Kadner: Madigan plan takes cash from suburbs and schools

Madigan

Updated: June 16, 2012 8:13AM

Confusion. Panic. Division.

It seems those are the goals of Illinois House Speaker Michael Madigan as he leads the Legislature toward teacher pension reform.

On Monday, groups representing suburban mayors and school districts were in a state of panic because of three legislative amendments that Madigan (D-Chicago) introduced late Friday.

The amendments are an attempt to grab corporate personal property replacement tax funds to finance the pensions of downstate and suburban teachers.

As soon as I refer to the corporate personal property replacement tax, I know the eyes of nine out of 10 readers will glaze over.

And I’m guessing Madigan knows this as well. It’s difficult to debate something that few people understand and most have never heard about.

Here’s what Madigan’s proposal would do: Swipe hundreds of millions of tax dollars from your local governments and use them to help the state pay for teacher pensions, which are underfunded by about $40 billion.

There has been a lot of talk by Madigan, Gov. Pat Quinn, and others of shifting the state’s cost for teacher pensions to local school districts. But that caused a lot of speculation that property tax bills would increase, and local officials are united in their opposition to that.

With mayors, educators, school board members and just plain taxpayers complaining to legislators about the possibility of higher tax bills, I think Madigan realized that idea might have trouble passing. So he came up with this new idea.

Once upon a time, about 40 years ago, local governments had the ability to place a personal property tax on corporations, partnerships and other business entities. When the Illinois Constitution was revised in the 1970s, it took that power from local governments and gave it to the state.

But the state agreed that it would share that tax revenue with local governments, based on the percentage that each received from the overall pot back in 1976.

Madigan now proposes three amendments to hijack that money and use it for the Teachers’ Retirement System.

Amendment 1 to House Bill 3637 diverts $536 million in corporate personal property replacement tax money from school districts outside of Chicago.

Amendment 2 diverts $982.3 million from all local governments outside of Chicago.

Amendment 3 diverts $1.4 billion (all the money collected in 2011) from all local governments, including Chicago. That ain’t going to pass because Mayor Rahm Emanuel won’t let it.

When I first heard about Madigan’s amendments, I saw them as a warning shot at suburban mayors who are struggling to balance their budgets.

Oppose the shift in teacher pension funding to school districts, Madigan seemed to be saying, and I’ll take money away from you.

Indeed, a Madigan spokesman told Capitol Fax, a newsletter on Springfield politics, that the speaker just wants to bring people to the table “who aren’t currently engaged in the process.”

The Illinois Municipal League has issued a news release denouncing the Madigan proposal and warning that “this is a problem that threatens everyone — regardless of the size of each affected community.”

The director of government relations for the Illinois Association of School Administrators sent out an email to members, warning about “microwave legislation.” The email states that pension reform could pass as soon as Wednesday, and there may be no time for public debate or discussion.

After looking over the financial impact of the numbers, I’m thinking Madigan may be trying to divide and conquer with this proposal.

For example, Oak Forest is slated to receive only $37,338 from the corporate replacement tax, while Chicago Heights gets $1.3 million. The imbalance among school districts is similar — Reavis High School District 220 is scheduled to get $2.9 million this year, compared with Oak Lawn High School District 229’s $495,368.

If all the talk about shifting the pension funding wasn’t sufficient to worry local school boards, on Monday a budget prepared by the House proposed a $260 million cut in state education funding if the teacher pension problem is fixed, but as much as $750 million if it is not.

“Nobody knows what Madigan’s thinking,” one lobbyist said. “You don’t try playing three-dimensional chess with the guy because he’s the only one who can see all the spaces on the board.”

Great for Madigan. Not so good if you believe in representative government.

I’m reminded of a kid I knew who captured bugs, put them in a jar and shook it up, just to see what they would do.

In Springfield, we’re the bugs.

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