It was the Republican governor’s second day in a row promoting the state takeover plan, despite nearly outright dismissal from city, school system, teachers’ union and Democratic legislative leaders.
Still, Rauner insists that when the true costs of keeping CPS afloat without a state intervention becomes clear, citizens will pressure state lawmakers to intervene on their behalf rather than see their taxes go up.
“You watch,” Rauner said at Chicago event Wednesday. “Watch Democratic legislators from around the state who are not from Chicago like the (House) speaker and the (Senate) president. You’re going to see that bill is not dead-on-arrival, as some people say.”
“We cannot allow the mayor and some of his friends inside the Legislature to come up with a structure to force liabilities onto other taxpayers,” Rauner said. “We cannot allow a transfer of those liabilities outside the city of Chicago.”
A day earlier, Senate President John Cullerton, D-Chicago, dismissed the Republican plan in three short sentences:
"I thought we’d already addressed this,” Cullerton said. “The law doesn't allow him to do that. So it’s not going to happen.”
Already deeply in debt and with a bond rating at junk status, CPS on Wednesday sold $725 million in bonds at a high interest rate (8.5 percent, according to the Chicago Tribune). It’s also recently courted as much as $500 million in assistance from the state, which itself is deeply in debt and still spending in the red.
Additionally, the city is reportedly considering seeking $200 million more in property taxes to bolster its school system, and that would come on the heels of a $588 million property tax hike passed just a few months ago.
CPS also is staring at a possible strike, as the Chicago Teacher’s Union this week rejected its contract offer and effectively started a countdown that could allow teachers to walk out in May, should they choose.
Rauner tore into Chicago and CPS leadership on Wednesday, saying “the numbers don’t lie,” and “CPS has been a disaster for years.”
“Now they’re looking to borrow more money to cover operations,” the governor said. “Borrowing to cover operations is basically taxing delayed. This is kicking the can, not solving the problem.”
Rauner also rebutted the accusation his remarks on Chicago schools this week were intended to complicate Chicago’s already difficult bond sale.
“That’s ridiculous,” he said. “I believe that’s City Hall flailing and floundering and failing and looking to blame others for it.”
The GOP’s plan, which would include changing state law to allow CPS to file for Chapter 9 bankruptcy, has been met by union, city and Democratic reaction with language on par with Rauner’s criticisms.
Forrest Claypool, CEO of Chicago Public Schools, has called it a sideshow intended to deflect attention from the state’s own heavy debt, lack of a state budget and stalled contract negotiations.
Chicago Teachers Union President Karen Lewis has called Rauner’s remarks “the ravings of a madman.”
Cullerton has called the plan mean-spirited, far-fetched and ridiculous.
But Rauner says CPS — and in the end, taxpayers — are looking at two options: “completely unaffordable tax rates that would devastate the city” or bankruptcy.
“If we don’t change the structure of Chicago and the structure of Illinois, taxpayers, homeowners (and) small-business owners in this city and in this state are looking at crushing tax increase,” the governor said Wednesday. “We’re just seeing the tip of the iceberg.”
“The critical issue is we get a broad restructuring of the state and we get reform so that we can get taxpayers voices with equal weight, rather than government insiders,” Rauner said.
While Rauner says he’s trying to protect the education of Chicago school children and the jobs of Chicago teachers, the teachers’ union opposes the takeover plan, perhaps largely because contracts might be reopened under a Chapter 9 bankruptcy.
CTU has called the proposal “a Flint, Michigan-style emergency management for Chicago Public Schools — a district that overwhelmingly serves low-income African-American and Latino students and families.”
Speaker Michael Madigan, D-Chicago, has used the term “bailout’ to refer to the CPS takeover proposal, although Rauner and other Republicans say their legislation explicitly says Illinois won’t be liable for CPS debts.
And the speaker and governor are hardly on the same page when it comes to Rauner’s agenda and their respective definitions of reforms.
“Don’t bring on ideas that cut the savings and property of middle class families in Illinois,” Madigan spokesman Steve Brown said Tuesday. “Don’t try to hold that out as ‘structural reform’ because it is neither structural nor reform. That’s just taking another whack at middle class families so the 1 Percenters can get further ahead.”
State Rep. Ron Sandack, R-Downers Grover, has said the proposed plan, and possibly a bankruptcy filing for CPS, is simply realistic financial thinking.
“It’s not a bailout to restructure debt,” said Sandack. “It’s not a bailout to look at contacts, try to renegotiate them and make them far more favorable to taxpayers. It’s not a bailout to actually construct a fiscally and financially responsible plan to put the school system …. in a better place than it is.”