Tag Archives: Illinois

Pipelines are bad but this is okay?

Another dangerous crude oil spill in Illinois

A freight train loaded with crude oil derailed in northern Illinois on Thursday, bursting into flames and prompting officials to suggest that everyone with 1 mile evacuate, authorities said.

The BNSF Railway train derailed around 1:05 p.m. in a rural area where the Galena River meets the Mississippi, according to company spokesman Andy Williams. The train had 103 cars loaded with crude oil, along with two buffer cars loaded with sand. A cause for the derailment hadn’t yet been determined. No injuries were reported.

Only a family of two agreed to leave their home, Galena City Administrator Mark Moran said at a news conference late Thursday, adding that the suggestion to evacuate was prompted by the presence of a propane tank near the derailment.

The derailment occurred 3 miles south of Galena in a wooded and hilly area that is a major tourist attraction and the home of former President Ulysses S. Grant. The Jo Daviess County Sheriff’s Department confirmed the train was transporting oil from the Northern Plains’ Bakken region.

Earlier in the day, Moran said 8 tankers had left the track. But Williams said at the news conference that only six cars derailed, two of which burst into flames and continued to burn into the night.

Firefighters could only access the derailment site by a bike path, said Galena Assistant Fire Chief Bob Conley. They attempted to fight a small fire at the scene but were unable to stop the flames.

Firefighters had to pull back for safety reasons and were allowing the fire to burn itself out, Conley said. In addition to Galena firefighters, emergency and hazardous material responders from Iowa and Wisconsin were at the scene.

The derailment comes amid increased public concern about the safety of shipping crude by train. According to the Association of American Railroads, oil shipments by rail jumped from 9,500 carloads in 2008 to 500,000 in 2014, driven by a boom in the Bakken oil patch of North Dakota and Montana, where pipeline limitations force 70 percent of the crude to move by rail.

Meanwhile Barack Obama continues to kill the Keystone XL pipeline.

How big of a mess is Illinois’s finances?

Really, really messed up.  It is bankrupt.

As dire as Chicago’s finances are, those of Illinois are in even worse shape. The primary cause, once again, is pensions, which are underfunded to the tune of $83 billion. Retirees’ future health care is underfunded an additional $43 billion. There’s a lot of regular debt, too—about $44 billion of it. And Illinois, like Chicago, has run large deficits for some time. Despite raising the individual income tax 66 percent and the corporate tax 46 percent in 2011, the state is projected to end the current fiscal year with an accumulated deficit of $5.2 billion. While California has made headlines by issuing IOUs to companies to which it owes money, Illinois has taken an easier route: it just stopped paying its bills, at one point last year racking up 208,000 of them, totaling $4.5 billion. Some businesses have gone unpaid for nine months or even longer. Unsurprisingly, Illinois has the worst credit rating of any state. Unable to pay its bills, it is de facto bankrupt.

It’s dragging down Chicago with it.

What accounts for Chicago’s miserable performance in the 2000s? The fiscal mess is the easiest part to account for: it is the result of poor leadership and powerful interest groups that benefit from the status quo. Public-union clout is literally written into the state constitution, which prohibits the diminution of state employees’ retirement benefits. Tales of abuse abound, such as the recent story of two lobbyists for a local teachers’ union who, though they had never held government jobs, obtained full government pensions by doing a single day of substitute teaching apiece.

If the state and city had honestly funded the obligations they were taking on, their generosity to their workers would be less of a problem. But they didn’t. As City Journal senior editor Steven Malanga has written for RealClearMarkets, Illinois “essentially wanted to be a low-tax (or at least a moderate-tax) state with high services and rich employee pensions.” That’s an obviously unsustainable policy formula. The state has also employed a series of gimmicks to cover up persistent deficits—for example, using borrowed money to shore up its pension system and even to pay for current operations. At the city level, Mayor Richard M. Daley papered over deficits with such tricks as a now-infamous parking-meter lease. The city sold the right to parking revenues for 75 years to get $1.1 billion up front. Just two years into the deal, all but $180 million had been spent.

The debt and obligations begin to explain why jobs are leaving Chicago. It isn’t a matter, as in many cities, of high taxes driving away businesses and residents. Though Chicago has the nation’s highest sales tax, Illinois isn’t a high-tax state; it scores 28th in the Tax Foundation’s ranking of the best state tax climates. But the sheer scale of the state’s debts means that last year’s income-tax hikes are probably just a taste of what’s to come. (Cutting costs is another option, but that may be tricky, since Illinois is surprisingly lean in some areas already; it has the lowest number of state government employees per capita of any state, for example.) The expectation of higher future taxes has cast a cloud over the state’s business climate and contributed to the bleak economic numbers.

It also has some messed up city politics.

Another reason for Chicago’s troubles is that its business climate is terrible, especially for small firms. When the state pushed through the recent tax increases, certain big businesses had the clout to negotiate better deals for themselves. For example, the financial exchanges threatened to leave town until the state legislature gave them a special tax break, with an extension of a tax break for Sears thrown in for good measure. And so the deck seems to be stacked against the little guys, who get stuck with the bill while the big boys are plied with favors and subsidies.

It also hurts small businesses that Chicago operates under a system called “aldermanic privilege.” Matters handled administratively in many cities require a special ordinance in Chicago, and ordinances affecting a specific council district—called a “ward” in Chicago—can’t be passed unless the city council member for that ward, its “alderman,” signs off. One downside of the system is that, as the Chicago Reader reported, over 95 percent of city council legislation is consumed by “ward housekeeping” tasks. More important is that it hands the 50 aldermen nearly dictatorial control over what happens in their wards, from zoning changes to sidewalk café permits. This dumps political risk onto the shoulders of every would-be entrepreneur, who knows that he must stay on the alderman’s good side to be in business. It’s also a recipe for sleaze: 31 aldermen have been convicted of corruption since 1970.

It kills small businesses

Red tape is another problem for small businesses. Outrages are legion. Scooter’s Frozen Custard was cited by the city for illegally providing outdoor chairs for customers—after being told by the local alderman that it didn’t need a permit. Logan Square Kitchen, a licensed and inspected shared-kitchen operation for upscale food entrepreneurs, has had to clear numerous regulatory hurdles: each of the companies using its kitchen space had to get and pay for a separate license and reinspection, for example, and after the city retroactively classified the kitchen as a banquet hall, its application for various other licenses was rejected until it provided parking spaces. An entrepreneur who wanted to open a children’s playroom to serve families visiting Northwestern Memorial Hospital was told that he needed to get a Public Place of Amusement license—which he couldn’t get, it turned out, because the proposed playroom was too close to a hospital!

And these are exactly the kind of hip, high-end businesses that the city claims to want. Who else stands a chance if even they get caught in a regulatory quagmire? As Chicagoland Chamber of Commerce CEO Jerry Roper has noted, “unnecessary and burdensome regulation” puts Chicago “at a competitive disadvantage with other cities.” Companies also fear Cook County’s litigation environment, which the U.S. Chamber of Commerce has called the most unfair and unreasonable in the country. It’s not hard to figure out why Chief Executive ranked Illinois 48th on its list of best states in which to do business.

Rahm Emmanuel is making some progress

Some of those challenges defy easy solutions: no government can conjure up a calling-card industry, and it isn’t obvious how Chicago could turn around the Midwest. Mayor Emanuel is hobbled by some of the deals of the past—the parking-meter lease, for example, and various union contracts that don’t expire until 2017 and that Daley signed to guarantee labor peace during the city’s failed Olympic bid.

But there’s a lot that Emanuel and Chicago can do, starting with facing the fiscal mess head-on. Emanuel has vowed to balance the budget without gimmicks. He cut spending in his 2012 budget by 5.4 percent. He wants to save money by letting private companies bid to provide city services. He’s found some small savings by better coordination with Cook County. Major surgery remains to be done, however, including a tough renegotiation of union contracts, merging some functions with county government, and some significant restructuring of certain agencies, such as the fire department. By far the most important item for both the city and state is pension reform for existing workers—a politically and legally challenging project, to say the least. To date, only limited reforms have passed: the state changed its retirement age, but only for new hires.

Next is to improve the business climate by reforming governance and rules. This includes curtailing aldermanic privilege, shrinking the overly large city council, and radically pruning regulations. Emanuel has already gotten some votes of confidence from the city’s business community, recently announcing business expansions with more than 8,000 jobs, though they’re mostly from big corporate players.

The Shape of Things To Come

60 Minutes had a feature on the budget crisis’ that are happening at the state level.  Stay with me on this one.

"The most alarming thing about the state issue is the level of complacency," Meredith Whitney, one of the most respected financial analysts on Wall Street and one of the most influential women in American business, told correspondent Steve Kroft

Whitney made her reputation by warning that the big banks were in big trouble long before the 2008 collapse. Now, she’s warning about a financial meltdown in state and local governments.

"It has tentacles as wide as anything I’ve seen. I think next to housing this is the single most important issue in the United States, and certainly the largest threat to the U.S. economy," she told Kroft.

Asked why people aren’t paying attention, Whitney said, "’Cause they don’t pay attention until they have to."

Whitney says it’s time to start.

California, which faces a $19 billion budget deficit next year, has a credit rating approaching junk status. It now spends more money on public employee pensions than it does on the state university system, which had to increase its tuition by 32 percent.

Arizona is so desperate it sold off the state capitol, Supreme Court building and legislative chambers to a group of investors and now leases the buildings from their new owner. The state also eliminated Medicaid funding for most organ transplants.

Then there’s New Jersey. It has the highest taxes in the country, a $10 billion deficit and a depressed economy when first-year Governor Chris Christie took office. But after looking at the books, he decided to walk away from a long-planned and much-needed project with New York and the federal government to build a rail tunnel into Manhattan. It would have helped the economy and given employment to 6,000 construction workers.

Gov. Christie acknowledged that’s a lot of jobs. "I cancelled it. I mean, listen, the bottom line is I don’t have the money. And you know what? I can’t pay people for those jobs if I don’t have the money to pay them. Where am I getting the money? I don’t have it. I literally don’t have it."
Asked if this is going on all over the country, Christie told Kroft, "Yes. Of course it is. It’s not like you can avoid it forever, ’cause it’s here now. And we all know it’s here. And the federal government doesn’t have the money to paper over it anymore, either, for the states. The day of reckoning has arrived. That’s it. And it’s gonna arrive everywhere. Timing will vary a little bit, depending upon which state you’re in, but it’s comin’."

And nowhere has the reckoning been as bad as it is in Illinois, a state that spends twice much as it collects in taxes and is unable to pay its bills.

"This is the state of affairs in Illinois. Is not pretty," Illinois state Comptroller Dan Hynes told Kroft.

Hynes is the state’s paymaster. He currently has about $5 billion in outstanding bills in his office and not enough money in the state’s coffers to pay them. He says they’re six months behind.

"How many people do you have clamoring for money?" Kroft asked.

"It’s fair to say that there are tens of thousands if not hundreds of thousands of people waiting to be paid by the state," Hynes said.
Asked how these people are getting by considering they’re not getting paid by the state, Hynes said, "Well, that’s the tragedy. People borrow money. They borrow in order to get by until the state pays them."

"They’re subsidizing the state. They’re giving the state a float," Kroft remarked.

"Exactly," Hynes agreed.

"And who do you owe that money to?" Kroft asked.

"Pretty much anybody who has any interaction with state government, we owe money to," Hynes said.

That would include everyone from the University of Illinois, which is owed $400 million, to small businessmen like Mayur Shah, who owns a pharmacy in Chicago and has been waiting months for $200,000 in Medicaid payments. Then there are the 2,000 not-for-profit organizations that are owed a billion dollars by the state.

Lutheran Social Services of Illinois has been around since 1867 and provides critical services to 70,000 people, mostly the elderly, the disabled, and the mentally ill. The state owed them $9 million just before Thanksgiving, and they nearly had to close up shop.

Asked how long his organization can go on like this, Rev. Denver Bitner, the president of Lutheran Social Services of Illinois, told Kroft, "Well, we wonder that too because we really don’t know."

He says they were forced to tap their entire line of credit and all their cash reserves before the state would finally pay them as a hardship case.
"It has to be that you’ve sold off all your assets, you have borrowed from everybody that you can borrow from, and then, we’ll think about it," Rev. Bitner explained.

And according to Bitner, that’s even though the state owes his organization the money.

"The first words out of my mouth are usually an apology, because they have been you know put in this situation, that is really unacceptable. And you know there is very little I can do or say other than apologize," Comptroller Dan Hynes said.

It’s not just the social safety net that Hynes has to worry about: there have been Illinois legislators that have been evicted from their offices because the state didn’t pay their rent, and stories about state troopers being turned away from gas stations because the owners refused to take their state credit cards.

"The state’s a deadbeat," Kroft remarked.

"Yeah. I mean, the state of Illinois is known as a deadbeat state. This is a reputation that has taken us years to earn and we’ve reached, you know, the heights of, I think, becoming the worst in the country," Hynes said.

In the early 1990s, Saskatchewan was on the verge of bankruptcy because the Grant Devine governments of 1982-1991 would not curb government spending and the deficit for a province under a million people grew to over one billion dollars.  The incoming NDP government of Roy Romanow was more pragmatist than idealistic and spent almost a decade trying to get the province on solid financial footings.  That journey was documented in the book Minding the Public Purse by the Hon. Janice MacKinnon, who was the Finance Minister during the most of the cuts.  Like I said, it was a decade of austerity.  There was funding cuts to healthcare, almost no building on the University of Saskatchewan or University of Regina campuses, a higher number of students in classrooms, longer waiting lists, rural hospitals closing, decaying highways, and it was really a lost decade.  Yes Saskatchewan did grow a bit during this time but with our financial house in disarray, growth was hard.

MacKinnon talks about how close Saskatchewan was to defaulting on it’s loans.  With the precarious state of the Canadian economy (pre-Chretien and Martin), there was some legitimate concerns that this could lead to an IMF bailout and intervention.  Luckily it never came to that but it did mean higher tuitions, higher taxes, more fees, a lot of lost opportunities that we are just now seeing as a province.

What’s scary is that the deficit numbers coming out of the U.S. states are worse and for all intents and purposes, the US economy is soon going to be in as bad or as worse shape as the Canadian economy was in the early 1990s.  I keep looking at the debt crisis that is swamping the EU economies and I can’t help but wonder until how long it is that you see places like Michigan, Illinois, and California needing massive financial bailouts.  Good grief, California has even looked at dissolving as a state and becoming a territory again (I don’t think it was a serious option).

How many lost decade will the United States go through to pay for wars in Afghanistan, Iraq, and the greed of the banks?  It took over a decade to recover from Vietnam and the state and cities economies weren’t in such tough shape.  This could either take decades or it could be the start of the long decline of the United States as a economic power.

The good news is that from Saskatchewan and Alberta’s experience is that as voters, we understood that it had to be done.  Whether it was the right wing Ralph Klein in Alberta or the centre-left Roy Romanow in Saskatchewan, we knew it had to be done and as a whole, we stood by them as they did the heavy lifting and hard cutting.  The  bad news for many states is that Saskatchewan has a natural inclination to support the NDP and Alberta has a natural inclination to vote Progressive Conservative which means that during the tough times, the provinces returned (or in Alberta’s case, they only ever elect Conservatives) what they knew and trusted during rough times.  If you don’t have you could have a series of one term administrations that moved from spend to cut to spend to cut for short term partisan advantage which could derail or destroy the entire process.  Too make spending cuts that are needed, you need a really strong majority which is not a strength of the American system which features a lot more checks and balances.

I can’t see many states turning themselves around.

Move over California, Illinois is broke as well

From The New York Times

Viw of Chicago Even by the standards of this deficit-ridden state, Illinois’s comptroller, Daniel W. Hynes, faces an ugly balance sheet. Precisely how ugly becomes clear when he beckons you into his office to examine his daily briefing memo.

He picks the papers off his desk and points to a figure in red: $5.01 billion.

“This is what the state owes right now to schools, rehabilitation centers, child care, the state university — and it’s getting worse every single day,” he says in his downtown office.

Mr. Hynes shakes his head. “This is not some esoteric budget issue; we are not paying bills for absolutely essential services,” he says. “That is obscene.”

For the last few years, California stood more or less unchallenged as a symbol of the fiscal collapse of states during the recession.

Now Illinois has shouldered to the fore, as its dysfunctional political class refuses to pay the state’s bills and refuses to take the painful steps — cuts and tax increases — to close a deficit of at least $12 billion, equal to nearly half the state’s budget.

Of course the impact is more than on just Illinois

The federal dollars are nearly spent. Last month, local governments nationwide shed more than 20,000 jobs. Should the largest struggling states — like California, New York or Illinois — lay off tens of thousands more in coming months, or default on payments, the reverberations could badly damage a weakened economy and push housing prices down still further.

“You’re not seeing these states bounce back, and that could be a big drag on the national economy,” said Susan K. Urahn of the Pew Center on the States. “It could be a very tough decade.”

Here is what it looks like in real terms

The Community Counseling Centers of Chicago is another of those workaday groups that are like the stitches on a baseball, holding together poor and working-class neighborhoods. With an annual budget of $16 million, the agency tends to families torn by crime and violence as well as people who are psychologically stressed and abusing drugs.

On any given Monday morning, the agency’s chief administrative officer, John J. Troy, 61, has no idea how he is going to keep its doors open until Friday. He said the state had not come through with an expected $2.2 million, which is about six months of arrears. He has laid off and recalled employees three times in the last two years.

“Two weeks ago, I had days to meet my $420,000 payroll and all I was looking at was a $200,000 line of credit from a bank,” recalled Mr. Troy. “I drove down to Springfield and said, ‘Hey, you owe us $3 million.’ They said: ‘Oh, that’s nothing. We owe another agency $10 million.’ ”

“The fact of the matter is,” he added, “I don’t sleep much these days.”

I know that several current and former politicians across the country read this blog but I can’t think of a Canadian equivalent.  In reading about the second Devine government in Saskatchewan the province was pretty much broke but from what I recall, bills were being paid.  While the Ontario government had Rae Days, I am pretty sure the bills got paid.  Actually outside of the 1930s, I can’t think of a time when a Canadian government didn’t pay it’s bills.  Anyone have an example?

Navy Pier, Chicago

While in Chicago we were only a couple minute walk from the historic Navy Pier or an even shorter trolley ride.  We found ourselves down there on three separate occasions and on one occasion we had a lot more time to explore and wander around.  On another night I finally went up in the famous Ferris Wheel at dusk which made for a fun ride but lousy photos.  Clicking on any of the photos will take you through to it’s page on Flickr and a more detailed explanation.

Navy Pier and the Chicago Children's Museum in Chicago 
The Windy (a sailing ship docked at Navy Pier in Chicago)
The Odyssey II docked at Navy Pier 
A very calm Lake Michigan by Navy Pier 
Navy Pier in Chicago
Some Canadian geek swim by Navy Pier 
Navy Pier Ferris Wheel 
Navy Pier Ferris Wheel 
The Navy Pier Ferris Wheel at night 
A handheld shot of the Chicago Fire Department's fire boat that was docked at Navy Pier 
The entrance to Navy Pier at night 
The helicopter on top of the Anita Dee II
Chicago as seen from Navy Pier

You can see the rest of my photos from Navy Pier in their photoset on Flickr.

Bloomingdales in Chicago

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Some photos from inside Bloomingdale’s in Chicago.

The building originally housed an ornate auditorium seating approximately 4,200 on three levels. The stage floor extended a considerable distance into the auditorium, and the seating was arranged in a U-shape around it. The auditorium contained an Austin Organ Company pipe organ (opus no. 558), installed in 1915, with 92 ranks, a 5-manual fixed console and a 4-manual movable console (added in 1931). Among the many events that took place in this venue was the annual Shrine Circus. Additionally, WGN-TV used the Medinah Temple for The Bozo 25th Anniversary Special (telecast live September 7, 1986).

The fine acoustics of the Medinah Temple’s auditorium made it a favorite site for recording. Many of the Chicago Symphony’s most famous recordings from the late 1960s (for RCA with then-music director Jean Martinon) through the 1980s (for Decca with then-music director Sir Georg Solti) were recorded there. The music to Fantasia 2000 was recorded at the Medinah Temple auditorium from 1994 to 1996.

Beginning in late 2000 the exterior of the building was restored and the interior gutted and reconstructed for use as retail space. It was designated a Chicago Landmark on June 27, 2001. It is currently occupied by Bloomingdale’s Home and Furniture Store, which opened in 2003.

I was kicked out shortly after I took these photos.  Photography is prohibited in the building.  I may or may not have ignored that rule.