March 23, 2015

In This Issue:
Ø Many Believe FY2015 Shortfall Solution at Hand
Ø  Bills Pass Out of Committees as Deadline Approaches
Ø  Discussion Begins on a Municipal Bankruptcy Law
Ø  Lobby Days Continue
Ø  New Effort to Reduce “Fair Share”
Ø  State Board of Education Discusses School Finances

Many Believe FY2015 Shortfall Solution at Hand       

       Negotiations to fill this year’s budget hole which have been ongoing since January could be completed this week. The budgets for a number of programs run out of money on April 1 and the legislature goes on spring break Thursday until mid-April. No legislator wants to be home to face families losing childcare, court reporters being furloughed, or prison guards leaving their posts.
       The FY2015 budget—like many before it-- was intentionally built upon insufficient revenue. The majority party plan appeared to be borrowing and preventing the income tax from dropping as it was scheduled to do in January. With Governor Rauner winning the election, those plans were scuttled. The discussion since then has been to use balances in a number of designated funds to fill the $1.6 billion hole.
       Three of the four legislative leaders and Governor appear to have reached an agreement so the pressure will be on Senate Democrats to jump on board by Thursday. The chief judge in each circuit was to have developed an emergency operations plan by last Friday to keep the courts functioning even if a supplemental appropriation is not made for court reporters. Courts with electronic recording systems will be able to operate and others may rearrange testimony to occur on days when reporters are not furloughed. No plans have been announced for other programs.

Bills Pass Out of Committees as Deadline Approaches
       Legislators have until Friday to present their bills to the various House committees and seek approval to move them to the House floor for further amendments and action. Here are a few of the dozens of bills that passed out of committee last week:

HB 3345 amends the minimum wage law to increase the wage of $8.25 per hour to $9 an hour effective July 1, 2015, and then to $10 an hour in 2016. To help small businesses compensate for the increased workforce costs, the bill also provides a small business temporary tax cut. No help is being offered to non-profit, university, or local government organizations already struggling to balance their budgets.
       Governor Rauner has indicated a willingness to raise the minimum wage if it is tied to comprehensive reform of business laws including lawsuits, workers’ compensation, and local worker freedom. A similar bill, SB11, has been overwhelmingly approved by the Senate.
HB3110 captures sales tax on airline fuel at the point of delivery to the airplane and ends purchases from satellite sales offices in outlying municipalities like Sycamore which avoid additional Chicago and Regional Transportation Authority (RTA) taxes. The use of satellite sales offices is being litigated so this bill is seen as subversion of a negative court ruling. The sponsor estimates that in 2013 the RTA, Chicago, and Cook County lost $52.7 million in aviation fuel taxes. This is another example of the high cost of doing business in Illinois and why companies are finding ways to take their business and jobs elsewhere.
HB3824 ends the Illinois income tax credit (deduction) for paying residential real property taxes and provides an annual $500 property tax refund for each parcel of qualified property. The measure will collect millions of dollars in additional income taxes for the state since the credit that property taxpayers received is much larger than the proposed refund.
HB1376 requires that all sales of homes include a report and video inspection of the sewer line by a licensed plumber. While homeowners already have to disclose any known problems to the buyer, this bill will add a minimum of $500 to the sale. There is no evidence that problems with sewer lines are a large problem or warrant a state-wide solution.
HB3428 requires colleges and public universities to give college credit to high school students for advanced placement courses when the student receives a score of 3 or higher on the College Board Advanced Placement test. Advocates argued this assures the student will receive college credit if they do well on the test and will reduce their cost of a college education.
HB3528 allows universities to give scholarships, grants, or other financial assistance to students who are not permanent residents or citizens of the U.S. This will expand the pool of candidates for already insufficient financial aid to reduce the cost of higher education. It also will benefit undocumented students who came to the U.S. as children and want to gain the skills necessary for more productive lives.

Discussion Begins on a Municipal Bankruptcy Law
        As fiscal pressures grow on Illinois local governments, local officials, residents and lenders are becoming more aggressive in looking for ways to reorganize the debt obligations. A hearing was held last week on a bill--HB 298--that would amend the Municipal Code to allow cities, towns, and villages to file petitions and exercise powers pursuant to applicable federal bankruptcy law.
       Municipalities in other regions of the country, such as Central Falls, Rhode Island and Detroit, Michigan, have declared bankruptcy through the laws of their states. Detroit was used as the main example of what can, and what cannot, happen under a Chapter 9 filing and witnesses included lawyers who represented Detroit in that case.
       Proponents tried to alleviate fears about the bill and dispel any misconceptions about Chapter 9 filings. Testimony stressed the high benchmark for a bankruptcy filing to be accepted and the possible impact on the municipality itself and the state as a whole.

Lobby Days Continue
       A number of groups continue to hold meetings in Springfield and then members visit the capitol to share information about their programs, press for funding, or discuss legislation. Here you see firefighters from DeKalb and Sycamore who received a round of applause from fellow Representatives for their public service.

       Middle and high school students were on hand to demonstrate some of the work they are doing in Career and Technical Education classes. Teachers made clear there are many good careers available that don’t require a four-year college degree. Pork and beef producers came to Springfield last week to share samples of their products and discuss state regulations that are pushing some farmers out of business.
       The Illinois Gun Owners Lobby Day (I-GOLD) attracted thousands of members to the capital last week to show support for their Second Amendment rights. They said Illinois residents continue to be subjected to time-consuming requirements when applying for concealed-carry permits.

       On March 16th, the online application for Firearm Owner Identification cards (FOID) went active. Paper applications will now no longer be accepted. FOID cards are required to purchase firearms or ammunition. The applications for FOID cards and conceal carry permits can be found on the Illinois State Police website and a call center has been established for those individuals who do not have computer access (217-782-7980).

New Effort to Reduce “Fair Share”        

       This past week the Governor ordered state departments under his control to stop withholding compulsory union payments from nonunion employee paychecks until the issue can be further adjudicated. An earlier Executive Order over such payments was determined to be illegal by the Attorney General and was therefore ignored by the Comptroller.
      Current state practice has required departments to withhold an amount from all employees for contributions to unions that represent that department. These monies are then paid to the unions for what is called “fair share” payments to be prepared to represent the nonmembers in labor-management disputes. Unions called the Governor’s moves non-contractual and unauthorized.

State Board of Education Discusses School Finance
       The State Board of Education will be meeting Wednesday to discuss the financial condition of schools and legislation to change the way education is funded in Illinois. You may listen to the discussion over a link provided on the board’s website.
       There will be an overview of General State Aid just before the 10:30 meeting. Part of the board meeting will be devoted to discussion of SB1 funding reform and the board will be asked to approve the financial profile of school districts. Overall, districts’ financial profile scores are shifting toward the mid-range of Financial Review and Financial Early Warning, while the number of districts that are deficit spending continues to increase.
       This is the second week of the performance-based assessment testing window and various schools across the state will be administering the new Partnership for Assessment of Readiness for College and Careers (PARCC). To date approximately 3.9 million tests have been completed by students across the country and 690,000 of those here in Illinois. It is obvious that students taking the test on paper rather than on computer, especially in the lower grades, have less test-taking stress and are believed to be giving a more accurate assessment of their knowledge and writing. The PARCC test needs considerable reworking before next year.

I look forward to hosting a group of clients from Opportunity House in Sycamore this week on their first trip to the capitol. Every citizen should visit Springfield to see the legislature in action and the Lincoln Presidential Museum. I hope you have a great week and, as always, feel welcome to contact Jesse in my Sycamore office or Shelly in my Springfield office if we can be of assistance.


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