Veto session ends on a partisan note. The first week of the 2014 Veto Session took place prior to Thanksgiving. In legislative action, members held informational and subject-matter discussions on various issues. Subjects discussed included the State formula for aid to public school districts, creation of a State medical insurance state exchange, and extension for one year of the Medical Practice Act.
Key bill actions took place this week on various issues that included election law, Illinois lawsuits, the ridesharing industry, and truck speed limits. Many of these actions were partisan actions taken by the House and Senate Democrats, in sharp contrast to Governor-elect Bruce Rauner’s belief that it is “important that our Government be done on a bipartisan basis.”
The General Assembly may meet again in special session at any time prior to the inauguration of the new Governor and new legislative members in mid-January. In particular, the House may meet again to consider an Illinois minimum wage increase (see “Minimum wage” section, below). However, as the House adjourned sine die, it may only reconvene at the call of Governor Pat Quinn. Governor-elect Bruce Rauner supports bipartisan solutions and opposes lame-duck and retiring lawmakers being asked to cast votes on key laws affecting all Illinoisans, especially bills that may discourage future job creation and economic activity. The new Governor will take the oath of office on January 12 and the new General Assembly will convene on January 14.
Governor-Elect Rauner – Budget
Rauner says budget crisis much worse than has been discussed. As part of the transition to his inauguration on Monday, January 12, Bruce Rauner again visited Springfield this week. The outgoing Quinn administration’s Governor’s Office of Management and Budget (GOMB) began to show him and top aides the State’s financial books, and Rauner confided to the press on Tuesday, December 2 that what he saw was “worse than discussed.”
The state Constitution requires the General Assembly to pass, and the Governor to sign, a balanced budget. However, in May 2014 Democrats enacted a $35.7 billion spending plan for fiscal year 2015 (FY15) in which cash outflows run well ahead of current and expected inflows. The cash flow pattern, which has also been tracked by Comptroller Judy Baar Topinka and the General Assembly’s Commission on Government Forecasting and Accountability (CGFA), could lead to a significant fiscal crisis facing the incoming chief executive.
Experts believe the State of Illinois could be facing a $6 billion “budget hole.” The missing money will consist not only of the ongoing operating deficit of the State in the first half of the fiscal year, but additional shortfalls stemming from declining tax revenues starting January 1, 2015. Illinois income tax rates, including individual income tax rates, are scheduled to partly “roll back” in calendar year 2015.
These problems will redouble in fiscal year 2016 (FY16) when the full rollback is scheduled to take effect. The Rauner team pointed out this week that “Governor Quinn and the Democrats built a FY15 budget that is laden with booby traps ready to explode in FY16.” Examples include $650 million in interfund borrowing that must be paid back, $600 million in FY15 Medicaid costs paid with a supplemental appropriation in FY14, and $789 million in total costs pulled out of FY15 through accounting gimmicks.
Bills – Unpaid State Bills
Comptroller estimates Illinois bill backlog is approximately $6.2 billion. The figure, calculated by Comptroller Judy Baar Topinka, covers both vouchers/transfers handed over to the Comptroller for eventual payment and bills being processed by other State agencies. The estimate was contained in the Comptroller’s 30-day public report, “Monthly Money Matters,” published on Wednesday, December 3. It covers the State’s fiscal cash flow through November 30, 2014.
The $6.20 billion in estimated bills counted by Comptroller Topinka in November is a $380 million increase from the $5.82 billion counted by Topinka in October 2014 (Monthly Money Matters). The continued negative trend is an example of Illinois’ current cash flow situation and the inability of current State revenues to keep up with spending trends enacted by the General Assembly in their May 2014 budget. It was widely predicted at the time that the FY15 budget, passed by legislative Democrats and signed by Gov. Quinn, was systematically unbalanced and made overly-optimistic predictions about State cash flow.
Constitutional Convention
General Assembly approves partisan call for federal constitutional convention. In contrast to other calls for federal constitutional action, SJR 42 contains language specifically slanted toward one particular issue. The joint resolution purports to limit the proposed federal constitutional convention to the duty of addressing what sponsors believe are concerns surrounding a particular recent federal Supreme Court decision, “Citizens United v. Federal Election Commission.”
The sponsors of SJR 42 assert that this convention can be limited to action on this one issue, and no others. Questions have been raised about this assertion. Partly as a result of these questions, SJR 42 was approved by the House on December 3 by a largely partisan roll call vote (72-40-0), signaling approval of the proposal by both houses of the General Assembly.
Eavesdropping – Response to Court Decision
New eavesdropping bill wins bipartisan approval. SB 1342 contains language intended to reinstate the dual-consent structure for granting permission to record words and conversation between parties. The eavesdropping law applies to contacts between private citizens and to contacts between private citizens and government officers and officials, including the police.
The recording of words and conversation is technically called “eavesdropping” and the previous Illinois eavesdropping law was struck down by the Illinois Supreme Court. Many parties of interest, including Illinois law enforcement, worked together to enact new compromise eavesdropping legislation. The House vote was 106-7-1, with the Senate concurring 46-4-1.
Economy – CGFA Report
CGFA tracks Illinois economic activity in November 2014. The Commission on Government Forecasting and Activity (CGFA) released their monthly report on Tuesday, December 2. The report covers Illinois economic activity during the month of November 2014 and makes projections to cover the remainder of 2014 and the first six months of calendar year 2015. CGFA staff is tasked, by statute, with monitoring Illinois economic activity in order to gauge compliance with the State’s balanced-budget constitutional mandate. As of November 30, Illinois was five months into our current FY15 fiscal year, which will govern State cash inflows, spending, and accounting through June 30, 2015.
The report uncovered continued slow economic activity in Illinois. Approximately 429,000 Illinoisans are classified as unemployed, leading to an official jobless rate of 6.6%. The unemployment numbers tracked by CGFA do not take account of additional potential workers who have been pressured into taking part-time employment or who have dropped out of the labor force entirely. Overall State base revenues declined $54 million in November, continuing a pattern of mismatches between cash inflows and outflows. Although Illinois individual income tax revenues and total sales tax receipts were up, other key cash inflow categories – including corporate income taxes and federal aid to Illinois – maintained their pattern of decline.
Education – Vision 20/20
Education leaders present Vision 20/20. An overview of Vision 20/20 was presented to educational policymakers and the press in Springfield on Tuesday, December 2. The Illinois Association of School Administrators, the Illinois Association of School Boards, the Illinois Principals Association, and other professional and administrative groups believe that Vision 20/20 will create a potential blueprint for the future of Illinois public education.
Vision 20/20 and its proponents propose significant adjustments to Illinois primary and secondary education policies, including changes intended to adjust to moves within Illinois to a more diverse student body that needs to be prepared for a post-industrial job landscape. Changes included in Vision 20/20 include alternative teaching licensure programs, student loan forgiveness for teachers, greater partnerships between secondary and higher education, and teacher certification reciprocity with other U.S. states. Under Vision 20/20, the State would make a major push to reduce the burden, or in some cases forgive, the burdens of student loans upon teachers in low-income districts, teachers in underserved parts of the State, and teachers specialized in helping students master underserved content areas, such as math, science, and special education.
Elections – Partisan Elections Bill Passed
SB 172 passes House on party-line vote; Senate also approves measure. Calling the measure “Chicago politics at its worst,” House Republicans opposed SB 172, the controversial legislation that allows political workers, including Chicago ward bosses, to bundle “absentee” ballots, and authorizes election clerks to start processing mail-in votes before Election Day. It imposes expensive new unfunded mandates upon election authorities, including burdens that will weigh especially heavily upon smaller, rural, and Downstate election authorities. It authorizes election judges to not only scrutinize people who vote in person, but to register new voters in person on Election Day.
The party-line House vote on SB 172, taken on Wednesday, December 3, was 70-44-0. The Senate debated the measure on the same day and approved it 40-17-0, sending the measure to Gov. Quinn for final action.
Energy – FutureGen
Controversial FutureGen project heads to state Supreme Court. The question before the Court is whether the Illinois Commerce Commission exceeded its constitutional authority in late 2012 when it ordered Illinois-based electric utilities, headed by ComEd and Ameren, to sign contracts promising to buy FutureGen electricity for the first 20 years that power is generated by the innovative power plant. It is expected that FutureGen electricity will be more expensive than conventional electricity and utilities will be required by the ICC order, if it is allowed to stand, to eat these costs or pass them on to their customers.
FutureGen has selected a previously-operated coal-fired power plant located adjacent to Meredosia, an Illinois River town west of Springfield. The inactive plant is scheduled to be refitted to resume the burning of coal under environmental controls hyper-sensitive enough to enable the continued operation of the plant under circumstances of so-called global warming. Among other engineering innovations will be the capture of much of the carbon dioxide (CO²) emitted by the plant’s boilers and its injection into layers of geological strata far below the earth’s surface and trapped by impermeable rock. It is the question of who is to pay for FutureGen’s innovative technology that is at the heart of the case that the Illinois Supreme Court will hear in 2014-15.
Many engineers believe that FutureGen’s successful operation as a subsidized power plant is an essential element in coal remaining a component of Illinois’ future electric power needs. The plant is being refitted with a combination of coal industry funds and federal taxpayer dollars. Read more here.
Forced Savings
General Assembly approves bill to impose automatic savings deductions upon Illinois paychecks. The Secure Choice Savings Program Act will assume that persons aged 18 and up, and employed in Illinois, should save money with money managers. The new Program will automatically deduct 3% from employees’ paychecks unless they explicitly drop out of the savings program. The program will apply, as a mandate, to all places of employment that are at least two years old and are without existing savings plans that have employed 25 employees or more throughout the previous calendar year. Approximately 2.5 million Illinois workers could be affected.
Under SB 2758, employers will present a limited number of savings choices to employees for the monies deducted from their paychecks. A governing board will have fiduciary responsibility over monies that some workers will not choose to allocate and will distribute these funds among a limited number of approved money managers.
Workers who actively participate in the p rogram will have some control over how much is deducted from their paychecks in each pay period and how it will be invested. However, employers will have little or no control over the program. In House discussion of the bill, many Republicans pointed out that it will be an unfunded mandate on Illinois employers and will impose significant additional administrative costs upon affected employers. The House vote on Tuesday, December 2, was 67-45-0, with the Senate concurring 30-25-2, sending SB 2758 to the Governor for final action.
Lawsuits – Asbestos
General Assembly passes language to expand trial-lawyer-friendly climate in asbestos cases. One of Illinois’ most profitable industries is the extraction of money from people with a tenuous contact with asbestos, a building material once widely used to fireproof walls, ceilings, and pipes in public buildings. After asbestos was discovered to be carcinogenic, a series of State and federal case laws made owners of these buildings, and contractors with direct connections to asbestos, financially liable for damages inflicted on people who lived in, worked in, or used the buildings.
In Illinois, the asbestos trial bar has worked hard to build connections with potential plaintiffs. Many billboards posted on Illinois highways, for example, solicit business from potential plaintiffs. A significant subset of lawyers has worked on these cases, developing their experience into a relatively confined specialty. However, little or no asbestos has been used in U.S. construction since the 1980s, leading to a decline in the number of new exposures to asbestos and thus a decline in the number of tort grievances and potential plaintiffs.
In response to these trends, Illinois Democrats passed SB 2221 this week to perpetuate an asbestos-lawsuit-friendly atmosphere in Illinois civil courts. Key changes made by this bill will make it possible to file asbestos damage lawsuits in perpetuity, and will greatly expand the list of entities that can be found potentially liable. For example, asbestos lawsuits could be filed against supervising architects, design engineers, and public school boards; and could be filed based upon conduct carried out decades or generations ago, when asbestos was widely used in good faith as a building material.
House Republicans voted in opposition to SB 2221, which they pointed out goes far beyond the laws of other states to favor a subset of trial lawyers over a wide variety of taxpayer-funded entities, professionals, businesses, and employers. They repeatedly warned that enacting this legislation will lead to higher taxes and fewer jobs down the road. The House vote on SB 2221 was 70-43-2, returning the measure to the Senate for concurrence. A Senate vote (38-16-2) on Wednesday, December 3, sent the controversial measure to the Governor for final action.
Lawsuits – Juries
SB 3075 approved by House and Senate by partisan votes. Current law provides that in most cases tried under the Code of Civil Procedure, a 12-member jury shall be empaneled. SB 3075 reduces this headcount, in almost all cases, from twelve jury members to six jury members. The only remaining twelve-member juries would be those agreed to by both parties prior to the start of the trial. SB 3075 also contained language increasing the daily rates paid by counties to their jury members. The new jury pay schedule mandates that jury members be paid at least $25 and up for each day of service. The actual pay rate will be determined by a sliding scale based on the population of the county where the jury member is empaneled.
House Republicans were deeply concerned about the political way this proposal was abruptly unveiled in the House and passed, in violation of norms that call for changes in court procedure to be extensively discussed by diverse legal practitioners before adoption. The partisan vote, taken on Tuesday, December 2, was 67-46-2, sending the bill back to the Senate for concurrence on Wednesday, December 3 (33-24-1). SB 3075 was then sent to the Governor for final action.
Minimum Wage – HB 4733
Senate passes bill to increase minimum wage throughout Illinois. HB 4733 would increase the Illinois minimum age from its current statewide level, $8.25/hour, to $9.00 beginning July 1, 2015. The bill contains a cost-of-living escalator clause that further increases the minimum wage by 50 additional cents per hour per year over a 48-month period, culminating in a minimum wage of $11.00/hour starting July 1, 2019. The minimum wage increase pre-empts minimum wage ordinances that could be adopted by home-rule municipalities, but a minimum wage increase recently enacted by the Chicago City Council is partly exempted from this pre-emption.
Many Senate Republicans raised concerns about the impact of HB 4733 on job creation and Illinois economic activity. The Senate vote, taken on Wednesday, December 3, was 39-18-1. The vote sent the measure to the House for concurrence. While the House Speaker has adjourned the House, departing Gov. Pat Quinn could call the chamber back in special session. The Peoria Journal-Star has more on this story.
Obamacare – State Exchange
Bill discussed to set up Illinois state exchange under Affordable Care Act (ACA). Under the ACA, states are granted the right to set up, or not set up, an exchange for residents to use when shopping for and purchasing mandatory health insurance under the Act. Illinois is one of more than 30 states that have not set up in-state exchanges. The federal government has set up a federal exchange that purports to legally describe ACA-compliant health insurance policies and help households “click through” to a willing provider.
One of the elements of the ACA is a significant cross-subsidy to household in certain income classes for the health insurance they buy. However, the text of the ACA as passed by Congress and signed by the President in March 2010 states clearly that this cross-subsidy shall only be available to purchasers of insurance through a state exchange and shall not be available to insurance purchasers through the federal exchange.
Concerned parties have filed a federal lawsuit, which will soon be heard by the U.S. Supreme Court, which seeks to strike down these cross-subsidies in the federal marketplace on the grounds that the government agency that oversees and implements the subsidies has exceeded its statutory authority as clearly defined by the words of the federal law. Based on this lawsuit, friends of the ACA and Obamacare no longer trust the federal government to provide health insurance informational services over the long term, especially with regard to these contested cross-subsidies. There is growing pressure from these quarters upon the General Assembly to enact language to create a unique Illinois state health insurance exchange.
Many members of both parties oppose setting up an Illinois insurance exchange that would have to be supported by the taxpayers. Many other states that have tried to set up exchanges have run into significant challenges and difficulties. In one extreme example the proposed Oregon state health insurance exchange, “Cover Oregon,” spent more than $250 million of that state’s tax money. After a series of computer glitches, the exchange and health-insurance-related software did not succeed in completing a single health insurance transaction. “Cover Oregon” was completely abandoned and collapsed into a cloud of lawsuits and angry political oratory. Concerned Illinoisans believe that a leapfrog attempt to cobble together a state exchange in Illinois, a state with a significantly greater population than Oregon that faces a large number of other governing challenges, could generate even worse results.
No action was taken on this issue by the Illinois House in the second week of veto session. As with the minimum-wage issue, the House could be called back into special session prior to January 12 to look at this question.
Ridesharing – Uber
House, Senate vote for compromise language to increase regulations on ridesharing firms. Many stakeholders, including municipal governments, taxicab firms, and advocates for persons with disabilities, have called for tightened regulations on fast-growing “ridesharing” firms such as Uber and Lyft. After lengthy negotiations, the House agreed to language that imposes additional liability insurance mandates upon ridesharing drivers, requires ridesharing firms to offer services to persons with disabilities, requires the firms to offer a presence in geographically underserved areas, and impose other mandates.
The largest ridesharing network operator, Uber, agreed with the changes made to State law by SB 2774 as amended. The bipartisan House vote on Wednesday, December 3 was 105-7-2. Approval by the Senate (52-2-1) sent this measure to the Governor. Further action on this issue is expected in the 2015 spring session to deal with issues left unresolved by this bill.
Transportation – Trucks
Trucks can now drive 60 mph legally on Downstate interstate highways. Until the passage of SB 930, trucks driving on Downstate Illinois’ interstate highways were legally restricted to traveling at the rate of 55 miles per hour, although this speed limit was not fully enforced in practice.
SB 930 increases this speed limit to 60 miles per hour for interstate highways only. The lower speed limit continues to apply to non-interstate highways. The bill applies to vehicles licensed in the second division, a category that includes most heavy and freight trucks. After being passed by both houses of the General Assembly in the spring 2014 session, the measure was vetoed by Gov. Quinn. Both houses of the General Assembly overrode this veto by the required three-fifths majority, thereby allowing SB 930 to become law as Public Act 98-1126. The House override vote on Tuesday, December 2 was 103-12-0.
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