Week in Review for week ending 12/2/16

Budget – FY17
Governor Rauner renews call for property tax freeze and term limits. Substantial segments of Illinois state spending are scheduled to run dry with the expiration of the so-called ‘stopgap” State budget that is covering the first half of FY17. This period of time will end on December 31, 2016, and further State action will be required to keep those facets of State spending in operation. However, meetings between Governor Bruce Rauner and the four legislative leaders, including House Republican Leader Jim Durkin, have not yet succeeded in achieving the level of agreement necessary for a budget bill to move forward.

Many Republicans believe that structural reforms are necessary in order to justify the investment of additional taxpayer money. Governor Rauner has released a video on his Facebook page describing his call for legislative term limits and a freeze on Illinois property tax extensions. Representative Mark Batinick introduced a property tax extension freeze bill in the Illinois House on Tuesday, December 1.

Budget – COGFA report
Income tax revenues continued below expenditures in November 2016; COGFA looks at State’s bond rating. The Commission on Government Forecasting and Accountability (COGFA), a nonpartisan General Assembly budget watchdog agency, tracks Illinois general funds revenues on a monthly basis. Working with the Illinois Department of Revenue (IDOR) and other State agencies, COGFA counts the money that is coming in during each fiscal year, and matches it to expected revenue streams. The COGFA report for November 2016 can be found here.

As in previous months of FY17, the fiscal year that started on July 1, 2016, Illinois saw less general-revenue money coming in during November 2016 than is needed to cover ongoing general-funds expenses. $1.9 billion in State general funds tax revenues were reported in November 2016. A particular weak spot, which has also shown up in previous months, is the cash flow from corporate income tax payments. This cash-flow line item dropped from $43 million in November 2016 to $2 million in FY17. On the other hand, overall tax revenues for the month as a whole were up by $111 million from the previous year. A key element in the increase was rising revenue from personal income taxes paid by households and individuals, which rose by $75 million in November 2016 over November 2015.

The COGFA report also discussed the State of Illinois’s troubled bond rating. Two major credit rating agencies, Moody’s and Standard & Poor’s, both lowered Illinois’ credit ratings twice in calendar year 2016. The widely-followed Standard & Poor’s credit rating for investment-grade securities is benchmarked by a series of ten letter grades from triple-A (AAA) down to BBB- (the lowest rating for investment-level securities). In 2016, S & P cut the rating it grants to Illinois general-obligation (G.O.) bonds twice, from A- to BBB+ in June 2016, and again from BBB+ to BBB (with a “negative outlook”) in September 2016. Two further cuts would reduce Illinois’ general-obligation credit rating down to “junk bond” territory. The prospect that this could happen is already empowering investor s to demand that Illinois pay higher interest rates. When Illinois sold $480 million in G.O. bonds in November 2016, the interest rate the State and its taxpayers was forced to pay was posted at 4.245%. This interest rate marked a spread of 200 basis points (2.00%) over the interest rates paid by AAA-rated entities such as the neighboring state of Indiana.

Chicago – School Veto
CPS pension funding vetoed by Governor. The veto message was filed on Thursday, December 1. Earlier in 2016, the Illinois General Assembly voted to send $215 million to Chicago Public Schools. The money was part of a stopgap package to reform Chicago schools, enable the Chicago school system to open on time, avert a teacher strike, and enable the Chicago teachers’ pension fund to be fully funded for one more year. The measure was SB 2822.

In his veto message on SB 2822, Governor Rauner pointed to the failure of Chicago and the State to take steps to enact promised reforms, including comprehensive pension reform. Governor Rauner also pointed to the State’s ongoing budget impasse, which encompasses all Illinois general-funds spending, as a reason why the State cannot set aside money for any one section of the State in the way that SB 2822 would do.

Criminal Law – Stateville Correctional Center
Illinois Department of Corrections (IDOC) clears out controversial “roundhouse.” Four floors of open-view cells were built around a great round space, designed to resemble an atrium. An armored guard tower, constructed on top of the roundhouse floor, housed correctional officers who could simultaneously watch and identify each prisoner. The roundhouse’s official name was Stateville F House. The F House space, built in 1922, could house 348 male inmates.

The brutal reputation of the “roundhouse” led to its designation as a place for inmates who posed a threat to staff or other inmates. Its design meant that the officers on duty could see every prisoner, in the same manner as officers in more modern facilities who are able to scan cellblock television monitors. However, the roundhouse was seen by many corrections professionals as having been used far longer than the span of its useful life. Earlier this year, Governor Rauner pledged to take steps to move prisoners out of the roundhouse. The roundhouse’s remaining inmates were transferred to other cells in a series of moves that began on October 26. With the transfer of the final prisoners on Wednesday, November 30, the move was completed and an era ended at Stateville Correctional Center.

Energy – Exelon Bill Passed
Future Energy Jobs Bill saves two nuclear power plants in Clinton, Quad Cities, but also includes controversial rate hikes. SB 2814, which parallels a recent law passed in New York State, contains a cross-subsidization program for electric markets across Illinois to support the continued operations of two nuclear power plants in Clinton and Cordova, Illinois (“Quad Cities”). Due to ongoing operating losses, Exelon had previously announced plans to close the Clinton plant in 2017 and the Quad Cities plant in 2018. One underlying theme of the legislation is the preservation of important carbon-free generating capacity for Illinois to meet power demands in the future.

As a result of passage of the Future Energy Jobs Bill, 1,500 direct jobs were saved at the Clinton and Quad Cities plants, with a total of more than 4,000 jobs impacted. In addition to the jobs saved, keeping Illinois’ nuclear plants in operation will prevent large increases in energy prices. Closure of the plants would have had a detrimental effect on electric rates, on the reliability and capacity of the grid, and on jobs and economic activity. The Illinois Commerce Commission had studied the effects of nuclear plant closures and in almost every scenario, rates would increase across the state. A report released in November by leading Illinois business organizations, including the Illinois Retail Merchants Association (IRMA), the Chicagoland Chamber of Commerce and the Hispanic Chamber of Commerce, indicated that preserving the Clinton and Quad Cities nuclear plants will save Illinois businesses and consumers over $3 billion in electricity costs over the next ten years.

SB 2814 also contains complex provisions intended to maintain and reorganize the way Illinois and its power companies generate and buy Illinois solar power and wind-generated power. Critics have pointed to elements in older Illinois law that seemed to encourage Illinois power distributors and customers to buy wind power from Iowa and other states west of Illinois. The complexity of the bill, and its effects on future electricity rates to be paid by Illinois homeowners and commercial/industrial users, pulled many Illinois lawmakers in different directions.

While electric rates will increase in order to fund a Zero Emission Standard and expanded energy efficiency programs, Governor Rauner successfully negotiated language that places a “hard cap” on the rate increases. A total cost rate cap of $0.25/month for ComEd residential customers and $0.35/month for Ameren residential customers were included at the Governor’s insistence. Large industrial users, as well as smaller commercial and industrial users, have a total cost rate cap of 1.3%.

Thursday’s House vote of 63-38-0, followed by the Senate’s concurrence vote of 32-18-0, will send SB 2814 to Governor Rauner for his signature.

General Assembly – Veto Session
General Assembly meets for final three days of veto session. The Constitution of 1970 directs lawmakers to come back twice each fall for the first and second weeks of veto session. The first week was held before Thanksgiving, and the second week was held from Tuesday, November 29 until December 1.

Following the final day of veto session, the House is not scheduled to return until after New Year’s Day. The Illinois House is scheduled to conclude its 99th General Assembly business in a special session to begin on Monday, January 9. After two days, the 99th G.A. will adjourn. The members of the 100th General Assembly will take their oaths of office on Wednesday, January 11, to begin the 2017 spring session in Springfield.

General Assembly – New & Retiring Members
Incoming freshman members of Illinois General Assembly arrive in Springfield for legislative training. The members who will serve their first terms in the 100th General Assembly were invited to Springfield for a seminar sponsored by the Legislative Research Unit (LRU). The get-acquainted meetings were meant to give the members of the 100th G.A. freshman class a chance to learn about the technical side of their new responsibilities. For example, each member of the Illinois House and Senate has to have at least one district office for local constituent services. The 100th General Assembly will be sworn into office on January 11, 2017.

Concurrent with the LRU seminar were retirement observances for the six representatives who will be leaving the House Republican Caucus at the end of the 99th General Assembly. These departing members are persons who are full of experience at shaping the policies and citizen outreach of the Caucus. Republican Conference Chairperson Adam Brown, Representative Dwight Kay, Deputy Republican Leader David Leitch, Representative Donald Moffitt, Assistant Republican Leader Ed Sullivan, and Assistant Republican Leader Mike Tryon are all saying good-bye to their public service as members of the Illinois House of Representatives.

Jobs – Granite City Works
Labor and management agree on unemployment insurance relief for steelworkers. Affected could be up to 2,000 workers at the Granite City Works, a steel mill in Madison County, Illinois east of St. Louis. The mill complex makes hot-rolled sheet steel, which is used in furniture, appliances, oil and gas drilling, and many other uses. Declining prices for hot-rolled sheet steel, and accusations that massive quantities of steel are being illegally dumped by China and other Asian countries, have led to the partial shutdown of this mill and the layoff of most of its workers.

SB 1941, approved by the Illinois House on December 1, grants emergency relief to Granite City workers who have been laid off. Most or all of them have exhausted their unemployment insurance (UI) benefits, and SB 1941 grants extended benefits to most of them to enable their ongoing search for new employment. In most cases, this measure will grant 26 weeks of additional unemployment relief. The bill was approved by both labor and management entities that keep watch over the financial solvency of the UI trust fund. The House vote on SB 1941 was 107-2-0; the Senate concurred with the House amendment and sent the compromise measure to the Governor’s desk.

Pensions – Chicago
Major Chicago pension refinancing bill approved by House. The bill refinances the pension system operated for the benefit of many Chicago employees who are not teachers, firefighters, or police officers. The measure, which was approved by the House on Thursday, December 1, does not call upon any money from statewide taxpayers. Instead, the proposal will impose a mandated pension contribution upon city employees and taxpayers. In addition, the bill would create a new “Tier 3” defined-contribution model for many future city employees.

The Chicago pension bill was SB 2437. While there was wide support for the measure on the House floor, many members expressed concern about the lack of comprehensive statewide pension reform. The House vote on the measure was 91-16-0 and it awaits a concurrence vote in the Illinois Senate.

Suburbs – Jane Addams Tollway
Illinois Toll Highway Authority (ITHA) announces key road-widening project nearing conclusion. The $2.5-billion ITHA project to rebuild, widen, and increase road safety on the Jane Addams Tollway neared its conclusion with the opening of new lanes and ramps that had been built as part of the project. The lane opening was timed to coincide with the Thanksgiving Day travel season. At least three lanes will be open in each direction from Chicago to the Elgin Toll Plaza.

The Jane Addams rebuild involves 62 miles of newly rebuilt and widened lanes. Key elements of the project include the rebuilding of the toll road’s bridge over the Fox River in Elgin and a complete interchange with Illinois Route 47 in Huntley.

Taxes – Lame-Duck Tax Increases
Illinois House approves constitutional amendment. The amendment, if approved by the state Senate and adopted in the 2018 general election, would increase the voting margin required to increase an income tax rate or a sales tax rate during the so-called ‘lame duck” session of the Illinois General Assembly. The General Assembly, under current law, can enact “lame duck” tax hikes by simple majority in both houses. If HJRCA 62 were to become law, the margin would increase to three-fifths – the same “supermajority” as is currently required to increase State general-obligation debt, approve amendments to the Constitution of Illinois, and approve amendments to the federal Constitution of the United States.

Lame duck sessions are sessions after Election Day when retiring legislators are still in office. The Thursday, December 1 vote by the House to approve HJRCA 62 was 84-18-2. The Senate has not taken action on this measure.

Fall in Illinois – Deer Season
Illinois’ first firearm deer season opens. The first firearm deer hunting season opened on Friday, November 18 and ended on Sunday, November 20. A second, four-day firearm deer hunt will start on Thursday, December 1 and will end on Sunday, December 4.

The first deer weekend’s cycle of electronic check-ins by licensed Illinois deer hunters indicated relatively mixed results throughout the state. Physical check-ins continue to be encouraged in a list of counties with positive reports of chronic wasting disease (CWD). The counties affected, and the addresses of the check-in stations, can be found in this list from the Illinois Department of Natural Resources (IDNR). Deer hunters in these counties are asked to bring their harvest to the check-in stations, where trained crews may ask for permission to cut out samples of older animals (at least 1.5 years old) for disease testing. Hunters can ask for test results through this website.

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