M E M O R A N D U M
To: Cathy Plouzek
Tami Ireland
Kay Tichneal
From:
Re:
Date:
Terry Steczo
Maureen Mulhall
Legislative Report
March 31, 2013
Budget Kerfuffle Begins
Even before the Governor provided his budget plan for FY 2014 it was DOA as the House, the day before, adopted revenue estimates approximately $500 million below his projected spending level. Now, the question is whether or not the Senate will hold to the House estimate or if they will determine their own. Until a few years ago, the Governor’s budget message was a focal point of each legislative session. However, with the state’s shabby fiscal health the legislature has pretty much taken ownership of the process, establishing its own revenue estimates and allocating resources in five general spending categories. So, these days, the Governor’s spending plan could just as easily be submitted by e-mail because, with the exception of certain policy priorities, it’s pretty fallow.
Both the legislature and the Governor have agencies that calculate expected revenue estimates.
Over time the legislature’s arm, the Commission on Government and Fiscal Accountability
(COGFA) has been more accurate in its estimates than the Governor’s Office on Management and Budget (GOMB). COGFA’s estimates range on the more conservative side. With little room for error allowed, the legislature feels more comfortable adopting a safer spending level knowing that any receipts over and above their estimates will allow some further debt relief.
The next part of the process will be for the House to officially adopt the categorical allocations for each of the appropriations committees that will govern how appropriations are to be distributed by agency.
For the past two years the General Assembly has used the same procedure to create its budget building process. First, they will first remove fixed costs (pensions, bond and other interest, and employee health care) from the mix and allocate the remainder to the appropriations committees.
Those allocations have been pretty much the same for the previous two budget cycles so there is little expectation that they will change this year. Those allocations were as follows: Human

Services – 50.361%; Elementary & Secondary Education - 28.742%; Higher Education –
8.761%; Public Safety - 6.978%; and General Services – 5.185%.
One question that remains is how much flexibility each appropriations committee will have to determine agency appropriation levels. Two years ago, legislative appropriations committees were able to provide funds to as number of programs that the Governor had “zeroed out” by reducing non-program expenditures. Last year was less flexible, and the current legislative session brings new leadership to some of the appropriations committees so the story of how they will grapple with making final determinations will still have to be written.
Disregarding the $500 million difference between the Governor’s spending request and the lower amount determined by the House, it is established that the General Assembly will have to fund room for an additional $1 billion for pension costs (barring the enactment and a successful court defense), $1.7 billion for state employee health care insurance, $2.15 billion in debt interest, and a $400 million increase in Medicaid to $7 billion. The big question is whether or not the legislature will once again be able to walk the fine line to be able to balance the need for education and human services funding with the need to bring down the $8 billion plus backlog in bills owed to provider and vendors.
In the last two months there has been no drumbeat for passage of a bond proposal that could clear up much of the backlog quickly, so the legislature is left with grinding out a budget the oldfashioned way with not many shortcuts available to being in new money. Gaming, closure of tax loopholes, satellite television taxes, fracking “severance” taxes and others have all been mentioned as potential sources of new income. However, no one has yet been able to put the requisite number of votes on the legislative scoreboard to enact any of those. Plus, most of those mentioned would not be available for appropriation until well into the new fiscal year, at the earliest. Legislators are also well aware that revenues will shrink considerably on January 1,
2015 when the temporary income tax increase goes away. Thinking of how to fill that $7 billion hole must already be giving nightmares to those who sense the gravity of it all.
Pension Breakthrough?
Over the past two years that pension reform, or lack thereof, has been the subject of intense discussion, one of the great unknowns has been the ability of the Illinois House to find enough consensus to actually approve some modicum of a bill. The Senate was able to pass a version of pension reform last year only to see it languish in the House at spring session’s end. The special legislative session called by the Governor last August also proved futile as the House wasn’t even able to pass a bill an extremely scaled down plan. But as of last week the pension reform playing field may have changed.
Since the beginning of the session the House has scheduled the consideration of pension reform amendments every Thursday at noon. At first those amendments were fairly draconian, gaining few votes as one after another was defeated soundly. But, as weeks went by and the language of the amendments became more temperate, more affirmative votes began to appear. Then, last week, a House version of pension reform received enough votes to pass and be sent to the
Senate. That action now puts the provisions of the House plan on the table for future discussion.
In the Illinois Senate, however, it seems like a “thrust and parry” between two competing pension reform plans. One plan, supported by President Cullerton, uses the “consideration” premise that he and his staff feel is the only principle that will be accepted by the Illinois

Supreme Court. The second plan, authored by Sen. Dan Biss, more closely resembles the House approved plan. In two test votes last week it was the Cullerton plan that barely squeaked by with a bare minimum 30 votes, while the Biss plan was seven votes short of passage. However, the
Biss plan received bipartisan support while the Cullerton plan did not.
So what does all this mean? Well, for starters, it means that for the first time the House is on record as supporting a specific plan and that may bode well for some final action to be taken before May 31. There is a huge divide between the version of pension reform that the House approved and the one that passed the Senate. But also keep in mind that the Biss plan received 23 bipartisan Senate votes, only seven short of passage, so it might be that pressure may build to move members toward it. There’s a lot at stake between now and May 31, and pension reform is a vital part of it. There will be a lot of discussion as to what the Supreme Court may or may not accept based on the “contractual provision” of the Illinois Constitution. But there may also be some feeling that if a good faith effort at logic and fairness is made by the General Assembly the
Supreme Court, fully aware of the consequences of rejecting the legislative plan they’re sent, might find a way to accept it. They seem to have done so before when the stakes were much less, so why not now?
Additionally, there is a huge budget implication with the passage, or lack thereof, of pension reform. A recent Chicago Tribune article pointed out that without a comprehensive reform package the additional budget requirement for the upcoming fiscal year would be in the neighborhood of an additional $1 billion. With a successful reform package, they say, the savings would be in the neighborhood of $800 million. That’s a lot of services or unpaid bills that can be addressed.
Cullerton’s plan relies heavily on “consideration … a tradeoff allowing retirees to choose between a compounded COLA or access to state health care. The House, on the other hand, thus far has passed a total of three bills that address benefits directly. A few weeks ago the House approved legislation that capped pensionable salaries at $113,700, and a sliding scale for employees under the age of 45 that increases the age at which benefits can be received. Neither of these provisions addresses employees hired after January 1, 2011 who have their own schedule. The bill passed by the House last week caps COLAs to 3% or $750, whichever is less, on only the first $25,000 of base pension salary. Also, retirees would have to wait until age 67 or five years after retirement to receive benefits. The House plan stipulates that revenues currently being used to pay pension-related bonds will be used to decrease unfunded liability once the bonds are paid.
Fiscal reviewers have suggested that the House plan comes closer than the Cullerton plan in achieving the objective of 100% pension funding for the five state systems by 2043. However, that may be in dispute. The plan passed by the House also does not address the concept of local schools district participation in pension costs. What’s not in dispute is that there may actually be a chance in 2013 to secure what had been previously considered to be unreachable.
So May Bills, So Little Time
March 22 marked the deadline for hearing bills in House and Senate committees. This session over 5,800 bills were introduced, most near the introduction deadlines of February 15 in the
Senate and February 26 in the House. In the interim committees worked overtime trying to hear as many bills as possible at each hearing, trying to give sponsors and witnesses every accommodation possible. But, how is it ever possible to hear that many bills in such a short

period of time? The simple answer is that it’s not. But, as bill introductions are reviewed the first thing that is observed are the large amount of “shell bills” that are introduced. Many sponsors file these because they may be working on legislation that may not be completely formulated and want to have a bill available just in case. Additionally, leaders and committee chairs also file shell bills just to have them available in case they may be needed. While this reduces the number of bills that are available to be considered appreciably, there are still a huge number that members want to have heard and not a very long time to do it, especially since committees are tied into two or four hour time blocks that severely limits the time that can be spent on each specific bill. On top of the specific time limitation, a bill with controversial aspects can eat up precious time at any specific committee hearing, leaving an even more compacted time frame to hear whatever assigned bills remain.
One of the frustrations of being as legislator is overcoming the roadblocks that can mar your chances of seeing your ideas make it successfully through the process ... even more so if you are prolific and gush ideas. In addition to overcoming and departmental agency and/or outside interest group opposition, legislative rules and housekeeping directives sometimes weigh just as heavily against you. For instance, after introducing a number of initiatives a legislator, a House member in particular, may work diligently to have a number of pieces of legislation approved and sent to the floor only to have a directive issued that asks a member to specify their top three or four bills, indicating that those most probably will be the only of their bills called. It also means that of the 3,600 House Bills introduced only 350-500 have any possibility of being considered during the upcoming period approaching the April 19 3 rd
Reading deadline … and that’s with a two week break built in. The Senate, with fewer members, doesn’t use such directives but there’s no way to physically hear all of the initiatives that make it through the committee system before their 3 rd
Reading deadline of April 26.
On the advocate side, initiatives of importance can also fall by the wayside if careful thought isn’t given to the process as sponsors are selected. It’s every special interest group’s desire to have an effective sponsor handle their legislation. The problem is that these sponsors become so overloaded that often some of their bills, and perhaps some interest group’s legislative program, die in the logjam. One of the ways to overcome this dilemma is to prepare legislation, choose sponsors, and have bills introduced and called early in the session. Limitations on calling bills pretty much take effect after committee deadlines have passed. It also means that legislation reaching the floor early in the session gets called fairly quickly with no limitations on the number of bills a sponsor can call. A second way to elbow into the bill calling limitation is to find a legislator who doesn’t choose to sponsor many bills so your initiative will be in their top three or four, provided that he or she can be proficient in the subject matter involved. There are other methods as well, but the truth is that there’s far more than simply whether or not a bill is a good idea that determines its success in the legislative process.
Looking Toward May 31
Just as the legislature seemingly began to find its rhythm the schedule called for a two week break. Whether or not the session will resume without missing a beat remains to be seen, however much of the time spent upon the resumption of the session will be spent on passage of bills from the chamber of origin to the other. The bulk of committee hearings are now over. Nonappropriation committees will continue to meet to act on amendments filed to various bills but those meetings are minor in comparison to the monumental number of bills that had to be heard over the last three weeks. Even when bills arrive from the first chamber, that relatively scant number of bills will be dispatched by committees in just a few short weeks. The House, in fact,

seems so confident that a workable number of bills will be passed by the Senate that they have scheduled an additional week off on the week of April 22.
But, make no mistake about it, the period between the legislature’s return on April 9 and the session adjournment on May 31 will be pressure-packed with a myriad of some high profile and other critical issues. What makes the outcomes of some of those issues even more in doubt are the large number of freshman legislators that populate both chambers. Most have not had prior governmental experience so the whole process is new to them. Add to that their perception that anywhere from 108,000 people (the size of a House district) to 216,000 people (the size of a
Senate district) are watching their every move and it really could be fascinating to watch.
Legislative leaders understand more than anyone that their members have to mind their districts.
The perception that leaders can “force” members to vote or take positions that are contrary to voters back home is far from accurate. Rather, effective leaders try to craft solutions that embody the interests and concerns of their members so there is a comfort level when voting on issues that may be controversial. The goal is to provide members with defensible positions back home so they can be re-elected. Hopefully, good public policy results as well.
Session Schedule/Deadline Dates
Here are some relevant dates for the legislative session.

March 25-April 7 – Spring Recess

April 19 – House 3 rd
Reading Deadline (House Bills)

April 22-26 – House Recess

April 25 – Senate 3 rd
Reading Deadline (Senate Bills)

May 10 – Senate Committee Deadline (House Bills)

May 10 – House Committee Deadline (Senate Bills)

May 24 – Senate 3 rd
Reading Deadline (House Bills)

May 24 – House 3 rd
Reading Deadline (Senate Bills)

May 31 – Scheduled Session Adjournment