Monday, January 31, 2011

Quinn signs civil unions bill

By Jamey Dunn

Same-sex couples in Illinois will soon have the opportunity to seek protections under state law, thanks to a bill Gov. Pat Quinn signed today.

“We believe in civil rights, and we believe in civil unions,” Quinn said in Chicago as he signed the bill. “Many people … all over Illinois, worked so hard for not just in the last few days or weeks or months but literally, for many people, almost their entire lives.”

Starting in June, same-sex and heterosexual couples will be able to enter into civil unions. The unions will provide couples with the same rights that come with marriage under state law, such as shared property rights, hospital visitation and the ability to file joint state tax returns. Illinois will also recognize civil unions — or same-sex marriages, which will be considered civil unions — from other states. Civil unions are not recognized by the federal government.

The General Assembly passed the civil unions bill in December. During debate, opponents argued that giving same-sex couples rights equal to married couples would be morally wrong and a danger to heterosexual marriage. “The reason marriage exists is that sexual intercourse between men and women … produces children. If intercourse did not actually produce vulnerable children who add to the population of a country, neither society nor the government would have much reason, let alone a valid reason, to regulate people’s emotional unions,” said Sen. Chris Lauzen, an Aurora Republican.

While many from their party opposed the measure, Republican Comptroller Judy Baar Topinka and Treasurer Dan Rutherford — who as a state senator cast the lone Republican vote in favor of the bill — were on hand at today’s bill signing.

Chicago Rep. Greg Harris said at the Chicago event that approval of the bill marked Illinois offering “basic equality and fairness” to all couples. But he added that more needs to be done to protect people’s civil rights regardless of sexual orientation, both in Illinois and around the world.

“But as great a victory as we celebrate here today, there’s more work to be done,”
Harris said. “Things can get better. … There are forces, powerful forces, who want to turn back the clock. Who still actively [em]brace intolerance and work to take away rights that generations of Americans have fought to protect and we, we must not let them succeed.”

Thursday, January 27, 2011

Emanuel can remain in mayoral race

By Jamey Dunn

The Illinois Supreme Court ruled unanimously today that Rahm Emanuel is eligible to run for mayor of Chicago.

An appellate had ruled Tuesday that Emanuel did not meet the city’s residency requirements and therefore could not run in the February election.

The majority opinion said that the appellate court ignored precedent in its ruling to throw Emanuel off the ballot. “Our review of the appellate court’s decision in this case begins not where it should, with an assessment of whether the court accurately applied established Illinois law to the particular facts, but with an assessment of whether the appellate court was justified in tossing out 150 years of settled residency law in favor of its own preferred standard. We emphatically hold that it was not,” Justice Robert Thomas wrote in the opinion.

Thomas stated that residency is determined by intent. So as long as it was Emanuel’s intent to return to Chicago, it continued to be his city of residence. Intent could be determined by the circumstances of the situation — such as Emanuel continuing to own a house, pay taxes and vote in Chicago.

Justices Charles Freeman and Anne Burke agreed with the ruling but not the logic that led to it. “Suffice it to say, therefore, that this court has not always spoken clearly on what is meant by residency, and the majority should acknowledge this fact. This is why both sides in this dispute can contend that their respective positions are supported by decades of precedent. Indeed, contrary to the majority’s assertions, the only thing that is well-established in this case is the confusion that has existed on this subject,” said the justices in their own separate opinion.

The justices did not agree that intent to return necessarily proved residency. The opinion goes on to say: “We would answer the narrow question that was actually raised by the objectors in this case: Does a person lose his permanent abode if the abode is rented during the relevant residency period? To that question we answer “no.” For that reason alone, we join in the judgment of the majority.”

The differing opinion also warns that the ruling could allow others to make claims of residency based on intent and pave the way for challenges to residency in a wide variety of situations. “It should be noted that today’s decision will raise questions beyond the facts of this case. Because the court holds that residency has one settled meaning, and that meaning rests on a person’s intent, today’s decision will have implications for residency requirements for in-state tuition, residency requirements for municipal employees such as police officers and firefighters, residency requirements for school districts and other similar situations. This court should be prepared to address those issues as firmly and expeditiously as we have done today.”

Wednesday, January 26, 2011

Court strikes down capital bill

By Jamey Dunn

An appellate court declared Illinois’ capital construction program unconstitutional today.

The 1st District Appellate Court in Chicago ruled the legislation that created the $31 billion program did not meet the “single subject” rule in the state Constitution, which requires that one piece of legislation can only deal with one topic.

“The single subject rule is designed to prevent the passage of legislation that, if standing alone, could not muster the necessary votes for enactment,” the opinion states, citing an Illinois Supreme Court ruling on a 2005 case. “The practice of bundling less popular legislation with more palatable bills so that the well-received bills would carry the unpopular ones to passage is known as ‘logrolling.’ In addition to preventing logrolling, the single subject rule also facilitates the enactment of bills through an orderly and informed legislative process.”

The state has a history of lawsuits based on the concept that legislators must stick to one topic when drafting a bill, and today’s ruling notes that the definition of what a single subject can be and what topics relate to that subject “generally is construed liberally in favor of the legislature.”

Encompassing several loosely related concepts into one bill under a general topic is by no means a new practice in the General Assembly. Often, such bills collapse under their own weight, end up being split into several pieces of legislation or never face a court challenge.

However, the court ruled that in the case of the bill that contains the funding mechanisms for the capital plan, there are just too many provision that are not related closely enough crammed into one piece of legislation.

The law increased sales taxes on a variety of hygiene products, candy, soft drinks and alcoholic beverages. It also increased some licensing fees. The most controversial components of the bill allow video poker in bars and restaurants across the state and the leasing of the lottery to a private management firm.

“The subject of a bill may be as broad as the legislature chooses as long as the bill’s provisions have a natural and logical connection. … We find that the wide range of topics in Public Act 96-34 cannot be considered to posses a 'natural and logical connection,” the ruling stated.

Rockwell Wirtz, owner of the Chicago Blackhawks hockey team, as well as Wirtz Beverage, a liquor distribution company, filed the lawsuit against the state in the summer of 2009. At the time, Wirtz told the Chicago Tribune that he understood that the state needed revenues for capital projects, but he took issue with the way the plan was rushed through the legislature.

But a spokesperson for Wirtz plainly stated today that the motivation for the lawsuit was the increased taxes. “This lawsuit was always about how the legislature passed this bill and the discriminatory tax on wine and spirits. The decision affirms that, and we are gratified by it,” Julia Sznewajs told the Chicago Sun-Times. A message left for Wirtz’s attorney was not returned.

The court said the state’s defense — that all of the bill’s provisions related to “revenue” — did not hold up, citing a previous Illinois Supreme Court decisions (Johnson v. Edgar ). That ruling stated that allowing legislators to define the subject of a bill under a very broad topic — in the Johnson case it was “public safety” — would “‘essentially eliminate the single subject rule as a meaningful check on the legislature’s actions.’” The opinion went on to say that most proposals could be tied to revenue if they impacted the state’s economy in any way.

However, the ruling says a provision in the plan that commissions a University of Illinois study on the effects of the lottery on families and a provision that requires the governor’s office to report on capital spending fall outside of the subject of revenue.

The court’s decision applies to all parts of the legislation, whether they relate to revenue or not. The opinion again sites the Illinois Supreme Court ruling in the Johnson case: “[T]he single subject rule prohibits the enactment of bills that encompass more than one subject. Thus, a challenge that an act violates the single subject rule is by definition directed at the act in its entirety.” The court found that severability clauses — a provision sometimes inserted in legislation that states that if any part of a bill is found to be unconstitutional, the rest of the bill still stands — would not protect legislation under a single subject challenge.

The opinion goes on to say that although the entire bill would be struck down, the legislature has the power to reconsider all the components contained in it. But different issues would have to be broken up into different pieces of legislation. Since the other parts of the plan — including the spending bill that lays out the projects — are contingent on the funding sources, the court threw them out, as well.

The ruling essentially puts the brakes on capital construction and the funding mechanisms that are being used to back the borrowing for the projects. It calls into question the state’s recent contract with Northstar Group to manage the lottery for 10 years, as well as the video gaming expansion and a pilot program to sell lottery tickets online.

Kelly Kraft, a spokesperson for Gov. Pat Quinn’s Office of Management and Budget, said the state has sold $4 billion in capital bonds so far. Of that, about $2.2 billion in bonds would potentially be affected by the ruling because they are backed by the revenue streams in the bill. The other bonding is backed by other sources, such as gasoline tax revenues from the road fund. However, Kraft said the $2.2 billion is also supported by the “full faith and credit” of the state, so that means the bonds also have the safety net of the general revenue fund. However, if the revenue streams from the capital bill are not reinstated in some way, another source of cash would have to be found down the road to pay off the borrowing. It is long-term borrowing, so lawmakers would have some time to find a way to pay the debt.

When asked how the state will proceed in regard to collecting the increased sales tax, a spokesperson for the Department of Revenue referred inquiries to Gov. Quinn’s office. A spokesperson for Quinn did not answer questions but did issue a written statement from the governor saying that he plans to appeal the ruling and ask the Illinois Supreme Court to put an immediate hold on the case.

“The administration intends to appeal the Appellate Court’s decision and to seek an immediate stay from the Illinois Supreme Court. … While the administration’s request for a stay is pending with the Illinois Supreme Court, capital projects already in progress will continue as scheduled. We would expect the Supreme Court to rule on the request for a stay in the very near future,” Quinn said in a written statement.

If the court grants the hold and agrees to take the case, Quinn and the legislature would have some time to sort out possible solutions to what could be a potentially messy situation that could halt or delay hundreds of construction projects.

Senate to consider last session's appointments

By Jamey Dunn

Attorney General Lisa Madigan ruled today that the Illinois Senate has to consider executive appointees it did not vote on during the last legislative session.

Senate President John Cullerton had sent a letter to Comptroller Judy Barr Topinka asking her to stop giving paychecks to state workers appointed by Gov. Pat Quinn who had not been confirmed by the Senate during the last two-year legislative session, which ended earlier this month. Cullerton said Quinn would have to reappoint those individuals, and the confirmation process would have to start over in the new legislative session because a new General Assembly could not act on matters presented to the old one.

Quinn maintained that the state Constitution requires the Senate to act on appointments after 60 session days but does not limit those days to the same legislative session.

Topinka asked Madigan to decide the issue, and Madigan agreed with Quinn. She said in a written opinion that the drafters of the Constitution did not include a “same-session” limitation on confirmations, though they did include such a limitation on other issues. She said to assume such a limitation on executive appointments would mean a “rewrite” of that section of the Constitution.

“Attorney General Madigan said today that essentially she agreed with the position we’ve held all along,” said Annie Thompson, a spokeswoman for Quinn. “Currently, we are reviewing her opinion and determining where we go next.”

Among the appointees the Senate did not consider last session was Quinn's controversial choice for director of the Illinois State Police, Jonathon Monken.

“Our opinion was based on 40 years of precedent followed by the attorney general's office, six prior governors and 21 prior General Assemblies regarding executive appointments. We are assessing how this impacts the legislative process, but we will comply with the opinion,”
Rikeesha Phelon, a spokeswoman for Cullerton, said in a written statement.

She added that an Executive Appointments Committee hearing will be scheduled when the Senate is back in session next week.

Tuesday, January 25, 2011

Quinn signs Medicaid reforms

By Lauren N. Johnson

Gov. Pat Quinn signed a bill today enacting comprehensive reforms to the Medicaid system in Illinois.

“It’s a very important day for health care in Illinois,” said Quinn, highlighting the measure’s passage during a challenging economic time for the state and the bipartisan effort put forth to approve the package in the last few weeks of session.

The governor said the measure is an “efficient” and “proper” response by lawmakers to remove waste and fraud from the state’s Medicaid system while saving taxpayers' money. He said the reforms also will help stabilize Illinois’ budget.

The legislation was sponsored in the Senate by Sen. Heather Steans, a Chicago Democrat, and Sen. Dale Righter a Mattoon Republican, and in the House by Rep. Barbara Flynn Currie, a Chicago Democrat, and Rep. Patricia Bellock, a Hinsdale Republican.

The state’s Medicaid system, which is administered by the Department of Healthcare and Family Services, provides health coverage to 2.8 million low-income individuals and families, people with disabilities and older adults. Of those, 160,000 are in the state’s voluntary managed-care program.

Under the new law, the department will expand so-called coordinated care – focused on wellness and prevention – to cover at least 50 percent of recipients eligible for Medicaid by 2015. That and other reforms are expected to achieve savings of more than $624 million during the next five years.

“We are reforming the [health care provider] service delivery system at the same time that we are reforming the payment system,” said Julie Hamos, director of the Department of Healthcare and Family Services, “and the combination of those two will produce the kind of incentives we need to keep people healthier and ultimately cheaper to provide health care for.”

As part of the coordinated care, said Michelle Saddler, secretary of the Department of Human Services, the department aims to put all Medicaid enrollees into “medical homes,” where they will consistently see primary care physicians.

The new law also will allow the state to save on prescription drug costs by increasing co-payments, promoting 90-day maintenance prescriptions and controlling utilization, and reducing prompt payment interest rates for pharmacy bills from 2 percent to 1 percent.

Beginning in July, the department will enhance the eligibility process – subject to federal approval – by requiring participants to prove Illinois residency annually and verify their incomes. The stepped-up process will require a month’s worth of income information instead of a single pay stub. Annual redetermination of eligibility will begin October 1.

Two ratings agencies tag Illinois with a 'negative' fiscal outlook

By Jamey Dunn

While one bond-rating agency upgraded Illinois status, two others held steady their ratings of the state’s ability to pay off its debt, reporting “negative” outlooks for the future.

Lenders look at Illinois’ bond ratings when deciding what interest rates to charge the state on its borrowing.

Moody’s Investor’s Services stuck with its A1 rating of Illinois state government. Standard & Poor’s extended its A+ rating and removed the state from a watch list for a potential downgrade, which Illinois had been on since March. However, both groups raised concerns about Illinois’ fiscal future. (Both groups' websites require registration to read the reports.)

Moody’s cited the state’s billions of dollars in overdue bills and the lack of an approved plan to pay them down as a primary reason for its negative outlook. “Legislation authorizing long-term debt to address past-due payments was not enacted at the end of the 96th General Assembly. Illinois' chronic failure to provide for structurally balanced operations over the years, and its reliance on payment deferral to manage operating fund cash, has fueled growth in past-due bills (those outstanding for more than 60 days). This practice has in turn hurt private providers of goods and services, as well as public-sector entities, such as transit agencies, universities and municipalities, that rely on state funding.”

Gov. Pat Quinn released three-year budget projections that include $8.75 billion in borrowing that would be used to pay down the backlog. That borrowing plan failed to pass in the General Assembly earlier this month, but Senate President John Cullerton reintroduced it at the beginning of the new legislative session. Moody’s report characterized the release of multi-year budget projections as a positive change for Illinois.

Both groups agreed that failing to make pension payments or taking on too much debt could cause Illinois’ rating to drop.

According to the Standard & Poor’s report: “The negative outlook reflect[s] our view of ongoing weakness in the state's pension funds and the possibility that the state might issue a significant amount of additional debt as part of its effort to address the large accumulated budget deficit. If the pension funding levels continue to deteriorate and debt levels increase significantly, which would pressure the state's near-term financial performance, we could lower the ratings. If pension funding levels stabilize and revenues meet the state's current projections, thereby stabilizing liquidity, we could revise the outlook to stable.”

Monday, January 24, 2011

Bond rating upgrade may be good for Quinn's budget plans

By Jamey Dunn

In the wake of the state income tax increase, one bond-rating agency has upgraded Illinois’ rating, which indicates the state’s ability to pay back its borrowing.

Fitch Ratings gave Illinois an “A” for $3.7 billion in bonds, which will be used to make the state's pension payment for the current fiscal year and are expected to sell in February. It also upgraded Illinois from a “negative” outlook to a “stable” one on $24.5 billion worth of bonds already issued. The group cited the recent income tax increase and pension reforms as improvements to the state’s fiscal stability.

David Vaught, Quinn’s budget director, predicted in January that rating companies would downgrade the state’s bond rating to “junk” if legislators did not raise the income tax rate. Lawmakers voted later that same day to increase the personal income tax rate from 3 percent to 5 percent and the corporate tax from 4.8 percent to 7 percent for four years.

“Following several years during which the state was unwilling to take action to restructure its budget to achieve balance and increased reliance on borrowing to close budget gaps, the tax increase and enacted spending limits close a significant portion of the structural gap in the state's budget through fiscal 2014,” Fitch’s researchers said in a written report.

A more favorable bond rating means lower interest rates on borrowing, which could be a positive for Gov. Pat Quinn. According to three-year projections released by his budgeting office, Quinn is still counting on the approval of $8.75 billion in loans to pay down the state’s backlog of unpaid bills. Legislators voted down the borrowing twice earlier this month. Sen. President John Cullerton has introduced a new borrowing bill, Senate Bill 3, and Republicans have expressed willingness to support some version of the plan. They say, however, that they want less borrowing and some reforms, such as changes to the state’s worker’s compensation system.

Quinn’s plan also includes a $1-a-pack tax increase on cigarettes, which failed to pass in the closing days of last legislative session, and revenues from the temporarily boosted income tax.

Fitch’s report predicts trouble on the horizon under the plan: “The Governor's projected spending plan, which incorporates the additional tax revenues and spending limits, continues to rely on borrowing for operations in fiscal 2012 to accommodate the loss of federal stimulus funds. Further, the tax increases are temporary and will begin to phase out in 2015. Even if the state has achieved budget balance by that point, it will once again be faced with a significant budget balancing decision to make severe expense reductions that it has been unwilling to make up to this point, identify new revenues, or make permanent the tax increases. In addition, the state's ability to reduce its accounts payable backlog in a meaningful way relies on debt issuance that has yet to be authorized.”

When asked if the governor's office has a backup plan if the legislature does not approve the borrowing or cigarette tax, Kelly Kraft, spokesperson for Quinn's Office of Management and Budget said in a written statement, "These projections, along with continued economic growth, represent the Governor's plan to address the state's fiscal challenges."

The group’s research found that Illinois’s current borrowing debt is 6.3 percent of 2009 personal income, which the authors describe as “moderate but above average.” Under Quinn’s plan, it would be nearly 9 percent of 2009 personal income, which is described as a “high level.” However, the report said, “The ability of the state to bring its payment obligations more current in a timely manner will be limited without the borrowing [in Quinn’s proposal].”

Court: Emanuel ineligible for mayor's race

UPDATE January 25, 2010: The Illinois Supreme Court has decided to consider Rahm Emanuel's appeal. They will review the briefs filed with the appellate court and will not hear oral arguments on the issue. Rahm Emanuel, a former congressman and top member of President Barack Obama’s administration, was declared ineligible to run for mayor of Chicago by an appellate court today.

The court ruled 2-1 that Emanuel — who left Chicago to work for Obama in Washington, D.C., but continued to vote and own a residence in Chicago — does not meet the residency requirements to appear on the ballot in the February 22 election.

Emanuel is the front runner — over opponents Carol Moseley Braun, Gery Chico, Patricia Van Pelt-Watkins and William Walls — in recent polls, as well as campaign fund raising. He told reporters he plans to appeal the decision to the Illinois Supreme Court.

Thursday, January 20, 2011

Study: States don't need bankruptcy option

By Jamey Dunn

A new study says doom-and-gloom news stories predicting that states will default on their debts are overblown and draw attention away from the need for long-term reforms.

The report was released today by the Center on Budget and Policy Priorities (CBPP) — a Washington, D.C.-based think tank that studies state and federal fiscal decisions that affect low- and moderate-income families and individuals. It acknowledges that many states and municipalities are struggling to overcome large deficits, partly because of falling revenues caused by the recent recession.

According to the center, states face a total shortfall of $125 billion for fiscal year 2012. The report says state governments are taking steps to address their deficits, such as often-unpopular cuts and tax increases. “While these deficits have caused severe problems, and states and localities are struggling to maintain needed services, this is a cyclical problem that ultimately will ease as the economy recovers.”

Iris Lav, one of the authors of the study, said states should be able to solve their budget problems without resorting to bankruptcy. “They have a lot of internal pressure [to make cost-saving changes]. They have resources, they have taxes, they have the potential for cutting spending if they need to.”

Lav, former deputy director of the CBPP and now a senior adviser to the organization, said the potential for bankruptcy might take pressure off of states to address some unpopular issues “The political process will be more difficult [with default as an option] … and there’s not evidence that it’s necessary.”

The report says lumping pension and borrowing debt into the immediate operating funds shortfall is the wrong approach because states have more time to solve such problems as under-funded pensions. “Unlike the projected operating deficits for fiscal year 2012, which require near-term solutions to meet states’ and localities’ balanced-budget requirements, longer-term issues related to bond indebtedness, pension obligations and retiree health insurance … can be addressed over the next several decades. It is not appropriate to add these longer-term costs to projected operating deficits.”

Lav said some media reports claiming that states have a total of $3 trillion in unfunded pension liabilities are are based on the notion that states will make nearly risk-free pension investments from now on, which she says is not the case. The study estimates the unfunded liability is “a more manageable (although still troubling)” $700 billion.

She added that many states, including Illinois, have taken steps to cut future pension costs, and more will likely follow suit. Lav thinks states will also start cutting some health benefits for employees or requiring them to pay more for their insurance coverage because health care costs are outpacing both the growth of the economy and state revenues.

The report's authors cite Illinois as an outlier state facing more extreme short- and long-term problems. “Illinois also has one of the worst structural deficits in the country,” said Nick Johnson, director of the State and Fiscal Project for the CBPP.

The study describes the pension systems of Illinois, New Jersey, Pennsylvania, Colorado, Kentucky, Kansas and California as “grossly underfunded.” While most states will have to increase average pension spending from 3.8 percent of their operating budgets to about 5 percent, the study says these states will likely have to take more drastic measures.

The study makes several recommendations for states seeking to get their budgets in order:
  • Expand the sales tax base to services to capture the economic shift from manufacturing to service industries.
  • Create a progressive tax system as opposed to a flat income tax rate.
  • Create five-year-plan budgets based on accurate revenue projections, so lawmakers can see the future impact of today’s choices.
  • Allow breaks for seniors only on a need basis instead of doling them out to all residents past a certain age.
The study cited Illinois as an “extreme example” of “failure” to address such fiscal and budgeting issues: "Because Illinois is chronically short of the revenues it needs to cover its expenses, it has engaged in a number of poor fiscal practices over the years. It has postponed payments to vendors, failed to make adequate pension contributions or borrowed money to make the contributions, securitized or sold assets, and taken other dubious actions. As a result, it has had a particularly difficult time coping with revenue declines during this recession, with a fiscal year 2012 deficit projected to equal half of its general fund budget, and has developed an large overhang of longer-term debt and unfunded liabilities."

Lav said Illinois lawmakers took a necessary step in passing an income tax increase. She said, however, that Illinois is “essentially paying the penalty for its failure to address its revenue situation over and over again for a number of years.”

Wednesday, January 19, 2011

State reaches deal on private lottery management

By Jamey Dunn

Illinois will hand over the reins of its lottery to a private firm next summer.

The state finalized its agreement let Northstar Lottery Group manage the Illinois Lottery for the next 10 years in return for the promise of more revenue. According to the Division of the Lottery, which operates under the Illinois Department of Revenue, Northstar plans to grow profits by about 10 percent over the next five years.

Northstar Group represents gaming vendors that have previously contracted with Illinois -- Rhode-Island-based GTECH Corp. and New-York-based Scientific Games Inc., along with marketing partner Chicago-Based Energy BBDO.

Northstar’s pledge to increase revenues by $1.1 billion over the next five years topped the proposal by the United Kingdom's lottery manager, the Camelot Group, by more than $500 million. “The state will benefit from [Northstar’s] familiarity,” Jodie Winnett, acting lottery superintendent, said when Gov. Pat Quinn announced the winner of the contract.

Camelot protested the decision, saying the state gave Northstar advantages in the bidding process because, in part, of the firm’s previous relationship with Illinois. The state denied protests from Camelot and the other failed bidder, Intralot S.A, a Greek firm.

If Northstar cannot reach its profit goal, it will have to pay the state half of its projections. It the firm cannot reach the numbers that the state estimates the Division of the Lottery could have achieved on its own, the firm must pay the entire difference. New revenues will go, in part, to help fund the state's capital construction plan, approved by the General Assembly in May, 2009. Plans to privatize the lottery and since-stalled efforts to sell lottery tickets online and allow video poker in bars restaurants across the state were all part of the original funding for new construction in Illinois.

Susan Hofer, a spokesperson for the Illinois Lottery, said Northstar has not changed its business plan from the original proposal pitched to the state last September.

According to the proposal, the firm plans to expand into so-called big-box stores, such as Walmart.

Hofer said the group is “using this time to gear up, so that they can hit the ground” at the beginning of Fiscal Year 2012 — when they are set to take over management in July.

“The lottery office at the Department of Revenue will do the state’s portion,” Hofer said. She said if lottery sales are expanded, it will be up to the state to investigate new vendors. The lottery division would also continue to investigate any alleged violations or fraud associated with lottery ticket sales.

Tuesday, January 18, 2011

Both sides on tax hike agree more needs to be done

By Lauren N. Johnson and Jamey Dunn


While many teachers and social service providers disagree with the much of the business sector on the merits of Illinois’ income tax increase, representatives of both groups say legislators must do more to get the state budget in line.

A number of groups that represent Illinois businesses are not pleased with the income tax increase package that Gov. Pat Quinn signed into law last week because they say reforms were left out of the final legislation.

Todd Maisch, the vice president of government affairs for the Illinois Chamber of Commerce, said the state should focus on encouraging hiring because higher employment rates mean the personal income tax would bring in more revenue, even without an increase.

“Despite an awful lot of discussion about reforms, we didn’t get any reforms to accompany the income tax increase. We think that ought to be the No. 1 focus when the legislature returns,” Maisch says.

Jeff Mays, president of the Illinois Business Roundtable, said unless the state takes a step further to address spending and the backlog of overdue bills, the new tax increase would not solve Illinois’ budget problems. “If you just raise taxes and don’t change how you’re spending your money, you’re just going to be filling a hole while at the same time you’re digging it deeper,” Mays says.

Mays supports reforms made to the pension systems last spring, as well as recent changes in the Medicaid system, but he said those alone would not be enough to address the state’s $13 billion deficit. “The Medicaid reforms [passed during the lame-duck session] were modest but good,” Mays says. However, he says lawmakers need to work on changes to the health care system for state employees, as well as reforming they way the state budget is created. “If you just raise taxes and don’t change how you’re spending your money, you’re just going to be filling a hole while at the same time you’re digging it deeper,” Mays says.

Maisch says a number of commercial developers have watched pending projects canceled as a direct result of the higher income tax for Illinois businesses, which increased from 4.8 percent to 7 percent for the next four years.

“One [tax increase] is not going to create a stampede,” Mays says, referring to some Illinois companies' threat to leave the state.

Compared with other states' costs for employers, Mays says: “We’re way out of line on unemployment insurance, we’re way out of line on corporate taxes and we’re way out of line on litigation. It’s the cumulative effect of all those things that’s making employers ask, ‘Why invest in Illinois?’”

Representatives of teachers and social service providers say, however, that the income tax increase was necessary to address the state’s financial crisis. But they are concerned that schools and providers may not receive the money the state owes them quickly enough to prevent more layoffs and program cuts.

“I think from our perspective, we realize that that was a tough choice for lawmakers, but it was the right one. … From our perspective, there was no other choice,” says David Comerford, spokesperson for the Illinois Federation of Teachers.

He said the failure of a proposed $1-dollar-a-pack cigarette tax increase, which would have brought it an estimated $370 million for schools, was a disappointing blow for education. Comerford says while there are reports of a last-minute agreement to funnel some money to underperforming schools, until such funding is officially approved, educators are operating under the assumption that there is no new money for education.

“At this point, it really doesn’t provide any new money for education. … Right now we’re just looking at flat funding for education. … Compared to the alternative of layoffs and massive cuts, it is a good thing.”

Don Moss, coordinator for the Illinois Human Services Coalition, agrees that the increase was the only option to address the budget crisis. However, he says lawmakers should approve a borrowing plan to pay off the backlog of overdue bills owed to schools, vendors and social service providers. A proposal to borrow $8.75 billion, which supporters said would have allowed the state to start sending checks out in March, failed to get the needed support to pass in tandem with the tax increase. However, Senate President John Cullerton introduced the plan for consideration in the new legislative session as Senate Bill 2.

Moss says that while the tax increase will help the state get its fiscal house in order, it will take time for Illinois to start seeing the new revenue. He says those owed money — some for months on end — need to be paid as soon as possible. “The nonprofit social service providers’ backs are against the wall. … {The state} need[s] to get as close to current as possible in the payment of [its] bills.”

Comerford says it is premature to try and predict how the tax increase would affect funding for different areas of the state budget because Quinn has not yet proposed spending for the next fiscal year. “We’re going to have to see what else the governor’s plan is [in February when he makes the budget address]. … As much as it sure felt like a budget was passed [last week], one hasn’t been.”

CapitolView

Between magazine deadlines and the holiday weekend, I didn't get this posted last week. But it is never too late to catch up on the new tax increase. We also covered some of the issues the legislature did not resolve in the marathon final days of session that will likely resurface in the new session.



Reviewing the week at the Statehouse, from repealing the death penalty to the tax increase and more. Chris Wetterich, Springfield State Journal-Register, Mike Lawrence, Statehouse columnist, and Kevin McDermott, St. Louis Post-Dispatch join moderate Jamey Dunn from Illinois Issues Magazine. A production of WSEC-TV/PBS Springfield.

Thursday, January 13, 2011

Quinn signs tax increase

By Jamey Dunn

Gov. Pat Quinn signed a bill today to increase Illinoisans' personal and corporate income tax rates.

Under the new personal rate, Chicago Democratic Rep. Barbara Flynn Currie estimated that a family of four with an income of $40,000 would pay roughly $800 more a year.

The personal income tax has increased from 3 percent to 5 percent, and the corporate tax has gone from 4.8 percent to 7 percent. Both rates are scheduled to drop after four years, to 3.75 percent for personal income tax and to 5.25 percent for the corporate income tax. The plan is expected to bring in roughly $6.5 billion in its first year.

The measure also includes spending caps for the next four fiscal years. The limits are: $36.8 billion in Fiscal Year 2012, $37.5 billion in FY 2013, $38.3 billion in FY 2014 and $39.1 billion in FY 2015. If the legislators spend more, the tax increases would be nullified. It is be up to the Illinois auditor general to determine whether the state has overspent.

Republicans did not support the tax increases, saying they will hurt businesses and chase jobs out of the state. The Democrats who supported the bill said the state could not get out of its current budget crisis without new revenues.

“This is a temporary income tax to deal with the immediate fiscal emergency our state faces. To pay the bills so we don’t have severe cutbacks in education, health care, public safety—important things that are absolutely vital to the lives of the citizens,” Quinn said at a news conference on Wednesday.

Quinn has yet to take action on another major piece of legislation passed in the final days of session: a measure to abolish the death penalty in Illinois. Quinn said during his campaign that Illinois should have capital punishment as an option for the worst crimes. He also supports the moratorium, which was put in place more than 10 years ago by former Gov. George Ryan. Quinn would not indicate his intentions for the bill. He said he will have to take it under careful review — by studying the history and seeking the opinions of people on both sides of the issue — because it is such a big decision.

Wednesday, January 12, 2011

Legislators sworn in as new session begins

By Jamey Dunn with Lauren Johnson contributing

After closing a two-year legislative session marked by the impeachment of a governor and a budget crisis, legislators reflected on the past as they welcomed the newly elected members to the 97th General Assembly.

During his speech at the House inauguration, held on the University of Illinois Springfield campus, Speaker Michael Madigan recalled three historic events that occurred during the 96th General Assembly: the election of President Barack Obama, the impeachment and removal from office of former Gov. Rod Blagojevich and the nation tumbling into an economic collapse. “Those three events, in the very beginning of the two-year period, greatly influenced the actions and considerations taken by the legislature,” Madigan said.

During a ceremony in the Senate chambers at the Capitol, Senate President John Cullerton congratulated his colleagues for addressing issues such as pension reform and new revenues during the previous session.

"I believe that we in the Senate have created a workplace of cooperation and bipartisanship in the last two years. Even though you may not agree with all that we’ve done, you would have to admit we’ve had the most productive session that Illinois has witnessed in decades,” Cullerton said.

Senate Minority Leader Christine Radogno said after the swearing-in ceremony that she was encouraged by the general attitude of cooperation in the Senate during the last legislative session and wants to continue an “atmosphere in the Senate” that is “conducive to problem solving.”

Although the relationship between Democratic and Republican leadership in the House cannot typically be described as friendly, House Minority Leader Tom Cross encouraged the newly sworn-in lawmakers to keep their discussions during the new session both “civil and respectful.”

Legislators pass a tax increase in the final hours of session

By Jamey Dunn with Lauren Johnson contributing

Illinois lawmakers passed an income tax increase before adjourning their two-year legislative session but failed to approve other pieces of a budget plan intended to quickly pay down the state’s backlog of bills and funnel new funding to education.

Chicago Democratic Rep. Barbara Flynn Currie said the time to point fingers about the deficit has passed. “Illinois is in crisis — absolute financial crisis — and there is no way we can dig ourselves out of the crisis without enhanced revenues.”

Currie, sponsor of Senate Bill 2505 added: “This mess is a mess that is the responsibility of all of us. … It’s too late. It’s time for us to be adults, face the crisis and figure out together a solution.”

However, Rep. Roger Eddy, a Hutsonville Republican, said that GOP calls for spending cuts have been ignored for years. “The time to be adults was eight years ago, when we were expanding programs,” he said.

Currie said that without the tax increase, lawmakers would have to make “wholesale” cuts to state government.

Speaker Mike Madigan has vowed on multiple occasions that an income tax increase would not pass in the House without Republican support, but in the end, that is what happened. Senate Bill 2505 passed with the 60 required “yes” votes to 57 opposition votes.

“They're on the sidelines. They don't want to get on the field of play,” Madigan said about Republicans after the vote.

The personal income tax would increase from 3 percent to 5 percent, and the corporate tax would go from 4.8 percent to 7 percent. Under the legislation, both rates would drop after four years, to 3.75 percent for personal income tax and to 5.25 percent for the corporate income tax. The plan is expected to bring in roughly $6.5 billion in its first year.

Currie estimated that a family of four with an income of $40,000 would pay roughly $800 more a year under the initial increase.

The measure also includes spending caps for the next four fiscal years. The limits would be $36.8 billion in Fiscal Year 2012, $37.5 billion in FY 2013, $38.3 billion in FY 2014 and $39.1 billion in FY 2015. If the legislators spend more, the tax increases would be nullified. It would be up to the Illinois auditor general to determine if the state has overspent. House Democrats described that provision as the “hammer” that will keep future budgeting in line. Both legislative chambers changed their rules to require a three-fifths vote on any legislation that increases the spending limits.

Democrats described those spending increases as lower than the rate of inflation. However, Republicans took issue with the Democrats' initial numbers, on which the structure is based.

Sen. Dale Righter, a Mattoon Republican, called the caps an “ill-fitting theater costume” used to dress up a tax increase to make it seem fiscally responsible.

House Minority Leader Tom Cross said he could not support locking in any increase to the future budget. He said Democrats should work with Republicans to find an appropriate spending level and stick to it while the state tries to make its way out of its budget hole. “Whatever that is, you need to stabilize that number — and that’s the point — instead of growing the number.”

Senate President John Cullerton said that without the tax increase, the future of Illinois and those waiting on state payments, such as human service providers, would be dire. “If we don’t do this … the people who would be waiting to be paid would wait for years to be paid, if they even continue to do business with us.”

Republican Sen. Matt Murphy of Palatine said legislators who voted for the tax increase could no longer claim that job creation is their top priority. “Your number one priority is supporting state spending at or above the current level. … because there is no question there will be job loss with this tax increase.”

However, Sen. Dan Kotowski, a Park Ridge Democrat, said failing to approve new revenue to properly fund the state budget would result in the loss of hundreds of thousands of jobs.

The Senate approved nearly $4 billion in borrowing — to be paid off over eight years — to cover the required payment to public employee pension systems for this fiscal year.

Righter questioned why Illinois needed to borrow after raising the income tax. Cullerton said borrowing was necessary so the state could afford to make the pension payment for this fiscal year. “The money that we raised with the income tax is going to start paying the pension payment for the next fiscal year.”

He added that the General Assembly also extended the emergency budget powers given to Gov. Pat Quinn as part of last spring’s budget bill. Those powers — originally granted for six months but now extended through June 30, the end of the current fiscal year — allowed Quinn to make cuts and allocate lump-sum appropriations the General Assembly sent him in lieu of a line-item budget.

“This bill effectively, for budget purposes, crowns the governor king,” Murphy said.

Currie removed from the bill a “property tax relief” provision that would have provided equal annual rebate checks to property tax payers across Illinois. Republicans complained that it was unfair to give someone who pays a higher level of property taxes the same amount of relief as someone who pays less. Cullerton estimated that the checks for next year would have been about $325.

Two other components to the overall proposed plan failed to clear the House.

Lawmakers in that chamber shot down a $1-a-pack cigarette tax that would have brought in an estimated $370 million for education. That caused a temporary hitch for the income tax increase in the Senate, where some Democrats were disappointed with the lack of new education funds.

Maywood Democratic Sen. Kimberly Lightford said those with concerns, including members of the Senate Black Caucus, we’re promised that the $250 million in revenues that will no longer be needed for property tax relief will go toward education.

She said after the potential revenue sources of the cigarette tax increase and a proposed gaming expansion failed to get support, “we felt like the commitment for education funding was not there.” Lightford said members of her caucus called on Democratic leadership and Gov. Pat Quinn to find money for schools. “You didn’t pass a cigarette tax; didn’t call gaming. You need to put that 250 to education,” she said.

Lightford said $250 million a year for the first four years of the tax increase would go into a fund that would specifically target underperforming schools. Quinn later said of the deal: “Many [of the Black Caucus members] are my friends, and we worked together in campaigns. We believe in working together on important things that help children.”

A plan to borrow $8.75 billion to pay down the state’s backlog of unpaid bills for this fiscal year also failed to get the 71 votes it needed to pass. The loan would have been repaid over 14 years. Spring Valley Democratic Rep. Frank Mautino, sponsor of SB 336, said if the measure had passed, the state could have started to send out checks to schools, providers and vendors in March.

Cross said he is still willing to negotiate with Democrats on a borrowing plan to pay off the bills but said it would have to be smaller and come in tandem with cuts and reforms, such as changes to workers’ compensation. The workers compensation efforts in the lame-duck legislative session fell short, but Cullerton called the issue a “top priority” for the new session, which begins later today.

Gaming expansion and medical marijuana measures that came up for votes in the waning days of the two-year session both died upon adjournment, along with the borrowing plan, workers’ compensation reform and the cigarette tax increase.

Tuesday, January 11, 2011

Lawmakers vote to abolish the death penalty

By Lauren Johnson

A repeal of Illinois’ death penalty passed today in the Senate after heated debate and is on its way to the governor’s desk.

Gov. Pat Quinn has said he supports capital punishment when it’s applied “carefully and fairly.” However, he has said he has no plans to lift the current moratorium on executions. A spokesperson for Quinn said today only that the governor plans to review the bill.

“The current moratorium gives the state an opportunity to reflect on the issue and create safeguards ensuring the death penalty is not being imposed improperly. “It is unconscionable that an innocent person could be put to death in Illinois,” Quinn said last year during his campaign for governor.

Cook County State’s Attorney Anita Alvarez, who opposes abolishing the death penalty, said changes that were enacted after then-Gov. George Ryan imposed the moratorium in 2000 have begun to improve the system. “In my office, the reforms are working,” Alvarez said.

During debate over the bill, its sponsor, Sen. Kwame Raoul, a Chicago Democrat, said Illinois “ought to be embarrassed” by its track record of wrongfully convicted individuals.

“This question is not about the people who we know did it,” said Sen. Toi Hutchinson, a Democrat from Olympia Fields. "It’s about the people who were convicted who didn’t. It’s about our system of justice that is actually predicated upon the protection of the innocent, and executing one innocent person is too high a price to pay.”

“What we have learned is that the system cannot be fixed,” said Sen. Dan Duffy, a Lake Barrington Republican. Twenty men previously on death row in Illinois were exonerated at the cost of taxpayers, he said.

“Seven out of 10 of those people on death row when Gov. Ryan commuted their sentences didn’t contest their own guilt,” said Sen. William Haine, a Democrat and former prosecutor from Alton. “People have not had a say as to whether these great crimes will no longer face just punishment.” He called for a constitutional amendment to be put to the voters instead of having the legislature decide the issue.

Raoul responded, “If you don’t want to take responsibility in making these hard decisions, then resign.”

Opponents of the legislation also voiced concerns about taking away law enforcement's ability to use the threat of the death penalty to obtain information from suspects. But proponents say the threat of death should not be a tool to push a plea bargain.

Monday, January 10, 2011

Quinn pledges fiscal solution but avoids tax talk

By Lauren Johnson

After he was sworn into office today, Gov. Pat Quinn vowed that the state will solve its budget crisis soon but avoided discussion of a proposed income tax increase.

During inauguration ceremonies at Prairie Capital Convention Center in Springfield, he said he looks forward to serving Illinois along with the other five statewide officers who also officially assumed office: Lt. Gov. Sheila Simon; Comptroller Judy Baar Topinka; Treasurer Dan Rutherford and returning constitutional officers Illinois Attorney General Lisa Madigan and Secretary of State Jesse White.

“We have replaced a government of deals with a government of ideals,” Quinn said. He became governor in 2009 after the impeachment of former Gov. Rod Blagojevich and was elected to his own four-year term last November.

Topinka called on both parties to work together to help solve the state’s budget woes.
“Some of this is not going to be easy because the problems are huge. … We’re going to need to disagree sometimes without being disagreeable.”

U.S. Sen. Dick Durbin, who attended the ceremonies, agreed. “Anything that’s done in Washington or Springfield will need more cooperation," he said. “It’s easy to play to draw, it’s easy to have a good press release, it’s easy to put off a tough decision, but we've got move beyond that.” To solve the large problems facing Illinois, lawmakers from both parties would have to work together, he added.

During his speech, Quinn identified jobs and education as top priorities. Jobs, he said, are the “best way to fight poverty, crime and to keep families together,” and “education is the strongest force in our land for equal opportunity.”

He added, “Our job is to make sure that we take care of our babies in every way we can, to make sure they have a decent future."

Quinn said Illinois “will pay our bills, we will stabilize our budget, we will strengthen our economy.” He said state spending obligations, such as contributions to employee pension systems, must be met to have a sound, balanced budget.

Some state workers could lose union protection

By Jamey Dunn

The Illinois House today passed a measure that would potentially bar state employees who work for executive officers and hold supervisory powers from joining unions and participating in collective bargaining.

Rep. Barbara Flynn Currie, the sponsor of Senate Bill 3644, said the percentage of state employees who are union members has grown from less than 80 percent in 2002 to almost 96 percent currently. According to Currie, there are about 1,600 petitions to join the union before the labor board, which would take the number up to almost 99 percent.

Currie said that is a problem because workers who deal primarily with policy decisions or supervise others need to be loyal to the governor instead of unions.

“My sense is that somewhere around 90 percent is probably reasonable and probably realistic,” she said. “I think that here has to be a balance between management and workers, and I think that we have unbalanced our work force in the state of Illinois.”

Opponents called on the Gov. Pat Quinn to work out the issue by negotiating with the unions.

Harrisburg Democratic Rep. Brandon Phelps, a former union organizer, said: “I’ve seen firsthand many employees that are getting passed for promotions, not being treated fairly by their boss or bosses. I’ve seen favoritism over one employee to another. That’s why a lot of these people have joined unions. … I believe this is a horrible precedent that we are setting here. I know that AFSCME and all the other unions are willing to negotiate this. “

Currie responded, “There have been negotiations that were not fruitful.”

Henry Bayer, executive director of Council 31 of the American Federation of State, County and Municipal Employees (AFSCME), characterized the bill as “anti-union.” He said it is not specific enough about which workers would be included. While Currie said the bill is intended to cover fewer than 200 employees, union officials are concerned that future administrations could apply it to many more positions.

Currie said the Labor Relations Board would have the final say on who could be in the union and who could not, but her bill would allow the governor to ask the board to reconsider some job titles, something that she said cannot be achieved through negotiations. “The collective bargaining process never suggests that unions should voluntarily give up membership.”

Currie added, “Our managers are not managing state government.”

In other legislative action today, the Illinois Senate passed a measure that would eliminate a controversial program created by former Gov. Rod Blagojevich. The issue of whether the state should continue giving all senior citizens free rides on mass transit became a political hot potato during the regular legislative session. A compromise was reached in the Senate after longtime proponent of the program, Chicago Democratic Sen. Rickey Hendon, signed on, but then it stalled in the House.

The new measure, which the House passed yesterday, would limit free rides to only seniors whose income levels qualify for state assistance programs, such as a state pharmaceutical aid program. Seniors who do not qualify would get to ride for half price. No legislators spoke in opposition of SB3778 on either the House or Senate floors before each chamber took a vote.

“It’s about time,” said Senate Minority Leader Christine Radogno, a Lemont Republican, who has been pushing to roll the program back.

Sunday, January 09, 2011

Workers' compensation reforms face strong opposition

By Jamey Dunn

An Illinois House committee passed a workers’ compensation reform package this evening, but most of the committee members voiced reservations about the bill.

The measure is the result of the efforts of a Special Workers’ Compensation Reform Committee, which held hearings in December. The short timeline was the reason some legislators gave for their concerns with Senate Bill 1066.

Rep. Angelo "Skip" Saviano, an Elmwood Park Republican, said he thought the reforms were being rushed for political reasons, as part of an effort to get a tax increase passed by offering reforms long sought after by Republicans. He voted against the bill, and called for the process to be slowed down. He said the committee’s efforts were a good start. But he added, “I don’t want that start [of workers’ compensation reform] to be flawed out of the gate.”

The bill would allow employers to choose the doctor who would check out and treat an employee making an injury claim. If an employee is not satisfied with the doctor, he or she could visit another doctor and get referrals to other specialists from that doctor, and the employer would cover the cost. However, if the employee wants a second opinion beyond that doctor or the referrals, the employer would not have to pay for it.

Fees paid to doctors for medical procedures would be cut. Loss of wages awards, which may be required of an employer if a work injury causes long-term problems that impair an employee's ability to work and earn the wage he or she was earning at the time of the accident, would be cut off at age 67.

The bill also calls for the creation of a workers' compensation advisory board, with members named by the governor and the four legislative leaders. The board would also include directors of state executive agencies.

Opponents of the bill said it does nothing to help injured workers receive better care or rein in the high premium costs paid by businesses for workers’ compensation insurance.

“What labor wants is what labor has always wanted on any day or any month of the year. We want good benefits for injured workers. We want injured workers to have rights under the act. And we want … access to good quality health care,” said Michael Carrigan, president of the Illinois American Federation of Labor and Congress of Industrial Organizations (AFL-CIO).

However, Michael McRaith, director of the Illinois Department of Insurance, said Illinois is not a highly profitable state for workers’ compensation insurers. McRaith , who is often a vocal critic of health insurance providers in the state, said: “In this case, it is not an insurance industry problem.”

McRaith said employers would see different levels of savings depending on their unique situations. He said they could save anywhere from 5 percent of their current workers’ compensation costs up to 12 percent. He said the state could save $10 million to $15 million.

Opponents representing labor and health care interests said they had been cut out of talks on the final version of the bill and called on lawmakers to return to the usual process for workers’ compensation legislation, which involves all stakeholders negotiating a bill they can agree upon.

“There were discussions. There were tentative agreements about: ‘Well we could live with this section of the agreement, or we could live with that section of the agreement.’ But they were all contingent upon a deal, a bill,” Carrigan said. “And so, there is no agreement.”

Bloomington Republican Rep. Dan Brady, co-chair of the Medicaid reform committee, was skeptical of the odds of reaching an agreement that also contained substantial reforms. “I’m not sure you’re ever going to get an agreement.” Brady’s fellow Republicans — Ed Sullivan from Mundelein and Michael Tryon from Crystal Lake — voted against the final bill.

Marion Democratic Rep. John Bradley, the sponsor of the legislation, said the fact that all the major interest groups we’re unhappy with the bill is an indication that it contains substantial reforms. “It’s not a perfect system. And we could come up with anecdotes all day, and we could come up with examples to scare people all day. … Something has to change. And so, none of us want to make all these groups mad. But let’s be honest about what we’re doing. … At the end of the day, something needs to be done. … I’m telling you, we’ve done the best we could do under the circumstances.”

The House is expected to take up the issues tomorrow morning.

The committee also approved a bill that would limit which state employees can join unions. Chicago Democratic Rep. Barbara Flynn Currie, the sponsor of SB3644, said the percentage of state employees who are union members went from below 80 percent in 2002 to currently almost 96 percent.

Currie said having supervisors and the workers they manage in the same union causes problems when the supervisors must mete out discipline.

“I think there need to be managers. I think there need be supervisors. I think there need to be people who are in charge at any particular workplace.”

The bill would move about 200 jobs from being a part of collective bargaining contracts to management positions that would not be eligible for union membership.

Opponents said more state workers have joined unions after seeing nonunion workers targeted for cost saving measures, such as furlough days, pay cuts and layoffs under former Gov. Rod Blagojevich’s administration. They also argued that fewer workers are supervising others as part of their primary duties because the state workforce has shrunk in recent years.

“Many of the people who have in recent years chose to be represented by a union, was because of the horrible horrible treatment they received from the prior administration. Their work was not valued. They not only didn’t get pay increases, they got pay cuts. And they came flocking to the union seeking representation,” said Henry Bayer, executive director of Council 31 of the American Federation of State, County and Municipal Employees (AFSCME).

Friday, January 07, 2011

Hynes: Lawmakers must act to prevent fiscal slide

By Jamey Dunn

If lawmakers fail to act on budget solutions, the state could face $7 billion to $10 billion in unpaid bills by the end of the current fiscal year, according to a quarterly fiscal report issued today by Comptroller Dan Hynes.

At the midpoint of this fiscal year, the backlog of unpaid bills is higher than it was at this time last year.

The total is greater in part because the General Assembly and Gov. Pat Quinn have not yet put a plan in place for making this fiscal year’s payment into the public employee pension system. More than $6 billion in bills from fiscal year 2011 have yet to be paid, including $1.8 billion unpaid pension obligations. The oldest bill dates back to the middle of last July, the first month of the current fiscal year.

The state did manage to pay off all its late bills from fiscal year 2010 by the end of last calendar year with some one-time cash infusions. The sale of bonds against some of state’s portion of a national tobacco settlement brought in $1.25 billion. A tax amnesty program raised $392 million, and $354 million came from inter-fund borrowing. “While the almost $2 billion in revenues helped reduce the overall backlog of unpaid bills, the state’s fiscal condition has not improved,” Hynes said in his report.

Paying off the $1.3 billion in short-term borrowing — made last July — by next June will result in more than $4 billion in fiscal year 2011 funds going toward fiscal year 2010 obligations.

On the revenue side, the personal income tax brought in $129 million more during the last six months, an increase of 3.4 percent. The corporate tax generated $235 million in growth over six months, an increase of 45.8 percent. Much of the growth came from delinquent tax payments paid during the tax amnesty period. Sales tax revenues went up 3.5 percent, not counting the portion paid under the amnesty, indicating some economic recovery.

Since legislators are considering several pieces of budget-related legislation while also mulling a possible tax increase package, Hynes’ future projections are not specific. The reports notes that a borrowing plan to make pension payments would prevent the need to take the money out of this fiscal year’s general revenues. Hynes cautions that borrowing would also limit future budget flexibility. According to Senate President John Cullerton, a tax package would also likely include borrowing almost $4 billion for the pension payment and more than twice that amount to pay down the unpaid bills for this fiscal year.

“Any use of bonds to deal with the state’s fiscal condition will continue to impact the state’s cash management practices in the future, as the state must adjust to those higher debt service obligations,” Hynes said.

However, Hynes warned that if legislators do not move some combination of new revenues, bonding and “budget restructuring,” the situation will only decline. Illinois received $600 million in federal funds for education in FY2010, which will not be coming again this year. The feds are also ramping down an elevated Medicaid match that was part of the stimulus package.

“Absent any significant budgetary developments, such as the initiatives currently under discussion in the General Assembly, the outlook for the state’s fiscal condition does not look to show any improvement and in fact is expected to weaken further,” Hynes said.

He added if that happens, legislators likely would have to extend the lapse period when the state is allowed to pay obligations from the previous fiscal year out of funds from the current year.

Controversial budgeting reforms head to the governor

By Jamey Dunn

A bill headed to Gov. Pat Quinn would limit his power to bargain with unions on public employee contracts.

The House passed House Bill 5424, today, which would change how state government approaches budgeting. Under the measure, the state would be required to pay its debt obligations and annual required pension payments before allocating general revenue funds to any other area of the budget. Spending also could not exceed projected revenues for the year. The estimate would be based on revenue sources approved by legislators when the budget is presented.

Under the plan, a number of grants administered by state agencies would be suspended as of July 1, 2012, unless the General Assembly enacts legislation to keep them in place. After 2012, legislators would have to approve grants every five years to keep them from expiring.

The bill also would require the governor to name an advisory board to help him create an annual list of budget priorities.

“We are looking here at major budget reform — a way to control our spending, a way to get our pension payments made and our debt obligations before we divide up the budget,” said Rep. Carol Sente, the House sponsor of the bill.

Social service providers are concerned about the potential for grants being canceled not because recipients were not worthy but because the legislature might not get around to assessing programs before the grants would automatically expire. They raised the issue that lenders may not want to float providers loans — something that has become a necessity in the face of the states overdue payments — if grants are set to expire. They say lawmakers should evaluate programs when they decide whether to delegate funds.

“There is a review process already in place, and it is the appropriations process,” said Nancy Nyman, vice president of Illinois Action for Children

Perhaps the most controversial section of the bill would prevent any executive officer from entering into a labor contract that would extend past his or her elected term.

Union opponents said contract negotiations can take as long as two years, which could mean that they could potentially start talks with one governor and then reach an agreement with another.

The bill comes on the heels of a controversial deal that Quinn made with Council 31 of the American Federation of State, County and Municipal Employees (AFSCME) near the end of his first term while he was campaigning for election. Sente said the legislation is a direct reaction to that deal, although Senate sponsor Sen. Dan Kotowski, a Park Ridge Democrat, said it is not. He characterized the provision as a sensible budgeting decision that would prevent a governor from locking a future administration into a pricey union contract.

Union representatives also argued that the state enters into several types of long-term contracts, and it is unfair to target labor. They added that a new administration would likely be overwhelmed by the logistics of negotiating contracts as soon as it enters office.

Kotowski said that in light of the budget crisis, the state is also reevaluating many contracts with vendors.

“[The] budget address [is] due in eight weeks, and then on top of all the things that have to be done — new directors, new administration, all the things that need to be done — the new chief executive is going to be worrying about a collective bargaining agreement as well,” said Timothy Drea, secretary treasurer of Illinois American Federation of Labor and Congress of Industrial Organizations (AFL-CIO). “This is bigger than AFSCME. This is bigger than AFL-CIO. This includes the trade unions. This includes a lot of people statewide from Chicago, from Waukegan to Cairo. It creates a lot of havoc.”

A spokesperson for the governor said he plans to review the bill when he receives it. It is unlikely, however, that he would approve it with a provision that limits his negotiating powers with unions.

Thursday, January 06, 2011

Cullerton outlines a tax plan

By Jamey Dunn

According to a member of Democratic leadership, legislators may be close to reaching a deal on a tax increase and borrowing plan that would pay off the state’s late bills.

The personal income tax would increase from 3 percent to 5.25 percent. Corporate income tax would go up from 4.8 percent to 8.4 percent. The state would borrow about $8.5 billion to pay off the state’s backlog of bills, using some of the revenue from the tax increase to pay off the bonds.

The personal income tax increase would bring in an estimated $6.1 billion, and the corporate increase would bring in about $1 billion.

After four years, the personal income tax rate would drop to 3.75 percent, operating under the assumption that the state would have paid off the $8.5 billion in borrowing by then. Senate President John Cullerton said the corporate income tax rate would drop along with the personal tax rate.

Local governments would not get any of the new funds, but they would not see a reduction in the portion they currently receive. There have been recent proposals to take away all of the money given to local governments out of income tax revenues.

“We’re going to pay our bills on time. We’ll pay all of our backlog bills in the first months of 2011. And we’re going to stay current going forward,” Cullerton said.

The proposal included property tax relief for property owners — there is no component for renters in the plan — which would come in the form of a tax credit this year. Next year and every year following, a check for $325 dollars would go to all who are eligible. Cullerton said. If the plan passes, checks would go out in early January of 2012.

Cullerton said legislators still plan to borrow nearly $4 billion to make the required payment to public employee pensions for the current fiscal year, but going forward, the payment would have to come out of the new revenue from the tax increase.

The plan would also include $377 million in revenue for an education fund from a $1-a-pack cigarette tax increase, which has already passed in the Senate. Cullerton said the fund would be used for “growth” in education but would not give any specifics.

The proposal would include some spending restraints. Cullerton said there would be a moratorium on new programs for the next three years.

“Just think about how we’re going to be after we pass this. We would have all our bills, all these people that are owed money — $8 billion dollars will go back into the economy — people will be paid on time. Our credit rating will be dramatically improved. We will then have a balanced budget with virtually no growth,” Cullerton said.

Some Republicans say a tax increase, in any form, is not the solution to the state’s budget woes. “At some point, the Illinois economy can’t sustain continuing to take more and more money out of it to filter it through the halls of state government. … A tax increase, even one this size, will work for a while, but it won’t work forever because at some point, if you keep spending more, there’s not enough money left in government coffers. The way to deal with that is to go into the areas where you’re spending and change those," said Mattoon Republican Sen. Dale Righter.

Cullerton said House Speaker Michael Madigan and Gov. Pat Quinn are on board with the plan, though he said it may see “tweaks” in the coming days. He said the House could take up a bill as soon as Sunday. Spokespeople for Madigan and Quinn would not confirm Cullerton’s statement.

The House passed another tax-related plan today backed by Cullerton. House Bill 3659 would require Internet vendors without brick-and-mortar locations in the state to collect sales tax on purchases made in Illinois. Cullerton said it is a way to bring in tax revenues that many Illinoisans already owe the state without even knowing it.

Milan Democratic Rep. Patrick Verschoore, the House sponsor of the bill, said the measure could bring in an estimated $70 million of lost revenue.

Opponents said the measure will just spur lawsuits, and it could be years before the state sees any money, if it ever does. Similar plans in other states, such as New York, have spurred lawsuits.

But Verschoore seemed to think the plan was worth a try if it could capture lost tax dollars for the state. “We’ll just have to see if it holds up,” he said in response to critics.

Medical marijuana fails in the House

By Jamey Dunn

An attempt to make medical marijuana available to residents with serious or chronic illnesses fell short in the Illinois House today.

The bill failed on a previous House vote in November (scroll down), when the ‘yes’ votes climbed as high as 56 before settling out at 53. Today’s count was 56 ‘yes’ votes, 60 ‘no’ votes and a single ‘present’ vote.

Opponents said that marijuana use can lead to addiction to harder drugs, such as heroin. They also voiced concerns that the plan would lead to the legalization of marijuana for recreational use.

“This … goes way beyond medical use, medical treatment. This is about the legalization of marijuana. … We’re sending the wrong message to our children,” Rep. David Reis, a Willow Hill Republican, said before the previous House vote.

Skokie Democratic Rep. Lou Lang, the sponsor of Senate Bill 1381, said conventional prescription pain treatments can be draining and even dangerous. He added that over the long term, they often stop being as effective after individuals in chronic pain develop a tolerance to them.

“Sometimes, they take the narcotic and it lays them flat in their bed and they can’t function and sometimes they overdose and die,” Lang said. “It’s not a quality of life. They can’t function. They can’t do laundry. They can’t take care of their children.”

Lang said he plans to introduce a similar bill in the next legislative session, which starts next week. He said he plans to keep pressing to make medical marijuana available as a treatment option until a bill eventually passes.



House votes to abolish death penalty

By Lauren Johnson with Jamey Dunn contributing

A bill that would abolish the death penalty in Illinois passed in the Illinois House tonight after coming up one vote short earlier this afternoon.

Maywood Democratic Rep. Karen Yarbrough, sponsor of the legislation, said the state spends at least $20 million a year on capital cases, with no executions performed in the 10 years since former Gov. George Ryan placed a moratorium on capital punishment.

In addition to abolishing the death penalty, Senate Bill 3539 would require the money from the capital litigation fund, which is used to aid defendants in building their cases when prosecutors seek the death penalty, to go to services for homicide victims' families and additional police training.

“Let's send a message to people across the state and the nation that Illinois is not the laughing stock anymore,” said Yarbrough, noting the 10-year absence of enforced capital punishment and Illinois' history of exonerations of death row inmates. “Now is the time to finish the job [of ending the death penalty]."

Rep. Jim Sacia, a Pecatonica Republican, recounted gruesome details of heinous crimes committed in Illinois and said police need the threat of the death penalty to press for confessions and obtain information.

Sacia added, “There are untold numbers, in Chicago and throughout Illinois, of successfully resolved crimes because law enforcement had the tool to say, ‘This is an opportunity for you to face the death penalty, or if you talk to us, maybe we can give you a lengthy prison sentence.’”

Proponents say the passage of the measure will lead to cost savings and prevent wrongful executions.

Rep. Robert Pritchard said punishment, should be shifted to a “swift justice” alternatives -- such as life in prison without parole -- instead of the long appeals process associated with capital cases.

Opponents
argued the importance of having the death penalty option for individuals who commit heinous crimes and said legislators should be sensitive to the possibility of victims’ families being left without a sense of closure.

Rep. Patrick Verschoore, who voted against the bill when it was called the first time and voted for it the second time around, told reporters he has gone back and forth on the issue. Verschoore, a Milan Democrat, said he couldn’t ignore the possible cost savings.

Senate President John Cullerton, who supports abolishing the death penalty, said the bill will be called in the Senate Judiciary Committee on Tuesday.

Medicaid reform heads to the governor

By Lauren Johnson and Jamey Dunn

A substantial Medicaid reform package is headed to Gov. Pat Quinn’s desk.

According to Chicago Democratic Rep. Barbara Flynn Currie — a sponsor of House Bill 5420 — it could save the state an estimated $775 million over five years.

Co-sponsor Patti Bellock, a Hinsdale Republican, said she was pleased with efforts of legislators on both sides of the aisle, as well as stakeholders.

“Even though they thought there was a little bit of a poison pill with every interested group … they were ready to live with it because they realized that the system needed a lot of reorganization to protect the integrity of the Medicaid system in Illinois,” Bellock said on the House floor before legislators voted to approve the measure.

Opponents say disappointment surrounded the measure that would limit the income eligibility requirement for Illinois families under the AllKids program to at or below 300 percent of the federal poverty level, or an income of $66,000 for a household of four.

John Bouman, president of the president of the Sargent Shriver National Center on Policy Law, said, “We don’t think it’s the best practice.” He said the provision could cost the state more money than it could save.

Bouman added, “The research-based policy of the federal government is to promote enrollment of children in health care, to connect them quickly to primary care and to maintain their care not interrupted with administrative reasons.”

Quinn has been working with the legislature on the bill, and it is likely he will sign it.

“Today we are following through with legislation that will help stabilize our budget and rebuild the foundations of our economy. This bill will streamline services and eliminate inefficiencies, saving the state hundreds of millions of dollars. In addition, it will improve efficiency in the program to ensure that Medicaid patients in Illinois are receiving the highest quality of care,” Quinn said in a written statement. “This is a powerful example of the reforms Illinois needs to stabilize its budget and the kind of legislation I will continue to work with the General Assembly to pass. I look forward to receiving this bill from the legislature and acting on it soon.”

If Quinn signs the bill, it would:
  • Allow the governor to transfer up to 4 percent of funds from long-term care facilities to community-based alternatives as part of a shift to more in-home care.
  • Allow the state to recoup payments gained through fraud, as well as a 5 percent interest charge. It would also create a $2,000 civil penalty for Medicaid fraud.
  • Require patients to prove residency and provide a month’s worth of income information to verify eligibility. It would also require patients to prove they are eligible each year. Pregnant women would be exempt from the annual verification.
  • Create a moratorium on expanding who is eligible for Medicaid.
  • Extend the AllKids program, which is slated to expire this year, to 2016 and cap the eligibility level at 300 percent of the federal poverty level, or a $66,000 household income for a family of four. Those above that level, who are currently covered on AllKids could keep their coverage until July 1, 2012.
  • Require that half of Medicaid patients receive so-called coordinated care — which is administered in a network of health care providers and focuses on preventative treatment and connecting patients to a primary care doctor—by 2015.
  • Allow for 90-day supplies of some non-narcotic drugs, which will cut down on dispensing costs paid by the state to pharmacies.
  • Cut the interest on overdue payments to pharmacies from 2 percent to 1 percent.
  • Upgrade the state's electronic medical records systems. The funds spent on upgrades are eligible for a 90 percent federal match.

Wednesday, January 05, 2011

Senate approves Medicaid reform package

By Lauren Johnson with Jamey Dunn contributing

The Illinois Senate today passed a major reform package to the Medicaid system, which provides health care to low-income individuals in Illinois.

House Bill 5420 would require Medicaid patients to provide proof of Illinois state residency and a month’s income as part of a stepped-up verification system that would be implemented by Department of Health and Family Services.

At present, individuals who initially meet eligibility requirements are presumed eligible each year regardless of verification.

House Bill 5420 would also lower the eligibility ceiling for the AllKids program to at or below 300 percent of the federal poverty level, or an income of $66,000 for a household of four.

The legislation extends the program, which would’ have expired in July, to 2016. Julie Hamos, director of the Illinois Department of Health and Family Services, said capping the eligibility for AllKids was a difficult decision but a necessary one to keep the program viable.

“This will be more of a program for low-income and middle-income families,” Hamos said.

Under the measure, at least 50 percent of Medicaid enrollees must be part of a so-called coordinated care system, which is similar to managed care, by January 1, 2015. Much of the coordinated care — which focuses on preventative care and directing patients to a primary doctor for basic treatment — would be contracted to private companies.

“Now, we have 2.8 million people in the Medicaid program," said Sen. Heather Steans, a Chicago Democrat. "Out of that, there are 160,000 that are in managed care, so this is huge change, turning a very large ship in the state into some sort of reshaping kind of environment."

Also included in the package is a new way to combat Medicaid fraud by recovering state and federal payments for benefits received by ineligible individuals and charging them interest and penalties. Offenders would be subject to a civil penalty of $2,000 for Medicaid fraud.

Steans said the committee’s short timetable made it nearly impossible to address all areas of potential Medicaid reform in Illinois. “This is clearly a start,” she said.

Both Steans and Hamos characterized the changes as substantial and said they would take time and a coordinated effort among several state agencies to implement.

If the measure becomes law, the Department of Health and Family Services will come before the Senate Medicaid Reform Committee for an evaluation on the larger aspects of the bill, such as the shift to coordinated care, next spring.

Steans said the push for the measure has been a collaborative process, with bipartisan support from each chamber as well as Gov. Pat Quinn's office. Hamos said the bill could be up for a vote in the House as soon as tomorrow.


Internet sales tax


By Jamey Dunn

The Senate also approved a plan that would allow Illinois to collect sales tax on online purchases from companies that do not have a brick-and-mortar location in the state — one of the most well-known examples being Amazon.com.

When Illinois residents buy goods on the Internet, they are supposed to pay the state a sales tax if the company does not charge them. But few are even aware they owe the state. Senate President John Cullerton characterized House Bill 3659 as an attempt to bring in the money by making the vendor collect it.

Opponents to the bill said they agreed with the idea but were concerned about the potential for lawsuits, uneven execution — which may not treat all business equally — and possible complications with potential plans to pass a national solution. “[The U.S.] Congress has got to be responsible and act on this,” said Sen. Dave Syverson, a Rockford Republican.

He added that large companies such as Amazon.com would find ways around collecting the tax, and that the legislation might hurt sales at smaller businesses.

New version of gaming expansion headed to House floor

By Jamey Dunn

The Illinois House's version of a whopping gambling expansion measure passed through a legislative committee today.

The Senate Bill 737 calls for a casino owned by the city of Chicago. The city would choose who would run the daily operations. New casinos would also be slated for construction in Park City, Rockford, Danville and an unnamed location in the southern suburbs of Chicago. The Illinois Gaming Board would chose the final location through a bidding process.

The measure also allows slot machines and video poker at horse racing tracks. Unlike the Senate version of the bill, it also allows slots at airports beyond security checkpoints. Sponsor Lou Lang, a Skokie Democrat, said the slots would target travelers with time to kill, and locating them past security would prevent airports from becoming gambling destinations.

Lang said the measure would bring in $1.3 billion in upfront licensing fees — three quarters of which would go to pay down the state’s overdue bills. The other quarter would be spent on capital construction projects. The expansion would also bring in $1 billion a year in revenue. He added that it would also create jobs, bring new revenue to economically depressed areas and help to grow agribusiness in Illinois by encouraging the horse racing and horse breeding industries.

Lang said he is concerned that if the gambling expansion passes, the state gaming board might skip over the stalled implementation of video gaming in bars, restaurants and truck stops throughout the state and begin licensing new casinos. The capital bill is supposed to be funded, in part, with revenues brought in from expanding video poker to those new locations. The bill now calls for 2,000 operating video gaming terminals in Illinois — 1,000 in Chicago and the collar counties and 1,000 throughout the rest of the state — before the gaming board can authorize any new casino licenses, existing casino expansions or slots at racetracks.

Lang pulled the bill from a committee hearing Monday, saying it needed work and that he hoped to make it more amenable to casino owners.

The new “sweeteners” include a chance to relocate casinos, various tax cuts and a $200 million tax credit for renovations.

However, Lang correctly predicted earlier this week that the new version of the bill would not get backing from casino owners, who say the expansion would over-saturate Illinois’ gambling market.

Tom Swoik, executive director of the Illinois Casino Gaming Association, said casinos are already facing dropping profits, and the expansion would likely lead to layoffs. He added that Lang is overestimating the potential revenue that could come from luring gamblers across state lines to new facilities.

“The revenue that this bill would generate is based on the assumption that the new northern venues would bring back business from Indiana. … Almost every person gambling in the state of Indiana is going to have to come over to the state of Illinois,” Swoik said.

Robert Molaro, a former Illinois House member and current lobbyist for the horse racing industry, said horse tracks need the money from slots to offer bigger purses for races. He said other states are offering larger prizes, and horse breeders are leaving Illinois. “We have no choice. This is all about our survival.”

Anti-gambling groups say the expansion will create many more gambling addicts throughout Illinois and cost the state millions on social services and addiction treatment as a result. “People who have never gambled before will start to gamble when it’s in their community, when it’s accessible,” said Anita Bedell president of the Illinois Church Action on Alcohol and Addiction Problems.

Lang said he plans to call the bill on the House floor as soon as tomorrow.