Rep. Greg Harris • 13th District
Springfield Update • October 28, 2011
Veto Session 2011, Week 1
There were a number of major actions taken this week, but an even larger number of important actions remaining for the second week of the Veto Session. Here are a list of the major actions from Week 1 and where I stood on them, and then a list of coming actions and some comments on their implications.
SB1652, the “Smart Grid” bill for ComEd and Ameren
This legislation was passed by both Chambers, despite the veto of the Governor. I voted ‘No.’ I believe that it was not good policy to give the electric utilities a 10 year period of guaranteed rate increases without regulatory review. Not only will there be increases for rates of return for investment in the ‘smart grid’ technology, I believe there may also be potential for additional unanticipated increases based on the fluctuations in either the financial markets or electric supply markets.
You can read the main bill here: http://ilga.gov/legislation/fulltext.asp?DocName=09700SB1652enr&GA=97&SessionId=84&DocTypeId=SB&LegID=57620&DocNum=1652&GAID=11&Session=
The ‘trailer bill’ can be seen here:
Public Employee Pensions
There have been several high profile reports of abuses in various public employee pension programs. These are not only harmful to the funds and unfair to the vast majority of police, fire teachers and public servants who have always played by the rules; they also become “poster children” that obscure the more major underlying issues with the funds.
Leader Tom Cross introduced a bill to close the loopholes which led to the most egregious abuses. I voted to support these loophole closings which were wrong and hurt the public and the rank-and-file. Leader Cross also committed to amendments within this legislation to address the specific concerns of police and fire. You can see the bill here:
Still potentially able to be called in week 2, are SB512 which would create a “three tiered” pension system for current government workers and dramatically changes the employee contribution for current employees or move them into defined contribution plans. This is the legislation being extolled by the Civic Committee of the City Club of Chicago. I oppose this legislation. You can read it here:
http://ilga.gov/legislation/97/SB/PDF/09700SB0512ham001.pdf
Leader Cross also has another piece of legislation which would change the composition of the governing boards of certain pension funds. I plan to vote ‘No’ on this should it be called. You can read it here:
Health Insurance Exchange
By next year, Illinois (and all states) must adopt appropriate legislation to create Health Insurance Exchanges in order to receive Federal funding and to avoid defaulting control over our state plans to the Federal government.
I have served as one of the members of the bipartisan commission of the House and Senate to craft the Illinois proposal. We held numerous public hearings in Chicago and Springfield, took hours of public testimony and received hundreds of pages of comment as well as studies and reports. All of the testimony and documents which we received may be seen here, as well as the Report of our findings:
http://ilga.gov/commission/cgfa2006/Resource.aspx?id=1227
Based on our findings, legislation has been filed to conform to what is required by Federal law, including a governance structure, authority for a broad based assessment to fund the operations of the exchange, legislative oversight and ethics language. Since there are still many regulations to be issued by the Federal government yet to come, because of the pending challenge to the individual mandate that will be heard in the U.S. Supreme Court next year, and because of the pending actions of the Congressional “super committee” that could affect financing of key portions of the Exchange, we felt it best to take only the required first steps now, and then make other critical decisions at appropriate times in the future, when more facts are revealed.
The introduced language (which you will see below) seems to me to be a fair compilation of the views and facts which were presented to us. It will likely undergo amendment going forward. You will note should you visit our website, that I am the only Member who submitted a written proposal for the Exchange governance and operation. My original proposal included representation of the insurance industry on the governing board. I may pursue amending the proposed legislation to do that. There will also be amendments to correct a few drafting errors related to parliamentary procedure and legislative oversight.
Cook County Property Tax Judgments and Order of Sales
The system for property tax assessment in Cook County differs from the rest of the State. In the 96th General Assembly, there was a change made to the Property Tax Act which created a ‘fix’ for other counties regarding Judgments and Orders of Sale, but a ‘glitch’ for property owners in the County of Cook. This glitch would drastically reduce the amount of time that a property owner had to pay their second installment before the county would be required to ask the circuit court for approval to sell them. I have introduced a 3-year fix for this problem while a comprehensive solution for all counties is worked on. This is scheduled to be heard in the Revenue and Finance Committee on Nov.7. It can be seen here:
State Budget
The financial condition of the state shows slow improvement. I hasten to point out it is still not good, and as I have said before, the problems it took decades to create will take several years to completely resolve, especially in a difficult economy.
In the first quarter of this fiscal year, personal income taxes came in slightly lower ($86 million) than expected, while corporate income tax, sales taxes and other taxes came in slightly higher than expected ($149 million, $209 million, and $90 million, respectively). It is a little early to say if these numbers represent trends or just timing issues. However, our Federal Sources declined $751 million. This can be attributed to accelerated payment of Medicaid bills prior to the end of FY2011 to get enhanced Federal match, and to the fact that the Appropriations-Human Services budget pushed significant FY12 payment cycle liability into FY13.
In FY12 we will live largely live within our means for the first time in years (excepting the Medicaid payment cycle extension which will haunt us in FY13, more on that below). We also began paying down the backlog of unpaid bills which the State owes, although at the end of this fiscal year we are still expecting a backlog of $2.4 billion in non-Medicaid bills, along with about another $1.5 billion in employee group health, MAP and corporate tax refund liabilities.
The Governor has proposed a dizzying array of actions related to this year’s budget, including cancelling pay raises under the AFSCME contract, vetoes of hospital, MCAT transportation and regional superintendent funding, and facility closures. All of these remain in a state of flux and legal challenges. The Governor’s Budget Director has also told us that there remains a potential “Phase 3” of unbelievably draconian budget actions yet to come. Even as Vice Chairman of an Appropriations committee, it is hard for me to track the status of these proposals, what their true financial and human impact would be, how funds would be utilized if any of these actions were allowed to take place, and whether any will take place at all. These are critical decisions that will be made in the second week of the Veto Session.
For next year, there are a few major cost pressures to keep your eyes on:
1) Reductions in debt service of $46 million
2) Increases in pension costs of $420 million
3) Costs associated with new collective bargaining agreements
4) Potential for $5 billion in Medicaid liability. There are a number of drivers of Medicaid costs, including the natural growth in eligibility due to an aging baby-boomer population, and increased eligibility and utilization due to the poor economy. This is a major issue which will have to be addressed. Among the components which will need to be examined and considered are 1) Federal share of cost, 2) Eligibility (including waste, fraud, abuse, verification and eligibility criteria) and 3) Provider costs (including rate reform, care management tools, improved outcomes, utilization review, etc.).
Going forward, addressing the major cost drivers and realizing savings in these categories will be among the critical public policy decisions we will face. As always, I welcome your comments at greg@gregharris.org, or 773 348 3434 in Chicago, or 217 782 3835 in Springfield.