Budget postpones tax debate until after election

By Jamey Dunn

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

House approves increased revenue estimate for next fiscal year

By Jamey Dunn


The House approved an increased estimate of the revenue the state will bring in next fiscal year. The new projection will match the spending that the chamber has approved over the last few days.

In February, the House passed a revenue projection of $34.495 billion with no opposition. Today, that projection was revised up to $35.352 billion over the opposition of Republicans in the chamber. In recent years, the House has approved a revenue estimate and then approved a budget based on that estimate. This year, things happened the other way around. “The process is kind of bass-ackwards here,” said Rep. David Harris, a Republican from Arlington Heights. “We have spent the money, so now we have to come up with a revenue estimate to meet the spending.”

A large portion of the difference between the estimates comes from $650 million that would be borrowed from funds outside of the state’s general operating budget. (For more on these special funds and how they play into the budgeting process, see Illinois Issues, April 2012.) Republicans argued that using money borrowed from other funds means that the state would have to raise more revenue to pay the money back later. “This is an unbalanced budget; this is a fund sweep; and this is a future tax increase,” said Rep. David McSweeney, a Republican from Barrington Hills.

 Marion Democratic Rep. John Bradley, who sponsored the resolution, noted that there are not enough votes to pass legislation maintaining the current income tax rates, which are due to begin stepping down in the middle of next fiscal year. The chamber also voted down a budget with no new revenues and deep cuts. “We are trying to cobble together a budget to get through the next fiscal year, and the next governor, whoever that may be, has got a real fiscal cliff to deal with,” Bradley said on the House floor. “But this budget—this budget—gets us through the next year without the devastating cuts that people were against and without the tax extension that people were against.” Bradley called upon his colleagues to “be realistic” and pass what he called the most responsible budget possible “in this climate given the fact that everybody’s against everything.”

Budget "middle road" paved with short-term fixes

By Jamey Dunn

The House passed what some have dubbed a “middle of the road” budget, which keeps many areas of state government funded at current levels.

Under current law, the state will lose nearly $2 billion in revenue next fiscal year when the income tax increase begins to roll back. The income tax rates are set step down from 5 percent for individuals to 3.75 percent and from 7 percent for corporations to 5.25 percent half way through Fiscal Year 2015. Earlier this month, the House voted to approve a nearly $38 billion budget, which would have required an extension of the current income tax rates to fund. However, House Speaker Michael Madigan later said that there were not enough votes in his chamber to extend the current rates. The House then rejected a so-called “doomsday budget plan,” with only five members voting in favor of the bill. That proposal would have made deep cuts to education and human services.

On Tuesday, the House approved with little debate a budget that would spend about $35 billion and not require an extension of the tax rate. After the bills passed, Madigan used a parliamentary procedure to block them from going directly to the Senate. Senate and House Democrats are working together on the plan in the hopes of getting it through both chambers before the regular legislative session is scheduled to adjourn at midnight on Saturday.

Debate on the bills was lacking in the House in part because lawmakers on both sides of the aisle were uncertain about the details of the budget. For example, none of the key budgeting players in the chamber were able to give a definitive answer on the total spending number for the plan. All the responses were between $35 billion and $36 billion, but nobody knew the number spot on.

The bills were worked out in House budgeting committees, but many Republicans on those committees said they were not included in negotiations. Complaints aired by Republicans on the floor were primarily about the process and not the specifics of the budget itself, which they say they got this morning. “This is not a good budgeting process when you don’t know what you’re talking about. You don’t know what you’re advancing,” said Rep. Ron Sandack, a Downers Grove Republican.

“I guess that the speed-reading classes that you’ve taken are paying off over there. Thank God. But the process has been a complete joke,” Elmhurst Republican Rep. Dennis Reboletti said to Democrats on the House floor. “You do this every year, and then you’re surprised that we’re not working with you, or that we’re angry or frustrated.” Democrats said they tried to include Republicans, but that many did not attend meetings held budgeting committees yesterday. They say that because Republicans have been unwilling to vote for budgets in recent years, they likely would not have been in favor of the plan, no matter what the process.

Those Democrats who crafted the proposal were able to keep the budget relatively flat by tapping into some well-worn creative budgeting tactics, such as delaying payment for some spending obligations, adjusting revenue estimates up and borrowing from funds outside of general spending. Democrats say that the moves freed up about $2 billion. Most of the tactics are short-term solutions or one-time sources of funding. Republicans, who had previously accused Democrats of exaggerating how painful a budget would be to try to pass an extension of the income tax rates, reacted with sarcasm to the plan unveiled today. “Magically, hundreds of millions of dollars extra have been found. Shocking. I am so surprised that now we’ve looked under the couch cushions and found a little bit of extra walking-around money to sprinkle around the budget,” Reboletti said.

But flat funding does not mean that the budget picture is rosy. The bill backlog would grow substantially and there would be layoffs under the plan, according to those who worked most closely on it. “As the year goes on, things are going to get tighter and tighter in our departments,” said Rep. Greg Harris, who chairs the House human services budgeting committee. Harris said that the budget would likely increase the state’s stack of unpaid bills by “a couple billions of dollars” and would result in “thousands” of layoffs of state workers. The backlog is expected to be about $5.6 billion by the end of the current fiscal year.

The House breaks down the budgeting process into general areas of K-12 education, human services, general services, higher education and public safety. The only of these areas that would see a funding increase would be K-12 education, which would go up $167 million over the current fiscal year. The increase would be needed to keep General State Aid to schools prorated at just under 89 percent and to pay for student assessments that are part of the state’s transition to the Common Core curriculum standards. While K-12 education will see a slight increase, Homewood Democratic Rep. William Davis, who is the chair of the House K-12 education budgeting committee, said that it is not enough to meet the need in many Illinois schools. “Is this the budget that I wanted? Absolutely not,” he said. General State Aid to schools has not been fully funded for the last three years.

Harris said that as the fiscal year wears on, state agencies would start to feel the squeeze of trying to stick to flat funding, while the cost of doing business grows. He said that services required by law our under court orders would likely start to crowd out other programs. “It’s going to be after January 1 that you see the problems beginning to add up.” Harris said that if nothing changes, the budget would be in an even worse place in Fiscal Year 2016. “Next fiscal year, we’re going to be in a terrible spot because next year we will have lost a full year’s worth of revenue.”

Quinn signs fee increase for doctors

By Meredith Colias

Doctors will have to pay more in fees so a state agency can continue to investigate and license them.

Senate Bill 622 passed on a 65-49 vote today, with two voting present. The legislation has already been approved by the Senate, and Gov. Pat Quinn plans to sign it. UPDATED FRIDAY MARCH 8: Gov. Quinn has signed the bill. The law and new fee took effect upon the governor's signature.

Because it was low on funds, the Department of Financial and Professional Regulation recently transferred 18 of the 26 staffers responsible for licensing physicians. Lower staffing levels created a backlog of applications and left fewer investigators to look into malpractice claims. If the licensing process remained funded at current levels, delays in processing were expected to be problematic for incoming medical students starting their residencies in July. “Right now, they are hard-pressed to do anything in the arena because there are not resources in the department,”said the House bill’s sponsor, Rep. Barbara Flynn Currie, a Chicago Democrat. She said without a fee increase, the wait time for licenses could be up to a year.

SB 622 would borrow $6.6 million from the Local Government Tax Fund to cover immediate costs. The money would be repaid by 2018. Currently. doctors pay $300 every three years to be licensed in the state. The measure raises fees to $700 paid every three years through 2018 to allow the department to rehire cut staff and be able to repay borrowed funds. At that time, fees would drop to $500 every three years. The increase would be the first time fees have been changed since 1987.

Currie cautioned that the plan might not be a long-term fix. She previously proposed increasing the fees to $750. Under her earlier plan, the fees would not have been reduced in 2018. “This will not be a long-term solution to the problem. It will certainly get us over the immediate crisis,” she said. “It is not the long-term solution that the department has requested of us.”

The fund that the fees go into has been swept to bolster previous state budgets. Rep Jack Franks, a Woodstock Democrat, said protections should be built into the bill to protect it from more sweeps. He said doctors would be punished having to pay higher fees to fund an agency where the same issue could reoccur. “There’s nothing protecting where these same monies won’t be swept again. …What we have here amounts to double taxation.”

Susan Hofer, spokeswoman for the Department of Financial and Professional Regulation, said the agency was “relieved” it would be able to start speeding up the application process.

In a prepared statement, the Illinois Medical Society said the legislation is shortsighted. “Better solutions were left on the table.” The group has acknowledged that a fee increase is needed but also wants the money from the sweeps paid back.

House misses deadline on doctor licensing fees

By Meredith Colias

The state agency that licenses doctors says it needs budget relief to ensure that a new crop of doctors coming to the state to complete residency training will receive licenses by the time they start this summer.

Lawmakers failed to address a shortfall in a state budget fund for licensing doctors in time for a deadline today for medical students nationwide to decide where they would like to complete their residencies. Danny Chun, spokesman for the Illinois Hospital Association, said he was concerned the issue could deter prospective medical students from coming to Illinois. “We would hope these medical students still hope to choose Illinois,” he said.

Dr. William Werner, president of the Illinois State Medical Society, said it was unlikely that medical students would reject Illinois because of licensing issues. Students usually rank their residency choices on where they would get the best training for their specialties, rather than the state, he said. Some heads of teaching hospitals were concerned, but “I’ve not heard a lot of concerns” that programs will fail to attract good candidates, Werner said..

But there is worry that the Illinois Department of Financial and Professional Regulation, the state agency that approves doctor licenses and investigates medical malpractice complaints, does not have enough money and staff to ensure that licenses are approved for medical students before they are scheduled to start their residencies in July. Susan Hofer, a spokeswoman for the Department of Financial and Professional Regulation, said money was needed to restore staff the department recently cut from 26 to eight. The reduction in staff has prolonged the processing time for a medical license application from about 15 business days to close to six months.

Werner said excessive application delays need to be resolved by April and called the matter “unacceptable”. “You can’t expect a young person to delay their training that long. This has to be solved by the spring, so residents can get their licenses,” he said.

An Illinois House committee today approved Senate Bill 622, which would transfer $6.6 million from the Local Government Tax Fund to the fund that pays for doctor licensing and increase three-year medical licensing fees from $300 to $750. The money from the local tax fund would be paid back by 2015. Chicago Democratic Rep. Barbara Flynn Currie told the committee that approving the measure “would be an indication to medical students across the country that Illinois is going to solve the problem.”

Manuel Flores, the acting secretary of the Department of Financial and Professional Regulation, said the long-term viability of the fund should be examined with the fee structure. “[Administrative] costs are going to continue to rise,” he said.

 “The one thing Illinois isn’t last place in is our hospitals,” said Rep. Michael Tryon, a Crystal Lake Republican.

James Tierney of the Illinois State Medical Society said a fee increase is necessary but not to the $750 figure that Currie proposed. The society has said it would agree to increasing the fee to $500 every three years. He said doctors should not have to pay for a problem created when money from the fund was swept and spent in other areas of the budget. The measure “really amounts to nothing more than a tax on physicians,” he said.

Senate approves fee increase for doctors

By Jamey Dunn

Illinois doctors would pay more for their licenses under legislation passed in the state Senate today. Supporters of the increase say the entity responsible for licensing and disciplining doctors in the state is dangerously underfunded.

Under Senate Bill 622, the license fees paid by doctors would increase from $300 every three years to $700 every three years. The last time the fee was increased was in 1987. According to the Illinois Department of Financial and Professional Regulation, the fund has been operating with a structural deficit in recent years. The department has cut staff responsible for administering licenses from 26 employees down to eight. “This measure will provide the Illinois Department of Financial and Professional Regulation medical disciplinary unit the necessary funding that it needs to be able to provide the consumers of the state of Illinois the protection to help maintain the integrity of the medical profession and also to allow the agency to process licensing as fast as we can.” James Tierney of the Illinois State Medical Society said that doctors are open to a fee increase to $500 every three years. But because part of the of the fund depletion can be traced to millions in fund sweeps under previous budgets, he said the money that was swept should be put back, and doctors should not have to pay for it. “The medical profession stands ready to pay a fee that is sufficient to fund the licensure and discipline process,” he said. “In our view, it is the sweeps that have caused the current depletion in the fund that demands ... immediate attention.”  For more on the issue and a broader look at fund sweeps, see Illinois Issues April 2012.

SB 622 calls for a $6 million transfer from the Local Government Tax Fund to the Illinois State Medical Disciplinary Fund, which is running low. Starting in 2014, the money would be paid back out of the licensing fund. When all the money is replaced in 2018, the fee would go down to $500 every three years. Senate President John Cullerton said that the transfer from the local government fund is not expected to cause a delay in revenue for municipalities.

“There’s a real crisis in the state of Illinois,” said A.J. Wilhelmi, senior vice president of government affairs with the Illinois Hospital Association. He said that medical students across the country must decide by Wednesday where they will go to complete their residency training. He said some are holding off on  choosing Illinois because they are worried about the state’s ability to license them.

Cullerton said he understands why the Medical Society is frustrated over the fund sweeps, but he said that their fund was not the only one hit under past budgets. “So we’re talking about ... a $200 difference for a three-year period, which is a relatively small amount of money each year, less than $70. That’s what we’re fighting over. It’s the principle. I get it.” But he said something must be done to ensure that the IDFPR can license doctors and take disciplinary action when there is wrongdoing. He called the bill “a reasonable compromise.”

The House is considering House Bill 193, which would increase fees to $750 for three years. A House committee approved the plan last week, but Cullerton said the issue cannot wait. “I have no idea what’s going to happen over in the House, but in the meantime, we can’t just sit by here in the Senate and not do anything.”

Rep. Barbara Flynn Currie, sponsor of HB 193, said she is willing to negotiate, but she is concerned that the increases in Cullerton’s bill may not be enough to ensure that the IDFPR can properly license and monitor doctors. “I think it’s going to leave the department without the ability to do the job we have asked it to do.”

The Senate today also quietly approved HB 156, which allows Gov. Pat Quinn to present his budget address on March 6 instead of February 20, when the Senate will not be in session. The legislation passed with no floor debate and only two votes in opposition. The House passed the bill last week, and Quinn is expected to sign it.

Quinn signs spending bill

By Jamey Dunn

Gov. Pat Quinn signed a spending bill today that will avert layoffs in the Illinois Department of Children and Family Services and restore funding to mental health providers. But opponents said it is too costly and was rushed through the legislative process.

The Senate approved House Bill 190 today. The measure contains about $1.5 billion in spending. The Department of Children and Family Services will get $25 million. Without the money, DCFS says it would have to lay off two-thirds of its staff. The measure also restores $12 million that lawmakers said was supposed to go to mental health services but did not because of a budgeting error. “As a result of today’s action, hard-working employees at the Department of Children and Family Services will continue their critical work of protecting vulnerable children who have been abused and neglected,” Gov. Pat Quinn said in a prepared statement.

The law also calls for more than $700 million in capital construction funds for roads, bridges schools and other projects. Republicans were critical of some of that spending, calling it “pork.” They said that Democrats moved the bill through both legislative chambers too quickly. The House approved the measure on Tuesday. “One of the things we see around here on occasions is, when we rush ourselves, mistakes get made, and I think this is a classic example of that occurring. There are some pieces in here in this package that I think everybody in this chamber can support. But when we rush through ... we see mistakes made,” said Palatine Republican Sen. Matt Murphy. Republicans were also upset that money was taken from the Road Fund for costs other than construction, such as employee health insurance.

But sponsor Sen. Dan Kotowski, an Oak Park Democrat, said some of the funding, such as the money for DCFS, could not wait. He said lawmakers on both sides of the aisle have been meeting about the issue. “These discussions have been ongoing for the past few months.” He pointed out that the bill is not new spending and instead draws from the governor’s budget vetoes, previously budgeted construction projects and money in various state funds. Kotowski pointed to a fiscal analysis, known as a note, on the legislation, which says: “The bill provides for no new revenue sources, nor does the bill require any additional state spending. This bill does not directly have any significant fiscal impact. The supplemental appropriation to the Department of Central Management Services for group insurance was expected to be included in the Fiscal Year 2013. Therefore the fiscal impact to the General Revenue Fund is negligible. Supplemental appropriations provided from other state and federal funds are provided on the basis of the availability of moneys in those funds.”

House Dems paint picture without tax hike

By Bethany Jaeger, with Hilary Russell contributing
House Democrats maintain that without Republican votes, an income tax increase is likely to fail. And the back-up plan isn't pretty.

House Democrats did advance a two-year income tax increase and a phased-in earned income tax credit for low-income families this morning. Senate Bill 2252 would net about $4.5 billion for state coffers, House Majority Leader Barbara Flynn Currie said in committee. The personal tax rate would increase from 3 percent to 4.5 percent, while the corporate rate would increase from 4.8 percent to 7.2 percent, ending in 2011. The earned income tax credit would phase in from 5 percent to 7.5 percent the first year, followed by an increase to 10 percent the second year. It would be permanent after that.

Without new revenue, House Democrats could resort to sweeping money out of dedicated funds and refinancing debt as the only new revenue sources for a total of about $4.5 billion, according to Assistant Majority Leader Frank Mautino. That would result in state agencies getting about 80 percent of their annual budgets, and only about half of the grants for community services would get funded.

“So it’s not a partial budget,” Mautino said after committee. “That’s how much money is approved, and that’s how much they will get.”

Currie said during committee that the state is more than $7 billion out of whack today. And even if a temporary income tax increase generated $4.5 billion, the General Assembly would still have to curb spending.

“If anybody thinks this is a way to duck out of our responsibility to tighten our belts, the answer is, it doesn’t make it. But it will help prevent the kinds of disasters that real people face if we don’t do something to stem the tide.”

The lack of new revenue, she said, would result in a 68 percent cut across the board for state agencies. That would affect everything from childcare programs for low-income working parents to services for the developmentally disabled and mentally ill.

All Republicans in the committee voted against the tax increase and sided with business groups, which argued that the proposal would give Illinois the second highest tax rate in the country and further discourage businesses from investing in this state. Todd Maisch of the Illinois Chamber of Commerce added that the income tax increase would not address the deeper problem. “Between pensions and government-funded health care, if you don’t do anything to address those issues, you’re going to be back here in two years still needing another tax increase,” he said during committee. “The drivers of the costs are going to outrun the revenues you’re going to get from the tax increase.”

Rep. Mark Beaubien, a Barrington Hills Republican, said Illinois has gone down the road of a temporary tax increase before. “I think the citizens know where that’s going to go in the future.” The General Assembly levied temporary income tax increases twice in the 1980s. The 1989 increase was made permanent under then-Gov. Jim Edgar.

Meanwhile, the House committee also advanced a measure that would intend to soften the blow for retailers if the state increased the sales tax on cigarettes by a $1 over two years, as proposed in SB 44. Rep. John Bradley, a Marion Democrat, sponsored SB 415 in response to retailers' concerns, which we wrote about before. It would only take effect if the cigarette tax increase were approved.

Smoking ban and budget restorations

Smoking ban finally could get some rules
By Hilary Russell
The legislature finally attempted to clarify the statewide smoking ban that took effect last January and that has lacked rules for its enforcement since then. Some Senate Republicans foresee problems, including the fuzzy guidelines about how and where people can fight their tickets.

“I still have some concerns with the ability of an individual to challenge a citation and where they’ll have to drive to get to that,” said Sen. Dale Righter, a Mattoon Republican. “I think if we give this a little time for the legislation we’ve passed here to work, we’re going to see if that’s a real issue or not.”

The original smoking ban did little more than allow authorities to ticket individuals and businesses, leaving both law enforcement and smokers scratching their heads about how to issue those citations and how to appeal them. The new rules should take care of that, according to sponsor and incoming Senate President John Cullerton, a Chicago Democrat. “We probably won’t need any more rules because the bill spells out exactly how it should be enforced.”

The ban prohibits smoking in most public facilities including restaurants, bars, student dormitories and office buildings. Tickets could cost from $100 to $250. Exempt from the law are nursing homes and veteran’s homes with specific smoking rooms, private residences and state labs used for medical or scientific research. The Illinois Smoke Free Act went into effect January 1, 2008. Illinois is one of 22 states that prohibit smoking in public places.

One more shot at budget restorations
By Jamey Dunn
The legislature wants to restore funding for three executive officers, an economic development agency and some health care and conservation projects, but Gov. Rod Blagojevich doesn’t appear to agree with the legislators' last-minute attempt to get something done before a new General Assembly starts Wednesday.

The Illinois Senate approved a measure, SB 1132, Tuesday that would restore funding to the secretary of state, the attorney general, the treasurer, the Department of Healthcare and Family Services, the Department of Commerce and Economic Opportunity and several conservation projects geared toward Illinois habitats, fish and birds.

Funding for the conservation projects was swept last year as part of a plan to restore deeper budget cuts enacted by Gov. Rod Blagojevich last year. But the funds are federally restricted and had to be restored.

Blagojevich also cut the executive officer’s budgets last year, particularly Attorney General Lisa Madigan and Treasurer Alexi Giannoulias. Both have said in the past that they thought these cuts were politically motivated.

The governor's office didn't seem inclined to sign the bill, however. A spokeswoman issued this statement by e-mail: “The state cannot afford additional spending during the current deteriorating economy. The state needs to find ways to save money right now, not spend it. The governor believes elected officials should be looking at ways to tighten their budgets —not increase them — during these tough economic times so that we can preserve the vital services we provide to Illinoisans.”

Sen. Donne Trotter, a Democrat from Chicago and chief budget negotiator, said he feels confident that the governor will change his mind about the cuts. Trotter said that the economic crisis and the need for federal funding would be two motivating factors for the governor to sign the bill into law.

Partial restorations and restored hope

State parks could remain open, but historic sites definitely would not. And substance abuse treatment services would receive the $55 million they need to remain active and to secure federal matching funds. But the state attorney general, other constitutional officers and legislative commissions weren’t so lucky.

In short, the battle ain’t over, even though the legislature’s annual fall veto session is.

Gov. Rod Blagojevich signed legislation Thursday restoring, according to his office, about $180 million that had been vetoed as part of his $1.4 billion budget cuts earlier this year. That leaves about $55 million unfunded from what the legislature wanted to restore this fall. The General Assembly approved a plan to transfer money from special dedicated funds to save state parks and historic sites, programs that deal with substance abuse and developmental disabilities, and funding for constitutional officers. Blagojevich approved half of the plan in September, leaving the restorations up in the air. And some of the budget restorations for state parks could remain up there, as the governor left himself some space to maneuver.

Blagojevich announced the $180 million in restorations minutes after the House and Senate adjourned their annual fall session Thursday evening. Through a news release, Blagojevich said certain special funds are restricted by the federal government and could jeopardize future federal funding if swept.

“If you discount those federal funds that are restricted, then that only leaves a certain amount available,” said Katie Ridgeway, a spokeswoman for Blagojevich’s budget office.

She added that the bigger picture is that these cuts are accompanied by a $2 billion deficit, for which the governor introduced a four-point economic plan. The House started early Thursday by discussing one part of the plan to let the governor reserve up to 8 percent of the budgets approved for numerous state services, but the bill wasn't called for a vote. Ridgeway said the governor will continue to work with the legislature to find more agreeable language, but she would not specify whether those changes would address some lawmakers’ concerns that the governor could withhold 8 percent of the budgets for some state services and not others. (See background here.)

The legislature is not supposed to return until January 12, meaning the governor’s economic plan won’t advance unless Blagojevich calls lawmakers back into special session before then.

What’s funded by SB 1103:
The governor’s release says he restored $175.9 million, much of it for substance abuse treatment centers, front-line staff for the Department of Children and Family Services and a reduced fare subsidy for the Chicago-area Regional Transportation Authority. Other beneficiaries include state parks front-line staff, water and soil conservation, higher education, mental health and developmental disabilities.

What’s not funded because of the veto of SB 1103:
The governor did not spare the $2.4 million for the Historic Preservation Agency’s front-line staff, which means the 32 employees already laid off won’t get their jobs back. And without the staff, about a dozen historic sites scheduled to close Nov. 30 will close for the remainder of the fiscal year, says Dave Blanchette, agency spokesman.

Another significant portion of the $55 million vetoed by the governor is from Attorney General Lisa Madigan’s office. Functions affected range from personnel to state law enforcement and contributions to the state employees’ retirement system.

The attorney general’s chief of staff, Ann Spillane, didn’t buy the governor’s explanation and said through e-mail that the restorations would have come from “money generated exclusively through this office’s litigation — and Illinois law requires that this money can only be used by the attorney general’s office. The governor’s decision to veto this funding is nothing more than petty politics. And his explanation for the veto is false. In this current economic crisis, when the attorney general’s office is working to help Illinois homeowners stay in their homes, it is a disgrace to let the governor’s politics get in the way of this critical work.”

Ridgeway would only say that the governor made difficult decisions and set a priority of protecting core services.

The secretary of state, also, maintained significant losses. Others include the lieutenant governor, the treasurer and the auditor general. The legislative branch wasn’t immune, either. Cut were budget items for legislative research, printing and audits, as well as funding for two commissions that project economic activity and review the governor’s administrative rules.

A brighter spot: New leaders
Thursday was a historic day in the Senate. Wednesday night’s rare, simultaneous internal elections of new leaders for the Democrats and Republicans undoubtedly will change the dynamic of leadership in the Capitol. Sen. John Cullerton of Chicago is slated to become the next Senate president and leader of the extraordinarily large Democratic Caucus. Across the aisle, Sen. Christine Radogno of Lemont will replace Senate Minority Leader Frank Watson as the first female caucus leader of either party. They start in January.

The mood in the Capitol Thursday felt lighter. People smiled, mingled, debated some serious legislation and congratulated each other. Perhaps the most touching moment came when Watson returned to the chamber floor for the first time since experiencing a stroke last month. Shortly after the stroke, he announced he would not seek re-election as minority leader but would continue to serve as a senator.

He spent four days in the hospital, 18 days in recovery and numerous days in therapy, but on Thursday, he Watson was walking, talking, laughing and crying. He broke down as he recalled the way he felt when he realized he had the symptoms of a stroke: slurred speech and difficulty walking. “I thought of [former Sen.] John Maitland and my dad,” he said, unable to finish his sentence through the tears. Both had serious strokes with lasting side effects.

Watson is undergoing intense therapy three hours a day, three days a week. He said he had low cholesterol, low blood pressure and didn’t smoke, although his family history increased his risk. He urges awareness. “People need to take care of themselves. They need to recognize that something like this can happen at any time. You need to take care of your diet, take care of your weight, take care of your blood pressure, take a baby aspirin every day.”

The previous night, Watson cast an important vote for Radogno over Sen. Kirk Dillard of Hinsdale. “She was my deputy leader,” Watson said. “I supported her and wanted to see her become leader. She did such a good job on the campaign side and on the policy side. And that’s important.”

Radogno, a moderate Republican, says she sees her role as a continuation of Watson’s. “One of the things that Sen. Watson did very well is keep the caucus together. And I think that’s probably the primary job that the leader has because when you’re in the minority, if you’re fractured, you’re even less effective. It’s going to be a challenge because we do have diversity within our caucus, but I think everyone in our caucus recognizes that we need to stick together. And I think it’ll be easy for us to do on both issues that are in the forefront right now, which are the tax issues and fiscal issues.”

We’ll have much more from Radogno in the coming months of Illinois Issues magazine.

Cullerton says he, too, will foster a more inclusive atmosphere in the Capitol, where the governor, House Speaker Michael Madigan and outgoing Senate President Emil Jones Jr. have been in years of gridlock. “I’m not going to fight with the speaker. I’m not going to fight with the governor. And hopefully, I can be a good go-between to try to bring about positive change.”

He already appointed Sen. James Clayborne, the runner-up in the Democrats’ internal elections, as his majority leader to signal a fresh start. “Even though we ran against each other, we remain friends,” Cullerton says of Clayborne. “He’s a very talented guy. He comes from another part of the state from me, and we need to make sure the downstaters feel like they can work with a leader from Chicago, which we can. So it’s important to have him as a person and the symbolism of having somebody from downstate in majority leader.”

Watch Illinois Issues for more about Cullerton’s first priority: advancing a long-awaited capital bill.

Nervous energy and four-point plans

The national economic doom and gloom is starting to cast ominous clouds on existing state budget problems, leading Gov. Rod Blagojevich and other state officials to propose some ways to adjust. So far, it seems as though the state is running in place. There’s no indication that the General Assembly and the governor are going to start getting along any time soon to follow through on some of these proposals. The legislature returns for its annual fall session Wednesday and Thursday. Friday is still up in the air.

The governor's proposal foreshadows this month's closure of numerous state parks and historic sites, as well as reduced human services, that resulted from $1.4 billion in budget cuts. While the first two rounds of money already have been transferred from special dedicated funds to help restore some of the funding, the governor hasn’t yet signed legislation authorizing the spending. He has until December 5 before it automatically becomes law.

In the meantime, Blagojevich released a four-point plan that includes borrowing money, asking the feds for some bailout money and withholding more state money. Announced through a news release, part of the plan would create a new law for emergency budget management. He seeks authority to hold as much as 8 percent of general revenue funds in reserves for state agencies, education, higher education, state pension funds and local government funding. That would be on top of the 3 percent reserves he already requested. Another portion of his new plan seeks as much as $3 billion in federal aid during the next three years.

Part of his proposal also relates to Comptroller Dan Hynes’ idea announced last week. It would allow the state to borrow money, which is nothing new. But instead of having to pay back the loan by the end of the state’s fiscal year (June 30), the state would have 12 calendar months to repay the loan. The premise is that because the comptroller would have more time to repay the loan, his office would have more flexibility in cash flow.

The proposal would need legislative approval by a three-fifths majority of each chamber so it could immediately take effect.

Right now, cash flow is a huge problem because the state can’t pay about $4 billion of its bills, including Medicaid payments to medical providers. The comptroller wrote in a letter to state officials to announce that the backlog could top $5 billion and inflict 20-week delays for payments by March. “To characterize this as an imminent crisis risks understatement,” he wrote.

Hynes’ spokeswoman, Carol Knowles, says the comptroller’s office is getting continuous complaints that unpaid bills threaten everything from police officers being unable to fill their gas tanks to prisons being unable to pay their vendors for food deliveries. Bills are paid as cash flows in, but the comptroller’s office also has to have enough money on hand to pay such long-term obligations as employee payroll and general state aid for schools. “It’s a very delicate balancing act,” she says, “and the larger the bill backlog is, the more difficult it is to answer the emergencies when they arise because it gets to the point where everything is an emergency.”

Senate Republicans describe the governor’s four-point plan as “begging and borrowing.” Sen. Christine Radogno, deputy minority leader from Lemont, says while she could support further belt tightening for state agencies or regular short-term borrowing as legitimate cash-management tools, she wants specifics that aren't available from the governor's press release. And she says she has concerns about short-term borrowing that crosses over into the next fiscal year, as proposed by Hynes. “I’m certainly willing to look at any proposal of the comptroller or the governor, but we just need to be careful not to fool ourselves and the taxpayers,” which, she says, are the same taxpayers who are footing the bill for the federal government’s $700 billion bailout package approved last month.

Cindy Davidsmeyer, spokeswoman for Senate President Emil Jones Jr., says he acknowledges that the state is facing a huge crunch, and he looks forward to hearing more details as they come out. House Speaker Michael Madigan’s spokesman, Steve Brown, says only that the plan is under review.

Education re-reform
Also Tuesday, a new diverse, well-funded education policy group announced efforts to issue comprehensive reforms by this spring, although it’s unlikely that the group’s recommendations would be ready to go by the time the legislature is supposed to enact a state budget for fiscal year 2010.

Founders of Advance Illinois, a nonprofit based in Chicago, plan to travel around this state and others to gather evidence during the next six months. The goal is to take a broad and long-term view of ways to reverse some of Illinois’ worst academic trends that hamstring its students and workforce.

“The bottom line is … that Illinois schools are performing, despite the fact that we’re the fifth largest economy in the country, at an average to below-average level,” says Robin Steans, executive director of Advance Illinois and sister of state Sen. Heather Steans of Chicago. “On any academic measure or any attainment measure you might care to look at, we’re trailing the nation. At all grade levels in all subject areas.”

Ellen Alberding, president of the Joyce Foundation, serves on the board and says the Chicago-based foundation funds educational policy efforts throughout the Midwest. Illinois’ condition sticks out, she said after the news conference, because a large gap exists between educational attainment of low-income minority students and higher-income white students. According to information released by the group Tuesday, Illinois ranks 6th in the nation for having one of the largest achievement gaps between African-American and white students. Alberding also said she was struck by a study of Chicago students that shows only 10 percent of eighth graders who score well on the Illinois Standards Achievement Test later score 20 or above on the ACT, which indicates that most students in the study were ill prepared for higher education.

“It’s outrageous that the state has its expectations so low,” she said.

The Joyce Foundation supports the new effort along with the Bill & Melinda Gates Foundation, the Chicago Community Trust, the Grand Victoria Foundation, the John D. and Catherine T. MacArthur Foundation, the McCormick Foundation and the New York-based Wallace Foundation.

Board members include a vast political mix, starting with co-chair and former Gov. Jim Edgar. The Republican unsuccessfully pitched a plan in the 1990s to reduce local property taxes and increase state income taxes as a way to reform education funding. He said Tuesday that he still believes the state relies too heavily on local property taxes to fund education, but the group would not focus on funding reforms. It only would announce recommendations for funding reforms as part of a more comprehensive plan, he said.

Deflecting the focus away from the question of whether taxes would increase, however, will be a challenge.

The other co-chair is former U.S. Commerce Secretary Bill Daley, the Democratic brother of Chicago Mayor Richard Daley and a rumored candidate for governor in 2010. Also among the board members is former U.S. House Speaker Dennis Hastert, a Republican who helped lead negotiations between Blagojevich and legislative leaders to draft a capital program for road and school construction projects. That plan stalled. Former state Sen. Miguel del Valle, a Democrat and current city clerk of Chicago, used to chair the Illinois Senate Education Committee. Del Valle said Tuesday that Advance Illinois “is the most promising” of all the efforts he’s seen to reform public education.

Only half way there ...

... With a long way to go.

Gov. Rod Blagojevich approved a way to restore money that was cut from the state budget earlier this year, but human service providers, state parks and historic sites and hundreds of state employees are still in limbo.

Blagojevich signed into law a deal between the House and the Senate that authorizes the governor to transfer about $221 million from special dedicated funds that have “excess” money. (For example, a plumbing licensure fund has about $750,000 available from fees paid by people applying for a plumbing license.) The transferred money would go into a new fund, called the FY09 Budget Relief Fund, which serves as a lockbox that can only be used to restore money to human services, state parks and historic sites and constitutional officers who had to lay off employees or require paid days off.

But that's only half the solution. The other half is an appropriations bill, SB 1103, which authorizes the comptroller to write the checks. Without spending authority, the “fund sweeps” money just sits there.

The governor's office issued this statement: “The governor did sign the funds sweep bill, but the budget office and agencies have expressed concern over certain funds that are included in the bill. With that in mind, there is no certainty at this time how much money will actually be available and, thus, it would be preliminary to say how far this money will go.”

Rep. Gary Hanning, a Litchfield Democrat and House member who negotiated the deal, said the bill was in the public domain in the House for a week, and it sat in the Senate for two weeks. Democrats and Republicans of both chambers had an opportunity to voice concerns and ask for changes, some of which were accommodated before they sent it to the governor.

“All through that period of time, the governor and his people sat silently by and never weighed in one way or the other, so we assumed that they were OK with this bill,” Hannig said.

The governor's office offered another statement that his office made its concerns known in September, and the rest is up to the controller to decide which funds can be moved over.

Carol Knowles, spokeswoman for Comptroller Dan Hynes, said the measure, which the governor signed into law without changes, spells out which funds to sweep, how much to sweep and when to sweep. “There is no ambiguity what the law states,” she said. The transfers should be completed within the next day.

But even if the governor signs the spending bill without making any changes, he's not compelled to actually spend the money. To do that, he would have to send a voucher over to the state comptroller, who would then write the check. “He could sign the bill, but if he doesn't send over the vouchers, the comptroller still can't issue a check,” Hannig said.

The governor has until the first week of December to act on the spending bill. It could come up in the annual fall session — if there even is a “veto” session (because the House and Senate already acted on all but a few of the governor's various vetoes last month).

One more note: Before this mess started, the governor sought authority to transfer about $530 million (scroll down) from special funds. But his proposal would have let him sweep the money at any time in any amount up to about $530 million, Hannig said. The House changed the proposal to limit the spending to $221 million and to identify which funds could be swept and what the money could be spent on.

Warning: Rocky road still ahead

State parks and historic sites would stay open. Substance abuse prevention and treatment services would avoid losing $55 million in state funding and the same amount in federal funding. State funding for human services would return to the levels approved by the legislature in May. The same would apply to the constitutional officers, which could hire back employees already laid off. Mass transit districts would receive more than $36 million in reimbursements for having to provide free rides to seniors and people with disabilities. But there’s a big “if.”

That will happen if Gov. Rod Blagojevich signs a plan approved by both chambers. The House approved the budget restorations earlier this month, and the Senate followed suit on Tuesday. But there’s no telling how long this could take. The Senate could send the approved measures to the governor’s desk right away, or it could wait for whatever reason. And once the governor does get the measures, he still has 60 days to sign them into law, veto them completely or send them back to the legislature with changes. Given the timeline or lack thereof, it’s questionable whether state parks and historic sites will close in October and November as scheduled.

All agree that the ball is in the governor’s court.

Rep. Mark Beaubien, a Barrington Hills Republican and budget negotiator for his caucus, expressed a concern about Blagojevich's next move. “Now he has the ability to take the veto pen and play games and eliminate programs to try to make different people look bad.”

Brian Williamsen, a Blagojevich spokesman, said the governor’s office has to review all of the details and added that it’s too early to speculate on a timeline. Williamsen could not say whether the governor would delay closing parks and historic sites if the House and Senate plan had potential to become law.

The House and Senate agreed to sweep unused money from the special state funds to collect about $221 million, which is included in SB 790. The package also would create a new fund, dubbed the “Budget Relief Fund,” so that the money could not be used for anything other than restoring the budget cuts spelled out in the spending bill, SB 1103.

The 15 votes against the fund sweeps were among Senate Republicans, who said there is no guarantee that the governor will sign the measure and, if he does, that he’ll release the money as intended.

The deal to accept the House’s version of the plan came only after much of the day was spent behind closed doors negotiating an even larger plan that would have increased funding for various programs, but the wish list ballooned out of control and eventually collapsed at the last minute. Literally at the same time, the Illinois Department of Revenue issued new information that revenue projections are coming in lower than anticipated. Income and sales tax revenues, as well as other tax revenues, are coming in below the levels on which this year’s budget was predicated. The difference: $200 million.

That slightly deflates the cushion that the governor has when distributing money throughout the fiscal year. But Rep. Gary Hannig, a Litchfield Democrat and budget negotiator for his caucus, said the $221 million in budget restorations that advanced to the governor’s desk Tuesday pay for themselves by transferring the same amount from special funds.

Sen. Donne Trotter, the Senate Democrats' budget negotiator, looked to the regularly scheduled fall session in November. “If there’s still an appetite to do more, then we can do more at that time.”

But the question of what the governor would do loomed like a black cloud. “There [are] no assurances — nothing that I can give — other than we know that there is a need, a necessity to get this done,” Trotter said. “And I think that we saw that, at least, in a rare occasion, the entire Senate that is present today voted for it. So we know at least what the legislators would like to see done. … It’s up to him of what he’s going to do otherwise.”

Which message are you sending?
Building on yesterday’s ethics reforms, the state Senate advanced a more sweeping measure that the governor tried but failed to advance through his executive powers. All GOP senators voted in support of the measure, five Democrats voted present and one Democrat voted against it.

Sen. Don Harmon, voted “present." The Oak Park Democrat sponsored yesterday’s successful pay-to-play ban, but he opposed the measure containing the governor’s proposals today because it sends the wrong message. He warned that approving a bill that almost everyone agrees is fatally flawed would undermine the behind-the-scenes negotiations already happening between both chambers and the governor’s office. He said it also could give the impression that the Senate is more interested in claiming that it advanced comprehensive ethics reforms than it is in ironing out the complicated and significant details with the House.

“Let’s negotiate this bill before we start throwing bombs across the building,” Harmon said before the Senate voted to approve the measure.

Fifty senators disagreed with Harmon and said approving the new reforms contained in SB 780 sends a different message: The Senate is ready to enact comprehensive reforms that could help regain the public’s trust during these troubling times. (That message is more likely to sound better on campaign literature landing in voters’ mailboxes from now until the November 4 elections.)

The legislation would enact more limits to political campaign contributions and shine more sunlight on who makes money off of whom. It would prohibit businesses with significant state contracts from donating to legislators and statewide political parties, prevent legislators from working in numerous government jobs as a second source of income, require more disclosure of legislators’ lobbying activities and reform the way the legislature enacts its own pay raises.

Through a news release, the governor applauded the Senate’s action. “This vote sends a message to the people that the tired tradition of double dipping, the fraudulent way pay raises are doled out and the deceitful way legislators who moonlight as attorneys can hide their clout-heavy client list should be a thing of the past.” His news release urged the House to continue the momentum and approve the more sweeping ethics reforms.

The Campaign for Political Reform, a Chicago-based good government group, testified against the legislation last night, saying it was fatally flawed and constituted more “political rhetoric” during the election season. But Cindi Canary, director of the think tank, said she has been working with other legislators and the governor’s office for the past few weeks on the governor’s ethics language.

The Senate president addressed the whole chamber but, at more than one point, seemed to speak directly to Harmon and Sen. Ira Silverstein, a Chicago Democrat who also voted “present.” (In the Illinois legislature, a “present” vote is intended to demonstrate opposition a flawed bill but support of the concept.) Both Harmon and Silverstein also happen to be among the names floating around as contestants to be the next Senate president when Jones’ term ends in January.

Jones said senators who oppose SB 780 want to either protect someone else or preserve their fundraising abilities so they can run for higher office. Silverstein later said that Jones’ comments are part of a political game and won’t hurt other negotiations. “But enough is enough,” he said. “You have to stand up for what you believe in.”

The only senator voting against the legislation was Sen. Mike Jacobs, an East Moline Democrat who often speaks out against Blagojevich. He repeated earlier sentiments that “the cancer of Illinois is the governor.” Jacobs made the point that the governor’s ethics legislation approved by the Senate today would not target the actions of convicted felon and political insider Tony Rezko, found guilty of 16 counts of federal corruption. It also wouldn’t have stopped another political insider and hefty campaign contributor, Ali Ata, from testifying that he donated to the governor’s campaign in exchange for a high-powered state job.

Sen. James DeLeo, the Chicago Democrat sponsoring the governor's ethics bill, defended the measure and said it wouldn’t stop drug dealing or bank robbing, but it would improve the transparency of state government.

Pay-to-play ban becomes law

Monday did become Ethics Day. After three years of back-and-forth, the Illinois House and Senate finally agreed and enacted landmark ethics reforms that will become effective January 1. The governor and some legislators already are trying to expand the so-called pay-to-play ban, but that could take just as long as the first effort. In the meantime, Monday’s action is likely to generate a lot of campaign mail as incumbents and candidates enter the home stretch before the November 4 elections.

Meanwhile, as I write this, budget negotiators from both chambers and both political parties are meeting behind closed doors to hash out a plan that would prevent state parks and historic sites from closing this fall, as well as prevent hundreds of state employees from losing their jobs. Whether they will strike a compromise, however, won’t be known until Tuesday, when both chambers will reconvene in another off-season legislative session.

All day Monday, which included multiple special sessions called by Gov. Rod Blagojevich, served as a perfect example of how everything will change in January. In addition to new ethics laws that will affect the governor’s fundraising abilities, January marks the end of Senate President Emil Jones’ reign. Throughout the day, there was an acute awareness that Jones is on his way out of office with numerous individuals interested in taking his place. More on that later.

One set of ethics reform down, more to go
The Illinois Senate agreed with the House to override Blagojevich’s changes to HB 824, meaning new campaign contribution rules will take effect in the new year. Businesses holding state contracts worth more than $50,000 will not be able to donate to the political campaigns of the officeholder who signs the contract.

The Senate president said the new law contained in HB 824 doesn’t go far enough. “It turns hard money into soft money,” Jones said, later adding, “They’ll still be able to give the soft money through the back door.” He meant that instead of donating directly to the officeholder, state contactors will still be able to give money to statewide political parties that turn around and filter the money to the officeholder who signs the contract, anyway.

Jones supports the governor’s proposals, which would expand the so-called pay-to-play ban. The governor’s amendatory veto language was inserted into a new bill. It would:

• Ban businesses that hold significant state contracts from donating to legislators and statewide political parties, as well as statewide officeholders;
• Prohibit legislators from working second jobs in any unit of government, with some exceptions;
• Clarify the process by which legislators vote to accept their pay raises.

The Senate sponsor, Chicago Democratic Sen. James DeLeo, said SB 780 would level the playing field and help legislators avoid the perception that money buys influence.

Cindi Canary, executive director of the Illinois Campaign for Political Reform and a main force behind HB 824, said it felt odd, but she had to oppose the new measure during a Senate committee Monday evening. She said the more expansive ethics legislation is “not ready for prime time, yet.”

She said she supports the concept but believes the governor’s proposal isn’t the right vehicle for enacting contribution limits on legislators. Banning state contractors from donating to elected officials who have no control over state contracts could invite a legal challenge based on the First Amendment that protects free speech, she said. She also questioned the fallout of prohibiting active state legislators from also working in some public sector jobs but not others. And she said the one aspect that would be ready to go if it were proposed as a stand-alone measure is the portion that would clarify the system of approving legislative pay raises.

Sen. James Clayborne, a Belleville Democrat, agreed with Canary and said the governor’s proposals need some more work, but he voted to advance the measure to the full chamber in hopes of working through more changes before a final vote.

Restoring budget cuts
Meanwhile, budgeteers are working behind closed doors in an effort to compromise to restore some of the governor’s $1.4 billion in budget cuts, which are resulting in plans to close 11 state parks and 13 historic sites, lay off hundreds of public employees and drastically reduce state funding for such human services as substance abuse treatment and prevention.

Earlier this month, the House approved two measures that would sweep about $221 million from special funds to plug some but not all of the budget holes. (See the spending portion in SB 1103.)

Sen. Donne Trotter, a Chicago Democrat and budget negotiator, said the Senate Democrats found $42 million of that $221 million that they would like to spend in a different way than approved by the House. That includes $37 million the House included to reimburse mass transit districts for the free rides granted to seniors and people with disabilities enacted earlier this year. The Senate Democrats would take that out and shift the funding, for instance, to increase the amount of money for college grants through the Monetary Award Program. The House also would restore funding for constitutional officers at 100 percent of the original funding level, while the Senate Democrats would restore them at 75 percent.

Republicans are involved in the budget negotiations. According to Patty Schuh, spokeswoman for Senate Minority Leader Frank Watson, the GOP Caucus prioritizes restoring funding for state parks, historic sites and human services. But members argue that it doesn’t make sense to restore funding to the parks and historic sites and then sweep money from the special fund dedicated to the Department of Natural Resources.

"Where's the beef?"

In a whirlwind session Wednesday, the Illinois House restored funding to prevent state parks and historic sites from closing and hundreds of public employees from losing their jobs. It also agreed to let the governor lease the Illinois Lottery as a way to fund a major capital construction program and negated changes that the governor made to unanimously approved ethics reform.

But none of it will happen immediately.

1) It all requires Senate approval — the ethics reform needs that approval within 15 days, or it dies. The Senate, so far, is not scheduled to return to Springfield until after the November elections, but political pressure on Senate President Emil Jones Jr. and his Democratic members is expected to build so that they restore some budget cuts and enact ethics legislation before then.

2) Even if the Senate approves the lottery deal to fund a statewide capital plan, the earliest construction crews could move dirt would be in about 10 months. House Democrats say they want to find out how much money the lottery lease would generate before they made a detailed list of how that money would be distributed.

Budget cuts
About 400 public employees would retain their jobs under a measure approved by most House members. The House would restore about $260 million, which Rep. Gary Hannig said would prevent layoffs in many state agencies and constitutional offices. It also would keep 11 state parks and about 13 historic sites open and restore massive budget cuts to human services. Hannig, a Litchfield Democrat and point person on the budget for his caucus, proposed paying for it by skimming “excess” money from dedicated funds, with some exemptions. Such funds as the Asbestos Abatement Fund accumulate money by collecting licensing fees. The House would create a new fund, dubbed the “Budget Relief Fund,” so that the money could not be used for anything other than restoring the budget cuts.

The cuts are rooted in an unbalanced state budget, estimated by the governor’s office to fall short on revenue by $2 billion as approved by the General Assembly in May. So Gov. Rod Blagojevich cut $1.4 billion as he saw fit. So-called fund sweeps have been approved and used before under this administration and previous administrations.

A separate measure approved by the House, although by fewer members, would ensure that Medicaid providers would receive more timely reimbursements from the state, but the $371 million to do so would not be covered by the fund sweeps. Hannig said the House wants to work with the governor to find another funding source for the Medicaid payments. Most of the state dollars would capture federal matching funds.

Lottery for capital
The House approved legislation to let the governor lease the Illinois Lottery to private investors as a way to garner about $10 billion. About $7 billion collected in the first four years would pay for construction projects. The rest would be split among public education and, if profits exceeded $11 billion, help pay down compounding public employee pension debt, said House Majority Leader Barbara Flynn Currie of Chicago. If bids for the lottery lease came in lower than $10 billion, she said, then the sale doesn’t happen. “The whole thing is predicated on the notion that if you don’t get $10 billion, you take your marbles and you go home.”

Rep. Jay Hoffman, a Collinsville Democrat and Blagojevich ally, said the measure does not constitute a capital bill that would create jobs because it lacks the spending portion. “The problem with this is, where’s the beef?” he said on the House floor.

Currie said approving the revenue side of the equation is a major first step and that there’s “no rush” to write the spending side. “I don’t think that it makes a lot of sense to establish a spending plan when you don’t know whether you’re going to have anything to spend. And if you do have something to spend, you’re not likely to see it for the next six or nine months.”

House Minority Leader Tom Cross said the absence of a spending plan is a “political hoax” because it gives House Democrats the ability to distribute campaign literature claiming they approved a capital bill even though the package is incomplete.

Ethics reform
The House rejected Blagojevich’s changes to a unanimously approved ethics measure. As approved, it would ban the governor from accepting political campaign contributions from businesses holding state contracts worth more than $50,000. The governor had expanded the ban to statewide officeholders, individual legislators and state political parties. Read more about the governor’s changes here. Rep. John Fritchey, the Chicago Democrat sponsoring the measure, said the governor’s ideas could have merit and deserve consideration, just not as they’re tacked on to an already approved bill without opportunity to revise them. Fritchey filed separate pieces of legislation that would do the same thing as the governor proposed. But by overriding Blagojevich’s changes to HB 824 by a vote of 110-3, the House sent a message that legislators want the so-called pay-to-play ban to take effect as is — and soon. The original legislation also received unanimous approval in the Senate before heading to the governor’s desk.

If the Senate fails to agree with the House within 15 days, then the whole bill dies. If that happens, the Campaign for Political Reform could try Plans B and C, said Cindi Canary, director of the Chicago-based nonprofit group. As a last resort, she said, that could involve starting over with a new bill or inserting the language into the ethics portion of a lottery deal.

We’re still waiting to hear from Senate officials about whether that chamber could return to consider the House’s actions within 15 days.

Insurance mandates
The House also rejected the governor’s changes to a few insurance-related bills. If the Senate fails to agree with the House and override the governor’s changes, then the bills die. Two are listed here:

HB 1432:
Insurance coverage of sexual assault services

Originally passed 94-20-0 in the House and 56-0 in the Senate
The House overrode the changes, 77-36, on September 10, 2008

Original intent: It would require insurance companies to pay for treatment of anorexia nervosa and bulimia nervosa in addition to other mental health services they already cover.
Governor’s changes: The governor would add treatment and services for sexual abuse victims, as well as for their parents, children, spouses, siblings, domestic or same-sex partners if they die or commit suicide from the abuse.

HB 953:
Insurance coverage of autism services
Originally passed the House 100-7-0 and the Senate 48-4-3
The House overrode the changes, 84-29, September 10, 2008
Original intent: It would expand mandatory insurance coverage of mental health services to also cover marriage counseling or therapy.
Governor’s changes: It would require insurance companies to reimburse families for diagnosis and treatment of autism spectrum disorders for children younger than 21. The benefit would max out at $36,000 a year but would be annually adjusted for inflation. Families still would have to pay a co-payment and deductible as usual for their policies, but they could not be dropped from their policies simply because their children were diagnosed with a form of autism.

More of the same

Most state agencies and services will remain funded at or below the same levels as last year, with slight increases for such items as education, higher education and the legislature’s annual 3.8 percent pay raises. The Illinois House failed today to restore most of the budget cuts that Gov. Rod Blagojevich implemented to balance a lopsided spending plan sent to his desk this summer. And the Senate still doesn’t plan to return to override nearly $480 million of the budget cuts that the House voted to restore this afternoon.

In May, the House and Senate approved a spending plan that exceeded the amount of money the state was projected to generate by about $2 billion, according to the governor’s budget office. So the governor cut $1.4 billion, often striking the increases that legislators sought for everything from alcohol and substance abuse treatment to frontline staff at prisons. But he also scratched entire lines from the budget, including $16 million from a Monetary Award Program for low-income college students.

While the governor’s office said Blagojevich acted “responsibly” to balance the budget, Rep. Gary Hannig, a Litchfield Democrat, called the governor’s method of balancing the budget “unfair” and said the cuts went “too far and were too deep.” Hannig said most Democratic members would have preferred that Blagojevich make more uniform cuts across the board or delay the payment of bills until the next fiscal year.

Minority Leader Tom Cross said the House GOP agreed that some cuts were “too deep,” but he added that they all could have avoided the situation had the House Democrats not approved a state budget that they knew had such a wide spending gap.

“We don’t agree that it’s unbalanced,” Hannig said. “We think it’s up to the governor to manage it.”

A majority of House members, including some Republicans, did vote to restore Medicaid funds that, if cut, would further delay state reimbursements to hospitals and nursing homes that care for Medicaid patients. And they agreed to restore money for such social services as the state Autism Program and centers for independent living arrangements for people with developmental disabilities, but both the Medicaid delays and the human service funding levels are likely to stand because the state Senate still does not plan to return to Springfield to overturn any budget cuts without new revenue sources to pay for them.

“There’s no money to go with it,” said Cindy Davidsmeyer, spokeswoman for Senate President Emil Jones Jr. “They did not pass any revenue.”

The one revenue idea that seemed to gain momentum in the House has now coasted to a stop. Rep. Sara Feigenholtz, a Chicago Democrat in charge of the Human Services Appropriations Committee, said she was trying to cut a deal with House Republicans to transfer extra money from specific dedicated funds to the state’s general fund, which would free up money to reverse some of the budget cuts to human services. That fell through, Feigenholtz said. “But we’re going to keep plugging away at it.”

The House and Senate are scheduled to return to Springfield November 12 for regular session to consider vetoes. House Speaker Michael Madigan closed today’s business by saying, “If the need arises in the interim, I may call the House into session.”

Let's be clear

Yes, Gov. Rod Blagojevich cut $1.4 billion out of the state budget, but even House Minority Leader Tom Cross recently said the governor didn’t have a choice. The Illinois General Assembly approved a budget that, by the governor’s count, authorized spending $2 billion more than it could afford.

While the state Senate approved a few revenue ideas that would pay for the extra spending, the House did not. The Democratic leadership said it’s up to the governor to balance the budget, so legislators expected the governor to make such cuts. Blagojevich had to either cut the increased spending over last year’s amounts or, as he described it, write checks that bounce.

So now the scene has been set for the House to vote this week on whether to restore some or all of the funding cuts. Democrats likely will have enough votes to advance the restored funding levels; yet, the House is unlikely to approve the revenue ideas needed to pay for the increased spending. The budget overrides also would need Senate approval within 15 days. In that chamber, Democratic leadership so far has been disinclined to return to Springfield before the annual November session, particularly if the House only restores funding levels without the associated revenue enhancements.

The scenario increases the likelihood that at least some or most of the funding levels will remain as enacted by the governor, at least until November.

There is a chance the House could approve one quasi revenue enhancement, but it just transfers money from dedicated accounts to the state’s general account. The so-called fund sweeps have been estimated to free up about $300 million to spend on whatever the House specifies, potentially human services.

Don’t expect a whole lot of Republicans to support that plan, and don’t count on the Senate to suddenly go along with fund sweeps that Senate President Emil Jones Jr. recently dismissed as a “drop in the bucket.”

At a Statehouse news conference this morning, Republican Caucus Chairman Rep. Dan Brady of Bloomington said it would be extremely difficult for GOP members to “pick and choose” which funding cuts to restore when Republicans never approved extra spending in the first place. (The caucus united in late May to cast “no” votes on the spending plan crafted by Democrats, but Democrats, the majority party, had enough votes by themselves to approve the budget bills.) Brady added that his caucus historically has opposed transferring money out of dedicated funds into the state’s general fund, although they're caucusing right now to decide where they stand.

That’s a brief synopsis of how we got here. When considering where we could go, look toward November. The House Democrats and the governor could swap a few jabs at each other in the meantime, particularly as it gets closer to the November 4 elections. However, little might change before then.

Tough times

The waiting list we told you about in June in Illinois Issues magazine could get worse if the General Assembly doesn’t override the governor’s recent veto of more than $43 million from community-based treatment programs for substance abusers.

The budget cuts could cause layoffs, program closures and “insurmountable” waiting lists for services, said Keith Kuhn, community director at Gateway Foundation in Springfield. The trickle-down effect would reach emergency rooms, mental health services, prisons and courts.

“A lot of the progress that we’ve been making in Illinois in trying to reduce the number of individuals incarcerated for addiction-related issues, a lot of those gains will be lost,” Kuhn said during a Statehouse news conference this afternoon. “And that would be a real shame that we had invested that much time, money and effort to only take significant steps back.” He described such a system as “barbaric” in the way it would approach addiction-related services.

Kuhn said the governor’s cuts reduce state funding for addiction treatment services in half, from $86.6 million to $43.3 million. “When factoring in other areas also receiving funding reductions, the cuts to our existing treatment service system total a little over $55 million.” Specific programs include those for domestic violence, youth in the court systems and temporary assistance for needy families. And once the state funding depletes, federal matching funds also decrease. So the effect doubles from $55 million to $110 million, he said, adding that amounts to about half of the $252 million total budget for substance abuse services.

Unlike other state programs where the governor simply erased the increases above last year’s funding levels, the cuts for some substance abuse prevention and treatment programs were “zeroed out,” or erased completely, said Peggy Powers, chief operating officer of the Illinois Alcoholism and Drug Dependence Association in Springfield. “This is gutting what was actually awarded during FY08.”

“The fact that it’s cut from the base of the FY08 funding level is something that has not occurred wholesale in any other programming,” she said. “We don’t know how the addiction treatment system came into the crosshairs of the governor’s cutting ax, but it certainly has, and it’s an incredibly crucial item.”

There’s some skepticism that the governor’s budget cuts target the particularly sensitive area of substance abuse to grab attention and to further apply pressure on the House Democratic leadership to approve funding mechanisms that would prevent these cuts. The governor’s budget office did not return my phone call this afternoon.

The House is scheduled to come back to Springfield Tuesday through Thursday to consider the governor’s budget cuts and attempt to override some of them. Some items that were reduced require a simple majority of 60 votes. Other items that were cut out require 71 votes to be restored.

Some could be restored under a revised revenue idea in the House that would allow the governor to sweep about $300 million from special dedicated funds and pad the state’s general fund. But it has potential to get complicated when the House Democrats likely tie those so-called fund sweeps to specific program areas — possibly such human services as substance abuse treatment and prevention.

Fund sweeps wouldn’t guarantee funding. The Senate would have to approve the revenue idea, as well as any overrides of the governor’s veto. But the Senate so far isn’t planning to come back before November. That could change.

November would be too late, according to Kuhn, who said agency offices would have to close or take on huge debt to stay open before then.

Many other groups also are worrying that the budget cuts would hinder current and future services. The Child Care Association of Illinois issued a press release saying a $45 million cut will affect services for abused and neglected children and foster parents. The Partners for Parks and Wildlife, including members of the Sierra Club, the Illinois Association Park Districts and the Nature Conservancy, will join forces to fight a 20 percent funding decrease for the state Department of Natural Resources. The group projects a loss of 163 jobs and zero out funding for the Water Supply Planning and Management Program and the Wildlife Prairie Park in Peoria.