Thursday, May 31, 2012

Bipartisan budget efforts dissolve in the House

By Jamey Dunn

Republicans pulled their support from House budget bills today after pension negotiations fell apart, but it appears that House Republican leadership will get another shot at passing pension reform Thursday morning.

House Minority Leader Tom Cross said Republicans made it clear that their bipartisan efforts on the budget were contingent on several things, including pension reform.

“We’ve attempted to work with the other side of the aisle on the budget process because of the problems we have as a state, and one of the things we talked about with our budget mess is that it’s a puzzle, and pieces need to fit together to show the road map out of here. And one of those pieces is the need to do pension reform,” Cross said on the House floor. “The condition, so to speak, or part of the puzzle was — we said to [House Speaker Michael Madigan] and all of you — is that we’ve got to get Medicaid done, we’ve got to do [reductions to] retiree health care [costs] and we’ve got to get pensions done.”

Cross said that once it became clear that Democrats would not back off a portion of the reform that would shift pension costs to schools, community colleges and universities, Republicans pulled back from budget negotiations. Republicans say the measure, which would shift the responsibility of paying for pensions to schools gradually over years, would result in spikes in local property taxes as schools struggled to cover the cost.

“It made it very difficult for us to continue down the road of working on the budget,” Cross said.

With Republicans refusing to support the budget, Democrats took license to make some changes from bills that had been negotiated by House budget committees. And as those bills came up for floor votes, Republicans did all they could to object to and stall the process. They filed several motions trying to keep bills from coming up for a vote and even tried to adjourn the legislative session at one point. None of their efforts at obstruction worked, and after more than three hours of debate, the House budget passed with almost no Republican support. Some Republicans did vote in favor of Senate Bill 2474, which would fund corrections facilities that Gov. Pat Quinn has targeted for closure.

“The adjustments today occurred because there was an interest on the part of both Democrats and Republicans. Mr. Cross and I worked through to provide an appropriation for all of the facilities where the governor is proposing to lose the facilities,” Madigan said. Quinn proposed closing state institutions throughout Illinois, including prisons, youth detention centers, centers for the developmentally disabled and a mental health center. Madigan emphasized that Quinn could still opt to close the facilities, even though there is money in the budget to keep them open.

Madigan said that the funds to keep the facilities open came from money that will be left over from the current fiscal year. Rep. Frank Mautino, a Democrat from Spring Valley, said money left over from Quinn’s budget vetoes during the current fiscal year was used to pay for transfers that automatically come out of the General Revenue Fund. He said that freed up $88 million to keep the facilities open.

Mautino gave credit to Republicans for negotiating the budget that passed this evening, even though few voted in supported of any part of it.

“In a really bad time, bad numbers, it’s amazing what just happened. Even though the roll calls don’t show it that way,” he said.

But Republicans gnashed their teeth over other spending that Democrats added to the negotiated budget bills. “You can’t control yourselves. You need to spend. You have an appetite you can’t control,” Cross said to Democrats.

Under the version of the budget the House was working off of before today, general state aid to schools would have been cut by $211 million. The budget that passed tonight put back about $50 million of that cut. Madigan said that money would come from savings the state created from a recent refinancing of some of its debts.

Madigan said the budget the House passed would still come in at $4.4 million under the $33.719 billion spending cap the House set for itself.

Republicans were also unhappy about some changes made to the human services budget. Funding for transportation for mental health patients was taken out, and instead, more money went to the Department of Children and Family Services. Money for drug addiction prevention and youth in transition programs also fell under the Democratic budget ax.

“It was a good budget before you started whacking away at it,” said Rep. Rosemary Mulligan, a Republican from Des Plaines. “Now you’ve cut things that everyone at the table agreed to, Democrat and Republican.”

Republicans were especially outraged at the zeroing out of money for a juvenile diabetes research program. Members of House Republican leadership, including Cross, have children with the disease. Republicans called the changes “punitive.”

Rep. Sara Feigenholtz, the chair of the House Human Services Committee, said research was cut in many areas to direct more money to services. “We have systematically removed all funding for research.”

Feigenholtz, a Chicago Democrat, said: “These are gut wrenching decisions that we make.”

After the budget passed, Madigan announced that he would transfer sponsorship of the House pension reform legislation, SB 1673, to Cross and let him take a shot at running the bill without the cost shift provisions.

“I think that there ought to be a shift in responsibility in the normal cost so that going forward ... the people making the spending decisions will be called upon to pay the bills. Today it’s very simple. Spending decisions are made. The bill is sent down to the Teachers Retirement System. The state pays the bill. I think that ought to change,” Madigan said. However, he said that Quinn told him this morning that the cost shift should be pulled from the bill.

“I disagree with the governor,” Madigan said. “But he is the governor. This is his request.”

Quinn has voiced support for the shift multiple times, and it was included in his own pension reform proposal. However, a spokeswoman for the governor said that it became clear the issue was sending reform into a deadlock. “The governor has kept his eye on the prize here, and that’s the achieving the big [pension] savings … and putting Illinois on the path to fiscal stability,” said Quinn spokeswoman Brooke Anderson.

The bill, with amendments from Cross that would strip out the cost shift, is scheduled for a hearing tomorrow morning in a House pension committee.

“Leader Cross is looking forward to presenting the amendments in committee, and he’s looking forward to passing it through the House,” said his spokeswoman, Sara Wojcicki Jimenez. She said Cross did not know the move was coming until Madigan announced it on the House floor.

Tuesday, May 29, 2012

Republicans balk at pension cost shift

By Jamey Dunn

Supporters of pension reform legislation approved by a House committee today say they want to see the bill called for floor vote. However, it may be difficult for them to find the support needed to pass the plan.

A House committee today approved Senate Bill 1673. Under the plan, state employees and others would have to choose between trading their current cost of living adjustments (COLAs) for less generous increases that would not kick in for five years after retirement or until age 67, or keeping their current COLAs but losing access to state health insurance. Employees who opt to keep the current 3 percent compounding interest COLA also would not have any future raises counted in figuring pension benefits. Retirees also would have to choose between their COLAs and their health care. The bill would apply to teachers outside of the Chicago Public Schools system, state employees, university employees, legislators and state officials. It would not apply to judges. House Speaker Michael Madigan said that judges are not included in the plan because some judges would likely have to rule on its constitutionality. He said if judges benefits were reduced under the measure, it would set up a conflict of interest for any judge who may have to rule on the plan in the future.

Union officials say that state workers, teachers and university employees faithfully made contributions to the retirement systems while the state skipped its pension payments. They argue that the bill violates a constitutional protection of pension benefits. Supporters of the plan say offering workers a choice allows the bill to pass constitutional muster. “This bill seeks to take from … workers their already hard earned and already paid for benefits in the guise of reform. I don’t think this bill is pension reform. I think it’s theft of earned benefits used to pay the state’s bills,” said Dan Montgomery, president of the Illinois Federation of Teachers. “It fails the constitutional test. … There’s no free choice here but a coercive dilemma where public servants choose between harm on the one hand or more harm on the other.”

Supporters argue that changes must be made to ensure that the pension system remains solvent for future retirees. “There are those that contend that the talk of disaster in our pension fund is just talk, that it would frankly never happen. I can tell you they are dead wrong,” said Rep. Elaine Nekritz, a Northbrook Democrat. Nekritz said that reducing the amount the state must spend on pensions would ease pressure on Illinois’ strained budget and free up money to spend in other areas, such as education and human services. “With this change, we can move away from being a financial laughing stock,”

However, some Republicans said that they cannot support a bill that would push costs onto local school districts that have been coping with state budget cuts in recent years. The measure would require school districts outside of Chicago to pick up the state’s portion of pension costs moving forward, but the change would be phased in gradually over years. The state would still be responsible for the unfunded liability already incurred. Beginning in 2013, colleges and school districts would pay an additional 1 percent of payroll cost into the pension system for six years. After that, they would pay an additional half a percent until they reach the point of covering all costs. They would also take on the liability if pension investments fail to perform as expected.

While the bill did not come up for a vote in the full House, some drama and shouting ensued on the House floor today as Republicans tried to push an amendment to the floor that would have taken the cost shift to schools out of the bill. House Minority Leader Tom Cross pointed to bipartisan efforts made in the House to pass Medicaid reform and work toward balancing the state’s budget. But Cross said that pension reform is a different story. “I had the false sense and hope that we were going to actually do something on pensions, a collaborative effort,” Cross said. Cross accused Madigan of inserting the “poison pill” of the cost shift in the bill to kill it because he says Madigan wants to stall on scaling pensions back for teachers until after the November election. “It became clear over the last couple of days that he was going to go down a route that reminded me of the old days of Mike Madigan. No more collaboration. No more bipartisanship,” Cross said. “And the biggest issue of the day, the biggest liability the state’s ever seen — we’re on the verge of getting it done, and he says: ‘No more. I’ve got a different idea. Take it or leave it.’”

Democrats used House rules to block Republicans efforts to have the amendment heard. “Total power in one person's hands is not the American way,” shouted Rep. Mike Bost, a Murphysboro Republican.

Madigan said that most in the chamber recognize that the state’s pension system is “financially unsustainable” and has to be changed and characterized the situation as one of simple disagreement. He warned that lawmakers should not get “swept up in the emotion of the minute.” “There’s a lot of frustration here in the House of Representatives and the General Assembly. We experience it all the time on a whole variety of issues — frustration, tension, interaction with different personalities pursuing different agendas. That’s life in the General Assembly. That’s life in the House of Representatives,” Madigan said. “Many people have worked on the question of pension changes, pension reform, for several several weeks — I being one of them. I’ve adopted a certain position on pension changes. Some of you agree with me; some of you don’t. That’s what happens here legitimately, and that’s what should happen. That’s why we come here. That’s why we’re sent here.”

Madigan added: “But it doesn’t serve any purpose to let our frustration and our disappointment get away with us. It doesn’t help. We have several major issues to get resolved before we end the session. I plan to work deliberatively on all of those issues. I don’t plan to issue any threats.”

Nekritz, who served on a pension working group, said she does not understand how Cross can oppose the cost shift to local school districts but not the shift to universities and community colleges. Cross’ amendment would only have eliminated the cost shift to K-12 schools. “I don’t quite understand how they can draw a distinction.” Update: According to a spokeswoman for Cross, he plans to file another amendment that would remove the cost shift to universities and community colleges.  She said said of SB 1673: “It would still be my hope that we would move forward. It’s still the right public policy.”

“Our hopes are to pass the bill,” said Madigan spokesman Steve Brown. Brown said the speaker is giving groups that support the bill time to lobby House members. Neither Nekritz nor Brown wanted to discuss what would happen if the bill were not approved. “I feel so committed to this [proposal] that I don’t know what the Plan B might be,” Nekritz said. “I would encourage people to focus on Plan A,” Brown said.

Senate approves tobacco tax increase

By Ashley Griffin

The Senate approved some of the final components of a Medicaid reform package today, and now two key pieces of legislation are on their way to the governor.

The process was kicked off when the General Assembly approved Senate Bill 2840, which would make cuts to Medicaid services as well as the rates Medicaid providers are paid in an effort to cut $2.7 billion from the state’s Medicaid liability. That measure passed in both chambers last week. 

But on Tuesday, SB 2194, which includes an increase in taxes on tobacco products,  passed on the Senate floor, 31-27. Last week the measure passed the House, 60-52. The proposed legislation features a $1-a-pack cigarette tax and would increase taxes on other tobacco products, such as cigars and loose tobacco, to bring them in line with the taxes on cigarettes. According to the Senate sponsor of the bill, Sen. Jeffery Schoenberg, a Democrat from Evanston, the measure would bring in about $700 million, including federal Medicaid matching funds. The proposal would also make changes to the hospitals assessment program to bring in more federal matching funds, which could produce almost $100 million revenue for the state. The proposal would also set requirements for hospitals to gain charity care status, which allows them to receive a local property tax exemption.

“I would vote for [the cigarette tax] if it didn’t bring in a penny,” Senate President John Cullerton said in the floor debate. “I would vote for this tax if it didn’t bring in a penny because the idea that we will have 77,600 kids who won't start smoking just because you pushed the green button, or 59,000 adults who quit, or how about the 59,000 people will be saved from premature death because you pushed the green button.”

But not all lawmakers agree a tax should be implemented to help fix the state’s Medicaid crisis. “The problem I personally have is the continued approach of more revenue, more revenue,” Senate Minority Leader Christine Radogno said in a committee hearing. “I mean, I have to ask if $7 billion in new income tax wasn’t enough to solve the problem, what’s another $300 million?” “It's really more of a difference in philosophy and approach, just of continuing of trying to look for revenue in every way we possibly can, rather than looking for other ways to contract the budget or in this case, maybe reallocate from other places in the budget to get some money to get Medicaid matched.”

 Gov. Pat Quinn has  advocated for the cigarette tax increase since he rolled out his own framework for Medicaid reform in April. “Increasing the price of cigarettes will decrease smoking-related costs to Medicaid, which came to $1.5 billion last year. This legislation will help 60,000 people quit smoking, prevent 60,000 deaths from smoking-related conditions and keep 80,000 kids from taking up smoking in the first place,” Quinn said in a prepared statement. “By working together to pass these bills, strong progress has been made in our mission to restructure Medicaid, so that it serves as a health and wellness system instead of a provider-payment system. As a result, our Medicaid system will continue to serve the millions of Illinois residents who rely on it.”

The Senate also passed SB 3261 on Tuesday, which would require hospitals to provide free care to low-income people if the treatment is medically necessary. Hospitals in urban areas would have to provide such care for people with incomes up to 200 percent of the federal poverty level, and rural hospitals would have to provide such care for those with incomes of 125 percent of the federal poverty level. So far, eight states have similar laws.

While the Illinois Hospital Association supports the bill as part of an overall Medicaid plan, Republicans voiced opposition on the Senate floor. They argued that the bill could a lead to more people dropping their health insurance and using an emergency room as their primary source of health care. “Once you tell someone they have access to this hospital, that emergency room without limits, it's been our experience that the emergency room becomes their doctor's office,” Sen. Dale Righter, a Republican from Mattoon, said  during a committee hearing. “Doesn't this take us a step backwards?”

There is still one more piece of the Medicaid reform plan yet to be approved, SB3397, which would prevent the state from rolling over Medicaid bills from one fiscal year into the next fiscal year.

Cross to Madigan: Take cost shift out of pension reform

By Jamey Dunn

A plan to reform most of the state’s pensions systems appears to have hit a snag.

 House Republican Leader Tom Cross says he cannot support Senate Bill 1673 because it would shift pension costs to local school districts, universities and community colleges. “I support a pension reform bill, not a [cost] shift,” Cross said. “Let’s do a pension bill, not a shifting bill.” Cross filed an amendment (Amendment 4) that he says would take the cost shift out of the bill. Update: Republican's tried to get Cross' amendment pushed out onto the floor for a vote

Amendment 3 of the bill, which passed a House committee this morning, would require school districts outside of Chicago to pick up the state’s costs moving forward, but the change would be phased in gradually over years. The state would still be responsible for the unfunded liability already incurred. Beginning in 2013, colleges and school districts would pay an additional 1 percent of payroll cost into the pension system for six years. After that, they would pay an additional half a percent until they reach the point of covering all costs. They would also take on the liability if pension investments fail to perform as expected.

The proposal would also require employees to choose between trading their current cost of living adjustments (COLAs) for less generous increases that would not kick in for five years after retirement or until age 67, or keeping their current COLAs but losing access to state health care. Employees who chose to keep the current COLA also would not have any future raises counted in figuring pension benefits. The measure would apply to teachers outside of the Chicago Public School system, state employees, university employees, legislators and state officials. It would not apply to judges.

Some Republican committee members and one Democrat said they would not support the bill because it is unclear how much schools would have to pay under the plan. Opponents said that there was not time for lawmakers to figure out how the proposal would affect their local school districts or get feedback from school officials. “How do I get input from my local school districts?” asked Rep. Karen May, a  Highland Park Democrat.

But Speaker Michael Madigan, who sponsored the amendment, said that it is lawmakers' job to look out for state government, which is facing substantial budget challenges. “Service this year in the General Assembly is not for the faint of heart,” Madigan told the committee.

 Cross said the shift would result in “uncertainty” for school districts and “that nobody knows how to quantify … their potential liability.” He added: “If you take out the shift, we can pass a pension bill. There [will] be no delay, and we can move forward and put it on the governor’s desk. And we’re willing to do that today, if [Madigan] will take out the shift.” But Cross said he thinks Madigan is running a bill that he knows will not get enough support to pass. “It really begs the question, what’s the speaker up to and is he really serious about pension reform?” He said Madigan is trying to avoid passing a bill that would reduce benefits for teachers. “He told me three weeks ago he didn’t want to do teachers,” Cross said. “So this is his way to not address the teacher problem.”

“There were a lot of hurdles to pension reform. … It’s very complicated, very convoluted,” Madigan said. “We’re just attempting to move forward with a very difficult piece of legislation.” He said of Republicans who did not support the bill: “I think they are concerned with the shift of the normal cost to the local school districts. My view, what we’re saying is, that the people that are spending the money ought to be responsible for paying the bills.”

Saturday, May 26, 2012

What's been done? What's yet to come?

By Jamey Dunn

The Illinois General Assembly approved historic changes to the state’s Medicaid system this week. But with six days left until the spring legislative session is scheduled to adjourn, lawmakers still have plenty to do.

Both chambers approved Senate Bill 2840 on Thursday. The measure contains reductions to Medicaid services. While lawmakers said they tried to avoid ending programs altogether, the plan would eliminate the Illinois Cares Rx program, which helps low-income seniors pay for medicine, and dental care for adults, except for in emergency situations. The legislation also includes cuts to the rates some hospitals and health care professionals are paid for providing Medicaid services.

Both chambers signed off on House Bill 5007, which will allow Cook County to put more people on its Medicaid rolls. The expansion would come at no cost to downstate taxpayers and would allow the county to recoup federal matching dollars for thousands of patients who are currently being treated at county hospitals.

The House today approved a cigarette tax that is a key piece of the overall Medicaid reform plan. The Senate has yet to take up the bill.

Neither chamber has taken a vote on SB 3397, which would prevent the state from pushing Medicaid bills off into future fiscal years.

The Senate Democrats approved a budget plan without Republican support in their chamber. But some predict that it will likely be ignored by the House, much like the Democrats budget was last year. “It’s … a chamber squabble for you folks. It’s to beat the House of Representatives. And here’s what’s going to happen: You’re going to go through all this turmoil over here and all this grief,” Sen. Dale Righter, a Republican from Mattoon, said during floor debate of the bills. “And what’s going to happen is, these budget bills are going to zoom over to the House of Representatives, and they will meet exactly the same demise as your budget did last year.”

The Senate Democrats’ bills are all currently scheduled for a hearing in the House Executive committee on May 31, the last day of the scheduled session.

Some pieces of the House’s budget have emerged, and they contain cuts that are sure to be unpopular. Senate Bill 2413, which was discussed in a House budgeting committee this morning, would cut $25 million from early education programs and reduce funding for children’s mental health programs from $1.6 million  to $300,000.

Ireta Gasner, senior policy associate for the Ounce Of Prevention Fund, estimated that the proposed early childhood cut would mean that more than 25, 000 children would lose the chance to go to preschool. She said that under the cut, early childhood programs would have been cut by a total of $80 million over the last four years. She said cuts to early childhood programs lead to greater spending elsewhere in future budgets because children who do not receive preschool are more likely to need other state services down the road. “We have to be clear that any savings we think we’re realizing from this $80 million in cuts is only going to come back in real costs to children and to our taxpayers in the near future and in the long term.”

Senate Democrats say their plan would not cut spending or K-12 education. Chicago Democratic Rep. Deborah Mell, who serves on the House’s K-12 budgeting committee, said that she hopes the House will consider some aspects of the Senate Democrats’ proposal.

SB 2443, which a House budgeting committee approved Friday evening, would cut higher education by just over 6 percent. The Senate plan would cut higher education by between 3 percent and 4 percent.

Gov. Pat Quinn's budget proposal called for no cuts to higher education or K-12. In fact, he pitched a $20 million increase for early childhood education and a $50 million increase for Monetary Award Program (MAP) grants for college students.

A proposal to reduce retirement benefits for state workers may emerge in the coming days. House Speaker Michael Madigan has hinted on what that plan could look like. He told the Illinois Channel yesterday that the bill would likely eliminate compounding interest cost-of-living adjustments and replace them with an adjustment of 3 percent or half the rate of inflation, whichever is less. Madigan said the plan would not require workers to pay more for their retirement or wait longer to be eligible for full benefits. Quinn's proposal included both an increase in employee contributions and the retirement age.

“We’ve made good progress. We’re concerned with the fiscal security of the pension systems, and we’ve determined that the biggest cost driver that leads to fiscal instability in the pension systems is the automatic compounded [cost-of-living adjustment],” Madigan said. “So our view is that should be adjusted. … There are other elements to the program. But we’re not going to call on employees to make additional contributions. We’re not going to change the retirement age. But we do feel that local school districts and community colleges and universities ought to assume the responsibility to make the pension payments for their employees.” Madigan said the cost shift would be done gradually. He said that he thinks lawmakers can send a plan to Quinn before adjournment.

“I don’t know. He may have an agreement with the unions by the end of the day,” House Minority Leader Tom Cross said this afternoon. Cross said that he has not been in on negotiations with unions. He said he plans to meet with Madigan on Saturday to discuss the issue. “This thing, I think, is still evolving. …We certainly will have a little better approach to it after tomorrow, a little better feel for it.”

Republicans have voiced opposition to the idea of shifting costs to school districts, universities and community colleges. “I’ve never been a big fan of the cost shift,” Cross said. But he would not say if he would oppose such a shift, saying that he wanted to see the whole proposal before ruling out any one idea.

Cross said that the current compounded cost-of-living increases are “not sustainable” and that they are a good place to look for cutting costs. “The key is, how do you find the most significant savings that’s constitutional. Whatever you do in this exercise, you’re going to make somebody very, very mad. But [when] we go back to the bottom line, we’ve got an $85 billion unfunded liability,” Cross said.

The House approved a gaming expansion bill, and the Senate will probably take a floor vote on it before adjournment. Sponsors say they think it would pass in the Senate. However, Quinn is opposed to the bill, so supporters would likely be seeking support to override a veto sometime down the road.

The House is scheduled for session Saturday morning, but not Sunday. The Senate is taking the weekend off. Both chambers are scheduled to be back in session on Monday.

Friday, May 25, 2012

House approves cigarette tax increase

By Ashley Griffin with Jamey Dunn contributing 

Illinoisans could see higher-priced tobacco products under the emerging Medicaid reforms.

On Friday, Senate Bill 2194, which is an important component in the multi-bill Medicaid reform legislation that aims to cut $2.7 billion from the state’s Medicaid liability, passed on the House floor with 60 “yes” votes and 52 “no” votes. The proposed legislation features a $1-a-pack cigarette tax and would increase taxes on other tobacco products, such as cigars and loose tobacco, to bring them in line with the taxes on cigarettes.

Rep. Barbara Flynn Currie, sponsor of the bill, said that the tax would bring in about $700 million, including federal Medicaid matching funds. She said the revenue estimates take the possibility of declining tobacco sales into account. She said that since the state raised the cigarette tax a decade ago, the revenues have gotten smaller but not disappeared. “Yes, there’s a bit of decline over time because nationwide smoking rates are on the decline, but we still have a lot more revenue from that increase than we would have [without it].”

Advocates of the bill believe that the tax would not only generate new revenue, it would also improve public health in Illinois. “If there is a public health initiative that can result in 60,000 people quitting smoking, that can result in 60,000 deaths avoided, that can result in decreasing the number of youth that may start smoking by 80,000 while stabilizing a very important and crucial safety net of Medicaid in our state, then I will buy that for $1,” said Dr. LaMar Hasbrouck, director of the Illinois Department of Public Health.

Frank Chaloupka, an economics professor at the University of Illinois at Chicago, said an increase in the tobacco tax would generate new revenue, save money on treating diseases caused by tobacco use and reduce other economic effects, such as lost productivity. “Tobacco tax increases are what I would consider a win win win.” He estimates that the state spends $1.8 billion through the Medicaid program to treat tobacco-related diseases, and tobacco use causes $5 billion in lost productivity in the state. Chaloupka, who has been studying tobacco tax policy for more than 20 years, said the increase would cause almost 60,000 current smokers to quit and keep more than 77,000 kids from every taking the habit up. “Kids are very responsive to increases in taxes and prices,” he said. “Because people stop smoking, because fewer kids take up smoking, we’re looking at significant pubic health benefits.”

But some argue that the tax increase would hurt Illinois businesses. According to Bill Fleischli, executive vice president of the Illinois Petroleum Marketers Association, testified in a committee hearing that retailers could see 20 percent reduction in cigarette sales under the new tax and could lead to many smokers going out of state to purchase cigarettes. “Our customers who purchase their cigarettes are going to border communities, the Internet or through illegal vendors, costing us money and the state of Illinois money in sales tax. A tax will take $300 million out of the retail community,” Fleischli said.

Rep. Jim Sacia — a Pecatonica Republican whose district borders Wisconsin and Iowa, said that he has gotten many calls urging him to vote against the increase. But he says that his view on it has “evolved” because of the budget challenges the state is facing. “We are in the midst of the worst crisis this state has ever seen,” he said. “It’s a tough vote, but it’s the right vote

The proposal will make changes to the hospitals assessment program in order to bring in more federal matching funds. Curry said that tweak would produce about $100 million in revenue. The proposal would also set  requirements for hospitals to have charity care status, which allows them to receive a local property tax exemption. That issue has been the subject of a court ruling and a point of contention between hospitals and the Illinois Department of Revenue.  For more on the standard for charity care status, see Illinois Issues September 2009, Illinois Issues February 2007, and this timeline.

Curry warned today that without approval of the bill, lawmakers would be forced to make even more painful cuts to the state budget. “This bill all by itself is worth $800 million. Without it, as you know, we will have to go back and make further cuts, further terrible, dreadful, Draconian cuts in the Medicaid program. And if we can’t do that, we’re just going to have to cut every other area of state government proportionally,” Currie said.

The legislation now heads to the Senate. Gov. Pat Quinn released a statement today supporting the tax. “Today’s action will improve the health of our people and lower the burden of smoking-related conditions on our Medicaid system, while helping to fill the $2.7 billion Medicaid shortfall and stabilize the system for those that need it. 

We hope senators will follow their colleagues in the House and quickly pass this legislation, which is critical to rescuing Medicaid,” said Quinn in a prepared statement.

Thursday, May 24, 2012

Cuts to Medicaid program headed to the governor

By Ashley Griffin and Jamey Dunn

Gov. Pat Quinn is close to his wish of having comprehensive Medicaid reform done by the end of this week.

A bill that would make massive changes to Illinois’ Medicaid system is on its way to his desk. On Thursday, Senate Bill 2840, which aims to cut $1.4 billion to $1.6 billion from the state’s Medicaid liability, passed the House with 94 “yes” votes and 22 “no” votes. It was approved in the Senate, 44-13.

The proposed plan includes tighter eligibility checkups, which would be conducted by an independent vendor, rate cuts to some providers and reduction and elimination of some services. The proposed plan emphasizes changes to utilization controls, which would limit how many times a patient could use a certain service or cap the cost of treatment he or she could receive. The cuts to services include:
  • Eliminating coverage for group therapy for nursing home residents, chiropractic care for adults and in-patient detoxification programs. 
  • Eliminating adult dental care other than emergency treatment. In emergency situations, such as infections, the program would cover patients getting teeth pulled. 
  • Eliminating the Illinois Cares Rx program, which helps seniors pay for prescription drugs. 
  • Requiring a $2 copay for prescription drugs.
  • Capping hearing, speech, occupational and physical therapy at 20 sessions. 
  • Limiting patients to four prescriptions per month. Three of the prescriptions could be brand name drugs. 
  • Limiting patients to one pair of eyeglasses every two years. 
  • Requiring prior approval for the repair or replacement of equipment, such as prostheses and wheelchairs 

“It is not without pain. The intent really is to minimize the hurt,” Chicago Democratic Sen. Heather Steans, who sponsored the bill in the Senate, said about the legislation.

The bill also contains rate cuts to some health care providers. Larger, for-profit hospitals would see a 3.5 percent reduction in the rates they are paid for providing Medicaid services, but safety net hospitals and rural “critical access” hospitals would be safe from the rate cut. Other providers would see a 2.7 percent rate reduction, but some, such as physicians and dentists, would be exempt from that cut.

Most provider organizations signed off on the rate cuts, but Department of Healthcare and Family Services Director Julie Hamos said the reductions were the result of difficult negotiations. “Nobody’s OK with this proposal, truthfully. Every single provider group, I think, would like to step before you and tell you that they’re not exactly OK with any of this,” she said. “We did do a lot of work with them. We really tried to understand how we could create a tighter system.” And Hamos said the state would come out with a “better” Medicaid system.

The General Assembly also approved today another key component of  Medicaid reform, House Bill 5007. The measure would allow Cook County to add to the Medicaid rolls an estimated 250,000 people who would become eligible in 2014 under the Affordable Care Act. The move to add more enrollees would let Cook County receive federal matching funds for an estimated 100,000 of those patients who are currently getting free treatment at county hospitals. Those pushing SB2840 noted that some patients who would lose services under the bill would be covered by such a Cook County expansion. The federal government would have to sign off on the plan, and no tax money from outside of the county would go toward the expansion.

The push to reduce Medicaid costs comes in the wake of Quinn’s “rendezvous with reality” budget address in February, when he told lawmakers they could not go home for the summer until they pass comprehensive Medicaid reform and called on a Medicaid working group to help solve a $2.7 billion crisis — an amount Quinn says would carry over into 2014 if lawmakers do not act now. “I assure you that if we do nothing, it will collapse,” said Rep. Sara Feigenholtz, a Chicago Democrat and sponsor of the bill.

Some of the most controversial cuts in the plan are the eliminations of maintenance dental care for adults and Illinois Care Rx, which is a prescription drug program that helps low-income seniors pay for their medicine. Approximately 180,000 seniors would be affected by the loss of the Illinois Care Rx program. The cut to adult dental care would affect 172,000 Illinoisans. “We believe that these cuts in human terms are very damaging. People will not get less sick because we made these cuts,” said William McNary,
 co-director of Citizen Action/Illinois. According to McNary, the cut to the Illinois Rx program is the biggest reduction in the plan, and it will cost the state more in the long run if seniors are not able to get the prescription drugs they need and end up in nursing homes.

Under the reductions, adults who have oral infections could get a tooth pulled. But Dave March, director of government relations for the Illinois State Dental Society, said most oral surgeons, who would perform an extraction in an emergency situation, do not take Medicaid. He said patients with oral infections often end up in emergency rooms, which have little to offer them. “All they can do is give them antibiotics and send them away.” He said that such infections left untreated can turn into life-threatening abscesses.

Those who opposed SB 2840 argued there are other options legislators could have considered, such as fund sweeps, applying sales tax to services and closing some of the corporate loopholes to help the state bring in more revenue instead of cutting Medicaid. “There’s lots of things, ladies and gentlemen, we can do rather than putting senior citizens and disabled people out on the street without having access to their health care,” Chicago Democratic Rep. Mary Flowers said during floor debate.

Members of the Black Caucus and the Latino Caucus came out strongly against the bill in both legislative chambers. “Once we push that green light, are we pushing people into the grave? That’s the question that we really need to ask ourselves,” said Sen. James Meeks, a Democrat from Chicago.

Proponents acknowledged the pain that the plan would cause but said the changes are needed to keep the system from collapsing because the state cannot afford to reimburse providers. “There are going to be people who get benefits today under the Illinois Medicaid program … who will no longer receive them. Or they’re not going to receive them in as convenient of manner as they do today, and that’s going to be tough on some people,” said Sen. Dale Righter, who served on the legislative working group that negotiated Medicaid reform.

“This is not immoral,” said Sen. Matt Murphy, a Palatine Republican. “What would be immoral in my mind would be to sit back, pretend there’s no problem” and let the system fall apart.

The measure that passed today would rely on other proposals that the General Assembly has not yet approved, such as a cigarette tax that could possibly generate $331 million with a federal match. Quinn is urging lawmakers to pass the tax. This is the first step toward saving Medicaid for those who rely upon it. “The status quo would have led to Medicaid’s collapse, and I am pleased to see the General Assembly take strong action to put our Medicaid system and our state on the path to sound fiscal footing,” Quinn said in a prepared statement. “And there is more work to do. The General Assembly must move quickly to pass legislation to add a dollar a pack to the cost of cigarettes, which — combined with today’s legislation — will achieve the necessary $2.7 billion in savings to rescue Medicaid.”

Righter, a Republican from Mattoon, warned that some of the reforms would need federal approval and that DHFS would have the last word on whether many of the changes are made in practice. “No one should walk away from this chamber tonight … and say, ‘We did our part, didn’t we?’ That would not be true,” he said. “We are going to have to work with and push and provoke the administration to move forward on all of the things that are in this bill.” Righter and other Republicans accused Hamos and Quinn of stalling previous Medicaid reforms by not being aggressive enough when seeking federal waivers.

Hamos said DHFS is committed to making the changes that are in the bill. She noted that the agency moved ahead with previous reforms without permission from federal officials. “You know that last year, I ran into some problems with the federal government. I expect to again. We challenged them. We did, in a very public way, take them on. They were unhappy then. They’re still unhappy with us. I expect that to happen again. I expect that there might be some lawsuits. But I’m the one who's responsible,” Hamos said.

 She added: “My agency is taking this very, very seriously. We have been fully engaged. We really believe in this. We really believe that it’s hugely important. …We have just a gigantic task ahead of us. I know that. I believe it. I don’t sleep well at night. But we are fully engaged and will do everything possible.”

Wednesday, May 23, 2012

Senate Democrats get a jump on the budget

By Jamey Dunn 

Illinois Senate Democrats passed a budget plan this evening without the support of Republicans in their chamber.

GOP members complained that Democrats were moving too quickly and should wait until changes to the Medicaid system are addressed. The proposal relies on lawmakers approving a way to cut $2.7 billion from the Medicaid liability for next fiscal year.

 “I don’t think that we want to be in a position of waiting for the House to pass a budget. We want to get the process rolling. We don’t know whether we will get to an agreement [on Medicaid] yet or not, yet. So we are going to move a budget to the House and continue negotiations,” said Sen. Heather Steans, who sponsored two of the three budget bills that passed tonight. The bills are:
“So it’s more important to beat the House than it is to pass a sound budget that’s premised on everything that’s necessary to pass a budget, like what’s going to happen with Medicaid, the central issue in the entire budget? We are in such a rush to beat the House that we would rather do it fast … than do it right?” Sen. Matt Murphy, a Palatine Republican, asked during floor debate. Murphy said that the proposal would not put the state on track for financial stability when the recent income tax increase rolls back in 2015.

Democrats argued that Republicans have not presented a plan of their own, and the massive cuts they say they want would never be politically viable on either side of the aisle. “We think we’re doing this right. I could also suggest, if you don’t like this approach, we’d be happy to entertain a bill from you suggesting how we might do the budget,” Steans said. Democrats say that their budget is responsible because doesn’t spend more than the state will take in next fiscal year, and it would address $1.3 billion in overdue bills. The proposal would dip into money that is usually automatically transferred out of the General Revenue Fund and special funds to pay down the bills, and Steans said the money would not be repaid to those funds.

The legislation that passed tonight does not contain the fund sweeps because Senate Democrats are still considering a list of more than 500 funds as sources. The plan has undergone some changes from the proposal Democrats approved in committee on Monday. That plan called for the closure of Dwight Correctional Center, the Murray Developmental Center in Centralia, the Jacksonville Developmental Center and the Tinley Park Mental Health Center. The bills passed tonight would spare the developmental centers.

The Senate raced to keep up with the House last year and passed a budget that would have spent more than the other chamber’s proposal. In the end, the House won out. However, lawmakers did approve some additional spending later in the fiscal year. (For more on last year's chamber vs. chamber budget battle, see the Illinois Issues blog.)

Sen. Dale Righter predicted that the history of last year would repeat itself. “It’s … a chamber squabble for you folks. It’s to beat the House of Representatives. And here’s what’s going to happen: You’re going to go through all this turmoil over here and all this grief,” Righter, a Republican from Mattoon, said. “And what’s going to happen is these budget bills are going to zoom over to the House of Representatives, and they will meet exactly the same demise as your budget did last year.”

House passes gaming bill it previously rejected

By Ashley Griffin and Jamey Dunn

The final weeks of legislative session rarely pass by without rumors of a gambling expansion passing. But sponsors of a bill that failed in the House last fall are betting that this is their year.

Earlier this week Gov. Pat Quinn urged legislators to address Medicaid reforms by the end of the week and not to get distracted by “shiny things,” such as gambling, but today a gaming bill passed on the House floor with 69 “yes” votes and 47 “no” votes.

Senate Bill 1849 was described by sponsor Rep. Lou Lang as an attempt to strike compromise with Gov. Pat Quinn late in May of 2011. A gaming bill, SB 744, had passed in both chambers, but Quinn had vowed a veto. Senate President John Cullerton used a procedural move to keep the measure from ever landing on the governor’s desk. Quinn put out some suggestions — which included not allowing horse racing tracks to have slot machines, a pivotal part of the bill that had passed — for a new bill. Lang came out with a new version, SB 1849, that he said scaled back the plan that had passed, and addressed some of Quinn’s concerns. The bill failed in the House during the legislature's 2011 fall veto session. 

But it would seem some attitudes have changed in the last year.

“When we have almost 8 percent of our people out of work, when we can’t cobble a state budget because we don’t have enough revenue, when the 30,000 or 40,000 jobs in the horse racing industry are disappearing, when our convention and trade shows are down — when they should be up — when thousands of our people every day get in their cars and drive through Chicago and the south suburbs of Cook County and spend their money in Indiana, I think this is much more than a bright shiny object. I think this is a imperative for state government to move this forward,” Lang, a Skokie Democrat, said during floor debate of his bill today.

The measure aims to open five casinos statewide, in Chicago, Park City, Danville, Rockford and in the south suburbs of Chicago. The exact location of the fifth casino would be up to the Illinois Gaming Board to decide. The bill includes slots at horse racing tracks but does not allow for slots at the Illinois State Fairgrounds or Chicago airports, which Quinn previously bashed publicly. The bill also aims to reduce the number of gaming positions available from 2,000 in the original bill to 1,600. Casinos currently are allowed 1,200 positions. The Chicago-owned casino proposed in the plan would be allowed 4,000 positions. Lang said the bill clarifies language about the oversight of the Chicago casino, something Quinn had cited previously as a concern.

According to Lang, the bill would direct all up-front licensing fees to pay down unpaid bills. Lang said the plan could pay off $1.2 billion to $2 billion in overdue bills. The legislation would provide a new inspector general for the Illinois Gaming Board and additional funding for that board. The plan also calls for $31 million to go to agriculture programs annually, $10 million to fix up the state fairgrounds and $10 million to go to gambling addiction services annually. Lang said the expansion could generate anywhere from $300 million to $1 billion for the state. He said the volatile economy makes estimating the total revenue difficult.

Supporters argued that gambling expansion could help bring in much needed revenue. “In the next week, we’re going to make some very, very, very difficult choices. This is the last place that we can go at this point to try and address some of the needs of our communities. So when you’re thinking about these appropriations committees and what we’re going to cut, remember that today … you’re going to have a choice. Do you want to raise money to help fill some of the problems and relieve some of the cuts?” Rep. Ed Sullivan, a Mundelein Republican, said during floor debate of the bill.

But some said lawmakers should not look to a gambling expansion to solve immediate budget woes. ‘If we’re talking about getting money to prevent the cuts that we’re going to have to make this year, it’s not going to happen,” said Rep. David Harris, a Republican from Arlington Heights. “It is not a windfall, so don’t go spending the money because it’s not coming in. Clearly there will be dollars coming into the state, but it’s not anywhere near what you think it’s going to be.”

Opponents called the promise of billions in revenue “fools’ gold.” “The amount of revenue generated is inflated, and they will not get that money for several years,” said Anita Bedell, executive director of the Illinois Church Action on Alcohol & Addiction problems. Bedell — who advocates on behalf of gambling addicts, the people she says are the collateral damage in such an expansion of gaming — said she was very disappointed in today’s vote. She noted that Quinn is unlikely to sign the legislation.

Earlier this week, Quinn warned against lawmakers losing focus on passing Medicaid and pension reforms by taking up gambling. “I’m not going to get distracted by that subject. Sometimes down here, shiny objects can distract people. We don’t want any of that this week.” Shortly after the House passed SB 1849, Quinn released a statement trashing the bill. “This new bill falls well short of the ethics standards I proposed in my framework last October. Most importantly, it does not include a ban on campaign contributions as lawmakers in other states have done to keep corruption out of the gambling industry and out of Illinois. Massachusetts, New Jersey, Pennsylvania, Louisiana and bordering states like Iowa, Michigan and Indiana have all approved such bans,” Quinn said in prepared statement. “It does not provide the Illinois Gaming Board with sufficient time to make critical licensing and regulatory decisions. This bill also does not provide adequate oversight of the procurement process. It does not ensure clear oversight of the proposed Chicago casino.

“As long as I’m governor, I will not support a gambling bill that falls well short of protecting the people of Illinois. It is clear that this gaming bill still needs significant improvement.” Quinn urged lawmakers to turn their focus back to the subjects of Medicaid and Pensions.

“This is a governor who has said that it's perfectly OK with him and his administration promoting online sales of lottery tickets, so 12 million Illinoisans are gambling at home online. So to say a few hundred people can’t put a nickel in a slot machine at a race track where they are already gambling just does not make any sense to me,” said Lang. He said he is confident that the measure will pass in the Senate and head to Quinn’s desk.

If Quinn fulfills his promise of a veto, backers may be spending time this summer lobbying for votes to override Quinn in the fall veto session, when they will have plenty of lame duck lawmakers to call on for support.

Tuesday, May 22, 2012

Medicaid plan not quite ready

By Ashley Griffin 

Gov. Pat Quinn says he wants lawmakers to address Medicaid reforms by the end of the week. But today, the sponsor of legislation that surfaced yesterday says the bill needs more work.

 In a House committee hearing, Rep. Sara Feigenholtz, a Democrat from Chicago, informed members that Senate Bill 2840, which contains various eliminations, service reductions and other changes to Illinois’ Medicaid system, was not ready for a hearing. “I think we’re moving forward, and we’re doing it well. I’m very optimistic that we’re going to have an agreement very shortly, but as you know, the devil is in the details. There’s a lot of moving parts in Medicaid reform. We just want to make sure that we’ve dotted all of our Is and crossed the Ts,” said Feigenholtz, the bill’s chief sponsor. She said House leadership is also working behind the scenes to make sure the proposal can get the votes needed to pass. “There are a lot of moving parts, I think the leaders continue to meet about making decisions about who's voting for what and putting together roll calls and making sure we’re ready to move forward.” Feigenholtz said they are also considering what parts of the overall proposal, which also includes a cigarette tax increase, to run first. Such an increase is not in SB 2840 and would likely be presented in a separate bill.

She added that she is weighing whether some components of her more-than-400-page bill should remain part of the measure. For example, Feigenholtz said a portion of the legislation that would clear the way for Cook County to take on more Medicaid patients might be removed. The provision would roll back a state mandate against Medicaid growth to allow Cook County to add to the Medicaid rolls 100,000 people who would become eligible in 2014 under the Affordable Care Act. The move to add more enrollees would let Cook County receive federal matching funds for patients who are currently getting free treatment at county hospitals. The measure would not be paid for with tax dollars from outside of the county.

 Cook County Board President Toni Preckwinkle appeared before a Senate committee yesterday to make her case. She testified in support of House Bill 5007, another piece of legislation that would lift the moratorium on Medicaid expansion for Cook County. “It would allow our system…to receive federal reimbursement for a population that we currently serve but who are not covered by any public or private health care coverage plan today,” Preckwinkle said. The federal government would also have to sign off on Cook County taking on additional Medicaid patients.

While Feigenholtz said she did not present her bill today because of “technical” issues, some Republicans have problems with the fundamentals of the overall plan. Sen. Dale Righter, who was a part of a legislative working group tasked with addressing Medicaid, said that Democrats jumped at the idea of using revenue to try to avoid cuts, but Republicans may not back that idea. “I can see where there’s an issue over there. … And it may be time for the Medicaid advisory committee to sit back down again and look for more reductions," he said. “Perhaps if they weren’t so quick to rely on new revenue, we’d be seeing a little more progress now." Righter, a Mattoon Republican, said he does not think there is any support in his caucus for a cigarette tax increase. Feigenholtz said again today that the plan, of which SB2840 would be a part, relies on a cigarette tax increase.

Quinn is pushing lawmakers to approve a solution this week, and take on pension reform, as well. “This is not a time for delay or denial or doing nothing,” Quinn said.

He said he wants lawmakers to deal with pension and Medicaid reform this week, so they have time to work out budget details next week. “We want two things this week — real focus on them. That’s pension reform and Medicaid restructuring.” The budget must be approved by May 31 to pass on a simple majority vote. If lawmakers fail to do that, there is the potential for a long and volatile summer session as Republicans try to wrangle more cuts out of Democrats. “It really comes down to, are we going to make things better for our kids than we found them? If we fail to act this week on Medicaid restructuring and pension reform, we’re letting our kids and their kids down. We have to rise to the occasion,” Quinn said.

House approves change to eavesdropping law

By Jamey Dunn 

The Illinois House today approved a bill that supporters say would bring the state's eavesdropping law in line with modern technology.

Senate Bill 1808 would allow people to make audio recordings of police officers who are on duty and in public. Currently, making such a recording without permission is a felony punishable by up to 15 years in prison. The 7th Circuit U.S. Courts of Appeals recently barred enforcement of the law as the court takes up a related case, and a preliminary ruling from the court said that it was likely unconstitutional. Other Illinois courts have ruled that the law is unconstitutional.

Rep. Elaine Nekritz, who sponsors the bill, said that these rulings provide lawmakers with an even more “compelling” reason to change the law. Nekritz made a failed attempt to pass another version of the plan earlier in the legislative session before the 7th Circuit Court issued its injunction. “So now we have three Illinois courts telling us: ‘Illinois General Assembly, your statue is unconstitutional. You need to make changes.’”

This new version of the plan includes a provision that Nekritz, a Northbrook Democrat, said she hopes will ease concerns from some law enforcement officials. The measure would bar using an edited recording to file a complaint against an officer. Nekritz said if a doctored recording were used for a complaint, the issue would be referred to a state’s attorney, who would decide whether the offense warranted a felony or misdemeanor charge.

But opponents said the proposal could endanger officers, police investigations and the people trying to make recordings. “I think it’s a liability and a safety issue,” said Democratic Rep. Dena Carli, who is also a Chicago Police sergeant. She said she was concerned that police might mistake somebody pulling out a cell phone to record as somebody pulling out a weapon. Carli said she was worried that people trying to record a situation might get in the way of police because they would have to get close to pick up sound on a recording device. Such crowding could interfere with police work, such as interviewing witnesses at a crime scene. “Video from a distance, that’s fine. You can pick up that video. In order to get that audio, you have to come into close proximity. It’s endangering everybody in that situation.” The current law allows video recording without audio.

Nekritz said that all the laws police currently use to keep people from obstructing their work would still apply, and anyone who interferes with police action would be subject to arrest under such laws.

Supporters of the bill said that it would catch the state law up to address the widespread use of many devices, such as cell phones, that can record audio and video. They say under the current law, people are committing felonies without knowing it simply by doing something that has become a force of habit for many — whipping out a camera phone and recording anything of interest they may see.

“This is a bill whose time has come,” Nekritz said. “I think many of us watched the goings on in downtown Chicago over the weekend with the NATO summit. And you could see the crowds, the police lines, and you could see kids and people with their cell phones held up recording what was going on. … No one would think that that’s really a felony. It’s time we modernize our law and make it consistent with what people expect today.”

Monday, May 21, 2012

Senate Democrats and Republicans bicker over budget proposal

By Jamey Dunn 

A legislative committee approved pieces of a budget plan crafted by Senate Democrats that would tap into special funds to pay down a portion of the state’s massive backlog of overdue bills.

 “It’s a very balanced approach which is providing funds for paying unpaid bills that are past overdue,” said Sen. Heather Steans, a budget point person for the Senate Democrats and sponsor of some of their budget proposal. “We very much want to take a tack of getting out our responsibility to the vendors and bringing that number down.” Their proposal calls for about $400 million from sweeping special funds to go toward paying off overdue bills. Senate Democrats say that money, coupled with money from another area of the budget and federal Medicaid matching funds, would reduce the backlog by $1.3 billion. Although the committee approved portions of the Democrats' proposed budget today on votes that split down party lines, they have not yet signed off on the fund sweeps. Democrats are reviewing a long list of more than 500 potential funds that could be targeted.

Steans, a Chicago Democrat, said there are no plans to repay the money that would be swept from special funds. For more on such funds and how they play into the budgeting process, see Illinois Issues April 2012. 

But Senate Republicans said Democrats should be considering cuts instead of tapping into other funds. They said they could not support the proposal because it does not put the state on a path to security after the recent income tax increase begins to roll back in 2015. “I believed that we shared brief, shining moment of optimism in the beginning of our talks,” said Sen. Pamela Althoff, a McHenry Republican. “Unfortunately as we tried to progress, we really broke down. Our conversations, they stalled over one basic staunch principle, and that was a promise of the Republican caucus to always craft a spending plan that put the state of Illinois on a trajectory to eliminate the tax increase on schedule. And what we see before us now makes [our] support of this proposal impossible, as we cannot meet that principle.”

Steans said that savings from Medicaid and pension reforms — negotiations on both are currently under way — would create future savings. She said changes to those two areas, combined with an effort to pay down the backlog, could prepare the state’s finances to be sustainable when the tax increase rolls back. “The tax increase is set to roll back in law. It’s going to take a vote of the General Assembly and the governor signing it before we could ever have something other than the tax increase going away. So there is nothing in this that precludes us from having that tax increase go away. I, in fact, believe this very much sets us on the path, so it will be a decision for future general assemblies and governors to decide on what we’re going to do about that,” she said.

Democrats said Republicans are stalling and being obstructive. Steans said that any time an agreement seemed close in negotiations, Republicans “moved the goalpost.”

Another potential sticking point is facility closures. The proposal calls for the closure of the Dwight Correctional Center, the Murray Developmental Center in Centralia, the Jacksonville Developmental Center and the Tinley Park Mental Health Center. While no Republicans spoke out adamantly against the closures at today’s hearings, Republicans on the Commission for Government Forecasting and Accountability, which takes advisory votes on facility closures, have general opposed closing downstate facilities.

Meanwhile, the Illinois House sent a bill to Gov. Pat Quinn today that would eliminate a controversial scholarship plan and another that would make lawmakers and constitutional officers take furlough days and bar them from getting a cost-of-living increase.

The legislative scholarship program lets lawmakers to give tuition waivers for state universities to students within their districts. The program has come scrutiny after reports that some lawmakers gave the scholarships to the children of campaign contributors and political allies.

Those in favor of the program argued that the legislative scholarships are a relatively low-cost way to ensure that some form of financial aid goes to students in every legislative district in the state. The program costs universities about $13.5 million annually. Proponents say that it gives an opportunity to students who might otherwise not get to attend college. Some lawmakers have opted to have independent panels award the scholarships.

Quinn, who has been pushing for the elimination of the program, said he plans to sign House Bill 3810. “Today is a good day for deserving students in financial need and a good day for the taxpayers of Illinois,” he said in a written statement. “There is no place for a political scholarship program in Illinois. As I have repeatedly advocated: Scholarships, paid for by Illinois taxpayers,should be awarded only to those with merit who are in true financial need. Abolishing this program is the right thing to do.”

According to Park Ridge Democratic Sen. Dan Kotowski, sponsor of HB 3188, the furlough days required in the measure would result in a 5 percent pay cut for lawmakers. The proposal also freezes salary levels for legislators and constitutional officers.

Cigarette tax is the linchpin for Medicaid reform plan

By Jamey Dunn and Ashley Griffin

One component of a proposal that lawmakers say would eliminate $2.7 billion in Medicaid liability was released today, and Democrats are optimistic that legislators can reach an agreement before session is scheduled to adjourn at the end of the month.

Senate Bill 2840 contains many of the cuts to Medicaid services previously suggested by Gov. Pat Quinn. The measure would:
  • Eliminate coverage for group therapy for nursing home residents, chiropractic care for adults and in-patient detoxification programs. 
  • Eliminate the Illinois Cares Rx program, which helps seniors pay for prescription drugs. 
  • Require a $2 copay for prescription drugs 
  • Cap hearing, speech, occupational and physical therapy at 20 sessions. Eliminate adult dental care except for in emergency situations. 
  • Limit patients to four prescriptions per month. Three of the prescriptions can be brand name drugs. Limit patients to one pair of eyeglasses every two years ,.
  • Require prior approval for the repair or replacement of equipment, such as prostheses and wheelchairs 
However, health care providers would take a much smaller hit under the plan. Larger, for-profit hospitals would see a 3.5 percent reduction in the rates they are paid for providing Medicaid services, while so-called safety net hospitals and rural critical-access hospitals would be exempt from the rate cut. “The governor throws out … broad brush concepts, and the legislature actually really got down to the details,” said Rep. Sara Feigenholtz, a member of the legislative group that worked on the plan. She said the governor’s proposal of 8 percent rate cuts was a nonstarter with most if not all members of the House. A spokesperson for the Illinois Hospital Association said he could not immediately comment on the bill because the group still needs to review it.

Feigenholtz, a Chicago Democrat, estimates that the rate reduction in the bill would result in $240 million in savings. Supporters of SB 2840 say they expect it to cut $1.4 billion to $1.6 billion out of the state’s Medicaid liability. “The bill that we have right now is about $1.6 billion in cuts and rate reductions and program efficiencies. Then, the cigarette tax is about $700 million [with a federal match]; there’s another $100 million from an expanded assessment. The assessment gets more than that [in total], but another $100 million will go to fill the $2.7 billion problem,” said Sen. Heather Steans, who was also a part of the legislative working group. “And then we also did a supplementary [appropriation] to pay unpaid Medicaid bills this year of $300 million, which we already passed [last week], so it’s all those things that add up to the $2.7 billion.

Feigenholtz and Steans said the plan relies on the approval of a cigarette tax. “If the cigarette tax doesn’t pass, we are going to have to go back to the drawing board and cut a lot of human services things that are very important to us, like taking care of the elderly [and] child care. It is going to blow a massive hole into the human services budget.” The proposed $1-a-pack increase is not in Senate Bill 2840. Steans, a Chicago Democrat, said she expects the tax legislation to surface in the next few days. Backers of the proposal also hope to rework the hospital assessment — which is an accounting practice that the state uses to leverage federal funds — to bring in $100 million more next fiscal year, which begins July 1. Steans said she hopes to have the whole plan approved by the end of the week, so lawmakers can move on to considering the budget. “The goal is to do it this week or try to finish it up by the end of this week. We have to turn over the budget by the [May] 31st deadline.”

When asked if she was confident that overall plan could find the needed support to pass, Feigenholtz said: “You know what, I am. I really am. I think that there was solidarity. I think it was tough, but everybody working in earnest together toward a common goal. …It’s time that we call the bill and have public debate about it.” But at least publicly, some Republicans are not warming to a cigarette tax increase. “I do not like the cigarette tax. There’s a lot of discussion going on right now as to what’s going to change in the bill and what’s going to be there. I don’t think the bill is going to be in the same form that it’s in today, I don’t know what its going to be,” said Hinsdale Republican Rep. Patricia Bellock, who was also a part of the legislative working groups.

Some Republicans are supporting a proposal from the Illinois Policy Institute, a think tank dedicated to “supporting free market principles,” which they say can cut the Medicaid liability by $2.7 billion without rate reductions or a tax increase. “The governor and the members of the House and the Senate agreed that it was imperative to find $2.7 billion in Medicaid savings. The plan that is being proposed and discussed by lawmakers unfortunately fails to live up to that promise. Instead, tax hikes and rate cuts are being substituted for reform,” Sen. Kyle McCarter, a Republican from Lebanon, said today at a news conference to promote the plan.

But advocates and experts warn that deep cuts look like savings on paper but could cost the state more in the long run. They say that cuts to preventative services can land patients, who would get sicker without maintenance care, in emergency rooms where care would cost more. Jim Duffett, executive director of the Campaign for Better Health Care, said that even the plan based around SB 2840, which would offset some cuts with new revenue, would likely cause such problems. “If you don’t get your oil changed, it’s going to cost you more later.” He said that rolling back services does not mean that people will not need care, and the costs that providers incur would instead be shifted elsewhere, possibly to insurance companies and down the pipe to their customers. “For many of us that do have health insurance, we are going to end up seeing those costs continue to increase.”

Duffet called today’s plan a “numbers game” that does not consider the possibility that cuts to such services as dental care and in-home care could lead to greater expenses, such as increased hospitalizations, for the Medicaid program down the line. “This is a bottom line budget figure that folks need to have.” Duffett said that lawmakers should look at the budget as a whole and consider alternatives, such as eliminating tax breaks for businesses, to bring in more revenues. “There are a few things in here that are positive, but the $1.4 billion in cuts to the most vulnerable in our view just doesn’t make sense,” he said.

Feigenholtz said the plan is not perfect, but she said lawmakers did their best try to protect Medicaid patients while also creating a piece of legislation that may be able to pass in the General Assembly. “We understand how important it is to the most vulnerable people in the state of Illinois. It was a lot of work to try and protect those people, the poor the elderly and children. We’re hoping at the end of the day that’s what we’re achieving.”

Friday, May 18, 2012

Senate Democrats say they are optimistic about Medicaid reform as they release a budget plan

By Jamey Dunn

Senate Democrats say they are confident that a proposal to address $1.7 billion in Medicaid growth will emerge soon, and they released a rough outline of their budget plan today based on that assumption.

“This is a budget that represents our commitment of the Senate Democratic caucus to have a budget that balances, that shows how we’re living within our means in the state, and that we’re funding programs based on priorities and that we have a commitment to paying off bills. So it represents the kind of budget that we think taxpayers want to see,” said Sen. Dan Kotowski, a Park Ridge Democrat. “We’re completely staying within the line of revenue [expected to come in next fiscal year]; we’re not going above it. We’re making significant cuts across the board. We’re also funding key priorities.”

The Senate Democrats are working from the same $33.7 billion revenue estimate that the House approved. Under the proposal, before state officials could consider how much to spend on operations, they would have to make the pension payment, which is $5.1 billion plus $11 million for the Chicago Teacher Pension Fund, the group health insurance payment, which is $1.17 billion, factor in Medicaid spending, which is $6.6 billion, and use $1.3 billion to pay down old bills. That would leave $16.85 billion for day-to-day costs. That would mean that the Senate Democrats are proposing more than $500 million in operational spending above the House’s numbers, which were approved in a resolution.

However, Senate Democrats said their proposal spends $317 million less on state operations than the current fiscal year’s budget and $248 million less than Quinn’s proposal for fiscal year 2013. The plan would hold K-12 education spending flat but would cut virtually all other areas of state spending:
  • General services would see a $68 million reduction.
  • Higher education would be cut by $48.5 million. 
  • Human services would be reduced $44.9 million. 
  • Public safety would take the biggest hit with a $156 million reduction. 
The Democrats said their plan relies on the closure of some state institutions, but they said that they are still negotiating over which facilities should be closed. Democrats working on the budget acknowledged that the amount of cuts in public safety would imply that they are considering prison closures, but they would not name any specific facility. They also noted that the Gov. Pat Quinn has the final decision when it comes to closures. A legislative panel voted against the closure of several state facilities. However, the panel’s vote was advisory, so Quinn could move forward with closures that he says are needed to balance the budget.

But one Senate Republican said the plan would spend too much and would not put the state on track for fiscal security when the income tax increase is scheduled to roll back in 2015. Sen. Matt Murphy, a Palatine Republican, said members of his party want to base the budget off of projections of what revenue would be after the tax increase is reduced. Murphy said that would be between $31.5 billion and $31.7 billion. “This [plan] is spending significantly above the House resolution. It’s above the governor[‘s plan]. It’s the highest proposal of spending anywhere under this dome right now. So this will not get us on the path to reducing the tax increase. It will put us on the path for, frankly, needing another,” Murphy said.

While the Senate Democrats call for less operational spending than Quinn, they are proposing that more money to go toward paying off old bills.  “We’re setting aside a lot more dollars [than Quinn] to pay down unpaid bill,” Chicago Democratic Sen. Heather Steans said. “And that was a real priority for our caucus. We have a lot of nonprofits and other vendors out there who are not getting paid — school districts, all sorts of local governments. And we felt strongly that we really need to start bringing down those unpaid bill levels. So we’ve made that a priority.”

Democrats said their budget does not spend more than what the state would bring in. Steans said Medicaid reform, pension reform and the backlog all need to be tackled to ensure the state’s budget is in good shape when the tax increase rolls back. “It is this three-legged stool here to get us in that position. … I think we’re going to have to see how that all comes together,” she said.

The Senate Democrats' proposal would draw money from areas of the state’s budget outside of the General Revenue Fund. In addition to the money being set aside to pay down the backlog, Senate Democrats are calling for more than $400 million be taken from special funds to pay overdue bills. Democrats say the fund sweeps they are proposing would be a one-time move to pay off old bills and would leave enough money in the funds to ensure that they are operational for their original purposes.

They are also proposing that less money be transferred out of GRF. More than $1 billion is automatically transferred out of GRF and into other funds each year. Those transfers are traditionally not a part of the debate over the annual budget. Kotowski said that under the Democrats’ plan, about $110 million of those transfers would instead be used for GRF spending. For example, in the proposal there would be no growth to the Local Distributive Fund, which funnels money — some of it automatically transferred from GRF — to local governments. Steans said holding the transfer flat would mean that $26 million could be spent elsewhere. “There’s numbers of items that really don’t usually get scrutinized, so we’re looking at those and making reductions to a number of the other ones,” she said. (For more on special funds and statutory transfers and how they play into the budgeting process, see Illinois Issues April 2012.)

Steans, who is also working on Medicaid negotiations, said she is optimistic that a deal to stave off $2.7 billion in Medicaid growth may be reached by next week. She did not give specifics on a proposal, but she did say that a cigarette tax increase is still on the table. “We are diligently working towards an agreement on [Medicaid], and I think we will hopefully make progress on that next week.”

Senate Democrats say they hope to have budget bills based on their plan filed and moving through the legislative process next week.

Quinn signs off on money for child-care providers

By Ashley Griffin

Child-care providers throughout Illinois can count on state funding through the end of the current fiscal year, but cuts are still on the horizon for next year.

On Friday, the Senate approved and Gov. Pat Quinn signed a supplemental appropriations bill that contains $73.6 million to pay providers and $151 million to pay down overdue Medicaid bills. Senate Bill 2450 passed with 46 “yes” votes and zero “no” votes. The bill would use unspent Fiscal Year 2012 funds to pay Medicaid bills, then direct the federal match that comes with Medicaid spending toward paying child-care providers for looking after low-income children. The House approved the proposal earlier this week.

The governor’s office had notified child-care providers that payments would be delayed until July. The move to delay the payments could affect up to 40,000 child-care providers and 85,000 low-income families. According to Kelly Kraft, a spokesperson for Quinn, the shortfall in child-care money was caused because an increased number of Illinoisans’ needed Temporary Assistance for Needy Families (TANF), which is paid out of the same fund. “We are encouraged legislators understand that just because reductions in the budget are made it does not mean the need goes away. This fiscal year we experienced a dramatic increase in demand for TANF... cases. TANF, along with child care are funded through the same line, and federal law mandates the state pay TANF first. Due to that unexpected increase in TANF, the state developed a $73.6 million shortage in funding available for child care. We have worked diligently with lawmakers over the last several months to make certain they were aware of the impending shortfall and the need to address it. This legislation restores that funding and ensures that the tens of thousands of Illinois residents who benefit from child care are not forced to choose between going to work and caring for their children,” Kraft said in a written statement.

Although funding will be restored for the remainder of Fiscal Year 2012, under Quinn’s FY '13 proposed budget, the program would see an $85 million reduction.

“We applaud lawmakers for sparing child-care providers and the parents who rely on these vital programs from a potentially crippling three-month delay in payments this year,” Keith Kelleher, president of SEIU Healthcare Illinois and Indiana said in a prepared statement. The union represents a number of child-care providers. “We must fully fund the child-care system in Illinois and keep working families on the job and in school where they can contribute to our economic growth.”

The proposal to fund the program through the end of the fiscal year was supported by the vast majority of lawmakers, but Republicans took the opportunity to criticize the way the state budget is crafted. “We need to do this -- we all know we need to do this -- but i'ts kind of interesting again for some of us who have been here awhile that when we really, really, really need to, we can always find a place to move money around,” said Sen. Carole Pankau, a Republican from Itasca. “But maybe it's time that we spent some extra time taking that fine-tooth comb to the budget as we go forward.”

Thursday, May 17, 2012

Legislative roundup

While comprehensive pension reform and Medicaid reform plans have yet to emerge in the form of legislation, lawmakers did take up several issues this week.

Minimum wage
Senate Bill 1565 would increase the state’s minimum wage, which is currently $8.25, by 50 cents per year until it reached $10.55. At that point, it would be tied to inflation. A Senate committee approved the measure this week.

Proponents say the increase would ensure that wages keep pace with inflation and would help lift the working poor out of poverty. “If you’re willing to work a 40-hour week, you shouldn’t live in poverty,” said Maywood Democratic Sen. Kimberly Lightford, who sponsors the bill. Opponents say that small businesses cannot absorb such an increase, and it would instead result in increased prices, reduced hours for workers and layoffs. “We operate on a very slim margin,” Kelly Wingard said. Wingard and her husband own the Wildflour Artisan Bakery & Cafe in Decatur.

Campaign finance 
Senate Bill 3722 would allow candidates in Illinois to ignore contribution limits when outside groups spend money in a race. If an outside group spends more than $100,000 campaigning for a single candidate in a municipal race or a bid for the state legislature, then candidates in that race would not have to stick limits on how much money they can accept from donors. In a statewide race, the threshold would be $250,000 spent by an outside group.

The bill is a response to a recent court ruling that allows political action committees (PACs) to take unlimited contributions as long as their campaign efforts are not coordinated with any candidates. When a group uses funds for campaigning, such as purchasing air time for a commercial, separately from a candidate's effort,s it is known as an independent expenditure. Proponents of the measure, which was approved by a House committee this week, say it would give candidates a fighting chance against PACs, which can collect money without limits. Opponents say it scales back the state’s recent campaign finance reform. They say it would encourage outside groups to spend enough money in a race to free their chosen candidate — along with everybody else in the race — from contribution limits. It heated races, the measure could have the effect of making the state’s contribution limits a thing of the past.

Legislative scholarships 
House Bill 3810 would eliminate the controversial legislative scholarship program, which allows lawmakers to hand out state university tuition waivers to students in their districts. The program came under scrutiny after media reports revealed that lawmakers had awarded scholarships to the children of campaign donors or politically connected families. Supporters of the program say it is an equitable way to distribute financial aid throughout the state and gives opportunities to students who may not have otherwise been able to attend college. The measure also calls for the creation of a task force to assess all other university tuition waivers. The bill has passed in the Senate and a House committee approved it this morning. The House left without taking it up for a floor vote.

Strip club tax 
House Bill 1645 would charge a tax on strip clubs that sell or allow alcohol. Revenues from the tax would go to fund rape crisis centers. Clubs would have the option or paying $3 per customer or a flat rate based on how much money the bring in. Under the measure, which was approved by a Senate committee this week, clubs that make more than $2 million a year would be charged $25,000. Clubs that make between $500,000 to $2 million would pay $15,000 in tax. Those that make less than $500,000 would pay $5,000.

Senate Bill 2888 would bar drivers caught going 31 miles per hour over the speed limit on a highway and drivers caught going 25 miles per hour over the speed limit in an urban area from being eligible for court supervision. The bill was previously approved by the Senate and passed in the House this week. It awaits a decision from Gov. Pat Quinn.

Shark fin ban
House Bill 4119 would ban shark fins in the state. Shark fins are used in a soup that is considered a delicacy in China. But the fins are often harvested in a manner that is considered cruel and leaves the shark to die. Other states have banned shark fins or are considering bans. The measure was approved in the Senate last month and passed in the House this week.