They came, they saw, they twiddled ... for the most part.
That pretty much sums up the net work product of the legislature during their annual veto session and its one day extension. Yes, there were a few policy initiatives that saw successful final action, such as “smart grid,” a short term resolution of regional superintendent’s salaries, and budget reallocations. But the remainder of issues on the table (casinos, corporate tax incentives, possible borrowing to pay back bills, major pension reform, creation of health care exchanges, hospital property tax exemptions, and others were put back in the cupboard for possible sampling at a later date … most probably after January 1. The failure of the legislature to approve corporate tax incentives, and the resulting threats of those impacted to potentially leave Illinois, may cause the General Assembly to head back to Springfield sometime in December … if and when they have the votes for passage. But the rest of the issues will have to wait.
“Smart Grid”: The General Assembly overrode the Governor Quinn’s veto of legislation that would allow Commonwealth Edison and Ameren rate increases for ten years in order to upgrade their respective power grids. The power companies and other proponents said the upgrade, at a cost to consumers of $3.50 per month, would allow better, more expeditious handling of power outages. Opponents argued that stockholders rather than consumers should shoulder the cost.
Regional School Superintendents: Their salaries were vetoed by the Governor in June as a means of freeing up budget funds. He argued that they do not perform essential state services so the state should not be required to pay their salaries. He suggested the personal property replacement tax, a tax collected by the state but whose proceeds are directed to local governments, be the funding source. After a few failed attempts to approve that plan the General Assembly gave it final approval during the first week in November. The kicker is that the deal is only good until June 30 so the issue will be revisited in the spring. Local governments have argued that tapping a resource dedicated to them will require pressure to raise other local taxes to compensate for the funding loss.
Corporate Tax Incentives: Punt. So much for threats. The story thus far … The Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBOE) want tax reductions or they threaten to move out of Illinois … They are the largest taxpayers in the state ... Sears Holding Company wants a 15 year extension of its TIF in Rolling Meadows or they threaten to move to Indiana or another state … The local school district (District 300) is up in arms and gets residents fired up to modify any deal so local schools receive additional funds… The Governor said that if we help corporations there should be also be help for the poor so he pushes for an increase in the Earned Income Tax Credit (EITC) … House Republicans say that they will oppose any corporate tax relief package that is not more broadly based … The legislature fails to approve any incentive package before the end of the veto session and schedules an overtime day on November 29 … In the interim a “Christmas tree” of tax incentive/relief goodies is developed that has something for just about everyone, including the CME and CBOE tax breaks, a negotiated extension for Sears, an increase in the EITC, an extension of research and development tax credits that expired last June, a live theater production tax credit, an indexing of the standard income tax deduction, an extension of the gasohol subsidy to 2018, and the creation of an independent tax tribunal that takes tax protests away from the Dept. of Revenue … House Majority Leader Barbara Currie questions whether profitable corporations should receive assistance … The Senate approves the package with six votes to spare … The House crushes the bill (8-99) complaining that the bill approved by the Senate was too expensive and that their own version is better, but it’s never called for a vote … The legislature goes home to return if and when the package can again be retooled … CME, CBOE and Sears wanted action by the end of the year … No word from them as yet … No telling whether any package that is put together can be viable enough to pass.
Budget Reallocations: Just prior to Tuesday’s session an agreement was crafted to avoid the 1,900 layoffs and facility closings threatened by the administration by reallocating a portion of the funds that were reduced from the budget by the Governor last May. Also, an additional $30 million for community mental health and $28 million for substance abuse treatment, funds that should have been included in the budget last May, were included as part of the package.
Borrowing: No action. There has been some movement to try to approve additional borrowing to help catch up on the backlog of outstanding vendor payments. However, if there has been any real progress it’s moving at a snail’s pace. The Illinois Constitution requires a three-fifths vote to approve new bonding so bipartisanship will be necessary to make this happen. Most Democrats offer deal that can’t be refused this idea is on hold.
Casinos: No action. Prior to the beginning of the veto session Governor Quinn said “no” to casino expansion that included slot machines at race tracks (“racinos”) and at the state fairgrounds. The General Assembly reformulated the proposal that was approved in May (but never sent to the Governor via a parliamentary maneuver) to answer some of his administrative objections, remove the state fairgrounds from slot machines but providing the fairgrounds a permanent stipend. Slots machines would not be allowed at Chicago airports but “racinos” remained, as did the five new casino locations. The new version was heard in the House and defeated. Proponents will keep on trying to find the right combination and opponents will continue to counter. Reports have also been released by opponents indicating that the expected revenues from expansion will be nowhere near what proponents have projected (75% less, in fact), and that may weigh heavily as the legislature continues to debate the issue.
One huge problem for casino expansion proponents is that successful efforts to address gaming participation occur once in the proverbial blue moon. As a result, whenever there seems to be a glimmer of hope that something might pass everyone who has even a modicum of interest piles on … thereby making it tougher and tougher to succeed. This year’s effort is a perfect case in point. Over time, as more casino expansion is approved, turf protection makes it even more difficult to approve the next one. And that bar will keep rising. Proponents this year also are aware of one other pertinent fact. Once Chicago gets its casino then it could be eons before Illinois will see any other major gaming legislation realistically considered. So everyone who has an interest is “all in” because anyone not included in a final package will be “all out”.
Pension Reform: Some action. The General Assembly approved legislation, HB 3813, prospectively closing loopholes that allowed individuals from various labor organizations to receive dual benefits from both public and labor pension systems. Those particular stories were profiled in the Chicago Tribune during recent months. HB 3813 was considered the “low hanging fruit” of pension reform and the bill passed nearly unanimously and with little controversy. Major reform was not discussed or considered. However, one provision of HB 3813 retroactively changes the ability of two individuals who took advantage of a loophole to embellish their pensions. The Chicago Tribune also broke this story a few weeks ago. It’s possible that these individuals may challenge that portion of the bill based on the provision in the Illinois Constitution that specifies pension benefits as contractual obligations. If they do, it may provide a roadmap to what the legislature can and cannot do to modify pension benefits for current employees.
Health Care Reform Implementation: No action. The Federal Affordable Care Act mandates the development of Health Benefit Exchanges in each state by January 1, 2014. The Exchanges as must provide access (primarily through an internet website) to both public and private health insurance coverage for individuals and businesses with fewer than 100 employees. The federal government has stated that it will provide opportunity for residents of a state to access a federally‐run Exchange if their state chooses to not establish an Exchange so the pressure is on the state to comply. Negotiations have been ongoing but time is getting short. House Bill 1577 is the vehicle for the Exchange legislation and it sits on 3rd Reading in the Senate after having passed the House. However, it’s a shell bill in its present form, waiting for the substance to emerge. To allow enough time to implement any provisions in time to meet the federal deadline a final version needs to be approved shortly after the session resumes,
Hospital Property Tax Exemptions: No action. The General Assembly is under pressure to determine exactly what constitutes an appropriate amount of charity care for Illinois hospitals to maintain property tax exemptions. Three Illinois hospitals, Northwestern Memorial Hospital's Prentice Women's Hospital, Edward Hospital in Naperville and Decatur Memorial Hospital, ran afoul of the Illinois Department of Revenue l few months ago when it was decided that their level of charity care didn’t add up. Up to 15 other hospitals in the state may face the same problem. The Governor has issued a moratorium on any further actions until the issue is resolved by the legislature. There was a minor expectation that it would be addressed in the fall. It wasn’t.
“Oh, Doctor”
Just when it appeared that there might be some light at the end of the fiscal tunnel, the Commission on Government Forecasting and Accountability (COGFA) snuffed out the candle when it recently issued a report indicating a whopping increase in state pension obligations for FY 2013. What was expected to be additional payments $400 million is now apparently in excess of $1 billion. Those figures came from tabulations provided by the various state pension systems.
Increases in pension liability and debt service will pretty much eat up whatever new revenues that were expected to be available for the FY 2013 budget. It means that hefty servings of angst and anguish will be on the budget table when the legislature returns in January and starts budget discussions.
To make the picture even bleaker, if the corporate tax incentive legislation is ever approved, it is expected that its cost will be somewhere in the $600 million to $850 million range. Add to that increased health care and Medicaid costs plus having to “absorb” over $1 billion in Medicaid costs that were pushed into the next fiscal year to help balance FY 2012’s budget. It’s not going to be a very happy new year at the state capitol.
Election Season Begins
Even though the federal courts have not yet rendered final decisions on lawsuits challenging Illinois reapportionment, the filing period for state candidates began this past Monday, November 28 and will continue through next Monday, December 5. The federal courts have extended the filing dates for congressional candidates to a period beginning on December 23 and ending on December 27.
On the challenge to state legislative maps, the federal courts have dismissed most allegations and are pondering questions relating to two districts, one in the Springfield area and another in southwest Chicago. Judges determined it was not necessary to extend filing deadlines, so many have interpreted that to mean that objections those two districts are weak. There is no estimate on when a final ruling will be issued. Similarly, the federal court has not indicated when a final ruling on the congressional reapportionment will be determined.
The end of the filing deadline will provide, barring the resolution of petition objections and candidate withdrawals, a final roster of state candidates that will participate in the March 20 primary election.
Legislative Turnover
State Sen. Jeff Schoenberg (D-Evanston) has announced that he will not seek re-election. State Rep. Daniel Biss (D-Skokie) has announced that he will be a candidate for Sen. Schoenberg’s seat and will not seek re-election to the House.
Rep. Scott Penny has been appointed to replace former Rep. Tom Holbrook who recently resigned.
2012 Session Schedule Announced
Both the House and Senate have released their 2013 session calendars, both containing the same session days and breaks. The session will begin on Tuesday, January 31 and is scheduled to end on Thursday, May 31. The legislature will meet weekly but has scheduled breaks for the weeks of February 13, March 12, April 2 and April 9. Session is scheduled for pretty much every weekday during the month of May.
Significant dates: February 1 – Governor’s State of the State Message; February 10 – Senate bill introduction deadline; February 16 – House bill introduction deadline; and February 22 – Governor’s Budget Message.
The House has also announced that it will now allow the filing of electronic witness slips. Slips can be accessed in the House committee area of the General Assembly website. The Senate has not yet announced it they will follow suit. Senate witness slip rules are far more arcane than those of the House, so a move to a similar system would be welcome.
