Pritchard's Perspective for January 30th

Observations and comments about state government by State Representative Robert W. Pritchard.
District Office 815-748-3494 or E-Mail to bob@pritchardstaterep.com

January 30th, 2017

In This Issue:

Ø  An Interesting State of Affairs
Ø  Senate Attempts to Break Gridlock
Ø  Illinois Makes Progress
Ø  Court May Force a Budget
Ø  Revenue Discussion Turns to Service Taxes
Ø  Standing Room Only

An Interesting State of Affairs
Last week was full of action and intrigue in Springfield.  If you aren’t watching events closely, you might miss the linkages and strategy of the Governor and Speaker Madigan to influence the policies of our state. 
The week began with Senate leaders rolling out a “grand bargain” for a budget and reforms.  Such action is what the Governor has been requesting over the past two years.
Then there was the Governor’s mid-week State of the State address where he outlined efforts to keep government functioning without a budget, and progress on improving government efficiencies, increasing state support for education and implementing criminal reforms.  He praised the bipartisan Senate action and said legislators—from both chambers—had a moral obligation to keep working together for a budget solution. 
Finally, Attorney General Madigan played a long awaited “trump card” (no, not Donald Trump) of asking a St. Clair County court to end worker pay without an appropriation.  If the court lifts its injunction, state employees will likely stop working which creates an immediate crisis for the legislature to pass an appropriation without funding or reforms.  Speaker Madigan would win the policy battle.
Let’s look at the individual events.

Senate Attempts to Break Gridlock
Frustrated with the lack of a state budget and negotiations over the Governor’s ideas for growing the economy, the Senate President and Minority Leader crafted a multi-faceted legislative solution that was unveiled about ten days ago.  Their plan was to call for hearings and vote early last week before opposition or interference from Speaker Madigan could derail the effort. 
The proposal, some call a grand bargain, includes 13 bills linked together so they all must pass or none can take effect.  The package includes increased state revenue and minimum wage, reforms in school funding and injured worker compensation, and decreases in pension obligations, state mandates and property taxes.  As the week progressed, Senators offered many ideas for amendments and refused to vote on the package.
With state spending exceeding revenue by roughly $5 billion and important programs costing another $2.9 billion go unfunded, the package included several revenue increases.  Initially income taxes were proposed to increase to 4.95 percent, a tax on sugary drinks would be created and five new casinos and a total of 19,500 gaming positions would be added.
The package included a call for issuing general obligation bonds to pay part of the $11 billion in unpaid bills.  While the interest rate for bonds would be lower than the 12 percent currently paid on the unpaid bills, the state would still have to find additional money to retire the bonds.
Another of the bills proposed a supplemental appropriation totaling $4.5 billion to fund higher education, some human services, agency operations and lots of member pet projects.  In all, the Governor’s Office of Management and Budget calculated spending in the package would exceed state revenue by over $4 billion. 
Many senators are pushing for amendments that would drastically change the provisions and cost of the grand bargain.  Go to my website (here) for a listing of the bills and brief content as introduced.  Like the Governor, I hope continued discussions will yield compromise for a balance budget and polices that will help our state grow jobs and economic activity.  If successful, there will be much needed pressure on the House to consider the legislation.

Illinois Makes Progress
In his annual State of the State address to the General Assembly on Wednesday, Governor Rauner reviewed progress on his key goals to return Illinois to a state of growth and opportunity.  He admitted frustration over the slow progress in convincing legislators that we can’t just tax our way out of our fiscal problems but must make Illinois more inviting to job creators.
The Governor said nothing is more important for the future of the state than educating young people, preparing them for good careers and capturing their ideas for new innovations.  He noted the unprecedented state investment in K-12 education over the past two years.  He reviewed efforts to target state resources to the students most in need by his Cabinet on Children and Youth, and School Funding Reform Commission. 
Many recommendations of the Commission on Criminal Justice Reform have been implemented that are helping non-violent ex-offenders get on their feet, lowering juvenile prison populations and addressing behavioral and mental health issues.  
Efforts to make government more efficient and citizen focused have reduced red tape, saved millions of dollars, cut processing time and focused efforts on business attraction.  Drawing on the wisdom and experience of top business executives, the state is recruiting employers like Amazon and creating thousands of new jobs.
The Governor had praise for the Senate bipartisan efforts to craft a comprehensive solution to our budget and many other issues.  I am hopeful the Senate’s example will energize the House to action.  Making compromises is hard but citizens keep telling me that they want a state budget now and the economy to move forward again.
Representative Sosnowski and Senator Syverson join me in listening to the speech


Court May Force a Budget
I have been saying for years that there would have to be a major interruption in state services for enough citizens to demand an end to the budget gridlock.  Attorney General Madigan may have just filed a court petition to do that.  The AG asked a St. Clair County Court to dissolve its injunction that has allowed the roughly 63,000 state workers to be paid without an appropriation.  No pay, no workers, angry citizens; you get the picture.
The State Supreme Court ruled last March in another case that union workers could not get a promised pay increase without a state appropriation.  Now, a year later and just as the Senate looks like it could be headed for a budget compromise, the AG asks the lower court to end pay for state workers.  If the St. Clair County judge allows the AG to enter as a party defendant, it would seem the court has little discretion but to lift its injunction. 
As workers walk off the job for lack of pay, public pressure would likely intensify on the legislature to pass a budget and for the Governor to sign it quickly so services could resume.  Speaker Madigan would get his budget with none of the Governor’s reforms.
Sound too devious to be true?  Not in Illinois.

Revenue Discussion Turns to Service Taxes
As legislators look for additional revenue, the Commission on Government Forecasting and Accountability (COGFA) examined the potential revenue that could be collected from taxing a myriad of services.  In a report released earlier this month, COGFA found that Illinois taxes 17 of the 168 different services that are identified by the Federation of Tax Administrators.
Comparing Illinois with surrounding state, the agency found Iowa taxes 98 services, Wisconsin 31, Indiana 25, Kentucky 23 and Missouri 28 services.  If Illinois taxed the same services as Iowa, revenue from the taxes when fully implemented would increase an additional $1.2 billion per year.
The majority of services taxed in Illinois currently come from public utilities.  Other taxes include car and hotel rentals, prepaid calling cards, photo processing, canned software, and coin-operated amusement machines. 
The report lists revenues from service taxes in other states.  The biggest revenue generators in Iowa were from barber and beauty shops, cable TV, golf country clubs, investment counseling, storage, and repairs.  You can find the Service Tax 2017 Update (here).

Standing Room at Town Hall
I want to apologize that not everyone found seats at the Town Hall event this past weekend in DeKalb.  Interest in expressing views and asking questions exceeded my expectations and meeting room capacity.  Thanks to all who took the time to attend and voice their concerns.
If you didn’t get to make your comments Saturday, please contact my office.  Citizen feedback and ideas about state issues and legislation help me represent this area and work to improve Illinois. 
I will be holding more events in the months ahead…with more seating.  Watch for a meeting about education in late February.


Bob

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