Saturday, May 31, 2014

Efforts to change business tax climate fall short

By Caitlin Rydinsky

A last minute push to change a highly scrutinized tax credit used by large corporations failed to move forward in the Senate.

House Speaker Michael Madigan, who sponsored Senate Bill 364, said the measure would allow smaller businesses more opportunities to gain the Economic Development for a Growing Economy (EDGE) tax credit and improve job development in areas that have high poverty and unemployment.

In recent years, a handful of larger business have requested special versions of the tax credit from the legislature in order to keep them from moving out of the state. Some that received the credit did not hire new employees, and some even laid employees off. Rep. Jack Franks, a Democrat from Marengo, said “I found that particularly distasteful in previous EDGE deals where employers would be able to claim retention of employees while at the same time actually reducing head count, then we would subsidize the termination of tax paying Illinoisans.”

Supporters in the House said the bill was a good step toward stopping the state from giving special breaks to companies that can afford to lobby them and broadening the availability to EDGE credits for employers with less than 100 employees by eliminating a $1 million capital spending requirement. The legislation came after a special house committee that was weighing the tax climate for Illinois businesses was unable to reach a consensus on any substantial recommendations. “We had been hopeful of a broader based bill, but we ran out of time in this session and the purpose of the legislation is to have that available as we continue discussions over the summer and fall sessions,” Madigan said. “I happen to think it’s a real good opportunity for Illinois to make some significant, meaningful change in the business tax credit that will help Illinois business going forward.”

Rep. David Harris, an Arlington Heights Republican, said that a provision in the bill that requires companies seeking special edge credits to make financial disclosures would likely put a damper on them coming to lawmakers for a tailored tax break. “They have to provide information which is so onerous to companies, so distasteful for a company, that they would say ‘uh-huh I’m not putting that kind of information out there for the public to see.’ It effectively stops the company, unless they are going to do everything in the bill and my sense is no company would want to do, it effectively stops that special company from coming to us. It stops us from having to pick winners and losers,” Harris said.

But Barrington Hills Republican Rep. David McSweeney said lawmakers should be focusing on other ways to improve the business climate within the state of Illinois. “We should be cutting corporate tax rates and cutting tax rates for individuals and small businesses,” he said. “This continues the program that the government is going to pick winners and losers. We’re much better off cutting tax rates across the board.”

The House approved the bill on the final day of the spring legislative session, but the Senate did not bring it up for a vote. Decatur Democratic Sen. Andy Manar, a sponsor of the bill, said: “It’s a comprehensive piece of legislation that was introduced in the final weeks of session. I would expect that the Senate President [John Cullerton], the sponsor of the bill and the Senate would want to have thorough review before the Senate takes it up.” Although the legislation was not called for a vote in the Senate, Democrats said the legislation is still “on the table” and could be considered over the summer or in fall veto session.

Friday, May 30, 2014

Budget postpones tax debate until after election

By Jamey Dunn

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

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

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

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

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

They FY 15 budget relies on $650 million in borrowing from state funds outside of the general operating budget. It would flat fund most areas of the budget with a slight increase in K-12 education. It would give larger agencies some lump sum appropriations so that they can have the flexibility to try to patch any holes that might spring up. The budget bills:
  • House Bill 6093 contains K-12 spending.
  • HB6094 contains higher education spending.
  • HB 6095 contains general operating services spending.
  • HB 6096 contains human services spending and required spending, including pension payments.
  • HB 6097 contains public safety spending 
  • HB 3793 contains capital projects, including school construction, and about half of the back pay owed to state workers. 
  • Senate Bill 220 contains budget implementation provisions 
  • SB 274 contains the authority for inter-fund borrowing and lawmaker’s pay. A mechanism in the bill would keep Gov. Pat Quinn from being able to cut off legislative pay, a move he made to try and push lawmakers to act on pension reform last summer. The bill would also put a freeze on legislative pay increases. 
Gov. Pat Quinn called the plan “incomplete” in a written statement he released after the Senate passed the spending bills. “The General Assembly didn't get the job done on the budget. ... In March, I submitted a balanced budget plan that continued paying down the state's bills, protected education and public safety and secured Illinois’ long-term financial future,” the statement said. Quinn called for an extension of the tax rates in his budget address earlier this year. “Instead, the General Assembly sent me an incomplete budget that does not pay down the bills but instead postpones the tough decisions. I will do my job. I will work to minimize the impact of cuts in vital services while continuing to cut waste and maintain our hard-won fiscal gains. There’s more work to do to continue moving Illinois forward.” 

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

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

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

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

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

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

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

House passes "mini" capital plan for roads and bridges

By Jamey Dunn

The House approved more than $1 billion in capital construction spending, the bulk of which would be spent by the Illinois Department of Transportation on “shovel ready” projects.

House Bill 3794 calls for $1.1 billion in construction spending, $1 billion of which would go to road and bridge projects included in IDOT’s 5-year plan. The bill does not list the projects because they would be determined by IDOT, but sponsor Rep. Luis Arroyo said that the department plans to prioritize projects that are ready to go during the summer construction season. The remaining $100 million would go to local street repair projects. The money for construction would come from funding sources approved as part of the 1999 Illinois First capital program. Borrowing for the plan has been paid off, but the increased fees and taxes remain. “Some of that debt has been retired. It’s been paid off, and the revenue stream that was used to support it is now available,” said House Speaker Michael Madigan.

The plan passed with bipartisan support. House Minority Leader Jim Durkin said that after the particularly harsh winter, the state’s roads need work. “Illinois roads were clobbered.” He said that while Republicans opposed other construction projects passed in the House yesterday, this pared-down plan is “responsible” because the spending will be decided by IDOT instead of legislators. “It’s a smaller bill, but this is going to get us through the end of the year.”

But some lawmakers questioned spending money that could otherwise go into the general revenue fund on a rushed capital bill that does not include anything other than road and bridge projects. “I think this is the wrong time to do this, and I think this is the wrong approach,” said Northbrook Democrat Rep. Elaine Nekritz. and Proponents argued that this plan can be accomplished now to get people to work in the coming months, and the issue of a larger capital plan could be revisited later. “Bottom line, this is going to put people to work. Those people will pay taxes, and some of those taxes will come to the state of Illinois,” said Madigan.

Thursday, May 29, 2014

House approves increased revenue estimate for next fiscal year

By Jamey Dunn

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

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

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

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

Committee evaluating business taxes releases report, but reaches no consensus

By Caitlin Rydinsky

A House committee released a report Wednesday evaluating the tax climate for business in the state, but the group struggled to find common ground on several major issues.

The House’s Revenue and Finance Committee and State Government Administration Committee spent months assessing the tax incentives the state offers businesses months after House Speaker Michael Madigan requested a review at the end of last year. Madigan made the call after several businesses approached the legislature seeking specially tailored versions of the economic development for a growing economy (EDGE) tax credit.

The report looked at various taxes and tax credits, but the 28 committee members were unable to reach a consensus on several of the tax breaks they scrutinized. Some they agreed needed further evaluation were the franchise tax, the economic development for a growing economy (EDGE) tax credit and fees for limited liability corporations. Marion Democrat Rep. John Bradley, who chairs the revenue committee, said that the group found that the collection of some fees and taxes was not being enforced by the state. “The franchise tax are not being audited by the state; companies are not paying the fees and having no consequences, or they are placing taxable stock in other states in order to avoid paying taxes.”

Bradley and other lawmakers agreed it was not benefiting the current economy of the state, and said in the report “although the committee members have not reached a consensus on how to replace the current corporate franchise tax revenue, the working groups have agreed to repeal the corporate franchise tax.” Lawmakers and advocates for the industry and businesses felt that the bipartisan report could potentially provide more competitiveness between companies large and small and generate job growth. Representatives of the business community had generally positive reactions to the report. “I think it’s a very impressive report, and there hasn’t been a legislatively generated report of this sophistication in I don’t know how long,”said Dan Johnson, president and lobbyist of Progressive Public Affairs a company that represents small businesses and not-for profits. “It’s a very thorough report and on that it’s great. And I hope that there’s some action taken in the next few days.” However, members of the committees were unsure if their proposals would become legislation in the near future. “We made recommendations that are being presented in a bipartisan manner,  and it will be up to leadership to decide what, if anything, would be part of a final package and make those decisions,” said Bradley of the findings.

While the EDGE credit is the incentive that likely spurred the group’s hearings on the issue, it was unable to reach any agreement on changing the credit. “No consensus was reached in regard to changes needed to the EDGE credit; however, all members feel that it is imperative to ensure that Illinois remains competitive in today’s economy,“ the report said. The credit has become controversial as several large businesses have threatened to leave the state if lawmakers would not adapt an EDGE credit specifically to them. Some who got the credit, which is meant to spur job growth, made layoffs after. Marengo Democratic Rep. Jack Franks said, “I wanted to focus on the small businesses that really are the job creators in the state of Illinois that have not been able to avail themselves of the EDGE credits.” Franks is the chair of the state government administration committee.

 Madigan proposed House Bill 3890 earlier this month. The proposal would remove a requirement that businesses spend $1 million on capital investments to get the EDGE credit. The move would allow smaller companies to take advantage of the EDGE program. Franks said members of the committee are waiting to see what happens with the speaker’s bill. The legislation in its current form, could not make it through the standard legislative process and to the governor’s desk before session is scheduled to adjourn on Saturday. Franks said that he hopes that the committees’ ideas will take the form of bills sometime soon, perhaps in the fall veto session.

Wednesday, May 28, 2014

House votes to restore Medicaid cuts, pay old bills and fund construction projects

By Jamey Dunn

The Illinois House voted Wednesday to restore several cuts to Medicaid and to tack more than $1 billion in spending onto the current fiscal year’s budget.

Senate Bill 741 would rollback several Medicaid program reductions that were cut under sweeping Medicaid reforms approved in 2012. The bill would restore podiatry services and preventative dental care for adults. It would lift the four-prescription limit for people with “severe mental illness.” It would also remove the limit on the number of physical therapy sessions patients can access. The bill allows for more funding for programs that care for children with extensive medical needs, such as those on ventilators. “We are restoring this simply because we have found out from experience that these cuts actually did not save us money. They cost the people of the state of Illinois more money, and they brought suffering and hardship to families. They brought overutilization to our emergency departments and interfered with the delivery of health care to other patients in need,” said Chicago Democratic Rep. Greg Harris, who sponsored the bill. The restorations would cost $221 million upfront. However, the spending would bring in federal matching funds, so Harris said the net cost would be about $125 million in general revenue funding.

Opponents questioned rolling back changes to Medicaid that were put in place to ensure that the system remained sustainable at a time when the state was pushing billions of Medicaid bills from one fiscal year into the next. The reforms now bar the state from shoveling Medicaid bills into future fiscal years. “How are we going to pay for that, and how are we going to sustain the system for the people who need it most?” Rep. Patricia Bellock asked on the House floor.

Those who have advocated to restore the cuts argue that they do not save the state money in the long run because Medicaid patients are forced to skip preventative care but later call on the system once their health deteriorates into an emergency situation. Chicago Democratic Rep. Mary Flowers said that a lack of dental care means missed wages when Medicaid patients stay home from work with tooth pain and missed opportunities when dental problems, such as missing teeth, keep them from making a good first impression at job interviews. “Access to dental services—like filling, cavities, root canals, dentures—means that the most vulnerable in our state will not need to suffer from unnecessary pain,” she said. 

Harris also sponsored House Bill 6060, which would add $1.8 billion in spending during the current fiscal year. Around $1 billion would go toward paying down old bills, and $600 million of that would go to Medicaid, triggering federal matching funds. The backlog stands at about $4.7 billion now. The money comes from new revenue that came in this year above projections for Fiscal Year 2014.

The House also reapproved ongoing capital construction projects for next fiscal year and tacked some new spending on, while they were at it. The new spending includes:

  • $13 million for sewage treatment and water projects. 
  • $10 million grant to the Uptown Theatre in Chicago. 
  • $40 million for school construction projects outside of Chicago. 
  • $35 million to Chicago Public Schools for school construction projects. 
  • $50 million for back pay to state employees in the departments of Public Health, Human Services, Corrections, Juvenile Justice and Natural Resources. The money would cover about half the cost of deferred raises that the state owes employees. 
  • $50 million for the Chicago teachers pension fund. 

 Chicago Democratic Rep. Barbara Flynn Currie, who sponsored HB 3793, said that the money for the additional spending would come from revised revenue estimates for Fiscal Year 2015 and funds left from the sale of the state’s 10th casino license.

 The measure did not have a standard committee hearing and came to the floor just hours after the amendment that contains the spending was filed. “We need to pass this bill if we want to make good on the commitments and promises we have earlier made,” Currie said of the spending that was part of the ongoing capital program. Republicans called the vote on the more than 1,000-page-bill rushed and argued that they did not have time to know what the legislation contained “We’re making a substantive vote with very little time to vet this vote,” said Downers Grove Republican Rep. Ron Sandack. “We seem to continue to do the wrong thing the wrong way, so I guess that’s consistency if nothing else.” 

House Speaker Mike Madigan also released his hold on the House budget bills approved yesterday, and they have been read into the record in the Senate. That means that the Senate could technically pass the budget and—as many in the Statehouse have been speculating—the spring session could adjourn a day early on Friday. However, such rumors always run rampant at this time of year. And so far, that possibility falls into the rumor category.

Tuesday, May 27, 2014

Senate approves changes to school funding formula, but House vote is unlikely

By Caitlin Rydinsky

A change to the way the state doles out school funding passed in the Senate today, but a House floor vote on the bill is not expected before session is scheduled to adjourn later this week.

Sen. Andy Manar, a Bunker Hill Democrat, sponsored Senate Bill 16, which supporters say could make school funding for poor communities more equalized to wealthier communities. A Senate committee spent months evaluating the current funding formula after questions arose about drastic disparities between schools throughout the state. The plan would put more of the money the state sends to local school districts through a filter that would weight funding more heavily toward factors such as whether students live in poverty or are bilingual learners. It would also consider the need of local districts that have less affluent property tax bases for local funding. “Will there be winners and losers under a new funding formula? Absolutely. But those winners and losers will be based on need and resources and not what their zip code is,” said Democratic Sen. John Sullivan of Rushville. “We’ve all said that around here for years that it ought to be based on not where you live, but what resources you have, and Senate Bill 16 addresses that.”

Republicans argued that the bill opens schools to vulnerability in funding because it would not hold the state to the current per-pupil required funding level, which is known as the “foundation level.” “Statewide, if this bill becomes law, the one objective measuring stick that we have to say, are we funding to the degree that we say we would, will be changed. It would be traumatic,” said Republican Sen. Dale Righter  of Mattoon. “Understand under Senate Bill 16 that number is no longer locked in statute.”

Lawmakers agreed that the state’s education funding formula needs to be changed, but Republicans questioned whether this legislation is the right way to go. Manar said when asked of the debate, “I was quite shocked at their defense of the status quo at the debate and it’s as if (Republicans) are immune or numb to the reality of what is going on in the state today. There’s no reason to pause, there’s no reason.”

Republicans said that they are wary that the process politicized, and some noted that the issue of distributing school funding has always been a difficult one to resolve. “Look at it from our standpoint as the minority party: are we headed in a direction of something political or are we really seriously trying to do something about this? I would like to do something about it. ... Everything that happens around here is political, and I think there’s a little politics involved in this. But I also think there is some sincerity in trying to come up with something better.

Manar that evaluating the issue and drafting a bill took time within the Senate, so he does not expect the House to vote on it in the few days left in the spring session. “The idea that the House is going to turn [it] around in a couple of days is not logical, nor was (the bill) designed to do that. They should take ample time to do it and make the appropriate changes and hopefully get a product in front of both houses as soon as possible.”

The legislation does not currently have a sponsor within the House, although Manar says he has worked with several Democratic representatives during the drafting of the bill. He says he will wait to see what lawmakers in the House propose after they evaluate the plan The legislation would not take effect until July of 2015 and would allow a phase in period to let schools adjust to the newly proposed funding formula.

Budget "middle road" paved with short-term fixes

By Jamey Dunn

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

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

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

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

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

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

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

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

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

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

Sugary drink tax fizzles out

By Caitlin Rydinsky 

Another potential revenue source hit a wall at the Statehouse today as a House committee rejected a proposed tax on sugary drinks.

House Bill 0397 calls for a one-cent-per-ounce tax on sugary beverages. Sponsor Rep. Gabel, an Evanston Democrat, said the bill could potentially raise more than $600 million to ease the state’s loss in revenue from expiration of the temporary income tax. Supporters hoped that increased tax could also help to reverse obesity and health- related issues  by prompting residents to drink fewer sugary beverages. The legislation called for the tax revenue to be used for physical and health education in schools and childcare centers, as well as walking paths and other community initiatives.

The bill failed by a wide margin in the committee, with only two of seven members voting in favor. Opponents argued that the tax would be hard on low- and mid-income families and would jeopardize jobs in the soft drink industry. Mark Denzler, chief executive officer of the Illinois Manufacturing Association, said, “You can’t raise the revenue without losing jobs.” The manufacturers and beverage industry raised concerns that a tax would impact stores and cause Illinoisans to go nearby states to avoid the cost. Denzler said, “If you raise the tax, and this is a tax increase by $2.88 on a case of soda, you will see consumers not necessarily changing their pattern of what they buy, but where they buy.”

Supporters said although the bill failed, they will continue efforts to pass such legislation. “Though we wish the outcome of the hearing had been different, we are glad this bill has started a public debate on the health impacts caused by sugary drinks. The fight will continue for a healthier Illinois,” said Elissa Bassler, executive director of the Illinois Alliance to Prevent Obesity, in a written statement. “The issues regarding obesity-related health impacts such as diabetes, heart disease and stroke are not going away, and we are committed to reversing the obesity epidemic in Illinois.”

Backers of the tax said that it would not limit consumers' ability to have a beverage they want, but it could encourage them to make healthier choices. They argued that while jobs might be lost in the soft drink industry, the legislation would promote growth in other sectors, such as health care and wellness. “I understand the concerns of the tax applied, but I also really want to emphasize the cost and the pain that obesity and diabetes have caused in so many working families,” said Gabel. “Particularly low-income families who don’t have proper medical care and insurance. They end up losing their legs, and so, I think we have to weigh in on these things as well as the creation of jobs in other industries.”

Friday, May 23, 2014

House working on less severe tax-rollback budget plan

By Jamey Dunn with Caitlin Rydinsky contributing 

After an austere budget bill failed miserably on the House floor on Friday, House Speaker Michael Madigan said that Democrats would craft a more workable budget without an extension of the current tax rates.

The proposal failed with only five voting “yes” and 107 members voting against it. All the votes in favor of the $34.8 billion budget came from Democrats. The so-called doomsday budget would have cut education by $570 million and human services by $365 million from the current fiscal year.

Republicans decried the proposal as a stunt and not a legitimate effort to cut the budget in a responsible way. “I think it was something that was another ploy, a tactic, that is in the game plan of the speaker. We’ll have to wait and see what the real meaning was behind that vote,” said Bloomington Republican Rep. Dan Brady, who serves on the House higher education budgeting committee.

Madigan said he was not surprised that most on his side of the aisle rejected the plan. “Democrats generally are not interested in reducing government and providing less government help for people. They’re not interested in that, and so [the] democratic vote on the budget this morning should not be a surprise.” He said that Democrats on the budgeting committees in the House will meet to try and work out a plan that can pass in both chambers and be signed by Gov. Pat Quinn. “My expectation is at the end of the day, there will be at least 60 Democrats, maybe more, that will be supporting a budget which will continue to provide a good level of state services to the people of Illinois without the extension of the income tax increase.”

As the law stands, the income tax rates would step down to 3.75 for individuals and 5.25 for corporations half way through Fiscal Year 2015. A rollback of the rates would take an estimated $1.6 billion in revenue with it. Gov. Pat Quinn and Democratic legislative leaders have said they support for an extension of the rates, which are 5 percent for individuals and 7 percent for corporations. But Madigan told reporters this week that there are not enough Democrats in the House who support keeping the current rates.

One way that plan without a tax rate extension might avoid deep cuts is by reducing the amount of money the state uses to pay down its backlog of overdue bills. Such a move would likely result in schools, social services providers, doctors and others who do business with the state having to wait longer to be reimbursed for their services. The backlog is expected to be about $5.6 billion when the current fiscal year ends on June 30. That number is down from the peak level of $9.9 billion in 2010. In some cases, those owed money by the state where waiting for six months or longer to be reimbursed.

Such a move could earn the plan opponents from both parties. “I know that the amount of the unpaid bills that the sate has outstanding is of concern, not only to me but to other legislators as well, and any budget plan is going to have to have a component that pays off a substantial amount of that debt,” said Rep. Sam Yingling, a Democrat from Round Lake Beach. “I think difficult decisions are going to have to be made. Everybody knows that the state of Illinois has lived far beyond its means for a number of years, and now the state is going to have to come to grasp with the fact that it can’t afford everything its been funding. So difficult decisions are going to have to be made, and not everybody is going to be happy with those decisions.” Yingling does not support an extension of the current tax rates.

Madigan said Friday that he still supports extending the current income tax rates, but he said that getting it done is another matter. He says that only 34 members of his caucus are in favor of extending the current rates. “I’m going to continue to work for the extension of the income tax increase because my view is that the state does need more money to support the programs that are offered by the state, but 34 is a long way from 60.” Madigan said that he does not plan to send Quinn a lump sum budget or pass bills that do not match the revenue coming in, forcing the governor to make cuts.

“There’s certainly not the votes for the tax increase,” said Rep. Jack Franks, a Marengo Democrat. Franks opposes extending the current tax rate. But he says that he thinks there could be an option in between the doomsday option voted down today and the $38 billion in spending the House approved last week. Madigan put a hold on those budget bills, so they did not go over to the Senate after passage. “I think there’s a happy medium; at least there should be a compromise and I’m hoping in the next few days we’ll get closer to it.”

Still, some are hoping that House Democrats will come around to the idea of keeping the income tax increase. Weekend session has been canceled, so lawmakers from both chambers will presumably head back to their districts for the next two days. “I think that the members, at least in the House, need to come to their senses and realize that you can’t adequately fund education without adequate resources to do so,” said Homewood Democratic Rep. William Davis, who chairs the House’s K-12 education budgeting committee. “Hopefully, members will take the weekend, come to their senses and realize that we need to come back sit down and have real conversations about the priorities of the stat of Illinois and then discuss what it’s going to take to fund those priorities.”

If the House can did pass a budget somewhere in the middle, the real challenge of getting support from the Senate and Quinn would begin. Senate President John Cullerton has said that he has the support to pass an extension of the rates, and Quinn has been lobbying house members hard for a tax vote. Getting more liberal Democrats in the Senate to vote for a budget that cuts or even funds services at a flat level but delays payments to schools and vendors could be difficult.

Quinn based his budget proposal on extending the rates, expecting the sometimes-stubborn governor to back track on the budget during a close election could be unrealistic. Part of Quinn’s proposal also included a $500 rebate for home owners to defer their property tax costs—an initiative the governor was no doubt hoping to tout on the campaign trail.

 Franks said of Quinn: “If there’s no additional revenue coming in, then he can’t spend any extra money. I think he may not like it, but it is going to be what it is.” He added, “Nobody’s going to like the budget.”

Voters may get a say on millionaire tax

By Caitlin Rydinsky

The House voted Friday in favor of allowing Illinoisans to voice their opinion on the November ballot about a proposal to tax income over $1 million at a higher rate.

House Speaker Michael Madigan sponsored House Bill 3816, which would allow for a advisory ballot question to ask voters what they think of a proposed additional three percent tax on income over $1 million. The revenue would be distributed to schools based on the number of students. Madigan proposed the tax as a constitutional amendment but was unable to get the support needed for it to pass. 

Homewood Democratic Rep. William Davis, who is chairman of the House education budgeting committee, said cutting more money from education would hinder the children within schools throughout the state. “This bill is a moderate request of those who earn billions, hundreds of millions, from the people of our state.”

Republican Rep. Mike Bostf Murphysboro questioned if the potential revenue would actually be used for education. He said: “Folks, we taxed the people of the state, and from what I have seen it has not been invested in education of the state. And yet we want a referendum to tax millionaires in the state. It is easy to target the millionaires of the state.” Republicans say that such a tax would result in job lose and a decrease in revenues generated to the state because of closures, layoffs or large businesses not coming to the state. Republicans said that because the original amendment did not have the support to pass, there is no reason to take the issue the public. But Madigan says he is confident that voters would respond differently than lawmakers on the nonbinding ballot question. “I think the Illinois voter is an intelligent and informed voter, and more than willing to participate in the electoral process.” Madigan said that the question would allow voters to help legislators make a decision on the bill after the election.

Rep. Ron Sandack, a Republican from Downers Grove, said that the ballot question and with another proposal from Madigan that would ask voters about increasing the minimum wage are politically motivated to get Democratic voters out to the polls in November. He said that Madigan's  efforts to allow for voter input were sincere,  the two citizens’ initiatives for constitutional amendments would not be facing a court challenge filed by a lawyer with close ties to Madigan. Groups supporting term limits and a change to the way the state draws it legislative districts both collected signatures to put proposed constitutional amendments on the ballot. The groups’ petitions are currently being reviewed by the Illinois State Board of Election.

If the legislation passes the in Senate and is signed by Gov. Pat Quinn, voters will be able to weigh in on the additional tax for the affluent during the November election.

Thursday, May 22, 2014

Lawmakers weigh potential hazards against risk of stifling new technology

By Caitlin Rydinsky 

Faced with the rapid rate of technological development, lawmakers find themselves questioning how soon is too soon to act when it comes to regulating new technologies.

Chicago Democratic Sen. Ira Silverstein's proposal follows those in other states such as Delaware, Maryland, Missouri and Wyoming in attempting to ban the wearing of a new device called Google Glass while driving. This product resembles a pair of glasses, but also allows users to browse the Internet, take pictures or videos, make calls and even check their emails hands free. Wilson White, public policy manager and associate litigation counsel at Google, said their product let consumers “have the Internet there when they want it and away when they don’t.”

Google Glass offers features that could be appealing to drivers, such as a GPS navigation application. The device would also prevent users from having to look down to a phone held in their hands or at a dashboard mount. It is activated and controlled by the user’s voice, head tilts, nods and multiple touches to the side of the glasses. Still, policymakers in several states question whether they would prove to be an distraction for drivers. “That’s my main problem, my main issue with this bill is safety, and I think this technology can hurt people, especially when driving cars. It can distract drivers in a second and cause a wreck and ultimately a tragedy,” Silverstein said. He is sponsoring Senate Bill 2636, which would ban wearing the glasses while driving. Texting and talking on handheld phones while driving are  banned in the state.

Google Glass is still in a customer-testing phase. The devices were only available to developers until this month. Now anyone can buy them for $1,500.

Sen. Daniel Biss, a Democrat from Evanston, knows all too well the difficulties and challenges that arise when trying to regulate advancing technology before it is being widely utilized by citizens. He sponsored a new law that restricts law enforcement's use of aerial drones. “Your knee jerk response would be to regulate, but you probably don’t want to just do it at a knee-jerk level. But again at the same time, you want to have appropriate regulation,” Biss said.

Biss’ legislation bans law enforcement from using drones to gather evidence without a warrant. It does allow for some exceptions, such as in the case of a missing person or a terrorist attack. Biss said that opposition to his proposal caused him to spend a summer learning more about drones and how law enforcement might use them. The next step, he said, was educating his fellow legislators about the issue. “Look [the Senate] has 59 members and across the building [are] 118 more. They all come from different places and different points of view. It takes a while to get people comfortable with something, particularly when the concept is new.”

Sen. Martin Sandoval, a Democrat from Chicago, said that public awareness of the dangers of texting while driving was key to passing a ban on it. “Public outcry and public demand is crucial to passing policy like the texting ban.” Sandoval says a large amount of evidence is needed to get people to see that there is a danger and be willing to put aside their desire for the instant gratification of checking their text messages while they drive.

Chicago Democratic Sen. Toi Hutchinson says that sometimes lawmakers do not have to pass a bill to have an impact on technology. She is a sponsor of SB 3593, which would require cell phones to have a “kill switch” to make them inoperable if stolen. Hutchinson said that she thinks here bill and similar legislation in other states resulted from large manufacturers volunteering to make the changes without any law being implemented. “The industry finally realized they were not going to oppose this bill state by state by state,” she said. Hutchinson still hopes to pass her bill to make sure that the companies stick to their word and that smaller manufacturers also offer the feature.

Because Google Glass is still in the experimental stage, many lawmakers feel it is too early to start regulating it. Rochelle Republican Rep. Tom Demmer borrowed a pair of Google Glass from his staffer, who worked for a developer, and wore them on the House floor on a session day. He said: “We’re jumping the gun on some of the regulations that come with technology. Often times you see technology be introduced, among a small community developer, you know, a tech advanced community, and we don’t really know how it will be adapted by the general public yet.” Demmer says that legislators run the risk of stifling innovation if the rush to restrict the use of new products. “I think we need to be cognizant that those actions we take in terms of regulating technology have an impact on the economy on what kind of businesses start in Illinois, (and) who brings their business in Illinois.” 

Silverstein has started the process of educating lawmakers about Google Glass. A team from Google came this week to meet with the Senate transportation committee and demonstrate their product.

“As far as the legislation, I think it’s a bit premature right now and I think the company, Google, would say they are still developing it and making adjustments on it. So we will see what the end product is and take a look at the legislation,” said Rushville Democratic Sen. John Sullivan, who is on the committee. 

“I don’t think it’s too early” Silverstein said. He said that the widespread use of cellphones while driving illustrates the risk of being distracted by gadgets while behind the wheel. He said that the fact that some drivers are constantly checking their phones indicates that the would be using Google Glass to do the same things, such as texting or reading emails, while driving.

Biss said that lawmakers who want to make sure that new technology is being used in a safe way that protects privacy must do so within a system that is designed to move at a deliberate pace. “Technology is changing incredibly fast right now and we have a legislative process that is designed to be sort of slow. So we have this challenge of how do you react nimbly and quickly to these unbelievable, rapid and radical technological changes in a way that it is consistent with the work things out, talk things through (and) think things over approach of legislation.”

 Although SB 2636 does not seem to be moving forward in the spring legislative session, the issue is unlikely to go away. Those who felt that it is too soon to ban them behind the wheel agreed that as more people use Google Glass and competing products hit the market, it is possible that the General Assembly would weigh in with regulations.

Wednesday, May 21, 2014

Madigan tells House committees to craft a tax-rollback budget

By Jamey Dunn

House Speaker Michael Madigan said Wednesday that a proposal to extend the current tax rates is short by nearly half the votes it would need to pass. Madigan said he told budgeting committees to draft a plan that assumes the rates will begin to step down next fiscal year.

As the law stands, the rates would step down to 3.75 for individuals and 5.25 for corporations half way through Fiscal Year 2015. A rollback of the rates would take an estimated $1.6 billion in revenue with it. Gov. Pat Quinn and Democratic legislative leaders are advocating for an extension of the rates, which are 5 percent for individuals and 7 percent for corporations.

House Democrats took a test vote on the extension behind closed doors this afternoon. Madigan said just 34 of them voted in favor of extending the current tax rates, while 30 voted “no.” A handful of Democrats did not take a stance. The proposal needs 60 votes to pass in the House, and the House Republican caucus has already taken a stance against it. “Obviously it’s a very difficult vote. It’s coming at a difficult time,” Madigan said after the caucus meeting. The plan also includes a annual $500 rebate for home owners, which Quinn has pitched as property tax relief.

Last week, the House passed spending that assumed the rates would be extended. Madigan said he has asked the chairs of the chamber's budget committees to work with committee members and present new budget bills without that revenue as soon as possible. “Our plan and our goal is to work toward the preparation of an alternative budget to the one that was adopted by the House a few days ago.” 
Budgeting committees in both chambers have already held hearings on what the fallout of such a budget might be. The potential outcomes have been framed as dire and include: the closer of state prisons and the release of inmates with little to no monitoring; the layoff of thousands of teachers; the elimination of child care for many low-income families and in-home care for many seniors; the closure of all forensic labs in the state and the layoff of hundreds of state troopers. The governor also presented a budget based on the current law, which he dubbed his “not recommended budget.”

“Things are very fluid,” Quinn's spokeswoman Brooke Anderson said of Madigan's vote count. “The not-recommended budget includes radical cuts that would harm schools, students and our most vulnerable residents.” Quinn has been meeting with House Democrats individually this week to try and persuade them to support the extension.

Madigan said he thinks it is possible that some House Democrats may change their minds about the tax vote once they see what the cuts without it would look like. “As far as I’m concerned, I’m going to continue to work for the governor’s proposal. I presume the governor is going to continue to work for the proposal. However, the clock is running, and we’re getting closer to the end of the month.” The regular session is scheduled to at midnight on May 31. A budget passed after that time would require a supermajority. However, after January (and after the November general election) the requirement goes back down to a simple majority.

Madigan said he plans to ask Senate Democrats to work with the House on a version of the budget that assumes the current tax rates. A spokeswomen for Senate President John Cullerton said that Senate Democrats will collaborate with the House. But she says they would likely not be willing to pass any plan that is based on an extension of the current rates if the extension is not approved, too. “We have the votes to renew our tax rates. There is strong opposition to passing a budget that doesn’t match available revenues,” Rikeesha Phelon said in a written statement. “If the House is unable to pass revenue, we will be forced to develop budget outlines that may be balanced [but] will be insufficient to meet our budget pressures. It won’t be pretty.”

Opponents to extending that rates claim that Democratic leaders are making the budget picture look worse than it would need to be in order to gain support for their plan. “The Democrats’ approach this entire spring has been to try to create as dire a picture as possible,” said Palatine Sen. Matt Murphy. “You can make it a lot more plausible that you can fund core services and still allow the tax rate to go back down as the Democrats promised it would, but they don’t want people to see that. They don’t want that argument out there because they want to continue to get the money that they’ve been getting.”

Madigan said he has not put forth any other potential revenue sources. He also said that a capital construction plan is not moving forward at this time. Quinn has called for a new capital bill because the current one will run out soon. Capital construction projects may also be a lure for Democrats who are on the fence about extending the tax rates. “In my discussions with members, some of those members talked about capital projects. I didn’t,” said Madigan.

Tuesday, May 20, 2014

House approves minimum wage ballot question

By Jamey Dunn 

The House passed legislation that would allow voters to weigh in on the state’s minimum wage.

House Bill 3814 would place a question on the November general election ballot asking voters if the state’s minimum wage for workers over 18 years old should be raised to $10 an hour by 2015. Democratic legislative leaders and Gov. Pat Quinn back an increase, but House Speaker Michael Madigan said last month that he did not have the vote to pass one. “It became apparent that there were some significant differences in opinion regarding this issue,” Madigan said on the House floor Tuesday. The referendum would not be legally binding, making it little more than a poll of voters on the issue. However, Madigan said that the results of a ballot questions could provide supporters with “evidence” that they could use to get an increase passed in the future. “It’s clear that we need to do more to help reduce economic inequality,” he said. “There’s just no way to support a family on a minimum wage of $8.25 an hour.” 

Senate President John Cullerton has said that he has the support to pass a wage increase in his chamber, so it is likely that the ballot question would pass in the Senate. Quinn has repeatedly called for an increase, so it seems probable that he would sign the bill. Also, such a ballot question might help with Democratic get-out-the-vote efforts in November— especially considering that the national party and President Barack Obama have been focusing on the issue recently.

Republicans said that a minimum wage increase could hurt job growth in the state. Some argued that lawmakers were shirking their responsibility by putting the question to voters. “Folks, do we really want to become California? The California legislature can’t make a tough decision without saying, ‘Oh, we’ve got to put it on the ballot,’” said Rep. David Harris “We, the legislature, are supposed to decide on these tough public policy issues.” However, a group of Republicans from both chambers introduced legislation to include an advisory ballot question about a proposed extension of the current income tax rates. “We’re asking the Democrat majority, ‘Before you break your promise and make your job-killing tax hike permanent, why not ask the people how they feel,” said Palatine Republican Sen. Matt Murphy. When the proposal came up on the floor during the debate over the minimum wage question, Madigan said, “On this side of the aisle, we’re working our way through the question of extending the income tax increase.” Madigan says he is lobbying House Democrats to extend the current tax rates, which are scheduled to begin stepping down next fiscal year. He told reporters yesterday that the plan is “significantly” short of the support needed to pass.

Monday, May 19, 2014

Madigan: tax extension is "significantly" short of votes needed to pass

By Jamey Dunn with Caitlin Rydinksy contributing  

House Speaker Michael Madigan said that an extension of the current income tax rates is “significantly” short of the votes needed to pass in his chamber despite Gov. Pat Quinn addressing a House Democratic caucus meeting Monday evening.

Quinn met with House Democrats behind closed doors for more than two hours Monday. The governor is advocating for an extension of the current income tax rates of rates of 5 percent for individuals and 7 percent for corporations. As the law stands, the rates would step down to 3.75 for individuals and 5.25 for corporations half way through Fiscal Year 2015. Supporters of extending the current rates argue that allowing the rates to sunset would cause devastating cuts to education and other core areas of state government. As part of his tax plan, Quinn also wants to send an annual $500 property tax rebate to homeowners in the state. “I think we need to make sure that we properly invest in our schools. Our state over relies right now on property tax to fund education. I think we have to do better. We have to use a tax based on ability to pay, the income tax, to properly fund our schools. I spoke about that quite a bit in the caucus,” Quinn said after he addressed the Democrats.

Upon exiting the meeting, many Democrats described it as “cordial” and said that their colleagues had plenty of questions for Quinn. Rep. Elaine Nekritz, a Northbrook Democrat, described the caucus meeting as “tense.” Nekritz said she would support an extension of the current rates if it was coupled with some larger budget reforms, such as the creation of a rainy day fund. “We have a variety of opinions and thoughts on the direction that we ought to be taking, and there was a lot of that aired,” Nekritz said of the caucus. “This is a very very difficult decision for members, so I think that it just creates tension.”

Madigan said that he is working to pass the tax rates extension solely with Democratic support. No Republicans voted in favor of the temporary increase when it was approved in 2011. House Minority Leader Jim Durkin said that he does not plan on putting any votes on an extension of the rates. “Our caucus is firmly against it.” Durkin said that Republicans would make a tax vote a campaign issue for Democrats running for reelection. “It’s kind of a defining issue between the parties,” he said. “Remember, this [tax increase] was temporary three and a half years ago.”

Madigan said that Quinn worked hard to present his case, but he doesn’t know yet if any minds were changed. “I thought he did an excellent job of presenting his position, arguing for his position, taking questions. He took every question. He answered every question. He got very animated on a lot of his answers because, at times, he wasn’t hearing what he wanted to hear,” Madigan said. “I think it’s significant that there was opposition expressed from all sectors of our caucus. I’m going to continue to work to find 60 Democrats to vote for the governor’s bill. We are significantly away from 60 today.” When asked how he would get the votes, Madigan said, “It’s going to take a great deal of persuasion.” He refused to answer questions about possible alternative revenue sources or what would happen with the budget if he cannot get the votes for the extension.

Quinn’s tone was more optimistic. “You’re always building a majority on any issue; it’s a building of a majority to get to 60. I think we’re doing our very best to get that majority. I think my philosophy in life is hope for the best and work for it. So, we’re working real hard on getting those 60 votes in the House of Representatives. Obviously, we have to keep on working until we get there.”

Lawmakers who are likely targets of lobbying efforts from Quinn and Madigan were coy when approached by reporters after hearing Quinn’s arguments. Rep. Sam Yingling, a Democrat from Round Lake Beach, would not comment when asked about his reactions as he excited the meeting. Yingling is signed on as a cosponsor of a bill that would roll back the tax rates to the levels they were at before the increase. Another suburban Democrat, Rep. Fred Crespo, said his constituents are “very concerned” about the possibility of the tax rates being extended. Crespo, who is from Hoffman Estates, has previously opposed extending the rates. “There’s a lot of conversations going on, and we’ll just have to wait and see,” said Crespo. “You know, every day’s a different day.”

Thursday, May 15, 2014

House approves budget bills without revenue source to cover costs

By Jamey Dunn

The House today approved budget bills for next fiscal year that would spend billions more than the amount of revenue the state would bring in under current law. UPDATE: House Speaker Michael Madigan has filed a motion that will effectively prevent the more than 70 budget bills passed today from automatically going to the Senate. Madigan told the Chicago Tribune that the move was needed in case the House wanted to further amend the bills. 

Earlier in the spring session, both chambers voted on a $34.4 billion revenue projection. Now many House Democrats are backing a plan that would require more. Spending was broken down into more than 70 bills. This gave lawmakers the chance to strategically pick and choose what areas of the budget they wanted to vote to support. It also made for more than 9 hours of debate. Republicans spent much of the time crying foul. They argued that the spending bills are unconstitutional because they were approved without matching revenues. The state’s Constitution calls for a balanced budget. “We are voting today for an unconstitutional budget, plain and simple,” said House Minority Leader Jim Durkin. “The state of Illinois needs to live within its means, and we must stop this reckless pattern of insane spending.”

Rep. Ron Sandack, a Downers Grove Republican, described the process as “a shame, a sham and something I am embarrassed to be a part of.” During the debate for almost every bill, Republicans decried voting for spending that they say would require making the temporary tax increase permanent. The current income tax rates are 5 percent for individuals and 7 percent for corporations. As the law stands, the rates would step down to 3.75 for individuals and 5.25 for corporations half way through Fiscal Year 2015. At one point during the debate, Durkin used a procedural move to try to force an end to the day’s session and slow down the process, but his motion was voted down. Democrats criticized Republicans for not presenting an alternative budget plan. “Here’s our plan. Stop spending money,” Sandack said in response.

Democrats who supported the legislation argued that lawmakers should move the appropriations bills through the process while the revenue side of the budget is still in the works because the end of session is rapidly approaching. Adjournment is scheduled for May 31. “There’s some discussion going on the revenue side. Obviously that’s not going very well,” said Hoffman Estates Democrat Rep. Fred Crespo, who presented several of the bills on the floor today. “There’s less than a week and a half left is session, and we need to come up with appropriations.”

The Democrats who presented the bills on the floor acknowledged today that the budget would need more revenue to support the plan, but they were careful to focus on their individual bills and not talk about the tax increase on the floor. Chicago Democratic Rep. Greg Harris, who chairs the human services budgeting committee, said that lawmakers must make the responsible choice to take care of those in need, such as the elderly and the disabled. He added that the funding levels would also be necessary to comply with state and federal law and several court orders that require certain services be provided.

Some Democrats opposed some or all of the spending. “You’re asking us to spend $4 billion more than what our revenue estimates indicate. You’re asking implicitly and tacitly for a tax increase. So a vote for this budget, is also a vote for a tax increase,” said Marengo Democratic Rep. Jack Franks, who was a vocal opponent of the temporary tax increase when it passed in 2011. “If we’re going to do that tax increase, let’s be honest about it. Let’s vote for it today. Let’s see if they’ve got the votes up for it, and let’s do it. Once we know what the revenues are, then we should be talking about the budget.” But Franks said he has his doubts about whether an extension of the tax rates could pass. “There’s no consensus here on raising taxes. ... We’re promising imaginary money that does not exist.”

Meanwhile, House Speaker Michael Madigan said yesterday that he is lobbying for an extension of current rates. There is also a package of changes to business taxes in the works. So the final revenue plan could be a combination of several things in addition to the income tax. Madigan said yesterday he was open to rolling back the corporate income tax rates as part of a larger “balanced package.”

Gov. Pat Quinn said today that he has been lobbying members of both parties in both chambers for a “responsible budget.” Quinn told reporters at an event in Cicero today: “The month of May is all about getting a responsible budget that invests in the future, invests in the classroom, making sure we have world class education, making sure we have [the] proper amount of money for our health care.” Quinn’s staff said that he was in Springfield meeting with lawmakers before he went to the event. “We’ll get a responsible budget, if we work together and work hard,” Quinn said. “That’s what I’m committed to, morning noon and night, getting a responsible budget that doesn’t go back in time, back to a time where Illinois had all kinds of fiscal problems.”

The plan approved today was largely based on Gov. Pat Quinn’s budget proposal, which calls for an extension of the current income tax rates. The rates are scheduled to begin stepping down in the second half of next fiscal year. The plan would increase spending for K-12 and higher education, as well as human services. The spending includes several line items specifically requested by Quinn, including increased funding to the Monetary Assistance Program (MAP) for low-income college students, additional funding for maternal and early childhood health programs, money to turn two shuttered youth centers into special treatment centers for mentally ill and substance addicted adult inmates and raises for home health care workers.

Still, the plan would not fully fund General State Aid to schools. GSA has been prorated for the last three years. The legislation passed today would fund GSA at 90 percent. Some Republicans argued that if there is going to be a tax increase, more of the money should go to education. The line item for transportation would be funded at 83 percent. “We’re spending more money than at any time in history and the question is where is the money? Cause it doggone sure is not in education,” said Rep. Chad Hays, a Catlin Republican. “Where is the money? This process doesn’t add up.” Lewiston Democratic Rep. William Davis, who is chairman of the House K-12 education budgeting committee, said that K-12 education would be getting a bigger chunk of revenue than other areas of the budget. “Tell me someone in this chamber who doesn’t run on some education platform—that they support education and want to see it fully funded? I think we all agree on that. But I think the reality is that there are always some limitations. We don’t have an unlimited pot of resources that we can use.”

In order to make it to Quinn's desk, the bills would still have to clear the Senate, where Democrats who work on the budgeting process have said they are reluctant to approve spending without the funding to match. Senate President John Cullerton has said that he has the votes to get the tax extension through his chamber, but he wants to wait and see if it can pass in the House first.

Wednesday, May 14, 2014

Madigan-backed EDGE credit changes advance

By Caitlin Rydinsky 

After months of discussion on tax reform, the House Revenue and Finance Committee on Wednesday passed an amendment that would tighten the rules on a high-profile tax incentive for businesses.

The legislation, House Bill 3890, will change the requirements for the Economic Development for a Growing Economy (EDGE) tax credit. House Speaker Michael Madigan, who sponsored the bill, said it would allow smaller businesses to apply for the credits, retain jobs within businesses and help spur development in communities with high rates of poverty and unemployment.

Madigan admitted before the committee that the legislature “fell into a habit” of treating companies individually who could not use their EDGE credit—because they had no tax liability to the state—despite meeting all of the other negotiated qualifications within the credit. Lawmakers began evaluating the incentive, as well as others, after several businesses lined up for Special EDGE credits, to use the credit toward other tax liabilities. The legislation would eliminate the $100 million capital spending requirement for small businesses that employ fewer than 100 employees. The bill would require them to hire five new employees to gain the incentive.

Many opponents said they support eliminating the spending requirement for smaller companies, but that they do not agree with how it is being done. Doug Whitley, president and chief executive officer of the Illinois Chamber of Commerce, who opposes the changes, said, “This labyrinth of exceptions and limitations is so lengthy that I would suggest to you that almost no one is going to comply with this EDGE credit.” Whitley was critical that the measure would still require that lawmakers approve special EDGE credits. “ I thought you were trying to get out of that business,” he said.

While supporters of the tax credit said that it would increase the amount of small businesses that qualify, Carol Portman of the Taxpayers’ Federation of Illinois said that many small businesses don’t pay state income taxes, so she doesn’t see how much it would actually help.

Madigan’s legislation would give special preference to businesses in economically depressed areas. Some argue this may limit development throughout the state. Mark Denzler, vice president and chief operating officer of the Illinois Manufacturers Association, said that because the legislation looks at Census tracks instead of entire communities, a business in a struggling town might not qualify just because of its address. Denzler said that growth in depressed areas is important but that lawmakers should not turn away jobs in more affluent areas. “A job is a job. Do we really want to be discriminant against jobs?”

The most controversial piece of the proposal would require businesses receiving the special EDGE credit to publicly release tax information. Madigan said “the business must agree to disclose income tax information during the term of its EDGE agreement, including gross income, the amount of income allocated to Illinois and net income before and after credits are applied.” Denzler and others in the business community are fundamentally opposed to requiring companies to release tax information. Denzler noted that tax disclosure has been a popular subject for some Democrats, and he said he thought that the requirement might be “throwing a bone” to those who would like to see corporations have to open up their books to the public.

 “I will say that what they what the speaker has done is limit … those entities that are going to come to the state and ask for that special treatment in allowing the credits to be used for withholding,” said the ranking Republican on the committee, Rep. David Harris, who is from Arlington Heights. “The way that it’s going to be limited is that those entities are not going to want to disclose all the kind of information that is asked to be disclosed. I have a problem even asking for that, but it’s limited strictly to the [special EDGE tax credit], so I don’t think this is a harmful move and [it] makes some positive reforms.”

Several factors at play in tax vote

By Jamey Dunn

The House plans to vote for spending before it takes up the issue of revenue, but a vote on extending the current income tax rate is just part of the budget picture.

House Speaker Michael Madigan said today that he hopes to first pass the spending portion of the budget, which would presume an extension of the temporary income tax. He said that the move is needed to help lobby lawmakers to approve tax rates needed to fund the budget. “Our purposes in advancing the budget first is to set the bar against which we will work to convince people to vote for the revenue.” House committees approved budget bills today that are based largely on Gov. Pat Quinn’s recommended budget.

Republicans say that the move “puts the cart before the horse.” Elmhurst Republican Rep. Dennis Reboletti said that businesses and families do not make their budgets by first deciding what they would like to buy and then figuring out how to pay for it. “We know what our income is. We make decisions based off of that. We don’t assume that we can buy a new house because we hope to have more money, but not have the additional revenue to pay for it.” Many Republicans argued today that a vote on a budget that spends more than the state expects to take in under current law would be unconstitutional. “It is on its face blatantly unconstitutional,” said Catlin Republican Rep. Chad Hays. “Who on planet earth budgets in this fashion? This is simply not done anywhere by anybody.”

 But Chicago Democratic Rep. Greg Harris, who is chairman of the House human services budgeting committee, said that moving spending bills along is all part of the process and that the order in which it happens is not as important as getting the whole job done. “There are a lot of pieces of the budget which we have to pass,” said Harris. “I think we have until midnight on the 31st of May to reconcile all of this.” He said that if lawmakers can determine what services they think the state should deliver, then when it comes time to make revenue decisions, they can avoid asking for more than is needed. Harris was clear that he does not think that the state can get by on the current revenue projections that allow the income tax to begin stepping down in the second half of Fiscal Year 2015. Harris called the step down “a terrible financial cliff that we would drive the families of Illinois right off of.”

Republicans argue that Democrats are making the budget scenario under the current rates look muckh worse than it would need to be. “We on our side of the aisle feel very strongly that we can craft a workable budget without devastating extreme irresponsible cuts or reductions. We can craft a responsible budget without having the continuation of the tax,” Rep. David Harris, a Republican from Arlington Heights.

The House is expected to start taking votes on spending bills tomorrow. As Democratic leadership in the chamber works to get the support to stop the income tax rates from stepping down, other issues will likely come into play.

Rep. David Harris said that he expects that a comprehensive business tax reform package will emerge before the end of the month. Harris serves on a House committee that has held hearings over the last year on the business tax climate in the state. (House Speaker Michael Madigan presented a bill with changed to the EDGE tax credit to that committee today. See this blog post for the details.) Madigan said to the committee this morning that he would be willing to allow the corporate income tax rates to roll back if the proposal was tied to other changes. “I’m prepared to advance that bill, but as part of a balanced package,” Madigan told the committee.

Business friendly tax breaks tied to an extension of the income tax rates, or possibly just the individual income tax rate, would serve several political purposes. They could provide cover for Democrats who vote for a tax increase as part of an overall “tax reform” package. They could possibly be used to lure Republican votes on the income tax extension. More likely, Republican “no” votes on business friendly concepts could be used for negative campaign advertising and mailers before the November general election.

But Rep. David Harris says that he believes that the business tax plan will be separate from an income tax vote. He says that he thinks that the package would address such issues, as the franchise tax, incorporation fees and tax credits for manufacturers when the buy equipment. “I think it will be separate from the tax rate bill,” he said. Harris said that if it is tied to extending income tax rates, he does not think any Republicans would vote for it. “I think if it’s a business related package, they’re going to want some Republicans on the package,” Harris says. “I don’t consider an extension of the income tax [to be] tax reform.” He said that any business tax tweaks would likely be revenue neutral. So if some tax cuts are made larger or some taxes eliminated, other tax breaks may be scrapped or reduced. Some would call it closing tax loopholes. Harris, however, would not call it that. “Let’s not call them loopholes. Let’s call them, perhaps, exemptions or credits that we now give that may no longer be beneficial or helpful, or they don’t achieve the public policy that we initially intended them to achieve.”

Mark Denzler, vice president and chief operating officer of the Illinois Manufacturers’ Association, said that he thinks that the work on a business tax package is a mix of policy and politics. “I think it’s a combination of both. I think there’s some legitimate changes being made.” Denzler said that he has not seen a plan yet. “We’ll just see how things play out. We’ll have to look at a final package. ... I think that there can be some positives for the business community.” But he said that coupling an extension of the tax rates with some tax sweeteners for businesses would fall short of being a game-changing move when it comes to the state’s fiscal policy. “Ultimately, we think we need comprehensive tax reform. Making the income tax increase permanent and adding a few tax incentives is a little bit more of a Band-Aid quite frankly to the whole problem that Illinois faces.”

A few more tax issues could also end up in the mix. In his budget address, Quinn called for property tax relief and an incremental doubling of the Earned Income Tax Credit. Both of these options could be used to soften the blow of a tax rate extension and potentially pull some reluctant votes on to it. Under Quinn’s plan, homeowners would lose their current property tax credit and it would be replaced with a flat $500 refund for each owner occupied property. Quinn’s budget office estimates that such tax relief would cost $1.3 billion annually. The current credit costs about $600 million. While some homeowners currently get a tax credit that is larger than $500, Quinn’s staff said that 92 percent homeowners would be better off under his proposal. Quinn’s plan would also increase the EITC from 10 percent of the federal credit to 20 percent at a rate of 2.5 percentage points per year. The increase would cost more than $200 million annually once it reaches 20 percent. At the time of the address, Quinn and his staff were aggressively packaging his pitch to make the tax increase permanent as a reform of the state’s tax system. His proposal also included a five-year budget “blueprint” that calls for spending caps, a rainy day fund and cutting the state’s bill payment cycle down to 30 days.

When all else fails, pork spending—I mean, local construction projects—may also be an option to get votes on a tax rate extension. Democrats acknowledged today that they are also working on a capital construction bill. Quinn has been calling for a capital bill because the current plan, which was the first in 10 years, is about to run out. While Statehouse observers are always (justifiably) skeptical of the way that capital projects appear to be leveraged for votes, nobody can deny that work on Illinois roads and bridges is necessary and that many state facilities are in dire need of maintenance. What the funding stream for a capital bill would be is unclear at this point. Republicans warned today that it could come with more taxation. “There may be additional taxes out there to accommodate some of our other unmet needs,” said Hinckley Republican Rep. Robert Pritchard.

 Madigan told reporters this morning that he is working the roll call for an extension of the tax rates. He said that he is not trying to strong-arm lawmakers. “We’re not in the business of issuing threats. ...We don’t engage in tactics like that. We try to work with people, persuade people, cajole people,” Madigan said. “We talk in terms of their view of where the sate should be, what the state should be doing for its citizens.” Madigan said.

When asked how many voted he still needed, he said that he was not to the point of knowing exactly how many members he still needs to persuade. While Senate President John Cullerton has predicted that session could adjourn early this year, Madigan indicated today that might not be the case. “There’s two and a half weeks left in the session. And we’ll be here. We’ll be on our job,” he said.

Tuesday, May 13, 2014

What to watch: legislation edition

By Jamey Dunn

With three weeks left in the regular session lawmakers have plenty of issues to consider. The House is expected to start taking budget votes this week, but Democratic leaders in the chamber have yet to secure the support needed to approve an extension of the current tax rates. Meanwhile, lots of legislation will begin to fly out of each chamber as deadlines for passage approach. Here are some measures to watch for:

Minimum wage increase 
A proposal to incrementally increase the state’s minimum wage from $8.15 an hour to $10.65 an hour by 2016 has the support of Gov. Pat Quinn and Senate President John Cullerton. Sen. Kimberly Lightford, a Maywood Democrat, said earlier this year that she had been working with business groups on Senate Bill 68 to try and make it more palatable. But she will likely never be able to get business leaders to remain neutral on the bill, let alone support it. Cullerton says that the bill has the support to pass in the Senate. House Speaker Michael Madigan said recently that he did not have to votes to pass the bill in his chamber, but that could change as end of session deals are worked out. The proposal currently does not have a house sponsor.

Republican Sen. Jim Oberweis, who is from Sugar Grove, has proposed increasing the minimum wage to $10 over three years. But the increase in his proposal, SB 2004, would only apply to workers who are 26 or older. Oberweis is challenging Democratic U.S. Senator Dick Durbin. Oberweis has only filed a handful of other bills, which are mostly related to increasing speed limits and allowing car sales on Sundays. It seems that politics might be a factor in his decision to weigh in on this national issue. 

Revenge porn 
There are two bills, one originating from the Senate and once from the House, that would make the it a crime to post explicit photographs or video of someone online without their permission. Sponsors Highwood Democratic Rep. Scott Drury and Democratic Sen. Michael Hastings, who is from Orland Hills, are reportedly working to iron out the differences between both bills. If they can come to an agreement, it seems likely that the measure would be approved by the General Assembly. Both House Bill 4320 and SB 2694 passed in their respective chambers with overwhelming majorities.

Rape statute of limitations 
A proposal that would start the time for the statute of limitations on sexual assault cases at the point when a rape kit is processes could get a hearing in a House committee tomorrow. Currently, the countdown on the statute of limitations begins at the time of the assault. The legislation comes in response to a recent backlog in rape kits. At one time the Illinois State Police had more than 4,000 untested kits. The backlog has since been cleared. The bill is SB 2609.

Smoking ban on campus 
SB 2202, which would ban smoking on public college campuses is positioned for a floor vote in the Senate. The measure would apply to all university property and would let universities decide what the penalty would be for those who violate the ban. Opponents to the proposal argued that smoking policy decisions should be left to university trustees. The House approved the bill in April. 

Regulation of ride-share startups
A hotly contested proposal to regulate ride-sharing startups, such as Uber and Lyft, could come up for a vote in a Senate hearing tomorrow. HB 4075 passed in the House in April. Ride-sharing companies link passengers up via their smartphones with drivers, who use their own vehicles. But the well-regulated taxi industry claims that ride-sharing companies and drivers are getting around the cost of doing business and skirting safety measures and inspections. Opponents to strict regulations argue that they would stifle a new and innovative business model.

Medical marijuana for epilepsy
SB 2636, would allow children with epilepsy access to marijuana as a treatment under the state’s medical cannabis pilot program. Some families have found that a liquid form of the drug helps control the disease in children with frequent seizures. Parents say marijuana oil has helped their children, who may have hundreds or thousands of seizures a day, to cut the number down to just a few. The legislation would also allow the use of the drug for adults with the disease. SB 2636 passed in the Senate in April and is currently on second reading in the House.

Monday, May 12, 2014


CapitolView, WSEC-TV Springfield. Host Amanda Vinicky (WIU/IL Public Radio) and guests Kent Redfield (UIS) and Andy Maloney (Chicago Law Bulletin) discuss legal troubles for both Bruce Rauner and Gov. Pat Quinn among other topics.

Tuesday, May 06, 2014

Legislative panel plans probe of Quinn's anti-violence initiative

By Jamey Dunn

A legislative commission that reviews state audits voted today to activate its subpoena power to look into Gov. Pat Quinn’s troubled anti-violence program.

A scathing audit from Auditor General William Holland thrust the Neighborhood Recovery Initiative (NRI) into the spotlight earlier this year. According to the report, the program did not use a competitive bidding process to select the providers and dole out grants but instead relied on recommendations from Chicago aldermen. Auditors found that at least $2 million was unaccounted for and necessary documentation was missing, including timecards for workers.

Since the audit, the U.S. attorney's office and the Cook County prosecutor's office have both begun investigating to program. Republicans have accused the governor of using the $54 million program as a “political slush fund.” The bulk of the money for the program came from discretionary spending Quinn is allowed under the state budget. Contracts for the program were signed shortly before Quinn narrowly won the 2010 race for governor, and some of the funding began to go out shortly after Election Day. 

Quinn says that he shut the NRI down as soon as he became aware that it had problems. “When it wasn’t going in the right direction, when it wasn’t doing what we wanted it to do, I shut it down completely and stopped it cold,” Quinn said today. “I didn’t sweep anything under the rug. I acted on behalf of the public and shut the program down.” Quinn is also advocating for the passage of House Bill 3820, which would require more oversight for state grants. The House passed the bill last month. “I’m ready to sign it into law. I think that that certainly is something that is an important mission.”

Sen. Jason Barickman, a Bloomington Republican, brought a motion to the Legislative Audit Commission today that would allow the bipartisan panel to subpoena witnesses or information pertaining to the NRI. The commission, which is made up of members of both chambers, reviews audits, holds public hearings with state agency heads and sometimes recommends changes to the law as a result of audit findings. “Given what we know today about this program, given the many questions that many of us have about this program, the statute makes clear that we need to further investigate, find out what facts exist and make our recommendations accordingly,” said Barickman. “It’s clear that we have more work to do to get to the bottom of this.”

The proposal received bipartisan support; however, several Democrats on the commission voiced concerns that a probe from the commission would at best produce nothing beyond what will come out during the ongoing criminal investigations and would at worst impede them. “What’s the value at the end of the day that we’ll be putting on the table?” asked Hoffman Estates Democratic Rep. Fred Crespo, who sponsors HB 3820. “What can we do that they cannot do?” Crespo and others said that the commission does not have the resources to launch a major investigation.

Barickman, who chairs the committee, and co-chair Rep. Frank Mautino, a Democrat from Spring Valley, would both have to sign off on any subpoenas issued. Mautino was the sole vote against the motion. He argued that the information the committee needs is already available and that subpoenas may be unecessary. He noted that Holland’s office has several boxes of documents related to the audit and that no legislative staffers have gone through them at this point. Mautino said that the panel should first ask for the information and witnesses it is seeking instead of resorting to subpoena powers.

Holland said he would provide the commission with any information they want. “You don’t have to subpoena the records, and you don’t have to FOIA the records. You make an appointment, you come in and you take a look. That’s the way we do business,” He said. Holland also said that state agencies are required by law to comply. Barickman said that because the agency that oversaw the program has been dissolved and some of the people who worked on the NRI have since left state government, the commission may need the legal power to compel them to cooperate.

Barickman said that today’s action would give the committee “every tool available” to look into the issue in the coming months. “We’re not scheduled to meet [again] until late August or September of 2014. So this gives us all of the tools necessary to continue with our duties over the summer.” If the commission decides to bring forward any revelations about the NRI at that next hearing, it would be pretty inopportune political timing for Quinn’s reelection bid.

Quinn called Brickman’s motion politically motivated. “Politcs as usual. It’s a political time of year. We shut the program down. That’s the bottom line. We did it two years ago.”

Barickman said Quinn has been trying to “rewrite the facts” in recent media appearances. He said that the commission’s vote today “demonstrated wholeheartedly” that “this absolutely is not a partisan issue.” But whether the power will actually come into play is yet to be seen. Mautino would have to agree to subpoenas and an equally balanced bipartisan subcommittee would then have to draft them and approve them by a majority vote. Democrats on the commission went along with today’s vote, for the most part, but they may not be as accommodating when and if the subpoenas begin to fly.