House passes the bulk of its budget

By Jamey Dunn and Meredith Colias

Illinois House Democrats passed several pieces of their budget today as Republicans bemoaned being cut out of the process.

Both higher education and K-12 will be funded at essentially flat levels, compared to the current fiscal year. Human services would see cuts under the plan, but the outlook is not nearly as gloomy as it seemed just a few weeks ago. Sponsors of the various budget bills say that the situation would have been much bleaker if a windfall of $1.5 billion in unexpected revenues had not come in. “In April, there was a large surge because people sold a bunch of assets at the end of [Fiscal Year] '12 in anticipation of capital gains rate changes,” said Rep. Greg Harris, who sponsored the human services budget bill.

House Minority Leader Tom Cross said Republicans do not support the $35.6 billion budget proposal, the bulk of which passed today. He said Republicans had been working on the budget, but Democrats stopped inviting his political party to talks in the last few weeks. “When it comes to spending ... the willingness to work with us goes by the wayside, and that is unfortunate,” Cross said. “Clearly we’re not going in the direction that we need to go if we intend to get our bills paid and if we intend to do away with the tax increase.” Republicans said they saw the budget bills for the first time last night.

While Republicans blasted the spending in the proposal, Harris, who took over the human services budgeting committee this year, said this is the first budget in recent years that will fully fund human services. “We’ve made cuts across the board but we’ve retained funding in core community services such as mental health, substance abuse, homelessness programs,” he said. This year and several other times in recent history, human services agencies have had to come back to the General Assembly midway through the fiscal year and ask for more money to avoid the shutdown of programs. “In other years, they’ve not appropriated for a full year, and they’ve always come back for [supplemental spending bills]. ... We wanted to pass something that was fully reflective of the realities of each department’s need,” he said. “I would say woe betide the department that comes back to us with a supplemental [request] this year.”

The budget does not explicitly include the raises promised to state union workers in a new contract. But personnel costs are provided in lump sums, and each agency is left to figure out how to work in the raises. “What we accounted for was their FY 14 raises, and they way we did that was to give our departments maximum flexibility.” A bill that would appropriate back raises, which Gov. Pat Quinn has said he will now give members of the American Federation of State, County and Municipal Employees union after earlier freezing them, was not called for a vote in committee today.

Some of the unexpected revenue would be used to immediately pay down nearly $600 million in old human services bills. Harris said many of those payments would be eligible for federal matching funds under Medicaid. Some of the additional revenues were incorporated to the revenue estimate for next fiscal year and will be used to defer cuts to education and corrections. Republicans expressed concerns that the additional revenue projected should not automatically be used to increase spending in the budget. “We were conservative a year ago, and it served us well,” Arlington Heights Republican David Harris said.

Chicago Democratic Rep. Louis Arroyo said that the additional money allowed Democrats to funnel $70 million to the Department of Corrections to prevent the potential closure of more state prisons. “I believe there will be no prisons closing,” Arroyo said in a budget committee hearing this morning. “Corrections is going to be OK.” The House approved a public safety budget sponsored by Arroyo today. Higher education is seeing only a slight drop in funding.

Chicago Democratic Rep. Ken Dunkin said that higher education would avoid the 5 percent cuts the governor called for in his March budget proposal. The extra funds would give "additional breathing room for some of our communities," Dunkin said. The House higher education budget, which was also approved today, calls for the Monetary Award Program, which provides scholarships to low-income students, to be funded at a level slightly less than what Quinn presented in his budget. The program has suffered cuts in recent years.

The House did not approve its K-12 budget, but House Democrats who worked on it say a vote is expected tomorrow. The proposal adds more than $150 million to General State Aid for schools to keep the state's proration at 89 percent of the recommended funding level to schools. The bus transportation budget will be kept at 64 percent of recommended levels for schools. The new budget figures will also keep early childhood education and bilingual education at flat funding, compared to last year's budget.

House passes budget

Rep. Edward Acevedo pushed the “yes” button along with every the other House Democrat to pass next year’s budget – without their Republican counterparts. Last night, Acevedo said a lot could change and needed to change before 8 a.m. for him to support the budget. Apparently, that happened. The Chicago Democrat said he and the Latino Caucus met with the governor's office late Tuesday night to ensure the budget contained money for community-based programs, such as the Coalition for Immigrant and Refugee Rights. He said the programs made the cut, allowing him to vote "yes" and send the budget to the Senate.

Here's a recap of some programs that would benefit from about $55 billion in spending:
- Education: universal preschool, college tuition grants, and nurses' scholarships
- Corrections: more prison guards, methamphetamine addiction treatment centers and state police cars
- Health care: veterans' and children's health insurance, and some (emphasize some) Medicaid bill relief
- Environment: water conservation and renewable fuels
- Other: telecommunications (see "The new digital divide" in Illinois Issues May issue) and minority jobs

The state will partially pay for the programs by banking on higher-than-expected tax revenues, sweeping hundreds of dedicated funds, taxing some more businesses, phasing out some tax credits and programs, reducing state employee headcount and attracting more federal matching dollars.

The four-hour-plus “debate” allowed Republicans to object to and question numerous parts of the budget, which they said will result in the following:
- A more than $1 billion shortfall in the amount the state should pay into public pension systems
- A nearly $2 billion backlog of Medicaid payments
- More than $1 billion increase in spending. Of that spending, they calculated $800 million would be dedicated to “mysterious” pork projects and $1.6 billion obligated to pay debt.

To point out the budget’s shortsightedness, House Minority Leader Tom Cross of Oswego cited Illinois’ poor financial rating. He also said the pork-laden budget spelled out that this is election year. Rep. Dave Winters, a Shirland Republican, called the budget shameless and “a champagne and caviar budget.” Republicans repeatedly said they had not been invited to any budget negotiations since February, shedding themselves of any blame for obstructing the process.

Rep. Gary Hannig, the chief Democrat budget negotiator, closed the debate by acknowledging two criticisms: “You're spending a whole lot of money that you don't have … Then you're not spending enough on schools, prisons and social services.” He said because arguments fall on both sides, the budget negotiators succeeded in striking a compromise. “We found just that level of funding that actually makes this budget work.”

Update: The Senate is expected to vote on the budget Thursday. Stay tuned.

The blame game

By Jamey Dunn and Rachel Wells

It seems everybody had someone to blame today after a budget failed to pass both chambers of the General Assembly.

Senate Democrats, with no Republican backing, passed a plan and are now looking to the House to finish the job. “The action is over in the House. We have passed a budget. We have passed the revenues necessary to fund the budget, and it’s up to the House,” Senate President John Cullerton said.

The Senate passed:

House Bill 2428 which is similar to the House “Emergency Budget Act” that emerged last night. It requires legislators, state constitutional officers and agency executives to forfeit one day's pay each month during the fiscal year. It also extends the “lapse period,” the time when the state can pay off its bills from the previous fiscal year, from August 31 to December 31. It also gives Gov. Pat Quinn the power to borrow from special funds and includes the tobacco settlement “securitization.”

HB543 would let the state skip its employee pension payment until Quinn can find the nearly $4 billion needed.

HB991 would appropriate the money from a $1-a-pack cigarette tax increase, which passed in the Senate last year, to K-12 education, assuming that the increase, Senate Bill 44, passes in the House.

The Senate passed a spending bill early this morning. That plan would require Quinn to make about $2 billion in cuts from last year’s spending.

Although the Senate passed several major budget components, the House failed to pass any budget legislation or take up the bills the other chamber approved.

“[House Speaker Mike Madigan] doesn’t have the necessary votes to pass the bills that we have passed here,” Cullerton said. However, he added that budget negotiations frequently take longer than originally planned. “Every once in a while this happens at the end of the year.”

Needing Republican votes to pass a borrowing plan to finance the annual pension payment, Rep. Barbara Flynn Currie from Chicago, the House majority leader, pointed to the minority party for failing to propose a real alternative. “Borrowing for the pension payment is not a great thing to do, but it is, I think, the only thing to do, since no one has proposed a $4 billion cut in state spending.

“More than half of you supported a substantial borrowing program for the state universities as recently as yesterday, and you supported a plan like this just one year ago. So what’s changed?” Currie asked.

But, as Currie blamed Republicans for the possibility that the state might skip a pension payment, which would cost more money in the long run, House Minority Leader Tom Cross blamed Quinn for repeatedly disappointing them.

“A year ago, we said to you, ‘Yes, we will participate in a borrowing plan,’” Cross said. “The problem of today versus a year ago is we said to the governor, ‘Governor, we’re going to give you a chance, we have a new governor, a fresh start, we have some problems.’” But Quinn didn’t live up to House Republicans’ expectations, Cross said. “Our governor needs to lead. Leaders lead. He needs to cut; he needs to control spending; he needs to pay his bills; he needs to provide for job growth and Medicaid reform.”

The bill, SB 3514, only received 59 votes, 12 short of the number required for a borrowing measure.

Democrats then moved on to SB 1211, a spending bill that called for cuts equal to what the pension payment would be. The reductions were aimed at primary and secondary education, an unpopular area to cut. The measure failed by a wide margin, but House Speaker Michael Madigan challenged the minority caucus to file amendments detailing other cutting options.

Sen. Donne Trotter sees the troubles in the House as a chronic problem. “The House, I believe, has dropped the ball for the past two years in trying to be a partner and trying to make Illinois whole again. And it’s not easy, the economy is still bad, but there are certainly things that can be done that make it better than what it is now.”

Trotter said he doesn’t blame Quinn, and in the end the legislature has a duty to legislate. “He’s not our daddy,” Trotter said.

That may be the biggest passing of the buck to come out of the negotiations. Like last year, the General Assembly plans to give Quinn lump-sum appropriations and expects him to make what are sure to be unpopular cuts instead of negotiating a budget that doles out money by line item.

Cullerton blamed the recent financial crisis and lack of Republican support for pushing legislators to what he called the “dubious honor” of letting the governor make the spending decisions.

“In order to pass a budget when you have to cut so much, you have to get 30 and 60 people to agree to these cuts, and when the other party is saying no to everything, it makes it very difficult to pass,” he said.

Cullerton said Democrats "have worked on many, many things with the Republicans here. The one area where they just basically have just said we’re not going to help you is the budget, and that obviously is major area.”

But the deadline that the General Assembly missed today was really only one that they imposed on themselves.

As lawmakers left the Statehouse on Friday, on the day leaders had for months said would be the final day of their spring session, Rep. John Fritchey, a Chicago Democrat, said the self-imposed deadline didn’t matter. He said any budget deadline other than the constitutionally established date of May 31 is “arbitrary.”

Cullerton said both chambers will be returning before the end of the month.

Down to the wire

By Jamey Dunn and Bethany Jaeger, with Hilary Russell contributing
Some of yesterday’s moving parts actually started revolving around each other late in the day Thursday. The Illinois Senate approved two major revenue enhancements, one a sizable tax hike and another a major gaming expansion. That immediately put the onus on the House, which was in the middle of trying to advance an “insurance budget” to fund agency programs at bare bones levels.

Income tax increases and education funding
The momentum started in the Senate. Democrats tweaked a bill that was intended to address education funding, which would include an income tax increase of 2 percentage points for individuals. It would increase from 3 percent to 5 percent. Different versions of the measure have long been presented by Sen. James Meeks, a Chicago Democrat, but never found the support to pass. However, a looming deadline and $7 billion budget deficit this fiscal year has created new possibilities for an old concept.

One difference this time around is that the plan would only raise the corporate income tax rate from 4.8 percent to 5 percent, a much smaller increase than previously sought. It also would expand the sales tax to include services.

Senate President John Cullerton said the tax restructuring would help solve some of the chronic budget woes, but the plan would still come up $2 billion short of what the state needs to fully fund pensions and to maintain current spending levels. A vote for the tax plan, he said, inherently would be a vote for $2 billion in budget cuts.

House Bill 174 (the "new 750"), would provide some targeted tax relief. It would raise the personal exemption and increase the earned income tax credit over two years to protect low-income residents. It also would provide property tax relief, which attracted Democratic Senators.

Over time, the tax plan would funnel more money into education and higher education, something Meeks wanted for years to address funding disparities between school districts throughout the state.

Republicans opposed the tax increase and sales tax expansion, describing it as a mistake during a recession. Sen. Matt Murphy, a Palatine Republican, said: “There’s a lot of different ways we can go at this if we go line-by-line through this budget, and I know because I’ve done it. This will cause more Illinoisans to lose their jobs, without a doubt.”

The bill passed with only Democratic votes. Sen. Dan Kotowski, a Park Ridge Democrat, gave an emotional speech about making his last-minute choice to vote for the bill. He said he had been praying about his decision and cast the vote that he knew would make his family proud. He said he had been telling leadership that he would vote “present,” but he changed his mind during floor debate. After the vote, Kotowski encouraged some House Republicans to follow suit.

Cullerton said that passing the bill in the Senate may help House Democrats feel safer about changing their minds. However, he said that the bill would need Republican support to pass. “When one chamber starts and passes a bill, they see that we’re still walking around — we’ve got a different version of what the governor has — that there’s a way to do this. So I think it’s a good start.”

But Gov. Pat Quinn is still backing the income tax proposal that has been introduced in the House. “I think the [temporary income tax] plan we have here in the House is probably the one we’ll have to go with. It’s straightforward. It’s pretty simple. It’s for two years. And the whole idea is for at least at this time to hold off dire catastrophes.”

Gaming
Momentum to consider alternative revenue sources continued with a Senate vote to expand gaming by adding four new facilities, including new gaming facilities in Chicago, Waukegan, Rockford and Danville. Existing gaming facilities, including horse tracks, also could start operating more slot machines. Senate Bill 744 would generate at least $150 million upon issuing the licenses, according to Sen. Terry Link, a Waukegan Democrat. Once the new facilities were up and running and the economy improved, he said the package could generate up to $1 billion a year.

Building new casinos and riverboats has been tried numerous times in the past few years, and similar proposals haven’t advanced in the House. But, Link said: “They need money and here’s a good way to give them money. So I think it's future is a lot better tonight.”

Rep. Bill Black, a Danville Republican who would receive a gaming facility in his district through Link’s bill, said the state may need an income tax increase. Then again, he said: “When you’re drowning and a life preserver floats by, your impulse is to grab it. When you have a community that’s so desperate for investment and jobs, you turn to things you normally wouldn’t even consider. I would support the riverboat. I don’t have the luxury to say I don’t.”

Bare bones budget
The so-called “insurance budget” advanced by House Democrats as a back-up plan would fund state agencies at about 80 percent of the level they were funded at last year, which would be about 50 percent of the governor’s proposed budget.

Majority Leader Barbara Flynn Currie tried early in the day to advance a temporary income tax increase. That wasn’t gaining enough votes. So late Saturday night, Currie tried to at least approve the “insurance budget” to keep the lights on, so to speak. Without it, agencies would be funded at 32 percent of Quinn’s proposed budget.

But after word spread that senators approved an income tax increase across the rotunda, several House Democrats started to peal off support for a bare bones budget. Rep. Sara Feigenholtz, a Chicago Democrat and vocal advocate of human services, urged fellow lawmakers to hold off on a bare bones budget to “continue to fight for more solutions.”

Currie said she would prefer either version of an income tax over a bare bones budget, but it was a way to ensure something landed on the governor’s desk just in case chaos ensued Sunday, the last day of the regularly scheduled session.

If all else fails, Currie said she would call the bare bones budget again before Sunday’s midnight deadline. Here’s what it would do:

On the revenue side:

• Sweep $356 million from dedicated funds four times throughout the year.
• Refinance debt to get a 4 percent interest rate and save $600 million next year, saving $237 million over the life of the bonds.
• Along with tapping into federal funds and starting other efficiencies, it would generate about $1 billion.

On the spending side:

• State agencies could receive lump sums at half the funding level proposed by the governor.
• The administration would have to figure out how to spread the money around and to cut certain grant programs.

House passes a budget

By Jamey Dunn and Rachel Wells

Legislators voted tonight to borrow billions to the make the pension payment for next fiscal year and to give Gov. Pat Quinn “emergency powers” to shift funds and cut the budget.

A group of House Democrats presented the budget ideas they came up with while the General Assembly was out of session for two weeks. But by the end of the day, the plan that passed out of the House was similar to the one that emerged earlier this month.

Earlier in the day, Democrats voted down or withdrew proposal after proposal, including $300 million in cuts to K-12 education, $100 million in higher education cuts and a plan to make state retirees pay health care premiums, which would have saved an estimated $100 million.

The largest and most contested component of the budget, $4.09 billion in borrowing to make the pension payment, narrowly passed this evening. It failed by one vote the first time it was called today. After some arm twisting by Democratic leadership and Quinn, Lynwood Democratic Rep. David Miller, one of two members in opposition from his party, changed his vote.

Elmhurst Rep. Robert Biggins, one of only two Republicans to vote against his party, said he decided to support pension borrowing, Senate Bill 3514, after speaking with the governor’s office while the rest of the House minority party met in private. “I thought about all the people in Illinois. This is the responsible thing to do,” said Biggins, who had voted against borrowing earlier in the evening. “This is a much less expensive way to go.” Biggins, about to retire from the General Assembly, said he did not ask the governor for anything, nor was he offered a job in return for his support. Danville Rep. Bill Black, another Republican who is retiring after the current session, voted consistently in favor of borrowing.

Other Republicans who had agreed to borrow for last year's payment after being promised cuts they say never materialized did not support a similar plan this year because they said Democrats haven’t done enough to trim the budget and encourage job creation.

“[Republicans] participated in that process to help [Quinn,] in his first term, try to address some issues,” Minority Leader Tom Cross said. “Many would say it was a mistake. … We get, this year, the downside of not making a payment, and we are not saying, ‘Don’t make a payment.’ We’re saying we want to fundamentally change the way we run government in Illinois,” However, House Majority Leader Barbara Flynn Currie of Chicago, the sponsor of the plan, said members on both sides of the aisle do not have the will to make cuts that would add up to the money needed for the payment. “You need 60 people to vote ‘yes’ to pass cuts of this magnitude, and [those people] are not in this chamber,” she said.

The House also passed its version of the “Emergency Budget Act,” introduced earlier in the month, with some new cost-saving measures tacked on. Senate Bill 3660 would:

• Extend the time the state has to pay any overdue FY2010 bills from August 31, 2010, to December 31, 2010.
• Require lawmakers, constitutional officers and executive agency directors to take 12 furlough days.
• Create an independent state agency called the Railsplitter Tobacco Authority. The state would transfer its future payments from a national tobacco settlement to the agency, which would issue $1.7 billion in bonding, with the settlement money pledged to pay off the borrowing.
• Allow the governor to borrow from special funds for the General Revenue Fund and Common School Fund. That money would have to be put back into the special funds 18 months after it was borrowed.

The new cuts in the bill would:

• Require state agencies to review contracts for opportunities to renegotiate, terminate or re-bid. House Democrats estimate that could save $300 million.
• Eliminate cost of living increases for legislators, state’s attorneys, constitutional officers and some state agency employees and members of boards of commissions for FY 2011.
• Reduce the per diem payments legislators get on session days from $139 to $111 and reimbursement for car travel from 50 cents a mile to 39 cents a mile.

A “tax amnesty” bill the House passed today would bring in an additional estimated $250 million.

SB 377 would allow anyone owing past due taxes between 2002 and 2009 to pay them during a tax amnesty period without penalties and interest. State agencies would also be allowed to enter into deferred payment agreements, settle debts at no less than 80 percent of the amount due and use private debt collection agencies to obtain owed money. Anyone who fails to take advantage of the tax amnesty period, from October into November 2010, would be charged double the penalties.

The House passed the Senate’s spending bill, HB859, which would cut 5 percent from agency operating budgets. Other than those cuts, the measure appropriates lump sums equal to last year’s spending to Quinn, giving him the power to cut where he sees fit.

Currie said that the education funding in the bill hinges on the House passing a $1-a-pack cigarette tax increase that the Senate approved last session. If not, she says at least $327 million in cuts to K-12 would be the alternative. The proposal lacked the needed votes in the House earlier this month.

The Senate is back in session tomorrow, and House members plan to be in at least through Thursday. The House passed the basic structure of a budget today, but changes could still be in the works. Check back for updates.

House plans human services cuts

By Jamey Dunn

The Illinois House is planning to fund human services in its budget at a lower level than Gov. Pat Quinn proposed in his budget.

“We’re looking at cutting $770 million form the governor’s introduced budget, which are horrendous cuts,” Rep. Greg Harris said this morning before heading into a working group meeting, which is not open to the public, to negotiate the human services portion of the House budget with other members of the House human services budget committee. Quinn called for an increase of about $340 million for the Department of Human Services for next year when compared with the current budget.

Harris said that he hopes pass a bill that would spend more on human services this fiscal year as an effort to soften the blow of next fiscal year’s cuts. Income tax revenues for the current year will exceed previous estimates by $1.3 billion. However, some of that money has been used to pay down a chunk of the state’s overdue bills to schools, vendors, social services providers, local governments and others. “The economy has begun the rebound; not a lot but a little. So we have had money come in that was above our target for FY 13,” Harris said. He said spending some of that money on human services this fiscal year, which ends on June 30, “would certainly make our job less horrible and the cuts less painful on people. I hope that everyone will go along with doing that so that we can minimize the cuts, but we still have to continue to look for ways to live within our means and not overspend our budget every year.”

Harris said he did not know when the human services portion of the House budget would be complete. He said members of both parties serving on the committee, which he chairs, are trying to reach agreements. “We’re all trying to work together, and we want to work in a collegial way.” Whatever the House passes would also have to be approved by the Senate and signed by Quinn.

Tax talk

It’s almost like we’ve come full circle. The spring session started with momentum behind talk of state tax increases to address funding for education, public employee pensions and health care. But the Statehouse chatter fizzled by the time the General Assembly missed its May 31 deadline to approve a state budget. Now, 48 days later, a couple tax ideas have popped back into summer budget negotiations.

It’s like déjà vu. House Speaker Michael Madigan announced on Chicago talk radio and to the Statehouse press Wednesday that the best way for Gov. Rod Blagojevich to get new revenue is to consider that the majority of House Democrats support some kind of an income tax increase. But Blagojevich has repeatedly and passionately promised to reject an increase in the state income or sales tax. The only possible change is by Senate President Emil Jones Jr., who has sided with the governor since he first proposed the now defunct gross receipts tax on businesses to fund health care. Jones said Wednesday, however, he would consider an income tax increase.

“[HB] 750 had the regressive sales tax, which I strongly oppose,” Jones said after a budget meeting in the governor’s Statehouse office. “But I’m open to the income tax, as well.” (The 750 legislation has long called for an increase in income and sales taxes to reduce property taxes and reform the way the state funds education.) When asked whether he could change the governor’s mind on an income tax increase, Jones said, “The governor was opposed to gaming, and I persuaded him to back off his opposition to gaming. And so if the House passes the income tax as the speaker indicated on WVON, he should go ahead and pass the legislation, and we would give it a strong consideration in the Senate.”

Madigan even made a point to tell the press that he had dinner with Jones Tuesday night in Springfield. “The most significant thing for me coming out of the meeting was that Sen. Jones strongly indicated that he was willing to work with me to finalize the budget for the next fiscal year,” Madigan said. He also said gaming was not in the budget that he was preparing.

But Jones said he wouldn’t accept a budget without gaming expansion unless Madigan came up with an alternative revenue source to fund Jones’ desired $1.5 billion increase in education funding. Jones said other revenue ideas still on the table include the closure of some corporate tax breaks and an alternative minimum tax, which would apply to businesses that make a lot of money but that don’t pay a lot of state taxes. The way to come up with a compromise on alternative revenue ideas, Jones said, was up to the speaker. “Now it’s up to [Madigan] to provide the quality leadership to get additional dollars we need for education — quality leadership.”

Senate Republicans oppose the idea of an income tax increase, according to Sen. Minority Leader Frank Watson. But his caucus’ votes wouldn’t be needed if the Senate Democrats utilized their veto-proof majority of 37 to 22. Over in the House, Republicans would be needed to override to a governor’s veto on an income tax increase.

House Minority Leader Tom Cross wasn’t feeling today’s leaders' meeting as he made an early exit. “We’re having the same discussion that we had in January, February, March, April, May, June, and now July,” he said, raising his voice a little more than normal and seeming more perturbed. “We’ve had a budget process, we’ve had a committee process, we have caucuses, and we hear political rhetoric and political speeches everyday, and it doesn’t bring us any closer to conclusion.”

Poll results favor Illinois Covered
BY DEANESE WILLIAMS-HARRIS
Will the results of a poll released today by Lake Research Partners make some lawmakers change their tune about the governor’s Illinois Covered proposal? One survey question in particular foreshadows campaign season. When asked whether they would be more likely to re-elect their legislator if he or she supported the governor's health insurance plan, out of the 600 likely Illinois voters surveyed, 55 percent said they would. That number breaks down to 67 percent Democrats, 40 percent Republicans and 52 percent Independents.

Participants also were asked whether they would support a plan if it were paid for by an increase in gaming taxes, a tax on employers who don’t offer comprehensive health insurance and an insurance premium based on the ability to pay. Seventy-eight percent were in favor of those three funding sources; 15 percent opposed and 8 percent were undecided.

People also identified that they thought the focus for this summer's special sessions should be health care costs and health care reform (88 percent), education investments and reform (80 percent), improving roads and transportation (65 percent), as well as unfunded state pensions (53 percent).

“The people of Illinois are telling us that health care is their top priority and we cannot let them down,” said Gov. Rod Blagojevich in a press release today. “This year in Illinois, we have a unique opportunity to pass the most comprehensive health care plan in the country that would give every family and small business in our state access to affordable health coverage.”

The poll was sponsored by America’s Agenda Health Care Education Fund, the AARP, the AFL-CIO and the Campaign for Better Health Care. All of those organizations supported Blagojevich’s Illinois Covered plan from the beginning.

House passes spending cap

By Jamey Dunn

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

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

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

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

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

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

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

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

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

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

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

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

Lawmakers keep busy on the second day of veto session

By Jamey Dunn

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Baby steps

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

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

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

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

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

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

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

House approves additional funds for home health care for seniors

By Meredith Colias

The Illinois House approved a temporary fix in an attempt to solve a $173 million funding shortfall for a program that provides in-home services for the elderly.

The Community Care Program in the state Department of Aging administers services including adult day care and pays providers to help its elderly clients at home with everyday tasks such as errands, groceries and bathing. It is estimated the yearly costs to care for elderly in their homes are about one-fourth the cost of paying for someone living in a nursing home.

Pending the potential influx of money, Department of Aging Director John Holton confirmed that the agency does not have the funding in its budget to pay providers until next  fiscal year’s budget funds become available on July 1. To cover that shortfall, the House approved a supplemental appropriation that will keep the program operating through the remainder of this fiscal year.

Jacquie Algee, director of relations for Service Employees International Union health care, said the House vote was a positive development, since 85,000 people depend on services paid for by the state. “We’re really pleased that [they] did the right thing, in our opinion,” she said. If the measure passes the Senate and is signed into law, she said, providers dependent on payments from the state “should be in a good place.” A similar issue could also arise in Fiscal Year 2014 because the department is scheduled to use about $142 million of that year’s budget to pay off expenses from FY 2013.

 Rep. Patricia Bellock, a Hinsdale Republican, said dealing with unbudgeted expenses was less than ideal because the state was forced to divert money from a plan to pay past Medicaid bills that were matched by the federal government. “Those are all pressures above the line. How are you going to pay for that?”

 Because demand for the Community Care Program is expected to grow in the years to come as the elderly population grows, other lawmakers are looking for ways for the program to cut its future costs. House Bill 2275, sponsored by Rep. Sara Feigenholtz, a Chicago Democrat, hopes to avoid a similar situation in the future by prohibiting the department from pushing off bills onto the next year’s budget unless approved by the comptroller and governor.

The legislation would also restrict the amount of hours that employees are allowed to claim for tasks such as doing laundry and be subject to GPS tracking to make sure they are actually going to homes to take care of clients. “All of the levers in the bill need to be pulled in order for this to work,” she said of the efforts to cut costs. It is necessary to make sure the services can still be provided, she said. “If we don’t pay these bills, what is going to end up happening is the doors of community care providers around the state of Illinois are going to close, and seniors will have nowhere to go except for a nursing home,” she said.

Legislators start final push on big issues

By Jamey Dunn and Lauren N. Johnson

With less than a week before their adjournment deadline, Illinois lawmakers are making final attempts to get several large proposals passed in the last days of regular session.

Pension benefits
House Minority Tom Cross submitted his proposal today to reduce future retirement benefits for current state employees. According to Cross' spokesperson, Sara Wojcicki, he plans to present his amendment to Senate Bill 512 in a House committee tomorrow morning. Under the proposal, current employees would be able to keep the benefits they have already earned. But starting July 1, 2012, they would have to pick one of three plans that call for larger contributions or reduced benefits. Employees could stay in their current defined benefits plan, but their contributions would increase:

• State Employees’ Retirement System (SERS) State employees who will also receive Social Security benefits currently contribute 4 percent of their salaries. Under the proposal, they would have to pay 9.29 percent. Members of SERS who do pay into Social Security now contribute 12.5 percent of their pay. They would have to kick in 18.91 percent under the proposal.State Employees’ Retirement System Alternative Plan Members of the alternative SERS system, which includes workers with potentially dangerous jobs, such as prison guards, and who also have an earlier retirement age, contribute 8.5 percent of their salaries now, if they also pay into the Social Security system. Under Cross’ plan, they would have to chip in 16.65 percent of their pay. Those who will not get Social Security pay 12.5 percent of their salary now and would have to pay 18.91 percent.
• Teachers’ Retirement System (TRS) Illinois teachers, except Chicago teachers, currently pay 9.4 percent of their salary and will not receive Social Security benefits. Under the bill, they would have to contribute 13.77 percent. Chicago teachers would see their contributions increase from 9 percent of their pay to 12.75 percent.
• State University Retirement System (SURS) University employees currently contribute 8 percent of their pay. Under the proposed change, they would pay to 15.31 percent.
• General Assembly Retirement System (GARS) Legislators currently contribute 11.5 percent of their income to retirement benefits. They would pay 24.89 percent under the proposed legislation.
• Judges Retirement System (JRS) Judges kick 11 percent of their pay into their retirement. Under Cross’ plan, they would pay 34.04 percent. Lawmakers reportedly considered leaving judges out of the plan, but according to Wojcicki , they will be included in Cross’ proposal.

The amount that employees would have to pay to stay in their current benefit plans would be recalculated every three years.

Under Cross' amendment, employees could also opt to move down to “tier two” of the system — which was passed by legislators in one day during last year’s legislative session — and applies to all employees hired after January 1 of this year. Or they could choose to participate in a self-managed plan, similar to a 401K. Under the self-managed plan, employees who would collect Social Security would contribute 6 percent of their salary, and those who would not would contribute about 4 percent. The state would match those contributions

Employees who chose the old benefits could opt to switch when the rates they must pay are refigured every three years. If they left the so-called tier one plan, they could not return to it but would keep all the benefits they earned under it.

Senate President John Cullerton has said he believes changes to current employee benefits would be unconstitutional. However, he has vowed to call the bill for a floor vote in the Senate if it passes in the House.

Borrowing
A Senate committee today approved a plan to borrow about $6 billion spread out through four proposals to pay down the state’s unpaid bills to vendors, schools, hospitals and local municipalities.  “In some instances, those bills are months and months old; in some cases they are over a year old. So, a tremendous backlog of unpaid bills,” said Sen. John Sullivan, a Rushville Democrat who is backing the legislative package.

Sullivan sponsored four Senate bills that make up the plan and total $6.17 billion:

• SB 342 would pay $1.5 billion owed to state vendors, non-governmental entities and private businesses. Sullivan said vendors have had to take out lines of credit, cut jobs and reduce their services as result of late payments or nonpayment.
• SB 343 would address payments owed amounting in $1.1 billion for health care providers whom the state contracts with for its group health insurance programs.
• SB 344 would restructure debt for private businesses waiting to be paid their corporate tax refunds by paying $800 million to the sector.
• SB 345 would provide the largest amount of money from the state to school districts, universities, community colleges and local units of government, amounting in $2.7 billion. Schools say that have had to make layoffs and cut programs as result of unpaid bills from the state.

Sullivan said his plan would pay off the bonds over the next seven years using money from the recent income tax increase. It would cost the state about $804 million in interest. “Even though it’s slightly different from the variation that we proposed three weeks ago, we think it makes a lot of fiscal sense and economic sense,” said Gary Plummer, president of the Springfield Chamber of Commerce, a group that suggested a similar plan almost a month ago. “It will allow the state to make good on past due bills owed for goods and services provided by agencies and vendors in good faith throughout the state.”

Although, the plan differs from an earlier borrowing proposal by Gov. Pat Quinn that called for borrowing $8.7 billion to be repaid over 14 years, Kelly Kraft, spokeswoman for the governor’s office, said Quinn has remained flexible with his proposal and supports Sullivan’s plan. “Overall, when you’re dealing the budget, it’s a negotiation process, so there’s give and take throughout. So this is something that we do talk about with legislators, as well as the budget,”  Kraft said. “We just want to come up with the best plan for everyone.”

However, the plan will need Republican support in each chamber to get the required super majority needed for the state to borrow. Senate Republicans, who have opposed additional borrowing, agree that individuals and businesses owed by the state should be paid in a timely matter but suggest that there are other ways to address the backlog. Sen. David Luechtefeld, an Okawville Republican, remarked: “Yes, you want your money, but it’s not going to be too long before those bills are going to go right back up because there’s no way to pay them anymore. We’ve borrowed too much.” Cullerton said Senate Democrats are looking for the Republican backing needed to pass the borrowing plan. “That will take some time,” he said.

Energy
House members are supporting a new version of a controversial proposal that would allow utility companies to raise rates while also requiring them to invest in infrastructure, as well as a proposal to build a coal plant that would utilize carbon emission reducing technology.

SB1652 would allow Commonwealth Edison and Ameren, the state's largest electric utilities, to increase customers’ rates by up to 2.5 percent annually and would require both companies to invest a combined $3.2 billion  in infrastructure to upgrade the existing electric gird and add so-called smart grid technology. Unlike in previous incarnations of the plan contained in House Bill 14, the Illinois Commerce Commission, which currently has to sign off on rate hikes, would decide on the increases.

The measure would also require utilities to meet benchmarks for customer service and reliability. The ICC would monitor the progress, and the utilities would face fines if they failed to meet the goals. The ICC would also review rates in 2014, and the entire bill would sunset in 2017, meaning lawmakers would have to approve it again.

David Kolota, executive director of the Citizens Utility Board, said the changes to the proposal are encouraging, but he said the customer-service benchmarks may be set too low.

On the policy front, on smart grid policy, it’s definitely a significant step forward,” said Kolota, whose consumer advocacy group opposed the original plan. “All [the previous plan] said was, ‘We’re going to do smart grid.’ It was like one sentence.” He said he is concerned that the rate cap is only in place until 2014. “We certainly wouldn’t want to see a situation where consumers are soaked and suddenly get hit with a significant rate increase.”

Orland Park Democratic Rep. Kevin McCarthy, a sponsor of the bill, acknowledged that the changes will not be enough to please all stakeholders. “I don’t pretend that these changes are everything some of our colleagues wanted.”

Sen. Mike Jacobs, an East Moline Democrat who sponsors the bill in his chamber, said the benefits that customers will see in future savings, as well as in more reliable power, are worth the up-front investment of higher rates,which sponsors estimate will average about $3 per household each month. “You can’t base this off price. That’s kind of silly. We’re dealing with hundred-year-old technology, and if consumers want something to work, they’ve go to pay for it. And the fact is, it costs money, and you know there’s nothing for free. My cable bill went up $10 a month last month nobody even asked me if they could raise it,” Jacobs said.

The changes were not enough to win the support of one vocal opponent, Attorney General Lisa Madigan. “A day after winning a $156 million rate increase, ComEd just can’t help itself. Today, their legion of lobbyists continue to push legislation that will require consumers to fund billions more in guaranteed profits. This new proposal is just more of the same — a plan that hits consumers where it hurts the most — their wallets,” Madigan said in a written statement. The ICC approved a ComEd Rate increase yesterday. Gov. Pat Quinn, who vowed to veto the earlier version of the plan, declined to weigh in on today’s proposal.

“If you want to vote in this General Assembly, run for the office,” Jacobs said in response the Madigan’s opposition.

Meanwhile, the attorney general did throw her support behind an attempt to resurrect a plan to help Tenaska Energy build a “clean-coal” plant near Taylorville. Paul Gaynor, chief of the Public Interest Division of the attorney general’s office, said that the Tenaska plant is a better investment for Illinois utility customers, calling the plan rate neutral. Energy generated by the plant would initially come at a greater cost, but supporters say that a provision giving the Illinois Power Authority more flexibility in purchasing power would result in savings that could negate any substantial rate increase.

Northbrook Democratic Rep. Elaine Nekritz, one of the House sponsors of SB 1653, said she hopes to get the plan through both chambers before the end of the regular session on Thursday.

Budget
Senate President John Cullerton said that the House and Senate are working to bring their proposed budget numbers in line and that a vote could come over the weekend. He said the Senate will likely come down to the House’s revenue estimate, which is $1 billion less than the estimate contained in the budget proposal passed by the Senate. Echoing House Speaker Michael Madigan, Cullerton said revenue that comes in beyond the estimate could be used to pay off overdue bills.

Workers' compensation
A House committee approved SB1933, which would repeal the current worker’s compensation system. House Democrats, including Speaker Madigan, have threatened to destroy the current system if stakeholders cannot agree on a reform package. The legislation would force any worker's compensation claims into the courts. The bill is sponsored by Marion Democratic John Bradley, who has been working on negotiations. Bradley said that the passage of the bill was not a indication that talks had fallen apart, but said he wanted to keep all options open. Cullerton said, “I think we’re really close to an agreement on workers’ comp — an agreement on workers’ comp among a number of the stakeholders.”

Redistricting
Cullerton also said he expects some changes to the Senate Democrats’ proposed legislative map to surface tomorrow and that the proposed map of congressional districts would come sometime after that.

Tomorrow is expected to be a busy day for the legislature. Check back for updates.

House passes comprehensive pension changes

By Jamey Dunn with Meredith Colias contributing 

The Illinois House approved changes to the state’s pension systems today that supporters say will likely be the plan that makes it to the governor’s desk.

“Obviously, it does not meet every request. Obviously, it does not make everybody happy. But I think we’re all familiar with the severe fiscal problems of our state. The fiscal problems of the pension systems are a large large part of that broader problem,” said House Speaker Michael Madigan, sponsor of Senate Bill 1. “In my judgment, this is a critical action that must be taken now. It must be taken for future budget making. It must be taken for the fiscal well-being and reputation for the state of Illinois.”

The bill would cap pensionable salary at $109,000, increase retirement ages for employers younger than 36 and increase employee contributions by 2 percent of their salaries over two years. Compounded cost of living adjustments would be capped based on the amount of time worked. For each year on the job, the cap would increase by $1,000. For example, if an employee worked for 30 years but received less than $30,000 of annual pensions benefits, he or she would receive a compounded COLA until the pension benefit caught up with that cap. Then the COLA would be flat amount going forward. Madigan said that it was the House’s affirmative vote a few weeks ago on capping COLA benefits that indicated a comprehensive plan could make it through the chamber. “I think that told the tale, and then we put the bill together,” he said.

Senate Bill 1, which passed 62-51 with two representatives voting “present,” is expected to save almost $2 billion up front and aims to fully fund pension benefits by 2044. The proposal also contains a guarantee that the state makes its annual required payments. When the state pays off bonds that were used to cover previous pension payments, $1 billion of that money will go toward the unfunded liability annually. House Leader Tom Cross, who a co-sponsor of SB 1, warned that lawmakers must become more fiscally prudent if they hope to live up to the funding guarantee in the bill. “I think we all need to keep in mind ... we can put anything we want in the law, and we can talk about the guarantees. But if the General Assembly, either the House or the Senate, doesn’t have the capacity or the willingness or the understanding to not spend more than we have, then it really doesn’t matter what we put in the law.”

House members listening to pension floor debate.

Rep. Thomas Morrison, a Palatine Republican, argued that the proposal would not go far enough. He said public employees should get all their benefits earned to date but should then be moved into 401(k)-like plans. “Other states have gone down this road. ... There are huge, huge problems with defined benefits systems,” he said. “I think there are some good reforms in this bill. I wish it would go significantly farther. I think we owe it even to the members of these pension systems to go significantly farther because I still am not confident that passing this bill is going to fulfill a promise to those workers who are counting on (pensions).”

However, Rep. Elaine Nekritz, a key player in the push for pension changes, and others noted the significance of today’s vote. “Today, we are very much taking an historic step to getting Illinois back in fiscal order,” said Nekritz, a Northbrook Democrat. “It’s historic in two ways. It’s historic because of the dramatic nature of the legislation itself. These are steps none of us relish taking, but we know we should. It’s also historic because we as a body today are sending a very clear message. We are putting necessity ahead of political expediency and doing the right things instead of the easy thing.”

Union leaders have the opposite view of today’s vote. They believe that cutting the benefits of workers who never failed to make their required payments toward their pensions is unconstitutional and just plain wrong. “Senate Bill 1 is unfair to the active and retired teachers, nurses, police and other employees who paid out of every paycheck to fund their pensions, even as the state shorted its share. On top of that, it is blatantly unconstitutional and thus saves nothing. It simply exacerbates Illinois' fiscal problems. In contrast, our coalition had a productive meeting today with [Senate] President John Cullerton, and we hope to be able to continue the dialogue,” said a statement from the We Are One Coalition. Cullerton has said he believes that the House plan is unconstitutional. He is working with union officials to try and craft a plan.

Madigan today dismissed the talks as a stalling tactic from the unions. He pointed to the negotiations of the union’s contract, which took more than a year. “I think this is a continuation of what we experienced a year ago. Henry Bayer [executive director of the American Federation of State County, and Municipal Employees Council 31] and the We Are One Coalition—where day to day they simply want to delay, delay, delay because maybe the problem will go away. Precisely what they did on the collective bargaining. And they only came to the conclusion on the collective bargaining because they knew there would be action in the legislature.” Madigan called Bayer an “expert at delay.”

However, the unions and Cullerton say they are making an earnest effort. Cullerton said Wednesday that the coalition presented him with a “credible constitutional plan.” But Madigan said that even if that is the case, it is unlikely that members of his chamber would go for a different bill that, all other things being equal, Cullerton admits would save less money. “I don’t expect that they’ll be able to come to an agreement such that people will be prepared to back away from this bill. There’s two chambers here, and both chambers have to pass the same bill. The House has passed a bill, and so whatever the Senate does, I don’t think it would achieve the cost savings that the House bill does.”

Senate Minority Leader Christine Radogno said she expects Republicans to support SB 1 if it is called for a vote in the Senate. “I am pleased the House will be sending over a comprehensive pension reform bill. These are substantial reforms that take a huge step forward in stabilizing the state’s finances,” she said in a written statement. She urged Cullerton to move ahead with the legislation. “A significant number of Senate Republicans supported similar legislation earlier this session. I anticipate they will join with me again to try to pass this bill to the governor’s desk. I’m appreciative of the Senate president’s efforts on a different framework, but the momentum may be building on this bill. Illinois desperately needs pension reform—we can’t afford to wait any longer.”

Gov. Pat Quinn congratulated the House on its vote in a written statement. “Today the Illinois House of Representatives took the biggest step to date towards restoring fiscal stability to Illinois. With the passage of this comprehensive pension reform solution, Illinois is closer than ever to addressing a decades-long problem that is plaguing our economy, our bond rating and the future of our children.”

Before the vote, Quinn said he does not want to dismiss the talks going on in the Senate. “I want to make sure that everybody has their say in both houses of the legislature,” Quinn said this morning. “We have to do it. The sooner it’s done, the better. I do think it’s important that both houses of the legislature know that it’s imperative this month that we pass a bill through both houses that comes to me so I can sign it into law. I want to make that point very clear to all the members of the legislature. We cannot delay. We cannot postpone. Our moment in history to get new pension reform is right now.”

Republicans say Quinn won't cut enough

By Jamey Dunn

Republicans said today that Gov. Pat Quinn is exaggerating his budget cuts, and his plan relies too heavily on taxes and borrowing.

Sen. Matt Murphy, a Palatine Republican, called Quinn’s budget “a lot of smoke and mirrors.”

“The governor came out and wants to convince people that he heard the people of this state when they said they want government to rein in spending. He is trying to convince people he’s going to cut $2.6 billion, when it’s clear that at best, he’s got $200 million up there in unspecified cuts [if his proposed 1 percentage point tax increase passes], and this is from a guy who’s got a track record of claiming he is going to cut and not having the guts to go ahead and do it,” he said.

However, Kelly Kraft, spokeswoman for Quinn’s Office of Management and Budget, said if the governor’s proposed income tax increase passes, there would still be $900 million in cuts. She added that Quinn is seeking to make $400 million more in reductions, in addition to the cuts he proposed in March.

“That’s still a huge amount of money,” she said. “We are making the cuts that we can. We are making responsible cuts.”

Republicans are calling for more substantial cuts before they would even consider a tax increase.
“Because we do, in the end, have to be specific with this. I would think that a number that would cause movement [on the governor’s budget] over in the House would be in the range between $2 billion and $3 billion,” said Sen. Chris Lauzen, an Aurora Republican.

Lauzen said those cuts could be achieved through Medicaid reform and changes to pension benefits for current employees. He also said that Illinois needs to lobby Washington, D.C., for more flexibility in spending stimulus money.

Quinn and Sen. President John Cullerton have both said that changes to pension plans for those who already work for the state would be unconstitutional.

Lauzen said he voted for billions in borrowing in the current fiscal year’s budget because the governor promised cuts that he says never materialized. “I voted for that borrowing, and I saw how it was used. I will not vote for that again — period, I won’t. I won’t be foolish a second time.”
Quinn proposed $4 billion in borrowing as part of the plan he unveiled last month.

Republican leaders are asking for a list of the cuts Quinn says he has made to the current fiscal year’s budget. Kraft said her office will give Republicans those numbers in the next few days.

Sen. Dave Syverson, a Rockford Republican, is optimistic about Illinois making a financial recovery, but he says it will take time.

“If we address the spending first and then we work on a plan to start paying off that debt by growing our economy, we can get through this. We just can’t get through it by continuing to spend at high levels and continuing to borrow and raise taxes. We can get through this, and we don’t have to do it overnight,” he said.

House leaders hopeful about pension vote

By Jamey Dunn

An Illinois House vote on changes to the state’s pension systems is planned for Thursday, and legislative leaders from both parties are optimistic that the newest iteration of pension reform can pass.

A House committee this morning approved an amendment to Senate Bill 1 presented by House Speaker Michael Madigan. “This amendment would offer a comprehensive reform of the Illinois pension systems. It would bring solvency and stability to the four systems,” Madigan told the committee. The measure contains several provisions pulled from other bills, including ideas that have already been approved by the House.

The new version of SB 1 would:

• Increase the retirement age for employees younger than 46. Employees from 40 to 45 would see a one-year increase, employees 35 to 39 would see a three-year increase and employees 34 and younger would see a five-year increase. 
• Require employees to contribute 2 percent more of their salaries. The increased contribution would be phased in over two years. 
• Cap pensionable salary at $109,000, the limit that is currently used for Tier Two employees. The cap would increase at the rate of one half of the Consumer Price Index that is set for urban consumers. 
• Base the amount of pension benefits that would be eligible for cost-of-living adjustments (COLAs) on the amount of time employees worked. For each year of employment, $1,000 (or $800 for employees who receive Social Security benefits) of pension income would be eligible for a COLA. For example, if an employee worked for 30 years, then $30,000 of his or her retirement benefit would see an annual COLA. Before employees reached their cap, they would receive a compounding COLA. After they reached the cap, they would get a flat annual increase. 

The measure does not contain any shift of future pension costs to schools outside of Chicago, public universities and community colleges. Such a provision helped sink an effort to pass pension changes in the final days of the legislative session last spring.

Chicago pays most of the employer cost for its teachers’ pensions, and Chicago Democrats have argued that it is unfair that the state chips in for benefits for teachers outside of the city. Madigan said he plans to move some kind of cost shift separately from SB 1. “I plan to do that on a different bill,” he said. “We haven’t begun that process.” However, he said he wants to pass it this session. Republicans, who oppose the cost shift, argue that Chicago makes out better than the rest of the state when it comes to overall education funding.

SB 1 aims to fully fund pension benefits by 2044. However, Madigan said there has not been an actuarial analysis of this new plan. “The only thing we can do today is to work off of the numbers that were generated from the other bills. So there’s a certain amount of speculation.” He said that if the bill were approved and signed into law, legislators should not count on any savings until the Illinois Supreme Court weighs in. “I just think that it would be prudent not to spend the anticipated savings in the next budget.” Madigan said he is confident that at least four members of the court would find the bill constitutional. However, he said that he had not talked with any of the justices about the legislation and did not plan to in the future. “It’s just my judgment,” he said. “I’ve had no conversations with any member of the court.”

The changes in SB 1 would apply to teachers outside of Chicago, state employees, legislators and university and community college employees. The state’s judges are not included in the plan. “That’s a practical judgment,” Madigan said about leaving out the judges. When pressed on the issue, he said he had “no further comment.”

Union leaders panned the bill, calling it blatantly unconstitutional and unfair to workers who made their required contributions while the state skipped payments. “The problem with this amendment is there is no shared sacrifice. While we ... have been willing to work collaboratively toward a fair and constitutional solution, this amendment represents a diminishment of benefits clearly prohibited by the Illinois Constitution,” said Michael Carrigan, president of the Illinois AFL-CIO. “Fixing a funding issue on the backs of public-sector workers, hard-working Illinois workers, by slashing their retirement benefits is not good public policy and will result in a legal challenge [that is] certain to be successful.”

Cinda Klickna, president of the Illinois Education Association, said the benefit cuts in the bill would make it difficult for some retirees on fixed incomes to make ends meet. She said that cuts to their incomes, which would likely result in them spending less, could hurt local economies. “Every public employee will be hurt. Every community will feel the impact, and it is about people,” Klickna said. “We can talk about numbers, we can talk about the state budget. We can talk about what something saves, but I think it’s a sad state of affairs when the state ignores its people.” Klickna added that increasing the retirement age means teachers would stay in their positions longer, making it more difficult for aspiring young teachers to find jobs.

But the unions’ complaints did little to dampen the optimism of those who see this bill as the culmination of work on the issue in the House. “My guess is this thing will pass out of the House. The question is what’s going to happen in the Senate,” said House Minority Leader Tom Cross, who has signed on as a cosponsor of the bill with Madigan. He said about the two partnering on the bill, “I think it puts a lot of pressure on the Senate and creates some momentum, where you’ve got a bipartisan effort coming out of the House.” Senate President John Cullerton said yesterday that he is still trying to work with union leaders to reach a compromise. Cullerton has said that he believes proposals such as the new SB 1 that unilaterally reduce benefits are unconstitutional.

Gov. Pat Quinn urged lawmakers to approve the legislation. “Illinois' economy will not fully recover until the General Assembly passes this comprehensive pension reform and sends the bill to my desk. Now is the time to take this major step to restore fiscal stability to Illinois,” he said in a written statement.

Cross said lawmakers should pass legislation that would reduce pension costs and stabilize the system instead of trying to predict what the courts will do with the final product. “No one knows. And we can all opine and give our theories on it. There are a number of folks in the legal community who have said this is constitutional,” Cross said. “But at the end of the day, whatever we pass is going to end up in the courts, and we will need to wait for the courts to give us their opinion. And we can all speculate, but until that happens, nobody’s going to know.”

Capital plan passes both chambers

By Jamey Dunn and Hilary Russell
Photograph by Hilary Russell

Right: The Illinois House approved a revenue package by a vote of 86-30-1, with opposition mostly objecting to new gaming sources.

The House tonight approved a major capital construction program, wrapping up one of the three major issues that lawmakers seek to tackle before session adjourns at the end of the month. The next step for the bill is approval from Gov. Pat Quinn, but whether that will happen quickly and when projects would begin is still up in the air.

The $26 billion plan will be funded by tax, fee and fine increases. The state will contribute about $11.5 billion, which will leverage federal and local funds. An expansion of lottery ticket sales and legalizing video gaming in bars, restaurants and truck stops will generate revenue for the state’s contribution.

However, House Minority Leader Tom Cross said he does not know exactly when construction would start. “Maybe summer, early fall. But I think even if you don’t have specific shovels in the ground, you’ve got engineers and architects putting plans together,” he said after the program won House approval. “We’ve got some good movement in that mini-capital plan, so there’s some activity out there. Would we all love to see it all tomorrow? Yeah, but it’s not going to happen.”

Some of the proposed revenue sources would not immediately bring in money. Video gaming would require implementing a complicated oversight process. Many establishments already have video poker machines, and some illegally pay out to winners. If the legislation becomes law, the payouts would have to be documented and regulated. Existing machines would have to be replaced or retrofitted to meet monitoring standards spelled out in the legislation. Proponents claim that the new regulation could weed out organized crime that has been perceived to be associated with illegal video poker.

Leasing the Illinois Lottery to a private entity is contingent on approval from the U.S. Department of Justice, and the state has no control over how soon, if ever, that will come. Selling lottery tickets online is an unprecedented move. If approved, getting the operation up and running could take awhile.

Legalizing video gaming and the proposed changes to the lottery kept the plan from getting unanimous support. Cross said it was a difficult vote for some members of the GOP caucus. “It’s going to be difficult, and it’s going to have a little pain in it. And, there are people that didn’t like it,” he said.

Some Democrats didn’t like it, either. The majority of “no” votes among Democrats came from suburban Chicago lawmakers. Many echoed Quinn’s statement yesterday that the state’s operating budget, which funds government operations, health care, education and social services, should have taken priority over a construction plan.

Rep. John Fritchey, a Chicago Democrat and the only lawmaker to vote “present” on the revenue sources, said he was hesitant to approve what he considered a gaming expansion and the privatization of the lottery. He added that while the legislature found money to build new schools, lawmakers haven’t yet figured out how to pay for the teachers who would work in those schools.

Legislators also expressed concern that Quinn might not sign the capital plan into law until the General Assembly sends an operating budget to his desk. He has 60 days to act before the capital program automatically becomes law. Cross said that Quinn had told him he would sign the bill, but he worries that Quinn could delay the signing.

Regardless, lawmakers expressed relief that both chambers finally approved a long-awaited infrastructure program after consecutive years of false starts.

Rep. Lou Lang, a Skokie Democrat, said: “The state of Illinois has needed an infrastructure bill for a very long time. We need to put people to work, we need to fix roads, bridges and schools and water mains, and I believe this is an economic stimulus package done by the state of Illinois. And it was critical that it passed.”

Now the legislature can turn its focus to the operating budget and government reforms. While some procurement and employee ethics reforms advanced to the Senate today, the Senate also could begin debate about the governor’s Illinois Reform Commission’s proposals tomorrow.