Thursday, July 31, 2008

Which way?

The first time a state legislative panel has gone this far in carrying out a statutory process for closing a state facility isn’t a pretty one. Whether intended or not, one Illinois town has been pitted against another after Gov. Rod Blagojevich in June proposed moving about 140 Illinois Department of Transportation positions from Springfield three hours south to Harrisburg.

It was easy to see the tension during a lengthy public hearing in the state Capitol building Thursday night. A packed committee room literally was divided. Harrisburg residents sat on one side in purple T-shirts encouraging people to visit the southern Illinois town. Springfield state employees sat on the other side in lime green T-shirts saying the move is the “wrong way.” More supporters and opponents overflowed to the floor below, where they sat in folding chairs lined up in two more hallways and watched the committee hearing on giant screens.

The dilemma facing the Commission on Government Forecasting and Accountability, the panel overseeing the process, is muddled. Facts have been complemented, and sometimes contradicted, by politics and emotions in the past few months.

Union-backed employees repeatedly have shared personal stories, including having to leave a grandmother with Alzheimer’s disease in a nursing home, forcing a teen-age son who lives between his mother’s and father’s homes to decide between the two and challenging people with disabilities who have support networks and medical experts in Springfield. The governor's office has said employees can choose to stay in Springfield and take jobs with equal pay and equal benefits, although the employees are skeptical.

Harrisburg officials said they feel left out and overshadowed by Springfield. “We’re depressed, not stupid,” said Harrisburg Mayor Valerie Mitchell.

They’re both victims, one set to lose either way. The motivation behind the move is the most contentious point, particularly whether the idea is rooted in economics or in politics.

GOP legislators representing the Springfield area allege the governor’s proposal was retribution for supporting a measure that would allow voters to recall elected officials, a measure perceived to be directed at the governor. Local officials list various state-owned facilities in Springfield that have space and could house the division. “We can move them a block or two and not 200 miles,” said Rep. Raymond Poe, a Springfield Republican, during the hearing.

The administration refutes the allegation and says the move is intended to give a boost to an economically depressed area of the state.

Sen. Christine Radogno, a Lemot Republican, said this proposal fails to consider economic development through private investment or tourism funding. Having spent the morning in Chicago at a leaders’ meeting about a statewide capital plan that would encourage such development, Radogno said during the hearing: “Guess what. It ain’t happening. It is so dysfunctional, the governance of this state, that we’re reduced to talking about economic development in terms of moving jobs around.”

“I want to help you,” she said to local Harrisburg officials, “but I’m not sure that, just again, moving government jobs around should satisfy us that we’re doing adequate economic development. That’s not economic development.”

Secretary of Transportation Milton Sees testified that it all started because of the need to replace old carpet nearly two years ago. Rather than continue to pay for an expensive lease to a California owner to house the Division of Traffic Safety, the department looked for ways to save money once the lease expired. Shortly after, Sees said the governor directed him to find a division that could serve in a stand-alone facility and relocate to an economically depressed area of the state. The focus shifted from finding space in Springfield to determining whether the Division of Traffic Safety could relocate to southern Illinois, eventually leading to Harrisburg. “They are starving for jobs, literally,” Sees said.

The transportation department already signed a contract to purchase space in the Harrisburg facility for $812,000, using money from the state’s dedicated Road Fund. IDOT’s chief counsel Ellen Schanzle-Haskins added that the department could break that lease at any time with five day’s notice. She also said the purchase is frozen until after the Commission on Government Forecasting and Accountability issues a recommendation, due September 11. The recommendation, however, is not binding. The governor could move the positions, anyway.

Out with a bang

Illinois is closing out July in style and gearing up for more politics in August. The same day Gov. Rod Blagojevich unveiled a “compromise” capital plan to fund road and school construction projects throughout the state, his office was sued along with Senate President Emil Jones Jr.’s office for not releasing budget-related details. And the governor’s idea to transfer nearly 150 positions from Springfield three hours south to Harrisburg is the subject of hours of testimony opposing the idea, although southern Illinois folks like the idea of an economic boost. (More on that in the next post.) And after all that in one day, the condition of state government is unlikely to change any time soon.

I write “compromise” in quotes because there’s no deal on the capital plan without all parties on board. Although the governor’s office made a gesture to compromise by getting rid of the revenue source that House Speaker Michael Madigan ruled out — expanded gaming — it’s clear that the governor’s revised proposal still lacks support from House Democrats. The new version reduces the spending amount from $34 billion to $25 billion. So, yes, the casino-less proposal satisfies three of four caucuses, but those three caucuses were on board in the first place.

House Democrats’ concerns about the first plan still stand. Most prominently, they still don’t trust the governor to fairly distribute the capital funds. House Majority Leader Barbara Flynn Currie, a Chicago Democrat who represented the speaker in today’s meeting and in previous leaders’ meetings, reiterated Madigan’s stance: House Democrats won’t get on board unless the spending side of the capital plan is crystal clear. Steve Brown, Madigan’s spokesman, said specific line items are an “absolute requirement.” In an e-mail after the meeting, Currie echoed: “Assuming we could reach agreement on the revenue side — a big assumption — we would definitely want line-item allocations and some way to guarantee that dollars allocated are actually spent.”

Her kicker: “So I think we continue to be on a very steep uphill climb.”

The governor’s revised revenue ideas still lack consensus. House Democrats repeatedly have questioned the wisdom of the first revenue source: selling off all or part of the Illinois Lottery to the private sector. The state asset generates money for public education and has been estimated to be worth more than $10 billion, leading some to question why the state would sell it rather than revamp it and maximize its value. Proponents say the private sector could be more efficient and aggressive in managing the lottery’s potential.

Currie said, however, that privatization also could negate the original intent and appeal. “The lottery was originally sold as a way to help education, so buying a losing lottery ticket still helped the kids. Take away education, and people may feel they’ve been bamboozled.”

The governor’s proposal does include a “lockbox” for capital investments and lottery proceeds for education. And supporters of the lottery lease say the upfront cash and the ongoing state share of the profits would ensure that public schools would receive at least the same amount under the public-private partnership.

The other funding idea includes transferring higher-than-expected revenues from two state taxes, the motor fuel tax that goes into a dedicated Road Fund and the sales tax on gasoline that goes into the general revenue fund. Currie said her caucus could consider using “excess” revenues from the motor fuel tax (a.k.a. Road Fund) if the administration proves that the money would go directly to capital construction projects. Transferring excess revenues from the state sales tax on gasoline (a.k.a. general revenue fund) is a different story. “Diversions from GRF — which, essentially, is what taking gasoline sales taxes really is — could be a very tough sell,” Currie said. Without support from House Democrats, a capital plan is unlikely to advance.

Another lawsuit
Two nonprofit groups supporting limited government are suing Gov. Rod Blagojevich and Senate President Emil Jones Jr. for denying access to budget-related documents.

The Illinois Chapter of Americans for Prosperity based in Chicago and Judicial Watch Inc. based in Washington, D.C., filed suit in Sangamon County. They allege that both offices repeatedly denied requests under the Freedom of Information Act to release information about how a lump sum of $1.7 billion was spent in fiscal year 2008. In a Statehouse news conference Thursday, the two groups justified their suit by citing newspaper reports about questionable grants doled out by individual legislators. They’re asking the court to require Blagojevich and Jones to release information about specific uses of the money.

They’re targeting so-called member initiatives that distribute state grants to local nonprofits or units of local government, and so on, and the grants aren’t subject to competitive bidding processes or to legislative debates. Projects often are lumped together in a single dollar amount and lack specific descriptions of how that money would be used.

Jones’ office says its attorneys are reviewing the suit and don’t have a comment. I’m still waiting for a response from the governor’s office.

Joe Calomino, director of the Illinois Chapter of Americans for Prosperity, said the group did not sue House Democrats or Republicans because they released detailed information about money issued for member initiatives.

The group, which publishes an online blog called Pork Report, also is behind legislation that would create a Web site to track all money spent on all districts, all state contracts, all state employees and all tax credits to improve government transparency. It was intended to serve as a one-stop shop for taxpayers. The measure was unanimously approved by the House but stalled in the Senate.

Thursday, July 17, 2008

Tenaska in Taylorville update

Taylorville is one step closer to building a $2.5 billion “clean coal” power plant using Illinois coal and advanced technologies to reduce pollution. The Illinois House twice rejected the plan before approving legislation Wednesday that would allow a so-called feasibility study to estimate the cost of the project and detail the engineering of the cleaner power production. You can read about the holdup of the project and the purpose of the legislation in my June column in Illinois Issues magazine.

Now the legislation goes to the Senate. If approved, then the Nebraska-based Tenaska Inc. would conduct a study to detail how it would generate cleaner electricity, the cost of the project and the amount of money it would expect to collect in the long run. The legislation also would set parameters for Illinois’ long-term energy portfolio. Read my column for more on that.

Rep. Gary Hannig, a Litchfield Democrat whose district includes the proposed Taylorville Energy Center, described the purpose of the study. “They’re not just guesstimating what it would cost to build a plant. They’d be pretty close, to the point where they could say, ‘This is what a kilowatt of electricity will cost us.’ Then they’ll come back to us and say, ‘We’ll build it this way, it’ll be clean, and this is what it’ll cost.’ And then we say yes or no.”

The Illinois legislature would be able to review the study and vote on whether the project should proceed. Right now, no Illinois power plants qualify as a “clean coal” facility, Hannig said. Taylorville could be the first if this goes through.

Some Republicans still opposed the measure because they said it had potential to spend a lot of taxpayer dollars on unproven technology. No tax dollars would pay for the construction of the plant, but all electricity users — including customers of Commonwealth Edison in northern Illinois and Ameren Illinois customers in the rest of the state — eventually would help pay for the power supplied by the Tenaska plant once it went online.

The other holdup, until Wednesday, was that ComEd formerly opposed the legislation. The utility said in a statement that it now is on board because the legislation would beef up the oversight by the Illinois Commerce Commission and would require the commission and the Illinois Power Agency to hire an independent consultant to review Tenaska’s cost and engineering study, which would help legislators decide whether to let the project go forward.

Wednesday, July 16, 2008

More of the same

Most state agencies and services will remain funded at or below the same levels as last year, with slight increases for such items as education, higher education and the legislature’s annual 3.8 percent pay raises. The Illinois House failed today to restore most of the budget cuts that Gov. Rod Blagojevich implemented to balance a lopsided spending plan sent to his desk this summer. And the Senate still doesn’t plan to return to override nearly $480 million of the budget cuts that the House voted to restore this afternoon.

In May, the House and Senate approved a spending plan that exceeded the amount of money the state was projected to generate by about $2 billion, according to the governor’s budget office. So the governor cut $1.4 billion, often striking the increases that legislators sought for everything from alcohol and substance abuse treatment to frontline staff at prisons. But he also scratched entire lines from the budget, including $16 million from a Monetary Award Program for low-income college students.

While the governor’s office said Blagojevich acted “responsibly” to balance the budget, Rep. Gary Hannig, a Litchfield Democrat, called the governor’s method of balancing the budget “unfair” and said the cuts went “too far and were too deep.” Hannig said most Democratic members would have preferred that Blagojevich make more uniform cuts across the board or delay the payment of bills until the next fiscal year.

Minority Leader Tom Cross said the House GOP agreed that some cuts were “too deep,” but he added that they all could have avoided the situation had the House Democrats not approved a state budget that they knew had such a wide spending gap.

“We don’t agree that it’s unbalanced,” Hannig said. “We think it’s up to the governor to manage it.”

A majority of House members, including some Republicans, did vote to restore Medicaid funds that, if cut, would further delay state reimbursements to hospitals and nursing homes that care for Medicaid patients. And they agreed to restore money for such social services as the state Autism Program and centers for independent living arrangements for people with developmental disabilities, but both the Medicaid delays and the human service funding levels are likely to stand because the state Senate still does not plan to return to Springfield to overturn any budget cuts without new revenue sources to pay for them.

“There’s no money to go with it,” said Cindy Davidsmeyer, spokeswoman for Senate President Emil Jones Jr. “They did not pass any revenue.”

The one revenue idea that seemed to gain momentum in the House has now coasted to a stop. Rep. Sara Feigenholtz, a Chicago Democrat in charge of the Human Services Appropriations Committee, said she was trying to cut a deal with House Republicans to transfer extra money from specific dedicated funds to the state’s general fund, which would free up money to reverse some of the budget cuts to human services. That fell through, Feigenholtz said. “But we’re going to keep plugging away at it.”

The House and Senate are scheduled to return to Springfield November 12 for regular session to consider vetoes. House Speaker Michael Madigan closed today’s business by saying, “If the need arises in the interim, I may call the House into session.”

Tuesday, July 15, 2008

Are smaller bites easier to digest?

The waiting list of construction projects isn’t getting any shorter, and the cost of gas and materials isn’t getting any cheaper, so any talk of a statewide capital plan to fund those projects is important. But frustration can worsen when the Illinois House and Senate and the governor’s office seem so far away from making any kind of deal but continuously promote their own plans and try to make the others look bad.

Most recently, the House Democrats are taking this approach: If you can’t get a $34 billion capital plan for road and school construction projects done, then at least try to capture nearly $2 billion of the federal funds that are earmarked for Illinois but that are vulnerable if Illinois fails to act.

House Democrats this afternoon advanced measures that would attempt to capture $1.8 billion in federal funds designated for some Illinois infrastructure projects. (For those who like details: SB 1116 and SB 1460 would allow the state to issue $360 million in bonds to pay for the projects over many years. The state would have to repay the debt in increasing amounts every year, starting with about $2 million the first year and $20 million down the road.)

The governor’s office wasn’t too pleased with the plan, as indicated by this statement offered in an e-mail: “The House move puts us 1 percent closer to meeting our state’s infrastructure needs. Before the House starts pounding their chests and congratulating themselves, it’s our hope that they go back to work and pass the other 99 percent necessary to meet our infrastructure needs and create thousands of jobs.”

Proponents of the capital construction plan for Illinois compiled by former U.S. House Speaker Dennis Hastert and Southern Illinois University President Glenn Poshard often say the state could lose out on money sitting in Washington if Illinois doesn’t provide its share (the feds pay 80 percent; the state pays 20 percent).

The House Democrats are trying to send a signal to the feds that Illinois has the money ready to go to fund the projects most at-risk of losing the federal funds, said Rep. Gary Hannig, a Litchfield Democrat sponsoring the measure [emphasis added]. “This would allow us to make our 20 percent payment. In turn, we would expect the federal government to then come up with the 80 percent. But these are projects that our congressmen have determined and earmarked in a federal transportation bill.”

Steve Brown, Democratic spokesman, said the measure aims to bring in $1.2 billion for highway projects and $600 million for mass transit projects. He said House Democrats proposed those amounts in response to information from the Illinois Department of Transportation about the federal dollar amounts at risk without a state match. But IDOT couldn’t confirm that information or interpretation of the situation. Department spokesman Mike Claffey said IDOT didn’t have a comment but was looking into the legislation.

And as Hannig said, no one really knows when the federal earmarks will expire. “I think the view is that the sooner we try to access this money, the better, clearly.”

If the couple of measures won House approval, it still would need to pass the Senate. “If it passes, we’ll take a look at it when it gets here,” said Cindy Davidsmeyer, spokeswoman for the Senate Democratic leadership.

Let's be clear

Yes, Gov. Rod Blagojevich cut $1.4 billion out of the state budget, but even House Minority Leader Tom Cross recently said the governor didn’t have a choice. The Illinois General Assembly approved a budget that, by the governor’s count, authorized spending $2 billion more than it could afford.

While the state Senate approved a few revenue ideas that would pay for the extra spending, the House did not. The Democratic leadership said it’s up to the governor to balance the budget, so legislators expected the governor to make such cuts. Blagojevich had to either cut the increased spending over last year’s amounts or, as he described it, write checks that bounce.

So now the scene has been set for the House to vote this week on whether to restore some or all of the funding cuts. Democrats likely will have enough votes to advance the restored funding levels; yet, the House is unlikely to approve the revenue ideas needed to pay for the increased spending. The budget overrides also would need Senate approval within 15 days. In that chamber, Democratic leadership so far has been disinclined to return to Springfield before the annual November session, particularly if the House only restores funding levels without the associated revenue enhancements.

The scenario increases the likelihood that at least some or most of the funding levels will remain as enacted by the governor, at least until November.

There is a chance the House could approve one quasi revenue enhancement, but it just transfers money from dedicated accounts to the state’s general account. The so-called fund sweeps have been estimated to free up about $300 million to spend on whatever the House specifies, potentially human services.

Don’t expect a whole lot of Republicans to support that plan, and don’t count on the Senate to suddenly go along with fund sweeps that Senate President Emil Jones Jr. recently dismissed as a “drop in the bucket.”

At a Statehouse news conference this morning, Republican Caucus Chairman Rep. Dan Brady of Bloomington said it would be extremely difficult for GOP members to “pick and choose” which funding cuts to restore when Republicans never approved extra spending in the first place. (The caucus united in late May to cast “no” votes on the spending plan crafted by Democrats, but Democrats, the majority party, had enough votes by themselves to approve the budget bills.) Brady added that his caucus historically has opposed transferring money out of dedicated funds into the state’s general fund, although they're caucusing right now to decide where they stand.

That’s a brief synopsis of how we got here. When considering where we could go, look toward November. The House Democrats and the governor could swap a few jabs at each other in the meantime, particularly as it gets closer to the November 4 elections. However, little might change before then.

Monday, July 14, 2008

Tough times

The waiting list we told you about in June in Illinois Issues magazine could get worse if the General Assembly doesn’t override the governor’s recent veto of more than $43 million from community-based treatment programs for substance abusers.

The budget cuts could cause layoffs, program closures and “insurmountable” waiting lists for services, said Keith Kuhn, community director at Gateway Foundation in Springfield. The trickle-down effect would reach emergency rooms, mental health services, prisons and courts.

“A lot of the progress that we’ve been making in Illinois in trying to reduce the number of individuals incarcerated for addiction-related issues, a lot of those gains will be lost,” Kuhn said during a Statehouse news conference this afternoon. “And that would be a real shame that we had invested that much time, money and effort to only take significant steps back.” He described such a system as “barbaric” in the way it would approach addiction-related services.

Kuhn said the governor’s cuts reduce state funding for addiction treatment services in half, from $86.6 million to $43.3 million. “When factoring in other areas also receiving funding reductions, the cuts to our existing treatment service system total a little over $55 million.” Specific programs include those for domestic violence, youth in the court systems and temporary assistance for needy families. And once the state funding depletes, federal matching funds also decrease. So the effect doubles from $55 million to $110 million, he said, adding that amounts to about half of the $252 million total budget for substance abuse services.

Unlike other state programs where the governor simply erased the increases above last year’s funding levels, the cuts for some substance abuse prevention and treatment programs were “zeroed out,” or erased completely, said Peggy Powers, chief operating officer of the Illinois Alcoholism and Drug Dependence Association in Springfield. “This is gutting what was actually awarded during FY08.”

“The fact that it’s cut from the base of the FY08 funding level is something that has not occurred wholesale in any other programming,” she said. “We don’t know how the addiction treatment system came into the crosshairs of the governor’s cutting ax, but it certainly has, and it’s an incredibly crucial item.”

There’s some skepticism that the governor’s budget cuts target the particularly sensitive area of substance abuse to grab attention and to further apply pressure on the House Democratic leadership to approve funding mechanisms that would prevent these cuts. The governor’s budget office did not return my phone call this afternoon.

The House is scheduled to come back to Springfield Tuesday through Thursday to consider the governor’s budget cuts and attempt to override some of them. Some items that were reduced require a simple majority of 60 votes. Other items that were cut out require 71 votes to be restored.

Some could be restored under a revised revenue idea in the House that would allow the governor to sweep about $300 million from special dedicated funds and pad the state’s general fund. But it has potential to get complicated when the House Democrats likely tie those so-called fund sweeps to specific program areas — possibly such human services as substance abuse treatment and prevention.

Fund sweeps wouldn’t guarantee funding. The Senate would have to approve the revenue idea, as well as any overrides of the governor’s veto. But the Senate so far isn’t planning to come back before November. That could change.

November would be too late, according to Kuhn, who said agency offices would have to close or take on huge debt to stay open before then.

Many other groups also are worrying that the budget cuts would hinder current and future services. The Child Care Association of Illinois issued a press release saying a $45 million cut will affect services for abused and neglected children and foster parents. The Partners for Parks and Wildlife, including members of the Sierra Club, the Illinois Association Park Districts and the Nature Conservancy, will join forces to fight a 20 percent funding decrease for the state Department of Natural Resources. The group projects a loss of 163 jobs and zero out funding for the Water Supply Planning and Management Program and the Wildlife Prairie Park in Peoria.

Thursday, July 10, 2008

Speaker: Gaming is dead

House Speaker Michael Madigan deflated all momentum behind a capital bill this afternoon with one statement: “Given the conditions that exist here in Springfield, I think that the proposed expansion of gaming is a dead issue.” And the state’s operating budget remains unbalanced, as the House continues to reject ideas that would plug what the governor describes as a $2 billion hole. While the House is expected to vote next week to restore some of the governor’s $1.4 billion in cuts, they’re unlikely to support revenue ideas to pay for them.

Madigan spoke in a Statehouse news conference shortly after the full chamber rejected the Senate’s gaming proposal, which would have allowed a new land-based casino in Chicago, a state-owned casino and a new riverboat somewhere in the state. It also would have allowed slot machines at horse race tracks.

The multibillion dollar revenue source was the crux of a $34 billion capital construction plan. Without it, Illinois enters its ninth year without a major capital plan and without federal matching funds earmarked for transportation projects.

“This is another example of the speaker’s shenanigans to thwart the capital bill, which would put hundreds of thousands of people to work, and to impose an income tax on the people of Illinois next year,” the governor’s office wrote in an e-mail. The governor is not giving up on capital, said his spokesman Brian Williamsen in a phone conversation.

In a characteristically methodical way, the speaker led his caucus in rejecting most of the funding source of the capital plan. Yet Madigan added that he would not declare a capital plan dead, just gaming.

Without gaming, he said he’d consider previous revenue ideas, including one proposed by House Minority Leader Tom Cross last year that would offer a limited expansion of gaming at existing casinos or riverboats. The speaker also has his own version of a gaming plan that would reform the Illinois Gaming Board. And he cited a previous measure he supported: a constitutional amendment that would increase the Illinois income tax to fund education and construction needs.

Madigan denied, however, that he would propose an income tax increase after the November elections, as the governor and some Republicans repeatedly have charged. “I am not going to support an increase in the income tax during a lame duck session of the legislature,” Madigan said. He did not, however, rule out next spring. “Next spring is next spring. That’s a long time away.”

Senate Minority Leader Frank Watson said it’s unfortunate the speaker took gaming off the table to fund capital. “Revenue has to be generated to fund a capital bill, and gaming seemed to be the best alternative.” He added that although he’s not happy about it, Madigan’s statement could have a positive side. “I think we’ve been strung along for a long period of time … If this is going to bring closure to at least the revenue source, then, I guess, so be it.”

Watson said his caucus would be willing to consider alternative revenue sources for a capital plan, and he charged the speaker with the responsibility to propose such alternatives.

Capital bill summary: All parties say they’re not going to give up on capital, but none seem to offer alternatives that would serve as a compromise. Gaming was thought to be the compromise between most of the parties, but the House didn’t like the Senate’s procedural method that prevented the House from being able to make any changes to the gaming plan. So the General Assembly went from having what looked like a compromise to what turned out to be another dramatized clash between two chambers, leaving us where we started.

The operating budget is just as anti-climactic at this point. To be clear, the state does have an operating budget in place with most of the $59 billion spending plan activated. Yet the governor’s $1.4 billion in cuts announced Wednesday still leave an unbalanced budget, according to the House and Senate GOP. According to the House speaker, “The word 'balanced' is one of these things that’s in the eye of the beholder.”

State Medicaid spending often is one area that can be delayed to balance the current year’s budget. Sen. Dale Righter, a Mattoon Republican, explained last night that regardless of the governor’s budget cuts that affect state Medicaid programs, the state still has to reimburse medical providers who care for Medicaid patients. “We still owe those bills. So the governor’s not cutting growth in government when he cuts Medicaid. He’s just pushing bills off into the future,” Righter said.

The rest of the governor’s spending cuts, particularly to human services, could be considered by the House next week. It’s scheduled to return Tuesday through Thursday. The Senate is not, meaning no cuts will be restored unless the Senate also agrees. That could be a while, considering Senate President Emil Jones Jr. said his chamber isn’t scheduled to come back to Springfield until the annual fall session in November. His spokeswoman said they would wait to see what the House did next week before deciding whether to override some of the governor’s vetoes before then.

But, there’s always the chance that the state budget could end up where it started, with relatively flat funding levels for most state services and some decreases for operations. “I could see nothing happening,” Cross said after the House rejected gaming.

The one option remaining on the table in the House is so-called fund sweeps. The Senate and the governor want to allow the governor to transfer about $530 million from dedicated funds to the state’s general fund. It’s been done for years under multiple administrations. Although fund sweeps appears to be the one common ground between all parties, Cross said it’s a) not enough and b) not guaranteed. “If you’re going to end up using fund sweeps, where does it go? Does it go back to pay bills? Does it go to [developmental disabilities]? Does it go to higher ed? To nursing? There’s not enough to take care of all these. So I don’t know. It’s possible at the end of the day nothing happens.”

Madigan said last night that his Democratic members want to define which funds could be swept and where the money would go. They also may want to reduce the amount transferred.

Sen. Donne Trotter, a budget negotiator for his chamber, said there’s actually about $1.9 billion available in the dedicated funds that otherwise is considered “surplus” at the end of each year. He said he’d be willing to consider changing the amount transferred, whether it’s more or less than $530 million. Madigan, however, said fund sweeps historically topped off at $300 million.

Either way, Trotter and many others agree that fund sweeps won’t solve the budget deficit, whether the state operates at $1 billion or $2 billion in the red.

Operating budget summary: There’s a lot of work to do. If the House overrides some of the governor’s budget cuts without approving ways to pay for them, the budget will tilt further out of balance. The level of funding for state services during the second half of the fiscal year could come down to how well the state economy performs and whether legislators agree on ways to plug remaining holes when they reconvene this fall.

Wednesday, July 09, 2008

Two-week notice

State employees and service providers should know within 15 days whether state funding for the current fiscal year will decrease by more than $1 billion. Gov. Rod Blagojevich not only cut $1.4 billion Wednesday, but he also asked state agencies to tighten their belts and avoid spending their entire allotments to save another $700 million. His office couldn’t say whether those actions would result in layoffs.

He made the announcement during a special session of the General Assembly, convened to address an unbalanced budget for state operations. Legislators sent to the governor in late May a budget that Blagojevich says approved spending about $2 billion more than the state is expected to collect in revenue. While the Senate approved a series of ideas to plug that $2 billion hole beforehand, all of those ideas failed in the House.

The governor used the special session to blame House Democrats, i.e. House Speaker Michael Madigan, for approving an unconstitutional budget they knew would result in drastic cuts. The House reacted by scheduling a special committee of the entire chamber to hear pros and cons of all of the governor’s big ideas. In the past, those special committees have served as a springboard to trounce on the governor's plans before flat out rejecting them.

The governor called the House committee a circus. “Forget about phony committees on the whole that are circuses of excuses to do nothing and to fail to meet their constitutional responsibilities,” Blagojevich said at a Statehouse news conference before the House even voted on any of his revenue ideas. “But understanding they’re unlikely to do that, a couple of hours ago, I did their job for them. I balanced the budget. So now the ball’s in their court.”

The House Democrats did, indeed, reject one of his funding schemes that would have freed up $400 million. A House smaller committee soundly rejected a $16 billion pension bonding plan that would have restructured the state’s annual payments to the state’s five public employee pension systems.

But the House showed some wiggle room in transferring about $500 million in special dedicated funds to pad the state’s general fund — but not before gutting the governor’s original version that already received Senate approval in the spring. Madigan said the intent of the revised “fund sweeps” measure is to show a willingness to work with the governor on the idea. (It's a blank slate — they still have to insert the language.) But Madigan’s caucus wants to spell out which funds could be swept and where the money would go. Otherwise, his members object to giving free reign to the governor to sweep about half a billion dollars and spend it on whatever he pleases. Rep. Sara Feigenholtz, a Chicago Democrat and point person on human services, said she would be willing to consider fund sweeps if it saved human services from the budget ax. The governor’s cuts on Wednesday did reduce funding for human services by $210 million, erasing increases for autism programs, substance abuse treatment and mental health services.

House Minority Leader Tom Cross said the fund sweeps idea would “probably not [be] well received” in his caucus. While the GOP will continue to push for a statewide capital plan for construction projects, he reacted to the governor's cuts to the operating budget by saying: “We’re for less spending … but we weren’t part of the budget process.”

Some of the governor’s other cuts also scrap increases for higher education, which has gotten flat or reduced funding for a handful of years. (CLARIFICATION: Higher education still would receive a 2.8 percent increase across the board, minus community colleges. Their funding levels slightly decreased. The governor's higher education cuts relate to specific grants, including the monetary award program for needy students. So-called MAP grant funding stands to lose $18 million if it's not overridden by the legislature.) The same goes for about $150 million that would have funded school construction projects in 24 districts that have been waiting as long as five years for the state’s share of the cost.

The House has 15 days to respond to the governor’s cuts before they automatically become active. Legislators will hold another special session Thursday, when the House will continue to debate components of a $34 billion capital plan for a whole host of construction projects. Few expect the House to vote on the governor’s budget cuts before they wrap up and go home Thursday afternoon. If so, the chamber would have to return by July 24 if Democrats want to attempt to override the governor’s budget cuts.

The rest of the state budget that was left untouched by the governor immediately takes effect. That means legislators and constitutional officers could receive annual pay raises, or cost of living adjustments, that were left in the budget. Cross described it as “absurd.” “The whole idea of a (cost of living adjustment) is just mind boggling to me in this economic climate.”

Bragging rights

The Chicago Tribune listed our own Illinois Issues magazine as one of its 50 favorite magazines in today's Tempo section. The entry reads:

Not just a magazine for policy wonks, Illinois Issues deciphers Springfield legislation for all constituents in the Land of Lincoln. Education, immigration, conservation and, of course, corruption are analyzed regularly in lively, well-informed articles on the state of our state.

Tuesday, July 08, 2008

For better or worse

Don’t expect House Democrats to deliver on the governor’s wish list in the next two days. Gov. Rod Blagojevich called a special session of the General Assembly for Wednesday and Thursday to urge House members to approve a series of revenue-generating ideas, combined with a major capital plan, to help plug a hole in the state operating budget. If they don't, he said he’ll have to cut $1.5 billion from the budget approved in late May. The proposed capital plan also would allow the feds to release matching funds earmarked for road and school construction projects that have accumulated over the past nine years.

The House rejected the revenue and capital ideas this spring, and there’s little evidence to suggest House Democrats would change their minds this summer. House Republicans, who would be needed to approve a capital plan, are expected to support the governor's proposal. Their ability to vote on it, however, depends on whether the proposal even makes it to the House floor in the next two days.

A lot of issues are at play here: 1) stubborn political agendas, particularly between House Speaker Michael Madigan vs. the team of Blagojevich and Senate President Emil Jones Jr.; 2) distrust of the governor to disperse money for the capital projects; 3) fuzzy math, or inconsistent projections about the money needed to balance the budget; 4) fuzzy projections about whether the state would jeopardize about $9 billion in federal funds if Illinois failed to approve a capital plan this year; and 5) the campaign season leading up to the November elections.

Regardless of which combination of factors comes out strongest this week, the consequences of not acting on the governor’s wishes likely would threaten some state employees’ paychecks and some service providers’ reimbursements. With little hope that the House will come through on the governor’s wishes, he’ll likely feel a lot of pressure to cut out portions of the budget by week’s end to prevent state government from shutting down. A spokeswoman for his budget office said last week, “The governor has said there will not be a state shutdown.”

So what would be better for the state? Option a) Balance the budget by allowing the governor to sweep about $500 million of special funds, float a $16 billion pension bonding scheme and approve a major construction plan? That would include leasing the Illinois Lottery, constructing new gaming facilities and expanding of other forms of gambling. Or option b) Reject most or all of those ideas and force the governor to cut $1.5 billion from the budget, which would erase funding increases for higher education and social services and reduce funding levels for many other state operations.

(A bipartisan state panel issued an analysis about a variety of the governor’s proposals. See the report here, but note that it was issued in February based on the governor’s original plans that have since been revised.)

This morning, the governor’s negotiating team pleaded its case for a compromise during a teleconference, led by former U.S. House Speaker Dennis Hastert and Southern Illinois University President Glenn Poshard.

Poshard referred to inconsistencies within the House Democrats’ complaints about the $34 billion capital plan. First, he said, they approved a $57 billion operating budget for one year and gave the governor total discretion to trim where he sees fit. Then they argued that they couldn’t support the capital plan — which Poshard said breaks down to about $5.5 billion a year — because they don’t trust the governor to spend the money as planned. Poshard countered that by describing “accountability provisions” that would check the governor’s power and grant legislative oversight. “Any contention that there’s no limit on the governor’s authority here and that he can end up doing what he wants to do with this money is just absolutely untrue,” Poshard said. He welcomed legislators to propose more ideas, which he said could be considered and added in a matter of days if done in earnest.

Steve Brown, spokesman for House Speaker Michael Madigan, said this afternoon that other proposals were suggested from the beginning but not included in their final proposal. Brown referred to provisions that would define all money allotted to specific projects, reform ethics provisions for the state’s gaming authority and decrease the fee that Chicago would have to pay to acquire a new gaming facility. Brown added that the speaker would be unlikely to sit down with Poshard and Hastert to discuss the ideas. “I don’t know what that gains. I mean, they’ve been aware of all these things for weeks, if not months.”

Requiring construction projects to be defined line by line has never been done before, Poshard said, adding that it could limit the Illinois Department of Transportation’s ability to adjust if projects came in over or under budget. “We discussed all those things, openly, honestly, thoroughly. To come up now and use those two things as concerns and issues, I don’t think are valid at all.”

As far as the best outcome for the state, Brown said this week’s so-called committee of the whole could help legislators decide what to do. The committee is scheduled to start about 1 p.m. and end about 5 p.m., when they’re scheduled to split off into a smaller committee to consider ways to close the budget gap. Brown said they could return Thursday morning but expect to wrap up that afternoon.

Then all eyes will turn to the governor’s office, which likely was the intent of House Democrats when they approved an unbalanced budget in the first place.

Ethical attitudes

The legislature waited a full month to send to the governor unanimously approved ethics reforms contained in HB 824. They sent it to his desk June 30, starting the 60-day clock for the governor to amend it, veto it or sign it before it automatically becomes law. That gives Gov. Rod Blagojevich until August 29, and he’s vowed to “improve” the measure but has not indicated what those changes might be and when they would come down. The legislation as approved by the General Assembly is designed to deter so-called pay-to-play politics, where state contractors donate to lawmakers’ political campaigns in an attempt to curry favor with the people who hire them. Blagojevich’s office says that’s not enough.

“We are disappointed that legislators didn’t take advantage of the opportunity to pass real and comprehensive ethics reform that would put strong campaign finance restrictions in place and end conflicts of interest across the board,” said Brian Williamsen, a Blagojevich spokesman, in an e-mail Monday afternoon. “We’re reviewing the bill.”

Legislators will return to the Capitol Wednesday and Thursday to convene a special session, ordered by the governor, to consider revenue-enhancing ideas to plug what Blagojevich says is a $2 billion hole in the current state operating budget. They’re also scheduled to consider a controversial way to fund a long-awaited capital plan for construction projects. (Check back later because the governor’s negotiators are set to hold a telephone conference about that plan this morning.) But ethics reform won’t be part of this two-day session. It's simply up to the governor to make the next move.

In the meantime, Illinois residents increasingly feel frustrated with state government for its lack of progress on major issues that affect daily life. Illinoisans, as well as voters throughout the Midwest, are getting more skeptical and distrusting of their government, according to a June poll commissioned by the Midwest Democracy Network. The survey was funded by the Joyce Foundation and conducted by Belden Russonello & Steward, an independent research firm in Washington, D.C. The firm called 2,044 adults in Illinois, Michigan, Minnesota, Ohio and Wisconsin between late April and early May. It has a margin of error of plus or minus 2.2 percent.

The survey spells out three important trends, according to Kate Stewart, partner at Belden Russonello & Stewart, in a release: “First, Midwesterners distrust their state governments. Second, despite their distrust, they are hopeful for change and support a range of reforms, and third, the voters are beginning to understand the connection between state government reform and solving problems like improving education, creating jobs and having a fairer tax policy.”

One of the items in the survey relates to the limited scope of the Illinois legislation: Get money out of state politics. The survey said 88 percent of respondents said not allowing state contractors to make political contributions to elected officials who issue the contracts would “make a difference,” while 61 percent said it would make a “big difference.” About the same percentage thought it would help to require lobbyists to report all of their clients, the issues they’re working on and the money they spend to lobby lawmakers.

Illinois voters will have a chance to put their votes where their mouths are this November, and they might not realize that they have more than one option to indicate that they want state government to change. In addition to voting for or against their local legislators, voters will be able to cast a vote to show whether they think the state should convene a constitutional convention. If yes, then elected delegates would be able to rewrite the state charter to draw truly competitive legislative districts, which is the hope of Cynthia Canary. She’s the director of the Illinois Campaign for Political Reform based in Chicago and an advocate for reform of the state’s ethics and election codes. She answered the following questions by e-mail, as she’s currently out of the country:

Q: On which government officials do voters take out their frustrations: The governor, their state legislators or their local officials?
With only 13 percent of respondents feeling the governor was doing a good job and 17 percent saying that of the legislature, the poll suggests that voters are frustrated with both the executive and legislative branches of government in Illinois. There is a frustration with the overall direction of state government (up to 68 percent wrong track from 42 percent in 2006) and a sense that no one is really at the helm. My sense is that the voters’ frustration is most likely to be aimed at the governor, as he is the one people believe should be steering the ship and he is the most visible embodiment of state government. Unfortunately for the governor, he is also the one most associated with ethical problems and scandal, and the poll very clearly indicated that Illinoisans are fed up with corruption and that honesty and accountability are the primary values they seek in state government.

We haven’t tested it, but my guess is that people's attitudes toward the [General Assembly] would mirror their feelings about Congress in that they may think that the institution and its members are dysfunctional, but they usually think their own representative is doing a fairly good job. In Illinois, voters have increasingly heard about the clashes between Blagojevich, [Senate President Emil] Jones and [House Speaker Michael] Madigan and about how the power struggles of these three have translated into broader gridlock in state government. Voters, en masse, may not have yet taken things one step forward to consider the role of rank and file legislators and evaluate whether their own representatives have displayed any leadership at the Capitol.

Q: Does that mean elections will be particularly interesting this fall, or do you think people who participated in the poll will put their vote where their mouths are?
I think that the state elections will largely be overshadowed by the federal elections this fall. To have really lively state elections, we need more truly competitive districts. Given the current map, few voters will have the opportunity to put their vote where their mouth is.

The great unknown in all of this and the possible exception is the vote on Con-Con. At this point, it seems that voter discontent with elected officials, more than any issues of a truly constitutional nature, is driving momentum for a constitutional convention. I don’t think that most voters know that the Con-Con question will be on the ballot, yet, but if we continue to have infighting, stalemate over the budget and allegations of (or indictments for) corruption, the idea of a convention may build momentum as we move into the fall election season. Clearly, voters are frustrated. And the expression of this frustration may be expressed in the populist sentiment that the people should wrest control of government and build in mechanisms that ensure accountability and responsiveness through a convention.

Q: The survey seems to indicate that the public thinks it would help to target lobbyists with more disclosure laws. Is that the next step for Illinois?
Sixty-one percent of respondents felt that greater lobbyist disclosure would make a large difference, with an additional 27 percent believing it would make some difference. Throughout the poll, we saw a desire for greater transparency and the belief that this would heighten accountability. I think that those polled understand that the regulation of lobbyists is an important part of the equation. Currently the state requires less disclosure from lobbyists than either Chicago or Cook County. Strengthening the Lobbyist Disclosure Act and introducing some real enforcement of the law is a practical next step and one with deep public support.

Thursday, July 03, 2008

Relief with a touch of uncertainty

Note: The following was written by Tony Hamelin, graduate assistant for Illinois Issues magazine, and Bethany Jaeger

No. We’re not talking about state employees. They're still wondering whether they'll get their paychecks on time this month. We’re talking about scientists in northern Illinois who might breathe a sigh of relief now that more than $30 million in federal aid is slated to rescue Fermilab and Argonne National Laboratory from massive budget cuts and layoffs by the end of the year. Federal funding for the next federal fiscal year, however, is still murky.

Fermi National Laboratory in Batavia is, as Illinois Issues contributor Dan Vock writes in a May story, “the nation’s premier site for particle physics research.” He adds, “It is, in fact, the best place in the world for scientists to study the building blocks of the universe under conditions that mimic the immediate aftermath of the Big Bang.” Scientists at Argonne National Laboratory in Lemont research a broad range of sciences related to engineering and technology.

On June 30, President George Bush approved a $162 billion package that would help supplement the facilities. On Wednesday, U.S. Sen. Dick Durbin, a Springfield Democrat, and U.S. Reps. Judy Biggert, a Hinsdale Republican, and Bill Foster, a Geneva Democrat and former Fermilab scientist who is filling the vacated seat by former U.S. House Speaker Dennis Hastert, were in Batavia to announce more than $29.5 million for FermiLab and $7.5 million for Argonne.

As Vock reported in Illinois Issues magazine, May, page 31 (his article is available in print only), Fermilab faced a $52 million cut and was under pressure to layoff about 200 employees and slow down research, symptoms of larger budget problems at the U.S. Department of Energy. Argonne faced a $21 million cut.

Wednesday, July 02, 2008

It's going to be close

Two special sessions next week, called by Gov. Rod Blagojevich this afternoon, is unlikely to solve the state’s pending budget problem. And GOP members have said they think the ongoing budget debate between the governor and Democratic leaders is setting up a proposal by House Democrats to increase the state income tax after the November elections. While Speaker Michael Madigan said this spring that some tough decisions will have to be made and that it could include some "pain," no income tax proposal is in sight.

But time is dwindling. The new fiscal year started Tuesday, and a new operating budget would have to be enacted by about July 10 or 11 before more than 1,000 state employees and some service providers would risk not getting paid on time. Although the General Assembly will be called back to Springfield July 9 to address what the governor says is a $2 billion deficit in the state budget, it’s unlikely the House will follow the governor’s wishes of approving a string of revenue-generating ideas. That leaves little time for the governor to act, including cutting program funding and erasing increased funding for, say, higher education.

Kelley Quinn, spokeswoman for the governor's budget office, said in an e-mail, "The governor has said there will not be a state shutdown."

That decreases the likelihood that he would veto the entire state budget, which would prove to be an popular choice. Legislators would have to spend the rest of the summer recreating a spending plan and delaying state payments until they struck a deal.

The governor wants the House to approve measures already approved by the Senate, including a huge capital plan for state construction projects that also would free up money for the state’s operating budget. House Republicans would definitely support a capital plan, said David Dring, spokesman for House Minority Leader Tom Cross. The problem is that the plan on the table would rely on a large expansion of gaming, the privatization of the Illinois Lottery and a bonding scheme. All three are unpopular with many House Democrats.

Their caucus leaders also repeatedly have said there isn’t enough support for two other cash-producing ideas: 1) floating $16 billion on pension bonds to restructure the state’s long-term debt of the five public employee pension systems, which also would free up about $500 million in cash, and 2) sweeping about another $500 million from dedicated funds that otherwise would be considered “surplus” at the end of the year.

State Rep. Gary Hannig, a Democratic budget negotiator from Litchfield, previously said that he thinks it would make more sense for the governor to use his veto pen to cut some of the spending out of the bloated budget himself, and then the legislature could come back in the fall to reassess the actual size of the deficit and the need to plug any holes.

The governor, however, doesn’t like that idea. He said Wednesday that if the House fails to approve the revenue ideas on July 9, then he plans to call legislators back July 10, as well. If they still fail to follow his wishes, then he’ll have to make those budget cuts himself.