Government Strategy Associates 4023 Terramere Avenue Arlington Heights, Illinois 60004

Government Strategy Associates
4023 Terramere Avenue
Arlington Heights, Illinois 60004

M E M O R A N D U M


To:
Laurie Dougherty
Gerry Bever

From:
Terry Steczo
Maureen Mulhall

Re: Legislative Report

Date: June 30, 2010


Budget D-Day - July 1
Tomorrow, July 1, is the date that the state fiscal year begins. It is also the date that Gov. Quinn will announce the breadth and depth of cuts and changes to the budget that will be the state’s spending roadmap for the next twelve months. When the legislature left Springfield at the end of May they threw an unbalanced budget document in the governor’s lap and, for the second straight year, left him to make the final spending decisions. The following items also pertain to, in essence, legislative abdication of budget making authority to the governor.

Rumors over the last month have abounded as to where cuts will be made and which programs will be impacted. Human services providers, education interests, and others to whom the state owes money are bracing for the worst as the size of the state deficit has been projected at $13 billion, approximately one-half of state generated revenues that are projected at $26 billion.

Thursday’s announcement will help determine whether that spending roadmap will help point the way to fiscal solvency or a fiscal cliff. Pray for the former but expect the latter.


No Will To Borrow
When the legislature departed Springfield a month ago the session ended in a whimper with no solution to the problem of making the required $3.7 billion pension payment. As you will recall, the House approved borrowing that amount but the Senate never considered the matter, indicating that they were one to three votes short of having the required number of votes. Since approving the measure requires a 60% majority (36 votes) and since 33-35 Democrats have committed, the additional votes would have to come from the ranks of Republicans. In the past month the governor and others have been dredging the harbor looking for those three souls … but, alas, they so far have yet to be found.

Will Dems be able to find one to three (wayward or courageous … insert your word preference based on your philosophy) GOP members to provide those needed votes? Very unlikely. Will the Senate be called back into session to approve the borrowing without them? Not a chance. What if the governor decided to show his mettle and call the General Assembly back into session anyway? It would be a huge risk that could call into question his leadership skills just in front of an election … especially since those Republican votes simply are not going to materialize.

The pension payment controversy is the one big issue that the GOP might feels plays into their favor as the gubernatorial races chugs toward November so that puts some pressure on their legislative members to stay put. Moreover, when two House Republicans jumped and provided the margin of victory for borrowing in the House they were vilified by their caucus members and demoted from positions of legislative leadership.

So, it appears that the state will not have the requisite funding available when pension payments are due on July 15 and September 15. The result will be pension systems being forced to sell assets to make the payments, thereby costing them billions of dollars over the long term. The cost to borrow would be approximately $1 billion in interest payments. While more drastic action to curb the state’s fiscal problems would certainly be in order, the borrowing plan can certainly be looked upon as the lesser of two evils … if it were not an election year and if there was not so much at stake in the upcoming November elections.


“No We Can’t”
Looking back at the 2010 legislative session and the lack of fortitude in fashioning a solution to the budget crisis, one of the most telling moments occurred on May 7, the date that had originally been designated as the final adjournment date. During that afternoon Speaker Michael Madigan first offered the plan to borrow to cover the state pension payments. The bill failed (although later in the month it did pass the House but is languishing in the Senate). Stuck with a $4 billion budget hole with no revenue to fill it, he then offered an amendment to Senate Bill 1211 that offered the only other practical solution … reductions. Or, to use another word, cutting … a word that makes conservatives cheer and salute and liberals sob and quake.

So, lacking any other budget balancing alternatives the amendment was approved, right? Wrong. The amendment was defeated 15-99-2. And it was the conservative members of the House that were those 15? Wrong again. The irony of the story is that the 15 House members who voted “yes” were Democrats. The number of Republicans that voted to cut? Zero. As the day of May 7 ended the Speaker announced that he would leave SB 1211 on the order of 2nd Reading so in the three weeks that the legislature would be in recess any House member could file an amendment to cut anything they thought was excess. How many amendments were filed during that time span? One … and it was not filed by anyone who purports to be a budget cutter or fiscal hawk.

The purpose of relating the above is not to suggest any partisanship but only to show that when you push the partisan rhetoric aside no legislator, regardless of party or political philosophy, wants to raise taxes, borrow or cut programs. They can argue all they want and take any positions that they want but when “push comes to shove” there are few, if any, that would qualify to be considered for a mention in “Profiles in Courage”. Secondly, what they do prefer is to have someone else make the tough decisions. So, again this year, they passed the buck to the governor who has the responsibility of making the numbers work, and making taxpayers happy or angry. The relevancy of this item is directly tied to the July 1 beginning of the state fiscal year and the governor’s June 30 announcement of what the state will and won’t be able to afford in FY 2011.


Lobbyist Registration Amendments
All registered state lobbyist and entities have been waiting patiently for the governor to put his signature on SB 1526, the long awaited and debated changes to the Lobbyist Registration and Reporting Act that clarified previous amendments to the Act approved in 2009.

Until January 1 of this year the registration fee was $150 for 501(c)(3) organizations and $350 for everyone else. The new law raised the fee to $1,000 for everyone, and resulted in a lawsuit alleging a violation of free speech. The argument focused on using funds beyond those needed to administer the program for general revenue fund purposes. The courts agreed and negotiations began to determine what the appropriate fee should be. In early May the legislature approved SB 1526 that established the new fee at $300 for all individuals and entities.

The new legislation also provides new lobbing expenditure reporting requirements. For the two, six month periods of 2010 expenditure reports must be filed by July 15 and January 15, 2011. Beginning in January, 2011 expenditure reports must be filed every two weeks within five business days of the close of each two-week period.

The governor received the legislation from the General Assembly on June 4. He has until August 3 to Act but there are some who look at the delay in quick action as a sign of possible disapproval of all or a portion of the final product. If he amends the bill then the soonest that it can take effect is sometime in December, leaving the entire registration process in turmoil and no funds for administration for months. Others suggest that he’s waiting until the beginning of the fiscal year so that all fees paid would be captured in FY 2011. Hopefully, it’s the latter rather than the former opinion that will prevail.


Legislation of Interest
The following is a sampling of bills that have been introduced this legislative session and that are being monitored and the current status. Only bills that remain alive are listed.

SB 580 – DuPage Water Commission. (Current Status – Governor’s Desk)

SB 3070 - Provides that if a carcinogenic volatile organic compound is detected in the finished water of a community water system at a certain level, then the owner or operator of that system must submit a response plan that meets certain requirements to the Illinois Environmental Protection Agency. Requires the Agency to approve, and the owner or operator to implement, the plan. Upon completion of the plan, requires the owner or operator to submit a response completion report to the Agency. Provides that any action taken by the Agency to disapprove or modify a plan or report may be appealed to the Illinois Pollution Control Board. (Current Status – Governor’s Desk)