Week in Review for Week Ending June 24, 2017

Key Republican Legislators Renew Urgent Call for Compromise Balanced Budget Plan. Upon returning to Springfield for special session on Wednesday, House Minority Leader Jim Durkin (R-Western Springs), Senate Deputy Republican Leader Bill Brady (R-Bloomington), Assistant Senate Republican Leader Jason Barickman (R-Bloomington), Senate Republican Caucus Whip Karen McConnaughay (R-St. Charles), Senator Dale Righter (R-Mattoon), Deputy House Republican Leader Patti Bellock (R-Hinsdale), Deputy House Republican Leader Dan Brady (R-Normal) and House Republican Conference Chairperson Tom Demmer (R-Dixon) offered a reminder that a compromise balanced budget with reforms is on the table and ready to be enacted.

“Last Wednesday we introduced a compromise budget and reform plan that respects the priorities of both parties and puts us on a path to end the impasse, if the Democrats will agree to engage with us. The provisions included in our plan have been thoroughly vetted. With only ten days left in the fiscal year, we don’t need more Committees of the Whole. We need immediate action!” said Durkin.

Senate Republican Leader Christine Radogno (R-Lemont) called the package “a reasonable compromise that will allow Illinois to move forward. We have to work together to enact a state budget and the reforms necessary to make it work.” Leader Radogno was unable to attend, but urged action in the General Assembly. “The time is now,” she said.

The comprehensive proposal includes a truly balanced budget, a four-year hard spending cap, lasting property tax relief, and changes to our regulatory system that will create jobs and grow the economy. The bills also include a $288 million increase for the new school funding formula, as well as additional funding to fulfill commitments to restore child care eligibility to 185% of the federal poverty level and a wage increase to Direct Support Professionals. It also includes term limits on legislative leaders and constitutional officers.

“The people of Illinois want a balanced budget, and that is what is on the table here. This isn’t another lifeline, stopgap, or band-aid. This is a real, balanced budget and reforms to grow our economy, create jobs and put Illinois on a more firm fiscal footing going forward,” said Senator Brady. “We’re back in Springfield this week and it’s time to do what is right and pass a balanced budget for the people of Illinois.”

The summary of the bills are as follows:

Budget Bills (SB 2176, 2214, 2215, 2216, 2217, 2218): Comprehensive budget proposal that includes real spending cuts and a four-year spending cap, while providing funding to state agencies like the Department of Human Services to care for our state’s most vulnerable and the Department of Transportation to continue important infrastructure projects.

Property Tax Relief (HB 4066): Four-year freeze for all taxing districts, but would allow residents, through voter referendum, to lower or increase their taxes. Allows for an exemption on existing debt service payments as requested by Senate Democrats.

Local Government Consolidation (HB 4067): Strengthens and improves the already passed SB 3, and will allow for citizens-initiated consolidation on units of local government.

Education Funding (SB 1124, HB 4069): Changes to the K-12 education funding formula that treats every district equitably that is consistent with the bipartisan framework of the Governor’s School Funding Commission. Funding for early childhood education, K-12 education, community colleges and universities.

Workers’ Comp Reform (HB 4068): Uses previously negotiated language between Senate GOP and Senate Democrats, like changes to the medical fee schedule, but does not reduce benefits to workers or include a causation standard.

Pension Reform (HB 4064, HB 4065): Accepts SB 16, which has previously passed the Senate, including President Cullerton’s consideration model and the state’s pickup of Chicago Public School’s pension payments.

Term Limits (HJRCA 2, HJRCA 33): Constitutional amendment to impose 10-year term limits on legislative leaders in the General Assembly and eight-year limit on Constitutional Officers (Governor, Lt. Governor, Attorney General, Comptroller, Treasurer, and Secretary of State).

“This plan as a whole represents areas of bipartisan consensus and reasonable compromise," said Senator Barickman. "This is largely where we were at before Democrats walked away from the table. We still have time to pass a balanced budget, fix our broken school funding formula, and make State government better for the people of Illinois."

“Putting government consolidation in the hands of local voters is the right thing to do to reduce the cost of government in Illinois. Unlike so much coming out of Springfield, this is not a mandate but an empowerment tool. We have over 7,000 units of local government and our property taxes prove unsustainable. Between pension reform and government consolidation, we can reduce the cost of government for taxpayers and right-size our services and costs,” said Representative Demmer.

“The comprehensive balanced budget we are offering will provide care for our state’s most vulnerable citizens and prevent further erosion of Illinois’ fragile safety net,” said Representative Bellock. “With the recent court ruling on the $2 billion backlog of unpaid Medicaid bills, it is critically important we take immediate action to address this backlog. Our plan includes more than $4 billion in bonding to help pay off old bills. We must address this crisis now. The consequences of not taking action now would be devastating to human services.”

“Illinois is close to starting its third fiscal year without a state budget, and this impasse has gone on for far too long,” said Senator McConnaughay. “We have ten days to come together, to pass a real balanced budget that will provide peace of mind to our residents, job creators, colleges and universities and our local school districts. We can get this done if there’s the will by each Caucus to work together toward true bipartisan compromise.”

“The partisanship and political posturing must end. Our families and communities need stability, and that is what is on the table with this compromise plan,” said Representative Dan Brady. “If Democrats will join us at the table, we can adopt a responsible, balanced budget that funds our priorities and implements many of the reforms we need to get our finances back on track for the long-term.”

“The plan we introduced last week has many Republican and Democratic priorities in it,” said Senator Righter. “This compromise budget represents the best shot at getting something to the Governor that he will sign into law. Time is of the essence.”

Illinois’ credit rating drops to lowest possible level that is not “junk” status. The debt rating house S&P Global Ratings has cut Illinois’ credit rating to BBB-, the lowest credit rating that can be assigned to a borrower that is not “junk bond” territory. A “junk bond” issuer of securities is a borrower whose standing and probity is seen as being so dubious that the securities cannot be viewed as being of investment-grade quality. Moody’s has taken similar action and has reduced Illinois’ rating to Baa3, which is their lowest investment-grade ranking and is equivalent to the S&P BBB-. Illinois has the lowest credit rating of the 50 U.S. states and its current rating is actually lower than the credit ratings of many Third World countries. In testimony presented to the House Revenue Committee on Friday, June 23, Nuveen’s John Miller stated that Illinois’s current credit rating is equivalent to the bond ratings of Argentina, Pakistan, and the Ivory Coast.

S&P accompanied its June 2017 ratings cut with a warning that the State of Illinois risks “entering a negative credit spiral” as its debt status falls over the edge into junk bond territory.

A diminution of Illinois’ debt to junk bond status would have serious negative effects on the credit of many entities affiliated with the State, including Illinois’ public universities, municipalities, and school districts. All but two of Illinois’ public universities have already had their debt grades reduced to “junk bond” level. These universities, school districts, and local governments are only some of the entities that are dependent on State funds. Their debt and credit status would take a hit if these State moneys were reduced or cut off, and this decline in their status would further add to the potential burden to be borne by Illinois taxpayers.

Deal that could yield $300 million for State budget continues to be blocked. House Republican Leader Jim Durkin has repeatedly called for enactment of a State budget that could enable the resumption of normal governmental functions throughout Illinois. After two years without a budget, however, extraordinary steps will be required to resume sound fiscal management. With HB 500, Durkin has called for the State of Illinois to begin negotiations for the sale of the State’s principal downtown Chicago office building, the James R. Thompson Center, to the private sector.

While the Thompson Center has physically deteriorated and would require hundreds of millions of dollars in renovations, including life/safety renovations, to remain habitable in the long term, experts say that the building’s physical site on LaSalle Street make the property a potentially valuable asset for redevelopment. A billion-dollar complex that could contain as much as 2 million square feet of property-taxpaying office space could be built on the site. Developers are ready to pay the State and its taxpayers a sum that would yield a margin of approximately $300 million net of relocation costs. These moneys are an essential element of any proposal to resume rational State fiscal management.

Governor Bruce Rauner supports the sale of the Thompson Center and the relocation of its essential workers to new sites throughout the Chicago area. However, Crain’s Chicago Business reported this week that the sale of the complex is being blocked. The impasse is ascribed to a lack of agreement between Gov. Rauner and Chicago’s Mayor Rahm Emanuel on the terms of the sale and the outline of what building complex would replace it. In HB 4044, Leader Durkin has pointed to the financial situation facing the Chicago School Board. The Durkin bill calls for all of the property tax moneys that would be generated by the proposed new structure to be paid to the troubled public school system.

Governor Signs Compromise Bill to Combat Repeat Gun Offenders. On Friday, Governor Bruce Rauner signed a landmark criminal justice bill in his capitol office with Chicago Police Superintendent Eddie Johnson, Sen. Kwame Raoul (D-Chicago), House Republican Leader Jim Durkin (R-Western Springs), and other members of the General Assembly. The bill is a result of successful negotiations between the administration, City of Chicago and the General Assembly that will crack down on criminals who are repeat gun offenders, safely reduce the prison population, and create a more rehabilitative criminal justice system.

"This legislation provides new tools for law enforcement and the Courts to take on violent crime, while providing a second chance for non-violent, first time offenders," Governor Rauner said. "This shows what is possible when leaders at all levels of government work together, and across party lines, to address the challenges facing our cities and state. It took several months of hard work, compromise and bipartisan cooperation - but together, we got it done."

SB 1722 makes a number of changes to the criminal justice system to improve how we punish and rehabilitate gun offenders, as well as combat gang violence in Illinois. The bill will strengthen sentencing guidelines if they have committed a gun crime before. It also creates a First-Time Weapon Offender Diversion Program to address the underlying reasons why a young adult may have committed the offense.

"The Safe Neighborhoods Reform Act will help improve public safety in Chicago and across Illinois, holding repeat gun offenders accountable for their crimes," said Chicago Mayor Rahm Emanuel. "I want to thank Senator Kwame Raoul and Leader Jim Durkin for their leadership in advancing this important legislation, and Governor Rauner for signing it into law. Improving public safety is everyone's responsibility, and this law will help make neighborhoods across Illinois stronger, safer and more secure."

"Today marks an important first step toward reducing gun violence in Chicago and other gang-ridden areas in this state," Leader Durkin said. "We need to take the streets back for the law abiding citizens of Illinois and turn the tide back to families that want nothing more than a chance to raise their children with safety."

Additionally, the bill will create a Violent Crime Intelligence Task Force within the Illinois State Police. This task force will be dedicated to combatting gun violence and other violent crime in Chicago and around the state.

"The Safe Neighborhoods Reform Act will be of great benefit to the criminal justice system in Illinois and will give law enforcement the tools they need to pursue violent criminals. The Act creates the Violent Crime Intelligence Task Force, which will compliment proactive measures taken by police officers, and allow law enforcement to focus on taking violent criminals off the street to protect the lives and safety of Illinois citizens," said Illinois State Police Director Leo P. Schmitz.

The bill also contains a number of criminal justice reforms like expanding probation eligibility for first-time drug offenders and gives the Department of Corrections more discretion in awarding sentencing credit.

"The Safe Neighborhoods Reform Act represents the essential balancing of public safety and individualized assessment of those in our criminal justice system by encouraging the judiciary to hold those who threaten public safety accountable without removing the judiciary's discretion to divert or provide lower sentences to low-risk or non-violent offenders," Sen. Raoul said. "The Act is not a cure-all to gun violence and our work on criminal justice reform is not complete."

"I am proud to join Governor Rauner, Leader Durkin and a bipartisan group of legislators to see the Safe Neighborhood Act signed into law. As a lifelong resident of the City of Chicago and as a representative of a segment of the City's northwest side, I am encouraged to see steps being taken to crack down on rising gun violence," explained State Representative Michael P. McAuliffe (R-Chicago). "I am honored to represent a district that is home to many members of the Chicago Police Department who work to keep the streets of Chicago safe, so I am hopeful that this newly enacted law will aid them in that effort."

Negotiations on SB 1722 were underway for months between the Rauner Administration and the General Assembly. The compromise bill passed the Senate in April, and the House passed it at the end of May. It takes effect in January of 2018.

All school districts benefit from more equitable compromise funding fix. All Illinois school districts would benefit from a more equitable distribution of state education dollars under a compromise proposal introduced by State Rep. Bob Pritchard to fix the state’s broken school aid formula and end the budget stalemate, according to data released by the Illinois State Board of Education (ISBE).

The legislation, House Bill 4069, is a true compromise that embraces the priorities of lawmakers from both parties and both legislative chambers, and reflects the recommendations of the Governor’s bipartisan, bicameral Illinois School Funding Reform Commission.

In addition, according to the Illinois State Board of Education data, House Bill 4069 ensures that no school district would lose funding and represents the most fair and equitable plan for all Illinois students.

House Bill 4069:
  • Incorporates the agreed upon evidence-based model
  • Treats all 852 school districts the same
  • Ensures no school districts lose funding
  • Provides meaningful assistance to Chicago
  • Relies on data to drive resources and funding to schools most in need
  • Creates real equity by treating all districts and students fairly under one system, regardless of zip code
  • Offers the greatest chance of becoming law

When including both base funding and tier funding, every downstate and suburban school district would receive more funding through House Bill 4069 than under Senate Bill 1. For a more detailed, side-by-side analysis, click here. However, embracing the spirit of bipartisan compromise, House Bill 4069 represents real concessions in many areas.

The legislation reflects the same language as Senate Bill 1 with regard to:
  • Using an evidence-based model
  • Addressing poverty concentration
  • Establishing a tier structure and retaining CPS in Tier 1
  • Applying a regionalization factor and other adjustments
  • Safeguarding English learners and special education students
  • Calculating local resources
  • Establishing a base funding minimum
In areas where there were differences of opinion, the legislation offers compromise with regard to the hold harmless, mandate relief, the Chicago Block Grant and CPS pensions.

However, while House Bill 4069 and Senate Bill 1 are nearly identical, there are a few important differences.
  • House Bill 4069 provides CPS with assistance based on evidence-based practices and the demographics of their students.
  • It does NOT offer special deals hidden in the formula that are designed to fix the Chicago Public Schools’ broken pension system and pay off their overwhelming debt from years of fiscal mismanagement.
  • It relies on data, and data alone, to drive resources to the schools that need it most, including Chicago.
  • It ensures that all schools are treated the same under a formula that is the same for everyone, regardless of zip code.
  • House Bill 4069 is realistic and fair, and it represents the best and most reasonable outcome for all Illinois students.
Legislature convenes in special session called by Governor Rauner. Republican lawmakers, speaking out on Wednesday, June 21, stated that three of the four caucuses of the Illinois General Assembly are ready to take action to avert disaster and enact a balanced budget to end the current two-year budget stalemate. They urged the House Democrats to step up and work to end the budget impasse. The Wednesday news conference marked the first day of the 10-day special session called by Gov. Bruce Rauner. The Governor has called upon the Democrat majorities to end their obstruction. Legislators are being asked to pass a plan to control State spending and end the pileup of unpaid bills.

Despite the Republican call for action, the Illinois House did little in the first three days of the 10-day session. House Speaker Michael Madigan did not allow the House to consider or debate any of the proposed budget plans that have been suggested by members of both parties. Instead, Madigan ordered the House to convene in a series of “Committees of the Whole” to hear testimony on various issues, in an apparent attempt by the Democrats to run out the clock on needed reforms.

Twelve of 14 Illinois metro areas fall short of national average job growth. The May 2017 monthly metropolitan-area job report was released this week by the Illinois Department of Employment Security (IDES). While unemployment rates dropped in most Illinois metro areas, this drop was attributed to a decline in the number of Illinois residents classified as being in the active labor force rather than new jobs being created. As with the state as a whole, few new jobs are being created.

Job seekers are beginning to see a tight job market in many metro areas of Illinois, with unemployment dropping to 4.1% in the key Chicago-Naperville region and to 3.9% in Lake County. For job-counting purposes, Lake County is separated from the rest of metro Chicago. Many Illinoisans are finding, however, that the continued transition of the Illinois and U.S. economies from a manufacturing-based economy to a services-based economy means that many residents need to have specialized skills in order to participate actively in the Illinois labor force.

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