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.
Friday, December 2, 2011
Wednesday, November 2, 2011
Failure to Communicate
“They’re baaaack!” That semi-famous catchphrase from the movie “Poltergeist” is an appropriate one, both for the particular time of year … and because the legislature has begun its fall session, slogging through its first week with thrill, chills … plus a certain degree of dysfunction between the legislative and executive branches.
Generally, most of the final action in fall veto sessions takes place during its second week, scheduled for November 8,9,10. The just completed first week is used to set the table and finalize whatever discussions may be necessary to complete action during the second week.
And that table is filled to capacity, with possible budget reallocation, “smart grid”, casinos, corporate tax incentives, possible borrowing to pay back bills, maybe some modicum of pension reform, health care reform implementation, regional school superintendent salaries, hospital property tax exemptions, and a host of others. In terms of the number of issues on the table, there’s enough for legislators to gorge themselves. As for how clean the table will be when the smoke clears on November 10, that remains to be seen.
One thing that has been apparent since the middle of the spring legislative session, through the summer and this past session week is the absence of meaningful communication between the legislature and the Governor. You’ll recall that after his budget message last year, when he proposed spending an additional $2 billion with state finances in a freefall, the legislature took over the budget process, adopted a strict spending cap and pretty much excluded the Governor from any budget discussions. During the summer as major issues were being decided there was little communication between the Governor and legislative leaders. Using the casino issue as an example, the Governor spoke to few legislators about concerns or alternatives, preferring to wait until the 11th hour to announce his objections. Similarly, the issue of reallocation of $376 million dollars that the Governor reduced from the budget sent to him in June has followed the same path, where the Governor has threatened facility closures and layoffs but hasn’t really engaged in conversations about a solution.
Governor Quinn has taken numerous shots at the legislature, chiding them in the media about the way they have handled issues. Call a press conference and complain has been his approach. Ironically, that’s pretty close to the tactic that former Governor Blagojevich used to use, and also similar to Quinn’s modus operandi when he was a political gadfly prior to his election to various offices. It’s not known for being a productive way to handle business.
Legislative leaders and their minions complain about governing by press conference and the absence of meaningful discussion, even when the parties get together to talk. One leader has even stopped attending meetings the Governor calls, preferring to send a replacement because of the lack of productive dialogue. With many major issues to be considered in the next two weeks it will be interesting to see whether there will be any thaw in the executive/legislative dynamic that will result in productive resolution.
“Gimme Money, That’s What I Want”
Last May Illinoisans were treated to the state government version of a Hollywood cliffhanger, with a budget fraught with uncertainty sent to the Governor and with a plethora of issues popping up during the summer. In the world of celluloid the next episode begins with the hero saving the day and moving on to the next adventure. In the governmental version there is no hero and the “cliff” keeps getting more slippery. And in the Illinois version it’s state finance that’s on the slippery slope. While there seems to have been a slight reversal in the depth of the fiscal sinkhole, there are abundant pressures on state government as it tries to pay bills and grow the economy at the same time. Everyone wants a larger piece of a pie that can’t possibly feed everyone as it is. Here are some of the major issues that the legislature is may try to tackle in the next few weeks.
Borrowing: Had fallen out of any conversations for months until State Treasurer Dan Rutherford apparently had a slight change of position this past week and suggested that maybe borrowing a little (maybe $2.5 billion to $4 billion) to pay vendors might not be such a bad idea after all. He had been a fervent opponent to borrowing in the past. It’s not certain that he’ll stick to his guns or has the clout to get Republican votes for any proposal that is put forward. The GOP is almost apoplectic about opposing additional borrowing and, with a three-fifths majority required to approve any new borrowing, it’s not going to happen without a few of them jumping over. Proponents of this additional borrowing like to refer to it as “debt restructuring.” The rationale of proponents is that late payments to vendors currently cost the state somewhere between 1%-2% monthly or 12%-24% per year. Issuing bonds at a lower interest rate, maybe 5%-7% would cost significantly less and would save dollars that can be used to help make bill payments even more current and lessen the amount of outstanding debt. The Chicago Tribune has run almost daily editorials adamantly opposing more borrowing, no matter what the purpose. One wonders whether this failure to comprehend simple mathematics could be one reason they’re in bankruptcy? It’s too early to tell if this issue has any traction, but it appears to be on some tables.
Corporate Taxes: During the past few months a number of Illinois corporations have put out feelers about a better tax deal for themselves with a suggestion that they might seek greener pastures otherwise. The Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBOE) have been in the forefront, but other companies have urged a 5-10 year reenactment of research and development credits, and others yet are looking for other enticements or incentives to help with their respective bottom lines. The cost of the CME proposal has been pegged at $75-$100 million. The research and development credit is estimated to cost $30 million per year.
It’s pretty much been Democrats who have been pushing for the current crop of business tax breaks with little GOP support. As to why, it has been the subject of both media accounts this week and debate in the Senate Executive Committee last Thursday that legislative Republicans feel that any tax incentive package considered by the legislature must be broader based and include more options for business relief. A package proposed by House GOP Leader Tom Cross is estimated to cost in the range of $500 million. In order for any legislation approved in the fall session a three-fifths vote is required, so that means that if there isn’t some bipartisan agreement it’s not going to happen, and agreement is far from certain at this point.
There’s one other sticking point with all the discussion about tax breaks. Where will the money come from? The state is pretty tapped out and there is a 33.2 billion pound gorilla in the room … namely, the spending cap the General Assembly approved last spring. It may take every creative juice that the legislature can muster to figure out how to make this happen without severely crimping state services, or their credibility, further.
Budget: The Governor cut $376 million from the budget sent to him by the legislature in May. In the meantime he indicated his desire to reallocate those funds or the result would be 1,900 layoffs and facility closings. He has also refused to pay raises negotiated under the AFSCME labor agreement negotiated last year, indicating that the legislature hadn’t provided enough funding. So far, hearing officers hearing AFSCME’s complaint about the raises have ruled against the Governor, so one budgetary thicket has been created. Legislative leaders have agreed to consider reallocating the $376 million so long as the spending cap is not exceeded. The bad news is that there have been at least double the requests for program spending so the reallocation won’t begin to make everyone happy.
In the meantime, Speaker Madigan created a stir last week when he introduced House Joint Resolution 45 that allows the legislature appropriate a specified percentage of increase for associated with any and all state government collective bargaining contracts. It also prohibits reductions in workforce from being bargained. Since the Governor has maintained that he can’t pay increases because the legislature didn’t give him enough money, the resolution is the legislature’s response … “then we’ll give you a finite amount you have to work with when bargaining”. Additionally, since the Governor agreed to no layoffs for two years when the current contract was negotiated in 2010, and that has become a contentious issue since the Governor has proposed laying off approximately 1,900, the legislature wants to be on record ending that practice. The Joint Resolution has been assigned to the House Revenue and Finance Committee but it’s too early to tell whether it will be moved or whether it was introduced to send a message.
Last summer, the Governor also vetoed the salaries of 44 state educational service region superintendents. He has commented that their cost, roughly $10 million, should not be paid from state resources because they provide a local government function. While there is much to quibble about with his rationale, efforts are being made to pay salaries from the Corporate Personal Property Replacement Tax, a tax that supports local governments. It would mean a loss of state reimbursement to those local governmental bodies. The regional superintendents have not been paid since July and efforts to approve the replacement tax transfer were defeated in the House last week, so the fate of the salaries is up in the air. Expect other attempts to try to have this legislation approved during the next veto session week. Some legislators have argued that these offices represent an unneeded layer of bureaucracy, so expect some discussion as to whether or not these offices should be abolished.
Tax Exemptions: Three Illinois hospitals potentially took a big hit this past summer when the Illinois Supreme Court ruled that the Illinois Department of Revenue was within its rights to repeal their property tax exemptions because those facilities did not provide enough charity care. The court ruling could have far reaching consequences and the Governor’s office, as well as the legislature, must decide soon as to specific rules that these and other facilities must follow in order to keep and/or restore the exemptions. Northwestern Memorial Hospital's Prentice Women's Hospital, Edward Hospital in Naperville and Decatur Memorial Hospital all, obviously, disagree with the Department’s actions. Action to actually take away the exemptions has been temporarily delayed while discussions take place between those hospitals and the administration … and there are potentially 15 other hospitals in the state that may have the same problem.
One of the hurdles that state policymakers will face when trying to determine appropriate levels of charity care that must be provided is that there is currently no particular standard or rules. The Illinois Department of Revenue, some have mused, uses the “I’ll know it when I see it” standard. Regardless, it’s going to be a battle royal as both sides prepare to address the issue of how much is appropriate. It’s doubtful that the legislature will be ready to address this issue in November but there is no doubt that it will be a focus of the 2012 general session.
The legislature is also in the process of addressing the question of erroneous homestead exemptions having been awarded to properties that do not qualify. House Bill 506 that was approved by the House last week stipulates procedures for determining penalties and payback of unpaid taxes. Erroneous property exemptions resulted in legislation two years ago to have senior citizens reapply each year for their senior homestead exemptions. As a result, some seniors have inadvertently lost their exemptions, have had to travel to county offices to reapply, and have howled about the hassle. It is expected that the General Assembly will repeal that provision sometime soon.
Pension Reform: For the last few weeks the Chicago media has been replete with stories about individuals who have used or abused Illinois pension statutes to enrich themselves. A few of the accounts were stories of individuals collecting multiple pensions or who were able to embellish their pensions by using statutory loopholes. But the big focus was the chronicling of various labor leaders who worked just short time for the City of Chicago but were able to meld in other time to their City pension account and collect substantial public pensions. There were also stories of some retired labor leaders apparently collecting both public and union pensions when state law permits only one or the other. These examples have given the Chicago Tribune the opportunity to carry on its crusade to have the legislature change and restrict pension requirements for current state and local government employees.
Legislation was approved in the House overwhelmingly this past week to address the abuses that were exposed by the media and it’s a given that the Senate will do the same next week. However, this legislation takes care of the “low hanging fruit” of pension reform. The big question is whether the General Assembly will address what many say the Illinois Constitution prohibits, and that is to change benefits for current employees. It’s doubtful that we’ll see action on those issues taken in the fall session because they will be extremely controversial. It’s unlikely that the extraordinary majority vote needed for enactment would be reached. But, you can be assured that pension reform will continue to be a hot topic through the 2012 session and the subsequent election season.
Long Odds on Gaming?
Just prior to the start of the veto session Governor Quinn announced his position on gaming expansion and promised to reject anything that reaches his desk that goes beyond his “vision”. The Governor’s position draws the line at five new casinos (Chicago, north suburbs, south suburbs, Rockford and Danville) and rejects slot machines at race tracks (racinos) and at the state fairgrounds. The Governor also espoused a change in the previously enacted video poker legislation that was approved two years ago to fund capital construction. He indicated that it is his preference now to see communities vote to accept video gaming rather than vote to reject it as is the current law. Lastly, he indicated a preference for all proceeds to be used for education rather than be placed in the General Revenue Fund.
While the original legislation containing the expansion is still being held by a parliamentary maneuver, the Governor has “dared” the legislature to send it to him so he can issue a veto. Because of the delicacy of the coalition that produced the votes to pass the bill initially, there is speculation that any expansion in now no longer possible. Opponents of additional gaming are thrilled at the prospect of the entire expansion proposal being thwarted. Their opinion is that the large expansion proposal was a “house of cards”. Remove one piece and the entire structure falls. And they may be right. Proponents are convinced that the Governor is posturing and can’t turn his back on $1.5 billion in upfront fees and potentially $1 billion of additional revenue annually. They feel they can put together a package that answers the Governor’s objections, but they have also indicated that without all the original pieces getting enough votes will be more than difficult. This may be a case where the growing number of lame duck legislators may prove decisive if proponents hope to succeed.
Discussions on expansion may take place during this week with some anticipation of trying to get a deal before the end of the veto session.
In the meantime, the Governor has replaced all members of the Illinois Gaming Board with the exception of the Chairman, Aaron Jaffe. Quinn and Jaffe have a relationship that goes back decades and the Governor trusts him implicitly. The remaining board members were Blagojevich appointees and the Governor has been replacing the vast majority of them on this and other board and commissions with his own.
It’s Electric
For Commonwealth Edison and Ameren customers, there’s a “Smart Grid” in your future. Last week the legislature overrode the Governor’s veto of legislation promoted by those utilities to upgrade the electrical grid. The proposal had been extremely controversial with consumer advocates contending that there was not enough protection for consumers and that the utilities should pay for any upgrade without nicking its users for the cost. The utilities, on the other hand, argue that the grid has not been upgraded in decades and that customers would be better served because outages could be minimized and/or outage power restored with greater efficiency, thereby providing less disruption. The anticipated cost to consumers for the upgrade is $3.40 per month for ten years.
Opposition to “Smart Grid” became a crusade for the Governor over the summer and fall. And his message did resonate with consumer groups and some legislators. Before the veto override votes were taken the General Assembly approved a “trailer bill” (legislation that takes effect only upon the enactment of another bill) that changes some of the provisions of the original proposal to take into account some of the Governor’s objections. But the elements contained in the trailer bill did not satisfy the Governor and consumer groups, who intensified their efforts to see the gubernatorial veto sustained. They lost, and by a razor thin margin the vetoes were overridden. The “trailer bill” was approved and sent to the Governor.
The override of the “Smart Grid” bill, and the subsequent passage of the “trailer bill,” creates a conundrum for Governor Quinn. The legislature overrode a bill he hated so it’s law regardless of his feelings. So, now he gets the trailer and he could be in a quandary as to what to do with it? If he signs the bill it could be perceived as his stamp of approval that makes what he considers bad public policy better. If he vetoes it will his detractors say that he passed on an opportunity to correct deficiencies and provide protections to consumers? It presents an interesting dilemma for Quinn. Sometimes, being Governor can be very frustrating.
Health Care Benefits Exchange
One of the major functions of the federal Affordable Care Act is 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.
A study panel was created this past summer to study available options and a draft report has been released, but specific recommendations were not made. Rather, there have been discussions and negotiations that have ensued to try to come up with a workable, agreeable program. As usual, lines have been drawn by consumer and business groups and those will have to be overcome in order to finalize plans for an Illinois Exchange. Current statistics show the present distribution of Illinoisan insurance coverage as follows: Employer plans – 52%, Medicaid – 20%, Medicare – 12%, Individual plans – 4%, and Uninsured – 12%.
Important issues that need to be resolved during current discussions are:
Exchange Model: There are two general models that can be followed. The “market organizer” model operates as a clearinghouse for health insurance coverage, where “any willing plan” that meets minimum requirements would not be precluded from being offered as an option for consumers. The alternative is the “market developer” model that would seek to leverage the Exchange buying power to get its members the best possible deal on the most valuable coverage.
Governing Board Membership: Who should be appointed to govern the Exchange and by whom? There is general agreement that the membership of any governing board be diverse, but there are questions as to whether or not certain groups should be excluded. For instance, it has been proposed that no representative from the insurance industry and no legislators be allowed appointment because of potential conflicts of interest. There is also a push to have any Exchange be independent from all state agencies.
Sustainability: The Affordable Care Act provides that Exchanges must be self sustaining by January 1, 2015, after initial start-up grants provided by the federal government. There are several options that will be considered to try to accomplish sustainability. Most of the options will most likely be rejected, and some hybrid plan will probably be developed based on what other states are doing and the reality of what can be achieved in Illinois in conjunction with the consent or objections of various consumer and business groups. Among the many options are:
• An assessment on participating Qualified Health Plans (QHPs) of approximately 2.24 percent and 3.39 percent of plan premiums;
• An assessment fee on insurers;
• A claims transaction fee, such as the one levied in the State of Michigan to fund its Medicaid program.;
• Use of General Revenue;
• Leveraging the state Medicaid program. Other states are considering utilizing the Exchange to determine Medicaid eligibility, which would allow Exchange costs to be charged to the state Medicaid program. The program would be able to offset this by receiving federal matching funds, which would lower overall Illinois costs
• Utilizing the Exchange as a purchasing agent for other state programs, including the State Employee Group Insurance Program and other managed care plans. This would potentially provide an ongoing source of income for the Exchange and useful experience in the health insurance field.;
• An assessment fee on consumers. No other state is pursuing this option and it is unlikely to be considered in Illinois;
• A licensing fee on “navigators” for the Exchange. Navigators are organizations who are utilized to help bring individuals and businesses to the Exchange, through advertising, social involvement, and a variety of other ways.
• Levying an assessment on all health care stakeholders in the state is also available as an option for financing the Exchange. This option is not being pursued by other states and most likely will not be pursued here.
Eligibility: There will be a push to allow any business with less than 100 employees to purchase insurance on Exchange. Initial language that had been offered limited participation to businesses with 50 or less employees.
SB 1313 has been identified at the bill that will ultimately carry the language that will establish the Illinois Exchange, however at this juncture it’s a blank canvass waiting for the picture it will carry to become clear. There had been some hope that the legislation could be finalized during the fall session, however while negotiations have been ongoing there apparently has been no agreement as yet. But expect that this issue will get boatloads of discussion once various specific proposals surface.
Reapportionment Update
Reapportionment lawsuits are still in federal court where a decision is expected soon. Candidate petition filing for the March 20 primary election begins November 28 and ends December 5, but there is no guarantee that the courts will render a decision prior to those dates.
Legislative Turnover
Rep. Tom Holbrook (D-Belleville) has resigned to become state Pollution Control Board Chairman. A replacement will be named soon.
Rep. Karen Yarbrough (D-Broadview) has announced she will not seek re-election to the Senate but will instead run for office in Cook County. Sen. Suzi Schmidt (R-Lake Forest) and Sen. Edward Maloney (D-Chicago) have also announced their intentions to retire and not seek-re-election. It is expected that Sen. James Meeks (D-Chicago) will also soon announce his intention to retire.
Candidate petition filing begins November 28 and ends December 5. The close of filing will yield the first official list of incumbents that are electing to take a pass on re-election. The addendum to the first list of non-returning incumbents will be the results of the March 20 primary election. A number of legislators are running against each other in the primary election so the losers will be added to the list of non-returnees. The November general election results will provide the last names to be added to the list. There is only one November race in the state that will pit a Democratic and Republican incumbent (Rep. Sidney Mathias (R-Buffalo Grove) v. Rep. Carol Sente (D-Vernon Hills)) so one of them will not be returning, but the prevailing opinion is that there will be a number of other very difficult races next fall that could send a few incumbents packing.
Veto Session
The final days of the General Assembly veto session will be November 8,9,10. It was also announced that the calendar for the spring legislative session will be released during that week.
Generally, most of the final action in fall veto sessions takes place during its second week, scheduled for November 8,9,10. The just completed first week is used to set the table and finalize whatever discussions may be necessary to complete action during the second week.
And that table is filled to capacity, with possible budget reallocation, “smart grid”, casinos, corporate tax incentives, possible borrowing to pay back bills, maybe some modicum of pension reform, health care reform implementation, regional school superintendent salaries, hospital property tax exemptions, and a host of others. In terms of the number of issues on the table, there’s enough for legislators to gorge themselves. As for how clean the table will be when the smoke clears on November 10, that remains to be seen.
One thing that has been apparent since the middle of the spring legislative session, through the summer and this past session week is the absence of meaningful communication between the legislature and the Governor. You’ll recall that after his budget message last year, when he proposed spending an additional $2 billion with state finances in a freefall, the legislature took over the budget process, adopted a strict spending cap and pretty much excluded the Governor from any budget discussions. During the summer as major issues were being decided there was little communication between the Governor and legislative leaders. Using the casino issue as an example, the Governor spoke to few legislators about concerns or alternatives, preferring to wait until the 11th hour to announce his objections. Similarly, the issue of reallocation of $376 million dollars that the Governor reduced from the budget sent to him in June has followed the same path, where the Governor has threatened facility closures and layoffs but hasn’t really engaged in conversations about a solution.
Governor Quinn has taken numerous shots at the legislature, chiding them in the media about the way they have handled issues. Call a press conference and complain has been his approach. Ironically, that’s pretty close to the tactic that former Governor Blagojevich used to use, and also similar to Quinn’s modus operandi when he was a political gadfly prior to his election to various offices. It’s not known for being a productive way to handle business.
Legislative leaders and their minions complain about governing by press conference and the absence of meaningful discussion, even when the parties get together to talk. One leader has even stopped attending meetings the Governor calls, preferring to send a replacement because of the lack of productive dialogue. With many major issues to be considered in the next two weeks it will be interesting to see whether there will be any thaw in the executive/legislative dynamic that will result in productive resolution.
“Gimme Money, That’s What I Want”
Last May Illinoisans were treated to the state government version of a Hollywood cliffhanger, with a budget fraught with uncertainty sent to the Governor and with a plethora of issues popping up during the summer. In the world of celluloid the next episode begins with the hero saving the day and moving on to the next adventure. In the governmental version there is no hero and the “cliff” keeps getting more slippery. And in the Illinois version it’s state finance that’s on the slippery slope. While there seems to have been a slight reversal in the depth of the fiscal sinkhole, there are abundant pressures on state government as it tries to pay bills and grow the economy at the same time. Everyone wants a larger piece of a pie that can’t possibly feed everyone as it is. Here are some of the major issues that the legislature is may try to tackle in the next few weeks.
Borrowing: Had fallen out of any conversations for months until State Treasurer Dan Rutherford apparently had a slight change of position this past week and suggested that maybe borrowing a little (maybe $2.5 billion to $4 billion) to pay vendors might not be such a bad idea after all. He had been a fervent opponent to borrowing in the past. It’s not certain that he’ll stick to his guns or has the clout to get Republican votes for any proposal that is put forward. The GOP is almost apoplectic about opposing additional borrowing and, with a three-fifths majority required to approve any new borrowing, it’s not going to happen without a few of them jumping over. Proponents of this additional borrowing like to refer to it as “debt restructuring.” The rationale of proponents is that late payments to vendors currently cost the state somewhere between 1%-2% monthly or 12%-24% per year. Issuing bonds at a lower interest rate, maybe 5%-7% would cost significantly less and would save dollars that can be used to help make bill payments even more current and lessen the amount of outstanding debt. The Chicago Tribune has run almost daily editorials adamantly opposing more borrowing, no matter what the purpose. One wonders whether this failure to comprehend simple mathematics could be one reason they’re in bankruptcy? It’s too early to tell if this issue has any traction, but it appears to be on some tables.
Corporate Taxes: During the past few months a number of Illinois corporations have put out feelers about a better tax deal for themselves with a suggestion that they might seek greener pastures otherwise. The Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBOE) have been in the forefront, but other companies have urged a 5-10 year reenactment of research and development credits, and others yet are looking for other enticements or incentives to help with their respective bottom lines. The cost of the CME proposal has been pegged at $75-$100 million. The research and development credit is estimated to cost $30 million per year.
It’s pretty much been Democrats who have been pushing for the current crop of business tax breaks with little GOP support. As to why, it has been the subject of both media accounts this week and debate in the Senate Executive Committee last Thursday that legislative Republicans feel that any tax incentive package considered by the legislature must be broader based and include more options for business relief. A package proposed by House GOP Leader Tom Cross is estimated to cost in the range of $500 million. In order for any legislation approved in the fall session a three-fifths vote is required, so that means that if there isn’t some bipartisan agreement it’s not going to happen, and agreement is far from certain at this point.
There’s one other sticking point with all the discussion about tax breaks. Where will the money come from? The state is pretty tapped out and there is a 33.2 billion pound gorilla in the room … namely, the spending cap the General Assembly approved last spring. It may take every creative juice that the legislature can muster to figure out how to make this happen without severely crimping state services, or their credibility, further.
Budget: The Governor cut $376 million from the budget sent to him by the legislature in May. In the meantime he indicated his desire to reallocate those funds or the result would be 1,900 layoffs and facility closings. He has also refused to pay raises negotiated under the AFSCME labor agreement negotiated last year, indicating that the legislature hadn’t provided enough funding. So far, hearing officers hearing AFSCME’s complaint about the raises have ruled against the Governor, so one budgetary thicket has been created. Legislative leaders have agreed to consider reallocating the $376 million so long as the spending cap is not exceeded. The bad news is that there have been at least double the requests for program spending so the reallocation won’t begin to make everyone happy.
In the meantime, Speaker Madigan created a stir last week when he introduced House Joint Resolution 45 that allows the legislature appropriate a specified percentage of increase for associated with any and all state government collective bargaining contracts. It also prohibits reductions in workforce from being bargained. Since the Governor has maintained that he can’t pay increases because the legislature didn’t give him enough money, the resolution is the legislature’s response … “then we’ll give you a finite amount you have to work with when bargaining”. Additionally, since the Governor agreed to no layoffs for two years when the current contract was negotiated in 2010, and that has become a contentious issue since the Governor has proposed laying off approximately 1,900, the legislature wants to be on record ending that practice. The Joint Resolution has been assigned to the House Revenue and Finance Committee but it’s too early to tell whether it will be moved or whether it was introduced to send a message.
Last summer, the Governor also vetoed the salaries of 44 state educational service region superintendents. He has commented that their cost, roughly $10 million, should not be paid from state resources because they provide a local government function. While there is much to quibble about with his rationale, efforts are being made to pay salaries from the Corporate Personal Property Replacement Tax, a tax that supports local governments. It would mean a loss of state reimbursement to those local governmental bodies. The regional superintendents have not been paid since July and efforts to approve the replacement tax transfer were defeated in the House last week, so the fate of the salaries is up in the air. Expect other attempts to try to have this legislation approved during the next veto session week. Some legislators have argued that these offices represent an unneeded layer of bureaucracy, so expect some discussion as to whether or not these offices should be abolished.
Tax Exemptions: Three Illinois hospitals potentially took a big hit this past summer when the Illinois Supreme Court ruled that the Illinois Department of Revenue was within its rights to repeal their property tax exemptions because those facilities did not provide enough charity care. The court ruling could have far reaching consequences and the Governor’s office, as well as the legislature, must decide soon as to specific rules that these and other facilities must follow in order to keep and/or restore the exemptions. Northwestern Memorial Hospital's Prentice Women's Hospital, Edward Hospital in Naperville and Decatur Memorial Hospital all, obviously, disagree with the Department’s actions. Action to actually take away the exemptions has been temporarily delayed while discussions take place between those hospitals and the administration … and there are potentially 15 other hospitals in the state that may have the same problem.
One of the hurdles that state policymakers will face when trying to determine appropriate levels of charity care that must be provided is that there is currently no particular standard or rules. The Illinois Department of Revenue, some have mused, uses the “I’ll know it when I see it” standard. Regardless, it’s going to be a battle royal as both sides prepare to address the issue of how much is appropriate. It’s doubtful that the legislature will be ready to address this issue in November but there is no doubt that it will be a focus of the 2012 general session.
The legislature is also in the process of addressing the question of erroneous homestead exemptions having been awarded to properties that do not qualify. House Bill 506 that was approved by the House last week stipulates procedures for determining penalties and payback of unpaid taxes. Erroneous property exemptions resulted in legislation two years ago to have senior citizens reapply each year for their senior homestead exemptions. As a result, some seniors have inadvertently lost their exemptions, have had to travel to county offices to reapply, and have howled about the hassle. It is expected that the General Assembly will repeal that provision sometime soon.
Pension Reform: For the last few weeks the Chicago media has been replete with stories about individuals who have used or abused Illinois pension statutes to enrich themselves. A few of the accounts were stories of individuals collecting multiple pensions or who were able to embellish their pensions by using statutory loopholes. But the big focus was the chronicling of various labor leaders who worked just short time for the City of Chicago but were able to meld in other time to their City pension account and collect substantial public pensions. There were also stories of some retired labor leaders apparently collecting both public and union pensions when state law permits only one or the other. These examples have given the Chicago Tribune the opportunity to carry on its crusade to have the legislature change and restrict pension requirements for current state and local government employees.
Legislation was approved in the House overwhelmingly this past week to address the abuses that were exposed by the media and it’s a given that the Senate will do the same next week. However, this legislation takes care of the “low hanging fruit” of pension reform. The big question is whether the General Assembly will address what many say the Illinois Constitution prohibits, and that is to change benefits for current employees. It’s doubtful that we’ll see action on those issues taken in the fall session because they will be extremely controversial. It’s unlikely that the extraordinary majority vote needed for enactment would be reached. But, you can be assured that pension reform will continue to be a hot topic through the 2012 session and the subsequent election season.
Long Odds on Gaming?
Just prior to the start of the veto session Governor Quinn announced his position on gaming expansion and promised to reject anything that reaches his desk that goes beyond his “vision”. The Governor’s position draws the line at five new casinos (Chicago, north suburbs, south suburbs, Rockford and Danville) and rejects slot machines at race tracks (racinos) and at the state fairgrounds. The Governor also espoused a change in the previously enacted video poker legislation that was approved two years ago to fund capital construction. He indicated that it is his preference now to see communities vote to accept video gaming rather than vote to reject it as is the current law. Lastly, he indicated a preference for all proceeds to be used for education rather than be placed in the General Revenue Fund.
While the original legislation containing the expansion is still being held by a parliamentary maneuver, the Governor has “dared” the legislature to send it to him so he can issue a veto. Because of the delicacy of the coalition that produced the votes to pass the bill initially, there is speculation that any expansion in now no longer possible. Opponents of additional gaming are thrilled at the prospect of the entire expansion proposal being thwarted. Their opinion is that the large expansion proposal was a “house of cards”. Remove one piece and the entire structure falls. And they may be right. Proponents are convinced that the Governor is posturing and can’t turn his back on $1.5 billion in upfront fees and potentially $1 billion of additional revenue annually. They feel they can put together a package that answers the Governor’s objections, but they have also indicated that without all the original pieces getting enough votes will be more than difficult. This may be a case where the growing number of lame duck legislators may prove decisive if proponents hope to succeed.
Discussions on expansion may take place during this week with some anticipation of trying to get a deal before the end of the veto session.
In the meantime, the Governor has replaced all members of the Illinois Gaming Board with the exception of the Chairman, Aaron Jaffe. Quinn and Jaffe have a relationship that goes back decades and the Governor trusts him implicitly. The remaining board members were Blagojevich appointees and the Governor has been replacing the vast majority of them on this and other board and commissions with his own.
It’s Electric
For Commonwealth Edison and Ameren customers, there’s a “Smart Grid” in your future. Last week the legislature overrode the Governor’s veto of legislation promoted by those utilities to upgrade the electrical grid. The proposal had been extremely controversial with consumer advocates contending that there was not enough protection for consumers and that the utilities should pay for any upgrade without nicking its users for the cost. The utilities, on the other hand, argue that the grid has not been upgraded in decades and that customers would be better served because outages could be minimized and/or outage power restored with greater efficiency, thereby providing less disruption. The anticipated cost to consumers for the upgrade is $3.40 per month for ten years.
Opposition to “Smart Grid” became a crusade for the Governor over the summer and fall. And his message did resonate with consumer groups and some legislators. Before the veto override votes were taken the General Assembly approved a “trailer bill” (legislation that takes effect only upon the enactment of another bill) that changes some of the provisions of the original proposal to take into account some of the Governor’s objections. But the elements contained in the trailer bill did not satisfy the Governor and consumer groups, who intensified their efforts to see the gubernatorial veto sustained. They lost, and by a razor thin margin the vetoes were overridden. The “trailer bill” was approved and sent to the Governor.
The override of the “Smart Grid” bill, and the subsequent passage of the “trailer bill,” creates a conundrum for Governor Quinn. The legislature overrode a bill he hated so it’s law regardless of his feelings. So, now he gets the trailer and he could be in a quandary as to what to do with it? If he signs the bill it could be perceived as his stamp of approval that makes what he considers bad public policy better. If he vetoes it will his detractors say that he passed on an opportunity to correct deficiencies and provide protections to consumers? It presents an interesting dilemma for Quinn. Sometimes, being Governor can be very frustrating.
Health Care Benefits Exchange
One of the major functions of the federal Affordable Care Act is 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.
A study panel was created this past summer to study available options and a draft report has been released, but specific recommendations were not made. Rather, there have been discussions and negotiations that have ensued to try to come up with a workable, agreeable program. As usual, lines have been drawn by consumer and business groups and those will have to be overcome in order to finalize plans for an Illinois Exchange. Current statistics show the present distribution of Illinoisan insurance coverage as follows: Employer plans – 52%, Medicaid – 20%, Medicare – 12%, Individual plans – 4%, and Uninsured – 12%.
Important issues that need to be resolved during current discussions are:
Exchange Model: There are two general models that can be followed. The “market organizer” model operates as a clearinghouse for health insurance coverage, where “any willing plan” that meets minimum requirements would not be precluded from being offered as an option for consumers. The alternative is the “market developer” model that would seek to leverage the Exchange buying power to get its members the best possible deal on the most valuable coverage.
Governing Board Membership: Who should be appointed to govern the Exchange and by whom? There is general agreement that the membership of any governing board be diverse, but there are questions as to whether or not certain groups should be excluded. For instance, it has been proposed that no representative from the insurance industry and no legislators be allowed appointment because of potential conflicts of interest. There is also a push to have any Exchange be independent from all state agencies.
Sustainability: The Affordable Care Act provides that Exchanges must be self sustaining by January 1, 2015, after initial start-up grants provided by the federal government. There are several options that will be considered to try to accomplish sustainability. Most of the options will most likely be rejected, and some hybrid plan will probably be developed based on what other states are doing and the reality of what can be achieved in Illinois in conjunction with the consent or objections of various consumer and business groups. Among the many options are:
• An assessment on participating Qualified Health Plans (QHPs) of approximately 2.24 percent and 3.39 percent of plan premiums;
• An assessment fee on insurers;
• A claims transaction fee, such as the one levied in the State of Michigan to fund its Medicaid program.;
• Use of General Revenue;
• Leveraging the state Medicaid program. Other states are considering utilizing the Exchange to determine Medicaid eligibility, which would allow Exchange costs to be charged to the state Medicaid program. The program would be able to offset this by receiving federal matching funds, which would lower overall Illinois costs
• Utilizing the Exchange as a purchasing agent for other state programs, including the State Employee Group Insurance Program and other managed care plans. This would potentially provide an ongoing source of income for the Exchange and useful experience in the health insurance field.;
• An assessment fee on consumers. No other state is pursuing this option and it is unlikely to be considered in Illinois;
• A licensing fee on “navigators” for the Exchange. Navigators are organizations who are utilized to help bring individuals and businesses to the Exchange, through advertising, social involvement, and a variety of other ways.
• Levying an assessment on all health care stakeholders in the state is also available as an option for financing the Exchange. This option is not being pursued by other states and most likely will not be pursued here.
Eligibility: There will be a push to allow any business with less than 100 employees to purchase insurance on Exchange. Initial language that had been offered limited participation to businesses with 50 or less employees.
SB 1313 has been identified at the bill that will ultimately carry the language that will establish the Illinois Exchange, however at this juncture it’s a blank canvass waiting for the picture it will carry to become clear. There had been some hope that the legislation could be finalized during the fall session, however while negotiations have been ongoing there apparently has been no agreement as yet. But expect that this issue will get boatloads of discussion once various specific proposals surface.
Reapportionment Update
Reapportionment lawsuits are still in federal court where a decision is expected soon. Candidate petition filing for the March 20 primary election begins November 28 and ends December 5, but there is no guarantee that the courts will render a decision prior to those dates.
Legislative Turnover
Rep. Tom Holbrook (D-Belleville) has resigned to become state Pollution Control Board Chairman. A replacement will be named soon.
Rep. Karen Yarbrough (D-Broadview) has announced she will not seek re-election to the Senate but will instead run for office in Cook County. Sen. Suzi Schmidt (R-Lake Forest) and Sen. Edward Maloney (D-Chicago) have also announced their intentions to retire and not seek-re-election. It is expected that Sen. James Meeks (D-Chicago) will also soon announce his intention to retire.
Candidate petition filing begins November 28 and ends December 5. The close of filing will yield the first official list of incumbents that are electing to take a pass on re-election. The addendum to the first list of non-returning incumbents will be the results of the March 20 primary election. A number of legislators are running against each other in the primary election so the losers will be added to the list of non-returnees. The November general election results will provide the last names to be added to the list. There is only one November race in the state that will pit a Democratic and Republican incumbent (Rep. Sidney Mathias (R-Buffalo Grove) v. Rep. Carol Sente (D-Vernon Hills)) so one of them will not be returning, but the prevailing opinion is that there will be a number of other very difficult races next fall that could send a few incumbents packing.
Veto Session
The final days of the General Assembly veto session will be November 8,9,10. It was also announced that the calendar for the spring legislative session will be released during that week.
Monday, October 3, 2011
Legislative Update - September 30, 2011
A Hot September
With the legislative veto session scheduled to commence at the end of October, the “issues table” began being set during September with a flurry of budgetary announcements initiated by the Governor, the most significant of which was the announcement of the closure of seven state facilities and the possible layoff of over 1,900 state employees. The Governor indicated that much of this pain could be remedied if the General Assembly allowed reallocation of the $376 million that be reduced from the budget that was presented to him in June. As far as this spending suggestion is concerned, it may have legs. Speaker Madigan issued a statement shortly after indicating that he might be amenable to discussing a reallocation, however under no circumstances would there be any consideration to approve expenditures beyond the level that was approved by the legislature at the end of May. The intention still appears to be that any revenues in excess of what was budgeted would be used to pay down debt.
Speaking of the state’s debt sinkhole, a recent report projected the level of unpaid state bills at the end of FY 2012 would be in the neighborhood of $5.5 billion. Another report pegged the number at $8 billion. Regardless, it’s still a huge number. But, the legislature did attempt to act like the adults in the room this past year and tried to get take steps to ameliorate the problem. There are also additions to the list of unpaid state bills like Medicaid reimbursements being delayed, higher projected pension payments, and health care costs that will make the final deficit even higher. But, projections last year put the state debt number at $12-14 billion so there apparently is some progress, albeit baby steps, being made. Also remember that the state income tax increase is supposed to expire in another 3+ years and that will mean a loss of $5-6 billion per annum. In the meantime, the General Assembly’s Commission on Government Forecasting and Accountability (COGFA) has projected an average revenue increase of $500 million per month, so barring a secondary national recession there is a tiny glimmer of hope that we can see some breathing room in a few years.
So even if pressures arise to spend beyond the already budgeted level in October, three of the four legislative caucuses (Senate Democrats excluded) fully intend to adhere to the spending levels that were previously set.
Reapportionment Maps in Court
A federal court decision on the validity of the Illinois state and federal reapportionment is expected sometime in November. In the meantime candidates for the state legislature have begun making plans, preparations and announcements to run in the newly designated districts. And, some prospective candidates, incumbents in particular, are grappling with very difficult decisions regarding residency. In a redistricting year the Illinois Constitution allows a candidate to run from any district that contains any part of their former district. The catch is that if you run and win then you have to move into the district you were elected from by May 1 of the following year. The thought of uprooting families and selling homes has caused many over the years to retire, and a number of incumbents have made such announcements with a number probably yet to come.
Illinois GOP congressmen, with the exception of Rep. Tim Johnson (R-Champaign) who has not taken part in a map challenge, have generally agreed that they will not distribute petitions for the newly formed districts because they do not want to anything that would suggest any validity to the courts. That may change as the deadline for submitting reelection petitions, the last Monday in November, draws closer. Illinois Republicans have also tried to goad Democrats into making statements regarding the map process that could be used in court. Notice that anytime charges are made and Democrats are asked for responses their answers are unwaveringly simple, stating that the maps were drawn in accordance with the federal Voting Rights Act and other applicable laws and nothing more.
Gaming Expansion Still On Hold
No further development have occurred with regard to gaming expansion, but expect discussions to heat up as the legislative veto session draws closer. The parliamentary hold that was placed on SB 744 by President Cullerton in May is still in place but is expected to be removed some time soon. With the exception of indicating that the bill is overloaded, Governor Quinn has not at this point indicated exactly where his objections lie and whether a compromise is possible that wouldn’t completely scuttle the bill. In the meantime, opponents and proponents are waiting anxiously to see what the next move will be. We may have some idea very soon.
Legislative Turnover
The following legislators have announced their intentions to retire at the end of their current terms rather than seek re-election: Sen. John Millner (R-West Chicago), Rep. Kimberly du Buclet (D-Chicago), Rep. Lisa Dugan (D-Kankakee), Rep. Connie Howard (D-Chicago), Rep. Joe Lyons (D-Chicago), Rep. Karen May (D-Highland Park), and Rep. Kevin McCarthy (D-Orland Park).
Tenure
There is often an erroneous perception that once elected legislators never leave willingly, rather they stick around one election too long and suffer defeats or are carried out. While that is true for some, the numbers show that there is a great deal of turnover in legislative seats during the course of each ten year period from one reapportionment to another. While sitting incumbents are still deciding whether or not to begin the process of putting their names on the ballot for the upcoming 2012 election cycle, a cursory review shows that there has been a fairly large legislative turnover since January, 2003, the date when legislators elected under the current maps were sworn into office.
Fifty-nine senators took the oath of office in 2003. How many are still serving today? Twenty seven … which represents a turnover of 54%. While a few did leave for other elective offices, most of the 32 departures simply completed their service by way of election defeat or retirement.
The turnover rate in the House is just as telling. Seventy of the 118 House members who took the oath of office in January, 2003 are no longer serving today, a turnover of 59%. Of those 70, seven moved across the rotunda to the Senate, but the other 63 left via deaths, defeats or retirements.
The departure numbers cited above do include legislators who have vacated offices by death or resignation this summer, but do not include those who have announced their intentions to retire at the end of their terms. Additionally, there will be a further winnowing of some incumbents because the new legislative maps have forced head-to-head primary election fights, and a few others that may not survive the general election next November. When the dust clears after the election season and legislators gather in Springfield in January, 2013 to begin the legislative session expected that at least 60% of senators and 65% of representatives were not around ten years prior.
These numbers should be very meaningful to those who promote and engage in advocacy because it fractures the presumption that legislative membership is a constant and never-changing. It verifies that there is always a new coterie of legislators to educate and to tell our story to.
Veto Session
The General Assembly will convene on October 25, 26, 27 and November 8,9,10 for its veto session.
With the legislative veto session scheduled to commence at the end of October, the “issues table” began being set during September with a flurry of budgetary announcements initiated by the Governor, the most significant of which was the announcement of the closure of seven state facilities and the possible layoff of over 1,900 state employees. The Governor indicated that much of this pain could be remedied if the General Assembly allowed reallocation of the $376 million that be reduced from the budget that was presented to him in June. As far as this spending suggestion is concerned, it may have legs. Speaker Madigan issued a statement shortly after indicating that he might be amenable to discussing a reallocation, however under no circumstances would there be any consideration to approve expenditures beyond the level that was approved by the legislature at the end of May. The intention still appears to be that any revenues in excess of what was budgeted would be used to pay down debt.
Speaking of the state’s debt sinkhole, a recent report projected the level of unpaid state bills at the end of FY 2012 would be in the neighborhood of $5.5 billion. Another report pegged the number at $8 billion. Regardless, it’s still a huge number. But, the legislature did attempt to act like the adults in the room this past year and tried to get take steps to ameliorate the problem. There are also additions to the list of unpaid state bills like Medicaid reimbursements being delayed, higher projected pension payments, and health care costs that will make the final deficit even higher. But, projections last year put the state debt number at $12-14 billion so there apparently is some progress, albeit baby steps, being made. Also remember that the state income tax increase is supposed to expire in another 3+ years and that will mean a loss of $5-6 billion per annum. In the meantime, the General Assembly’s Commission on Government Forecasting and Accountability (COGFA) has projected an average revenue increase of $500 million per month, so barring a secondary national recession there is a tiny glimmer of hope that we can see some breathing room in a few years.
So even if pressures arise to spend beyond the already budgeted level in October, three of the four legislative caucuses (Senate Democrats excluded) fully intend to adhere to the spending levels that were previously set.
Reapportionment Maps in Court
A federal court decision on the validity of the Illinois state and federal reapportionment is expected sometime in November. In the meantime candidates for the state legislature have begun making plans, preparations and announcements to run in the newly designated districts. And, some prospective candidates, incumbents in particular, are grappling with very difficult decisions regarding residency. In a redistricting year the Illinois Constitution allows a candidate to run from any district that contains any part of their former district. The catch is that if you run and win then you have to move into the district you were elected from by May 1 of the following year. The thought of uprooting families and selling homes has caused many over the years to retire, and a number of incumbents have made such announcements with a number probably yet to come.
Illinois GOP congressmen, with the exception of Rep. Tim Johnson (R-Champaign) who has not taken part in a map challenge, have generally agreed that they will not distribute petitions for the newly formed districts because they do not want to anything that would suggest any validity to the courts. That may change as the deadline for submitting reelection petitions, the last Monday in November, draws closer. Illinois Republicans have also tried to goad Democrats into making statements regarding the map process that could be used in court. Notice that anytime charges are made and Democrats are asked for responses their answers are unwaveringly simple, stating that the maps were drawn in accordance with the federal Voting Rights Act and other applicable laws and nothing more.
Gaming Expansion Still On Hold
No further development have occurred with regard to gaming expansion, but expect discussions to heat up as the legislative veto session draws closer. The parliamentary hold that was placed on SB 744 by President Cullerton in May is still in place but is expected to be removed some time soon. With the exception of indicating that the bill is overloaded, Governor Quinn has not at this point indicated exactly where his objections lie and whether a compromise is possible that wouldn’t completely scuttle the bill. In the meantime, opponents and proponents are waiting anxiously to see what the next move will be. We may have some idea very soon.
Legislative Turnover
The following legislators have announced their intentions to retire at the end of their current terms rather than seek re-election: Sen. John Millner (R-West Chicago), Rep. Kimberly du Buclet (D-Chicago), Rep. Lisa Dugan (D-Kankakee), Rep. Connie Howard (D-Chicago), Rep. Joe Lyons (D-Chicago), Rep. Karen May (D-Highland Park), and Rep. Kevin McCarthy (D-Orland Park).
Tenure
There is often an erroneous perception that once elected legislators never leave willingly, rather they stick around one election too long and suffer defeats or are carried out. While that is true for some, the numbers show that there is a great deal of turnover in legislative seats during the course of each ten year period from one reapportionment to another. While sitting incumbents are still deciding whether or not to begin the process of putting their names on the ballot for the upcoming 2012 election cycle, a cursory review shows that there has been a fairly large legislative turnover since January, 2003, the date when legislators elected under the current maps were sworn into office.
Fifty-nine senators took the oath of office in 2003. How many are still serving today? Twenty seven … which represents a turnover of 54%. While a few did leave for other elective offices, most of the 32 departures simply completed their service by way of election defeat or retirement.
The turnover rate in the House is just as telling. Seventy of the 118 House members who took the oath of office in January, 2003 are no longer serving today, a turnover of 59%. Of those 70, seven moved across the rotunda to the Senate, but the other 63 left via deaths, defeats or retirements.
The departure numbers cited above do include legislators who have vacated offices by death or resignation this summer, but do not include those who have announced their intentions to retire at the end of their terms. Additionally, there will be a further winnowing of some incumbents because the new legislative maps have forced head-to-head primary election fights, and a few others that may not survive the general election next November. When the dust clears after the election season and legislators gather in Springfield in January, 2013 to begin the legislative session expected that at least 60% of senators and 65% of representatives were not around ten years prior.
These numbers should be very meaningful to those who promote and engage in advocacy because it fractures the presumption that legislative membership is a constant and never-changing. It verifies that there is always a new coterie of legislators to educate and to tell our story to.
Veto Session
The General Assembly will convene on October 25, 26, 27 and November 8,9,10 for its veto session.
Sunday, May 1, 2011
ISAWWA Legislative Update - May 1 - 2011
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)
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)
Tuesday, April 5, 2011
Bean Counting - ISAWWA Legislative UPDATE
“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)
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)
Tuesday, March 1, 2011
“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)
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)
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