Energy – Fracking
Negotiations continue on new rules. The Illinois Department of Natural Resources continues work to finalize the rules it will use to regulate future horizontal shale drilling in Illinois. New engineering technologies, known as “fracking,” have multiplied the power of drilling activity to get oil and natural gas out of rock characterized by tightly-packed grains of clay and sediment – the kind of rock known as “shale.” Until recently, engineering challenges prevented these deposits from being drilled and pumped.

House GOP members of Legislative Audit Commission
Rep. Ron Sandack, Dennis Reboletti & David Reis

After 12 full hours of testimony on Wednesday into Governor Pat Quinn’s disgraced Neighborhood Recovery Initiative (NRI), House Republicans on the Legislative Audit Commission were left with more questions than answers and continue to demand accountability for the failings of the program.
In day one of two days of testimony, members of the bipartisan and bicameral commission heard from four of seven witnesses who were subpoenaed to appear before them. While issues brought up in the Auditor General’s report into the program, such as hasty implementation, lax oversight and poor record keeping, were largely confirmed as accurate, members did not receive testimony into how the failings occurred and who was responsible.

For the first time, proof emerged that Gov. Pat Quinn’s 2010 Neighborhood Recovery Initiative factored into his election strategy that year in personal emails from the governor’s former top aide that were released Wednesday by a legislative panel investigating the program.

The emails from ex-Quinn chief of staff Jack Lavin represented a key highlight from the opening of two more days of hearings on the $54.5 million anti-violence grant program that is now under federal investigation. The former head of the now abolished agency that Quinn put in charge of implementing the program, Barbara Shaw, was at the witness table all morning. Dave McKinney has the story in the Chicago SunTimes.

A church closely connected to former top gubernatorial aide Billy Ocasio was awarded a contract for up to $100,000 from Gov. Pat Quinn's embattled Neighborhood Recovery Initiative — even though Mr. Ocasio had helped supervise NRI grant-making as Mr. Quinn's senior adviser.

New Life Covenant Church, where Mr. Ocasio's wife, Veronica Ocasio, works as chief of staff, received the contract and ultimately was paid just under $43,000 for developing a youth employment program, according to records compiled by the Illinois Auditor General's office and information obtained from state records by Crain's.

In what could be a major development in the bitter race for governor, a federal prosecutor has cleared the way for state lawmakers to resume hearings on Gov. Pat Quinn's controversial Neighborhood Recovery Initiative, and Republicans are immediately pressing to do so. In a phone interview, Sharon Paul, spokeswoman for the U.S. Attorney's Office for the Central District of Illinois...

Read the entire story by Greg Hinz in Crain's Chicago Business.

Chicago – NRI
Federal subpoena against Quinn agency responsible for NRI.  A federal prosecutor based in Chicago has issued a subpoena against the Illinois Criminal Justice Information Authority, a State panel that monitors funding for crime-fighting activities statewide.  The subpoena was dated August 27 and was made public on Tuesday, September 18.  The Authority was the successor-in-interest to the 2010 Neighborhood Recovery Initiative (NRI), a $54.5-million program funded by Democrats in the Illinois General Assembly that targeted State taxpayer general funds toward social-work initiatives.

A new subpoena seeking records about Gov. Pat Quinn's botched 2010 anti-violence program has been issued, this time from a federal grand jury based in Chicago.

The request marks the first subpoena issued by Chicago-based federal authorities in the probe into Quinn's $54.5 million Neighborhood Recovery Initiative. Numerous prior subpoenas had come from federal authorities in Springfield.

(The development means an additional set of federal authorities are looking into Quinn's $54.5 million Neighborhood Recovery Initiative beyond those working on a probe in progress in Springfield.)

The federal grand jury in Springfield has subpoenaed emails from the governor's former chief of staff, Jack Lavin, and several others heavily involved in implementing the program. The administration did not respond immediately to requests for comment today. Ray Long and Monique Garcia have the story in the Chicago Tribune.

Gov. Pat Quinn’s administration Wednesday turned down a bid by a Downstate Republican to search state computer servers personally for any unreleased emails related to the governor’s Neighborhood Recovery Initiative anti-violence program.

Rep. David Reis, R-Willow Hill, was not given access to state email systems by officials at the state Department of Central Management Services, who cited state and federal law and security concerns as the basis for their decision. Read more.

A key House Republican involved in the legislative probe of Gov. Pat Quinn’s 2010 Neighborhood Recovery Initiative announced plans Wednesday to personally visit a state agency to mine additional staff emails involving the program that the lawmaker believes have been withheld improperly by the administration.

Reis noted that a lawyer for former Quinn deputy chief of staff Toni Irving, who helped oversee the anti-violence grant program, indicated to the Legislative Audit Commission that CMS, which controls most of the state’s computer data servers containing emails, had found “over 100,000” relevant emails in a search. Yet, Auditor General William Holland had access to “a number much less than that figure,” Reis wrote. Dave McKinney has the story in the State Journal-Register.

Chicago – NRI
Call for disclosure of State budget games associated with troubled Chicago program. Federal, state and local investigators and law enforcement are looking into the Neighborhood Recovery Initiative (NRI). The troubled program, initially funded with $54.5 million in State taxpayer money in late 2010, was created to distribute resources to community organizations in neighborhoods, most of them located within Chicago and adjacent suburbs that were and are threatened by violent crime.

Leader Jim Durkin calls on the Governor to explain spending

The Illinois Senate and House Republican Leaders today – in concert with members of the Legislative Audit Commission – called on Governor Quinn and his Administration to lift the curtain of secrecy and come clean on new spending for a rebranded version of his failed Neighborhood Recovery Initiative.

“We’ve seen a disturbing pattern of a lack of transparency from Governor Quinn and his Administration,” Senate Republican Leader Christine Radogno said. “Every week we see new reports about the mismanagement of the NRI program. Every week, Governor Quinn spins that he’s fixed the problems. It’s the same claim he made about the patronage scheme at the Department of Transportation and we all know now that just wasn’t true.

As Gov. Pat Quinn's aides sought to pump up an anti-violence program ahead of his November 2010 election bid, they decided to add to the pot $3.76 million in federal disaster recovery funds from Hurricane Ike to make loans to small businesses.

In the rush to get the program launched, the Quinn administration hired a financially troubled West Side business development group to dole out loans, despite concluding the organization had recently misspent state grant funds.

The group, Chicago Community Ventures did not make a single loan, but was allowed to keep more than $150,000 when the contract was nixed, the Tribune has found.

Newly released emails from Gov. Pat Quinn’s office show politics appeared to trump credentials when deciding how big a serving some nonprofits should get from his now-tarnished $54.5 million Neighborhood Recovery Initiative anti-violence grant program.

Emails from Quinn’s former top aides recount how Cook County Recorder of Deeds Karen Yarbrough, a Maywood Democrat who had been the suburb’s state representative, approached Quinn’s administration in January 2011 to oppose giving NRI funding to a longtime social service provider in Maywood. Dave McKinney and Frank Main have the story in the Chicago SunTimes.

Illinois has become the first state in the nation to enact a comprehensive set of standards to ensure transparency in the management and oversight of state grant funds.

The Grant Accountability and Transparency Act, signed into law by the Governor on Wednesday, strengthens and streamlines requirements for all state grants across all state agencies. The reforms include stronger state grant procedures to bring them in line with federal standards; improved conflict of interest disclosure requirements; and strict, real-time auditing of all state grants.

The new law is in response to a report by the Illinois Single Audit Commission, created last year by legislation spearheaded by Leader Patti Bellock, which found that, currently, the Illinois grant process has no common application, no common grant agreement, a lack of transparency, no uniform administrative rules, and a lack of a State-wide non-compliance list.  Many of these issues are what result in the ability to misuse grant funds.  The legislation co-sponsored by Leader Bellock and signed by the Governor remedies all those current failures. Read more.

Chicago – NRI Scandal
Reports surface that federal investigators are requesting that the Legislative Audit Commission suspend its inquiry for 90 days. The U.S. Department of Justice’s request could delay efforts by the Commission to hear testimony from key former aides to Gov. Pat Quinn, including former chief of staff Jack Lavin and ex-deputy chief of staff Toni Irving. The Commission has subpoenaed seven witnesses to testify on the scandal-plagued Neighborhood Recovery Initiative (NRI) at a two-day hearing scheduled to start on Wednesday, July 16.

Rep. Dwight Kay

A metro-east lawmaker says investigators might not have received all of the emails they sought in connection with Gov. Pat Quinn's scandal-tainted Neighborhood Recovery Initiative, an anti-violence program that critics say was used as a political slush fund.

The grant program is the subject of a federal investigation and also came under fire from the state's auditor general. The auditor general, in a blistering report issued in February, found there were "pervasive deficiencies" in how the program was operated.

But some emails from Quinn subordinates involved with the program might have been hidden from the auditor, according to Rep. Dwight Kay, R-Glen Carbon. The News-Democrat has the story by Brian Brueggemann.

Budget – cuts

Quinn administration has FY15 budget; taxpayers on hook for increased spending while many areas see reduced funding. The FY15 budget, passed by Democrat partisan majorities in the Illinois General Assembly but largely not yet signed into law as of Thursday, June 26, will see reductions in spending in some areas while overall spending increases. The budget bills are on the Governor’s desk and he must sign or veto them prior to the startup of the new fiscal year on July 1^st for spending to continue.

Observers say that Quinn, in deciding whether or not to sign the budget bills, is facing a dilemma. Although the numbers will impose spending shortfalls on many specific areas of the overall budget for State operations, the budget continues to call for spending more money than the State will have. In addition, Comptroller Judy Barr Topinka’s June 2014 report to taxpayers, “Monthly Money Matters”, shows that Illinois continues to owe $5.1 billion in unpaid bills (http://www.ioc.state.il.us/comptroller/assets/File/MMM%20-%20June5%202014.pdf).

Anticipated revenue numbers, unlike spending numbers, are hard numbers based upon the overall status of the State’s economy and the tax rates the State has pledged to charge against its citizens and residents in the private sector.

An example of future FY15 reductions can be found in projected spending numbers for the Illinois Historic Preservation Agency (IHPA), operator of 56 visitor sites throughout Downstate and the Chicago area. The IHPA operates most of Illinois’ sites relating to Abraham Lincoln, including the Lincoln Tomb and the future president’s first home in Illinois, Lincoln’s New Salem village northwest of Springfield. Amy Martin, agency director, said on Wednesday, June 25 that the agency plans to complete a list of sites in which hours and days of public operation will be reduced or eliminated in the summer or fall of 2014.

Other Illinois agencies have also had cuts imposed on their FY15 budgets for the fiscal year starting on Tuesday, July 1. If the Governor signs the budget, either as a whole or after making amendatory and line-item veto changes, similar announcements can be expected from these offices and departments in the days ahead to describe the cutbacks they will have to make.

Chicago/NRI

• Subpoenas issued in continuing NRI investigation; head of the former Illinois Violence Prevention Authority under increasing scrutiny. State auditors, in recent months, have begun checking into the disbursement of $54.5 million in taxpayers’ money by the so-called “Neighborhood Recovery Initiative,” a 2010 program operated by the Illinois Violence Prevention Authority (IVPA) under the close supervision of Gov. Pat Quinn and his office. Audit findings show a comprehensive failure by the Authority to comply with standard record-keeping procedures to track where the money, slated for community social work, actually went.

These audit findings have triggered action by the Legislative Audit Commission (LAC), a bipartisan panel of the General Assembly. Pushed by Representative David Reis, a key House Republican in this investigation, the Commission previously voted to grant itself subpoena powers to pursue this investigation. Continuing this inquiry, a subset of the Commission met on Monday, June 23, to discuss and implement these subpoena powers so that key Quinn administration personnel can respond to these audit findings and answer questions raised by the findings.

The audit findings have raised new questions about the actions taken by the IVPA. This lack of compliance with established norms of conduct in the accounting and spending of public-sector funding has become coupled with individual reports that specific sums of IVPA money were distributed to well-connected Chicago political insiders, such as Benton Cook III. Cook is the husband of the elected circuit clerk of Cook County. Reports, not yet fully investigated, indicate that substantial sums derived from the funding for this program may have been distributed as “walking-around money” during the weeks immediately prior to the November 2010 general election. In November 2010, Gov. Quinn was elected to a full term by a margin of less than 33,000 votes after losing 98 of the 102 counties of Illinois. The winning candidate was not selected by voters in the Chicago suburbs or Downstate, but was pushed over the top by his margin within Cook County.

The Legislative Audit Commission (LAC), a nonpartisan arm of the General Assembly, has pursued the Neighborhood Recovery Initiative audit and investigation. A panel within the LAC discussed this issue at its meeting on Monday, June 23 in Chicago; the Commission has issued subpoenas to seven officials, including IVPA Director Barbara Shaw, former Quinn chief of staff Jack Lavin, and former deputy Quinn chief of staff Toni Irving. The full Commission will meet on Wednesday, July 16, and Thursday, July 17, and investigators hope to get some answers from these key personnel at this time.

Reports indicate that the NRI issue has become a serious embarrassment for Gov. Quinn as he seeks another full term in elected office. Springfield insiders say that the Quinn administration is pushing its political friends on the Commission and in General Assembly partisan leadership to set an internal deadline to abandon the inquiry, even if this move leaves behind an expanding list of unanswered questions. The Commission’s subpoena powers have so far been exercised upon other State officials, leaving behind the key questions of what the Governor himself knew and when he knew it.

Downstate

• Federal report confirms soaring value of Illinois agricultural land. Paced by natural resources concerns, wiling buyers have offered increasing sums in recent years for prime Illinois Downstate arable land. A U.S. Department of Agriculture report shows that the overall value of farm real estate in Illinois, including buildings, approached the $200 billion level.

The USDA tabulators estimated the average value of Illinois land used to grow corn, soybeans, and other cash crops was $7,190/acre in 2013, up 59% from 2009 (a compound increase rate of more than 12%). A similar figure for Illinois pastureland was $3,370/acre in 2013, appreciating 21.6% from 2009.

Farmland values are closely tied to crop prices, estimates of future crop prices, and the carrying cost of the investments needed to buy and mortgage land if it changes hands at current prices. Record-low interest rates for good-quality borrowers are a factor in these trends.

Education – bullying prevention

• Anti-bullying bill signed into law; will affect Illinois public and private schools, including charter schools. HB 5707 mandates that all public and private schools develop and implement policies aimed at stamping out bullying behavior. Public school districts, charter school entities, and private schools are asked to adopt a package of policies that will include mandatory reporting of bullying activity, parental notification, investigations of all reports, and a checklist of potential response actions available to educators.

The move was imposed by the General Assembly as a way to strengthen the State’s existing opposition to bullying behavior. The General Assembly has taken previous actions against bullying; for example, a 2008 law (Public Act 95-849) struck back against “cyberbullying” in which isolated students are harassed or tormented online. Some House members, when they saw HB 5707, were concerned about the ever-increasing burden of State mandates on public and private schools, including charter schools. After full debate and a House vote of 75-40-0, the measure was sent to the chief executive and signed into law on Thursday, June 26. The bill number was Public Act 98-669 (P.A. 98-669).

Education – school safety

• General Assembly school safety bill signed into law. SB 2710 expands the existing School Safety Drill Act to extend the safety drill requirements to all private schools, including charter schools. Each affected school will be required to conduct at least one annual meeting to discuss and review its safety procedures, including procedures for evacuating or partly evacuating a school should a safety incident arise. Emergency and crisis response incidents include incidents when a person without legal access to school grounds enters a place of education with a firearm.

SB 2710 was agreed to by members of both parties. The House vote to pass the bill was 105-0-0, and it was signed into law on Saturday, June 21 as Public Act 98-663 (P.A. 98-663).

Gambling/Lottery

• Associated Press finds that Illinois’ chief State Lottery contractor is falling far short of revenue promises. Profits from the sale of net growth in Illinois State Lottery tickets, including tickets sold for the popular multi-state Mega Millions and Powerball games, are slated to be paid to schools, charitable organizations and public-sector infrastructure programs. However, the AP finds that Northstar, the chief contractual firm that operates the Lottery, has paid the State approximately $40 million less than anticipated during the last three fiscal years. Another shortfall of more than $200 million is expected in FY14, which ends June 30.

The Associated Press report described the reaction of disappointment expressed by Illinois lawmakers upon news of the shortfall. The transfer of the operational responsibilities over the State Lottery to Northstar had been expected to improve productivity and unleash aggressive and innovative lottery promotions. The contractual firm, as a condition of being granted this status, had promised four years ago to pay a tracked sequence of monies to Illinois over a 10-year period. Failure of the firm to meet this payment schedule could further worsen relations between the State agency responsible for the Lottery and its chief contractor.

Budget – cuts

• Illinois State Police agrees to $40 million settlement. The State law enforcement agency, which is also the operator of a major Illinois crime lab, agreed to pay the settlement to the “Dixmoor 5.” The five men, arrested in 1992, were exonerated in a process ending in 2011. DNA evidence released by the State Police, and made available to attorneys for the five defendants, belatedly shows they had been innocent of the rape and murder of 13-year-old Cataresa Matthews in Dixmoor in 1991. The agreement was made public on Wednesday, June 25.

Prosecutors had trumpeted their arrest and processing of the five defendants in the notorious case. Press coverage and courtroom evidence included the publicizing of “confessions,” allegedly from three of the defendants that had appeared to implicate all of them. The size of the settlement indicates that forensic evidence, even with the state of knowledge available at the time, should have pointed law enforcement in another direction. The murder case has since been re-opened.

Pensions

• Teachers Retirement System (TRS), largest State-managed defined-benefit pension panel, again lowers its estimate of future returns on investments. The expected move from 8.0 percent to 7.5% brings TRS’s actuarial projections closer into line with global projections of future investment returns to be enjoyed by prudent money managers with a substantial presence in high-grade fixed-income assets. Continued economic trends have reduced the rate of interest earned by investors in highly-rated dollar-denominated bond assets down to near zero, and investment of part of a prudently managed defined-benefit portfolio in specific equity investments cannot make up the gap enough to enable professional money managers to pledge 8.0 percent returns in future years.

The TRS move is expected to increase the State’s unfunded pension liabilities by a further $6 billion and to require the annual payment of an additional $500 million/year by State taxpayers to TRS to enable fulfillment of existing pension laws demanding make-up payments to try to get the State’s pension systems back toward “full funding” at a distant future date.

Taxes/Zurich Insurance

• $20.35 million in State tax breaks for Wall Street-listed financial firm. While the General Assembly once again failed to enact significant tax reform legislation in the 2014 spring session, the Pat Quinn administration has taken steps to grant individualized packages of assistance to favored business firms. Attacked by advocates who point out Illinois’ high tax rates and perceived low stature as a place to make investments and create jobs, the current State administration has dangled targeted tax incentives to companies, including global-sized firms, that are strong enough to ask for them.

In a recent move of this type, Springfield announced on Monday, June 23 that it had awarded a package of tax incentives totaling $20.35 million as compensation for the decision by Zurich North America, the U.S. subsidiary of an internationally known financial firm that writes policies in specialized fields of property/casualty insurance, to break ground on a headquarters facility in Schaumburg. The Zurich Insurance Group is traded on major equities exchanges worldwide. Zurich, which already employs approximately 2,500 in Schaumburg, did not promise to create any new Illinois jobs in exchange for the tax incentive package. Other states, including jurisdictions with higher rankings as centers of low taxes and enterprise, had offered to help Zurich move its headquarters operations out of Illinois.

The tax incentives provided by the Quinn administration to the Zurich Group’s wholly-owned subsidiary is expected to further increase the “structural budget deficit” in which revenues from existing taxes continuously fall short of the State’s urgent spending needs. The “structural deficit” is blamed for the creation and maintenance of the January 2011 Quinn-signed individual income tax increase on Illinois families.

Week in Review

• The “Week in Review” is available by email! Sign up today to keep track of major events and trends. As the Illinois General Assembly finishes its 2014 spring session, “Week in Review” subscribers will follow many of the State’s major bills as they move to the Office of the Governor for final action. Subscribers will also get a first-hand look at the continuing challenges facing lawmakers in Springfield, and what our leadership team and Caucus members are doing about these challenges.

Rep. Ron Sandack a member of the Legislative Audit Commission spoke at a recent press conference about the scandal-ridden anti-violence program.

Gov. Pat Quinn's scandal-plagued anti-violence initiative directed thousands of state dollars to a nonprofit that purported to provide services for former inmates, but actually never existed, according to a published report Wednesday.

Project Hope, Inc., which was run out of a suburban Chicago day care center, received $15,770 through Quinn's 2010 Neighborhood Recovery Initiative, the Chicago Sun-Times reported. The newspaper cited state records that also showed it took months for officials to notice.  Read more from the Associated Press in the Pantagraph.

A legislative subcommittee voted Monday to subpoena seven former state officials connected to Gov. Pat Quinn's troubled anti-violence initiative that's also under federal and Cook County probes.

The rare move — the Legislative Audit Commission last issued subpoenas in the early 1980s — would mean that the former state officials would be compelled to turn in documents and testify next month over two days about the 2010 Neighborhood Recovery Initiative, which was blasted in a state audit earlier this year for mismanagement and misspending. The subpoenas still required a sign off from state Rep. Frank Mautino, a Democratic co-chair of the commission that reviews state audits.  Read the Associated Press story by Sophie Tareen in the Belleville News-Democrat.