STUMP » Articles » Illinois and Chicago Round-Up: Soda Taxes, Holding Legislation Hostage, Tiffs over TIFs and More! » 25 July 2017, 12:55

Let us call this the “meep is swamped” link dump. I was working on four separate blog posts, and frankly, what I can do is provide a short summary of each issue, and provide you links to the various stories and/or commentary.

Because I’m really sick of commenting on how fucked up Chicago and Illinois are. I have so many more fucked up situations to comment on!

COOK COUNTY SODA TAXES

Short version: Cook County (Chicago’s county) is super-thirsty for some sweet sweet tax revenue, but how to do that while not being the baddie in an already overtaxed populace?

Tax soda! That’ll show the fatties! Uh, I mean, that will provide incentives for people to reduce their soda consumption…. which will reduce the tax revenue… uh, how have cigarette taxes worked out, again?

And how have soda taxes worked out in other areas?

Philadelphia Soda Tax Leads To 30-50% Plunge In Sales, Mass Layoffs… oh.

Since this is Illinois, they couldn’t pass a simple soda tax without screwing it all up: the way the tax is imposed is idiotic, all of a sudden they remember they can’t impose this if the buyer is using food stamps (aka SNAP), and then there’s a bunch of lawsuits saying it’s discriminatorily imposed because not all sellers of soda have to do this.

Oh, and it’s illegal to put a tax on a tax in Illinois, so sales tax could not be imposed on top of the soda tax. It’s an operational mess.

And one of the lawsuits is delaying the imposition of the tax, so Cook County is “forced” to lay off people.

Also, Rauner is a meanie.

Here’s a boatload of related links:

• 13 June 2017: Cook County, Illinois, Experiences Disastrous Rollout of Its Soda Tax
• 27 June 2017: Retailers File Temporary Restraining Order and Preliminary Injunction to Block Cook County’s Sweetened Beverage Tax
• 28 June 2017: Merchants ask court to stop Cook County soda tax from taking effect
• 29 June 2017: Letter: Preckwinkle: The soda tax isn’t popular — but it’s necessary
• 30 June 2017: Judge Blocks Cook County Soda Tax
• 6 July 2017: Preckwinkle administration: Prepare for 10% budget cuts if soda tax stays on hold
• 6 July 2017: Exclusive: County Board president lists 925 for layoffs if no soda tax
• 6 July 2017: Editorial: How will Cook County survive without the soda tax? Let’s find out
• 13 July 2017: Preckwinkle Pops Off On Retailer Lawsuits Against Soda Tax
• 14 July 2017: Soda tax delay leads Cook County to lay off more than 300 workers
• 18 July 2017: Chicago Lays Off Prosecutors as Bodies Pile Up – 39 Cook County State attorney’s office employees were laid off because the soda tax was stayed
• 24 June 2017: What shoppers need to know about the Cook County soda pop tax
• How the 2017 soda tax will impact consumers
• From a year ago: Opinion: Why soda taxes are a stupid idea
• Soda taxes popping up around the U.S. — supposedly, Berkeley, California’s soda tax has worked out just fine
• 24 July 2017: We can balance Cook County’s budget without dangerous layoffs — or a soda tax

There’s probably a lot more commentary out there on the soda tax, but I can dump those when we actually find out if the soda tax is completely eradicated due to its illegality.

ILLINOIS STATE SENATE HOLDS LEGISLATION HOSTAGE; BLAMES RAUNER

I really wish Illinois would pipe down for a while. But as Mish notes, in a state where 4 governors went to federal prison in the past 40 years, you can’t really be surprised in how this all “works”.

So, the Illinois legislature passed the budget over Governor Rauner’s veto.

But here comes the real poison pill: Senate Bill 1.

This one is a lot more complicated than the soda tax snafu. But I’m going to write even less and you can follow the links for the explainers.

Basically, there’s one part of the budget bill that requires additional legislation to enact — how school funding is distributed among the disparate parties. That legislation was actually passed at the end of May. I mean, it’s Senate Bill 1 for crying out loud. It’s the first bill!

So what’s the big deal, eh?

Well, there’s a big fat sweetener for the Chicago Public School System in the bill, and Governor Rauner said he’s not going to let that through. And the Democrats, while they did have enough turncoat Republicans to override Rauner’s veto, don’t look like they’ve got enough votes YET to override such a veto. It’s some kind of line-item veto or amendatory veto or something.

Oh, and there are parties making arguments that Rauner can’t legally amendatorily veto the bill. I have no clue. I barely know the U.S. Constitutional quirks; I’m not about to dip into the Illinois state constitution (again).

Okay, well fight out the veto power in the Illinois Supreme Court or whatever.

But here’s the kick-in-the-pants: Rauner hasn’t vetoed the bill in any kind of manner, yet. Because Cullerton, the guy in charge of the state Senate, hasn’t sent him the bill.

Oh, and there’s some kind of drop-dead school funding deadline on August 4 or some such. The betting is that Cullerton holds the bill hostage until the day before. Or something similarly weasely. Like they did with the budget crap… the budget that they could have passed and overturned the veto on for years before this particular political theater.

Here are some links:

• 24 July 2017: Gov. Rauner yet to receive Senate Bill 1, Special Session starts Wednesday
• 21 July 2017: Rauner sets deadline for SB 1, says he’ll call special session— the deadline is July 31. Sure, we’ll see
• 25 July 2017: The Education Funding Bill is a Monstrosity of Unknown Proportions – Wirepoints Original — I agree with Mark. Go read this.
• 25 July 2017: State school funding bill would micromanage public school spending— down to the cent
• 24 July 2017: Two political views of SB 1
• 24 July 2017: ILGOP Supports Rauner Decision to Call Special Session — Mike Madigan’s Attempt to Hold Schoolchildren Hostage Needs to Stop
• 24 July 2017: Ives condemns Senate education bill as Chicago bailout
• 18 July 2017: Illinois Gov. Rauner Can’t Legally Veto Pension Reform Bill, CPS Says
• 17 July 2017: Breen: Democrats’ school funding bill latest in series of “blackmail” bills
• 17 July 2017: Here comes your bailout for the financially-mismanaged Chicago Public Schools
• 17 July 2017: Chicago Officials Say Rauner’s Plan To Veto More Money For CPS Is Illegal
• 17 July 2017: Illinois governor to block Chicago schools’ funding boost
• 18 July 2017: ILLINOIS SCHOOL FINANCE BILL BAILS OUT CHICAGO
• 17 July 2017: Superintendents Face Down School Year Without Funding Agreement
• 20 July 2017: Suburban property taxpayers would be on hook for CPS’ $17B in debt if schools bill becomes state law
• 8 June 2017:
  Could an SB 1 veto be overridden?
• 7 June 2017: How SB1 Would Rewrite Illinois’ Broken Education Funding Formula
• 20 July 2017: While Rauner and other politicians argue about education funding, schools just want their money
• 20 July 2017: Senate Democrats should forward school funding bill
• 23 July 2017: State CPS pension bailout also a boon for its investment managers
• 20 July 2017: Gov. Rauner threatens to veto Illinois school funding bill over Chicago pensions

Okay, let me excerpt from that last one:

As part of the new budget, school funding is to be allocated based upon a new evidence-based model. Senate Bill 1 is the model that needs to be signed. Governor Rauner said it passed the Illinois House and Senate six weeks ago, but has not been sent to his desk for his signature.

“They’re sitting on it, holding it until August to force a crisis to force taxpayers of Illinois to fund a bailout of Chicago pensions,” he said.

The governor said school districts such as Belleville, Edwardsville, Collinsville, and Granite City will have millions of dollars taken away from them over time and given to Chicago pensions.

Oh, and to tie over to my next item…

20 July 2017 – WHILE CHICAGO PUBLIC SCHOOLS CALLS FOR STATE BAILOUT, CHICAGO TIF DISTRICTS BRING IN RECORD $561M IN REVENUE IN 2016:

Slush fund hits record amounts as Chicago looks to the state for a bailout.

Tax increment financing, or TIF, districts in Chicago generated a record $561 million in 2016, up nearly 22 percent from 2015, according to the Cook County clerk. As long as Chicago’s TIF program continues, Chicago Public Schools won’t see a dime of this revenue.

A TIF district is a special economic zone the mayor effectively controls, and property tax revenue above a certain level from any property located in a TIF goes directly to a special fund the mayor can use to encourage developers to undertake projects.

That leaves taxing bodies such as CPS scrambling for funding to make up for the revenue diverted to TIF funds. And while TIFs are bringing in record amounts of revenue, CPS has turned to the state to make up for its budget shortfall in the form of Senate Bill 1, which would provide a $215 million annual pension bailout and other carve-outs worth millions to CPS. This would force downstate taxpayers to bail out Chicago after more than 20 years of district mismanagement, skipped pension payments, excessive borrowing and unaffordable teacher contracts.

That brings me to…

TIFFS OVER TIFS

As mentioned above, TIFs are Tax-Increment Financing, which is a lovely little developer slush fund.

Oh, that’s not how they were sold originally. They were to be used to providing financing for improving blighted areas. Supposedly.

Well, it seems that there may be an email trail showing just how the slushies get made with the slush fund, with money going to some fancy hotels instead of improving blighted districts in Chicago.

Kudos to the Better Government Association, who investigated the situation — and kicked off the controversy on Friday:

HOW CITY POWER PLAYERS DIVERTED $55 MILLION IN BLIGHT-FIGHTING TIF CASH TO NAVY PIER

Mayor Rahm Emanuel’s administration signed off on an elaborate financial shell game that obscured payment of $55 million for renovations at Navy Pier with tax dollars reserved to fight urban blight, records show.

The bookkeeping jiujitsu appears to violate the spirit, if not the letter, of the controversial tax-increment financing program, which critics say has been widely abused and not used for its intended purpose of spurring development in or near economically disadvantaged neighborhoods.

A joint investigation by the Better Government Association and Crain’s Chicago Business finds that the administration began filtering the money in 2014 through a hotel project at McCormick Place, capitalizing on its Near South Side location as a rationale for tapping funds reserved for struggling communities.

More items on the investigation.

• 24 July 2017: Emanuel Defends Diverting $55M in TIF Funds to Navy Pier Rehab
• 25 July 2017: No TIF funds were diverted to Navy Pier, city officials say
• 24 July 2017: Report: Chicago funneled millions in TIF dollars from South Side toward Navy Pier project
• 24 July 2017: “Outraged” Aldermen Demand Hearings On $55 Million Navy Pier TIF Transfer

Quote from that last:

Ald. Pat Dowell (3rd), whose ward includes McCormick Place, has called for City Council hearings, and other aldermen also voiced their outrage on Monday.
….
Ald. John Arena (45th) said the Emanuel administration lied to aldermen about how the $55 million in TIF money would be used.

“We were lied to. Alderman Dowell in the 3rd Ward was lied to in public and in private. They perjured themselves to us about this money, and then openly in city emails they discussed the laundering of the money from that project to this tourist trap. This is unconscionable,” Arena (45th) said.

Several students, teachers, and activists joined aldermen on Monday, noting the $55 million transfer took place in 2013, at the same time the Emanuel administration was closing dozens of public schools it deemed underutilized.

Critics said the money in question shouldn’t have been used for a hotel near McCormick Place in the first place, and instead should have gone to struggling public schools.

Alize Vijil, with the Logan Square Neighborhood Association, said Navy Pier should return the TIF money it received.

“Our money should go into education, not into golden hot dogs,” Vijil said.

Well, well, well.

CHICAGO AND ILLINOIS LINK DUMPS

Some leftover recent stories that are interesting, but don’t merit their own sections:

• Joe Berrios’ property tax debacle — on the Cook County property tax system, which is awful
• Higher Education Funding Shortfall Persists Despite New Budget
• Illinois’ credit rating stays investment grade with Fitch
• Fitch eases pressure on Illinois
• Ellen Brown’s Certified Nutcase Proposal to “Save Illinois”
• Eight States Including Illinois Have Not Recovered Jobs Lost in Prior Recessions
• Commentary: Mike Madigan doesn’t care
• Anger over $40M Red Light Settlement
• Zero Hedge: Tracking the Great Escape from Cook County and Illinois
• Budget won’t pull IL out of financial straits; Residents can ‘look forward’ to more taxes, U of C prof says

Oh fun. Means I’ll never run out of blogging material.

Compilation of Chicago posts

Compilation of Illinois posts