Big Budget Decisions Loom In May
T-31 days before the scheduled end of the legislative session and it appears that the coming of May will bring flowers that bloom and a Statehouse in gloom. After a one week spring break by the House and a two week hiatus by the Senate, both chambers will be at the ready to complete tackling the major issues that lie on the legislative table. Tops on the list is reapportionment (nothing is more important to legislators, individually and collectively, than their political futures), followed closely by the budget and health care, pensions, worker’s compensation reform and others.
To a vast majority of Illinoisans, however, funding, or lack thereof, of government through the budget process will be the main event in May. As the legislature works through its budget process agency by agency in a process that, for the first time in decades, will let the sunshine in and allow funding decisions to be made before the public, expect frayed nerves and gnashing of teeth as massive cuts and program disruptions are explored, discussed and decided. It won’t be pretty, and with the huge deficit to contend with there are sure to be many unhappy, disappointed parties when the smoke clears on May 31 or thereabouts.
Grinding out the budget will begin in earnest this coming week. According to Rep. Sara Feigehnoltz, Chair of the House Human Services Appropriations Committee, the intention is to begin with smaller agencies first and work up the list. She indicated that her caucus expects cuts of approximately $1.2 billion out of state human services agencies. Similar “goals” have been provided to the other House appropriations committees in order to meet their arbitrary spending cap of $33.2 billion. The legislature is also looking to possibly add more revenue by some added pension reform by requiring retirees to pay some portion of health care premium costs (possibly as much as $250 million) and by trying to qualify for some additional federal reimbursements before July 1 ($100 million).
Remember that the Senate has adopted a spending cap that is substantially, almost $2 billion, higher, so at some point there will have to be some serious discussion about a cap level, presumably somewhere in between. Any change in the House level, of course, means a tad less pain. But the big looming question will be whether the rank and file members, who have been insulated from making big budget decisions in the past, can look program interests in the eye and have the intestinal fortitude to vote to reduce or deny funding. Agony will abound.
Budget Warfare Ahead?
April 15 marked the first significant deadline of the current legislative session, getting bills from the chamber of origin to the other. But the bills that will be the subject of greatest discussion, anticipation and possible angst are appropriations bills, and they have no deadline.
After passing hundreds of non-appropriations bills across the rotunda, the House took a one week break and the Senate two weeks. When the Senate returns this week expect the first volleys in the battle of the budget to be fired as visions of balanced budgets and programmatic cuts dance through the heads of House and Senate appropriations committee members and others. With the substantive bill workload now diminished with the passing of the deadline, the major part of the last five session weeks will be devoted to the budget and the attempts by the Senate and the House to figure out where the “twain shall meet.”
Much has been said about the legislature making a serious attempt to get state finances under control. All appropriations bills this year have begun in the House and beginning this week they will begin to emerge from the committee pupae as butterflies (not likely) or as vermin (more probable). The House has set an extremely austere appropriations goal or $33.2 billion, less than the Governor’s Office of Management and Budget and also a lot less than the legislature’s own Commission on Government Forecasting and Accountability. The Senate, however, is predicted to be more generous than the House and that’s where the battle royal will commence.
The joining of forces by Speaker Madigan and Minority Leader Cross in the House has created a situation where for the first time in a number of years the GOP is actually part of the budget process and will have a say as to what stays and what goes, as well as some consideration for their priority policy initiatives. It also creates shared responsibility for some awful decisions that will have to be made so the Democrats won’t have to take the collar alone, and some of their members will be allowed off the “bad vote hook”. Looking across the rotunda, it’s not a stretch to imagine that the Senate Republicans will look at the conservative House spending ceiling as desirable. So, three of the four parts of the legislative branch would seem to be on board. But Senate Democrats, on the other hand, have let it be known that they won’t be pushovers and could be heading for their battle stations.
Senate appropriations chairs, Sen. Dan Kotowski and Sen. Heather Steans, strongly suggested recently that they’re not drinking the House Kool-Aid. They plan to fight to budget at higher levels while also realizing that cuts are going to be necessary. There is no doubt that budget reductions this and the next few years are going to be potentially devastating. So Senate Democrats are of the opinion that by accepting the higher Commission on Government Forecasting and Accountability estimated revenue level of $34.3 billion the pain could be made a tad less severe in some quarters.
As the legislature left for its break they sent to the Governor legislation that provide for the FY 2012 pension and bond payments totaling $7 billion. No borrowing for those budget elements this year. Regardless of which spending cap will be determined in the end the General Assembly now knows how much is left to spend for state government operations and also knows that some very difficult decisions loom ahead. Edwin Way Teale once wrote, “All things seem possible in May.” We’ll see about that.
Breaking New Ground
There is a new budgeting “sheriff” coming to town this year and the arrival is looked upon with hope by the Governor and legislators, and a sense of some confusion and consternation by most others. The name is “Budgeting For Outcomes,” approved during the waning days of the previous General Assembly with the intention of trying to inject some logic in the way the yearly appropriations process works. Some are hailing the onset of the new process as a breath of fresh air that will require accountability from departments of state government and providers. Skeptics opine with a “here we go again” attitude and a belief that this is the latest “process du jour” that ultimately will prove a waste of time and energy.
According to the new law, appropriation levels recommended by the Governor must be formulated according to each department or institution’s ability to “effectively deliver services that meet established statewide goals”. The process of how these goals are established and measured is to be created before the budgeting process for the next fiscal year begins on or about December 1. So far, the explanation of the elements by those involved has been clear as mud, so there is a lot of work that has to be done to get everyone on the same page in the next eight months.
We are told that the basics for budgeting through this method are 1) Set a realistic revenue ceiling; 2) Pay our debts first; 3) Include outside and public input into budgeting process; 4) Set specific annual goals, priorities, budget amounts and desired outcomes with each goal created to be specific, measurable, realistic, attainable and time specific; and 5) The State will purchase services based on annual goals. The last two points resemble a “zero based budgeting” component that requires goals to be met or funding will be denied or reduced. Originators of the concept insist that with this new process no state program is sacred. But they also acknowledge that they are breaking new ground here. No other state has implemented this new scheme to address budget decision making. Washington State is in the process of implementation of something similar but there are no real results to report as yet.
In the future the expectation is that the results of the outcome measurements and the evaluation of a program’s ability to meet performance standards will determine who gets funded and who doesn’t. Sponsors say that they’re hopeful that agencies will look to be creative in the way they deliver services and try to make programs more effective … a lofty, worthwhile goal for sure.
But can the process withstand the ever present political firestorm that may/will be created when someone’s favorite program gets the ax or slashed? Will the goal numbers be able to be fudged and who will verify and audit those numbers to verify they are true and accurate? Will the statewide goals create a pressure to perform at a higher level or will they set the average standard at mediocre and reward those who rise to a smidgen over average? Notwithstanding what the numbers show, do Governor and legislature have the will to say “no”? Eventually, the answers will be clearer, but the progression of the process and its implementation over the next few months should be interesting to watch.
Now, About Those Bonds …
Bonds are back on the radar but are nowhere near the “fail safe” point, the point of a decision with no return. Comptroller Topinka this past week announced her estimate of an $8 billion backlog in unpaid bills, remarkably close to the Governor’s original request of $8.7 billion. So, that should provide some ammunition for the Governor to convince wary legislators on both sides of the aisle to support it? Not quite … especially since the Governor’s office has moved the bond target downward to $4.5 billion, the bare necessity level. Of course, once you reduce your asking price you can seldom go higher, so if a bond sale agreement is ever reached expect something closer to the lower level.
Until this past week nary a word has been said recently about bonding approval whose proceeds would be used to pay down that backlog of billions. Capitol prognosticators have speculated that both parties will come together toward the end of session as other major issues on the table, such as worker’s compensation, are resolved and vote to approve some level of bonding. However, the rhetoric from legislative leadership on both sides of the aisle has been anything but positive. Speaker Madigan has turned cool to the plan, and Republicans have continued to express negativity, although Senate Republicans have alternated between saying that the problem could be addressed by selling some portion of the bonds that the Governor is asking for and saying that new bonds are a non-starter. That leaves the Senate Democrats again as the possible last ones standing.
The Governor also may have hurt his cause this past week when his office suggested that local elected officials put pressure on their legislators to back the bond sales. His office indicated that it was a means of reminding those local governments to whom the state owes money that more available cash means that funds and reimbursements can be distributed more quickly. However, some local officials are characterizing the Governor’s effort as pseudo-extortion, suggesting that they won’t get paid unless they join the chorus to get the bond legislation approved.
Many Statehouse observers are of the opinion that these bond sales are a critical way to provide temporary cash flow to pay long overdue bills and allow somewhat of a fresh start. The fact that a small percentage of the state income tax increase was dedicated to pay these not yet approved bonds justifies the approval even further. That small portion of the income tax does not expire until 2025. At this point the odds of providing relief to state providers from the current nine-month payment cycle are about 50/50.
The Future Is Near - Reapportionment Maps Coming Soon
Within the next three weeks we’ll have the first glimpses of what the political landscape of Illinois will look like for the next ten years, and who the individual and collective winners and losers will be. Just before the legislative spring break a number of reapportionment shell bills were introduced by Democratic leaders. Their appearance sparked the first spate of what will be almost endless bouts of nerves and sleepless nights over what these bills will eventually contain.
Over the past few weeks there have been reapportionment hearings held in all parts of the state and they will continue for a few weeks. And then final decisions will be made, the new district maps will be unveiled, individual careers will be made or broken, and the state for the next decade of state and legislative policy decisions will be set. Since the Democrats control the legislature and the Governor’s office it is they who will, for the first time since the adoption of the 1970 Constitution, control the reapportionment process. Their map is the one that will be enacted. The only question now is the what, and that should be known in a few weeks.
Like it or not, the reapportionment process is highly political and sometimes very personal. Democrats will do their best to try to guarantee solid majorities through the next five election cycles. It doesn’t always work that way … House Republicans drew the maps in 1991 and were only able to capture majorities in one of the five elections. But, having control of the cartographer’s pen certainly gives you the advantage.
Speaker Madigan has said in the past that his preferred member ship level is in the range of 65-66 seats. He has explained that more can be harder to manage. But, with the tea party movement afoot and other political forces that could play havoc with his ability to maintain a majority in the House he may opt for more. President Cullerton has not been as specific about numbers, but there is no doubt that he would like to provide some cushion so backlash elections such as 2010 don’t dismantle his majority.
Drawing legislative maps is very complex. Some individuals are of the opinion that you should start in come corner of the state and just draw squares or rectangles. It’s not that easy. This past week two Hispanic groups testified that based on population increases there should be more Hispanic districts created. One of these groups won a reapportionment lawsuit in 1991 so their requests have to be taken seriously. The African-American community is also regarded as a protected class by the U.S. Supreme Court, so their representation needs must also be taken into consideration. And there’s also a ton of other considerations.
There was a video clip posted this week on You Tube where House Majority Leader Barbara Flynn Currie explains some of the factors that complicate mapmaking. It’s short, succinct and a good primer on some of the considerations that must be accommodated in order for any map to withstand a court battle. You’ll also hear what arguments Democrats will probably make to defend their reapportionment decisions before the Illinois Supreme Court and perhaps in other judicial venues. Here is the link: www.youtube.com/watch?v=6KZZHw-9u0g
Bills of Interest
Senate 3rd Reading Deadline for Senate Bills extended to May 4. Deadline for House or Senate bills in the opposite chamber is May 27. Committee deadline in both chambers is May 13.
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: Passed House; Senate Committee on Assignments)
HB 308 – Rep. Tryon/Sen. Link - 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: Passed House; Senate Environment Committee)
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; Senate Agriculture and Conservation 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: 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: Re-referred to Rules Committee – dead)
HB 2056 – Rep. Osmond/Sen. Schmidt - 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: Passed House; Senate Environment 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: Re-referred to Rules Committee – dead)
HB 3090 – Rep. Arroyo/Sen. Delgado - 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: Passed House; Senate Public Health 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: 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/Rep. Tryon - 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: Passed Senate; House Executive 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 – 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)
