YA RAHMIE... MR. DICTATOR- GIVING AWAY OUR LIVES, PENSIONS, BENEFITS TO YOUR OWN BENEFACTORS...Revealed: Rahm Emanuel cuts public pensions, diverts money to benefit campaign donors BY DAVID SIROTA ON APRIL 4, 2014 If you’ve read the financial news out of Chicago the last few weeks, you’ve probably heard that the city faces a major pension shortfall, supposedly because police officers, firefighters, teachers and other public workers are selfishly bleeding the city dry. You’ve also probably heard that the only way investment banker-turned-mayor Rahm Emanuel can deal with the seemingly dire situation is to slash his public workers’ retirement benefits and to jack up property taxes on those who aren’t politically connected enough to have secured themselves special exemptions. This same story, portraying public employees as the primary cause of budget crises, is being told across the country. Yet, in many cases, we’re only being told half the tale. We aren’t told that the pension shortfalls in many US states and cities were created because those same states and cities did not make their required pension contributions over many years. And perhaps even more shockingly, we aren’t being told that, while states and cities pretend they have no money to deal with public sector pensions, many are paying giant taxpayer subsidies to corporations — often far larger than the pension shortfalls. Chicago is the iconic example of all of these trends. A new report being released this morning shows that the supposedly budget-strapped Windy City – which for years has not made its full pension payments – actually has mountains of cash sitting in a slush fund controlled by Mayor Rahm Emanuel. Indeed, as the report documents, the slush fund now receives more money each year than it would cost to adequately finance Chicago’s pension funds. Yet, Emanuel is refusing to use the cash from that slush fund to shore up the pensions. Instead, his new pension “reform” proposal cuts pension benefits, requires higher contributions from public employees and raises property taxes in the name of fiscal responsibility. Yet, the same “reform” proposal will actually quietly increase his already bloated slush fund. But it gets worse: an investigation by Pando has discovered that Emanuel has been using that same slush fund to enrich some of his biggest campaign contributors. How a “shadow budget” is bankrupting Chicago The new report, from the taxpayer watchdog group Good Jobs First, shows how Chicago’s roughly 150 “tax increment financing” (TIF) districts divert property taxes out of schools and public services and into what is now known as Chicago’s “shadow budget.” That’s a slightly nicer term for what is, in practice, Emanuel’s very own sovereign wealth fund. Living up to his billing as “Mayor 1%,” Emanuel has used the fund to (among other things) offer up $7 million of taxpayer cash for a new grocery store, $7.5 million for a proposed data center, $29 million for an office high rise and $55 million for a huge new hotel (and that latter project is on top of $75 million more in tax money Emanuel has offered up to build a private university a new basketball stadium). And these are just a few of the corporate subsidy proposals in a $300 million spending spree Emanuel has championed at the very moment he has pled poverty to justify pension cuts, property tax increases and the largest school closure in his city’s history. Contrary to the story of public employees bleeding taxpayers dry, the Good Jobs First report proves that the slush fund is the root of the city’s true fiscal problem. As the municipal budget figures show, over the last 14 years Chicago refused to make its necessary pension contributions. Yet, at the same time, the city’s TIF-based “shadow budget” skyrocketed. In effect, more and more public revenue that was contractually obligated to pensioners was being diverted by politicians to fund TIF subsidies, many of which go to subsidize wealthy corporations. The scheme has gotten so out of control that, according to Good Jobs First, annual TIF revenues now far exceed the annual cost of funding the city’s pension systems. The report shows that in 2013 Chicago’s pension costs were $385 million whereas Emanuel’s slush fund that year received $457 million. For his part, Emanuel has insisted that roughly a third of TIF funding goes into schools (at his sole discretion, of course). Yet, his slush fund is so opaque there’s little way to verify this claim. Indeed, Chicago’s local public radio station WBEZ recently noted that it “has repeatedly requested a breakdown of all current TIF-funded projects, but [the Emanuel administration] has not yet provided it.” Enlarging the slush fund under the guise of “reform” What is certain is that while Emanuel has been shuttering schools and proposing big pension cuts, he has also refused to release more than $800 million in surplus taxpayer monies sitting in his slush fund. He has also killed legislation that would force him to put at least some of those resources into plugging school funding gaps and pension shortfalls. Instead, as of this week, he has put forward a proposal that uses the guise of pension “reform” to further balloon his corporate-subsidy slush fund. Of course, that’s not how it is being billed. Emanuel’s administration insists the proposal “strikes the right balance of reform and revenue and serves as an honest framework in which everybody gives something.” Not surprisingly, the notion that the mayor’s proposal is about “sharing the pain” has been loyally echoed by much of the Chicago press. Yet, there’s one group that is being exempted from sacrifice and that will likely be further enriched by Emanuel’s proposal: Chicago’s corporate class. As the Chicago Reader’s Ben Joravsky reports, Emanuel’s proposal will actually “cut payments to municipal retirees, jack up property taxes, and give the mayor more slush funds to play with.” Here’s how this latest wealth-transfer scheme works: If the mayor raises the overall tax rate to fund his pension bailout, he is of course raising the rate in TIF districts thereby. That means more property tax dollars will flow into the TIF bank accounts. Think of it as more slush for the fund… Remember, the mayor says he’s cutting benefits for geezers cause Chicago’s dead broke and he wants to limit the burden on beleaguered taxpayers…But, as I like to point out, there’s “broke” as in “We gotta make some retired Water Department clerk live on less” and broke as in “Ah, what the hell—might as well add a little more slush to the pile.”… So in short…Mayor Emanuel cuts benefits to retirees, jacks up your property taxes, and brings in more cash for things like the River Point office building in the West Loop, the Hyatt hotel in Hyde Park, the aforementioned South Loop basketball arena for DePaul, and that South Loop hotel for Marriott. The question, then, is why? With his reelection poll numbers plummeting, why would Emanuel refuse to give up some of his slush fund? Why would he instead propose a plan that increases the slush fund and threatens to anger property-tax-averse voters and enrage pensioners? Why, in short, is he so protective of the slush fund? Still an “insider’s game” As usual, one answer can be found by following the money. When you do that, you discover that despite Emanuel’s declaration that “government can no longer be an insider’s game, serving primarily the lobbyists and well-connected,” the TIF scheme is often exactly that – an insider’s game. And, as Pando’s investigation into the TIF program proves for the first time, the corporate beneficiaries of that insider’s game just so happen to be Emanuel’s major campaign donors. For example, just after Emanuel took office, his apparatchiks on Chicago’s City Council passed that $7 million TIF subsidy that will benefit grocery chain Mariano’s Fresh Market. Mariano’s is owned through a parent company by Willis Stein & Partners, whose CEO gave Emanuel $25,000 just months before the TIF was approved. Similarly, in the above mentioned data center proposal (which fell through), Emanuel offered to use his TIF authority to let private equity firm Madison Dearborn Partners and real estate company JDI Realty get away with not paying back $7.5 million in TIF money that is still owed to taxpayers. Madison Dearborn Partners is one of Emanuel’s biggest sources of campaign cash. Then there is Emanuel’s $29 million office-tower TIF. That boondoggle will underwrite the new Chicago headquarters of DLA Piper – the same law firm whose employees have given Emanuel more than $125,000. The law firm will benefit not only from having its leased office space effectively subsidized by taxpayers, but also from the preservation of TIFs in general, as the firm’s Chicago office has a long history of TIF legal work. As just one example of that, DLA Piper is the law firm involved in the $4.5 million TIF Emanuel’s allies engineered for Vienna Beef. Not to be forgotten is Emanuel’s $55 million TIF for a massive new hotel near Chicago’s convention center. According to the Chicago Tribune, Emanuel appointees on the Metropolitan Pier and Exposition Authority awarded commercial real estate company Jones Lang Lasalle the big construction management contract that will benefit from that huge TIF. One of the largest shareholders of Jones Lang Lasalle is Ariel Investments, whose president gave Emanuel’s campaign $31,500. There are likely more such examples, and we’ll keep digging to uncover them. What we know now is that the real estate and financial industries are among the big beneficiaries of Emanuel’s shadow budget. The former often benefits from TIF subsidies of development deals, while the latter often either has ownership stakes in TIF projects or sells off the debt at a profit in the financial markets. And – surprise, surprise! – campaign finance data show that those two particular industries bankroll Emanuel’s campaigns. So again, why is Emanuel aggressively trying to preserve his slush fund, even if it means inflicting unnecessary budget pain on retirees and rank-and-file taxpayers? Because preserving his slush fund defends the people he really represents – the financiers who sponsor his political career. Pando contacted Mayor Emanuel’s office for comment on this story (~2hrs ago) but they had not responded by publication time. We will update this story if we hear back. [Photo: Eric__I_E (Creative Commons)] David Sirota David Sirota is a staff writer for PandoDaily, television commentator and nationally syndicated weekly newspaper columnist living in Denver, Colorado. He is the author of the books Hostile Takeover, The Uprising and Back to Our Future” and has written for The New York Times Magazine, Harper’s, Wired, Vice, The Nation and Salon. He covers the intersection of politics, technology and popular culture. 178 comments Sign in37 people listening + Follow Share Post comment as... Newest | Oldest | Top Comments ex city Sep 24, 2014 I would like to fill you all in on what exactly happens when you work for the City of Chicago and you retire. First of all , I am a retired Chicago employee. I worked for the City for 30 years, as such I was required to live in the City. I have contributed to my own pension fund for my entire 30 years, also as I was rquired to live in the City , I have also had to pay property taxes, and all taxes for purchases made such as food, fuel for my car, and other such purchases my entire life while living here. So in essence you would say I have also paid more into my pension fund as I am a tax paying citizen of the City of Chicago. Now lets look at what my benifits are, I receive $ 4,500 a month gross. Out of that I must pay $ 510. In Federal taxes, my health insurance was just increased to $ 602. This is taken out off the top, so now I am at $ 3, 388.a month, now take out property taxes which break down to about $ 270. A month, balance - $ 3,118. Mortgage -$1,800. , balance - $1,318. Of which I now get to purchase food, fuel , gas , electric , etc....I do not get Social Security, medicaid, or anything for free . I have to pay my health care, which by the way has a $2,700. A year pre pay before full benifits kick in. So take that off my yearly pension also. So now when you want to blame the hard workers of the City for this mess with our so called inflated union contract pay, take a step back and look at what I just posted here. I am not a first responder( police / fire ) their contracts are completely different than the blue collar city workers, of which I was. Lets see how many of you would be able to live on what I do. I still live here, I still pay property taxes, I still shop here, and so on. And , no I wont move away from my family and grandkids, ( not an option ) . The problem as I know it is , is exactly what has been posted by some of you, its the politicians , private sector business people who by their greed has all but made this City the joke it is today ! Remember, I have always lived here, and still do, so my tax dollars are here, and you could say Im paying myself, or at least it seems that way, but I cant seem to find all this money I have put in ! And also while I have and still put in my hard earned dollars, I for the life of me cant seem to find the proof of funds that the City was supposed to contribute, money by the way, of which I have also contributed to by way of ME paying MY taxes! Oh well , guess Ill just keep giving. FlagShareLikeReply barbls23 Sep 23, 2014 David Sirota you are something. Speculations piled on allegations. Your article is so convoluted. Not one piece of evidence or verifiable facts. You also dont make sense. You say Emanuel coerced the Chicago City Council to pass a 7M TIF to benefit a Corp that gave him a $25,000 campaign contribution, but then in the next paragraph in parenthesis state (the deal fell through). How did the deal fall through? I get your angry with Emanuel for how he is running the city, but this article is absurd, and what really makes me angry is that people buy this so easily. Where does the truth lie? Certainly not from your mud slinging piecing together this must be because...... article. Todays Journalists interpret what people say and not what they actually say. They theorize what is happening or happened with no real facts/truths to back it up. Go back and do the work you should have done before writing this article, and prove your speculation that Emanuel sold his office for $25,000 or $31,500 contributions. FlagShareLikeReply k123 Sep 23, 2014 @barbls23 You are right, he did not sell his office for a measly $25,000 or $31,500 contributions, hes collected wayyyy more than that over the course of his little business venture here in the city, lol. If you cant wrap your head around what he is up to, well then you are no different than the rest of the fools hes counting on. FlagShareLikeReply Redbaron89
Posted on: Wed, 17 Dec 2014 12:10:32 +0000
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