Governor Pat Quinn’s controversial Neighborhood Recovery Initiative (NRI) continued to draw negative headlines during the past week. Stories surfaced that the husband of a prominent Cook County officeholder received nearly $150,000 under the program. It was also learned that a teen who received grant money through the anti-violence program has been charged in the killing of another participant in the program during a gang-related break-in and robbery.
In response to a joint request by House and Senate Republicans, Auditor General Bill Holland turned over his report of Governor Quinn’s NRI to U.S. Attorney James Lewis and to state Executive Inspector General Ricardo Meza.
A recent newspaper investigation revealed that seven percent of more than $2.1 million appropriated from NRI funds to the West Garfield Park neighborhood from 2011 to 2012 was paid to the husband of Cook County Circuit Court Clerk Dorothy Brown. Records obtained by the Chicago Sun-Times show that Clerk Brown’s spouse, Benton Cook, received $146,401 in salary and benefits between 2011 and 2012, working as the NRI program coordinator for the Garfield Park neighborhood.
In a related development, the Chicago Sun-Times found that a teen who received grant money through the program has been linked to an alleged gang murder.
Governor Quinn’s roughly $100 million taxpayer-funded NRI program was described in Auditor General Holland’s audit as “hastily implemented” and inundated by “pervasive deficiencies in…planning, implementation and management.” Auditor General Holland’s findings reveal questionable political activity as the program was rolled out just one month before Governor Quinn’s 2010 election.
These findings provide additional evidence of cronyism and political clout behind the Governor’s failed anti-violence initiative. The NRI was proposed as a way to “combat violence” in Chicago; however, the grant money was not directed to many of Chicago’s most dangerous neighborhoods, Governor Quinn relied on Chicago aldermen when picking what organizations would receive money, and there is no evidence that it has been effective in preventing violence.
State Grants: Where government waste goes to hide
The controversy over the NRI program also prompted Chicago Sun-Times Columnist Mark Brown to describe state grants as “where the bodies are buried— along with the money to pay them. This is where government waste goes to hide.”
But, that hiding could become a bit harder thanks to legislation introduced by Senate Republican Leader Christine Radogno of Lemont that will make it easier to track state grant dollars. Senator Radogno introduced Senate Bill 2381 last year in response to initial reports that taxpayer-financed grant dollars had been used by the NRI to finance a variety of questionable activities.
The measure requires the state’s Chief Information Officer (CIO) to develop a system to collect and maintain state financial data, including information specific to the management and administration of grant funds. Each agency that authorizes grant funds must coordinate with the CIO to have the applicable grant information published on www.data.illinois.gov for public review.
The information will be updated quarterly and include the name of the agency distributing the grant, the name and zip code of the grantee, a short description of the purpose of the grant, the amount of the grant, the date the grant was awarded and the duration of the grant funding.
Illinois’ ‘Scarlet Letter’
Illinois wears a “scarlet letter” when it borrows money because of its poor financial reputation, a March study found. The study said that poor reputation cost state taxpayers at least $80 million in additional interest charges over a five-year period.
Illinois has the worst credit rating in the nation. Under Governor Quinn, the state has taken a beating on its credit, with Governor Quinn racking up 13 credit downgrades in his time in office. That is 10 more than his now-imprisoned predecessor and constitutes more credit downgrades than all past governors combined.
The University of Illinois’ Institute of Government and Public Affairs compared the state’s sales of general obligation bonds against other states from 2005 to 2010 and found Illinois paid a “risk premium” based solely on buyers’ perception of its credit stability.
The study was done by DePaul University professor Martin Luby and Tima Moldogaziev of the University of South Carolina. They wanted to determine if interest rates are higher than other states’ rates in similar situations.
Using a “scarlet letter” metaphor, they found that high interest rates associated with a poor credit rating are actually worse than the financial, economic and fiscal conditions would warrant if rates were set purely on an objective basis.
They also argued there are hidden costs, as well. For example, the state’s poor financial reputation may discourage some companies from competing for state business. Less competition can then lead to the state paying higher prices for goods and services.
Topinka: State deficit up in FY 2013
The latest annual financial report from Illinois Comptroller Judy Baar Topinka showed that the state deficit was up in Fiscal Year 2013.
Illinois’ net position reported a deficit of $44.799 billion as of June 30, 2013, in the state’s Comprehensive Annual Financial Report (CAFR). That is $49 million more than the deficit of $44.750 billion the previous year.
The state’s assets increased $3.762 billion from the prior year, offset by an increase in liabilities of $3.811 billion. The increases in liabilities resulted mainly from increases in the state’s net pension obligation of $1.720 billion and net other postemployment benefit obligations of $1.753 billion.
The Comptroller did have some good news though. The 2013 CAFR received a clean audit opinion from the Auditor General and was signed on February 28, 2014, approximately three months earlier than the 2012 CAFR, and earlier than at any time in the last seven years.