Tuesday, March 31, 2009

Search for a common ground

By Bethany Jaeger, with Jamey Dunn contributing
House Speaker Michael Madigan and Senate President John Cullerton advanced their first joint measure to reform state government, focusing on the management of the public employee pension systems and targeting board members appointed by former Gov. Rod Blagojevich. At the same time, the independent reform commission created by Gov. Pat Quinn issued its first set of recommendations for beefing up state ethics laws and improving transparency of government operations.

How the legislative reform committee and the governor’s reform commission will work together, however, is yet to be seen. So far, they’ve operated in similar hemispheres but in separate quarters. They’ve heard hours of testimony from a lot of the same witnesses, they’ve debated some of the same proposals and they’ve used the same language to define their missions. To date, they have not yet testified to each other's public hearings. And the governor’s reform commission is different in that it “has a voice but not a vote,” to borrow the words of Patrick Collins, former federal prosecutor and chair of the governor’s commission. What is realistic by the end of the spring legislative session depends on the level of support the proposals can gain from the legislative leaders and their members, although Quinn has indicated he's willing to use his executive powers to institute some of changes.

One item to note is that the House speaker and the Senate president have been meeting about once a week for breakfast with Quinn to talk about a broad range of issues facing the state, including everything from a potential $12.4 billion budget deficit to possible ethics reforms. Madigan told Illinois Issues this morning said he finds those meetings to be “very productive.” He added: “They’re not 100 percent harmonious. … There’s differences, but you’ve got people who are committed to working through differences and coming to a result.”

In terms of ethics, some of the proposals of the governor's reform commission already are being considered by the legislature. In addition to pension reforms advanced by Madigan and Cullerton, the governor’s reform commission offered two more starting points: The “pay” side (or campaign finance) and the “play” side (or state procurement), to borrow another Collins phrase. The governor’s Illinois Reform Commission will issue many more recommendations in its final report by the end of April.

Pension board reforms
Madigan and Cullerton started with pensions. Their measure, SB 364, would remove all members of the existing pension oversight boards, and Quinn would have 30 days to nominate new members. The governor would be able to nominate current members to stay, but they would have to get Senate approval. Board members currently are reimbursed for expenses but are not paid for their work, and that would remain.

While Madigan said he did not intend to accuse current members of corruption, he said it was important to start over with a “clean slate.” The measure also would require all board members to follow the same ethics standards currently applied to legislators and executive branch employees. The standards are meant to prevent conflicts of interest and so-called pay-to-play politics from influencing the investment decisions made by the pension boards, investment managers and consultants.

Similar pension reforms passed the House twice before but stalled in the Senate under then-President Emil Jones Jr.

Madigan said this morning that the pension reforms illustrate the good that can come out of cooperation between presiding officers. “The people of Illinois feel that they deserve better, and they’re right. And with myself and Sen. Cullerton working together — not trying to one-up anybody, not trying to play gotcha-politics — I think that we can accomplish a lot.”

Campaign contribution limits (The “pay” side of pay-to-play)
The Illinois Reform Commission recommends campaign contribution limits of $2,400 for individuals and $5,000 for political committees and would completely ban contributions from lobbyists and trusts. The legislature is split on the idea of campaign contributions, with opponents saying that there are too many loopholes and that it wouldn't reduce the cost of political campaigns. All four legislative leaders have said they could consider campaign finance reform, but contribution limits are not considered the priority. The legislature already is considering some measures that would limit contributions, including:
  • HB 24: Rep. Harry Osterman’s bill resembles the commission’s recommendations. He’s a Chicago Democrat.
  • SB 1768: Sen. Heather Steans’ bill would enforce similar limits for individuals and political committees that are not controlled by the candidates, but it also would cap the amount political committees for the Democratic and Republican caucuses could transfer to candidates at $30,000, among other things. She’s a Chicago Democrat.
  • SB 1548: Senate Minority Leader Christine Radogno’s bill would limit donations for all individuals, political parties, corporations, unions, etc., at $10,000. She’s a Lemont Republican.
  • SB 2257: Sen. Kwame Raoul’s bill would, among other things, limit individual donations at $7,500 and corporate and labor group donations at $20,000. He’s another Chicago Democrat.

Two measures would establish a voluntary public financing system for judges and set various limits on the amount candidates could raise from individuals, political committees, corporations, labor groups, etc. They include:
  • SB 2144, sponsored by Raoul.
  • HB 1390, sponsored by freshman Rep. Will Burns, a Chicago Democrat.

Here are more highlights from the Illinois Reform Commission's recommendations for campaign finance, including extending last year’s pay-to-play ban to prevent state contractors from donating to legislators, as well as executive officers.

Procurement (The “play” side of pay-to-play)
The Illinois Reform Commission recommends the following:
  • Make the procurement officials part of an independent arm of government to shield them from political pressure.
  • Establish an independent contract monitor to review contracts and expose problematic deals.
  • Scale back exemptions to the procurement code.
  • Apply the procurement code to legislative, judicial and such quasi-governmental bodies as the Illinois Finance Authority.
  • Subject no-bid and emergency contracts to tighter scrutiny and limitations.
  • Disclose subcontractors, lobbyists and agents representing clients.
  • Document any contact between vendors or their agents and procurement staff.
  • Post all procurement information online.

Auditor General Bill Holland echoed some of the recommendations today during a special legislative hearing about state government reforms. But he added that the procurement code currently does not prevent agencies from accepting services before the terms of a contract are settled or before the contract is officially filed. He said that was “unacceptable” and said that all documents related to the contracting process, including losing proposals, should be made public.

Sen. Jeff Schoenberg, an Evanston Democrat, said the state also should tighten provisions on informal advisers, something noted during the corruption trial and conviction of former Blagojevich adviser Tony Rezko.

Friday, March 27, 2009

Transit and taxpayers

By Bethany Jaeger
Mass transit advocates say Gov. Pat Quinn’s proposed capital program needs an overhaul and relies on “fuzzy math,” and they look to an increase in the state’s motor fuel tax to help pump more money into transportation projects.

Quinn said this week that he wants to see the start of a capital program approved by the legislature by April 3. “I think it should be for roads, bridges and public transit. We shouldn’t forget that one of the key things of reducing our reliance on petroleum and foreign oil is having good public transit, as well as improving our roads and bridges.”

Yet, his proposal to provide about $4.6 billion for mass transit systems over five years doesn’t satisfy Chicago-based civic organizations. They said that Quinn’s plan relies more on federal funds and matching grants, including only about $1.5 billion in new state spending for transit.

“It’s not even enough money to cover the basic maintenance and repair needs to keep the [Chicago] region’s transit network in its current condition, much less to upgrade the transit network,” said Brian Imus, state director of Illinois Public Interest Research Group. He joined leaders of Chicago Metropolis 2020 and the Metropolitan Planning Council today in a teleconference.

Given the economy, a business and labor-based group called the Transportation for Illinois Coalition recently reduced it’s request for transportation infrastructure from $23 billion over five years to $13.5 billion over five years, but that would only fund a “minimally adequate, maintenance- and safety-focused program.”

To reach the $13.5 billion, it would take about a 13-cent increase in the state’s motor fuel tax, said Chicago Metropolis 2020 Vice President Jim LaBelle. The motor fuel tax has been 19 cents a gallon since 1990. If it were adjusted for inflation, it would be about 32 cents, he said.

Quinn, however, opposes the motor fuel tax increase. The idea has support from Senate President John Cullerton, and the House currently is considering HB 1, which would increase the tax by 8 cents a gallon.

LaBelle said his organization would support a motor fuel tax increase if it were accompanied by reforms to the way the state prioritizes construction projects and distributes the money. The group supports HB 2359, Rep. Kathy Ryg’s bill that we wrote about earlier this week. It would create regional transportation policy groups to advise the Illinois Department of Transportation when ranking projects.

Peter Skosey, vice president at the Metropolitan Planning Council, agreed with the need for a new planning process. “We for too long have spent our dollars based upon arbitrary geographies and political clout and less upon strategic investments.”

Watch whether Ryg’s measure combines with Rep. John Bradley’s 8-cent increase in the motor fuel tax to create a new revenue source, as well as a new way of distributing that money to transportation projects.

The state's TAB

By Jamey Dunn

The state’s new Taxpayer Action Board, created by Gov. Pat Quinn by executive order, held its first meeting today. The board plans to explore only ways to reduce spending, not ways to find new revenue sources, according to Tom Johnson, chairman of the new board and president of the Taxpayers’ Federation of Illinois. (He’s also a former director of the Illinois Department of Revenue during Gov. Jim Thompson’s administration.)

The board is supposed to make recommendations by May 22, nine days before the state constitutional deadline for the General Assembly to adjourn for the summer.

The board is charged with proposing ways to streamline government operations to save money, particularly for Medicaid, education, human services, as well as pensions and health care benefits for state workers.

The board is comprised of former lawmakers, policy experts, educators, business leaders, tax experts and individuals from health care and human services. Organizations such as the Metropolitan Planning Council and the Illinois Farm Bureau also have members on the board.

Jerry Stermer, Quinn’s chief of staff, said at the meeting that the board was formed to get a new perspective on the state’s deficit from people who represent their communities. “Maybe we’ve asked some of these questions before, but let’s ask them again. Let’s ask them in a different way, and let’s see if there are some redesigns, some reshuffling of the deck,” he said.

The state Senate also formed a special Deficit Reduction Committee, which issued a bare bones report with pages of testimony but few recommendations after four weeks of public hearings. See more here.

Wednesday, March 25, 2009

Starting points, but no consensus, yet

By Hilary Russell and Jamey Dunn
It's the time of year when legislative leaders continue to say everything is on the table, but nothing seems to be falling to the ground.

The Senate’s special Deficit Reduction Committee ended today without any clearer answers about solving the state’s financial crisis than when the committee started meeting a month ago. Gov. Pat Quinn also held a meeting with Republican leaders and business leaders today in the Statehouse in an attempt to find some consensus.

Neither provided a common ground. But they did provide more "starting points."

“We had a really good discussion and dialogue,” Quinn said. “I’m sure not everyone is of the same mind, but I think it’s healthy to have a discussion about our economic crisis. The statistics yesterday were extremely sobering.” The state’s unemployment rate reached 8.6 percent, according to the Illinois Department of Employment Security.

The meeting included House Minority Leader Tom Cross of Oswego, Senate Minority Leader Christine Radogno of Lemont and business leaders, including the Tooling and Manufacturing Association and the Illinois Chamber of Commerce.

The special Senate committee charged with finding consensus about where to cut spending out of the state budget with little consensus. Here's the report.

“What we did not come up with in the past four weeks — and this was not the intent of this committee — we did not come up with the final solution,” said Sen. Donne Trotter, co-chair of the committee and a Chicago Democrat. “We did, in fact, meet and define some parameters in which we should start this appropriation process as we go forward with the strong intent to be out of here by May 31.”

Republicans want to cut spending and avoid raising taxes.

“We heard many people from this committee who passionately and sincerely believe that raising taxes is essential,” said co-chair Sen. Matt Murphy, a Palatine Republican. “Speaking for myself, … I think the proposal to raise taxes is profoundly misguided. Raising taxes in Illinois will cost more Illinoisans their jobs. Period. With 8.6 percent unemployment, we cannot afford to lose any more jobs.”

Quinn proposed a 1.5 percentage point increase in the state income tax as part of his budget plan for next fiscal year, which is projected to have up to a $12.4 billion deficit.

Democrats, in turn, said cutting spending is not nearly enough to fill the gap.

“I hope we can also agree that we cannot solely cut our way out of this deficit,” said Sen. John Sullivan, a Rushville Democrat. “The cuts will be, to say the least, drastic and devastating, and when you talk about making some of the cuts that would be necessary to balance this budget, we would be laying off thousands of people across the state of Illinois to do that.”

One way to increase the number of jobs available is for the legislature to pass a capital bill; the problem reverts to how to pay for it.

Quinn proposes funding the capital plan through fee increases and some new tax revenues. Republicans oppose that idea and support gaming as a funding source.

One example is to legalize video gaming. Sullivan said revisiting gaming as a funding source for a capital plan, however, is a mistake. He said that two previous capital bills that included gaming advanced through the Senate with bipartisan support, but they stalled in the House. “We tried it. It didn’t work. There wasn’t enough support in both chambers for it to become law,” he said. “So, why are we still having that discussion?”

Sullivan suggested that lawmakers move on to an income tax increase or come up with some new suggestions for funding sources.

Watch for Republicans to release some proposals next week. In the meantime, Murphy said that some of the broad suggestions made by the committee such as Medicaid and pension reforms are important starting points. The one thing everyone seems to agree on is the need to pass a capital plan. “We just have to get around to doing it and stop making excuses,” Murphy said.
Quinn remains opposed to gambling expansion. " I think it's a bad bet. Take a look at some of the stocks at these gambling firms. I don't think you'd want to buy those penny stocks today.”

Video gaming advances in the House
By Bethany Jaeger
Meanwhile, a House committee advanced a bill that would legalize video poker machines and tax them, potentially generating between $300 million and $500 million a year, according to Rep. Frank Mautino, the Democratic sponsor. He would dedicate the revenue to school construction projects, starting with a list of 23 schools that have been waiting for money that the state promised to them since 2002.

“The realization is that some of the things in the governor’s budget proposal are going to fail,” Mautino said shortly after his bill sailed through committee. “And so there have to be other alternatives that are out there. I don’t think the speaker’s interested in a big gambling package, but here’s something that we have to make a decision to either get rid of it or tax it — because they’re producing this money one way or the other.

Party politics

By Bethany Jaeger
Politics often intertwine with state government, but it’s not often that state government tries to control the operations of political parties.

Democrats today advanced a measure that would force the Republican Party to change the way it selects State Central Committee members to match the process of the Democrats. Currently, the general public elects Republican precinct committeemen, who then internally select people to lead the GOP State Central Committee. On the contrary, the Democratic State Central Committee members are elected directly by voters during primary elections.

Rep. Lou Lang, a Skokie Democrat and an assistant majority leader in his chamber, is the new sponsor of HB 825, which would require open ballots for Republican State Central Committee members, too. He said the change would improve transparency and would respond to Republicans’ repeated argument that voters elect someone to replace U.S. Sen. Roland Burris, a Democrat appointed by impeached Gov. Rod Blagojevich to fill the seat vacated by President Barack Obama.

Republicans debated the idea of letting voters elect their State Central Committee members but rejected it during a statewide convention last year.

Yet, a similar bill, SB 600, is sponsored by Republican Sen. Chris Lauzen and has the support of Senate Minority Leader Christine Radogno. Several top Democrats also have signed on in support. Patty Schuh, spokeswoman for Senate Republicans, said while the caucus is split on the measure, it's peculiar that Democrats want to have such a heavy hand in the way Republicans conduct their own business.

Rep. Michael Tryon, a Crystal Lake Republican, said political parties are private organizations that should have the right to self-governance, and it would be “very wrong” for one political party to dictate to another how to operate.

Rep. Skip Saviano, an Elmwood Park Republican who also is a Republican State Central Committee members, said the Democratic leadership flat out is trying to retaliate against Republicans for calling them out on inconsistencies over how to handle Burris’ controversial appointment. It also would kick the GOP when it’s already down, when they hold minorities in both chambers and don’t hold a single constitutional office. “This is an attempt to keep the Republican Party in disarray,” Saviano said to Lang during a House committee this morning.

Saviano said there’s been a longstanding agreement that each political party could conduct its own business. “Now, they’ve crossed the line.”

Then again, the numbers favor the Democrats, which have enough votes to send the bill to the Senate without a single Republican vote. “If they want it to be a done deal, Democrats could pass it and hijack the Republican Party,” Saviano said. “I mean, that’s what this is all about.”

Tuesday, March 24, 2009

Will the "cutting committee" cut much?

By Jamey Dunn and Hilary Russell
The state’s budget deficit could be worse than Gov. Pat Quinn’s projection of $11.6 billion next fiscal year. But some education-funding reform advocates see a silver lining in that the dire budget constraints could open the door for a longstanding effort to restructure the way Illinois pays for public education.

They’re again supporting a so-called tax swap, which would increase the state income tax and expand the state sales tax to apply to services. The new revenues would help offer property tax relief. Sen. James Meeks, a Chicago Democrat who has been pushing the idea for seven years, says relying less on property taxes to fund public education would help address funding disparities between property rich and property poor school districts.

We’ll find out tomorrow morning whether such tax reforms will be included in a series of recommendations that a special bipartisan committee will pass along to legislative leaders as they try to figure out how to balance next year’s state budget. The special committee is led by a rare co-chairmanship of one Democrat and one Republican. Sen. Donne Trotter is the Democratic chairman. He said the committee is considering recommending such revenue changes as a tax swap, as well as other changes to the public employee pension system, that both parties can support.

“There’s probably going to be a larger stack of things that we could agree upon than things that we can’t,” Trotter said. However, he added that there’s a good chance that the committee could produce a majority and minority opinion reports.

Trotter said Meeks’ tax reforms have support from committee members of both political parties.

Legislators’ reluctance to raise state income taxes has been one of the main roadblocks to various tax swap proposals advanced in the past seven years, but Meeks said the likelihood of an income tax hike this year creates a “now or never” opportunity for reform. The latest proposal, SB 750, would raise the state income tax from 3 percent to 5 percent for individuals and from 4 percent to 8 percent for corporations.

While the tax reforms traditionally have been proposed as a way to reform education funding, Meeks said he’s open to using new tax revenues to plug the state’s budget deficit for up to two years. But then it would have to switch to fund education. If lawmakers only consider the deficit, he said, “we’ll end up raising taxes, but we won’t end up fixing anything.”

Ralph Martire, executive director of the Chicago-based Center for Tax and Budget Accountability, supports Meeks’ plan for education funding and said there’s an added reason (scroll down) to reform the state’s tax structure. “The bottom line is Illinois cannot get to a balanced budget situation without adjusting both of its major taxes,” he said. He added that expanding the state sales tax could allow for a lower rate.

The Taxpayers’ Federation of Illinois opposes the bill because, according to organization president Tom Johnson, property tax is a reliable revenue source for local governments even in hard times. He added that the state may not be able to keep up with the property tax relief, which he said could “vanish in a relatively short period of time.”

Tomorrow morning’s Budget Deficit Reduction Committee will wrap up four weeks of testimony, which started out by focusing more on what agencies and advocates couldn’t live without than what they were willing to cut. The last two meetings have changed the focus to more concrete examples of ways the state could generate money while it also saved money.

Sen. Matt Murphy, the Republican co-chair from Palatine, said: “I love the idea of restraining future growth for spending because there’s never gonna be enough tax revenue if we don’t get a handle on the spending. I look forward to coming out with a collection of deficit reduction measures that we think can help fill this hole and do it in a way that’s productive for the long-term benefits for the state.”

Monday, March 23, 2009

Countdown to capital begins

By Bethany Jaeger and Jamey Dunn
Gov. Pat Quinn wants at least a portion of his statewide plan for major construction projects approved by the General Assembly before April 3. That’s the last session day scheduled before legislators are supposed to head home for a two-week spring break, and Quinn reportedly said today that he thinks they should bypass spring break to work on a capital plan.

The $26 billion plan, called Illinois Jobs Now, eventually would fund infrastructure, mass transit, railroad improvements, new school buildings, housing, conservation projects, and water treatment projects. Two new projects also would include an airport near Chicago’s south suburbs and the construction of the first veterans’ home within Chicago.

The proposed funding mechanisms, as usual, spark controversy. If Quinn’s budget plan were approved, vehicle-related fees would help fund road and bridge construction. (Driver’s license fees would increase from $10 to $20; license plate fees would go from $79 to $99; and vehicle registration fees would rise from $15 to $30.) Mass transit projects would be funded by title transfer fees, which would increase from $65 to $105.

Plans to build new schools, then, would be funded by shaving a portion of tax revenues typically given to local governments.

In addition to federal stimulus money, Quinn also proposes using about $150 million a year from the state’s dedicated Road Fund. That would allow the state to bond/borrow money to pay for projects specifically for roads and bridges.

That’s one portion of a capital plan that could be done by April 3. Senate President John Cullerton said it could be realistic for the legislature to approve increasing the amount the state may borrow for the purposes of kick-starting a road program and tapping into federal matching funds.

The part of the capital plan that will take the longest to negotiate is other sources of funding, especially if it's intertwined with an attempt to increase the state income tax rate or motor fuel tax rate. For instance, Cullerton said he still supports the idea of increasing the state’s 19-cent tax on each gallon of motor fuel, which hasn’t changed since 1990. He describes the motor fuel tax as a traditional way to pay for roads, and because it’s a so-called user fee, people could adjust their lifestyles if they didn’t want to pay more. (Senate Democrats are working on a plan that would increase the tax by about 16 cents, while the House is considering a bill to increase the tax by 8 cents.) According to Cullerton, an 8-cent increase could generate $500 million.

Sen. Martin Sandoval, a Chicago Democrat who chairs the Transportation Committee in his chamber, agreed that an increase in the gasoline tax has support in the legislature and would fund a “robust” capital plan. He’s sponsoring SB 200, which doesn’t have language, yet, but could be used to advance a motor fuel tax bill.

Sandoval is one critic of Quinn’s capital plan because, he said, he’s concerned it would be unfair to Chicago. “Mass transit takes a huge hit at a time when we’re preparing for the Olympics, at a time when we’re trying to protect the environment, at a time when we’re trying to put people back to work. Gov. Quinn is going in the wrong direction when it relates to mass transit.”

Under Quinn’s proposed budget, the Chicago-area Regional Transportation Authority would lose $32 million in grants for operating assistance. Public transportation also would lose about $42 million, but that’s based on decreased sales tax revenues. Downstate transportation districts, on the other hand, would see an increase of about $24 million.

Jennifer Morrison, managing director of the Transportation for Illinois Coalition, said that her organization was encouraged by Quinn's emphasis on a long-awaited capital plan but that the funding for mass transit, highways and local roads would be “way too small to make any meaningful impact.” She added that the budget plan is “more than a little unclear” about which revenue sources would be designated to which projects.

While neither Senate Minority Leader Christine Radogno nor House Minority Leader Tom Cross supports Quinn’s fee increases, they said last week that they do hope to meet with the governor to work out a compromise.

Another part of the plan that will take a long time to negotiate is how the money would be distributed throughout the state. Not only could it differ depending on the source of revenue approved by the legislature, but it also could change if Democratic Rep. Kathleen Ryg of Vernon Hills has her say.

She wants the planning process to empower local stakeholders through various metropolitan planning organizations. House Bill 2359 would create a new advisory committee to the Illinois Department of Transportation when prioritizing road projects. Ryg said the new committee would help assure taxpayers and state officials that the limited amount of money available would be spent on the best use, particularly as a capital bill is drafted and new revenue sources are generated.

The recent appointment of Transportation Secretary Gary Hannig, a former state representative and budget expert for House Democrats, actually could help the measure advance. Ryg said this afternoon that she changed her bill from its original form in response to concerns expressed by Hannig shortly after his transition from the legislature to the state agency. Now Ryg's bill would ensure more representation for all areas of the state, including those that don't have metropolitan planning organizations.

Her bill also would change the way projects would get funded. Currently, engineers distribute money based on such factors as the condition of roads, the traffic flow and the population served. Ryg said her bill would fund the greatest maintenance needs first, and then the regional groups would advise the Transportation Department on other local needs. All areas of the state would be evaluated under the same set of new criteria.

Regardless of which revenue sources the General Assembly ultimately agrees upon, the influx of money has some legislators nervous about whether their districts will benefit. So watch for the concept in Ryg’s bill to serve as a potential “accountability” measure, meant to assure legislators that, at the least, their areas would be represented in the decision-making process.

Wednesday, March 18, 2009

Legislators eye "adjustments"

By Bethany Jaeger, Jamey Dunn and Hilary Russell
Gov. Pat Quinn wrote his 40-minute Budget Address himself, just one indication of the change under the Capitol dome since the impeachment and removal of former Gov. Rod Blagojevich.

Wearing glasses and a navy blue suit, Quinn opened his speech Wednesday before the General Assembly to a standing ovation from Democrats and Republicans. But the tone soon changed when Quinn described the context in which he proposes a bold spending and revenue plan:

  • An integrity crisis — The state citizenry is damaged and embarrassed by the “bipartisan betrayal” of former Govs. George Ryan, a Republican serving in federal prison, and Blagojevich, a Democrat fighting federal corruption allegations.
  • A fiscal crisis — The budget deficit is projected to be $11.6 billion by the end of fiscal year 2010, and the state can’t afford to pay nearly $5 billion in overdue bills.
  • An economic crisis — Unemployment is rising to nearly 8 percent.
“To be direct and honest, our state is facing its greatest crisis in modern times," Quinn said.

David Merriman, an economist and professor of public administration with the Institute of Government and Public Affairs, said in stark contrast to the budgets proposed by Blagojevich, “Quinn’s proposals are transparent, and the effects are relatively simple to identify. There is little or no smoke and mirrors.”

Senate President John Cullerton said he could see the looks on the faces of Democratic and Republican legislators. “Even if you didn’t agree with everything he said, it was just so gratifying to see the reaction of the members based on the governor’s sincerity and his words.”

Cullerton also pointed to the weighty proposals of an income tax increase, a road and school construction program, a reformed pension system and a slight bump in education funding. “It’s a lot of work, and he’s to be congratulated for making those proposals.”

But that doesn’t mean Quinn will get everything he wants. Legislators of both political parties already are eyeing “adjustments,” in Cullerton’s words, to ensure that an income tax increase is used as a last resort.

“If we cut as much as the governor has proposed, and we guarantee that we have paid our bills, and we guarantee that we have a capital bill, then — and only then — do we look to the income tax and determine whether we need it,” Cullerton said. “And, if so, how much we have to raise it?”

Income taxes
As we said last night, Quinn’s blueprint relies on a state income tax increase of 1.5 percentage points for individuals and 2.4 percentage points for businesses. But some of the new tax revenue would be shaved off to provide a heightened personal tax exemption, from the current $2,000 to $6,000 per individual. The net revenue: about $3.15 billion, according to House Democrats.

That’s one area subject to negotiations. Senate Democrats want to look at a personal exemption that’s lower than Quinn’s proposal or, possibly, phasing it in over a few years. Or, while they eventually could sign on to an income tax increase, they might seek a lower rate.

Quinn also wants to restructure the public employee pension system, which we wrote about last week. Business groups have been advocating for pension reform for years. Yet, there’s a concern about Quinn’s plan to divert money away from the amount the state is supposed to pay into those systems through 2011.

Quinn proposes changing benefits for newly hired employees. Among other changes, that would increase the retirement age and require them to pay more into their retirement benefits. At the same time, Quinn proposes shorting the amount the state pays into the pension system by $500 million this year and $2.3 billion next fiscal year (CORRECTION: I misread a chart and mistakenly thought there would be a third year of reduced pension funding. I was wrong. There are only two years, totaling $2.8 billion. I sincerely apologize.). The pension reforms are estimated to save about $160 million by 2045.

Cullerton said while he believes the governor’s pension reforms could save money over time, “we just have to examine the numbers and make sure that those savings that we would get in the future would justify lower payments into those funds right now.”

Public employee unions reject the idea in its entirety. According to Anders Lindall, spokesman for the American Federation of State, County and Municipal Employees Council 31, retiree benefits average about $18,000 a year. He said the state’s debt should have nothing to do with employees who consistently contribute to their benefits. “Cutting future benefits will not reduce the state’s current debt by a single penny, and skipping payments on the basis of such imagined savings will only compound the current crisis.”

State employees
AFSCME also opposes Quinn’s idea of making current employees, minus public safety, health care and university workers, take four unpaid days off, called furlough days, and pay more into their health care plans.

There’s a contract in place, Lindall said. “The state can’t force changes in any of these areas. Under our contract, they have to negotiate it. If they don’t negotiate those changes, we will enforce our contract in court.”

What else is on the table?
Republicans say everything — from budget cuts to expanded gaming — should be on the table before resorting to an income tax increase.

While Senate Minority Leader Christine Radogno agreed with parts of Quinn’s proposed budget such as pension reforms and the removal of a gas tax increase as a revenue source, she called an income tax increase “premature and irresponsible right now.”

House Minority Leader Tom Cross agreed that Medicaid spending should be reduced and, he added, lawmakers need to ensure they assess all the possibilities for using federal stimulus funds to help fill in the deficit.

Neither GOP leader would say that the state could pay off its debts without raising taxes, but they both said that tax increases should only be considered when all other options have been exhausted. Both also said that Republicans would be less wary of a tax increase if it would have a set end date.

Expanded gaming as a revenue source isn’t dead, either. Rep. Jim Durkin, a Western Springs Republican, said the state still should consider leasing the Illinois Lottery to a private entity to raise money, which has been tried before. Radogno agreed that the state should look to the “voluntary activity of gambling” for increased revenues.

Democrats also have been considering expanding gaming as a revenue source, although Cullerton said he would not intend to expand gaming as a way to pay for a capital construction plan. He did say gaming could be used to lessen the need for an income tax increase.

We'll talk more about capital plans soon.

Tuesday, March 17, 2009

Share the wealth and spread the pain

By Bethany Jaeger, with Jamey Dunn and Hilary Russell contributing
The theme of Gov. Pat Quinn’s first budget proposal, which will be announced at noon Wednesday before the General Assembly, is “shared sacrifice.”

It is “a very difficult budget, but it’s an honest budget,” Jack Lavin, Quinn’s chief operating officer, said during a Springfield budget briefing tonight. “It’s an honest budget that we present the people of Illinois to address the tsunami of red ink that we are facing, but it’s one worth having — shared sacrifice, shared responsibility — to address this unprecedented budget crisis.”

The tsunami of red ink he’s talking about is the recent $11.6 billion deficit projected by the end of next fiscal year. The budget proposal needs to go through the legislative process, meaning it’s far from a done deal. For it to become law, Quinn will have to persuade lawmakers to take a series of politically tough votes.

The most controversial item would be to increase the state income tax rate on individuals and businesses. The rate levied on individuals would rise from 3 percent to 4.5 percent, while the rate applied to corporations would jump from 4.8 percent to 7.2 percent.

According to the administration, if Quinn's budget is enacted, about half of the state’s 11.3 million taxpayers would pay more in state income taxes, while the rest could pay less.

That’s partially because Quinn wants to help individuals cope with the increased rate by tripling the personal exemption from $2,000 to $6,000, which would take a chunk out of the new tax revenue. A family of four would pay no state income tax on the first $24,000 they earned.

Quinn also proposes implementing a “back-to-school sales tax holiday” for 10 days each August to help spur the economy and help families better afford everything from school supplies to gym shoes for kids.

Jerry Stermer, Quinn’s chief of staff, said the extraordinary budget scenario creates a once-in-a-lifetime opportunity to reform the state’s tax structure based on ability to pay. “So those who have more ability can pay more. Those who have less ability ought to be asked to pay much less. And this would bring that kind of fairness to our code.”

If the legislature didn’t enact all of Quinn’s proposals, his administration says drastic changes would occur. According to Ginger Ostro, Quinn’s budget director, if the state cut spending without raising new revenue to fill the deficit, state government would return to 2004 funding levels. The result: 800,000 people losing health care coverage, 200 state police officers laid off, 34,000 teachers laid off, per-student education funding down by $1,200 per child, and one of the state’s four veteran’s homes closed.

State employees (Pending negotiations with public employee unions)
  • Take four furlough days (one each quarter) — $36 million saved.
  • Pay more into their health care plans (the administration offered no estimate per person) — $200 million saved.

Pension benefits
  • Maintain the “defined benefit” plan, but new employees would receive fewer benefits.
  • Employees would increase their contributions by 2 percentage points.
  • Cost-of-living adjustments would be readjusted to 50 percent of the consumer price index or 3 percent, whichever is lower.
  • Similar to the Social Security system, retirement age for new employees would be 67.
  • Employees covered by Social Security would earn 1.5 percent of their final pay per year of service. Employees not covered by Social Security would earn 2 percent.
  • Estimated savings by the new system: $162 million by 2045.

Pension funding
  • The administration would pay less than scheduled into the five public employee pension systems by $550 million this fiscal year and by nearly $2.3 billion next fiscal year.

Budget cuts
  • The $500 million in cuts implemented in FY09 would remain.
  • Across-the-board 2 percent reductions in grant programs, excluding programs for education and health care — $80 million saved.
  • Reduce some community grant amounts by 10 percent and eliminate other grants altogether.
  • Consolidate the Historic Preservation Agency into the Department of Natural Resources, reducing some administrative positions — $2.3 million saved.
  • Other cuts and efficiencies to state agencies — $390 million total saved.

Federal stimulus
  • Use about $4 billion of federal stimulus funds to plug the state deficit.
  • Use $2.9 billion in federal stimulus funds to reduce the Medicaid payment cycle to 30 days.
  • Use $2 billion to support elementary, secondary and higher education to avoid budget cuts below current FY09 levels.

Road and school construction
$26 billion plan paid for by:
  • Increase driver's license fees from $10 to $20.
  • Increase license plate fees from $79 to $99.
  • Increase vehicle registration fees from $15 to $30.
  • Increase title transfer fees from $65 to $105.
  • Use Road Fund money.
  • Shave some of the local governments’ share of tax revenues to pay for school construction.
  • No increase in motor fuel taxes.
We'll have reaction from lawmakers and policy analysts after Quinn's budget address tomorrow.

Monday, March 16, 2009

Tax increases will spark controversy

By Jamey Dunn
Gov. Pat Quinn already faces opposition from the business community to a possible income tax increase, even though his budget address will not take place until Wednesday. The Tooling and Manufacturing Association released a proposal today that suggests making budget cuts before turning to tax increases to solve the state’s deficit.

The premise of the plan is that Illinois corporations and families must pare down their budgets to survive difficult financial times, so the state should follow suit. “There really are some areas that we can cut in this budget before we go to that tax increase,” said Zach Mottl, chairman of the association’s government relations committee.

The association suggests a state hiring and promotions freeze, as well as changes to the state pension system that would resemble a private-sector 401(k) plan. That could include requiring larger employee contributions, getting rid of guaranteed retirement benefits and raising the retirement age to 67. The plan also includes substantial cuts to public schools, higher education and Medicaid. The only budgetary increase the association recommended was money for a job training grant program.

The plan also suggested that Quinn meet with business and labor groups to discuss changes to the worker’s compensation system, and they wanted him to reconsider his position on closing so-called corporate tax loopholes that the group said offer incentives to stimulate business growth in Illinois.

Ralph Martire (scroll down), executive director of the Chicago-based Center for Tax and Budget Accountability, recently said that budget cuts will actually hurt the state’s economy and result in job loss. He said that a progressive tax increase, which would put more of the tax burden on the wealthy, is the solution for getting the state through the recession.

“If the state raises taxes progressively and maintains its expenditures on essential public services, we have the potential to shorten the recession in Illinois by half a year, maintain or grow jobs and actually do something that counters the negative impact of this spiral down for most people in the state,” Martire said in a Statehouse news conference last week.

What's your limit?

By Bethany Jaeger
One of the most controversial and politically challenging ethics reforms being discussed this session is limiting the amount people and private interests can donate to political candidates. It’s a fight against the establishment as much as it is an attempt to Rod Blagojevich-proof the state. His campaign collected numerous $25,000 checks from businesses that held significant state contracts. In fact, that’s the impetus for last year’s so-called pay-to-play ban.

Since that ban took effect, a new coalition of business, labor, civic, nonprofit and philanthropic groups has formed and thrown its support behind campaign contribution limits as the gateway to more drastic steps, eventually including public financing. The so-called CHANGE Illinois coalition is advocating for limits on the amount individuals, businesses and private interest groups could donate to candidates at the state and local levels. It would resemble a law already in place at the federal level: a $2,300 limit for individuals and a $5,000 limit for businesses, unions and interest groups per election cycle. In Illinois, the coalition is keeping tabs on two bills sponsored by Democrats, HB 24 and SB 1768. Senate Minority Leader Christine Radogno also is sponsoring SB 1548, which would limit contributions to $10,000.

Yet, legislative leaders express concerns about the practicality of ensuring a level playing field for all candidates. For instance, House Speaker Michael Madigan cited the example of a statewide candidate running for office against a self-funded, or individually wealthy, candidate. He mentioned a 2002 race of his daughter's, Illinois Attorney General Lisa Madigan, as an example. If she had to abide by contribution limits, how could she compete against an individually wealthy candidate who funded his or her own campaign, he asked. Of note, however, is that Attorney General Madigan is supporting the campaign contribution limits measure proposed by Rep. Harry Osterman, HB 24, because it is the most comprehensive, according to the attorney general's spokeswoman, Robyn Ziegler, this evening.

Senate President John Cullerton said he is open to considering contribution limits, as long as they’re not set so low that candidates have to spend more energy and resources seeking many more contributions than they already do.

Ann Lousin, who helped write the 1970 state Constitution and who teaches law at John Marshall Law School in Chicago, spells out some of the opposition to campaign finance limits for individuals, businesses and political groups. “If I can figure out a way around it in five minutes, you shouldn’t put it into the statute,” she said. “You go back to sunshine, sunshine, sunshine. Sunshine is the best disinfectant.”

She said individuals could disguise their financial support through friends or relatives, while state contractors could hide their donations by funneling money though subcontractors, which aren’t part of the public record. “All you’re doing is putting it underground,” she said.

She also opposes prohibiting people from out of state or out of district from donating to candidates because she said she believes that would unfairly hinder minority groups and female candidates, who often raise money from outside of their home bases.

“If you keep on putting in these rules, you’re going to define the only candidate who can run is somebody [who appeals to] narrower and narrower groups, somebody who takes only $100 contributions from a variety of different people, none of whom do business with the sate,” she says. “You’re going to get such purity. ... Who can run after a while?”

Cynthia Canary, director of the Chicago-based Illinois Campaign for Political Reform, said contribution limits would challenge all candidates to reach out to more voters. And the measures supported by CHANGE Illinois would help disclose “bundling,” or the gathering of a group of checks from different people so that each contribution remains under the limit. The group also seeks more authority and funding for the Illinois State Board of Elections to conduct random audits so the campaign contribution reports don’t just end up in a file, unmonitored and under the radar.

Canary also said in a previous phone conversation that the goal is to enact reasonable, practical steps that will help scale back the influence of money in politics. And sunshine alone won’t cut it. “We have had sunshine for over 30 years, and look at the situation we’re in.”

Thursday, March 12, 2009

Gas, Gambling, Games, Governor and Safeguard

By Jamey Dunn
A gas tax increase, a proposition to sell lottery tickets online and early plans for possible 2016 Chicago Olympic Games all progressed in the legislature today. So did a measure to protect youth from sex offenders who prowl on social networking Web sites.

A controversial measure to increase in the sales tax on gasoline, proposed by Democratic Rep. John Bradley of Marion, advanced this morning. Bradley warned that HB 1 still needed work, and he urged committee members to support the concept rather than the details as introduced.

A bill backed by Senate President John Cullerton would allow the state to sell lottery tickets on the Internet. Sen. Don Harmon, a Democrat from Oak Park, said SB 1654 would do three things:

  1. Prohibit the state from selling the Illinois Lottery to private investors.
  2. Allow the state to hire a private firm to manage the lottery, while the state would still own it. Harmon said the idea would be to “contract with someone smarter than us to operate it.”
  3. Create a pilot program to sell tickets for the Lotto and Mega Million games online.

The measure advanced out of committee today, but Harmon said it needed work before it would be ready for a final vote on the Senate floor.

The Senate sent a bill to the House that is an early step towards preparing for the possibility of the 2016 Olympic Games being held in Chicago. The specifics of the bill will be worked out in the House, but sponsor Sen. Kwame Raoul, a Chicago Democrat, said it was important to get the ball rolling to meet an April deadline set by the International Olympic Committee.

Also in the Senate today, Cullerton announced that Senate Secretary Deborah Shipley (scroll down for bio) will join Gov. Pat Quinn’s staff as director of legislative operations. It’s another move that could build bridges between the executive and legislative branches, which have had frosty relationships during the past six years.

Shipley was elected secretary by Senate members in January 2007, replacing retired secretary Linda Hawker. Shipley will bring some institutional knowledge and offer guidance to Quinn’s relatively new and young legislative staff.

Safeguard against sex offenders
By Hilary Russell
The state could make it harder for individuals convicted of sex crimes to use the Internet.

Rep. Sandra Pihos, a Glen Ellyn Republican, is sponsoring HB 1314, a bill that would make using a social networking Web site a Class 4 felony for registered sex offenders. Convicted offenders must register with the state.

Earlier this year, Pihos said she read a report that nearly 100,000 sex offenders were removed from social networking Web sites in Connecticut and North Carolina, where two state attorneys general targeted sex offenders who used the Web.

“If they can remove that many sexual predators, we can do that here,” Pihos said. “Until we’re sure we have a mechanism in place that actually safeguards our children from sexual predators being on that site, I just feel that here in Illinois, we need to put some legislation in place.”

Her bill would apply a Class 4 felony or up to a three-year prison sentence if someone used social networking Web sites while registered as a sex offender. As a condition of parole, probation or release, the offender would have to agree not to use such sites as MySpace or FaceBook.

MySpace and FaceBook have more than 180 million users, and Pihos said that it’s an ideal anonymous place for sexual predators to troll for young people.

Wednesday, March 11, 2009

Similar concepts, new context

One week before Gov. Pat Quinn proposes his first state budget to the General Assembly, legislators and advocates of all stripes are revisiting a lot of issues they tried but failed to enact during the Blagojevich Administration. This time, there’s a new context:

  1. Legislators and Statehouse insiders trust Quinn more than they trusted Blagojevich.
  2. Senate President John Cullerton has a better working and personal relationship with House Speaker Michael Madigan than did former Senate President Emil Jones Jr.
  3. The economic and fiscal crises have sparked a new sense of urgency to find quick fixes at the same time they have inspired a willingness (however reluctant) to pursue more long-term reforms.
Whether the new context and new players actually will foster consensus and meaningful changes to revenue and spending, however, is yet to be seen. At this point in the spring session, it’s still all talk. Here are a few examples:

Gaming for capital
Republican leaders oppose increasing the state sales tax on gasoline to pay for a major construction program. Instead, they rekindled ideas to fund a capital program for schools, mass transit and infrastructure projects by expanding gaming. Their goal is to avoid raising any state taxes in a recession.

“Right now is absolutely not the time to be raising taxes on people who are struggling themselves,” said Senate Minority Leader Christine Radogno.

She and House Minority Leader Tom Cross propose expanding gaming to generate $1 billion in new revenue, which would help finance a $25 billion capital program. (They propose bonding about $12 billion, tapping $11 billion in the dedicated Road Fund to pay for transportation projects and leveraging about $3.5 billion from federal and local matching funds.)

Their gaming ideas include recurring proposals to allow a Chicago casino, expand positions at existing gaming facilities and enter a public-private partnership so that private investors manage the Illinois Lottery while the state continues to own it. Newer ideas include allowing video poker, as proposed in HB 4329, which is sponsored by one of Madigan’s assistant majority leaders, Rep. Frank Mautino of Spring Valley. Republicans also mentioned allowing Lottery tickets to be sold online, a proposal previously advanced by Cullerton.

Madigan took gaming off the table last year, but his spokesman, Steve Brown, said this is a new year. However, he said gaming tends to be a regressive source of revenue that usually generates a bunch of hype before falling by the wayside.

Senate Majority Leader James Clayborne said gaming for capital is still on the table in his chamber.

Tax reforms for education and economy
Ralph Martire, executive director of the Chicago-based Center for Tax and Budget Accountability, reintroduced a concept of increasing the state income tax rate and expanding the state sales taxes to cover services. The goal is to reform the way the state pays for public education and to reduce the burden on local property taxes.

Cutting back on state spending during a recession may sound logical, Martire said, but “it is quite clearly the absolute worst thing the state of Illinois could do.”

He joined two leaders in the Illinois Legislative Black Caucus to cite new evidence from Mark Zandi, Moody’s Economy.com’s chief economist, that the idea could help reduce the length of the economic recession in Illinois by preserving thousands of jobs and helping taxpayers spend money in their local economies.

The plan has been proposed in various forms before and would increase state income taxes, expand state sales taxes and provide targeted tax relief to low- and middle-income taxpayers. He added that broadening the sales tax to apply to services could reduce its rate, although it would be a hard sell to Cook County residents who already pay some of the highest sales tax rates in the country.

Sen. James Meeks, a Chicago Democrat and longtime sponsor of education funding reform measures, said Blagojevich is no longer in a position to threaten to veto tax reforms, and Cullerton has been a co-sponsor of such reforms. However, he added, his peers in the Senate likely would not support an income tax increase if it didn’t lead to education funding reform and property tax relief.

GOP budget reforms
By Hilary Russell
House Republicans flatly disagree and say Illinois has a spending problem, according to House Minority Leader Tom Cross.

He joined his GOP Caucus members and John Tillman, chief executive officer of the Chicago-based Illinois Policy Institute, a nonpartisan research organization, to propose budget reforms that would help reduce the $9 billion deficit and increase accountability. Introduced today in a Statehouse news conference, the proposals include:

The Sunshine Act (HB 4134) would create a volunteer commission of four legislators and four members of the public to review each of the state’s executive branch programs. The bill is sponsored by Rep. David Reis, a Willow Hill Republican. The state does not have an accurate list of existing programs, making it difficult for lawmakers to keep track of them, GOP members said.

Reis is also sponsoring the Stimulus Watch Act, which would require the General Assembly’s approval to use federal stimulus funds to create new state programs. Once the funds run out for a particular program, it would end.

“Pay as You Go Spending” (HB 3189), sponsored by Rep. Mike Connelly, a Lisle Republican, would implement a start and end date for new state spending programs. Just to add a program another must be eliminated.

Rep. Darlene Senger, a Naperville Republican, is co-sponsoring a constitutional amendment that would change the required number of votes to raise taxes. Currently, a majority of 60 votes in the House and 30 in the Senate is needed to increase fees or taxes. Senger’s proposal would increase the required number of votes to a “supermajority,” or 71 votes in the House and 36 in the Senate, making it more difficult to pass tax bills.

Rep. Lou Lang, a Skokie Democrat, said that the Republican’s timing was more showboating for their constituents than offering real solutions. “I find it very interesting that whenever there is a public policy decision to be made and the facts are clear that many people look for a political peg to take the chance to hang their hat on rather than take any political risk whatsoever.”

Gun control vs. gun rights
By Jamey Dunn
On the same day that thousands of people came to the Capitol building to participate in the annual gun owner lobbying day, every gun control measure voted on in a House committee advanced to the floor. A feeling of déjà vu was in the air.

Two of the gun control measures that passed through the committee today were proposed last session by the same two Democrat sponsors from Chicago. House Bill 12, sponsored by Rep. Luis Arroyo, would limit handgun purchases to one per person per month. House Bill 165 , proposed by Rep. Edward Acevedo, would ban semi-automatic assault weapons.

Other measures before the committee included House Bill 179, proposed by Chicago Democrat Rep. Deborah Graham, which would require that guns must either be equipped with gun locks or stored in lock boxes around minors. House Bill 180, also sponsored by Graham, would make gun dealers register with the Illinois State Police, who could then do spot checks on the dealers.

Rep. Brandon Phelps, a Democrat from Harrisburg, supports gun rights and is pushing for a few different bills that would allow counties to decide if they wanted to allow concealed carry of guns. One concealed carry bill sponsored by Sen. John Jones, a Republican from Mount Vernon, did not make it out of the Senate Public Health Committee yesterday.

Special elections
Two special election bills were killed today in a partisan showdown in the House Executive Committee. The hearing only included Cross’ special election bill and one proposed by Rep. Jack Franks, a Democrat from Woodstock. Both votes split along party lines. Republicans on the committee were visibly miffed and protested the demise of the bills.

Tuesday, March 10, 2009

Challenges for Gov. Quinn's first budget

By Bethany Jaeger, with Jamey Dunn and Hilary Russell contributing
Gov. Pat Quinn said he’s trying to come up with the “least bad option” to navigate the state into fiscal and economic recovery “because there are no good options.”

When he proposes his first state budget and spending plan before the full General Assembly next Wednesday, he said “it’ll have some castor oil in it, but when you take castor oil, hopefully it’ll get better in the long run.”

That castor oil could come in the form of tax increases, spending cuts, public employee pension reforms and a way to finance a long-term capital plan for road and school construction. None of those is easy to swallow, particularly when his plan is sandwiched between a nationwide economic crisis and an alleged corruption spree that has crippled voter confidence.

Tax increases
One online survey conducted last month by Zogby International indicates that the majority of 644 likely voters rejected two revenue options on the table. Slightly more than a quarter of the respondents said they could support an income tax increase, while about 13 percent said they could support broadening the state sales tax to include services. But more than half, about 55 percent, said that they supported neither and that the state needed another plan.

Slightly more than half also said they would be less likely to vote for a member of the General Assembly who supported a tax increase.

Zogby International conducted the poll on behalf of the Independent Insurance Agents of Illinois and the Illinois Insurance Association. John Zogby spoke to the groups in Springfield Tuesday afternoon and said that when voters do not want tax increases, budget cuts, increased spending or tax cuts as possible solutions to the economic downturn, “they’re not being stupid” and “they’re not being fickle.” He said voters would start to see progress and grow more confident “when the orange cones go up, when the roads are starting to be paved, when the money actually gets in to the communities.”

Zogby said that if the survey would have framed the questions as either-or situations such as increasing income taxes or cutting education funding, voters would have responded differently. “If you throw out a tax increase and are not able to sell it, that’s the kind of result you’re going to get,” he said of the survey results.

Spending cuts
Quinn said in his Statehouse office Tuesday afternoon that trimming state spending is the No. 1 focus. “We have to cut, cut and cut costs in the budget” to economize and save money for the taxpayers. He didn’t specify but repeated that “everything is on the table,” which could refer to anything from reducing state headcount to pulling back on educational grants. He said the core priorities of state government are public safety, education, health care and, right now, a $25 billion capital investment program that creates jobs.

“You have to cut wherever you can,” he said. “There are some things that we’d like to do normally, but if in a tough economic time, you have to cut back. I think that’s what people understand. Nobody’s happy about this.”

A special Senate committee is trying to look specifically at ways to cut state government services; yet, officials and advocates for education last week and for health care this week more often stated why their programs could not be sacrificed. Instead, some supported calls for a state income tax increase to bring in new revenue. Two more meetings about ways to reduce state spending will be held before March 24 and will touch on public employee pensions and state government operations, as well as ideas for new revenues and reductions.

On Tuesday, the committee heard from the Civic Federation, a nonpartisan think tank in Chicago. It just launched a new Institute for Illinois’ Fiscal Sustainability and issued a new report that calls for reducing spending, avoiding the creation of new programs and implementing a construction and infrastructure plan. One suggestion for reducing Medicaid costs, for instance, is to move some mental health patients from long-term care services that do not receive federal matching funds. Instead, the federation reported that clients could be moved to services that offer more integrated settings, which would receive federal matching funds and which could potentially save hundreds of millions of dollars.

Quinn said part of the need to cut back on spending is so that the state can have enough cash to pay its service providers, particularly medical providers who are at risk of closing their doors or laying off employees because they don’t get reimbursed by the state for months at a time.

More than 200 health care providers rallied at the Capitol Tuesday with Comptroller Dan Hynes to support a measure that would ensure that they got paid in a more timely manner. “This is just a small sampling of the thousands of providers who are desperate right now for relief,” Hynes said during a Senate committee. “These are small business owners. These are frontline service and social safety net services in our communities, and they have been devastated by these delays. They need our help.”

Hynes is again supporting a measure that would prohibit the state from deferring Medicaid bills into the next fiscal year, which has often happened as a way to make the current year’s budget appear balanced.

Pension reforms
Another area subject to reforms is public employee pension systems. Quinn said he’s considering a two-tiered system, meaning that existing employees would keep their current pension benefits but that new hires would receive lower benefits.

“We want to make sure we have adequate money not just to pay the pensions of public employees, which is an important policy goal and it’s a legal requirement, but we also want to have money to invest in health care and education and having public safety,” Quinn said. “So there’s a lot of balancing.”

While the idea has support from such think tanks as the Civic Federation, it has strong opposition from such public employee unions as the American Federation of State, County and Municipal Employees Council 31.

The Civic Federation’s report suggests ways to chip away at the state’s $73 billion unfunded pension liabilities. One idea includes imposing a moratorium on new employee benefits until the pension system had enough assets on hand to fund 90 percent of its liabilities.

“It would not be imperative to have to change the pension benefits if, in fact, the state could afford them,” said Laurence Msall, president of the Civic Federation. “But the fact it has not fully funded them for over 30 years is a strong indication to the Civic Federation that the benefits are unaffordable, and there is no comparable type benefit program in the private sector. You just don’t see people retiring after 20 years of service with a defined benefit that goes up by 3 percent a year and that allows for free health insurance.”

He said the federation’s No. 1 recommendation to the state is to stop digging and making the problem worse. “These runaway pension costs are compounded by the under-funding, but inherent in the under-funding is the state’s 30 years of not adequately funding them. And if the state was able to afford this generous of benefit, it would be funding them.”

AFSCME Council 31 said the public employee benefit levels are modest and below the national average, and they’re not the problem, according to spokesman Anders Lindall. Rather, he said, the problem is that previous governors and legislatures have chronically failed to adequately pay the state’s contribution into the pension systems, creating a mountain of unfunded liabilities.

“Cutting pensions and undermining retirement security for state employees is wrong, period,” Lindall said. “And AFSCME will oppose any unfair two-tiered system that would have employees doing equal work for unequal benefits. It’s important to know that the average benefit for a current retiree is $1,500 a month, about $18,000 a year. I think anybody that would consider that gold-plated is out of touch with reality.”

However, even legislators such as Rep. Joe Lyons, who describes himself as a pro-labor Democrat, know they have to keep an open mind and prepare for some politically tough votes this year. “It’s one of these very bitter, bitter pills that we’re going to have to at least think about swallowing,” he said.

Members of the General Assembly already have tiered pension benefits, depending on when they were elected. And Rep. Kevin McCarthy, an Orland Park Democrat who chairs the House committee on pensions, said he’s proposed a measure with the support of House Speaker Michael Madigan that would change the General Assembly’s pension system from a “defined benefit” to a “defined contribution” plan. It would create a 401(k)-type system where legislators paid into their retirement accounts, and the state matched that amount up to a certain percentage.

“People have to realize that this is a system that we just cannot afford in the long term,” McCarthy said, adding that the legislation would start with the General Assembly’s retirement system and then extrapolate whether it would work for the four other pension systems for teachers, state employees, university employees and judges.

Quinn said he does not plan to propose a 401(k)-type system for public employees.

We'll have much more on reform proposals in the next week.

First sign of Burris’ uphill battle

By Jamey Dunn
An online survey conducted last month by Zogby International indicates that most of 644 likely voters would not vote for incumbent U.S. Sen. Roland Burris in 2010. Just 5.3 percent of the survey respondents said they would support him in the Democratic primary, while Treasurer Alexi Giannoulias and Comptroller Dan Hynes garnered about an equal level of support: 28.1 percent for Giannoulias and 26.8 percent for Hynes.

However, Zogby said, “it’s very, very early. It’s a name recognition game, essentially.”

Of the Republican respondents, 26.3 percent said they would support U.S. Rep. Mark Kirk, and
21 percent would support U.S. Rep. Peter Roskam in the GOP primary for Burris’ seat.

Attorney General Lisa Madigan led incumbent Gov. Pat Quinn in the question about whom respondents would support for governor in 2010. Madigan received 41 percent, while 29.5 percent supported Quinn.

However, Zogby said that Quinn has an approval rating of 46.4 percent during an economic crisis, indicating that he does have at least “some political capital.”

Republicans supported DuPage County State’s Attorney Joe Birkett for governor over state Sen. Bill Brady, who received 8.5 percent, and the Illinois Chamber of Commerce president Doug Whitley, who received 5.6 percent. Birkett received 39.3 percent.

Zogby said that a high number of Democrats, Republicans and independent undecided voters means that the Illinois GOP could have a shot at making these races close. He advised the Republican Party to reach out to the middle and to pick moderate undecided voters, as well as to try to avoid infighting. “Republicans have an opportunity in 2010, but the opportunity will not be in embracing their old [conservative] principals. You don’t embrace your fundamental principles when you’re out of office. You’re supposed to do that when you’re in office.”

Friday, March 06, 2009

Tax talk and FutureGen update

Income tax talk
By Bethany Jaeger
Senate Democrats are considering ways to trim the budget at the same time they’re considering revenue ideas to help alleviate the $9 billion to $11 billion budget deficit. At least one revenue idea includes an increase in the state income tax by as much as 2 percentage points, which would bring the rate to 5 percent for individuals.

Sen. Donne Trotter, budget negotiator for the Senate Democrats, said that for every percentage point increase, the state could collect an extra $3.3 billion, meaning 1 percentage point wouldn't plug the expanding budget gap. “If you’re going to do something as dramatic as raise the income tax, you might as well make it workable. Let’s not just do it and still have a hole and have to come back and do it next year.”

Trotter said early internal discussions about changing the tax structure include establishing a progressive system that would levy a higher tax rate on people who made more money and giving tax credits to families who made less money.

He said the idea to grant tax credits to lower-income families would allow the legislature to get around having to change the state Constitution, which established a flat income tax rate. Illinois lawmakers would have to propose a constitutional amendment to levy the tax on a sliding scale based on ability to pay.

FutureGen still being considered by the Feds
By Jamey Dunn
The U.S. Department of Energy has not taken the proposed FutureGen plant in Mattoon off the table, but the overall plan and the details of the bureaucratic process remain in flux.

According to the New York Times, Energy Secretary Steven Chu said yesterday that he still is considering the Mattoon plant as part of a “modified” project that could include international partners. “We are taking, certainly, a fresh look at FutureGen, how it would fit into this expanded portfolio,” Chu was quoted as saying.

Illinois lawmakers have focused on the record of decision, a statement that says the plan for the Mattoon site has met all environmental standards for construction. U.S. Sen. Dick Durbin recently called for Chu to sign the document so the project can move forward.

However, John Grasser, a spokesman for the Fossil Energy Division of the Department of Energy, said that being concerned with the record of decision at this point is “putting the cart before the horse.” Grasser said that the project must be resurrected before the record can be signed. He said that Chu is still open to the possibility of breathing new life into the project that was abandoned by former President George Bush's administration in January 2008. Grasser said that if the Mattoon site becomes part of a new plan, it could require a new record of decision and some administrative planning that will be worked out when, and if, the time comes.

Thursday, March 05, 2009

Civil unions measure advances

On the same day that the California Supreme Court heard arguments on the legality of Proposition 8, a ballot initiative that defined marriage in that state’s constitution as being between a man and a woman, an Illinois bill that would create civil unions advanced to the House floor.

The bill, proposed by Democratic Rep. Greg Harris of Chicago, would create civil unions for both heterosexual and homosexual couples, giving them the same state and local rights as married couples. According to Harris, however, the bill could not address the more than 1,000 rights and responsibilities that the federal government grants to married couples.

Churches in opposition to same-sex civil unions could not be forced to perform any kind of civil union ceremony.

Opponents to the bill call it a backhanded attempt to legalize same-sex marriages in Illinois. Robert Gilligan, executive director of the Catholic Conference of Illinois, said the legislation “is all about same sex-marriage” because it would redefine the term “spouse” by including anyone in a civil union.

Gilligan also expressed a concern that faith-based organizations that oppose homosexuality would be forced to acknowledge civil unions when making hiring decisions and giving benefits.

Austin Nimocks, senior legal counsel for the Arizona-based Alliance Defense Fund, said that this bill is identical to efforts in other states that set off judicial battles over same sex-marriage. “There is no doubt that a legal challenge will follow,” he said. If that happened, the Illinois Supreme Court would face the decision of legalizing same-sex marriage. “You very well may see a same sex-marriage decision in Illinois. … Obviously, that would happen without the consent or will of the people,” Nimocks said.

Those in favor of the bill say it is important to grant all couples the same rights in situations such as medical care decisions, hospital visits and funeral planning for a life partner. Harris said these rights are necessary “so that no one is left a legal stranger at the time of need in a loved one’s life.”

Rev. Suzanne Anderson-Hurdle, a Lutheran minister from Romeoville, said she agreed with opponents of the bill on the desire to keep the government from telling her church what to do, but she also said that sometimes the “secular or governmental world might be ahead of us believers and can challenge us to do what we should be doing.”

Anderson-Hurdle, whose church welcomes gay, lesbian, bisexual and transgender individuals, said that the bill was about equality, not religious faith. “This is not and should not be a religious discussion. This is a matter of legal, civil and human rights.”

Harris tried to advance an identical bill last year, but he said his effort was derailed by the impeachment proceedings of Gov. Rod Blagojevich. But it also was subject to several delaying tactics by the opposition.

Wednesday, March 04, 2009

Deficits and guns

Deficit redux
By Hilary Russell
Members of the bipartisan Senate Committee on Deficit Reduction held the first of four hearings today to determine how to pare down the state deficit. Education advocates and officials testified for three hours about how budget cuts to education would have lasting consequences.

Sen. Matt Murphy, a Palatine Republican, chairs the committee with Sen. Donne Trotter, a Chicago Democrat. Murphy said today’s hearing detracts from the committee’s initial intention. “We want to know where you’re willing to cut and where we think we can cut. I mean, it’s not supposed to be a parade of people explaining how they’re indispensable,” he said.

Glenn Poshard, president of Southern Illinois University, said the school received $ 9 million less this year than it did eight years ago, and that loss resulted in tuition hikes that nearly doubled the cost of an education since 2004.

Trotter said he viewed the committee hearing as a positive work-in-progress. “We asked the individuals, the stakeholders, to talk about how we could find money. And there were some ideas that weren’t considered before. I think we are getting the feel of what we can seriously be looking at that individuals are willing to stomach,” he said.

The hearings will span through March 24, covering topics such as health and human services, pensions and state government operations and revenues and reductions. The next committee meets Tuesday, March 10, and will discuss the Healthcare and Family Service budget deficit and revenue shortfall. Senate President John Cullerton, a Chicago Democrat, and Senator Minority Leader Christine Radogno, a Lemont Republican, each appointed five party members to the committee.

Gun bill advances
By Jamey Dunn
Gun owners may have to report any loss or theft of a handgun to local police within three days or they could lose the right to own a firearm.

House Bill 845, sponsored by Chicago Democrat Sen. Edward Acevedo, passed out of a House committee today with a 6 to 4 vote. Cook County State’s Attorney Anita Alvarez testified in favor of the measure, which she called “common sense gun legislation.” She said it would help law enforcement track guns that are used in crimes because the owners often supply the guns to people who commit the crimes, and then the owners claim they lost the gun.

Todd Vandermyde, spokesman for the Illinois Rifle Association, said the bill is unconstitutional because it could take away the right to own a firearm for a “failure to report a property crime.” He said that current laws should be properly enforced to keep guns out of the hands of criminals.

Failing to report a lost or stolen handgun the first time would be a petty offense. A second offense could carry the weight of a felony, possible jail time and loss of the Firearm Owner’s Identification Card, which is required for gun ownership in Illinois.

Tuesday, March 03, 2009

FutureGen confusion

By Jamey Dunn
With speculation running rampant about how federal stimulus funds will be spent, it seems that Illinois lawmakers and the U.S. Department of Energy may not be on the same page when it comes to FutureGen, a one-of-its kind project slated for Mattoon that got the kibosh at the last minute in late 2007.

Supporters of the near-zero-emission power plant that would use Illinois coal say they are waiting on Energy Secretary Steven Chu to sign the record of decision, a statement that says the plant has met all required environmental standards for construction. “I think this is the best project to move quickly in coal research, good for Illinois, good for the United States and the world,” said U.S. Sen. Dick Durbin, who appeared in Springfield last week. “And so what we’re looking for is [Secretary Chu’s] signature on something called a record of decision. And if he would sign that document, we’d be ready to move forward. And so I’m going to do everything I can to urge him to do so.”

Meanwhile, John Grasser, a spokesman for the department’s Fossil Energy Division, says the project has been restructured, so the record of decision no longer matters. “The original FutureGen does not exist right now as a federal project. The record of decision is moot.”

Regardless of the record of decision, FutureGen is eligible for the $1 billion in grants included in the stimulus package for fossil fuel research. The money could be given to one project or split up over several. Chu could hand it out as he sees fit, or several projects may be given the opportunity to compete for the money. According to a timeline on the federal stimulus Web site, agencies must start reporting on these competitive grants by May 20. Even if FutureGen got all the funding, it would not be enough to cover the plant’s estimated $1.8 billion dollar price tag.

Warren Ribley, new director of the Illinois Department of Commerce and Economic Opportunity, says that FutureGen has a good chance to receive funding, partially because the project has potential to stimulate the economy almost immediately.