leslie munger

Comptroller Munger: No Budget, No Pay

With just days before the election, Dan Proft & Patrick Hughes, co-founder Illinois Opportunity Project, discussed what's at stake in Illinois and nationally. Illinois Comptroller Leslie Munger called in to tell us why she's enacting, "No budget, no pay". 

Special Interview With Comptroller Munger

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Munger Presents Voters' A Choice: No Budget/No Pay Or More Of The Same?

Illinois State Comptroller, Leslie Munger, who was appointed by Gov. Rauner after the passing of Judy Baar Topinka, joined Dan & Amy to discuss the platform she’s running on and why she’s a better fit to fix Illinois over career politician Susana Mendoza.

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Illinois Legislators Should Wait in Line to Get Paid Just Like Everyone Else

In a state with $8 billion in unpaid bills trending to $10 billion in unpaid bills, the Comptroller turns out to have a critically important (and exceedingly difficult) job. The woman with that job, Leslie Munger, sits down with Dan Proft on this edition of Against The Current.

Munger translates the state's finances to your household so Illinois families and state vendors alike understand what she's up against in trying to navigate the impossible: the creative math of Illinois' Ruling Class politicians.

Munger also discusses a number of her reform proposals including a soon-to-launch transparency play that connects state contracts with campaign donations.

View full transcript

Dan Proft: Thank you for joining us on another edition of Against the Current coming to live you from downtown Chicago, atop the Old Republic Building at the Sky-Line Club. My guest on this edition of Against the Current is Illinois State Comptroller Leslie Munger. Leslie, thanks so much for joining us. Appreciate it. Leslie Munger: Happy to be here. Thanks for having me. Dan Proft: I also appreciate that you let us call you Leslie. We don't have to always use your formal political title. It’s a nice thing. It’s little bit anti-ruling class so we appreciate that. Just a little bit of back story before we get into what besets your everyday which is the state budget and trying to pay bills particularly since we don't have enough money for all the bills that we have. You had a successful career in corporate America. Leslie Munger: I did. Dan Proft: Raised two boys, went off to college, they're on their way, you got a husband who’s successful, an intellectual property attorney. Then in 2014 for some reason you decided to run for state representative. You lost a very close race in Lake County where you reside and then that was not enough punishment. Then you subsequently took the appointment to be Illinois State Comptroller. You should have been on Mediterranean cruises with your husband John after your career but you chose to run for state rep. Then you should have gone on the Mediterranean cruises but you chose to take the appointment for Illinois State Comptroller. Why? Leslie Munger: I'm a lifelong Illinoisan and I just want to see our state do better. Really, the impetus for me was back when my older son graduated from college, U of I engineer, honor student, leader, minor in business, all these things. I thought he's for sure going to get a job in Illinois. He looked for jobs for a long time. He ended up actually having to move out of state. A lot of great job offers out of state but not so many in state. Driving him down to Texas where he took his first job was really a wake-up call to me. I thought people who can do something have to step up and try and take back our state. It was really what led me to decide to run for state rep and I worked as hard as I could for as long as I could, came pretty close and as you already noted, not quite close enough and really was just getting back to my nice life. I put my credentials into the governor's transition team thinking maybe I can help somewhere. Really thought maybe I'd be a trustee at U of I since my husband and both of our sons and I are all your U of I alumni. Then the call came from the governor's staff right after the first of the year and I'll tell you never in my wildest dreams did I think I would be sitting here as the Comptroller but when the governor calls and asks you to step up and help, you can't really say no. I feel really grateful that he asked me to help at this time in the state. I think my business skills and the background I have in social service is a really good mix of things to help the state right now. Dan Proft: Distinguish between your decades in corporate America and the various job responsibilities and skill sets that were required to be successful in corporate America and then what you’ve experienced in your time as Comptroller and where there are some similarities, some fungible skill sets and where maybe you needed to develop new skill sets that you didn't have because you didn't need them in the corporate sector. Leslie Munger: You know, interestingly from my office of Comptroller, there's a lot of similarities between the corporate side and what we do now. I'm responsible for the state's checkbook. All of my background in finance and managing budgets and having to look for ways to save money to deliver results or expectations for my company financial expectations while still getting the job done, a lot of times we had to cut costs and still get the job done, similar things to what I've done in my own office as Comptroller. In my office I cut my own budget 10% and I still think arguably we’re in the most challenging era we've ever had in state. I have to manage a large staff within the Comptroller's office. I have 219 people on my staff. I had to manage a large staff when I worked in my years in corporate America and particularly Helene Curtis. There's a lot of similarities Probably the biggest difference is that in the state, in business you know you have a problem, you get everybody on a table, you say this is a problem, this is our goal, this is what we have to do, everybody puts in their best ideas, you figure out what you’re going to do and you move forward. The state does not work that way as I think everybody's probably seen firsthand this last year. Dan Proft: I assume Helene Curtis is a little bit more bottom line sensitive than the state of Illinois. Leslie Munger: Oh, absolutely. Dan Proft: Yeah, not a lot to have $10 billion of bills go unpaid, to not be resourced to be paid. Leslie Munger: No, there was never a time when we did not meet our budgets. Even if our sales did not meet what they were supposed to be, then we were cutting budgets and we still had to deliver our goals. If another part of the company didn't do well, it didn't matter. It was my problem. I still had to help come up with extra money so we met our shareholders’ expectations. In the state, there just is no accountability. People who make decisions, and it doesn't matter whether they're good or bad decisions, those same people get elected over and over again. There's no willingness, no sense of urgency to sit down and really attack the problem and look for a long-term solution. Everyone's more worried about maintaining their political careers and so that's really the biggest difference. We don't solve the problem. We see people really doing a short-term band-aid. How do I get myself to the next election kind of a fix instead of really looking at a long-term solution to get on better track. Dan Proft: That's describing a little bit of the corporate culture, if you will, in state government, a kleptocratic one I would describe. I think that was illustrated rather nicely recently by State Senator Kimberly Lightford who is from west central Cook County and again $10 billion is we track in terms of unpaid state bills. Is that rough number, is that correct? Leslie Munger: That’s about right, yeah. We’re eight currently but we have more coming in. We think will be a ten by the end of the calendar year. Dan Proft: We're talking about social service providers, state vendors, people that have provided goods or services to the state held up their end of the bargain and the state doesn't the resources to hold up its end of the bargain or at least not in terms of a reasonable turnaround, reasonable billing cycle. Kimberly Lightfoot stands up in the Senate floor and says, “Comptroller Monger, we worked. We want our paychecks.” Essentially she said, “We shouldn’t be in the queue with social service providers or private sector companies that provide goods or services to the state. We should be at the front of the queue getting paid first because frankly, in no uncertain terms, I want my money.” Leslie Munger: Right. Dan Proft: What's the response in terms of should legislators be at the front of the queue making sure they get paid first and foremost or should they be in line like everybody else and frankly, since you could, I think, pretty persuasively argue there's been a bit of an abrogation of their duty, maybe all the way at the end of that line? Leslie Munger: Well, that little discussion of hers on the floor of the Senate was illuminating, wasn't it? It really I think sheds a lot of light on the attitude that a lot of people have down there. I made the decision back in April to put all of the elected official pay in line. It includes all constitutional officers including my own pay and the 177 members of the General Assembly. I put the payroll in line with the rest of the state's bills. I did that because under the law, I'm obligated to make payments. make that payroll payment every single month. It was a law passed by the General Assembly back in 2013 that even if we didn't have a budget in place, they were going to make sure they got paid. Dan Proft: Well, this is when previous Governor Quinn tried to not pay them and so they remedied that to make sure they get their pay. It's important because a lot of people probably listen to this and they say, “You should be more punitive. They shouldn't get paid at all until there's a budget, until everybody else is paid first, they should get paid” when you can't do that under the law. Leslie Munger: Right. Governor Quinn was taken to court and the courts ordered him to make a payment and so by law, I have to run the payroll every month. The other thing I need as the Comptroller is money to make payments with is money and we’re pretty clear out of money. The more I traveled around the state talking to social service organizations, looking at the devastation of promises made but not funded for many years, I thought, “how can I do something to help here?” I felt it was wrong for me to be paid when all of the people whose salaries pay the taxes to fund our paychecks were waiting in line for months to get paid and in some cases some of them didn't get paid all of last year with no budget. It took me a little while to figure out how I could follow the law and not pay them on time and put them off but by putting them in line with the state's bills, I think it's a great way to comply with the law, puts us on an even footing. It's about fundamentally being fair and having us all walk in the same shoes and I will tell you it has been an eye-opener for a lot of the legislators who call me, both sides of the aisle frankly I've heard from, that are worried about how long it's going to be before they get a paycheck and I remind them at least they still have a job. Dan Proft: Yeah. Welcome to the party. Leslie Munger: Yeah. This has been going on for a long time and we'll all get paid on time when we get our backlog of bills down to a normal amount that gets paid in 30 days. Dan Proft: Well, and speaking of this, again part of your challenge I suspect, and it's the challenges inherent to the office, is communicating with the Comptroller does, what the Comptroller can and can't do under the law and also just this kind of large amorphous thing called the state budget whether it's a stopgap budget, whether it's a constitutionally balanced state budget that we had some time just after the state was incorporated and haven't seen since, but you've tried to drill this down in such a way that's understandable so people can appreciate – just because people make demands, that doesn't create new money for the Comptroller or the state, for the Comptroller to distribute and you've tried to drill this down into a household analogy so people can understand the financial pressures you're under to prioritize and to keep the household together while you don't have enough resources to pay all of the obligations that have been imposed on the household. Give us that example because it's a meme that's now gone viral on the Internet because it's an easy way for people to understand exactly where Illinois finds itself financially. Leslie Munger: Yeah, it was interesting because I can't vote in the legislature, I can't force the Governor to do something so I have my hands tied as the Comptroller in what I can actually do to help this mess but I can be an educator. So I started going around, traveling around, taking the state budget issues all around the state and invariably I would talk about how we had at the time, and actually I apply these currently, we have about $8 billion worth of unpaid bills in the state. For a long time, we had a large unfunded chunk of our government that was about another $2 billion that we were accruing. We have unfunded pension liabilities of over $116 billion. I would take these numbers around and explain this to people and say, “We have on average everyday in the state about $100 million to pay our bills with” and then somebody would raise their hand and say, “Well, why can't you pay this and when are you going to pay that” and it really became very clear to me quickly that these numbers are so big nobody can wrap their heads around the magnitude of the problems that the state faces every single day with cash flow. Dan Proft: Right, and $100 million sounds like a lot. Leslie Munger: It’s a lot of money. It’s a lot of money. Dan Proft: Right. It sounds like my priorities could be your priorities if I just lobbied you for it, right? Leslie Munger: Exactly. So I started taking – I looked for a way to get this down to something we can all understand in our own homes. I started taking six zeros off all the numbers. Then I say, “I imagine if you sat down at your own kitchen table to pay your bills, you’d look in your checkbook, you would see that you had $100 because if you take six zeros off of $100 million, you have $100. Then you would be looking at a pile of bills sitting right before you that you had to pay right now that would be over $8,000. Now, you knew you’d spent more money - in fact, those bills just showed up in your mailbox because we just passed the stopgap budget a couple of weeks ago but we haven't even opened those bills yet but we know we have about another $1,500 worth of bills that we're going to have to pay as soon as we get those bills open and add them to the pile. If we open up our credit card statement and look at what we owe in our unfunded pension liability that we as a state make a monthly contribution or payment on, so we would have to make a monthly payment, we would be looking at a bill of over $116,000 and we have $100. Are any of us going to look at that $100 and think we have any more money to spend? Are we going to think, “Oh, it's time for a trip to the mall” which is sort of the attitude that our legislators take when they, with all these bills, with all this backlog, with such limited cash resources, they go out and pass bill after bill that has no funding with it. Then they say, “Well the Governor didn't sign it so isn't he a bad guy?” Well, the Governor didn't sign it because there's no money to pay for it and it's just yet another empty promise and adds to the backlog of bills we have. It makes it longer for the people who are in line to get paid. It costs the state money because we pay 1% a month interest on bills that have been in the state for more than 90 days. So it's expensive. It's irresponsible. It makes promises we can't keep. It's the wrong thing to do. Dan Proft: A hundred dollars in your checking account, $1,000 in bills on the table, $1,500 in bills in the mailbox and $116,000 in credit card debt. Make the math work. Leslie Munger: You can't make the math work. Right, right. Dan Proft: No, right. Yeah, yeah. Leslie Munger: That’s the problem. You can’t make it work. We have $100 today. Tomorrow we'll have $100, the next day we might have $80 or $50. On average, we bring in between $80 million and $100 million every single day into the state but you can't make the math work. It’s really why we need to do things differently going forward. We can't even raise taxes enough anymore to get out of this mess. Taxes would have to go so high that (a) no one would vote for it on either side of the aisle but (b) no one would stay here for that. Dan Proft: Well, right, I mean if you can come up with a solution to that equation then you deserve a Nobel Prize in mathematics. The other problem that you have or the other challenge you have as I understand is you’re a bit constrained in terms of rank order or priority based on judicial decrees as to who shall get paid for what services provided. So explain that piece of it too because it kind of further limits your latitude and your options for decision making. Leslie Munger: Since we ran our state for most of last year, for all of last year without a budget, and really our stopgap provides some ability to make payments but we're still paying a lot under court orders. We're running it under court orders, consent decrees, various continuing appropriations by the legislature. We have a lot of things that have to be paid on certain timetables. First and foremost, we make payments on our debt. We know when those are so we don't default on Illinois bonds which would be catastrophic if we did that. We have to make Medicaid payments within a certain period of time in order for the state to qualify for the nearly 50% match that we get back from the federal government. Those Medicaid bills are about usually $1 billion roughly or more. So it takes us days to save up cash in order to make those Medicaid payments. When we make the full payment, we get a portion back several days later from the government then we can redeploy those funds into something else. We have court orders for various social services like developmentally disabled that have specific pay dates we need to comply with and there's just a whole host of things that we have to operate within and then we put everybody else in line and try to follow a first-in and first-out bill payment methodology but we have social service organizations all around the state that have waited - it really can't wait anymore. They're shuttering services. They're laying off people. They can't make their payroll. Now we have some that have not been paid all year and so we prioritize those payments and we tell them to give us a call when they get to a point where they can no longer meet their payroll or are about to close something down and we'll get them some money. We go through the big pile of vouchers we have, we find something we can pay and we expedite those funds out to try and keep those services going. The other thing I forgot to mention, we have general state aid payments for our schools that are big payments that also have to go out on the 10th and 20th every month so there's a lot of constraints about what has to be paid and we just try to cast manage that small amount of money to get as many things paid as we can as quickly as we can given all the constraints. Dan Proft: It seems to me part of the challenge that you have, that the Governor has, that members of the General Assembly have is communicating to a public that sometimes doesn't see the intersection between state government in their lives. It was really interesting the survey research that came out during the budget impasse right up until the stopgap was agreed to and passed the signed by the Governor, 60% of Illinoisans said they weren't impacted by the state budget impasse. Now most of those people are wrong. They're impacted indirectly but they're impacted in a way that's very much like the withholding system for federal income taxes. You don’t really see it. It’s not put between your eyes unless you rely on services because you have a family member with developmental disabilities or you rely on the Medicaid program. When it was the potential of schools not opening on time or at least some schools, now all of a sudden a lot more people started to say, “Well, maybe I will be directly impacted” but the challenge of communicating the indirect impacts of the financial picture that you just painted if you're not directly accessing state services. Leslie Munger: Right. It's very challenging and that's why I spent a lot of my time going out and talking to groups all over the state. I talked to municipal groups. I talked to chambers. A lot of businesses feel some of the challenges honestly even if they're not directly impacted every single day because people who might work for them have issues with some of their childcare. Some of the things that have impacted actually a broader group than you think and the other group that actually is feeling new this year that a lot of people spoke up about was the higher education lack of funding where many people in the state have kids who are going to some of these colleges that are having difficulties. All of them have been very vocal about the lack of state funding and I think it's really raising everyone's… Dan Proft: Well, and part of it needs to be perhaps a little bit of an adult conversation to say, “Look, a lot of people have been talking about the financial state of Illinois for a long time” and you understand the numbers that I just described. Anybody can understand the numbers you described especially when you translate it into a household setting. You think anybody's getting out of this without feeling some pain. We have put ourselves in a position and, I'm a firm believer that people get the representation they deserve, we put ourselves in a position where you can't make the math work anymore. It’s not Republican/Democrat. It’s either you believe math exists or you believe it's an opinion. That you think you can walk away from this on somebody else's dime unscathed, that's not going to be the case for anybody. Leslie Munger: Right. Everyone is getting hit. We are very likely going to have to have a tax increase in the short term at least to get out of this mess. I know it's been something that's been on the table. It's part of things the Governor’s talked about at least in the short term with some reforms but people are going to see their taxes go up, people in Chicago, the property tax has are gone up because of the issues with CPS and pensions, etc. Everyone is screaming about that. How do you think we pay for this? We are out of money. We are out of money in the state. We are out of money in Chicago. We’re out of money. We can't print money. We can't go bankrupt as a state. We have to pay for this. Everybody, I think, is beginning finally to wake up and see that the whole financial situation of the state is really a house of cards and that we must begin to bring some fiscal discipline back in. We have to have a balanced budget. We have to stop spending more money than we have. Dan Proft: So the stopgap budget. I mean it's interesting that it’s $8 billion round numbers in unpaid bills right now, tracking to bubble back up to $10 billion despite the stopgap budget. Now, Governor Rauner to his credit wasn't running around saying this is a big victory. This was a way for him to essentially provide some short-term relief to the captives until he can change out some of their captors I think, particularly with respect to opening the schools but people need to understand that because this band-aid was passed and you no longer have job owning between politicians in the headlines, that doesn't mean right after November and frankly every day in between, we're not in the same dire financial position. Leslie Munger: Right. I mean I’m glad we pass the stopgap really for the reason primarily that it gives us the authorization to help catch up the many social service organizations and small businesses frankly who have provided services for the state, they signed contracts pending a budget, who ever thought we would be a whole year without a budget? It gives me the legal authority to release some funds to them and begin to catch them up. It also helps make sure our schools open on time which would’ve been disastrous. It helps a little bit higher education although not nearly enough. But it's not a budget that is a long-term budget and importantly as I know from my time in business and I've heard from many of the organizations all around the state, this short-term six month stopgap does not give them any certainty predictability as to what their whole year will look like. It makes it impossible for them to plan a budget for their whole year of what services they can provide. We need some predictability for those organizations that are at any amount reliant on state funding. They need to know how much are they going to get so they can plan and budget and they've all said, “If you're going to cut my budget 20%, I get that, just let me know so that I can plan accordingly” and we don't do that and that's really what we need to do. We need a balanced budget where we live within our means for everybody, the providers of services and those who need services in the state, the taxpayers so we know what we are spending, we can actually pay for. Dan Proft: Now I know obviously the as we spent the focus of our time here talking about this financial house of cards, you have to keep erect but in addition to that there are other responsibilities or opportunities for the Comptroller's budget and one of the problems in state government for a long time has been its opacity and operation and even if you put a check register online, well, there's never any context for me to understand if the Comptroller's office or any other offices is cutting the right checks to the right people or not or what the deal is and so initiatives in the vein of transparency that help people connect the dots, to get a better understanding of state government in a relatively straightforward fashion. Leslie Munger: We've actually done a lot in the year and a half that I've been in office. We have taken all these transparency tools that we have a ledger in the warehouse where you can look at state funding and we've made those tools much simpler to use. A little bit more app-based and created a much easier way for people to follow the money in state spending. Next week we're going to actually announce a new initiative. It’s called Open Book and it is one where it tracks state contracts with donations. So people will be able to go online and say, “Who's getting state contracts and who's getting money from these same people”. The more I think we can get out there where is the money going and making it very transparent for people to follow the money, the more likelihood we get we will have better spending choices, more accountability for the leaders who are in office that actually control where that money goes. Dan Proft: Political question. You’re up for election in, not reelection because you're appointed, up for your first statewide election in November of this year. You’re running against Susana Mendoza who’s a long time state legislature, Chicago Democrat, now she's the City Clerk. She’s been mostly charged with overseeing these city sticker design process which is important to keep it away from gangbangers. I understand the city’s had some problems with that. In terms of setting up the race between yourself and Miss Mendoza, what's the contrast that you would present and are presenting to voters? What's the question they should be asking themselves when they look down ballot to the Comptroller’s race say Munger or Mendoza? Leslie Munger: Hopefully at the highest level they will look and say, “Who is there to support me?” the people of Illinois versus their political career. While I am the incumbent, I’m pretty new to state politics. I've only been in office a year and a half. My opponent has spent her entire career in politics. She's never had a regular job. I come from the business community. I have 25 years of private sector business experience. I have a Masters in business and my opponent has an undergrad in business and went right into politics and never look back. I think right there we have a career politician, her versus me, relatively new. I really try to use my time as Comptroller to focus on doing a good job as the Comptroller and to put people before politics and I’m continuing to try and do that. I have worked very hard to take expenses out of the state that will reduce the costs to taxpayers, that will help free up critical funds that we don't have to help people most in need. I've done that by cutting my own budget 10%, consolidating departments, cross training people. I turned $1 million back to taxpayers at the end of last fiscal year. Our budget this year is 10% less. I am constantly looking for ways to hold budgets flat or in my own case reduce budgets instead of having them grow. I’m working with the Governor's office to lead an effort to change our state financial systems over. The current ones are extremely old. They’re 30 plus years old. They're programmed in COBOL. They cost us hundreds of millions of dollars to maintain. We’re just finished the first year of a pilot. It's going to take us five years to fully implement the whole project. It says our state half a billion dollars a year when it's fully implemented and up and running and importantly will make it very easy for people to see where we're spending money because there will be one set of books and we won't have all these different systems. I put the legislative pay in line. I think it gives everyone an understanding that I don't view myself as any more important in my own salary as everyone else waiting in line for the state and we are all going to wait in line. I think that those are really some of the things that I've tried to do, really bring my business experience to bear, try to be a good example and lead solutions and to try and do what’s right. Follow the law and do what's right for the people of Illinois and I don't think you could say that about my opponent. My opponent, as I mentioned, she spent her career there. She has voted every tax increase, every unfunded pension holiday that was taken, every unbalanced budget, she voted for every one of them over 10 years. Her actions are really part of the reason we have all these problems today. I think if people look they'll be a very good contrast. Dan Proft: One more political question and that's it's a little bit different for you running statewide and you’re the only state constitutional officer running statewide this election cycle. Republicans, Democrats traditionally at least in part this game of regionalism, right? You saw it with a stopgap budget a little bit, don't bail out Chicago and jawboning Chicago if you're downstate and so on and so forth. I wonder if, as you get around the state, and I did when I was a candidate, but a lot more people are interested to talk to you than they were when I was a statewide candidate, so you probably have a better perspective… Leslie Munger: It’s because I have the money. Dan Proft: …but the regionalism of this idea of pitting southern Illinois or even the suburbs versus Chicago, I mean it's not so much the communities, it's more kind of a commentary on where the politicians are from and who holds the purse strings and the levers of power, but I just wonder if you think that at the regular Illinois family level, those regional political formulations are productive or if they really talk past the issue and at the end of the day folks in Carbondale aren't all that different than folks in Lincolnshire or the northwest side of Chicago? Leslie Munger: That's a difficult question. I think when we start talking about school funding, I actually have seen a lot of difference particularly between the suburbs or the down state schools versus what CPS has been asking for. There's been a lot of discussion about that and people say, “Look, we already spent a lot of our own tax dollars to fund our schools. We have very little from the state as it is. Don't take any more of our money to fund CPS.” I think some of that regionalism seeps in there. That frankly is where I've seen most of it and as the Comptroller, I've really tried to just treat everyone fairly evenly. There are social service organizations here in Chicago that do great work for people. I was just in a run with John. I ran a run with our dogs actually last Sunday actually for Safe Haven. Wonderful organization, helps a lot of people, really turns our lives around. I've been to organizations down in east St. Louis, same kind of Lessie Bates Davis houses, same kind of place or up in Rockford and so I really try to get all around the state and meet with organizations and try to be a help no matter where they're from and try to help people, businesses, no matter where they're from. I think the average person in Illinois just wants our state to run well. They want to be able to have their kids get jobs here. They want to send their kids to school and know they're going to open on time. They want their kids to go to college and not be feared that their university is going to go out of business. I think they're more concerned in total about just the lack of accountability. Dan Proft: She is Illinois State Comptroller Leslie Munger, our guest on this edition of against the current. Leslie, thanks so much for joining us. Appreciate it. Leslie Munger: Thanks for having me on. I appreciate your time.

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Without An Approved State Budget, Payments For Vital Resources Could Be Delayed Come July 1st

"They say they care about these vulnerable populations yet they're not passing a budget” 

On this edition of Illinois Rising, Dan Proft and Kristina Rasmussen, President and COO at the Illinois Policy Institute, talk with IL Comptroller Leslie Munger about possible delays in payments for 911 call centers, lottery etc., Rahm’s proposed 4% tax on Airbnb stays (and being required to track all rental guests), AFSCME’s latest antics and more. 

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Dan Proft: Dan Proft back with Kristina Rasmussen, Executive Vice-President at the Illinois Policy Institute, on this edition of Illinois Rising; you can catch my act with Amy Jacobson as well, as you do on this show, Monday through Friday, 5am to 9pm… 5 am to 9 am – yeah, 9pm, that would be a long show – a four hour morning drive show with Amy Jacobson called Chicago’s Morning Answer, and Kristina, one of the issues that Governor Rauner has made part of his turnaround program is workers’ comp reform. If you’re not an employer, this is a bit of an esoteric issue. And so it’s been difficult to translate for the electorate, I think, but it turns out to be a real cost savings, a real way – without jeopardizing workers safety or compensating those workers who were hurt on the job - to reduce the cost of doing business in Illinois. Kristina Rasmussen: Absolutely. You walk onto any manufacturing floor in Illinois and you talk to management, and they’re trying to make this work and stop the jobs from fleeing to Indiana, or out of the country, and they say “We need workers’ comp reform, we need relief; we want to hire more people; we want to spend this money by giving out more jobs, not necessarily playing these overinflated costs that Illinois State Government has forced upon us”, and they’re crying out for a relief, and they have been for some years, and we’re just not seeing the change that they deserve out of Springfield. Dan Proft: And it’s one of these things where relief, lowering the costs of people doing business, would be a better way to go, perhaps, than subsidizing people to locate their jobs here. I mean, all you’re doing is essentially conceding that the cost of doing business in Illinois is too high, so we’re going to give you money to come here to locate your business, to grow jobs, but we would achieve the same thing without transferring money from somebody’s pocket to somebody else’s pocket if we just reduced the cost. Kristina Rasmussen: Absolutely, and instead of giving out crony deals that benefit a few companies who happen to have a good lobbyist and good connections, you could treat everyone fairly and make Illinois just a more generally well liked place to do business. Dan Proft: The fairness argument; yeah, that’s a good one. Zach Mottl, he’s the Chief Alignment Officer of Atlas Tool and Die Works in Lyons, there, in west-central Cook County, and he knows what it’s like to deal with the workers’ comp system in Illinois, because he runs a manufacturing company, and Zach joins us now. Zach, thanks so much for joining us, appreciate it. Zach Mottl: Well, thanks for having me, Dan, great to be here. Dan Proft: So just explain, from your first person account, what the impact of the current workers’ comp regime is in Illinois, and perhaps in comparison to other states to the extent that you can compare and contrast, and what some kind of reform that, again, protects the workers generally hurt on the job so that they’re made whole, but also made it a little bit more competitive to be here in Illinois, particularly as a manufacturer? Zach Mottl: Absolutely. From my perspective, as a manufacturer, the system, it’s not working here for anyone in Illinois. It’s a system that’s designed to protect injured workers and employers in a no-fault system, and really get injured workers treated properly and back to work quickly, especially in a costeffective manner. But what we have in Illinois is a system that has higher costs than surrounding states and much slower outcomes. So it’s not working for anyone. We’re not getting injured workers back on the job quickly, and what we are doing costs a lot more than it does in any other state around us. And so, as a manufacturer, we have to compete both locally, nationally and globally, and when we have costs that are three times higher than what our competitors in other states are paying for workers compensation, it really is a drag on our ability to grow and export more product from Illinois. Kristina Rasmussen: You mentioned three times higher; I have a steel manufacturer near where I live and he’s looked at the cost in Indiana, and if he moved his company across the state line, he could cut his costs by two thirds. It’s really quite incredible. Why is it that Illinois is so much higher? I mean, surely the money is going somewhere. Where is it going and why do we have such higher costs compared to everyone else? Zach Mottl: I think it’s a great question. There’s been a lot of finger-pointing around the issue as to who’s making all this money off of it, but I’ll tell you, I’ve talked to companies that self-ensure, and that means that they don’t have an insurance company; they pool their money and save it, and when they have a claim they pay it themselves, and some of these companies operate in multi-states. And what I’ve heard from these folks is that Illinois, our claims cost more, the system goes longer. You can’t get an injured worker back to work. It requires more treatment to get the same exact outcome as what happens in other states. So I think we have kind of a perverse system that’s been set up here in Illinois, that is incentivizing the wrong kind of thing. It’s incentivizing care that goes on longer and longer, and it’s not incentivizing getting the worker back to work quickly. To me, there’re a lot of players involved in the system here, but I think we really need to address – people all [loath? 00:05:12] to talk about it – but the causation standard, I don’t blame my injured workers for following the system through, because that’s what it’s set up to do. We have a system that is set up the wrong way, and we need to really look at the causation; because right now, an injury that happens at home and employee comes to work, if the workplace is 1% responsible, does anything to aggravate that injury, it’s a workers’ comp claim. That’s not the right way to have it here in Illinois. Dan Proft: One of the issues is the gaming of the system, and I would suggest not just the costs of it, but it probably doesn’t do too much to advance employee morale if you see your colleagues gaming the system and being compensated not to work effectively. We’ve heard stories – being seen your personal experience – not just about the “I play basketball on the weekend and I got hurt and then I went to work and I got hurt a little bit more or I just claimed that what happened playing basketball over the weekend actually happened on the job’ and then you’re embroiled in this back and forth in the workers’ comp system, or even going so far as people injuring themselves while they’re under the influence of illicit substances, or legal substances, but they shouldn’t be under them at work. That’s how wild and wacky the workers’ comp system is in Illinois. Zach Mottl: And it goes beyond that. We, in manufacturing, are certainly dealing with an aging workforce. You’ve heard about the skills gap and the shortage of manufacturing workers and skilled workers. We have workers that are working longer and getting older and staying on the job longer, and I am seeing things that are absolutely related to the aging process. They claimed their workers’ comp, because you come to work and your shoulder hurts you, it’s a part of the aging process, but your job aggravates it and it goes into a workers’ comp claim. And these soft-tissue claims, they just go on and on and on; they’re very nebulous, so it’s everything you’ve talked about, plus, our system is such a loose standard in Illinois. The workers aren’t wrong. They’re not gaming; they are following the law, but our law is set up so poorly in Illinois, it has actually no restriction for what it should be, for a health insurance claim versus a workers’ comp claim. Dan Proft: I guess a better way to put it is, are the politicians gaming the system? Zach Mottl: There you go. Somebody’s winning off of it, Dan, but it’s certainly not the employers and it’s certainly not the employees, the injured worker, either. They’re definitely not benefiting. Kristina Rasmussen: And of course, this is not only a manufacturing issue, right? The state government, local government also pays work comp on its employees. And so you have taxpayers paying for these inflated work comp claims, the insurance costs, so it does directly hit everybody in this state in some former fashion. But speaking of the laws down in Springfield, you know, work comp has finally gotten to a point where people on the left and right say, “Okay, we need to do something”, right? But the deal that was trying to be offered out of Springfield this spring was, “Okay, we’ll give you a little bit of a work comp reform in exchange for a massive tax increase on businesses in Illinois. From your perspective, Zach, does that sound like a good deal? A little bit of work comp reform in exchange for a massive tax hike? Zach Mottl: If they said a massive workers’ comp reform for a little tax hike, you might have my attention. Kristina Rasmussen: Done, deal! Zach Mottl: But I think they’ve got the cart in front of the horse here. I will say this, that for manufacturers, and again, you touched on the government, police, fire department, all of these people are paying workers’ comp. For me, in manufacturing, if we can get significant workers’ comp reform, if we really saw our rates go down, maybe not a third, but a half, I would be saving six figures a year. And I’m a small business. Those six figures are not going to go into my pocket. I’m going to buy another machine; I’m going to buy another employer. My company is growing right now, and so are a lot of other manufacturers. We are growing, we have opportunity, and we will create the jobs and the growth, but we need an environment that supports us, and when I can move 15 minutes over the border and realize these savings that can help me grow my company, I would be foolish not to do that. So we really need the people in Illinois. It’s not their issue, it’s not of our issue, it’s the state of Illinois’ issue. We need to move beyond the politics and focus on the solutions that are going to bring us the jobs and the growth that we need. Dan Proft: And for manufacturers, this isn’t just idle chat or an unserious threat. I assume you find colleagues in your sector that are moving 15 minutes across one of our Illinois borders to another state to reduce their costs of doing business and taking their jobs with them. Zach Mottl: All the time, and you know, it’s not that hard to do. I don’t want to do it. This is not my desire; I love being here; I love Illinois; I think it’s a great sate, but between property taxes and workers’ comp, there are some things that cost me six figures in a variety of areas to stay in Illinois. And again, as a small business owner, you scratch your head and you say, “Is that making sense?” And when times are tight, boy, a little cushion would go a long way, so I just think, I hope that politicians in Illinois will move beyond the politics and really get some solutions and not just window dressing. We need, in workers compensation, to really get at the causation, get at some of the costs, and there are a lot of good proposals out there. People know what the answers are. We just have to move beyond the politics. Dan Proft: Well, a boy can dream. Zach Mottl, Chief Alignment Officer of Atlas Tool and Die Works in scenic Lyons, Illinois. Zach, thanks so much for joining us, appreciate your time. Zach Mottl: Pleasure to be here, thank you.

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