to remote “computers” — really any device that stores information — regardless of how they’re accessed.

You know, Chicago, it’s not necessary to tax every damn thing that people do.

What will be next — a sex tax?

(if they start taxing the frequency of people having sex, I totally disavow ever saying the above)


Some other people are picking up the ‘let them eat bankruptcy’ cake

Government bankruptcy is a mystery to most of us in Illinois because there’s been no compelling reason to explore this arcane chapter of the federal bankruptcy code — until now.

With Chicago Public Schools and the City of Chicago on major begging, borrowing and belt-tightening sprees to avert imminent financial meltdowns, we need to understand how bankruptcy works, and whether it’s a viable way to restore solvency.

The State of Illinois is also teetering on the edge of the fiscal cliff, but there’s no legal way a state can declare bankruptcy — no applicable law on the books — so it would presumably take an act of Congress and a favorable Supreme Court ruling, or maybe even a Constitutional amendment, to change that.

+ The stigma of bankruptcy is overblown. It may be a “scarlet letter” for politicians in the middle of it — a big “B” — but it’s not necessarily a permanent blemish if the reorganization plan is well executed.

It would be nice if watchdogs like the BGA didn’t have to raise the draconian specter of bankruptcy, but the time for wishing upon that star is long gone.

We’re realists, and bankruptcies may be in our future, so we should understand what that could mean for Illinois residents and their local governments.

In this case, ignorance is anything but bliss.

Look, there’s reality (which always wins in the end) and there’s wishing with all your might.

Somebody is going to get screwed. Might I say, multiple somebodies will likely get screwed.

Official bankruptcy proceedings can help the screwed get equitably screwed. Just consider it.

Because avoiding the screwing is not an option. Unless that Magic Money Fairy™ really does show up.

(SPOILER: the MMF does not come via Netflix)


Rauner is getting a crash course in Illinois politics.

There is currently a budget impasse in Illinois. Rauner would like some breathing room for negotiation.

Top Democrats aren’t really interested in that.

When someone tells you it is not about the money— it’s about the money. Similarly, when Deputy Solicitor General for the State of Illinois, Brett Legner, on behalf of Attorney General Lisa Madigan’s Office told Chancery Judge Diane Joan Larsen (in the Circuit Court of Cook Country) yesterday that it’s not about politics, you kind of knew— it’s about politics.

I mean think about it, Lisa Madigan has been groomed for this day most of her life. As a teenage girl, she was the one Madigan kid who went to the Capitol to learn what her dad, Speaker Mike Madigan, did and how he did it.

Speaker Mike is now in the battle of his life.

Finally, he is up against a Republican, Gov. Bruce Rauner, with more financial resources ($700 million in net worth) than the Speaker’s organization/Party has, with a strong, consistent philosophy (free markets, term limits, fair drawing of legislative districts, curtailment of union power, workers’ comp. reform, tort reform, pro economic growth and turning around the Illinois Economy), with style and finesse— and who is fresh off a convincing win (51% to 46%) over six year incumbent Governor, Pat Quinn.

With the Democrats having Supra-majority, veto proof margins in the General Assembly, the only way for Gov. Rauner to make any headway in turning the State around is to win concessions from Speaker Madigan on pro-economic growth/job issues as a part of the budget negotiation.

So when the Democrats passed a Fiscal 2016 budget with a four billion dollar deficit, Rauner smartly vetoed it, but with a carve out for education spending.

So, while nominally, the plaintiff, in court, yesterday, was AG Madigan, in support of her motion for a declaratory judgment seeking a Temporary Restraining Order blocking the State Comptroller from paying the state employees their full salaries and the Defendant was the State Comptroller, the real opponents in court were Speaker Madigan (represented by his loving AG daughter) and Governor Rauner (represented by Comptroller Munger, appointed by Gov. Rauner, after Judy Baar Topinka died one week after she was elected to the Comptroller’s office last November).

Outside counsel for the Comptroller, Dave Gustman (Freeborn and Peters) explained to Judge Larsen that state employees were coming to work and thus had to paid, under the federal Fair Labor Standards Act at least the federal minimum wage of $7.25 per hour.

As Mark Glennon at Wirepoints noted, this “We gotta go by the rules” play was to drop state employees’ pay as low as possible, even if they couldn’t stop operations. They’d love to blame this on Rauner.

So, in an interesting move, both the Republican governor and the public employee unions are contesting this.

Dealing a blow to Gov. Bruce Rauner’s pledge to keep public worker paychecks flowing while state government limps along without a budget, a Cook County judge ruled Tuesday that state employees must be paid only federal minimum wage while the broader political battle at the Capitol plays out.

The ruling may not be the final word on the fate of state worker pay, however. The Rauner administration, the comptroller’s office and the state’s largest public employee union quickly appealed the decision. Comptroller Leslie Munger has said her office can’t even process the smaller paychecks in time, given the complexity of the payroll systems. And state lawmakers will return to the Capitol on Wednesday as Democrats try to approve a one-month emergency services budget that would pay some, but not all, state workers.

I don’t really care to follow the legal blow-by-blow. I’m removed from this, and if the Madigans want to play hardball, I hope they’ve got their protective gear on.

And now Rauner has put out some 500-page something-or-other.


No, I’m not looking at any of this crap until something is passed. At least at 500 pages, it’s shorter than a standard Dickens novel. Or the last few Harry Potter installments.

And now it’s time for me to hit the first Metro-North train of the morning. Keep down the fort til I get back.

Compilation of Chicago posts.

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