Today’s topic is Things They Don’t Teach in High School Government Class.
For some time, industry groups have wanted the state to adopt uniform standards for hydraulic fracturing, or fracking. That’s where a mixture of water, sand and chemicals is forced into rock formations under high pressure to extract oil and natural gas.
Environmental groups oppose the practice because they say it can pollute water supplies and even trigger seismic events. They want a two-year moratorium to give it more study.
About three weeks ago, a bi-partisan group of lawmakers announced agreement on fracking regulations. Even some environmental groups stood with the lawmakers and said the regulations were the toughest in the country. Yes, there is still opposition, but it appeared the fracking train was about to leave the station.
Still, the lawmakers said they didn’t have agreement with industry on the taxes and fees to be imposed on fracking. Make no doubt about it, Gov. PAT QUINN and other officials were figuring the state could make some good money off of fracking, both from direct taxes on it and from jobs created from it.
The lawmakers said more work needed to be done negotiating those fees, and they weren’t making predictions when that would be finished. And that’s where things stood until last week.
On Wednesday, House Speaker MICHAEL MADIGAN, D-Chicago, held a short Q&A session with reporters. At the tail end, he was asked about fracking. He said he supports a moratorium.
He didn’t really elaborate and walked away, ending the questions. News stories were written about Madigan’s comment. Within a few hours, there was agreement on the taxes and fees.
That is likely not the example used in textbooks to illustrate how laws are made, although it probably should be in Illinois.
* Madigan got a little defensive when asked about the fact that the Securities and Exchange Commission last week said Illinois committed securities fraud from 2005 to 2009.
Specifically, the SEC said the state sold $2.2 billion worth of bonds without telling buyers the pension funding plan it was using was actually making the state pension systems worse off, not better. The worsening condition of the pension systems, in turn, put enormous pressure on state finances, something bond-buyers should have been told.
Madigan, though, said the people who buy Illinois debt are pretty sophisticated about finance and likely knew of the state’s pension/budget problems without being told.
“Buyers of Illinois debt have all been paid,” he said. “There are no victims here. Nobody has lost any money.”
Page 2 of 2 - And people are still buying Illinois debt after being fully informed.
* By the way, without admitting any wrongdoing, the state settled the case by agreeing not to mislead investors anymore about the condition of its pension systems and finances.
It shouldn’t be hard to live up to the agreement since even the SEC agreed the state started to clean up its act in 2009. That was after ROD BLAGOJEVICH was booted out of office and Quinn brought in some new people to run the budget operation. Illinois took further steps after the SEC settled with New Jersey for similarly misleading investors about pensions.
So basically the state agreed to continue to quit doing what it had quit doing. It will not have to pay any fines, which is just as well since it has no money anyway.
It would have been nice, though, if the SEC had moved while Blagojevich was still in office instead of four years after he was impeached.
* ”This is not as dire as some portray it to be.” Attorney JOHN STEVENS, who represents public employee unions, while arguing that pension reforms should be negotiated with unions and do not have to be severe.
Doug Finke can be reached at (217) 788-1527. Follow his at twitter.com/DougFinkeSJR.