COGFA reduces State revenue forecast by $657 million. Many State tax revenues streams are earmarked for general funds used to fund key budget areas such as education, public safety, and social services. The Commission on Government Forecasting and Accountability, the General Assembly’s nonpartisan budget forecasting arm, reported to the legislature this week on trends in State revenues that will affect the reminder of FY17, ending June 30, 2017, as well as the approaching FY18 (starting July 1, 2017). COGFA uncovered patterns of modest year-over-year gains, or even declines, in many categories of revenue that are closely tied to overall State economic activity. Areas of weak or absent revenue growth included individual income taxes, corporate income taxes, sales taxes, public utility taxes, cigarette taxes, and corporate franchise taxes.
All of these tax revenue streams showed modest growth, or absent growth, in the current FY17 from the patterns of money flow posted in the most recently concluded full fiscal year, FY16. This cash flow picture has forced COGFA to reduce its FY17 Illinois tax revenue forecast by $657 million, worsening the State’s fiscal situation. This pattern of revenue stagnation, while State spending continues to increase, underlies the current inability of the State to pay its bills on time. The State’s ledger currently counts more than $12 billion in unpaid bills. The COGFA revenue report was presented to the General Assembly on Tuesday, March 7.
Budget – State Financial Report for FY16
Comptroller reports Illinois operated at $9.6 billion annual deficit in fiscal year 2016. The deficit number was released in the Comprehensive Annual Financial Report compiled by the Office of the Illinois Comptroller. The red-ink number is believed to be the largest deficit in State history. It reflects the expiration of much (although not all) of the “temporary” State income tax hike enacted in January 2011, poor revenue numbers from remaining tax streams, and exponential growth rates in continuing expenses such as pensions and health care costs.
Illinois is the only state to lack a complete budget for two consecutive fiscal years. Some operations, seen by courts as being essential, have continued under court orders. Other spending is protected by continuing appropriations. The pattern of continuing spending and inadequate revenues have combined to reduce Illinois’ credit rating to BBB, the weakest such number awarded to any of the 50 states. When Illinois sells 10-year notes to borrow money, it has to pay an interest rate that is 213 basis points higher than the rate paid by a borrower that is triple-A-rated.
Budget – State Employee Pay
Bourne calls on House to take up her state employee pay bill. Rep. Avery Bourne said Thursday there is renewed urgency for the House to stop delaying action on her bill to ensure that state employees will be paid even without a budget in place.
At a Statehouse news conference, Bourne, R-Raymond, said the Democrat-controlled House should act now that Attorney General Lisa Madigan is asking the Illinois Supreme Court to decide if workers can be paid without an appropriation by the General Assembly.
"This bill will ensure state employee pay and make sure state employees and their families are no longer used as political pawns," Bourne said. "We feel our legislation is the best approach to avert a government shutdown, to ensure that vital state operations continue, and to make sure state employees continue to be paid for their work. This issue is much too important to stall any longer." Read more.
Chicago Cubs – Trophy Presentation
2016 World Series trophy displayed at State Capitol. The 2016 World Series Champions Chicago Cubs brought the Commissioner’s Trophy to Springfield Wednesday. In a joint session of the General Assembly, legislators thanked the Cubs and their owners, the Ricketts family, for bringing baseball’s highest honor back to Illinois. The House floor was draped in “W” flags and Cubs World Series Champions banners, with Cubs Hall of Fame second baseman Ryne Sandberg on hand to sign autographs and take pictures with hundreds of fans.
Many House members described what loyalty to Illinois’ oldest professional baseball club meant to themselves, their families, and their neighbors. Prior to last fall, the last time the Cubs won the World Series was in 1908. This meant that no Cubs World Series winning game had ever before been broadcast on radio or television. The Cubs defeated the Cleveland Indians in a thrilling seven-game World Series, with the final game (November 2, 2016) going into extra innings before the Cubs won with a score of 8-7.
Criminal Law – Hate Crimes Initiative
Governor Rauner announces new initiative to crack down on hate crimes. The initiative, announced this week by Governor Bruce Rauner, responds to an epidemic of hate crimes reported recently by Jewish community centers, synagogues, schools, cemeteries, and other places of Jewish identity throughout the United States. Hate crimes include telephoned bomb threats, vandalism, and graffiti.
The proposal includes tougher penalties for crimes committed against churches and religious centers if they are charged as hate crimes by law enforcement. The Governor also pledged that completion of community service and an education program about the Holocaust and genocide will be part of the required file on a prisoner before the prisoner can be considered for his pardon or parole from the Illinois Parole Board for an Illinois hate crime against Jews. The Governor also called for expanding the State’s current educational mandate that school districts implement anti-hate education in schools.
Economy – Science/Technology Startups
Illinois Science and Technology Coalition report record number of university-supported startups. In a report released on Wednesday, March 8, the Coalition found that 804 entrepreneurial technology startups have been launched with help from the Illinois Coalition public and private institutions of higher education during the past five academic years (from summer 2011 through summer 2016). Well more than half of these firms (497 of 804) remained active as of 2016 with headquarters operations in Illinois.
Illinois scientists and engineers did not concentrate on any one industry in this innovative activity. Firms that reported their focuses to the Coalition said that they were working on innovations in “biomedical and healthcare,” software, “apps and information technology,” finance and business services, and “agricultural and food technology”, with no single industrial area the focus of more than 17% of the whole. All of these fields are areas that have been designated as potential hubs of Chicago-area entrepreneurial activity.
Startup activity appears to be accelerating in Illinois. The full report shows that 285 qualifying startups were launched by entrepreneurs affiliated with the Coalition in the 2015-16 academic year, up from 158 such startups in 2013-14 and 146 in 2014-15. The Coalition is a consortium of Illinois public and private universities, and the venture-capital wing of the private sector.
Higher Education – Governors State University
Chicago-area university cuts 22 degree programs. The elimination of the academic programs was Governors State’s response to the ongoing Illinois budget crisis, which has sharply reduced State funding to institutions of higher education. While some funding streams continue for specific earmarked programs, the flow of general funds money to State university operating budgets has completely dried up in the absence of appropriations. The “stopgap” State budget expired on December 31, 2016, ending the payment of State general funds to higher education. Previously, these general funds had supplemented the revenue these universities earned from student tuition and fees.
Governors State University is located in University Park, Illinois, in Will County on the southern edge of metropolitan Chicago. About 5,600 students enrolled in the university in fall 2016. In addition to eliminating programs, the university’s trustees approved a major tuition hike for newly enrolled students. Students entering Governors State for the first time will have to pay tuition bills for course hours that will equal $9,400 per year for a full-time student’s course load, up 15% from the current level of $8,160 per full-year course hours for an incoming student. The trustee decisions were reached at their meeting on Friday, March 3.
Jobs – United Airlines
WARN Act report for February 2017 shows major layoff at United Airlines. The Chicago-hub air carrier announced plans in February to eliminate 300 managerial positions at its downtown Chicago headquarters. The headquarters downsizing was the largest layoff reported to the State of Illinois as part of the WARN Act, the law that requires employers to provide their workers and the State with a minimum of 60 days’ advance notice in the cases of major Illinois layoffs.
Illinois’ second-largest layoff warning came from U.S. Smokeless Tobacco, which announced 246 moist-snuff worker layoffs at its Franklin Park plant. The layoffs had been expected, as the operating unit of tobacco giant Altria had announced plans in October 2016 to close the plant. U.S. Tobacco is moving the production of its “Skoal” and “Copenhagen” tinned tobacco products to central Tennessee.
Sizable layoffs were once again posted in the retail sector, with Sears Holdings reducing its headquarters staff by 120 WARN-eligible positions (130 total layoffs) at their Hoffman Estates headquarters.
O’Hare Airport – New Flights
American Airlines, United Airlines announce new flights at O’Hare. Fourteen new North American cities will be served by the new spread of flights from O’Hare International Airport to destinations such as Boise, Idaho and Colorado Springs, Colorado. The expanded flight offerings from O’Hare’s two hub airlines signal the continued implementation of the airport’s multi-year expansion program. The realignment of O’Hare’s runways, from a pinwheel of directions to a predominant orientation that runs east-and-west, has made it possible to add more flights and departure gate slots within the existing terminal footprint. Experts say that Chicago’s status as an airport hub city is a key element of the city’s ability to create jobs and enjoy future economic growth.
Women’s History Month
Rep. Lottie Holman O’Neill, first woman elected to Illinois House. One hundred years ago in 1917, Illinois native Lottie Holman O’Neill was working with her fellow women to expand the American right to vote. In the 1910s Illinois women, unlike women in many neighboring U.S. states, had already won a partial right to vote. They could cast ballots for President and Congress, and for questions in some local elections. O’Neill and her allies demanded that this be expanded to cover voting for all the candidates on Illinois ballots.
On the home front during World War I, women across America demonstrated their right to vote in countless ways. The Nineteenth Amendment was ratified in 1920, and Illinois women joined the nationwide League of Women Voters to educate themselves on their new responsibilities of citizenship. As a League leader, O’Neill herself ran for and won a seat in the Illinois House in 1922 as a member of the Republican Party. Her rural, multicounty House district, centering on DuPage County, was what is now a large swathe of residential suburbs containing more than two million Illinoisans. She was the first woman to serve in the Illinois House and in the Illinois General Assembly. After forty years of service to her fellow Illinoisans, O’Neill retired as a state senator in 1963 and died in 1967. Her colleagues honored her in 1976 by having a sculptor mold a statue of her. Her image stands today on the second floor of the Illinois State Capitol rotunda.
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