Bankruptcy, as one lawyer familiar with the legal process puts it, works best as kabuki theater.
The actors get all gussied up in outlandish outfits—some as samurai warriors with scary swords and scarier faces. Everyone postures and gestures and engages in exaggerated argument. In the end, they’re hopefully all frightened enough that they’ve worked out a compromise rather than pulling the trigger on Chapter 9.
I sure hope Gov. Bruce Rauner knows it’s theater. And I hope that his political foes—particularly in organized labor—know that theater sometimes echoes reality as Chicago Public Schools heads down the horrid path to fiscal collapse.
CPS has been making lots of news lately, almost all of it bad. Even before CEO Barbara Byrd-Bennett was ensnared in a federal corruption probe, the agency faced a $1.1 billion hole for the budget year that begins July 1, a hugely underfunded pension plan and tough negotiations with the Chicago Teachers Union.
Rauner’s seeming solution: bankruptcy. “The state has a crisis. The city has a crisis. I’m concerned that (CPS) is going to have to go bankrupt,” he told attendees at a school conference April 14. “Bankruptcy code exists to help the organization get out of financial trouble. There’s a reason for the bankruptcy code.”
The governor has his allies in pushing for a state law that would allow local governments to declare bankruptcy and bust those union contracts Rauner so detests. “I’m not saying it’s a good thing, but it ought to be an option,” Rockford Mayor Larry Morrissey says. “Sometimes it’s better to let a court work it out.”
But even Morrissey considers actually doing the deed “a last resort.” Others liken it to opening Pandora’s box—risky in the extreme.
After months of indecision, the Rauner administration is lifting a freeze it put on $100 million in business tax-incentive deals that had been approved in principle by outgoing Gov. Pat Quinn but not yet executed.
The Rauner administration and business sources confirm that an internal review of such spending was conducted and a decision reached to fulfill “commitments made by the Quinn administration” to companies including eBay, Capital One, CDW and SAC Wireless. Some deals reportedly were finalized in the past 10 days or so; others are still in process. (Take a look for yourself here.)
But already, Rauner’s approval ratings are droppingand some state Republicans are worried about their own jobs. Like most bad marriages, saying one thing (during the campaign) and doing another (once elected) is bad news for any politician.
The 2014 election campaign theme was to fix Illinois’ perceived budget problems, which are estimated in the billions as a result of prior Republican and Democrat administrations’ policies (let’s give money to the rich and steal from the workers’ pensions).
Once Rauner was governor, he has started with a lot of ALEC-inspiredmoves that aren’t popular with Illinois voters. And actually do nothing to fix the budget problems, but in reality make it worse.