Week in Review for week ending 02/03/17

Caterpillar Inc.
Caterpillar to move headquarters from Peoria to Chicago. The earthmoving giant, headquartered in Peoria for more than 90 years, announced plans this week to move its corporate headquarters to the Chicago area. The move is expected to affect only about 300 of the 12,000 Caterpillar employees in the Peoria area, with most of the firm’s engineering, production, and back-office staff remaining in Peoria. Caterpillar’s chief executive officer and his personal staff will, however, vacate their headquarters office in the central Illinois city. The transfer is expected to be substantially completed before the end of the 2017 calendar year.

In addition to the move, Caterpillar announced the permanent cancellation of its previous plan to construct a new headquarters building in Illinois. Caterpillar’s new Chicago-area headquarters will be located in existing office space that will be rented or leased by the firm. Caterpillar had previously announced the indefinite postponement of its prior plans to build a new headquarters building in downtown Peoria. The firm described its moves as a response to the worldwide downturn in demand for power and earthmoving equipment. Caterpillar, a key component of the infrastructure-building U.S. private sector, is a member of the Dow Jones Industrial Average (DJIA).

Caterpillar has strong historic ties to the Peoria area, and as recently as October 2012 the firm opened a Visitors Center on the Peoria riverfront. The Visitors Center offers the public a chance to learn more about the firm’s construction-equipment history, and the current operating goals and challenges facing the firm and its designers and engineers. Children are encouraged to touch and interact with the machinery on display.

Budget – FY17
Legislation proposed to ensure state workers’ pay. State Rep. Avery Bourne and numerous House Republican colleagues filed House Bill 1787 Wednesday that would make state workers’ salary payments a continuing appropriation, guaranteeing payment during a budget impasse. This measure would keep workers paid and prevent a government shutdown.

This has become a particularly urgent issue due to Attorney General Lisa Madigan filing a motion in court to end payment to state employees beginning February 28th, 2017.

“This legislation will prevent state worker pay from being used as a political pawn. Families across Illinois rely on the vital services provided by our state agencies. Before I arrived in the General Assembly, legislators chose to make their pay a continuing appropriation which guaranteed their pay with or without a budget. However, those legislators did not afford those protections to state employees. This legislation will keep state worker pay out of the political games that are too often played in Springfield,” said Bourne.

If enacted, HB 1787 would be effective immediately. House Republicans sponsored similar legislation in the 99th General Assembly that was not allowed a committee hearing. Representative Bourne and her colleagues are calling on the House of Representatives to take up this issue as soon as they return to the Capitol next week.

Fitch Ratings cuts Illinois’ credit rating. The move by one of the “Big Three” debt rating agencies serves as further evidence of the dismal state of Illinois’ public finances. Fitch Ratings cut Illinois’ general obligation bond rating this week from BBB+ with a negative outlook to BBB with a negative outlook. The new rating is only one notch above the lowest possible rating (BBB-) that can be granted to an entity that is viewed as an investment-grade credit risk. Two other bond issues that are tied to the State of Illinois, the bond issued by the Illinois Sports Facilities Authority and the bonds issued by the Metropolitan Pier and Exposition Authority, also saw cuts in their ratings from Fitch. The New York-based credit rating house added that they believe that the failure of the State to deal with its fiscal challenges “has fundamentally weakened the state’s financial profile.”

The Southern Illinoisan looked this week at the Illinois budget impasse, including the fork in the spending road caused by the classification of some of the State’s spending streams as “mandated by law” while others are subject to appropriation. Examples of mandated spending include Medicaid, pension fund contributions and interest on state debts. Examples of non-mandated spending include expenditures for higher education, social services, and many state agencies’ operations.

The expiration on January 1, 2017 of the stopgap budget that provided appropriations for some of Illinois’ state government has created a serious cash flow situation in many Illinois offices and institutions. Hard-hit entities include public universities, community colleges, agencies that provide community mental health treatment, and agencies that provide attention to elderly persons who are not in residential care.

Chicago – Field Museum
Free admission in February for Illinois residents. The Field Museum of Natural History, in Chicago, announced the free admissions program on Wednesday, February 1. Proof of residency will be required. The basic free admission will not include special ticket exhibits or admission to any 3-D movies that may be screened. Persons given free admission will get the chance to upgrade to an all-access pass with additional payment at the door.

Basic free admission to the Field Museum will include the chance to see a selection of the more than 24 million human and scientific objects and specimens on display. The Museum has collections of cultural history, biology, and geology from all over the world.

Chicago – Shopping Bag Tax
New tax took effect this week. The additional 7-cent-a-shopping-bag tax in Chicago for household foodstuffs and other goods, and asking for a bag, was imposed by the Chicago City Council and Mayor Rahm Emanuel. The tax is aimed at disposable bags given away for free by many retailers. After one-time use many shopping bags are immediately disposed of as landfill garbage, and some are let go to blow around.

The seven-cent tax replaces an earlier Chicago ban on lightweight plastic bags, which city officials characterized as only partly effective at best. Various bags used by shoppers inside supermarkets, such as lightweight bags used by shoppers to wrap produce or baked goods, are exempted from the tax. Shoppers who bring reusable bags woven from plastic fiber or canvas, as many shoppers do in Europe and on the U.S. West Coast, will not need a plastic bag and will be exempted from the tax.

The new Chicago tax does not apply to retail purchases made outside Chicago. It went into effect on Wednesday, February 1.

Education – School Funding Reform Commission
Blue-ribbon commission announces consensus on what a new school funding formula should look like. State aid to schools is one of the largest appropriations of Illinois’ state budget. The complex formula, which is set forth in Illinois statute and administered by the Illinois State Board of Education (ISBE), includes a wide variety of tweaks and variables. Money that is not provided by federal or State aid must be brought in from property tax levies and concerns about the Illinois school funding formula are increasingly intertwined with concerns about Illinois property taxes and tax rates.

In July 2016, Governor Rauner and the four legislative leaders created the bipartisan, bicameral Illinois School Funding Reform Commission. The 25 members of the Commission were asked to revamp Illinois’ education funding formula to provide a more equitable and adequately funded system for all students. The Commission met for a final time on Wednesday, February 1 to finalize a report to submit to the Governor and General Assembly. The final report provides a framework on how to move forward in establishing an equitable school funding formula. It is the hope of the Commission that the General Assembly and the Governor’s Office can work together to put this framework into legislation to create a new, more equitable and adequate funding system for FY18.

The State of Illinois currently funds 26% of the total cost of Illinois primary and secondary education. It is the Commission’s hope that in the future, the State can be the primary funding source of education. In order to get to that level of funding, the Commission’s framework points to individual “adequacy targets” for each district based on the district’s individual needs, including student enrollment, teacher salaries, low-income students, and English language learners among other factors. This target will help districts and local residents understand how much a school must spend to provide an adequate and equitable education to each student. In addition, the Commission also agreed that any new school funding formula must provide transparency when it comes to local dollars being spent on education in hopes of lessening the State’s reliance on property taxes to fund education.

In its report, the Reform Commission announced that they have reached a consensus on what a new school funding formula framework would look like. The new framework is built upon the idea of “adequacy targets” to be met by schools and school districts; a school district’s eligibility for aid will be partly tied to evidence that one or more of their schools have fallen short of adequacy targets and that, at the same time, the school is making progress toward meeting these targets. The goal of this new paradigm is to concentrate aid on vulnerable students while not, at the same time, rewarding schools and school districts that sit on their hands and maintain a perpetual state of poor performance and outcomes.

Human Services – Developmental Disabilities
House Republicans respond to Chicago Tribune investigative report with package of House bills. The legislative package, numbered HB 737 through HB 742, would require the Illinois Department of Human Services (IDHS) to sharply increase its oversight and monitoring of Illinois’ troubled system of group homes for persons with developmental disabilities. While many homes in this class provide good-quality care and residential services to their clients, investigative reporters for Chicago’s largest newspaper found that some do not. Serious cases of patient neglect were uncovered. The bills are meant to create a client-centered process when a DD group home gets its care license revoked.

The Chicago Tribune revelations were underlined when the state attempted to move 45 patients from one particular network of group homes (Disability Services of Illinois) to new locations that would provide a different quality of care. The process of legally moving these clients from one location to another is legally time-consuming and cumbersome, and while the moving process was taking place the first network of homes dispersed the patients. The Department of Human Services came under criticism when they were unable to share information to help law enforcement search for the missing Illinois residents, who were all eventually found and successfully relocated. HB 740, sponsored by Deputy Republican Leader Patti Bellock, will require the safe and secure storage of contact information and location information so that Illinois never again loses track of those of our residents who need help the most. Other bills in the reform package were sponsored by Rep. Terri Bryant and Rep. Charles Meier.

Rockford – 300 Jobs
Auto parts supplier to move 300 jobs from Detroit to Rockford area. The announced move by Yanfeng Automotive Interiors follows the decision by Fiat Chrysler to move production of the Jeep Cherokee from Toledo, Ohio, the traditional home of Jeep assembly, to the company’s plant in Belvidere, Illinois.

In a press statement, Yanfeng disclosed that its decision had been determined by the need to maintain a just-in-time production relationship with Fiat Chrysler and its Cherokee assembly line. Yanfeng has made floor consoles and door panels for the sports-utility vehicle in a plant in Monroe, Michigan near Toledo. About 300 headcount positions are affected by the move.

Veterans – Quincy Home Water Treatment
New water treatment facility includes extensive plumbing repair and replacement. Governor Rauner announced Wednesday that the U.S. Department of Veterans Affairs (USDVA) has awarded the Illinois Department of Veterans' Affairs (IDVA) $4.173 million dollars to reimburse funds spent for the new water treatment facility at the Illinois Veterans' Home in Quincy (IVHQ). The scope of the work included repair, replacement and upgrades to the domestic water system at the Illinois Veterans Home in order to treat the water with chemicals and heat, and to eliminate non-circulating plumbing.

The construction of this new state-of-the-art water treatment facility features redundancy capabilities and decentralization of the domestic hot water system, providing 160 degree water to all points-of-use throughout the Veterans' Home. Additionally, the project involved domestic plumbing replacement, removal, and other upgrades where necessary resulting in a new domestic water service for the campus.

The funding was made possible through the VA State Veterans Home Construction Grants Program, which prioritizes projects that have significant impact on resident safety. The construction of the new water plant is scheduled to be completed in February 2017.

The Illinois Environmental Protection Agency (IEPA) and the Illinois Department of Veterans’ Affairs (IDVA) fronted the cost of this multimillion-dollar project. At the same time, IDVA applied to the U.S. Department of Veterans Affairs for a grant to reduce the cost of the project to Illinois taxpayers.

Winter in Illinois
American bald eagles winter in Illinois. After flying south from their nesting grounds, many “proud birds of freedom” find winter homes near open water in central and southern Illinois. A reporter recently saw many bald eagles in the area of Alton, Illinois, is southwestern Illinois. The inrushing waters of the Illinois River and the Missouri River, as they enter the Mississippi, add nutrients to the larger body of water and help encourage fish to spawn. The eagles then come to look for the fish. Pere Marquette State Park near Alton, operated by the Illinois Department of Natural Resources, offers resources intended to help birdwatchers catch a glimpse of the iconic birds.

Week in Review
Get the Week in Review emailed directly to your inbox! Sign up today to get a first-hand look at the continuing legislative and fiscal challenges facing policymakers in Springfield.