Week in Review - August 12-16

Budget/Old Bills

·         Despite the influx of higher than anticipated revenues in fiscal year 2013, the Comptroller’s office reported on the week of August 12 that the backlog of unpaid State bills remains a problem for state vendors, with efforts to solve the problem facing stagnation.  At the end of June 2013, the increase in FY13 revenues had allowed the backlog to be paid down to $6.1 billion, compared to $7.5 billion a year earlier.  However, the increased spending levels contained in the final FY13 and FY14 budgets have consumed all available revenue and remaining spending pressures, such as pensions, have not been addressed.  As a result, the Comptroller has stated that the backlog at the end of July 2013 stood at $6.8 billion, and this backlog is expected to increase to $7.5 billion at the end of August 2013.  By December 31, 2013, the backlog of old bills is expected to reach $9 billion.



·         Speed cameras could bring tens of millions to cash-starved city coffers annually.   The Illinois General Assembly recently enacted legislation authorizing Chicago to install automated cameras to take images of motor vehicles driving through city speed zones.  Widely flouted speed limits include zones posted around city parks and schools.  Under the city ordinance and state law, the driver or owner of a vehicle that is photographed driving 11 mph or more over the posted speed limit will get a $100 ticket by mail.  Violations of 6 mph – 11 mph will draw a $35 ticket.  At least 50 cameras are likely to be operating by year’s end.   A study performed by Chicago’s speed-camera affiliates and reported by the Chicago Tribune on Monday, August 12, indicates that the new enforcement powers could bring in revenues of as much as $40 million to $60 million per year in fines imposed upon drivers operating vehicles within Chicago.    


·         Former Congressman sentenced.  Representative Jesse Jackson, Jr., who represented Illinois’ 2nd District in Congress from December 1995 until November 2012, was sentenced on Wednesday, August 14 to serve 30 months in federal prison.  The charge was wire fraud/mail fraud in connection with the diversion of $750,000 of funds from Jackson’s campaign account, containing monies earmarked for the congressman’s re-election.  The diverted monies were used for purposes that included a $43,000 Rolex wristwatch.  Jackson’s wife Sandi Jackson was sentenced to serve 12 months in federal prison for a related offense.  Illinois 2nd District includes small sections of Downstate Illinois and the city of Chicago, but centers on a group of Chicago suburbs in southern Cook County.  A former member of the Illinois House, Robin Kelly (D-Matteson) has been elected to replace Jackson. 

Domestic Violence

·         General Assembly bipartisan bill package signed to reduce domestic violence.  HB 958 increases penalties for persons convicted of felony repeat domestic violence; HB 3236 extends the life of the Task Force to Eradicate Domestic Violence; and HB 3300 creates an alternative method for insurance companies and victims of domestic violence to communicate outside the sight of their abusers.  These three bills were signed on Tuesday, August 6. 

Representative Rich Brauer (R-Petersburg) described this domestic-violence package to Illinoisans through the House Republicans’ daily “In the Know” Internet web resource.  Brauer presented these new domestic violence laws in his “In the Know” column for Tuesday, August 13.  The “In the Know” column can be read every weekday throughout Illinois by visiting www.intheknowillinois.com.


·         New video gaming industry scores success: $106 million earned in first half of 2013.  Even as new video gaming machines continue to stream online in truck stops, taverns, and adult gathering places throughout Illinois, existing video gaming machines have drawn eager customers in transactions electronically recorded by the Illinois Gaming Board.  The Board’s report for the first half of 2013, published Sunday, August 11, indicates that gamblers lost $106 million playing 8,830 machines  at 1,800 licensed locations in the six-month period.  This money was shared between the owners of the premises where the gaming took place, the machine operators, and the State and local governments that taxed the gaming transactions.  2,000 license applications, representing thousands of additional machines, are pending.

General Assembly

·         Pay stoppage continues.  The current date set by the court to hear arguments in the lawsuit by Democrats Madigan and Cullerton, leaders of the majority party in the General Assembly, is September 18.  The lawsuit against the Governor and Comptroller is meant to pry paychecks for the General Assembly’s 177 members, although money for the paychecks has been vetoed by the Governor.  On Thursday, August 8, Madigan and Cullerton asked a Cook County judge to speed up his resolution of the case once the arguments are heard.   This move does not, however, advance the September 18 date for oral arguments.  Pending resolution of this case, members of the Illinois House and the Illinois Senate continue to serve without pay.      


·         Questions continue about ties between politicians and Illinois public transportation boards.  Thorntown Township Supervisor Frank Zuccarelli, a choice of Gov. Pat Quinn to serve on the governing board of the troubled Chicago Transit Authority (CTA), resigned on Tuesday, August 13 after charges that the board member was a “double-dipper.”   The local government official’s township pay-and-benefits package, which is a matter of public record, is $186,418/year.  In addition, Zuccarelli, who had just begun his CTA tenure, had been slated to collect a transit governing board stipend that would have totaled an additional $25,000/year. 

The Zuccarelli affair followed a string of resignations at the separate Metra board, the governing board that oversees the operation of diesel and electric commuter train service in the Chicago suburbs.  As of Thursday, August 15, five Metra board members have left the challenged agency (see “Metra” section, below).  Metra is a separate agency from the larger CTA, but Zuccarelli’s appointment and resignation indicate the possible presence of common factors involving conflicts of interest at both governing boards and in Chicago-area public transportation as a whole.   

Chicago-area public transit fares cover less than one-half of the total cost of operating local bus, train, and disability transit service, and the service is heavily subsidized by tax subsidies paid by Illinois consumers at motor fuel pumps and retail ship checkout lines in gas and sales taxes. 

Higher education

·         Leading New York City credit rating firm, Moody’s, downgrades debt issued by seven Illinois public universities.  Among the institutions of higher education hit by the downgrade was the Land of Lincoln’s flagship system of advanced learning, the University of Illinois.  The U of I operates campuses in Champaign-Urbana, Chicago, and Springfield.  More than $2.2 billion in debts were affected by the downgrades, which brokers expected to increase the underwriting costs and interest rates when these universities seek to refinance existing bonds or take on new debt.  The multi-billion debt downgrade, and associated financial costs, could have a negative effect upon tuition pressures facing trustees, chancellors, and presidents of the affected institutions.  The debt downgrade was tied to the negative overall financial conditions facing the State of Illinois and its pension funds.  One of the five underfunded State-managed pension funds, the State Universities Retirement System (SURS), pays defined-benefit pensions to thousands of retired educators.  Moody’s downgraded this debt on Friday, August 9.           


·         Federal rules changes could help douse the boilers that fire up 2,000 Illinois jobs from Chicago area through Downstate.  13 coal-burning electrical generating plants, operating throughout Illinois, employ approximately 2,000 full-time Illinois workers.  Continued changes in federal administrative law could, however, make it increasingly challenging for these facilities to earn enough money to cover their operating costs.  Previous revisions to State and federal rules, including rules governing the emission of byproducts from coal-burning such as mercury and sulfur dioxide, have decreased the viability of burning coal within Illinois and led to the closure of several existing generating plants, such as Fisk Station in Chicago and Meredosia Station in downstate Illinois.  In addition, possible future regulations involving controls on the venting of carbon dioxide, a massive byproduct of coal-fired electrical generation, could mark a death knell for this industry in Illinois. 

Larger coal-burning plants, ranging from Waukegan north of Chicago to Joppa in far southern Illinois, remain in operation for now.  A typical coal plant that remains in operation as of 2013 uses significant-sized turbines to generate up to 1,000 megawatts of electricity.  Coal-fired electricity is an essential element in Illinois peak-load power supply during Midwestern summer heat waves, when consumer demand for air conditioning spikes upward.  Demand spikes often lead to widespread electrical blackouts, especially during summer months.  Federal regulators counted 679 major blackouts throughout the United States in 2003-12, a series of events that led to a cumulative additional national economic burden estimated at $18 billion - $33 billion per year.  However, key owners of Illinois coal-burning power plants face increasing financial challenges in achieving the financing necessary for renovations and capital maintenance of their facilities.  In at least one key incident, the parent holding company of Illinois’ Midwest Generation filed for bankruptcy in December 2012.  An investigation published on Monday, August 12 by the St. Louis Post-Dispatch questioned whether coal-fired electrical generating plants have a long-term future in Illinois.   

Local Government/Museums

·         Governor vetoes bill to reduce fiscal pressures on local government.  Most local museums and aquariums that charge admission and are located in city or county parks operate on real estate that is owned by the public and are partly supported by local taxes.  This means that any State law that increases their costs of doing business could, as an unanticipated outcome, increase the tax extensions that they are forced to levy in order to continue to operate. 

One of these museum mandates is the so-called “free day.”  Current State law requires these museums to operate for free at least 52 days a year (typically, one “free admission” day is offered every week).  In spring 2013, Illinois museums persuaded the Illinois General Assembly to pass a bill sponsored by Representative Joe Sosnowski (R-Rockford), HB 1200. This bill would reduce Illinois tax burdens, especially property tax burdens, by making the move to reduce “free days” from 52 per year to 26 per year.  Although this is a sacrifice, families that need to come on a “free day” would still be able to do so by timing their visit to the correct week, rather than just the day of the week. 

On Tuesday, August 13, Gov. Quinn vetoed HB 1200.  The bill had been approved by a three-fifths majority in both chambers of the General Assembly, however, and with continued fiscal pressures on local governments and taxpayers it is possible the measure could be passed again in the November 2013 veto session over the Governor’s veto.  Persons interested in this issue may wish to monitor this bill on the Illinois General Assembly’s website, www.ilga.gov.


·         Five board members resign in ongoing political-influence scandal.  The departure in June 2013 of former Metra chief executive officer Alex Clifford has led to ongoing questions about the existence of continued conflicts of interest between powerful statewide officials and members of the controversial agency’s governing board.  Metra is the local government agency with the responsibility of operating diesel and electric commuter trains throughout the suburban Chicago area, including five “collar counties” that receive little other service from the area-wide Regional Transportation Authority (RTA).   Inquiries have reached the office of Illinois House Speaker Mike Madigan, who as of August 2013 remained under ethics investigation for his role in recommending potential employees to executive positions within Metra.  The fifth of 13 Metra board members to resign, Stanley Rakestraw, left the board on Thursday, August 15.  Rakestraw’s departure signaled a potential looming crisis in Metra’s operations, as his resignation left Metra’s board with the minimum of eight members necessary to continue to carry out the management of the troubled agency. 

·         Gov. Quinn appoints inquiry panel to look into Chicago transit issues.  The 15-member committee will include former U.S. Attorney Patrick Fitzgerald and local transit planning leader George Ranney, Jr.  The committee has been asked to look into allegations of misconduct and conflict of interest in all of the operating boards that work under the RTA umbrella, including the CTA, Metra, and the suburban bus board/paratransit operator PACE.   The panel has been asked to submit preliminary findings and recommendations to the Illinois General Assembly prior to the November 2013 veto session, and final findings and recommendations prior to the spring 2014 full session. 


·         Chicago Tribune warning raises questions about costs to Illinois consumers of Affordable Care Act coverage.  In addition to the income tax increase enacted on many Americans to cover some of the costs of the looming Affordable Care Act (ACA), known as “Obamacare,” questions are being raised about possible increases to individual Illinois consumers for the coverage they will be required to maintain under this new federal law.  Many Illinoisans may find that the new, mandatory health coverage that they will be required to buy under this Act will actually cost more than the existing private-sector coverage that they may already have (due in part to the complex new coverage mandates and add-ons).

In a warning published on Wednesday, August 14, the Chicago Tribune raised the possibility that Illinois may join other states, such as Florida and Ohio, where insurance regulators expect sharp increases in insurance bills under “Obamacare.”  Florida regulators see a 35 percent jump likely to be imposed in their state, and in Ohio the comparable increase is expected to be 41 percent.   The Illinois Department of Insurance, which is affiliated with the Office of the Governor of Illinois, has not yet estimated what the additional savings or additional costs, in relation to private-sector health care insurance, will be to Illinois patients under the Affordable Care Act. 

·         Additional costs to Illinois health care customers and taxpayers will be associated with what is shaping up to be a major push to “sell Obamacare” to U.S. and Illinois citizens.  An investigation by the Wall Street Journal, published on Thursday, August 15, indicates that the “Obamacare” push will include more than $1.0 billion in television advertising intended to persuade Americans to voluntarily comply with the new law.  This figure was developed after talks by reporters with U.S. broadcasters and a broadcasting industry trade group that tracks ongoing nationwide ad buys.  Compliance is seen as especially challenging by the White House in the case of younger adults who may be tempted to try to evade the costly mandate and go without insurance in 2014.  

·         Affordable Care Act mandate may force some Illinoisans to find a new primary medical care provider.  This dilemma could hit Illinois patients who find that their compliance with the  ”Obamacare” mandate will force them  to choose an insurance product on the ACA insurance exchange that will include a list of approved medical care providers that does not include their current primary care physician.  Most modern health insurance policies include complex limitations on the individual physicians accessible to insured patients, including, in the case of preferred provider organizations (PPOs) a rigid “list” of in-network caregivers.   Patients who sign up with a specific PPO are generally restricted to care offered by individual health care professionals on the PPO list.   A Wall Street Journal article published on Wednesday, August 14 warned of a significant number of ACA patients in Indiana who are facing separation from their current primary care physicians – including, in some cases, physicians who have established a doctor-patient relationship with their patients that have lasted for decades.