Week in Review for 11/18/13 through 11/22/13

Illinois Tornadoes
  • Tornadoes strike communities throughout Illinois.  While twelve states were affected, Illinois was especially hard-hit by the severe frontal system that moved eastward on Sunday, November 17.  Death and destruction followed cyclonic strikes, including at least two tornadoes measured at a severe EF-4 on the North American scale of intensity, on the central Illinois city of Washington, located east of Peoria; the central Illinois town of Gifford, north of Champaign-Urbana; the southern Illinois town of New Minden, east of St. Louis; the far southern Illinois town of Brookport, north of Paducah; and other communities in Illinois.  More than 1,500 Illinois homes were damaged or destroyed. 
  • Fifteen counties declared disaster areas.  The State has declared fifteen counties that contain tornado-hit communities to be disaster areas, and took steps to have the federal government do likewise.  As of Thursday, November 21, the fifteen counties are Champaign, Douglas, Fayette, Grundy, Jasper, LaSalle, Massac, Pope, Tazewell, Vermillion, Wabash, Washington, Wayne, Will, and Woodford.  Other counties may be added to this list.  
  • Ready Illinois contains information about the State’s specific activities on behalf of storm-affected communities.  Recovery help includes State grants and loans to affected households and businesses, the organization of post-disaster volunteers, outreach to local governments, and advocacy to get help or increased help from the federal government.  The Federal Emergency Management Agency (FEMA) has begun damage assessments in the affected communities.  

New DCFS acting director promises immediate action against child deaths.  Acting Director Denise Gonzales told the press on Wednesday, November 20 that her employees are stepping up field work aimed at inspecting homes where at-risk children live.  The Department of Children and Family Services (DCFS) has been asked to respond to reports of child abuse or neglect made by both mandated reporters and citizens.  The DCFS hotline phone number is 1-800-252-2873.

Forensic auditing work has shown that the number of children with open DCFS case files who have died as a result of abuse and neglect has more than doubled in recent years, from 15 identified cases in 2010 to 34 in 2011 and 34 again in 2012.  In a typical incident, a report is made to DCFS that a child is living in unsafe conditions and the case is assigned to a caseworker.  If the child then dies, the death is investigated, and a wide variety of signs and signals that point to abuse or neglect may become part of the final judgment.  One reason for the increase in abuse/neglect deaths in 2011-12 is a recent consensus, driven by child-welfare advocates and law enforcement, to increase conclusions of abuse or neglect in cases that previously might have been characterized as accidental or remained open without a judgment.   

DCFS is currently operating under an Acting Director, as former Director Richard Celica resigned on Friday, October 15 due to serious illness.  Advocates say that Celica’s performance as DCFS Director was good, and that pressure on case files due to the State’s ongoing budget crisis, rather than management failure, is one reason for the dismal DCFS reports in the media recently.  Many of these reports have included the names and faces of victimized Illinois children.  

Five public hearings scheduled for public fracking rules.  The General Assembly enacted legislation in May 2013 to legalize the chemical drilling of Illinois shale beds for oil and gas (“fracking”).  After this legislation was signed into law, the Department of Natural Resources (DNR) went to work to write administrative rules to cover day-to-day enforcement of the principals set forth in the new law.  The rules are now being subjected to a public hearing process where interested parties, including owners of land that may be drilled, can offer thoughts and testimony. 

DNR has scheduled five public hearings on their new fracking rules.  The hearings will be held on Nov. 26 in Chicago, Dec. 3 at Rend Lake College in Ina, Dec. 5 in Effingham, Dec. 17 in Decatur, and Dec. 19 in Carbondale.  Ina is located in southern Illinois’ Jefferson County, close to the center of the New Albany shale formation that is the center of fracking interest.  DNR will also accept public comments in writing until Jan. 3.  Following these hearings and public comment, DNR has the right to voluntarily change the rules to accommodate specific concerns raised by Illinois residents and other stakeholders.  

Persons interested in the fracking issue may wish to take a look at the DNR public hearing website at http://www.dnr.illinois.gov/OilandGas/Pages/PublicHearings.aspx.  The hearing schedule was finalized on Wednesday, November 20.    

2014 live horse racing may be saved by proposed deal.   Long-term fiscal problems facing the live horse racing industry have been exacerbated by political infighting to create a situation where insiders say many of the tracks could be silent in 2014.  Illinois currently has five operating racetracks, including four in greater Chicago, that are set up with stables, barns, and other infrastructure to support live horse racing.  However, current tax revenues from live horse racing are no longer sufficient to cover the operating expenses of the Illinois Racing Board, the State panel that inspects and monitors horse races.  

Subsidies from other forms of legal horse betting have kept the Racing Board operational.  However, the Board’s cash crunch was exacerbated during the first half of 2013 when elements within the Illinois General Assembly temporarily banned a form of video horse race betting from home.  The ban lasted for almost six months, reducing betting revenues to Illinois racetracks and horse owners, and reducing taxes paid to the Racing Board.  Press accounts now indicate that a compromise has been reached to extend the legal status of video horse race betting from home.  

Should this language not be passed into law, the status of live Illinois horse racing could be endangered in 2014.  While horse race betting could continue in Illinois in 2014 without live horses, the silent tracks would be forced to reduce employment by many hundreds of specialized personnel.  Trainers, jockeys, veterinarians, and racetrack workers would be affected; these men and women, in turn, support other jobs.  The Illinois Department of Agriculture believes that the Illinois horse racing industry has $1.4 billion of economic impact in Illinois and sustains 37,000 jobs.  If the tracks were to fall silent and betting from home were to again be banned, Illinois horseplayers would continue to be able to go to off-track-betting parlors and place wagers on video feeds of races taking place in other U.S. states.         

General Assembly
Downstate Republican member’s office damaged by fire.  The district office of Representative Dwight Kay (R-Edwardsville) was damaged by fire on Monday, November 18.  On Tuesday, it was announced that law enforcement officers had joined firefighters in investigating the incident.  Kay and his staff were unhurt by the blaze and smoke damage.  The lawmaker has stated that his Springfield office remains open and he is working to serve his Metro-East constituents via traveling office hours while he secures a new permanent office.

Health – Obamacare
Obamacare implementation sharply shifts Illinois health care further towards public sector.  Although State and federal figures agree that more than 206,000 Illinois residents have signed up for health care opportunities under the federal Affordable Care Act in October 2013, less than one percent of this total (1,370) had worked through the troubled HealthCare.gov website to sign up for and enroll in private-sector insurance policies.  By contrast, more than 205,000 Illinoisans had signed up on by the end of October 2013 under expanded, taxpayer-funded Medicaid enrollment opportunities.  These pathways are a part of the Affordable Care Act only in states that have voluntarily “opted into” Medicaid expansion.  Other states, such as Florida, Texas, and Wisconsin, have refrained from opting in.  Money from State and federal taxpayers will be required to cover the expanded health care needs of these new Illinois enrollees. 

Small ray of good news for troubled Illinois pension systems as national settlement includes $100 million for Teachers Retirement System (TRS) and other State-managed pension systems.  The affected systems had purchased or acquired interests in various mortgage-backed securities that had been “bundled” by financial institutions affiliated with JPMorgan Chase, the global banking firm.  In a nationwide settlement, the firm acknowledged that its bundling activities had the effect of concealing the actual risk level assumed by the investors that purchased the securities.  The payment will be made as part of an overall nationwide settlement of $13 billion.  The agreement was announced on Tuesday, Nov. 19. 

Key Illinois Supreme Court decision could move sales tax revenues from Downstate to Chicago area.  A decision handed down on Thursday, November 21 in the case of “Hartney Fuel Oil vs. Brian A. Hamer” casts sharp doubt upon a sales tax strategy used in many Illinois end-use transactions, particularly business-to-business transactions.  

Under current sales tax law, a sales tax is supposed to be charged and collected whenever an Illinois-based entity sells a taxable good or service to an Illinois-based consumer for end-use consumption.  Based on this law, sales taxes are charged at grocery stores, retail stores and other places where prices are rung up on a cash register.  Gray areas have appeared in this law in cases of goods that are typically not sold in a retail store.  Many of today’s goods are sold electronically by personnel in a telephone-based office, or even a computer server bolted to the floor of an unmanned office.  

Under the law in place prior to today’s decision, some retailers have believed that they possessed wide discretion to physically move their electronic point-of-sale to any location in Illinois that charged the lowest sales taxes.  Many sales transactions have been electronically moved out of the greater Chicago area; where supplementary sales taxes are charged by the city of Chicago, the Regional Transportation Authority (RTA) and other authorized and home rule taxing bodies.  These transactions are then credited to other municipalities throughout northern Illinois.  Some of the sales tax revenues generated by this repositioning have been enjoyed by these municipalities and their local taxpayers, and some have been returned by the winning municipality to the business firms involved to enable them to operate more successfully and create jobs.  

The “Hartney vs. Hamer” decision will be closely examined by tax law professionals, but it casts grave doubt on one of the key legal reasons used by advocates who justify the electronic repositioning of Illinois sales tax revenue.  The decision upheld, instead, a different doctrine that points toward a complex, multi-pronged test for determining the actual location of a transaction for Illinois sales tax reporting purposes.  If in the future, for example, a sale is made through a computer located in “Town A,” but the support desk and help squad for the transaction are located in Cook County or DuPage County, the Department of Revenue (currently headed by Brian Hamer, the defendant in this week’s case) will be authorized to use this complex test when auditing the sales tax returns of the firm that made the sale.         

Service Personnel and Veterans
House Republican member rings up Cell Phones for Soldiers program.  Used mobile phones are welcomed by the popular program, which mates the devices with prepaid calling-card hours to give the gift of communication to U.S. soldiers serving overseas.  Representative Ed Sullivan (R-Mundelein) has asked his Lake County office to serve as a dropoff point for the pocket phones.  Cell Phones for Soldiers was founded in 2004 and has, so far, prevented more than 10.8 million phones from ending up in landfills.  Thousands of American troops remain in Afghanistan, many living in combat or semi-combat conditions.  Persons looking for more information can read more at http://www.repedsullivan.com/sullivan_collecting_cell_phones_for_soldiers.  The dropoff opportunity was announced on Wednesday, Nov. 20.