Do you want to get paid?

About 4,900 state employees would start missing paychecks July 9 if the top lawmakers can’t agree on a state budget before the new fiscal year starts July 1. That’s the first symptom of a government “shutdown” outlined in this report released Monday by Comptroller Dan Hynes’ office.

“A fiscal meltdown would begin on July 9, and a full-blown crisis would ensue, by any standard, toward the middle of July,” wrote Rick Cornell, assistant comptroller for fiscal policy, in the memo.

Employees of the constitutional offices would be the first to get delayed paychecks. Agency workers who get paid later in the month, such as Department of Corrections and Human Services staffers, would start missing paydays without a budget in place July 25. (State university payrolls would be on a case-by-case basis.) But all employees eventually would get their checks. “If you work, you get paid,” said Carol Knowles, spokeswoman for the comptroller’s office. “It’s not a question of there not being money.” It’s a matter of the comptroller’s office having the authority to collect information from all the state agencies and to write the checks.

In addition, the state wouldn’t have the spending authority to pay doctors and nursing homes waiting for Medicaid reimbursements. That includes the medical providers who signed up for Gov. Rod Blagojevich’s All Kids health insurance program, which guaranteed payment within 30 days.

Some payments are court-ordered, including money for food stamps, Temporary Assistance to Needy Families and aid for the elderly, blind and disabled. State retirement benefits, state income tax refunds and state debt also would have to be paid regardless of a shutdown.

Knowles said the spending authority, even if it's in the form of a month-long temporary budget, could be approved as late as July 9 for the first round of FY08 checks to be sent out by July 13. “To absolutely avoid any delays,” however, she said, “it would be helpful to have it in place by June 29th.”

The House is scheduled to be in session the last full week of June, but for better or worse, the chamber cancelled Tuesday’s session. A spokeswoman for the Senate Democrats said that chamber will be in session Tuesday, and Senate President Emil Jones plans to attend a leaders’ meeting in the afternoon.

"Substantial progress"

BY BETHANY CARSON AND DEANESE WILLIAMS-HARRIS
Repeat after me: “We made substantial progress.” Every person who emerged from today’s meeting between state lawmakers the electric utilities in Senate President Emil Jones’ office said the same thing, ensuring that we’ll see those words in headlines across the state Friday. But no one said what that progress entailed.

Those words and the meeting are significant not just because they sidelined the scheduled budget meeting that didn’t happen in Gov. Rod Blagojevich’s office this morning, but because they could weave together a state budget or pull the loose threat to unravel it. Remember that the House-approved minimal-growth budget has been held hostage until skyrocketing electricity rates are addressed. It’s hard to suppress the excitement that something could actually happen soon. If an electricity agreement is close, then would House Speaker Michael Madigan release the minimum-growth budget to the Senate? Would it have a chance in that chamber even though Jones has repeatedly said it’s unbalanced and would cut services for children?

Consider the setup: The so-called rate-freeze bill, HB 1750, that would roll back rates, freeze them for three years and reimburse customers for the high rates since January. It’s on the final passage stage in the Senate. And the Senate is scheduled to be in session Friday. And that chamber is prepping some “shell bills” that don’t have any language now but will become the measures containing a state budget later.

The House left Springfield until Tuesday, but not before Madigan sent a few messages plucking one more item from the Team Blagojevich-Jones wish list. First, Madigan released a letter indicating he’s sticking to his guns on the minimal-growth budget. Then a House committee rejected the Blagojevich-Jones gaming expansion that includes four new casinos in the Chicago region.

Rep. Lou Lang, the Skokie Democrat who heads many of the House gaming efforts, said HB 25 as amended by the Senate wasn’t cutting it. He doesn’t like the Senate’s criteria for the potential locations of the boats, and he thinks there’s insufficient aid for the racetracks and supporting agribusinesses. But he’s not giving up on gaming as a piece of budget negotiations. “Whether you have a budget problem or not, it’s hard to turn down [20,000] or [30,000] or 40,000 new jobs, a lot of construction and $2 or $3 billion a year. That having been said, we do have a budget problem in the state of Illinois, and I will leverage that if I need to move this ball forward.”

Let’s recap
- The House, Senate and governor’s office are still on opposite sides of the minimal-growth budget that passed the House. But it still has life as a viable safety measure if everything else implodes.
- They still differ on the extent of which gaming should expand: Madigan and the Republicans favor allowing existing riverboats to expand, while Team Blagojevich-Jones support the four-new-casino deal.
- Madigan and the governor differ on how the Chicago Transportation Authority can overcome a massive budget hole. Blagojevich wants to use corporate tax break closures to help out mass transit, while Madigan favors a regional sales tax increase proposal.
- One agreed revenue idea is the $300 million closure of corporate tax breaks.

So we’ve got potential electricity relief, potential gaming expansion and potential “corporate tax break closing” revenue. It doesn’t quite add up to a budget, yet, but we’re encouraged by the veering from the path Blagojevich was leading us down with daily seminars that leaders repeatedly said weren’t advancing budget negotiations.

"Closing in on a collision"

Scratch the Illinois Lottery off the list of major revenue ideas, said House Speaker Michael Madigan Tuesday. The state legislative leaders agree overtime budget “negotiations” lack progress toward an agreement, but they do seem to be inching toward a process of elimination. Madigan said three out of four caucuses “strongly rejected” Gov. Rod Blagojevich’s idea to put $26 billion toward the $41 billion unfunded public pension liability by leasing the Illinois Lottery for $10 billion and floating $16 billion in pension obligation bonds.

Madigan’s statement adds one more item that the House eliminates from the governor’s wish list, including the gross receipts tax and universal health care. But Madigan said the governor doesn’t seem interested in resolving the issues one by one. “I can sit and look at a list of issues that are on the table, and I can go through and personally resolve them,” Madigan said. “But I’m not alone. It requires five people.”

Senate President Emil Jones Jr. said it was “rather foolish” to reject the pension plan. “The other caucuses don’t want to do it, which seems ridiculous to me, because if we do a bond issue and sell the lottery, we’ll cut down on the indebtedness we have with the pension. And we save money,” he said. “Maybe they’ll come to their senses and realize that we have this obligation.”

Senate Minority Leader Frank Watson and his caucus members haven’t taken a final position on leasing the lottery, said his spokeswoman Patty Schuh, but they have “serious reservations.” “Sen. Watson’s concerned that it's perhaps being proposed not for pension relief, but rather for budget relief, to free up cash for the governor to spend.”

House Republican Leader Tom Cross said these budget “negotiations” that include guest presentations aren’t even talking about numbers or a bottom line, yet. And it’s possible that this could just be a waiting game until everyone agrees on the House version of a limited-growth budget. Then everyone goes home knowing that the spending plan won’t get the state through an entire fiscal year.

No end is in sight if everyone remains entrenched in their positions:

1. The governor frames universal health insurance as the civil rights issue of the time.

2. Jones threatens to reject anything that cuts education funding or public services.

3. Madigan points to the House’s limited-growth budget that relies on $300 million in corporate tax break closures.

4. and 5. Republicans in both chambers oppose all tax increases.

Join the waiting game for a contingency plan if no state budget happens before July 1, the start of a new fiscal year. As Cross said, “We are closing in on a collision.”

Wednesday’s leaders’ meeting topic: mass transit funding. Thursday’s topic: property tax relief for Cook County.

Can, can you vote for a "Con Con" in 2008?

If the General Assembly can’t break the deadlock on education funding reform, ethics and property tax relief, then the Illinois voters should be encouraged to support the call for a constitutional convention, possibly changing the state document and making that reform happen. That’s what 48 representatives approved Thursday morning before the House and Senate finished their first, three-day week of overtime session. The House won’t be back in the Capitol until the June 12, the Senate June 14, much to the dismay of Gov. Rod Blagojevich. His administration repeated its belief that lawmakers should work all week every week until they agree on a state budget before the next fiscal year starts July 1.

The stalemate over the FY08 budget is just one example of the General Assembly’s inability to resolve some major policy issues.

In 2008, voters will be asked on the ballot whether Illinois should call another constitutional convention, last held in 1970. The existing state constitution requires the question to be on the ballot every 20 years. The last time was in 1988, when the call for a “con con” was soundly defeated by more than 1.8 million votes, said Cris Cray, legislative liaison with the Illinois State Board of Elections. Rep. John Fritchey hopes voters are frustrated enough to reconsider this time around.

His measure approved Thursday encourages Illinois voters to support the 2008 question and lists education funding, ethics and property taxes as issues unable to be resolved the General Assembly. The Chicago Democrat said during debate that a convention would allow the opportunity to reconsider whether the constitution should be changed to address those and other stubborn policy issues. “It’s about putting a room full of people in here that are going to put policy and intellect over election cycles, over politics, over campaign funding,” he said.

He gained support from Republicans, including his co-sponsor Rep. Bill Black of Danville, who said it’s time for the public to finally have a say in education funding reform. Because, he said, the other way to establish a major policy change, through legislation seeking a constitutional amendment, typically gets stuck in the legislative process.

Such opponents as House Majority Leader Barbara Flynn Currie of Chicago and Assistant Majority Leader Lou Lang of Skokie don’t like the idea of opening up the entire state document to change. “I think there’s a big risk in saying, ‘Let’s throw the whole thing open. Let’s start from scratch,’” Currie said. “We don’t need to start from scratch” because the General Assembly has a “good, sound” document to guide its operations. Lang added that a convention would invite all types of groups with specific agendas to cause “mischief” in altering the framework of the constitution.

Forty-seven House members rejected Fritchey’s measure, but it had enough votes to be adopted.

Shortly after lawmakers left town for the weekend, the governor led the third overtime meeting with the four legislative leaders. But his “speechmaking” and “nebulous talking” isn’t getting them closer to a budget agreement, according to Senate Minority Leader Frank Watson per his spokeswoman, Patty Schuh.

Blagojevich sent out Deputy Gov. Sheila Nix to address reporters again after the meeting. She said he wants property tax relief, that he’s willing to consider different approaches and that he plans to bring in Cook County Assessor Jim Houlihan into next week’s leaders’ meeting.

Pondering pensions and leasing the lottery

BY BETHANY CARSON AND DEANESE WILLIAMS-HARRIS
Unfunded liabilities for public employee pensions was the subject of the second day of leaders’ meetings in Gov. Rod Blagojevich’s Statehouse office. Democratic and Republican leaders talked about the administration’s ideas to pay down some $41 billion in liabilities by a) issuing $16 billion in bonds and b) leasing the Illinois Lottery to generate $10 billion in new revenue. Thursday’s leaders’ meeting is scheduled to be about gaming and mass transit.

But the leaders said they’re no closer to agreeing on a budget today than they were before the May 31st deadline. Today’s meeting was “a couple of steps forward, two steps backwards, inch by inch,” said Senate President Emil Jones Jr. He later added, “Right now we do not have a budget. The proposed budget they voted on in the House is a budget that’s unbalanced.”

House Speaker Michael Madigan is set on his limited-growth budget that would allow a 3 percent increase in spending with no new programs. “I will repeat what I said about 10 times in the meeting: The House has passed a budget; the House has passed a budget. In due time the Senate can pass it with 36 Democratic votes, and the state will have spending authority for the next 12 months.”

As far as leasing the Lottery, Madigan said he’s willing to take a “good hard look” at the whole proposal. However, he doesn’t think the idea has enough support in his chamber. “The bottom line is that the state would lose somewhere in the future,” he said. “It will lose whatever money comes out of the Lottery today.”

On the Republican side of the House, Minority Leader Tom Cross said that leasing the Lottery sounds like a “financially smart thing to do” as long as the money goes where the governor promised it would go: the state’s unfunded pension liability.

In the Senate, Minority Leader Frank Watson said he’s also concerned that leasing the Lottery isn’t responsible. “That’s the problem with this administration. They haven’t been fiscally responsible for the future. It’s all about today. And that’s what concerns us. That’s what concerned us three years ago.”

He also gives us today’s big picture item about Madigan’s budget: “The speaker calls it the high-water mark budget for the House, and I’d say if that’s what he says, then I would assume that’s got to be the high-water mark for the Senate.” But one thing Watson said the speaker’s budget doesn’t take into account is the growth of Medicaid, which he said is “totally out of control” with $585 million expected natural growth next year even without expansions of eligibility for public aid. He perceived the governor as willing to meet throughout the summer. “You could sense that he’s not in any big rush to get out of here.”

Keeping 25 alive
Meanwhile, Rep. Lou Lang, the Skokie Democrat and one of the lead reps on gaming issues, is trying to keep gaming expansion as a viable option for budget deliberations. Despite Madigan’s previous comments that the idea to create four new casinos also doesn’t have enough support in his chamber, the speaker spent some time listening during Lang’s 2.5-hour gaming committee hearing Wednesday morning.

“Just because the speaker believes there’s not enough support today doesn’t mean there won’t be enough support tomorrow,” Lang said after committee. While Lang’s not sold on the Senate version of legislation that would create four new casinos, he said, “I intend to try to keep the gaming issue alive, and if the way to do that for now is to keep HB 25 alive and not kill it, then that’s what I’m going to do.”

Yes, Madigan let gaming be heard, but he also issued a “warning” memo that indicates four new casinos still aren’t in his minimal-growth budget.

Baby steps

It’s June 5, five days after the General Assembly missed its deadline to pass a budget, two business days after overtime session started and the first day Democratic and Republican leaders met with Gov. Rod Blagojevich in his Statehouse office to talk about the budget. And no one seemed in a real hurry.

As usual, a slew of reporters waited outside of the governor’s office for an hour and a half to get reaction from the first lawmaker to emerge from the glass doors. The maintenance crew even brought us chairs again. While waiting, we saw lawmakers hanging out, leaning on the rotunda’s brass rail, seeming as if they had no where else to be. Neither the House nor the Senate did much business. They have legislation they can move, but they’re unlikely to act on major spending or revenue plans until there’s an agreed budget. That counteracts the Blagojevich Administration’s repeated criticism that lawmakers should be in session every day of the week until a budget passes and before state agencies start to shut down July 1 from lack of a new state spending authority.

In other words, nothing’s advancing. The leaders aren’t changing their positions. In fact, they keep adding ultimatums.

House Speaker Michael Madigan said Tuesday that the minimal-growth budget already approved by his chamber won’t be released to the Senate until there’s electricity rate relief. He said that relief has to include a rate freeze, although it doesn’t have to be the three-year freeze currently in the House. But Senate President Emil Jones Jr. said he continues to oppose any freeze.

Jones, in line with the governor, said the General Assembly first has to take care of education and health care for everyone. However, that’s excluded from Madigan’s minimal-growth budget.

House Minority Leader Tom Cross, who has gained some political leverage now that overtime measures require some Republican votes for passage, said the meetings were a necessary step — but not exactly a step forward. “It’s part of the process,” he said. “Is it frustrating? Sure. Is it productive? Probably not. But is it something that has to happen. Yeah, I guess it has to happen. Is it a good use of your time? Probably not. But it’s the nature of this beast.”

They’ll take another baby step in a second leaders’ meeting Wednesday.

There's a first time for everything

BY BETHANY CARSON AND DEANESE WILLIAMS-HARRIS
News flash: Gov. Rod Blagojevich and his senior staff want to be helpful. Deputy Gov. Sheila Nix held a Statehouse press conference Monday to announce the governor wants to invite all four legislative leaders, including Republicans, to weekly budget meetings. The first meeting scheduled for Tuesday would be the first time the governor has met with all four legislative leaders this session.

Nix repeatedly said the governor was “flexible” and “willing to compromise,” but she had a warning for both chambers: “The General Assembly does need to begin to start passing elements of a budget that the governor can sign.” She added, “The General Assembly needs to take action, not just engage in a three-day work week without progress.” She called the House schedule “back-loaded” because the chamber plans to hold session Tuesday through Thursday each week until the last week of June, when lawmakers could be in session Monday through Saturday.

The governor wants to meet with the four tops — Speaker Michael Madigan and Minority Leader Tom Cross in the House, and President Emil Jones Jr. and Minority Leader Frank Watson in the Senate — at the start of every week. And at the end of each week, Nix said the administration would available to meet with any of the caucuses to go over questions, numbers or concerns.

So far, Republican leaders Cross and Watson plan to attend Tuesday’s leaders’ meeting. “We’ve been waiting since January, so we’ll be there,” said Cross’ spokesman, David Dring. Watson’s spokeswoman, Patty Schuh, said Watson “absolutely” would attend and that “he’s looking forward to putting together a responsible budget for the coming fiscal year.” We’ll include Democratic leaders’ responses as we get them.

After her speech, Nix answered some questions from reporters but dodged others, including whether the governor would sign a limited-growth budget approved but stalled in the House. She and the senior staff immediately receded into the governor’s Statehouse office when reporters started asking about Sen. Mike Jacobs, the East Moline Democrat. He lashed out last week about feeling intimidated by Blagojevich after Jacobs cast a “no” vote for the governor’s health insurance plan. (See our June 1 blog.)

Blagojevich’s spokeswoman Rebecca Raush said after the press conference that she couldn’t speak to whether the governor would sign some of the budget pieces that already landed on his desk. Specifically, both chambers sent him a measure creating $300 million in revenue from ending some corporate tax breaks. They also sent him a $1.4 billion supplemental budget that would give more than $1 billion to hospitals caring for Medicaid patients and more than $1 million for lawmakers, judges and executive pay raises. It also includes more than $7 million for Court of Claims cases and payments to military families who lost a soldier in active duty.

Big picture: The limited-growth budget that’s stalled in the House (because it’s being held hostage until electricity rate relief happens) would rely on less than $800 million natural revenue growth, $300 million in “corporate loophole” closings with a construction program paid for by gaming expansion. A House committee is scheduled to consider the four-boat gaming expansion Wednesday morning. The Senate recently approved the measure.

Twilight zone

Just when you thought things couldn’t get weirder, the Statehouse erupts with tension-riddled drama. Gov. Rod Blagojevich’s communication staff has a public relations emergency on its hands leading into the weekend after Democratic Sen. Mike Jacobs of East Moline didn’t hold back in describing his confrontation with the governor over a spoiled deal.

Jacobs’ fellow Democrats tried twice to pull him away from the microphones in the Senate press box Friday afternoon.

The apparent tension started to build more than 12 hours before, at 12:15 a.m. on the last night of regularly scheduled session. Jacobs pressed the “no” button for the biggest item on the governor’s wish list: expansion of state-sponsored health insurance for adults. It was agreed that in exchange for Jacobs’ “yes” vote on the health plan, he was promised $75 million for a college in his western Illinois district. Right after he pressed “no,” however, Jacobs said loud enough for reporters to hear, “Sometimes you’ve gotta do what you’ve gotta do.”

The governor’s office had this to say in an e-mailed statement: “Senator Jacobs wanted a commitment of a $75 million project in his district in exchange for his vote to provide healthcare for everyone. The governor refused.”

Jacobs said the governor went as far as calling Western Illinois University president Al Goldfarb and said he had Jacobs to thank for putting the college’s capital funding at risk. A spokesman for Western Illinois University confirmed that the governor’s office called Goldfarb asking him to encourage Jacobs to vote in favor of the health plan. University spokesman John Maguire said no threats were made to withhold funding, and the university has been working with Jacobs and the governor’s office for months to arrange $73 million in new funding for capital projects, as seen in Blagojevich’s proposed budget for fiscal year 2008.

Though unconfirmed by the administration, Jacobs also said that the governor threatened his political career and that he felt intimidated in the governor’s Statehouse office Friday morning. “We can disagree. We can have moments where we don’t even like each other. But there should never be a time when the governor of Illinois threatens someone in a political and personal manner. It’s beneath the quorum of this building.”

According to Jacobs, he rejected the health plan because of its $1.5 billion tax increase. “It’s a lot of money for an experiment, for tinkering,” he said. “Somebody suggested, ‘Senator, throw the bill over to the House and let the House take care of this.’ Well, OK. But I want to stay focused on what I found offensive, and that was not the message, but the tactics. It was beneath the governor of Illinois.”

We’ll never be in that room to know who’s telling the truth.

Other Democrats voted against the governor’s health plan on the last night of regular session, too. They included first-year Sen. Dan Kotowski of Park Ridge, Latino Caucus leader Sen. Tony Munoz of Chicago and Sen. Louis Viverito of Burbank.

Weekly roundup

BY DEANESE WILLIAMS-HARRIS
Stem cell research
Public dollars would be set aside for all types of stem cell research, including the highly controversial embryonic stem cell research, under a measure approved by both chambers.

House Minority Leader Tom Cross, whose daughter has juvenile diabetes, made an emotional plea during House floor debate for his peers to approve the proposal. “I understand people may have different beliefs and views about [stem cell research],” said Cross of Oswego. “But this is the right thing to do.”

The research has been touted as potentially helping people with diabetes, spinal cord injuries, multiple sclerosis, Parkinson’s disease and cancer. The measure moves to the governor’s desk, and if he signs, people would be able to donate their unused frozen embryos for research.

“This new law will create further incentives for leveraging additional research dollars from foundations, private donors and investors in biotechnology and medical research,” said Sen. Jeff Schoenberg, an Evanston Democrat and Senate sponsor.

Cross also introduced a measure that would earmark $25 million of a national tobacco settlement for the Illinois Regenerative Medicine Institute to fund stem cell research projects in the state.

HPV vaccines
Parents would receive information about the human papillomavirus, the most common sexually transmitted disease, under a measure approved by both chambers. The disease, often called HPV, is linked to about 70 percent of cervical cancer cases, according the U.S. Center of Disease Control.

Merck & Co. developed a vaccine that would target four types of the HPV virus. Under the measure, parents also would get information about the three-shot series during their daughters’ sixth-grade school physicals. The pharmaceutical group came under fire earlier this year when accused of lobbying legislators to push for mandatory vaccinations.

If the governor signs the measure, the state would make the shots available in 2011 to any female younger than 18 who wants to be vaccinated.

The sponsor, House Majority Leader Debbie Halvorson of Crete, also drafted a separate proposal earlier this year that would include the vaccination into girls’ inoculation schedules. The measure stalled in the Senate. Read our March issue for a more in-depth look at the HPV legislation.

Roadside markers
Both chambers also approved a measure that would provide roadside markers to families wishing to place a memorial on the site where their loved ones were killed by an intoxicated driver. If the governor signs it, grieving family members could apply for a roadside marker with the Illinois Department of Transportation.

Mental health
A person with mental illnesses deemed as a danger to himself or herself or to others wouldn’t be allowed to own guns, and his or her information would be shared with law enforcement under a measure approved by the Senate. Mental facilities would forward patient information to the Illinois State Police and the Federal Bureau of Investigation.

And families and other caregivers would be able to admit a person with mental illness into an institution without his or her consent under a separate measure approved by both chambers. If the person had a history of not being able to care for himself or herself or a history of harming others, the caregivers would be able to petition the court and ask for the person to be institutionalized.

Happy June 1

The clock struck midnight, and instead of hearing a chime, the Senate heard bombs nose diving into the ground. That was the sound of Senate Democrats whistling in anticipation of Gov. Rod Blagojevich’s universal health-care proposal failing when called for debate at midnight, the scheduled adjournment of the regular spring session. Accepting the lack of support for the governor’s plan, the Senate leadership continued business but had to postpone voting on the full measure. They’ll be back for more legislative action Friday before leaving for the weekend and returning in overtime session Tuesday, June 5.

BY DEANESE WILLIAMS-HARRIS
In the final hour, Republicans mustered enough energy for the last stand against the Democrats’ proposed four new casinos. “You couldn’t get it together for a budget, but somehow in the 11th hour, you get it together for gambling,” said Sen. Kirk Dillard, a Hinsdale Republican. Sen. Carole Pankau, a Roselle Republican, questioned the motives of selecting four areas around Chicago and said it didn’t “smell right.”

Senate President Emil Jones Jr. briefly walked around the Democratic side of the chamber before calmly sitting to his chair. As Republicans threw out a barrage of verbal cuts, Jones didn't seem the least bit fazed by their remarks. He didn't flinch.

But one of his own party members, Sen. James Meeks of Chicago, sat quietly, and it was hard to tell if the look on his face reflected anger, fatigue, disgust or disappointment. He voted against the casinos, saying earlier he preferred a way to raise money for education without relying on gaming.

The measure still had enough support from 30 senators to advance to the House. Democratic Sen. James Clayborne, the measure’s sponsor from Belleville, said he hopes House Speaker Michael Madigan will decide that expanding gaming is good for the state because it will create jobs and increase education funding. Madigan has already said there isn’t enough support for four new casinos, but some Democrats and Republicans could approve a limited gaming expansion to fund road and school construction.

The Senate also approved the House's version of a revenue package expected to generate $300 million by closing "corporate loopholes," a.k.a. tax breaks. But they still don't have a full budget. Both chambers will have 30 days to debate and agree on revenue and spending plan before the next state budget takes effect July 1.

The clock’s ticking, but the hands aren’t moving

BY BETHANY CARSON AND DEANESE WILLIAMS-HARRIS
About two hours before the midnight deadline for the regularly scheduled spring session, Republicans called a caucus just as the Senate was about to vote on a multi-billion proposal to create four Chicago-area casinos. Stay tuned.

About three hours before the midnight deadline, the House left for the night without acting on a legislative motion filed to stall the budget that won approval last night. The budget is just sitting there as a leveraging point for downstate lawmakers who don’t want to adjourn for the summer without addressing high electricity rates.

The House inaction spoiled Senate plans to vote on that minimum-growth budget in committee tonight. With no budget to vote on, Sen. Jeff Schoenberg, committee chairman and Evanston Democrat, couldn’t help cracking a few jokes about presenting and debating a bill that didn’t exist in his chamber yet. “This is all conceptual,” he said motioning his hands around an imaginary ball.

On a more serious note, Sen. Donne Trotter, a Chicago Democrat and budget negotiator, said the House budget is a “great start,” but it’s not balanced. And he’s disappointed the Democratic-controlled House, Senate and governor’s office missed opportunities — such as leasing the Illinois Lottery or expanding gaming — to make a dent in the drastically under-funded state employee pension system while also bolstering education and health care funding. “What this is lacking is a real revenue stream to pay for the needs of this state,” Trotter said. “I’m always disappointed that we weren’t able to finish the work when we felt that it was supposed to be done. But we also know that by constitution, we have 30 more days to get that job done.” They have all of June before the next state budget kicks in July 1.

Gaming is the answer for some Senate Democrats. “We have to have revenue before we can start putting a budget together,” said Sen. James Clayborne of Belleville earlier Thursday night. He’s sponsoring the legislation to create the new casinos that’s about to be voted on in his chamber, and although he said he expects the expansion of gaming to be difficult for some legislators to vote on, he said, “When we call it, we will have the votes to pass the bill.”

As for the electricity rates that caused the House budget to stall in the first place, Democratic Rep. John Bradley of Marion said it’s a good sign because it shows lawmakers aren’t leaving for the summer without addressing the sky-high rates. After the House finished business about 1:30 a.m. Thursday, he showed up at the Capitol at 7 a.m. for more negotiations with Ameren Illinois and ComEd utilities and a group of lawmakers from both chambers. Then again, they’ve been negotiating since last September.

Overtime

Plan to work into June, said House Speaker Michael Madigan at 7:20 p.m., less than five hours before the constitutional deadline to wrap up the regular spring session. He just told lawmakers that the House would work Friday, leave for an early weekend and pick up Tuesday, June 5. Gov. Rod Blagojevich could still call a special session any minute given that neither chamber has advanced a state budget to his desk. I had an idea lawmakers conceded to an overtime session because no one seemed pressured by a deadline Thursday. While late committees are scheduled and could bring up gaming, shoulders are shrugging about what could happen before the midnight deadline. We’ll keep you posted.

Video competition?
The telecommunications measure allowing cable and phone companies to compete in providing video services slid through the House Thursday night without the controversy that held it in limbo all session. Months of negotiations paid off for Rep. James Brosnahan, the Evergreen Park Democrat whose measure won unanimous support with two lawmakers voting present.

The proposal would allow phone companies, AT&T and Verizon being two of the major forces, to get Illinois Commerce Commission approval to offer video services anywhere throughout the state without having to go to each individual municipality as cable companies have to do right now.

The bill started with lots of opposition from the cable industry, municipalities, public access channels and consumer advocate groups that feared loss of local control, erosion of customer service standards and “cherry picking” in affluent communities rather than offering the video services to low-income areas. Stalled for months in a House committee, the bill was rewritten by the Illinois attorney general’s office. It now requires the video service providers to extend a certain percentage of their services to low-income communities within three years of earning the so-called statewide video franchise. It also empowers local governments to decide where the video provider could construct rather large utility boxes around neighborhoods, a former point of contention. And the state attorney general would have the power to enforce consumer protection standards and investigate violations.

At risk of sounding too good to be true, Brosnahan said on the House floor that the measure would lay the policy needed to spur competition that would drive down prices. And AT&T has committed to investing $750 million and creating 2,000 union jobs in spreading its video services around the state.

One of the concerns left unaddressed, according to lawmakers who spoke on the floor, was that constituents needed to know that even if Brosnahan’s bill became law, it wouldn’t guarantee competition or availability of the high-tech video services in their areas. If approved by the Senate as expected and if signed by the governor, the plan would be immediately effective and sunset six years later. That would allow the General Assembly could reevaluate if the policy succeeded in creating competition, Brosnahan said. We’ll include more reaction from the cable industry as we get it.

What's left?

The news Wednesday night seemed to be when the House approved a limited-growth budget that mirrors this year’s fiscal budget with some changes, but that’s predictable. It was approved along partisan lines with one Democrat, Rep. Jack Franks of Woodstock, voting against it. And earlier in the night, a Senate committee approved a three-year freeze on electricity rates and approved four new casinos as a revenue source for education, construction projects and higher education.

But as the night got weirder, it became clear the real story was whether the two chambers would come together to agree on all this “major” legislation bouncing around the Capitol.

By 9:30 p.m., the Sen. Debbie Halvorson said the full Senate has enough votes to approve the three-year rate freeze that’s already been approved by the House. If it gained approval by the full Senate Thursday, it would land on the governor’s desk. But, Halvorson pointed out in debate, there’s no guarantee it would actually spell relief for Ameren Illinois and Commonwealth Edison customers. “You know how easy it will be to go back home and say, ‘I voted for a freeze. You may never see anything, but I voted for that freeze,’” Halvorson said. “I’m not sure if I can sleep at night if I go home and say, ‘I voted for a freeze, but now they’re going to get a temporary restraining order. They’re going to get an injunction. You’re not going to get a freeze ever.’ How can I sleep at night knowing full well that our responsibility is to maintain our promise?”

In the House, floor action lasted until 1:15 a.m. Democrats approved a) $300 million in revenue by ending some corporate tax breaks, b) a supplemental budget to finally clear a four-year waiting list of school construction projects and implement the second year of a federal program to reimburse hospitals caring for Medicaid patients and c) the so-called “7 percent” rule to relieve Cook County property taxpayers.

What’s left for the House to do before adjourning this week? The House plans to advance a telecommunications bill I mentioned May 29. It would allow AT&T and Verizon telephone giants to compete with cable companies in the race to provide high-tech video services anywhere in the state. Stem cell research still hasn’t been addressed. And a group of lawmakers from both chambers is still trying to relieve constituents’ electricity rates. They joined heads late, and I mean late, Wednesday night. We’ll wait to find out if they agreed on similar language that has a chance in both chambers or if they’re efforts are going to fizzle once again.

Until we can get more details and reaction Thursday, here’s a simple breakdown of the limited-growth budget approved by the House:
A few highlights
- The minimum amount spent per student increases by $387, which is an 8 percent increase over FY07 and puts the minimum at $5,721 per student.
- Early childhood education would receive $30 million.
- Each school district would receive at least as much as it did in FY07.
- State universities would get a 2 percent increase.
“While it may not be as much as some had hoped for, it’s certainly a healthy increase,” said Rep. Gary Hannig, the Litchfield Democrat sponsoring the budget proposal. “It’s certainly something that will allow our K-through-12 institutions to move forward.” He later added, ‘We’ve seen the difficulty we’ve had this year in trying to find additional revenues. I would argue that this is the best that we can do at this revenue level.”

Doomed from the start?

BY DEANESE WILLIAMS-HARRIS AND BETHANY CARSON
House Speaker Michael Madigan is expected to answer the governor’s call by introducing his own budget tonight. It’s a limited-growth budget proposal that includes closing corporate loopholes to the tune of $300 million dollars, said Chicago Democratic Rep. Jay Hoffman after House Democrats finished their caucus Wednesday afternoon. “There’s many more that should be on the table,” he said. “But this is a start.”

Rep. Barbara Flynn Currie, a Chicago Democrat, said on the House floor no business groups voiced opposition to the closing of the selected tax breaks, including state income tax exemptions for corporations engaged in real estate investment trusts (she cited Wal-Mart). And car rental companies that don’t pay sales taxes on cars that they buy and then rent would no longer get that exemption. The measure hasn’t been called for a final vote, yet.

Madigan’s limited-growth budget also would rely on natural revenue growth, estimated to be less than $800 million.

Not everyone is happy. “There’s a consensus about $300 million [in revenue], and there’s consensus about $800 million in spending,” said Rep. Robert Molaro, another Chicago Democrat. “Consensus. I didn’t say 60 votes.”

Rep. Marlow Colvin, a Chicago Democrat and head of the Black Caucus, said he would vote against the budget on the House floor. He wasn’t happy that the RTA and the CTA aren’t slated to receive much-needed money in Madigan’s short-term budget. Molaro said legislators would have to return in the summer to do more work.

Legislators are certain the budget bill will be called tonight. They’re not so sure it will be approved.

Power politics

In the midst of all the budget talk, high electricity rates finally emerged in legislative action Wednesday. The House advanced last-minute changes to legislation this morning. The Senate is expected to move a different measure tonight. Whether either chamber is interested in working to approve the same language in the same piece of legislation is yet to be seen.

Under the House measure, not only would consumers pay cheaper electricity rates and get a refund for the higher ones they’ve been paying since January, the state also would create a new Illinois Power Authority to buy electricity and eventually generate its own. A House committee advanced the proposal along partisan lines. The same House committee approved an earlier version of the measure that I wrote about May 25 (scroll down). But Rep. George Scully, a Flossmoor Democrat, changed the bill to do a lot more. Here’s a recap of what’s already been approved:
- Roll back electricity rates to their 2006 levels for one year (consumers would see a credit on their monthly bills);
- Refund customers for the higher rates they’ve paid since January (consumers would get a check in the mail from the utilities);
- Tax power generators to reimburse utilities for the mandated refunds;
- Prohibit utilities from shutting off the power of delinquent payers until March 2008;
- Change condos to be charged residential rates rather than more expensive commercial rates.

Here’s what Scully’s changes would add:
- The tax on power generators would expire once all the refunds and the new efficiency initiatives were paid for (the initiatives would aim to reduce the amount of power in demand at "peak" times when electricity is most expensive);
- Separate electric utilities from their parent companies and prevent utilities from joining regional transmission organizations that are federally regulated;
- Abolish the current Illinois Commerce Commission and appoint five new members with specific qualifications to avoid conflicts of interest with the electric industry;
- Create the Illinois Power Authority to procure the cheapest possible power and eventually generate its own power using Illinois coal;
- Require utilities to disclose whether they’re behind advertising campaigns and prohibit utilities from passing those advertising costs on to consumers.

Utilities obviously hate the plan. Commonwealth Edison CEO Frank Clark had the most colorful interpretation, saying the legislation is “blatantly unconstitutional,” “socializes the electricity industry,” and the equivalent of “going to Los Vegas and throwing dice.” More specifically, he said the Illinois Power Authority would buy and sell power but have no responsibility for the outcome, leaving utilities to deal with customers if something goes wrong or if rates are sky high.

A Midwest Generation representative added this assessment, saying it would take the industry a long, long time to put Humpty Dumpty back together again. “In two days, we’re being asked to turn this industry on its head,” said Becky Lauer of Midwest Generation, adding the measure would ruin competition and incentives to keep costs down, risking unreliable power supplies for customers. Ultimately, she said consumers would pay the price.

Rep. Karolyn Krause, a Mount Prospect Republican, said this doesn’t give immediate rate relief and will be tied up in lawsuits for more delayed relief.

Scully could call the legislation any time, but he said he feels no pressure to get it on the House floor before Republicans gain legislative power after May 31, the constitutional deadline. “I don’t see [Thursday] as a deadline at all,” he said. “I think we’ll go into overtime.” He said he’d rather that the House approve the measure on its merits than on party lines. Yet, Republicans have repeatedly voted against his bill.

Meanwhile, Attorney General Lisa Madigan, filed a lawsuit in Jackson County Circuit Court against AmerenIP and AmerenCIPS for allegedly deceiving customers shortly before a 10-year rate freeze came off the books January 2. According to a release, Madigan said the Ameren Illinois companies enticed customers to sign up for all-electric services by promising a discount, but they knew months before that they would end the discount as soon as the electricity rate freeze was lifted. “Ameren IP and AmerenCIPS took unfair advantage of their customers,” Madigan said in the release. “Many of these families invested in all-electric power or installed new electric appliances as part of home construction or remodeling because they were looking at the long-term savings that the all-electric discount program would provide. Now their investment means nothing but additional hardship and incredible additional expense.”

Ameren Illinois spokesman Leigh Morris responded in an e-mail: “AmerenIP and AmerenCIPS have not been formally served with the lawsuit. We understand the nature of the allegations which are under review and take them very seriously. The Ameren Illinois utilities expect to prevail in this lawsuit because the companies have not improperly promoted all-electric rates.”

“The rates that are in effect are lawful and have been approved by the Illinois Commerce Commission. The power prices associated with these rates were not known until the September 2006 auction, and the delivery service components of the rates were not known until November 2006. Ameren Illinois utilities’ rates now are approximately at the national average. The change in rates comes after a 10-year rate freeze and a legislatively mandated rate reduction.”

Later tonight, we’ll follow the Senate’s action on a different electricity rate freeze bill. Who knows if any electricity legislation will land on the governor’s desk any time soon.

Also later tonight, we’ll follow House action to find out whether House Speaker Michael Madigan moves a no-growth budget that would propose a short-term solution. If so, lawmakers would have to come up with a longer-term revenue and spending plan during an expected overtime or special session.

Two days to go

Democrats have Wednesday and Thursday to agree on a state budget before Republicans gain more legislative power, but it doesn’t look good. Democratic leaders aren’t changing their tunes. I’d have to check my tape, but it’s almost as if they all repeated Monday’s speeches after breaking from budget negotiations. The only thing that changed is that Gov. Rod Blagojevich sent his Deputy Gov. Sheila Nix to give a speech to the media, and she repeated, and I mean repeated multiple times, the governor’s finger-pointing: House Democrats need to propose their own budget or risk pushing the legislature into overtime session and empowering Republicans who want to cut social services.

Republicans want a state budget that doesn’t rely on tax increases and that avoids spending more than last year, but House Minority Leader Tom Cross said his caucus isn’t interested in cutting services. “We believe the best way out of here, if we ever have an opportunity to be at the table, is you live within your means and you don’t raise taxes,” he said shortly after the Democratic leaders left the budget meeting in the governor’s Statehouse office.

House Speaker Michael Madigan came out of the budget meeting to say he didn’t get answers about his concerns, and his caucus still prioritizes new money for education and school and road construction. And, as before, he said closing corporate loopholes and limited gaming expansion has more support in the House. But we could find out which tax breaks the House Dems are willing to close after their Wednesday morning caucus. The only other glimpse of compromise is that Madigan said he’s not ruling anything out in regards to health care, which the governor demands in a state budget. But, Madigan closed with, “Obviously there’s two different views as to how much money might be available to pay for the budget.”

Senate President Emil Jones Jr. did his best to dodge reporters’ questions by heading straight from the governor’s office to the elevator, but he had time to slip in one dig of the House speaker: “There’s no votes in my caucus for [only expanding positions at existing casinos], so we don’t have anything. I wish the speaker had brought in a proposal. We did last week, but all he brings in is surveys.”

If Democrats can’t agree and Republicans do get a say, there will be a lot of pressure for lawmakers to scale back their wish lists and expand gaming positions within existing casinos to pay for a construction bill. Cross is ready to go with the House GOP proposal, which has Madigan’s approval. “In the past, all of these bills have gotten too heavy, they’ve gotten weighted down, people have wanted too much,” Cross said. “This is a bill we think can pass both chambers, and I would hope that the governor would sign it.”

Stay tuned on cable bill

A measure posing AT&T against local cable and telephone companies could come to light soon in a House committee, where it’s been stalled for more than a month. The House Telecommunications Committee met Tuesday morning but recessed to “the call of the chair,” allowing sponsor Rep. James Brosnahan, an Evergreen Park Democrat, to reconvene the committee as soon as the compromise language is ready to go. He said he hopes that would happen in the next two days.

Then again, the urgency of state budget negotiations between Gov. Rod Blagojevich and the top Democratic leaders could delay Brosnahan’s proposal into the fall veto session, says Gary Mack, lobbyist for the Cable Television and Communications Association that opposes the measure.

The proposal would basically allow such telephone companies as AT&T and Verizon to compete with cable providers that have enjoyed a monopoly in providing high-tech video services. AT&T wants to change the way video providers get authorization to build a video franchise using broadband, fiber optics and Internet protocol technology to supply those services. AT&T can do that right now, but it would have to do the same as cable companies and go through individual municipalities to get approval to provide the service. Brosnahan’s measure would allow providers to get a statewide video franchise through the Illinois Commerce Commission instead. But the original language in his measure limits the commission’s power to approving or denying applications to provide the service, so it stops short of giving the commission the ability to regulate what happens after that, says Jim Zolnierek of the commerce commission.

Attorney General Lisa Madigan wants the commission to have more regulatory power. Her office joins other opponents — cable providers, public access channels and consumer advocates — in arguing that the legislation opens the door for a deregulated industry and doesn’t adequately protect local control, public access channels or customer service standards.

Supporters say the proposal would boost competition and benefit consumers by giving them more choice. Stay tuned. A revised telecom bill could drop back into committee at any time.

Gov: It's your turn, House Democrats

Is a state budget possible by May 31? That’s still a mystery, but the ball may be in the House Speaker Michael Madigan’s court. His Democratic caucus spent nearly three hours meeting with Gov. Rod Blagojevich Monday evening, but members don’t feel any closer to an agreement than they did last week.

“I’m not as optimistic walking out of caucus as I was walking into caucus,” said Rep. John Fritchey, a Chicago Democrat. “There’s a large difference between where the governor would like to see this be and where we believe is realistic for us to get. It’s not to say that either one of those positions is wrong, but they are not close to each other.”

Specifically, the governor isn’t budging from his proposal to expand state-subsidized health insurance for adults, but House Democrats are skeptical that the state can or should cover a new demographic when it’s unknown whether lawmakers could approve a revenue source that would support the life of the program. Some members also said the state could take on a smaller health-care expansion by filling in some gaps of Blagojevich’s first-term All Kids program.

“There’s a willingness to do some things in health care, and we may be just a little bit off in terms of that, but I think most the members think the spending is probably too high,” said Chicago Democratic Rep. Marlow Colvin of the governor’s Illinois Covered plan. “[The governor] did challenge the Democrats in the House to put a plan on the table that we could support. I will say that’s something we have not yet done, and I guess we have to as House Democrats think about a funding solution that we can all support.”

Discussed as revenue ideas were the closing of “corporate loopholes” (a.k.a. getting rid of some tax breaks) and adding an alternative minimum tax on businesses, which could generate up to $2.4 billion, according to Sen. James Meeks, a Chicago Democrat who met with other members of the Latino and Black caucuses in the governor’s office earlier Monday. They talked about ways to raise money for school construction and to increase the minimum amount spent per student.

As we said last week, the governor still opposes an income and sales tax increase that gained early support from the Black and Latino caucus members, but Blagojevich said again Monday night that he supports Senate President Emil Jones’ gaming proposal to add four new casinos in the Chicago area. But neither House Republicans nor some Democrats want four new casinos.

The one thing Blagojevich and House Democrats agree on is that they still want to approve a state budget before May 31 so they don't empower Republicans, who advocate for a no-growth budget. But logistically, a state budget would be hard to craft and approve in three days.

“To be honest with you, I don’t think it looks very good for the adjournment date this Thursday,” Colvin said. “Unless he’s playing a great game of chicken, but right now, it looks unlikely.”

Side note Electricity rates were not discussed.

Legislative roundup
BY DEANESE WILLIAMS-HARRIS
As we start the last week of regular spring session, here’s a legislative roundup of recent floor action.

Teen driving safety
New driving curfews would be set at 10 p.m. on weekdays and 11 p.m. on weekends if the governor signs a measure on his desk that was called for by Secretary of State Jesse White. Exemptions would be made for emergency situations and for school or job activities. Teens also would be required to carry a driver’s permit for nine months instead of six months and be restricted to one unrelated passenger in the car. Those caught street racing would be in danger of losing their licenses and their cars. If approved by the governor, the new rules will go into effect next July.

Under a separate measure approved by both chambers, teens younger than 19 wouldn’t be allowed to drive and talk on a cell phone at the same time other than in cases of emergencies. The measure now moves to the governor’s desk.

Horsemeat ban
The governor signed a measure banning slaughter of horses for human consumption in the state. Selling horsemeat for food is illegal in the United States; however, it was shipped and sold overseas for dining. The nation’s last slaughtering plant, which is in DeKalb, will have to close its doors or switch to another farm animal. But lawmakers were considering exceptions to the law as late as the end of May. One measure would allow the slaughtering of horses to make animal feed.

Breast exams
Doctors would have to conduct regular breast exams, and insurance companies would have to pay for them under a measure approved by both chambers. If the governor signs, women between 20 and 39 would receive the required exam every three years. Women older than 40 would receive an exam every year. The exam would have to last six to 10 minutes.

Mortgage fraud
Victims of mortgage fraud and identity theft would have more time to file a complaint against people they accuse of scamming them out of home equity and using their identities. Both chambers approved an earlier version of the measure; however, it’s since changed to make the legislation immediately effective, and scam artists would be on the hook for seven years instead of three. The House must approve the measure before it goes to the governor.

Criminal code
The state’s criminal code would shrink by one-third under a measure approved by the Senate. For the first time in 40 years, redundant and unconstitutional language would be eliminated from the code. If approved by the House and signed by the governor, supporters say the measure would ease the backlog of cases in the state’s judicial system.

Dining with dogs
Dog owners would be able to take their furry friends to outdoor seating areas at restaurants if the governor signs a measure approved by both chambers.

Ban on some ammunition clips
A proposed ban on ammunition clips that shoot off more than 10 rounds won approval by a House committee. Supporters say the ban would ease the emotional and social costs of losing innocent victims of gun violence, while opponents say it would worsen economic loses when gun manufacturers move to other states. The emotional issue has continued to come up in Illinois since a 1994 federal ban on assault weapons and the high-capacity magazine clips expired. Such opponents as the National Rifle Association and downstate lawmakers trying to protect sport say the legislation is too broad and would ban some firearms without stopping plotted crimes like those at Virginia Tech this spring.

He spoke!

BY BETHANY CARSON AND DEANESE WILLIAMS-HARRIS
Not about the subpoenas received by his campaign, but Gov. Rod Blagojevich did address the media outside of his Statehouse office about budget negotiations (it's rare, if at all). While the governor said he’s not giving up on his gross receipts tax, the majority of the legislature has. And while he’s accepting gaming as a revenue idea, he’s not accepting a budget without health care.

“Like anything else, if you’re willing to compromise, you’ve got to [accept some] things that you’re really not in love with,” he said in his nearly three minute appearance. “The idea of more gaming is not something that I like, but I’m prepared to accept it if it means every citizen in our state can get access to affordable, quality, comprehensive health care.”

He said he and Senate President Emil Jones Jr. and House Speaker Michael Madigan have made progress. They do seem to be in the same page, but they’re not exactly agreeing on vexing details about where new revenue would go. Still, he said they want to adjourn by the May 31 constitutional deadline. “I feel good about the fact that Senate President Jones, House Speaker Madigan and I agreed [with] one another that we’re going to work in good faith and provide our best efforts to try and finish the budget on time, be willing to compromise and make adjustments so we don’t empower the Republican minority and allow [House Minority Leader Tom Cross and Senate Minority Leader Frank Watson] to cut programs that help people.”

Cross and the House Republicans proposed their own, no-growth budget that doesn't include four new casinos currently being pushed by Democrats. They draw the line at selling 6,000 new positions to existing casinos, a proposal introduced earlier this session. The revenue would be used for a capital program for roads and mass transit, school construction and higher education.

Cross said it’s time for the state to live within its means and use the nearly $1 billion in natural revenue growth to pay compounding state obligations. He proposed fully funding the state pensions out of those funds, eliminating the need to borrow more money. More than $200 million would put into education, and per pupil spending would be raised by $250.

The GOP budget also wouldn't fund $60 million in what Cross called "Democrat pork projects" for the 2008 fiscal year. He couldn't pinpoint the special projects but said some were tacked onto the budget of the Department of Commerce and Economic Opportunity.

If Senate Democrats had their way, four new casinos would be built around Chicago. Their plan would generate $2.1 billion in the first year and $1.4 billion each year after. Early childhood education, road and school construction projects, depressed areas needing economic development and a fund for horseracing workers would get the money, although the language is fluid and expected to change. An item to give $40 million to Chicago State University, for instance, didn’t bode well with Republicans, and even Democratic Sen. Ira Silverstein of Chicago suggested divvying the money to all state universities. Chicago State University has close ties to the Senate president, whom it calls a “patron saint” (scroll down to the last line of the document).

Right before they left town for the weekend, the Senate easily approved the authority to distribute $1.2 billion, part of which will enact the delayed second year of a federal program that reimburses hospitals for caring for Medicaid patients (we wrote about it in our April 26 blog). The extra spending also will give money to families of soldiers killed in the line of duty.

Both chambers will return for session Monday afternoon.

Going after the big guys

Customers would get a rebate and pay cheaper electricity rates under a proposal approved along party lines in a House Committee late Thursday night. A $2 billion tax on power generators would allow utilities to start doling out reimbursements in January, a full year after most Illinois customers were hit with higher utility bills. Last January, a decade-long rate freeze was lifted. Under the measure, electricity rates would be rolled back and frozen at their 1997 levels for one year.

The major power companies subject to the tax — mainlny Exelon Generation, Ameren Generation, Midwest Generation, Dynegy and Dominion — predictably opposed the idea and threatened financial disaster. They also said Thursday night that the tax would be passed on to consumers (they would be taxed on their capacity for producing electricity, not on the actual amount of electricity they produced).

“Are you trying to run out … profitable business in Illinois?” asked Rep. Dave Winters, a Shirland Republican. “Because that’s what the message of this bill is, is you’re trying to destroy jobs, destroy industry that needs electricity. And believe me, if this goes through, you might as well shut the doors, blow up the bridges because nobody’s going to want to live in Illinois if there’s no power available. And this will do it.” He pointed out that the measure has no sunset, and his Republican peers on the committee didn’t like that the measure fails to specify what the state could do with the revenue once customers received their rebates.

The House sponsor, Democratic Rep. George Scully of Flossmoor, said he knows this would only yield a short-term solution, but it would buy time for lawmakers to come up with a longer-term idea for procuring power (read: getting rid of the Illinois Commerce Commission’s auction process that set electricity prices for distribution companies this year). Scully said, again, he doesn’t believe the power companies’ threats. “The hyperbole that the sky was going to fall that I heard tonight was over the top. The only thing that didn’t really disturb me is I’ve heard the same thing so many times before. That’s the exact same rhetoric. I don’t believe it this time. I didn’t believe the last time.”

Other changes in the measure include prohibiting utilities from shutting off power until March 2008, and condominiums would be charged residential rates rather than commercial rates they’ve been paying since January. Scully said he could call the bill today, Friday, but he hasn’t talked to anyone in the Senate about whether it has a chance in that chamber. The Citizens Utility Board executive director, David Kolata, said one good sign is that Sen. James Clayborne, a Bellville Democrat, first proposed a similar idea in his chamber. (Clayborne later said he sponsored the bill to tax power generators as a way to get them to the bargaining table, not because he thought it would solve any problems.) It’s also the chamber that hijacked Sen. Gary Forby’s original proposal to freeze rates for the Ameren Illinois and Commonwealth Edison utilities. Only Ameren was left in the one-year rate freeze measure approved by the Senate.

Earlier Thursday, House Speaker Michael Madigan surveyed his members about offering property tax relief for Cook County residents and about which income-tax breaks they’d end for businesses. Members received a list of some 20 “corporate loophole” ideas they would close to raise revenue. Next to the possibilities were the names of groups that would be against it.

We’ll blog again later today about legislative action, including whether the Senate acts on the governor’s Illinois Covered insurance program and the gaming proposal that we talked about yesterday that would create up to four new casinos in the Chicago area.

New boats?

While House Speaker Michael Madigan has said he would consider expanding gaming to generate money for road and school construction, the Senate is working on two significant gaming measures potentially for education, construction projects and health care. Sen. James Clayborne, a Belleville Democrat, says he’s in negotiations to draft legislation that could create three or four new casinos in the Chicago area, although he didn’t know whether they would be land-based or riverboats. “I think that we should look long-term to make the industry competitive, and we should consider all options,” he said Thursday morning. “So that’s still being worked out.”

Clayborne also said negotiations include discussion about such ways to help racetracks remain competitive by allowing slot machines or charging boats “impact fees” that would offset some racetrack losses.

His proposals resemble a measure introduced by Rep. Lou Lang, a Skokie Democrat, that also would create four new casinos and add slot machines at racetracks. But Madigan announced Wednesday that the House would need Republican support to approve an expansion of gaming, which is significant because the chamber’s Minority Leader Tom Cross of Oswego said again Thursday he doesn’t want to add new casinos. At the start of this session, he led House Republicans in proposing a $5 billion capital plan ($3 billion for roads and mass transit, $1.5 billion for schools and $500 million for higher education) paid for by allowing existing casinos to add gambling positions.

Senate President Emil Jones Jr. wouldn’t say, however, how he felt about new casinos when he walked out of budget negotiations in Gov. Rod Blagojevich's office today. All he said was, “I’ve been here long enough to know that nothing’s ever dead,” referring to the governor’s gross receipts tax. Blagojevich spokeswoman Rebecca Rauch said the governor is willing to consider gaming as a way to help advance his priorities: health care, education and making businesses pay “their fair share.”

Meanwhile, Clayborne also is revising a second measure that would exempt all Illinois casinos from the statewide smoking ban for five years. He recently tried to exempt only casinos operating near state borders as a way to help East St. Louis. He said the city estimates it would lose $2 million in revenue because people wouldn’t be able to smoke in its casinos. He expanded the scope to heighten the chance of his measure winning approval. “We’re looking to exempt all the boats because obviously we need the support of those legislators from [districts with casinos].”

Success in taming gang violence?
BY DEANESE WILLIAMS-HARRIS
A program aimed at decreasing gang violence is working wonders in some areas of the state but not others. State legislators discussed potential problems hindering the success of the CeaseFire project during a House committee Thursday. Under the program, ex-offenders and community activists are deployed into communities to mediate problems that may lead to gang violence.

Rep. Annazette Collins cited workers not getting paid on time and some getting fired in her district representing the East and West Garfield neighborhoods of Chicago. Program director Dr. Gary Slutkin has yet to look into those allegations, he said. Rep. La Shawn Ford said outreach workers in the Chicago Austin neighborhood don’t have a chance to work with probation and parole officers to help other ex-offenders stay out of prison.

Other lawmakers were very pleased with the difference the program has made in their districts. Rep. Robert Flider, a Mount Zion Democrat, spoke highly of the project and the work of outreach worker Brandy Brown, who turned her life around as an ex-offender. She works with school principals, church pastors, social agencies, probation officers and law enforcement to create strategies to prevent gang violence in Decatur. “I walk the streets from 7 a.m. to midnight helping ex-offenders, gang members and children stay out of jail,” she said.

A few legislators asked to work with the director to assimilate some of the things that are being done in Flider’s district. Rep. Esther Golar, who represents Chicago’s Englewood area, was interested in some of the Decatur strategies as she described recent gang violence as being “explosive.”

Statewide, the program since 2004 has mediated more than 900 gang conflicts and saved between $100 to $200 million that would have been spent on medical care for shooting victims and on incarcerating offenders.

No dice for taxes, but good hand for gaming

Something may be brewing, but it’s not a tax increase. The House doesn’t have enough votes to support an increase in the income or sales tax, and that basically defeats the core of the HB 750 “tax swap” proposal, House Speaker Michael Madigan said in a rare Statehouse press conference Wednesday afternoon. He blamed the lack of support on Gov. Rod Blagojevich’s repeated threats to veto any income or sales tax increases.

Madigan said a survey of his 65 House Democrats (Madigan makes the 66th) revealed his caucus’ priorities remain education and a capital plan for road and school construction projects. Health care didn’t rank so well, he said. But to fund the caucus priorities, only 38 members would support some level of increase in the income tax. Only 10 would be OK with an expansion of the sales tax. There’s slightly more support for closing “loopholes” in the corporate income tax code and for expanding gaming in some way. But as Madigan said, “They’re still somewhat short of the 60 votes required to pass.”

If the speaker got his way, he would like to expand gaming — but he wouldn’t specify whether that would mean opening new casinos, allow existing casinos to add more employees or add slot machines at racetracks. He said he has spoken to House Minority Leader Tom Cross of Oswego about the possibility of gaming, and both “have an interest” in using any new gaming revenue to fund a capital plan. Madigan also said he met with Senate President Emil Jones Jr. to share the survey results with him, and he said their meeting was “fruitful.” Again, no details. Jones’ office said he has no comment.

In terms of the “alternative minimum tax” for businesses we talked about in Tuesday’s blog, Madigan said he was still attempting to fully understand how it would work. The sale of the Illinois Lottery got minimal interest in the caucus. He would not comment about the possibility of a “zero-growth” budget that doesn’t include any new revenue or new programs.

Madigan said it was unusual that the legislators differ this greatly from the priorities by the governor. And while he said he hopes the legislature can wrap up business by the May 31 constitutional deadline, he would oblige if the governor called a special session this summer. Madigan expects to meet with the governor Thursday. We’re still waiting for a response from the governor’s office.

Something's brewing

It’s no secret that House Democrats reject the governor’s gross receipts tax, but they’re coming up with a new mix of tax increases and other revenue ideas that they think would be easier for lawmakers to support — considering the GRT has been painted by the opposition as mysterious, catastrophic for businesses and sure to trickle down to consumers.

Rep. Edward Acevedo, a Chicago Democrat and an assistant majority leader in the House, dropped this one before noon today: “There were other ideas that were going to be brought to the table probably by the end of the day today — something that you haven’t heard of yet.”

Their priorities? More money for education and more ways to make the state and the schools accountable for what’s done with that new money. Their other priorities: Medicaid payments, road and school construction and higher education, for instance. In sum, the House Dems’ priorities would cost about $1.2 billion in new revenue. To raise that, they’re looking at closing corporate loopholes or reforming the state’s corporate income tax.

From GRT to AMT? One of the revenue ideas would still target businesses. The alternative minimum tax is becoming more common nationwide, but it applies to individuals. It basically taxes high-income individuals that could otherwise skirt the federal personal income tax. That falls in line with Gov. Rod Blagojevich's justification for a gross receipts tax — that corporations are allowed by law to skirt the state's corporate income tax — but Blagojevich spokeswoman Rebecca Rausch said Monday night that the alternative minimum tax hasn’t been talked about by the governor’s office as an option.

What it AMT? It’s currently a flat tax on individuals. The federal government uses a different formula that excludes some tax breaks or deductions allowed by personal income tax. If it were applied to Illinois businesses, some would have a higher tax liability under the alternative minimum tax than they would under the state corporate income tax. Some would have less liability, but they’d pay whichever amount was higher.

The alternative minimum tax at the federal level wasn’t widely used before 2001, but Congress keeps approving tax cuts that change taxpayers’ liabilities. By 2010, the tax is expected to affect one-fifth of all taxpayers, according the Internal Revenue Service’s 2003 annual report to Congress.

Opponents call the alternative minimum tax problematic because it’s not adjusted for inflation, requiring Congress to increase the income levels each year. And opponents say it complicates the tax filing system. The Center on Budget and Policy Priorities has some more FAQs here.

House Dems aren’t sold, however. They have questions about it just like they had questions about the governor’s gross receipts tax. Rep. Gary Hannig, a Litchfield Democrat and deputy majority leader, says it’s easy to look at tax stats and see who’s not paying their “fair share,” but then you realize that the way the law would be written might subject a hog farmer in Macoupin County to bear a high tax burden. The Devil’s in the details of how an alternative minimum tax would be written into law, he says.

Why would House Dems support it? Rep. John Fritchey, a Chicago Democrat, says, “It is easier to apply, easier to understand, easier to ascertain the impact. Additionally, you don’t have the pyramiding problems that you have with GRT. And it is not a tax that is as readily passed on to the consumer.”

Could Republicans support an AMT in the tax mix? “It would not be well received,” says House Minority Leader Tom Cross of Oswego. “I’m not buying into the premise that we need a tax increase.”

The House and Senate GOP members have said all along that they oppose tax increases because they don’t believe the state needs to spend more than it already is, especially with such ballooning costs as Medicaid bills and state employee health care and pension benefits. But could the House GOP support a plan that would override the governor’s veto of any income or sales tax increases? “Depends what the situation is,” Cross says, adding they want to improve education funding, build new roads and take care of Medicaid payments just as much House Dems. “We’re for less spending and less growth. We know the reality is people aren’t talking, and we could get out of here with a minimal-growth budget. And we’re certainly willing to look at that.”

Hannig, however, says the state’s obligations by law (eg. pensions) and by contracts (eg. AFSCME and SIUE contacts for state employees) add up to about $1.3 billion, which exceeds the nearly $900 million natural revenue growth expected in fiscal year 2008.

What about Senate support? Few if any House members would vote for an income tax increase if it were known to be dead on arrival in the other chamber. Senate President Emil Jones Jr., however, “ran faster than the speed of light into the chamber, avoiding the press” before the Senate started session at noon today, according to Deanese. We’ll get back to you with Senate reaction.

We’ll also post more revenue ideas as they shape up in legislation this week.

Some Senate comments update
BY DEANESE WILLIAMS-HARRIS
Sen. Donne Trotter, a Chicago Democrat and budget point person, says the Senate members he’s heard from want some sort of revenue growth in the next state budget. On the other hand, he said, “There’s no consensus at this point. We’ve had no discussions.” Instead, he says they’ve been studying the proposals on the table before debating the issue.

Sen. Christine Radogno, a Lemont Republican and GOP budget negotiator, said the House’s departure from the governor’s health care and tax proposals reflect public opinion. While Radogno says health care for the uninsured is definitely an issue legislators are interested in, she also says the governor’s Illinois Covered plan is “way too big and has way too many unintended consequences.”

At this point in the session, Radogno says she sees two choices before the legislature: It could either approve a maintenance budget, which Republicans in both chambers favor, or consider a tax swap package that would increase the state’s income tax and expand the state sales tax in return for property tax relief. The likelihood of both chambers approving a tax swap is slim, she said. And because the existing language in HB 750 is vague, she doesn’t see it winning legislative approval in just nine days. “My guess is that we’ll get called back in the summer to address education funding and health care.”

Weekly round up

Budget no-no’s
After 15 senators signed a letter opposing a so-called no-growth budget, we’re left asking what the majority of lawmakers would support by the end of the scheduled session (May 31, less than 13 days away)? Their Senate President Senate Emil Jones Jr. reportedly says he also opposes a flat budget, but he hasn’t publicly backed down from his support of the governor’s $7.6 billion gross receipts tax, either. While we know 107 House members voted in opposition to the governor’s gross receipts tax concept, we still don’t know what their leader, House Speaker Michael Madigan, thinks is the most reliable, politically palatable way to bring in more revenue to the state. The House Democrats are expected to hash out their wish lists in a meeting next week. And the governor’s administration still sends daily e-mails about why his “Tax Fairness Plan” would solve the state’s “unfair” tax system.

College loans for immigrants
College-bound students who are immigrants from low- or middle-income families would be eligible for a state grant to help pay for college under a measure unanimously approved by the Senate Friday. The original version failed by one vote earlier this week. Sen. Martin Sandoval, a Chicago Democrat, says regardless of legal status, all students should have an opportunity to finance their educations. To be eligible for the annual $5,000 loans, students would have to be an Illinois resident and a citizen or a permanent resident, which requires them to have a visa. They’d also have to have a “B” average and come from a family with an income less than 250 percent of the federal poverty level.

Sandoval adds the state also should get back into the business of making loans directly to college students. He echoes presidential candidate U.S. Sen. Barack Obama’s recent statement that all federal student loans should be under the government rather than through federally guaranteed bank loans, which have been under national scrutiny for potential conflicts of interest lately.

Statewide smoking ban exemption?
Rep. Lou Lang, a Skokie Democrat and frequent sponsor of gaming legislation, said while he voted for the statewide smoking ban, he supports an effort to grant a five-year exemption for casinos that operate on Illinois’ borders. He said they’re at a severe disadvantage to casinos less than five miles over the Missouri or Indiana borders that allow people to smoke. He expects an uphill battle in pushing for the exemption. The effort is starting in the Senate, where it’s already being delayed by a bunch of procedural tactics to prevent the opening the crack to reversals before the actual ban is signed by the governor.

A call for fiscal restraint ignored
Despite Senate Minority Leader Frank Watson’s pleas with legislators to halt to state overspending, the Senate joined the House in approving a measure that would start a pilot project to provide health care for the uninsured in Kane County. The program is designed provide additional health services to people who don’t qualify for any other form of public aid. “We don’t have a revenue problem,” Watson said, urging his peers to reject the idea. “We have a spending problem.”

However, Sen. Linda Holmes, an Aurora Democrat, said recent closing of clinics and the slashing of services used by the uninsured and the underinsured increase the need for drug assistance, diagnostic testing and extra state aid. A lot of Kane County residents use clinics in neighboring Cook County, but Cook County Board president Todd Stroger proposed closing more than a dozen medical clinics and cutting some health services provided by Cook County hospital earlier this year.

HIV testing gains momentum
HIV testing and counseling may soon become a routine part of prenatal care under a measure approved by both chambers. If the governor signs it, all expectant mothers would receive counseling prior to being tested. If she opted out of testing, her refusal would be documented in her medical records.

In another step for HIV testing, the House approved a measure that would make HIV testing a part of annual physicals. Doctors would offer the testing during routine blood tests. Patients would have to consent before being tested. However, refusals would be documented in their medical records. Earlier this session, Ford faced a lot of opposition from AIDS advocacy groups that were concerned that the measure would mandate testing, taking the choice away from patients. The Chicago Democrat compromised.

Prison time for Internet creeps
Sexual predators caught engaging in illicit chats with minors on the Internet would get sent to prison if the governor signs a TEXT
http://www.ilga.gov/legislation/billstatus.asp?DocNum=2858&GAID=9&GA=95&DocTypeID=HB&LegID=31692&SessionID=51 measure now on his desk. Such predators would face felony charges for using the Internet to lure underage victims or anyone they believed to be a child. “Unfortunately, sexual predators are using this new technology as a means to gain access to children,” says Rep. Tom Cross in a press release. “This bill will help law enforcement to intervene and prevent meetings before they are arranged.”

Oprah Winfrey Week
Oprah Winfrey will get an entire week of observance in Illinois starting next February’s first week of Black History Month. Both chambers approved a measure to recognize her accomplishments in and contributions to media, publishing, film, philanthropy, education, health and fitness.

Mayor Daley rocks Springfield

Well, not really, but charter public school students from Chicago gave Mayor Richard Daley the star treatment —pictures, screeches and all — when he visited the Capitol Wednesday afternoon. Daley was in Springfield to meet with state lawmakers and to host the annual Taste of Chicago in Springfield. After meeting with each Democratic and Republican leader of both chambers for a brief, and I mean brief, meeting, he spoke to Democratic lawmakers in the afternoon.

“You could have heard a pin drop in that room because he’s that kind of force,” said Rep. Lou Lang, a Skokie Democrat in the afternoon meeting. Although, he added, “I don’t think we heard anything in that room that was surprising.” He said the mayor is anxious to make sure that education, particularly in Chicago, has a “bigger bite of the apple” and that funding comes through for mass transit and other infrastructure needs.

The governor, the mayor and Senate President Emil Jones Jr. briefly met this evening. When they came out of the governor’s office, they only joked about the Chicago Cubs vs. White Sox baseball rival, not about the $55 billion or more state budget in limbo with less than 12 days left in the scheduled spring session.

In the wake of a dismal House vote opposing the governor’s gross receipts tax proposal, such other revenue ideas as gaming are entering the mix. Lang, the chief sponsor of gaming legislation that would create four casinos in the Chicago area, isn’t giving up on his idea that could generate between $2 billion and $3 billion a year if approved. “The time will come in the not too distant future that we’ll be taking a vote on that legislation, and I think it’ll have a reasonable chance of passing,” he said. He’s tried and failed multiple times before, but he said he thinks “the demise of the gross receipts tax is actually going to be helpful in my effort to pass this.”

By Deanese Williams-Harris
Meanwhile, lawmakers talked about the governor’s attempted ban on violent video games for minors and its cost to the state in legal fees. We wrote about it in our May issue (see page 10).

Bob Greenley, the governor’s deputy chief of staff, and Matt Ryan, the governor’s deputy general counsel, sat in the hot seat as they testified to a House committee that the plaintiff's legal fees amounted to more than $500,000, and multiple state agencies footed the bill.

“How do we raid government agency [funds] to pay for legal fees?” said committee chairman Rep. Jack Franks, a Woodstock Democrat. “We’ve spent over a million dollars on a glorified governor press release.”

Rep. Robert Pritchard, a Sycamore Republican, rehashed a floor debate where legislators argued that the law violated First Amendment rights. In committee, Ryan said a similar measure in Indiana was found unconstitutional before Blagojevich drafted his ban, but the governor pursued it anyway.

Committee members repeatedly said the governor’s office and the attorney general’s office should have been responsible for the legal fees. Greenley said the fees were paid out of a general state fund, which he says is legal.

“It may be legal, but it doesn’t seem to be good policy,” Franks said.

The committee will meet again once the administration submits more information to the committee.