Emanuel Counts on Rauner to Shake Money Loose for ChicagoTim Jones
With Chicago facing a solvency-threatening pension crisis, Democratic Mayor Rahm Emanuel knows just what he wants from Illinois’s newly elected governor: “more money,” he says.
Emanuel won’t have to endure an awkward get-to-know-you session before he asks Bruce Rauner, the first Republican governor elected in 16 years. Their careers intersected in 1999, when Emanuel, during an investment-banking foray, represented Rauner’s private-equity firm in a half-billion dollar deal that made a lot of money and formed the foundation of a friendship.
The financial peril of the nation’s fifth-most-populous state -- the lowest credit rating, the worst-funded retirement system, $4.9 billion in unpaid bills -- is compounded by pension liabilities that could cripple its largest city. Unlike Washington, where President Barack Obama and congressional Republicans have been locked for years in partisan money battles, Illinois has a long history of deal-cutting between governors and Chicago mayors of different parties.
“But we’ve not had a situation like this, where the governor and the mayor are personal friends,” said former Republican Governor Jim Edgar, who dealt with Chicago Mayor Richard M. Daley in the 1990s. “This is unique.”
The 58-year-old Rauner, in his first campaign, defeated incumbent Pat Quinn last week and will take office Jan. 12. He established himself as, at the least, a formidable Republican obstacle in a state largely run by Democrats.
Emanuel, who endorsed Quinn, wants the new governor to support a restructuring of Chicago pensions, which have a $19.2 billion funding shortfall. He also wants to extend income-tax increases scheduled to expire at year-end, with additional revenue committed to schools. Rauner campaigned against the extension and this year opposed a pension rescue.
“I’m going to be clear to Governor-elect Rauner of the importance in investing in the city of Chicago,” Emanuel, 54, told reporters Nov. 12, using the formal title that belies what both men have acknowledged as a friendship.
A spokesman for the mayor, Adam Collins, didn’t respond to questions regarding the friendship. Neither did Mike Schrimpf or Lyndsey Walters, who represent Rauner.
In an Oct. 9 debate in Peoria, Rauner laid what he called “the tragedy in Illinois” at the feet of the two most recent Democratic governors and the speaker of the House of Representatives.
“We have been controlled now for 12 years by a group of Chicago machine political leaders, Pat Quinn, Rod Blagojevich and Mike Madigan,” he said. “That trio of terrible government has controlled our government for 12 years. It’s led to massive debt, deficits, unemployment, brutally high taxes, deteriorating schools. We’re the worst-run state in America.”
Still, there was no mention of more than 80 years of Democratic rule in Chicago, where one of Rauner’s nine homes overlooks the post-modern Millennium Park. And there was no criticism of Emanuel.
While Illinois politics is often defined by sharp partisanship as well as corruption, Republican governors have a long history of deal-making with Chicago mayors, all Democrats since William “Big Bill” Thompson left office in 1931. More than half of the chief executives elected in the past eight decades have been Republicans, and out of necessity they’ve worked with city leaders.
“There’s no way a Republican governor will ever be mayor of Chicago and the mayor isn’t interested in being governor,” Edgar said. “So they’re not competitors.”
Another reason is pragmatism.
“Chicago is about two-thirds of the state’s economy, and governors have a vested interest because if the city does well, the state does well,” said Dick Simpson, a former city alderman and University of Illinois at Chicago political-science professor. That gives Emanuel and Rauner a common interest, he said.
“It looks like they should have no trouble at all,” Simpson said.
While that has yet to be proved, the men are linked by a record of business and pleasure. The friendship was born of business, after Emanuel left his job in 1998 as a senior adviser to Democratic President Bill Clinton. With no experience in investment banking, he joined the Chicago office of Wasserstein Perella & Co., founded by the late Bruce Wasserstein, a mergers and acquisitions pioneer and prolific fundraiser for Democrats.
Rauner was chairman of GTCR LLC, a Chicago-based private equity firm that has invested more than $10 billion in more than 200 companies since 1980, according to its website. Emanuel brokered a deal on behalf of a GTCR-owned company, leading to the 2001 acquisition of a home-alarm business, SecurityLink, from SBC Communications, for $479 million.
Both men share an interest in improving public schools, and after Emanuel was elected mayor in 2011, he appointed Rauner chairman of Choose Chicago, a nonprofit agency that acts as a convention and tourism bureau. Rauner resigned in May 2013, before entering the governor’s race.
The mayor has vacationed with Rauner at one of the governor-elect’s nine homes. A picture published in 2010 by the Montana Pioneer newspaper showed a smiling Emanuel, shirttails out, walking with Rauner outside his house near the Yellowstone River.
The photo became an issue in the governor’s race, emphasizing what Quinn said was the disconnect between the wealthy Republican and average citizens. The new governor’s income in 2013 was $61 million, according to tax returns, making him a peculiarity in Illinois politics: a business executive who is beginning to climb the elective ladder at the top rung.
Rauner and Emanuel are both strong-willed players, said Richard Ciccarone, the Chicago-based chief executive officer of Merritt Research Services LLC, which analyzes municipal finance.
“More often than not, we’re expecting that their previous relationship will be more of an asset rather than a liability,” Ciccarone said in a telephone interview.
“They are both problem-solvers as well as deal-makers,” Ciccarone said, creating the potential to “chip away the mountain of liabilities which plague both the state and the city and the school district.”
When asked this week what counsel he’d give Rauner, the blunt-talking mayor chose his words carefully.
“Well, if I had advice, I’d give it in private,” Emanuel said.