Government Strategy Associates
4023 Terramere Avenue
Arlington Heights, Illinois 60004
MEMORANDUM
To:
Peter Weber
Executive Director, ISVMA
From:
Terry Steczo
Maureen Mulhall
Re:
Legislative Report
Date:
April 30, 2013
Chugging Toward A Budget
In the next 31 days the General Assembly will have a plethora of heavyweight issues on the table
to resolve, the biggest of which is the operating budget for the state of Illinois for the fiscal year
beginning July 1. Notwithstanding all other items, creating a spending plan each year for the
state of Illinois is their first priority. During the last ten years that hasn’t easy and even with an
economy on the rebound the fiscal hole is so deep, and the debt looks so insurmountable, that
legislators must see stars when they envision the enormity of it all.
Even though state unemployment rates seem to be stubbornly high, the Commission on
Government and Fiscal Accountability (COGFA), an arm of the legislature, estimated last month
that new revenues available to the state for FY 2013, the current fiscal year, would be a smidgen
above $700 million. Looking ahead to FY 2014, COGFA estimates another $800 million in new
revenue to be generated for state coffers. In a normal time the thought of an additional $700 or
$800 million to spread around for program creation and expansion would be hailed. But, with a
backlog of $8 billion or so outstanding, and with the prospect of another $7.5 billion evaporating
when the temporary income tax expires in January, 2015, the additional resources are welcome
but as a fix is equivalent to treating a bursting appendix with aspirin.
During the past two years the legislature has been very deliberate in creating spending plans.
They pretty much have taken the job away from the Governor and have hunkered down and
spent hours developing budgets that balance the need to cut debt and pay bills with the need to
fund critical state services. Through cuts, program modifications, and attempts to implement
other efficiencies the General Assembly has trimmed the deficit from $13 billion to $8 billion,
but there’s still a long, long way to go.
In addition to the above, there is a heightened expectation that the legislature will send the
Governor a pension reform plan by the end of May, and along with that a reduction in state
pension contributions. Unfortunately, in order to receive any revenue benefit from any pension
reform the courts are going to have to rule on the constitutionality of any plan first, so those
dollars won’t be available until then. Speculation is that any cost savings from pension reform
may not be fully realized until FY 2015 unless the Illinois Supreme Court takes the case
immediately, hears arguments quickly, and issues a ruling without much delay. Still, that could
take at least six months. So, don’t start spending these proceeds quite yet. And it the court throws
out the legislature’s plan? That could be a headache with no cure. But, there is a growing feeling
that the Illinois Supreme Court will approve whatever plan the General Assembly send them so
long as they feels it’s a good, fair attempt at resolving the problem. The justices read newspapers
too, and they are well aware of the fiscal strife that would result in turning away a “reasonable”
plan, especially since they’ll also be aware that whatever they get will be the best the legislature
can do.
May is always an interesting month in Springfield. This one could be a topper.
Magic Number: $98 billion
Fresh back from a two week hiatus, the General Assembly is back in session, beginning to crank
out the waft of bills that are now before the full chambers after having received committee
approval. During the next two weeks each legislative chamber will be like a bill passing
machine, approving one after another, sending them across the rotunda for future action.
Casual legislative observers are always mystified by the large number of bill that pass with
relatively little debate. What they aren’t aware of are the hours of meetings and discussions that
take place in order to take a piece of legislation then engenders opposition and/or controversy
and hammer out an agreement that all sides of an issue can live with, at least temporarily. Those
bills where such agreements are reached are those that move through the process smoothly, and
are responsible for the unanimous or near-unanimous votes that occur often with sparse debate.
Sometimes it takes only hours to reach agreements, some take weeks and months, while others
take years. And the legislature has adapted to the process of negotiating. It allows legislative
floor time to be more efficient and, more importantly, it allows legislators to avoid having to vote
on controversial issues. The days when legislators battled it out on issue after issue on the
legislative floor is no longer and the negotiation room has become the main legislative
battlefield.
That’s not true for all issues, however. Two of the most contentious issues of the session,
pension reform and gun legislation, may be partially settled in negotiations, but there have and
will be many floor test votes taken in order to see how far a consensus can develop. Pension
reform, in particular, has been negotiated for the past two years with no substantial progress and
with the fiscal hole getting deeper and deeper. The camel’s back is almost broken and legislators
know that this us their last chance to try to keep the walls from crashing in on them. Their
mission? Save the state’s pension systems $98+ billion dollars over the next 30 years.
So how did we ever get to this point in the first place? There’s enough blame to go around, for
sure. For decades prior to 1995 the legislature continually underfunded the five state pension
systems, so the problem is not new, it’s only been exacerbated over the last ten years. In 1994 the
General Assembly and Governor Edgar created a 40 year schedule that was to begin in 1995 and
would fund the state pension systems at 90% by 2045. That was the good news. The bad news
was that the schedule called for front loading higher payments in the early years. That schedule
was going to be difficult to meet under the best circumstances, but when the economy tanked and
resources diminished after the beginning of the new millennium, and questionable pension
funding decisions were made, meeting the schedule became “mission impossible”. Add to that
the sale of $10 billion in pension obligation notes it 2003, adding mightily not only to the
unfunded liability but adding interest payments as well, and you can see the tall order facing the
legislature. And, if that weren’t enough, add $8 billion in unpaid bills to the recipe and the result
is a very distasteful concoction whose solution will be very hard to swallow. But wait, there’s
even more … bond houses are no longer satisfied with a 90% funding level and want each
system funded at 100%. No matter which way they turn, legislators are faced with an almost
ever-mounting series of hurdles that make a solution even harder.
Assuming that whatever the General Assembly approves will be held constitutional by the courts
… not a “gimme” by any stretch of the imagination … the focus will be to make sure that there
will be enough savings or cash infusions to fully fund the system by 2043. Financial experts have
indicated that replacing the compounded 3% COLA with a more limited, non-compounded
COLA would save a huge amount of money and be the main cog of any solution. The plan
approved by the House a few weeks ago prevented retirees from taking COLAs until they
reached that age of 67; capped the salary on which any pension could be based at the social
security maximum (currently $113,000); and, among other things, limited COLAs to the first
$25,000 of annual pension payments. But, these alone do not completely resolve the unfunded
liability problem. More “reforms” will have to be added to the pile in order to get it to the
appropriate level. One item that hasn’t been discussed it redoing the 1995 schedule. The 40 year
plan established then was arbitrary, so why can’t the General Assembly consider any reform
legislation similar to a refinance and recalculate level payments and establish a new schedule?
Recalculating the schedule could help getting over the final hurdles as the pressure to find a
solution in the waning weeks of the session come closer. Yes, it would cost more in the long run,
but if a new schedule was fair and the payments were met, the immediate relief it could provide
to the other budget pressure might be well worth it.
The road to a successful pension reform bill will be made up of a number of paving blocks that,
when completed, provide a path to state pension and fiscal solvency. The next six weeks will tell
whether that road is smooth or laden with potholes.
Constitutional Roadmap Ahead?
Last May, the General Assembly approved and the Governor signed HB 1313, legislation that
creates a method by which state pension retirees would pay for their health care benefits based
on a the size of pension benefit received. Most legal experts feel that health care in not a
constitutionally protected benefit, but that didn’t stop four lawsuits from being filed the day after
the legislation was signed into law.
Recently, a Sangamon County judge concurred that the health benefit is not constitutionally
protected. Last Friday, the Illinois Supreme Court announced that they would hear the appeal
directly, bypassing the appellate stage. The Supreme Court’s decision will pave the way for a
quicker determination. Additionally, the Supreme Court may, in its decision in this case, provide
some guidance regarding what may or may not be constitutional regarding other factors that the
General Assembly may be weighing.
Article XIII, Section 5 of the Illinois Constitution states, “Membership in any pension or
retirement system of the State, any unit of local government or school district, or any agency or
instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which
shall not be diminished or impaired.” In the very near future the legislature may have some
roadmap from the court as to how to address this legal thicket in a meaningful, legal way.
The Good, The Bad, and Maybe The Ugly?
It's no secret that pension reform is the issues that overshadows all others as the General
Assembly heads into its final month. Now that the first major legislative deadlines have passed
(the 3rd Reading deadline for bills introduced in the first chamber) the legislature will focus on it
and a number of other important non-appropriations issues as the session begins to hit full stride
in May.
Rumor has it that the Senate Democrats may unveil their latest pension reform package as early
as this week. There is no word on how it differs from the proposal that was approved earlier with
the minimum of 30 party-line votes, or whether it contains elements from the plan offered by
Senator Daniel Biss that lost but received 23 bi-partisan votes. The word is that House
Democrats are also working on their own version of a pension reform plan. Again there is no
specificity at this point and there is no telling when it will be put forward (this week as well?),
but there seems to be every indication that is borrows heavily from the bi-partisan effort put
together by Rep. Elaine Nekritz and Rep. Tom Cross. These efforts certainly can be considered
good news, as both chambers seem to be sincerely focused on finally resolving this issue.
At the beginning of each legislative session hope springs eternal. But it’s not uncommon for
those hopes to be dashed upon the rocks as the General Assembly finds itself unable to reach a
common consensus on important issues. That happens often, and the inability to find common
ground on pension reform is a case in point. While all signs point to an extraordinary effort to
resolve the problem in 2013, news that there has been no coordination between the chambers as
they attempt to define acceptable reform provisions certainly enters the realm of potentially bad
news. There is no doubt that each chamber has a different philosophical take on what is
necessary for a constitutional resolution, but being at loggerheads and static does not inspire
confidence that a final solution will be achieved … and failure to do so will result in some pretty
ugly decisions having to be made that will impact the lives of many Illinoisans.
12%
At the beginning of every session legislators are filled with vim and vigor and are brimming with
ideas that they think of themselves, are given by others, or are responses to news items that they
feel warrant legislative attention. And every year, notwithstanding the thousands of bills
introduced, the average number of proposals that reach the Governor’s desk hovers at about
10%.
So, halfway through the legislative process how to those numbers look? Not too dissimilar. In
the Senate, for instance, there were a total of 2,579 bills introduced this session. How many
passed over to the House as of their 3rd Reading deadline last week? 329, or 12.65%. The House
numbers were similar. Of 3,624 introductions, 443, or 12.3% were approved. When you take into
consideration that some of the bills that passed from one chamber to the other were duplicates
and only one of those will be sent to the Governor, some others were shell bills that may or may
not be utilized for anything, and others may not fare was well in chamber number two, the final
result will probably be close to that 10% mark once again.
One reason for the small number of bills that pass is, simply, there is a finite amount of time that
each chamber has to devote to hearing bills. It might be a different story if the legislature was a
full-time body and devoted more time to discussing issues. But the Illinois Constitution embraces
the “citizen-legislator” and session dates and rules reflect that, and so do the number of proposals
that are able to receive legislative attention.
A second reason is that not every bill is in shape to become law on the date of introductions.
Some proposals are complex and need a wealth of conversation, debate and amendment before
they are ready for prime time. Legislators will often spend as much time as necessary to try to
find agreement among all issue stakeholders if an issue is important to them. When (or if) an
agreement occurs then that legislation is able to take its place among the lucky 10%.
Thirdly, legislators my introduce legislation solely at the request of a constituent, or to point out
a state or local problem in order to create discussion or get the attention of a state agency.
Legislators also have an option of extending deadlines for their proposals to give them a bit more
time to try to put together compromise language. Some of these bills will ultimately make it
through the process in the next few weeks, but most will not.
There are some that look at the potential of 600-700 new laws each year and say it’s way too
much. Others think that the legislature should do more. The reality is that with the time that they
have available to them and the difficult of moving legislation through the process, the numerical
outcome is probably just right.
Spring Cleaning?
Every so often in legislative debates an opponent to a measure that might be deemed
inconsequential will tell colleagues that the Illinois Compiled Statutes used to be comprised of
three volumes. Now, that number has tripled.
There’s no doubt that the 700 bills that become law each year have caused the statute books to
expand over the decades. But, it’s also a fact that over those same decades the statutes have
become the repository for laws that conflict, laws that become void because of constitutional
problems and laws that are simply duplicative. Each session the Legislative Reference Bureau
creates a “revisory” that corrects some references and small, non-substantive conflicts but does
not attempt to make any substantive statutory changes.
Now the legislature is preparing to go one step further. Senate Bill 1415 creates the Board of
Legislative Repealers Act. This board would determine instances in which State laws and
regulations are unreasonable, unduly burdensome, duplicative, onerous, in conflict, or
unconstitutional, to create a system for receiving public comments on those issues. It would also
recommend changes in the law that it deems necessary to modify or eliminate antiquated and
inequitable rules of law and to bring the law of the State into harmony with modern conditions.
To accomplish its objective, the board would be required to set an investigative schedule and
adopt rules establishing the criteria to be used to determine whether a State law, regulation, or
other governing instrument is unreasonable, unduly burdensome, duplicative, or onerous, or
conflicts with another law, regulation, or governing instrument.
Senate Bill 1415 was approved by the Senate last week, surprisingly, by a vote of 55-0-0.
Obviously, not much opposition was raised. But a major question regarding the identification
process needs to be answered as the legislation moves forward. Identifying state law that is
duplicative, in conflict or unconstitutional should be easy and non-controversial. However,
determining laws and regulations that are unreasonable, unduly burdensome, and onerous can be
extremely controversial and opinions can differ greatly depending in the eye of the beholder.
Meet “ABE”
In anticipation of the October 1, 2013 deadline to get its Health Care Benefits
Exchange/Marketplace component up and running, the state of Illinois decided on a name for the
portal that will be used to assist individuals to obtain health care insurance, as well as apply for
other state benefits. The Illinois portal will be called the “Application for Benefits Eligibility” or
“ABE”, and should be available on October 1 in preparation for the January 1, 2014 start of the
requirements of the Affordable Care Act.
“ABE” will be jointly operated by state and federal regulators. Insurers have until the end of
April to submit plans for consideration. All plans in the exchange must provide for essential
health benefits and must adhere to strict financial requirements.
Bonding Proposal Back In Play
Last week, Rep. Barbara Flynn Currie introduced an amendment to House Bill 374 that puts the
idea of helping pay state providers and vendors back at the discussion table. The amendment
provides $2.5 billion in bonding to be paid to a Human Resources Provider Fund and would
provide needed assistance to DHS, DCFS, HFS, IDPH and Department on Aging
vendors/providers who have borne the brunt of the state’s inability to pay bills. The amendment
was approved in the House Revenue & Finance Committee by a 6-4-0 vote.
Over the past few years there have been many failed attempts to increase bonding authority to
provide a break to beleaguered state providers/vendors. The first attempt to secure $8 billion in
new bonding authority for back payments failed, as did the second effort to secure $4 billion.
Now, proponents are hoping that a limited, scaled down version that targets those who have
really been devastated by the state’s inability to pay bills will be successful.
The Illinois Commission on Government Forecasting and Accountability (COGFA) reported this
month that over the last five years the state has paid over $256 million in late payment interest
under the State Prompt Payment Act, $83 million in the last fiscal year alone.
The close committee vote suggests that there is far from consensus on this issue. And, there is
also no way around the constitutional requirement that all new bonding authority requires a
three-fifths vote in the legislature. Proponents are certain that a majority of legislators will
support the proposal, but getting to the three-fifths level might be difficult, even with the larger
Democratic majorities in each chamber. Even though it’s back on the table, there are still long
odds on this one.
Practice Act Extension Moving Forward
Legislation to extend the Veterinary Medicine and Surgery Practice Act for ten years has been
approved unanimously by the House and now moves to the Senate where action will be taken in
committee within the next two weeks. Thus far, no changes in the language as introduced have
been offered or suggested.
As has been mentioned previously, the ISVMA worked closely with the Department of Financial
and Professional Regulation prior to introduction to update Practice Act procedures that were
incorporated in the introduced version of House Bill 2517. If any problems or unwanted
amendments are introduced ISVMA members will be notified immediately so that legislators can
be contacted.
Puppy Lemon Law Update
The Senate Executive Committee gave approval last week to a Puppy Lemon Law sponsored by
Sen. Dan Kotowski. Senate Bill 1639 impacts pet stores and provides for procedures for
remedies to consumers. The bill was originally assigned to the Senate Labor and Commerce
Committee, but after it appeared that the bill didn’t have the required support it was re-assigned
to the Senate Executive Committee and approved 8-5-1.
The ISVMA has taken a position against SB 1639 and registered in opposition at the Executive
Committee hearing. After much review and discussion the Board of Directors felt strongly that
the scope of the bill is too narrow and more time should be taken to have a more thorough
discussion of the desired need and impact. In 2009, the ISVMA offered its own version of a
Puppy Lemon Law, House Bill 3888, that was a work product of discussions between the
ISVMA and the Illinois Department of Agriculture. Our proposal has been provided to the bill
sponsor and other interested parties to review and consider as an alternative to the current
language of SB 1639.
Session Schedule/Deadline Dates

May 10 – Senate Committee Deadline (House Bills)

May 10 – House Committee Deadline (Senate Bills)

May 24 – Senate 3rd Reading Deadline (House Bills)

May 24 – House 3rd Reading Deadline (Senate Bills)

May 31 – Scheduled Session Adjournment
Bills of Interest
HB 83 – Rep. D. Burke/ Sen. Holmes - Provides that certain requirements must be met in order
for an owner to lawfully tether a dog outdoors. Creates certain exemptions from that
requirement. Provides penalties for violations. Defines "tether". (Current Status: Passed
House; Senate – Executive Committee)
HB 1581 – Rep. Beiser - Prohibits drivers from holding an animal in their lap while driving
unless the driver is operating a commercial motor vehicle or agricultural motor vehicle. Provides
that a violation of this Section is a petty offense with a fine not to exceed $25. Provides that law
enforcement officers may not stop a vehicle or search its contents or driver solely for violating
this prohibition on animals riding in a driver's lap. (Current Status: House – Re-referred to
the Rules Committee)
HB 2517 – Rep. Hurley/Sen. Althoff - Extends the repeal of the Veterinary Medicine and
Surgery Practice Act of 2004 from January 1, 2014 to January 1, 2024. Amends the Veterinary
Medicine and Surgery Practice Act of 2004. Defines "address of record" and "veterinarian".
Makes changes to provisions concerning exemptions, restrictions on practice, administration of
the Act, the Veterinarian Licensing and Disciplinary Board, renewal of licenses, licensure
without examination, fees, continuing education, advertisements, disciplinary actions,
injunctions, investigations, hearings, records, and violations of the Act. Provides that
veterinarians have authority to dispense drugs in emergency situations as specified in the Act and
that all information collected by the Department in the course of an examination or investigation
of a licensee or applicant shall be maintained for the confidential use of the Department.
Effective December 31, 2013. (Current Status: Passed House; Senate – Committee on
Assignments)
HB 2699 – Rep. Rita - Amends the Humane Care for Animals Act. Provides that no person shall
dock the tail of any cattle or procure the same to be done, except under certain conditions.
Provides that any person who violates the provision is guilty of a Class C misdemeanor and shall
pay a fine not to exceed $500 for each animal whose tail was docked. Amends the Veterinary
Medicine and Surgery Practice Act of 2004 to make corresponding changes. (Current Status:
House – Re-referred to Rules Committee)
HB 2823 – Rep. Mitchell - Amends the Illinois Controlled Substances Act. Deletes provision
that a prescription for a Schedule II controlled substance shall not be issued for more than a 30
day supply, except as otherwise provided in the dispensing provisions, and shall be valid for up
to 90 days after the date of issuance. (Current Status: House – Re-referred to Rules
Committee)
HB 2924 – Rep. Fine - Amends the Animal Welfare Act. Requires certain disclosures to be
made by animal shelters, animal control facilities, and animal rescue groups. Authorizes the
Department of Agriculture to issue fines for violation of the Act. Provides that injunctive relief
shall be available to correct violations of the Act. (Current Status: House – Re-referred to
Rules Committee)
SB 1532 – Sen. Rose – Amends the Humane Care for Animals Act. If the Department of
Agriculture determines that a complaint made under the Act against a person or entity is false or
unfounded and made with the intent to harass the person or entity, the Department may waive
any confidentiality of the complainant and refer the matter to the State's Attorney for
consideration of criminal charges against the complainant. (Current Status: Passed Senate;
House – Rules Committee)
SB 1639 – Sen. Kotowski - Provides that certain disclosure requirements apply to the sale or
exchange of each dog and cat within the State (rather than the sale of dogs and cats by pet shop
operators). Provides that, if there is an outbreak of distemper, parvovirus, or any other contagious
and potentially life-threatening disease affecting more than 2 dogs at a seller's pet shop or kennel
within a 60-day period, then the seller shall provide each customer that purchases a dog a written
notice stating the nature of the outbreak, and shall notify the State Veterinarian of the outbreak
within 2 business days after becoming aware that a third animal has contracted the disease.
Provides that a customer who purchased a dog from a seller is entitled to a remedy if certain
conditions relating to a disease, illness, condition, or death of the dog are met. Sets forth
conditions that a customer shall meet to obtain a remedy from a seller and a timeframe in which
the seller shall provide a reimbursement to the customer. Provides that a customer may not be
entitled to a remedy if the customer fails to meet certain requirements. Provides that a seller may
contest a remedy sought by a customer. Provides that if a customer and seller do not reach an
agreement within 10 business days, then the parties may agree to binding arbitration or the
customer may bring suit in a court of competent jurisdiction. Changes certain references from
"pet shop operator" to "seller".(Current Status: Senate – 2nd Reading)