May is always the most interesting month on the legislative calendar. May, 2010 was no exception, especially since the initial calendar indicated that the goal of legislative leaders was to adjourn on May 7.
Thursday, May 6. Everything was rolling toward adjournment. The final agreements among Democratic leaders apparently had been reached and the respective amendments filed. One path to a May 7 adjournment was questionable, but there was a backup plan in case that failed. While the result was going to be very unpleasant the bills would pass and the legislature would be going home. Wrong.
While there were underpinnings of dissatisfaction bubbling in the House Democratic caucus during the week there was no real expectation that a revolt would result to derail the expected early legislative adjournment. Those underpinnings were the result of pressure from a number of sources that caused many caucus members to think twice about taking an early deal and heading home to face constituents. The message that resounded for many was, “Don’t shirk your responsibility to try to approve a responsible budget by leaving town three weeks before your real deadline”. More than a few took that message seriously and the end result was a “victory” to try to effectuate a better budget deal by the end of May. But will it be a real “victory” when the smoke clears? That’s the $13 billion question.
A budget proposal that took shape after long discussions by the governor and Democratic legislative leaders contained the following provisions: borrowing $3.7 billion to make the state’s required pension payment; sending a lump sum budget to the governor similar to last year and relegate the establishment of spending priorities to him: providing the governor with emergency budget powers; extending the state “lapse period” until December 31; increasing the state cigarette tax; creating a tax amnesty program; and “securitization” of the state’s tobacco settlement funds (borrowing against the expected proceeds).
With 37 Democratic members and a three-fifths majority (36) needed to approve borrowing, the Senate had little trouble moving the proposals through its chamber. When the first attempt to do the same in the House (70 Democrats and 71 votes needed for a three-fifths majority) fell two votes short due to one Democratic defection and zero GOP support it became somewhat obvious that unless a Republican or two votes for the additional borrowing the path to adjournment would be through a pension payment delay (the backup plan) and enactment of the remainder of the budget “package”.
But, during legislative sessions there are often strange twists that develop and create diversions.
The diversion this time was a rumor that eight Republicans were willing to come forward and vote for HB 174, tax increase legislation approved by the Senate last year and that has been long sought after by many interests. This development fractured the House Democratic caucus into three groups: 1) “Get Me Outa Here” – The state is broke … let’s just pass something and go home; 2) “Hey, If We Take Some Time Maybe We’ll Look Like Statesmen” – they’re pressuring us not to take a quick deal and go home quickly so let’s stay a while and make it look “deliberative”; and 3) “I Can Dream, Can’t I?” – let’s see if we can imitate the ending of a Frank Merriwell novel and pass the tax increase at the last second. The resulting dysfunction resulted in a collapse in any hope of a realistic solution, for now. Even a two hour private caucus meeting between the governor and House Democrats on Friday morning couldn’t create harmony and support for a unified plan.
Later in the day on May 7 the House took another shot at approving the borrowing plan. It received only 57 votes, 12 votes less than needed, due, most probably, to the realization that it had no chance to pass because no Republicans were going to offer support. Immediately after this vote Speaker Madigan offered an amendment that would have cut the $3.7 billion from the budget. To no one’s surprise the amendment failed on a 15-99 vote. But, these two votes did point out the quandary the legislature finds itself in … not enough votes to borrow and no will to cut.
Also on that same day the Senate approved a pension funding bill that specifies that the governor should make the January, 2011 pension payment if the state has the money. This proposal was not considered by the House on Friday but was thought to be the linchpin for a final solution. It’s not borrowing and it’s not quite a pension “holiday”. Or, to describe it as one would the Three Bears children’s story … it’s not too hot, not too cold, but the big question is if it’s “just right.” Judging from legislative actions in late May, this may be the base upon which the rest of the budget rests.
When the budget cut amendment failed on May 7 Speaker Madigan announced that he would leave the bill on the order of 2nd Reading and welcome any member amendments seeking cuts. Only two were filed so far and they did’t do very much cutting. Soon after, the announcement was made that the legislature went home to return at the end of the month.
“The Merry, Merry Month Of May” – The End
“The more things change, the more they stay the same,” the old saying goes. Looking back on the semi-concluded General Assembly session and its final budget product the gist of that saying strikes a perfect chord. Was there any major difference between what the legislature considered last week and what was before them when they recessed on May 7? Nope. So what was the point? The break did allow some legislators an attempt at identifying and generating support for targeted budget reductions, but in the end those efforts were to no avail. The break certainly didn’t provide any clarity to whether or not the legislature would leave town with a balanced budget and an agreement on how to pay for pensions. Quite the contrary.
To borrow or not to borrow, that is, and remains, the question. Since new revenues are not on the table, borrowing the $3.7 billion to make the state’s upcoming pension payment seems the only prudent thing to do in the eyes of practically everyone except legislative Republicans and the Chicago Tribune. The cost to borrow would be approximately $1 billion in interest payments. Missing a payment would require pensions systems to deplete assets that could cost billions over the long term. While more drastic action to curb the state’s fiscal problems would certainly be in order, the borrowing plan can certainly be looked upon as the lesser of two evils.
When the legislature left Springfield on May 7 it was unsure whether there was support enough for borrowing. Three weeks later it is still the great unknown and may force the Senate to make a summer trek back to Springfield if the question is answered in the affirmative.
After the House approved the additional borrowing last week with no votes to spare an estimated five Senate Democrats balked at the plan for various reasons. So, at this juncture either the Democratic dissidents will have to “get religion,” or the governor will have to convince a few Republicans to cross over … plausible but not likely. Borrowing requires a three-fifths majority in each chamber and the Democratic majority there exceeds that percentage with one vote to spare. So, if they can convince the remaining members of their caucus to support it, they can pass it. Senate President John Cullerton indicated that if the votes materialize he will call the members back to session. Does it matter if this occurs after May 31? No. While the Constitution requires a three-fifths vote for legislation to be effective immediately after May 31, vote requirement for borrowing is also three-fifths, so that question is moot.
If the borrowing plan is not approved, what we are left with is a “pension payment alternate” that was approved. It calls upon the governor to make the January pension payment if the state has the money. There is little doubt that the result of this “alternate” will be a missed payment, unless new revenues appear before January.
Regardless, the focus now shifts to the gubernatorial and legislative election contests to be decided in November. Because those elected on November 2 will be directly involved in the 2011 remap process, the legislative actions or inactions in May and their impact on November’s elections will shape Illinois public policy for at least the next decade.
Laws and Sausage
There is an old adage that says “there are two things that people should never watch being made, laws and sausage”. The actions of the House last week to approve the borrowing measure was a classic example.
The seventy member House Democratic majority was one short of the three-fifths majority needed to approve the pension borrowing plan, so at least one Republican vote was needed … and, since the GOP was adamantly opposed to that scheme, they couldn’t be counted on to lift a finger to help. The GOP goal was to get the session into overtime so they would have a seat at the table and help both steer the session and, consequently, try to impact the upcoming gubernatorial campaign. It is also important to note that the pension borrowing bill was the “big enchilada”. Since every other bill on the budget or other relevant issue would require a 60 vote majority to pass, the borrowing proposal was the House GOP’s last stand. If the borrowing passed then the game, for all intents and purposes, was over. Especially since the Senate has enough Democratic votes to provide the extraordinary majority needed … provided, of course, that they are all on the same page … but the extent of Senate opposition was unknown as of the afternoon of Tuesday, May 25.
It wasn’t easy, but sometimes things in Springfield never are. Late that afternoon a vote was taken to approve SB 3514 – the borrowing bill. It failed by one vote… with two Republicans, Reps. Bill Black (R-Danville) and Robert Pritchard (R-Sycamore), voting yes but two Democrats, Reps. Jack Franks (D-Woodstock) and David Miller (D-Dolton), voting no. Shortly after, Rep. Miller, because he voted on the prevailing side, was able to file a motion to reconsider the vote and that motion was approved. When the second vote was taken, the magic number of 71 was achieved. On the Republican side Rep. Pritchard changed his vote from “yes” to “no” on the second try. But Rep. Robert Biggins (R-Elmhurst) switched to “yes”. His vote along with that of Rep, Miller made the difference. House Republicans were apoplectic at the defectors, their strategy of forcing the session into overtime having been thwarted.
Once SB 3514 was approved the House, in short order, approved a budget, a tax amnesty program, and provided the governor with emergency powers. They thought the rest of the session would end in a snap. Little did they know ...
On Wednesday, May 26, the Senate arrived back in Springfield to consider the House actions. As noted above, the expected quick ratification of the borrowing plan never occurred thereby thwarting a decisive end to the spring session.
Budget High/Lowlights
Here are some of the budget related actions taken by the General Assembly prior to their “adjournment” last week:
• State Budget – HB 859 – provides a total of state appropriations of $26.2 billion, including a 5% across the board decrease ($400 million) in state operations from FY 2010.
• Tax Amnesty – HB 377 was approved and designates a period between October 1 and November 8 as a tax amnesty period for individuals who accumulated unpaid taxes between June 30, 2002 and July 1, 2009. The state will also be able to sell debt to private collection agencies.
• Emergency Budget Act – SB 3660 gives the governor extraordinary powers to make spending decisions between now and January 9, 2011 (the day before the winner of the governor’s race will be sworn into office). The legislation also allows the governor to initiate emergency rules, extends the state lapse period to December 31, allows the governor to modify or terminate state contracts, and provides for interfund borrowing with interest and will generate over $1 billion.
• Railsplitter Tobacco Settlement Authority – SB 3660 establishes this authority to leverage or “securitize” of the state’s annual tobacco settlement payment by borrowing against those proceeds. It is estimated that over $1 billion could be generated.
• Legislative Benefit Reductions – SB 3660 requires that members of the General Assembly take a total of twelve furlough days and receive no COLA during the next fiscal year. Per diem and mileage reimbursements were also reduced. The governor will also be required to take twelve furlough days.
• Medicaid – the legislature approved a $200 million reduction in Medicaid appropriations. No direction was given as to what programs will be impacted, although there is some speculation that the All Kids program may be a target due to investigative revelations that came to the fore recently.
• Budget Reduction Attempts – During the May legislative break a group of eight House and two Senate Democrats attempted to try to find an additional $1 billion in cuts to be considered when the legislature reconvened. While the group identified $1.3 billion in potential cuts, few of the resulting amendments were adopted. Their recommendation of $200 in Medicaid cuts was adopted, but cuts in elementary, secondary and higher education, as well as requiring retired state employees to pay higher health care premiums were rejected.
• Cigarette Tax Increase – Senate Bill 44 that passed the Senate in April was not considered on the Floor of the House. The bill still sits on the calendar and could still be considered in November, but that may be unlikely.
• School Sales Tax Holiday – the legislature approved Gov. Quinn’s proposal to exempt sales taxes school supplies and clothing from August 6 through August 15. Opponents argued that the state can’t afford it. Proponents said that in other states where such limited tax holidays are offered there are net revenue gains.
• Gaming – the legislature approved the expansion of legalized video poker machines at truck stops and fraternal organizations. Attempts to legalize slot machines at horse racing tracks, once thought to be a legitimate cog in the effort to raise state revenue, was not called for a vote and is dead. This marked another in a long series of attempts to place gaming expansion on the front burner during the session only to see no action occur. Gaming opponents are thrilled. Proponents, not so much. Gaming issues have always had plenty of bark but no bite.
Veto Session Dates Set
The dates for the post-election veto session have been announced: November 16, 17, 18 and November 30, December 1, 2.
Grab The Tylenol … Or Something Stronger
It was reported last week that the Center for Tax and Budget Accountability has estimated that they estimate the state deficit will be approximately $7 billion at the end of FY 2011. They also conclude that to maintain that level into FY 2012 the state will need an additional $3.1 billion … not including the required pension payment.
Legislation of Interest
The following is a sampling of bills that have been introduced this legislative session and that are being monitored and the current status. Only bills that remain alive are listed.
SB 580 – DuPage Water Commission. (Current Status – Passed Both Houses)
SB 3070 - Provides that if a carcinogenic volatile organic compound is detected in the finished water of a community water system at a certain level, then the owner or operator of that system must submit a response plan that meets certain requirements to the Illinois Environmental Protection Agency. Requires the Agency to approve, and the owner or operator to implement, the plan. Upon completion of the plan, requires the owner or operator to submit a response completion report to the Agency. Provides that any action taken by the Agency to disapprove or modify a plan or report may be appealed to the Illinois Pollution Control Board. (Current Status – Passed Both Houses)
