Week in Review for October 25, 2019

Fall veto session set to begin in Springfield. The lawmakers of the Illinois House will gather on Monday, October 28, to consider new business and take action on the vetoes signed by the Governor. The members of the Illinois General Assembly are mandated by the Constitution to meet for two three-day annual veto sessions every year. The first veto session will be in the final week of October, and the second week of veto session will be in the second full week of November.

This six-day period does not, typically, give legislators very much time to take up entirely new business. Matters that have been left pending from the prior spring session can sometimes be taken up in the veto session. In addition, lawmakers often find that the veto session is a good time to introduce new bills and start discussions about rising issues in order to get ready for the next full-length session, which will begin in January 2020. All of the bills and other legislative activities considered by the Legislature during the 2019 veto session and full-length 2020 session can be found on the Illinois General Assembly website.

Rivian hires first 200 workers in Bloomington-Normal; excitement builds as prototypes unveiled in Central Illinois. The pioneering electric-powered light-truck assembly plant has begun to tool up for production. Rivian and its backers, including Amazon, plan to make self-propelled vehicles that are charged from batteries, not gas tanks. While electric-motor cars and hybrid sedans are now familiar on U.S. roads, this technology has not yet been adapted to the popular light-truck marketplace. Amazon and Rivian believe the Bloomington plant can make vehicles large enough to run delivery rounds and carry large quantities of packaged goods to U.S. consumers.

Excitement is growing as Rivian moves towards Central Illinois assembly. In a recent Normal, Illinois community-outreach event, the budding light-truck firm unveiled prototypes for the vehicles that will go into production in 2020. Up until now, Rivian has kept its designs under high security. Thousands of Illinoisans attended the marquee event. The Rivian light-truck chassis centers on a flat, low-riding armored battery pack, which factory developer-owner R.J. Scaringe calls a “skateboard,” and which can be adapted to at least three vehicle bodies. In addition to the van model ordered by Amazon, the Rivian skateboard can carry the bodies of an SUV and a pickup truck.

Illinois prepares to sell $750 million in new bonds in November 2019. The general-obligation debt, backed by tax revenues such as income and sales taxes, will help cover the costs of the $45 billion infrastructure program approved by the General Assembly in the spring 2019 session. The Infrastructure program includes both “horizontal” infrastructure such as roads and bridges, typically backed by motor fuel tax moneys, and “vertical” infrastructure such as roof repairs and building rehab jobs. State-owned structures, including university classroom space, prison cellblocks, and State park visitor centers, need work.

The proposed debt sale comes despite the fact that Illinois has the lowest credit rating among the 50 states. Although Illinois’ BBB ranking technically counts as “investment grade,” many nearby states have much higher ratings. For example, neighboring Indiana, Iowa, and Missouri all have top-ranked AAA credit ratings. The state’s population of 12.7 million is in slow decline, with almost stagnant rates of private-sector investment and job creation.

Observers report that Illinois’ reputation as a free-spending, high-tax state with significant unfunded pension debts is reducing the ability of the State to sell its bonds at acceptable interest rates. Illinois has run a “structural deficit” for many years, in which the budget has been “balanced” by letting bills pile up. Illinois currently has an unpaid bill backlog of almost $6.7 billion, which could increase to $19 billion in 2024-25 under current projections. Interest charges on Illinois general-obligation debts and unpaid bills are paid by the State’s taxpayers.

Spring flood disaster application rejected by Federal Emergency Management Agency (FEMA). Illinois filed for flooding disaster assistance after rivers rose to high-water levels on the Mississippi River, the Illinois River, and many tributaries. Many communities throughout Downstate Illinois, especially along the State’s western border, suffered historic damage. However, FEMA has now decreed that the event does not meet the criteria needed to declare a disaster and provide aid. The decision from Washington, D.C. is currently under appeal. The Illinois Emergency Management Agency (IEMA) is gathering additional documentation of ongoing damages to individuals and community infrastructure, such as riverside parks and water treatment facilities, throughout Illinois. An estimated 1.4 million Illinois residents were affected by the flooding event, including persons who suffered loss of jobs or business when key roads were closed or blocked off.

Nationwide damage from flooding and high water in spring 2019 is estimated to have topped $12 billion. So far in 2019, FEMA has declared nine major U.S. disasters with individual assistance available, including seven declarations for flooding events. The declarations were made for beneficiaries in the states of Alabama, Arkansas, Iowa, Nebraska, Ohio, Oklahoma, South Dakota, and Texas. The Iowa declaration encompassed counties directly across the Mississippi River from Illinois.

New area code to be imposed in Central Illinois. The change was announced this week by the Illinois Commerce Commission (ICC), which oversees telephone service throughout Illinois. The area affected is covered by the existing “217” area code, which includes Champaign-Urbana, Decatur, Quincy, Springfield, and other towns and cities in the middle portion of the state. Telephone service providers are reporting to the ICC that numbers within the 217 area code are running out and they must ask for a new overlay code. The overlay code number will be 447, and the ICC and the industry will transition the new overlay code into use during a six-month period in late 2020 and early 2021.

Telephone users in areas of Illinois north of Interstate 80, including greater Chicagoland, are already familiar with overlay codes. In an overlay-code region of Illinois, the dialer must use all ten digits to dial a phone number, including numbers within his or her local area. The ten-digit number for local calls within Central Illinois will become voluntary on August 29, 2020, and mandatory on February 28, 2021. On and after that date, people in the affected area who try to dial a seven-digit number will get a recorded voice telling them to dial again. In April 2021, some new phone customers in Central Illinois will start to get the 447 area code assigned to them. After this 2020-2021 transition, the only remaining non-overlay code areas left in Illinois will be the areas served by the 309 area code, which operates in the Peoria-Quad Cities area, and the 618 area code, which serves southern Illinois.

Changes in video gaming laws being felt in many Illinois municipalities. One of the changes enacted to the Illinois Video Gaming Act in spring 2019 was an authorization, in communities that allow video gaming, for the parlors, taverns, and other places that have these games to install more machines. In most non-truck-stop locations, the allowable upper limit will now be six machines (up from five), if the local municipality signs off on the increase. The owners of the machines pay taxes to their local governments, and many of these cities and villages are supportive of the additional machines. As an example of this trend, the Rockford City Council approved the sixth machine this week. The new state law also authorizes the video gaming machines to offer bigger prizes and take in more money for each play pull.

State report finds unemployment down in twelve Illinois metropolitan areas. The report on Illinois cities and metro areas, published by the Illinois Department of Employment Security (IDES), covers September 2019 job trends in local regions throughout the state. During this 30-day period, unemployment dropped throughout Illinois to 3.9%, signaling so-called “full employment.” The IDES survey, which uses data sent to it by employers throughout Illinois, found full-employment below-4.0% jobless levels in many widely scattered regions of the Prairie State. Metro areas with low unemployment included Chicago (3.2%), Champaign-Urbana (3.5%, Springfield (3.5%), Bloomington (3.6%), Carbondale (3.7%), and the Metro-East area east of St. Louis (3.8%). These are all areas with either large-city settings or major State universities, or both.

Several metro areas in Downstate Illinois continued to have unemployment numbers that are significantly higher than the State average. These metro areas included Kankakee (4.2%), Peoria (4.3%), Decatur (4.9%), Danville (5.0%), and Rockford (5.3%). These are metropolitan areas with workforces traditionally oriented towards manufacturing and industry. With a rate rising from 4.9% in September 2018 to 5.3% in September 2019, Rockford was the one major metro area of Illinois that has seen rising joblessness over the past 12 months.

Illinois named fourth-worst state to retire. The nationwide rating, by financial services information aggregator Bankrate, looked at a variety of metrics in making its negative judgment. Illinois’ high property taxes and winter weather appeared to be key factors in the negative ranking. In subsets of the overall ranking, Illinois was ranked 40thin “affordability” and 49th in “wellness.” Crime, culture, and weather were also used as metric data. Other poorly-ranked states were high-tax environments in colder parts of the U.S., with Alaska, Maryland, and New York all earning rankings lower than Illinois.

Illinois to spend $23.5 billion for roads and bridges. The Multi-Year Plan (MYP) was announced by the Illinois Department of Transportation on Monday, October 21. Over the next six years, $23.5 billion will be invested in maintaining, preserving and expanding 4,212 miles of roadway and 9.2 million square feet of bridge deck statewide. Much of the funding for this MYP will come from the motor fuel tax increase enacted by the General Assembly in spring 2019. Under the Constitution, money raised from motor fuel taxes cannot be “swept” for other purposes, and must be spent on transportation.

This new Multi-Year Plan represents a shift in Illinois' approach to its roadways and bridges. Previously, the state waited to rebuild until projects had deteriorated so much that they presented safety hazards; under guidance from the Federal Highway Administration, Illinois will now prioritize maintaining its system over time, which is also a more cost-effective way to manage long-term capital needs. To achieve that, this plan dedicates more than 75% of the funds to reconstructing and preserving roadways and bridges, 16% to strategically expanding the system in areas where data have shown the investment will be highly effective and the remainder for necessary traffic and safety improvements.

Of the major categories of state investments in the plan, $7.58 billion will go toward roadway reconstruction and preservation, $4.99 billion for bridge replacements and repairs, $1.59 billion for safety and system modernizations like interchange reconstructions, $3.08 billion for strategic expansion of the system and $2.11 billion for system support like engineering and land acquisition.

A full list of road and bridge projects coming across the state can be found here.

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