Week in Review for 3/3/14 through 3/7/14

Chicago – Neighborhood Recovery Initiative
Lawmakers Urge Freeze of Chicago Anti-Violence State Funds; Call for Additional Investigation of Programs.  In the wake of the Illinois Auditor General’s scathing audit of Governor Quinn’s $54.55 million Neighborhood Recovery Initiative (NRI), State Reps. David Reis (R-Ste. Marie), John Cavaletto (R-Salem) and Dwight Kay (R-Glen Carbon) are demanding all state funds allocated to questionable Chicago anti-violence programs be frozen.  The lawmakers are also calling upon the Auditor General to further investigate state moneys allocated to these programs.

“The initial audit exposed ‘pervasive deficiencies’ we knew permeated Quinn’s politically-motivated and tarnished Neighborhood Recovery Initiative.  We must go further and investigate who profited from and where taxpayer dollars have been spent in recent years,” Reis said. “The Quinn administration has moved fast to push money out of the failed NRI program and to shift the taxpayer resources to different programs with the same objective.”

The Auditor General stated the $54.55 million NRI program was “hastily implemented” with “pervasive deficiencies in Illinois Violence Prevention Authority's (IVPA) planning, implementation and management.”  The IVPA was abolished in Fiscal Year 2013 and the NRI programs were put under the direction of the Illinois Criminal Justice Information Authority.

House Bill 6011 halts any remaining Fiscal Year 2014 funding to the Illinois Criminal Justice Information Authority for grants associated with Chicago’s community-based violence prevention programs, after school programs and the Chicago Area Project.

House Resolution 888 directs the Auditor General to conduct a performance audit of State moneys provided through the Illinois Criminal Justice Information Authority to all community based violence prevention programs, after school programs, and the Chicago Area Project, under contracts or grant agreements in Fiscal Year 2013 and Fiscal Year 2014.  It also requests that the Comptroller not release funds to these programs until the audit has been finalized.

“The legislature must protect taxpayer dollars,” Reis said.  “Fifty million plus have already been spent by the Quinn administration with lingering questions of impropriety and possible criminal activity.  Endemic mistrust is engulfing the Quinn administration and I’m confident further investigation will expose more questionable activity.”

Representative Reis and fellow lawmakers also sent letters this week to Auditor General Bill Holland urging him to forward his findings and complete audit to the Executive Inspector General for investigation and to the U.S. Attorney requesting a review of the audit and to open a criminal investigation if so warranted.

The letters state that the Auditor General’s “findings suggest that, at a minimum there were ethical violations, mismanagement, and exertion of political influence in directing the expenditure of state tax dollars.  It appears there may have been criminal actions in the handling and management of state tax dollars.”

Chicago – Debt, Pensions
World’s largest bond ratings firm, Moody’s , cuts Chicago’s debt rating again.  The move, announced on Tuesday, March 4, reduced the rating from A3 to Baa1.  The drop in the rating awarded to the general-obligation debt issued by Illinois’ largest city followed a triple downgrade impose on Chicago by the same firm in 2013.  The move makes Chicago the holder of the lowest credit rating of any of America’s largest cities with the exception of Detroit, which has filed for bankruptcy.  In a credit report that accompanied the move, Moody’s believes that “the size of Chicago’s unfunded pension liabilities makes it an extreme outlier” among U.S. cities and units of local government.

Moody’s recognizes ten separate levels of investment-grade debt securities, with Aaa being the highest level and Baa3, two levels below Baa1, the lowest.  Money managers that purchase interest-bearing securities are often restricted by law or contract to investment-grade debt securities ranked Baa3 or higher.  This, in turn, shades the value of securities that are ranked barely above investment grade cutoff, as their value could be cut down below investment grade, leading to a mass selloff.  Another triple ranking reduction imposed on Chicago would re-classify the city’s debt as a speculative investment of the type commonly referred to as ”junk bonds.”

Chicago’s mayor plans to sell $388 million in bonds in the near future to meet the costs of recent legal settlements, and for other purposes.  The sale is expected to take place in the second full week of March 2014.  The debt ratings change is likely to lead to higher interest rates demanded by purchasers of the new bond issuance.

Concealed Carry
First group of 5,000 CCLs mailed out.  The 2013 concealed carry law, HB 183 (PA 98-63), bore its first fruit this week as the Illinois State Police mailed out an initial group of 5,000 approved concealed-carry licenses (CCLs).  The licenses were expected to arrive in mailboxes starting on Monday, March 3.  Holders of valid CCLs are legally entitled to exercise their right to carry a concealed firearm for purposes of self-defense.  The State Police counts approximately 48,000 applications that have entered the approval process, so further batches of CCLs may be mailed out soon.

The completion of the first CCL cycle opens the door for discussion of amendments to the law.  Many firearms owners have expressed concern over the lack of a paper application process for a CCL.  Under current law, applicants must submit electronic applications, a process that imposes an additional burden upon Illinois residents who lack Internet access.  A State Police spokesperson told the Joint Committee on Administrative Rules that they are working on an alternative paper application process for possible availability in the summer of 2014.      

Meanwhile, politically active gun owners rallied at the Illinois State Capitol on Wednesday, March 5 to enact changes to the current concealed carry law.  In addition to a paper CCL application process, concerns include a wide list of areas that are empowered, under current law, to post signs announcing that concealed weapons are not allowed on the premises; the high cost of applying for a CCL; and what many gun owners believe are inadequate provisions for partial waiver of the training requirements of the Act to reflect previous firearms experience of various groups of gun owners.  Illinois does not have full reciprocity with the CCL and CCL training requirements of other states.    

CCL applicants are required to submit an application fee of $150 and to post proof of completion of up to 16 hours in concealed-carry safety instruction.  The training must be provided on a face-to-face basis by a certified training provider.  Currently, the Illinois State Police accepts electronic applications for a CCL via their CCL website.

Chicago advocacy institute makes suggestions for FY15 budget.  The Institute for Illinois’ Fiscal Sustainability, an arm of the Civic Federation of Chicago, published its FY2015 Budget Roadmap on Monday, March 3.  The Civic Federation’s white paper set forth what the Institute sees as changes to State policy necessary to partially roll back Illinois individual income tax rates, meet essential continuing public-sector commitments, begin to pay down the backlog of unpaid State bills, and develop a State “rainy day fund” for future economic downturns.  The roadmap was added to the list of policy proposals that the General Assembly will consider as they examine the State’s budget options for FY15.

Budget – Unpaid Bills
State lawmakers set goal for summer 2014: reduce backlog of unpaid bills to $5.6 billion.   The figure would represent progress from the high of $9.9 billion marked in 2010, and the level of $6.4 billion posted in December 2013.  Current law strongly orients surplus State revenues to the reduction of past deficit spending, although the law is not airtight.  Unexpected new Medicaid billings, for example, can reduce or eliminate any surplus earmarked to pay back Medicaid bills from previous years.

On Monday, March 3, the State Journal-Register reported ongoing progress in the bill backlog challenge.  “It’s getting slowly better.  Slowly,” responded Rep. David Harris (R-Mount Prospect), pointing out that more than half of the 2010 backlog of red ink is expected to remain in place after the conclusion of the 2014 fiscal year.  By bipartisan consensus, the House unanimously adopted HR 842 last week to continue the State’s tight budgeting in to FY15.  This would allow continued allocation of future State surpluses, if any, to back-bill reduction.

Electric Deregulation
1997 bill led to Illinois customers saving as much as $37 billion.   The figure comes from a follow-up study on Illinois electric utility deregulation reported by the AP on Monday, March 3.  The average household has paid $20 less per month – about $240 annually and about $3,600 over the life of the law so far – for electricity than they would have had this law not been enacted.  Total Illinois household savings are estimated at $18 billion, with billions in additional savings going to commercial and industrial customers that consume more than two-thirds of the electricity used in Illinois.

Enacted in November 1997, HB 361 (P.A. 90-561) deregulated the process by which Illinois customers buy and pay for electricity.  Until 1997, customers were compelled to buy electricity from the owner of the wire into their home or business (the same model as is used by cable TV providers today).  However, changes in electrical technology made it possible for a wide variety of new providers of electrical generating capacity, including owners and operators of renewable energy, to sell electricity.  The Illinois business community saw these changes and worked with consumer advocates and the General Assembly to pass the “dereg” law.  The electric deregulation bill created the system, now familiar to electric customers through Illinois, where many customers can choose the supplier of their electricity.  Customers buy the electricity and also pay a fee to the owner of the neighborhood supply wire to compensate them for the cost of carrying the electricity and maintaining the infrastructure.  

In mid-1998, when the new law began to be implemented, Illinois had the 13th highest electricity prices in the U.S.; the March 2014 follow-up study found that by 2013, the Illinois price had dropped to be among the 10 lowest.  The study won unusual praise from both the Illinois Retail Merchants’ Association, a key business group, and the Citizens’ Utility Board (CUB), a customers’ advocacy organization.

Advocates call for new riverboat casino in Chicago’s south suburbs.  In a delayed public hearing held Monday, March 3 at the Tinley Park Convention Center on comprehensive Illinois gaming expansion, advocates for various specific expansions and locations made their cases.

One area where many local municipalities are pushing for a riverboat license is a cluster of suburbs directly south of Chicago.  Under State law, part of the taxes paid by casino riverboats and their customers goes to the municipal government where the boat is docked.  In the case of the south suburbs, various proposals have been made for a consortium of local municipalities to apply jointly for dockside status and share the expected proceeds.

A typical modern casino “riverboat” is a floating block of floor space for electronic and table games, with an attached hospitality space and hotel tower for extended-stay gamblers.  Bill Paulos of Cannery Casino Resorts (North Las Vegas) assured hearing participants that the junction area of Interstates 57, 80, and 294 – Markham, Hazel Crest, and Country Club Hills – could be a suitable location for a $200 million casino development project.

Advocates assert that a casino located in Chicago’s south suburbs could divert Chicago-area gamblers who are currently urged, through heavy advertising, to drive southeast and spend their money in Indiana casinos.  Others believe that Illinois’ public-sector budgets are already over-dependent upon gambling and wagering activities and that the state and its units should not take steps to further encourage gaming and enable the behavior of persons challenged by gambling patterns of personal behavior.    

Heroin Epidemic
Heroin bill package posted in House Judiciary Committee; Task Force meeting held.   In the House Heroin Task Force meeting on Tuesday, March 4, House Republicans – led by Rep. Dennis Reboletti (R-Addison) – heard testimony that the street price of heroin has fallen to a level equal to or below that of comparable legal opiate drugs sold as controlled-substance prescription medication.  Furthermore, powerful prescription opiates such as OxyContin and Vicodin are often themselves used as “gateways” to opiate addiction, leading some victims to try to buy opiates and heroin on the street in order to maintain their dependency.  This and other testimony will be taken into account in further development of a bill package to provide expanded addiction treatment opportunities for persons challenged by heroin and other opiate drugs, and provide education initiatives to promote awareness of the specific dangers of heroin and opiate addiction.

The Task Force is expected to meet at least five additional times as bill action continues, including work during the spring break of the Illinois House.  They are expected to hear testimony from providers of addiction education and treatment opportunities.  DuPage County has seen a dramatic increase in heroin overdose deaths and arrests in recent months, and one of these Task Force meetings will be held in the west suburban county at a time and place to be determined.

The House Republican heroin package – HB 5527 (Reboletti), HB 5528 (Reboletti), HB 5531 (Bellock), HB 5766 (Reboletti), and HB 5767 (Reboletti) were all posted to the House Judiciary Committee for a hearing when the House returns from a one-week break.

HR 883, a bipartisan resolution co-sponsored by seventeen House Republicans, declares a Heroin State of Emergency in Illinois and directs the House Task Force on Heroin Crisis to develop legislation to combat the problem.

Illinois Unemployment
27,600 fewer Illinoisans had jobs in January 2014.  The drop, reported by the Illinois Department of Employment Security (IDES) on Thursday, March 6, reflected a seasonally adjusted change from the previous month, December 2013.  Post-holiday layoffs were accompanied by very severe weather as a reason for diminished economic activity and local Illinois layoffs.

At the same time that total employment fell, the nominal unemployment rate also declined by 0.2%, from 8.9% in December to 8.7% in January.  The same rate was 9.2% in January 2013.  Experts continued to point out that Illinois’ unemployment rate reflects not only the number of job hires and job layoffs that occur in each month, but also reflects the activities of discouraged persons who drop out of the labor force or leave the state.  Individuals who do not report that they are looking for work are not included in the aggregated statistical samplings that generate each state’s percentage unemployment rate.

Property Tax Relief
Protecting Taxpayers.  State Rep. Sandy Pihos (R-Glen Ellyn) joined State Reps. Ron Sandack (R-Downers Grove) and Dennis Reboletti (R-Elmhurst), along with Senator Michael Connelly (R-Naperville) and DuPage County Board Chairman Dan Cronin to unveil two taxpayer protection bills that would prevent taxing districts from raising taxes when home values are declining.

Sandack, chief sponsor of House Bills 4426 and 4429, said the legislation addresses an unforeseen issue with the Property Tax Extension Limitation Law. “When PTELL was created, it protected property owners from huge tax increases during the era when home values were increasing very quickly,” said Sandack. “I would imagine that the authors of the PTELL bill never imagined a scenario where that bill would actually hurt taxpayers. This legislation takes steps to freeze taxes when property values fall and helps people from getting taxed out of their homes during difficult economic times.” Read more.

Public Health – Cupcake Girl
Illinois House responds to case of Chloe Sterling, 11-year-old cupcake baker.  Legislation filed by State Rep. Charlie Meier (R-Okawville) that would allow home baking for both charity organizations and limited home sale passed out of a House committee this week.

House Bill 5354 was inspired by news reports of an 11-year-old girl in Troy who had her home-based cupcake business shut down by the Madison County Health Department.  However, Rep. Meier says this bill will benefit more people than just the young baker.

“While the idea for this may have been started because of a little girl in Troy, her situation did shed some light onto a bigger issue negatively impacting charity groups and their ability to raise funds.  This legislation will allow for groups to hold bake sales without any fear of the health department shutting them down.  We don’t want the government to be so huge and oppressive that it hurts people more than it helps,” Rep. Meier said.  Read more here.  See the story on the Rachel Ray Show.

Tornado Relief
FEMA denies Illinois’ appeal of disaster assistance.  The Federal Emergency Management Agency (FEMA) on Tuesday denied the State's appeal for federal disaster assistance for local governments that were impacted by the Nov. 17, 2013 tornado outbreak.  State officials were disappointed in the denial because it was based on outdated federal rules and not the serious need that exists in Washington, Brookport, Gifford, New Minden, Diamond and other hard-hit Illinois communities.

Governor announces $45 Million State relief package for communities devastated by November tornadoes.  Following federal denial of urgently-needed disaster assistance, Governor Quinn announced a $45 million state relief package to help Illinois local governments recover from the deadly November tornadoes.  The relief package will provide much-needed aid for impacted municipalities, including Washington, Brookport, Gifford, New Minden, Diamond, Coal City and East Peoria. All local governments in the nine counties impacted by the historic tornadoes will be eligible for assistance. The counties are: Champaign, Douglas, Grundy, Massac, Tazewell, Vermilion, Washington, Wayne and Woodford.

The state's multi-agency relief package for local governments includes assistance from the Department of Commerce and Economic Opportunity (DCEO), the Illinois Department of Transportation (IDOT), the Illinois Finance Authority (IFA), the Illinois Emergency Management Agency (IEMA), the Illinois Environmental Protection Agency (IEPA) and the Illinois Housing Development Authority (IHDA).

For information on how local government can benefit from the relief package, please visit Ready.Illinois.gov.