I’ve written constantly over the past year about dangerous, new legislation that authorized Illinois towns and cities to sell off body parts through a new bond structure, but props to Jeanne Ives for articulating it better than I did. She’s the Republican candidate for governor challenging Bruce Rauner in the primary.
Ives spoke at the City Club yesterday. The whole speech is worth watching for anybody interested in Illinois’ fiscal crisis, but the segment below is about the new borrowing scheme. It authorizes Illinois municipalities to transfer to bondholders full ownership of future income that flows from the state. The purpose is to make sure bondholders come first before pensioners, taxpayers and other stakeholders, even in bankruptcy.
“Alchemy turns Chicago junk to gold,” as Bloomberg put it. Chicago’s new bondholders will have a first claim to more than 90 percent of the approximately $715 million of sales-tax revenue collected each year.
Since it became law, the controversial new scheme has been widely discussed in national and state media, but no regular media warned about it as it progressed through the legislature.
But we did. Repeatedly. “It must be stopped,” we wrote.
And it was stopped, initially, thanks to Ives’ work in the House. It was from her comments that we initially learned about it. No other legislator understood what was at issue until she, and we, explained — aside from a few Democratic sponsors who gave the muni bond community what it dreamed of.
But Chicago Democrats later stuffed the legislation into the 756-page budget implementation bill that the General Assembly had only hours to review before voting.
Decide what you want about Ives’ recent controversial ad. We try to avoid social issues on this site. But have no doubt that she’s tops in the General Assembly when it comes to understanding our fiscal crisis and having the courage to call it straight.
–Mark Glennon is founder of Wirepoints. Opinions expressed are his own.