WBEZ | Politics http://www.wbez.org/news/politics Latest from WBEZ Chicago Public Radio en Nine Illinois lawmakers vote to fund Obama library - but only five members in attendance http://www.wbez.org/news/nine-illinois-lawmakers-vote-fund-obama-library-only-five-members-attendance-110042 <img typeof="foaf:Image" src="http://llnw.wbez.org/main-images/AP942082181766.jpg" alt="" /><p><p>Illinois State House members are advancing a bill that would devote $100 million toward a Barack Obama presidential library. The House Executive Committee meeting in Chicago today voted, by an official tally of 9-0, to authorize using state money for the library.</p><p>Chicago Mayor Rahm Emanuel testified in favor of the legislation. So did representatives from several Chicago universities, including Anthony Young, who is chairman of the board at Chicago State University.</p><p>&ldquo;The legacy of President Obama has been and will continue to be one of restoring hope in America,&rdquo; Young testified. &ldquo;We feel that it&rsquo;s only fitting that the physical symbol of that legacy, his presidential library, be built in the community where his message of hope first took shape.&rdquo;</p><p>Hawaii, where Obama was born, and New York, where he went to college, also want to house the presidential library.</p><p>Nine representatives were recorded as voting for the bill, even though there were five lawmakers in attendance at the hearing. That is because Rep. Bob Rita (D-Blue Island), who chairs the Executive Committee, employed a procedural move.</p><p>Rita used the attendance record from a previous hearing that occurred Wednesday as the vote for the presidential library cash. House Speaker Michael Madigan, who sat in on today&rsquo;s hearing, clarified Rita&rsquo;s maneuver, saying the attendance would serve as nine votes in favor of the library, even though the previous committee hearing was on a possible Chicago casino and not related to a presidential library.</p><p>No Republicans attended Thursday&rsquo;s hearing on the presidential library.</p><p>Rep. Ed Sullivan (R-Mundelein) was marked as voting yes on the measure, even though he did not attend Thursday&rsquo;s hearing and was working at his non-legislative job. He had attended Wednesday&rsquo;s hearing on gambling expansion.</p><p>Sullivan said he was under the impression Thursday&rsquo;s hearing was only to hear testimony about the presidential library, and no votes would be taken.</p><p>&ldquo;They&rsquo;ve broken the trust and I think they&rsquo;ve done something illegal,&rdquo; Sullivan said of the procedural move. &ldquo;The legacy of a potential Obama library shouldn&rsquo;t start out as a result of an illegal act.&rdquo;</p><p>Sullivan said he would be filing a protest against using the attendance of Wednesday&rsquo;s hearing as the vote record in favor of state money for the library. In a phone interview, Sullivan said he wants Madigan, as the sponsor of the library bill, to table the proposal for now.</p><p>Steve Brown, a spokesman for Madigan, said it is not uncommon for committees to recess until the call of the chair. And it is within the rights of the committee chairman to use the attendance from the previous meeting as a vote.</p><p>&ldquo;The chairman asked for leave to use the attendance roll call. There was no objection and so that was the vote that will be recorded,&rdquo; Brown said.</p><p>But Sullivan said the move sets a bad precedent for what remains of the legislative session, which is scheduled to end next month.</p><p>&ldquo;It galls me. It literally galls me,&rdquo; Sullivan said. &ldquo;I guess it shouldn&rsquo;t gall me. They seem to try and do anything that they want to do in a very sneakily way.&rdquo;</p><p>Sullivan said he would support a presidential library using private money, but not public funds. He said that money is needed for education.</p><p>None of the five Democrats who attended Thursday&rsquo;s hearing spoke out against the bill that calls for $100 million of state money to go toward the potential presidential library.</p><p dir="ltr"><em>Tony Arnold covers Illinois politics for WBEZ. Follow him <a href="https://twitter.com/tonyjarnold">@tonyjarnold</a>.</em></p></p> Thu, 17 Apr 2014 17:21:00 -0500 http://www.wbez.org/news/nine-illinois-lawmakers-vote-fund-obama-library-only-five-members-attendance-110042 FBI agents say indicted state rep took them to get bribe cash http://www.wbez.org/news/fbi-agents-say-indicted-state-rep-took-them-get-bribe-cash-110027 <img typeof="foaf:Image" src="http://llnw.wbez.org/main-images/derricksmith.jpg" alt="" /><p><p>Federal prosecutors say indicted Illinois State Rep. Derrick Smith took FBI agents to his house and turned over cash he had allegedly taken as a bribe. But Smith&rsquo;s attorneys are trying to make sure that information does not come up at his pending trial.</p><p>Smith was arrested more than two years ago and charged with taking $7,000 in exchange for writing a letter of support for a daycare operator applying for a grant.</p><p>In a new court filing, federal prosecutors say Smith repeatedly told FBI agents after he was read his Miranda rights that he &ldquo;f***ed up&rdquo; -- and never should&rsquo;ve written the letter or taken the $7,000.</p><p>&ldquo;Smith stated that it was all about getting money to put money back out on the streets in the hands of his campaign workers,&rdquo; FBI agents Bryan Butler and Timothy Keese wrote in the report, made public Monday, that is a government exhibit in his court case.</p><p>The agents wrote that Smith even took FBI agents to his house and turned over the remaining $2,500 from the alleged $7,000 bribe. Smith, before he was arrested, had already given some money to the campaign worker who had secretly recorded him, as pay for the assistant&rsquo;s work, and to another individual not identified by FBI agents in their report.</p><p>Smith&rsquo;s defense attorneys say the comments he made to the FBI following his arrest should not be allowed at trial because Smith thought they were part of his plea negotiations.</p><p>Prosecutors say Smith made those comments before an attorney entered the room. And even then, they say, the federal prosecutor did not negotiate a plea deal with him.</p><p>Smith was appointed to the Illinois House in 2011. The agents write Smith was &ldquo;going crazy&rdquo; about a primary challenger he faced in the March 2012 election. They say Smith told them he did not want to lose the election, but needed money to pay campaign workers so they would stay loyal to his campaign.</p><p>Smith, who represents parts of Chicago&rsquo;s West and North sides, defeated Tom Swiss in the 2012 Democratic primary. Other Democrats had encouraged primary voters to support Smith despite his arrest, claiming that Swiss was a Republican running as a Democrat.</p><p>After Smith won the primary, Illinois House members voted to expel him from the chamber -- in an act that had not been done in 100 years. But Smith had already won the primary, remained on the ballot and won election back to the state House that November.</p><p>Smith, however, will not be returning to Springfield next year. He lost his bid for another term in office to attorney Pamela Reaves-Harris in the Democratic primary last month.</p><p><em>Tony Arnold covers Illinois politics for WBEZ. Follow him <a href="https://www.google.com/url?q=https%3A%2F%2Ftwitter.com%2Ftonyjarnold&amp;sa=D&amp;sntz=1&amp;usg=AFQjCNFPSylltvw6suohIk5BgHodNjZYxg">@tonyjarnold</a>.</em></p></p> Tue, 15 Apr 2014 13:15:00 -0500 http://www.wbez.org/news/fbi-agents-say-indicted-state-rep-took-them-get-bribe-cash-110027 Woman alleges housing voucher discrimination in pricey Chicago buildings http://www.wbez.org/news/woman-alleges-housing-voucher-discrimination-pricey-chicago-buildings-110023 <p><p>Tiara is a African-American mother of two small children who longed for a better Chicago public school for her six-year-old son.</p><p>Last year, Tiara decided to move out of Bronzeville and began searching for apartments in the pricey River North area.</p><p>But when she mentioned she had a housing choice voucher, or Section 8, landlords told Tiara they wouldn&rsquo;t take her voucher. A few places said &ldquo;yes&rdquo; over the phone. So she&rsquo;d arrive on time, with a paycheck stub and a rental deposit. But no matter -- Tiara says those places rejected her too.</p><p><a href="http://www.thecha.org/filebin/2014_Mobility_Program_Flier_FINAL.pdf" target="_blank"><img alt="" class="image-original_image" src="http://www.wbez.org/system/files/styles/original_image/llo/insert-images/map.PNG" style="height: 521px; width: 400px; float: right;" title="CHA Opportunity Area Map (Courtesy of the CHA)" /></a>Tiara is painfully shy and asked that her last name not be used. As she recounted her story, Tiara dabbed her teary eyes with a tissue.</p><p>&ldquo;I&rsquo;ve never experienced anything like this. I couldn&rsquo;t believe it. It still took me awhile to like really come to the fact that I was discriminated against. That hurt so bad,&rdquo; she said.</p><p>Tiara filed complaints against four property owners and management companies with the Chicago Commission on Human Relations. The complaints are currently under review.</p><p>Tiara&rsquo;s allegations aren&rsquo;t occurring in a vacuum. Earlier this month, the Chicago Lawyers&rsquo; Committee for Civil Rights Under Law&nbsp;issued a <a href="http://www.wbez.org/news/new-report-reveals-pervasive-discrimination-housing-voucher-program-109946">report that found rampant racial discrimination in housing.</a></p><p>Tens of thousands of Chicago families rent in the private market using a housing voucher. Renters with vouchers only have to pay a portion of their rent. The Chicago Housing Authority administers the program and picks up the rest. CHA has been criticized for putting families in poor segregated neighborhoods in the city.</p><p>In 2011, the public housing agency started&nbsp;a <a href="http://www.thecha.org/pages/mobility_counseling/2639.php">mobility program</a>. In&nbsp;very limited cases, CHA will pay more in rent if a family moves to so-called &ldquo;opportunity areas.&rdquo; About 10 percent of voucher holders are in this program.</p><p>Opportunity areas are communities with fewer than 20 percent in poverty and low-subsidized housing saturation. That&rsquo;s how Tiara was able to consider high rises with monthly rents upwards of $3,000 a month.</p><p>&ldquo;It allows families an opportunity to explore areas of the city that they might not otherwise be familiar with,&rdquo; said Mary Howard, executive vice president of resident services for CHA.</p><p>Many neighborhoods with the highest number of vouchers also have the highest poverty and crime rates in the city.</p><p>&ldquo;Families that live in opportunity areas on average have higher earnings than those that do not live in opportunity areas,&rdquo; Howard said. She added that these areas can have higher retention rates. &ldquo;So that once a family does move and becomes integrated in their new community, that they&rsquo;re not moving is success.&rdquo;</p><p>In segregated Chicago, North Side neighborhoods may seem inaccessible for some families in the voucher program. There can be feelings of isolation. CHA has mobility counselors who try to alleviate those concerns.</p><p>But that was never an issue for Tiara. She said in her case it was pushback from the rental community. It&rsquo;s illegal for Chicago landlords to say at the outset that they won&rsquo;t take Section 8 vouchers.</p><p>Danielle McCain is an attorney with the Chicago Lawyers&rsquo; Committee for Civil Rights Under Law, and she represents Tiara.</p><p>&ldquo;We want her voice heard as a voucher holder. We want these landlords to have to address these issues. Whatever damages we&rsquo;re able to recover, those are ways in which we can influence landlords going forward not to have conduct such as this in the future,&rdquo; McCain said.</p><p>McClain said housing voucher discrimination is common, and not just in affluent areas. She pointed to her group&rsquo;s&nbsp;recent <a href="http://cafha.net/wp-content/uploads/2014/02/CLCCRUL-CHA-testing-report.pdf">report</a> as evidence, but also says a lot of discrimination goes unreported.</p><p>As for Tiara, she eventually found a happy ending in a Streeterville apartment building that accepted her voucher.</p><p>&ldquo;I love it,&rdquo; Tiara said. &ldquo;You have parks everywhere. You have bus stops everywhere. You have stores, easy to get to. Healthy food. Healthy food almost everywhere. So it&rsquo;s more like convenience.&rdquo;</p><p>And most importantly, Tiara said, her six-year-old son attends a high-performing public school. And he&rsquo;s thriving.</p><p><em><a href="http://www.wbez.org/users/nmoore-0" rel="author">Natalie Moore</a> is WBEZ&rsquo;s South Side Bureau reporter. <a href="mailto:nmoore@wbez.org">nmoore@wbez.org</a></em></p><p><em>Follow Natalie on <a href="https://plus.google.com//104033432051539426343" rel="me">Google+</a>, &nbsp;<a href="https://twitter.com/natalieymoore">Twitter</a></em></p></p> Mon, 14 Apr 2014 17:52:00 -0500 http://www.wbez.org/news/woman-alleges-housing-voucher-discrimination-pricey-chicago-buildings-110023 Judge orders Indiana couple's marriage recognized http://www.wbez.org/news/judge-orders-indiana-couples-marriage-recognized-110008 <img typeof="foaf:Image" src="http://llnw.wbez.org/main-images/Capture_6.PNG" alt="" /><p><p>A ruling Thursday morning by U.S. District Court Judge Richard L. Young requires the state of Indiana to recognize the marriage of a local gay couple. Starting today Niki Quasney and Amy Sandler are Indiana&rsquo;s only legally recognized same-sex couple.</p><p>But only for about a month.</p><p>The temporary restraining order expires in 28 days. The judge made the ruling after an hour-long hearing in Evansville in far southern Indiana.</p><p>The longtime couple who live near Chicago in Munster, Indiana, got married last year in Massachusetts.</p><p>Indiana, however, does not allow same-sex marriage.</p><p>But Quasney is terminally ill with stage 4 ovarian cancer, so they sued to have their marriage recognized&mdash;that way Sandler can receive death benefits afforded other married couples.</p><p>&ldquo;We are happy the court made the decision to recognize their marriage so she can focus on spending quality time in the days she has left with her family,&rdquo; the couple&rsquo;s attorney Paul Castillo said.</p><p>Indiana Attorney General Solicitor General argued against the injunction, stating that under current state law, the marriage statute does not allow for hardship exceptions and the relief sought could not be granted.</p><p>The decision does not affect four other lawsuits challenging Indiana&rsquo;s gay marriage ban.</p><p>Although county clerks in Indiana are still prohibited from issuing marriage licenses to same-sex couples, Castillo sees it as a positive step forward for gay couples.</p><p>&ldquo;Our goal is to make sure that same-sex couples throughout the state both have an ability to get married within their home state and have their valid out-of-state marriages recognized,&rdquo; Castillo said.</p><p>The issue of same-sex marriage remains a hotly debated issue in Indiana, although opposition isn&rsquo;t as strong as it used to be, even as recently as four years ago.</p><p>An effort to write Indiana&rsquo;s same-sex ban into the state&rsquo;s constitution failed in the Indiana General Assembly in the most recent session that ended in March.</p><p>The marriage amendment was opposed by many major corporations and public universities. &nbsp;</p></p> Thu, 10 Apr 2014 16:04:00 -0500 http://www.wbez.org/news/judge-orders-indiana-couples-marriage-recognized-110008 Mayor Emanuel’s pension plan headed to governor http://www.wbez.org/news/mayor-emanuel%E2%80%99s-pension-plan-headed-governor-109989 <p><p>Controversial legislation that would change the retirement benefits of some City of Chicago employees raced through the state legislature on Tuesday and is now headed for Gov. Pat Quinn&#39;s desk.</p><p>The plan, backed by Chicago Mayor Rahm Emanuel, cleared the State House of Representatives on a 73-41 vote. A few hours later, it passed through the State Senate on a 31-23 vote. Gov. Pat Quinn has not said whether he&#39;ll sign the plan, which is opposed by several powerful city workers&#39; unions because it scales back benefits for retirees.</p><p>The debate on the House floor largely centered around what would happen to the two pension funds for city laborers and municipal workers if they continued their current benefit structure. City officials had warned lawmakers the retirement funds could run out of money to pay retirees their benefits within 10 years.</p><p>&ldquo;The numbers alone would behoove us to take action and pass this bill,&rdquo; said Democratic House Speaker Michael Madigan, who sponsored the bill for &nbsp;Emanuel.</p><p>Of the two pensions affected, the municipal pension is currently funded at 37 percent, while the laborers&rsquo; system is funded at 55 percent.</p><p>&ldquo;These plans will be out of money, insolvent, bankrupt, unable to pay any of their obligations in somewhere between 10 and 15 years,&rdquo; said State Rep. Elaine Nekritz, D-Buffalo Grove.</p><p>Most of the opposition came from members of the black caucus, who represent parts of Chicago, and suburban and downstate Republicans, who warned that the legislation depends on the city council to raise property taxes.</p><p>&ldquo;If&nbsp; you vote for this bill, you are voting for at least $2 billion of higher property taxes over the next 10 years,&rdquo; said Rep. David McSweeney, R-Cary.</p><p>An earlier version of the bill required Chicago&rsquo;s city council to approve a property tax increase, but Speaker Madigan removed that language after objections from several lawmakers.</p><p>The bill&rsquo;s main goal is to pump more money into the Chicago pension funds for city laborers and municipal workers, while scaling back benefits to cut costs. Under the proposal, the city would finally scratch the inadequate funding formula it has used for decades, which experts say is a big reason the city&rsquo;s retirement systems are now in such dire shape.</p><p>Much of that ramped up funding would come from Emanuel&rsquo;s proposal to raise Chicago property taxes by $50 million a year, ultimately netting the city $750 million more revenue over the next five years. For the owner of a $250,000 home, that would cost about $58 dollars more per year on their property tax bills, according to the mayor&rsquo;s office.</p><p>Lest City Hall try to wriggle out of its pension obligations during tough budget times, the bill also gives pension funds the power to sue the city if it fails to pay up. By 2018, the pension funds would also be able to garnish all state grant money headed for the Chicago if the city fails to meet its obligations.</p><p>City workers, meanwhile, would pay more money into the system but get less out of it. By 2019, they&rsquo;d be paying 11 percent of each paycheck toward their pension, compared with the current 8.5 percent. That contribution would drop back down to 9.75% once the pension funds are healthy, which could take decades.</p><p>The bill also does away with the annual, compounding 3 percent benefit increases that have been blamed for much of the strain on the laborers and municipal workers&rsquo; pension funds. Instead, workers would now see their pension checks increase each year by a flat 3 percent or half the rate of inflation, whichever is less. And most workers wouldn&rsquo;t receive any increases in 2017, 2019 and 2025.</p><p>Retirees who earn less than $22,000 would be guaranteed to see their benefits grow by at least 1% a year, and also would not be subject to the three years of skipped increases.</p></p> Tue, 08 Apr 2014 14:17:00 -0500 http://www.wbez.org/news/mayor-emanuel%E2%80%99s-pension-plan-headed-governor-109989 Madigan drops property tax mandate in pension bill http://www.wbez.org/news/madigan-drops-property-tax-mandate-pension-bill-109983 <img typeof="foaf:Image" src="http://llnw.wbez.org/main-images/Pat-Quinn-AP-Seth-Perlman.jpg" alt="" /><p><p>Illinois House Speaker Michael Madigan is removing a controversial provision from a Chicago pension bill that would have required the City Council to raise property taxes in order ease the city&rsquo;s nearly $20 billion pension crisis.</p><p>The move to strip the property-tax language in the bill came late Monday, just a few hours after Gov. Pat Quinn signalled he would not back a proposed property tax hike that Mayor Rahm Emanuel is pushing in order to bolster the ailing pension funds for Chicago laborers and municipal workers.</p><p>&ldquo;Working with legislative leaders, bill sponsors, the Governor, and our partners in labor, we have addressed their concerns and can now move forward to save the retirements of nearly 60,000 city workers and retirees in Chicago,&rdquo; Emanuel was quoted as saying in an emailed statement late Monday afternoon.</p><p>But the removal of the property tax language doesn&rsquo;t mean Emanuel&rsquo;s tax hike proposal is going away. That plan, which would bring the city $750 million in revenue over the next five years, still seems to be central to the mayor&rsquo;s plan to pump more money into the city&rsquo;s pensions.</p><p>The difference is that state legislators, who must approve changes to Illinois pension law, don&rsquo;t have to worry about being blamed for raising Chicago property taxes during an election year. The bill&rsquo;s original language mandated that the City Council raise property taxes to pay for pensions. The latest version allows the city to use &ldquo;any available funds&rdquo; to make its annual payments.</p><p>Speaking at an event Monday morning, Emanuel said he is not trying to hang a potential property tax hike around legislators&rsquo; necks.</p><p>&ldquo;It was never anybody&rsquo;s intention to have Springfield deal with that,&rdquo; Emanuel said. &ldquo;That&rsquo;s our responsibility. But I do believe to actually give the 61,000 retirees and workers the certainty they deserve, you need reform and revenue. And we&rsquo;ll deal with our responsibility.&rdquo;</p><p>Emanuel said he will continue to &ldquo;address people&rsquo;s concerns&rdquo; about the pension plan, though he would not speak directly to its fate in the City Council, which would also need to approve any property tax hike.</p><p>To placate public worker unions who had wanted a dedicated revenue stream, Madigan&rsquo;s changes also beef up the penalties if City Hall wriggles out of paying its pension contributions. The bill directs Illinois&rsquo; Comptroller to cut off state funding to the city indefinitely if it doesn&rsquo;t pay its pension tab, and it gives pension funds the right to sue City Hall in order to get their money.</p><p>The new bill would also guarantee that retirees who make $22,000 or less in annual benefits would get a cost-of-living increase of at least 1 percent each year. Prior proposals set the annual increases at the lesser of 3 percent or half the rate of inflation. Right now, city laborers and municipal workers get a guaranteed annual benefit increase of 3 percent, which builds on the previous years&rsquo; increases.</p><p>The changes to the mayor&rsquo;s proposed pension fix came just hours after Gov. Pat Quinn slammed Emanuel&rsquo;s proposed property tax hike.</p><p>&ldquo;They&rsquo;ve gotta come up with a much better comprehensive approach to deal with this issue,&rdquo; Quinn said at an unrelated press conference. &ldquo;But if they think they&rsquo;re just gonna gouge property taxpayers, no can do. We&rsquo;re not gonna go that way.&rdquo;</p><p>Quinn, a populist Democrat who is seeking re-election in November, has made property tax relief central to his 2015 state budget proposal. And while he shot down Emanuel&rsquo;s proposed property tax hike, the governor did not offer an alternative source of revenue for Chicago pensions.</p><p>&ldquo;I think they need to be a whole lot more creative than I&rsquo;ve seen so far,&rdquo; Quinn said.</p><p>State legislators could consider the new amendment as soon as Tuesday.</p></p> Mon, 07 Apr 2014 15:32:00 -0500 http://www.wbez.org/news/madigan-drops-property-tax-mandate-pension-bill-109983 Protesters want Obama to end mass deportations http://www.wbez.org/news/protesters-want-obama-end-mass-deportations-109982 <img typeof="foaf:Image" src="http://llnw.wbez.org/main-images/protest1.jpg" alt="" /><p><p>More than 200 people, including groups of children, are staging a two-day march drawing attention to mass deportations of undocumented immigrants. The protesters want the Obama administration to end the practice by executive order.</p><p>The march, which began this morning at the U.S. Immigration and Customs Enforcement office in downtown Chicago before heading west. It is an extension of this past weekend&rsquo;s National Day of Action against deportations.</p><p>As of this month, around 2 million undocumented people have been deported since Barack Obama took office, which is approaching the record set by his predecessor, George W. Bush.</p><p>Immigration reform advocates have shifted their focus recently&nbsp; to putting an emphasis on the number of mass deportations. Previously their priority was pushing for immigration reform legislation. An immigration bill passed the U.S. Senate early last year but has stalled in the House since June).</p><p>&ldquo;Two million (is) too many,&rdquo; says Rosi Carrasco, with Organized Communities Against Deportations. &ldquo;It is possible to stop deportations with the organization, determination, and strength of our community. President Obama can use his executive authority to avoid that detention centers continue to profit from human suffering.&rdquo;</p><p>The Chicago-area protests will continue into tomorrow. Lawrence Benito is executive director of the Illinois Commission for Immigrant and Refugee Rights, and he says the focus on mass deportations highlights the continued frustration he has with Obama -- who he said pledged to pursue immigration reform as an agenda item he would tackle during his second term.</p><p>&ldquo;He promised our communities that passing immigration reform would be a priority,&rdquo; says Benito. &ldquo;Instead he has prioritized enforcement. He can remedy the situation while Congress debates immigration reform, through administrative relief.&rdquo;</p><p>Advocates want the president to take the same approach he did in 2012 when he ended the deportation for so-called &ldquo;Dreamers,&rdquo; young people who were brought into the country with undocumented relatives.&nbsp;</p><p>Marchers began their demonstration at ICE shortly after 10 a.m today. Their route wends through the city, including a stop in the heavily Latino South Side community of Pilsen, before decamping tonight in the western suburbs.</p><p>Tuesday&rsquo;s events are scheduled to start at the Broadview Detention Center. That is where more people are scheduled to take part in civil disobedience protests.</p><p><em>Follow WBEZ Host/Producer Yolanda Perdomo on <a href="https://twitter.com/yolandanews">Twitter</a> and <a href="https://plus.google.com/u/0/106564114685277342468/posts/p/pub">Google+</a></em></p></p> Mon, 07 Apr 2014 12:55:00 -0500 http://www.wbez.org/news/protesters-want-obama-end-mass-deportations-109982 Bigger than burgers and fries, franchising blamed for low wages http://www.wbez.org/news/bigger-burgers-and-fries-franchising-blamed-low-wages-109978 <p><p><iframe frameborder="0" height="310" scrolling="no" src="https://w.soundcloud.com/player/?url=https%3A//api.soundcloud.com/playlists/29724231&amp;color=ff5500&amp;auto_play=false&amp;hide_related=true&amp;show_artwork=false" width="100%"></iframe></p><p><br /><img alt="" class="image-original_image" src="http://www.wbez.org/system/files/styles/original_image/llo/insert-images/Franchising%201%20FINAL_sh.jpg" style="margin: 4px 0px 0px 0px; float: right; height: 233px; width: 350px;" title="Hashim Syed, owner of a 7-Eleven in Chicago, says company rules make it hard for him to cut costs so he could pay employees more. (WBEZ/Shannon Heffernan)" />When we asked what it is like to own a franchise of the world&rsquo;s largest convenience-store chain, Hashim Syed took us to a cramped back room of his store, a 7-Eleven on Chicago&rsquo;s North Side.</p><p>Sitting next to a wall of tubes filled with bright-colored syrup for the soda machine, Syed recalled a young man working the graveyard shift a few years back. This employee wanted to be with his father, who was gravely ill.</p><p>&ldquo;Where we come from,&rdquo; said Syed, 71, who was born in India, &ldquo;it&rsquo;s very important that you spend the final days with parents for the comfort.&rdquo;</p><p>But the worker could not afford to take unpaid leave. And Syed could not afford to replace him. &ldquo;I&rsquo;d have had to have somebody else do his work,&rdquo; Syed said, his voice becoming faint. &ldquo;I would have ended up paying two wages.&rdquo;</p><p>The employee kept most of his shifts and, to this day, Syed regrets it. &ldquo;I wish I would have given him some time off,&rdquo; he said.</p><p>In Syed&rsquo;s nearly quarter century as a 7-Eleven franchisee, he has worked brutally long hours, his profits have fallen far short of his expectations, and the Dallas-based chain has imposed tighter rules on how he runs the store.</p><p><iframe allowfullscreen="" frameborder="0" height="400" src="//www.youtube.com/embed/6fidL51oakg?list=UUkpMCLrDFxb1n74GOOw81-w" width="600"></iframe></p><p>Something else that steams Syed is his role as an employer. He says all of those 7-Eleven rules limit his ability to cut costs and free up resources to treat his workers better. &ldquo;When I lived in Bombay,&rdquo; Syed said, &ldquo;this is not what I thought they meant by the American Dream.&rdquo;</p><p>An array of signs suggests Syed is not the only one questioning the effects of franchising.</p><p>Franchisees are pushing several states to clamp down on allegedly predatory franchisor practices. Web sites such as <a href="http://www.bluemaumau.org/">Blue MauMau</a> and <a href="http://www.unhappyfranchisee.com/">Unhappy Franchisee</a> have sprung up to connect these small business owners and give them a voice.</p><p>In one industry, &ldquo;franchisees&rdquo; have won a string of class-action lawsuits claiming that they are really employees and that their employers are using the franchise model to skirt wage-and-hour laws.</p><p>Franchises, especially those serving fast food, have also become frequent protest sites for a movement demanding higher wages and benefits such as paid sick leave. Those protests have grown louder as some politicians, ranging from Illinois Governor Pat Quinn to President Barack Obama, call for raising the minimum wage.</p><p>And, while many economists and business groups praise franchising as efficient, the model is taking hits from some scholars, including an Obama nominee to head the U.S. Department of Labor&rsquo;s Wage and Hour Division. That nominee says franchising is part of something much bigger &mdash; something bad for the workplace.</p><p><strong>How Franchising Works</strong></p><p>Franchising dates back to the 19th century, when manufacturers such as the Singer Sewing Machines Company developed the model for sales representatives. By the 1960s, franchising was ubiquitous, thanks to fast-food chains such as McDonald&rsquo;s and Burger King. Today franchising takes place in a dizzying range of industries, from tax services to child care, from real estate to car repair.</p><p>The number of U.S. franchise jobs in recent years has grown, now totaling more than 8.1 million &mdash; about 7 percent of private-sector jobs, according to data from payroll processor ADP. Franchise employment growth has outpaced jobs growth in the economy as a whole for 12 consecutive months, the data show.</p><p>In Illinois, franchise employment totals almost 345,000, according to the<a href="http://www.franchise.org/"> International Franchise Association</a> Educational Foundation. As of January, 1,152 companies had active registrations to sell franchises in Illinois, the state attorney general&rsquo;s office says.</p><p>Here is how the model works. A company thinks it has a good thing going and decides to expand. But it may not be familiar with the new places and may be short on capital. It also does not want to employ the necessary workers. It would rather have someone else do that &mdash; someone with skin in the game.</p><p><img alt="" class="image-original_image" src="http://www.wbez.org/system/files/styles/original_image/llo/insert-images/Franchising%202%20FINAL_sh.png" style="margin: 4px 0px 0px 0px; float: left; height: 244px; width: 350px;" title="Amjad “AJ” Haj, who co-owns three Al’s Beef franchises in Chicago, praises the company’s support to run them. (WBEZ/Shannon Heffernan)" />&ldquo;A franchisee will do the best job,&rdquo; said David Howey, who bought an old Chicago sandwich brand, <a href="http://alsbeef.com/">Al&rsquo;s Beef</a>, and stepped up the chain&rsquo;s franchising. &ldquo;Instead of a large company having a bunch of managers who are running the stores, a franchisee buys into the system and it becomes their business. It becomes their life. So the brand is represented properly by people who really care.&rdquo;</p><p>For the franchisees, the model allows them to run their own business and take advantage of company resources for things such as property, equipment, training and marketing.</p><p>The franchisees also pay an upfront sum known as the franchise fee, typically five figures. Once in business, they pay a specified royalty &mdash; often 5-10 percent of sales &mdash; and fees for things such as advertising, management and insurance.</p><p>Amjad &ldquo;AJ&rdquo; Haj, who owns three Al&rsquo;s Beef franchises with his brother, says he appreciates being able to focus on day-to-day tasks. &ldquo;You do not have to go test 20 different burgers to see which one you want to sell,&rdquo; Haj said. &ldquo;They&rsquo;ve already done that. They&rsquo;ve tested out all the different mayos for you.&rdquo;</p><p>Successful franchising depends on a good brand &mdash; which means, above all, consistency. At all 16 locations of Al&rsquo;s Beef, the sandwiches not only taste the same, they drip the same, thanks to a uniform recipe for their <em>jus</em>.</p><p>What protects the brand is the franchise agreement, which spells out franchisee rules on topics such as operating hours, dress codes, supply vendors and payroll processes.</p><p>Despite paying all the fees and following the rules, a franchisee has no guarantee the unit will flourish. Franchises go belly up about as often as independent businesses in their industry, according to the<a href="http://www.sba.gov/"> U.S. Small Business Administration</a>.</p><p>Many franchisees do hang on &mdash; some for decades, like Syed, the 7-Eleven operator. A third of franchisees run multiple units, usually two or three, according to Franchise Business Review.</p><p>&ldquo;We see that this is successful &mdash; businesses being franchised &mdash; simply by the fact that they exist all around us,&rdquo; said <a href="http://www.bus.umich.edu/FacultyBios/FacultyBio.asp?id=000119727">Francine LaFontaine</a>, a University of Michigan professor of business economics and public policy. &ldquo;And then consumers are voting with their feet by consuming the goods and services that are offered this way. That means we&rsquo;ve made that sector more efficient.&rdquo;</p><p>That efficiency can lower prices, said LaFontaine, a&nbsp;<a href="http://books.google.com/books/about/The_Economics_of_Franchising.html?id=HaZuDYzXLSYC">leading researcher</a>&nbsp;on franchise economics. &ldquo;That&rsquo;s good for consumers. It probably also means we consume a bit more of these things, which means there are more jobs in this sector than there would be otherwise.&rdquo;</p><p>But the model is fraught with tensions. When a franchise agreement expires, companies sometimes take the opportunity to increase the royalty or impose tighter rules. If the franchisee does not follow the rules, the company might take over that unit. Last summer, 7-Eleven ousted franchisees from several Chicago stores for alleged franchise-agreement violations.</p><p>The company, for its part, has reasons to establish rules &mdash; and enforce them. Making all franchises buy from the same supplier can help bring down costs. Higher fees can fund more advertising. Quality standards help keep franchisees from freeloading on the brand.</p><p>Other tensions stem from the wages and work conditions of franchise employees &mdash; the workers who flip the burgers or ring up the Slurpees.</p><p>Last June, federal <a href="http://www.justice.gov/usao/nye/pr/2013/2013jun17.html">authorities seized</a> fourteen 7-Eleven stores in New York and Virginia and arrested the franchisees for allegedly employing illegal immigrants, forcing them to work long overtime hours, paying them for just a fraction of their work and forcing them to live in substandard housing owned by the franchisees. After the arrests, the corporation said it planned to step up its franchisee monitoring.</p><p>This March, McDonald&rsquo;s workers in California, Michigan and New York <a href="https://drive.google.com/folderview?id=0BwU-XxSsYz21eXluRzFpVFFzMFE&amp;usp=sharing">filed lawsuits</a> claiming that the Oak Brook-based corporation is responsible for alleged wage-and-hour violations, even at franchises. A company statement about the suits said McDonald&rsquo;s was committed &ldquo;to the well-being and fair treatment of all people who work in McDonald&rsquo;s restaurants&rdquo; and that it would investigate the allegations and &ldquo;take any necessary actions.&rdquo;</p><p><img alt="" class="image-original_image" src="http://llnw.wbez.org/styles/original_image/llo/insert-images/book cover.jpg" style="margin: 4px 0px 0px 0px; float: right; height: 296px; width: 200px;" title="A Boston University economist likens franchising to outsourcing." />Economists disagree about what causes such work conditions. Some cite the low-skilled jobs in many heavily franchised industries. They point to cutthroat competition. &ldquo;It&rsquo;s more the industry that determines the working conditions of the employees than it is the way in which this is organized,&rdquo; said LaFontaine, the University of Michigan economist, defending the franchise model.</p><p>Other experts tie the low wages to the franchising. When a company franchises, they point out, it is adding extra owners and a new layer of competition. That means more people taking slices of the pie and more pressure to cut costs such as wages. &ldquo;Each different business is operating on a thinner margin,&rdquo; said David Weil, the Labor Department nominee, who is a business professor at Boston University.</p><p>Weil co-authored a study that found that fast-food restaurants operated by a franchisee are more likely to violate wage-and-hour laws than eateries the big corporation runs itself.</p><p>When workers earn less, a related argument goes, they also consume less &mdash; a drag on the economy.</p><p>In a <a href="http://www.hup.harvard.edu/catalog.php?isbn=9780674725447">new book</a>, Weil acknowledges the benefits of franchising for businesses that want to expand, but he also likens the model to&nbsp;various forms of outsourcing. He says they are all ways for big companies to shed employment responsibilities.</p><p><strong>The Slurpee Economy</strong></p><p>Syed says he bought his 7-Eleven franchise in 1990. &ldquo;I was very excited,&rdquo; he said. &ldquo;I could buy everything from where I wanted to.&rdquo;</p><p>After a while, however, Syed decided that being a franchisee was not all it was cracked up to be. It was not just the long hours. The company allowed another 7-Eleven to open just a few blocks away. Then it changed the terms of his franchise agreement.</p><p>Franchisees learned they had to buy 85 percent of supplies from approved vendors. &ldquo;Now everything will be controlled by 7-Eleven Company,&rdquo; Syed said. &ldquo;They will decide what to buy, where to buy.&rdquo;</p><p>Other franchisees complain that 7-Eleven goes as far as to remotely control the temperature in their stores, even the volume on their televisions.</p><p>Many of 7-Eleven&rsquo;s rules do help protect the brand. And the company has reasons to make franchisees purchase supplies from an approved vendor. For one, 7-Eleven can use the collective buying power to keep costs down, a company official said.</p><p>Something 7-Eleven does not control are employment decisions, including the amount Syed pays his workers. Syed said one of his half-dozen employees, the manager, makes $10.50 an hour. He said the rest earn less &mdash; in a state where the minimum is $8.25.</p><div class="image-insert-image "><img alt="" class="image-original_image" src="http://www.wbez.org/system/files/styles/original_image/llo/insert-images/banner-edited.jpg" title="Syed, the 7-Eleven franchisee in Chicago, calls himself a 'front man' for the Dallas-based corporation. (WBEZ/Shannon Heffernan)" /></div><p>Syed said he can hardly blame employees who are upset about the pay, but he insisted he is not getting rich either. Last year, his 23rd at the store, Syed took home $53,866, he said. That was one of his best years, he added.</p><p>To Syed, the whole franchise model feels like a setup. &ldquo;We are as much of a victim in it as the workers are,&rdquo; he said. &ldquo;We are nothing more than a glorified manager.&rdquo;</p><p>7-Eleven officials declined to get specific regarding the company&rsquo;s agreements with its approximately 6,200 franchises. But Jay Mitchell, a franchise-sales manager at the Dallas headquarters, said 7-Eleven was not going to take responsibility for wages or work conditions.</p><p>Franchisees are &ldquo;going to be independent operators so they are going to be responsible for employing people and determining what they pay those people as well,&rdquo; Mitchell said. &ldquo;While we will provide them guidance, it is completely up to [the franchisees] how they pay their employees.&rdquo;</p><p>Questioned about such employment policies, 7-Eleven spokeswoman Margaret Chabris said the company provides franchisees &ldquo;very comprehensive&rdquo; training and said the franchise agreement requires them to follow the law.</p><p>But Syed said the rest of the agreement makes it too hard for him to cut costs, leaving him little room to pay his employees more. &ldquo;That worker also thinks &mdash; and I know it for a fact &mdash; that I am just greedy and I want to keep all the money in my pocket instead of giving him fair wages,&rdquo; he said.</p><p>It might have been harder for Syed to run a convenience store without the 7-Eleven brand, said LaFontaine, the economist. &ldquo;Independent businesses or franchises fail all the time. That is just a reality of these kinds of small businesses.&rdquo;</p><p>Syed, who publishes a <a href="http://7-elevenfoac.com/data/newsletter/Final_FOAC_December_2012_Newsletter.pdf">newsletter</a> for Chicago-area 7-Eleven owners,&nbsp;says state and federal lawmakers should do more to protect franchises from the companies that own their brand.</p><p>To date, just 17 states have any laws governing franchisor-franchisee relations, according to Dean Heyl, who directs state government affairs for the <a href="http://www.franchise.org/">International Franchise Association</a>.</p><p>Those states include Illinois, which enacted its&nbsp;<a href="http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2381&amp;ChapterID=67">Franchise Disclosure Act</a>&nbsp;in 1987. That law regulates how franchisors treat prospective franchisees and requires franchisors to have &ldquo;good cause&rdquo; for terminating a franchise.</p><p>Last week, Maine&rsquo;s state Senate voted down a bill that would have, among other things, required franchisors to provide a franchisee a 60-day notice to resolve a problem before termination. The bill also would have allowed franchisees to leave their business to a spouse, partner or heir.</p><p>Heyl said such legislation, if enacted, would &ldquo;hurt franchisees who are playing by the rules.&rdquo;</p><p><strong>Franchising</strong>&rsquo;<strong>s New Frontier</strong></p><p>As franchising has spread, some industries have pushed the model to the extreme. In commercial-cleaning franchising, the customers that need the service usually come through the franchisor. They also make their payments to the franchisor. The franchisee gets just a portion of the payments in periodic checks from the franchisor &mdash; after deductions for insurance, royalties, management and so on.</p><p>In Chicago, the commercial-cleaning franchisees include hundreds of Mexican immigrants. One of them is a woman we will call Gloria Pérez. We agreed not to use her real name because she fears retribution from her franchisor. Pérez entered the commercial-cleaning business four years ago.</p><p>Back then, she and her husband were both unemployed, they had three kids at home and a mortgage, and they were burning through their savings. Pérez saw a newspaper ad placed by CleanNet of Illinois, part of<a href="http://www.cleannetusa.com/"> CleanNet USA</a>, based in McLean, Virginia.</p><p><img alt="" class="image-original_image" src="http://www.wbez.org/system/files/styles/original_image/llo/insert-images/Franchise%203_sh%20%28CM%20credit%29.JPG" style="margin: 4px 0px 0px 0px; float: right; height: 233px; width: 350px;" title="A CleanNet janitor works after hours in a Chicago-area car dealership. Treated like a franchisee, she says her pay amounts to less than Illinois’s minimum wage. (WBEZ/Chip Mitchell)" />The ad said she could have her &ldquo;own business.&rdquo; Pérez, interviewed by WBEZ in Spanish, said it seemed like &ldquo;a good opportunity because we did not have any other work.&rdquo;</p><p>Pérez went in for an appointment. CleanNet gave her more than 150 pages of legal disclosures &mdash; all in English, she said. She did not understand much except some numbers on a chart the company gave her. &ldquo;It said I could make $6,000 a month if I bought a franchise for $21,000,&rdquo; she said.</p><p>After a discount, Pérez said, she managed to put in $19,000. Since then, she said, she has never come close to earning the monthly $6,000. &ldquo;Every month they take out 20 percent of what I earn&rdquo; and CleanNet does not give her enough customers within range of her home, Pérez said.</p><p>&ldquo;It&rsquo;s a scam,&rdquo; said Chicago attorney Christopher Williams, who filed a class-action lawsuit against the company in March on behalf of janitors such as Pérez. &ldquo;CleanNet is trying to say, &lsquo;We have no unemployment obligation to them. We have no workers-comp obligations to them. We do not pay payroll taxes. We are not their employer. And these are people who need public assistance because they&rsquo;re making so little money. They can&rsquo;t afford health care. If they get injured on the job, they have no workers compensation insurance.&rdquo;</p><p>If a customer falls behind on its payments, CleanNet warns it could deduct that money from paychecks too.</p><p>Another way CleanNet makes money off its janitors is by loaning them money when they cannot afford the franchise fee &mdash; the upfront payment from the workers. Paying off that loan means yet more paycheck deductions.</p><p>&ldquo;All they&rsquo;re left with after that agreement is debt,&rdquo; Williams said.</p><p>The suit against CleanNet, filed in federal court, claims hundreds of the company&rsquo;s Illinois janitors are not franchisees but employees. It accuses the company of violating state and federal laws regulating wages and work hours.</p><p>CleanNet officials did not respond to our requests for comment about the suit. When janitors in Massachusetts filed a similar claim against the company, CleanNet denied any liability or wrongdoing. It did settle with those janitors last November, agreeing to pay out $7.5 million.</p><p>In Illinois, CleanNet is among at least eight commercial-cleaning firms registered to offer franchises, according to the state attorney general&rsquo;s office. The biggest is Jani-King International, based in Addison, Texas.</p><p>Jani-King says it pioneered franchising in the commercial cleaning industry. Asked whether ducking wage-and-hour laws was a big factor in deciding to sell franchises to janitors instead of employing them, the company emailed a statement that did not directly answer the question.</p><p>&ldquo;Franchise owners, like all business owners, have control over their day-to-day operations as well as their profitability,&rdquo; the Jani-King statement said. &ldquo;They can solicit and bid their own business, and they can accept or decline the right to service accounts offered by Jani-King. They can hire employees to clean accounts, or they can clean themselves. They buy all of their own equipment and supplies. The franchise owners receive all revenue generated by their business (less Jani-King&rsquo;s fees).&rdquo;</p><p>But Weil, the Boston University business economist, said the franchise model enables the cleaning companies to shortchange the janitors. &ldquo;If you start doing the math, you realize that people are being paid way below the minimum wage or being denied overtime payment and are really being subjected to inappropriate expenses by another company for, essentially, being an employee of that company,&rdquo; he said.</p><p>In the cleaning industry, it is not just the &ldquo;franchisees&rdquo; who are vulnerable to wage-and-hour violations. Those workers often bring other people to help them with jobs. Pérez gets part-time help from her husband, a son and a neighborhood friend. &ldquo;I can&rsquo;t afford to pay them minimum wage,&rdquo; she said.</p><p>Court rulings in Massachusetts have upended franchising by janitorial companies. &ldquo;Several have closed down or stopped operating the way they were operating,&rdquo; said attorney Shannon Liss-Riordan, who filed the key suits. Now the companies are either treating their janitors like employees or &ldquo;not charging workers upfront for a job,&rdquo; she said.</p><p>&ldquo;My hope is that some of the rulings that we&rsquo;ve gotten [in Massachusetts] will spread,&rdquo; Liss-Riordan said.</p><p>That prospect worries Heyl, the <a href="http://www.franchise.org/">International Franchise Association</a> lobbyist. If lawsuits drive franchised cleaning companies out of business, there will be less competition and increased prices, he warned.</p><p>Heyl also sees a threat to franchising in all industries. &ldquo;We&rsquo;re just coming out of a recession, and banks are very skittish and, if they start looking at a franchise system and open up the [newspaper] and say, &lsquo;Look, some of these franchisees are employees,&rsquo; and there&rsquo;s litigation to follow, there&rsquo;s numerous negative economic impacts.&rdquo;</p><p><em>Follow <a href="http://www.wbez.org/users/cmitchell-0">Chip Mitchell</a> at <a href="https://twitter.com/ChipMitchell1">@ChipMitchell1</a>.&nbsp;Follow <a href="http://www.wbez.org/users/shannon-0">Shannon Heffernan</a> at <a href="https://twitter.com/shannon_h">@shannon_h</a>.&nbsp;</em><em>This report, edited by <a href="http://www.wbez.org/users/djohn">Derek John</a>, is part of WBEZ</em>&rsquo;<em>s&nbsp;</em>&ldquo;<em>Front and Center</em>&rdquo;<em>&nbsp;series, funded by the Joyce Foundation,&nbsp;</em>&ldquo;<em>Improving the quality of life in the Great Lakes region and across the country.</em>&rdquo;</p></p> Mon, 07 Apr 2014 05:01:00 -0500 http://www.wbez.org/news/bigger-burgers-and-fries-franchising-blamed-low-wages-109978 Quinn quiet on mayor’s pension plan, questions property tax hikes http://www.wbez.org/news/quinn-quiet-mayor%E2%80%99s-pension-plan-questions-property-tax-hikes-109966 <img typeof="foaf:Image" src="http://llnw.wbez.org/main-images/Quinn - AP Seth Perlman.jpg" alt="" /><p><p>Illinois Democratic Gov. Pat Quinn is raising questions about whether he would support a plan to bolster Chicago&rsquo;s underfunded public pensions by raising property taxes, telling reporters today that property taxes are already &ldquo;overburdening&rdquo; state residents.</p><p>State lawmakers are now debating <a href="http://www.google.com/url?q=http%3A%2F%2Fwww.wbez.org%2Fnews%2Femanuel-pension-deal-would-raise-property-taxes-trim-benefits-109948&amp;sa=D&amp;sntz=1&amp;usg=AFQjCNHVMds9AwIwUN5U23ljh0rlrgfAPg">Chicago Mayor Rahm Emanuel&rsquo;s plan</a> to prop up city&rsquo;s pension funds for laborers and municipal workers. Central to that is a proposal to raise property taxes by $50 million each year for five years, which would ultimately net the city $750 million. The mayor also is calling for city workers to chip in more money toward their retirement benefits, and he wants to scale back the rate at which those benefits grow each year.</p><p>But Emanuel&rsquo;s blueprint, which he said would solve about half of Chicago&rsquo;s nearly $20 billion public pension crisis, first needs approval from the state legislature and the governor, because all Illinois pensions are governed by state law.</p><p>Quinn on Thursday would not say whether he would sign the <a href="http://www.google.com/url?q=http%3A%2F%2Fwww.ilga.gov%2Flegislation%2Fbillstatus.asp%3FDocNum%3D1922%26GAID%3D12%26GA%3D98%26DocTypeID%3DSB%26LegID%3D73354%26SessionID%3D85&amp;sa=D&amp;sntz=1&amp;usg=AFQjCNHCEIli0kRUcM8Np1l1LxGkpZmWDg">Chicago pension bill</a> if it landed on his desk.</p><p>&ldquo;I don&rsquo;t know what that bill is, frankly,&rdquo; Quinn told reporters in Chicago. &ldquo;I think it has all kinds of different descriptions. They&rsquo;re, I guess, looking at it in Springfield. When they have something put together we&rsquo;ll look at it. But I wanna make it clear: I believe in reducing the burden of property taxes in our state.&rdquo;</p><p>Quinn would not detail any specific concerns he had with Emanuel&rsquo;s pension plan. But he returned repeatedly to the talking points he has been using to push his own 2015 state budget proposal. &ldquo;The bottom line in our state is we have to reduce our reliance on property taxes and we have to invest in education,&rdquo; Quinn said.</p><p>The governor&rsquo;s 2015 budget would make permanent a <a href="http://www.google.com/url?q=http%3A%2F%2Fwww.wbez.org%2Fstory%2Fincome-tax%2Ftemporary-tax-hikes-dont-always-stay-way&amp;sa=D&amp;sntz=1&amp;usg=AFQjCNHDXygwYKimhgniQZB0Efijo86f_Q">income tax hike</a> enacted in 2011, while guaranteeing all Illinois homeowners a $500 property tax refund. The governor is hoping that will allow municipalities around the state, boosted by trickle-down state income tax revenue, to lower local property taxes, which Quinn thinks disproportionately favor wealthy areas.</p><p>The mayor&rsquo;s Springfield allies put his plan into legislative form on Tuesday, shortly after he outlined it for reporters. The bill passed a key House pension committee on Wednesday, but is still awaiting a debate before the full House.</p><p>The State Senate, meanwhile, adjourned for the week on Thursday without taking up the plan.</p><p>The blueprint Emanuel outlined earlier this week aims to pump more money into the two pension funds for more than 56,000 city workers -- one for city laborers and the other for municipal workers, including administrators and skilled tradesmen.</p><p>By 2020, Emanuel&rsquo;s plan would finally do away with the <a href="http://www.google.com/url?q=http%3A%2F%2Fwww.wbez.org%2Fnews%2Fexperts-say-chicago-has-public-pension-system-set-fail-109329&amp;sa=D&amp;sntz=1&amp;usg=AFQjCNGzLcw0b8YPzM-h-NQSYombAlYX5g">archaic math</a> the city has been using for decades to calculate how much money to chip into its workers&rsquo; retirements. Experts say that is a primary reason the pension funds have been shorted for decades, leading to their current dire shape. Instead, the proposal in Springfield would slowly ramp up contributions from the city, before switching over to a self-adjusting funding formula.</p><p>If the city tries to skimp on payments -- or skip them altogether -- <a href="http://www.google.com/url?q=http%3A%2F%2Fwww.ilga.gov%2Flegislation%2Ffulltext.asp%3FDocName%3D09800SB1922ham004%26GA%3D98%26SessionId%3D85%26DocTypeId%3DSB%26LegID%3D73354%26DocNum%3D1922%26GAID%3D12%26Session%3D&amp;sa=D&amp;sntz=1&amp;usg=AFQjCNEL9MZWqOZTKPul1CQW64R2_sAHpA">the current proposal</a> allows the pension funds to take Chicago to court, or even garnish City Hall&rsquo;s share of state grant money.</p><p>But the stabilization of the pension funds would also come at a cost for taxpayers and city workers.</p><p>The mayor&rsquo;s proposed property tax hike, which would still need approval from the City Council, would cost the owner of a $250,000 home about $58 more in property taxes each year for the next five years, according to the mayor&rsquo;s office.</p><p>Current and retired city workers would also kick more into their pension funds, but get less out of them. Employee contributions would jump from the current 8.5 percent of each paycheck to 11 percent by 2019.</p><p>But the mayor also wants to scale back the rate at which those benefits grow each year. Retirees in the municipal and laborers pension funds currently see their retirement benefits grow at a 3 percent compounded annual rate. The mayor wants to cut that down to a flat 3 percent, or half the rate of inflation, whichever is smaller. And retirees would see no benefit increase in 2017, 2019 or 2025.</p><p>Several of Chicago&rsquo;s most powerful city workers&rsquo; unions quickly came out against the mayor&rsquo;s plan, arguing it violates a part of the <a href="http://www.google.com/url?q=http%3A%2F%2Fwww.ilga.gov%2Fcommission%2Flrb%2Fcon13.htm&amp;sa=D&amp;sntz=1&amp;usg=AFQjCNHYjOR9TNeMJMsYGbhWyAumt2lbbA">Illinois Constitution</a> that says pension benefits &ldquo;shall not be diminished or impaired.&rdquo;</p><p>That includes the unions for police, firefighters and teachers, whose members all have their own woefully underfunded pensions systems that would not be affected by Emanuel&rsquo;s proposal. What&rsquo;s more, the mayor&rsquo;s plan does nothing to stave off a state-mandated spike in the city&rsquo;s contributions to its police and fire pensions next year, which will cost nearly $600 million.</p><p>The jump in required payments was designed to finally bring the city&rsquo;s police and fire pensions into the black, after decades of City Hall shorting the funds. But Emanuel has threatened that such a huge, one-time increase would force drastic budget cuts or steep property tax hikes.</p><p>A spokesman for venture capitalist Bruce Rauner, Quinn&rsquo;s Republican opponent in the November election, said in a statement that Rauner disagreed with the mayor&rsquo;s proposal.</p><p>&ldquo;Bruce has always maintained that true pension reform requires moving towards a defined contribution style system and believes that should also be part of the solution for Chicago,&rdquo; said campaign spokesman Mike Schrimpf.</p><p><em><a href="http://www.google.com/url?q=http%3A%2F%2Fwww.wbez.org%2Fusers%2Fakeefe&amp;sa=D&amp;sntz=1&amp;usg=AFQjCNHCooL3ruU-DUyQdnHprdBP25WItg">Alex Keefe</a> is political reporter at WBEZ. You can follow him on <a href="https://www.google.com/url?q=https%3A%2F%2Ftwitter.com%2FWBEZpolitics&amp;sa=D&amp;sntz=1&amp;usg=AFQjCNE7HeV8c3K0gV2LF_GODmIGo6nkkg">Twitter</a> and <a href="https://plus.google.com/102759794640397640028">Google+</a>.</em></p></p> Thu, 03 Apr 2014 15:40:00 -0500 http://www.wbez.org/news/quinn-quiet-mayor%E2%80%99s-pension-plan-questions-property-tax-hikes-109966 Emanuel pension deal would raise property taxes, trim benefits http://www.wbez.org/news/emanuel-pension-deal-would-raise-property-taxes-trim-benefits-109948 <p><iframe width="100%" height="166" scrolling="no" frameborder="no" src="https://w.soundcloud.com/player/?url=https%3A//api.soundcloud.com/tracks/142758537&amp;color=ff5500&amp;auto_play=false&amp;hide_related=false&amp;show_artwork=true"></iframe><p>Chicago Mayor Rahm Emanuel&#39;s plan for fixing part of the nation&#39;s worst municipal pension crisis is now in the hands of state lawmakers &mdash; and it&#39;s likely just the first of many from cities across the state seeking legislative help for their employee retirement funds.</p><p>The Democratic mayor&#39;s proposal comes just months after the General Assembly finally tackled a plan &mdash; challenged in court &mdash; to deal with its own $100 billion pension problem. But Emanuel hasn&#39;t yet addressed shortfalls in the city&#39;s fire and police pension programs, a problem that nearly every large city in Illinois faces.</p><p>Chicago has the worst-funded public pension system of any major U.S. city, a distinction that could threaten its attempts to position itself as a modern transportation hub and a place for high-tech development.</p><p>Emanuel announced he had reached a deal with several municipal and laborers unions to cut in half a $19.5 billion pension debt over 40 years in accounts that cover more than 50,000 employees and retirees. The agreement would raise property taxes by $50 million a year over the next five years, ultimately bringing in $750 million over that time. It would also require higher contributions from employees and reduce the annual benefits retirees receive.</p><p>Less than a year from facing the voters for re-election, Emanuel&#39;s plan is politically risky.</p><p>&quot;Voters did not elect me to think about my political future,&quot; Emanuel said in a statement Tuesday. &quot;They elected me to think about Chicago&#39;s future.&quot;</p><p>He suggested the effort with the unions could be a template for solving $10 billion in police and fire shortfalls, but didn&#39;t suggest specifics, including how the city can meet a required $600 million balloon payment to police and fire funds next year.</p><p>And despite Emanuel&#39;s claim of widespread union support, a coalition of labor groups representing firefighters, police officers, teachers, nurses and other city workers called We Are One Chicago all but promised a lawsuit if lawmakers OK the plan. A similar group has filed a lawsuit over the state plan.</p><p>In Springfield, Republicans were noncommittal, saying they wanted to see the details and who would have to pay for the plan before they signed on. Democrats, who control supermajorities in both legislative chambers, already begun drafting language for the necessary bills in the House.</p><p>Other cities wrestling with their own pension shortfalls are watching.</p><p>&quot;Chicago drives things throughout the state and it also gets the majority of funding from Springfield and Washington, D.C.,&quot; Peoria Mayor Jim Ardis said. &quot;A healthy Chicago means more scraps for the Peorias, Rockfords, Danvilles of the state.&quot;</p><p>Rep. Elaine Nekritz, a Northbrook Democrat and House leader on pension issues, predicted lawmakers would deal with the current Emanuel plan by itself, but that when it comes to police and fire funds, Chicago and the state&#39;s other large cities will be coming to Springfield for help.</p><p>Aurora, the state&#39;s second-largest city, is among municipalities struggling with police and fire obligations, including state financial penalties to take effect in 2016 for cities that do not make sufficient contributions to those pension accounts. That amounts to an increase of more than $1 million annually for Aurora, which has reduced its operating expenses and laid off employees in recent years, Mayor Tom Weisner said.</p><p>&quot;It&#39;s not sustainable. Without some reform, there&#39;s going to be cities that basically, I believe, will be going under,&quot; Weisner said. &quot;I&#39;d be hard-pressed to find a community whose leaders are not in favor of pension reform for public safety employees.&quot;</p><p>According to the Commission on Government Forecasting and Accountability, a legislative budget analyst, police and fire pension funds in cities outside Chicago have deteriorated significantly in the past two decades. Police funds, for example, were 75 percent funded in 1991, while they were only 54 percent funded &mdash; $4.4 billion short &mdash; in 2010.</p><p>The commission points out that assets in that time have tripled, but liabilities have increased even more. Springfield Mayor Michael Houston said police and fire funds were hit hard by the financial downturn of 2008 and, over the years, legislatively approved enhancements to pension benefits that did not come with money to pay for them.</p><p>&quot;While we can lobby for changes, it&#39;s up to the state Legislature to make changes,&quot; Houston said.</p><p>If the state approves Emanuel&#39;s plan, &quot;it has the potential to create a path for the mayor to address his police and fire pension fund, which will also need to be addressed by downstate police and fire funds,&quot; said Laurence Msall, president of the Chicago-based Civic Federation.</p><p>But he cautioned that the two systems are different. Chicago is unique for having a separate fund for municipal employees and laborers. In other cities, those jobs are covered by the Illinois Municipal Retirement Fund, which is generally in good shape in cities across the state because of stricter contribution requirements and less-generous benefits.</p></p> Tue, 01 Apr 2014 08:35:00 -0500 http://www.wbez.org/news/emanuel-pension-deal-would-raise-property-taxes-trim-benefits-109948