Friday, April 25, 2014

What to watch: budget edition

By Jamey Dunn

Illinois lawmakers have had a two week break from the capitol, but they are scheduled to be back in session on Tuesday. As those who watch the legislature closely know, the action typically doesn’t truly get geared up until this point. But soon enough we will be immersed in the blur of activity that is May at the Statehouse. Here are some things to watch for on the budget front.

The General Assembly has until midnight on May 31 to approve a budget with a standard majority. After that time, any bills passed require a three-fifths majority to have an immediate effective date. Crafting a budget is not going to be easy this year. The temporary income tax approved in 2011 is set to begin its phaseout in the second half of Fiscal Year 2015. For months, heads of state agencies, lobbyists, public university presidents and others have come before budget committees to lay out what they say would be the dire consequences of the cuts that would be needed if the tax rates drop. Mass layoffs, facility closures, threats to public safety, spikes in K-12 class sizes and deep cuts to programs that provide care to seniors or children, have all been cited in the doom and gloom presentations. 

Meanwhile, Republicans argue that the state’s budget outlook is being framed as worse than it really is. They say that Democrats are pushing a doomsday version of the budget to lay the ground work for making the temporary income tax permanent. “The Democrats’ approach this entire spring has been to try to create as dire a picture as possible,” said Palatine Sen. Matt Murphy. “You can make it a lot more plausible that you can fund core services and still allow the tax rate to go back down as the Democrats promised it would, but they don’t want people to see that. They don’t want that argument out there because they want to continue to get the money that they’ve been getting.” Democrats passed the increase without Republican support in 2011. It seems likely that if the want to extend the rates, they will have to go it alone again. House Speaker Michael Madigan told reporters this week that the votes aren’t there to pass it in his chamber. He said that extending the tax would be a “difficult role call.” “Every person in the legislature is going to be called upon to make a budgetary decision — either a reduction budget or an as-is budget or a slight-increase budget,” Madigan said. “And they’ll be called upon to vote for the money to support the budget that they want.”

Gov. Pat Quinn advocated for extending the current rates in his budget address. He also wants to give homeowners a $500 tax credit that he has dubbed property tax relief. Madigan and Senate President John Cullerton quickly backed the governor’s call for keeping the current rates.

A potential extension of the income tax rates is not the only tax talk legislators are going to have in the coming weeks. The sponsor of a proposal to allow the state to have a graduated income tax has said he plans to call his proposal for a vote next week. Oak Park Democratic Sen. Don Harmon’s Senate Joint Constitutional Amendment 40 would overturn the current provision in the state’s Constitution that requires Illinois to have a flat income tax. The plan would not set the rates for such a tax, but Harmon and other supporters have issued proposed rates framework. If the amendment makes it through both chambers, it would appear before voters on the general election ballot. But that seems unlikely. Harmon may be able to get the amendment through the Senate, but Madigan said that it is “significantly short” of the support needed to pass on the House. Two constitutional amendments — one that would voters from discrimination and another that would strengthen the role of victims in the judicial process — have already been approved by lawmakers and will appear on the November ballot.

Proposed tax changes relating to business in the state could also be on the way. A House committee has been focusing on the tax climate faced by Illinois businesses. The group has been taking testimony on the issue for months, but has yet to publicly present any ideas.

Before the break, a Senate committee approved a plan to change the way that the state funding is doled out to schools. Senate Bill 16 would focus more heavily on the financial need of districts. The proposal would also eliminate the individual block grant that is given to Chicago schools, something Republicans on the committee have supported. The plan would also require more spending transparency at the district level. The committee debate became heated when Republicans accused sponsor Sen. Andy Manar, a Bunker Hill Democrat, of rushing the process. The Illinois State Board of Education is working to produce numbers that would show how the changes in SB 16 would affect each school district. Republicans say that they do not want to vote on the plan until they have that information.

Manar said that lawmakers from both parties agree that the current funding formula does not work. “The idea that we can have a few premier school districts in the state that exceed every expectation ... and have an incredible number that lag behind and call that a win in the state system is not a win in my book.” The ideas behind the legislation came from a report complied by a bipartisan committee that spent more than a year considering the topic. However, Republicans say they were not involved in drafting SB 16. Manar hopes that there will eventually be bipartisan support for the bill. He says he introduced it when he did to spur debate. “We could have waited until the last week of May, negotiated behind closed doors, popped a bill out and then had a vote. That’s not the way to do this,” Manar said. 

A gaming expansion always seems to be on the table as the end of spring session nears. But getting it done is a difficult task. Putting together a bill that will make all the powerful groups involved happy, or at least not irate, is a balancing act, so is figuring out how to spread around the potential revenues in a way that will please or at least appease lawmakers. And even when gambling expansions have passed, Quinn has vetoed them. This time around, the governor has made some positive comments about expanding gambling. “You’ve got to have strong ethical standards, and I think they need to be enforced, and it has to be done by the independent Illinois Gaming Board,” Quinn told reporters in early April. “I think we have kind of ironed that out. I think we’re on the right path.” The governor has said in the past that he would not support an expansion unless the revenues went to fund education. 

Blue Island Democratic Rep. Robert Rita is sponsoring a bill that would allow for the creation of new casinos, including one in Chicago, and slots at horse racing tracks. However, when compared to past proposals, Rita’s bill would scale back the number of slot machines racetracks could have. Rita has another version that would only create a Chicago casino. The racing industry opposes both. It also seems that Chicago Mayor Rahm Emanuel will not throw his weight behind a Chicago casino plan at this point. Emanuel is echoing past statements from Quinn, saying that he will not focus on a casino until the city’s underfunded pension systems are addressed. The General Assembly already approved changes to the systems for city workers. Emanuel also wants changes to stabilize the systems for teachers, police officers and firefighters. Before they passed changes to the state’s pension systems, Quinn warned lawmakers not to be distracted by the “shiny” object of gaming legislation.

Check back for a guide on bills to watch as legislators make the final push toward the end of spring session.

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