Illinois Issues blog

Quinn wants high school dropout age raised to 18

2012-01-27T16:45:00.000-06:00

By Jamey Dunn

Following a call to action that President Barack Obama made in his State of the Union Address, Gov. Pat Quinn today proposed raising the dropout age for Illinois high school students.

“When students don’t walk away from their education, more of them walk the stage to get their diploma. When students are not allowed to drop out, they do better. So tonight, I'm proposing that every state -- every state -- requires that all students stay in high school until they graduate or turn 18,” Obama said in his address before Congress on Tuesday.

In Illinois, students can drop out at 17. According the National Conference of State Legislatures, 29 states allow students to drop out of school before they turn 18. Quinn plans to propose a bill during his State of the State address next week to change the age in Illinois, and he hopes to see it passed within the year. “Every child in Illinois deserves a quality education that will serve them throughout their lives,” Quinn said in a prepared statement. “The best way to ensure that our children have the chance to achieve and succeed is to make sure they stay in school long enough to earn their diploma.”

Illinois high school students could drop out at age 16 until lawmakers voted to increase the age to 17 in 2005. According to the Illinois State Board of Education, the statewide dropout rate in 2004 was 4 percent, and the rate today is 2.7 percent. “I would anticipate if it was raised to 18, we would see another decrease in the dropout rate,” said Matt Vanover, spokesperson for the ISBE.

Vanover said that moving the age up from 16 made a difference. “You get the driver’s license, and all of sudden you think, 'I don’t need school, and I don’t want to stick around for two years,’” he said. “Two years is an eternity in a teenager’s mind.” He said that the closer that students get to being able to see the light at the end of the tunnel, the more likely they are to stick it out and graduate.

Vanover said that without a high school diploma, young adults have little chance at finding a job that can support a family. “Anything that we can do to ensure that students are going to be in school, we’re going to be for it. We know that if you do drop out, the chances to succeed in life just plummet.”

Charles McBarron, spokesperson for the Illinois Education Association, said that the teachers union supports the concept of raising the dropout age. However, he said that may not be enough to ensure that students get a solid education. “It probably requires more than just keeping them in the building. We have to find way of engaging them.”

Rep. Roger Eddy, a Hutsonville Republican, agreed. “If it was as easy as Obama said, it would be wonderful,” said Eddy, who is a school superintendent in Hutsonville. “To accomplish something with it, we’re going to really have to look at what we do to provide students with a meaningful experiences.”

Eddy said that vocational courses or workplace readiness programs might connect with students who are not succeeding in a traditional academic setting. “To serve the needs of all students, we do have to understand that some students aren’t going to college.”

He said that in some areas where dropout rates are highest, students may face challenges that schools cannot easily overcome, such as homelessness or violence. Eddy added that levels of truancy enforcement vary throughout the state, and an increase in the dropout age would require consistent enforcement to be effective. “It’s really hard for the school to be the police, too.”

Part 3: A look at pension reform across the country

2012-01-25T18:08:00.000-06:00

By Jamey Dunn

All four legislative leaders and Gov. Pat Quinn have said that pension reform is a priority in the upcoming legislative session, but their opinions differ on what would be best for the state and legal under the Illinois Constitution. Recent reforms in other states could provide models as lawmakers move forward. This is the final installment in a three-part series that looks at different aspects of reform in other states.

While labor issues in some states have turned into ugly fights that involved sit-ins and heated rhetoric, one state managed to work out pension changes through negotiations with its unions.

In Vermont, state officials sat down with labor leaders and worked out a deal that will save the state about $15 million a year, which was about 10 percent of the state’s budget deficit at the time the deal was struck. Employees will contribute more of their pay toward their retirement costs. It varies for different workers, but it will mean about 1 percent more of their salaries would go to their pensions. Workers will have to wait longer to retire, but will see a bump in benefits. The deal also includes a two-year 3 percent pay cut for state employees, a first in Vermont.

Employees in many states have had to pay more for their retirement benefits. In 2010, 11 states increased the amount employees must contribute to their retirement. In 2011, it happened 16 more times, although some of the same states that had raised contribution levels the previous year made the move again. “If you were to look across the country in cases where required pension contributions has been raised by employees you would find a range for different reasons,” said Keith Brainard, research director for National Association of State Retirement Administrators.

He said, “It’s more the absence of something — the absence of a constitutional provision, the lack of a statute” that allows states to increase contributions. According the National Conference of State Legislatures, 12 of the 2011 increases applied to at least some current employees. However, David Draine, senior researcher for Pew Center on the States, said: “We’ve seen more states considering — though not necessarily going for it — models where employees can keep their current benefits but have to pay more for them.”

That is what House Minority Leader Tom Cross said needs to happen in Illinois. Under Cross’ proposal, Senate Bill 17, workers who want to stay in the current benefit system would have to pay more. “You’ve got to truly pay for the cost of your benefits,” Cross said at a recent news conference.

What sets Vermont apart is that state workers — not legislators — approved the increased contributions through their unions.

“I think what happened in Vermont is that the governor and others sat down with labor and said, ‘We’ve got this problem. There’s only so much money to go around, and something’s got to give,'” Brainard said. The state is facing a deficit, a pension funding shortfall and, according to Vermont Public Radio, 25 percent of Vermont state workers will be eligible to retire by 2015. Other key factors in the negotiations may be the fact that Vermont is a small state and has a tradition of public civic engagement.

Brainard said Vermont is an example where defined benefits plans can continue to be workable and states do not have to switch to 401(k)-type defined contribution plans to tackle their pension problems.

Senate President John Cullerton said he would like to see Illinois negotiate a deal with its unions. “We can affect current employees … with laws that have a contractual basis. If there’s a reduction in benefit, there has to be a corresponding consideration, and there has to be acceptance," Cullerton said at a recent news conference.

Cullerton believes that any changes imposed by the state to benefits for current employees would be unconstitutional. Cullerton said Cross’ bill is unconstitutional and lacks the support to pass. “It hasn’t even been called, so apparently they don’t have enough votes for it.” He said that pension reform is also a priority of his, but that it should be achieved through negotiations with unions. “Politically, it would be real, for some people, just easy I guess to pass a bill, claim you did something, have it [blocked by the courts], spend millions of dollars in legal fees and then two years later find out it is unconstitutional.”

That is what former Vermont Treasurer Jeb Spaulding, who worked on the agreement in his state, wanted to avoid. “It would have been a Pyrrhic victory if we forced through a plan that was enjoined or overturned and we didn’t have any savings at all,” Spaulding told Stateline.

However, Brainard said states such as Illinois might have little to offer unions besides the avoidance of negative outcomes. “I think Illinois is almost in a class by itself in terms of its chronic neglect of its pension plan.” He said. “The best they might have to offer in a lot of cases is that they would forestall attrition and layoffs.”

Illinois union officials say they want to be at the table for any talk of pension changes, but they say that workers should not have to pay for the underfunding of the pension system after lawmakers and governors skipped required contributions year after year. The only way to solve the pension funding problem is for the unions that represent public employees — whose retirement security is dependent on the health of the pension funds and whose deferred compensation makes up 100 percent of the funds’ assets — to be full partners in discussions that are appropriately structured and focused on the real problem, funding,” Anders Lindall, spokesman for the American Federation of State County and Municipal Employees Council 31, said in a prepared statement.

Brainard said that Illinois' constitutional provision creates a “higher hurdle” to pension changes. However, he said, “I would not consider any single provision to be absolutely iron clad, with the one exception of benefits earned to date.”

Both Brainard and Draine agreed that states also need to consider the role that pension benefits play in recruitment.

“A lot of the focus has been on the pension side of things,” Draine said. “States do need to balance the need to control costs with the need to recruit and retain a public sector work force.”

Brainard said the promise of retirement security can help to attract quality workers and keep them on the job. “You have to find a set of solutions that will get you a work force capable of delivering the results that your constitutions want and deserve, and you have to do that at a cost that’s sustainable over the long term.”

Part 2: A look at pension reform across the country

2012-01-24T16:46:00.001-06:00

By Jamey Dunn

All four legislative leaders and Gov. Pat Quinn have said that pension reform is a priority in the upcoming legislative session, but their opinions differ on what would be best for the state and legal under the Illinois Constitution. Recent reforms in other states could provide models as lawmakers move forward. This is the second installment of a three-part series that looks at different aspects of reform in other states.

While Gov. Pat Quinn has been coy in the past about his stance on pension changes, he has voiced strong support for passing pension reform legislation in 2012. “For all the beneficiaries in the system, it’s important that we maintain the integrity the stability of the system, otherwise there won’t be any pensions for anybody,” Quinn said earlier this month.

The governor created a special working group of legislators headed up by close adviser and former chief of staff Jerry Stermer to take on the issue and come up with recommendations for change. Quinn has not addressed whether he supports changing benefits for employees hired before a previous round of reforms went into effect last year. He has only said he does not want to make any changes that are unconstitutional.

However, the governor’s top budget adviser, David Vaught, said that reductions to cost of living adjustments given to retirees would likely be part of the discussion. “Some people say the [cost of living adjustment] is not protected constitutionally.”

Two recent court cases may have opened the door to more states considering reducing or outright eliminating cost of living adjustments for retirees.

According to the National Conference of State Legislatures, 17 states have taken actions in the last two years that would reduce COLA benefits. Most states making such changes, including Illinois, have reduced COLAs for future employees. However, in 2010, Colorado, Minnesota and South Dakota all reduced the cost of living increases given to their current retirees, and other states are taking notice. “It was new news in 2010 when three states made changes to their COLA that affected existing retired members," said Keith Brainard, research director for National Association of State Retirement Administrators. Since then, New Jersey and Rhode Island have both put a freeze on COLA benefits until their pension systems get on sound financial footing.

Last summer, judges in Colorado and Minnesota tossed out court challenges from retired state workers, allowing the COLA reductions to stand.The states said that the COLAs were not part of contractually guaranteed benefits, while the workers argued that reducing them would violate both state and federal protections for contracts. “The big legal question that has resulted in these court cases is to what extent are future COLAs … promised and protected benefits,” said David Draine, senior researcher for Pew Center on the States.

Denver District Judge Robert Hyatt ruled that lawmakers could not touch the base pension benefits promised to retirees but that cost of living increases were not a protected by contract law. One reason that states with budget problems or underfunded pensions might be quick to jump on the COLA cutting bandwagon is that cuts to COLA increases for current retirees produce almost immediate savings, while other pension changes can take years to produce substantial savings.

Social Security benefits and pension benefits for federal workers contain a cost of living increase that is tied to inflation. But with deficit reduction talks taking place on the national level, they too are under fire. There are proposals to link them to a more conservative inflation projection, which would effectively cut the size of future increases.

The rulings in Colorado and Minnesota do not apply to other states, and judges elsewhere, including California and West Virginia, have ruled that COLAs cannot be reduced. However, Brainard said the rulings do indicate that some judges are willing to take into consideration the dire situation that some pension systems are in and may allow lawmakers to use more discretion if they are “making a reasonable effort to share the burden equally — that is you’re not taking it out on only one group.” In the case of Denver, the money saved from COLA reductions is slated to go back into the pension system to help shore it up, instead of being spent in areas that lawmakers might consider more popular with voters. “You’ll see this wiggle room that the judges seem to have found,” Brainard said.

Quinn has also proposed calling on universities and school boards to pay a portion of the retirement costs for the workers they employ. “Our pension payment this year looks like about $5.2 billion, and of that, about a fifth, 20 percent, is actually state employees. More than half are school teachers in school districts and also the university employees, as well. So we’re going to come up with a good program that makes sure that everyone who is involved in this program has some investment in it,” Quinn said at a recent news conference.

Skeptics of the plan say it would lead to detrimental cuts to education and potentially spur property tax increases as local governments look for a way to cover the cost of teachers’ pensions. Quinn said that the employers that negotiate the salaries on which pensions are based should bear some of the responsibility of the costs. “I think we have to be very prudent that we don’t hurt any of our current education efforts. But at the same time, you don’t want to have a system where those who are negotiating with employees don’t have a stake in the outcome. If they just want to shift the burden onto the state, then sometimes, they don’t maybe negotiate as well as they should. … Everyone who has employees in the pension system should contribute something to the pensions.”

House Minority Leader Tom Cross said such a proposal would not do enough to address the state’s pension problems. “The pro might be that they have some skin in the game, but the reality is, we’re going to have to address what people contribute. That is a component that you cannot escape. It is a very real part of the solution,” Cross said at a recent news conference. “It can’t be just an issue of cost shifting or nibbling around the edges. This thing is beyond nibbling around the edges.”

Maryland Gov. Martin O’Malley pitched a proposal this month that follows in the lines of Quinn’s statements. Under O’Malley’s plan, local governments would pick up half of the cost of teachers' retirement benefits, including Social Security contributions. Currently, districts pay about one third of the cost. If O’Malley’s plan were approved, local governments would pay almost $240 million more, but they would get some funding — from the proposed elimination of a tax break for top earners — to help with the transition.

“It sounds a little bit like taking money out of one pocket and paying it to another, … although, there is something to be said for linking the benefit obligation [to bargaining decisions],” Brainard said. “From the outside perspective, it’s all sort of coming from the same pot, and that is the taxpayers.”He said that the share that local public entities pay for their worker’s retirement costs vary from state to state. However, he said that the split is more an issue of cost sharing between state and local governments than it is a component of pension reform.

Yesterday's post explores so-called hybrid pension systems.

Check back tomorrow for a look at a state that achieved pension changes by working with unions.

Pension reform across the country

2012-01-23T16:42:00.000-06:00

By Jamey Dunn

All four legislative leaders and Gov. Pat Quinn have said that pension reform is a priority in the upcoming legislative session, but their opinions differ on what would be best for the state and legal under the Illinois Constitution. Recent reforms in other states could provide models as lawmakers move forward. This three-part series will look at different aspects of reform in other states.

As Illinois looks at its seriously underfunded retirement system for state workers, it is not alone. A recent Pew Center on the States study found that at a 51 percent funding level, Illinois has the most under-funded pension system in the nation as of Fiscal Year 2009. However, 30 other states were also under the recommended 80 percent funding level. In FY 2008, 22 states fell below that funding level. Overall, state pensions were funded at a 78 percent level in fiscal year 2009, which is down from 84 percent in FY 2008.

Since pension systems vary so much across the states—including to whatdegree benefits are protected by statute and constitutional provision—Susan Urahn,managing director for Pew Center on the States notes that it is difficult tomake an "apples to apples comparison."

“We’ve talked about pension reform in this state until we’re blue in the face. We know what needs to be done. We know that other states have done what we need to do, like Rhode Island,” House Minority Leader Tom Cross said during a recent news conference.

It is fitting that Cross would cite Rhode Island as an example, since it is the only state that has in recent years taken some controversial pension reform steps similar to a proposal from Cross. David Draine, senior researcher for the Pew Center on the States, called Rhode Island’s reforms “the only [recent] example of a state that really changed the terms of pension benefits for current employees.”

The plan, approved by Rhode Island lawmakers and signed into law late last year, would freeze cost of living increases for current retirees. Current workers would keep all of their benefits to date, but they would be shifted to a so called-hybrid plan for future benefits. Part of their retirement investment would go into a defined benefits plan and part of it would go into a defined contribution plan, much like a 401(k). Some of the payout would be guaranteed, and some of it would be tied to the performance of investments. The retirement age would also increase for many workers.

Rhode Island had one of the largest funding gaps in the country relative to its size. The state operated its fund on a pay-as-you-go basis from the 1930s until the 1970s. “Pension systems with really severe problems often started out as 'pay-as-you-go' plans, in which retirees derived their benefits from current state revenues, not any pool of accumulated cash. Inevitably, the number of retirees grew, relative to the number of currentemployees, and the checks going out the door took up a larger and larger portion of state revenues,” said a study of state pensions from the Pew Center on the States. “You’re paying for the sins of the past,” Frank Karpinski, executive director of the Rhode Island system, told Pew.

If the reforms in Rhode Island survive the expected court challenges, they are projected to reduce the state’s more than $7 billion unfunded liability by $3 billion. That plan passed with the bipartisanship that Cross is seeking for pension reform in Illinois. It was backed by the Democratic state treasurer and independent governor. However, unlike Illinois, Rhode Island does not have a provision in its constitution protecting pension benefits.

Rhode Island Treasurer Gina Raimondo, who created plan for change and traveled the state for almost a year to promote it, said that the debate was not marked by the anti-union rancor that characterized labor disputes in states such as Wisconsin. But a backlash has begun. “This would be different if it was given to us. No one gave us anything. We paid for these pensions,” Michael Downey — president of Council 94, Rhode Island's largest public employees union — told Rhode Island Public Radio. Downey said the unions are gearing up for a court challenge as well as a political battle. “When you are retired and you go to check your monthly statement, you won't forget this. You'll remember this. Will it be remembered in the polls? I'm sure it will,” he said.

The main similarity that the Rhode Island plan has to Cross’ proposal is that it would change the benefit structure for employees hired before its creation. Under Cross’ plan, workers would keep previously earned benefits but then would have to choose between paying more for their current benefit level, having their benefits reduced or moving to a 401K-type plan known as a defined contributions program. Illinois currently has a defined benefits plan that guarantees employees a specific level of benefits no matter what happens to the pension funds’ investments. Instead of requiring employees to choose between defined benefits or defined contributions, plans like the one passed in Rhode Island rely on a combination of both.

So-called hybrid pension plans have become popular in recent years. In addition to Rhode Island, Florida, Georgia, Indiana, Michigan, Ohio, Oregon, Utah and Washington all have hybrid style pension plans. Under these plans, employees do not chose between a defined benefits and defined contribution plan but participate in both. Most typically, employee contributions are placed into a 401(k)-type savings plan while state funds pay out defined benefits. While hybrid plans have been getting recent attention, the majority of states still have defined benefits plans.

“Currently, [the hybrid] plan design is receiving increased attention as states find that closing a traditional defined benefit pension plan to new employees could increase — rather than reduce — costs, and that providing only a 401(k)-type plan does not meet retirement security, human resource or fiscal needs,” said a report from the National Association of State Retirement Administrators. Legal issues aside, transitioning from a defined benefits to a defined contribution plan can be tricky because those who have retired under the defined benefits plan will still get their benefits. If there are no new enrollees in a defined benefits plan, it cuts off a large source of funding to the plan, and the state often has to make up the difference.

“It is difficult — usually impossible — to save money certainly in the near term by closing down a pension plan and moving to a defined contribution plan,” said Keith Brainard, research director for National Association of State Retirement Administrators.

Check back tomorrow for a look at the legal battles in other states over scaling back cost of living increases for retirees.

Quinn plans to close Jacksonville and Tinley Park facilities

2012-01-19T17:23:00.000-06:00

By Jamey Dunn

Gov. Pat Quinn today announced plans to close the Tinley Park Mental Health Center and the Jacksonville Developmental Center as part of a larger proposal to close several state institutions.

Quinn previously proposed the closure of seven state facilities because he said there was not enough money in the Fiscal Year 2012 budget to keep them open. Lawmakers worked out a budget deal in November to keep the institutions open through the end of FY 2012, but Quinn said he planned to move ahead with closures after the end of the fiscal year.

Under the plan, 600 of the about 2,000 people with developmental disabilities currently in state institutions would be moved into community care settings over the next two and a half years, up to four state centers for the developmentally disabled would be closed and two state mental health centers would also be shuttered.

“My administration is committed to increasing community care options and improving the quality of life for people with developmental disabilities and mental health conditions,” Gov. Pat Quinn said in a prepared statement. “The approach we are taking will allow for the safe transition of care for some of our most vulnerable citizens to community care settings. I want to thank the members of the public, the General Assembly and advocates who worked with my administration to meet this challenge and help our state move forward.”

Under the governor’s proposal, the Tinley Park Mental Health Center would shut down in July, and the Jacksonville Developmental Center would close in October.

The Tinley Park Center primarily serves so-called acute care patients, who typically stay between 24 hours to 21 days. The administration plans to halt admissions at Tinley in time for all patients to complete treatment before the closure, but no date has been chosen yet. “The [Department of Mental Health], however, is actively securing additional beds at community providers and hospitals in the area surrounding Tinley Park [Mental Health Center] to ensure that services in the area are not interrupted,” said a summary of the plan issued by Quinn’s office.

According to the governor’s office, several factors were weighed when considering which facilities to close, including the age of the facility, the amount of deferred maintenance and repairs, the level and quality of care and the economic impact.

But Rep. Jim Watson, a Republican from Jacksonville, said that he thinks administration officials knew what facilities they wanted to close and created the rubric to fit those institutions. “It was pretty obvious that they developed criteria to get the outcome they wanted.” Watson was part of a working group that took up the issue of which facilities should be on the chopping block. “I think that they picked facilities that were largely downstate geographically where he did not fare well and then picked them in mainly Republican districts.”

Watson noted that Tinley Park us in northern Illinois, but he said it made the list because Quinn has been considering closing it for a while. Both of the facilities announced today were also on the list for closure under the governor’s previous plan.

Unions representing the workers and families of residents at the state’s developmental center say Quinn has not included them in talks over closure decisions. Watson said he thinks that Quinn is listening to advocates on just one side of the issue. “As a governor, don’t you have to be responsive to both sides of the issue and the entire state?” he asked. Watson was critical of Quinn for being in Washington, D.C., when the word came down about planned facility closures today. “I think it’s reflective [of his mindset on the issue] that the governor today is in [Washington,] D.C., when he makes an announcement that affects the lives of thousands of Illinoisans.”

Union officials complained earlier this week about working group meetings that were held outside of the public view and said Quinn was moving forward without their input. “Mental health and developmental centers provide essential health care services in communities across Illinois. When these facilities are threatened, what’s at stake is life or death for men and women who need intensive developmental services or treatment in mental health crisis and have nowhere else to go. The closure push appears based on politics and budget considerations, not what’s best for individuals, families and communities. It’s grossly irresponsible to plot to close these facilities behind closed doors,” Henry Bayer, executive director of AFSCME Council 31, said in a written statement.

“The governor’s office has not reached out to us at all,” said Rita Burke, president of the Illinois League of Advocates for the Developmentally Disabled, which represents parent organizations from the state facilities. “My concern about these particular people making decisions that are monumental in meaning in scope for families is that I don’t believe that they are intimately knowledgeable about the facilities or about the residents.” She said that the quota-driven nature of the plan could force people into the community against their will or into situations that do not provide an appropriate level of care.

Advocates for delivering care in smaller settings argue that receiving services in one’s home or a home-like setting with fewer residents allows developmentally disabled adults more freedom, flexibility and the ability to be a part of their community through activities, such as holding a job or volunteering. “Community-based care is about quality of life,” Kevin Casey, director of the Division of Developmental Disabilities, said in a prepared statement. “Through this careful, deliberate process, Illinois will improve quality of life for hundreds of people with developmental disabilities, while realizing significant savings through the closure of a costly state facility.” The Department of Human Services said it would conduct thorough assessments, so residents of facilities would be matched with the services they need when they are outside of institutions. The plan is to move 20 residents per month out of institutional care.

Supporters also highlight the potential cost savings that could come from closing facilities and serving those with developmental disabilities and mental health needs in community settings. According to the Department of Human Services, operations at the Jacksonville Developmental Center cost about $29.7 million annually. Under Quinn’s plan, the state would invest about $16.2 million in community care and save about $11.7 million. Tinley Park Mental Health Center has an annual operating cost of about $20.6 million. The state would invest $9.8 million in community mental health programs and save about $8.1 million.

But Watson said that losing the economic stimulus that the facilities provide to the local communities is not worth savings that seem somewhat meager when compared with the overall state budget. “Is this financial or is this philosophical?” he asked.

“If the Department of Commerce and Economic Opportunity could make an investment of $12 million and get an economic impact of $47 million, they would do it in a heartbeat,” Watson said of the plan to close the facility in Jacksonville.

For more on the state's shift away from institutional care, see the upcoming February issue of Illinois Issues.

Comptroller: State's stack of unpaid bills isn't growing smaller

2012-01-18T16:34:00.008-06:00

By Jamey Dunn

Even after a tax increase, Illinois has not made much progress on the total of overdue payments it still owes to vendors, medical providers and others.

According to Comptroller Judy Baar Topinka’s quarterly report, the comptroller’s office had almost $4.3 billion in late bills as of December. Topinka said that number, combined with approximately $2 billion in Medicaid bills being held at state agencies and other late payments such as corporate tax refunds, brings the total backlog to about $8.5 billion.

“Even if current revenue projections hold, the backlog at [the comptroller's office] is not expected to change much from last year,” the report said. Topinka said that the bulk of new revenues from the tax increase is not being used to pay down old bills. “It think everybody assumes that if we’re going to have the largest tax increase in the state of Illinois, that this was going to apply to unpaid bills,” Topinka said.

Kelly Kraft, spokesperson for Gov. Pat Quinn’s budget office, said growing demand for programs is sucking up revenues. “It is important to talk about program growth and need. People will see the increase in spending, but it is not because a new program or something of that nature has been created. It is because of growth in demand. For instance Medicaid costs are growing at 6 percent a year. Growth rates like these are unsustainable that is why further reforms are a must.”

Topinka agreed that growing Medicaid spending is a concern. She said that the economic crash has caused more people to be eligible for the program, and so-called baby boomers will likely need more medical care as they age. “You’ve seen the Medicaid rolls blossom,” she said.

The state has also seen federal funds dip as stimulus dollars have stopped coming in. According to the report, Illinois has gotten $1.6 billion less — about a 55 percent drop — in federal funds this fiscal year.

As part of the state budget plan approved in the spring, Illinois is slated to push billions in Medicaid spending into next fiscal year. “The [General Assembly] significantly under-budgeted Medicaid [appropriations] for [Fiscal Year 20]12, so processing has been slowed down so cash is available throughout the [current fiscal year], right through June 30th. If the entire Medicaid [appropriation] is spent by, say, April 1st, then health care providers would not receive any payments until the new [fiscal year] starts,” Kelly Kraft, spokesperson for Gov. Pat Quinn’s budget office, explained in a written statement.

Topinka said she is concerned about the state being able to pay those bills once they are sent to her office. She said that if all of the $2 billion is sent at once, “I don’t know how [we will pay it.]”

Perhaps the one bright spot in the comptroller's report was that Illinois has paid off all of its bills from FY 2011. However, $5.15 billion in FY 2012 revenues was used to pay down the FY 2011 bills. Topinka said this practice of kicking such a large chunk of obligations into the next fiscal year, once seen as a move to be made only during a fiscal emergency, has recently become a standard budgeting tactic. “Now it is perpetual emergency, and literally, the nonpayment of vendors is almost like a line item in the budget,” Topinka said. “We almost work on the basis that the private sector is going to carry the load for the state.”

She said that if a substantial effort is not made to address the backlog, Illinois will likely see a similar stack of unpaid bills next fiscal year. “So here we sit — same time, same channel, different year, but it’s the same problem.”

Push for pension changes grows, but players are far from agreement

2012-01-12T16:25:00.000-06:00

By Jamey Dunn

As lawmakers prepare to return for session in the coming months, Gov. Pat Quinn and the four legislative leaders all count changes to the public employee pension system as a top priority, However, agreement across the aisle and between the two chambers on what needs to be done seems, for now, to be in short supply.

Since taking office Gov. Pat Quinn has been careful when he speaks of pension changes for workers who were hired before changes that went into effect last year. Quinn supported the plan, approved in early 2010, that reduced benefits for employees hired after its passage. But as some lawmakers pushed for further reform, Quinn only said he would not support anything that was unconstitutional, without defining what sort of proposals would fall into that category.

This week, Quinn declared that changes to the pension system are at the top of his agenda for 2012. “We have to reform the public pension system of our state in order to have good finances, proper finances, and definitely enough money for education and health care and public safety — things that count,” Quinn told reporters in Chicago. “We’re going to get this done once and for all.”

Quinn’s budget director, David Vaught, said many ideas to change the system are on the table.

Both Quinn and Vaught have noted that the bulk of pension costs come from the Teacher’s Retirement System. “More than half of the money that we contribute every year is for teachers who are outside of the city of Chicago,” Quinn said. Senate President John Cullerton has pitched the idea of asking local school districts to pay teachers’ pension costs, and Quinn seems to be warming to that concept. Vaught said asking universities to pay retirement costs for those in the State Universities Retirement System could also be a possibility. Quinn’s office estimates that about 2.7 billion in general revenue funds would go to the Teachers’ Retirement System next fiscal year out of the $4.1 billion of general revenue funds that will have to be spent on pensions. Including money from other funds, next fiscal year’s pension payment is estimated at more than $5 billion.

Vaught said that cost-of-living increases given to retirees could be a target. “Some people say the [cost of living adjustment] is not protected constitutionally.”

Vaught said of Quinn, “He’s not coming around to anything that’s unconstitutional, and he’s said that repeatedly.”

But, for now, constitutionality is in the eye of the beholder. House Minority Leader Tom Cross has the most aggressive plan on the table, Senate Bill 512. Under Cross’s proposal, workers would keep all the benefits they have earned to date. Going forward, they could opt to either pay more for the same benefits that have now, take a cut in benefits and retire later or join what is called a defined contribution plan, which is similar to a 401k. Cross has yet to call his bill for a floor vote in the House. “We’ve talked about pension reform in the state until we’re blue in the face. We know what needs to be done.” Cross said that asking school districts and universities to pay would not solve the problem.

However, Cullerton said Cross’ bill is unconstitutional and lacks the support to pass. “It hasn’t even been called, so apparently they don’t have enough votes for it.” He said that pension reform is also a priority of his, but that it should be achieved through negotiations with unions. “Politically, it would be real, for some people, just easy I guess to pass a bill, claim you did something, have it [blocked by the courts], spend millions of dollars in legal fees and then two years later find out it is unconstitutional.”

Cullerton added, “We can affect current employees … with laws that have a contractual basis. If there’s a reduction in benefit, there has to be a corresponding consideration and there has to be acceptance.”

Quinn has called for the creation of a working group to address the pension issue. It will be made up of lawmakers appointed by the legislative leaders and led by longtime Quinn adviser Jerry Stermer. Quinn said he wants to use the same collaborative model for negotiations that produced education reforms and workers’ compensation reform laws. “This working group that we’re convening, it's going to start form zero in the sense of everybody has a chance to some in with their ideas,” he said. “I think it’s very important that no one who comes to the pension reform feeling that there’s some particular bill we’ve already adopted.”

Union officials argue that the pensions systems are facing problems because they have been underfunded by legislators. “The problem is not the cost of the modest benefits earned by teachers, police, caregivers and other public employees. The problem is the failure of politicians over decades to make adequate employer contributions,” Anders Lindall, spokesman for the American Federation of State County and Municipal Employees Council 31, said in a written statement. Lindall said that union representatives should be involved in any conversations about changes to the system. “The only way to solve the pension funding problem is for the unions that represent public employees — whose retirement security is dependent on the health of the pension funds and whose deferred compensation comprises 100 percent of the funds’ assets — to be full partners in discussions that are appropriately structured and focused on the real problem, funding.”

Quinn said his goal is to pass pension legislation by the end of this year. “Our time has come. Our rendezvous with pension reality will come this year.”

Human services spending restored as part of larger budget deal

2012-01-11T16:58:00.001-06:00

By Ashley Griffin

As part of legislation that will keep some state institutions open through the current fiscal year, the Illinois General Assembly also approved more spending for some human services programs.

With all eyes on a plan to halt state facility closures and avert 1,900 layoff, the General Assembly was able to quietly restore millions to some human services programs statewide in cash-stricken times.

Teen Parent Services, which helps low-income parents younger than 20 receive their GEDs and offers parent training classes, received $1.4 million under Senate Bill 2412.“Redeploy Illinois,” a program designed to provide services to youth 13 to 18 years old who are in the juvenile system and are at high risk of being committed to the Department of Corrections, received $2.4 million.

Legislators also allocated $1.4 million to the state’s Homeless Prevention program. Sen. Heather Steans, one of the sponsors of the bill, said that if programs to address homelessness did not receive funding now, it would lead to larger problems and costs for the state because more people would end up in emergency rooms, institutionalized and on the streets. “We were making sure it was getting maintained, not cut out completely,” said Steans, a Chicago Democrat. Senate Democrats pushed for more human services spending last summer but lost when the House and Gov. Pat Quinn refused to go along with the plan.

The Homeless Prevention program was designed to help provide rental assistance, utility assistance and supportive services to individuals and families who are at risk of being evicted or entering foreclosure on their homes. For the past five years, the program has provided counseling, job preparation and assistance with rent or security deposits. It is administered by six centers in the Chicago area and more than 75 sites statewide that aim to help families remain in their homes by offering various programs such a one-month rental-assistance program and emergency funds for families.

According to the Department of Human Service’s website, the program served more than 14,000 households in Fiscal Year 2007. The state’s economic downturn has brought a growing demand for social services and left the state climbing to the top of the nation’s largest inventory of foreclosed homes. A May 2011 RealtyTrac report showed the Chicago metropolitan area had 118,776 homes in foreclosure.

“I think there’s a lot of cold people in the street in the winter months, and homeless families have it the worst. … At the end of the day, it didn’t make a whole lot of sense to make an inhuman line item to cut the program,” said Rep. Sara Feigenholtz, a Democrat from Chicago. Currently, more than 14,000 Illinoisans experience homelessness each night, according to a report from the National Alliance to End Homelessness.

Although some legislators pushed for the increase in spending for human services, a recent budget projection from Quinn revealed the state plans to spend $507 million more than it will take in during the current fiscal year. The state is also set to hit $7 billion in overdue bills to vendors — including human service providers — by the end of FY 2012. As part of the projection, Quinn called for a 9 percent cut to state spending, with the exception of education and health care, paving the way for potentially large human services cuts in FY 2013.

While Feigenholtz acknowledges that FY 2012 was a difficult budget year, she said the state must address the backlog of bills, and she predicted that the next budget could possibly send major cuts to human services. “We have to start paying our bills and stop spending,” Feigenholtz said. “As bad as last year was, it may be a walk in the park compared to this year budget.”

Quinn signs tax breaks; says he is ready to take on pension changes

2012-01-10T16:36:00.000-06:00

By Jamey Dunn

Gov. Pat Quinn today signed a tax break for low-income workers and said changes to the public employee pension systems are a top priority for him in 2012.

Quinn signed Senate Bill 400, which will increase the Earned Income Tax Credit (EITC) from 5 percent to 10 percent of the federal credit over two years. The increase will start for tax year 2012, moving it up to 7.5 percent of the federal credit, so it will not apply in the coming months as Illinoisans are filing their 2011 income tax returns.

According to Quinn about 935,000 households will benefit from the credit. He said a single mother earning $12,800 a year would save about $150 on her taxes, and a family of five with a household income of $30,000 would save about $199 this year. “It’s very important here in Illinois that we help parents raising children, parents who are working, and they are working hard and they are living from check to check every month. We want to make sure that those paychecks have enough money for the family to pay its bills and raise their children right. So that’s really our mission in Illinois, to help everyday people raising children living form paycheck to paycheck,” Quinn said today at a bill signing event.

Supporters of the increase argue that it will also help to spur local economies. “That family is not going to admire money in a bank vault, especially now. They are going to go out and spend the money in their local economy, creating jobs for local businesses in particular,” Quinn said. “There are some who think that the Earned Income Tax Credit and tax relief for working families is not part of job creation, and they’re just plain wrong.”

Rhonda Jones, a single mother who has three children in college and two more in high school, said she has often spent money from the EITC on necessities, such as car repair, children’s clothes or food. “The Earned Income Tax Credit has helped me out of a lot of jams when I have found it hard to make ends meet,” she said at today’s bill signing.

The new law also increases the $2,000 personal tax exemption by $50 and links it to federal inflation. Sponsor Sen. Toi Hutchinson said if the exemption had been indexed to inflation when the income tax was first created, the exemption would be more than $6,000 today. “That would be $24,000 for a family of four that would be untaxed — $24,000 off the top — had they been a little more progressive when they instituted the income tax in the beginning,” Hutchinson said. “Because we didn’t think that far, we’re doing it today. So, yes, it can seem insignificant right now; the point is indexing so that it keeps up with the times.”

Some Republicans traditionally opposed to new spending supported the EITC increase.“This is an opportunity to help people grab the bottom lung of the ladder, to start to get away from the dependency of welfare and get to work,” Sen. Matt Murphy of Palatine said during floor debate of the plan This is a reasonable piece of tax relief for most who get that tax credit. It’ something that I’d like to see—on both sided of the aisle—us support because it is the right thing to do.” .

But opponents of the credit, which was part of a package that also offered tax breaks to businesses threatening to leave the state, said Illinois cannot afford to hand out tax cuts. Quinn signed the corporate tax break bill late last year. The overall package is expected to cost about $300 million next fiscal year and $350 million in fiscal year 2014. According to Quinn’s budget office, the bill he signed today will cost $55 million in FY 2013 and $105 million in FY 2014. “Where will the money come from when we have $8 billion in unpaid bills, we have debt, our credit score is going down the tubes, we’re listed as the 48th worst-run state in the union? Where will the money come from?” asked Sen. Chris Lauzen, an Aurora Republican. Quinn’s own budget analysis shows that the state ending the current fiscal year with a $507 million deficit, and Moody’s Investor Services downgraded the state’s credit rating to the worst in the nation last week. Two other rating agencies did not downgrade Illinois but gave firm warnings about the possibility of future downgrades.

Quinn defended the cost of the credit today. “We can certainly afford this. It think we can’t afford not to do this. … I really think the EITC more than pays for itself in terms of economic growth and jobs.”

However, he added, “It is important that we take this year, 2012, and do some hard things when it comes to the finances for Illinois, and that begins with pension reform.” Quinn said he is willing to touch the third rail of pension reform, benefits for workers who were hired before benefit changes that went into effect last year. “Now we have to address the issues of our current employees but do it in a way that’s constitutional and fair and definitely something that involves everybody.”

Union officials maintain that changes to employee benefits hired before the pension revamp would be unconstitutional. Senate President John Cullerton has also questioned the constitutionality of such proposals.

Quinn said he wants to address growing pension costs to free up revenue for spending on education, public safety and health care. “This is a major mountain to climb this year, and I’m willing to lead the expedition,” Quinn said. “We’re going to get this done once and for all. ... For 30 years, three decades, governors and legislatures didn’t do enough. They let it go. It’s time now to tighten up and get it done.” He has formed working groups to take on the issue and wants to hear from all stakeholders involved. Quinn refused to comment on what specific changes he would support. “I think it’s important not to say what we’re going to do until everybody has a chance to speak.”

Moody's downgrades Illinois' credit rating

2012-01-06T16:42:00.002-06:00

By Jamey Dunn

Recent efforts to close the state's budget gap, including a temporary income tax increase, were not enough to save Illinois from a credit rating downgrade.

Moody’s Investor Services lowered Illinois’ bond rating today. (You must login to see all rating agencies' reports.) The downgrade was from an “A1” rating to an “A2” rating and made Illinois the agency’s lowest rated state. “The downgrade of the state's long-term debt follows a legislative session in which the state took no steps to implement lasting solutions to its severe pension under-funding or to its chronic bill payment delays. Failure to address these challenges undermines near- to intermediate-term prospects for fiscal recovery. It remains to be seen whether the state has the political willingness to impose durable policies leading to fiscal strength,” said the Moody’s report.

Fitch, another bond rating agency, affirmed Illinois' “A” rating yesterday. Standard and Poor’s also held its rating of the state flat at an “A+” in a report released today. Under the Fitch rating, Illinois is only second to California for the lowest rating in the country. Fitch gave the state a “stable” outlook but cited concerns similar to Moody’s: the growing pension liability, billions in unpaid bills and lack of a clear budget plan when the income tax increase is set to begin rolling back. Standard & Poor’s gave the state a “negative” outlook. “If Illinois does not make meaningful changes to further align revenue and spending and address its accumulated deficit (accounts payable and general fund liabilities) for fiscal years 2012 and 2013, we could lower the rating this year,” the agency’s report said. Standard and Poor's analysts said if Illinois can begin to address the unfunded pension liability and balance the budget, the outlook may change to “stable,” but there is little chance the state would see a ratings upgrade in the next year.

The ratings came as a result of the state planning a sale of about $800 million in bonds for capital construction projects. All three rating agencies viewed the recent tax increase as a positive step toward stabilizing the budget. However, it was not enough in the eyes of Moody’s analysts to deter a downgrade. The lower rating does not come as a total surprise because Moody’s did slap the state with a “negative” outlook last year and pointed to the state’s backlog of unpaid bills as the cause. Moody’s report said Illinois could improve its credit rating by enacting “a credible, comprehensive long-term pension funding plan” and paying down the backlog. The agency also called for “a legal framework or plan to prevent renewed buildup of late bills.” However, the report said a phase out to the tax increase without a solid plan to keep the budget balanced could result in further downgrades.

Gov. Pat Quinn’s budget office said the downgrade emphasizes the need to focus on pension and Medicaid reform and balancing the budget. “We are encouraged both Fitch and Standard & Poor’s affirmed the state’s long term bond rating. These actions indicate the state has taken positive steps to address its decades old budget challenges by reducing spending and enacting Medicaid, pension, worker’s compensation and education reforms,” said a prepared statement from the budget office.“The downgrade by Moody’s underscores that although the state has taken positive steps toward fiscal stability, as Standard & Poor’s and Fitch indicate by holding our rating steady, swift bipartisan action to implement further cost reductions and reforms in the upcoming legislative session are needed to stabilize the budget.”

As part of a three-year budget projection, Quinn proposed approximately 9 percent cuts to all areas of state government besides education and health care for fiscal year 2013. “We’re going to have to tighten the belt again this year,” Quinn told reporters in Chicago today.

Republican legislative leaders said the downgrade marks the need for substantial reforms. “Today’s downgrade in our bond rating is obviously very bad news for our state, and it proves that the General Assembly and the governor must do some very substantive things this spring that show we are committed to fundamentally changing the way we structure our budget now and going forward. Enacting major pension reform and Medicaid reforms must be at the top of the list. Obviously the practice of nibbling around the edges on reform and other budget strategies has not convinced these bond rating agencies that we are on the road to recovery. We must be bold and deliberate this spring," House Minority Leader Tom Cross and Senate Minority Leader Christine Radogno said in a joint statement.

Although Quinn's projection showed a deficit of more than $800 million in FY 2015, the year the tax increase begins to phase out, the governor said it was to soon to focus on the issue. “I don’t think there’s a lot of need right now to be talking about that. I think we have to take one year at a time. Our goal this year in 2012 is to grow the economy, create more, have more exports help businesses expand and grow. … Robust economic growth is the key to getting a better budget.”

Quinn has also renewed his call for borrowing to pay down the state’s backlog of unpaid bills, which totals about $7 billion, according to his budget office. The governor’s repeated calls to refinance the debt by borrowing to pay it off now and then paying back borrowed funds over time at a lower interest rate have for the most part fallen on deaf ears in the legislature. Republican U.S. Sen. Mark Kirk weighed in today against Quinn’s borrowing proposal. “Moody's' decision to downgrade Illinois debt echoes the judgment of my Sovereign Debt Advisory Board report last year. Governor Quinn is planning to borrow $800 million more in the near future, with higher and higher interest costs paid by Illinois taxpayers. We are reaping the results of years of irresponsible spending and debt,” Kirk said in a prepared statement.

Rating agency says Illinois has more budget work to do

2012-01-05T15:19:00.003-06:00

By Jamey Dunn

One bond rating agency says that if Illinois does not do more to balance its budget before the recent tax increase begins to phase out, the state could face another hit to its credit score.

Fitch Ratings held Illinois’ rating steady at “A” with a stable outlook. (You must log in to see the report.) However, the rating means Illinois continues to be the second lowest rated state in the nation, behind California. The rating came as Illinois looks to sell bonds for capital construction projects. The state’s bond rating are used to determine the interest rates it must pay on debt.

An analysis from Fitch says Illinois has taken some steps in the right direction to close the budget gap, such as the recent income tax increase. However, the analysis notes that the state will still end the current budget year with a deficit of more than $500 million. The rating agency says that Illinois has more work to do to address long-term problems. “While the actions taken were positive, significant challenges remain. The tax increases are temporary and will begin to phase out in 2015. Even if the state has achieved budget balance by that point, it will once again be faced with a significant budget balancing decision to make severe expense reductions that it has been unwilling to make up to this point, identify new revenues or make permanent the tax increases. In addition, there is limited ability within the existing budgetary framework to reduce the accounts payable backlog in a meaningful way without reliance on debt issuance, which has yet to be authorized,” the report said.

Fitch analysts agree with Quinn that the projected pension payment of $5.2 billion, which is a 27 percent increase over the FY 2012 payment, and increased Medicaid costs, including bills that were pushed to next fiscal year, will put pressure on the FY 2013 budget. Quinn wants to keep education and health care spending flat next fiscal year, which his budget office says will require an approximate 9 percent cut to all other areas of state government.

Even with cuts next fiscal year and generally flat spending levels in the next two fiscal years, Quinn’s budget office projects a more than $800 million deficit in FY2015, which is when the recent income tax increase begins to phase out. Fitch’s report says that if Quinn and lawmakers wait too long to address the issue of the tax increase phase out, the state’s credit rating could be downgraded. “Deterioration in the state's financial position, as evidenced by excessive use of non-recurring revenues or additional payment deferrals in the budget, could lead to negative rating action. Also, pushing up against the expiration of temporary tax increases in fiscal 2015 without a solution in place would put extreme pressure on the budget and likely lead to a [negative] rating action,” the report said.

“We hear and acknowledge from rating agencies and investors that additional bipartisan action to implement further cost reductions and reforms is needed in this upcoming legislative session to achieve fiscal stability in our state,” said Kelly Kraft, Quinn’s budget spokesperson. Kraft said that Quinn is considering potential Medicaid and pension changes that would create savings and also hoping for increased revenues from economic growth to help stabilize the budget before FY 2015.

Karen Krop, the primary analyst on Fitch’s report, said that Illinois must take steps to address the issue by the FY 2014 budget year at the latest. “When you get into 2014 budget, one would hope that they would be talking about how they are going to deal with that in the coming year.” But Krop noted that Illinois officials have a history of “waiting until the last minute” to address difficult situations. “If the income tax had been raised sooner, we wouldn’t have this accounts payable problem,” she said.

The rating agency has yet to embrace Quinn’s plan to borrow money to pay off the backlog of unpaid bills. According to Fitch’s report, the state was able to pay off $1 billion in late bills with revenues from the tax increase, which brought the total down to $5.2 billion. But the report says the state expects an increase the amount of unpaid bills in the remaining months of the current fiscal year.

Krop said that Illinois is unlikely to see its bond rating improve until it addressed the backlog. The report calls for “a comprehensive approach to reducing the accounts payable backlog that does not significantly exacerbate the state's already high debt position.”Krop said that doesn’t rule out borrowing, but that Illinois should make cuts and other budgeting efforts and borrow as little as it can to make up the difference. She noted that paying off the bills would create an economic boost for Illinois. At 6.2 percent of 2010 personal income, Fitch classifies the state’s debt level as “moderate but above average.” Krop said Quinn’s previous proposal to borrow $8 billion, to pay late bills and other costs, would have pushed that level into the “high” range. “It’s clearly a problem that needs to be solved. There’s been this overhang accumulating for a few years,” she said. “The question of how to resolve it is kind of up to the state.”

Budget projection anticipates cuts

2012-01-03T18:57:00.000-06:00

By Jamey Dunn

A three-year budget projection that Gov. Pat Quinn’s office released today calls for cuts in most areas of state government.

The plan lays out a proposed 9 percent decrease in Fiscal Year 2013 to all areas of state spending other than education and health care, which would both remain funded at FY 2012 levels for the next three fiscal years. According to the report, all levels of education — from early childhood education to universities and community colleges — will escape the ax under Quinn’s proposed budget plan.

David Vaught, Quinn’s budget director, emphasized that the analysis released today is a projection, and the level of cuts to each area of government may differ when Quinn presents his budget, but 9 percent is generally what Quinn is looking at. “There will be adjustments up and down,” Vaught said.

He added, “They’re pretty serious cuts.”

The report, which is required under recent budget reforms, said that the cuts are due in part to the squeeze that pension and Medicaid costs will put on next year's budget. The FY 2012 budget pushed about $2 billion in Medicaid costs into next fiscal year, and at $5.3 billion, the required pension payment in FY 2013 is projected to be $1 billion more than last year’s payment.

Quinn has called for rate cuts to some Medicaid providers instead of slowing down the reimbursement cycle, which is the reason why so many FY 2012 Medicaid bills will be paid next fiscal year. “We don’t think that’s a good solution, and we think it just puts off the problem.” The report says Quinn plans to focus on pension reform in the coming fiscal year. “He’s not coming around to anything that’s unconstitutional, and he’s said that repeatedly,” Vaught said. However, he said that other options, such as targeting cost-of-living adjustments in pension benefits or shifting pensions costs to school districts and universities could be on the table.

Vaught said that next year’s budget could result in more staff reductions but would not say if that meant layoffs or simply not hiring to fill positions that open up. He said that agencies have been informed of the level of cuts the governor expects, and they will began presenting their ideas for implementing cuts to Quinn’s budget office next week.

According to the projections, the state will end the current fiscal year with a $507 million deficit. In FY 2015, the year the recent income tax increase is set to begin phasing out, Quinn’s office predicts a deficit of $818 million. Vaught said the projected deficit illustrates the need to turn the state’s economy around. “It shows you that economic growth is hugely important.” He said that supporters of the tax increase planned that the decision of whether to extend it once it is slated to taper off would be a subject of public debate and an issue for the 2014 gubernatorial election. “[The projections] tell us what we’ve got to work with.”

Vaught said today’s report is intended to start the conversation of the budgeting process with legislators, agencies and other interested parties. The report emphasizes that tough budget decisions are needed to get Illinois back on track. “FY 13 will bring challenges. Shortfalls of billions of dollars mean a government must change. Such changes are difficult and cannot be accomplished overnight or even in one fiscal year.” However, Vaught appeared hopeful. “We see a way to get Illinois out of the woods.”

2011 in review

2011-12-28T08:47:00.000-06:00

By Jamey Dunn

It was a busy year at the Statehouse as Illinois legislators passed an income tax increase, a significant change to the state’s criminal justice system and reforms to two important state systems, among other bills.

Death penalty
Perhaps the most pivotal change to come this year was the abolition of Illinois’ death penalty. Because of the state’s checkered past of false convictions, proponents argued that the state could not in good conscience reinstate the death penalty. More than a decade ago, George Ryan called for a moratorium on capital punishment after several death row inmates were exonerated. Ryan also commuted the sentences of 167 death-row inmates to life in prison before leaving office in 2003.

Opponents argued that law enforcement officers need the threat of the death penalty as a bargaining chip when negotiating plea deals or trying to get a confession. Others argued that state should have the option for the “worst of the worst” offenders. “Seven out of 10 of those people on death row when Gov. Ryan commuted their sentences didn’t contest their own guilt,” said Sen. William Haine, a Democrat and former prosecutor from Alton.

Former Democratic Rep. Susana Mendoza said she was conflicted about supporting the abolition because she supported the death penalty, but she said her decision to vote for the repeal came after she put aside her own emotions and acknowledged how flawed Illinois’ system has been. “We’ve come horrifyingly close to executing innocent men, and it could happen again,” Mendoza said.

After taking public feedback, Gov. Pat Quinn signed the bill and communicated the sentences of all the inmates on death row. The passage of the plan resulted in some savings for the state as well as the elimination of some positions in the office of the state appellate defender's office.

Tax increase
Early this year lawmakers voted to increase the income tax rate for the first time since 1989. Legislators voted to make that increase permanent in 1993. This year's temporary income tax hike raised the personal rate from 3 percent to 5 percent and the corporate tax from 4.8 percent to 7 percent.

Supporters said that the increase was necessary to get the state’s fiscal house in order. “This mess is a mess that is the responsibility of all of us. … It’s too late. It’s time for us to be adults, face the crisis and figure out together a solution,” said Rep. Barbara Flynn Currie, a Chicago Democrat. However, Republicans argued that Democrats did not do enough to cut the budget. Rep. Roger Eddy, a Hutsonville Republican, said that GOP calls for spending cuts have been ignored for years. “The time to be adults was eight years ago, when we were expanding programs,” he said. The measure also includes spending caps for the next four fiscal years.

The limits would be $36.8 billion in Fiscal Year 2012, $37.5 billion in FY 2013, $38.3 billion in FY 2014 and $39.1 billion in FY 2015. If legislators spend more, the tax increases will be nullified.

Worker’s compensation
Worker’s compensation reform was a top priority for all four legislative leaders and the governor at the beginning of the spring 2011 session. Lawmakers approved and Quinn signed a reform package backed by several business groups, but detractors were skeptical about how much money employers would save from the plan. The negotiations over workers’ compensation reform were tense. and at one point the bill’s sponsor — Rep. John Bradley, a Marion Democrat — threatened to call a bill that would have dismantled the entire system.

The legislation that passed in the end reduces the fees paid to doctors for treating employees by 30 percent, creates new rules for the appointment of arbitrators, who decide the outcome of claims, and requires the use of American Medical Association standards when determining workers’ level of impairment from injuries.

Republican opponents to the plan said it asks for too large a sacrifice from the medical community in the form of reduced fees and may not result in substantial savings for businesses. Doug Whitley, president of the Illinois Chamber of Commerce, said lawmakers should not think their work is done just because they made tweaks to the system. “The political leadership has to appreciate, understand, recognize that workers’ compensation is not a static action. … Even if we make progress in Illinois, that doesn’t mean that other states didn’t do things similarly. There’s a keeping-up-with-the-Joneses aspect to this.”

Education reform
Teachers unions, education reform groups, administrators, business leaders and parents' organizations worked together on an education reform package that was generally agreed upon by all groups. The plan changes the way teachers are granted tenure, hired, fired or laid off.

Under the new law, teachers have to receive positive evaluations for three years to receive tenure. Teachers who earn “excellent” reviews in each of their first three years will also earn tenure. Teachers with tenure who receive two unsatisfactory reviews within a seven-year period could have their teaching licenses reviewed by the state superintendent and be required to complete professional development geared toward improving their performance or face having their licenses revoked. Layoffs will no longer be decided on a “last-in-first-out” basis but instead will be determined by qualifications and job performance. Seniority will only be used as a “tie-breaker.” Administrators will be free to hire any candidate for new positions instead of giving preference to teachers transferring within the district. The measure also makes it easier for districts to fire underperforming teachers.

“With this bill, we’re going to ensure that the better teachers stay and the lesser teachers go,” said Palatine Republican Sen. Matt Murphy. Half of teachers’ evaluations will be based on student performance under the new system that starts to kick in at different times for different schools based on size and student performance level. Most schools must switch to the new evaluations by 2016.

Rep. Monique Davis, a Chicago Democrat who cast the lone vote against the legislation in the House, said aspects of the bill that apply only to Chicago Public Schools, such as a greater threshold for going on strike that requires the support of a supermajority of voting union members, were discriminatory. “The intentions are good, but the results will not change a thing. I’m not going to be a union buster,” the former teacher and administrator said during floor debate. Unions outside of Chicago will need the support of half of union members to strike. The measure lengthens negotiations required before a strike and would force both sides to release their demands to the public if an impasse is reached.

Smart grid
The two largest utility companies in the state will be able to increase customers' rates to make improvements to the state's electric grid and add so-called smart grid technologies. The plan allows Ameren and Commonwealth Edison to increase customers’ rates 2.5 percent annually to pay for improvements to the state’s electric grid ranging from basic repairs to poles and lines to cutting-edge technology that could allow utilities to prevent outages and customers to track their energy usage.

The companies are required to invest a total of $3.2 billion in the grid over 10 years. The measure also requires ComEd to create 2,000 new jobs through the plan and Ameren to create 450 jobs. If they do not meet those goals, they will be subject to fines.

Doug Scott, chairman of the Illinois Commerce Commission, which signs off on rate increases and will oversee the utilities under the plan, said the bill strips away too much regulation. “In the normal circumstance, our review serves a check to companies to spend money only on the items they are allowed by law. … We think that this bill significantly weakens that check and provides no real incentive for the companies to control their costs.”

Sponsors of the plan say the upgrades will bring economic development and allow the state’s aging grid to keep pace with modern energy demands. “Sometimes we’ve got to do what we’ve go to do,” said East Moline Democratic Sen. Mike Jacobs, who sponsored the plan. “If we’re going to have success in the 21st century, we need to have a 21st century grid.”

Gov. Pat Quinn adamantly opposed the legislation and vetoed it once it reached his desk. But the General Assembly overrode his veto in the fall session.

Tax breaks
After several businesses threatened to leave the Illinois, lawmakers voted to give tax breaks to some to try and stem job loss in the state. The package will give about $200 million in tax breaks to the CME group, and Sears. The plan contains other breaks meant to help businesses throughout the state — such as an extension of the research and envelopment tax credit and a reinstatement of the net operating loss provision in 2012 for losses up to $100,000. The package also offers tax breaks for individuals in the form of increasing the Earned Income Tax Credit from 5 percent of the federal credit to 10 percent over two years and linking the standard exemption to federal cost of living increases. In total, it is projected to cost about $300 million next fiscal year and $350 million by fiscal year 2014.

Up next
The passage of the tax breaks passage spurred a call from both sides of the aisle in the House to roll back corporate income tax rates. “I think people at the time of the increase of the corporate tax realized that that was not the route to go,” House Minority Leader Tom Cross said. “Business after business potentially will be coming to the state and looking for relief, and doing it on a per-company basis is not the way to go.”

Expect the issue to get plenty of lip service, and maybe even some action, next year.
Other noteworthy pieces of legislation failed to gain in 2011 the support needed to become laws. However, the sponsors of many such bills say they will fight on. Rep. Lou Lang, a Skokie Democrat, will likely spend some time in 2012 trying to hammer out a plan gaming expansion that can pass in both chambers and gain Quinn’s signature. A plan he sponsored passed in 2011, but Quinn said it was too large of an expansion and refused to sign a bill that would allow slot machines at horse racing tracks. Without the slots for the tracks, Lang could not find the support to pass a scaled back gaming package during the fall veto session. Lang has also vowed to continue to push a bill that would allow the chronically ill access to medical marijuana. He has called various versions of such a proposal but has yet to find enough support to pass the plan in the House.

House Republican Leader Tom Cross has been unable to find the support to pass his plan to reduce pension benefits for current state employees, but he has been able to pass bills to try and reign in what many saw as abuses of the system. With a pension payment that is projected to be $5.3 billion — about $1 billion more than last fiscal year — expect to hear more about potential changes to benefits.

Illinois is the last state to allow the concealed carry of firearms, and a sponsor of a bill that would allow it says it “only a matter of time” before it happens here. The legislation failed in the House this year, but sponsor Brandon Phelps is working to drum up the votes and says he is only “five or six votes away” from House approval. “Forty other states are not wrong, I believe, and it’s not the Wild West anywhere else,” said Phelps, a Harrisburg Democrat. There are pending court cases, as well as federal legislation, that could also potentially open up the state to concealed carry.

New year brings new laws

2011-12-22T15:47:00.002-06:00

By Jamey Dunn

As the new year begins, more than 200 new laws will take effect in Illinois. Among them are:

Safety belts
The new law that will likely have the broadest impact on Illinoisans is House Bill 219 (Public Act 97-0016). After January 1, passengers in the back seat of vehicles will be required to wear their safety belts. Passenger of emergency vehicles and taxis will be exempt. Those who do not wear seatbelts will be subject to a fine.

Red lights
Motorcyclists can proceed after waiting a “reasonable” amount of time at a red light if it fails to change according to HB 2860 (PA 97-0627). Traffic signals can sometimes fail to register the weight of a motorcycle and will not change as they would for another vehicle. Motorcyclists in such a situation are required to yield to oncoming traffic.

Crime database
HB 263 (Public Act 97-0154) will require first-degree murderers who have been released from prison to register with the state as part of an online database searchable by the public. Those released 10 years prior to the new law will not be required to register.

Internet threats
Under HB 3281(PA 97-0340) school boards will be able to suspend or expel any student who makes an online threat to another student or school employee.

DNA testing
Those accused of certain crimes, including murder, home invasion and sexual assault will be required to provide a DNA sample. HB 263 (Public Act 97-0154) requires that DNA be destroyed if the arresting charges were dismissed or if the individual was acquitted.

Juvenile sentencing
Judges will be required to consider the least restrictive options when sentencing a juvenile offender. Under HB 83 (PA 97-0362), incarceration must be the last resort after all other options have been exhausted or deemed inappropriate.

Electronic waste
Illinoisans will not be able to toss out old computers, and other electronic waste and landfills will no longer be allowed to accept such unwanted items. Electronic devices that cannot be thrown in the trash under Senate Bill 2106 (PA 97-02870) will include: televisions, keyboards, video game consoles, DVD players, fax machines and MP3 players, such as iPods. Consumers who throw away such items face a $25 to $50 fine, and businesses face a fine of up to $500. Instead of pitching such devices, consumers will have to take them to recycling centers.

Home cooking
People who make foods such as certain baked goods, jams and fruit butters for sale at farmer's markets by themselves or family members can prepare such foods in their home kitchens. The law previously required that so-called “cottage foods” be made in an industrial kitchen. The exemption in SB 840 (PA 97-0393) is for anyone who sells less than $25,000 worth of food in a year.

Lasers
Shining a laser, such as commonly found laser pointers, at an airplane that is in taking off, in flight or landing will be a Class A misdemeanor under HB 167 (PA 97-0153).

For a complete list of the 214 laws that will go into effect on January 1, see Senate Minority Leader Christine Radogno’s website.

College Illinois' investment process should be public, legislator says

2011-12-19T16:37:00.000-06:00

By Jamey Dunn

One Illinois lawmaker says the first step to repairing the faltering College Illinois prepaid tuition program is making its investment decisions public.

Rep. Jim Durkin recently filed legislation that would require investment decisions for the program to take place in meetings that are open to the public. Such decisions are currently exempted under the Open Meetings Act. Durkin’s bill, House Bill 3923, comes after the Illinois Student Assistance Commission announced it has suspended the sale of College Illinois contracts until reforms to the program can be made.

“I’m not discouraged by what ISAC announced,” Durkin said. “They’ve taken some time to study the issue — new board, new executive director, new chairman — they’ve come to the same conclusions that we have: that we have to fundamentally change the program to keep it a viable option for parents and grandparents in Illinois.”

A recent report from ISAC showed College Illinois had a deficit of $559 million and was underfunded by about 30 percent as of March 2011. A state audit of the program released last summer found problems with the way ISAC chose contractors for investment advice. Durkin, a Republican from Western Springs, also takes issue with the types of investment being made, which have shifted to include investments in hedge funds, private banks and real estate along with the more traditional stock and bond purchases.

Durkin said he is working on a bill that would apply the investment restrictions put upon other state funds to College Illinois. He said such legislation “would require that the tools would be more conservative and not this whole world of alternative investments, which over the last three years the past board embarked on. I think it’s too risky. It’s not what parents signed up for.”

He added, “I do want to move us as far as we can off alternative investments because you either win big or you lose big.”

John Samuels, a spokesperson for ISAC, said that commission staff members are working on recommendations that will be heard at a meeting scheduled for January 29. Then, the commission will send recommendations to Gov. Pat Quinn and the General Assembly. Samuels said he thinks it will take legislation to reform College Illinois. He said that belief, along with the fact that ISAC was in the process of hiring a new actuary to set contract prices, is why contract sales were suspended. “Until we knew what the changes were, we felt it was unfair to sell contracts.”

“We’ve got some time between now and the end of January to discuss what type of legislative changes need to be enacted,” Durkin said. The House is scheduled to return for the spring legislative session on January 31, 2012.

Durkin said that administrators should be included in the conversation because he said that the growing costs of tuition in the state are also contribution to College Illinois’ woes. “The rising cost of [college education] has caused stress upon the value of the funding within the system,” he said.

Durkin said the most important thing is to make sure that College Illinois contracts are honored. He said the future of the programs depends on the public having faith enough in it to buy contracts. “We need to market it better. We need to approach this in a better way. We’re not getting a lot of people signing up for the contracts. … I think we need to present it in a new manner to the people of Illinois and explain to them why it still is a good program.”

For more on the problems facing College Illinois, see Illinois Issues May 2011.

Lawmakers seek to roll back corporate income tax rates

2011-12-14T16:51:00.005-06:00

By Jamey Dunn

Just a day after passing a tax break package that would benefit some businesses, House lawmakers on both sides of the aisle are pushing for a rollback of corporate portion of the recent income tax increase.

“I think people at the time of the increase of the corporate tax realized that that was not the route to go,” House Minority Leader Tom Cross said. “Business after business potentially will be coming to the state and looking for relief, and doing it on a per-company basis is not the way to go.” Under Cross’ plan, House Bill 3918, the corporate rate would drop from the current 7 percent to 6 percent in 2013 and would return to 4.8 percent, the rate before the increase, in 2014. Any unemployment rate increase of more than .3 of a percentage point over a four-month period would trigger a .25 percent reduction in the corporate tax rate as well. However, the rate could not dip below the 4.8 percent mark.

Under current law, the corporate rate will decrease to 5.25 percent in 2015 and go back to 4.8 percent in 2025.

“This bill is both measurable and meaningful to everybody. It doesn’t cut out a particular segment of businesses in the state of Illinois. It applies to everybody. So this is a way to keep jobs,” said Rep. Dwight Kay, an Edwardsville Republican. HB 3917, filed by House Democrats, would roll the tax rate back to 4.8 percent as of January. Cross said the fact that Democrats and Republicans favor a rollback on the corporate tax makes him think some version could pass in the House. “I applaud them,” Cross said of the Democrats’ measure. “We obviously support that concept and are willing to do that.”

The proposal comes the same week lawmakers approved a tax break package geared toward keeping Sears and the CME Group, which owns the Chicago Mercantile Exchange and the Chicago Board of Trade, in the state. Both companies had threatened to leave. The package included an extension of tax breaks for Sears that were set to expire and a reconfiguration of the way CME’s corporate income tax bill is figured based on its electronic sales. The plan also included other business friendly provisions, such as a reinstatement of the earned operating loss tax credit, which was suspended when lawmakers approved the income tax increase last January. Business leaders supporting Cross’ proposal called the plan passed this week a “first step” toward making the state more business friendly. They say the second step is cutting tax rates for all other corporations in the state. “In January of 2011 … we advised the members of the General Assembly that the corporate tax increases that were being proposed would be a serious mistake. And indeed, we’ve had a serious backlash and an ongoing discussions about taxes all throughout the year,” said Doug Whitley, president of the Illinois Chamber of Commerce.

The tax cut package passed this week also contained breaks for individuals, including an increase to the Earned Income Tax Credit and a provision that links the personal exemption to federal cost of living increases. Such breaks helped to draw the support of many Democrats, including Gov. Pat Quinn. Individuals saw their tax rates go from 3 percent to 5 percent under the increase earlier this year. The personal rate is set to drop to 3.75 percent in 2015 and 3.25 percent in 2025. There are no tax cuts for individuals in either the House Democratic or House Republican plan to decrease the corporate income tax rate.“We’re very cognizant of the increase to individuals, and we have a bill to roll that back. But the bottom line is, unemployment continues to rise in this state … we need to provide jobs, and that’s the compassionate approach,” Cross said. Cross said it will take budget cuts to defray the cost of his plan, and that is why he is proposing a decrease that is phased in over two years. “Every point you drop the corporate tax, it’s about a $400 million hit. So we were very cognizant of the fact that we have a problem with our budget. And that’s why we drafted it in the way we did. We would of course like to see it rolled back immediately”

Senate President John Cullerton said he supports lowering the tax rate if the taxing base is broadened and the revenue coming in remains the same. He said a tax increase approved by the Senate in 2009 — which would have extended sales taxes to many services but only raised the corporate income tax to 5 percent — would have done the trick. “That provision was rejected by the House, and it did not pass. And as a result, when we negotiated the tax increase [that passed earlier this year], the corporate tax was as high as it was,” Cullerton said.

John Bouman, president of the Chicago-based Sargent Shriver National Center on Poverty Law, said the state simply cannot afford such corporate tax breaks. “I just don’t think we’re in a position in Illinois to be spending large amounts of money either on expenditures or on tax expenditures while we still owe people money, including a lot of corporate tax refunds.” He said lawmakers should view tax cuts, such as $100 million in incentives given to Sears and CME, the same way they would view spending on a program. “Even if it was justified, I just don’t think we’re at a time and place where any big expend from there can be done without offsetting with either revenues or spending cuts.” He gave the example of a group appealing to the General Assembly for $100 million in spending on programs that would benefit children in the state. “Their response would be: ‘Are you nuts? We’re in a crisis here. This might be a very worthy and fair thing to do, but we just don’t have the money.’”

Bouman — who is also a member of the Responsible Budget Coalition, which supported the income tax increase — said the state should instead focus on getting out of its budget hole and paying its billions in overdue bills. “The public supports a balanced approach to this that includes revenue and also includes spending reforms, but it requires a sustained effort on both of those … because we’re not out [of the budget hole] yet. We’re not balanced. The bills aren’t being paid.” He said HB 3917 and HB 3918 do not appear to be “aimed at any kind of coherent economic or tax policy” but are instead “pretty clearly political moves” being made by lawmakers running for reelection.

“We passed just yesterday an economic growth and tax reform measure for 2011,” said Gov. Pat Quinn. He told reporters in Chicago today that he wants to pass another tax reform package next year. However, he said that a tax break shouldn’t come at the cost of education or other core areas of government. Quinn also said that tax breaks for individuals are an important part of economic stimulus. “If you’re only going to have a corporate situation, I think you’re missing the people of Illinois … so we just can’t have it all one way. We’ve got to make sure everything is balanced for everyday people who are the heart and soul of our economy.”

Quinn to get bills giving tax breaks to companies

2011-12-13T17:38:00.000-06:00

By Jamey Dunn

Two companies threatening to leave the state will likely stick around if Gov. Pat Quinn signs tax breaks the Illinois Senate approved today, but some lawmakers say it isn’t worth the price tag.

The Senate passed two bills today that contain a plan similar to one piece of legislation that the chamber approved two weeks ago. That bill only received eight “yes” votes in the House. “The bill was separated into two pieces to allow folks who feel pretty strongly on one or the other bill to vote their consciences,” said Sen. Toi Hutchinson, sponsor of the package.

Senate Bill 400 offers tax breaks for individuals in the form of increasing the Earned Income Tax Credit from 5 percent of the federal credit to 10 percent over two years and linking the standard exemption to federal cost of living increases. SB 397 has tax breaks for Sears and the CME Group, which owns the Chicago Mercantile Exchange and the Chicago Board of Trade. Sears and the CME group both threatened to leave the state in recent months. A previously approved tax credit for Sears was set to expire. The CME Group argued that it was being taxed unfairly because its income tax bill, which is based on profits made from sales, counted all sales as taking place in Illinois, but the company makes many of its sales online to customers outside of the state. Under the plan that passed today, 27.54 percent of the company's electronic sales would be used to calculate its Illinois tax bill. The package also includes tax changes meant to help businesses throughout the state, such as an extension of a research and development credit and reinstatement of a net operating loss credit. The plan is projected to cost about $300 million next fiscal year and $350 million by fiscal year 2014.

“We are in the position right now where — yes, it’s unfortunate — there are businesses that are coming and holding us over the barrel, and I understand that that leaves a bad taste in a lot of legislators' mouths,” Hutchinson said during floor debate. But Hutchinson, an Olympia Fields Democrat, said the state cannot afford to lose the jobs those companies provide. “Every one of those people who are working live here. They pay sales taxes. They pay income taxes. … We are in a serious situation right now. We did the best we could with the negotiations we had. This is a bill that you can go home and defend.”

Opponents said that the state cannot afford the plan. Many argued that giving tax breaks to companies that threaten to leave favors big business with the means to lobby the legislature and opens the door for a rush of companies threatening to leave unless the state gives them something as well. “These special deals are bad public policy,” said Sen. Kyle McCarter, a Lebanon Republican. “This is a great bill for lobbyists, in fact maybe we can rename this bill the lobbyist dream act. Because every business in this state will and probably should line up to get their money back, and they are going to need a lobbyist.

Gov. Pat Quinn, who supports the plan, said that competing with other sates and offering tax incentives to encourage businesses to remain in the Illinois is part of the current economic climate. “Every state in the union has on the books tax incentive measures that have been passed by their legislatures to try and get jobs from other states, other businesses from other states. We just have to understand that that’s what the reality is.”

Sears has indicated that if Quinn signs the plan, it will stop shopping around for a potential move. James Parasi, chief financial officer for CME, told a House committee Monday that the passage of the plan into law would keep the CME Group in the state for years to come.

Report finds Illinois juvenile justice system is "failing"

2011-12-13T15:49:00.001-06:00

By Jamey Dunn

A new study has found that more than half of youth imprisoned by the Illinois Department of Juvenile Justice ended up back behind bars.

The report, released by the Juvenile Justice Commission today, said: “While precise data is difficult to come by — itself an indication of our current reentry shortcomings — it is clear that well over 50 percent of youth leaving Department of Juvenile Justice (DOJJ) facilities will be reincarcerated in juvenile facilities; many others will be incarcerated in the adult Department of Corrections (DOC) in the future.”

For seven of the last eight years, more than half of the incarcerated juveniles had been locked up over parole violations, such as truancy or curfew offenses. The report said, “On any given day, approximately 40 percent of incarcerated youth are technical parole violators.” The study found that 2 percent of all the incarcerated population was made up of offenders who committed a new crime while on parole. George Timberlake, chair of the commission and a former judge, said that many youth are going back to jail for “typical teenage” behavior.” The report said: "An essential measurement of any juvenile “reentry” system is whether youth returning from incarceration remain safely and successfully within their communities. By this fundamental measure, Illinois is failing."

A 2009 law called for the commission to conduct the study and make recommendations on how DOJJ could do a better job of helping youth offenders become productive members of society. The state commission, which advises the DOJJ, looked into 230 prisoner review board hearings on juvenile cases and the cases of 400 juveniles whose parole had been revoked.

The report said a major problem is that the DOJJ, which was split off from the DOC, continues to use an adult parole system through the DOC. The commission said this one-size-fits all system is only geared toward policing youths’ behavior after release and does nothing to address their needs or help them make connections to schools, services, employment and their communities. “Responding appropriately to the differences between youth and adults does not require absolving youth of accountability for harmful behavior. Instead, it requires skilled professionals charged with moving a youth toward successful and safe return to the community,” the study said. Commissioners said that this failure of the DOJJ parole system to address the needs of youth and its focus on “surveillance” rather than rehabilitation contribute to the high rate of juvenile recidivism.

Timberlake said that parole hearings for youth, conducted by the Illinois Prisoner Review Board, are brief — sometimes lasting only minutes — and the board gave many of parolees the same terms for release. “We found them rushed, to say the least,’ he said. “Often they were the same conditions time after time after time.” He said many children were not aware of their rights, did not have legal representation and did not understand the proceedings. The report found that the proceedings were improperly recorded, and there was no system to review or reassess the board’s decisions. The commission recommended that if a juvenile faces losing parole and going back to a detention center, a court and not the review board should make that decision. Timberlake said that moving such cases in the court system would mean about one more case a day in Cook County, which would have the most cases. He said as time goes on and fewer youth are in the system, because parole changes would help more stay out of detention centers, the number of cases gets even smaller. “When you look at the numbers, it’s very doable now. And when you look at the future, it’s not even a blip on the screen.” The report said that the review board should document its hearings more thoroughly, and a legal advocate should be on hand for youth that do not have a lawyer.

The report also recommended that parole conditions be tailored to each offender and offenders have individual plans to help them get back on their feet. Case plans might include access to mental health treatment, addiction services or family counseling after release. The report said that holding a youth behind bars for one year costs $86,861. Timberlake said that community-based services, such as counseling, cost between $4,000 to $7,000 a year. “The economic ripple effect of incarceration inflates taxpayer costs even more. In human terms, we must do better for our young people and our communities. In fiscal terms, we simply cannot afford to continue business as usual,” the report said.

Arthur Bishop, director of the DOJJ, said that his department is moving in the direction of many of the commission’s recommendations. “This report and these findings are definitely in line with the mission of the Department of Juvenile Justice under this administration, which is a change the culture.” He said that the department is working to move from a “punitive model” to “therapeutic, rehabilitative” process. Bishop said that linking incarcerated youth to community programs before they are released is key to trying to keep them from coming back to prison. “Those youth tend not to commit new crimes. Those youth then can become tax-paying citizens.”

Commissioners and Bishop acknowledge that it may be difficult to find the money needed to execute the commission’s recommendation during the current budget crisis. Bishop said a previous plan from Gov. Pat Quinn to merge DOJJ with the Department of Child and Family Services has been abandoned. But he said DOJJ is working with DCFS and other agencies to provide wrap-around services to youth offenders and their families and to try to recoup federal Medicaid dollars whenever possible. “I think in some ways, we’re not just having to add new money to accomplish this, but use some services more wisely," he said.

“Certain things will cost money up front,” said Julie Biehl, a commission member and director of the Children and Family Justice Center at Northwestern University Law School.

However, she said: “It’s predicted it’s going to be saving money by not reincarcerating kids at the same rate. … Over time, I think you are going to see a tremendous cost savings to the state.”

The commission plans to release a fiscal analysis of its recommendations sometime in the next few months.

Tweaked plan for tax breaks clears the House

2011-12-12T17:18:00.000-06:00

By Jamey Dunn

A package of tax breaks that failed miserably in the House just two weeks ago passed in the chamber today after undergoing some tweaks.

The main change supporters made to the plan was cutting it into two bills. Senate Bill 400 contained tax breaks for individuals, including raising the Earned Income Tax Credit from 5 percent of the federal credit to 10 percent over two years, and linking the standard personal exemption, which is given to all taxpayers, to federal cost-of-living increases. SB 397 included tax breaks tailored to specific businesses, as well as some cuts geared toward improving the business climate in the state.

The two bills passed today with bipartisan support. SB 397 received a whopping 81 “yes” votes, which is a far cry from the 8 “yes” votes that a similar plan passed by the Senate received on November 29. Rep. John Bradley, who sponsored SB 397, said splitting the plan into two bills made all the difference. He said the move allowed lawmakers to vote for the components they felt were most worthy without feeling like they were being log rolled into passing something they opposed.

“These two bills put together are pretty much the same as the single bill that was defeated two weeks ago,” said Rep. David Harris, a Republican from Arlington Heights who worked with Bradley on a lower-cost House plan that was never called for a vote. “I think that such is the nature of Springfield, that we end up having two bills instead of one — two bills that pretty much do the same thing but end up costing more than one.” However, Harris spoke in favor of both bills, saying that the plan was worthwhile, even if it was not ideal.

Bradley said the plan approved today would have no impact during Fiscal Year 2012, would cost less than $300 million in FY 2013 and would cost less than $350 million in FY 2014.

Rep. Barbara Flynn Currie said 2.5 million low-income, working Illinoisans qualified for the Earned Income Tax Credit in 2010. “It’s an incentive; it’s a reward for hard work, not a giveaway.” Currie, who sponsored SB 400, said giving money back to working families would help the state’s economy. “They’re going to spend it and give us back an economic boost.”

Harris agreed but said the increase in the bill was too large when weighed with other budget pressures in the state. “Many on my side of the aisle seem to be uncomfortable with the Earned Income Tax Credit. I would like to remind my colleagues for low-income wage earners … this is not welfare. This is for people who have jobs and who are productive members of society. We on this side of the aisle should not shy away from the Earned Income Tax Credit. At the same time, we should ask the question, ‘How much can we afford?’”

Other Republicans said the tax cuts for individuals simply cost too much and did not include enough relief for middle-class residents. “This state is penniless. I don’t know that anyone disagrees with it. We all want to help people, but I think if we do it we need to do it on a broad-based … basis,” said Rep. Dwight Kay, a Republican from Glen Carbon.

Floor debate on the package was briefly interrupted after protesters in the House gallery unfurled a large banner urging lawmakers not to give in to threats from businesses by offering them tax cuts. The banner hung down into the chamber until House security snatched it away and escorted the protesters out of the gallery.

The push for the bills that passed today started after the CME Group, which owns the Chicago Mercantile Exchange, and Sears threatened to leave the state. The plan includes tax breaks for both companies, as well as southern Illinois manufacturer Champion Labs, which was added to the deal in the last two weeks.

“We spent the summer working on issues regarding reform of the tax code in Illinois, particularly with regards to businesses in the state of Illinois — trying to create a fair system, trying to create a system which made sense,” Bradley said. “Our timeline, though, for acting on this measure was increased substantially by the potential issues with the relocation of two longstanding Illinois companies, Sears and the [CME Group.]”

James Parasi, chief financial officer for CME, told a House committee this morning that the passage of the plan into law would keep the CME group in the state for years to come. And Sears thanked lawmakers for approving the plan. "We thank the House of Representatives for passing legislation today aimed at keeping Sears an Illinois company. This is a major step in the process. We appreciate the House's efforts and are hopeful that when the Senate returns tomorrow, it will follow suit,” Sears spokesman Chris Brathwaite said in a written statement.

Bradley’s bill included some ideas brought up during the summer hearings, including a return of the net operating loss credit for businesses, which lawmakers voted to suspended as part of the recent income tax increase, and an extension of a research and development tax credit. Bradley said those provisions should help small- and medium-size businesses throughout the state. He added that a measure creating a larger exemption for the estate tax would help family farmers when their land and operations are passed down to their heirs. Bradley has vowed to continue legislative efforts to reform the state’s tax code.

Opponents to the tax cuts for businesses said the state cannot spare the revenue in a time when other vital programs such as education are being cut. “I am outraged that the state of Illinois would give the CME group a tax break while education spending in the state is languishing, and quite frankly, in a state of absolute crisis,” said Kit Main, a member of the Chicago-based community organization Northside P.O.W.E.R. and the group Make Wall Street Pay Illinois, told a House Committee this morning.

House Republican Leader Tom Cross, who worked with Bradley on the bills that passed today, acknowledged that many in the House disliked some parts of the plan. “There’s a lot of angst on this bill today, I realize that.” But Cross said lawmakers will take many difficult votes in the future, especially in regards to the state’s budget. He said $1 billion more in pension obligations due next year, as well as a stack of Medicaid bills that will be pushed into FY 201,3 would result in the need for unpopular budget decisions. We no longer have any easy choices,” Cross said during floor debate. “You think today’s tough? You think today is a difficult vote. I can’t imagine what it’s going to be like next year. … You ain’t seen nothing yet.” Cross called for sweeping reforms to the tax code, including a reduction in the corporate income tax rate. “If we are going to accept the fact that this state is in as bad of shape as it is — and it is — and we want companies to stay, the picking and choosing [for tax breaks] has got to stop.” Cross said he was optimistic about the Senate approving the two bills when they are in session tomorrow because they are much like a plan the chamber approved two weeks ago.

A prepared statement from Gov. Pat Quinn indicates that he is on board with the plan. Quinn originally supported increasing the Earned Income Tax Credit to 15 percent of the federal rate, but he said the deal that passed today provides “help for both hard-working families and employers.” He also encouraged the Senate to “take swift action tomorrow.”

Federal bill would allow concealed carry in Illinois

2011-12-09T15:31:00.000-06:00

By Jamey Dunn

After state legislation to allow concealed carry of guns in Illinois was shot down, some Illinois lawmakers are working at the federal level to open the door to concealed carry in the state.

U.S. Rep. Timothy Johnson is sponsoring a bill that would allow individuals who hold concealed carry licenses from other states to carry firearms in Illinois. “Overturning this prohibition in Illinois is long-overdue,” Rep. Johnson said. “Law-abiding citizens deserve the right to protect themselves. Over 100 years of Supreme Court rulings and the 14th Amendment guarantee that no state can deny the rights and privileges of any citizen. The Second Amendment could not be more clear on this issue. Forty-nine other states understand this and have reasonable policies in place to ensure that only law-abiding people willing to go through authorized safety training are permitted this right. The only reason Illinois is the exception is Cook County. This is not acceptable,” Johnson said in a written statement.

State Rep. Brandon Phelps, a sponsor of legislation that would allow concealed carry in Illinois, said he supports Johnson’s bill. Phelps' bill to legalize concealed carry failed in the Illinois House earlier this year. He said Illinois residents currently hold licenses for concealed carry in other states, and those licenses should apply here. Illinois is the only state in the union that does not allow some form of concealed carry after Wisconsin legalized concealed carry earlier this year.

Phelps, a Harrisburg Democrat, said he is about “five or six” votes short of the supermajority he would need to pass his bill. Because the bill would overrule home rule authority, it requires more than a simple majority. He said if Illinois would allow concealed carry, as opposed to accepting licenses from out of state, it would mean more revenue in the form of fees associated with licensing. “This can bring in a lot of money, people don’t realize that.”

Phelps thinks it is “just a matter of time.” Before some form of legal concealed carry happens in Illinois. He points to several pending court cases on the issues. “If it goes through the courts…it will be wide open.” He said his bill is preferable, because it contains restrictions on eligibility and where weapons can be carried. He said if Johnsons’ bill becomes law, he would back a state plan that would add some restrictions.

“Forty other state’s are not wrong, I believe, and it’s not the Wild West anywhere else,” Phelps said.

However, opponents say that concealed carry would not make the state a safer place. “Public safety has been and continues to be one of Gov. [Pat] Quinn’s top priorities, which is why he is opposed to allowing people to carry loaded, concealed handguns in public places, such as college campuses, parks, malls and our city streets,” said a written statement from Quinn’s office. Quinn spoke out against Phelps' bill during the regular legislative session. He has vowed to veto any concealed carry legislation that comes to his desk. “We must ensure the safety of our neighborhoods and allowing concealed carry does not advance that goal. Our streets need to be safer, and a concealed carry law would put first responders and the public at risk by allowing more weapons – hidden weapons – in public places. Guns must not fall into the wrong hands and our current regulatory system is antiquated – there are large gaps when it comes to identifying individuals who should be prohibited from carrying weapons. We cannot allow those individuals to carry loaded, hidden weapons.”

House reaches deal on tax breaks

2011-12-08T20:17:00.000-06:00

By Jamey Dunn

Members of the Illinois House working on a plan geared toward keeping businesses in the state say they have reached a deal.

Lawmakers returned to the Statehouse last week in hopes of passing tax breaks for Sears and the CME Group, which owns the Chicago Mercantile Exchange and the Chicago Board of Trade. Legislation passed in the Senate but only received 8 “yes” votes in the House. John Bradley, sponsor of a separate House plan, announced that he would not call his bill in that chamber because he lacked to support to get it through. Senate President John Cullerton said that Bradley’s measure could not pass in the Senate.

The House and Senate plans differed in the size of tax breaks individuals would receive. The House plan would have increased the Earned Income Tax Credit from 5 percent of the federal credit to 7.5 percent, but the Senate version would have increased the credit to 10 percent over two years. The General Assembly left without approving a plan, and House Democrats and Republicans have been working to reach a deal since.

Supporters hope to have better luck when legislators return next week. “After days of carefully weighing the costs and benefits of possible proposals, [House Minority Leader Tom] Cross and I crafted a bipartisan package of tax relief that will keep jobs in Illinois, spur further investment in new products by our manufacturers and provide tax relief for families and small businesses,” Bradley, a Marion Democrat, said in a written statement.

The “deal” is very similar to the plan that passed in the Senate, but this time the plan is split into two bills. Some Republicans in the House did not support the tax cuts for individuals in the plan, and some House Democrats were unwilling to settle for the smaller individual tax breaks contained in the House proposal. Splitting the two will allow lawmakers to vote for the aspects they support without having to vote for the other portion. Cross has pledged Republican support for the business tax incentives, something he did not do for the first version of the plan. “We have come to an agreement on a jobs package that will give some relief to a broad base of businesses in our state. This package will allow businesses to plan on longer term research and development and the ability to carry their losses forward in a tough economy. It will also lessen the tax burden on our family farmers and small businesses,” he said in a prepared statement.

Champion Labs in Albion has been added to the deal. The southern Illinois manufacturer would receive a credit that would cost the state $3.5 million over 10 years. The plan also includes other tax cuts that sponsors say will help businesses across the state, such as an extension of a tax break for research and development.

After one package went down in flames last week, reactions to the current deal were guarded. “We are encouraged that they are returning to Springfield to consider a package that will help us remain an Illinois company,” Sears spokesman Chris Brathwaite said in a written statement. “We sincerely appreciate the efforts of many members of the General Assembly over the last several months on our behalf.”

Gov. Pat Quinn said he would not sign a plan unless is contained “significant relief for working families.” He did support the Senate proposal, and the new agreement includes the larger increase to the Earned Income Tax Credit — 10 percent over 10 years.

It seems unlikely that Quinn would sign the business tax breaks bill unless the measure including the individual tax cuts also makes in to his desk.“The governor is very encouraged with the bipartisan agreement reached in the House. Before veto session, we brought the leaders to the table with the goal of delivering economic growth and tax reform that would provide relief to working families and help employers put more people to work,” Brooke Anderson, a spokesperson for Quinn, said in a written statement. “As we head into Monday's session, we'll continue working closely with the leaders and sponsors to get the job done. A spokesperson for Cullerton said the president’s staff is still reviewing the new bills.

The House is scheduled to return to Springfield on Monday, and the Senate plans to be back in session on Tuesday.

Is Blagojevich's sentence enough to deter corruption?

2011-12-07T16:51:00.000-06:00

By Jamey Dunn

Almost three years after his arrest on corruption charges, former Gov. Rod Blagojevich was sentenced to 14 years behind bars today, but some say the work to clean up “pay to play politics” in the state is not done.

“The long Blagojevich nightmare is over,” Andy Shaw, director of the Better Government Association, said in Chicago after the sentence came down today.

While the sentence is shorter than the 15 to 20 years that prosecutors requested for Blagojevich's 18 felony convictions, it is the longest prison term ever doled out for corruption in the state. Blagojevich was reportedly contrite today when he addressed U.S. District Judge James Zagel, saying he was sorry and that he has no one to blame but himself. According to the Chicago-Sun Times, Zagel told Blagojevich, “When it is the governor who goes bad, the fabric of Illinois is torn and disfigured and not easily or quickly repaired.” Blagojevich is must surrender on February 16, 2012. Under federal guidelines, he is required to serve 85 percent, almost 12 years, of his sentence. He was also hit with almost $22,000 in fines and penalties.

However, after the sentencing, Blagojevich vowed to fight on. “This is a time to be strong. This is a time to fight through adversity. This is a time for me to be strong for our children, be strong for Patti,” he told reporters in Chicago. “We’re going to keep fighting on though this adversity, and we’ll see you soon.” Blagojevich dusted off one of his favorite literary works, quoting Rudyard Kipling’s If, a poem he has been citing in speeches for years.

“It’s profoundly sad that we are here for the second time in five years to discuss the conviction and sentencing of a governor of Illinois.” U.S. Attorney Patrick Fitzgerald said today in Chicago. He said the sentence should deter future corruption and that it “sends a strong message that the public has had enough and judges have had enough. This needs to stop.”

Fitzgerald said that an end to corruption in Illinois would come with a change in public sentiment. He said that “to some extent” people are “resigned to corruption.” He encouraged citizens to become whistleblowers and change the climate so that those who would seek money or personal benefit in exchange for a political act “should be afraid to ask.”

Lt. Gov. Shelia Simon said Blagojevich’s sentence does not ensure an end to political malfeasance in the state. "We cannot rely on a prison sentence to deter corruption,” Simon said in a prepared statement. “Illinois needs stronger ethics laws to kill pay-to-play politics. It's time we expose conflicts of interest before they cost taxpayers, and clear the way for true public servants to rebuild trust with the public. Increased transparency, coupled with the threat of serious prison time, can end these shameful courtroom battles. Together we can put this chapter behind us, restore integrity to government and live up to our legacy as the Land of Lincoln.” Simon, who served on an ethics commission that made recommendations to the General Assembly in the wake of Blagojevich’s impeachment and removal from office, said the former governor’s conviction and sentencing provide an opportunity to have “public conversation again” about ethics in the state.

Dick Simpson, a professor and head of the Department of Political Science at the University of Illinois Chicago, agreed with Simon. “I don’t think that the sentence will be enough to deter corruption in the future.” He said that more recommendations from the ethics commission should be enacted. Simpson said that the job of cleaning up Illinois requires an educated public. “I think the most important single [recommendation to act on] would be to reintroduce into the public school system … both civics and the cost of corruption, and those are not taught in most schools anymore.”

He said students should be made aware of both the monetary costs of corruption as well as the human toll. “You can show examples of what happens when you can’t trust the policeman or you can’t trust the inspector and how it undermines trust in government and willingness to pay taxes. It’s not hard to put together a curriculum.”

He added, “Teaching political and civic engagement, rather than just the three branches of government, would be useful.”

He said that locking up offenders would never address the problem on a holistic level. “No amount of sentences would be sufficient. … Catching one crook at a time is not enough. It’s good that we punish people, but it isn’t sufficient.”

Gov. Pat Quinn called his predecessor’s sentence “stiff” but “necessary.” Quinn said there is “more work to do” to implement reforms, including enacting recommendations of the ethics commission. He renewed his call for a change to the state Constitution that would allow for citizens to put ethics measures on the ballot for a popular vote by collecting a enough voters’ signatures. Quinn said such initiatives, if passed, could apply to any level of government in the state. “We should not just have to rely on a legislature, or city councils or county boards [to pass ethics measures.]”

Quinn added, “We need to have a way for people to bypass the insiders to enact reforms that the people, the taxpayers, think are necessary.”

When asked about being Blagojevich’s running mate twice, Quinn said, “I think he let me down like he let down the people of Illinois.”

Other reading:
For more on the lack of civic education in Illinois schools, see Illinois Issues, September 2011.

For more on the history of political corruption in Illinois, see Illinois Issues Blog, December 2008.

For courtroom reporting on the sentencing, see the Chicago-Sun Times and the Chicago Tribune.

Quinn and Rutherford spar over borrowing

2011-12-05T14:49:00.001-06:00

By Jamey Dunn

State Treasurer Dan Rutherford said today he will not keep quiet about his thoughts on state borrowing or Illinois’ dire financial situation.

Last week, Gov. Pat Quinn voiced frustration over Rutherford’s recent comments on the state’s debt and financial standing. Rutherford called Illinois the “most bankrupt state in the nation” and has publicly warned Wall Street investors not to buy more of the state's debt.

Quinn told reporters in Chicago that he is “disappointed” in Rutherford for not being more cooperative on billions in borrowing that Quinn has proposed to pay off some of the state’s backlog of overdue bills. “I used to be state treasurer, and I know you can work with a governor,” Quinn said. “I’m a little disappointed in Treasurer Rutherford.”

Quinn has argued that the interest costs on loans would be cheaper than the interest the state is required by law to pay vendors on late bills. “I think if we do it in a good public finance way, we can save the taxpayers millions of dollars and help our business get paid the vouchers and invoices that they have quicker.” The plan has failed to gain traction in the legislature.

When asked if Rutherford’s public negative comments created fears that could lead to a credit rating downgrade for the state, Quinn recalled an old security slogan. “My father was in the United States Navy. Loose lips sink ships, and I think maybe Treasurer Rutherford should commit that to memory.”

“The governor has got to understand that this is not a secret." Rutherford said today that Quinn and others cannot hide from the reality of the budget — especially new information from Moody’s Investor Services that the state’s required pension payment next fiscal year, estimated to be about $5.3 billion, will be more than $1 billion higher than the payment for the current fiscal year. Moody’s estimates that the payment will account for about 14 percent of general revenue fund spending for Fiscal Year 2013. The bond credit rating agency described the state’s pension obligation as a “credit negative.”

“When Moody’s just came out within the last week talking about this new revelation about the greater payments that are going to be necessary in our pension funds, that’s no secret, governor. Everybody knows it. We’ve got to address it.” He said that when lawmakers passed a tax increase in January, they should have leveraged the prospect of new revenue to force cuts and pensions reform as part of an overall plan. “They didn’t put together the rest of the deal. … They blew it here in Springfield.”

Rutherford said he is willing to work with Quinn on short term borrowing — to be repaid within a year — to address cash-flow issues. But he said he would continue to be a vocal opponent of any other new borrowing. “Don’t loan my state any more money, they are addicted to debt.”

Rutherford clarified his statement about the state being bankrupt, noting that Congress has not voted to allow states to default. However, Rutherford said if the state were a private entity, it would be facing bankruptcy. He said he does not support proposals to allow states to default because vendors who have done business with the state would potentially get short changed. “If someone sold bread to the Pontiac penitentiary, that vendor should get the dollar for dollar, rather than [price] negotiated by a federal bankruptcy judge and get 80 cents on the dollar.”

Rutherford made his comments today at a news event announcing the start of an online auction to sell unclaimed property. After unclaimed property left in safety deposit boxes is held by banks for five years, it is passed on to the treasurer’s office, which then tries to locate the rightful owners. If the owners cannot be found, the state auctions off the property. Rutherford said the state has been searching for the owners of everything in the current auction for at least five years.

If owners come forward after an item has been sold, they are still entitled to the cash amount that the item was appraised for. Rutherford said of unclaimed property, much of which is kept in a vault under the state Capitol building, “it never becomes the property of the state. As the treasurer, I’m only the caretaker.” The online auction started today and will close December 11. Rutherford said holding the auction online will bring the cost to the state down from about $29,000 to about $2,000.

Advocates hope for federal Internet sales tax solution

2011-12-02T09:27:00.001-06:00

By Jamey Dunn

Illinois retailers are renewing a push for a federal law that would require online vendors to collect taxes on their sales.

Illinois lawmakers passed a law earlier this year that requires online sellers to collect state taxes if they work with marketers located in the state. Amazon.com and Overstock.com severed ties with marketers Illinois, which led to a few of such businesses to leave the state. The U.S. Supreme Court ruled that states cannot require businesses to collect the tax unless they have a physical presence in the state.

While the Illinois law may have chased off some businesses, proponents say it helped to draw national attention to the issue. Illinois' law has begun to bring in some tax dollars. According to the Department of Revenue, dozens of Internet retailers have registered with the state. Sue Hofer, a spokesperson for the department, said it does not yet have figures on how much is being collected under the law. “We are making process. It’s not everyone, and it certainly isn’t several of the much larger ones," Hofer said.

Until recently, Amazon and other large online retailers either cut ties in states that tried require them to collect taxes or fought the issue in court. Amazon lost its legal battle in New York and currently collects taxes there. However, the company worked out a deal with California lawmakers that has led to Amazon actively lobbying for a law to address the issue nationally. If a national solution does not pass, Amazon has agreed to collect taxes in California next year.

U.S. Sen. Richard Durbin has backed a national solution for years, but retailers, both online and brick and mortar, say a new version of the Illinois Democrat's plan has a real shot at approval in Congress.

Bricks-and-mortar retailers maintain that not collecting the taxes gives online sellers an advantage because they can offer what seems to be a lower price. Illinois residents who buy goods from non-collecting Internet retailers still owe the tax and are required to declare their purchases on their income tax returns. This was the first year that the Illinois Department of Revenue included a line on tax returns specifically for online purchases. According to the department, residents declared their purchases on about 270,000 returns, bringing in an estimated $11 million in revenue for the state. Those advocating for Durbin’s plan say that is a fraction of the revenue that could come in if online retailers were required by Congress to collect the tax.

David Vite, president of the Retail Merchants Association, says expecting customers to keep track of their online purchases — as well as differentiate between a seller such as Target that does collect the sales tax because it has stores in the state and one such as Amazon that doesn’t — isn’t realistic, and the consequences for getting it wrong are too dire. “They are confronted with possible perjury charges. They are filing a false income tax return. That’s not fair to the customer. That’s not fair to the citizens,” he said.

The U.S. Supreme Court ruling that bars states from making out-of-state retailers collect taxes focused on mail order purchases and did not address online sales because it was made 1992, long before e-commerce was a consideration. The court did open the door in its opinions for Congress to revisit the topic. “The underlying issue is not only one that Congress may be better qualified to resolve but also one that Congress has the ultimate power to resolve. No matter how we evaluate the burdens that use taxes impose on interstate commerce, Congress remains free to disagree with our conclusions. … Accordingly, Congress is now free to decide whether, when, and to what extent the states may burden interstate mail order concerns with a duty to collect use taxes.”

A new plan, called the Marketplace Fairness Act in the U.S. Senate and the Marketplace Equity Act in the U.S. House, would allow states to require tax collection if they take steps to streamline taxes and make the process simpler for retailers, which would likely be collecting taxes across multiple states. Previous versions would have required states to sign onto a universal Streamlined Sales Tax Agreement.

Under the new proposal, states could sign onto the agreement or take less sweeping steps to simplify tax collection, such as agreeing to a universal classification of items for taxing purposes. Currently, a snack cake may be classified for taxing purposes as food in one state and candy in another, or a scarf might be clothing in one state and an accessory in another. These different classifications might also be taxed at different rates. The goal is to build a classification system that applies nationwide. “The Market Place Equity Act would be easier to comply with for the state of Illinois,” Vite said.

The act is currently held up in Congress over concerns about what size businesses it should apply to. Lawmakers are considering an exemption for small business. Talks on the exemption size range from businesses bringing in $500,000 each year to up to $1 million. Some retailers, such as eBay, say that a small business exemption in the law should be larger, potentially up to $30 million.

“The idea that small business retailers on the Internet are a threat to the survival of small business storefronts is ridiculous. The threat to small independent retailers is coming from giant multibillion-dollar competitors online and offline, which has been the case for nearly half a century,” Tod Cohen, vice president and deputy general counsel of government relations for eBay, told a U.S. House committee this week according to a written transcript. “You hear a lot about fairness in this debate. Some have claimed that a 'level playing field' means all retailers using the Internet should be held to the same remote sales tax standard. However, sameness is not fairness. Small businesses retailers face many competitive disadvantages when compared to larger retailers. They have proportionally higher costs of doing business, including providing employee benefits. And one must especially consider the costs of shipping when considering the playing field for small e-commerce businesses. Shipping prices, as with other costs, are directly related to sales volumes and how close the retailers [are] to the customer.”

But Amazon and others oppose such a large exemption. “Fairness among sellers should be created and maintained. Sellers should compete on a level playing field. Congress should not exempt too many sellers from collection, for these sellers will obtain a lasting unlevel playing field versus Main Street and other retailers. Congress should rectify the current imbalance and avoid a future imbalance,” Paul Misener, vice president for global public policy for Amazon.com, told the House committee this week, according to the written transcript. “With today’s computing and communications technology, widespread collection no longer would be an unconstitutional burden on interstate commerce, and Congress feasibly can authorize the states to require all but the very smallest volume sellers to collect.”

Vite said he doubts the commitment of retailers who want a high threshold for exemption. “I’m not sure they’re serious about getting anything done yet. Amazon is.” Vite and others are hopeful that a solution can be reached soon, whether it is the new plan, which has bipartisan support, or a version of Durbin’s previous proposals. “Whichever one passes, we’re happy with,” he said. “The Marketplace Equity Act is probably the [plan] that has the most likelihood of passing.”

For more on the effort to collect sales tax on online purchases, see Illinois Issues April 2011

Lawmakers say budget deal fixed mistakes

2011-11-30T18:17:00.000-06:00

By Jamey Dunn

A plan the General Assembly approved yesterday to shift money to and from various funds would correct what some lawmakers say were errors in the original budget they passed last spring.

The agreement that Gov. Pat Quinn and the legislative leaders reached yesterday was primarily meant to halt the looming closures of seven state facilities and the layoffs of almost 2,000 employees. However, additional money would be filtered toward human services programs, such as addiction treatment, mental health services and programs to combat homelessness. The plan would be paid for with money from Quinn's budget vetoes and transfers from state funds outside the General Revenue Fund.

Sara Moscato Howe, chief executive officer of the Illinois Alcohol and Drug Dependence Association, said that the original budget cut allocations for addiction treatment further than the House budgeting committee for human services intended. “We were reduced by about 25 percent when the budget came out in July, and that was not the intention of the legislature,” Moscato Howe said.

“It was essentially a math problem,” said Chicago Democratic Rep. Sara Feigenholtz, who heads the human services budgeting committee in the House. She said the committee was working off of last fiscal year’s spending numbers without accounting for an infusion of funds late in the fiscal year by Quinn to ensure that addiction treatment was funded through the end of FY 2011. “We found ourselves $28 million in the hole.” Feigenholtz said that the lump sum budgeting process that lawmakers resorted to for the first two years Quinn was in office made it difficult to track when and where Quinn may have shifted money. “Hopefully, now that we’re line-iteming our budgets again, these kinds of errors will not occur again.”

Feigenholtz said a cut to mental health services was also inadvertent, resulting from a much less complicated mistake. “The mental health cuts were a typographical error, frankly.” She said House members meant for the funding level to be approximately $143 million, but “somebody hit an extra one” and turned the number into $114 million. The House passed a trailer bill last spring to correct the issue, Feigenholtz said, but the Senate did not take it up for a floor vote. She said that before yesterday's vote to reallocate funds, the human services budget “was heading in the opposite direction than the committee had intended to move.”

Moscato Howe said addiction treatment providers had cut programs, laid off workers and extended waiting lists in the last six months because of what is now being described as an accidental cut. “We’ve been cut every single year. Without this restoration, we were down 50 percent from where we were in FY [20]09.” She said that addiction treatment has never been funded to a level that could offer “treatment on demand,” but she said new funds should help cut wait times for patients.

Feigenholtz said she hopes human services will stop being a primary target for cuts. While human services have seen some cuts during the current budget crisis, providers have also had several brushes with the possibly of debilitating cuts, only to have them scaled back at the 11th hour. “Human service providers, just like any businesses in this state, deserve predictability,” she said. “We have to get them off this roller coaster.”

Those hoping for more education dollars were disappointed by the plan approved yesterday. No funds would be put back into general state aid, which was cut under the House budget passed last spring, or school transportation funding, which was cut by Quinn’s vetoes.

“It would be wonderful if we could [restore general state aid funds],” David Vaught, Quinn’s budget director said. “That’s a policy objective of the governor he’d very much like to see addressed. …We’ve got a lot more to do on the education priorities.

“One hundred million dollars was vetoed out of the budget for education by the governor, and none of it was restored,” said Rep. Roger Eddy, who is a school superintendent in Hutsonville. “It was cut more than the other budgets.”

Eddy, who is the ranking Republican on the House education budgeting committee, pushed for more transportation spending in the FY 2012 that budget after Quinn had cut them from the FY 2011 budget. “All we’re doing is reimbursing districts for what’s required," Eddy said. But Quinn removed the money with his veto pen.

Eddy said that during negotiations for yesterday's deal, downstate lawmakers went through a list of funds looking for the approximately $30 million they believe is needed to go toward transportation, and they offered to give up more than $20 million out of funds that are vital to downstate Illinois. Eddy pointed specifically to $4.5 million moved out of a tourism promotions fund, $6 million from the Downstate Public Transit Fund, $1.4 million from a conservation fund and $1 million from a fund meant to address the digital divide that were included in the overall budget plan that passed yesterday.

“It’s almost like a bait and switch,” Eddy said. “Bottom line is, I’m not sure we would have agreed to taking that money out of downstate funds if it wasn’t going to go toward education.”

Vaught said Quinn’s administration negotiated with Republicans in both the House and Senate. “This agreement was put together with both sides of the aisle,” he said. “We did something that they haven’t been able to do in Washington -- you know, actually get both parties to agree to do spending changes and reductions.”

Pension fund
One fund transfer, out of a fund that feeds the State University Retirement System, raised eyebrows yesterday. Money from that fund, which contains dollars brought in from unclaimed property, normally goes into SURS, and then any shortfall from the required payment is covered through general revenue funds. The original budget did not appropriate $95 million from that fund. According to Senate Democratic staff, the money was sitting idle and would not go into SURS without legislation to move it. Lawmakers voted to push the $95 million into SURS and shifted the $95 million from general revenue funds to other spending in yesterday’s plan. So after that shell game, the total amount of money that would have ended up in the pension system -- without lawmakers voting to add more -- is still there.

Tax plan fails while budget plan sails

2011-11-29T22:31:00.002-06:00

By Jamey Dunn

In a session day that one legislative leader described as “ a mixed bag,” lawmakers approved a budget deal to keep state facilities open but failed to pass a tax incentive package geared at keeping businesses in the state.

Legislators returned to the Statehouse today for a single session day that was scheduled for the explicit purpose of approving a tax break plan meant to appease the CME group, which owns the Chicago Mercantile Exchange and the Chicago Board of Trade, and Sears. Both businesses have threatened to leave the state in recent months.

But the two chambers were unable to agree on a bill. Yesterday, a House committee approved Senate Bill 397, scaled back version of previous plans that had been floated. However the Senate approved House Bill 1883 this afternoon. (Each chamber amended a bill from the other chamber and added its plan.) The Senate measure mirrors the House version except for a few important areas that became the sticking points that prevented lawmakers from finding an agreement that could clear both chambers today.

“We just don’t have an agreement yet as far as I know,” said Senate President John Cullerton.

HB 1883, like SB 397, offers about $200 million in tax breaks to CME and Sears. Both bills also include an extension of the research and envelopment tax credit and a reinstatement of the net operating loss provision in 2012 for losses up to $100,000.

However, the proposal from the Senate offers more tax breaks for individuals. Under SB 397 the earned income tax credit would increase from 5 percent of the federal credit to 7.5 percent in 2012 and 10 percent in 2013. The House version only calls for an increase of 7.5 percent. The Senate plan would link the personal tax exemption to the federal exemption, while the House plan would only tack on a flat $50 to the exemption. The House shot down HB 1883, with 99 “no” votes and only 8 “yes” votes. Cullerton said he doubts that the Senate would approve SB 397 because of the lower earned income tax credit.

Rep. John Bradley, who worked on SB 397, said many in the his chamber think the proposal from the Senate is too costly. He said his plan relies on a tax credit that is being fazed out and would not dip into general revenue funds in the near future. “We had created a package that we felt was sustainable without getting into general revenue funds,” he said. Bradley, a Marion Democrat, said the Senate’s larger earned income tax credit would cost about $50 million more than the House plan annually, and the personal exemption would be about $25 million a year.

Bradley announced on the House floor that he did not have enough support to pass his own plan. “At this point and time,we have reached a temporary impasse. This is not going to happen tonight,” Bradley said. “We are prepared to come back as soon as there is an agreement and as soon as we are able to work this out in order to save the two companies that are threatening to leave and in order to try to provide relief to working families and relief to small business in Illinois. Unfortunately, that day is not today. Whether it’s tomorrow the next day or next week, we’re prepared to come back as soon as this is settled.”

“I think there’s ample time,” Gov. Pat Quinn said as he was leaving the Capitol this evening to catch a plane. Clearly the House and the Senate are deeply divided on the issue.” Quinn said he thinks lawmakers should “take a step back.”

He added: “If you’re going to have any kind of tax relief package, it must have significant relief for working families — raising kids, working hard. That’s my fundamental bedrock principle. And unless that happens, there won’t be any action.” Quinn supported the Senate version of the tax plan.

“We are disappointed that today, the legislature was not able to reach agreement and pass a package that will help us remain an Illinois company,” Sears spokesman Chris Brathwaite said in a written statement. “It is our hope that lawmakers will achieve a compromise very soon as our timeline for making a decision about our future by the end of the year has not changed. We sincerely appreciate the efforts of many members of the General Assembly over the last several months on our behalf.”

The General Assembly did approve budget changes late this evening that are meant to avert the seven state facility closures and nearly 2,000 layoffs that Quinn announced in September.

Under the new plan, the facilities would remain open through the current fiscal year, paving the way for the governor’s plan to close some state facilities in what he describes as a slower and more deliberative manner.

“[The legislation] will enable us to create a sensible, reasonable, responsive and effective plan for moving people from state operated facilities into the community,” said Rep. Barbara Flynn Currie, who sponsored the budget plan in the House. Currie, a Chicago Democrat, said the proposal would not put state spending over the caps set with the income tax approved in January.

The plan combines money from the governor’s budget vetoes with cash transferred from various state funds and Medicaid reimbursements brought in from the federal government. The total amount of dollars shifted would be more than $270 million, and a strategy called “churning” is projected to bring in an additional $136 million in Medicaid dollars from the feds. Just over $200 million is slated to keep state facilitates open. Additional money would be spent on human services and other programs that Quinn and some lawmakers did not want to see cut in the budget that was approved in the spring, including:

$30 million for mental health programs.
$4.7 million for programs to combat homelessness.
$8 million for indigent burials.
$28 million for substance abuse programs.
$33 million for Monetary Award Program grants for college students.

Opponents voiced frustration over the funds that were not restored. Rep. Roger Eddy, who is a school superintendent in Hutsonville, said it was “unfair” that money for transportation, which has been drastically cut in recent years, was not restored when state law requires schools to provide transportation. Eddy, a Republican, said the transportation cut hits downstate school districts harder than Chicago districts, which are mostly represented by Democrats. Eddy said downstate legislators agreed to shift money from funds for spending that did not end up in the final bill. “That money wasn’t used exactly the way we thought it was going to be used.” The plan passed with no debate in the Senate.

Kelly Kraft, a spokesperson for Quinn’s budget office, said Quinn is working to avoid all layoffs announced under his original closure plan. However, she said the state might have to work out agreements with unions for employees who have already been laid off.

“That, I think, was a great victory for the public that we are able to have adequate human services,” Quinn said. “Think back [to] last summer of how dire this was. We were able to, I think, rescue the people of Illinois from a budget disaster.”

Republican Leader Christine Radogno, who called the session a “mixed bag,” said Quinn should have been more actively involved in the tax plan. She said when the two chambers battle over an issue, as they have tended to do recently, Quinn should work to diffuse the situation and find a compromise. She said a deal was not reached today because of "a failure of leadership."

Lawmakers look at public campaign financing and corporate tax breaks

2011-11-28T18:49:00.000-06:00

By Jamey Dunn

Illinois lawmakers might approve tax cuts to help keep businesses in the state, but they apparently are a long way off from shelling out state dollars to finance political races.

A task force created under the law that set campaign donation limits in Illinois is delving into other potential campaign finance reforms. Today during a legislative hearing, the group looked at public funding of campaigns.

Rep. Elaine Nekritz, a Northbrook Democrat, told the task force that she doesn’t think the recently enacted contribution limits will change much in the state. “While I voted for the campaign [contribution] limits … I don’t really think that they do anything to take money out of campaigns, and out of politics, and out of influence of government. So, I would say, ‘Yes, we did that.’ But that’s been done since the 1970s at the federal level, and I don’t see anything that’s removed the influence of money or reduced the amount of expenditures on campaigns on the federal level,” she said. “So I don’t think that there’s any need to wait to see what the impact will be in the state of Illinois.”

Nekrtiz said that she supports spending limits. However, she said “the U.S. Supreme Court is not headed in that direction. So we have to find an alternate method to get that done, and I think the next best thing is to create incentives for candidates to control spending.”

She said that during the current budget crisis, money is probably too tight for the state to offer public funds to political candidates. But she said lawmakers should have a plan for when the state is on better financial footing. “It’s critical that we have the dialogue and be prepared [for] such time as we can come up with a source of funding for public financing.”

However, Kent Redfield, an emeritus political science professor at the University of Illinois Springfield, said any plan to publicly fund governor or General Assembly races would not find enough support to become a reality. “If you are trying to get a system to substitute public money for private money, I don’t think there’s a political will to do that. The cost is just way too high, and I’m not even sure that it’s good public policy to try and do that. You’d be spending so much money to affect a very small number of races, and the rest of it would be going to people who were either going to lose or win regardless of how much money was there.” Redfield said many candidates in close races likely would not take public funds because then they would be tied to a set amount of spending. “There are states that finance their gubernatorial races through public finance, and there’s longstanding traditions, and it would be really bad form not to take the money. They tend to be smaller states where it’s a lot cheaper to run. But to institute that kind of system in Illinois would be very difficult.”

The federal government offers public funding for presidential races, and at least a dozen states have some sort of public funding system for elected offices.

Redfield said that instead, Illinois should offer smaller grants to candidates who raise money from small contributions, which often come from private citizens. Redfield said such grants would “encourage candidates to raise money in small amounts and provide resources for people who otherwise would not be able to run.”

He added, “Those are positive things for the system, but they’re not game changes in terms of who control the House or the Senate.”

Redfield did advocate for public funding for judicial races, saying that the state’s judiciary may have “crisis of credibility” in its future. “The more that you get big private interests that are interested in the outcome of a judicial decision engaged in political campaigns, the more you’re going to call the independence of the judiciary into question, and that’s very corrosive. If people don’t accept the legitimacy of the courts, the foundation of the whole system is gone.”

Meanwhile, the House Revenue and Finance Committee approved a plan today that is geared at keeping two businesses in the state.

Senate Bill 397 would offer about $100 million in tax breaks to the CME Group, which owns the Chicago Mercantile Exchange and the Chicago Board of Trade, and Sears, both of which have recently threatened to leave the state. Other breaks meant to benefit the business community at large, such as an extension of the research and development tax credit, are also in the bill.

The plan also includes an increase to the earned income tax credit and a $50 bump in the personal income tax exemption. The proposal would cost an estimated $250 million annually, which is scaled back from a plan floated last week that would have eventually cost the state about $850 million a year. A vote on the package is expected in the House tomorrow.

State will let couples in civil unions file joint tax returns

2011-11-28T16:54:00.009-06:00

By Jamey Dunn

UPDATED: Equality Illinois released a statement regarding the Illinois Department of Revenue's decision on state tax returns. See below.

Illinois couples in civil unions will now be required to file their state tax returns in the same way as married couples. The new plan is a reversal from a previous policy, under which couples in civil unions could not file state taxes together.

The Illinois Department of Revenue had decided that such couples would have to file separately because they could not file their federal taxes together. Sue Hofer, spokesperson for the Illinois Department of Revenue, said the agency looked to New York, which legalized same sex marriage this year, when trying to find a way to allow couples in civil unions to file joint state taxes.

Hofer said partners in a civil union would fill out the federal form as if they were married, and then fill out the state form as a married couple. The federal return would be sent only to the state, along with the state form, to be used as a dummy to base the state return upon. Those in civil unions would still have to file separate federal returns as single because the federal government does not recognize their partnerships. Couples who do not wish to file a joint return would still file as married but would be able to file separate state returns.

Hofer said joint filing for state taxes will not result in large tax benefits for couples -- the substantial benefit comes at the federal level for couples with disparate incomes. If one person has a much smaller income, it can move the household into a lower tax bracket than the individual was in. “In Illinois because we are a flat tax state, you really aren’t going to see any significant change to your taxes. … With the state, everybody pays a 5 percent flat tax. But there will be some benefits.” She said that exemptions such as for property taxes or education expenses, could be applied a couple’s total income instead of just an individual’s earnings.

Randy Hannig, director of public policy for Equality Illinois, declined to comment specifically on the change because he said the group had not received an official announcement from the department. However, he said he is “cautiously optimistic.” UPDATE: From a prepared statement released by Equality Illinois Monday night: "Since the beginning of June when same-sex couples first started entering into civil unions, no one could speak with certainty about how this new status would affect state tax policy," said Hannig. "We immediately reached out to the Illinois Department of Revenue and started the process of figuring out a solid solution to this problem. Illinois law specifies that couples in a civil union are afforded the same rights and benefits as married spouses, so why should same-sex couples' state tax status be any different?” Illinois is the 10th state, including the District of Columbia, to allow same sex couples to file joint tax returns, according to Equality Illinois.

Hofer said the department will work in the coming weeks to get the word out about the change so couples in civil unions know what to do when filing their returns early next year. “We realize we had to make a decisions before the end of the year,” she said. “We will be talking with advocates and folks that this will impact.”

Rep. Greg Harris, a sponsor of the law that legalized civil unions in the state, said he did not know whether the department had created a final policy on the issue. “I do know in having talked to tax partners in a number of major law firms ... that this change would bring us in line with what other states do,” Harris said. He said the problems the department had in sorting out tax policy for couples in civil unions highlight a disparity that exists at the federal level. Harris, a Chicago Democrat, said because the federal government does not recognize civil unions, couples will miss out on tax benefits and have to jump through “additional hoops” to file state taxes together. “There’s still an inequality in the way relationships between same sex couples are treated and the way relationships between opposite sex couples are treated.”

Study: Illinois is no longer a model for higher education

2011-11-22T18:29:00.001-06:00

By Jamey Dunn

A new study found that Illinois’ higher education system, once one of the best in the country, has lost substantial ground in recent years

A Story of Decline: Performance and Policy in Illinois Higher Education found that between 1998 and 2008, there was a 10 percent drop in the number of high school graduates who enroll in college within four years of graduation and an 8.5 percent decline in the number of students who enroll in college directly after graduating.

Researchers at the University of Pennsylvania’s Institute for Research on Higher Education also found many factors that could lead to a college degree becoming less affordable in the state. “From 1999 to 2009, median family income in Illinois fell by 7 [percent] in constant dollars while tuition increased by 100 [percent] at public four-year universities and by 38 [percent] at public two-year colleges. At the same time, state support for need-based grants dropped from $1,036 to $745 per undergraduate full-time student, a decline of 28 [percent.]”

The study found racial disparities among Illinois college students. “Blacks and Hispanics and individuals with low incomes are far less likely than other Illinoisans to enroll in college or, if they do enroll, to earn degrees. For example, as of 2009, only 36 [percent] of black students and 44 [percent] of Hispanic students attending four-year colleges and universities were graduating within six years, compared with 66 [percent] of white students and 69 [percent] of Asian-American students,” said the report.

The report pointed to a lack of universal priorities in the state’s higher education planning, as well as the existence of few incentives for schools to increase performance in areas such as graduation rates and closing learning gaps. “The Illinois legislature, for its part, is seen as partisan and lacking consistent and substantive leadership for higher education. State leaders we interviewed, including state legislators, questioned the legislature’s ability to establish shared goals and priorities for higher education,” said the study. The study said that recent governors have not made higher education a priority, and political corruption has only made matters worse.

George Reid, executive director of the Illinois Board of Higher Education, said that the study is outdated. “My take on that study is that it might have been accurate two or three years ago, but it definitely does not characterize higher education in Illinois today.”

Reid said the Illinois Public Agenda for College and Career Success, a master plan released by the board in 2008, is an integral part of the turnaround. Reid said many of the problems pointed out in the University of Pennsylvania study are included in the agenda, along with the state’s plan to address them. “The legislature and [Gov. Pat Quinn] and all of us are now singing from the same hymn book,” he said.

Reid said the board is working to address the performance gaps found in Illinois’ higher education system. “We know we have two states of Illinois.” He said one state is filled with residents who have financial security. However, Reid said, “we have this underside of Illinois where people are not doing well — where they don’t have a job, and their economic outlook is not good. … What we found out in the public agenda is that if you have a college degree, that is the gateway of rising out of that underside.”

The authors of the report agree that education is the key to closing that so-called prosperity gap. However, they say the agenda needs more focus. “There are so many recommendations without a clear sense of the priorities,” said Laura Perna, a professor at the University of Pennsylvania and an author of the report. She said that especially during a budget crisis, state leaders must agree on a set of realistic priorities if the higher education system is to be led in a coherent direction.

The report cites funding cuts as part of the problem, and said the often staggering totals of overdue payments to universities have eroded trust between academic leadership and lawmakers. However, the report also said that the decline began before Illinois’ current budget crisis. “The state is also facing substantial fiscal shortfalls, but it is important to note that the decline in higher education performance began before the recent budget challenges; it is likely that increased funding alone will not improve performance.”

Illinois is looking to create financial incentives for schools to improve performance. In August, Quinn signed House Bill 1503, which is the first step to linking funding and school performance. The bill calls for a commission to create metrics to measure the performance of higher education institutions. Chicago Democratic Sen. Edward Maloney said that work on the metrics has been productive and he expects them to be released sometime next month. He said that one important detail has been to ensure that schools are not measured in an across-the-board manner, but that the system takes into account each institution's unique circumstances and mission. He said one way this might be accomplished is giving schools more credit for positive outcomes for students who have been determined as “at risk.”

Maloney, chairman of the Senate Higher Education Committee, said that the amount of funding linked to performance would likely be small at first. He said that one of the biggest challenges to the plan is the state budget. Maloney said the idea is to reward schools that are doing well, not punish schools that are under-achieving. But he said if higher education funding is cut or even holds steady, the end result would be punitive — taking away money from current funding levels — instead of a positive incentive — getting bonus funds for good performance. “The higher ed community has celebrated flat funding as a victory. That is unfortunate, but that’s where we’re at.”

Perna and her research partner, Joni Finney, who is also a professor at the University of Pennsylvania, looked at Illinois as part of a series of five state studies and plan to release data on other states in the near future. The project focuses on the possible causes of higher education outcomes in different states. Perna said that other states are struggling with issues similar to those facing Illinois. However, she said that the findings in Illinois are particularly disheartening because the state was performing very well in recent years. According to the study, Illinois was a leader on enrollment rates and college affordability during the mid-90s. “Illinois was once a state that people looked to as the model for higher education performance, as well as public policy and government, and it's not really any longer,” Perna said. She said that Illinois' more positive performance history is an indicator that higher education in the state could bounce back. “The potential is there, but there’s been a serious erosion. … Some profound things have to change.”

Several tax breaks are on the table

2011-11-16T17:45:00.000-06:00

By Jamey Dunn

Illinois lawmakers took a look at ways to change tax policy in the state as part of a package to keep companies that have threatened to leave.

Threats to leave the state from the CME group, which owns the Chicago Mercantile Exchange and the Chicago Board of Trade, spurred work on a package that could offer tax relief to CME, other businesses and Illinois families.

Lawmakers are considering a number of tax tweaks meant to spur economic growth, including:

Changing the way the state calculates the tax bill for CME and other exchanges in the state by reducing the percentage of sales that are taxable. Currently, CME’s income tax is calculated based on all of its sales even though online trading leads to many of the sales going to customers outside Illinois The Illinois Department of Revenue estimates that this change would cost the state about $85 million in revenue.
Extending the research and development tax credit. The Department of Revenue estimates that this would cost about $40 million a year.
Increasing the Earned Income Tax Credit for working families from 5 percent of the federal credit to 15 percent over two years. According to the Department of Revenue, the increase would cost about $112 million annually.The department estimates 900,000 households or 2.5 million residents would benefit from the credit.
Reinstating the Net Operating Loss Credit that allows businesses to write off losses. It was temporarily removed under the tax increase passed in January. The Department of Revenue estimates that this would eat up about $275 million each year.
Reducing to $100 the fees companies must pay to become corporations, which can range from $500 to $750. The change would cost about $12 million in state and local revenue.

The plan would be paid for in part by decoupling from a federal tax incentive meant to encourage businesses to buy equipment. The plan allows businesses to deduct more of the costs of such purchases upfront, instead of spreading it out over several years. Illinois links its practices to the federal tax code, but if it were to “decouple” from the feds on this policy, the Department of Revenue estimates that it would mean an additional $571 million in revenue for Fiscal Year 2012, and another $354 million next fiscal year. These estimates are based on applying a decoupling retroactively back to January.

Many who testified today at committee hearing on the package said that such a retroactive action would be unfair to businesses that bought equipment under the current rules. John Stevens—owner of Stevens Implement Company, a John Deere dealership in Petersburg— said his sales have gone up 10 percent in the last year, and the increase has allowed him to hire more staff. The tax incentive, known as bonus depreciation, is “one of the major reasons we have seen our sales increase in 2011.”

Stevens said the change would pull the rug out from under companies that have made large purchases in “good faith” under the bonus depreciation plan. “Large investments like this must be planned well in advance to engineer, schedule and finance while considering all tax implications.”

Creating a package that can pass will be a difficult task. Legislators on both sides of the aisle support the idea of making some tax changes to spur the economy, but opinions differ on what is needed. Senate President John Cullerton introduced a plan that only targets exchanges, such as CME. Many Republicans did not support the measure, saying it was unfair to help out one large business when many small companies are struggling. Gov. Pat Quinn has backed an increase to the Earned Income Tax Credit since lawmakers were weighing tax increase options shortly after he took office. However, all of these tax breaks will suck up precious revenue in a time when the state is making cuts to education, human services and politically popular programs. The difficulty in weighing all these considerations likely played a part in the issue being pushed out of the regular veto session and into some specially scheduled session time later this month. Another hearing is scheduled on Friday, and the full House is scheduled to return to Springfield to take up a plan on November 29.

For more on the businesses lobbying the General Assembly, see the current Illinois Issues.

Catholic Charities to end fight over foster care

2011-11-15T16:16:00.000-06:00

By Jamey Dunn

Catholic Charities has given up its fight to administer foster care and adoption services in the state of Illinois.

The Thomas More Society announced today that it plans to drop its lawsuit against the state. The organization argued that the state did not have the right to end contracts with Catholic Charities to provide adoption and foster care services.

The dispute was over placing children in the homes of couples who have a civil union. Church representatives said it went against the organization’s belief system to place children with unmarried couples. Catholic Charities pushed for legislation that would have allowed them to refer couples in a civil union to another adoption and foster care provider, but the measure was shot down in committee. Kendall Marlowe, a spokesperson for the Department of Children and Family Services, said the agency did not renew the contracts because representatives of Catholic Charities voiced the organization’s intention not to comply with the state’s new civil unions law.

Opponents to ending the contracts say that provisions in the civil union law itself should protect religious-based organizations in situations like the one Catholic Charities is facing. “The dismantling of Catholic Charities’ foster care ministry marks a tragic end to 90 years of foster care service by some of the most effective child welfare agencies in Illinois,” Peter Breen of the Thomas More Society, said in a written statement. “The Religious Freedom Protection and Civil Union Act only passed after specific assurances that the law would not impact the work of religious social service agencies. Specific protections for these agencies were written into the law, but unfortunately, Illinois officials refused to abide by those protections. This stands as a stark lesson to the rest of the nation that legislators promising ‘religious protection’ in same sex marriage and civil union laws may not be able to deliver on those promises.”

However, civil rights advocates argue that when an organization—religious or otherwise—goes into business with the state, it must treat everyone equally and fulfill all requirements set out by state law. “When a private organization — even a private religiously affiliated organization — performs what is really quintessentially a government function, such as screening foster homes for licensure or caring for the wards of the state, it must abide by the laws that bind the government. If the religiously affiliated organization does not want to abide by these laws, it should exercise its choice not to accept those government duties,” said Mary Dixon, legislative director for the American Civil Liberties Union of Illinois.

Sangamon County Circuit Judge John Schmidt ruled in August that Catholic Charities was not entitled to new contracts. “No citizen has a recognized legal right to contract with the government,” the opinion said. The Thomas More Society has filed an injunction trying to halt the end of contracts with Catholic Charities affiliates of the dioceses of Springfield, Joliet, Belleville and Peoria. But the group said it now plans to end its legal battle.

Veto session roundup

2011-11-11T16:25:00.000-06:00

By Jamey Dunn

While Illinois lawmakers pushed some issues to additional session days scheduled later this month, they did pass a few substantial pieces of legislation.

Regional superintendent pay
The wait for paychecks will end for regional superintendents after Gov. Pat Quinn signs Senate Bill 2147. Quinn vetoed the funds for the administrators’ salaries, and while many have remained on the job, they have not been paid since summer. The measure draws from local revenues to compensate superintendents for one year. The bill also calls for a task force to study a potential consolidation of some of the Regional Offices of Education, which are run by the superintendents. Lawmakers expressed frustration with Quinn for cutting the funding for the superintendents' pay without a plan for who would take over their legally required duties, including school inspection and teacher certification. “We should be ashamed of the position that the governor’s veto has put us in,” said Spring Valley Democratic Rep. Frank Mautino, a sponsor of SB2147.

Quinn has maintained that local governments should pay for their salaries. A spokesperson for Quinn said that he plans to sign the bill.

Speed cameras
The city of Chicago could install cameras to catch speeders around parks and schools if Quinn signs SB965. The cameras would take a picture of the license plates of speeders who then would be mailed a ticket. They would not be charged with a moving violation. The offense would be on par with a parking ticket. And, like a parking ticket, the owner of the car, who may or may not have been driving at the time of the violation, would be responsible for the ticket.

Unemployment insurance
Legislators also approved a plan to address the state’s growing obligation to the federal government for unemployment benefits. The state has been borrowing money for the feds to keep pace with unemployment benefits paid out during the recession. The interest bill would have reached an estimated $240 million, which would have come out of general revenue funds. Under SB72, business will have to pay up to make the trust fund that pays benefits solvent. However, the interest payment and even larger penalties for businesses that would have happened if no action were taken, would be avoided. Companies that have not had any layoffs, nearly half of businesses in Illinois, would pay less. The plan passed with bipartisan support and the backing of the business and labor communities. “Many of us have campaigned that we want to help business out. … Well, here is your bill,” said Sen. Kyle McCarter during floor debate. Quinn also supports the measure. "We are in difficult economic times, and we need to bolster our unemployment insurance program to protect both workers and businesses," Quinn said in a prepared statement. “As we did with our workers’ compensation overhaul this spring, we brought everyone to the table to find a solution.”

For a comprehensive look at the unemployment insurance trust fund, see Illinois Issues November 2010.

House Speaker Michael Madigan said the House plans to return for session on November 29. Senate President Cullerton said his chamber would return before the end of the year to take up issues that were not resolved during the veto session.

Quinn hopes to slow facility closures

2011-11-10T15:24:00.000-06:00

By Jamey Dunn

Gov. Pat Quinn’s plan to close seven state facilities may soon be put on hold, but layoff notices have already gone out to some workers.

Members of the General Assembly are in talks with Quinn about shifting funds to avoid the looming closures, which Quinn had planned to implement in the closing months of 2011 and the beginning of 2012. Kelly Kraft, Quinn’s budget spokesperson, said she expects an agreement to be reached when lawmakers return for an additional session beginning on November 29. The House announced last night plans to return to the Capitol later this month to work on a business friendly tax incentive plan that didn’t gel during the time frame that legislative leaders set for the General Assembly's fall veto session.

But Quinn has not backed away from the idea of closing state institutions. The new plan calls for the shuttering up to four centers for the developmentally disabled and at least two mental health centers.

The plan would transition about 600 of the 2,000 people with developmental disabilities in state institutions to community care settings. Michael Gelder, senior health policy adviser to the governor said the transition would take two and a half years. Once the plan gets rolling, he said, about 20 people a month would be transferred according to individual transition plans based on assessments of their needs.

“As appropriations increase, we’ll be able to maintain these facilities over the course of this year. That is our goal,” Gelder said.

Gelder said the plan could result in closing more than two psychiatric hospitals by 2014. “That would be the minimum. We think we could do more with that planned thoughtful approach working with local hospitals and working with other community base service providers to prevent emergency psychiatric admissions that are now treated in our state centers.”

Kraft said the money to keep the facilities open would likely come from Quinn’s budget vetoes, which stand because they did not come up for a vote this week, and transfers from special funds — the same funds targeted by Senate Democrats as a revenue source during their failed attempt to add spending to the budget shortly after it passed. She said federal Medicaid dollars might also be tapped.

Union officials, who represent many workers at state institutions, were not impressed with Quinn’s new plan to close facilities in a slower and more deliberate manner. “Governor Quinn is under fire for his irresponsible push to cut mental health care, force people with severe developmental disabilities out of the homes they have chosen and destroy thousands of middle-class jobs. Spreading that pain out over the coming years doesn’t make it any less wrong,” Anders Lindall, spokesperson for the American Federation of State County and Municipal Employees Council 31, said in a written statement.

The Commission on Government Forecasting and Accountability voted to keep all seven facilities open. Though many members said they thought some facilities should be closed, they objected to Quinn’s rushed timeline. Republican legislators, including House Majority Leader Tom Cross, have accused Quinn of targeting facilities in Republican districts. These opponents called on the governor to slow down the process and put all state facilities on the table.

“There’s a right way to close these places and a wrong way to do it, and I thought this was the wrong way,” said Rep. Kevin McCarthy, an Orland Park Democrat. “We are over-institutionalized in our state. We understand that. We want to move forward.” COGFA plays an advisory role in the process, but according to COGFA co-chair Sen. Jeff Schoenberg, no governor has gone against its recommendations on a facility closure.

While lawmakers argue that they want all facilities up for consideration, many members of COGFA say that it would be impossible to close either the Logan Correctional Center in Lincoln or the Chester Mental health center, which houses the criminally insane. “There are two facilities I think that we just couldn’t close, and it’s incumbent upon us to find the resources. One is Chester, one is Logan [Correctional Center in Lincoln,]” Rep. Michael Tryon, a Crystal Lake Republican, said at a previous COGFA hearing. “[Chester is] the only maximum security facility for the criminally insane and those who are not fit to stand trial. … These are not the kind or prisoners that we should put in Alton [Mental Health Center] or any other facility.”

The proposed plan to close Logan, which Schoenberg said “defies imagination,” involves housing prisoners in the gymnasiums of other prisons.

The new tack described by Gelder did not focus on correctional facilities, although Quinn’s original plan called for closing Logan and the Illinois Youth Center in Murphysboro. “We would rather spend less on maintenance of institutions and more on the people who are served in [them.] So we will move ahead with a planned thoughtful approach — stopping admissions, initiating assessments and completing care plans and transition plans that will enable us to serve and meet the needs of the people that we all want to meet wherever they are in the state,”Gelder said . “We will work with the General Assembly…to identify the facilities and prioritize those facilities. Not everybody is going to agree.”

Although members of Quinn’s administration say he wants to put the breaks on closures, the state sent out layoff notices earlier this month to 200 employees of the Tinley Park Mental Health Center. The layoffs would be effective December 3. Kraft said if legislation to shift funds is passed soon, it would save those workers’ jobs, but the state is obligated by law to give them layoff notices because the money is not there to pay them. If a plan is not approved soon, about 160 workers at the Singer Mental Health Center in Rockford would be the next to get pink slips.

Kraft said there are no plans to reinstate 21 Department of Agriculture employees who have already been laid off under the original closure plan.

COGFA co-chair Rep. Patricia Bellock said hearings held throughout the state on the proposed closures helped to raise awareness among lawmakers about the need to give more patients access to community based care. “Besides the 12 members of COGFA, at all those hearings, the local legislators were there. So now you have 35 or 40 legislators who are familiar with this process in Illinois of institutionalization and are ready to move forward with the [Quinn] administration on this in a serious way,” said Bellock, a Hinsdale Republican.

She added, “This will not go away.”

House plans additional session to finish business incentive plan

2011-11-09T20:38:00.001-06:00

By Jamey Dunn

UPDATED ON NOVEMBER 10: Speaker Michael Madigan announced on the House floor today that members of the chamber will return for session on November 29. That is a change from last night's announcement of November 21.

Lawmakers will likely be returning to Springfield later this month to wrap up a plan intended to keep businesses in the state.

As the legislative session was drawing to a close this evening, it was announced on the House floor that legislators should be prepared to return to the Statehouse for session on November 21. Veto session was originally scheduled to last through tomorrow. “It will be an opportunity for the House Revenue Committee to report a tax incentive bill,” House Speaker Michael Madigan said after the announcement. When asked whether the tax incentive package, which began as a plan to keep the CME Group from making good on threats to leave the state, would be addressed, Madigan said, “That’s the plan.”

A spokesperson for Senate President John Cullerton said Cullerton is “surveying his members” to see if they are available for more session days.

Cullerton introduced a bill that would cut taxes for the CME Group, which owns the Chicago Mercantile Exchange and the Chicago Board of Trade. CME representatives said the recent income tax increase would result in the company owing the state $158 million. Republicans demanded other business friendly provisions and said they would not support a bill that was geared to only one business. Sears is also looking for incentive to stay in the state. Since the introduction of the bill, wish lists from all sides have been piled on, and Madigan seems to be seeking more time to iron out a deal that can pass.

Additional session days would allow sponsors who have been unable to drum up support for their bills more time to try an find “yes” votes.

One such sponsor could be Skokie Democratic Rep. Lou Lang. Senate Bill 1849, a revamped version of a gaming expansion package, failed to pass today in the House. Lang said yesterday that he was seeking a veto-proof majority, but the bill failed to gain even the simple majority needed to move it over to the Senate.

Lang said the new bill was a better version of a gaming package that lawmakers approved last spring. “This bill provides less gaming and more oversight.” He said he took Gov. Pat Quinn’s complaints about SB 744, which Quinn vowed to veto, under consideration when drafting the new plan. But in the end, the sticking point is allowing horse racing tracks to have slot machines. Quinn is opposed and Lang and Waukegan Democratic Sen. Terry Link, who is the gaming point man in his chamber, say a gambling expansion cannot pass in the legislature without them. Quinn’s office did not respond to an inquiry about the governor’s position on SB 1849.

“The first thing that the governor said was, No help for our agribusiness people. No help for central and southern Illinois. 'No help for you. You’re on your own. You’re on your own. Oh, we’ll continue to cut jobs in your communities. We’ll close facilities in your communities,'” Lang said during floor debate. “It would make me angry if I lived in central Illinois.”

Lang attempted to tweak legislative frustration with the governor toward his favor, but in the end, it may have been Quinn’s opposition that pulled off of this new bill at least some of the original 65 “yes” votes for the larger gaming package approved in spring.

Madigan said Quinn’s opposition to slots at horse racing tracks and what most see as an inevitable veto for SB 1849, if it should pass, may have damped support. “That could dissuade people from voting yes.”

“Clearly several people who voted for this in May did not vote for it today. I had several members who voted no last time that told me that they were going to vote yes today,” Lang said. “We’ll get to the bottom of it and figure out if we can find the necessary votes to pass it by tomorrow.”

Lang said legislators should not allow Quinn’s veto threats to sway their votes. “That happens around here a lot. And that would be not a proper way to make legislation. We have a Constitution that provides for three coequal branches of government, and I would hope that legislators would not abdicate their responsibilities under the Constitution worrying about what [the governor] might do if we pass a bill.”

Other issues could bleed into extra session days. House Minority Leader Tom Cross has yet to call, SB 512, his plan to reduce pension benefits for workers hired before reduced benefits kicked in this year. The deadline has passed to override Quinn’s budget vetoes, which include a cut to Medicaid reimbursements for hospitals and an unpopular cut to funding for school transportation. Without a corresponding rate cut, the Medicaid reduction would essentially push bills into next fiscal year. The vetoes stand, so lawmakers may look to make budget tweaks in the near future.

House approves plan to pay school administrators

2011-11-09T19:43:00.001-06:00

By Jamey Dunn

School officials who have worked for months without pay are one step closer to getting a paycheck.

The Illinois House today approved Senate Bill 2147, which would pay regional superintendents out of a local revenue stream. The administrators have not received pay since Gov. Pat Quinn vetoed the funding for their salaries last summer. However, many have continued to work. Regional superintendents' duties include inspecting schools, certifying teachers, training bus drivers and conducting background checks on job applicants.

The legislation's sponsor, Rep. Frank Mautino, a Spring Valley Democrat, called the situation “an embarrassment to the state of Illinois, and it needs to be corrected.”

The bill would allow for regional superintendents to be paid for one year, including back pay from the time they have worked without compensation, out of corporate personal property replacement tax revenues. The measure also calls for the creation of a task force that would make recommendations on potential consolidation of the Regional Offices of Education, which are run by the superintendents.

Mautino said that the plan would cost about $13 million. “It’s a one year hit of less than 1 percent, less than a penny on the dollar.” But local representatives of local governments say the real issue is not the price tag, it’s about the state shifting the cost onto local governments of an office created by the legislature.

Joe McCoy, legislative director for the Illinois Municipal League, said the move to pay regional superintendents from local funds falls into a larger pattern of the state looking to shift expenses to local governments during the current budget crisis. He said there is concern that some lawmakers are starting to view money from the personal property replacement tax as a “slush fund of the state of Illinois.”

McCoy said that although the provision that would end payment out of the tax revenue after one year does provide a safeguard, “it doesn’t really address our underlying concern, which is that the state is going to begin to cost shift onto local governments.”

The deadline has passed for lawmakers to override Quinn’s veto, so the bill appears to be the superintendents’ only hope. “We have to act today because an override is no longer an option. Because if we do not, the next time we will meet will be in January, and they will not have been paid for seven months,” Mautino said today on the House floor.

But some opponents said the General Assembly should not swoop in to fix a problem that Quinn created. "I don’t know how many times we’re going to have to keep cleaning up the mess that our governor is making. This is the mess that he’s created, and he’s asking us to fix it. We shouldn’t do that for him,” said Rep. Jack Franks, a Marengo Democrat. Franks was critical of Quinn for cutting the superintendents’ pay without a clear plan of who would handle their responsibilities, many of which are required by law. “If he didn’t think that the Regional Offices of Education were necessary, then he should have had their duties transferred to the state superintendent of schools, but he didn’t do that.”

A Senate committee approved the bill this evening, and supporters expect it to come up for a floor vote in that chamber tomorrow.

Pension changes still up in the air

2011-11-08T20:18:00.000-06:00

By Jamey Dunn

A bill to overhaul pensions benefits for state workers was approved by a House committee tonight, but the measure’s future remains uncertain.

An amended version of Senate Bill 512 would reduce retirement benefits for workers hired before a new benefits system took effect in January. If the measure becomes law and survives court challenges vowed by unions, employees hired under the old system would be allowed to keep all the benefits they earned until the law goes into effect. After the law kicked in, they would have to pay more to keep their current or so-called tier one benefits, switch to the so-called second tier that contains any workers hired after January and offers reduced benefits and a later retirement age, or move their money to a savings plan similar to a 401(k).

Under a previous incarnation of the plan that failed to gain the support needed to pass last spring, the amount employees would have to pay to remain in tier one would have been recalculated every three years in order to reflect the real cost of tier one benefits. The proposal that House Minority Leader Tom Cross presented today would allow for a single recalculation after three years with any increase capped at a 2 percentage points. Cross said the change reflects a willingness to compromise and is meant address complaints that members of tier one would have difficulty planning around required contributions that could change every three years. However, he said without the additional recalculations, members of tier one will likely end up paying less than the actual cost of their retirements.

“The downside is that it doesn’t completely cover the cost of the benefits. I think you’ll hear from people who will say … it should be higher, and that was the rational for the original version. But in the legislative process, we try to hear what people are saying,” said Cross.

Supporters of Cross' plan said the state’s billions in unfunded obligations to the pension system would continue to eat up the budget, leaving little money for core state services such as education and public safety.

“Without reform, we must either watch as pension contributions crowd out all other state services … or accept responsibility for allowing the pension funds to fail,” said Tyrone Fahner, president of the Civic Committee of the Commercial Club of Chicago, one of the driving forces behind the pension reform push.

However, union officials argued that changes to benefits for employees hired under the old plan are unconstitutional.

“Whether it was corporate tax breaks or new programs — for decades these tax breaks and these programs have been paid for in part by putting off or ignoring pension payments due to these good workers," said Michael Carrigan, Illinois AFL-CIO president. “Pensions have become an issue because they weren’t a priority when spending decisions were made over the past decades. Had pensions been adequately funded down throughout the years, the recent economic downturns … could have been weathered.”

Opponents of SB 512 said that reductions in benefits would not automatically create reform in the system and questioned the lack of a guarantee in the bill that the state would make its required contributions. Rep. Karen May said she would like a so-called lock-box provision in the bill that would end the increased contribution levels for workers if the state fails to make its contribution.

May, a Highland Park Democrat, and Rep. Daniel Biss, an Evanston Democrat, said that they thought the proposal needed improvement. Biss said that since the effective date for SB 512 is not until July 2012, with most of the provisions kicking in even later than that date, lawmakers can work until the spring legislative session on a better bill. However, he said as of now, “there is not a clear counter proposal on the table.”

Biss added that he hopes working groups with representatives from all sides of the issue can come up with a more holistic plan. “I’m going to be for a major pension reform bill this spring. Period. If there’s nothing better on the table than Senate Bill 512, I’ll be for 512. I hope that’s not where we are.”

After the hearing, Cross declined to comment on his next move. He claimed in the first week of veto session that he has 30 Republican “yes” votes for the plan and said it was up to bill co-sponsor House Speaker Michael Madigan to supply 30 Democratic supporters and call the bill for a floor vote. When asked yesterday when he planned to call the measure, Madigan replied that the bill belongs to Cross. Senate President John Cullerton has said that he believes that the bill is unconstitutional, but he said he would allow it to come for a vote in his chamber if it passes in the House.

New gaming plan could cut out Quinn

2011-11-08T17:16:00.000-06:00

By Jamey Dunn

A sponsor of legislation to expand gambling in the state said he is looking for enough votes to override a potential veto from Gov. Pat Quinn.

Skokie Democratic Rep. Lou Lang sponsored Senate Bill 744, which the General Assembly passed last spring. Senate President John Cullerton used a procedural move to hold the bill to try to negotiate with Quinn. However, Lang said the strategy did not work. “Throughout the summer, there were many meeting held with the governor, but none of those meetings are what you would call negotiations. There was never a point in time that the governor chose to negotiate,” Lang said. “And so we were left with trying to figure out how to handle this.”

During a news conference shortly before veto session began, Quinn said he would veto SB 744 if it were sent to his desk. He also detailed some suggestions for rewriting the bill. He said he supported new casinos but would not go along with allowing slot machines at horse racing tracks. He also raised concerns about the oversight included in the original plan.

Sen. Terry Link, sponsor of SB 744 in his chamber, introduced another bill, SB 747, during the first week of veto session that he said was based on Quinn's suggestions. Quinn came out strongly against Link's proposal, and the plan has not been called for a floor vote.

Lang said he tired to take Quinn’s thoughts — as well as criticisms from Illinois Gaming Board Chairman Aaron Jaffe, newspaper editorial boards and others — into account when drafting a new gaming expansion bill, SB1849. A House committee approved Lang's bill today.

The measure includes slots at horse racing tracks but does not allow for slots at the Illinois State Fairgrounds or Chicago airports. It would reduce the number of gaming positions available to casinos from 2,000 in the original bill to 1,600. They currently are allowed 1,200 positions. The Chicago-owned casino proposed in the plan would be allowed 4,000 positions. Lang said any unused positions at a facility could potentially be transferred to another casino that would use them. “It is in the benefit of our citizens to have all of those positions used.” Lang said that it would be up to the Gaming Board to create the procedure for transferring positions.

SB 1849 does not include a controversial provision that called for the Gaming Board to issue temporary licenses within 60 days of application to bars and restaurants seeking video gaming. The proposal was meant to spur the board to implement video gaming, which was approved as part of the funding for the state’s capital construction plan. So far, no licenses have been issued and no revenue from video gambling has come in.

Lang said some lawmakers were uncomfortable with issuing the temporary licenses. His new bill calls for the board to begin implementing video poker before any new casinos can be licensed and before horse tracks can get a license for a permanent location for slots. However, they would be able to operate out of a temporary facility, such as a tent. Lang said he wanted to ensure that the board did not “skip over” video poker to begin work on a gaming expansion. “That could be one machine, it could be 10,000 machines, but they’ve got to get it up and running.”

Lang said the legislation should clear up concerns about oversight of the Chicago casino. He said the ultimate authority would belong to the Gaming Board. Quinn complained that the city would be allowed too much regulatory leeway under SB 744.

But Lang’s stated goal of finding 71 “yes” votes in the House — enough supporters to override a veto from Quinn — indicates that he is less worried about pleasing the governor with his bill and more concerned with getting as much support from his fellow lawmakers as possible. While Quinn has yet to take a position on the plan, Lang's goal shows that he is anticipating a veto. A spokesperson for Quinn said his administration is “reviewing the proposal.” Quinn has said numerous times that he opposes allowing slots at horse racing tracks. He has said that such a proposal allows for too much gambling in the state and would lead to the cannibalization of business from existing casinos.

Current casinos owners oppose Lang’s plan for that very reason. “We’re not opposed to a casino in Danville. We’re not opposed to a casino in Rockford, Chicago, the Waukegan area. … We are opposed to the facilities right next door to existing casinos,” said Tom Swoik, executive director of the Illinois Casino gaming association. Swoik said casino owners are not opposed to expansion as long as it is “reasonable” and in “new market areas.”

He added: “The state isn’t going to get the kind of money that they think they are going to get out of this. We’re just transferring gamblers from one area to another.”

But Lang said the bill would bring in roughly $1 billion in licensing fees in addition to future revenues from taxes paid by casinos and racetracks. “I think we’ve made a very good piece of legislation better; one that will raise billions of dollars for the state, one that will pay our old bills,” Lang said. “At a time when our unemployment rate has reached 10 percent, this is something that we must do.”

He said finding the backing for a veto proof majority is “not going to be easy,” and he is not above exploiting recent rifts between the governor and the legislature to rally the votes he needs. “I will use any legal means to get a veto proof majority to pass this bill.” He said Quinn’s proposal to close state facilities, his comments implying that campaign contributions influenced votes to override his veto on a smart grid plan and his refusal to negotiate about gaming caused some animosity toward the governor among lawmakers. “I think when the governor announced two weeks ago that he was not in favor of slot machines at racetracks, it made some people very angry. … I’m going to go to those legislators, and I’m going to get them angry.”

Lang said he hopes to call his bill for a floor vote tomorrow.

Plenty on the table heading into last week of veto session

2011-11-07T10:41:00.000-06:00

By Jamey Dunn

When lawmakers return to Springfield to wrap up their veto session this week, borrowing to pay off the state’s backlog of overdue bills may be on the table, as well as several items of unfinished business from the session two weeks ago.

Borrowing
A new plan from Gov. Pat Quinn to borrow $4.5 billion to pay down some of the state’s overdue bills could surface this week. Quinn pitched an $8.75 billion borrowing plan in his fiscal year 2012 budget proposal, but it never gained traction. House Minority Leader Tom Cross said the idea of a smaller borrowing package came up in leader’s meetings last week and that Quinn voiced interest in engaging in some horse trading — Republican votes on a borrowing plan for his support of a business friendly tax incentive package. A spokesperson for Quinn said that the governor pitched the idea as part of an overall “jobs creation” package. Paying vendors could potentially halt layoffs and would inject billions into the state’s economy.

Rushville Democratic Sen. John Sullivan, who sponsored a package of borrowing bills, said legislators are coming around to the idea. “I’ve been talking to a lot of members and colleagues about the issue and trying to explain to them why we need to pay our bills. … And I feel that there has been momentum.” While some lawmakers may be warming to the idea, recent polling shows voters are not. A Paul Simon Public Policy Institute survey of 1,000 Illinois voters found that only 39 percent favored borrowing to address the backlog. The poll had a margin of error of plus or minus 3 percentage points. "If every dime of that borrowing package were dedicated to paying past-due bills and making pension contributions on time, it might be something citizens would be willing to tolerate," institute Director David Yepsen said in a prepared statement. "Even that would be a tough sell, since many voters thought the last round of tax increases were supposed to pay bills on time, and they don't feel that happened."

Sullivan said that he is not working directly with Quinn on a revamped plan, but he said he is willing to tweak his legislation in whatever ways needed to garner support. When Sullivan called a measure to borrow about $6.2 billion for a vote in the spring, it only got 19 “yes” votes. “I definitely think that we’re at a better place now than we were when the plan was introduced,” he said. At least one Republican vote will be needed in his chamber for borrowing legislation to pass.

Business package
Lawmakers will likely consider a second incarnation of a tax incentive package meant to keep large businesses in the state. Senate President John Cullerton sponsored a plan to offer a tax cut to the CME Group, which owns the Chicago Mercantile Exchange and the Chicago Board of Trade, to keep it from moving out of state. Terrence Duffy, chairman and chief operating officer of the CME Group, starting making such threats after realizing that the company would pay more than $150 million in income taxes under the state’s recent income tax increase. During a committee hearing on the measure last week, Republicans said they could not support giving target breaks to one company. They said they wanted a broader relief package that would help out other businesses, too.

A revamped plan could offer relief to Sears, which has also threatened an exit, as well as some generally business friendly sweeteners, such as an extension of a research and development tax credit.

Collective bargaining
House Speaker Michael Madigan pitched a resolution that would allow the legislature to get involved in bargaining union contracts.

Under the plan, both chambers would agree to put a spending cap on how much the governor can offer public employee unions in wage increases under a new contract. Current contracts are set to expire in 2012. “What we’re talking about is about a two-and-a-half-year obligation on spending. Well, I think the legislature has a rightful place in this bargaining,” said Madigan when the resolution was read on the House floor two weeks ago.

Traditionally, the legislature has not been at the forefront of contract negotiations. But lawmakers became frustrated with Quinn after he promised no public union employee layoffs through the end of the current fiscal year. Quinn has since gone back on that promise by backing a plan for layoffs and facility closures. He also froze union pay raises included in contracts. Quinn said both moves are necessary because the legislature did not include enough money in the budget to cover personnel costs and keep basic services running through the end of the fiscal year. Union officials say that Quinn has violated their contract and are taking the state to court.

Cross went one further than Madigan, proposing an amendment that would halt pay increases until the state has had a budget surplus for two years. “Our priority is on the protection of jobs in this state and ensuring that we get our fiscal house in order above all else,” Cross said in a written statement. “We should not enter into any new contracts that guarantee wage and benefit increases at a time when the governor is talking about closing seven state facilities that serve those with mental health needs, at-risk youth, and house dangerous criminals.” The Republican leader has said the facilities Quinn want to shutter are primarily in Republican districts and accused Quinn of playing politics when choosing his closure targets.

Madigan called upon the House Revenue and Finance Committee to set the number for the cap. The committee may also consider Cross’ proposal. The House Revenue and Finance Committee has two hearings scheduled for next week. The first is scheduled for today.

Insurance Exchange
Legislators may also consider a pivotal component of the federal health care reform law. Illinois is working to set up its own insurance exchange, an online marketplace meant to drive down the cost of insurance policies by encouraging competition. Health care advocates are pushing for lawmakers to approve legislation that would determine who would serve on the board overseeing the marketplace and who would ultimately pay for the exchange. “We want the state to move forward, and we are optimistic,” said Jim Duffett, executive director of the Campaign for Better Health Care.

The major sticking point is who will be eligible to sit on the board. Advocacy groups want insurance industry insiders barred from holding any voting power, because they could potentially profit from board decisions. They say those in the industry should hold purely advisory positions. Duffett said the board should be made up of “health care experts, small business owners and consumers.” He likened allowing insurance professionals voting power to letting a fox into the hen house.

Representatives of the industry say their hands-on expertise is needed on the board to shape an exchange that works well in practice. “To suggest that insurance expertise should be prohibited on the board, as some have … we believe is analogous to suggesting that an aeronautical engineer should be prohibited from serving on the board of Boeing Aircraft,” said Phil Lackman, Illinois vice president of government relations for the National Association of Insurance and Financial Advisors.

The House Insurance Committee has a hearing scheduled for Tuesday. “We do believe that there will be some action taken on Tuesday,” Duffett said.

Gambling
Supporters of a gaming expansion package are still looking for a plan that can pass in the legislature and get Quinn’s support. Quinn is opposed to Senate Bill 744, which passed last spring and would allow for five new casinos and slots at horse racing tracks. Quinn laid out his recommendations days before the veto session started, and Sen. Terry Link, sponsor of SB744, backed a bill that he said was based on those suggestions. Quinn did not agree and opposed the bill. Link held off on calling the legislation, SB747, last week and said he wanted to continue talks with Quinn.

This week, Quinn said that he was not engaged in negotiations on gaming. He said passing an expansion is not one of his priorities, but he is “open minded” about the concept. After meeting with Quinn last week, Cullerton told reporters that he was optimistic about finding a compromise. “I expect we will have a gaming bill going on next week as well. … We had a lot of productive input from the governor in ways in which we could correct the bill that we did pass. I can’t say we’ve narrowed the differences to agreement, but I think we’ve made a lot of progress. A lot of reforms suggested by the gaming board, we can incorporate into the bill.” More than half — 57 percent — of respondents in the Paul Simon Public Policy Institute survey said they backed expanded gambling as a way to bring in more state revenue.

Poll: Illinois voters have appetite for reform

2011-11-02T22:25:00.000-05:00

By Jamey Dunn

Illinois voters support a variety of reforms to state government, ranging from tweaks to campaign finance rules to term limits for elected officials

The Paul Simon Public Policy Institute at Southern Illinois University in Carbondale today presented results of a survey of 1,000 registered voters — part of the institute’s annual poll. The results have a margin of error of plus or minus 3 percentage points.

Those surveyed strongly backed legislative term limits, with 75 percent saying they support limits of five consecutive two year terms for state representatives and three consecutive four year terms for state senators.

David Yepsen, director of the institute, said widespread support for term limits is an indicator of the public’s frustration with their state government. He noted that the Tea Party has supported term limits, and that issue could become the focus of such a populist movement in Illinois. “If I am member of the legislature, I’ve got to be thinking, ‘How do I get the fuse out of this bomb?’” Yepsen said.

He said he thinks term limits cut in on the democratic process by blocking voters from choosing incumbents once their time has run out, regardless of what the popular vote might be. Yepsen said that forcing out lawmakers with institutional knowledge and experience would leave new lawmakers to turn to staff members and lobbyists for the bulk of information. “Staff people have too much power as it is, and lobbyists have too much power as it is.”

However, Yepsen said, “There’s all kinds of reasons why term limits are a bad idea, but voters are so fed up and so exasperated.”

Charles Leonard, visiting professor and polling director for the institute, agreed that term limits may not be the best public policy choice, but he said that if the redistricting process in the state is not changed, that idea could find more supporters. He said because districts are often drawn to protect incumbency, “a lot of people who might otherwise not support term limits may see it as a desperate move to throwing the bums out.”

Respondents also backed several campaign finance reform measures, including changes to the rules for judges:

61.4 percent favored limiting the amount of money that party leaders can give to other candidates.
71.4 percent supported limiting the amount of money that people can contribute for judicial races.
53.6 percent backed giving judicial candidates public funding for their campaigns.

Leonard said after an attempt to unseat Illinois Supreme Court Chief Justice Thomas Kilbride last year resulted in the most expensive retention bid in the state’s history and the last 25 years nationally, voters seem ready for changes in how judges’ campaigns are run. He said such big-spending campaigns bring the issue to a place where most voters cannot ignore it: their television screens. “I think there’s a clamor for the need for judicial reform when judicial races start to bring that sort of sludge into their living rooms that the legislative [races] bring.” Those attempting to oust Kilbride came under fire for controversial television attack ads. “I’m sure that it will turn people off, never mind it being terrible public policy that people who practice before [the court] can give them large sums of money for their retention.”

Leonard said judicial reform might be low hanging fruit for legislators because they could institute a change that does not apply to their own branch of government.

Voters who responded to the poll also supported reworking the way Illinois redraws its legislative maps every 10 years after the census takes place. A plan to overhaul the redistricting process failed in the legislature last year, and the League of Women Voters was unable to capture the needed signatures to get a constitutional amendment on the ballot to change the process. But the institute’s poll found that voters generally agreed with one of the primary components of the league’s proposal. About 65 percent of respondents said they were in favor of having a commission independent from the legislature draw the map. That number increased from 53.5 percent in favor of such a plan in 2010. Yepsen and Leonard agreed that the efforts to change the system, as well as media coverage of the legislature drawing new maps last spring, has put the issue on the voters’ radar. “I think our mass media culture is capable of keeping about four items on the agenda at any time given our short attention span, And it’s up there right now,” Leonard said.

Yepsen said another effort to put a new method on the ballot as a constitutional amendment could be successful, but it would take a lot of money and professional organization. “A ballot initiative in a state this size takes a level of sophistication that a bunch of well-meaning volunteers just simply can’t do.” However, he said attempts to get an amendment on the ballot, such as ones from the league and others, may eventually spur legislative change. “I think just the threat of these constitutional amendments might give reform-minded people in the legislature and legislative leaders reason to do something on their own on these things.”

Leonard noted that only about 15 percent of voters think the state is headed in the right direction. “I think there’s some potential for this dissatisfaction to coalesce around an issue.” Out of all the reforms those polled supported, Leonard said redistricting reform may be the most pivotal to changing state government. “I think it’s our best hope at getting reformed politics. “

Operation Board Games investigation winding down with Cellini conviction

2011-11-01T16:17:00.000-05:00

By Jamey Dunn

Springfield businessman William Cellini, a longtime Illinois political insider, was convicted on two federal felony charges today in Chicago.

Cellini was accused of attempting to extort campaign contributions for former Gov. Rod Blagojevich from Thomas Rosenberg, an investment firm owner and movie producer, in exchange for business handling pension investments for the state. Blagojevich was convicted on 17 corruption counts in June.

A jury found Cellini guilty of conspiracy to commit extortion and aiding and abetting bribery. He was found not guilty on two other charges, attempted extortion and mail and wire fraud.

Cellini’s lawyers painted him as and innocent go-between, saying he had nothing to do with any plans to squeeze campaign funds from Rosenberg but only delivered information to him. “We made our points. Obviously I’m very grateful that the jury appears to have agreed and at least has thrown out the most serious charges against Mr. Cellini,” Attorney Dan Webb told reporters in Chicago today.

“Shaking someone down and threatening them with loss of business is a crime,” U.S. Attorney Patrick Fitzgerald said today in Chicago. He said the conviction should make power brokers in Springfield and Chicago think twice before committing any illegal backroom deals. “The fact that Bill Cellini was convicted today sends a very, very loud message there.” Fitzgerald said that the investigation dubbed "Operation Board Games" — which led to the convictions of Blagojevich, his confidante Tony Rezko, Stuart Levine, who testified against Cellini, and others — is not officially closed because some defendants have appealed their convictions. However, he said he was not “predicting anything in the future” in regards to the investigation.

“I think clearly the whole corruption problems that occurred under the Ryan administration and then under Blagojevich — we have to root out every single manifestation, and that’s what I’ve tried to do since January 29 of 2009,” Gov. Pat Quinn told reporters in Chicago today. “We’ve passed ethics laws. We’ve established strong standards of conduct, and we enforce them,” Quinn said that “more than anything,” his “mission” is to “clean up Illinois government.”

More info on the Cellini trial see:

The verdict and reactions from the Chicago Sun-Times.

A reaction from Cellini's former Gov. Jim Edgar.

Coverage from the Chicago Tribune.

A timeline of Cellini's life from the State Journal-Register.

Quinn: Gaming negotiations aren't taking place

2011-11-01T15:53:00.000-05:00

By Jamey Dunn

Gov. Pat Quinn said today that he is not negotiating when it comes to a gaming expansion in Illinois.

Quinn told reporters in Chicago today that lawmakers who want more gambling in the state have two options: Pass a bill based on his ideas; or send him the bill they passed last spring. “I’d be happy to take it, veto out the defects and flaws and put in the good important things and send it back to them,” Quinn said. In the hopes of working out a plan that Quinn and lawmakers could live with, Senate President John Cullerton used a parliamentary procedure to hold the bill from going to the governor’s desk. But when asked today if he was working on a compromise with lawmakers, Quinn said, “I don’t think the word negotiate is appropriate.”

He reiterated his call for Cullerton to send Senate Bill 744 to his desk. “This is rather unusual, to say the least, if you believe in what you voted for. Now if they want to send it to me, we’ll be very happy to apply my framework to their bill. And my framework will emphasize integrity and honesty.”

Quinn said he would support five new casinos but could not back allowing horse racing tracks to have slot machines. He said he wants more oversight of the proposed Chicago casino and he wants an option that would require local governments to opt into legalizing video gaming in some bars and restaurants. Legalized video gaming is one of the founding sources of funding for the state’s capital construction program. Quinn’s proposal would likely reduce potential revenues once the program was implemented. Quinn also wants to give the gaming board unlimited time to vet businesses owners seeking to offer video gaming. SB744 allows for probationary licenses for applicants 60 days after they apply.

Sen. Terry Link presented a bill during the first week of veto session that he says is based on the governor’s ideas. The governor did not agree. “The bill was not our framework," Quinn said today. "Charades and playing games on any subject are inappropriate, in my opinion. The legislature should be serious about its work. They tried to do a kind of a charade their last week, and we called them out on it.”

Link, who also sponsors SB744, said today that he has tried to pass a gaming expansion for years and has backed several different versions of the idea. “These we’re his ideas; these were his thoughts,” he said about the governor. “We weren’t trying to do a charade. We were trying to see if there was a will out there for this [to pass in the legislature. The point is that we’ve tried different ways — with or without the track, with the casinos owning the slots at the tracks. … We’ve tried every which way you could conceivably think of.”

Link, a Waukegan Democrat, said he held the bill, SB747, from a floor vote last week at Quinn's request. “The governor called and didn’t want it and [said] he wants to talk.” But Link said that meeting has not materialized. ‘We have done everything in our power to try to set up [meetings] and discuss these things. I just hope that the governor doesn’t get to this point where he wants to draw a line in the sand.”

Quinn explained today that while he is “open-minded” about gaming, it is not a priority for him.

“It is up to the legislature,” Quinn said. “My interest is not to promote gambling. That is not my foremost goal in Illinois. I don’t think you can gamble your way to prosperity.”

Veto session CapitolView

2011-10-31T13:58:00.000-05:00

The first week of veto session in the Illinois General Assembly wraps up with some unexpected movement on some of the issues facing the legislature. Gaming, the Smart Grid/ComEd rate hike and pensions are discussed.

Panel: Mike Lawrence, Charles Wheeler & Benjamin Yount. Moderated by Jamey Dunn (Illinois Issues Magazine)

Lawmakers push some issues to the last week of veto session

2011-10-28T17:11:00.000-05:00

By Jamey Dunn

This week, lawmakers overturned Gov. Pat Quinn’s veto of a smart grid plan, clearing the way for the state’s two biggest utilities to raise rates and begin work on the state’s electrical grid. But legislators left many issues unresolved and say they plan to revisit them when they return next month for the second half of veto session.

Tax breaks
Senate Present John Cullerton presented a bill in committee this week that would give a tax break to a business that says the recent income tax increase would result in a $158 million tab.

The CME Group, which owns the Chicago Mercantile Exchange and the Chicago Board of Trade, has threatened to leave the state if lawmakers do not provide some form of tax relief.

Cullerton purposed changing the way the group’s taxes are calculated. CME’s tax bill is based upon its sales, but many of those sales are online trading. Cullerton said that state considers all of those sales as happening in Illinois, even though many of CME’s customers do not live in the state. “You can’t tell where the customer receives the service nor where the customer orders the service, so there’s a default that every sale takes place in the state of Illinois. So 100 percent of the revenue from this activity is being sourced to Illinois,” Cullerton said. His plan would lower the percentage of CME sales that are taxed by Illinois, and he said cut that $158 million tax bill “about in half.”

Cullerton added, “So there would definitely be a reduction in revenues to the state, but of course if they leave, there will be an even further reduction.”

Cullerton and other Democrats framed the change as keeping the tax code modern and in step with new technology. “The exchanges have said that if we don’t correct this inequity that they would consider going to another state, and so that obviously is something that we should take into account as well,” he said. “But it really is not a threat to leave that motivates me to do this. I think it’s just a recognition that this is an unfair way of calculating their tax.”

The proposal also includes a five year extension of a business tax break for research and development.

James Parasi, chief financial officer for CME, said his company employs more than 2,000 people in Illinois. He said those employees also pay income, property, sales and other taxes in the state. Parasi said CME’s income tax payment for 2010, before the tax increase, made up 6 percent of all the cooperate income tax revenues the state brought in that year.

Senate Republicans said they supported the idea of lightening CME’s tax load, however they said it was unfair to focus in on one business for relief. “There are dramatic and significant unintended consequences from that tax increase that need to be addressed. And it is preferable if they are addressed not necessarily on a company-by-company basis so much as in a broader based fashion,” said Sen. Matt Murphy, a Palatine Republican. “And including things that frankly will help the little guy, the small business, as well.”

Sen. Dale Righter said that offering help to only CME sends the wrong message to small-business owners who do not have the means to lobby the General Assembly on the same level. He likened the plan to a “corporate bailout.”

“I believe that you have a real problem. I believe that you have been caught in a glitch here that probably does need a fix,” Senate Minority Leader Christine Radogno said to Parasi. “This may be a real issue, but there is a perception problem that the only folks that get the help are those that have the access and the money to buy that access.” She said of the bill as is: “What’s not real is moving this bill forward because the governor is not going to sign it. It is not going to go through the House. And I don’t want to perpetuate the perception of this special treatment.” Radogno said she is willing to work on a more comprehensive package, but she did not think that lawmakers should rush a plan through before the end of the veto session to appease CME. “If you guys leave because this doesn’t pass today, it does raise the question to the sincerity of whether or not you were staying in the first place.”

A Quinn spokesperson said the governor had some suggestions to be included in the plan.

Regional superintendents
Quinn’s plan to pay regional superintendents was shot down in the House this week, leaving the administrators, who have not been paid since the summer, scrambling to find a solution before the end of veto session.

Quinn vetoed from the budget in June the money to pay regional superintendents and their assistants. He said the locally elected administrators should not be paid with state dollars and put forth a plan to pay them out of a local tax.

Rep. Frank Mautino said some of the superintendents are receiving support from public aid programs because they are barred by law from having another job. Mautino, a Spring Valley Democrat, is the sponsor of House Bill 3828, which calls for the superintendents to be paid out of the personal property tax replacement fund.

Opponents said that it is unfair to push the cost onto local governments, when the budget the legislature passed included the funding for the administrators’ pay.

“We’re getting a lot of concern from every unit of government that receives part of this money,” said Crystal Lake Republican Rep. Michael Tryon. Some opponents said it would be better to simply override Quinn’s veto of the funds. Mautino said he had no control over whether an override would be called for a vote. He placed HB 3828 on postponed consideration, which means he could call the bill for another vote. An override of Quinn’s veto could also happen before the end of veto session, but for now, the superintendents continue to wait for paychecks.

"We have said from the outset we deserve to be paid now and moving forward. We are disappointed by [the] vote in this chamber against this possible funding solution. We know we need a solution now and can't wait any longer. We will keep working with legislators to find the votes for a reasonable solution for our very serious funding problem, and we remain hopeful that resolution will happen in this veto session,” Bob Daiber, president of the Illinois Association of Regional Superintendents of Schools and Madison County regional superintendent, said in a prepared statement.

Pension reform
House Minority Leader Tom Cross said this week that he has the 30 Republican votes he needs to pass Senate Bill 512 — which would reduce pension benefits for employees hired before January, when a reduction for new hires went into effect. Cross said it is now up to House Speaker Michael Madigan to call the bill and put up 30 Democratic votes. Madigan’s spokesperson said once Cross gives Democrats a chance to review an amendment he is working on, Democratic leadership will start polling its caucus members to gauge whether there is enough support to pass the measure.

Gaming expansion
Gov. Pat Quinn said that if he were given the opportunity, he would veto the gaming bill lawmakers passed last spring. Since the bill, Senate Bill 744, was held from going to Quinn’s desk through a parliamentary procedure, he instead laid out what he would like to see changed. After being pushed all summer by the sponsors of SB744 for specifics, Quinn shared his thoughts in a news conference a week before veto session. Waukegan Democratic Sen. Terry Link, sponsor of SB744, said Quinn’s plan couldn’t pass in the Senate.

However, Link is also sponsor of SB 747, a plan he says is “based” on Quinn’s demands. Quinn denounced that bill and called Link's efforts a “charade.” Link said he would call SB747 for a vote on Wednesday but then opted not to because he said he wanted to allow for more discussion on the bill.

Cullerton, who supports gambling expansion, said he wants to give Quinn next week, when lawmakers take a break from session, to consider his options. Cullerton said his chamber would take up the issue of gaming in the last days of veto session. Lawmakers are scheduled to return to Springfield for the final three days of the veto session on November 8.

House minority leader says Republicans are ready to pass pension reform

2011-10-27T18:47:00.001-05:00

By Jamey Dunn

House Minority Leader Tom Cross said today that he has the Republican votes needed to pass a plan to reduce pension benefits for most state employees, but a teachers' union claims there is not enough support from lawmakers to pass the legislation.

Cross said he and House Speaker Michael Madigan agreed that each of them would find 30 votes for Senate Bill 512 within their respective caucuses. The two House leaders have partnered on pension reform talks that took place while the legislature was out for the summer. Cross said today that he has the votes on the Republican side. “We’ve got our votes ready to go. The bill itself is still being finalized. It’s a very complicated bill, so it should be ready this week.”

Cross said it is up to Madigan whether the bill is called for a vote when lawmakers return in November for the last week of the veto session. “We want to have a bill ready, and we want to be prepared on our side, and that’s what we’re doing.”

He added: “This is a priority. We need to do it.”

Cross' legislation would allow employees to keep all the benefits they previously earned. Under the bill, they would have to opt to pay more for their benefits, choose to participate in a reduced-benefit plan that was enacted for employees hired after Jan. 1 of this year or move into a plan similar to a 401(k).

Steve Brown, Madigan’s spokesperson, said Democrats are waiting to see Cross’ changes to the bill. “An accurate view of the situation from our side is the Cross staff has said there is another amendment to the bill. … That’s where we’ve been all week.” ” Brown said once lawmakers get a chance to see the review, Democratic leadership will begin polling them to see if there are enough votes to pass the bill.

The Illinois Education Association issued a response today saying that members of House leadership have told the organization that there are not enough legislators willing to vote in favor of Cross' bill. Jim Reed, director of government relations for the IEA, said in a video statement on the group’s website that claims that there is enough support to pass the bill are “false” statements. Reed said the group has been told by legislators that “really nothing has changed since last spring.” The House held a hearing on SB 512 during the the spring legislative session, but Cross acknowledged then that it lacked the support to needed pass on a full floor vote. Union officials say pension benefits are protected by the state Constitution, and plans such as SB 512 are unconstitutional. Senate President John Cullerton has said that he agrees that such changes are unconstitutional. However, if the bill is approved in the House, Cullerton said he would allow it to come up for a vote in his chamber.

The House today passed a different bill from Cross, House Bill 3813, meant to prevent pension fraud and double-dipping cases. The bill was rushed through the legislature after the Chicago Tribune reported on Chicago unions officials collecting both city and union pensions. The paper also uncovered two union officials who served as substitute teachers for one day each and then counted their years working for the union toward state pensions. Cross said such abuses have helped solidify support behind broader pension reforms. “We’re going to do what we can — and I think others will, too — in saying that those days are over, and we can’t go forward. We can’t afford it. Plus, it’s just wrong.”

Cross said Quinn backs HB 3813 and that it has a good chance of passing in the Senate.

“Earlier this week, at the start of session,” said a prepared statement from Quinn’s office. “Governor Quinn urged lawmakers to address flagrant abuses of the pension system. The governor wholeheartedly supports the pension abuse reforms that passed today and is very interested in pension reform moving forward but has always noted that any changes to the pension system should be within the bounds of the Constitution. Governor Quinn looks forward to reviewing legislation once it arrives on his desk.”

COGFA shoots down facility closures

2011-10-27T17:12:00.002-05:00

By Jamey Dunn

A legislative panel voted today to reject the closure of four state facilities because legislative leaders plan to work with the governor on budget tweaks that may make some closures unnecessary.

Gov. Pat Quinn called for the closure of seven institutions and the layoff of more than 1,900 state workers. Quinn said the budget approved by the legislature in the spring would not fund basic services through the end of the year, and the closures would be needed to keep government afloat. “Something has to give, and what has to give is we have to close down some of those facilities,” Quinn said when he announced the closures. Under Quinn’s timetable, the state would start closing facilities next month, with the last of the closures coming early next year.

But lawmakers sitting on the Commission of Government Forecasting and Accountability (COGFA) disagreed with Quinn’s tactics.

Legislators who voted for and against the closures generally agreed that the state does need to consider shutting down some of its institutions. Those who voted on both sides of the issue also agreed that Quinn’s plan was rushed and a coherent transition would take time. “We’re trying to do something in three or four weeks that we’ve waited eight years to do,” Hinsdale Republican Rep. Patricia Bellock said at this hearing this morning. “We want to close facilities, but taking a look at all the lives and jobs and people in these residences, it’s a very, very hard decision to make.”

Bellock, a co-chair of COGFA, said budget cuts affecting small providers that offer community-based care to the mentally ill and developmentally disabled raised concerns about whether they will be able to handle the needs of patients currently housed in state facilities. “The community providers have lost money, so to put that all on them and the hospitals … it’s a very. very difficult decision, especially when we’re looking at the fragile lives of the mentally ill. … It’s just not the one place. It’s how it affects the entire mental health system in Illinois.”

Other lawmakers echoed Bellock’s call for a more comprehensive look at all the institutions in the state to best determine where closures can be made. “We need to be taking a systemic look at all of these, and there may be a need for some closures, but it needs to be done in a much more organized [way] and in a manner that’s going to make financial sense and fit into reality,” said Sen. Dave Syverson.

Syverson, a Rockford Republican, argued that the closure of the Singer Mental Health Center in Rockford would not result in savings because the center is used for emergency cases — the average stay is 14 days — and such patients would have to be transported long distances to get similar treatment. “From a dollar standpoint, it does not make sense. The idea of how can we operate these facilities more cost-effectively immediately makes sense. Can some of these services of any of these facilities, can they be transferred to the private sector over a period of time with a legitimate transition plan? … That is a possibility, but again, that is going to have an upfront cost to it. And if the goal here is to try to save $50 million, that’s not going to occur.” Singer was in Syverson’s district until a new legislative map was drawn this year.

However, Rep. Elaine Nekritz, who voted to close Singer, said that the budget crisis is forcing lawmakers to make choices that could be damaging. “In this kind of environment — and it’s happening in other states too — the old decision-making models where it’s harm versus no harm or risk versus no risk don’t really work. The decisions we’re going to have to make are harm versus less harm and risk versus less risk because people are going to be hurt by the decisions we make,” said Nekritz, a Northbrook Democrat. “We don’t have the luxury of unlimited time or lengthy time. I wish we did. … And we’re going to have to make these decisions with incomplete information.”

Chicago Sen. Donne Trotter, a budget point man for the Senate Democratic leadership, scolded lawmakers who backed budget cuts in the past and voted today to keep facilities open. “I think that everyone that represents these districts that didn’t vote for some funding to make sure that these most-vulnerable people are taken care of should be voted out of office,” Trotter said. “That was not the concern when they were voting last May. Hard decisions had to be made … and we have to make them now. So there’s a story that should tug at everybody’s heart every place we go, but some hard decisions have to be made. … Do the right thing. Either close these places or come up with funding to ensure that we can keep them open until we can find some other alternatives.”

He added “This is B.S. The chickens have come home to roost, and the egg is on your face.”

All the members of the panel agreed to keep the Chester Mental Health Center open, arguing that there is no other facility prepared to house the criminally insane. “There are two facilities I think that we just couldn’t close, and it’s incumbent upon us to find the resources. One is Chester, one is Logan [Correctional Center in Lincoln,]” said Rep. Michael Tryon, a Crystal Lake Republican. “[Chester is] the only maximum security facility for the criminally insane and those who are not fit to stand trial. … These are not the kind or prisoners that we should put in Alton [Mental Health Center] or any other facility.”

The committee also voted to recommend that the Illinois Youth Center in Murphysboro and the Jack Mabley Developmental Center in Dixon remain open.

Those who did not vote in favor of some of the closures said that they were still open to the idea of closing facilities, but they want to see how budget negotiations during veto session pan out. “I think that these are things that really take time. A lot of things are happening. We’re looking at maybe redistribution money in the budget. I think there’s more information that we need. I don’t think that it really does us any good to be hasty just for the sake of haste,” said Rep. Al Riley, a Democrat from Olympia Fields.

House Minority Leader Tom Cross said that the four party caucuses plan to come together with Quinn and discuss shifting about $240 million in funds to other areas, including keeping facilities open. He said some of the money would come from Quinn’s line item vetoes. Cross said House members are open to moving dollars around, as long as the spending total is the same as the original budget passed in May.

COGFA plays an advisory role when it comes to facility closures, so Quinn could ignore today’s votes.

However, Evanston Democratic Sen. Jeffrey Schoenberg, co-chair of COGFA, said, “No administration has ever moved contrary to how the commission has recommended.” He said he expects the commission to vote on more closures during the last week of veto session.

"While we respect the role of COGFA, their recommendations do not change the reality of the budget we are tasked with managing. These are not closures that we sought to accomplish this fiscal year; we are forced to close these facilities now because there is not enough money appropriated to run all these facilities for the entire year. Unless the General Assembly takes action, we must continue to seek these closures and other actions to responsibly manage the budget, and we will continue to do so," said a prepared statement from Quinn's office.

Legislators override Quinn's veto on smart-grid bill

2011-10-26T19:47:00.001-05:00

By Jamey Dunn

Lawmakers today overturned Gov. Pat Quinn’s veto of a bill that will allow the state’s two biggest utility companies to raise customers' rates in exchange for investments in the state’s power grid.

Under the plan, Ameren and Commonwealth Edison will be able to increase customers' rates by 2.5 percent annually in exchange for $3.2 billion in spending on the grid over 10 years. The companies will add smart grid technologies that allow them to monitor transmission and respond quicker to outages. The measure would also require ComEd to create 2,000 new jobs through the plan and Ameren to create 450 jobs.

Supporters were able to pass a trailer bill this week that would impose reliability standards on the utilities. It would also require them to spend more on traditional infrastructure, such as underground wires, to prevent blackouts. The bill also calls for $60 million from the utilities annually to go toward rate relief programs for low-income customers. Backers of the overall plan say the so-called trailer bill helped pull in the three-fifths majority needed to override Quinn’s veto.

Sen. Mike Jacobs, a sponsor of the plan, said the state’s increasing demands for energy make upgrades to the out-of-date grid a necessity. “If you look around the room here, everybody is on the phone. Everybody’s got a computer in front of them. Everybody’s got a smart phone in their pocket. We need the power.”

Opponents say the bill is just a way for the utilities to skirt the authority of the Illinois Commerce Commission (ICC), which rules on proposed rate hikes. “I’m not sure smart grid’s really the issue here. It think the real issue is that this is a new way to recalculate rate hikes because Ameren and ComEd didn’t get the approval that they wanted from the ICC. Let’s be honest, that’s what this is about. If you put the name smart grid on it, it doesn’t make it any better,” said Rep. Kyle McCarter, a Lebanon Republican.

McCarter said that increased energy rates would drive business out of the Illinois. “One of the last good things we’ve got going in this state for businesses is affordable power. We’ve increased taxes on people, we’ve got high regulation. and we still have high workers’ compensation rates.”

But Jacobs, a Democrat from Moline, pointed to the economic development that he says the plan will bring. “I don’t know the last time I was in a legislative body when anyone stood up and said they we’re going to create 2,450 jobs. And these are good paying jobs. … These are jobs that are written into the contract.”

Quinn, a vocal opponent of the plan from the start, would not say if he plans to sign the trailer bill containing some consumer protections. “The consumers of Illinois are deeply disappointed in the General Assembly’s action today to give Commonwealth Edison and Ameren guaranteed annual rate increases for each of the next 10 years… and so am I,” said a prepared statement from his office. “The fight for consumers against unfair utility practices will go on and will never end as long as I am governor.

Gaming bill held for more work

2011-10-26T19:36:00.001-05:00

By Jamey Dunn

After publicly calling lawmakers' attempts to pass gaming legislation based on his suggestions a “charade,” Gov. Pat Quinn is reportedly in talks with its sponsor.

Last week, Quinn laid out the changes he wanted to the gaming expansion package lawmakers approved last spring. Sen. Terry Link, the sponsor of the original plan, Senate Bill 744, decided to back a bill, SB747, that he said was based on Quinn’s proposals.

A Senate committee heard testimony on SB747 today, and Quinn balked at the idea of his plan being pushed through the legislative process. “This is not the governor’s bill. Instead of improving their current bill and having good faith discussions within the governor’s framework amongst the House, the city of Chicago, the racing industry, the [Illinois] Gaming Board, and the governor’s office, some have chosen to put on a charade,” said a prepared statement from Quinn’s office. “The governor announced a framework — not a bill — for any gambling expansion last week. He will support a smaller, more moderate gambling expansion that prevents corruption and provides adequate revenue for education.”

But Link, a Waukegan Democrat, said he carried they bill with the sincere hope that it would pass. “I can do only as much as I can do.”

Link said he thinks Quinn may have backed away from the plan after he began to realize that it did not have enough support to pass in the legislature. “I think he already felt that there were a lot of people out there that didn’t have the willingness to vote for his concept. So now that we put it in a bill form, his feelings [are] a little bit different.”

Link said he and supporters of the original bill tried to work with Quinn all summer to negotiate a rework of the bill that he could live with. “President [John] Cullerton has met with him a couple times without any type of real negotiations,” Link said. “Until that press conference [when Quinn made his demands] … we had no idea of where the governor stood on any of these issues.”

After the committee hearing this afternoon, Link said he doubted Quinn’s willingness to negotiate. “If he was truly open to negotiations … why wouldn’t he personally call me and say, ‘I’d like to negotiate with you?’ I’m still the sponsor of the bill. I’m the chief sponsor of both bills.” However, someone must have picked up the phone because a member of Cullerton’s staff said Link, Quinn and Cullerton plan to meet to discuss an amendment to SB747. Earlier today, Link said he planned to call the bill for a floor vote this evening, but later, he chose not to. “We’re going to have a meeting,” he said. A spokesperson for Quinn would not confirm the meeting, but said the governor will be attending a scheduled leaders meeting in the morning where several topics would be discussed.

Per Quinn’s suggestions, the bill does not allow for slot machines at horse racing tracks and limits gaming expansion to five new casinos, including one operated by the city of Chicago. However, it would require casinos to pay a so-called impact fee of more than $330 million to replace the money that the tracks could have made with slots. “This would be a fee that would make up for the amount of money that was figured to be made from the racetracks,” Link said. “Casinos would also have to chip in on an impact fee of $70 million that would go toward education.” He estimated that each casino would pay about $25 million.

Tom Swoik of the Illinois Casino and Gaming Association said the fees would put four or five of the state’s 10 existing casinos out of business. “You’re against SB 744 when you had the racinos,” Link said of the casino owners. "Now you’re against this with the impact fee. What do you want? You can’t have it both ways. If we want to increase he number of casinos in the state of Illinois, you have got to be for something." Link said that he was open to making changes to the fee system and filed an amendment this afternoon that would put off the fees until 2015.

Swoik said casino owners are not inherently against new casinos, as long as they do not cannibalize the business of existing operations. “We’re not opposed to expansion if it’s in new markets and in areas that don’t have such a concentration of existing gaming positions. All of the racetracks are right next to existing casinos.”

Cullerton said today that he supports the legislation but that there were some components he did not like. He noted that making local governments vote to opt into a plan to legalize video poker in bars and restaurants across the state likely result in less money for capital construction projects. Currently, local governments can vote to be exempt from the plan but do not have to vote to be included. The Illinois Gaming Board has not issued any licenses for video poker, and the gaming expansion has yet to bring in dollars for the capital plan it was enacted to fund.

Cullerton said SB 747 plan could bring in education dollars and more than $1 billion to help the state pay down its billions of dollars in unpaid bills. He said that even though he disagrees with parts of the plan, it is more important to try to stop gamblers from crossing state lines by approving five new Illinois casinos. “We do have all these people from Illinois spending their money in other states,” Cullerton said. “If you supported the original bill, I think there’s a way in which you could also support this bill.”

Sen. Matt Murphy, a Palatine Republican said that if a gaming bill does not pass during the veto session, it would be a “failure of leadership” on Quinn’s part. “The state is losing out on the $1.5 billion in up front revenue to pay down the backlog of bills and $1 billion in annual revenue that say could go to reducing or rolling back the tax increase that has seen us struggle on the jobs numbers since January.”

Murphy added: “That is going to sit right at the foot of the governor.”

Whatever happens with SB 747, Link, who by his own count has been pushing gaming expansion for about 20 years, said he would not be ready to give up. “I won’t sit back and just go in a corner. I will be working with the [Senate] president and the House to try to get another bill resurrected and make sure we can get something done.”

Madigan wants lawmakers involved in union contract negotiations

2011-10-25T19:30:00.000-05:00

By Jamey Dunn

House Speaker Michael Madigan today unveiled a plan that he says would allow lawmakers to play a role in bargaining with unions for state employee contracts.

“Traditionally, prior governors have negotiated with [the American Federation of State, County and Municipal Employees] and the other unions without regard to the legislature. Traditionally, the governor would negotiate. The governor would come into agreement with the unions, and then subsequently, the legislature would be told this is the cost of the contract we just negotiated,” Madigan said. “They’d send the bill to us, and we’d be told pay the bill.”

Madigan seeks to change that. He introduced a resolution today that he said would “interject the legislature into collective bargaining.” If approved, the measure would allow the legislature to vote on a cap for wage increases when union contracts are up in 2012. It would also remove staffing levels from bargaining contracts. Madigan said this would prevent governors from making a deal like Quinn’s promise to AFSCME last year that there would be no layoffs until 2012. “Once there’s a contract in place that states a rate of pay, why the only venue for adjustment in a budget year is the size of the workforce. Gov. Quinn gave that away. I don’t think he should do that.”

Quinn has since gone back on that deal by announcing about 1,900 layoffs as part of a state facility closure plan. He also recently put a freeze on pay raises included in union contracts. Quinn said he was forced to do both because the legislature approved a budget that does not include enough money to fund essential government services through the end of the fiscal year. The unions and Quinn are fighting over the raises in court, and hearings on the proposed facility closures are currently under way throughout the state.

House members publicly grumbled about Quinn’s deal with AFSCME during the spring legislative session as they tried to craft a budget without spending more than their chamber’s admittedly conservative revenue estimates. Madigan tapped the same committee that produced the revenue estimate to come up with a percentage to use as the wage increases cap. “We have a choice. We can stand on the sidelines and let those people go off and do what they do and send us a bill. Or we can interject ourselves now and be present through the negotiations so that our position is known and understood,” Madigan said.

He added: “What we’re talking about is about a two-and-a-half-year obligation on spending. Well, I think the legislature has a rightful place in this bargaining,”

House members said they were unsure whether the resolution would have any binding effect on Quinn’s actions. However, they said it would send a message to the governor about how such agreements limit their budgeting power, especially when faced with revenues lowered by the recent economic crisis.

“The governor created his own problem by not only the raises but by guaranteeing no layoffs. I mean how do you do that combination in this kind of an environment?” asked Hutsonville Republican Rep. Roger Eddy. He said the resolution sends “the message to the governor that we can’t have that type of budgeting take place. We’re the appropriating agencies. We’re the arm of appropriation in the Constitution.”

Quinn has yet to take a position on the plan. “It’s an interesting suggestion. There will be many challenges confronting the state as we begin collective bargaining negotiations,” said a prepared statement from Quinn’s office. A call to AFSCME for comment was not returned.

Meanwhile, the Illinois Senate approved a bill today that is the first step to a potential override of Gov. Pat Quinn’s veto of a plan to upgrade the state’s electric grid.

Lawmakers approved a so-called trailer bill that would increase requirements on Commonwealth Edison and Ameren. Supporters of plan that would allow the companies to raise customers' rates in exchange for more than $3 billion in grid investments over the next 10 years hope that the changes will bring enough votes onto the original bill to override Quinn’s veto.

The utilities would be able to increase rates by up to 2.5 percent annually. Quinn said today the plan allows the companies to do “an end run” around the Illinois Commerce Commission, which rules on rate hikes. Quinn called the trailer bill — which among other changes, would require utilities to spend more money on grid upgrades focused on reliability and spend millions more annually on rate relief for low-income customers — “a hasty effort to try and paper over this bad bill.”

Oak Park Democratic Sen. Don Harmon, who sponsored the follow-up bill that passed today, said that the plan would not result in the automatic rate increases opponents have described. “You have to remember, it’s not net revenue to the utility. They are recovering costs that they have already incurred.” Harmon said any rate increases would be capped and would likely result in about $3 more per month for average customers.

However, he conceded that voting on a bill that would result in rate increases may be unpopular with voters. “This is one of those things that is difficult to explain to folks back home, and I understand that. … We all want reliable power delivered to our homes and businesses. The only way that’s going to happen is if the ratepayers pay for it.”

Lebanon Republican Rep. Kyle McCarter said that instead of raising rates on all customers, the legislature should set a price for smart meters — an important component of Smart Grid that allows customers to potentially save money by monitoring their power usage — and utilities could then give interested customers a chance to buy them. “Other states have chosen other ways to pay for this,” McCarter said. “If this smart grid is wonderful like we’re being told it is, surely everyone will ask to have a smart meter and be part of the smart grid.”

Lawmakers look for ways around Quinn's opposition

2011-10-24T19:25:00.001-05:00

By Jamey Dunn

Tweaks to two major legislative packages emerged the day before the fall veto legislative session is scheduled to begin.

Waukegan Democratic Sen. Terry Link said he plans to bring a bill that contains Gov. Pat Quinn’s suggested changes for the gaming expansion up for a floor vote in the Senate this week. Quinn said last week that he supported five new casinos in the state, including one owned by the city of Chicago, but opposed the slot machines at horse racing tracks that would be allowed under the gaming plan lawmakers approved in the spring session.

Last week, Link told Illinois Issues that legislation based on Quinn’s demands could not find the support needed to pass in the Senate. However, Link said today: “I will carry it with sincerity. I will tell all the facts, figures and everything that the governor has in it. I will … make it as a positive endeavor.” He said if it does not pass, he plans to sponsor a trailer bill in the last week of veto session that he hopes will be a “compromise” that the governor can accept. Quinn has been unable to veto the gaming bill because a parliamentary move was used to hold it from going to his desk. But he said last week that given the opportunity, he would use his veto pen on Senate Bill 744. Link would not share any details today about a potential trailer bill.

Gov. Pat Quinn has also shot down a plan that sponsors say would help the state’s two biggest utility companies update Illinois’ electrical grid. Quinn was a vocal opponent of Senate Bill 1652 when lawmakers passed it last spring. He followed through on his vow to veto the bill and has been urging residents to call their lawmakers and ask them to vote against a potential override of his veto.

The measure would allow the companies to increase consumer rates in exchange for a $3.2 billion investment in the grid over 10 years.

Supporters worked to craft a follow-up bill that they say would tighten restrictions on Ameren and Commonwealth Edison. They hope it will be enough top drum up the supermajority needed to undo Quinn’s veto. A Senate committee approved the changes today.

“I commended the governor for vetoing the bill, having voted against it. There were clearly some defects in Senate Bill 1652 that caused concern for myself and other members of the General Assembly who voted ‘no,’” Oak Park Democratic Sen. Don Harmon said. Harmon is the sponsor of House Bill 3036, the so-called trailer bill that asks more of utilities and would only go into effect if lawmakers vote to override the governor’s veto. Harmon said the plan “would make that underlying bill, in my opinion, much better.”

House Bill 3036 would increase reliability standards and require the utilities to spend more of their investment on traditional infrastructure, such as buried power lines, to make transmission more reliable. The plan calls for spending on so-called smart grid technologies — which allow utilities to better monitor lines, outages and transmission in real time — as well as basic costs like power lines and poles.

The original legislation requires ComEd to create 2,000 jobs under the plan and Ameren to create 450 jobs. Harmon said his bill would crack down on how those jobs are counted to avoid the potential double counting of a single job. It would also increase the penalty for not meeting those hiring goals from $3,000 per job to $6,000.

The bill calls for both companies to spend an annual combined total of $60 million a year on rate relief programs for low-income customers.

The legislation would also lower the return on equity the companies would be allowed to earn from 10.4 percent to about 9.7 percent. Harmon said in years two through 10 of the plan, the return would be capped at 8 percent to 9 percent. Consumer advocates said the utilities should not be able to make more than 10 percent returns on their investments, since they would likely be backed with rate increases.

Despite such changes, major consumer advocacy groups, along with Quinn and Attorney General Lisa Madigan, remain opposed to the plan.

“We don’t think ... it addresses the fundamental problems,” said Scott Musser, associate state director of AARP Illinois. “I think we need to start from square one on this and go a new direction and get everyone at the table. One of the fundamental problems all along is there hasn’t been substantial negotiations.”

Madigan blasted the proposed changes to the plan. “Just like they tried to muscle this legislation through the spring session, ComEd and Ameren are at it again. On the eve of veto session, the utility companies gave the public just 59 minutes to review their smart grid “trailer bill” before taking it to the Senate for a vote. If ComEd and Ameren’s proposal were actually a “smart” deal for consumers, it would hold its own rather than be rushed through the process without public input. Instead, ComEd and Ameren have produced a “Trojan Horse” deal that’s designed to distract us from what this legislation really does: guarantee the utilities’ profits, mandate automatic, annual rate hikes and eviscerate independent oversight,” the attorney general said in a written statement.

For more on what to expect during veto session, see Illinois Issues' roundup of the big issues with links to background piec

Veto session preview

2011-10-21T15:18:00.000-05:00

By Jamey Dunn

Illinois lawmakers will likely have a busy veto session as they consider two industry changing plans opposed by Gov. Pat Quinn, components of a budget that Quinn says is forcing him to close several state facilities and other potentially hot button issues.

“The agenda is pretty full. It’s really kind of the fall legislative sessions these days rather than a veto session,” said Kent Redfield, an emeritus political science professor at the University of Illinois Springfield. Several committee hearings are scheduled for Monday, and the session will runs Tuesday through Thursday. It will resume November 8, with an adjournment date scheduled for November 10.

Gaming
Gov. Pat Quinn laid out what he would like to see changed in the gaming expansion package that lawmakers passed at the end of the spring legislative session. Senate President John Cullerton still has a procedural hold on Senate Bill 744, so Quinn has been unable to do anything but present his list of demands. Skokie Democratic Rep. Lou Lang and Waukegan Democratic Sen. Terry Link, the sponsors of the bill, have been pushing Quinn all summer for specifics on what he wants. When he finally gave them this week, the sponsors seemed less than thrilled. Lang and Link agree that if they drafted Quinn’s plan into a bill, they couldn’t scrape up the votes to pass it.

The governor wants to remove a provision that would allow slot machines at horse racing tracks. He does support the addition of five new casinos, including one owned by the city of Chicago. He also wants to add a measure to address legalization of video poker in some bars and restaurants across the state. When video poker was approved as part of the funding plan for the capital construction bill, Quinn supported allowing local governments to opt out of having it in their area. Now, he wants local officials to vote to opt it if they want video poker. So far, the Illinois Gaming Board has not issued any video poker licenses, and the plan has not generated any revenue for the state. Quinn also wants to take tax breaks out of the bill, which are a sweetener for existing casinos. His plan also calls for a ban on campaign contributions from those holding gaming licenses or managing a casino.

Supporters of the gaming expansion say they are working on a trailer bill with changes that they hope will appease Quinn and say they plan to roll it out in a committee hearing early next week. They say they cannot pass legislation that does not include slots at the racetracks. Quinn said he will not sign a bill that does, and he has also vowed to veto SB 744 if it is sent to him — making the plan to fix the situation with a trailer bill that would tack changes onto the original legislation a shaky prospect. “Somebody may figure out how to pull a rabbit out of a hat that makes Quinn, and [Chicago Mayor Rahm] Emanuel, and downstate [lawmakers] and the horse racing people happy,” said Redfield. “But it would be a neat trick.”

For more on video poker and the challenges it has faced getting off the ground, see Illinois Issues April 2010.

Smart grid
Sponsors of a Senate Bill 1652, which would allow the state’s two biggest utility companies to increase customers’ rates in exchange for investments in the state's electric grid have said they will try to drum up enough votes to override Quinn’s veto. Supporters say smart grid technology will create jobs, make service more reliable and help some customers save money by allowing them to monitor their usage.

Opposition to the bill includes AARP; the Citizens Utility Board, which is a consumer advocacy group started by Quinn; and Attorney General Lisa Madigan. Quinn has appealed to the public and even set up a website encouraging people to call their lawmakers and tell them to vote against the bill. Quinn and others say it was written by Ameren and Commonwealth Edison lobbyists as a way to lock in the utilities’ profits. “It seems to me that the governor has a right to set up a media campaign and hire lobbyists and do everything that he’s doing,” said Sen. Mike Jacobs, an East Moline Democrat and sponsor of SB1652. “But at the end of the day, this comes down to the question, do you want a smart grid or don’t you?”

Lawmakers backing the legislation say they are working on a trailer bill to tighten up customer service and reliability requirements in the hopes of getting some fence sitters’ votes to keep the plan alive. Expect heavy lobbying and public relations efforts on both sides of the issue.

For more on smart grid technology and its potential public policy implications, see Illinois Issues July/August 2011.

Budget
Hearings are under way throughout the state about the potential closure of seven state facilities. Quinn announced last month his plans to close the institutions and lay off more than 1,900 state employees. The governor said the budget lawmakers approved in the spring would not fully find state operations, so the facilities must be shuttered to shift money to the core services of the state. Quinn is calling on lawmakers to approve his budget vetoes, many of which, such as a cut to school transportation budget, are generally unpopular with legislators. Quinn is also reportedly working up a list of budget tweaks and cuts he would like to see restored.

Some school officials are looking to lawmakers to find a way for them to get paid. Quinn cut money for the salaries of regional superintendents. The majority of them stayed on the job and have not seen a paycheck since June. Quinn said that local governments should pay them and has a bill in the works to shift the cost. The Illinois Municipal League opposes dipping into local funds. Lawmakers could also vote to override the governor’s veto and restore the money to the state budget. Regional superintendents say they do not prefer one plan over they other; they just want to get paid.

Legislative scholarships
Quinn used his veto pen to try to end a program that has been a source of controversy and scandal for years, but it is unlikely that his changes will ever see the light of day.

Quinn took a bill that would have barred lawmakers from giving scholarships to family members and rewrote it to end the program altogether. He has the support of the bill’s sponsors and has been publicly calling on lawmakers to end the program. However, House Speaker Michael Madigan said Quinn overstepped his constitutional authority, and it is unlikely that the speaker will call the veto for a vote. If no vote is taken, Quinn’s changes and the underlying legislation would die.

Lang, a longtime member of House Democratic leadership, said Madigan has historically been opposed to allowing governors to use their veto pens to make broad changes in the legislation that lands on their desks. “Even if he likes the changes, he has not allowed those bills to be called to a vote because they violate the Constitution.”

Other critical pieces of legislation may come up for a vote in the short time that lawmakers are scheduled to be in session. Legislators may consider a bill that would create the state’s insurance exchange, an online marketplace that is meant to drive down the cost of insurance by encouraging competition. Such exchanges are a key component of the new federal health care reform law. Legislators may also consider a controversial bill that would bring the state in line with a federal plan regarding the punishment and tracking of sex offenders. For more on those topics, see Illinois Issues September 2011 and Illinois Issues blog. Pension reform working groups that include Madigan and House Minority Leader Tom Cross have been meeting throughout the summer and could potentially produce a bill. For more on the two sides of the pension debate, see this month's Illinois Issues. Cross backed a bill that would diminish benefits for employees hired before other changes to benefits went into effect in January, but it lacked the needed support in the House. “Most people I talk to would be really surprised if [Cross’ plan] moved in the House [during veto session.] Other than if the speaker really just got tired of doing all this and puts it out there so it won’t pass,” Redfield said.

He added: “There are a lot of very heavyweight things to be dealing with. And there’s the context of the budget. … They may not ultimately do anything, but they do have a lot on their plate.”

For more on veto session, see this month’s Illinois Issues.

Illinois tries again for Race to the Top education dollars

2011-10-20T16:20:00.019-05:00

By Jamey Dunn

Illinois education officials have decided to again try their hand at the federal Race to the Top competitive grant program. This time, the state wants money to fund early childhood programs.

Illinois lost out on Race to the Top funds in the first two rounds of the program and is now competing for up to $70 million for early childhood education from the up to $500 million the U.S. Department of Education is offering to all competing states. The money would be spent to ensure that more children with the “highest needs” would end up in preschool programs. “Although Illinois currently has enough publicly funded preschool — Preschool for All and Head Start — slots to serve more than 85 percent of the 3- and 4-year-olds in low-income families across the state, school districts continue to report that many children with the highest needs — those from families in poverty, with very low levels of parental education, and with multiple risk factors — still arrive at kindergarten having received no high-quality early learning services,” said the state’s grant application.

The plan calls for a coordinated outreach programs that start before a child is even born. “The state recognizes that its existing strategies are not yet sufficient to ensure that the most at-risk young children and their families will be connected to the services they need. Finding every child with high needs and connecting them with services requires a systemic effort that spans multiple service delivery systems — health care, education, child care, Early Intervention, Child Welfare, etc .— across the prenatal to kindergarten entry age span.”

Illinois set the goals in its grant application that by 2015, 75 percent of children with “high needs” would have at least one year of preschool before kindergarten, 40 percent would have two years or more and 15 percent would have five years of preschool services, including homes visits during their toddler years.

The Illinois Department of Human Services and the state Department of Children and Family Services are also included in the grant application, and some of the money would go toward offering wrap-around social services, such as family counseling, health care and mental health services, to young children and their families. Money would also go toward training and professional development for early childhood educators.

The State Board of Education also proposes that all school districts offering kindergarten programs administer a uniform school readiness test to incoming students so the effectiveness of preschool programs at preparing children for K-12 education can be studied.

The announcement that the state is vying for the grant comes as Illinois is still hoping to opt out of some requirements from another federal program.

No Child Left Behind, passed under former President George W. Bush, requires that all students reach math and reading proficiency goals by 2014. Assessment data released today shows that 695, or 80 percent, of Illinois school districts and 2,548, or 65 percent, of schools failed to make the 2011 Adequate Yearly Progress in student test scores required by the program. Last year, 51 percent of Illinois schools failed to meet the bar set by the federal programs.

In 2011, 85 percent of students had to have proficient test scores in reading in math for schools to pass. That requirement increased from 77.5 percent of students in 2010. The goals for high school graduation rates increased to 82 percent in 2011 from 80 percent in 2010. Only eight Illinois high schools were able to meet the standards in 2011.

U.S. Secretary of Education Arne Duncan announced last summer that his agency would offer waivers to exempt schools from stringent No Child Left Behind performance requirements. “Where there’s a high bar, where folks are really doing the right thing for children, we want to give them a lot more flexibility,” Duncan said when he announced that states would have a chance receive the waivers if they meet certain reform standards.

Illinois officials said they plan to seek a waiver. “We need a realistic, measurable accountability system based on growth and individual student progress rather than an absolute, unattainable goal handed down from Washington,’’ Gery Chico, chairman of the State Board of Education, said in a written statement. “Illinois will request a waiver that builds upon the board’s goals to better prepare every student for success in college and careers, raising expectations for all students and closing achievement gaps.”

State education officials saw at least one bright spot in the scores: progress on closing the achievement gap. Test scores for African-American elementary students have increased by 11 percent since 2006. Scores for Hispanic students have increased by 2.6 percent over the same time frame.

Lawmakers may move on setting up health insurance exchanges

2011-10-19T18:34:00.000-05:00

By Jamey Dunn

As lawmakers return to the Statehouse next week to consider several headline grabbing issues, they also may take up legislation that would affect the lives of the millions of Illinoisans living without health insurance.

Under the federal health care reform law, states can either join the federal health insurance exchange — a competitive marketplace for insurance that is intended to drive down costs — or they can create their own exchanges. Lawmakers in Illinois have opted for the latter, but some say they must make a move during the veto session to ensure that the state fulfills the timeline set out by the feds.

Illinois must submit its plan for an online health insurance exchange to the federal government for approval by December 2012. If the state misses that deadline, it also loses the opportunity to tailor its own exchange. “It is our feeling that an Illinois-run exchange will offer the state more local control,” said Michael Gelder, senior health policy adviser for Gov. Pat Quinn. Gelder said a local exchange would allow decisions about enrollment, eligibility and other issues to remain at the state level.

About 1.7 million of the 11.2 million Illinoisans under 65 are uninsured — or about 15 percent of that age group. Quinn’s office estimates that about 900,000 of those people would purchase insurance through the exchange by 2015. The federal government plans to help cover the costs of those buying on the exchange who cannot afford insurance on their own. An estimated 1.4 million would be insured through the exchange by 2020. “A million people who will who get health insurance coverage in the state of Illinois. That is a terrific thing,if we get it all done right,” Gelder said during a recent hearing on the exchange.

But to get to that goal, he said there is still much to be done. “Many people …think of the exchange as, ‘Well, it’s just getting an Internet site up so that people can sign up.’ … But the fact is, it’s a whole series of tasks, each one of which has a certain degree of complexity associated with it. All of these have to be done in a very short time.”

The first two tasks some lawmakers are looking to tackle during the veto session are deciding how the board that oversees the exchange is chosen and how the exchange will be funded after federal money to administer it dries up in 2015.

The state must demonstrate progress on the plan by March to get in on the first round of so-called phase two federal grants. Illinois already received about $5 million in phase one funds for research. “Most other states who have received their phase one establishment funding have legislation passed,” Gelder said.

Jim Duffett, executive director of the Campaign for Better Health Care, estimated that the next level of grants could bring up to $30 million to cover technology costs and pay new staff to work on the exchange. “It could be a lot of money to really begin to put in the infrastructure that needs to happen,” he said. “I see level one money as really digging the basement and beginning to put up the foundation. … The level two money is really [needed to begin] building the house.”

But the issues of governance and funding are not without controversy. Health care advocates and the Quinn administration oppose allowing members of the insurance industry to sit on the governing board because they stand to profit from the exchange. They also oppose legislators serving on the board because they say every effort should be made to keep politics out of the exchange. “This new marketplace is going to be very beneficial to the insurance companies. They want to be the fox that guards the chicken coop,” Duffett said. He said the board should be similar to the Illinois Commerce Commission, which oversees utility companies and decides whether they can increase rates for consumers. “We wanted to make sure on the board that nobody serving would have a vested financial interest in the outcome of their votes,” Gelder said.

However, industry representatives say the board needs their professional expertise. “To suggest that insurance expertise should be prohibited on the board, as some have…we believe is analogous to suggesting that an aeronautical engineer should be prohibited form serving on the board of Boeing Aircraft,” said Phil Lackman, Illinois vice president of government relations for the National Association of Insurance and Financial Advisors “Everyone has a potential conflict. The key is not having a lopsided board because all interests are relevant and they’re all very valuable.” Lackman suggested to a legislative committee that has been holding hearings on the issue in recent months that a nine- to 13-member board should have two members from the industry, one agent and one representative of an insurance company. That way, they could provide institutional knowledge but not band together to create a majority.

Gelder and some legislators support the idea of allowing the board to create advisory committees so that members could draw on other sources, such as industry insiders, consumer groups and lawmakers, for information.

Duffet said insurance companies should foot the bill when the federal government stops paying to administer the exchange. He said of the price tag, which is estimated at up to $89 million, “This is a spit in the bucket for them.” Gelder said everyone who buys insurance in the state should pay a small fee to subsidize the exchange.

Brian Imus, director of the Illinois Public Interest Research Group, agrees that all insurance buyers chipping in would be a fair deal because he said the exchange will make the market better for everyone, even those who purchase policies through more traditional means. “Everyone is going to benefit from the exchange program. There are going to be more choices in Illinois.”

Another issue that must be resolved is how the exchange will work. It can be an open marketplace where sellers compete for customers, or the board could be given the power to negotiate with insurers to try to get lower rates for customers. While Duffett, Imus and several good-government organizations favor allowing the board to negotiate, Quinn’s administration is undecided on the issue.

Duffett said there is still time to sort that out, and he hopes that lawmakers do not vote in the coming weeks to close the door on the potential for the board to negotiate. “Definitely the insurance industry wants nothing to do with that at all, and many legislators don’t either,” he said. “That should not be on the table during the veto session, but you know it might get snuck in there.”

Some lawmakers disagree that there is an urgent need to pass legislation. “There’s a lot more information that needs to be gained before we can even think about making recommendation or before the legislature can consider any action,” said Sen. Bill Brady, who served on the committee that took up the issue during the legislature’s summer break. “There are a number of things that the federal government has to define for us to really know what we are in for.”

The United States Supreme Court is slated to decide on the constitutionality of the new federal health care law — specifically the requirement that all individuals have health insurance — and Brady said he would like to wait and see how it rules. “There’s a court case that may challenge the whole nature of this, and it may be determined before the end of next legislative session.”

Imus said Brady and other Republicans calling for more time are simply stalling to put off the implementation of policy they do not support. “Regardless of what happens at the national level, creating a health exchange is the right thing to do in Illinois,” he said.

Gelder said the state has to get moving because insurance companies need time to develop the plans they will offer in the exchange. “The insurance companies asked for 18 months of lead time so they can have a product ready to sell on the exchange.” Open enrollment for such plans is scheduled to begin in October 2013. He said passing a bill that sets out the guidelines for the board and funding would only create the bare bones of the plan, and there will be plenty of flexibility to tweak things down the road. Gelder said the board itself would make the final decisions on many of the details of the exchange. “We need the money as soon as possible so we can plan the exchange so that it is functional in order to be approved by the federal government.”

He added, “December 2012 is like tomorrow.”

Quinn vows to veto gaming plan, but supporters still seek a deal

2011-10-17T17:09:00.000-05:00

By Jamey Dunn

Gov. Pat Quinn wants lawmakers to start over with new gaming legislation, but backers of the gambling expansion that passed last spring are not ready to walk away from the bill.

“I think it was done in a hasty manner, and it has major flaws. That’s why I will veto it,” Quinn said about Senate Bill 744 at a Chicago news conference today.The governor presented sweeping changes that he says he would like to see drafted into a new bill. “I think members of the General Assembly realize it’s not exactly a masterpiece. It has a lot of shortcomings. It needs fundamental improvement. It’s better to go back and start over and do it right.”

Perhaps the most controversial part of the governor’s plan is his opposition to slot machines at horse racing tracks. Instead he said he would only back the five new casinos called for in SB 744. Quinn also shot down slots at the state fairgrounds and Chicago airports. “We … cannot have the massive expansion of gambling envisioned by this bill. A smaller and more target expansion is the way to go,” Quinn said. “The bottom line is, in the metropolitan area of Chicago, instead of having nine new casino gaming operations, there would only be three — Chicago, Lake County, southern Cook [County.] Downstate, instead of having five new casino gaming operations, there would be two — Rockford, Danville.” Quinn said he is concerned about oversaturation of the gambling market. “If folks are leaving our state to gamble, the locations that I’ve selected are right in the area[s] where people are most likely to leave. … There’s a limit to how many dollars can be spent on gambling in the first place. Our current casinos have seen a decline in revenues — rather significant.”

Quinn also called for a tweak to implementing video poker, which was legalized at some bars and restaurants statewide as part of the capital construction plan passed in 2009. While local governments can now opt out of allowing video poker machines, Quinn wants local officials to have to vote to accept video gaming instead. The Illinois Gaming Board has yet to issue any licenses to businesses seeking to offer video poker, and the plan has brought in no revenue. SB 744 would require the board to begin issuing provisional licenses, but Quinn said the gaming board should be allowed to work on its own timetable. He also complained that the proposed timeline for issuing new casino licenses would be too rushed. “I think that gaming board should act after it’s done all its work and feels that it’s complete.”

Quinn said that the gaming expansion plan would not direct enough money to schools and construction. He added that the plan’s tax breaks for casinos were too generous. “We do not need excessive tax breaks for lucrative casinos.” While the legislation calls for revenues that state would receive from new casino licenses to be paid over time, Quinn wants the money upfront to spend on the state’s overdue bills.

Despite Quinn’s vow to veto SB 744, supporters say they are still working on a trailer bill with changes in the hopes of reaching a compromise. Waukegan Democratic Sen. Terry Link is optimistic about working out a deal. “I think that we addressed [in the trailer bill] a lot of the concerns that the governor addressed in his statement today, even though we didn’t know about it,” Link said. “We’re probably not a mile apart, but we’re maybe a half of a mile to a quarter of a mile.”

Link, who sponsored SB 744, did take issue with Quinn’s plan to assign some casinos to cities, while leaving the locations in Lake County and southern Cook County up for grabs. “Some he’s designating and some he’s not, and I think it’s ridiculous.” Quinn said that opening up the licenses for bidders in the two areas would likely pay off in more revenues for the state. “I think the gaming board should choose the location in Lake County. I think the gaming board should pick the location in southern Cook County. There will be, I think, robust competition in both of those locations for a site for gambling.” However, Quinn may be open to compromise about the locations. He made previous negative statements about a Danville casino but ultimately included it in his plan. “I said ‘Don’t hold your breath.’ Well, they’re breathing now,” he said today.

Link also said it would be difficult to pass a plan that doesn’t include slot machines at horse racing tracks and that slots at the tracks are included in the working version of a trailer bill. “No, we did not take slots away from the tracks because we don’t think the bill will sail out of the General Assembly if we did that. It will have a hard time.” Sponsors sold the bill as a way to help the state’s struggling horse racing industry. Tony Somone, executive director of the Illinois Harness Horsemen’s Association, said that under Quinn’s proposals, “harness racing in Illinois in two years would look very, very different. And I am confident that within three to five years, it would not exist.”

Current casino operators may see Quinn’s suggestions as a favorable shift and an opportunity to get back to the negotiating table. “It certainly is reflective of many of our concerns about the size of expansion,” said Tom Swoik, executive director of the Illinois Casino Gaming Association. “We’re not against expansion … as long as it’s done reasonably.”He said he thought Quinn’s plan was “well-thought-out” but said it was difficult to judge because it has not been drafted into legislation. Swoik said he hoped the governor’s reservations about expansion and cannibalization of current casinos would make current owners' interests heard in the debate that is sure to come over the next few weeks. As for the trailer bill, he said, “To my knowledge we have had not input into the bill, which is sort of distressing.”

Skokie Democratic Rep. Lou Lang, the House sponsor of SB 744, said it is not up to lawmakers or Quinn to make sure that casinos’ profits are protected. “We should not care as a government which gaming enterprise makes money, as long as we as a state make more money.”Lang agreed that a trailer bill would be the simplest solution. “It would be very difficult to put the coalition together necessary to get the votes to pass [a gaming bill] again.”

Both Lang and Link said they have not ruled out creating a new bill if Quinn cannot be persuaded to sign the original legislation and a trailer bill. Link, who has been pushing various gaming expansion packages in the Senate for years, said Quinn’s statements that the legislation was rushed and ill-conceived are wrong. “He never sat down with us and questioned why we did some of the stuff. We didn’t just pull this stuff out of the clear blue sky,” Link said. “It’s easy to tear it apart if you don’t understand it.”

Senate President John Cullerton is sponsoring Senate Bill 747, which his office has identified as the vehicle for a trailer bill. “Now that the governor has articulated his proposed changes, we will fold his recommendations into our ongoing discussion of how we can make the gaming bill better for the state. Additionally, we will be evaluatingthe governor's framework in light of what is passable by both chambers of the General Assembly,” Cullerton said in a prepared statement. Those following the issue closely say they expect the legislation to be filed publicly soon, possibly as early as tomorrow.

While supporters have said they want a resolution on the gaming bill by the end of the legislature's fall veto session, which is scheduled to start next week, Quinn said he doesn’t mind waiting. “If it takes longer, so be it. If they have to take a longer period of time in order to do their work. I think it’s better to do it right the first time so we don’t have problems,” he said. “The bottom line is, I’m the goalie. I’m the final word.”

Quinn wants speedy end to legislative scholarships

2011-10-13T16:08:00.000-05:00

By Jamey Dunn

A day after House Speaker Michael Madigan rejected his plan to abolish legislative scholarships, Gov. Pat Quinn renewed his call for lawmakers to put an end to the embattled program.

“We should abolish political scholarships altogether in Illinois. I think every citizen feels that way, and it’s time for the legislature to wake up,” Quinn told reporters in Chicago today.Last spring, lawmakers approved a bill that would ban legislators’ family members from receiving the tuition waivers. Quinn used his veto pen to rewrite House Bill 1353 so the measure would outlaw the program altogether.

But Madigan said Quinn has overstepped his amendatory veto powers. “It’s not in compliance with the constitution as it relates to the use of the amendatory veto. That’s very clear,” Madigan spokesman Steve Brown told the Chicago Sun-Times.

Quinn argued today that he and Madigan agree on the subject of scholarships. “He has voted in the past himself to end this program.” The governor said he wants the $13 million spent on legislative scholarships each year to instead go toward the Monetary Award Program. “We should devote our scholarship money to those who have the merit to go to college and the need [for help] to go to college. Political connections shouldn’t play a role in any way, shape or form.”

Skokie Rep. Lou Lang, a longtime member of House Democratic leadership, said Madigan’s support for the issue is irrelevant. He said the speaker has historically been opposed to allowing governors to use their veto pens to make broad changes in the legislation that lands on their desks. “Even if he likes the changes, he has not allowed those bills to be called to a vote because they violate the Constitution.”

Quinn said today that he would back a new bill to outlaw the scholarships, but he wants to see it approved within the next month. “There are some legislators who are very contentious and have not abused the program. But, unfortunately, too many have. And we have example after example over decades of this program being abused,” Quinn said.

Lawmakers seek to improve conditions for migrant workers

2011-10-12T17:14:00.000-05:00

By Jamey Dunn

Lawmakers are looking to improve conditions for the thousands of migrant and seasonal workers who travel to Illinois to work in agriculture and other industries.

One witness testifying before an Illinois Senate agriculture committee this week compared the conditions for migrant workers formerly living in an apartment building in northern Champaign county to those documented in "The Jungle," Upton Sinclair’s 1906 expose on the conditions workers met in Chicago’s meat packing plants.

Julie Pryde, administrator of the Champaign Urbana Public Health District, said her department received a complaint about raw sewage being dumped from the Cherry Orchard housing complex, which often houses migrant workers. “I was absolutely shocked with what I encountered. And all of the amount of services that have come to bear on this one situation, and the hundreds of thousands of dollars it costs [to intervene],” Pryde said. “We were not able to do anything until this summer, when the courts were finally able to give us the authority to go up there and board up the facility and shut it down and keep people out for good.” Pryde recounted holes in walls and ceilings and a lack of running water and electricity.

The owners — who Pryde said were licensed in the past by the Illinois Department of Public Health (IDPH) to use the building as housing for migrant workers — were brought up on charges. It is this sort of scenario that committee members say they hope to address. “In 35 [or] 40 years, things have not changed. This is a condition of indentured servitude,” said Peoria Democratic Sen. David Koehler, who says he saw such conditions first hand when he worked with organizations run by immigrants’ right advocates Dolores Huerta and Cesar Chavez. “It was deplorable then. It’s deplorable now, and I think we need to do something to fix it.”

Pryde said industries reap the benefits of cheap labor while local governments and charity organizations foot the bill for services needed by the workers. “This is subsidized labor. If you think that cheap labor is cheap, you are absolutely not looking at it correctly. … There are enormous costs for having what I would consider a very low paid group of workers who are not even earning a living wage. … We need to provide them rent subsidies. We need to provide them health care.” She said it is not just farming operations that profit from the situation. “It is all the really cheap labor we’re talking about. We’re talking about agribusiness. We’re talking about people working in restaurants. We’re talking about people working in manufacturing.” According to the Latino Policy Institute, a majority of the migrant workers in the state are legally allowed to work in the United States, and 33 percent are U.S. citizens. They typically bring family members along for the trip — on average four people — and their median household income is $17,000 to almost $20,000. The average length of stay for a migrant worker in Illinois is just over six months. According to the Illinois Migrant Council, approximately 28,000 seasonal and migrant workers traveled to the state last year. That number is down from about 32,000 in previous years.

Pryde pointed to local efforts to close down Cherry Orchard. “This one situation cost tens of thousands of dollars locally. That’s not even counting what the state had to pay for this situation—to finally get it shut down. And of course all we’ve done is push the situation elsewhere. The situation still exists. We just can’t see it.’Miguel Keberlein Gutierrez, supervisory attorney of the Illinois Migrant Legal Assistance Project, said migrant workers are lured to Illinois, as well as other states across the nation, by labor recruiters. The recruiters contract with companies to provide low cost workers and also act as sort of a legal buffer because the companies often do not technically employ the workers. Gutierrez said workers typically come to Illinois from Texas, Florida and Mexico. “[The recruiters] begin to make promises about good free housing, about getting their kids into school, about access to food stamps, SNAP benefits. But of course, farm workers are never told how dangerous or poor the housing will be that they’re going to be placed in.” He said once workers come here, they and their families are usually crammed into small and decrepit living spaces. “The labor contractor is used as the middle man to do all the basically the dirty work that no one else wants to do,” Koehler said.

If workers complain, they can lose their jobs and have no way to get home, or they can even face physical retaliation. Gutierrez said the only way a worker can get legal help is to file an injunction to shut downh a housing camp or a work operation. “The likelihood of a farmworker being able to navigate the local court system [with no legal representation] to get an injunction against a labor camp is remote,” he said.

Pryde said cramped and unsanitary living conditions create a public health threat for the community at large. “It does hurt them, and it hurts us when there is tuberculosis involved, when there are other illnesses involved. People are coming here and being hired without even the most basic infectious disease health screening.” She said the dumping of raw sewage, like what was happening at the Cherry Orchard complex, opens up the potential for the public to be exposed to a host of diseases. “You're probably thinking, 'Cholera, typhoid fever, what are the chances of that happening?' Cause we don’t even see those in this country hardly, do we? We certainly have had cases of them in Champaign County this year.”

Witnesses suggested that lawmakers require the IDPH to meet three times a year with advocacy groups and those providing services to migrant workers, make it easier for migrant workers to contact the state for help and to highlight the need for legislation to improve IDPH oversight of both migrant housing and labor contractors. Bob Palmer, policy director for Housing Action Illinois, said lawmakers must step up the consequences for those who skip out on the state’s licensing process. Multiple witnesses said that because since the consequences for not getting licensed are minimal, many involved in recruiting and housing migrant workers do not go through the process and avoid oversight from the state. “In order to not have more growers or labor contractors totally remove themselves from the limited regulatory system that we have now, we need to have … some penalties for not participating,” he said.

The committee plans to hold more hearings on the issue, and Sen. Toi Hutchinson said she hopes they will produce legislation addressing some of dangerous housing and labor conditions faced by many migrant workers in the state. “If this were [happening] in another country, we would be talking about human rights violations — not an agricultural protection act — I’m talking about human rights violations.”

Pryde said she thinks the issue is one that goes largely unnoticed by Illinois residents. “I am truly an accidental advocate,” she said. “Until I had a personal experience with this, I had no idea. And now I simply cannot not talk about it.”

Gaming revenues down as Quinn continues to mull expansion

2011-10-11T17:08:00.000-05:00

By Jamey Dunn

A legislative commission report paints a bleak picture for Illinois gaming revenues, and Gov. Pat Quinn says he plans to have specifics by the end of the month on what he wants for a gambling expansion bill.

The Commission on Government Forecasting and Accountability released a report that says total gaming revenues for the state in 2011 reached their lowest level since 2001. The state's take of riverboat, horse racing and lottery revenues for last fiscal year was about $1 billion.

Revenue for riverboat gambling decreased by almost 6 percent from Fiscal Year 2010 and made up almost 34 percent of total gaming revenues. Four years ago, riverboats contributed about 52 percent of gaming revenues. The report said revenues from riverboats are at the lowest since FY 1999.

The report pointed to the economic downturn and increased competition from neighboring states as possible causes for the drop. However, the numbers continue to suggest that the biggest contributor to the drop in Illinois casino revenues is the indoor smoking ban. “Since the indoor smoking ban began in January 2008, adjusted gross receipts for Illinois riverboats have fallen a combined 30.7 percent from pre-smoking-ban levels,” the report stated.

COGFA’s report also warned against expecting consistent revenue increases under a gaming expansion plan that will be a topic of debate during the legislature's fall veto session. “Many estimate a significant amount of one-time revenues and recurring revenues would come from gaming expansion. However, factors such as a reduced tax rate and cannibalization will make it challenging for substantial amounts of new state revenues to be realized. Lowering the tax rates would likely increase the amount spent by gaming operators on the casino[s], which, history has shown, could lead to higher attendance. … But large increases in overall adjusted gross receipts will be necessary to offset the loss of revenues from the lower tax rates and from the expected loss of revenues from existing gaming facilities that would be cannibalized by the new casinos.” The report estimates that revenues from legalizing video poker in some bars and restaurants across the state would not start coming until "FY2013 at the earliest." The state has been dragging its feet getting the licensing process off the ground and had to rebid a contract for a necessary computer system because of mathematical errors made when totaling costs associated with bids.

Quinn again pointed to fears of saturating the gaming market as he talked to reporters in Chicago today about the gaming expansion passed by the legislature last spring. “I just think it’s top heavy, I’ve said that all along. You can’t over-saturate the gambling market in metro Chicago or anywhere else. If you have too many positions and casinos, they hurt each other, and they don’t really add to the revenue. And I don’t think the people really want our state to become the Las Vegas of the Midwest.” Quinn has voiced support for a provision of the bill that calls for the creation of a casino owned by the city of Chicago.

Meanwhile, lawmakers have said negotiating with Quinn over Senate Bill 744, which would allow for slot machines at horse racing tracks, as well as five new casinos, have been difficult because Quinn won’t say what he wants. Quinn countered today that legislators have not been specific about changes they are willing to make. “I haven’t seen anything specific or tangible from the legislature. All I know is what they did on May 31.” He said he would release specific changes he would like see “later this month.”

Senate President John Cullerton put a procedural hold on the bill in the hopes of negotiating with Quinn. The governor has pointed to that move as an indicator that the plan is flawed. “Obviously they know they have some defects there, because they haven’t sent it my way,” Quinn said. He added, “obviously they’re afraid of my review, and I think they should be.”

Skokie Democratic Rep. Lou Lang, a sponsor of SB 744, said he expects the fate of the expansion will be decided one way or another when lawmakers return later this month. “The plan would be to have some finality to this gaming issue during veto session.” Cullerton backed a plan to draft a so-called trailer bill that would make changes to the original legislation and then send both bills to the governor to be signed at the same time. “I’ve been pushing for a trailer bill. … It would be very tough to pass a new gaming bill or an amended gaming bill that makes substantial changes,” Lang told Illinois Issues.

But Quinn came out strong today against reworking the plan with a trailer bill. “They have a bill. If they don’t think the bill is good enough, they should go back to the drawing board and pass another bill that’s better,” Quinn said. “Do it right the first time. If it’s not right the first time, it’s got to go in the reject pile, and [lawmakers have] got to go back to the drawing board.” When asked if he would veto SB 744, if given the chance, Quinn said, “I think anybody with common sense, if they saw that [bill], would probably throw up their hands in shock and disbelief that we would have gambling expansion in Illinois without proper oversight.”

For more on video poker and the challenges the state faces in implementing it, see Illinois Issues April 2010.

For more on the upcoming veto session, see Illinois Issues October 2011.

Democrats use rail construction project to push Obama's jobs plan

2011-10-10T17:11:00.001-05:00

By Jamey Dunn

Illinois Democratic officials today used the ground breaking of a project aimed at reducing rail congestion to urge support of President Barack Obama’s jobs plan.

Gov. Pat Quinn was joined by several of Illinois’ political elite, such as Chicago Mayor Rahm Emanuel, U.S. Sen. Dick Durbin and U.S. Rep. Bobby Rush, to kick off the so-called Englewood Flyover, a bridge meant to untangle one of the state’s worst snarls of rail traffic. According to figures from Quinn’s office, each day,14 Amtrak trains, 78 Metra trains and 46 Norfolk-Southern freight trains pass through the area where Norfolk Southern Railway and Metra Rock Island District Line tracks cross near 63rd Street and State Street in the neighborhood of Englewood. The project, scheduled for completion in 2014, will run three Metra tracks over the freight traffic.

“When you talk about trains, that’s really what defines our state. We have just about every railroad in the country crisscrossing Illinois,” Quinn said at the Chicago event. “We want to eliminate delays and end bottlenecks and make things faster for freight and for passengers. We take literally thousands of tons of freight through this very area every single day.” The overpass will also create room for Amtrak trains capable of travelling up to 110 miles per hour. “We want to build a fast train from Chicago to St. Louis,” Quinn said. “One of the keys to making that possible is to eliminate the bottlenecks right here.”

The $133 million project will be funded with about $6.6 million from Illinois’ capital construction legislation, which leveraged $126 million in federal dollars. A group of railroads kicked in more than $3 million for design costs through the Chicago Region Environmental and Transportation Efficiency Program (CREATE).

U.S. Secretary of Transportation Ray LaHood, a Republican from Peoria, said more money will be needed to complete to project, and he urged lawmakers to approve the jobs creation package that Obama presented before a joint session of Congress last month. “This project will continue to get funding [if Congress passes the plan]. We don’t have all the money for this project right now. We have a good share of it, but we know that it needs a lot more money that can really come about as a result of the American Jobs Act,” LaHood said. “This project is also illustrative of what can happen other places in America if the Congress were to pass the American jobs Act.”

The president’s plan includes a cut to payroll taxes, an extension of unemployment benefits, spending for new infrastructure projects, incentives for businesses that hire the long-term unemployed and money for local governments to fund salaries for teachers and first responders.

Durbin also pointed to the Englewood project and the estimated 1,500 construction jobs he says it will create as an example of a positive inroad against the state’s unemployment rate, which has hovered recently around 9 percent. “We need these jobs. They’re good paying jobs right here at home — that pay a living wage with benefits. That’s what we need for the future of American.”Durbin called on Republicans in the U.S. Senate to back the president’s legislation when it comes up for a procedural vote in the chamber tomorrow. “This much I can guarantee you. We’re going to produce an overwhelming number of votes on the Democratic side for the president’s bill. But this much I can guarantee you as well: Without the support of Republican senators, the president’s jobs bill will not pass. That’s a reality. We need bipartisan support on the floor of the Senate tomorrow. … Tomorrow is the test.”

The bill has been widely panned by Republicans in the Senate and the House, who say that it relies on accounting gimmicks and unfair taxes on the wealthy for funding. After Obama introduced his plan, U.S. Sen. Mark Kirk, a Republican from Illinois, said he support some aspects, such as rolling back regulations on some businesses and entering into trade agreements with foreign countries. "Some parts of the president's proposal should receive quick, bipartisan action, like tax reform, trade agreements with South Korea, Colombia, and Panama and enactment of regulatory relief for businesses,” Kirk said in a written statement.

However, Kirk was less than thrilled about Obama’s plans to pay for the spending in the bill and cut the deficit. "We need the president to endorse bipartisan ways to reduce federal borrowing, runaway spending, entitlement growth and closing loopholes through tax reform. I am concerned that the president is pushing a formula of partisan tax hikes and budget gimmicks. Tax hikes made the Great Depression vastly worse.” Members of House Republican leadership agree that the taxes proposed to fund the plan would stymie economic growth. U.S. House Majority Leader Eric Cantor, a Republican from Virginia, has described the bill as “dead.” It seems unlikely that the package in its current form will ever make it to a floor vote in the Republican controlled U.S. House.

Quinn looks to public to fight smart grid plan

2011-10-06T16:59:00.000-05:00

By Jamey Dunn

Gov. Pat Quinn is gearing up for a battle with legislators over smart grid legislation.

Quinn toured the state today pushing back against backers of Senate Bill 1652, which he vetoed last month. Supporters say the measure would help the state’s two largest utilities upgrade infrastructure and add new technologies to make power delivery more reliable. Quinn — who is joined in his opposition by Attorney General Lisa Madigan, AARP, the Illinois Commerce Commission, which oversees utilities and signs off on rate increases, and others — says the legislation would lock in “automatic rate hikes” for consumers and loosen oversight of utility companies. “We’re really on the eve of one of the biggest consumer battles in Illinois in the last generation really,” Quinn said today at a Peoria event. “It’s very very important, I think, that consumers in Illinois know that this is a bill that will impact their utility rates now and for years and years to come.”

Quinn said today he is hoping to spearhead a “statewide movement of citizens and businesses” opposing the bill. He rolled out a new website that prompts visitors to contact their state representatives about the legislation. “[Commonwealth Edison and Ameren] have a lot of campaign money. They have a lot of lobbyists. As a matter of fact, I think they may have hired a lobbyist for each member of the General Assembly. … They’re putting every ounce of their power and money behind this bill. They want to override my veto. I believe the people of Illinois are on our side,” Quinn said at a Decatur news conference. AARP has joined Quinn in his opposition tour. “This bill would give many of our members increased utility costs. A lot of our members live on fixed incomes. And when their expenses go up, their standard of living goes down. It’s a balancing act,” said Dean Clough, a member of AARP’s Illinois Executive Council.

The governor said the potential rate increases would be bad for business in Illinois. “One of the very best and most important things that businesses look at is what your utility rates are. And it’s not good at all for the people of Illinois and their jobs to have a permanent raise in utility rates. That is something that’s going to hurt the jobs climate in our state of Illinois.”At least one Illinois business agrees with this assessment. “[Archer Daniels Midland Co.], like other employers in Illinois, relies on competitively priced, reliably delivered electricity in order to operate,” said Greg Webb, a spokesperson for Decatur-based ADM. “Unfortunately, this bill does neither of those things in our view. Its reliability provisions are not strong enough. And its rate provisions could very well lead to Illinois businesses paying higher rates than neighboring states without commensurate benefits.”

But the bill’s sponsors maintain that an upgraded grid — which could help consumers save energy and make utilities more responsive to outages — would be a business draw. “It seems to me that the governor has a right to set up a media campaign and hire lobbyists and do everything that he’s doing,” said Sen. Mike Jacobs, an East Moline Democrat.“But at the end of the day, this comes down to the question, do you want a smart grid or don’t you?”

Jacobs said that smart grid technologies, such as allowing consumers the option to track real-time power prices and lower their usage when rates are highest, would result in savings on many power bills. He added that customers would value getting their lights back on more quickly after an outage with the help of smart grid technology that notifies utility companies when there is a problem with power transmission. “When the power goes out, right now nobody even knows. How can that be good for consumers?” Jacobs said the use of more technology in Illinoisans’ everyday lives has created the demand for grid upgrades. “You can’t have all these brand new iPads and not provide a way to power them,” he said. “Yes, things cost money. You can’t have something for nothing. Those days are over.”

Jacobs is confident that the three-fifths majority needed to override Quinn’s veto will materialize by the legislature's veto session, which is scheduled to start Oct. 25. But he said things could change. “Nothing’s ever a lock in government. People have a right to change their minds.” If Quinn’s efforts work to urge large numbers of voters to call their legislators in protest, he may be able to scare some votes off of a potential override. However, his repeated use of the bully pulpit on this issue, capped off with a campaign-like tour of the state, may alienate some lawmakers from his cause.

For more on smart grid technologies and how they might affect public policy in the state, see the July/August 2011 Illinois Issues.

Conditons at prisons could lead to lawsuits

2011-10-05T14:04:00.000-05:00

By Jamey Dunn

A prison watchdog group predicts that if Illinois cannot change the overcrowding and other serious conditions in its corrections system, it may face a court ordered solution in the future.

The Chicago-based John Howard Association’s assessment of the maximum security Menard Correctional Center in Chester found that overcrowding and understaffing at the facility led to strenuous conditions for both inmates and guards. “In the past year, Menard has had an alarming number of reported staff and inmate assaults,” Maya Szilak, director of the Prison Monitoring Project for the John Howard Association, wrote in her report. Members of the association visited the facility, which is the largest maximum security prison in the state, in June 2011.

The report said that lockdowns and disciplinary segregation were overused during efforts to keep order at the prison, which was designed to house 3,098 inmates but as of June has 3,618. The prison was on full or partial lockdown more than half of the time during the last year and a half. “During lockdowns, inmates are subject to severely restrictive living conditions. Inmates are confined to their cells for 24 hours a day; visiting hours with family are suspended; showers, phone calls, yard and recreation time, commissary, and access to the library and legal services are restricted or suspended; participation in educational, vocational and rehabilitative programs is restricted or suspended entirely; and access to mental and physical health care services is greatly restricted. Inmates who depend on prison wages cannot work. Friends, family members and the children of inmates, who have often traveled long distances, expended significant funds and taken time off from work or school to visit are simply turned away,” the report said .

When John Howard Association representatives visited the prison, 414 inmates were confined in disciplinary segregation. Inmates in segregation eat their meals in their cells and are allowed two showers a week and five hours a week out of their cells for recreation. More than half of those in segregation were receiving medications for mental illness. “This number is extremely disturbing and, yet, wholly unsurprising given the evidence that segregation greatly exacerbates existing mental illness and can independently induce acute mental illness and traumatic disorders in otherwise healthy persons,” the report said. However, the report commends Menard’s administrators for making progress, such as increasing the number of showers allowed for segregated prisoners from one to two per week. “The administration is to be greatly commended for instituting a small but substantial measure to improve the quality of life for segregation inmates.

Inmates who were not segregated for disciplinary reasons spent most of their time in their cells. “In the absence of sufficient space, staffing and resources, the vast majority of Menard’s inmates do not have educational, vocational or job assignments. Consequently, the average inmate at Menard spends roughly 21 to 22 hours a day locked in cells idle, with little or no activity or opportunity for normal social and human interaction,” Szilak wrote. The association also found that inmates lacked reliable water sources and contended with high temperatures and little airflow during summer months. “Reliable delivery of water is critical at Menard because of high temperatures in housing units in summer. This is a serious concern, particularly in the segregation unit where the cells do not have access to an outside window and are closed off from any airflow by a solid metal door. In the past seven years, two inmates have died due to extreme body temperatures caused in part by cell conditions.”

John Maki, executive director of the John Howard Association, said assaults at Menard demonstrate the consequences of “warehousing” prisoners. He said leaving inmates in cramped cells for long periods of time with nothing to do often results in violent behavior. Maki added that prisoners who spend most of their time in cells — especially those serving long sentences in maximum security prisons, such as Menard — are not prepared to transition back into society. However, Maki said, the Department of Corrections focuses its education and rehabilitation programs on lower security prisons where the inmates will presumably be serving shorter sentences. “A good chunk of [Menard’s prisoners] are eventually getting out. … It comes down to a public safety issue.”

Maki said the problems at Menard are “illustrative” of the conditions caused by overcrowding throughout Illinois’ prisons. “There’s really two options given the kind of numbers we have. One, we could build a prison or open new prisons. Or two, we can figure out a way to avoid sending as many people to prison or get more guys out,” he said. But under the current budget climate, which Gov. Pat Quinn said is forcing him to push a plan to close seven state facilities including a medium security prison and a youth prison, Maki said the second option is the only viable one. The report warns that if it doesn’t do something to bring down the number of inmates, a lawsuit may cause the courts to step in. The U.S. Supreme Court recently ordered California to reduce its prison population by 33,000 inmates over the next two years. “The Illinois governor and General Assembly must reduce the prison population through sentencing reform, enacting a safe replacement for Meritorious Good Time, and providing Menard and other DOC facilities with the funding and staffing needed to meet the population’s basic physical and mental health needs. If such actions are not taken, it is all but inevitable that this issue will end up being litigated in the courts,” the report says.

Stacey Solano, a spokesperson for the DOC, said the state is working to lower its numbers through alternative programs, such as drug courts and an Adult Redeploy Illinois, that allow nonviolent offenders to avoid prison time. However, she said that lawmakers must be part of the solution. “The management of Illinois’ prison population is an ongoing issue that must be dealt with both legislatively and administratively. This spring, the governor’s office convened meetings with members of all the caucuses to discuss potential policies that address population, inmate reintegration and alternatives to incarceration. This issue must be addressed from both a policy and budgetary perspective, and we will continue to work with members of the General Assembly to find long-term solutions to maintain safe, sustainable prisons. While the administration is working toward the goal of policy reforms in areas such as inmate re-integration and alternatives to incarceration, such policy is best accomplished with the help of the legislature,” Solano said in a written statement.

Maki agrees that most of the responsibility for addressing overcrowding falls on lawmakers and Quinn. The report is relatively positive about Menard’s administrators, and Maki said that generally prison administrators are doing the best they can with very limited resources. “They’re really tasked with almost an impossible mission.”Maki said he hopes that Illinois can change its prison conditions without a judge forcing it to. “What happened in California is horrible. We don’t want the courts to have to step in.”

But he said if Quinn and lawmakers do not tackle the problem, a judge would likely order them to. “I think it’s almost inevitable that some one is going to come in there and start the litigation process.” Maki said a court battle could take years and result in the state scrambling to reduce its population, much as California is doing now. Among other measures, the state is moving many prisoners back to city and county jails. “It’s not a quick fix, and it’s not going to lead to an ideal solution.”

Arbitrator: Closure plan violates agreement with unions

2011-10-03T16:14:00.000-05:00

By Jamey Dunn

The same arbitrator who ruled that Gov. Pat Quinn owes state employees the raises he has refused to pay, found today that if Quinn moves forward with his plan to close state facilities, Illinois may end up owing some state employees even more.

Arbitrator Edwin Benn’s ruling issued today said Quinn must stick to the deal he made with a public employee union. Members of the American Federation of State, County and Municipal Employees had agreed to cost saving measures that included a reduction in the raises in their contracts in exchange for a promise of no facility closures or layoffs. Benn said if the state does not hold up its end of the deal, it would be required to pay back wages and medical costs for employees who are put out of work by Quinn’s plan. “No employees represented by the Union can be laid off through June 30, 2012; the seven mental health and correctional facilities targeted for closure cannot be closed prior to July 1, 2012; and if any employees represented by the Union are laid off, bumped or transferred as a result of layoffs and facility closures involved in this matter prior to July 1, 2012, those employees shall be reinstated and returned to their former positions and made whole in all respects for their losses flowing from the State’s violation of its contractual promises to not lay off employees and to not close facilities prior to July 1, 2012,” the ruling stated.

Benn said the state would also be on the hook for damages paid to employees who went through certain hardships as a result of a layoff. “If as a result of the state’s violation of the cost savings agreements, adversely impacted employees are put in a position of not being able to make timely payments on their homes or cars and are foreclosed upon or evicted or otherwise forced to move from their residences, as part of the make whole relief, the state shall compensate the employees for those losses.”

Union officials said Quinn should halt his plans and avoid the risk of having to pay costly settlements to workers. “This order is unequivocal. Governor Quinn should rescind all threatened layoffs and closures,” Henry Bayer, AFSCME Council 31 executive director, said in a written statement. “Failure to do so will not only harm the vital public services state employees provide, it will expose the state to significant damages for lost wages, benefits and other costs incurred as a result of the governor’s irresponsible actions.”

The ruling included a timeline for the planned layoffs and facility closures, as well as the number of union employees that would be affected:

Tinley Park — Closure date: November 30, 2011; union layoffs: 143
Singer Mental Health Center (Rockford) — Closure date: Dec. 31, 2011; union layoffs: 122
Illinois Youth Center (Murphysboro) — Closure date: December 31, 2011; union layoffs: 97
Logan Correctional Center (Lincoln) — Closure date: December 31, 2011; union layoffs: 324Chester Mental Health Center — Closure date: March 31, 2012; Union layoffs: 419
Jacksonville Developmental Center — Closure date: February 29, 2012; union layoffs: 390
Jack Mabley Developmental Center (Dixon) — Closure date: February 29, 2012; union layoffs: 162

Under Quinn’s plan, the Department of Human rights would also lay off 23 employees starting on November 1, 2011. According to the ruling, 288 nonunion employees would receive pink slips under the plan.

The arbitrator noted that laid off workers would face a tough jobs climate due to high unemployment rates — which range from 7.8 percent in Jackson County, where the Illinois Youth Center is located, to 13 percent in Winnebago County, home to the Singer Mental Health Center. “Employees who gave concessions to ease the state’s financial difficulties, and in return were promised by the state that they had job security and would not be laid off through June 30, 2012 will, because of the state’s violation of its promises, be thrown into an economy with little chance of finding comparable employment.”Anders Lindall, spokesperson for AFSCME Council 31, said elected officials should avoid creating more jobless Illinoisans. He points to recent incentives Quinn has offered corporations such as Motorola to keep jobs in the state. “If you imagine a plant closure or a business or corporation threatening to leave the state and take 2,000 jobs with them, you would hope that the governor and every other elected official would be there to save those jobs,” Lindall said. “But what we are facing right now is just that situation — state government threatening to throw 2,000 women and men out of work across the state.”

Quinn, who has previously defended the no layoffs deal with AFSCME, has said he has no other options based on the budget that lawmakers approved. He said that under that budget, if he does not skip pay raises, close the facilities and institute layoffs, the state will run out of money before the end of the current fiscal year. “[Lawmakers who approved the budget] knew exactly what they were doing. They knew there would not be enough money to maintain our facilities for the whole fiscal year or maintain our workforce for the whole fiscal year,” Quinn said when he announced the closures. According to the governor, his budget proposal, which called for billions more in spending than the plan he signed, included funding to avoid layoffs and institute pay raises. “This ruling does not change the fact that the money to run all these facilities for the entire year was not appropriated by the General Assembly. You can’t spend money you don’t have,” said a statement issued by Quinn’s office today.

Benn said Quinn’s argument is outside of his realm of consideration. “The statutory, Constitutional and other non-contract arguments raised by the state in which the state seeks to avoid its contractual obligations are not for me as an arbitrator to decide. My function is to interpret the state’s contractual obligations, and those obligations are clear and have been violated. The state’s statutory, Constitutional and other non-contractual arguments are to be resolved by the courts.” Benn predicted a lawsuit and urged any judges who take up the case to decide it quickly, given the state’s timeline for facility closures.

“Arbitrator Benn concedes that he does not have jurisdiction over the Illinois Constitution and statutes that apply to this issue, and both the Constitution and statutes remain to be addressed by the courts. We will seek to stay and vacate the decision while we continue to manage the budget so that core services the people of Illinois depend upon can be provided for the entire year,” said Quinn’s statement.

Hearings on the facility closures begin this week.