When it comes to theft of public money in Illinois, Rita Crundwell probably comes to mind for most folks in DeKalb. At one time, however, the name was Orville Enoch Hodge. Hodge, as Illinois auditor of public accounts, stole $6 million in 1950s dollars, the equivalent of about $57 million today – and he accomplished this in a mere four years on the job.
Hodge was the reason for abolishing the office of state auditor and establishing the separate offices of Illinois comptroller and treasurer we have today. When these state-level offices come up for re-election now, we invariably hear calls for consolidating the two to save money, but I’ll bet we wouldn’t if we could manage to remember how much Hodge cost us.
Crundwell, like Hodge, acted as both treasurer and controller of the City of Dixon, meaning she controlled both the money coming in and the money going out. But jackpot-sized hauls aside, municipal theft is common, according to the Illinois Municipal League (IML). IML laid out a series of articles about prevention of municipal theft in the October 2019 volume of its Review Magazine, and about treasurer and controller said, “Separating those positions is a simple and effective control, requiring the numbers to match on both sides of the equation.”
How much did the expansion cost?
Total cost was $25.3 million. At center was an $11.6 million Illinois State Library construction grant, along with funding from a mix of public sources (e.g., TIF funds from City of DeKalb), loans, and private donations to DeKalb Public Library (DKPL). State grants involve a local match, so part of the non-grant funding covered the local share. Non-grant funding also paid for extras that were not eligible to be covered by the grant.
What was the delay of grant funding about?
The library construction grant is released in four stages based on percentage of construction completed. If a portion of a grant isn’t released during a given fiscal year, it must be re-appropriated the following year. The library received chunks of the grant at 30% and 60% project completion, but release of monies for 90% and 100% completion were delayed during Illinois’ budget impasse. The outstanding amounts, totaling $4.6 million, couldn’t be re-appropriated until passage of another state budget.
Was there a real danger that the grant money would never be released to the library?
Probably not. According to DKPL, the state had already issued bonds specific to the construction grants, so they couldn’t be used for anything else. It was just a matter of re-appropriation when Illinois started passing budgets again. The immediate threat was a shutdown if the library couldn’t find a way to keep construction going. A shutdown of any length would have been expensive in its own right.
Why has controversy cropped up now?
In January, the state released the rest of the grant except for a final installment of $1.1 million. With millions now in the bank, DKPL faces the decision to keep the money or to keep its promises of 2015. At issue is abatement/rebate of some $971,000 back to property taxpayers, and the removal of the emergency property tax levy of $500,000. People who attended library board’s recent special meeting saw the board “leaning” toward remitting only a partial rebate and keeping the levy for operations. Either action would break a promise.
…the Illinois model ordinance [for adoption by local units of government] is not even minimal. It only deals with political activities and gifts. There is nothing about conflicts; the word doesn’t even appear. To call it an ethics ordinance is like calling a burglary law a criminal code.
~ Robert Wechsler, CityEthics.org
Minimal as it is, City of DeKalb still can’t get it right. Remember when DeKalb Mayor Rey was called out for using his city email account for political activities? He was “admonished” by the city manager, who is the designated ethics advisor for the city. Even beyond the fact that city council members are the collective boss of city staff and shouldn’t be “admonished” by any city employee, that’s not how a complaint is supposed to be handled. Here’s what the Office of the Attorney General has to say:
Because it is vital that officers and employees understand the ethics laws, Article 15 of the Model Ordinance provides for the designation of an Ethics Advisor to whom officers and employees can address questions or concerns regarding compliance with its provisions, as well as other ethics matters, such as filing Statements of Economic Interest, where required.
Get it? Advisor. Handles questions and concerns, not complaints. Complaints are supposed to go to an ethics commission if the local unit has adopted this part of the model ordinance, and if the local government has not adopted a commission (as DeKalb has not), complaints are supposed to go “to an attorney representing the entity for review and prosecution.”
Did the city attorney not know this, or was he counting on no one’s looking it up?
Obviously, the city has not yet adopted enough of the state’s model ordinance language to address its responsibility to penalize ethics scofflaws like Mayor Rey. Considering that local units of government, home rule or not, are required to adopt regulations that are “no less restrictive” than those contained in the Ethics Act, and “admonishment” is lesser than prosecution, DeKalb should correct its ethics ordinance right away.
The AG’s model ordinance is here. It is 11 pages long.
DeKalb’s ethics ordinance is here. It is two pages long.
CityEthics.org also has a model ordinance, and it is here.
At Monday’s council meeting, DeKalb’s finance director will present the mid-year budget report. The city appears to be pretty much on target for the current fiscal year, but administrators are concerned about possible future cuts to DeKalb’s share of the state income tax (see p. 26) if the governor gets the budget he wants.
Income tax started out on pace at the beginning of the year and has slowly fallen behind budgeted dollar expectations. Dollars are projected to come in slightly below budget at $4.15 million. Please note this revenue source is a part of the Local Government Distributive Fund (LGDF) which is currently collected and disbursed by the State of Illinois based on a per capita basis. With a new Governor, there has been discussion about perhaps eliminated [sic] these funds or changing the distribution allocation.
The current budget proposal doesn’t eliminate the income tax LGDF, but if passed would halve it. The impact on a given municipality would depend on how much of its budget depends on income tax. In DeKalb’s case it makes up about 12.5% of the operating budget so its absence would definitely cause pain.
This post updates one from August about Ty Fahner, partner of the law firm Mayer Brown, who told the Chicago Civic Committee the following last spring:
Last March, during a Civic Committee discussion of the state’s public pension problems, Fahner claimed that some members had talked to bond ratings agencies about lowering Illinois’ bond rating to create more pressure for pension reform.
Lowered bond ratings lead to higher borrowing costs, which is bad enough. Worse yet, Mayer Brown was Illinois’ contracted bond counsel for a million a year.
Let’s just say the optics were bad.
And yes, I did write that Mayer Brown “was” the state’s bond counsel. The Quinn administration announced it has selected another firm, Chapman & Cutler, to serve in its place.
Thought you’d like to know that the right thing happened.
In a post from January 10, I told you I’d continue trying to get information about the state’s Public Library Construction Grant Program since we knew so few of the institutions that won them.
Part of the reason it has taken so long to get back to you is that I goofed up my chance to fight for the information. Yep, I sure did. Since the Illinois State Library had always responded quite fully and promptly to previous Freedom of Information Act requests, I didn’t bother to make a copy of the request for the list of awardees. This time they denied me the document and I was unable to ask for a review of the decision because under FOIA you must provide a copy of the original FOIA request along with the Request for Review.
Consultants estimated one option for renovating City Hall – including upgrades to the heating and cooling system, plumbing and fire protection system, among other things – would cost $3.7 million. City Council members also are exploring spending $7.5 million on renovations, with $5.5 million of that coming from tax increment financing dollars and $2 million coming from increases to gasoline taxes, water bills or property taxes.
From the article it sounds like Aldermen Jacobson, Snow and Baker do not support a plan to raise our taxes for this. Good. It’s bad enough the city will likely have to use TIF money to upgrade the HVAC instead of addressing our rotting neighborhoods, but raising taxes to put council chambers on the first floor would be absolutely obscene in view of the bills coming due for unpaid pension liabilities, public building construction and whopping raises for the rookie staff.
As an aside, I returned to my old home town in Indiana last weekend — you know, the one with real TIF oversight and an Ethics Commission, among other things. We paid 7% tax on our lunch bill, and when we went downtown near 7 p.m. on Friday we found the sidewalks filled with students and families and all the downtown shops lit and open.
They are doing it by filing a lawsuit to let a judge decide. From the Journal-Standard:
Freeport Township now looks to the court system to see if last year’s joint purchase of the property at 206 E. Stephenson St. with the Veterans Assistance Commission [of Stephenson County] was legal.
“An opinion by attorney Greg Pelini says that a township can co-own a building with a municipality,” said Mike Phillips, attorney for the Freeport Township. “The VAC[SC] is not a municipality and according to the opinion we are not authorized to co-own a building with them. We have no authority to do it.”
The pending lawsuit includes the VAC[SC], Security First Title Company and local businessman Dave Fonda as defendants. The township and VAC[SC] jointly bought the property that they currently share from Fonda for $366,971 and moved there in January.
The basis for the lawsuit is three counts, according to the article. The court is being asked to determine whether the VAC[SC] is prohibited from entering into contracts to buy property unless it’s partnering with a municipality, whether the electors of the township should have voted on the purchase, and whether the township failed to appropriate funding to cover operational expenses in the new building.
I guess theoretically a positive finding on any of these counts could result in vacating the purchase, though the township seems to prefer just to find a way to make it legal if it currently isn’t. The township is not asking for money damages.
Illinois’ Mercer County lies south of the Quad Cities and comprises part of its metro area.
Perhaps you’ve heard that the county’s treasurer, Mike Bertelsen, has been arrested and charged with stealing at least $13,000 from the county’s 911 Fund, the result of investigations that followed a forensic audit in the county office.
A failure to file annual reports on a timely basis
Violations of the Freedom of Information Act (FOIA)
Violations of the Open Meetings Act (OMA)
I’ve suggested before that failures to turn in Comprehensive Annual Financial Reports (CAFRs) and Tax Increment Financing (TIF) annual reports to the state might signal trouble, as tardiness correlated with financial corruption cases in Alorton and Dixon.