STILL TO COME TONIGHT, HOW TO

SAVE MONEY ON YOUR TAXES.

JAMES "BIGCAT" WILLIAMS ON THE

LATEST LOP-SIDED LOSS IN THE

GRIM SEASON FOR THE BEARS.

AND MAKING GUITARS WITHOUT THE

HELP OF A COMPUTER, ONE CHICAGO

MAN SAYS IT IS A DYING ART.

BUT FIRST, COULD CITIES AND

TOWNS IN ILLINOIS GO BANKRUPT?

A NEW REPORT SAYS LOCAL LEADERS

ARE EYEING BANKRUPTCY AS A WAY

TO RESTRUCTURE DEBT AND PENSION

OBLIGATIONS, EVEN THOUGH IT IS

TECHNICALLY ILLEGAL FOR

MUNICIPALITIES IN ILLINOIS TO

FILE SOME ARE PUSHING FOR IT AS

AN OPTION.

JOINING US TO DISCUSS THIS IS

ANDREW SCHROEDTER AND PATRICK

REHKAMP OF BGA.

AND THE CO-AUTHOR A REPORT ON

MUNICIPAL BANKRUPTCY THIS MONTH

THAT RAN IN THE "SUN-TIMES".

AND LARRY MORSEY MAYOR OF

ROCKFORD, FIRST ELECTED IN 2005.

AND JAMES MCNAMEE, PRESIDENT OF

THE ILLINOIS PUBLIC PENSION FUND

ASSOCIATION.

THAT IS AN UMBRELLA ORGANIZATION

REPRESENTING POLICE AND FIRE,

AND IN THE INTEREST OF FULL

DISCLOSURE I SHOULD NOTE I HAVE

MODERATED DEBATES ON PENSION

REFORM FOR THE ASSOCIATION.

WELCOME BACK TO "CHICAGO

TONIGHT."

GLAD YOU ARE HERE.

PATRICK OR ANDREW, HOW DID YOU

COME TO FOCUS ON THIS ISSUE?

>> A LOT OF REPORTING ON THE

FINANCIAL CONDITIONS, WE FOUND A

LOT OF MUNICIPALITIES STRUGGLE

TO PAY THE BILLS AND STRUGGLING

WITH PENSION DEBT AND CUT JOB,

ET CETERA.

AND WE STARTED TO ASK OURSELVES

WHAT CAN THEY DO TO GET OUT OF

THE MESS AND A LOT SAID IF IT

WAS AVAILABLE THEY WOULD

CONSIDER FILING BANKRUPTCY.

>> CURRENTLY AS WE MENTIONED,

THE LEGAL STALL US OF MUNICIPAL

BANKRUPTCIES IS...

>> THE WAY FEDERAL BANKRUPTCY

LAW WORKS MUNICIPALITIES NEED

STATE APPROVAL BUT THERE IS NO

STATE LAW THAT SPECIFICALLY

OUTLINES HOW TO DO THIS.

I GUESS IF THEY WANTED TO DO THE

THEY WOULD NEED APPROVAL FROM

STATE IF THEY DID IT ONE BY ONE

BUT WE FOUND SOME TOWNS IN EAST

ST. LOUIS AREA THAT DID FILE FOR

BANKRUPTCY WASN'T THROUGH IT.

WE HAVE A GRAPHIC SHOWING THAT,

THE FEW TOWNS, ONE IS BROOKLYN,

750 PEOPLE, AND IT FILE FORWARD

BANKRUPTCY IN 20 HAVE 3 AND

FACED PAYOUTS FOR POLICE

MISCONDUCT ANDALLERTON, IT FILED

IN 2005, AND IT FACED A PAYOUT

TO A POLICE SHOOTING VICTIM.

VERY SMALL COMMUNITIES, AND

THOSE TWO ISSUES THEY WERE

FACING BANKRUPTED THEM.

IF IT IS NOT LEGALLY POSSIBLE TO

FILE FOR BANKRUPTCY IN ILLINOIS,

HOW DID THEY DO IT?

>> THEY FLEW UNDER THE RADAR,

VERY SMALL TOWNS, AND DID NOT

HAVE A LOT OF DEBT, NOT A MAJOR

PRESTRUCTURES AND THEIR ATTORNEY

SAID, HE GOT AWAY WITH IT.

NO ONE NOTICED, PROBABLY

WOULDN'T HAPPEN IN THE CHICAGO

AREA.

BUT WITH MORE MEDIA AND PEOPLE

WATCHING.

BUT IT DID TAKE PLACE DOWN

THERE.

MAYOR MORSEY WOULD YOU BE IN

FAIR OF BANKRUPTCY AS AN OPTION?

>> THE CITY OF ROCKFORD HAS

ABSOLUTELY NO PLANS TO FILING

FOR BANKRUPTCY EVEN IF WE HAD

THE NORTH.

WHY DO I FAVOR IT AS A TOOL

SENATE LEGISLATURE FAILING TO

TAKE ACTION ON CRITICAL ISSUES

LIKE PENSIONS AND ASH STRAIGHT

REFORM AND COLLECTIVE BARGAINING

REFORM MAY LEAVE THE COMMUNITIES

NO OPTIONS AND DO WE HAVE A

DISORGANIZED CHAOTIC QUESTION OF

HOW WE PAY OUR BILLS OR AN

ORGANIZED FORMAT THAT WORKED FOR

GM AND CHRYSLER TO RESET AND

REBUILD, FRANKLY I THINK CITIES

NEED THE SAME TOOLS.

JAMES MCNAMEE, HOW ABOUT THAT,

CHRYSLER CAN DO IT, IF

INDIVIDUALS CAN DO IT, WHY NOT

MUNICIPAL PAYMENTS?

>> MUNICIPALITYS ARE A

GOVERNMENT, AND IT IS MUCH

DIFFERENT THAN A CORPORATION.

YOU ARE SHAKING THE INVESTOR

CONVERSATION IN THE COMMUNITY

AND THEIR LEADERSHIP.

WHAT IS NEEDED RIGHT NOW IN A

LOT OF MUNICIPALITIES IS A

MARSHAL PLAN, WHERE THEY PUT

FORWARD A PLAN TO REBUILD

EUROPE, THERE NEEDS A MARSHAL

PLAN FOR THE COMMUNITIES.

WE NEED LEADERSHIP THERE AND WE

NEED A PLAN THERE TO SELL THAT.

WHEN YOU PUT THAT PLAN FORWARD,

AT THE END OF WORLD WAR 270% OF

THE PUBLIC WAS AGAINST IT AND BY

THE END YOUED WITH 8 HAVE% FOR

IT.

>>> MAYOR, WHAT IS THE STATUS OF

ROCKFORD'S PENSION OBLIGATIONS?

A PENSION OBLIGATION FOR POLICE

AND FIRE THAT ARE CREATING THIS

PRESSURE, THIS INTEREST IN

EXPLORING THE POSSIBILITY OF

MUNICIPAL BANKRUPTCY?

>> BASED ON THE LAST BIT OF

LEGISLATION CREATING A SECOND

TIER OF PENSIONERS, A BIG PART

CREATES IN 2016 A DAY OF

RECKONING, IF YOU ARE NOT

FUNDING, THE STATE WILL HAVE THE

NORTH TO START REDIRECTING

FUNDINGS IN YOO PENSION SYSTEMS.

>> THAT IS NOT THE MARSHAL PLAN?

>> I WASN'T ALIVE WHEN THAT

HAPPENED SO I DON'T KNOW.

THE REALITY I LIVE IN IS THAT WE

ARE PAYING OUR BILLS IN ROCKFORD

AND WE WON'T HAVE A BIG CRISIS

LIKE SOME CAN.

BUT FANGLY AT SOME POINT IN TIME

IF WE DON'T REDIRECT OR

ATTENTION, WE DO HAVE A HAVE A

PLAN THAT DEALS WITH THE

UNDERLYING ISSUES, ORB STRAIGS

REFORM IS ONE.

WE HAVEN'T BEEN ABLE TO GET THE

STATE'S ATTENTION, THE

NONEPALITIES HAVE BEEN FORGOTTEN

AND WHEN CHICAGO MOVES BECAUSE

THEY HAVE TO MOVE, WE WANT TO BE

PREPARED IN THE SPRING TO MAKE

SURE DOWNSTATE HAS A GOOD PLAN.

ANDREW, WHAT IS THE STATUS OF

SUBURBAN DEBT AND POTENTIAL

BANKRUPTCY?

>> PATRICK AND I LOOKED AT EVERY

SINGLE POLICE DEPARTMENT IN COOK

COUNTY, WE FOUND THAT THEY ARE

UNFUNDED LIABILITIES, AND $23

BILLION IN UNFUNDED LIABILITIES

AND MOST INTERESTINGLY, WE SAW

FOUNDS THAT WERE BORROWING TO

MAKES PAYMENTS AND THAT A FEW

HUNDRED THOUSAND LEFT.

REALLY IN DANGER OF GOING

BANKRUPT.

>> GIVE ME AN EBBS OF SOME OF

THE MUNICIPALITIES IN BAD SHAPE?

>> A LOT OF THE SOUTHLAND,

SOUTHERN COOK COUNTY AND NEAR

WESTERN SUBURBS, AND ST. CLAIRE

COUNTY BY EAST ST. LOUIS.

OBVIOUSLY, WE FOCUSED ON ALERTON

AND BROOKLYN, AND THEY ARE

BETTER, BUT STRUGGLE AT TIMES.

WASHINGTON PARK, ANOTHER TOWN

FILED FOR BANKRUPTCY.

THEY WERE DENIED IT, BUT ONE OF

THE ATTORNEYS FOR THE VILLAGE

TOLD US THAT IN WASHINGTON PARK,

SOONER OR LATER YOU WILL HAVE

BANKRUPTCY WITHOUT HAVING IT.

>> WHAT WOULD BE THE CONSEQUENCE

OF THAT?

EVEN IF THERE WEREN'T A FORMAL

BANKRUPTCY PROCEEDING, WHAT

HAPPENS IF THEY JUST RUN OUT OF

MONEY?

>> MY ARGUMENT HAS BEEN SOME OF

THE FINANCE FOLKS THAT WE ARE

MUCH BETTER OFF HAVING ORGANIZED

FORM OF RESOLVING ISSUES BECAUSE

THE END OF THE DAY IF A COUNCIL

MEMBER HAS TO MAKE A CHOICE, TO

I KEEP COPS AND FIRE MACHINE ON

THE STREETS OR PAY A BOND, I

KNOW THE ANSWER.

SHOULDN'T WE ADDRESS THE ISSUES.

THAT IS NUMBER ONE.

IF WE DON'T WOULDN'T WE LIKE TO

HAVE A SYSTEM THAT DEALS WITH

THIS, THESE OBLIGATIONS IN AN

ORDERLY FASHION AS OPPOSED TO

CHAOS.

THAT WHAT IS IT WOULD BE.

MPBLTSDS JIM, WOULD IT BE CHAOS?

>> THERE ARE SOME ISSUES OUT

THERE WITH THE FUNDING AND

MAKING SURE LEVELS OF FUNDLING.

GOING THROUGH BANKRUPTCY TO GET

OUT OF AN OBLIGATION IS

REPREHENSIBLE IN MY OPINION.

IT IS A WAY TO WIPE THE SLATE

CLEAN OF YOUR OBLIGATIONS.

IF THEY LOOK AT BLOOMINGTON THAT

SAYS WE WILL FUND OUR PLANS AND

THEY CAME UP WITH A PLAN AND THE

MAYOR SAID WE WILL DO THAT.

IN THE CITY OF BLOOMINGTON

APASSED A UTILITY TAX AND

DEDICATE TAD TAX TOWARD THE PPX

AND IN THE LONG RUN IT WILL SAVE

THEIR RESIDENTS MONEY.

MILLIONS OF DOLLARS.

THEY HAD IT PROJECTED OUT, WHAT

THE SAVINGS WOULD BE.

THAT IS WHAT I'M TALKING ABOUT.

SOME CASES WE ARE DEALING WITH

WASHINGTON PARK AND WE ARE

DEALING WITH CORRUPTION AND

ABSOLUTE STEALING OF CITY ASSETS

THIS HAPPENED IN DIXON, AND THEY

BECAME WHOLE, LATER ON.

BUT YOU HAD THEY COULDN'T EVEN

OPEN THE POOL UP BECAUSE THEY

SHUT IT DOWN BECAUSE SO MUCH

MONEY WAS DIVERTED AND STOLEN.

WE HAVE SEEN THIS IN OTHER

CITIES, TOO, SOME MALFEASANCE.

>> RESPECTFULLY THAT IS NOT IRAQ

FORWARD AND THE PICTURE IN MOST

ILLINOIS CITIES WHERE WE PAY OUR

BILLS AND WE ARE FINANCIAL

RESPONSIBLE AND WE NEED TO KNOW

THE SYSTEM THAT WE HAVE TO PAY

ON IS A SYSTEM DESIGNED APRIL

BUILT FOR BY THE STATE OF

ILLINOIS AND PENSIONERS AND WE

HAVE TO PAY THE BILL.

WE HAVE NO IMPACT ON THE DESIGN

OF THE PLAN.

>> HOW IS IT THAT THESE

MUNICIPALITIES GOT IN TROUBLE.

THE STATE TOOK THE PENSION

HOLIDAYS AND DID NOT CONTRIBUTE

ITS SHARE.

>> IT IS THE SAME, I THINK, JIM

WOULD AGO REWITH US ON.

WE HAVE FOUND THEY DID NOT MAKE

THEIR PAYMENTS.

THEIR FULL PAYMENTS TO THE

PENSION FUNDS AND THE BENEFITS,

THEY ARE NOT FUNDING THEIR

BENEFITS AND THEY SAY IT IS

BECAUSE THE MONEY IS NOT THERE,

AND I THINK JIM AND OTHERS WOULD

PROBABLY DISAGREE BUT THE FACT

OF THE MATTER IS THAT COUPLED

WITH THE RECESSION AND LOSSES IN

THE STOCK MARKET AND THE FACT

THAT, LET'S BE HONEST, LAW

ENFORCEMENT FOKTS ARE MAKING

MONEY AND THEY ARE LIVING LONG

AND THE PENSION BENEFITS ARE

SWEETER AND THAT IS A PERFECT

STORM THAT CAUSEDS FUNDS TO

SUFFER.

GIVE ME AN IDEA OF WHAT AN

AVERAGE PENSION IS FOR A RETIRED

POLICE OFFICER OR FIREFIGHTERS?

>> IT WOULD BE IN AND AROUND THE

50s.

IT DEPENDS ON WHAT AREA YOU WERE

IN.

PAYING BENEFITS, IT CHAIGS BY

WHAT COMMUNITY YOU WORKED FOR.

IN HAVE HIGHER THAN OTHERS.

I WOULD SAY IN THE 50s.

DO THEY GET SOCIAL SECURITY NO

THE CITY DOESN'T HAVE TO PAY FOR

THE SOCIAL SECURITY END OF IT,

AND THE BENEFIT THAT GIVES THEM

THEIR BACKUP IS THEIR PENSION.

>> WHAT WE NEED TO REMEMBER FEF

FOLKS THAT ARE ELIGIBLE TO

RETIRE AT AGE 50 AND 75% OF

THEIR HIGHEST WAGE AND

COMPOUNDING INTEREST AND FOR

POLICE AND FIREFIGHTERS THAT

MEANS THEIR SPOUSE GETS THEIR

BENEFIT WITH NO DECREASE.

THAT IS A NOT FINANCIALLY SOLVE

VENT SYSTEM, AND AN APPROACH, IT

CAME AT A TAME WHEN A LOT OF

CHANGES WERE MADE THE STOCK

MARKET WAS GOING CRAZY IN THE

EARLY 90s AND WE DON'T HAVE THE

ABILITY TO KEEP PAYING AT THE

SAME LEVEL.

WE HAVE A CHOICE, WE REFORM THE

SYSTEM AND WE DO IT IN A WAY

THAT IS PROTECTED OR WE HAVE TO

PREPARE FOR BIG TAX INCREASE

THAN AND UTILITY TAX, PROPERTY

TAX.

WE ARE NOT THE LARGEST HOME

RULED KMTD IN THE STATE AND WE

ARE UP AGAINST PROPERTY TAX CAPS

AND WE CAN'T RAISE OUR RATES

HIGHER.

WE HAVE TO LOOK AT A DIFFERENT

WAY TO RAISE REVENUE.

WE ARE LOOKING AT REFORMS TO

DEAL WITH THE PROBLEM.

>> SO THE PENSION IS GOING

FORWARD AS YOU MENTION, AND THEY

HAVE BEEN CHANGED AND THEY

REDUCED ALL FROM THE COLAS TO

THE RETURMT AGE.

A LOT OF THIS WE HAVE TO KEEP

PERSPECTIVE ON WHEN WE LOOK AT

PUBLIC SAFETY INDIVIDUALS WHY

THEY RETIRE AT THATLE AGE.

DO YOU WANT A 60-YEAR-OLD MAN

WRESTLING WITH AN 18-YEAR-OLD

MAN OUT THERE.

YOU WILL HAVE A DISABILITY ON

THAT 60-YEAR-OLD.

WE DESIGN THE PLANS WITH THE

INDIVIDUALS IN MIND TO GET THE

ROTATION OUT AND BRING IN

YOUNGER PEOPLE AS YOU POINTED

AUTOMATIC THERE ARE BANKRUPTCIES

IN THE U.S. THAT WE ARE TALKING

ABOUT.

FOR EXAMPLE, OYK ORANGE COUNTY,

CALIFORNIA, FILED FOR BANKRUPTCY

IN 1994.

DETROIT, MICHIGAN, WELL KNOWN

CASE, 700,000-PLUS IN 2012.

JEFFERSON COUNTY, ALABAMA

POPULATION ABOUT 700,000, FILED

IN 2011.

IN SOME OF THOSE

JURISDICTIONINGS MY

UNDERSTANDING THINKS WERE

CONSTITUTIONAL PROTECT TEXTS AND

FEDERAL COURTS WENT ALONG WITH

IT.

HOW COME?

>> THAT IS WHERE IT GETS

INTERESTING, ESPECIALLY HERE IN

ILLINOIS.

PENSIONS PROTECTED BY THE

CONSTITUTION BUT THE JIFRT OF

WHAT HAPPENED IN THE BANKRUPTCY

CASES AT THE FEDERAL JUDGES SAID

FEDERAL LAW SUPERCEDES THAT

STATE PROTECTION AND I THINK

SOME JUDGES SAID THEY CAN'T BE

ADJUSTED AND THIS IS WHERE THE

FEAR IS IF THERE WAS A PROVISION

IN ILLINOIS THAT ALLOWED THEM TO

FILE FOR BANKRUPTCY A LOT OF

PEOPLE WOULD SEEK TO TAKE

ADVANTAGE OF IT BECAUSE SOME OF

THE PENSIONS BENEFITS COULD BE

RESTRUCTURED.

>> AS WE MENTIONED JAMES

MCNAMEE, TODAY THERE WAS A

LAWSUIT FILED AGAINST THE CITY

OF CHICAGO PLANS FOR PENSION

REFORM THAT INCLUDES HIGHER

CONTRIBUTIONS AND LOWER COST OF

LIVING INCREASES.

IS THIS A CONCERN THAT THE

FEDERAL COURT MAY STEP IN AND

SAY FEDERAL LAW PREEMPTS STATE

LAWS?

WE GET CONCERNED ABOUT THAT AND

WE SHOULD LOOK AT MICHIGAN.

MICHIGAN'S CONSTITUTION IS A

LITTLE BIT DIFFERENT AND THE

LANGUAGE IS DIFFERENT ABOUT HOW

THEY PROTECT PENSIONS.

AND THERE ARE DIFFERENCES THERE.

AND IN CALIFORNIA WHERE THE

BANKRUPTCIES CAME IN PLACE THE

PENSION BENEFITS WERE NOT

REDUCED.

THE BANKRUPTCY COURTS DO D NOT

REDUCE THEM.

COULD HAVE BUT DIDN'T.

AND IN CHICAGO, I THINK ONE OF

THE QUESTIONS THAT WE HAVE TO

GET GOING, AN ISSUE THAT WE HAVE

BEEN PUSHING IS THEY SHOULDN'T

BE SELLING OFFER INFRASTRUCTURE,

TO PLUG A ONE-TERM BUDGET HOLE

LIKE WHAT HAPPENED WITH PARKING

METERS.

THEY SHOULD HAVE BEEN LOOKING AT

THE MONEY AND PARKING METER

GIVEN TO THE PENSION FUND.

>> WE ARE OUT OF TIME.

BUT REAL QUICKLY, WHAT DO YOU

WANT THE PUBLIC TO KEEP IN MIND?

>> WE'LL HAVE A BUSY SPRING

LEGISTATIVE SESSION AND

UNDERLYING ACTION THAT HAS TO

TAKE PLACE F IF WE TAKE ACTION

SOME OF THE FUNDAMENTAL COST

DRIVERS WE WON'T HAVE TO TALK

ABOUT MUNICIPAL BANKRUPTCY.

THE CITY OF ROCKFORD IS IN A

STRONG FOOTING AND WE WILL DO

OUR PART TO HELP LEAD REFORMS IN

THE STATE.

>> I APPRECIATE IT AND ANDREW

SCHROEDTER AND PATRICK REHKAMP