Illinois lawmaker wants to offer advertising on license plates

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A Chicago-area politician thinks that offering private companies an opportunity to advertise on Illinois license plates is a good way to raise money for the cash-strapped state.

The plan would allow companies to put their advertising message on the plates, if they subsidize the cost to consumers. The state would also get a cut of the action.

“This gives us a chance to raise revenue without raising taxes,” said state Sen. John Mulroe, D-Chicago. “We’ve got to think outside the box these days.”

According to the Chicago Tribune, instead of the $99 annual fee, a driver might only pay $84, with the balance being paid by the advertiser. On top of that payment, an additional amount would be paid to the state.

Mulroe said his proposal is a win-win situation.

No word yet on whether bail-bond, liquor or cigarette companies would be able to participate in the program.

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Report shows every Chicago resident owes $12,000 for pension liability

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A report set to be released today by the Chicago Civic Federation, shows that the massive unfunded pension liability of the city and county’s 10 public pension plans has reached nearly $23 billion. That amount, plus Chicago’s share of the state’s unfunded pension liability, adds up to a total of $11,934 owed by every man, woman and child in Chicago.

Ten years ago, the combined city and state unfunded pension liability amounted to $2,442, only one-sixth the current amount.

The report from the Civic Federation comes to the same conclusions as a series of stories reported in the Chicago Tribune in November about the massive debt owed by city residents and taxpayers.

In 2000, eight of the 10 pension funds, were funded over an 80 percent level; now, eight have fallen below 60 percent. Despite the precarious position of the funds, only recently has pension reform become an urgent issue with Illinois Gov. Pat Quinn and the legislature.

The two funds that were above the 60 percent funding level in 2009 are the Chicago Transit Authority and the city’s labor union.  The only reason the CTA was above that level was because of an emergency infusion by the state in 2008 to keep the plan from becoming insolvent.

The Civic Federation blamed the deficits on the Illinois pension code, which allows the state and local governments to avoid having to pay in actuarial –determined contributions each year.

Making the problem worse are the steady increases in benefits, early retirements incentives and the weak economy. The ratio of active to retired workers has also decreased by 75 percent since 2000, meaning that as more retired workers need to be paid, fewer workers are paying into the system.

Even though the funds have experienced large investment gains over the last year, there is no way that investment performance can restore the funds to solvency.

The only two options are raising taxes, or sharply cutting back on retiree benefits. So far, politicians seem to prefer taking the risk of angering the public by suggesting hikes in property and income taxes, instead of incurring the wrath of the public employee unions.

Information from: Chicago Tribune

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Chicago government agencies ignore do-not-hire list of banned employees

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What seems like a no-brainer in transparent governance is being ignored or resisted in some Chicago-area government agencies.

Employees who are fired by the city for wrongdoing are put on a list called the do-not-hire list, signally other city departments that an employee was terminated for cause, and they should not be rehired in another city department.

Despite the presence of the list, some of the employees on it are showing up in other city departments. To make matters even worse, many other city agencies including the City Council, the Chicago Public Schools and the Park District, have not agreed to use the list, and hire offending employees anyways.

A court-appointed city monitor and the city’s inspector general have long pushed for the hiring restrictions on the “blacklisted” employees, although they say that the city doesn’t do enough to effectively enforce the rules.

“The city still hasn’t used it to ensure these same people haven’t been hired at sister agencies, each of which are either controlled by, or whose leadership is appointed by, the mayor,” said Jon Davey, a spokesman for Inspector General Joseph Ferguson.

Mayor Richard daily’s administration says that it’s been trying to get other city agencies to go along with the list, but Jenny Hoyle, a spokesperson for the city’s Law Department, said nothing yet has been formalized.

Some critics fear that once a new mayor is elected later this year, the new administration may drop the list altogether.

When first asked in 2009 by the Chicago Tribune for a copy of the list as a public records request, the city’s Human Resources Department refused to provide it claiming that it was as “unwarranted invasion of personal privacy.”

The list, called “Ineligible for Rehire – Indefinite,” contains the names of workers that have been terminated for committing crimes or violating city policy.

The list includes the names of employees that have criminal convictions, have broken state or federal statutes, violated the city’s hiring plan, committed workplace violence, harassment or discrimination, or have been found guilty of wrongdoing by the inspector general’s office.

The current list contains the names of 218 employees that were fired, or resigned after being told they would be fired, and covers only the period from 2007 through 2009.

At least three employees on the current list have turned up in other city departments, according to the Tribune. One of those, an employee in the inspector general’s office that was fired for shoplifting but later acquitted, was rehired in a similar position in the Chicago Public Schools.

Information from: Chicago Tribune

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Illinois school superintendents get rich on pension benefits by fleeing state

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Retired school superintendents are making a mad dash for the border, that is, the state border, in order to effectively double up on their annual compensation.

And that’s exactly what’s happening in Illinois, and likely other states, according to an investigative report in the Chicago Tribune. In fact, while educators are moving out of state to get around pension payment rules, superintendents from other states are moving into Illinois, presumably to fill in for the jobs left by those taking advantage of the loophole.

Illinois state laws are in place to prevent its public school superintendents from retiring and triggering outsized pensions, and then taking another superintendent job to collect two checks from the state. Unfortunately, when politicians crafted the law, they forgot to limit retirees’ pensions if a superintendant took a job across state lines.

In many cases, those moving into Illinois are also retirees, hiding from their state while cashing pension checks and continuing to earn large salaries.

Even though the state’s pension system is in serious financial straits, there’s nothing much that can be done under existing rules, since it’s all legal.

“We have allowed a system to develop that is grossly underfunded and that has very generous benefits,” said Laurence Msall, president of Chicago’s Civic Federation, a nonprofit government research organization. “To draw a pension from the state … and then immediately go get another job as a superintendent or in another teaching capacity — they’re really not retiring.”

Some examples found by Tribune investigators include:

  • Retired superintendent of New Trier Township High School District Hank Bangser, collects a $261,681 state pension, while working as a school superintendent in Southern California’s Ojai Unified School District making $170,000. His total annual compensation: $431,681.
  • Retired Wheaton Superintendent Gary Catalani receives a $237,195 Illinois state pension while earning another $195,000 from the Scottsdale, Arizona school district. His total annual compensation: $432,195.
  • Retired South Cook superintendent Eric King receives a $166,608 Illinois state pension and earns another $168,343 salary as the superintendent of the Muncie, Indiana school district, for a total of $334,951.
  • Retired East Maine Superintendent Kathleen Williams receives a $177,711 Illinois state pension, and earns another $156,000 in Wausau, Wisconsin. Her total compensation: $333,711.
  • Retired Superintendent Rebecca van der Bogert collects a $169,050 Illinois state pension, another $21,974 from Massachusetts, and currently works in Florida as the head of the Palm Beach Day Academy.
  • Retired superintendent of the Oak Park and River Forest Districts Attila Weniger, receives an Illinois state pension of $180,302 while earning another $149,500 as the superintendent of the Stevens Point Area Public Schools District in Wisconsin, for a total of $329,802.

The is no system in place that monitors how many retired school superintendents are crossing state lines to work while they are “retired,” and there is no system in the state that checks to make sure that the superintendents are not working another job in Illinois.

Tribune reporters tracked down retired superintendents through Internet searches, newspaper articles and public records, since state records do not track the whereabouts or employment of the retirees.

However, data at the Illinois State Board of Education does show dozens of superintendents moving into its system with 20 or more years of employment at out-of-state districts, but does not show how many are receiving pensions.

All of the superintendents who were contacted by the Tribune defended their employment while collecting retirement benefits, and some were angry that the issue was being raised.

“Somebody who retires can go to another state and work. To me, that is the story, and that’s what I’ve done,” Weninger said.

“I worked uninterrupted for 36 years and obviously made all the (retirement) contributions, as did all of my colleagues,” Bangser, 61, said. “The point is that, I think like anything else, you operate under the rules, restrictions and guidelines of whatever is in place at the time.”

Others see it differently.

One critic, Jeremy Gold, a New York-based actuary and pension expert, called earning multiple government incomes “indicative of sloppy governance and a cavalier attitude by those ‘public servants’ who exploit these loopholes selfishly.”

Gold said “Illinois is the poster child for pension abuses. One of my colleagues calls this child because or children must pay for fiscal irresponsibility.”

“We have allowed a system to develop that is grossly underfunded and that has very generous benefits,” said Laurence Msall, president of Chicago’s Civic Federation, a nonprofit government research organization. “To draw a pension from the state … and then immediately go get another job as a superintendent or in another teaching capacity — they’re really not retiring.”

Another issue that arises when school superintendents play musical chairs, by retiring for the pension and then taking a position elsewhere, is that they deprive employment opportunities for younger administrators moving up in the system, potentially adding to unemployment.

The Chicago Tribune

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Illinois gets tough on sales tax for online purchases

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While the Illinois state legislature waits to see if Gov. Pat Quinn signs a bill into law requiring out-of-state Internet retailers to collect a 6.25 percent sales tax on purchases made by Illinois residents, the Illinois Department of Revenue is moving ahead with its own plan to put the taxpayers on the hook for the tax, requiring it be paid alongside the state’s income tax.

Critics say that the move puts ordinary residents at risk of being tax evaders if they don’t keep track of all the items they purchase online, or pay an estimated tax suggested by tax officials.

Illinois tax authorities have discovered a novel way to collect Internet sales tax from the state's residents.

Other states are likely to adopt the Illinois plan, if legislators in other financially-troubled states see it as an easy way to collect more revenues from taxpayers.

Currently, federal law protects online retailers from having to collect sales tax on goods they ship to states in which they do not have a physical presence. A 1992 court decision, Quill v. North Dakota, established the law, which at the time applied to catalogue sales, although has been interpreted to also include Internet sales.

Existing laws in Illinois and many other states require that companies or individuals report online purchases for which no sales tax was paid, and pay a “use tax.”

In Illinois, a use tax return, Form ST-44, is used by those wishing to report the tax. According to the Illinois Department of Revenue, about 5,000 to 6,000 taxpayers file the form annually and pay about $6 million in use taxes.

Starting this year, state tax officials plan on putting a separate line on its income tax form, highlighted in bright red, requiring individuals to report their online purchases or pay an estimated tax based on a schedule provided by the state.

In order to avoid penalties, taxpayers will have to sift through credit card records and report all online purchases, or cough up an estimated tax, which at $100,000 of gross income, amounts to $52.

Accountant James Funkhouser, head of TTS Tax Services, called it a “stealth tax.” He said that it’s another incidence of the cash-starved state “raking through their old records looking for anything that pops up and sending out a bill.”

Others say that the state is merely collecting tax that it is rightfully owed. State Rep. Don Moffit, said “It’s voluntary. There’s no new penalty, fine, or fee, no new enforcement. It’s a way in get new money without raising taxes.”

However, the instruction guide for this year’s individual Illinois income tax return describes it a bit differently, how they intend to enforce the tax:  “If we find that you owe additional tax, we may assess the additional tax plus applicable penalties and interest. We conduct routine audits based on information received from third parties, including the U.S. Customs Service and other states.”

The state is also offering amnesty for taxpayers for sales or use tax that they did not report in previous years. Those wishing to take advantage of the amnesty program can fill out form ST-44, including all the Internet purchases made between July 1, 2004 and December 31, 2010, write “Amnesty” on the top of the form, and pay the tax due by Oct. 15.

A spokesperson at the Illinois Department of Revenue, Sue Hofer, said authorities won’t be chasing after taxpayers for minor purchases such as a pair of shoes. However, “if you go online and buy a boat…in Florida, we have a number of ways to learn about that transaction.”

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Jobs threatened in Illinois, legislation passes taxing Internet retailers

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Politicians in the Illinois House passed legislation last week and sent it for signature to Gov. Pat Quinn, that would require out-of-state companies, such as Amzon.com or Overstock.com, to charge its Illinois customers a 6.25 percent sales tax. If signed into law, the tax would add further pain to residents after the 67 percent income tax increase recently enacted by legislators.

Even though a U.S. Supreme Court ruling bans the collection of sales sax on purchases made outside a state, legislators have been busy looking for ways to get around the law, or overturn it.

Illinois lawmakers say that it’s a good way to raise more money for the state, and that it’s only fair, since in-state retailers are required to collect the tax. They add that it would simply level the playing field among local retailers and those elsewhere. The tax could add up to another $70 million annually to state coffers.

The bill that passed in the House 88-29, would require retailers to collect the tax from customers, and turn it over to the state. Under the current law, customers must voluntarily remit sales tax on Internet  purchases to the state. Very few residents do so.

States around the nation have been long interested in the idea, hoping to somehow tax Internet transactions, that to date, have been off limits thanks to a U.S. Supreme Court ruling.

The 1992 court decision, Quill v. North Dakota, ruled that states are prohibited from collecting sales tax made by retailers, who have no physical presence in the state where the sale was made. Although the ruling dealt with a catalog retailer at the time, the law has been widely considered to include Internet sales.

In its decision, the court left the door open for Congress to change the policy, if it later enacted legislation requiring the collection of the tax on a national basis. So far it has not.

Illinois intends to get around federal law by requiring collection of the sales tax if a retailer has so-called in-state “affiliates”, local individuals or companies that advertise products on behalf of a retailer. Affiliates are commonplace throughout the country and on the Internet, and provide sales leads to retailers via links on their web sites.

The bill’s opponents say that if enacted, Amazon.com and others will simply terminate its affiliate contract with those in the state, costing individuals and small businesses millions of dollars in annual affiliate revenues. Critics also argue the bill raises the cost of products to Illinois residents by the amount of the sales tax, which is still prohibited by federal law.

A letter sent by Amazon.com to its affiliate marketers said, “The unfortunate consequences of this legislation on Illinois residents like you were explained to the legislature, including Senate and House leadership, as well as to the governor’s staff. Over a dozen other states have considered essentially identical legislation but have rejected these proposals largely because of the adverse impact on their states’ residents. We thank you for being part of the Amazon Associates Program, and wish you continued success in the future.”

Other states which passed similar laws, including Colorado, New York, Rhode Island and North Carolina, have not seen large increases in sales tax collected, since out-of-state merchants reacted by terminating affiliate contracts. The net affect has been the lost of thousands of jobs, and taxable income reported to the state by the affiliates.

Gov. Quinn has said in the past that he supports the concept, but has not given any information whether he is likely to sign it into law.

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Lame-duck lawmaker who provided crucial vote on Illinois tax bill given state job by Governor

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Within days of leaving office, having supplied the swing vote to pass Gov. Pat Quinn’s controversial income tax bill, former state Rep. Careen Gordon was appointed to the Illinois Prisoner Review Board.

The 67 percent income tax increase, sponsored by Quinn and pushed through the Democrat-controlled legislature, passed the House with 60 votes, the bare minimum needed. The bill was passed at 1:00 a.m. the morning that Gordon’s replacement was sworn in.

Commenting to the Chicago Tribune, Quinn’s spokesperson Annie Thompson said, “It doesn’t have anything to do with what she did at the end of her term in the General Assembly.”

She added that the appointment was a coincidence and she was selected because she is a lawyer and has previous experience as an assistant county prosecutor and state assistant attorney general.

Gordon claims that she approached the governor about the position, after losing the Nov. election to Republican Sue Rezin.  She said they talked about the tax bill, but she did not feel pressured to vote for it.

She also spoke with him again about the bill in December, at a meeting with other Democrats at the governor’s mansion.

Gordon said she didn’t think about whether her crucial vote might affect her chances of getting the $86,000 part-time appointment. “I don’t think that way,” she said. “I never allowed anyone to hold anything over my head like this.”

Chicago Tribune

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