“No Room For New Programs with Price Tags”

“No Room For New Programs with Price Tags”

Many legislators over the last few years talked about being serious about spending cuts as a component of curing the state’s fiscal ills in addition to raising revenues. The revenue part, of course, occurred in January. Now, the heat is on to make certain that the need for cutting was not empty rhetoric, and from the early session vantage point it appears that the legislative leaders and many members are taking that part seriously. Speaker Madigan, for instance, gave an interview recently where he spoke of “spending restraint” to both protect the state’s credit rating and regain the confidence of Illinois citizens. His comments mirrored those of other leaders who appear poised to say “no” to new program initiatives and current program expansions.

One factor that will weigh heavily in the next two months as a state budget is cobbled together is the spending cap that was included in the income tax increase legislation. Because future pension payments must fall within the cap, look for some very difficult decisions that will have to be made in order to meet the cap limits. The spending caps enacted in January were meant to be taken seriously, so much so that the law says that if the Auditor General does mandated reviews of spending levels and determines that the caps were violated, the tax rates fall back to their previous levels. The only other way to avoid that scenario would be to have the Governor declare a budget emergency. However, the law says that to do so both the Treasurer and the Comptroller would have to sign off. Since both are Republicans the popular view is that there would be little chance of that occurring.

The inaugurations are over, the budget address is now history, and the bill introduction deadline has now passed so the legislative session will now be hitting full throttle. The deadlines in each chamber for hearing bills in committee is March 17, so for the next three weeks legislative committees will be grinding out the bills as legislators, and lobbyists, try to keep up with the furious pace of action.

The Senate deadline ended with 2,479 bills being introduced, while House members opted to file 3,636 proposals. About 15%, or possibly less, would reach the Governor’s desk in a good year. But this isn’t a good year, so expect most that even hint at costing anything to be torpedoed.

Since many legislative Democrats feel they are on the hook for raising taxes, look for them to try to be particularly conscientious about justifying expenditures, cutting and acting like adults. To be honest, legislators hate saying no … to constituents and to their colleagues … and their leadership has always been there to make it easy for them to make everyone as happy as possible. But the real world is different than the Shangri-la they’ve become accustomed to. They experienced “round one” of that real world when they had to hike the income tax. They’ll get to experience “round two” this spring. The Speaker has let it be known to his members that he will expect them to take some of the responsibility for determining the budget bottom line, and a lot of rank and file members are going to have a rude awakening. Some, in the past, have criticized the Speaker for being too controlling, expressing a desire for more freedom to make decisions. Be careful what you ask for.

To make the point, Speaker Madigan has introduced House Resolution 110, a resolution that specifies how much money the state will have at its disposal. HR 110 lists each of the state’s revenue sources and eventually will provide the estimates as to how much revenue will be available from each. Right now each line item contains $1, but those lines will be amended to reflect the true estimates as the session progresses. The idea is to determine available resources and then have the House appropriations committees divvy up what’s available, a far cry from how the legislative budget process has worked in the past. It also means that those appropriations committee members are in a position to make some important decisions, especially since there is nowhere near the revenue necessary to make everyone happy. In the past the process of hearing budget bills in the General Assembly has involved splitting them up and hearing half in the House and the other half in the Senate. Not this year. The decision has apparently been made to hear all appropriations in the House first. That puts the focus squarely on the need to look at the budget and spending as a whole.

Obviously, there is no way to predict how this new process will end. In the past the final budget decisions have always been determined at the very end of the session after negotiations between the governor and legislative leaders. That may or may not change. But, in the meantime, it’s a good bet that legislators may get the opportunity to experience their own profiles in courage.
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Governor’s Budget

State budget deliberations begin and end with the Governor. He proposes, the legislature disposes, and then a meeting of the minds helps create some semblance of a fiscal plan between the end of May (in most cases) and the end of summer (in rare cases). The process begins with the Governor’s annual budget message, and the news was gloomy, at best.

In his short speech the Governor reiterated the need to borrow to pay the current backlog of bills (see next item). He called it “debt restructuring” which it could be, in a very Jekyll and Hyde sort of way, to bring down the current 6-8 month payment cycle. Otherwise, he was very short on specifics. He mentioned a few areas where cuts or reductions would have to be made, some large and some small, and then talked about his vision for Illinois that lasted all of about three minutes.

Even the post speech budget briefings were compacted. All human service agencies were forced to hold their briefings together and each agency director was given a scant three minutes to address those gathered.

What the Governor provided in his budget message were his recommendations. What happens next is that the legislature will place its own imprint on the budget, and shifting of spending priorities and line item amounts are not uncommon. It appears that the state will be going full speed trying to maximize federal matching dollars and limiting program participation to those who are ineligible for Medicaid and changing that emphasis may be difficult. The remainder is probably in play and it is very likely that the squeaky wheels will get the grease.

Borrowing Plan

One of the last actions of the previous General Assembly was to attempt to approve $8.7 billion in borrowing to pay vendors and service providers that have been basically carrying the state’s debt for the last few years. That legislation failed but was reintroduced in the new session as Senate Bill 3. To make this borrowing more palatable and realizable, a portion of the new income tax has been dedicated to paying any bonds issued for this purpose.

Recently, at a joint meeting of the two Senate appropriations committees, sobering news was delivered from the Governor’s Office of Management and Budget about the backlog of unpaid bills, suggesting that even if SB 3 was approved there would still be “hundreds of millions” of dollars still owed. Even worse, in the event that SB 3 fails and no borrowing is approved it was estimated that it would take up to ten years to get the state back to a 60 day payment cycle.

There have been rumblings that some Democratic Senate members who voted for borrowing in January are having second thoughts and have become lukewarm about providing support. Republicans have withheld any support until issues that they hold dear, such as worker’s compensation reform, are addressed. It is expected that some of the GOP issue concerns will be addressed early in the session, so it appears that some approval of the plan could occur in the relatively near future.

Pensions

Another issue that may get another serious look in the next few months is additional pension reform. Last year the General Assembly approved pension reform that impacted newly hired state and local government employees. This year they may take a look at impacting benefits of current employees, but expect a spate of possible lawsuits should they.

Article XIII, Section 5 of the Illinois Constitution contains the following language: “Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.” The popular interpretation of this section has always been that benefits of state and local government workers are protected from any diminution. Until now, the Chicago Tribune and a few others have argued that there is some legal loophole that could allow the state to make changes. Last week Speaker Madigan suggested that the House may take a look. President Cullerton, in the meantime, said that while he feels that such changes would be constitutionally impermissible, if the House sends a bill over to the Senate there may be some “discussions”. Increasing insurance premiums for current state/local government retirees based on a sliding scale of income may also be gaining some traction.

Pension changes made by the legislature last year will have save the state billions of dollars, but the impact will not be seen for many years. The changes that may be discussed in 2011 will have an immediate impact … depending on which side the Illinois Supreme Court eventually takes.

Also on the “proactive” front, Speaker Madigan has also introduced HJR – Constitutional Amendment #6 that, if approved, will ask voters in 2012 to approve a requirement that a three-fifths vote in the legislature be necessary to approve any future pension benefit increases.


Legislative Turnover

Sen. Brad Burzynski (R-Sycamore) has resigned. His replacement is Christine Johnson, former DeKalb County Treasurer. Sen. Ricky Hendon (D-Chicago) and Sen. Dale Risinger (R-Peoria) have also resigned. Darin LaHood will replace Sen. Risinger. Sen. Hendon’s replacement has not yet been named.

Three Chicago Democratic legislators were victorious on February 22 as they sought local offices. State Rep. Susan Mendoza was elected Chicago City Clerk, and Reps. Will Burns and Harry Osterman were elected aldermen. Each will be sworn in on May 16 and replacements will be named when the vacancies occur.


Redistricting Ready To Begin

The new organizations paid little heed, but a very significant development that will ultimately help impact the political and policy future of Illinois for the next ten years and possibly beyond occurred this week. That “development” was the arrival of the block data from the census bureau that will allow the mapping of new congressional and legislative districts in Illinois. The Census Bureau is mandated to provide this data to the states by the end of March. Its arrival has started the wheels of the process six weeks earlier than expected, and a high state of anxiety will reign over the General Assembly and the Illinois congressional delegation for some weeks to come.

Illinois will be losing one congressional seat, so someone will be losing that games of musical chairs. No telling who, but since the Democrats alone will be drawing you can guess where the speculation is leading.

All General Assembly seats will be up for election in 2012, with each legislator running from what may be a somewhat or completely new district. Those new territories can be friendly or hostile, may create opportunities for primary or general election opposition, or may provide a member with a safe haven. It’s a bit too early to speculate on who may win or lose in the process, but the sale of Tums in the state capitol should be on a major upswing as legislative members potentially see their political futures maintained, enhanced or destroyed by the cartographer’s “pen”.

Congressional districts will be approved by a resolution approved by the General Assembly before the end of the session. Illinois House and Senate districts must be approved by the legislature passing a bill that the Governor approves prior to June 30 (actually May 31). It’s a gut-wrenching process and a highly personal one … and the clock has begun to tick.


Bills of Interest

HB 308 – Rep. Tryon - Provides that beginning January 1, 2012, the Department of Public Health shall issue permits for the construction and modification of closed loop well systems. Provides for the certification and registration of closed loop contractors by the Department. Amends the Water Well and Pump Installation Contractor's License Act to make a technical and a related change. (Current Status: House 2nd Reading)

HB 1585 – Rep. Sente - Provides that "plumbing" includes rainwater harvesting distribution systems, but does not include any rainwater harvesting distribution system or rainwater harvesting collection system unless otherwise required by the Illinois Plumbing Code. Requires the Illinois Department of Public Health to adopt and publish a minimum code of standards for rainwater harvesting collection systems and rainwater harvesting distribution systems by January 1, 2012. Requires rainwater harvesting collection systems and rainwater harvesting distribution systems to be (A) used only for non-potable uses and (B) constructed in accordance with the Illinois Plumbing Code. Defines "rainwater harvesting collection system" and "rainwater harvesting distribution system". (Current Status: House Executive Committee)

HB 1657 – Rep. Bellock - Adds an Illinois congressional delegation member, or his or her designee, to be appointed by the Governor to the Task Force on the Conservation and Quality of the Great Lakes. Provides that no later than June 1 of each year, the Task Force shall submit a report to the General Assembly outlining its recommendations concerning legislative actions to protect the water quality and supply of the Great Lakes. (Current Status: House Environment & Energy Committee)

HB 1660- Rep. Bellock - Creates the Prescription Drug Repository Program Act. Requires the Department of Public Health to establish a prescription drug repository program, under which a healthcare facility may donate a prescription drug or supplies needed to administer a prescription drug for use by an individual who meets eligibility criteria specified by the Department. Sets forth requirements that prescription drugs or supplies must meet in order to be accepted and dispensed under the program. Provides that no drugs or supplies donated under the prescription drug repository program may be resold. Provides that nothing in the Act requires that a pharmacy or pharmacist participate in the prescription drug repository program. Provides for civil and criminal immunity for drug and supply manufacturers and pharmacists in relation to the donation, acceptance, or dispensing of prescription drugs or supplies under the prescription drug repository program. (Current Status: House Health Care Availability and Accessibility Committee)

HB 1704 – Rep. Bradley - . Provides that NPDES permit applications are deemed approved if not approved or denied by the Environmental Protection Agency within 120 days after being filed with the Agency. (Current Status: House Environment & Energy Committee)

HB 2056 – Rep. Osmond - Excludes from the definition of "pollution control facility" the portion of a site or facility used to incinerate only pharmaceuticals from residential sources that are in the possession or control of a law enforcement agency. Authorizes a law enforcement agency to collect pharmaceuticals from residential sources and to incinerate the collected pharmaceuticals in a manner that is consistent with rules adopted by the Agency. Authorizes the Department of State Police to use moneys in the Household Pharmaceutical Disposal Fund to make grants to local law enforcement agencies for the purpose of facilitating the collection and incineration of pharmaceuticals from residential sources. Defines "law enforcement agency". Amends the Unified Code of Corrections. Requires a $20 assessment to be levied against persons who commit specified drug offenses. (Current Status: House Environmental Health Committee)

HB 2879 – Rep. Davis - Provides that inspection fees for all commercial fertilizers and custom mixes shall be $1 per ton (up from 25¢ per ton). Provides that seven-eighths (up from one-half) of the $1 per ton inspection fee shall be paid into the Fertilizer Control Fund. Provides that not less than 50% of the funds appropriated to the fertilizer research and education program shall be used for projects designed to avoid or reduce water pollution that may arise from the use of fertilizer in agriculture. Increases the Fertilizer Research and Education Council members to 15 (up from 9) and provides qualifications for the additional members. (Current Status: House Agriculture & Conservation Committee)

HB 3090 – Rep. Arroyo - Provides that notwithstanding any provision of law, any person who is authorized to dispense prescription drugs in the State must accept, free of charge, expired or unwanted prescription drugs for proper disposal. Provides that the prescription drug dispenser shall make available to its customers or patients a container suitable for use as a receptacle that only permits for the deposit of items and the contents of which are locked and secured for the expired or unwanted prescription drugs. Provides that if a patient or customer is issued a prescription drug from a person who is authorized to dispense prescription drugs in the State and that prescription drug causes an adverse reaction and the patient or customer returns the remainder of the prescription drug to the dispenser, then the dispenser shall refund the full cost of the prescription drug to the patient or customer. (Current Status: House Rules Committee)

HB 3099 – Rep. Tryon - Requires the rules of the Environmental Protection Agency and the Illinois Pollution Control Board to include a process for expediting the issuance of permits and licenses for all projects requiring permitting or licensure. Authorizes the Agency and the Board to engage the experts and additional resources that are reasonably necessary for implementing this process. Specifies that an expedited process applies only upon the request of the applicant and that any additional costs for using the process are to be borne by the applicant. (Current Status: House Rules Committee)

SB 38 – Sen. Garrett/Rep. Sente - Provides that "plumbing" includes rainwater harvesting distribution systems, but does not include any rainwater harvesting distribution system or rainwater harvesting collection system unless otherwise required by the Illinois Plumbing Code. Requires the Illinois Department of Public Health to adopt and publish a minimum code of standards for rainwater harvesting collection systems and rainwater harvesting distribution systems by January 1, 2012. Requires rainwater harvesting collection systems and rainwater harvesting distribution systems to be (A) used only for non-potable uses and (B) constructed in accordance with the Illinois Plumbing Code. Defines "rainwater harvesting collection system" and "rainwater harvesting distribution system". (Current Status: Passed Senate; In House)

SB 1222- Sen. J. Sullivan - Provides that any public water district organized under the Public Water District Act is authorized to construct, maintain, alter, and extend its water main along, upon, under, and across any highway, street, alley, or public ground in the State. (Current Status: Senate Local Government Committee)

SB 1682 – Sen. Link - Requires the Illinois Department of Public Health, by January 1, 2012, to (i) establish standards for the certification and licensing of individuals and contractors constructing and modifying closed loop wells and (ii) issue permits for the construction and modification of closed loop wells. (Current Status: Senate Environment Committee)

SB 1903 – Sen. Clayborne - Provides that NPDES permit applications are deemed approved if not approved or denied by the Environmental Protection Agency within 120 days after being filed with the Agency. (Current Status: Senate Committee on Assignments)

SB 1981 – Sen. Garrett - Authorizes the Environmental Protection Agency to disburse grants from the Illinois Clean Water Fund to other State agencies, local governments, publicly owned entities subject to NPDES permitting requirements, and charitable organizations for the purposes of reducing water pollution and protecting surface and ground water quality and aquatic habitats. Authorizes the Agency to adopt rules to administer this grant program. (Current Status: Senate Committee on Assignments)