Week in Review: Ethics, COVID-19, Road Repairs


Illinois House Republican Leader Jim Durkin Files Petition to Form Special Investigating Committee on Speaker Madigan. On August 31, 2020, Illinois House Republican Leader Jim Durkin filed a petition to form a Special Investigating Committee. The subject of the petition is Illinois House Speaker Michael J. Madigan and surrounds information from the Deferred Prosecution Agreement entered into by ComEd and the United States Attorney’s Office. The petition was signed by House Republican Leader Jim Durkin, Rep. Andrew Chesney and Rep. Ryan Spain.

“Given the facts admitted by ComEd for its nine-year-long scheme to bribe Speaker Madigan, the Illinois House of Representatives must do its job and conduct a thorough investigation,” Leader Durkin said.

On July 17, 2020, the United States Attorney for the Northern District of Illinois released a Deferred Prosecution Agreement (“DPA”) with Commonwealth Edison (“ComEd”) in Case Number 1:20-cr-00368, where ComEd acknowledges and agrees that ComEd engaged in a bribery scheme with Public Official A and individuals closely associated with Public Official A from 2011-2019. In the DPA, Public Official A is referred to as the Speaker of the House of Representatives. Michael J. Madigan was the Speaker of the House from 2011-2019 and is still the Speaker today. ComEd admits to corruptly providing, offering and agreeing to give things of value, namely jobs, vendor subcontracts, and monetary payments associated with those jobs and subcontracts for the benefit of Madigan and his associates, with the intent to influence and reward Madigan. ComEd admits to bribing Madigan and his associates with jobs, contracts and payments in an effort to influence Madigan to assist ComEd with respect to legislation concerning ComEd and its businesses.

As part of the DPA, ComEd agreed to pay $200 million to resolve a federal criminal investigation into a years-long bribery scheme, which implicates Speaker Madigan. On the same day ComEd agreed to pay the fine, Madigan’s office received a subpoena from a federal grand jury for documents concerning an ongoing investigation.

The House Republican members appointed to the Special Investigating Committee are Reps. Tom Demmer, Deanne Mazzochi and Grant Wehrli.

The U.S. Attorney’s Office has been advised of the petition and the legislative process moving forward. It is Leader Durkin’s intention not to interfere in any way with the federal investigation.

Continued upward movement in cases. The current upward trend in coronavirus positivity rates (positive test results as a percentage of all cases) continued this week in many regions of Illinois. The COVID-19 positivity counts are stated as reasons for the current “mitigation restrictions” in place in IDPH Region 4 (Metro-East) and Region 7 (Will County/Kankakee County). These two regions, after posting positivity counts above 8% over a period of three consecutive days, had separate mitigation orders posted. A high positivity count represents a strong likelihood that the COVID-19 virus is actively spreading from person to person in a region.

The statewide positivity count was 4.3% this week (a slight increase from 4.2% last week) but the shallow step upwards indicates that many Illinoisans are continuing to wear face coverings, maintain social distancing, and are continuing to take other steps to reduce the speed at which this virus moves from person to person. Many Illinois elementary and secondary schools are re-opening for the fall 2020 term under remote learning conditions. These and other public policies, including restrictions on restaurants and bars, are continued reminders of the presence of the sometimes-fatal virus.

McPier bonds downgraded to “junk bond” status. The New York City-based Fitch Ratings applied a “BB+” rating, one notch below “junk bond” level, to three series of bonds (2020B, 2020C, and 2020D) set to be sold in the first half of September 2020. The bonds will be issued by the Metropolitan Pier and Exposition Authority (MPEA), the public authority that owns and operates the McCormick Place Convention Center. The MPEA also owns, but does not operate, the quasi-privatized Navy Pier on the Chicago lakefront. Both McCormick Place and Navy Pier have been hard-hit by the COVID-19 pandemic, with almost all Illinois convention activity cancelled and Navy Pier set to shut down after Labor Day.

The Fitch Ratings decision applies to pending MPEA debt sales totaling $162.7 million. Proceeds from the debts are meant to cover a major capital project program intended to refurbish the McCormick Place convention center’s exhibition and infrastructure spaces. The long-planned capital project coincides with the COVID-19 pandemic, which has temporarily eliminated demand for the convention center space being upgraded, has also sharply increased the operating costs of carrying out a capital construction project. In addition to applying the “BB+” rating, Fitch Ratings also separately applied a “negative outlook” to the MPEA securities, indicating what analysts believe to be a substantial possibility that the rating will be further lowered in future.

The junk-bond rating does not mean that the MPEA bonds are unsalable. Some aggressive investors buy “junk bonds,” and collect substantial interest returns on their investments. However, many institutional investors, including pension funds, are bound by internal covenant to avoid purchasing “junk bonds” or to sharply limit their presence in their bond portfolios. A “junk bond” is a security that is seen as having a statistically significant chance of becoming insecure. In the case of the MPEA debt, which is nominally backed by State of Illinois sales tax revenues, the year-to-year future payments of State sales taxes to MPEA to cover debt service costs are dependent upon future appropriations by the Illinois General Assembly. The Fitch analytical conclusion is that the General Assembly’s pledge is no longer good enough to warrant the MPEA bonds being classified as investment-grade; there are too many other calls on limited State revenue at this time.

State imposes two different sets of rules for COVID-19 aid granted to Chicago area vs. Downstate communities. In March 2020, Congress appropriated money to be distributed to all units of local government, including Illinois municipalities and counties, that have been hard-hit by the 2020 coronavirus pandemic. The federal money was appropriated under the terms of the federal CARES Act. Under the rules set by Congress, units of local government located within the nation’s largest metropolitan areas – regions such as Chicago and the five counties that immediately surround it – got the money straight from Washington. Under the conditions of the pandemic emergency, and in line with the knowledge that urgent needs were popping up everywhere, local governments like Chicago and DuPage County were granted some discretion on how to spend this money. Local governments throughout the Chicago area have worked out plans for using this emergency CARES Act money.

Congress aimed another set of CARES Act money at local governments in areas outside the nation’s big cities. These moneys were paid to the 50 states, including Illinois, and were meant to be forwarded by these states to these local governments in proportion to their populations. This chunk of money is $200 million. As with Chicago, local governments in Downstate Illinois face many urgent needs as a result of the coronavirus and partial economic shutdowns of Year 2020. However, with respect to this program, an agency of the Pritzker Administration added a long series of rules with which local governments must comply before they can apply for pieces of the $200 million CARES Act funding that they are in line to get.

The CARES Act money is “inaccessible to us,” says the city manager of Carbondale, Illinois. The Pritzker Administration rules, enforced by the state’s Department of Commerce and Economic Opportunity (DCEO), make it difficult or impossible for many localities that desperately need help to get any of it. Time-consuming paperwork requirements, defended by DCEO as necessary steps to maintain the security of the money, render the applications an impossible burden for many local governments. Many Downstate local governments are citizen-governments where the mayor, or village president, has a full-time job in the private sector.

The Illinois Municipal League (IML), the voice of local governments in Springfield, has examined the Pritzker/DCEO CARES Act rules. After looking at them, the IML executive director criticized DCEO for imposing “administrative hurdles that are unnecessary and burdensome.” In addition, these hurdles were not imposed on the same set of federal funds that were paid out to the five counties immediately surrounding Chicago: Cook, DuPage, Kane, Lake, and Will Counties.

As motor fuel tax revenues slow to trickle, some previously scheduled road repairs may be put off into 2021. Badly needed State infrastructure work includes necessary repairs to Illinois roads and bridges. Deferred maintenance on this transportation infrastructure had drawn warnings from highway engineers and from facets of American job-creating industry that values logistics. Plans were developed in 2019 to apply a stream of Illinois taxpayer-funded money to road and bridge repairs, and the first year of the rebuilding program went well.

The 2020 coronavirus pandemic, however, has disrupted the Illinois infrastructure-rebuilding plan. Many Illinois residents have reduced their motor vehicle travel. New factors in our collective lives include many Illinois residents working from home. We are driving less, consuming less motor fuel, and paying lower taxes to the State. The Illinois Department of Transportation (IDOT) reports that State motor fuel tax revenues dropped $82 million in the second calendar quarter of 2020 from the same period last year. The lowered cash flow means less money for road contracts. IDOT has announced plans to reprioritize their work and to continue work on essential projects, such as bridge repairs, towards completion. Some road resurfacing projects may have to be put off until 2021.

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