Budget postpones tax debate until after election

By Jamey Dunn

The Senate approved the budget bills passed by the House earlier this week, essentially delaying the debate over a tax increase or deep cuts until after the November election.

This session, lawmakers had the challenge of crafting a budget with about $2 billion less revenue because the temporary income tax increase will begin to step down halfway through next fiscal year. The only options seemed to be deep cuts, new revenue or some combination of the two. Democrats eventually presented a third option, which relies on borrowing from special funds and increasing the state’s backlog of overdue bills

Chicago Democratic Sen. Heather Steans, who sponsored some of the budget bills in the Senate, said that the state could make it through the entire fiscal year on the spending approved today. “This budget is a full-year budget that can be executed for a full year without requiring any sort of a revenue vote. No tax increase is required for this budget.” But she said that if lawmakers do not approve any new revenues before the end of Fiscal Year 2015, many programs, such as in-home care for the elderly, would have to be cut. “We are going to have a huge issue that we cannot contend with without either mass cuts or revenue.” Steans said that there are about $700 million in new projected budget pressures that “are not probably totally funded” under the plan.

Republicans accused Democrats of setting the state up for a budget emergency, so they can push through an extension of the tax increase after the election. “This is an irresponsible budget seeking to create a crisis because you failed at convincing the people this year that there’s a sufficient crisis to require a tax increase. So now, you’re taking another stab at creating a crisis by making this huge cliff,” said Sen. Matt Murphy, a Palatine Republican.

Democrats say that they picked the least harmful option that was politically possible. “This maintenance budget allows us to provide level funding for key priorities and services. The effect of the budget is to avert doomsday cuts by deferrals, borrowing and increasing our backlog of bills,” Senate President John Cullerton said in a prepared statement. “Admittedly, this budget reverses some of the progress that we have made in recent years. Since we passed the income tax increase in 2011, we have paid down $3.6 billion in old bills and fully funded our ballooning pension payments. We have paid off $8 billion in pension debt. We have saved billions with responsible budget cuts and that demonstrated that we can be good stewards of taxpayer dollars.”

They FY 15 budget relies on $650 million in borrowing from state funds outside of the general operating budget. It would flat fund most areas of the budget with a slight increase in K-12 education. It would give larger agencies some lump sum appropriations so that they can have the flexibility to try to patch any holes that might spring up. The budget bills:

• House Bill 6093 contains K-12 spending.
• HB6094 contains higher education spending.
• HB 6095 contains general operating services spending.
• HB 6096 contains human services spending and required spending, including pension payments.
• HB 6097 contains public safety spending 
• HB 3793 contains capital projects, including school construction, and about half of the back pay owed to state workers. 
• Senate Bill 220 contains budget implementation provisions 
• SB 274 contains the authority for inter-fund borrowing and lawmaker’s pay. A mechanism in the bill would keep Gov. Pat Quinn from being able to cut off legislative pay, a move he made to try and push lawmakers to act on pension reform last summer. The bill would also put a freeze on legislative pay increases. 

Gov. Pat Quinn called the plan “incomplete” in a written statement he released after the Senate passed the spending bills. “The General Assembly didn't get the job done on the budget. ... In March, I submitted a balanced budget plan that continued paying down the state's bills, protected education and public safety and secured Illinois’ long-term financial future,” the statement said. Quinn called for an extension of the tax rates in his budget address earlier this year. “Instead, the General Assembly sent me an incomplete budget that does not pay down the bills but instead postpones the tough decisions. I will do my job. I will work to minimize the impact of cuts in vital services while continuing to cut waste and maintain our hard-won fiscal gains. There’s more work to do to continue moving Illinois forward.” 

Steans and Park Ridge Democratic Sen. Dan Kotowski, who also sponsored budget bills, would not say if they intended to revisit the income tax rates after November. But they did say that they believe more revenue is needed. However, on the topic of the tax rates, Cullerton did not mince words. “In order to return to [the state’s] path of fiscal progress, we will have to bring revenues in line with our growing liabilities. While a vote on our tax rates has been deferred, rising costs and pressures will force the issue at a later date.” Cullerton has said that he has the votes in the Senate to keep the current income tax rates of 5 percent for individuals and 7 percent for corporations. But House Speaker Madigan said that he was a long way off from being able to pass an extension of the rates in the House. If lawmakers do not opt to extend the current rates, they will step down to 3.75 percent for individuals and 5.25 percent for corporations in January.

Republicans took issue with giving Quinn the power to sweep funds in an election year. They also cried foul over areas of spending in the budget, such as money going toward a summer jobs program to prevent violence. The governor has recently come under fire for the Neighborhood Recovery Initiative (NRI). The program was funded primarily from discretionary funding that Quinn could access. NRI was the subject of a scathing audit that found that the program did not use a competitive bidding process to select the providers and dole out grants but instead relied on recommendations from Chicago aldermen. Documentation from providers implementing NRI was seriously lacking and at least $2 million was never accounted for. Contracts for NRI were agreed upon just before the 2010 election and Republicans have accused Quinn of using the program as a “political slush fund.”

Democrats argued that the problems in the program have been cleaned up and that violence prevention continues to be an important priority. They criticized Republicans for not presenting their own detailed plan for coping with the loss of revenue in FY 15. “There’s no place to really pretend in this budget. It is what it is. It’s very straight forward it’s very clear,” said Kotowski of the plan. “It’s clear where the pressures exist. It’s clear the actions that we’re taking to live within the means already provided by taxpayers.”

In his traditional end-of-session floor speech, House Speaker Michael Madigan noted that lawmakers have been faced with many tough issues in recent years. “This has been a difficult session, a very difficult session. Over the last few years, nothing seems to be simple; nothing seems to be easy. It’s just one difficult complicated issue after another.”

The legislature is not scheduled to return for fall veto session until November 19th.

Roads and bridges capital bill
The Senate sent a “mini” capital bill with road and bridge constructions projects to Quinn’s desk. House Bill 3794 calls for $1.1 billion in construction spending, $1 billion of which would go to road and bridge projects included in IDOT’s 5-year plan. The remaining $100 million would go to local street repair projects.

The bill does not list projects because they would be determined by IDOT. The department would prioritize projects that are ready to go in the summer construction season. The money for construction would come from funding sources approved as part of the 1999 Illinois First capital program. Borrowing for the plan has been paid off, but the increased fees and taxes remain. The Senate approved the bill with no debate.

Safeguard in recall amendment could be its downfall

By Jamey Dunn

A provision to require statewide voter support to unseat a governor, which legislators viewed as a safeguard in a proposed recall amendment to the Illinois Constitution, has raised questions of constitutionality days before voters will consider it.

The American Civil Liberties Union (ACLU) of Illinois claims that requiring any effort to recall the governor from office to get at least 100 signatures from 20 different counties violates the equal protection clause of the U.S. Constitution by running counter to the “one person, one vote” principle.

Harvey Grossman, ACLU of Illinois’ legal director, said the requirement gives individual voters in smaller counties more power. In a large county, such as Cook, it would theoretically be easier to find 100 voters to sign a petition, while in a much smaller county it might be more difficult. Grossman said this would mean signatures from voters in smaller counties would be in greater demand, and the voice of a voter in larger county would be diluted.

Grossman said one alternative that would ensure statewide support would be to require signatures from a certain number of legislative districts, which are drawn up to contain the same number of voters. He said such a plan would prevent the problem that using counties, with varying populations, presents.

Rep. Jack Franks, a sponsor of the amendment, said legislators, working with Gov. Pat Quinn’s office, tried to ease the fears of those who were concerned that a governor could be recalled too easily or that recall power could be used as a political cudgel to threaten a sitting governor and sway his or her decisions. The requirement that a recall campaign collect signatures from multiple counties was meant to prevent a more populous county from single-handedly initiating a process, which would affect residents throughout the state.

Those seeking to recall a sitting governor would have to collect signatures from citizens equal to 15 percent of votes cast in the last gubernatorial election. A bipartisan group of 20 House members and 10 Senate members also have to sign off on a recall effort.

Franks, a lawyer, said he does not know if the ACLU’s argument would hold up in court, but he said the organization should have raised concerns earlier in the process instead of days before the election. He is encouraging voters to approve the amendment, saying that if it is struck down, previous voter support would make it easier to pass a new version through the legislature.

Grossman, who wrote an opinion piece on the topic for the Chicago Tribune, said that his organization was responding to recent complaints from voters. “We felt we had a duty, once it was brought to our attention, to inform the voters.”

While the ACLU does not take a stance on recall, the organization is encouraging voters to reject the amendment because it is unconstitutional. He said the ACLU does not have any immediate plans to stage a legal challenge of the amendment if it receives the required support from 60 percent of individuals who vote in the general election next Tuesday. However, he thinks if it does pass, “the most likely result would be a court would strike down recall altogether.” He said the legislature should "go back to the drawing board" and create an amendment that would not face such legal challenges.

Kent Redfield, an emeritus professor at the University of Illinois Springfield and director of the Sunshine Project, a nonprofit campaign contribution database connected to the Illinois Campaign for Political Reform, described finding the right balance of safeguards against abuse while still making a recall process feasible for voters as a “three bears kind of problem.” He added the Quinn and the legislature could have taken more time if they wanted to get the amendment just right. “I don’t know that there as a lot of thought about these issues. … They could have found better mechanisms to protect against the things they wanted to protect against. … Could we have spent six months and got a better provision that would have been on the ballot two years from now? Sure.”

Redfield said although Quinn has historically supported recall, the impeachment and removal from office of his predecessor, former Gov. Rod Blagojevich, added political pressure to get an amendment on the ballot this November. “The governor wanted that skin up on the wall as he was running for election.”

Redfield said he is not convinced by the ACLU’s case against the amendment. “I think the argument is a stretch, and I think it’s one of the reasons [they] didn’t raise it sooner.” He thinks it will do little to sway voters one way or another. “If you’re for recall, you’re for recall. If you’re against it, then you’re against it.”

Lobbyist registration system shut down

By Jamey Dunn

Lobbyists are not currently being required to register with the state or report on their spending.

In the wake of a court ruling that barred the state from collecting increased lobbying fees that went into effect January 1, Secretary of State Jesse White’s office has pulled the lobbyist registration and reporting system from its Web site.

Both the ACLU and the Illinois Society of Association Executives sued White over the fee increase, claiming it was an unconstitutional tax on free speech.

Pamela Tolson, executive director of the Illinois Society of Association Executives, said she had already advised her members not to pay the increased fees after a court granted a temporary halt on collection. Now, she says lobbyists also may not be required to report their spending for the last six months by the deadline at the end of this month.

The increased fees were part of a bill aimed at creating more oversight into lobbyists’ activities. The new law requires them to file spending reports weekly while the General Assembly is in session and monthly when it is not. Under the previous law, reports are due twice a year.

Sen. Susan Garrett, a Lake Forest Democrat, sponsored the bill. She said the increased fees are necessary to administer the reforms. However, she is concerned that some nonprofit advocacy groups may not be able to afford the higher fees. She said she hopes a compromise can be reached. “This never should have gotten this far,” Garrett said in response to the lawsuit.

The law is not specific on the details of executing many of the new requirements. It passes those decisions on to the secretary of state. Tolson said many of the associations she represents are concerned about the logistics of pulling off the ramped up reporting schedule, both on their end and the state’s.

It appears that White is washing his hands of the entire situation until the courts sort it out. If that doesn’t happen before next week, lobbyists will return to Springfield for the spring legislative session without having registered and unsure of what reporting requirements they face in the near future. (White’s website does say that after the court makes its final decision, lobbyists who register within two weeks will be retroactively registered from January 1.) So the result, for the time being, is that an attempt to create more transparency has led to having none.

Judge blocks lobbyist fee increase for nonprofits

By Jamey Dunn

Nonprofit organizations have been temporarily spared from paying thousands of dollars in fees to lobby Illinois lawmakers.

A law aimed at cleaning up unethical practices in the wake of former Gov. Rod Blagojevich’s impeachment would also nearly triple the fees that lobbyist must pay (pg 131) each year to register with the state.

The new law goes into effect January 1 and would require organizations to pay $1,000 to register and an additional $1,000 per lobbyist.

Both the American Civil Liberties Union and the Illinois Society of Association Executives are suing Secretary of State Jesse White on the basis that the increased fees infringe on the First Amendment rights of lobbyists by requiring them to pay an unreasonable amount to discuss legislation and policy with elected officials. White is named in the suit because his office administers the registration program.

A judge ruled today to temporarily block the state from collecting the increased fees from nonprofit groups. All other lobbyists will have to pay the higher fees.

Adam Schwartz, senior staff counsel for the ACLU, said other than Illinois, no state has registration fees higher than $365, and 42 states have a fee of $150 or lower.

Schwartz said nonprofit organizations, including the ACLU, would feel that pain if such a large increase were allowed to go into effect. “We are talking about nonprofit organizations that are not showing up with buckets of money,” he said. “We are concerned that there are some groups that will be squeezed out of the process.”

White spokesman Henry Haupt declined to comment on the case.