Week in Review for 10/21/13 through 10/25/13

House Republican Leader Jim Durkin
Jim Durkin unanimously elected by Illinois House as Republican Leader.  Durkin’s election, which was an anticipated event after his colleagues unanimously elected him in August 2013 to lead their caucus, took place on Tuesday, October 22.  This was the first day of the Illinois House and Senate veto session, a series of days set aside in the fall to respond to veto messages submitted by the Governor and take action on urgent issues of public interest.  Durkin’s election formalized his status, and renewed the ability of House Republicans to slate members of House committees and participate in the naming of members of their caucus leadership team.

Leader Durkin announced that his highest priority would be to reverse current State laws that discourage job creation and economic growth.  “The biggest social issue of the day is the 9.2 percent unemployment rate,” Durkin told reporters.  Illinois’s jobless rate is currently the 2nd highest of the 50 U.S. states, exceeded only by Nevada.

Medicare Advantage
General Assembly panel holds hearing on botched rollout of new Medicare Advantage program; Rep. Raymond Poe files bill to delay move to allow further discussion.  The program, intended to reduce the cost of health care given to retirees in State-managed pension systems, has come under severe criticism from many retirees in recent weeks.  Changes by the State, imposed by the Quinn administration, have led to notices to many seniors that they will be separated from their current health insurance provider and, in some cases, from their current doctor.

Particularly affected are retirees enrolled in the Champaign-Urbana-based Health Alliance medical care insurance system, and the 6,000 retirees possessing existing doctor-patient relationships with the medical professionals affiliated with the Carle Foundation Hospital and Carle Physician Group.  These individuals have been instructed by the Quinn administration to find new health care providers no later than January 1, 2014.  Many of these individuals have two or more chronic diagnoses, and face challenges in moving their care to a new insurer or physicians’ clinic.    

The General Assembly’s Commission on Government Forecasting and Accountability (CGFA) held a hearing on the Medicare Advantage situation on Wednesday, October 23.  At the hearing, members of all four caucuses subjected the Quinn administration to severe criticism for its handling of the situation and lack of prior outreach to the retirees now facing crisis-level decisions about their health care future.  In addition, on Tuesday, Rep. Raymond Poe (R-Springfield) filed HB 3719 to increase CGFA’s power to examine and impose institutional burdens upon administrative decisions involving Medicare benefits.

CGFA members asserted that Health Alliance had submitted a Medicare Advantage proposal that would have been less expensive to the State than the accepted proposals from three nationwide health insurance firms, but the Department of Central Management Services had imposed specifications that were allegedly designed to prevent Health Alliance’s bid from being opened or considered.  Health Alliance had sought the right to compete for Medicare Advantage business with the three firms whose bids were accepted. These three firms, each with a nationwide health insurance presence – Aetna, Humana and UnitedHealth – were the only firms to win the right to offer their services to State retirees across Illinois and elsewhere in the United States.  

Budget – Medicaid 
Rep. Patti Bellock demands answers on Medicaid budget situation.  Bipartisan negotiations, aimed at stemming exponential growth in the rate of taxpayer-financed spending on Illinois’ Medicaid program, led to the enactment of reforms in spring 2012 and spring 2013.  A key component of the 2013 reform package was the Redetermination Project, a multistage project to enhance the examination, and verification, of the eligibility of the 2.8 million Illinois residents currently enrolled in Medicaid.  Verifying these individuals’ status will help to pinpoint some individuals who, as a result of changes in their life circumstances, have undergone changes in their eligibility.    

The Quinn administration had hired a private-sector firm, Maximus, to conduct a key segment of this enhanced verification program.  This decision to hire a contractor had been based on the experience of Maximus at conducting similar database work in other jurisdictions, but a State arbitrator has suspended Maximus’ work on the ground that this is a task that, by contract, must be done in-house by unionized State employees.  As a result of this arbitration decision, the redetermination appears to have sharply slowed down if not halted, rending highly at risk the ability of the State to clarify its Medicaid eligibility situation and realize the budget savings enacted by the General Assembly in the spring 2013 budget process.

The House Republican spokesperson on Medicaid issues, Deputy Minority Leader Patti Bellock, a key figure in the passage of statutory authorization for the Redetermination Project, expressed concern this week about the lack of disclosure by the Quinn administration on any pending appeal of this arbitrator’s decision, the status of the project, and the impact of its stoppage on other FY14 budget issues.  Bellock’s remarks, made on the House floor on Wednesday, October 23, are covered in greater detail on The Caucus Blog, the official blog of the Illinois House Republican Caucus.

Illinois House hears requests for FY14 supplemental appropriations.  The budget enacted by the General Assembly in May 2013 was meant to cover all of Illinois’ spending needs from July 1, 2013, through June 30, 2014 (FY14).  However, the Governor has submitted a request for supplemental spending for FY14 totaling over $200 million.  During the first week of the fall veto session, appropriation committees in the House met to begin reviewing the items in the Governor’s request and to examine available revenue to support the new spending.  Key items on the General Revenue Fund side of the request include over $100 million to pay for wage increases previously authorized under the contract with AFSCME, and include $40 million for operational expenses at the Department of Corrections.

The supplemental request also includes spending authority to use fees paid by concealed carry applicants to pay for costs associated with processing concealed carry applications.  Separate from the Governor’s request, Cook County has also requested $30 million in General Revenue Funds for costs associated with the Affordable Care Act (aka “Obamacare”).

Meetings of the House appropriations committee thus far have been for discussion purposes and no votes have yet been scheduled.  Additional action may occur during the second week of the veto session.  The second week is scheduled to begin on Tuesday, November 5.

Mayor Rahm Emanuel calls for 75-cent-a-pack cigarette increase.  The proposal, which would raise an estimated $10 million in additional annual tax revenues for the troubled budget of Illinois’ largest city, would increase the price of cigarettes within city limits to the highest price charge anywhere in the United States.  Taxes already account for well over one-half the price of cigarettes sold in Chicago, with a total of $6.67 charged per pack.  Mayor Emanuel’s proposal would raise this tax take to $7.42 per pack.  The proposal was included in Emanuel’s budget proposal to the Chicago City Council, submitted on Wednesday, October 23.

Critics stated that enactment of this proposed ordinance (which under “home rule” does not require State consent) could further increase moves by Chicago’s remaining smokers to drive to a neighboring state, such as Indiana, to make their purchases.  The move could also encourage an increasing number of Chicagoans to consider changing the way they consume an active pharmacological element in cigarettes, nicotine, by buying an e-cigarette apparatus and fitted nicotine cartridges.  E-cigarette cartridges are taxed at a significantly lower level than conventional cigarettes.

Crime – State Government
Administrative order removes criminal conviction question from State employment application forms.  Until October 2013, persons applying for jobs with the State of Illinois were required to disclose whether they have been convicted of a criminal offense.  Failure to answer the question truthfully could be taken as grounds for summary rejection of the application.  Previous State administrations had asserted that persons seeking to be hired for a taxpayer-funded position should disclose their criminal history up front.

However, an administrative order signed by Gov. Pat Quinn on Thursday, October 3 has removed this question from the State’s job application forms.  State agencies retain the right to conduct a criminal background check on short-listed finalists for State jobs, but Quinn’s administrative-order action did not allocate additional State budgetary funds to help cover the costs of carrying out these background checks.

Gambling – Chicago Casino
Major expansion in Illinois slot machine, casino gambling again under discussion.   Advocates say the change in Illinois law would enable the Prairie State to “catch up” to other states that offer high-tech gaming opportunities at horse racetracks and in large cities.  For example, Detroit and St. Louis have downtown casino complexes, and neighboring/comparable states such as Iowa and Pennsylvania have allowed their racetracks to install slot machines.

Proposals on the table in Illinois include authorization for a major free-standing casino complex in the city of Chicago; additional casino riverboats in key state locations, including a location to be shared by up to 42 financially-pressed suburban municipalities south of Chicago; and the installation of banks of slot machines in annex facilities to be built adjacent to the grandstand of horse racetracks.  Member of the Illinois House and Senate discussed these proposals in the first week of veto session without reaching agreement.  Casino gaming expansion proposals continue to draw opposition from advocates concerned about expanded gaming facilities and compulsive gambling.  

Gambling – Riverboat Casinos
Illinois Gaming Board nixes call by casino riverboats to operate 24/7.  Under current Illinois practice, the ten operating casino riverboats (including five casinos in the greater Chicago area) operate almost continuously year-round.  However, each riverboat closes its gaming floor for two hours every day, usually in very early morning; these closures are meant to allow each casino to clean and maintain the casino floor and its gaming machinery, and to prevent persons challenged by compulsive gambling from going on a gaming binge.

These concerns remain valid.  However, Illinois riverboat casino owners assert that their licenses face market challenges, including rivalries that did not exist in 1999 when the casino industry took its current form by moving to “dockside gambling.”  In 2009, State lawmakers enacted the Video Gaming Act, a new State law that authorizes 24/7 operation of video gaming machines at truck stops; during the first three calendar quarters of 2013, many Illinois truck stops installed gaming machinery in compliance with this new law.  In addition, some states that neighbor Illinois also license riverboat casinos, including casinos that offer 24/7 gaming opportunities.

In September 2013, the Illinois Casino Gaming Association asked their State regulator, the Illinois Gaming Board, for permission to move to 24/7 gaming-floor operation.   However, on Thursday, October 24, the Gaming Board rejected this request.  Pointing to ongoing problems in Nevada (the state with the highest current unemployment rate among the 50 states, even exceeding Illinois), the current Illinois Gaming Board has made it a priority to discourage full-blown Las Vegas-style gaming operations in Illinois.  

Health Care
Medical Practice Act renewed.  The Illinois House took necessary action on Wednesday, October 23, to renew the Medical Practice Act of 1987.  This is the State law that governs the status of professionals, including medical doctors (M.D.s), licensed to practice medicine.  This law, which would have expired (“sunsetted”) on December 31, 2013, was extended by SB 1496 until December 31, 2014.  The House’s vote of 115-2-0 sent the amended measure to the Senate for final action.  Discussions about the future of medical care in Illinois are expected to continue.

Revenue – Internet Tax
State’s “Amazon tax” struck down by an almost-unanimous Illinois Supreme Court.   The financially-troubled State of Illinois has enacted an increasing number of new taxes and fees in recent years, including some charges that are facing constitutional challenges as unwarranted extensions of the right of the public sector to impose a tax.  One of these taxes, enacted by the House and Senate majority in 2011 as the “Main Street Fairness Act,” imposed a fee on the act of offering a “click-through” button on a website.  Buttons of this type allow a visitor to the site to connect himself or herself to a larger retailer or merchandiser.

The fee was informally called the “Amazon tax” because current federal law does not allow the State of Illinois to order retailers based outside Illinois, such as Amazon, to charge a sales tax on goods shipped to Illinois.  Imposing a “click-through” fee was supposed to partly replace this lost sales-tax revenue.  However, owners of Illinois-based webpages that offer a click-through option took action to apply the federal Constitution, with its controls on State actions that impede interstate commerce, to this fee.  A state Supreme Court ruling, handed down on Friday, October 18, invalidated the click-through fee.  The decision was signed by six of the court’s seven justices.   The Illinois Department of Revenue has the right to appeal the decision to the federal courts.

Revenue – Tax Credits
The House Revenue and Finance Committee heard testimony and prepared for what could be significant work in the first week of November.  The House Revenue committee, which has jurisdiction over requests for changes in Illinois tax law, is reviewing a series of requests from Illinois businesses, such as Decatur-based Archer Daniels Midland (ADM), for reductions in tax burdens paid by the private sector.  A public hearing, held on Tuesday, October 22, listened to OfficeMax’s CEO Ravi Saligram advocate for a change, from corporate income tax-based to individual income tax-based, in the way existing Economic Development for a Growing Economy (EDGE) tax credits are reported and filed by his company.

The OfficeMax change would benefit Saligram’s successor, the future head of the merged company that will combine the operations of OfficeMax and its competitor Office Depot, and his or her employees.  Illinois-based OfficeMax and Florida-based Office Depot have announced their intention to complete a “merger of equals” between their Fortune 500 companies.    Other firms have filed similar requests.      

Illinois House unanimously approves bill to move forward with consolidation of regional offices of education.  SB 1689 moves Illinois towards completion of a multiyear process intended to implement budget savings to taxpayers by consolidating the regional offices of education (ROEs).  An ROE is a facility that provides intermediary services between each individual local school district on the one hand, and the State Board of Education on the other.   In order to attain needed budgetary savings, the General Assembly has worked closely with the Illinois Association of Regional Superintendents of Schools and other stakeholders to develop a consensus policy to consolidate some of the smaller ROE offices and reduce the total number of ROEs operating statewide to no more than 35.

SB 1689, as amended, represents another step towards completion of this process.  The bill, which was unanimously approved on Wednesday, October 23 by both houses of the General Assembly, creates a timeline for the State Board of Education to take consolidation action  through the process of administrative decision making.  A timeline was necessary to encourage voluntarily consolidations initiated by the ROEs themselves before the deadline requested by local election officials for printing up ballots and taking other actions; in election year 2014,these ballots will contain the names of regional superintendents of schools.  Should voluntary cooperation not be possible in some regions of Illinois, SB 1689 will allow the State Board to step in.