Home health care providers lobby for funding to cover shortfall

By Meredith Colias

Social service advocates say agencies providing in-home care for seniors could be at risk if additional state money is not set aside to pay them.

The Illinois Department of Aging notified service providers in a letter March 7 that it would soon run out of money to fund the Community Care Program for the current fiscal year, which ends on June 30. Providers say that $173 million is needed to properly fund service through the end of Fiscal Year 2013. Kimberly Parker, the Department of Aging's spokeswoman, said in an email it was “common knowledge” the legislature did not give the agency enough money to continue to pay providers through the entire fiscal year and that administrators are hopeful additional money could be found. She said that so far, providers have continued to administer services, but without more funding, payment would likely be delayed until the start of next fiscal year.

The program serves mainly lower-income seniors who apply for assistance through the state for home-based long-term care assistance, with everyday needs ranging from preparing meals and running errands to dressing and bathing, according to the agency's website. The program helps to care for an estimated 80,000 senior citizens in the state. Aside from at-home providers, it also helps to pay for background checks for at-home caregivers, adult day centers that watch elderly clients during the day and a program designed to preventing elderly spouses from being burdened by their spouses in-home care and falling into poverty. To qualify, Illinois residents must be at least 60 years old, the state must determine that they need long-term care and they must have less than $17,500 in assets aside from their home, car and furniture.

 Helping senior citizens remain in their homes is preferable for the state from a financial standpoint, since the Department of Aging estimates the costs would be as much as four times higher to pay for an individual placed in round-the-clock care in a nursing home. The Department of Aging estimates 96 percent of the money it receives from the General Revenue Fund goes to the program. The department says the program was underfunded last fiscal year, as well. Part of the reason why the program is facing a shortfall is because it had to use some of the money it received this year to cover last year's costs.

Jacquie Algee, executive director of relations for Service Employees International Union health care, said smaller providers that primarily rely on the state for their operations are most at-risk if the additional funding is not found. “It’s been a problem because it happens every year,” she said. The Illinois Association of Community Care Program Homecare Providers estimates that one-third of its members depend heavily on funding from the Department of Aging and would not be able to continue operations for more than 30 days without it.

Abdon Pallasch, a spokesman for Gov. Pat Quinn, said the governor supports restoring the funds to the department, although Pallasch was unsure where money would be diverted from in the current budget to continue funding. “It’s up to the legislature,” he said.

Lawmakers keep busy on the second day of veto session

By Jamey Dunn

During a busy veto session day today, lawmakers voted to override Gov. Pat Quinn’s budget vetoes, approved a bill that would require publicly traded corporations to share some tax information with the public and passed a resolution that could bar the way for pay raises for public employees.

Budget vetoes
The Senate voted to override some of Quinn’s changes to the budget they approved in the spring. Quinn signed the budget sent to him by the General Assembly, but he vetoed $19.4 million that was included to run the state’s only super-maximum security prison, located near Tamms, and the $21.2 million included to operate a women’s prison in Dwight. In addition to the prisons, he plans to close three transition centers meant to help inmates reenter society. Quinn also cut $8.9 million for a youth prison in Joliet and $6.6 million for a youth prison in Murphysboro. The chamber approved putting funding back for the corrections facilities.

“Our prison population is at an all-time high, our prisons are severely overcrowded and our staffing levels are down,” Sen. Gary Forby, who called for the override, said in a prepared statement. Tamms is located in Forby's district. “I hope that today’s Senate vote sends a clear message to the governor that he needs to stop fighting us on this issue. He needs to use these funds to manage the overcrowding of our prison system and ensure the safety of employees and inmates.”

The governor has been lobbying lawmakers to uphold his changes. “I had to make those vetoes in order to have money for the Department of Children and Family Services, and also because we can’t be spending millions of taxpayer’s dollars on prisons and juvenile justice camps that are half empty and in one case totally empty,” Quinn said. “The concept that we’re going to keep open Murphysboro, which is a juvenile justice camp, at a cost of millions of bucks and then take away money from neglected and abused children is I think really upside down. So I hope we prevail. We have two [chambers], and we’re going to fight hard in both places to uphold my decision.” The bill will now go over to the House.

Quinn is under no obligation to spend the money even if the General Assembly votes to restore it. However, he cannot spend the money elsewhere, such as on DCFS costs, without the approval of lawmakers.

DNR funding 
After a failed attempt at the end of the spring legislative session to approve revenue to fund the state’s struggling Department of Natural Resources, the bill passed in the Senate today. Senate Bill 1566 would increase vehicle registration fees by $2, which would bring the cost of registration for a standard passenger vehicle to $101 annually. The proposal would also allow the DNR to charge out-of-state visitors park entrance fees and charge all visitors access fees for certain park features, such as beaches and horse trails. A previous plan of charging entrance fees for all park visitors was scrapped in lieu of the proposed increased vehicle registration fee. “If you live in Illinois and you have an Illinois plate, it’s open season. Go to any park you want to,” Hutchinson said of the plan the last time it was up for a vote. The measure has already passed in the House, and a Quinn spokesperson said the governor plans to sign the bill.

Republicans who opposed the bill said that the Quinn administration chose to underfund DNR and spend the money on other programs.

Corporate tax info 
The Senate approved Senate Bill 282, which would require publicly traded corporations doing business in Illinois make some tax information public.

Senate President John Cullerton, who sponsors the bill, says that the measure is meant to help legislators make more informed tax policy decisions. “It’s not a gotcha to the business community. It’s actually something that helps us have a better tax structure.”

Under the proposal, corporations would submit tax information such as their incomes, tax liability and tax credits they receive to the secretary of state. The information would not be made available to the public until two years after the information is filed. At that time, it would be available to the public through a searchable online database.

Leaders of business organizations have balked at the idea of having to release information they say is private. “I think tax information is proprietary and confidential and should not be publicly released,” said Mark Denzler, vice president and chief operating officer of the Illinois Manufacturers Association. “The reaction from the business community ... has been pretty reflexively negative,” said Palatine Republican Sen. Matt Murphy. He said that he recognizes that Cullerton is not trying to hurt businesses, but he said, “I think at its core it sends the wrong message.” Murphy called on Cullerton to compromise with businesses.

Cullerton said business groups have not come to him with any suggestions for compromise so far, but he said he hopes that might change. “Sometimes, people’s willingness to negotiate increases after it passes one chamber.” The bill has an influential House sponsor in Chicago Democratic Rep. Barbara Flynn Currie and also has the support of Quinn.

Cullerton said he is open to changes being made to the bill in the House. “If there is some reason why some of these things that we’re asking to be disclosed should not be, and there’s a rational basis for that, I can take it out.”

State workers pay raises 
The House approved a resolution stating that it will not include money for state employee pay raises in the Fiscal Year 2013 budget, which takes effect in July. House Speaker Michael Madigan, who sponsors House Joint Resolution 45, said it is “a clear message from the House, to both the negotiators, both sides, that we don’t see room for salary increases. We just don’t see it.”

Quinn is currently negotiating a new contract with the American Federation of State, County and Municipal Employees. Quinn said today that he told the union there is no money for raises under the new contract. “I honor the workers all the time. I have never said anything other than I really appreciate their public service. At the same time, if the state has these severe financial challenges, we’re all going to have to realize that that’s the reality and we’re not going to be able to have raises.” Union officials say the resolution undermines collective bargaining.

Anders Lindall, spokesman for AFSCME Council 31, said the union has offered to forgo pay increases in 2013 in exchange for concessions from the state. “In reality, state employees have voluntarily done more than anyone to help the state close its budget gap — agreeing in 2010 and 2011 to unpaid furlough days, wage deferrals, health plan changes and other concessions that saved the state more than $400 million, and offering in the current round of negotiations to accept no pay increase in 2013 as part of a comprehensive settlement,” Lindall said in prepared statement.

Assault weapons ban 
The Senate also voted to override a veto that Quinn used to tack an assaults weapon to another bill.

SB681 would allow Illinois gun owners to purchase ammunition from in-state dealers through the mail. However, after a mass shooting in Colorado movie theater in July, Quinn used his veto pen to attach a ban on semi-automatic rifles, high-capacity magazines and .50-caliber guns onto the bill. Many lawmakers agreed that Quinn overstepped his authority by hijacking a bill that is at best tangentially related to the issue. “If the governor wants to do that, then he probably needs to find someone who introduces that bill and then we have a discussion about that bill,” said Okawville Republican David Luechtefeld, who sponsored SB 681. If the House also votes to override the veto, the underlying legislation would become law.

Quinn plans to keep pushing for a ban. “In the past six months, our nation experienced two violent shootings with an assault weapon in everyday settings: A gunman used a semi-automatic assault weapon to kill six worshipers at a Sikh temple in Milwaukee, Wisconsin. Illinois also lost one of its own, Petty Officer 3rd Class John Larimer, in the Aurora, Colorado, movie theater massacre with an assault weapon that left 12 dead. As the governor has said, there is no place in Illinois for weapons designed to rapidly fire at human targets at close range,” Brooke Anderson, a spokeswoman for Quinn, said in a prepared statement. “A statewide ban on assault weapons is good public safety policy, and we will vigorously pursue this cause.”

The House has canceled its session for tomorrow, but the Senate is scheduled to start its session at 10 a.m. 

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

By Jamey Dunn

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

Senate Democrats get a jump on the budget

By Jamey Dunn 

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

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

 “I don’t think that we want to be in a position of waiting for the House to pass a budget. We want to get the process rolling. We don’t know whether we will get to an agreement [on Medicaid] yet or not, yet. So we are going to move a budget to the House and continue negotiations,” said Sen. Heather Steans, who sponsored two of the three budget bills that passed tonight. The bills are:

• Senate Bill 2404
• Senate Bill 2455
• Senate Bill 2461 

“So it’s more important to beat the House than it is to pass a sound budget that’s premised on everything that’s necessary to pass a budget, like what’s going to happen with Medicaid, the central issue in the entire budget? We are in such a rush to beat the House that we would rather do it fast … than do it right?” Sen. Matt Murphy, a Palatine Republican, asked during floor debate. Murphy said that the proposal would not put the state on track for financial stability when the recent income tax increase rolls back in 2015.

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

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

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

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

House passes gaming bill it previously rejected

By Ashley Griffin and Jamey Dunn

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Republicans blame Quinn for child-care funding shortfall

By Ashley Griffin

Child-care providers in the state are one step closer to being certain that they will receive state payments through the end of the fiscal year. 

The Illinois House approved a supplemental appropriations bill today that contains $73.6 million to pay providers and $151 million to pay down overdue Medicaid bills. Senate Bill 2450 passed with 113 “yes” votes and 3 “no” votes. Gov. Pat Quinn’s office had notified child-care providers that state payments, which help cover costs of the care for low-income children, would be delayed until July. A delay in payments would affect up to 40,000 child-care providers and 85,000 low-income families.

Although lawmakers may approve a solution to ease the funding crisis in the coming days, some blamed the governor for fiscal mismanagement.

“We appropriated that money, the governor shorted another line and used your money to fund that line,” House Minority Leader Tom Cross said to child-care providers watching the vote from the House gallery. “He used you, and we’re going to take care of it. But we can’t let that go on anymore.” Some Republicans accused Quinn of intentionally underfunding the program so there would be a reason to ask for more money. They said that the move erodes trust as they are working with the governor on the budget for next fiscal year.

 But Quinn’s office said the shortage of funds came from an increase in the need for the Temporary Assistance for Needy Families program, which is paid for out of the same fund. The TANF program has seen an 80 percent increase in enrollment since 2009. “We are encouraged legislators understand that just because reductions in the budget are made, it does not mean the need goes away,” Kelly Kraft, a spokeswoman for the governor's budget office, said in a prepared statement. “This fiscal year we experienced a dramatic increase in demand for TANF cases. TANF, along with child care, are funded through the same line, and federal law mandates the state pay TANF first. Due to that unexpected increase in TANF, the state developed a $73.6 million shortage in funding available for child care. The legislation passed by the House calls for that funding to be restored, ensuring that the tens of thousands of Illinois residents who benefit from child care are not forced to choose between going to work and caring for their children. Unspent general revenue funds from this fiscal year will be used to fund the child-care program.”

However, Quinn's proposed Fiscal Year 2013 budget calls for $85 million in cuts to the Child Care Assistance Program, which already has some lawmakers thinking in advance on how to handle the program for next year. “We can try to predict caseloads better. … So we can avoid this kind or problem for FY13,” said Chicago Democratic Rep. Sara Feigenholtz, who chairs the House Human Services Budgeting Committee.

Chicago mayor jumps into Statehouse pension debate

By Jamey Dunn

As lawmakers look to scale back retirement benefits for state employees, Chicago Mayor Rahm Emanuel asked them to also consider cutting benefits for workers in his city.

Emanuel presented the broad strokes of his proposal to change the city’s six pension systems to an Illinois House committee today. He proposed:

• A freeze on cost of living increases for 10 years. After 10 years, the COLAs would not be figured on a compounded basis. 
• A phased in contribution increase for employees. Employees currently contribute between 8 percent and 9 percent of their pay depending on which system they are in. Under Emanuel’s plan, that would increase by a percentage point each year for five years. After five years, the average cost employees pay would be 14 percent. 
• A five year increase in retirement age that Emanuel said would be phased in over time. This change would increase the age to 67 for most city workers and 60 for police officers and firefighters. 

The mayor’s proposal would have to be approved by the General Assembly, and it would apply to Chicago’s pension systems for laborers, municipal employees, teachers, police officers, firefighters and park employees.

Emanuel estimated that his plan would eliminate about 40 percent of the city’s $20 billion unfunded pension liability. He said that growing pension costs are crowding out other vital services. “Our taxpayers cannot afford to chose between pensions and police officers or pensions and paved streets or pensions and public health,” he said. “Our pension payment will eventually squeeze out every essential that residents require and a city must provide.”

Emanuel projected that if nothing is done to scale back benefits for city employees, property taxes would have to be increased by 150 percent to keep up with the cost. “I do not believe that property taxes should go up 150 percent. No business will come to the city of Chicago or Chicago land area, and no family will relocate [there].”

He praised Gov. Pat Quinn’s plan to reform the state’s pension system and acknowledged similarities in the underfunding that Chicago pensions and state pensions are facing. He said taxpayers and workers are not to blame. The mayor said that politicians have not been honest with the public in the past about the magnitude of the problem and have made promises to workers that they cannot keep. While his plan shares some components with Quinn’s, he said Chicago has different needs. “We are facing problems that a one-size fits all framework will not fit.”

House Speaker Michael Madigan agreed that Chicago and the state face similar problems when it comes to pensions. “Well, I think he delivered his message that the city pension systems need to be reviewed. They need to be examined. They’re not financially sustainable as they’re currently constituted. It’s very similar to what we’re doing here at the state level with the state pension systems. I’ve been very much involved in that. Same issues,” Madigan told reporters today.

The mayor came out strongly in favor of Quinn’s proposal to have school districts outside of Chicago take on some of the cost for teachers’ retirement. He said it is unfair that Chicago covers most of the cost for its teachers while school districts outside of the city do not. “Only taxpayers in Chicago pay for the pensions of their own teachers and those teachers statewide. If taxpayers in Northbrook or Springfield or Marion were faced with that kind of double duty, their mayors would not tolerate it. And as mayor of Chicago, neither will I.”

House Minority Leader Tom Cross said there are other funding inequities between Chicago and downstate that benefit the city, and any potential unfairness should be considered in the context of all state spending. Cross and other Republicans have been less than enthusiastic about the possibility of shifting costs to local school districts. Cross said it would do nothing to address the problem of the unfunded liability. Republicans who have been more vocally opposed have said that it would decimate school budgets. Besides the call for a cost shift, Cross was supportive of Emanuel’s plan. “I like his concept. I like the governor’s concept. I like our concept,” Cross said. “We’re ready to go. We need to do this now.”

Unions decried Emanuel’s plan, saying that he is blowing the situation out of proportion. “What he’s trying to do is alarm the tax payer and pit them against the Chicago Police officers and the fireman that protect our city every single day,” said Michael Shields, president of the Fraternal Order of Police Chicago Lodge 7. “A guy does 30 years, 27 years down the road you can’t just change the rules of the game for the employee. It’s an individual contract between the employee and the employer and you cannot reduce those benefits. It’s against the constitution in Illinois.”

Union officials say Emanuel sprung the proposal on them during today’s hearing and voiced frustration about not being asked for input in the mayor’s plan. “The unions representing city employees have repeatedly conveyed to the mayor our willingness to work constructively to solve the pension funding problem. Yet he has never once met with us to hear our views or put forward the suggestions he unveiled today,” Henry Bayer, executive director of the American Federation of State, County and Municipal Employees Council 31, said in a prepared statement. “No one has a bigger interest in assuring the fiscal stability of city pension funds than the retirees and employees who depend upon them. Our union remains committed to working toward a solution that is fair and constitutional, but we need an administration that shares our commitment to a collaborative process and a genuine solution.”

Emanuel said his “framework” is just the start of a discussion over pension reform for Chicago. He said he would use all the political capital he may have with the legislature to help back reforms to both the state’s pensions systems and the city’s pensions systems through the legislative process this session. But, Emanuel said, getting something passed this spring is not a given. “I never underestimate — given that you’re about to make change — the difficulties surrounding it,’ he said. “Because details matter.”

House passes spending cap

By Jamey Dunn

The Illinois House is on track to cut from Gov. Pat Quinn’s proposed budget in the same way that it did last year.

The chamber today approved an estimate of what the state would have available to spend for the Fiscal Year 2013 budget, and the number was about $200 million less than Gov. Pat Quinn’s revenue estimate. The House estimate of general revenue funds that will be available for FY 2013 is $33.7 billion, and Quinn’s, $33.9 billion. “I thought we needed to take a conservative approach. I think we needed to give ourselves some breathing room,” said John Bradley, a Marion Democrat.

The resolution setting the estimate and committing the chamber not to approve a budget with more than $33.7 in spending passed with bipartisan support. The House approved an identical joint resolution, which will head over to the Senate for consideration. Last year the House only passed its own resolution and left the Senate behind in the budgeting process.

Opponents say setting a spending cap limits flexibility and could lend to unnecessary cuts. William McNary, co-director of Citizen Action Illinois, said the state should work off of projections but not set a cap. He said that lawmakers should instead base spending decisions on the need for and effectiveness of programs. “Upfront hard spending caps put the cart before the horse. It would arbitrarily set an appropriations number and try to get the need to fit to this number. ” He added: “One way to find over $200 million immediately is to use the [Commission on Government Forecasting and Accountability] revenue estimate. They’ve been historically reliable.” COGFA’s projection is $50 million more than Quinn’s.

This year’s House estimate is much more in line with the governor’s numbers than last year’s House projection, which was $750 million less than Quinn’s revenue estimate. “Last year we were below the numbers of [Commission on Government Forecasting and Accountability] and the Department of Revenue and [the Office of Management and Budget] and we were right. And so I would rather err on the side of safety and caution, then to be high and get into trouble at the end of the year--worse than what the state’s already in,” Bradley, who is the chair of the Houses’ revenue committee—which produce both the estimates from last year and this year.

Supporters of last year's admittedly conservative estimate said that any additional money would go toward paying off the backlog of overdue bills. The state has paid off about $1 billion of those bills with additional revenues. However, Illinois is projected to complete the current fiscal year with a deficit of about $500 million. One possible trigger for the deficit is the repayment of more than $600 million in interfund borrowing.

This year, some lawmakers support the idea of setting aside revenue before any operating expenses are paid and spending it on the backlog. The idea is similar to the way lawmakers paid the pension payment and debt service last year. “I would personally be in favor of taking money off the top to begin the process of paying off the backlog of bills,” Bradley said.

But such a move would add to the list of growing costs that are putting pressure on state spending. “We know the pension payment is up. We know we have Medicaid pressures, and we know we have general operating pressures. And we’ve only estimated about $500 million additional [revenue] from what was available last year, and you may have as much as $4 billion of additional pressure, not including the backlog of bills,” he said. Quinn proposed closing corporate tax loopholes to help pay off the bills. If lawmakers fail to close such loopholes, Quin also proposed spending about $160 million less than his projection and using the extra cash to pay down bills.

“The governor's FY 2013 revenue projections utilized economic forecasts from nationally recognized forecasting firms with final revenue estimates developed by state agencies using detailed historical tax collection data and employment records,” Kelly Kraft, a spokeswoman for Quinn’s budget office, said in a written statement. “A difference of more than $200 million will lead to even further reductions during a time when many legislators call for cuts, but when cuts are proposed they say, ‘Don't cut here.’”

Rep. Ed Sullivan, a Mundelein Republican, warned that the state must get a handle on spending before last year's income tax increase is set to begin phasing out in FY 2015. “We have to address the structural problems that we have because in FY 15, [FY] 16 we’re on a cliff if we don’t start building in numbers to get rid of the tax increase. Or is the governor just saying, ‘We’ll make that tax increase permanent?’” Sullivan said that despite some large growth in expenses, such as a pension payment that will be about $1 billion more, Republicans do not want spending for FY 2013 to total more than the FY 2012 spending.

 He said some Republicans are frustrated that additional spending for the current fiscal year was approved last fall. “Last year we made this leap of faith,” and then the legislature passed additional spending bills. “The next step [in the budgeting process for FY 2013] is the big step, and the next step is the trust that we’re going to build between the caucuses,” he said.

 Bradley said that the House plans to handle the budgeting process in a similar manner as last year, when the projected revenue was carved up and assigned to different areas of state spending, such as education or human services. The budgeting committees for those sectors were then asked to craft a spending plan based on the amount they were assigned.

State could fail to reach the foundation funding level for education for the second year in a row

By Jamey Dunn

Under the current budget, schools will miss a general state aid payment in June. Under Gov. Pat Quinn’s budget for next year, they can expect a similar outcome.

General state aid for education in the Fiscal Year 2012 budget fell 5 percent short of covering the foundation level of $6,119 per student paid to many schools. Lawmakers chose to hold off the reduction so it would kick in at the end of the current fiscal year.

State Superintendent Christopher Koch says that means most school districts will see a reduction in their first June payment, and no schools will get a second payment in June. But Koch said that districts should not be caught by surprise when the check doesn’t come. “The have known it for a long time. In fact, districts requested that we hold it off until the last month,” Koch said. “They’re trying to get through the school year as much as possible on what they can, and then they’re going to shoulder June’s payments to be less. But they’re quite aware of it.”

Overall, payments for general state aid, which is the largest area of state education spending, are being sent out on time. “They’ve been on time consistently, which is really good. Even through the worst of the recession, we’ve kept those payments coming. Now other payments, that’s not the case.” Payments for mandated categorical grants, for such programs as special education and student transportation -- which are the second largest area of state funding for education -- are lagging behind. “Those have gotten a little better though, and we’re not as far back as we were a year ago. I look at incremental progress, but we’re still not in great shape,” Koch said. Some mandated categorical payments are only caught up through the first quarter of the current fiscal year, which ends June 30.

Quinn is proposing to hold general state aid flat next fiscal year. Koch said the state would not be able to maintain the foundation level of $6,119 per student under the governor’s budget. Koch said that instead of simply reducing the level, lawmakers chose to take an action the state board is describing at prorating general state aid. So the foundation level did not change, but the actual payments were cut. That way wealthier schools, who receive a flat grant, would also see their aid cut. “It’s a fairness issue of everyone taking a hit versus just districts that are under general state aid taking the hit.” Under Quinn’s proposal general state aid would fall 8 percent short of meeting the foundation level.

 Koch said that the recession has put a squeeze on state dollars because local districts have less money, so that state must pay more to maintain the funding levels determined by the general state aid formula. The state board is asking for an additional $201 million above Quinn’s proposed spending level for general state aid. Under the board’s proposal, general state aid payments would fall 4 percent short of the foundation level. “Asking for an increase in this climate is not an easy thing to do, but it takes a lot of money in the GSA formula to make it work. It’s working. It’s compensating for the increased poverty and the property values [that] have not rebounded yet in this state, the home values for example. So when those do, it will take less money. But right now, the recession has been hard on the formula.” Koch said it would take about $400 million more than Quinn’s proposed spending to fully fund the foundation level.

Rep. Daniel Biss, an Evanston Democrat, said that instead of using complicated accounting tactics to make sure that cuts are spread out evenly among the spectrum of wealthy to impoverished school districts, the state should rethink the formula it uses to determine funding. “This is just the latest in a long series of very clear evidence that we, the General Assembly, ought to look under the hood of the funding formula a lot more comprehensively,” Biss said. Koch said in response that he would support a funding plan where money follows children in the system.

The state board also asked for additional dollars, $64 million total, for programs such as advanced placement classes and bilingual education. State Rep. Roger Eddy, a Hutsonville Republican, questioned proposed spending in other areas if the state cannot afford to make its general state aid payments. “The documents I’ve read from the State Board of Education in the past … in order of priorities the general state aid foundation level is number one,” says Eddy, who is also a Hutsonville superintendent. “I’m tying to figure out how, if that is the priority [and] we have available funds, why is it not going into that if it’s not funded at the level promised?”

Koch said the increases the board is asking for outside of general state aid are needed to implement programs that are mandated by law, including the recent education reforms approved by the General Assembly. “There’s other mandates. The General Assembly passed additional requirements for preschool bilingual programs. Well, that’s a lot more kids,” he said. “We are not asking for anything that is not a requirement. There’s not fluff in our budget. Everything there has a statute in behind it or some requirement on schools districts or on us to deliver on. We’ve been prioritizing among priorities for a long time now.”

UPDATE:  Quinn said he is looking for ways get schools their full general state aid payments in June. “I’m not giving up on that,” Quinn told reporters at a news conference in Berwyn.

He said sales tax revenues are better than expected this year, and some of that money could help stave off cuts. “We’ve got some revenue that we were happy to get because our sales tax this year, this fiscal year, performed better than expected,” Quinn said. “It seems to me we ought to take a look at investing that money in learning and education this fiscal year and definitely next fiscal year.”

Quinn's staff expects more revenue for upcoming budget

By Jamey Dunn

Gov. Pat Quinn’s budget team indicated today that he would likely have more money to work with in his upcoming budget than initially thought.

Budget Director David Vaught told a Senate budget committee in Chicago today that there would be “some revision” in the revenue estimate that was part of a three-year budget projection released in January. That document called for about $33.1 billion in total revenues. Vaught did not give specifics on how the numbers would change before Quinn's budget speech, which is scheduled to take place in a week, but he said revenues are “trending up.”

Vaught told the committee that Quinn does not intend to make the 9 percent cuts to all areas of spending that the January projection called for. Vaught said Quinn is not planning “across the board reductions of this size and scope in all areas.” But he added, “We will have them in some areas.” Quinn has said that he does not want to reduce spending on education and health care. Vaught reiterated Quinn’s desire to reform the Medicaid and pension systems this year, calling the growing costs of both “the squeeze” on other spending. Vaught said another goal for the year is to bring down the cost of health care to the state for retired public employees. He said a previous proposal to charge premiums to some retirees over a set income level would likely be up for consideration again. He also emphasized the need to address the backlog of bills but did not share details on what, if any, new ideas Quinn may present in his speech. Quinn has supported borrowing to pay down the backlog, but so far, that plan has found a chilly reception from many lawmakers.

Vaught added that Quinn plans to look at health care and human services as two separate areas of the budget this year because advocates complained that lumping them together led to human services being cut to keep up with growing Medicaid costs.

 Steve Schnorf, a member of the Budgeting for Results Commission and a former director of the Bureau of the Budget under former Gov. George Ryan, warned against a repeat of the fight over revenue estimates that happened last spring as lawmakers started the budgeting process for the current fiscal year. The House created a smaller estimate that the Senate and Quinn disagreed with, but that was what the budget was ultimately based upon. “Starting with an agreed upon revenue number … creates buy-in from all the players,” Schnorf said. “I think that buy-in is important.”

Vaught said that the three-year projection created last year was done hastily and that his office was “a little uncertain” about the revenues that the then newly passed income tax increase would bring in. He said the estimate this year is much more certain.

Today’s hearing was held to discuss the implementation of a new budgeting system, which would focus on the desired goals of programs and allocate money based on the success of programs toward reaching those goals. The system, known as Budgeting for Results, was signed into law by Quinn last year shortly after he presented his budget plan. This will be the first budget proposed under the new law, which requires the governor to create his plan based only from existing revenue. That means that — unlike last year — Quinn cannot pitch new revenue sources and tie spending to them.

Schnorf said that plans like Budgeting for Results aren’t new. “Most administrations have an initiative of some sort like this,” he said. “You go back through the last 30 years of press clippings and you would find initiatives like this announced by administrations.” But Schnorf said he thinks Quinn and lawmakers are committed to make the program work, and he predicted it would not become “sizzle rather than steak.”

 However, Schnorf warned lawmakers that if they focus only on tangible goals when making decisions and have an eye for programs that are measured as successful, they might not like the budgeting outcomes. He said that public schools, for example, may not rate as high performers and asked lawmakers: “Does that mean we should take the money away from them and invest the money somewhere else that has a better return on investment?"

He said that promoting successful programs during tight budget times would come at the cost of other programs that may not seem successful under Budgeting for Results measures but are nonetheless important to the state. “In a time of scarcity, the only way you can reward someone for performing well is by punishing someone else,” Schnorf said. “Every dollar you spend is a dollar you don’t have. You have to take it from somewhere else.”

Quinn pitches tax cuts to spur economy

By Ashley Griffin 

As Gov. Pat Quinn presented his take on the status of the state today, lawmakers and business leaders said they were listening specifically for the governor’s plan to grow Illinois’ economy.

Quinn gave them the Illinois Jobs Agenda for 2012, which includes three-targeted tax cuts for the state’s working families, employers and veterans.

“We owe it to the next generation to continue our progress of the past three years,” Quinn said in his speech. “To create jobs and grow our economy, we must continue to invest in Illinois and help everyday people.”

The plan aims to permanently abolish the natural gas utility tax in Illinois; establish a child tax credit for parents, which would provide a $100 direct tax credit for the average family of four; and create a tax credit for companies that hire unemployed veterans.

The governor’s budget office estimates that abolishing the natural gas utility tax will provide $164 million in savings for families, the child tax credit will provide $130 million in savings for parents raising children and the tax credit to hire veterans will provide $5 million to $10 million in savings for employers. The total cost would be about $300 million. Quinn’s budget spokesperson, Kelly Kraft, said the governor would lay out how he plans to pay for the agenda when he delivers his budget address later this month.

“The governor and the General Assembly have been good in the past couple of sessions in giving us the kind of tools we need, but we have to be able to put more disposable income into the hands of our working families, and we have to put our veterans back to work. They’re good incentives that will help both business and families and create jobs,” said Warren Ribley, director of the Illinois Department of Commerce and Economic Opportunity.

But some lawmakers are skeptical of the plan.

“We don’t have any money. All these sound good, but we can't afford them,” said House Minority Leader Tom Cross. “That’s what is disturbing … the failure to acknowledge the gravity of the situation.”

“He imposes a 67 percent tax increase, extracting one week’s pay out of every family and business, and yet he turns around and tries to pretend to provide some sort of relief without having any meaningful reform,” said Sen. Bill Brady, a Republican from Bloomington. “I am sure I can support all of them because they are needed, but he’s not hitting the core of what we need to hit, and that is eliminating the deficit and the debt in order to bring jobs back to Illinois,”

Members of the business community supported some of Quinn’s ideas. “He touched on some new areas that we were surprised by, most particularly the idea of reducing the cost of doing business in Illinois by repealing the utility tax. … That should be a real job benefit to a lot of companies that are heavy users of natural gas,” said Doug Whitley, president of the Illinois Chamber of Commerce. “All in all, the Illinois Chamber was very pleased.”

However, some said they did not hear everything they were hoping for. “Certainly he set a tone that was positive. Talking about jobs is always a good thing,” said Todd Maisch, vice president of government affairs for the state Chamber of Commerce. He said he was disappointed that Quinn did not bring up reforms to the way the state judicial system handles medical malpractice suits, something that has long been on the wish list of many business organizations.

Maisch added that that some of the reforms Quinn counted as victories still need work. “I would say probably the most troubling was the notion that workers comp and unemployment insurance are reforms that are done. We have not scratched the surface. Those need to get back on the agenda and in a hurry.”

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

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.”

Human services spending restored as part of larger budget deal

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.”

Rating agency says Illinois has more budget work to do

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.”

Lawmakers say budget deal fixed mistakes

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

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."

Veto session preview

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.