March 17 (Bloomberg) -- Bruce Rauner is a private-equity executive running for governor of Illinois who wears an $18 watch and a Carhartt vest as he discusses how he’ll shake up government. That’s what viewers see in television ads promoting the political novice in tomorrow’s Republican primary.
Organized labor sees a reincarnation of Wisconsin Governor Scott Walker, who derailed collective bargaining for public workers and triggered a wave of anti-union legislation in the nation’s industrial heart. Unions spent more than $3.6 million to oppose Rauner, 57, who blames their “bosses” for Illinois’s ills.
Rauner has spent more than $6 million of his own to win the right to face Democratic Governor Pat Quinn in November. He’s leading the four-person primary field as the only candidate with no elective experience, a distinction he emphasizes. The owner of nine homes with a 2012 income of $53 million, he’s a breed apart from Quinn, 65, a lifetime politician with a populist bent.
While Illinois, the home of President Barack Obama, has been reliably Democratic in recent years, Republicans say long-running fiscal stress and the nation’s lowest credit rating grant them a good shot at the governor’s office. Labor leaders are keen to reverse regional momentum against them, which they say is propelled by billionaires Charles and David Koch, brothers who have bankrolled conservative causes and candidates, including Walker.
“Illinois is part of the pattern -- these rich folks are going wherever they see an opportunity, just like they did in Wisconsin, Indiana and Michigan,” said Henry Bayer, executive director of the American Federation of State County and Municipal Employees Council 31, representing 95,000 workers and retirees in the state. “Illinois is experiencing some real difficulties, so they think they can make some inroads.”
Illinois is fertile ground for discontent. In December, it had the nation’s third-highest unemployment rate, 8.6 percent. It has the worst-funded state pensions and its stack of unpaid bills adds up to about $5 billion. The governors preceding Quinn, Democrat Rod Blagojevich and Republican George Ryan, were convicted on corruption charges and sentenced to prison.
“This could be a state that could swing,” said Pat Brady, former chairman of the Illinois Republican Party.
Democrats hold veto-proof majorities in the Illinois Senate and House of Representatives, which would make it difficult for a Republican governor to enact his agenda. Organized labor, though, was caught off guard by Walker and union-weakening moves in other states.
Since Walker pushed through collective-bargaining restrictions in 2011, membership in Wisconsin Afscme, the state where the union was born, has plunged 60 percent. Republican governors and legislatures in Indiana and Michigan passed laws exempting nonunion employees from paying dues, the first of their type in the industrial Midwest. Republicans pushed similar legislation in Missouri, where Democratic Governor Jay Nixon has vowed to veto it.
“The folks in Illinois sort of feel like they’re surrounded,” said Robert Bruno, a professor of labor and employment relations at the University of Illinois at Urbana-Champaign.
Four years ago, Republicans almost defeated Quinn, a former lieutenant governor who ascended to the executive office in 2009 when Blagojevich was impeached and convicted. Unions backed Quinn, who prevailed by less than 1 percentage point over state Senator Bill Brady, a candidate in tomorrow’s Republican primary.
Quinn supports raising the state’s minimum wage. Rauner proposed cutting it by one dollar to $7.25 to keep the state competitive for business growth. He later backed off.
Public-employee unions are “organized against the public good,” Rauner said during a March 13 debate in Chicago. His antipathy toward unions is coupled with his support of charter schools that don’t have them. While he has accused insiders in both parties of abusing power and influence, he gave $250,000 to an elite Chicago prep school in 2009 that initially denied his daughter’s application. The payment came after she was admitted.
Rauner, who didn’t respond to requests for an interview, is the former chairman of GTCR, a Chicago private equity firm that has invested more than $10 billion in 200 companies since 1980, according to its website. Clients include the Illinois Teachers’ Retirement System and New York’s teachers’ pensions.
He supports shifting public workers to 401(k)-type plans from traditional defined-benefit pensions, which give retirees a payout based on years of service and final salary. Illinois can no longer afford defined-benefit pensions, Rauner says.
That position prompted the American Federation of Teachers, the second-largest teachers union, to urge public pensions to review investments with GTCR.
Pension debt amounting to $100 billion in unfunded liabilities caused Illinois’s financial crisis. Although Quinn signed a cost-saving restructuring bill approved by lawmakers in December, unions challenged it in court.
Rauner’s three Republican competitors -- state senators Kirk Dillard and Brady, and Illinois Treasurer Dan Rutherford -- trail him in polls. Dillard, a former chief of staff to Republican Governor Jim Edgar, has argued that he, not Rauner, will be able to work with Democrats to solve fiscal troubles.
“I’ve done it,” Dillard said during last week’s debate, referring to his experience working for Edgar.
Dillard, who voted against the pension bill, won the endorsement of the Illinois Education Association and rose in the polls as a result of the union’s anti-Rauner ads. He trailed the businessman 36 percent to 23 percent in a poll by the Chicago Tribune and WGN-TV published March 7.
“Bashing labor unions resonates with the Republican electorate,” said David Yepsen, director of the Paul Simon Public Policy Institute at Southern Illinois University. “And the people of Illinois have had a bellyful of politics as usual.”
The union-backed political action committee that had paid for the television campaign against Rauner said March 11 it was ending the effort, which began in early February. Quinn will need its money and support in the general-election campaign.
“This is not at all a concession that Rauner has won,” said Bayer, of the government workers’ union.
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