“How much?” and “Where?” Three words and two questions that have generated hours of discussion and speculation in Springfield over the past few weeks. Since the first priority of every General Assembly is to create and approve a balanced budget for the upcoming state fiscal year, and since an end to our fiscal turmoil appears not to be in the cards at least in the near future, there is great interest being paid to how the pieces of the state “pie” will be cut.
This much we know … when the final budget is crafted, presumably by May 31, there will be anger and sadness across the entire spectrum of interested parties that rely on state government for funding of a myriad of programs. The January tax increase will provide some modicum of relief and assistance but will serve as more of a speed bump than a relief valve. The process by which the legislature will craft that budget has now begun, and will ostensibly be a far cry from years past.
The FY2012 budget process will include multiple steps that are new to the General Assembly: 1) All appropriations bills to begin in the House; 2) Determination of revenue estimate and spending cap by the House Revenue Committee; 3) Determination of “split” or “allocation” of general revenue to fund major program categories; 4) Determination of agency and funding budgets by House appropriations committees according to dollar levels provided them; 5) Passage by the House and consideration of House spending and appropriation levels by the Senate; and 6) Reconciliation of any differences between House and Senate versions. All logical but complex stages that allow input and the possibility that real decision making will occur, an occurrence that hasn’t been witnessed in Springfield in decades.
Over the last 30+ years there has been only one step to the process … legislative leaders and the governor cut a budget deal and the General Assembly goes along sooner or later. No fuss, some muss. If the process for FY2012 is serious it could be a very interesting spring session to observe but, in the end, still one that will have an unpleasant after taste.
Last week the House Revenue Committee and the House approved House Resolution 110 that sets forth the revenue estimate and budget spending cap. The level set was $32.2 billion. Remember that a provision in the income tax increase bill stipulated that if the legislature violated the spending cap rules then tax rates revert back, so they need to be particularly careful how they calculate. To no one’s surprise, the level set by the House was below the revenue estimates that were provided by the Governor’s Office of Management and Budget (GOMB), generally always considered too rosy on revenue projections. But the legislature’s own Commission on Forecasting and Accountability, generally a better gauge, bested GOMB by almost a billion dollars. Still, the House set the revenue estimates lower. Only time will tell if this was done to allow for unanticipated needs, like the additional $800 million ($6.2 billion versus $5.4 billion) that will be needed to pay the upcoming pension payment or to try to get a real handle on state spending. But no matter, to hit the current target there’s going to have to be some major decisions on how funding levels are determined and as to how funds are allocated.
Speaker Madigan has introduced HR 156 that is scheduled to be heard in the House Revenue Committee this week. The resolution lists five appropriations areas (Elementary and Secondary Education, General Services, Higher Education, Human Services and Public Safety) and has been amended allocating a certain percentage to each category. Then the action will shift to the appropriations committees that will try to make lemonade.
This new process is only at the beginning stages, the gestation stage if you will. If the process is a serious attempt to formulate a budget it may not be pretty or without frustration. And, in the end, it remains to be seen as to whether or not it was worth all the effort.
A Verse of Kumbaya
A funny thing happened on the way to a budget. This past week, for the first time in memory, both Speaker Madigan and House Minority Leader Cross joined together to provide a unified front in the initial stages of crafting a budget for FY2012. In the past week the leaders have made joint appearances and statements both in appropriations committees and on the House floor to inform their members and the public about their seriousness at getting the state’s fiscal morass under control, or at least throwing more than a few shovels full into the deep crevasse.
Is this joint effort significant? Undoubtedly, but the end game is still in some doubt in the efforts to craft a meaningful budget. The House appears unified in its determination to hold to making expenditures match its revenue estimate of $33.2 billion. Both the Governor and the Senate have estimates that are higher, and therein may lie the ultimate rub as the end of session nears. At some point in the session all of the differing revenue estimates and expenditure priorities and allocations must be reconciled and that will be an interesting exercise in fiscal discipline, as well as a true test as to whether the rhetoric of March can equal the final action taken in May, and whether the need for the legislature to say “no” will match its resolve to do so. Because of their lack of resolve in the past, the end game at this point looks pretty murky.
The Madigan and Cross rendition of Kumbaya so far is only one verse of a multi-verse song. There are lots of verses left and some will undoubtedly be sung off-key. The big question is whether or not they can gat to the last stanza.
The legislature finished their non-appropriation committee deliberations on March 17 and then took a week break. They were back this week preparing to spend until April 15 considering legislation on the order of Third Reading and having budget hearings (appropriations bills do not have deadlines). Before their break they approved the previously mentioned House Resolution 156 that sets forth their budget allocations by five subject areas. Those categories, and their share of the $33.2 billion that would be allocated, are:
Human Services – 50.361% ($16.7 billion)
Elementary & Secondary Education - 28.742% ($9.5 billion)
Higher Education – 8.761% ($2.9 billion)
Public Safety - 6.978% ($2.3 billion)
General Services – 5.185% ($1.7 billion)
The most telling information presented at the joint budget appearances by Madigan and Cross was their listing of priorities that must be considered and carved out before the committee considers programmatic appropriations. Appropriations for debt service, pension and group insurance requirements, plus a set aside for statutory transfers mandated by statute must all come first. What’s left then must be prioritized and distributed … and there won’t be much, or at least not enough to consider without some painful reductions. Since all appropriations bills are being heard first in the House this year, the first round of apparent winners and losers will be determined there. Earlier this week Speaker Madigan was quoted with reference to some of the big decisions that appropriations committee members are going to have to consider, saying, “most of them have no idea what they are going to be faced with, in terms of choosing among spending purposes.” He was never more correct in his assessment. If it actually comes to pass it will be a rite of passage and level of responsibility that has been missing for almost 40 years.
Senate GOP Budget Proposal Unveiled
Just before the March legislative break, Senate Republicans offered a budget plan that would save approximately, $6.7 billion if enacted. Some of the major cost-saving points proposed were:
• A Medicaid savings of $1.3 billion by reviewing the cost of drugs, increasing co-pays, rolling back eligibility levels, establishing an asset test for the All Kids program, and by reviewing optional programs offered in Illinois but not mandated by the federal government;
• Saving $300 million in group insurance costs by establishing retiree contributions to health care costs, possible premium increases for current employees, and reviewing the creation of premium differentials;
• Making cuts in the State Board of Education budget of $725 million by freezing state aid, reviewing all programs that are non-mandated categoricals, as well as those programs unrelated to the funding formula, among other things;
• Repealing the Local Government Revenue Sharing would save $300 million. This is the local government share of the income tax; and
• Enacting pension reforms that would impact current employees would save approximately $1.35 billion.
Some of these suggestions, while drastic, will certainly be on the table as both parties in both chambers seek both consensus and shared responsibility for whatever unpleasantries result from the final budget actions. However, some such as the revenue sharing repeal will be dead on arrival. Additionally, even if successful, any change to the pension status and benefits of current would result in lengthy court battles that would never be resolved in time to benefit the FY 2012 budget.
Remap Roadshow On The Way
Final reapportionment of all state legislative and congressional districts will be completed by the General Assembly before May 31. It is a highly political and personal process for everyone involved, but one that provides boundless opportunities to consolidate power and vanquish opponents for the party that controls the cartography (this year, the Democrats). But, because revised maps are always subject to legal challenges, those doing the drawing must be very careful in how they accomplish their objective. That, primarily, is accomplished through public hearings that are held in various areas of the state so that interest groups and the citizenry at large can express their wishes as to how any new maps will impact them.
What’s certain is that there will be varying opinions provided at the hearings as to the wants and wishes of the citizens in that area. What’s also true is that any testimony will be culled so to provide the defense fodder for whatever map challenges arise. Both Democratic and Republican operatives and allied interest groups will appear at these hearings and provide on the record statements as to what considerations should be taken when the district lines for their areas are determined. It won’t be the average citizen who appears and provides testimony because 1) they don’t really have an interest, although they should; 2) they don’t understand the process, although the people elected as a result of the new maps will probably have a major impact on their lives. These hearing statements will help provide legal cover when the time for a challenge comes.
The census data needed for the cartography to begin has been in the hands of legislative leaders for over a month, enough time for the map making process to begin. And there probably is no question that many districts have already taken shape in the nether regions of the State Capitol.
Regardless of which party leaders draw the maps there is always the so-called effort to “assure” the public that their concerns are being taken in to consideration. While we’re often reminded that “there is no crying in baseball,” we should also be reminded that there is no real transparency in reapportionment.
Senate Pension Study
In the ever present debate on whether or not the pension benefits of current state employees can be amended or changed, Eric M. Madiar, Chief Legal Counsel to President Cullerton, has completed and published a comprehensive study that concludes “that legislation enacted to unilaterally reduce the pension benefits of current employees would violate the Pension Clause based on the Clause’s text and origins, constitutional convention debates revealing the framers’ intent, contemporaneous news articles demonstrating voters’ understanding of the Clause, and a host of court decisions construing the Clause.”
Madiar concludes that “the Pension Clause not only makes a public employee’s participation in a
pension system an enforceable contractual relationship, but also constitutionally protects the pension benefit rights contained in the Illinois Pension Code when an employee joins a pension system, including employee contribution rates. The Clause also safeguards pension benefit enhancements that are later added during employment.”
The law firm of Sidley and Austin had released an earlier study that concluded the opposite. In his study Madiar also addresses the conclusions and refutes of that effort.
At this point in the session there is no conclusive evidence that the legislature will attempt to modify current pension benefits, but if they do we know for sure that the Supreme Court will be the final arbiter. The Madiar study gives a good basis for understanding what each side will argue.
The full study and appendices can be found at www.illinoissenatedemocrats.com.
Some Say Tomahto …
Remember that talk of borrowing so payments to state vendors be made and provide some relief, and get the state back on a somewhat shorter payment cycle? So what’s the latest? Nothing. Nada. We’ve had testimony, plenty of charges, counter charges and differing estimates, but Senate Bill 3, the apparent vehicle to accomplish this act of mercy, lies dormant.
Trying to get a fix on the appropriate amount has been mystifying. The first number that was given by the governor’s office was $8.7 billion. That was the magic number … at the time. Then, in early February GOMB told the Senate that even at that amount the state would be “hundreds of millions” short completely remedying the problem. Republicans, on the other hand, came up with their own number that indicated that an amount somewhat less than $8.7 billion could handle the need and, surprisingly, there was some serious discussion about using that number. But wait, there’s more … now GOMB has indicated that the official need may be more than the original request.
Adding to the confusion is the discussion about what to do about balancing this year’s budget. For example, a few weeks ago human services providers were apoplectic when they were told that $200 million in cuts in the next few months would be necessary. A few weeks later that number was halved. Now, as of last week, that number has been halved again, to $57 million. Who’s on first?
This type of bouncing ball policy and budget discussion drives people crazy. You can’t hit targets shooting blindfolded, and that seems to be exactly how budget issues are being handled … again. With only a little over three months left in the fiscal year the time has come to give vendors and providers something positive.
Legislative Turnover
State Rep. Annazette Collins has been selected to fill the vacancy of Sen. Ricky Hendon (D-Chicago) who recently resigned. Derek Smith of Chicago has been selected to fill the vacancy of Rep. Collins.
Bills of Interest
HB 248 – Rep. May - Amends the North Shore Sanitary District Act. Authorizes the board of trustees of a sanitary district to enter into an agreement to sell, convey, or disburse treated wastewater with any public or private entity located within or outside of the boundaries of the sanitary district. (Current Status: House 3rd Reading)
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: Re-referred to Rules Committee - dead)
HB 1657 – Rep. Bellock/Sen. Althoff - 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: Passed House)
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: Re-referred to Rules Committee – dead)
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: Re-referred to Rules Committee – dead)
HB 1955 – Rep. Holbrook - Provides an alternative procedure that a large public utility may choose in establishing the ratemaking rate base of a water or sewer utility that the large public utility is acquiring. Provides that the Commission's order that approves the large public utility's acquisition of the water or sewer utility shall include the Commission's decision establishing (1) the ratemaking rate base of the water or sewer utility and (2) the district or tariff group with which the water or sewer utility will be combined for ratemaking purposes. (Current Status: House 2nd Reading)
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 2nd Reading)
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: Re-referred to Rules Committee – dead)
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 – 3rd Reading)
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: Re-referred to Rules Committee – dead)
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; House – Executive Committee)
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: Re-referred to Committee on Assignments - dead)
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 – 2nd Reading)
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 – 2nd Reading)
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: Re-referred to Committee on Assignments - dead)
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