Week in Review for week ending 11/18/16

General Assembly – Veto Session
First week of veto session held in Springfield. The Constitution of Illinois asks State lawmakers to spend two session periods of three days each in Springfield each fall. The veto session weeks, which straddle Thanksgiving, give the General Assembly the opportunity to consider and approve or reject the total and amendatory vetoes signed by the Governor earlier in the summer.

Action remains uncertain on some of the issues discussed this week, and both the House and the Senate final action on many of the measures considered in this first week of veto session will take place during the 2nd and final week of the session. The General Assembly is discussing the stabilization of Illinois’ electrical generating infrastructure, workers’ compensation, legislative term limits, and many other issues. The General Assembly will reconvene on Tuesday, November 29.

Budget – Leaders Meeting
As budget impasse continues, Governor Rauner meets with legislative leaders. The meetings were aimed at developing a solution to Illinois’ historic budget crisis, which has preempted the passage of a constitutional balanced budget since June 30, 2015.

With many key recipients of Illinois GRF funds facing a growing cash crunch as State payments are delayed or blocked, House Republican Leader Jim Durkin called on Tuesday, November 15 for bipartisan action to resolve the impasse.

“We’re at a tipping point. We are willing to work with the Democrats with their priorities but it’s a two-way street. They have to work with us on our priorities. If we can do that we will get a good product and the governor will sign a budget,” Durkin said. “But going down the same road and saying ‘it’s our way or the highway,’ which the Democrats have been doing for the past two years, is going to put the state in further peril.”

The budget impasse has caused an unprecedented backlog of unpaid bills in the Office of the Illinois Comptroller, with more than $10.6 billion in unmet vouchers and commitments awaiting payment as of Tuesday, November 15. Bills from as far back as June, 2016 are awaiting payment. The Governor’s Office of Management and Budget (GOMB) projects, based upon current spending and revenue numbers, that this unpaid-bill total could reach more than $13.5 billion by June 2017. Hypothetically, the bill backlog could reach $47 billion by 2022.

Budget – $480 Million Borrowed
Illinois borrows $480 million at comparatively high interest rates. The General Obligation debt, sold on Thursday, November 3, raised money for Illinois capital spending and infrastructure projects such as roadbuilding and bridge repairs. The State and its taxpayers will have to pay almost 4.425% interest on the bonds sold last week, a 200-basis-point (2.00%) spread over the current triple-A (AAA) rate offered to the highest-quality borrowers.

The high interest rate charged by Wall Street’s largest banks to which the bonds were sold reflects recent declines in the credit rating imposed on Illinois by debt rating offices. After a series of cuts and reductions, the State’s general obligation credit rating is now seen by major credit-rating firms as only two notches above “junk bond” level. Furthermore, the 200-point spread noted in November 2016 marked comparative worsening from the spreads that Illinois had been forced offer when bonds were issued earlier in 2016. The spread in January 2016 was 155 basis points (1.55%) and the spread in June was 185 basis points. The State’s deteriorating credit position reflects its continued structural deficit and growing pile of unpaid bills.

Human Services – Developmental Disabilities
Chicago Tribune investigation finds abuse, neglect, and cover-ups in Illinois group homes. The investigative report, published on Thursday, November 17, found at least 42 deaths linked to abuse or neglect in this care category over a recent seven-year period. The deaths were only a small part of the 1,311 cases of documented harm tallied by the Tribune investigative team since July 2011. These cases of documented harm, in turn, were only part of the 7,241 allegations of abuse or neglect audited by Tribune reporters. More than 1,000 of these allegations had been subtracted from publicly-disclosed spreadsheets. Allegations covered both 24-hour care in private-sector group homes, and less-than-24-hour private-sector day care given to patients who are not classified as requiring 24-hour care.

Residents with developmental disabilities are oftentimes placed in group homes and their care is paid for by the State. The State of Illinois’ responsibilities for persons with developmental disabilities are concentrated in the Illinois Department of Human Services (IDHS). The Tribune story included reports of tight budgets, underpaid group-home staff, and a lack of oversight and accountability. Stories of individual patients, and their fates, were included in the investigative reporting.

Jobs – Unemployment Rate
Department of Employment Security (IDES) announces jobless rate for October 2016. The new unemployment rate of 5.6% marked an increase of 0.1% from the 5.5% rate posted for September 2016. The new Illinois figure was 0.6% higher than the 4.9% national unemployment rate for October 2016. In addition, Illinois continued to mark almost-flat rates of net new job creation, with entities located within the State continuing to pay fewer people than were on Illinois payrolls in September 2000. We have 32,500 fewer nonfarm payroll jobs in Illinois than we had 16 years ago.

The IDES numbers continues to show net Illinois job movement away from traditional sectors, such as construction, trade, transportation, and utilities. These traditional sectors of the Illinois economy lost a net of 4,300 jobs in October 2016. Sectors that gained ground during this 31-day period included professional services, business services, and government. These sectors gained 6,800 jobs.

Manufacturing, which has been a sore spot since the 2008 economic downturn, stabilized in October 2016 with a net gain of 1,600 jobs for the month. However, there were 10,000 fewer Illinois payroll factory jobs in October 2016 than there had been in October 2015. The new numbers were released by IDES on Thursday, November 17.

Medical Cannabis – Law marks 1 year in effect
Approximately 12,000 Illinoisans have cannabis dispensary cards. The registry identification cards (RICs) serve as unique identifiers for approved patients and give them the legal right to enter an assigned cannabis registry. In November 2016, the medical marijuana program marks the end of its first year of active operation.

The Illinois medical cannabis program is carefully guarded and monitored for security reasons. Patients face several significant hurdles to get a RIC card and approval for access to the program, including a requirement that they get a recommendation from a physician with whom the patient has an established medical relationship. Information about the program, including information for potential applicants, can be found here: http://www.dph.illinois.gov/topics-services/prevention-wellness/medical-cannabis.

Pensions – COGFA Briefing
New COGFA briefing on Illinois pension liabilities. The reformulated estimates, which combine together numbers from Illinois’ five state-managed pension funds, have reset the State’s unfunded pension liabilities at $129.8 billion. The Commission on Government Forecasting and Accountability (COGFA) reported the new numbers this week in their November 2016 publication, “Special Pension Briefing.”

COGFA’s calculations show a year-over-year increase of 17% in the unfunded pension bottom line as the pension systems approached year-end 2016. Their report indicates that this trend continues to be associated with near-zero interest rates on high-quality investments. In 2016, this near-zero-interest situation forced four of the five pension systems to reduce their actuarial projection for long-term rates of return for the monies previously invested in these pension funds. It was also associated with a relatively low rate of return on the prudent assets mandated for investment choices by professionally managed pension funds.

State Government – Labor Impasse Declared
Labor relations board declares impasse. The declaration by the Illinois Labor Relations Board could open the door for the Rauner Administration to declare an end to contract talks with AFSCME, the bargaining unit for approximately 38,000 unionized state employees. After further legal steps this could, in turn, lead to Governor Rauner exercising his legal right to impose his last, best, and final offer upon AFSCME members. AFSCME members could then accept these terms or undertake a labor action.

State employees have been working without a contract since June 2015. After the previous contract expired, labor negotiations took place to try to write a new contract to govern relations between the State and its largest public-sector labor union. However, these negotiations were broken off in January 2016.

Governor Rauner’s spokesperson, Catherine Kelly, says that acceptance of the terms offered by Gov. Rauner would save State taxpayers $3 billion over a four-year period. Major elements of these savings would be the substitution of merit pay increases for the current seniority-based pay increase system, and the imposition of substantial medical co-payments upon State employees similar to those paid by employees in the private sector.

Transportation – License Plates
New Illinois license plate design unveiled. Illinois Secretary of State Jesse White announced a program to retire the State’s current motor vehicle plate design for individual motor vehicles (such as cars and light trucks). Designs for a new license plate were unveiled on Tuesday, November 15. The new license plate features Abraham Lincoln’s head, supplemented by a silhouette that is framed by outlines of the Illinois State Capitol dome in Springfield and the Willis Tower in Chicago.

Secretary of State White expressed the hope that the new plates could be stamped starting next year. Starting to stamp new plates could make it possible to replace the older plates being used by some vehicles in active use in Illinois. Under a tentative schedule released by the Secretary of State and his Office of Vehicle Services, plates made in calendar years 2000 and 2001 would be scheduled to be replaced first, in calendar year 2017, at no additional cost to motorists. Under the proposed plan, persons requesting the new plates ahead of schedule would be able to submit requests starting in January 2017 for a replacement fee of $29.

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