Week in Review for week ending 12/16/16

Budget – FY17
As year-end deadline approaches, talks are suspended. Many facets of state spending are moving towards limbo with the approach of New Year’s Eve. December 31 is the expiration date for the so-called “stopgap budget” that is authorizing much of the State’s spending activities during the final two quarters of calendar year 2016. The “stopgap budget,” which was enacted in summer 2016, was meant to serve as a bridge to cover the first half of the 2017 fiscal year while budget negotiations took place. However, high-level budget talks have been suspended. Governor Bruce Rauner stated on Wednesday, December 14, that based on his face-to-face contacts with leading Democrats, negotiations are not being productive at this time.

Under the complex current Illinois budget situation, not all areas of State spending are tied to the so-called “stopgap budget.” Significant FY17 spending programs, such as Medicaid and pay for state employees, are tied to court orders, consent decrees, and continuing appropriations. Other spending programs are being carried out through December 31 in line with the so-called stopgap budget. Still other areas are not covered by any current appropriation at all, and monies for these programs are not being spent. Many entities that are not receiving needed state funding, such as community colleges and offices that carry out many social programs, are begging for relief.

Energy – Nuclear Power
Exelon announces intent to hire more than 400 workers at Clinton, Quad Cities. The workers, some of which will fill existing positions upon retirements, will help maintain these three nuclear reactor generators for the long term. The two-reactor Quad Cities plant near Cordova, Illinois, and the one-reactor plant near Clinton, had both been slated for closure prior to the recent enactment of SB 2814. This new Illinois law will impose a surcharge upon Illinois electric bills to subsidize the continued operation of the two plants and will maintain more than 1,500 jobs, including many of the job positions included in this announcement. The new law was signed on Wednesday, December 7.

In addition to existing work positions, Exelon will create new positions within this 400-worker figure, with the new job positions intended to maintain the long-term equipment reliability, safety status, and regulatory compliance of the three reactors. The job announcement was made on Thursday, December 15. The provisions of SB 2814, together with this job announcement, are intended to make sure that the two reactor complexes will be profitable and safe to run for at least 10 years into the future. These additional 10 years of working life will help these plants generate power over a major percentage of their entire design lifetimes. Other provisions of SB 2814 will create subsidies for various programs intended to enhance energy conservation and renewable energy sources.

Energy – Oil and Gas Fracking
Promise of enhanced energy recovery from Illinois shale beds turns into dry hole, for now. Newly-invented chemical engineering processes offer promise to unlock significant quantities of hydrocarbon fuel from U.S. soil. In the family of processes that is loosely called “fracking,” a bed of shale is repeatedly drilled, injected with chemicals, and seismically tapped to force the shale to release its oil and gas. Geologists say that a surprisingly large percentage of U.S. oil and gas hydrocarbons are locked in shale beds that can be fracked, and U.S. oil and gas production figures have soared in recent years after decades of decline.

Illinois has frackable shale beds; they are concentrated in a large section of southeastern Illinois. After some debate the Illinois Department of Natural Resources (IDNR) adopted rules in November 2014 to authorize drilling firms to apply for permits to drill into Illinois shale. Formulated with an eye towards Chicago-based opponents of Illinois fracking, the rules were proclaimed at the time to be far stronger and stricter in their controls on fracking activity than similar rules adopted by many other U.S. states. The goal of these rules was to allow profitable fracking activities while protecting the Illinois environment.

Soon after these rules were adopted, the market prices of U.S. oil and gas declined significantly. The decline was associated with significant frack drilling in many other U.S. states; in particular, natural gas produced in the three states of Ohio, Pennsylvania, and West Virginia has generated a significant surplus of natural gas in the eastern U.S. These states have different rules from Illinois and frack drillers continue to be active there. However, IDNR has not issued any permits for Illinois shale drilling under the November 2014 rules. Industry observers believe that a sustained increase in oil and gas prices, if it comes, will “unlock” the economic potential of Illinois shale for profitable and productive drilling. However, a price trend of this type could also lead to higher prices at the pump for Illinois drivers and motorists.

General Assembly – New Members
Illinois House Republican Caucus welcomes 15 new members. Fifteen Republicans who were not on the November 2014 ballot will be taking their oaths of office in January 2017 as members of the 100th General Assembly. These fifteen new members make up almost one-third of the 51 total members of the Caucus.

Five of these new members were recently elected to the Illinois House in November 2016 from northeastern Illinois. They represent very different middle-class and working-class areas within the great stretch of counties that make up the Chicago media market. These five are:
  • Jerry Long (76th District, north central Illinois). Representative-elect Long is an over-the-road trucker and property manager. His district includes many working-class communities along Interstate 80 and the Illinois River. 
  • Lindsay Parkhurst (79th District, Kankakee area). Representative-elect Parkhurst is an attorney who has actively practiced her profession for 27 years. Her district, also traditionally seen as working-class, covers small cities and rural areas along Interstate 57 south of greater Chicago. 
  • Steven Reick (63rd District, McHenry County). Representative-elect Reick is an attorney-accountant who has practiced tax law since 1981. His once-rural district has been strongly affected by the economic and geographic growth of the northern Chicago suburbs into McHenry County.
  • Nick Sauer (51st District, Lake County). Representative-elect Sauer is a partner in his family business, and worked in the U.S. Department of Commerce in the George W. Bush administration. His district is made up of well-established suburban neighborhoods.
  • Allen Skillicorn (66th District, Lake and McHenry Counties). Representative-elect Skillicorn is a businessman who has served as village trustee for his home community of East Dundee. His district has seen rapid development in recent years. 
Human Services – Developmental Disabilities
Department of Human Services (IDHS) director responds to reports. In the wake of an investigative-report series published by the Chicago Tribune that uncovered serious problems in some Illinois group homes for the developmentally disabled (DD) population, the General Assembly convened a joint committee to hold a hearing on the issue. More than 1,300 cases of abuse and neglect were uncovered by the series of news stories. Meeting on Tuesday, December 13, the committee heard from agency Director James Dimas, who described work being done by him and his top aides to understand the size of the scandal and improve enforcement of living conditions in Illinois DD group homes.

IDHS is required, under law, to supervise 3,000 licensed private-sector DD group homes throughout Illinois. These homes shelter approximately 12,000 persons with intellectual and developmental challenges, often in an extended-family setting. The treatment provided to persons in this category ranges from thoughtful, high-quality care to abuse and neglect. In some cases, DD group home caregivers are overwhelmed by the challenges of taking care of persons with two or more separately diagnosed disabilities.

A major finding by the Tribune was that many of the cases of abuse and neglect that had taken place since July 2011 had been flagged in some way or another by IDHS oversight, but that many of the investigative files on these cases had been hidden, concealed, or even legally sealed. A key pledge made by Director Dimas this week was that the Department will create a new infrastructure of electronic transparency to increase access to information on the standing of each group home. The transparency infrastructure will include an Internet-based public report card to detail the status of many State investigations based upon allegations of abuse and neglect. The report cards will include evaluations of many Illinois DD group homes. In another pledge, Director Dimas stated that Illinois group homes for adults with disabilities will face stricter standards for establishing and maintaining licensure.

Jobs – Granite City Works
More than 200 workers to be recalled from layoff. The Granite City Works steel mill complex, located in Madison County east of St. Louis, has been operating in partial shutdown mode since December 2015. Granite City specializes in making hot strip steel, a commodity steel product used to sheet-clad a variety of machines, devices, and manufactured goods. For example, many of the kitchen appliances most Americans use in their homes are clad in sheet steel manufactured through hot-strip processes. Demand for U.S.-made hot strip steel has been adversely affected in recent years by significant new construction of steel mill capacity in eastern Asia, especially China. Most large factories in China are either owned or controlled by their government, and many observers of the steel industry believe that Chinese steel mills “dump” their steel in the U.S., with severe negative consequences for American workers who make steel.

Due to recent economic and political developments, Granite City owner U.S. Steel now believes that they can meet their customers’ demand for U.S.-made hot strip by balancing production between three mill complexes located in greater Pittsburgh, Pennsylvania; Gary, Indiana; and Granite City. U.S. Steel will call 220 workers back to Granite City to restart a hot-strip production line, with the rollers set to spin in February 2017. However, all of these workers have been warned that, in line with changing conditions, they may be rotated in and out of layoff even after this line is restarted. All three mills will remain in active status, but specific groups of workers will or will not be needed at any one time. The callback only overs part of the Granite City layoff list; when the facility began to close twelve months ago, approximately 2,000 workers were laid off. Subdued demand for other products also made in Granite City, such as tubular steel goods used in oil and gas drilling and fracking, continues to weigh on the status of the half-closed steel mill.

Jobs – Mitsubishi
Shuttered automotive assembly plant may be sold and reopened. A buyer is negotiating to purchase the former Mitsubishi Motors automotive assembly plant in Bloomington-Normal, Illinois, officials said. Closure of the plant, which at one time employed 3,000 workers, was announced in January 2016 as Mitsubishi reduced its presence in the U.S. automotive market.

Selling its cars for many years under the Diamond-Star name and logo, Mitsubishi Motors was one of the largest employers in Central Illinois. In addition to the thousands of workers who were directly employed by the plant, additional thousands of Illinoisans worked for Mitsubishi suppliers and contractors. The possible purchaser of the shuttered plant is Rivian Automotive, a Michigan startup firm that would like to make self-driving electric cars. If the plant changes hands and if Rivian is able to raise sufficient capital, their goal would be to invest up to $175 million in the factory in 2017-2024.

While future demand for self-driving electric cars is expected to be intense, officials were not able to predict the plant’s future. Other firms own many patents and much of the current intellectual property connected with electric cars and self-driving technology.

Governor Rauner – Clemency
Governor’s office announces that clemency backlog has been eliminated. Under the Constitution of Illinois, persons negatively affected by criminal convictions (including, but not limited to, prisoners in State prisons) have the right to petition the Governor of Illinois for clemency. Nothing in the Constitution says that the Governor has to respond at once, though, and previous Governors had let a backlog of more than 2,300 clemency petitions build up in the Office of the Governor without final action.

When he took office in January 2015, newly-elected Governor Bruce Rauner pledged to work with his staff to eliminate this massive backlog of clemency requests. Upon digging into the pile, at least one unanswered request was found that had been filed thirteen years earlier, in 2003. Most of the clemency requests were standard pleas that a prisoner or convicted felon should not be punished. Although all of the 2,300 petitions were read, Governor Rauner granted pardons in less than 4% of the cases. Approximately 80 pardons were handed out. The backlog has now been eliminated, which will enable new requests to be read and acted on in a timely manner.

Illinois State Fair
Department of Agriculture asks for ideas to revitalize State Fair. Attendance at the Springfield, Illinois 2016 State Fair dropped by more than 13% on a year-to-year basis. While severe weather events – heading by a flood-level cloudburst on the night of a key scheduled musical concert – were blamed for part of the attendance shortfall the overall numbers indicated growing problems with bringing in fair-going customers and exhibitors this year. Springfield fair attendance fell from 411,547 in 2015 to 357,409 in 2016.

The Illinois Department of Agriculture, which operates the Illinois State Fair, has begun an 80,000-recipient survey exercise. A wide variety of selected Fair attendees are being sent online questionnaires intended to gather data about their State Fair visit. Questions include requests for data on potentially controversial subjects, such as the recent hike in State Fair admission ticket prices. People who get the survey will be asked to rate various facets of the State Fair experience, including exhibits, entertainment, and food. Respondents will also be asked to help the State Fair understand how many miles people travelled to attend the Fair, how many tickets were bought by a household, and whether a ticketholder also visited the Fair on a different day.

Results from the survey may be used to help shape future State Fair revitalization decisions. One of the biggest challenges facing the Fair is the infrastructure of the buildings and grounds that house most of the Fair’s activities. The new State Fair friendship foundation board, which intends to become the governing authority of a new private-sector body that is seeking 501-c-3 status, held its first meeting last month. If and when the new foundation achieves designation from the federal government as a nonprofit body, it will begin active fundraising with the goal of raising badly needed funds to begin the task of rebuilding the State Fairgrounds. Donations could include large gifts that would convey naming rights over sections and buildings within the Fairgrounds.

Week in Review
Holiday Break. The Week in Review will return in January after the holiday break. Have a safe and happy holiday season.

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