Thursday, March 31, 2011
Gov. Pat Quinn signed into law today a measure that will ensure unemployment benefits continue to flow to thousands of Illinois residents.
The measure will continue the state’s extended benefits program that allow those facing long-term unemployment to collect checks after they have exhausted the standard unemployment benefits. Because of the state’s slowly but steadily improving unemployment rate, Illinois was in danger of falling outside of the statutory requirements for federal support of the program. The new law allows the state to change the way it calculates who is eligible for the program. The bill passed in the Senate Wednesday and the House today.
The legislation also addresses interest that Illinois must pay on a $2.9 billion federal loan it took out to fund unemployment benefits by allowing the Illinois Department of Unemployment Insurance to temporarily divert some of the unemployment tax employers pay into a special fund dedicated for the payment. The state has to pay up on $83 million in interest by September, or risk losing out on $1 billion in federal tax credits for employers and $100 million in federal funds for the Illinois Department of Employment Security.
Timothy Drea, secretary treasurer of the Illinois AFL-CIO, told a Senate committee this week that the change to the law will allow 41,000 unemployed workers to continue to collect benefits.
“This is a temporary solution to the major problems within the unemployment insurance trust fund,” David Vite, president of the Illinois Retail Merchants Association. “It’s a temporary solution because there were a few things that needed to be done immediately.”
Vite said the law had to be changed to allow unemployed workers to continue to receive federal benefits as well as to ensure that the state can make its interest payment. “If the $90 million interest penalty that the state of Illinois…[owes] is going to be paid, changes had to be made to the unemployment insurance act right now so those revenues from the first quarter payments would be available September 30.”
He added, “Those things had to be done in the next week or so.”
Vite and Drea said that labor and businesses groups plan to come back to the table to sort out a long-term solution that they say would be considered by lawmakers during the fall veto legislative session.
For and in-depth look at the state’s troubled unemployment insurance fund, see Illinois Issues November 2010 page 24.
Gov. Pat Quinn’s proposals to gain savings by cutting the number of the state’s school districts in half through consolidation and eliminating funding for regional offices of education received continued pushback from lawmakers today.
Rep. Al Riley, an Olympia Fields Democrat, voiced concern over the possible negative impacts of consolidation on rural, poverty-stricken areas. He said it could lead to a lack of resources for students and possibly result in a dip in academic achievement.
Christopher Koch, superintendent of the Illinois State Board of Education, said consolidation would not be an easy task, and the the board's primary focus is the best interests of students. He said any plan involving the state forcing schools to consolidate districts is unlikely to happen this year. “I doubt there’s a bill that passes that mandates consolidation beyond any authority that’s currently in precedent,” Koch said.
Legislators also took issue with Quinn’s plan to eliminate funding for regional superintendents. Some said students would lose resources provided by regional offices, such as student truancy programs and professional development for teachers. Rep. Roger Eddy, a Hutsonville Republican who also is a school superintendent, said: “If they are not there, they are not able to provide those services. What about truant students? We would have to provide services [at the district level] because they are mandated for truants. But we wouldn’t have a regional way of doing it at a low cost, so money would be taken away from classrooms." Rep. Pam Roth, a Coal City Republican, added that the regional offices are “critical” to the operations of school districts.
Those developments come a day after House Speaker Mike Madigan said he has no plans to pursue the governor’s idea for consolidation of school districts.
Voters may have the choice to eliminate a constitutional office on the 2012 general election ballot.
The Illinois Senate approved a measure today to amend the Illinois Constitution. The plan would merge the offices of comptroller and treasurer. The legislation has the support of both Treasurer Judy Baar Topinka and Comptroller Dan Rutherford.
The majority of states do not have two separate offices to handle their finances, and in the past, neither has Illinois. Framers of the 1970 Constitution created two positions to add extra oversight after Orville Hodge, the state’s chief financial officer in the 1950s bilked the state out of about $2.5 million in the 1950s. After such blatant corruption, the drafters decided to split up the functions of the office, known as the auditor of public accounts, charging the treasurer with making the state’s investments and the comptroller with paying its bills. (For more on the merger, as well as another story of financial corruption in Illinois history, see Illinois Issues blog February 14, 2011.)
Rutherford said that another move the drafters made—the creation of the office of auditor general—has led to the two fiscal offices being obsolete. He says the oversight provided by the auditor’s office, currently held by William Holland, safeguards taxpayers against graft. He added that advancements in technology over the last six decades also make dollars much easier to track and account for. “Back in the days of Orville Hodge, they were still using typewriters, pieces of paper and pencils,” he said.
According to Rutherford, the move would save the state about $12 million. “If government can be more efficient by having less officers and less departments and so forth, then government should do that.”
The proposal still needs the approval of three-fifths of House members. Then the question of whether to merge the two positions into a single one called the comptroller of the treasury would appear before voters on the 2012 general election ballot. If voters chose to merge the offices, then they would have the opportunity to elect Illinois’ first comptroller of the treasury in 2014.
While the presidents of several of Illinois' public universities are predicting tuition increases, which they say result from a lack of state funding, some lawmakers are proposing that the General Assembly exert more control over the budgets of the state’s institutions of higher education.
Currently, universities set their own tuition rates and fees. However, Senate Republicans suggested as part of their recently unveiled budget plan that lawmakers should have some say in how the universities spend the money they collect from students. Sen. Matt Murphy, a Palatine Republican, said legislators should consider capping how much tuition revenue public universities can spend each year.
“Families going to these universities are making cutbacks at home, and they are being asked to pay higher and higher tuition,” Murphy said. He emphasized that it would be important to place the cap in the least harmful way to universities. Republicans also project $200 million in savings from a proposal elimination of half of university tuition waivers and say such savings could reduce what they characterize as runaway tuition increases.
Tom Hardy, spokesman for the University of Illinois, said if the Republican plan were approved, some academic programs might have to be cut completely. “We’re going to lose ground,” Hardy said. University employees have not had a general salary increase since 2008, according to Hardy.
The proposal has not been introduced as legislation, but the Republican budget plan says lawmakers and university officials should begin a “conversation” about the issue.
Another measure, Senate Bill 135, sponsored by Chicago Democratic Sen. Martin Sandoval, would strip power from university trustees to determine tuition rates and fees.
Under that legislation, Illinois State University, Southern Illinois University, Northern Illinois University, Eastern Illinois University, Western Illinois University and the University of Illinois would need to seek approval from the legislature before raising the cost for students above the current rate.
Sen. Chris Lauzen, an Aurora Republican who co-sponsored the bill, said the legislature would continue to work with the trustees and their respective university presidents. Lauzen said involving lawmakers in the public universities’ budgeting processes “would be some kind of accountability, some kind of checks and balances, on their power to spend that money that comes from the income fund, which is tuition.”
However, Sen. Ed Maloney, a Chicago Democrat and chair of his chamber's Higher Education Committee, said, “Clearly the only relief that universities have is increases in tuition, given the fact that there has been really no additional funding from the state.” He added that the biggest impact on public university systems would be “the unknown.”
Maloney introduced Senate Bill 1773, which would set up a process for performance-based funding of universities starting in 2013. The bill passed out of a Senate committee on March 15.
Dave Gross, a spokeperson for Southern Illinois University, said the state owes SIU about $140 million in unpaid bills, noting that if control over the income fund is taken away, universities could fail to make payroll, and layoffs would likely occur. “We’re taking those tuition dollars while we wait for the state to pay us. We’re floating in the state’s inability to balance its own budget,” Gross said. The state owes the other public universities hundreds of millions of dollars, as well.
Hardy said, “[University budgeting has] been pretty effective the way it’s been working for the past 15 years. …When we see the way it’s done in other states, the biggest factor of tuition increases is the spiraling decline in state support of higher education.”
In New York, tuition revenues from the 64-campus State University of New York system go directly to the state, and the legislature then doles out amounts of that revenue to go to each campus. That practice has become a point of controversy because New York's public university system suffered faculty losses and a $640 million cut from its budget last year. Soon after that cut, George Philip, president of the Albany campus, suspended five humanities programs as result of budget shortfalls.
Murphy said, however, that under the Republican plan, tuition dollars would not be lumped into the general revenue fund and could not be diverted to other state costs. Instead, lawmakers would only have the power to limit how much tuition revenue universities could spend.
Wednesday, March 30, 2011
Tuesday, March 29, 2011
Illinois gamblers may soon be permitted to smoke in the state’s riverboat casinos.
House Bill 1965, which passed in the House today on a 62-52 vote, would give casinos an exemption to the state's smoking ban, as long as the nearest neighboring state does not have a ban. If a nearby state adopts a ban, the casinos closest to it would lose the exemption.
Chicago Democratic Rep. Daniel Burke, the sponsor of the bill, said Illinois’ casinos have been consistent contributors of revenue for the state, and Illinois can no longer ignore declining gaming revenues. “If we’re serious about the budget crisis here in Illinois, let’s be real. This is not about the smoking issue. This is about the money,” he said.
A 2010 report from the legislature’s Commission on Government Forecasting and Accountability found that gross income for Illinois riverboats has dropped about 28 percent since the ban was put in place.
“Several factors have contributed to the dramatic turnaround in riverboat figures over the last three fiscal years. These factors include the struggling economy, increased competition from other states and the effects of the graduated tax structure. However, the numbers continue to suggest that the biggest contributor to the drop in Illinois casino revenues is the indoor smoking ban,” the report says.
Opponents of the bill say it is unfair to subject casinos employees to secondhand smoke, and policies that discourage smoking actually do more to address the state’s budget shortfall by helping to reduce health care costs. They say restaurants and bars could make the same argument that the smoking ban has hurt their businesses, and giving casinos an exemption could open the door to a much larger rollback of the smoking ban.
Rep. Lou Lang, a Skokie Democrat, said while health concerns are important, the economy is also a pressing issue, and Illinois casinos should be allowed a level playing field to compete with facilities in states without a ban. He added that as soon as those states adopt a ban, Illinois should eliminate the exemption. The legislation faces an uphill battle.
Senate President John Cullerton has stated his opposition to the bill on several occasions. “We have votes on everything … so of course we’ll have a committee hearing. People will testify, and we’ll have votes.” He added, “I’m opposed to it.”
Gov. Pat Quinn told Chicago reporters today that he is also opposed to the measure.
Friday, March 25, 2011
Borrowing, pension issues, school consolidation and more on this week's program. Bob Gough (quincynews.org), Charlie Wheeler (Public Affairs Reporting Program, University of Illinois Springfield) and Scott Reeder (Illinois Statehouse News) join moderator Jamey Dunn (Illinois Issues Magazine). A production of WSEC-TV/PBS Springfield.
Gov. Pat Quinn named a new director of the Illinois State Police after shifting his original and controversial choice for the job to a different position in his administration.
Quinn tapped Hirum Grau, deputy chief of investigations for Cook County State’s Attorney Anita Alvarez, to head up the state police. Grau started his 27-year stint with the Chicago Police as a beat cop and eventually became deputy superintendent for the Bureau of Investigative Services. He is also a Vietnam War veteran.
Quinn’s first choice for the position, Iraq War veteran Jonathon Monken, drew criticism because of his lack of law enforcement experience. Although Quinn appointed him in 2009, Monken never faced a confirmation hearing in the Senate. Instead, Quinn moved him in February to director of the Illinois Emergency Management Agency, and the Senate confirmed the appointment earlier this month.
Quinn also appointed Joe Costigan as director of the Department of Labor today. Costigan is Chicago secretary-treasurer of Workers United, a labor group that is associated with the Service Employees International Union. He previously served as vice president of the Illinois branch of the American Federation of Labor and Congress of Industrial Organizations.
Grau and Costigan await approval from the Senate.
Thursday, March 24, 2011
Regional superintendents say that if their offices are eliminated, they don’t know who will offer the services they provide, which are required by law.
Gov. Pat Quinn proposed to eliminate the Regional Offices of Education in his budget plan. He estimates the move would save about $13 million. However, superintendents say eliminating their operations would not justify the savings. The say they have been responsible with state money, operating on a flat budget for more than the last five years. “That [$13 million] may not sound like a whole lot of money, and frankly it isn’t. But for everything that we do, it’s a ton of money. … This is [a] cut that really doesn’t add up,” said Gil Morrison, president of the Illinois Association of Regional Superintendents of Schools and a regional superintendent in DeKalb County.
Regional Offices of Education offer mandated services, such as teacher certification, building inspections, employee background checks and other support services to schools and districts. They also provide professional development opportunities, such as workshops that teachers are required to take to keep their certification and mentoring programs for new teachers and principals. Regional superintendents administer alternative schools for children facing challenges in the traditional system or who may have been expelled for truancy or behavioral issues.
Kay Pangle, regional superintendent for the Iroquois Kankakee Regional Office of Education, said that regional offices brought in $135 million in federal dollars and other funds last fiscal year. “That’s a pretty good return on investment - one that you’re not going to get in the stock market, I think.”
Pangle said that many of the things that Regional Offices of Education handle for local districts and schools are required by laws approved by the General Assembly, so it would be unfair to pass those costs on to local governments. “It seems only prudent that the state would be the one to bear the cost of providing those services. No one at the local level should have to provide that money to provide those services [required] by the state legislature,” she said.
Ralph Grimm, superintendent of West Central School District in Biggsville, said local districts that are losing staff because of budget cuts and coping with late payments from the state while also trying to fulfill requirements of reform efforts need the support of regional administrators. “Who will do the work of the regional superintendents and their staff on behalf of our children if these offices are eliminated?” Grimm asked. “I haven’t heard yet who’s going to step up and take care of those responsibilities. All public schools are doing more with less, as we have dealt with the state’s inability to pay what it owes us. We are all working with smaller staffs. ….We are in a time when we are asked to do more and more and more: accountability, assessment, certified teacher evaluation, No Child Left Behind, Race to the Top … with fewer and fewer resources.”
State Superintendent Christopher Koch said eliminating the offices would be a blow to the Illinois State Board of Education (ISBE), as well. “There’s all kinds of work they do with certification. They run schools, alternative schools and truancy alternative schools. They do all sorts of compliance reviews for us at the state board. So it would be a significant loss for us as well,” he told RFD radio after Quinn’s budget address. ISBE’s budget proposal for fiscal year 2012 recommended a $2 million increase for the regional offices.
Before Quinn pitched his budget proposal, members of his staff laid out two possible alternatives for the regional offices. They said that ISBE might take up some of their functions or local districts would have to pick up the slack. Since staffing levels at ISBE have shrunk from 800 employees in 2000 to 500 today, it seems unlikely that the agency would be able to pick up the bulk of the regional office’s duties.
Kelly Kraft, spokesperson for Quinn’s budget office, said the concept of eliminating the regional offices was a “budget proposal” they put forth. She said a commission proposed by the governor to research a school district consolidation plan, which also proposed in his budget, would look at the issue and weigh the details. Kraft said it is possible that local governments would have to foot the bill for the regional offices if they find them valuable. “If local districts still want to have the regional superintendents, then local districts would need to take up that funding,” she said. That would mean the districts would pay for requirements such as background checks on employees that are mandated by the legislature.
David Vaught, Quinn’s budget director, said during a budget briefing in January that in light of the state’s deficit and billions in overdue bills, the administration had to make some difficult spending choices. He said education cuts to administration and transportation would allow for increases in areas of higher priority, such as early childhood education.
Wednesday, March 23, 2011
Incoming freshmen at the University of Illinois will pay 6.9 percent more for their education after the university's board of trustees voted today to increase tuition, citing potentially stagnant funding levels and the state's overdue payments as the cause.
The increase – for Illinois-resident freshmen only – would mean on average annual tuition of $11,104 at the Urbana-Champaign campus, $9,764 at the Chicago campus and $8,670 at the Springfield campus, based on a per-credit system. The 6.9 percent increase amounts to a total of $22 million in additional tuition revenue for next fall. Last year, trustees raised tuition by 9.5 percent.
Chris Kennedy, chairman of the university's board of trustees, said the main issue surrounding tuition is the state's law guaranteeing a stable four-year tuition rate for each incoming freshman class. He said the board’s decision today would maintain a flat tuition rate, adjusted for inflation.
Kennedy also said it would be a “false choice” for the legislature not to make higher education a priority in the upcoming state budget. “I don’t think that we need to choose between being an excellent, outstanding university and being an accessible university. I think that it’s the burden of the trustees to figure out a way to have one of the best colleges that’s made affordable to everyone in our community,” Kennedy said.
Michael Hogan, president of the University of Illinois, said increased tuition is necessary because state funding for higher education remains stagnant. “I think the state has to ask itself, ‘Is it true that we can’t afford the University of Illinois?’" he said. "The second question would be, ‘Can we afford not to do without it?’ … And if the answer to one is yes and the other is, 'No, we can’t afford it,’ then they have to let us find ways to support ourselves.”
Hogan remarked that if state funding continues to fall short, the university could soon be perceived as merely Illinois-located and heavily state-regulated, rather than as a public state university.
Walter Knorr, vice president, chief financial officer and comptroller for the U of I, said most of the revenue from the tuition increase will go toward education, academic support and infrastructure.
Gov. Pat Quinn proposed a $697 million budget for the university for Fiscal Year 2012. Knorr said the university’s budget is still up in the air, and lawmakers could alter Quinn’s original proposal in May.
“We have two months [more] to go with the legislative process ... for financial aid and appropriations, benefits and pensions. It’s all out there over the next couple of months,” Knorr said.
While Quinn's budget calls for flat funding for higher education in the state, Senate Republicans have said they would support up to $200 million in cuts to higher education through elimination of some programs, a review of university sabbatical policies and limits to tuition waivers.
According to a Senate Republican budget proposal, public universities last year,gave about $400 million in tuition waivers to students, while the universities took in about $1.5 billion in tuition. “When a student attends a public university for free, other students pay more to account for it,” the proposal states. Republican leaders say legislators should first eliminate the scholarship waivers they dole out.
The state still owes the University of Illinois $447 million for the current fiscal year, Knorr said.
During the next few months, other state universities will weigh tuition increases at their campuses, and today’s move by the state’s largest university system to raise rates may play into their decisions. “I think most public universities are in a world of hurt,” Kennedy said. Since the flagship university in the state has taken the first step in raising tuition because of dwindling state funds, that might make it easier for other public universities to do the same, Kennedy said.
Western Illinois University trustees are supposed to meet this week but will not consider a tuition increase until June, according to Darcie Shinberger, director of media relations for the university. In recent years, Western Illinois University has increased tuition, fees and room and board costs annually about 6 to 7 percent, Shinberger said. When the presidents of Southern Illinois University, Eastern Illinois University, Illinois State University, Northern Illinois University and Western testified before legislative committees in Springfield earlier this month, they all agreed that tuition increases might be on the table.
Gov. Pat Quinn has pitched more short-term borrowing to help Illinois bring in federal dollars, but the plan is still being formed.
Quinn told reporters in Chicago yesterday that he wants to borrow about $2 billion to capture a temporarily higher rate of federal matching dollars for the Medicaid program. The state must reimburse certain Medicaid providers on a set schedule, so Quinn wants to borrow, in part to help the state keep up with its Medicaid bills.
According to Kelly Kraft, spokeswoman for Quinn’s budget office, the governor actually wants to borrow $1.75 billion. The larger portion of the money, $1 billion, would go to the state’s employee health insurance. According to Quinn’s budgeteers, the state only made about half of the needed payment for employee health care this fiscal year. The rest of the money, $750 million, would be used to pay Medicaid providers in a more timely fashion. Kraft said some federal reimbursement would also be available for money spent on employee health insurance. Quinn said without this plan, the state could potentially lose out on $175 million in federal matching funds. Kraft said revenues from the recent income tax increase would be used to pay off the borrowing. As for when the money would need to be repaid, Kraft said in a written statement that the budget office is still “working on details for that.”
According to Kraft, the borrowing will require legislative approval. Quinn, state Treasurer Dan Rutherford and Comptroller Judy Baar Topinka can approve short-term borrowing if the state fails to capture expected revenues or needs to borrow to supplement cash flow. However, Quinn’s budget office says this borrowing doesn’t fit either of those scenarios, and Kraft said the legislature would need to change the rules for this type of short-term borrowing. Yesterday, Quinn goaded legislators to act quickly. “I think the people of Illinois would be sorely disappointed in a bunch of politicians in Springfield playing political games instead of getting maximum federal money from Washington. We pay a lot of taxes from our state to the federal government. We’re entitled to money back. And if we don’t meet the deadline, we won’t get it,” he said at a Chicago news conference.
Legislative leaders are reviewing the plan. “We will take a look at the governor’s recent proposal — and take it to our caucus. In the short term, it is our understanding that the governor is working with the comptroller and treasurer to pay down $600 million in Medicaid bills through March to capture some of those federal funds. … We remain committed to paying the bills that we owe, as well as remaining committed to making cuts, efficiencies and structural reforms to stabilize our state budget,” Sarah Wojcicki, spokesperson for House Minority Leader Tom Cross, said in a written statement.
Quinn emphasized that he continues to support a proposal to pay down the state’s backlog of bills, which his budget office tallies at more than $8.75 billion — including the insurance payment, overdue corporate tax refunds and other costs. That borrowing would be paid back over 14 years and would also be funded by the recent income tax increase. “It’s not like we’re borrowing new money. Our state owes money already to many small businesses — to Metra that runs the trains [in the Chicago area,] to universities like the University of Illinois. We already owe the money. … We think it’s better that the state of Illinois bear that burden rather than have all these small business that employ people have to wait six [to] eight months to have their bills paid,” Quinn said.
Senate Republicans say, however, that the state can pay down its bills without borrowing if lawmakers would cut about $5 billion from Quinn’s budget proposal for the next fiscal year.
Tuesday, March 22, 2011
Illinois is a step closer to having passenger trains that travel at speeds of more than 100 miles per hour between Chicago and St. Louis.
Gov. Pat Quinn announced in Chicago today the state will break ground in early April on the second phase of a high-speed rail route to connect the two cities. New tracks with ties made of concrete will be built between the northern Illinois village of Dwight and the central Illinois city of Lincoln and between Alton, a southern Illinois city near St. Louis, and the Mississippi River. A new signaling system will also be installed between Dwight and Alton. The $685-million project will be backed with money from $1.2 billion in federal funds awarded to Illinois for high-speed rail projects, as well as $42 million in state capital construction funds. An upgrade to the tracks between Lincoln and Alton, the first phase of the project, began last September.
Trains traveling up to 110 miles per hour are expected to begin routes between Dwight and Pontiac next year. Illinois was the first state to break ground on a federally backed project to create a high-speed rail network in the Midwest. Illinois is also conducting a study on the possibility of one day having passenger trains that could run up to 220 miles per hour.
“We’re going to move people. We’re going to move freight. We’re going to set a standard for America,” U.S. Sen. Dick Durbin said in Chicago. “We’ve just gotten started. There’s a lot more to be done to build these high-speed rail corridors and provide the transportation for the 21st century.”
According to Quinn, the entire project will result in 24,000 new jobs in the state. “We know we have a long way to go, but we’re getting there by investing in public works, especially high-speed rail,” Quinn said of the state’s economic recovery.
Durbin estimates that the second phase of construction will create about 6,200 jobs. The estimates are based on new construction jobs, as well as jobs that would result from the expanded economic activity that is often spurred by infrastructure upgrades. “High-speed rail is more than just an alternative mode of travel — it is a shot in the arm to today’s recovering economy and an investment in infrastructure that will serve us for generations to come. … That economic boost is already being felt in and around Alton, where construction began several months ago,” Durbin said in a written statement.
Friday, March 18, 2011
After Illinois schools have laid off thousands of employees, they likely face another fiscal year of funding below levels recommended by the State Board of Education and no end in sight to their wait for late payments from the state.
Illinois schools laid off 2,102 educators in 2010, up from 1,428 in 2009, according to a recent report from the Illinois State Board of Education. Of the 828 schools that responded to the survey in 2010, 549 issued layoff notices. In 2009, 349 schools — of the 791 schools that submitted information to the board — sent out pink slips. More tenured teachers, 426, lost their jobs in 2009. In 2010 the number was 199.
The Illinois State Board of Education (ISBE) recommended around $7.6 billion in education spending for the upcoming fiscal year, while Gov. Pat Quinn proposal calls for about $7.2 billion. State Superintendent Christopher Koch said at a recent budget hearing in Springfield that the request represents a 3.5 percent increase, or $260 million, from fiscal year 2009 levels. ISBE proposed that the state increase the foundation level — the amount of money it gives schools per student — to $6,416 from the current $6,119. Quinn proposed a smaller increase to $6,267. Senate Republicans are calling for a 10 percent reduction in Quinn’s proposed general revenue fund education spending, which would equal a cut of about $725 million.
The superintendent took issue with Quinn’s proposed $95 million reduction in state support for local school districts’ transportation costs. “The bottom line is that we cannot teach students if they are not in school.” He called for a restoration of the cuts to transportation made during the current fiscal year.
Koch said the board has cut 34 programs, such as reading improvement, textbook loans and gifted programs, and saved about $246 million. He added that ISBE has gone from about 800 employees in 2000 to less than 500 today.
The board’s Financial Profile of the state’s school districts, also released this week, shows some district budgets have become more stable. The number of districts on the board’s financial watch list dropped from 39 last fiscal year to 32 in fy 2011. The number of districts the board recognized for their well-balanced budgets went up from 63 last year to 66 in the current report. The board took the state’s late payments into account when profiling districts, and according to the report, took steps to “specifically ensure that districts are not designated as being in financial difficulty solely due to delayed state payments.”
Regardless of these small steps in fiscal improvement, Koch said at a recent budget hearing that the state’s late payments to schools — totaling around $1 billion — are a huge burden to local school officials trying to keep schools in the black. “This situation makes it difficult if not impossible to plan: To determine staffing levels, to negotiate contracts and to conduct business overall in our districts.”
Koch renewed his call this week for $8.75 billion in borrowing — sometimes referred to as a “debt restructuring plan” — backed by Democrats to pay down the state’s backlog of overdue bills. “There are many moving parts to the budget process. I am concerned that unless the state is able to move forward with this debt consolidation, education funding could be reduced even further than what is currently proposed. Despite the recent income tax increase, our state’s deficit is so large that our cash-flow position will not improve anytime soon,” Koch wrote in a newsletter this week.
The borrowing plan would require Republican votes in the Senate. Senate Minority Leader Christine Radogno says she continues to support the concept of borrowing as part of a responsible budget plan. However, Senate Republicans’ call for around $5 billion in cuts from Quinn’s budgets, which they say could allow the state to pay off its bills without borrowing, indicates that there may be little appetite to take up a borrowing plan in the Senate any time soon.
State budget, construction plan, cigarette taxes and school consolidation are discussed on this week's program. Benjamin Yount (Illinois Statehouse News), Charlie Wheeler (Public Affairs Reporting Program, University of Illinois Springfield) and David Dahl (Illinois Radio Network) join moderator Jamey Dunn (Illinois Issues Magazine). On Facebook at CapitolViewPolitics.
Thursday, March 17, 2011
Senators approved a revenue projection for the next fiscal year today that is more than the estimates of both the House and Gov. Pat Quinn.
The $34.3 billion estimate is based on numbers from the Commission of Government Forecasting and Accountability (COGFA), but removed revenue that would only come in if the General Assembly made a change on the tax code. (For more on the Senate’s estimate, see yesterday’s blog.)
Republicans voiced concerns about the revenue estimate, which is $1 billion more than the House’s estimates. Sen. Chris Lauzen, an Aurora Republican, said it is always difficult to predict what the economy, and, in turn, state revenues will do. However, he said that lawmakers should opt for a more conservative estimate. “We all need to be humble when we’re trying to predict the future,” Lauzen said. “I would have liked to have seen a lower estimate.”
Evanston Democratic Sen. Jeffrey Schoenberg accused those who spoke in opposition to COGFA’s numbers of trying to discredit a body that has historically produced accurate estimates, for the sake of political grandstanding. Schoenberg, who chairs the commission along with Hinsdale Republican Patti Bellock, added that the state trusts COGFA to handle economic projections for a variety of issues, and the commission used the expertise of respected economists to produce its analysis of revenue.
“This is what COGFA does, and they have a very good track record of being close on their projections,” said Democratic Sen. Heather Steans, who sponsored the resolution that contains the revenue estimate.
But opponents argued that increased gas prices and the recent tsunami and nuclear disaster in Japan could have a negative impact on the economy that was not factored into the COGFA estimate.
“Does it make more sense to use a conservative number [in light of recent events?] And if we’re wrong, that’s great. We have more money left over,” said Sen. Dave Syverson, a Rockford Republican.
Senate Republicans today followed up last week’s proclamation that Illinois could potentially face a $22 billion cumulative deficit in five years — which they say would mean an $8 billion operating deficit in fiscal year 2016 — with a proposal for massive cuts to the state budget.
Senate Minority Leader Christine Radogno said her party’s push to cut about $5 billion from Gov. Pat Quinn’s proposed budget would allow the state to pay down its backlog of late bills without borrowing. She said it would also ensure that the income tax increase is phased out by FY 2016. Republicans say that even though Democrats called for the increase to be temporary, Quinn’s spending plan would guarantee that an increased tax rate would have to be extended beyond the five years called for in the legislation.
“Many worthy programs, programs many of us strongly believe in, that we have advocated for would be impacted by our plan. The fact is we have no choice. If we do nothing, the problem doesn’t disappear. It gets worse,” said Sen. Pamela Althoff, a McHenry Republican.
Republicans released a “menu” of $6.7 billion in proposed reductions and say they hope to work with Democrats to approve $4 billion to $5 billion of them. This marks a change in the party’s behavior. Up until now, they have called for serious cuts but failed to provide any specifics. While their proposal is not line-item reductions, it does make specific suggestions and gives hard numbers for reductions in specific areas of government. Radogno said that Republicans are willing to put at least half of the votes needed to pass any of the suggestions from their plan.
The two largest reductions would come from cuts to Medicaid, a state program that provides medical care to low-income residents, and a controversial change to the state’s employee pension system.
Republicans say $1.3 billion could be trimmed from Quinn’s budget, primarily by changing rates paid to doctors for providing services to Medicaid patients and changing the thresholds for eligibility, which would mean fewer residents would be able to access to program. The Republican's written proposal says the state may have to seek a waiver from the federal government to implement some of their suggestions.
The Senate minority party also endorsed a plan that calls for changes to the retirement benefits of current state employees and has been the subject of recent legal debate. They are backing a proposal from the Civic Committee of the Commercial Club of Chicago, which is also supported by House Minority Leader Tom Cross. The legislation would not affect benefits already earned by current employees but would limit future benefits that would be earned after it was enacted. House Speaker Michael Madigan said on the day that Quinn released his budget that he thinks this concept would meet the state’s constitutional requirements to state employees. Senate President John Cullerton disagrees. Radogno said questions of constitutionality shouldn’t stop lawmakers from trying to make a change that could save the state $1.35 billion. “If it need to go to court, it needs to go to court. This is problem we can’t be timid about,” Radogno.
While Republicans said education is a top priority, the plan calls for a $725 million reduction in K-12 spending from Quinn’s proposal. The plan calls for changing the way the state calculates so-called poverty grants, “streamlining of high school and elementary districts” and eliminating Quinn’s proposed $40 million restoration of early childhood funding, which was cut last fiscal year.
Senate President John Cullerton indicated that he was willing to work with the Republicans to find cuts. However, he did not offer support for any specific areas of the proposal. “We applaud the Senate Republicans for coming to the table with suggestions on how to mend our fiscal crisis. It’s nice to hear them say something other than ‘no.’ Nevertheless, their efforts must go beyond more than press releases and photo ops. Releasing a list of possible cuts shouldn’t be the end of their participation in the budget process. I hope that this is just the beginning,” Cullerton said in a written statement. “To that end, I am reserving a series of appropriations bills for their use in hopes that they will use this opportunity to fully engage in the appropriations process. I believe that their proposals and commitment can be the baseline for discussion on what we all agree is a necessary process of cutting waste and creating efficiencies.”
Quinn appears less receptive to some of the proposals, noting that cuts to programs like Medicaid would mean that Illinois would miss out on federal matching dollars.
“We appreciate the Senate's effort to identify additional savings. The challenge, however, is not coming up with myriad possibilities. As we examine their proposals, we must look at their consequences. If Illinois were to implement the cuts proposed today, Illinois would miss out on millions Illinois taxpayers have sent to D.C. in taxes; legal action would be taken against the state for violations of funding statutes, and conflicts of interest would be codified into state agencies; and economic recovery efforts that are creating jobs would be halted in their tracks,” Quinn said in a written statement.
A revamped gaming bill emerged in the House today. The newest version of the plan does not call for new casinos and lacks the support of a key Senate backer of gaming expansion.
Sponsor of the measure, House Bill 3107, Rep. Lou Lang said the expansion would “soften the blow” to the industries’ losses in revenue stretching back to 2008. The bill, passed in a House committee today, would allow slot machines at horse racing tracks and the expansion of gaming positions on riverboats. Currently, operating casinos are allowed to have up to 1,200 to 2,000 positions at each facility. The measure’s earlier version, Senate Bill 737, which would have allowed five new casinos in Chicago, Rockford, Danville, Park City and a suburb south of Chicago, were removed from the new bill.
New revenue gained by the expansion would be used for the state’s backlog of overdue bills and capital projects. Lang, a Skokie Democrat, said the measure would save horse-breeding industry jobs lost to other states that, he says, offer larger purses for horse races. “There are 40,000 jobs at stake in the [horseracing] industry. We can save those jobs in Illinois if we can pass this bill,” said Lang.
Opponents say when other states have allowed slots at racetracks, instead of benefiting the horse racing industry, it has pulled focus from it. More than 90 percent of the revenue at racetrack casinos comes from slot machines, according to Anita Bedell, executive director of Illinois Church Action on Alcohol and Addiction Problems. “Not from people betting on the horses,” Bedell added.
Lang said the racing industry supports the bill; however, casino owners still oppose the idea of increased competition at a time when they are seeing decreased revenue. “Illinois casino revenue has decreased by 31 percent over the last three years. We’ve lost 1,415 employees during that time. We estimate this bill will cause an additional 20 percent of loss of existing casinos because people will go to other venues,” said gaming lobbyist Tom Swock.
Lang said his bill addressed the recent downturn in revenues by providing large tax incentives for casinos, riverboats, and racetracks in the state. It would also allow casinos to expand the number of gaming stations at their facilities.
Senate support for the measure as-is doesn’t seem likely. Sen. Terry Link — a Waukegan Democrat, who has historically teamed up with Lang to sponsor gaming bills -- opposes this new version of gaming expansion. Link, who supports the creation of new casinos in the state, said the new measure does not address the state’s budget concerns and that his bill —w hich passed in the Senate last fall and included five new casinos — would have brought in more money for the state. The measure, which would have brought in an estimated $424 million, was never called for a vote in the House. Lang does not have a revenue estimate for his revamped bill.
Another measure that would extend areas where people could smoke in casinos also passed through the House committee. The bill, sponsored by Rep. Andre Thapedi, a Chicago Democrat, would extend smoking to only designated and ventilated smoking rooms in licensed gaming facilities in the state.
Wednesday, March 16, 2011
The Illinois Senate’s revenue estimate is $1 billion more than the number the Illinois House approved as the ceiling for state spending in the next fiscal year.
The Senate arrived at its projection of almost $34.3 billion by taking the nearly $34.9 billion estimate from the legislature’s Commission on Government Forecasting and Accountability (COGFA) and trimming away about $600 million in revenues that would require a break from the federal tax code. The General Assembly has not approved the change needed for those revenues to be realized.
The House has opted for a more conservative estimate of almost $33.2 billion. Gov. Pat Quinn estimates the state will have almost $34 billion to spend on next year’s budget. Quinn’s projection also includes money from the proposed change to the tax code.
COGFA Director Dan Long said the commission’s estimate is more than Quinn’s because of a timing issue with revenues from the recent income tax increase. Long said that some of the money from the increase expected in the current fiscal year will not actually come in until FY 2012. He said the shift is not reflected in Quinn’s numbers.
Some Republican members of the Senate Revenue Committee, which approved the estimate today, said they were concerned with the difference of more than $1 billion in the amounts estimated by both legislative chambers.
Sen. Chris Lauzen, an Aurora Republican, asked, “Why would we ever take a higher assumption when the folks that are running the government are saying, ‘Well, this is what we think it will be.' Why would we even take that risk of having a billion-dollar higher assumption?”
Chicago Democratic Sen. Heather Steans, sponsor of the Senate resolution that contains the estimate, said that COGFA's projections have historically been accurate. She added that because the Senate's projection is a joint resolution, the House would also have to approve it. “We will send it to the House they may decide to take it up,” Steans said, “or they may use their estimate, which is fine. We will both go about creating our budgets, and if they are different, then we will go to a conference committee at the end of session and reconcile.” The House's estimate, which has already passed, is in a standard resolution, so it does not need Senate approval.
Meanwhile, a House committee approved today a breakdown of the nearly $33.2 billion it estimates legislators have to dole out to different areas of government. House appropriations committees will each be given a percentage of available funds to work with. Human services would see largest portion with 50.361 percent of total revenues. K-12 education would come next with 28.742 percent of the pot. Higher education would get 8.761 percent, public safety 6.978 percent and 5.158 percent would go toward “general services” spending. House Resolution 156 now awaits a full House vote.
A push to pass a cigarette tax increase to fund capital construction fell flat today.
Senate President John Cullerton said lawmakers need to approve a new version of the state’s capital construction plan, which an Illinois court ruled unconstitutional in January.
He is backing a $1-a-pack tax increase on cigarettes to take the place of legalized video poker as a revenue source for the plan. The increase would be phased in over two years, with a 50-cent increase in fiscal year 2012 and another in fiscal year 2013, and would bring in a projected $300 million.
However, Senate Republicans said there is no need to rush a new plan through the process, and they would rather wait to see how the Illinois Supreme Court rules on the original legislation. Senate Minority Leader Christine Radogno said she worries that making changes now could endanger the plan, and the legislature should only address the issue if the Supreme Court makes it necessary by upholding the lower courts’ ruling.
She said that leaving out video poker indicated that Cullerton either wants to swap revenue sources — noting that he also introduced a bill to eliminate video gaming — or plans to expand capital spending if the court upholds the original funding. “If you want to pass this for [general spending], heaven knows the state could use the money. But I have a great deal of concern that this is laying the groundwork to undoing the entire capital [plan,]” Radogno said of Cullerton’s tax increase proposal. She also said she was concerned about a cigarette tax unfairly targeting lower-income residents. She and other Republicans said that doubling the cigarette tax, which is currently 98 cents a pack, might push Illinoisans to buy cigarettes in neighboring states.
Cullerton supports the tax, in part, because he says it would stop young people from taking up smoking and encourage smokers to quit. Proponents also highlight the fact that fewer smokers would mean less state money spent on medical care for smoking related ailments.
Radogno said it would be unfair to start the process of legalizing video poker in bars and restaurants across the state — something that had previously been an illegal under-the-table source of profit for many establishments — and not follow through. “These people are going to lose lots and lots of money because they relied on their state government,” she said.
Cullerton said that he does not have any immediate plans to call Senate Bill 17, which would repeal the Video Gaming Act passed in May 2009.
“I was never really a big supporter of the video gaming, but we did vote for it. We just haven’t made any money on it yet,” Cullerton said. However, he added: “We’re not doing anything now. We’re just being neutral.”
The cigarette tax increase and two other bills — SB 1323 and SB 1322 — that contain other parts of the new capital plan passed in a Senate committee today with no Republican support. Cullerton said he planned to call the tax increase for a full Senate vote this afternoon, but he did not, likely because there were not enough legislators on board for it to pass. “The [Senate] president did not obviously call it for a vote, and I’m assuming that he did not do that because he didn’t think he had the votes to do that,” said Sen. John Sullivan, a Rushville Democrat.
Sullivan said that lawmakers have been looking for a way to replace the expected revenues from the video gaming plan once it became clear that implementing the bill would be difficult. “It’s a real issue. The money has not come in from the video poker.” However, he said he could not support a cigarette tax increase “at this time” because he is concerned it would hurt business in areas of his district that are close to the Missouri border. “If it was just cigarettes, it would be one things, but many people who buy cigarettes, when they travel to Missouri, for example, not only do they buy cigarettes, they buy gas. They buy groceries. They buy other goods and get other services while they’re there. So it’s not the one factor of that tax increase. … You’ve got to look at it in its entirety.”
Tuesday, March 15, 2011
The elimination of the death penalty and the clearing of death row in Illinois has already resulted in savings reflected in the budget requests of some state agencies.
State Appellate Defender Michael Pelletier said today that Gov. Pat Quinn’s signature on the abolition bill and commutation of the sentences of 15 inmates sentenced to death “essential eliminated the need” for areas of his agency that dealt with capital cases. He said his office would no longer need parts of its Supreme Court Unit, which handled death penalty appeals to the high court. The agency also plans to eliminate the Capital Post Conviction Unit, which assisted those sentenced to death with the appeals process, and the Capital Trial Assistance Unit, which helped the defense in cases where the prosecution was seeking the death penalty.
Pelletier said the elimination of death penalty cases would result in a savings of about $4.7 million from his office. The agency is requesting $21 million instead of its initial request of about $26.6 million. The office is asking for money to go toward a juvenile resource center that has not been funded in recent years and a student program that would allow interested young people to be exposed to the work of public defenders that has not been funded for the past four years. Pelletier said the appellate defender’s office would still need some money to assist on appeals for former death row inmates. “Ethically [those defense attorneys] have an obligation to continue to represent those clients at the [post-conviction level] … and eventually, the appeals.” However he said the agency is starting the process of “winding down and closing [those] offices.”
The office closings and budget reduction would also mean layoffs. Pelletier said that 37 employees would “not be with the agency next fiscal year.” However, he added that new dollars for a Juvenile Resource Center would mean the creation of four new positions.
Patrick Delfino, director of the Illinois state’s attorneys appellate prosecutor's office, said the elimination of capital cases will mean a reduction of about 23 percent in costs to his office that are covered by the general revenue fund. The office received slightly more than $9 million in general revenue for the current fiscal year.
The Illinois Senate will likely consider a cigarette tax increase this week as part of a new version of the capital construction plan, while the House looks at doling out the money it estimates the state will bring in next fiscal year.
Senate President John Cullerton told reporters today that he plans to push for a $1-a-pack cigarette tax increase to help pay for construction projects because the state’s capital plan is tied up in a lawsuit. Cullerton said the increase would be used to replace the most controversial funding source of the plan: the legalization of video gaming in bars and restaurants across the state, which has yet to be implemented.
“We’re not going to deal with video gaming. We’re going to let the courts deal with that issue. We’re going to reenact the other taxes except for video gaming. We’ll let the courts decide on whether or not they want to keep that or not,” Cullerton said.
Rocky Wirtz, owner of the Chicago Blackhawks hockey team, as well as Wirtz Beverage, a liquor distribution company, sued the state, calling the capital bill unconstitutional because it contained provisions on multiple topics. The Illinois Constitution requires lawmakers to stick to one subject for each piece of legislation, so they cannot force votes onto an unpopular measure by attaching it to a popular one. An appellate court sided with Wirtz, and the Illinois Supreme Court is now considering the case.
Wirtz's suit also claimed that the original measure unfairly raised taxes on wine and spirits much more than the increase on beer. Cullerton said he plans to make the increase for all types of alcohol equal in the new legislation. He said all the other original funding mechanisms, including sales tax increases on some candy and hygiene products and fee increases, would be included in the reworked plan.
When asked whether he thought it would be difficult to pass a cigarette tax increase so soon after an income tax increase, Cullerton said lawmakers must do something or the bonds already sold to fund projects would be “in jeopardy.” He said the new revenue proposal would bring in about $300 million.
“There’s a challenge to the capital bill in the Supreme Court. If they overturn it, we won't have any funding for the bonds that we’ve sold or the bonds we want to sell, so we are responding to the concerns raised by the lawsuit,” Cullerton said.
When asked if he thought the new plan could get enough votes in the House, Cullerton said it would need bipartisan support. “I don’t have an agreement [with the House leaders], but I have hopes that we will have enough votes in the House.” He said he plans to call a cigarette-tax-hike bill for a committee vote this week.
Since it became clear that video gaming would be highly controversial and difficult to implement, lawmakers have been quietly searching for a way to replace it as a revenue source for the capital plan. The cigarette tax has lacked the needed backing to make it through the House, and so have large gaming expansion bills, which have been pitched as another option. However, the chance to replace video poker, or at least a reason to put pressure on lawmakers to consider other options, may be a blessing in disguise for those who would like to see the plan backed by a different funding source.
Meanwhile, a House committee plans this week to take up the task of distributing funds for next fiscal year’s budget to different areas of state government. The House settled on a revenue estimate last week, and now those expected funds will be split up among appropriations committees, such as elementary and secondary education, higher education, human services and public safety, so they can start planning the House’s budget proposal.
Rep. John Bradley, a Marion Democrat and chairman of the House committee dealing with House Resolution 156, the measure that will be used to distribute the money, said he is in talks with legislators on the funding each area. The controversy that is bound to arise around doling out the money, however, may be heightened because some describe the House’s general revenue estimate of $33.2 billion as “conservative” and claim that the low number is the product of a politically driven desire to cut the budget.
“I think that they’re being conservative. The expectation is that revenues would be somewhat higher,” said Fred Giertz, an economics professor with the University of Illinois who testified before the committee earlier this month. He said that a $34.8 billion estimate from the legislature’s Committee On Government Forecasting and Accountability is probably the most realistic projection of revenues for the next fiscal year.
Friday, March 11, 2011
This week's topics include abolishing the death penalty, pension & budget reform and guns. Jim Leach (WMAY-AM/Springfield), Kevin McDermott (St. Louis Post-Dispatch) and Charlie Wheeler (Public Affairs Reporting Pgm @UIS) join moderator Jamey Dunn (Illinois Issues Magazine).
Follow CapitolView on Facebook at facebook.com/CapitolViewPolitics.
Thursday, March 10, 2011
As Gov. Pat Quinn pulls back on proposed budget reductions for this fiscal year, Senate Republicans say an additional $4 billion to $6 billion in cuts to next year’s budget are needed to avoid future deficits.
Quinn backtracked on proposed cuts to human services for the current fiscal year. Addiction treatment providers began to publicly push back in late February after they say they received word that Quinn planned to cut human services by $208 million in Fiscal Year 2011 — with substance abuse programs bearing the brunt of the cut. After addiction treatment providers across the state said they would have to stop taking patients, the governor’s office rolled the number of potential cuts back to about $100 million. Today, Quinn’s budget office confirmed that the governor plans to use $43 million from a lump-sum line item, which has yet to be allocated, to bring the number to about $57 million in cuts to human services. (Corrected with info from Quinn's budget office. Sara Moscato Howe, chief executive officer of the Illinois Alcohol and Drug and Dependence Association says Quinn is looking to save about $7 million on medicaid backed addiction services through a program known as "utilization managment." )
“This was one hurdle that we needed to get through to survive,”Moscato Howe said She said treatment providers would likely be able to start taking in new patients soon. The governor’s budget proposal for next fiscal year calls for deep cuts to substance abuse programs. However, Mascato Howe said her organization has been told that Quinn’s administration is reviewing the budget and looking for ways to prevent the “decimation” of addiction services. “Which is certainly good news,” she said.
Meanwhile, Senate Republicans are calling for billions more in cuts from Quinn's proposed budget for the next fiscal year but so far have suggested few specific areas that could be trimmed. While Quinn says his budget for fiscal year 2012 would make about $1 billion in cuts from the current fiscal year, Republicans say it will take much more to get Illinois’ budget in line. Without the additional $4 billion to $6 billion reduction, they say the annual deficit could be as much as $8 billion in five years. To come to that figure, Republicans are assuming Quinn will propose to spend as much as he can under the spending caps put in place as part of the recent income tax increase. Quinn proposed spending less than the cap in his plan for FY 2012. “Let’s be honest, he may say he’s spending under the cap this year, but his track record doesn’t suggest he spends less than he can,” Sen. Matt Murphy, a Republican from Palatine, said of Quinn.
Senate Minority Leader Christine Radogno of Lemont said the recent income tax increase alone will not solve Illinois’ budget crisis. Although she said she is still open to some form of borrowing to pay down the state’s backlog of overdue bills, she is not willing to support any plan until substantial cuts are considered. Radogno said Senate Republicans would present their ideas for budget reductions next week. She added that members of her party would be willing to cast votes for unpopular cuts today to prevent future fiscal disaster. “It’s not all fat and waste. It’s not easy. Some of it’s fat and waste. Some of it’s going to hurt a little bit. … If you do something hard today, there is a reward that far outweighs the short-term pain,” Murphy said.
Quinn’s office responded to the Republicans claims with a written statement: “The time for Senate Republicans to begin looking for cuts has long since passed. …. Governor Quinn has been asking Republicans for input and specific suggestions on ways we can reduce government spending for more than two years. And when cuts have been made in Republican districts, we have heard loud complaints about even the most common sense cutbacks.”
Gov. Pat Quinn signed a bill today that is intended to make large Internet retailers collect state sales tax on Illinois residents’ online purchases. However, some small business that have partnerships with the large sellers may flee the state as a result.
Although Illinois residents owe taxes on anything they purchase online, the U.S. Supreme Court ruled in 1992 that the state cannot make retailers collect the tax if they do not have a physical location in the state. Illinoisans are supposed to send the tax they owe on these purchases to the state, and this year there will be a special box on the state sales tax form to declare any such tax owed. However, few residents actually send the money, and the state is missing out on revenues.
Other states — including New York, Rhode Island and North Carolina — have tried to make retailers, such as Amazon, collect the sales tax by targeting businesses within their borders that have marketing relationships with out-of-state-sellers. Those marketing affiliates draw customers to their websites by offering deals on a variety of products from multiple sellers. They drive traffic to the retailers’ websites and receive a commission on any purchases customers make once they get there. Under the new Illinois law, such marketing relationships are equivalent to online sellers having a brick-and-mortar location in the state and as a result, they have a legal obligation to collect the tax.
Proponents say the new law will create fairness between Illinois stores and online retailers that do not have to collect a tax. “We think that now, retailers will be on a level playing field with their Internet counterparts who don’t do direct business here. We hope that we can maintain all the local retailers that we have. … We hope that by having an equal footing they won’t be used as showrooms anymore for those people who go in, get the serial number and then go on Amazon.com and buy it [and avoid paying the sales tax],” said David Vite, president of the Illinois Retail Merchants Association.
However, in other states that have passed the similar laws, Amazon has ended its relationships with the in-state marketers to avoid collecting sales tax. Tim Storm, chief executive officer of one such Illinois marketer called Fat Wallet, said he plans to move his business out of the state before the law takes effect in July. He said he cannot afford to lose his relationships with out-of-state retailers, which make up about 40 percent of his business. Storm said he agrees with the Vite that the tax code should treat all business the same, but he says the law will not accomplish that goal because big retailers will just cut ties with businesses such as his in Illinois. “This bill will accomplish nothing for the state of Illinois. It’s been a big political power play of appeasing big retail,” he said.
Storm joined Scott Kluth — president of Chicago-based Internet marketer Coupon Cabin, who said he also planned to move his business out of state — last week to ask Quinn to veto the bill. Storm said he is disappointed with the governor’s decision but relieved to have an outcome on the issue.
“Illinois’ main street businesses are critical to ensuring our long-term economic stability, which is why they must be able to compete with every company doing business online in Illinois,” Quinn said in a written statement.
Wednesday, March 09, 2011
As the presidents of Illinois’ universities face the possibility of flat budgets for the next fiscal year as a best-case scenario, some look to raise tuition, but others say they have reached a ceiling on what they can charge students.
William Perry, president of Eastern Illinois University, said if the school receives the same level of funding next fiscal year as it did during the current one, it could have to raise tuition. However, he said an increase would be a last resort. “We have to take a longer view. There’s the next fiscal year view, but we have to look longer term at the economy. We know that the issues of affordability and access are paramount in the minds of citizens [and] the parents of students,” he said.
Perry told a Senate budgeting committee that Eastern has cut operating costs by 25 percent in the last year and realized $1.6 million in savings. He said that like other universities in the state, the school has a hiring freeze, and he must approve all new hires. Perry said the freeze has resulted in about a reduction in faculty and staff of about 60 employees and saved the school more than $3 million. However, he said, since the university is a large economic driver in its area, the school is working to avoid layoffs, and he does not anticipate any in the near future. The state owes Eastern about $35 million in general revenue funds for the current fiscal year.
“Higher education is in an era of tremendous change and uncertainty. … The public university model of the 20th century no longer fits, so we have to make fundamental changes,” said John Peters, president of Northern Illinois University. Peters said if his school continues to increase tuition, it could price itself out of the market for higher education. He said asking students to pay more could block access to college educations for many young people from “working-class and middle-class” families, as well as those returning to school seeking training to reenter the workforce. Peters asked legislators to stop placing mandates on universities and start paying schools on time. Illinois currently owes Northern about $65 million. Peters said if the university does not get a payment, it will run out of money by April 15.
Al Goldfarb, president of Western Illinois University, agreed that mandates on universities and the state’s late payments have put pressure on his school.
“The biggest thing the state can do [to help universities plan their budgets] is predictability of state support,” he said. Illinois owes Western $50 million for the current fiscal year. He said the school has had to spend on maintenance with no help from the state because of last year’s cuts, which including deferring maintenance across all areas of state government. Gov. Pat Quinn called for increased capital spending in his fiscal year 2012 budget so the state can catch up on some of the repairs it has put off. Goldfarb said his school has also cut 25 percent from operating costs and has held off on hiring for about 60 jobs.
Goldfarb said Western asked for an increase in funding — as did many other schools. While he said he does not expect the school will get the money, he said it is important that legislatures recognize the needs of higher education. For instance, he said Western has seen an increased interest in the areas of nursing and engineering, so expansions are needed to meet that demand.
Al Bowman, president of Illinois State University, said his school also faces increased demand on its nursing programs and the high cost of upkeep. He said ISU asked for a more than 9 percent increase in funding for next fiscal year. “We understand that the state is not in a position to provide those kind of new resources, but we wanted to document what the real need was.” Without more state funding, Bowman predicted across-the-board tuition increases at state universities. “Unless the state begins to reinvest in higher education, we are going to be faced with — year in and year out — raising tuition to not only cover cost increases but to cover a greater proportion of the state’s share.”
For information on budget hearings for University of Illinois and Southern Illinois University, see Illinois Issues blog March 2.
After a decade-long ban on the use of capital punishment in Illinois, Gov. Pat Quinn today abolished the state’s death penalty and commuted the sentences of the 15 inmates on death row.
“I believe if we abolish the death penalty in Illinois that we should abolish it for everyone,” Quinn said shortly after announcing what he called the most difficult decision he has made as governor. Quinn said he sought input from citizens on both sides of the debate while mulling his choice. He said he read letters and books and sat down with individuals to get their perspectives on the controversial issue. “It’s probably impossible for me to talk to everyone, but I certainly talked to a representative number of every single one of those who have an interest in this issue. That’s the best you can do.”
Senate Bill 3539, sponsored by Sen. Kwame Raoul, a Chicago Democrat and Rep. Karen Yarbrough, a Maywood Democrat, will permanently abolish the death penalty after July 1.
“When I entered the General Assembly, I was on the other side of the issue,” Yarbrough said. “But when you become a representative of the people, it’s up to us to study the tough issues, to understand both sides of the issue and then come down on one side or the other. I feel like I came down on the right side of the issue.”
In Illinois, capital punishment cases cost the state more than $100 million, according to the sponsors of the legislation. Proponents say the measure will lead to cost savings and prevent wrongful executions. The law also requires creation of a fund to be spent on support for homicide victim’s families and police training. “I want to say to the family members of victims, those who have been murdered, there are no words in the English language or any language to relieve your pain, and I understand that,” said Quinn.
The repeal comes years after serious flaws were detected in Illinois' criminal justice system, especially in the prosecution of capital cases. In 2000, former Gov. George Ryan imposed a moratorium on capital punishment after a number of death row inmates had been found to be wrongfully convicted,. He commuted the death sentences of more than 150 inmates to life in prison in 2003.
Randy Steidl, one of the inmates exonerated after he was wrongfully convicted in 1987, said there will always be wrongful convictions, but innocent people who are put to death they lose the chance to fight for their freedom. “You can’t have an irreversible system when you know full well innocent people go to prison,” he said. He added that shocking crimes, such as those that often become capital cases, put pressure on law enforcement and prosecutors to convict someone. “Those are exactly the kind of cases that end up being wrongful convictions because of public outcry [and] pressure on police and prosecutors to solve the case. ... It’s a system made up of humans, and humans have agendas. And even if prosecutors do everything above board, there’s still that possibility that you’ve got the wrong person.”
While Quinn said during his campaign for governor that he supported having the death penalty as an option for the most heinous crimes, he also said he supported the moratorium. Today, Quinn said after lawmakers passed the abolition bill, he thought it was his “duty” to rethink the issue. “I felt it was important to study every aspect of the death penalty system,” Quinn said. He pointed to inconsistencies in when and why prosecutors seek the death penalty. A study commissioned by Ryan found that those who killed a white victim in a rural area were much more likely to be sentenced to death than others convicted of murder. Quinn said a “consistent and perfect” death penalty system in all 102 counties of the state is impossible. and since other punishments are available for serious crimes, capital punishment is not necessary. He commuted sentences of the 15 inmates on death row to life in prison without the possibility of parole.
Opponents argued the importance of the death penalty option for those who commit heinous crimes and said reforms in place that require taping of interrogations and DNA testing lessen the risk of wrongful convictions. “Our system is not broken; it has been fixed,” said Rep. Jim Durkin, a Western Springs Republican.
In an attempt to address disparities in the system, Sen. Kirk Dillard, a Hinsdale Republican, proposed SB 2277, which would set up a statewide panel of judges and prosecutors to oversee capital punishment cases. He said, “While all life is precious, those crimes — the worst of the worst — go to the heart of the order of our society.” Dillard said his bill would address concerns that race, gender, geographic location and economic status factor into death penalty sentencing in Illinois.
Tuesday, March 08, 2011
The Illinois House today voted without opposition to approve a “conservative” estimate of revenues for the next fiscal year.
House Resolution 110 caps the estimated revenue for fiscal year 2012 at $33.2 billion — a projection that is less than estimates from Gov. Pat Quinn, as well as the legislature’s Commission on Government Forecasting and Accountability. Rep. John Bradley, a Marion Democrat, said he planned to meet with the heads of appropriations committees this afternoon to begin negotiating the best way to dole out the money to different areas of state government. For more information on the resolution, see Illinois Issues blog March 3.)
Bradley said if any unexpected or new revenues come in, the House would have to determine how to appropriate them at that time. Under the resolution, the House cannot exceed the projection in its spending proposal. Bradley said it would be fair to view the resolution as a spending cap. “This is how much money we have. ... So this is how much money we can spend at this point,” Bradley said.
Gun owners in Illinois would be allowed to legally conceal and carry firearms under legislation that would require sheriffs and the Illinois State Police to process and issue licenses.
House Bill 148, sponsored by Rep. Brandon Phelps, a Harrisburg Democrat, would require applicants to have eight hours of firearm training, gun range qualifications and notice of carry zones where individuals would be allowed to bring their firearms. A House committee approved the bill today with bipartisan support.
Illinois would join 48 other states with laws permitting concealed carry of firearms, if the measure is approved on the House floor, by the Senate and signed by the governor.
“The gangbangers are the problem,” said Todd Vandermyde, a lobbyist for the National Rifle Association. The fact that Illinois does not allow concealed carry when 49 other states do is "just a slap in the face to the law-abiding citizens in this state that work hard, live the right way, and they just don’t want to feel like they are going to be victims every time they step out the door because the gangs are controlling the streets,” he said.
After negotiations with the law enforcement agencies and advocacy groups throughout the state, proponents of the legislation said it is “fair and equitable” and would benefit law-abiding Illinois citizens who want to protect themselves.
Two downstate sheriffs, Bob Houston of Tazewell County and Jeff Standard of Fulton County, took issue with gun ownership being restricted to those in law enforcement only. “We all want to defend our constitutional rights,” Houston said.
“The right to defend your own life is more important than any of the others. If you don’t have that one, the other ones kind of pale in comparison,” Houston said. Standard said a 20- to 30-minute emergency response time is common in his county, and he feels that residents should be able to protect themselves if the police are not present.
Opponents of the measure said qualifications for applications were loosely defined, fail to mention background checks of applicants with mental health illnesses and would decriminalize incidents when firearm permit holders trespass into areas that ban concealed carry. Samantha Fields, an assistant to Chicago Mayor Richard Daley, said, “There is no evidence that proves that a concealed-carry state is a safer state.” If the legislature approves the legislation and Gov. Pat Quinn signs it, Chicago could go from having a ban on handguns, which was overturned by the U.S. Supreme Court last June, to allowing concealed carry within less than a year.
Utility companies hope to raise rates to help finance upgrades to the state’s electric grid and infrastructure, but regulators and community advocates say the proposed changes would result in automatic annual rate increase for consumers.
In its current form, House Bill 14 would let utilities that commit to investing in upgrades to set their rates annually through a formula. The Illinois Commerce Commission — which currently approves or rejects requests for rate increases after an 11-month review process — would have 45 days to object to new rates. The commission also would be tasked with policing how the utilities are spending the new revenues and verifying that the money is going to projects to strengthen the grid.
“Under the current system, do the utilities always get what they want? No. Do the consumer advocates always get what they want? No. This means the process is balanced, and it falls somewhere in between, and it works,” said Paul Gaynor, chief of the public interest division in Attorney General Lisa Madigan’s office.
Susan Satter, a senior attorney in Madigan’s public utilities bureau, described the legislation as an “automatic annual rate increase” because the commission would not have the necessary time to research the rates. Satter said the proposed process would “effectively leave the Commerce Commission, the attorney general and other consumer advocates on the sidelines as Illinois utilities automatically raise their rates year in and year out.”
The Commerce Commission opposes the bill in its current form. Spokeswoman Beth Bosch said the agency has questions about the rate formula, the smart grid plan and the spending oversight in the legislation.
However, representatives of the state’s major utility companies say the state needs to update its woefully out-of-date grid to make it more reliable and efficient, as well as to prepare for the technology of the future, such as electric cars. Under the plan, Commonwealth Edison (ComEd), which is pushing the change, would invest $2.6 billion in grid upgrades. Rates for ComEd customers would increase by about $3 a month. Ameren would invest about $950 million, and its customers would see an estimated $5-a-month rate increase. Those increases would come on top of regular rate jumps that utilities describe as the cost of doing business. Utility providers say that in return for the rate increases, customers will eventually see more reliable services, as well as ways to save on their bills through energy efficiency and an updated metering system.
“If Thomas Edison and Sam Insul, the innovators of the original grid, took a tour in 2011 of any system in the United States, they would not bat an eye as they would see essentially the same technology they deployed 100 years ago, operating in much the same way,” said Anne Pramaggiore, chief operating officer of ComEd. She added that 44 other states are taking “significant action” to modernize their grids. Pramaggiore said ComEd is already making investments in the grid but can only make limited changes because the company cannot predict its future revenues, as determined in part by rate increases that the Commerce Commission approves or rejects.
Craig Nelson, senior vice president of regulatory affairs and financial services, agreed. “We need to upgrade, strengthen and modernize our utility structure. … In order to make these incremental investments, we must also upgrade, strengthen and modernize the rate-making process in Illinois.”
Advocates for grid upgrades say they would make the state’s energy system more environmentally friendly, but environmental advocates said HB 14 does not do enough.
Jack Darrin, director of the Sierra Club's Illinois chapter, said the group is in favor of updating the state’s power grid. However, he says the bill needs more specific commitments to encouraging renewable energy and making sure Illinois is prepared for the infrastructure that would be needed for widespread use of electric cars. “House Bill 14 currently doesn’t do those things.”
Parties on all sides of the debate said they are willing to work on the concept and find areas of compromise, and sponsor Rep. Kevin McCarthy, an Orland Park Democrat, said he plans to make changes to the bill.
On one side, you have utility companies with lots of money and lobbyists. On the other is a regulatory body, backed by the attorney general, that does not want to give up its oversight powers. Look for this to be a hot topic throughout the legislative session.