The mess over electricity rates just got messier. Illinois Attorney General Lisa Madigan filed a complaint with the Federal Energy Regulatory Commission to allege that 15 power companies manipulated a power auction last September. The auction set electricity prices for Ameren Illinois and Commonwealth Edison, which buy power and distribute it to homes and businesses. Madigan’s office says the auction set unfair prices that cost Illinois consumers an extra $4.3 billion.
The complaint cites evidence, some of which is blacked out for the public. For instance, it says ComEd’s parent company, Exelon Generation, won 97 percent of the 41-month ComEd contracts.
Madigan, along with Lt. Gov. Pat Quinn, has opposed the so-called reverse power auction from the beginning, saying it violates the intent of the 1997 state law that set the stage for today’s “deregulation” process.
Today also marks the day that Ameren Illinois has to answer the first batch of questions from the Illinois Commerce Commission, but spokeswoman Beth Bosch says the commission will have to review the answers before deciding whether they’ll be public. She adds that the commission is scheduled to meet at 1:30 p.m. Tuesday and 10:30 a.m. Wednesday in Springfield. Ameren’s invited to the Tuesday meeting. We’ll see if we can hear some of those answers.
Friday, March 16, 2007
Wednesday, March 14, 2007
ICC calls Ameren to account
This just in: The Illinois Commerce Commission asked Ameren in a letter to explain all the threats they’re making about how a negative credit rating (see the March 13 blog below) would lead to drastic measures and hurt customer service. Specifically, the commission demands explanation of why the company would resort to laying off between 700 and 800 workers and delaying projects and connections when the higher 2007 rates should cover those costs (the commission allowed the downstate utility to collect $96.7 million from customers to cover operating costs and to get a fair return on investments). And the commission points out that the Ameren Illinois utilities paid millions that padded the pockets of shareholders of the parent company, Ameren Corp.
The commission set deadlines for Ameren to answer some questions by March 16 and the rest by March 28.
Hell freezing over in the Senate?
The Senate previously rejected the idea to freeze electricity rates again. Committee action today could potentially shift the winds, but the coast still isn’t clear.
Seven Senate Democrats approved legislation that led Moody’s Investors Service to give a negative outlook for Ameren Illinois’ credit rating (see the March 13 blog below for the story).
After starting an hour late, the Senate Environment and Energy Committee took a break to gather enough votes to approve Sen. Gary Forby’s legislation (see amendment 2). It would roll back Ameren's electricity rates to the December 2006 level and freeze them for a year, which Froby said would buy time so lawmakers could figure out a more permanent solution to skyrocketing electric bills in downstate Illinois. The four Republicans present voted no.
Forby, a Benton Democrat, said his legislation focuses on Ameren customers and that lawmakers who want to address Commonwealth Edison customers in northern Illinois should introduce a separate measure. He added that he’s got a feeling Senate President Emil Jones Jr., who opposes a rate freeze, would call his bill for Senate floor debate. “I’m pretty convinced, not 100 percent convinced, but I’m pretty convinced that he’s going to let my bill run,” Forby said.
Jones’ spokeswoman, Cindy Davidsmeyer, said, “[Jones’] personal position on a freeze has not changed, but he certainly realizes that the situation with Ameren is very serious.”
As with every other rate freeze proposal, Ameren opposes the measure and threatens financial hardship. But one shoe has already dropped. Ameren spokesman Leigh Morris sent this e-mail Tuesday night in response to the Moody’s credit rating announcement:
“The Ameren Illinois utilities are continuing to evaluate the impact of yesterday’s decision by Moody’s Investors Services to downgrade the issuer credits of the three Ameren Illinois utilities (AmerenCILCO, AmerenCIPS and AmerenIP) to non-investment grade (junk) status. The utilities are carefully evaluating our next steps. It must be noted this credit rating action already has triggered cash collateral demands from several of our natural gas suppliers including banks with which we have financial hedging positions. In addition, the Ameren Illinois utilities believe our ability to acquire long term gas supply will be effected very shortly, which could ultimately drive up costs to our customers and potentially impact system reliability.”
Downstairs in a House committee, Rep. Bill Black moved a bill that would freeze electricity rates just for Ameren’s all-electric customers, who were particularly shocked by higher bills after their discount ended along with the state’s 10-year rate freeze. Black, a Danville Republican, says the year would give the homeowners and businesses time to find an alternative power source or to rewire their homes so they wouldn’t be all-electric anymore.
Black promised the committee that he would amend the bill to remove ComEd from the legislation, although some Chicago lawmakers wanted their all-electric customers to be included in the one-year freeze.
The commission set deadlines for Ameren to answer some questions by March 16 and the rest by March 28.
Hell freezing over in the Senate?
The Senate previously rejected the idea to freeze electricity rates again. Committee action today could potentially shift the winds, but the coast still isn’t clear.
Seven Senate Democrats approved legislation that led Moody’s Investors Service to give a negative outlook for Ameren Illinois’ credit rating (see the March 13 blog below for the story).
After starting an hour late, the Senate Environment and Energy Committee took a break to gather enough votes to approve Sen. Gary Forby’s legislation (see amendment 2). It would roll back Ameren's electricity rates to the December 2006 level and freeze them for a year, which Froby said would buy time so lawmakers could figure out a more permanent solution to skyrocketing electric bills in downstate Illinois. The four Republicans present voted no.
Forby, a Benton Democrat, said his legislation focuses on Ameren customers and that lawmakers who want to address Commonwealth Edison customers in northern Illinois should introduce a separate measure. He added that he’s got a feeling Senate President Emil Jones Jr., who opposes a rate freeze, would call his bill for Senate floor debate. “I’m pretty convinced, not 100 percent convinced, but I’m pretty convinced that he’s going to let my bill run,” Forby said.
Jones’ spokeswoman, Cindy Davidsmeyer, said, “[Jones’] personal position on a freeze has not changed, but he certainly realizes that the situation with Ameren is very serious.”
As with every other rate freeze proposal, Ameren opposes the measure and threatens financial hardship. But one shoe has already dropped. Ameren spokesman Leigh Morris sent this e-mail Tuesday night in response to the Moody’s credit rating announcement:
“The Ameren Illinois utilities are continuing to evaluate the impact of yesterday’s decision by Moody’s Investors Services to downgrade the issuer credits of the three Ameren Illinois utilities (AmerenCILCO, AmerenCIPS and AmerenIP) to non-investment grade (junk) status. The utilities are carefully evaluating our next steps. It must be noted this credit rating action already has triggered cash collateral demands from several of our natural gas suppliers including banks with which we have financial hedging positions. In addition, the Ameren Illinois utilities believe our ability to acquire long term gas supply will be effected very shortly, which could ultimately drive up costs to our customers and potentially impact system reliability.”
Downstairs in a House committee, Rep. Bill Black moved a bill that would freeze electricity rates just for Ameren’s all-electric customers, who were particularly shocked by higher bills after their discount ended along with the state’s 10-year rate freeze. Black, a Danville Republican, says the year would give the homeowners and businesses time to find an alternative power source or to rewire their homes so they wouldn’t be all-electric anymore.
Black promised the committee that he would amend the bill to remove ComEd from the legislation, although some Chicago lawmakers wanted their all-electric customers to be included in the one-year freeze.
Tuesday, March 13, 2007
Reconsidering rebate
Shortly after the Illinois Commerce Commission approved a plan Monday to reimburse some Ameren Illinois customers for high electricity bills, the utility began reconsidering that proposal because Moody’s Investor Service downgraded the utility’s credit rating to junk status. That makes it more expensive for Ameren to borrow money, says spokesman Leigh Morris. “But it creates tremendous problems for the company and it puts at risk all of the programs we have in play.”
Currently at risk is Ameren’s latest plan to spend $20 million (using $10 million of its own money and borrowing the other $10 million) to reimburse customers who use a lot of electricity, mainly residents who use only electricity to heat their homes. The plan also would stop charging interest on the customers who have chosen to phase in their rate increases over three years. As of Tuesday morning, Morris says Ameren still hasn’t declared whether it would take the plan off the table.
But in its March 7 filing with the Illinois Commerce Commission, Ameren warns the $20 million plan would end if its credit rating status were downgraded to junk.
The utility, which serves 1.2 million electric customers downstate, and the Illinois Commerce Commission have been under scrutiny for increases in electricity rates since a 10-year rate freeze expired in January. Ameren’s all-electric customers have gotten bills that have increased an average of 90 percent to 150 percent over last year’s rates. Lawmakers are still trying to move legislation to return all electricity rates to their 2006 level, when rates were frozen. The pending legislation was a factor in Moody’s decision to downgrade the utility’s credit rating.
Currently at risk is Ameren’s latest plan to spend $20 million (using $10 million of its own money and borrowing the other $10 million) to reimburse customers who use a lot of electricity, mainly residents who use only electricity to heat their homes. The plan also would stop charging interest on the customers who have chosen to phase in their rate increases over three years. As of Tuesday morning, Morris says Ameren still hasn’t declared whether it would take the plan off the table.
But in its March 7 filing with the Illinois Commerce Commission, Ameren warns the $20 million plan would end if its credit rating status were downgraded to junk.
The utility, which serves 1.2 million electric customers downstate, and the Illinois Commerce Commission have been under scrutiny for increases in electricity rates since a 10-year rate freeze expired in January. Ameren’s all-electric customers have gotten bills that have increased an average of 90 percent to 150 percent over last year’s rates. Lawmakers are still trying to move legislation to return all electricity rates to their 2006 level, when rates were frozen. The pending legislation was a factor in Moody’s decision to downgrade the utility’s credit rating.
Wednesday, March 07, 2007
Budget reaction
Gov. Rod Blagojevich’s budget proposal for the next fiscal year now goes to the General Assembly. Many Democratic and some Republican lawmakers applauded parts of his plan, but there’s a lot of negotiating to be done before the spring session’s constitutional deadline of May 31. (I’m not holding my breath that they’ll adjourn by then.) Deanese Williams-Harris and I gathered some reaction from lawmakers on Budget Day:
See highlights of the governor’s budget proposal in the “governor’s moral imperative” blog entry below.
Senate President Emil Jones Jr.
He says he supports the governor’s entire plan and doesn’t have anything he wants to change right now. While he supports the tax on business’ gross receipts (because it would be fairer than the current tax on corporate income), he leaves the door open to other revenue ideas.
Specifically — and significantly — Jones says four new casinos in the Chicago area are still on the table. And that could possibly be linked to a capital plan for school and road construction. He also says senators are talking with utilities and that a tax on power generators is something to consider for easing electricity rates, although he’s not revealing his stance on the subject, yet. He flat out opposes another regulatory freeze on electricity rates because he says it would “only delay the inevitable.”
Rep. Lou Lang, a Skokie Democrat
He introduced gaming legislation to create four new casinos in the Chicago area, which he expects could generate $2.3 billion to $3.5 billion this year. The governor didn’t mention gaming in his budget address.
“I think that to ignore the obvious economic development and revenue that we could get by making some changes in gaming laws is short-sighted. I did notice that while he didn’t mention it, his budget plan includes new taxes on casinos. And so it’s a tremendous source of revenue for our state, and to make it more difficult for them to do their work, to make it more difficult for them to create jobs or build things all over the state of Illinois, I think he’s putting a road block in front of a business that simply wants to invest in Illinois. I think we need to do more in that area.”
“I think my plan regarding gaming and his plan might find a way to mesh. And we need to sit down and talk about balance. I’ve got a bill that would generate $2 or $3 billion. I don’t think we should ignore that. And I’d do it without a tax increase. The governor’s proposal today will raise several billion dollars, but it’s taxes. No matter what he calls it, it’s taxes.”
House Minority Leader Tom Cross of Oswego
About the gross receipts tax: “Call this what you want. It’s a tax on consumers. What’s interesting about today and the speech is that everything is connected. The concern you would have about lottery is that you’re giving up $620 million in annual revenue. And the governor would say, I suppose, that if you do GRT it wouldn’t matter.”
“I’m not embracing [the idea to lease the lottery], but I’m not outright dismissing it. The thing about the lottery is, ‘What would be the conditions of the lease? What would the company that comes in and gives us money demand?’ Might be some good, might be some bad.”
About education: “No one is talking today about how to ensure a quality education. I don’t know if everybody accepts the premise that if you throw $1.5 billion into schools, then all of a sudden you’re going to end up with a perfect product. We need to focus our attention on how we can end up with a quality education and a quality product at the end of the day and not just have a discussion about money.”
Sen. Minority Leader Watson of Greenville
About the governor’s spending plans: “This is the largest spending increase in the history of the state, the largest tax increase in the history of the state,” he says. “Another $16 billion in borrowing, and what troubles me greatly is to see the debt being piled upon debt.”
About universal health care: “Fifteen percent of people in Illinois do not have health care insurance, and I feel bad for them. But is it the government’s responsibility to take care of them from birth to the grave?”
About electricity rates: “The issue of the day is what’s happening with people getting their power? To not even spend four sentences on the power rate issue and then have the audacity to say I’ll sign whatever bill you agree to, that’s not leadership.”
About the gross receipts tax: “The consumer is who pays taxes in Illinois, and for him to stand there and say that this isn’t going to be an increase on taxes to the consumer is totally misleading to the public. There’s a certain amount of class warfare that’s being developed by these kinds of policies. It’s a hidden tax and those are the worse kind.”
Sen. James Meeks, a Chicago Democrat
He’s sponsoring the education reform proposal in Senate Bill 750, which we explain in our “Moneymakers” blog entry February 9, 2007.
“Generating new dollars for education is great, but true education reform is going to have to deal with property tax relief.” Under the governor's plan, Meeks says, “Those who are paying property taxes that are too high now, there is no room for relief for them.”
Sen. Christine Radogno, a Lemont Republican
She’s the Senate GOP budget negotiator and last year’s Republican candidate for treasurer.
About the gross receipts tax: “The consumers will be paying that. The assertion that he made in the speech over and over again — it’s corporate, not people — is just baloney. Corporations don’t have bank accounts and checkbooks the way a family does. There’s really no such entity. It’s a legal entity. There’s no question a $6 billion tax increase is going to be paid by people. If it was not going to be paid by people, why would he exempt food and drugs? Because he knows it’s going to apply to people. It is a sales tax that is embedded throughout the system, and people will pay it. They won’t be able to see it, but they will pay it, there’s no question.”
About pension bonding: “There are ways to do it that could be positive. The question is what are the details of his plan, and that’s oftentimes the problem with this administration: We don’t see the details. We’ll have to see how the bonds are structured, whether he’s going to take some of that bond money out to use as cash for budget relief today instead of putting it all in [pensions]. I would take a look at that, for sure.”
See highlights of the governor’s budget proposal in the “governor’s moral imperative” blog entry below.
Senate President Emil Jones Jr.
He says he supports the governor’s entire plan and doesn’t have anything he wants to change right now. While he supports the tax on business’ gross receipts (because it would be fairer than the current tax on corporate income), he leaves the door open to other revenue ideas.
Specifically — and significantly — Jones says four new casinos in the Chicago area are still on the table. And that could possibly be linked to a capital plan for school and road construction. He also says senators are talking with utilities and that a tax on power generators is something to consider for easing electricity rates, although he’s not revealing his stance on the subject, yet. He flat out opposes another regulatory freeze on electricity rates because he says it would “only delay the inevitable.”
Rep. Lou Lang, a Skokie Democrat
He introduced gaming legislation to create four new casinos in the Chicago area, which he expects could generate $2.3 billion to $3.5 billion this year. The governor didn’t mention gaming in his budget address.
“I think that to ignore the obvious economic development and revenue that we could get by making some changes in gaming laws is short-sighted. I did notice that while he didn’t mention it, his budget plan includes new taxes on casinos. And so it’s a tremendous source of revenue for our state, and to make it more difficult for them to do their work, to make it more difficult for them to create jobs or build things all over the state of Illinois, I think he’s putting a road block in front of a business that simply wants to invest in Illinois. I think we need to do more in that area.”
“I think my plan regarding gaming and his plan might find a way to mesh. And we need to sit down and talk about balance. I’ve got a bill that would generate $2 or $3 billion. I don’t think we should ignore that. And I’d do it without a tax increase. The governor’s proposal today will raise several billion dollars, but it’s taxes. No matter what he calls it, it’s taxes.”
House Minority Leader Tom Cross of Oswego
About the gross receipts tax: “Call this what you want. It’s a tax on consumers. What’s interesting about today and the speech is that everything is connected. The concern you would have about lottery is that you’re giving up $620 million in annual revenue. And the governor would say, I suppose, that if you do GRT it wouldn’t matter.”
“I’m not embracing [the idea to lease the lottery], but I’m not outright dismissing it. The thing about the lottery is, ‘What would be the conditions of the lease? What would the company that comes in and gives us money demand?’ Might be some good, might be some bad.”
About education: “No one is talking today about how to ensure a quality education. I don’t know if everybody accepts the premise that if you throw $1.5 billion into schools, then all of a sudden you’re going to end up with a perfect product. We need to focus our attention on how we can end up with a quality education and a quality product at the end of the day and not just have a discussion about money.”
Sen. Minority Leader Watson of Greenville
About the governor’s spending plans: “This is the largest spending increase in the history of the state, the largest tax increase in the history of the state,” he says. “Another $16 billion in borrowing, and what troubles me greatly is to see the debt being piled upon debt.”
About universal health care: “Fifteen percent of people in Illinois do not have health care insurance, and I feel bad for them. But is it the government’s responsibility to take care of them from birth to the grave?”
About electricity rates: “The issue of the day is what’s happening with people getting their power? To not even spend four sentences on the power rate issue and then have the audacity to say I’ll sign whatever bill you agree to, that’s not leadership.”
About the gross receipts tax: “The consumer is who pays taxes in Illinois, and for him to stand there and say that this isn’t going to be an increase on taxes to the consumer is totally misleading to the public. There’s a certain amount of class warfare that’s being developed by these kinds of policies. It’s a hidden tax and those are the worse kind.”
Sen. James Meeks, a Chicago Democrat
He’s sponsoring the education reform proposal in Senate Bill 750, which we explain in our “Moneymakers” blog entry February 9, 2007.
“Generating new dollars for education is great, but true education reform is going to have to deal with property tax relief.” Under the governor's plan, Meeks says, “Those who are paying property taxes that are too high now, there is no room for relief for them.”
Sen. Christine Radogno, a Lemont Republican
She’s the Senate GOP budget negotiator and last year’s Republican candidate for treasurer.
About the gross receipts tax: “The consumers will be paying that. The assertion that he made in the speech over and over again — it’s corporate, not people — is just baloney. Corporations don’t have bank accounts and checkbooks the way a family does. There’s really no such entity. It’s a legal entity. There’s no question a $6 billion tax increase is going to be paid by people. If it was not going to be paid by people, why would he exempt food and drugs? Because he knows it’s going to apply to people. It is a sales tax that is embedded throughout the system, and people will pay it. They won’t be able to see it, but they will pay it, there’s no question.”
About pension bonding: “There are ways to do it that could be positive. The question is what are the details of his plan, and that’s oftentimes the problem with this administration: We don’t see the details. We’ll have to see how the bonds are structured, whether he’s going to take some of that bond money out to use as cash for budget relief today instead of putting it all in [pensions]. I would take a look at that, for sure.”
The governor's "moral imperative"
Gov. Rod Blagojevich proposed levying new taxes and floating bonds pay for his spending plans, particularly “universal health care,” education and pension obligations. Here’s the breakdown. Reaction from legislators and groups from around the state will come in the next blog.
Taxes
Governor: “This will ease the burden on the middle class and force big corporations to start paying their fair share.”
Businesses aren’t so excited about the new taxes, one of which — the gross receipts tax — would tax every Illinois-based business input as it goes through the distribution chain. Think of it in terms of two key factors — how many steps are in the supply chain and how many of those steps happen in Illinois — says Tom Johnson, president of the Taxpayers’ Federation of Illinois. (See his highlights of the budget here.) While the governor says five other states tax business’ gross receipts, Johnson says the governor’s plan as it would be applied could make Illinois unique and, therefore, at risk of losing a competitive edge.
The governor’s tax idea, expected to net of $6 billion a year, would eliminate the corporate income tax and phase in a tax on business’ gross receipts. That’s an alternative to expanding the state sales tax to such services as haircuts and car repairs. Some lawmakers and education groups prefer the sales tax expansion as a way to reform education funding and to relieve the burden on property taxpayers.
John Filan, the former budget director and current chief executive officer for the state, said Tuesday night that a gross receipts tax would be “less onerous” than an expanded sales tax because it’s broad-based and low-rate. However, Johnson says the gross receipts tax is not as low-rate as it seems on the surface, and there’s a risk that businesses would move part of their supply chains out of state to avoid the tax. “Companies that don’t make a profit would have a liability they didn’t have before,” he said last week at a Statehouse press briefing.
The other tax that’s likely to raise opposition, particularly among small businesses, is a 3 percent tax if employers don’t offer comprehensive health benefits to employees. The so-called payroll tax is expected to generate $1 billion a year, which the governor would use to help fund his new $2.1 billion health care program.
Health care
Governor: “First, we will cover the 1.4 million uninsured adults in Illinois. Second, we will help provide assistance to middle-class families so they can get, keep and afford the health care they need. Third, we will help small businesses pay for health insurance for their workers.”
Illinois Covered offers three types of plans. One gives state subsidies to help people pay for their private insurance plans if they don’t get medical benefits through their employers. Another offers rebates to help individuals or families pay their monthly insurance premiums if they have employer-based plans. And a third expands the public aid program FamilyCare for single adults who have children or for families with incomes at 400 percent of the federal poverty level ($80,000 a year for a family of four).
And businesses that have more than 10 employees and that don’t pay for at least 70 percent of employees’ health benefits will be assessed a 3 percent tax on their total payroll.
Education
Governor: “Ten billion new dollars [over four years] will help relieve the pressure on local property taxes and finally bring an end to the savage inequality in how we fund our schools.”
For fiscal year 2008 that starts July 1, he proposes spending $1.5 billion on education. Some of that money would increase the state minimum spent per student by $686, bringing the minimum to $6,020. Students would have more options for after-school tutoring, and the school year and school day would be extended.
He also would increase the reimbursement rate for special education teachers for the first time in 20 years.
Early childhood education would get $70 million to expand state-sponsored preschool for children of low- and middle-income families and $10 million for all-day kindergarten.
Teachers would have access to statewide mentoring programs and have incentives to work in schools with limited resources and poor test scores. The governor proposes working with teachers’ unions to develop “merit-based pay,” which would reward teachers whose students meet federal testing standards.
But perhaps most important to hundreds of districts that have been on a waiting for state capital funds to build new schools or do maintenance projects, the governor proposes $1.5 billion over three years for school construction.
Pensions
Governor: “Our plan will free up an asset like the [Illinois] Lottery, lease it, generate $10 to $12 billion and put that toward our pension obligation. That, along with another pension bond refinancing, will put an infusion of $26 billion into the system and bring down our liability from $41 billion to $15 billion.”
He wants to float $16 billion in pension obligation bonds and rely on $10 billion from leasing the Illinois Lottery. Filan says paying down the pension debt from $41 billion to $15 billion would require less drastic increases in the state’s annual pension contributions. He says increased investment returns would help pay off the debt.
Ginger Ostro, the governor’s budget director, adds private operators could run the lottery more efficiently because they’re more nimble and can respond better to the market.
Watch list
What wasn’t on the governor’s list of revenue ideas was an expansion of gaming. Instead, his administration is proposing a new renewal fee on gaming licenses. Meanwhile, state Rep. Lou Lang, a Skokie Democrat, has sponsored legislation to create four new casinos in the Chicago area. See more reaction in the next blog.
Watch for legislation that would consolidate some of the state’s 621 special funds dedicated for such services as youth alcoholism and substance abuse and veterans’ rehabilitation. As with other governors, Blagojevich has swept some surpluses of the funds to pad the state’s main checkbook called the general revenue fund. Some of those funds could be merged into the general revenue fund to shore up the state’s “rainy day” fund.
Taxes
Governor: “This will ease the burden on the middle class and force big corporations to start paying their fair share.”
Businesses aren’t so excited about the new taxes, one of which — the gross receipts tax — would tax every Illinois-based business input as it goes through the distribution chain. Think of it in terms of two key factors — how many steps are in the supply chain and how many of those steps happen in Illinois — says Tom Johnson, president of the Taxpayers’ Federation of Illinois. (See his highlights of the budget here.) While the governor says five other states tax business’ gross receipts, Johnson says the governor’s plan as it would be applied could make Illinois unique and, therefore, at risk of losing a competitive edge.
The governor’s tax idea, expected to net of $6 billion a year, would eliminate the corporate income tax and phase in a tax on business’ gross receipts. That’s an alternative to expanding the state sales tax to such services as haircuts and car repairs. Some lawmakers and education groups prefer the sales tax expansion as a way to reform education funding and to relieve the burden on property taxpayers.
John Filan, the former budget director and current chief executive officer for the state, said Tuesday night that a gross receipts tax would be “less onerous” than an expanded sales tax because it’s broad-based and low-rate. However, Johnson says the gross receipts tax is not as low-rate as it seems on the surface, and there’s a risk that businesses would move part of their supply chains out of state to avoid the tax. “Companies that don’t make a profit would have a liability they didn’t have before,” he said last week at a Statehouse press briefing.
The other tax that’s likely to raise opposition, particularly among small businesses, is a 3 percent tax if employers don’t offer comprehensive health benefits to employees. The so-called payroll tax is expected to generate $1 billion a year, which the governor would use to help fund his new $2.1 billion health care program.
Health care
Governor: “First, we will cover the 1.4 million uninsured adults in Illinois. Second, we will help provide assistance to middle-class families so they can get, keep and afford the health care they need. Third, we will help small businesses pay for health insurance for their workers.”
Illinois Covered offers three types of plans. One gives state subsidies to help people pay for their private insurance plans if they don’t get medical benefits through their employers. Another offers rebates to help individuals or families pay their monthly insurance premiums if they have employer-based plans. And a third expands the public aid program FamilyCare for single adults who have children or for families with incomes at 400 percent of the federal poverty level ($80,000 a year for a family of four).
And businesses that have more than 10 employees and that don’t pay for at least 70 percent of employees’ health benefits will be assessed a 3 percent tax on their total payroll.
Education
Governor: “Ten billion new dollars [over four years] will help relieve the pressure on local property taxes and finally bring an end to the savage inequality in how we fund our schools.”
For fiscal year 2008 that starts July 1, he proposes spending $1.5 billion on education. Some of that money would increase the state minimum spent per student by $686, bringing the minimum to $6,020. Students would have more options for after-school tutoring, and the school year and school day would be extended.
He also would increase the reimbursement rate for special education teachers for the first time in 20 years.
Early childhood education would get $70 million to expand state-sponsored preschool for children of low- and middle-income families and $10 million for all-day kindergarten.
Teachers would have access to statewide mentoring programs and have incentives to work in schools with limited resources and poor test scores. The governor proposes working with teachers’ unions to develop “merit-based pay,” which would reward teachers whose students meet federal testing standards.
But perhaps most important to hundreds of districts that have been on a waiting for state capital funds to build new schools or do maintenance projects, the governor proposes $1.5 billion over three years for school construction.
Pensions
Governor: “Our plan will free up an asset like the [Illinois] Lottery, lease it, generate $10 to $12 billion and put that toward our pension obligation. That, along with another pension bond refinancing, will put an infusion of $26 billion into the system and bring down our liability from $41 billion to $15 billion.”
He wants to float $16 billion in pension obligation bonds and rely on $10 billion from leasing the Illinois Lottery. Filan says paying down the pension debt from $41 billion to $15 billion would require less drastic increases in the state’s annual pension contributions. He says increased investment returns would help pay off the debt.
Ginger Ostro, the governor’s budget director, adds private operators could run the lottery more efficiently because they’re more nimble and can respond better to the market.
Watch list
What wasn’t on the governor’s list of revenue ideas was an expansion of gaming. Instead, his administration is proposing a new renewal fee on gaming licenses. Meanwhile, state Rep. Lou Lang, a Skokie Democrat, has sponsored legislation to create four new casinos in the Chicago area. See more reaction in the next blog.
Watch for legislation that would consolidate some of the state’s 621 special funds dedicated for such services as youth alcoholism and substance abuse and veterans’ rehabilitation. As with other governors, Blagojevich has swept some surpluses of the funds to pad the state’s main checkbook called the general revenue fund. Some of those funds could be merged into the general revenue fund to shore up the state’s “rainy day” fund.
Budget highlights
Tom Johnson, tax expert and president of the Taxpayers' Federation of Illinois, breaks down Gov. Rod Blagojevich's budget proposal for the next fiscal year with these highlights. The governor will give his annual budget address and combined State of the State to the General Assembly at noon today. We'll provide updates and reaction as much as we can throughout the day. And, as always, see Illinois Issues magazine for more in-depth coverage in the issue that publishes April 1.
Tuesday, February 27, 2007
Utility campaign contributions
The House conducted a rare Committee of the Whole Tuesday that included hours of testimony about Illinois’ electricity rates. Commonwealth Edison and Ameren Illinois customers have experienced increases ranging from 24 percent to as high as 300 percent (anecdotally) since a decade-long freeze was lifted on electric rates in January. A lot of downstate legislators have gotten earfuls from constituents, particularly those who use only electrical power. The electric-only customers of Ameren Illinois have been hit the hardest, leading Democrats and Republicans to raise a storm of opposition to the current rate-setting process.
Those lawmakers want immediate action, but the committee didn’t take a vote on any proposed solutions (the most recent being Rep. George Scully’s House Bill 1750 that would reinstate the rate freeze and refund customers with interest). The governor wasn’t present, and the Senate wasn’t involved. There’s no telling how long a compromise to relieve electricity rates could take, if it could happen at all this session. Senate President Emil Jones Jr. has said he opposes reinstating a rate freeze.
The debate has become particularly political because the major utilities have a huge stake in the outcome, and they’ve been putting their money where their mouth is by donating to political campaigns in recent elections.
The Campaign for Political Reform says Commonwealth Edison is a “career patron” of Senate President Emil Jones, Senate Republican Leader Frank Watson and House Republican Leader Tom Cross. Records from the group’s Sunshine Database show ComEd gave $2,429,000 from January 1, 1993, through June 30, 2006, to candidates for Illinois statewide candidates and legislative candidates. Of that, 53 percent was contributed to Republicans.
Cross also received $22,000 from Ameren Illinois’ political action committee in 2005 and 2006. House Speaker Michael Madigan received $50,000 total from Ameren Illinois between 2003 and 2006. He also received $15,000 from the interest group for Dynegy, the utility that purchased Illinois Power before it merged with Ameren Illinois the election cycle before that.
You can find more campaign donations at the Campaign for Political Reform’s Sunshine Database.
For more context on the electricity challenge faced by state officials, see our December blogs and our feature about the Illinois Commerce Commission.
Those lawmakers want immediate action, but the committee didn’t take a vote on any proposed solutions (the most recent being Rep. George Scully’s House Bill 1750 that would reinstate the rate freeze and refund customers with interest). The governor wasn’t present, and the Senate wasn’t involved. There’s no telling how long a compromise to relieve electricity rates could take, if it could happen at all this session. Senate President Emil Jones Jr. has said he opposes reinstating a rate freeze.
The debate has become particularly political because the major utilities have a huge stake in the outcome, and they’ve been putting their money where their mouth is by donating to political campaigns in recent elections.
The Campaign for Political Reform says Commonwealth Edison is a “career patron” of Senate President Emil Jones, Senate Republican Leader Frank Watson and House Republican Leader Tom Cross. Records from the group’s Sunshine Database show ComEd gave $2,429,000 from January 1, 1993, through June 30, 2006, to candidates for Illinois statewide candidates and legislative candidates. Of that, 53 percent was contributed to Republicans.
Cross also received $22,000 from Ameren Illinois’ political action committee in 2005 and 2006. House Speaker Michael Madigan received $50,000 total from Ameren Illinois between 2003 and 2006. He also received $15,000 from the interest group for Dynegy, the utility that purchased Illinois Power before it merged with Ameren Illinois the election cycle before that.
You can find more campaign donations at the Campaign for Political Reform’s Sunshine Database.
For more context on the electricity challenge faced by state officials, see our December blogs and our feature about the Illinois Commerce Commission.
Thursday, February 15, 2007
TGIF
Nothing has gone as planned this week, so here are some links that could be useful throughout the spring session. They provide thinking points about 1) the Illinois GOP, 2) Illinois poverty and 3) Illinois' financial health (and other major policy issues).
1) The House Republican’s new brainstorming Web site
2) The Illinois Poverty Summit’s 2007 report (More information here)
3) The Institute of Government and Public Affairs’ 2007 report (IGPA is a public policy research unit comprised of researchers at the University of Illinois' three campuses.)
1) The House Republican’s new brainstorming Web site
2) The Illinois Poverty Summit’s 2007 report (More information here)
3) The Institute of Government and Public Affairs’ 2007 report (IGPA is a public policy research unit comprised of researchers at the University of Illinois' three campuses.)
Saturday, February 10, 2007
Obama for president
Thousands of people — kids in snow pants, adults in long johns — saw U.S. Sen. Barack Obama’s breath as he said the highly anticipated words, "Today, I announce my candidacy for the president of the United States," on the backdrop of the Old State Capitol in Springfield Saturday morning.
They heard him propose a form of universal health care by the end of the next president’s term and promise a plan to bring U.S. troops home from Iraq by March 2008. But they didn't hear any details of the plans. You can listen here.
He entered the stage with his wife, Michelle, and their two daughters. One of the first thing he said: “We all made this journey for a reason. It’s humbling to see a crowd like this, but in my heart I know you didn’t just come here for me (some people yelled, ‘Yes we did’). No. You came here because you believe in what this country can be. In the face of war, you believe there can be peace. In the face of despair, you believe there can be hope. In the face of a politic that’s shut you out, that’s told you to settle, that’s divided us for too long, you believe that we can be one people, reaching out for one possible, building that more perfect union. That’s the journey we're on today.”
He smiled and laughed throughout the rest of his speech, but when he spoke of Iraq, his voice was low, deliberate and calm. When he spoke of health care and ethics in government, he raised his voice and his volume to rekindle the crowd. By far, the most energetic responses were to his comments about establishing universal health care and removing troops from a civil war in Iraq.
The scene fit the image of a presidential campaign: a huge American flag hung the Pease’s Fine Candies building with others between the pillars of a bank. Supporters waved blue Obama signs. Guards with bulletproof vests and binoculars surveyed the crowd from the top of three buildings.
The public gathered a couple of hours before gates opened 9 a.m. State, federal and local officials filled the gates first. Some people came to see “history in the making,” a common phrase this morning. Others were skeptics who wanted to see what was the big deal about Obama. One anti-abortion group held graphic signs and chanted against Obama’s belief that a woman has the right to choose to have an abortion.
The number of media was amazing. Some crews waited in line as early as 3:30 a.m. to secure a good spot when the media gates opened at 5 a.m. Local and international reporters from as far as Japan stood on three, multi-level stages lining the grounds. A British reporter told me that he would expect this size of a gathering in the final stretch of a presidential run, but not the first. Canadian reporter Beth Gorham, Washington correspondent for the Canadian Press, said people in her country feel curious about the potential of the first black or first woman president of the United States. She said people also were simply interested in knowing more about the man behind the buzz.
U.S. Sen. Dick Durbin of Springfield, stepped onto the stage first and introduced Obama. Without saying Obama was the next Abraham Lincoln, Durbin did say Lincoln’s journey included skeptics who wondered whether he could meet the challenges of his time. Earlier, Durbin said Obama’s life experiences would inspire people to support him. “To rise to the position of being the editor of the Harvard Law Review, that says a lot. And then to make the decision not to cash in and make a lot of money as a lawyer, but rather become a civil rights lawyer working for poor people in the city of Chicago, community organizer, all these things tell me where his values are.”
After the event, Gov. Rod Blagojevich told one group of reporters after another: “The whole thing was great, especially his focus on health care for everybody. That’s a tremendous objective. Our objective is to get it done here in Illinois. So when Sen. Obama becomes president, all he has to do it get it done in 49 states instead of 50.”
State Sen. James Meeks, a Chicago Democrat, said he thinks Obama has a “great chance” to appeal to the masses because he's "uniter, not a divider." He added that he thinks Obama is not a political insider tainted by lobbying dollars.
Bethany’s perspective
I’ve never been so thankful for hand warmers and soccer socks. It was so cold that ink froze in my pens (good thing I had a few pencils), battery juice froze in my camera, and my digital recorder was stuck in the “on” position. I was lucky enough to score a good spot by one of the media stages. I knew what to expect with the size of the crowd, but it started to hit me just how big this day was when I felt the entire audience take a deep breath and stand on its toes when Durbin welcomed Obama to the stage, the music picked up and he came closer into view.
It was pretty neat standing among so many people from so many countries listening to an Illinois senator announce a presidential bid. Yet, many people don't know that much about Obama or his political stances, allowing them to assign any ideal identity to the candidate. We'll have to see how he rides the wave.
Deanese’s perspective
Seven out of eight people I spoke with had the facts wrong about today’s events. The majority believed that Obama was making history by being the first African American to announce a presidential run. Not to shame any of his supporters, but it’s not true. The Rev. Jesse Jackson, Al Sharpton, Carol Mosley Braun and Shirley Chisholm have all made steps towards the White House in earlier races. Chisholm was actually the first African American to announce her bid for the presidency on Jan. 23, 1972.
They heard him propose a form of universal health care by the end of the next president’s term and promise a plan to bring U.S. troops home from Iraq by March 2008. But they didn't hear any details of the plans. You can listen here.
He entered the stage with his wife, Michelle, and their two daughters. One of the first thing he said: “We all made this journey for a reason. It’s humbling to see a crowd like this, but in my heart I know you didn’t just come here for me (some people yelled, ‘Yes we did’). No. You came here because you believe in what this country can be. In the face of war, you believe there can be peace. In the face of despair, you believe there can be hope. In the face of a politic that’s shut you out, that’s told you to settle, that’s divided us for too long, you believe that we can be one people, reaching out for one possible, building that more perfect union. That’s the journey we're on today.”
He smiled and laughed throughout the rest of his speech, but when he spoke of Iraq, his voice was low, deliberate and calm. When he spoke of health care and ethics in government, he raised his voice and his volume to rekindle the crowd. By far, the most energetic responses were to his comments about establishing universal health care and removing troops from a civil war in Iraq.
The scene fit the image of a presidential campaign: a huge American flag hung the Pease’s Fine Candies building with others between the pillars of a bank. Supporters waved blue Obama signs. Guards with bulletproof vests and binoculars surveyed the crowd from the top of three buildings.
The public gathered a couple of hours before gates opened 9 a.m. State, federal and local officials filled the gates first. Some people came to see “history in the making,” a common phrase this morning. Others were skeptics who wanted to see what was the big deal about Obama. One anti-abortion group held graphic signs and chanted against Obama’s belief that a woman has the right to choose to have an abortion.
The number of media was amazing. Some crews waited in line as early as 3:30 a.m. to secure a good spot when the media gates opened at 5 a.m. Local and international reporters from as far as Japan stood on three, multi-level stages lining the grounds. A British reporter told me that he would expect this size of a gathering in the final stretch of a presidential run, but not the first. Canadian reporter Beth Gorham, Washington correspondent for the Canadian Press, said people in her country feel curious about the potential of the first black or first woman president of the United States. She said people also were simply interested in knowing more about the man behind the buzz.
U.S. Sen. Dick Durbin of Springfield, stepped onto the stage first and introduced Obama. Without saying Obama was the next Abraham Lincoln, Durbin did say Lincoln’s journey included skeptics who wondered whether he could meet the challenges of his time. Earlier, Durbin said Obama’s life experiences would inspire people to support him. “To rise to the position of being the editor of the Harvard Law Review, that says a lot. And then to make the decision not to cash in and make a lot of money as a lawyer, but rather become a civil rights lawyer working for poor people in the city of Chicago, community organizer, all these things tell me where his values are.”
After the event, Gov. Rod Blagojevich told one group of reporters after another: “The whole thing was great, especially his focus on health care for everybody. That’s a tremendous objective. Our objective is to get it done here in Illinois. So when Sen. Obama becomes president, all he has to do it get it done in 49 states instead of 50.”
State Sen. James Meeks, a Chicago Democrat, said he thinks Obama has a “great chance” to appeal to the masses because he's "uniter, not a divider." He added that he thinks Obama is not a political insider tainted by lobbying dollars.
Bethany’s perspective
I’ve never been so thankful for hand warmers and soccer socks. It was so cold that ink froze in my pens (good thing I had a few pencils), battery juice froze in my camera, and my digital recorder was stuck in the “on” position. I was lucky enough to score a good spot by one of the media stages. I knew what to expect with the size of the crowd, but it started to hit me just how big this day was when I felt the entire audience take a deep breath and stand on its toes when Durbin welcomed Obama to the stage, the music picked up and he came closer into view.
It was pretty neat standing among so many people from so many countries listening to an Illinois senator announce a presidential bid. Yet, many people don't know that much about Obama or his political stances, allowing them to assign any ideal identity to the candidate. We'll have to see how he rides the wave.
Deanese’s perspective
Seven out of eight people I spoke with had the facts wrong about today’s events. The majority believed that Obama was making history by being the first African American to announce a presidential run. Not to shame any of his supporters, but it’s not true. The Rev. Jesse Jackson, Al Sharpton, Carol Mosley Braun and Shirley Chisholm have all made steps towards the White House in earlier races. Chisholm was actually the first African American to announce her bid for the presidency on Jan. 23, 1972.
Friday, February 09, 2007
Moneymakers
Pressure is mounting for Illinois to milk the cow this year. Lawmakers need a long-term plan to pay for education, transportation, health care and public employee pensions, but there’s disagreement about which cash cow to milk.
HB/SB 750 tax reform
Sen. James Meeks reintroduced a so-called tax swap plan to raise income taxes, lower property taxes and expand the sales tax as a way to fairly fund education and significantly pay down the state’s pension obligations.
Ralph Martire, executive director of the Chicago-based Center for Tax and Budget Accountability, says the bottom 60 percent of income earners would not pay more in income taxes than they are now. And the money they saved in property taxes would be intended to offset the cost of sales taxes on consumer services, such as auto repair labor and haircuts.
Martire adds that the property tax relief would total $2.7 billion statewide. “No school district loses a penny,” he says.
He says the drafters of the legislation tried to “depoliticize” the distribution of the money. Of the state’s $5 billion net revenue, $720 million would go to downstate schools, $420 million to Chicago schools, $400 million to suburban Chicago schools, and $300 million for higher education.
Depoliticize is a bold word, considering this year's budget debate is expected to be a doozy. Gov. Rod Blagojevich has repeatedly said he would veto an increase in state taxes. Senate President Emil Jones Jr. also said on Inauguration Day that he definitely opposes expansion of the sales tax to consumer services. But he did leave the door open to other revenue ideas. “We do not have a spending problem. We have a revenue problem,” Jones said.
Good or bad, he'll have plenty of “creative” revenue ideas to consider.
Privatizing the lottery and the tollway
The governor is still considering selling the Illinois Lottery to fund a $6 billion plan to pump more money into education, school buildings, teacher quality and books. But the plan doesn't address pensions.
Sen. Jeff Schoenberg, an Evanston Democrat, is still considering privatizing the Illinois Tollway (scroll down to the August 29, 2006, blog) as a way to raise lots of money to pay the state’s unfunded pension liabilities and transportation costs. However, he said on Inauguration Day that he is convinced the state should not sell the tollway, but maintain majority ownership. He said the next step is to work with the Illinois attorney general’s office to get insight on the legal dimensions of such a lease.
Sen. Bill Brady’s solution to the pension liability problem is giving current state employees an option to participate in a self-managing plan (like a 401-k) that mirrors the private sector retirement options. New state employees would have to participate in the self-managed plan. The board of trustees of each of the five retirement systems would select up to seven companies where state employees could choose to invest their money as they wished. Brady, a Bloomington Republican, says it would save taxpayer money, reduce political influence on state investment decisions and prevent the state from raiding the five pension systems to pay for general state costs.
More to come
There’s also more creative — read politically risky — revenue ideas to come, potentially targeting businesses as one way to pay for the governor’s promised plan of universal health care. He gives his combined State of the State address and his budget address March 7.
Deanese Williams-Harris contributed to this post.
HB/SB 750 tax reform
Sen. James Meeks reintroduced a so-called tax swap plan to raise income taxes, lower property taxes and expand the sales tax as a way to fairly fund education and significantly pay down the state’s pension obligations.
Ralph Martire, executive director of the Chicago-based Center for Tax and Budget Accountability, says the bottom 60 percent of income earners would not pay more in income taxes than they are now. And the money they saved in property taxes would be intended to offset the cost of sales taxes on consumer services, such as auto repair labor and haircuts.
Martire adds that the property tax relief would total $2.7 billion statewide. “No school district loses a penny,” he says.
He says the drafters of the legislation tried to “depoliticize” the distribution of the money. Of the state’s $5 billion net revenue, $720 million would go to downstate schools, $420 million to Chicago schools, $400 million to suburban Chicago schools, and $300 million for higher education.
Depoliticize is a bold word, considering this year's budget debate is expected to be a doozy. Gov. Rod Blagojevich has repeatedly said he would veto an increase in state taxes. Senate President Emil Jones Jr. also said on Inauguration Day that he definitely opposes expansion of the sales tax to consumer services. But he did leave the door open to other revenue ideas. “We do not have a spending problem. We have a revenue problem,” Jones said.
Good or bad, he'll have plenty of “creative” revenue ideas to consider.
Privatizing the lottery and the tollway
The governor is still considering selling the Illinois Lottery to fund a $6 billion plan to pump more money into education, school buildings, teacher quality and books. But the plan doesn't address pensions.
Sen. Jeff Schoenberg, an Evanston Democrat, is still considering privatizing the Illinois Tollway (scroll down to the August 29, 2006, blog) as a way to raise lots of money to pay the state’s unfunded pension liabilities and transportation costs. However, he said on Inauguration Day that he is convinced the state should not sell the tollway, but maintain majority ownership. He said the next step is to work with the Illinois attorney general’s office to get insight on the legal dimensions of such a lease.
Sen. Bill Brady’s solution to the pension liability problem is giving current state employees an option to participate in a self-managing plan (like a 401-k) that mirrors the private sector retirement options. New state employees would have to participate in the self-managed plan. The board of trustees of each of the five retirement systems would select up to seven companies where state employees could choose to invest their money as they wished. Brady, a Bloomington Republican, says it would save taxpayer money, reduce political influence on state investment decisions and prevent the state from raiding the five pension systems to pay for general state costs.
More to come
There’s also more creative — read politically risky — revenue ideas to come, potentially targeting businesses as one way to pay for the governor’s promised plan of universal health care. He gives his combined State of the State address and his budget address March 7.
Deanese Williams-Harris contributed to this post.
Tuesday, February 06, 2007
Budget buzz
Budget will be No. 1
Anything the Illinois General Assembly wants to accomplish this session will revolve around the state budget. Gov. Rod Blagojevich will propose the budget for fiscal year 2008 on March 7 (in combination with his State of the State address). Three challenges — taxes, pensions and Medicaid bills — could trump the buzz about some of his new proposals for social programs.
We already know gaming and privatization are options for new state revenue. Raising taxes is not, according to the governor.
House Speaker Michael Madigan and Senate President Emil Jones Jr., on the other hand, have each mentioned the possibility of tax reform. One panel of budget analysts considered some possibilities Tuesday. (The panel was part of a series of luncheons sponsored by the Institute of Government and Public Affairs and the University of Illinois at Springfield’s Center for State Policy and Leadership.)
While the panel members’ comments echoed reports by the Commercial Club of Chicago and the Center for Tax and Budget Accountability, the panel also highlighted some ideas for tax reform.
Economics Professor Patricia Byrnes at the University of Illinois at Springfield says the state is missing the boat in taxing Internet sales. In 2008, she says Illinois can expect to miss out on $622 million to $900 million in collections from Internet sales. That’s about 2.8 percent to 4.4 percent of sales tax collections.
That combines with the state’s sales tax being too narrow. She says Illinois currently taxes only 17 of 164 services. And unlike the governor’s budget office, Byrnes says she wouldn’t focus on corporate taxes. Instead, she would focus on the state income tax, which she called the least progressive because it’s a flat rate for all incomes. She recommends increasing the tax rate up to 5 percent and increasing the reasons for personal exemptions.
According to economics Professor J. Fred Giertz of the University of Illinois at Urbana-Champaign, the political question this session is whether lawmakers would override a governor’s veto and raise taxes without his support, particularly when a tax increase simply would generate more money for the governor to spend on his programs. Giertz says that’s “unlikely.”
State Sen. Christine Radogno, the Senate Republican’s rising budget expert (and unsuccessful candidate for state treasurer last year), says another big question this session is whether lawmakers would have the political will to implement changes that would have delayed gratification.
She adds the public has no confidence in state government to spend money responsibly if Illinois general taxes were to increase.
The next portion was written by Deanese Williams-Harris, the Public Affairs Reporting intern working in the Statehouse with Bethany Carson. The Chicago native joins us from Southern Illinois University Carbondale, where she was a McNair Scholar.
Education will be No. 2
The legislature’s new Education Caucus met Monday afternoon and debated whether the group’s reform efforts should focus on elementary education, higher education or both.
Rep. Dave Winters, a Shirland Republican, opened the debate to whether the caucus should focus on K-12 to avoid being distracted by higher education.
Rep. Robert Pritchard, a Sycamore Republican overseeing the meeting, quickly rebutted, saying, “Illinois has always had a disconnect between pre-school, K-12 and higher education. We need to make those connections now.”
He recalled a recent visit to one of the state’s juvenile detention centers and said it was heartbreaking to see kids getting less than two hours of education or skill development.
“We need to develop a system that does it right the first time so that kids don’t get discouraged and drop out and don’t turn to a life of crime,” he said.
Anything the Illinois General Assembly wants to accomplish this session will revolve around the state budget. Gov. Rod Blagojevich will propose the budget for fiscal year 2008 on March 7 (in combination with his State of the State address). Three challenges — taxes, pensions and Medicaid bills — could trump the buzz about some of his new proposals for social programs.
We already know gaming and privatization are options for new state revenue. Raising taxes is not, according to the governor.
House Speaker Michael Madigan and Senate President Emil Jones Jr., on the other hand, have each mentioned the possibility of tax reform. One panel of budget analysts considered some possibilities Tuesday. (The panel was part of a series of luncheons sponsored by the Institute of Government and Public Affairs and the University of Illinois at Springfield’s Center for State Policy and Leadership.)
While the panel members’ comments echoed reports by the Commercial Club of Chicago and the Center for Tax and Budget Accountability, the panel also highlighted some ideas for tax reform.
Economics Professor Patricia Byrnes at the University of Illinois at Springfield says the state is missing the boat in taxing Internet sales. In 2008, she says Illinois can expect to miss out on $622 million to $900 million in collections from Internet sales. That’s about 2.8 percent to 4.4 percent of sales tax collections.
That combines with the state’s sales tax being too narrow. She says Illinois currently taxes only 17 of 164 services. And unlike the governor’s budget office, Byrnes says she wouldn’t focus on corporate taxes. Instead, she would focus on the state income tax, which she called the least progressive because it’s a flat rate for all incomes. She recommends increasing the tax rate up to 5 percent and increasing the reasons for personal exemptions.
According to economics Professor J. Fred Giertz of the University of Illinois at Urbana-Champaign, the political question this session is whether lawmakers would override a governor’s veto and raise taxes without his support, particularly when a tax increase simply would generate more money for the governor to spend on his programs. Giertz says that’s “unlikely.”
State Sen. Christine Radogno, the Senate Republican’s rising budget expert (and unsuccessful candidate for state treasurer last year), says another big question this session is whether lawmakers would have the political will to implement changes that would have delayed gratification.
She adds the public has no confidence in state government to spend money responsibly if Illinois general taxes were to increase.
The next portion was written by Deanese Williams-Harris, the Public Affairs Reporting intern working in the Statehouse with Bethany Carson. The Chicago native joins us from Southern Illinois University Carbondale, where she was a McNair Scholar.
Education will be No. 2
The legislature’s new Education Caucus met Monday afternoon and debated whether the group’s reform efforts should focus on elementary education, higher education or both.
Rep. Dave Winters, a Shirland Republican, opened the debate to whether the caucus should focus on K-12 to avoid being distracted by higher education.
Rep. Robert Pritchard, a Sycamore Republican overseeing the meeting, quickly rebutted, saying, “Illinois has always had a disconnect between pre-school, K-12 and higher education. We need to make those connections now.”
He recalled a recent visit to one of the state’s juvenile detention centers and said it was heartbreaking to see kids getting less than two hours of education or skill development.
“We need to develop a system that does it right the first time so that kids don’t get discouraged and drop out and don’t turn to a life of crime,” he said.
Friday, February 02, 2007
Blagoterminator
Yes, it’s easy to get sidetracked by the name game of Team Blagojevich-Schwarzenegger that met in California yesterday. But they made environmental announcements that show promise, according to the Environment Illinois advocacy group.
Rebecca Stanfield, Environment Illinois state director, says it’s significant that Illinois partnered with the “Golden State” because California has already enacted some of the policies recommended in the Illinois group’s report to reduce global warming emissions.
For instance, she says California was the first state to set carbon dioxide emission standards for cars made in 2009 and beyond. That law was approved in 2002 under the former governor. Last summer, California Gov. Arnold Schwarzenegger also approved a cap on greenhouse gas emissions (coupled with reporting requirements) so statewide levels would return to 1990 levels by 2020.
Stanfield says there’s no doubt the auto industry would fight tooth an nail against a CO2 standard for cars (they’ve already taken their case to Supreme Court), but she hopes that consumer demand for clean cars could heighten the chances that CO2 standards could be adopted in Illinois.
Gov. Rod Blagojevich released another statement today touting his anti-pollution programs, including the creation of the Illinois Climate Change Advisory Group that has to make recommendations to the governor by July 30 this year. Last summer, Blagojevich also unveiled an energy plan to invest in renewable fuels (corn and soybeans) and wind power. And he caps his accomplishments with this week’s announcement of BP PLC funding of the Energy Biosciences Institute that promises up to $100 million for the University of Illinois at Urbana-Champaign’s research on converting plants to fuel.
This all comes on the heels of an international panel’s declaration that human behavior, particularly burning of fossil fuels, “very likely” causes global warming. Fossil fuels emit CO2, the most important greenhouse gas, according to the Intergovernmental Panel on Climate Change created by the United Nations.
BP invests in UI, biofuel development - News
Rebecca Stanfield, Environment Illinois state director, says it’s significant that Illinois partnered with the “Golden State” because California has already enacted some of the policies recommended in the Illinois group’s report to reduce global warming emissions.
For instance, she says California was the first state to set carbon dioxide emission standards for cars made in 2009 and beyond. That law was approved in 2002 under the former governor. Last summer, California Gov. Arnold Schwarzenegger also approved a cap on greenhouse gas emissions (coupled with reporting requirements) so statewide levels would return to 1990 levels by 2020.
Stanfield says there’s no doubt the auto industry would fight tooth an nail against a CO2 standard for cars (they’ve already taken their case to Supreme Court), but she hopes that consumer demand for clean cars could heighten the chances that CO2 standards could be adopted in Illinois.
Gov. Rod Blagojevich released another statement today touting his anti-pollution programs, including the creation of the Illinois Climate Change Advisory Group that has to make recommendations to the governor by July 30 this year. Last summer, Blagojevich also unveiled an energy plan to invest in renewable fuels (corn and soybeans) and wind power. And he caps his accomplishments with this week’s announcement of BP PLC funding of the Energy Biosciences Institute that promises up to $100 million for the University of Illinois at Urbana-Champaign’s research on converting plants to fuel.
This all comes on the heels of an international panel’s declaration that human behavior, particularly burning of fossil fuels, “very likely” causes global warming. Fossil fuels emit CO2, the most important greenhouse gas, according to the Intergovernmental Panel on Climate Change created by the United Nations.
BP invests in UI, biofuel development - News
Friday, January 26, 2007
Dream job ends at IDOT
Illinois’ Secretary of Transportation Tim Martin resigned today, according to an abrupt announcement from the governor’s office that provides little explanation other than he’s returning to the private sector.
Martin has led the Illinois Department of Transportation since 2003 under Gov. Rod Blagojevich. In the governor's release, Martin calls it “a dream job for any engineer that grew up in Illinois.” The governor’s announcement says Martin’s leadership was “instrumental in modernizing and making IDOT more efficient and focused the agency on better using technology to accomplish its goals.” He also marked the agency’s 2006 record of having the fewest fatalities since 1924.
Also on Martin’s watch, however, is IDOT’s status as one of at least 15 agencies to have received federal subpoenas in an ongoing federal investigation into hiring and contracting practices within Blagojevich’s administration. No one has been charged with wrongdoing.
IDOT spokesman Matt Vanover says Martin resigned and was not asked to leave. These types of changes are common as administrations transition into new terms, he says.
Milt Sees, IDOT director of highways, takes over until the governor nominates a permanent secretary, which requires Senate approval.
Martin has led the Illinois Department of Transportation since 2003 under Gov. Rod Blagojevich. In the governor's release, Martin calls it “a dream job for any engineer that grew up in Illinois.” The governor’s announcement says Martin’s leadership was “instrumental in modernizing and making IDOT more efficient and focused the agency on better using technology to accomplish its goals.” He also marked the agency’s 2006 record of having the fewest fatalities since 1924.
Also on Martin’s watch, however, is IDOT’s status as one of at least 15 agencies to have received federal subpoenas in an ongoing federal investigation into hiring and contracting practices within Blagojevich’s administration. No one has been charged with wrongdoing.
IDOT spokesman Matt Vanover says Martin resigned and was not asked to leave. These types of changes are common as administrations transition into new terms, he says.
Milt Sees, IDOT director of highways, takes over until the governor nominates a permanent secretary, which requires Senate approval.
Thursday, January 25, 2007
Mayday, mayday
The state has lost nearly $17 million over four years because the Illinois Department of Transportation hasn’t billed politicians and businesses the full cost of flying them between Chicago and Springfield, according to a state audit released this week.
The Illinois Auditor General’s office says the rates charged to businesses have been the same since 1981, and the rates charged to state officials and politicians has been the same since ’95. Passengers are only charged for their seat. That means if the plane seats nine but only six people are on board, IDOT eats the cost flying three empty seats. And because the planes are based in Springfield’s airport, they often fly empty to Chicago, pick up the politicians, fly them to Springfield, fly them back to the Windy City and then return empty to the Capitol. Over four years, the cost of operating the air fleet reached nearly $20 million, but IDOT only collected $2.8 million.
The audit points out that the money comes from elsewhere, meaning the Road Fund and the state’s main general fund. IDOT officials say the goal has never been to make money on the air fleet, but the agency agrees to most of the auditor’s recommendations.
The audit calls for a review of ways to be efficient and for better documentation of the reasons and the true costs of operating the flight. Only then can IDOT figure out how many planes and helicopters are needed and whether the agency should adjust its rates.
The Illinois Auditor General’s office says the rates charged to businesses have been the same since 1981, and the rates charged to state officials and politicians has been the same since ’95. Passengers are only charged for their seat. That means if the plane seats nine but only six people are on board, IDOT eats the cost flying three empty seats. And because the planes are based in Springfield’s airport, they often fly empty to Chicago, pick up the politicians, fly them to Springfield, fly them back to the Windy City and then return empty to the Capitol. Over four years, the cost of operating the air fleet reached nearly $20 million, but IDOT only collected $2.8 million.
The audit points out that the money comes from elsewhere, meaning the Road Fund and the state’s main general fund. IDOT officials say the goal has never been to make money on the air fleet, but the agency agrees to most of the auditor’s recommendations.
The audit calls for a review of ways to be efficient and for better documentation of the reasons and the true costs of operating the flight. Only then can IDOT figure out how many planes and helicopters are needed and whether the agency should adjust its rates.
Wednesday, January 17, 2007
Illinois buzz
U.S. Sen. Barack Obama may use Springfield as a backdrop to announce whether he’ll run for president in 2008, according to state Rep. John Fritchey, a Chicago Democrat. Fritchey posted a blog that said he was on the conference call with Obama and reported he could make the announcement in Springfield February 10. We’ll confirm that as soon as possible.
Obama announced Tuesday that he filed papers to form a presidential exploratory committee. His second to last sentence reads, “And on February 10th, at the end of these decisions and in my home state of Illinois, I’ll share my plans with my friends, neighbors and fellow Americans.”
Hospital money
Another topic — federal funds for Illinois hospitals — has Illinois lawmakers saying the state is in better shape today than it was before. The federal government approved a program that will bring $1.8 billion in federal matching funds to Illinois health care over the next three years.
But the money won’t be distributed to hospitals throughout Illinois until the Illinois legislature approves a measure that gives the Department of Healthcare and Family Services the ability to distribute the money.
The money comes in the form of federal matching funds for a hospital tax enacted by Gov. Rod Blagojevich in July 2005. The so-called hospital assessment program didn’t receive federal approval until last fall.
“Our financial situation has improved dramatically with the recent good news from Washington,” says state Sen. Jeff Schoenberg, the Evanston Democrat who sponsored the legislation creating the assessment program. “Certainly a great deal of credit goes to former [U.S. House] Speaker [J. Dennis] Hastert for making sure we receive federal approval in one of his last acts as house speaker in Washington.” Rep. Barbara Flynn Currie, a Chicago Democrat, sponsored the measure in the House.
Hospitals could expect to receive the money in the next few months, according to Director of Healthcare and Family Services Barry Maram, who spoke Tuesday at press conference at St. John’s Hospital in Springfield.
The appropriation needed from the Illinois legislature was recently tied to a controversial measure that would allow the state to give pay raises to lawmakers, judges and department heads. The Senate approved the measure. The House gutted it because Speaker Michael Madigan says he does not think the state should approve any spending that is not necessary right now.
When the money is released, hospitals around the state will be able to spend it on necessary medical equipment, recruitment of doctors or anything that helps the hospital serve Medicaid patients, Maram says.
Ed McDowall, spokesman for Memorial Medical Center in Springfield, says, “The assessment will significantly reduce that gap between the cost of care and the value of the Medicaid reimbursements.” Medicaid reimbursements pay for about 75 percent of the cost of providing care Medicaid patients.
Obama announced Tuesday that he filed papers to form a presidential exploratory committee. His second to last sentence reads, “And on February 10th, at the end of these decisions and in my home state of Illinois, I’ll share my plans with my friends, neighbors and fellow Americans.”
Hospital money
Another topic — federal funds for Illinois hospitals — has Illinois lawmakers saying the state is in better shape today than it was before. The federal government approved a program that will bring $1.8 billion in federal matching funds to Illinois health care over the next three years.
But the money won’t be distributed to hospitals throughout Illinois until the Illinois legislature approves a measure that gives the Department of Healthcare and Family Services the ability to distribute the money.
The money comes in the form of federal matching funds for a hospital tax enacted by Gov. Rod Blagojevich in July 2005. The so-called hospital assessment program didn’t receive federal approval until last fall.
“Our financial situation has improved dramatically with the recent good news from Washington,” says state Sen. Jeff Schoenberg, the Evanston Democrat who sponsored the legislation creating the assessment program. “Certainly a great deal of credit goes to former [U.S. House] Speaker [J. Dennis] Hastert for making sure we receive federal approval in one of his last acts as house speaker in Washington.” Rep. Barbara Flynn Currie, a Chicago Democrat, sponsored the measure in the House.
Hospitals could expect to receive the money in the next few months, according to Director of Healthcare and Family Services Barry Maram, who spoke Tuesday at press conference at St. John’s Hospital in Springfield.
The appropriation needed from the Illinois legislature was recently tied to a controversial measure that would allow the state to give pay raises to lawmakers, judges and department heads. The Senate approved the measure. The House gutted it because Speaker Michael Madigan says he does not think the state should approve any spending that is not necessary right now.
When the money is released, hospitals around the state will be able to spend it on necessary medical equipment, recruitment of doctors or anything that helps the hospital serve Medicaid patients, Maram says.
Ed McDowall, spokesman for Memorial Medical Center in Springfield, says, “The assessment will significantly reduce that gap between the cost of care and the value of the Medicaid reimbursements.” Medicaid reimbursements pay for about 75 percent of the cost of providing care Medicaid patients.
Monday, January 08, 2007
Now we know
Last month I blogged about something I found strange, that the two dominant electric utilities in Illinois weren’t on the same side of the proposal to phase in electricity rate increases over the next three years (see December 14 blog). Commonwealth Edison supported the so-called compromise introduced by Senate President Emil Jones Jr. and House Minority Leader Tom Cross. Ameren Illinois opposed it.
A House committee Sunday shed light on the politics shaping the debate. House Speaker Michael Madigan suggested ComEd was at the table in drafting the Jones-Cross bill. Ameren was not. Neither was the attorney general’s office or the Citizens Utility Board.
Madigan asked ComEd’s general counsel when he found out about the Jones-Cross phase-in plan. Counsel Darryl Bradford said he and ComEd CFO Robert McDonald talked to legislative staffers and offered suggestions for the bill. None of the others who testified Sunday — Susan Hedman of the Illinois Attorney Genera’s office, David Kolata of CUB and Michael Sullivan of Ameren — said they knew about the bill until shortly before it surfaced in the Senate.
Sunday night, Cross said ComEd didn’t write the phase-in proposal. His staff and Jones’ staff served up the meat and potatoes. “ComEd may have ultimately been talked to, but the idea of coming together and trying to work out a compromise came from us talking, and Emil talking and his chief of staff talking,” he said. “We knew where we wanted to go with it. We were just trying to get some specifics.”
He said he wasn’t aware of whether Ameren Illinois was asked to provide specifics for the language in the bill.
Also Sunday night, enough House Democrats and Republicans voted to approve a three-year rate freeze extension. It’s not expected to see daylight in the Senate. Even if it does, Cross said the rate-freeze measure could be thrown out because he expects the electric utilities to end up in bankruptcy court or federal court.
The Illinois Commerce Commission already approved a different plan to phase in electricity rate increases over three years. The big difference is that consumers can opt to phase in their rate increases over three years, but they would have to repay the deferred amount each year between 2010 and 2012. If no legislation makes it to the governor’s desk, the ICC-approved phase-in will remain in effect. It started January 2.
A House committee Sunday shed light on the politics shaping the debate. House Speaker Michael Madigan suggested ComEd was at the table in drafting the Jones-Cross bill. Ameren was not. Neither was the attorney general’s office or the Citizens Utility Board.
Madigan asked ComEd’s general counsel when he found out about the Jones-Cross phase-in plan. Counsel Darryl Bradford said he and ComEd CFO Robert McDonald talked to legislative staffers and offered suggestions for the bill. None of the others who testified Sunday — Susan Hedman of the Illinois Attorney Genera’s office, David Kolata of CUB and Michael Sullivan of Ameren — said they knew about the bill until shortly before it surfaced in the Senate.
Sunday night, Cross said ComEd didn’t write the phase-in proposal. His staff and Jones’ staff served up the meat and potatoes. “ComEd may have ultimately been talked to, but the idea of coming together and trying to work out a compromise came from us talking, and Emil talking and his chief of staff talking,” he said. “We knew where we wanted to go with it. We were just trying to get some specifics.”
He said he wasn’t aware of whether Ameren Illinois was asked to provide specifics for the language in the bill.
Also Sunday night, enough House Democrats and Republicans voted to approve a three-year rate freeze extension. It’s not expected to see daylight in the Senate. Even if it does, Cross said the rate-freeze measure could be thrown out because he expects the electric utilities to end up in bankruptcy court or federal court.
The Illinois Commerce Commission already approved a different plan to phase in electricity rate increases over three years. The big difference is that consumers can opt to phase in their rate increases over three years, but they would have to repay the deferred amount each year between 2010 and 2012. If no legislation makes it to the governor’s desk, the ICC-approved phase-in will remain in effect. It started January 2.
Thursday, December 21, 2006
Phases of deregulation
This week the Illinois Commerce Commission approved Commonwealth Edison’s and Ameren Illinois’ plans for phasing in higher electricity rates, which have been frozen for nearly 10 years by a state law that expires in about a week. Essentially, residential customers, small businesses and municipalities will get to decide whether a) they want to pay the full increase each month come January 2 or b) pay smaller increases over three years with a balloon interest payment at the end. Businesses and other major electricity users not eligible for the phase-in will have to pay even higher increases or find another power supplier.
Lt. Gov. Pat Quinn doesn’t like the phase-in plans. “They’re trying to put perfume on a skunk,” he said Wednesday in a phone interview. “The concept of requiring customers to pay interest down the road — we’re going to end up having payday loan stores right next to the electric company.”
He supports legislation that has the backing of House Speaker Michael Madigan that calls for a three-year rate freeze, but the measure failed the House last month. Madigan said he expected it to gain approval in January. Yet, it’s unlikely a rate freeze would gain necessary approval in the Senate.
That means ComEd and Ameren will have to adjust to paying more for buying and distributing electricity. And customers, especially residents and businesses who use Ameren’s electricity, will have to adjust to increased monthly rates.
The Illinois Commerce Commission got to this point by trying to strike a balance between allowing utilities to collect the money they need to survive and protecting consumers from high prices and unreliable service, according to Kevin Wright, one of the five commissioners. He spoke during Wednesday’s public utility hearing in Chicago that was heard over teleconference in Springfield.
Commissioner Erin O’Connell-Diaz agreed. “It’s not a 100 percent win for everyone,” she said. “I think in these types of situations, everyone should walk away a little unhappy.”
But the tough decisions aren’t over. Come spring 2008, the commission will have to coordinate another process so utilities can start buying a three-year power supply every year, according to Harry Stoller, director of the commission’s energy division.
While the commission staff investigates the next phase of this new system, the question remains whether the process will actually spur competition and increase consumer choice. In fact, Stoller said one who speaks of a deregulated electricity system speaks of a “fictional state of affairs that will never be reached.”
Lt. Gov. Pat Quinn doesn’t like the phase-in plans. “They’re trying to put perfume on a skunk,” he said Wednesday in a phone interview. “The concept of requiring customers to pay interest down the road — we’re going to end up having payday loan stores right next to the electric company.”
He supports legislation that has the backing of House Speaker Michael Madigan that calls for a three-year rate freeze, but the measure failed the House last month. Madigan said he expected it to gain approval in January. Yet, it’s unlikely a rate freeze would gain necessary approval in the Senate.
That means ComEd and Ameren will have to adjust to paying more for buying and distributing electricity. And customers, especially residents and businesses who use Ameren’s electricity, will have to adjust to increased monthly rates.
The Illinois Commerce Commission got to this point by trying to strike a balance between allowing utilities to collect the money they need to survive and protecting consumers from high prices and unreliable service, according to Kevin Wright, one of the five commissioners. He spoke during Wednesday’s public utility hearing in Chicago that was heard over teleconference in Springfield.
Commissioner Erin O’Connell-Diaz agreed. “It’s not a 100 percent win for everyone,” she said. “I think in these types of situations, everyone should walk away a little unhappy.”
But the tough decisions aren’t over. Come spring 2008, the commission will have to coordinate another process so utilities can start buying a three-year power supply every year, according to Harry Stoller, director of the commission’s energy division.
While the commission staff investigates the next phase of this new system, the question remains whether the process will actually spur competition and increase consumer choice. In fact, Stoller said one who speaks of a deregulated electricity system speaks of a “fictional state of affairs that will never be reached.”
Tuesday, December 19, 2006
Crossfire
Shots are being fired across the battlefield prior to legislators returning to Springfield. Senate President Emil Jones Jr. sent his own memo defending legislation that would phase in electricity rate increases in January. His fact sheet rejects House Speaker Michael Madigan’s interpretation of House Bill 2197 (see previous blog 12/13/06). Jones denies the phase-in proposal would be bad for consumers. Instead, he says, the plan would encourage competition, include Illinois Commerce Commission oversight, protect consumers from having to pay interest on the deferred amounts, and create a revenue source for utilities to repay the bonds that would cover ongoing costs or reduce debt.
Watch Illinois Issues magazine for more context.
Watch Illinois Issues magazine for more context.
Thursday, December 14, 2006
More electrifying debate
House Speaker Michael Madigan is governing by letter, again. This time, he’s lobbying against a proposal to phase in electricity rate increases scheduled to start in January. It’s not just any proposal. It’s one supported by Senate President Emil Jones Jr. and House Minority Leader Tom Cross, as well as Commonwealth Edison, the company serving most northern Illinois customers.
In a letter starting, “Dear Reporter,” Madigan says he intends to continue trying to pass legislation that “protects consumers and allows the electric monopolies serving Illinois to earn fair profits.” His emphasis on “fair” is consistent with his veto session comments that he takes the utilities’ warnings of financial ruin “with a grain of salt.”
Madigan then attached a memo (1 and 2) to all House and Senate members with some details that can be summarized by this argument: If signed into law, the phase-in proposal approved by the Senate would actually be a better deal for utilities and worse deal for consumers than if the General Assembly took no action and let the Illinois Commerce Commission decide how the new rates would be carried out. “The bill has been presented as a compromise measure and a better deal for consumers,” he wrote. “It is neither.”
Something’s not adding up here. While ComEd supported the phase-in approved by the Senate, Ameren Illinois CEO Scott Cissel opposed it and said the company prefers the proposals filed with the Illinois Commerce Commission.
The company still opposes House Bill 2197, according to spokesman Leigh Morris. He didn’t know of Madigan’s memo and letters Wednesday night but said the company didn’t believe the Senate version of a phase-in would be a good deal for Ameren customers. In fact, he said the company filed a new proposal with the ICC that would 1) allow the company to charge a “carrying fee” associated with the phase in; 2) allow customers to opt into a phase-in plan, which would carry a 3.25 percent interest rate; 3) allow schools, municipalities and small businesses to opt in; 4) allow the utilities to opt out of the plan if the credit rating slipped to junk bond status; and 5) designate $15 million of non-consumer costs to energy assistance and renewable energy programs.
Ameren asked the commission to review the newest proposal before the end of the year. Lawmakers are scheduled to reconvene in Springfield a week later, when they’ll rehash the debate, again.
To me, the biggest question in this complicated, easily skewed debate remains: What power should the ICC have in regulating electricity rates?
In a letter starting, “Dear Reporter,” Madigan says he intends to continue trying to pass legislation that “protects consumers and allows the electric monopolies serving Illinois to earn fair profits.” His emphasis on “fair” is consistent with his veto session comments that he takes the utilities’ warnings of financial ruin “with a grain of salt.”
Madigan then attached a memo (1 and 2) to all House and Senate members with some details that can be summarized by this argument: If signed into law, the phase-in proposal approved by the Senate would actually be a better deal for utilities and worse deal for consumers than if the General Assembly took no action and let the Illinois Commerce Commission decide how the new rates would be carried out. “The bill has been presented as a compromise measure and a better deal for consumers,” he wrote. “It is neither.”
Something’s not adding up here. While ComEd supported the phase-in approved by the Senate, Ameren Illinois CEO Scott Cissel opposed it and said the company prefers the proposals filed with the Illinois Commerce Commission.
The company still opposes House Bill 2197, according to spokesman Leigh Morris. He didn’t know of Madigan’s memo and letters Wednesday night but said the company didn’t believe the Senate version of a phase-in would be a good deal for Ameren customers. In fact, he said the company filed a new proposal with the ICC that would 1) allow the company to charge a “carrying fee” associated with the phase in; 2) allow customers to opt into a phase-in plan, which would carry a 3.25 percent interest rate; 3) allow schools, municipalities and small businesses to opt in; 4) allow the utilities to opt out of the plan if the credit rating slipped to junk bond status; and 5) designate $15 million of non-consumer costs to energy assistance and renewable energy programs.
Ameren asked the commission to review the newest proposal before the end of the year. Lawmakers are scheduled to reconvene in Springfield a week later, when they’ll rehash the debate, again.
To me, the biggest question in this complicated, easily skewed debate remains: What power should the ICC have in regulating electricity rates?
Friday, December 08, 2006
Universal health care?
A plan to mandate health insurance for all Illinois residents, and, yes, that means a mandate on businesses to offer health benefits to employees, is sure to catch attention in the upcoming legislative session. Today’s stories (here and here) talk about a plan the state’s Adequate Health Care Task Force came up with to address a growing problem — the cost of caring for the uninsured.
You can read more details (scroll to the bottom on the page) in documents prepared for the task force’s December 7 meeting, but to gain even more context, check Illinois Issues’ June feature, “Alternative medicine.” Massachusetts enacted a similar law this summer, but that plan might not be very easy to translate to Illinois’ political and business climate. The 95th General Assembly would have to find a balance between businesses, hospitals, insurance industries and private citizens, not to mention public aid dollars.
Watch Illinois Issues for more anlysis in the next few months.
You can read more details (scroll to the bottom on the page) in documents prepared for the task force’s December 7 meeting, but to gain even more context, check Illinois Issues’ June feature, “Alternative medicine.” Massachusetts enacted a similar law this summer, but that plan might not be very easy to translate to Illinois’ political and business climate. The 95th General Assembly would have to find a balance between businesses, hospitals, insurance industries and private citizens, not to mention public aid dollars.
Watch Illinois Issues for more anlysis in the next few months.
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