Week in Review for 3/23/15 - 3/27/15

FY15 Budget Solution
Governor Rauner & General Assembly take steps to resolve FY15 budget shortfall. Faced with a $1.6 billion FY15 budget deficit upon taking office, Governor Bruce Rauner almost immediately asked for executive powers to reorganize spending and enable the State to get through the fiscal year, which covers spending needs through June 30, 2015.

Without immediate action, the State would have been unable to make payroll at Illinois prisons, low-income working families would lose their child care assistance, court reporters would be laid off and money for services for the mentally ill and developmentally disabled would run out. In addition, inaction would have further delayed and perhaps jeopardized critical categorical school funding and State aid payments.

After negotiations in which House Republicans were full participants, the General Assembly agreed this week to language contained in HB 317 and HB 318. HB 317, an appropriations bill, made cuts and transfers in State spending. HB 318, a budget implementation bill, granted the Governor the legal authority to carry out and implement the cuts in spending and spending transfers made in HB 317. Together, these bills work to fill critical holes in the deliberately unbalanced FY15 budget passed by majority Democrats and signed by former Governor Quinn.

Approximately $1.3 billion of the moves occurred in the form of budget transfers from various funds, and approximately $400 million was in the form of an across-the-board budget cut. The HB 317-HB 318 package created $97 million in budgetary flexibility that can be used to respond to specific challenges, including the challenge of school districts that have run out of reserves.

The House vote on HB 317 was 72-45-0 and the House vote on HB 318 was 69-48-0, with all House Republicans voting in favor of the measures. The Senate followed up by approving both bills on Thursday, March 26, sending the measures to Governor Rauner for final action. Rauner, who pushed for and signed both bills into law, expressed a readiness to follow up on this work in alliance with House Republicans. The two bills became law as Public Acts 99-0001 and 99-0002, the first bills signed into law by the new Governor.

FY16 Budget – Revenue Hearing
House panel hears FY16 revenue estimates. The House Revenue and Finance Committee heard testimony on Friday, March 27 from the Commission on Government Forecasting and Accountability (CGFA), the Governor's Office of Management and Budget (GOMB), and the Illinois Department of Revenue (IDOR) on expected State revenues in FY16, the spending period that will begin on July 1, 2015.

Spending pressures in FY16 are being driven by the continuing phase-down of the "temporary" January 2011 income tax increase. CGFA estimates that the State's cash intake from the income tax hike is dropping by nearly $5 billion over the two-year period starting in FY14 and leveling off in FY16. This matches the two-year period marked by a drop in the State's personal income tax rate from 5.00% to 3.75%. GOMB's numbers and IDOR's numbers closely match these estimates.

General Assembly – House Committee Deadline
House committees advance 512 bills to floor. Including action in “committee deadline week,” which ended on Friday, March 27, the Illinois House advanced 512 bills from committee to the House floor in the 2015 spring session. House committees began meeting in February to take testimony and hear advocacy from witnesses, proponents and opponents for and against the measures filed by House members. This work was finished up this week. After the conclusion of the two-week “Easter break,” the House and its committees will consider floor action and amendments to the House bills that advanced out of committee. The House will also start looking at bills coming over from the state Senate.

Most of the 4,198 House bills filed so far in the spring session will not be considered further this spring, at least under their own names. Less than 13% of the bills filed this spring were able to achieve approval by a House committee. Advocates sometimes try to “consolidate” a stalled bill into a moving bill by redrafting the stalled bill as an amendment to the moving one. In addition, bills that do not move in the 2015 spring session may be taken up by the Illinois General Assembly in fall 2015 or spring 2016.

Illinois Economy – Unemployment
Jobless rate falls to 6.0% in February. The Illinois Department of Employment Security (IDES) announced on Tuesday, March 24 that the unemployment rate for February 2015 fell to 6.0% from 6.1% in January. While an estimated 391,100 workers remained jobless in February, the overall numbers indicated that Illinois could be coming out of recession-scale unemployment numbers for the first time since the 2000s. 13,800 net new jobs were created in February, all in the private sector.

Illinois’ jobless numbers remained higher than the national average, which was 5.5% in February. However, the new Prairie State figures represented an improvement of almost two full percentage points from the deep-recession figure of 7.9% posted twelve months earlier in February 2014. Economists and commentators often use “year-over-year” unemployment figures, particularly for specific states and metropolitan areas, as a tactic to reduce false signals resulting from random fluctuations in the overall numbers.

Most areas of Illinois employment showed strength in February, with two key sectors – trade, transportation and utilities, and professional and business services – each adding more than 5,000 net new paid positions statewide. Three areas of weakness were statewide manufacturing, which lost 800 jobs statewide, educational and health services, which gave up 1,400 positions, and government, which yielded 1,600 positions.

IDES has rolled out a new, automated database for the use of Illinois residents seeking jobs and in possession of vital skill sets. Illinois Job Link offers a wide variety of positions and opportunities.

College of DuPage
House Republicans continue push for audit of troubled expense accounts. After the story of mammoth expense-account spending by senior executives of the College of DuPage broke earlier this year, House Republican taxpayer advocates began calling for a deeper inquiry into the financial reality behind the troubled college management team’s books. The College’s board recently approved a severance package of benefits totaling $763,000 for the college’s president.

DuPage County lawmakers have made this a key focus area in 2015. HR 55, a resolution requesting that the Illinois Auditor General conduct a performance audit of the College of DuPage to cover fiscal years 2011 through 2014, was unanimously approved in House committee on Wednesday, March 25. HR 55’s lead co-sponsors are Representatives Jeanne Ives, Jim Durkin, Patti Bellock, Peter Breen, and Ron Sandack.

Fair Share
State employees file lawsuit, seek clarification. Three Illinois state employees filed a lawsuit on Monday, March 23 to seek legal clarification of their right to not make mandatory payments to labor unions in lieu of union dues. Called “fair share” payments, the funds raised by their mandatory payments are supposed to recompense public-sector labor unions for the administrative burden of representing all of the members of a unionized State office or workforce. Governor Bruce Rauner has publicly called for granting freedom to Illinois State workers to decide whether or not to belong to a union and pay dues.

Kraft Foods
Longtime Chicago-area firm, Kraft Foods, announces deal to be acquired. The acquisition partner is Pittsburgh-based HJ Heinz, backed by 3G Capital and Warren Buffett’s Berkshire Hathaway. Buffett’s longtime interest in established American consumer brands turned to the owner of “Jell-O” jellied desserts, “Kool-Aid” sweet drinks, “Kraft” cheeses, “Maxwell House” coffee, “Oscar Mayer” prepared meats, and “Planters” nuts, as well as a wide variety of other consumer products. The deal, announced on Wednesday, March 25, was slated to present Kraft Foods shareholders with approximately $50 billion in cash and Kraft Heinz stock based on market trading prices posted on that day.

Prospects for Kraft’s corporate headquarters in Northfield, Illinois were not certain. Preliminary press announcements indicated that the merged Kraft Heinz would retain executive operations in both Illinois and Pennsylvania, for now. However, few observers of U.S. corporate customs expect Kraft Foods’ Illinois jobs to remain in place indefinitely.

Medical Cannabis
Card applicants top 2,500; challenges remain. The Illinois Department of Public Health told the Belleville-News-Democrat on Monday, March 23 that the Department has received more than 2,500 requests for cards that will enable the holder to enter a permitted dispensary and purchase medical cannabis. The Department has walked many of these applicants and their physician care providers through the complex application process, and has mailed out approximately 1,600 approval letters. However, as of March 2015 no dispensaries have opened to legally sell cannabis in Illinois.

Plans to open growing centers and dispensaries for medical cannabis continue to move through a series of legal challenges. Winners of what are expected to be lucrative permits to legally grow and sell cannabis are facing challenges from parties that were not awarded permits. Under the medical cannabis law, single business firms are being awarded exclusive permits to grow or sell cannabis for significant geographic regions of the State. Firms not granted permits have incentives to slow down and try to reopen the process. Holders of winning permits are telling the press they expect to clear away remaining legal challenges and begin implementation of the Compassionate Use of Medical Cannabis Act by September, 2015. Questions about the cannabis medical card program and application process are answered here.

Granite City steel mill will shut down operations, more than 2,000 to be laid off. U.S. Steel announced the move on Wednesday, March 25. Blamed in the blast furnace closing were international economic trends, including drops in the price of crude oil and increased steel dumping by Chinese and South Korean steel mills. Changes in the price of fossil fuel are causing many oil and gas drillers to cut back on the quantity of seamless pipe their drilling rigs use.

America’s largest remaining steel company held out hope that the shutdown was temporary and that the mill could soon reopen if it sees better economic conditions. A similar shutdown in late 2008 was reversed after six months, and steelworkers were recalled to the plant in 2009. Under federal law, the notices have 60 days to take effect and the layoffs will be effective in late May 2015. The Granite City Works has been one of the economic backbones of the Metro-East region since World War II.

Poker Runs 
Rep. Keith Wheeler moves poker run bill through House committee. HB 3538 is aimed at making it easier to use this popular fundraising tool throughout Illinois. Current law creates local snags in the ordinances that groups use to win licenses to carry out these popular fundraising activities, and HB 3538 pushes to streamline out these snags by placing poker run licenses in the hands of Illinois county boards. The bill also clarifies that all bona fide nonprofit groups are eligible to seek to operate a poker run.

Poker runs are activities, usually one day long, in which a group of people make an event of traveling from place to place and playing a game at each location. At the end of the poker run, the players concentrate at a finish line and play out the game, and prizes are awarded. Under the provisions of HB 3538, the poker run must be set up so as to raise money for a needy person, a good cause, or the financial survival and stability of the group sponsoring the run. Many motorcyclists and biker groups carry out poker runs. The vote in the House Revenue and Finance Committee was 10-0-0 and HB 3538 progressed to the House floor for further discussion and debate.

Submarine “Illinois” – launch date nears
Illinois helps U.S. Navy prepare for launch of new submarine. The capital ship, which will be called the “U.S.S. Illinois” when it enters commissioned service, is in the final stages of being fitted out on the East Coast and is expected to be launched later in 2015. Chicago business leaders are helping train two key members of the crew – the culinary specialists who will man the submersible boat’s tiny galley.

Physically slightly smaller and with smaller crews than the armored battleships that were once the backbone of the U.S. Navy, an attack submarine like the “U.S.S. Illinois” is in some ways even more heavily armed. A crew of 145 to 150 men will sail on a six-month tour of duty, much of which will be spent submerged. Modern technology even allows submarines to communicate with naval headquarters while deep under water. Although the “Illinois” is only 370 feet long, the “silent service” believes that American submarines serve as the ultimate deterrent to potential enemy action.

The “Illinois” will be the first U.S. Navy capital ship to bear this name since an obsolete battleship commissioned in 1897. Efforts to build a new American super-battleship in the 1940s to carry on the heritage of the Prairie State did not survive the end of World War II in 1945. The Aurora-based U.S.S. Illinois Commissioning Committee is leading fundraising efforts to properly celebrate two separate events: the new vessel’s approaching launch and its commission.

University of Illinois 
Champaign-Urbana medical school plans approved by board of trustees. Seeking to utilize its globally-ranked standing in materials research and development, the University of Illinois this month finalized plans to oversee the construction of a new medical school adjacent to its primary Champaign-Urbana campus. The plans were described on Sunday, March 22 by the USA Today.

Responding to researchers who see increasing challenges and opportunities in biomedicine, the University of Illinois sees the new medical school as a way to bring together the College of Engineering and the clinical resources of the nearby Carle hospital-and-health-system. The University’s trustees repeatedly assured staff and affiliated professionals at their existing medical school, the University of Illinois College of Medicine, that the decision did not signal any diminution of their support level for the existing UIC school, which is organized around a traditional urban teaching-hospital model and is affiliated with the University of Illinois at Chicago.

The new medical school will be located in Champaign-Urbana, at Carle’s flagship hospital and at campus locations to be determined. It will be the first medical school opened in Downstate Illinois since the creation in 1970 of the SIU School of Medicine in Springfield. The first Champaign-Urbana medical school students will begin class work in fall 2017.

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