* Here we go…
From: xxx@xxxx On Behalf Of John Terranova
Sent: Wednesday, November 16, 2016 15:23
To:
Subject: AFSCME Employees - Labor Board Update
Dear Colleagues,
As many of you are aware, the Illinois State Labor Board yesterday confirmed what we have known since January 8 of this year-the State and AFSCME’s negotiating team are at an impasse in bargaining for a new collective bargaining agreement.
You may be wondering what comes next.
As a practical matter, yesterday’s ruling means that the State may begin implementing its last, best, and final offer. Our labor relations team is continuing to analyze the decision and has begun meeting with agency directors to discuss which provisions should be implemented and when. We will, of course, keep all of you apprised of our implementation plans and how they impact you individually.
Below is some guidance on the two proposals-merit pay and overtime after 40 hours-that we are proceeding to implement as soon as operationally feasible.
· Merit Pay. The State’s merit pay proposal provides that employees who missed less than 5% of assigned work days during the July 1, 2015-June 30, 2016 fiscal year would receive a $1,000 bonus. Vacation, personal, and sick days, including FMLA leave, would not be considered assigned work days.
It is the State’s expectation that the vast majority of employees satisfied this requirement. The State will therefore begin working with payroll and timekeeping administrators to process these bonuses as quickly as possible.
For subsequent fiscal years, the State will, in consultation with AFSCME, develop fair performance criteria to evaluate and reward employees based on specific achievements, and policies to reward employees based on attendance and compliance with work rules, and hopes that the union will work with us on these efforts.
While we hope for a smooth implementation that results in the vast majority of employees receiving bonuses, we should flag that AFSCME may ask a court to enjoin the State from implementing its merit pay proposal.
· Overtime. Consistent with federal law and contractual provisions governing thousands of state employees outside the AFSCME bargaining unit, overtime will now be paid after an employee has worked 40 hours in a given week. This also means absences due to holidays and vacations will not count towards the 40-hour mark-only actual hours worked above 40 will be at the overtime rate.
These common-sense provisions are fair to both our employees and taxpayers alike. We hope AFSCME will partner will us as we implement them and analyze how and when it would be best to implement the rest of our last, best, and final offer.
If you have additional questions, please consult the Labor Relations tab on the Team Illinois website, http://www.illinois.gov/sites/TeamIllinois/LaborRelations. There, you will find the entirety of the State’s final offer to AFSCME, as well as other useful information.
Sincerely,
JT
John Terranova
Deputy Director
CMS Office of Labor Relations
Meanwhile, the union is preparing some informational pickets for tomorrow.
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[The following is a paid advertisement.]
It just keeps…Getting…BIGGER!
FIRST Exelon demanded a $2.6 billion Low Carbon Portfolio Standard, then they increased the cost to $8 BILLION with the “Next Generation Energy Plan.” Now, Exelon demands legislators pass the LARGEST RATE HIKE IN US HISTORY – the $24 BILLION “Future Energy Jobs Bill”, adding BILLIONS for downstate Dynegy plants that burn Wyoming coal – not even Illinois coal.
The $24 BILLION rate increase will provide a subsidy for nuclear and coal plants that would have otherwise closed because they are no longer competitive in the Illinois market. Last year Illinois generated 41% more power than we needed even as demand continued to shrink.
As Crain’s recently pointed out in their editorial, “Illinois ratepayers will effectively be paying more so ratepayers in other states who use our surplus power will pay less. And that’s just another incentive for commercial and industrial consumers – and employers – to jump the border.”
This $24 BILLION energy tax on the Illinois economy will hurt consumers and businesses. It is opposed by Illinois’ leading consumer groups including AARP and the Attorney General’s office.
Illinois can’t solve the budget crisis but it’s considering a $24 billion energy tax????
JUST SAY NO TO THE EXELON BAILOUT
BEST Coalition is a 501C4 nonprofit group of dozens of business, consumer and government groups, as well as large and small businesses. Visit www.noexelonbailout.com.
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Question of the day
Wednesday, Nov 16, 2016 - Posted by Rich Miller
* What did you get most wrong about your own 2016 campaign predictions? Explain why if you can, and please keep it Illinois-centric. Thanks.
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Rauner changes his top priority
Wednesday, Nov 16, 2016 - Posted by Rich Miller
* From late August…
The Governor says redistricting should be the number one priority of lawmakers when they return to Springfield after the election in November. […]
Rauner says he wants redistricting reform passed before he can agree to a comprehensive budget deal that will include a tax hike.
Rauner did say the second priority should be pension reform, after the Teachers Retirement System voted to lower their expected investment returns, meaning the state will be on the hook for hundreds of millions more when it comes time to make the pension payment.
* Today…
Discuss.
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Rauner says he talked to Trump
Wednesday, Nov 16, 2016 - Posted by Rich Miller
* I’m told that VP-elect Pence was also on this call…
From what I’ve gathered it was a positive conservation, with Pence asking Rauner about all those Daniel Biss super PAC ads attacking him on Chicago TV that paired him up with Trump.
Considering the “blue” nature of Illinois, they reportedly said they understood Rauner’s predicament during the presidential race.
* Related…
* Illinois, a blue island in a red sea: Data analysis
* IL Lawmakers’ Reaction To Steve Bannon Pick A Mix Of Silence & Scorn
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* The Governor’s budget office has published its latest five-year fiscal projection. Click here. And click here for a more complete explanation and background.
If things continue down this same path (with the same levels of taxation and spending patterns), GOMB projects a total bill backlog of more than $47 billion by Fiscal Year 2022.
Oof.
* The projected fiscal year backlogs are as follows…
2017 $13.543 billion
2018 $20.639 billion
2019 $27.692 billion
2020 $34.103 billion
2021 $40.593 billion
2022 $47.121 billion
…Adding… Here is where we are as of today. We’ve broken the $10 billion mark…
*** UPDATE *** From SEIU Healthcare, with emphasis added by me…
Hi all,
Today the Governor’s Office of Management and Budget published its economic and fiscal policy report and five-year projections. Below are some summary points.
These are required to be published every year by law, as a prelude to the budget, in order to set out the “economic and fiscal policy objectives of the State” in the coming year and beyond. This year is the first year that they were moved up from January to November, and the first year the projections are for five years rather than three. (Last year’s report will be remembered for the headline that the state’s bill backlog was projected to reach $25 billion by the end of 2019.)
This year, the news is just as bad: The report shows clearly the damage the Rauner administration has done to the state budget and economy, and declares Rauner’s intention to continue the hostage situation with the state budget to pursue his ideological agenda and damage working families.
Some highlights:
- Declares that the Rauner administration will double down on a hostage-taking approach to the budget. The only mention of Governor Rauner actually getting a budget done is prefaced by “If the legislature is willing to enact adequate structural reforms…” There is no definition of what are “adequate structural reforms,” and no evidence given for the claim that these “reforms” will induce miraculous growth in the Illinois economy.
- Projects that the state’s bill backlog will grow to $27.7 billion by the end of 2019, rather than the previous projection of $25.0 billion. Through Rauner’s hostage-taking on budget and revenue, the state is digging this hole faster. By the end of 2022, this bill backlog is projected to grow to $47.1 billion. That is more than one full year of state operating expenditures.
- Observes that Illinois’ economy has performed poorly in the past 1-2 years, but refuses to even consider that this might have something to do with the protracted crisis and uncertainty Rauner has caused by refusing to sign a budget. (For example, nonfarm employment grew by less than half the national average, 12,700 manufacturing jobs left the state, and job growth has been in low-wage sectors, over the year from August 2015 to August 2016.)
- Includes a full page on the “stopgap” spending plan passed at the 11th hour this June that declares it a success by not mentioning the “limited” General Funds appropriations meant many human service providers are taking a 33% or higher cut, resulting in a continued wave of closures and no rebuilding whatsoever of these vital services since the stopgap was signed into law; and not mentioning at all the much deeper cuts to higher education and MAP grants that have state universities on the verge of collapse.
- In a list of problem areas that “crowd out” other state spending, misidentifies home care for seniors as a problem area. Home care for seniors has grown because it is a preferred care setting for tens of thousands more seniors in a growing senior population, and it has saved the state at least as much as it has cost by preventing the need to pay for costly institutional care. (Overall, the categories of spending called out in this section are highly selective and problematic. Home care for seniors might only be the most absurd example.)
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Layoffs, changes at Crain’s
Wednesday, Nov 16, 2016 - Posted by Rich Miller
* Robert Feder…
Business must be bad even for Crain’s Chicago Business: Three newsroom positions were eliminated Monday at the privately-owned weekly business publication and website. Forced out in the cost-cutting move were two assistant managing editors — Tom Corfman, who led coverage of government and politics, and Craig Newman, who headed daily news and digital operations. Corfman first joined Crain’s in 1997 and returned in 2006 after six years at the Chicago Tribune. Newman was managing editor of the Sun-Times before joining Crain’s last March. Also laid off was copy editor Richard Skews, who signed on last February after 35 years at Advertising Age.
Cartoonist Roger Schillerstrom also got the ax.
Tom Corfman was my editor. I think the world of the guy. He’s made me a better writer, but he’s also been a reliable personal sounding board.
Man, is he ever gonna be missed. I have his resume if you’re interested in hiring him.
* And then this…
Those folks helped bring my column to Crain’s after the Sun-Times and I parted ways.
* Crain’s today…
The two top executives of Crain’s Chicago Business—Publisher David Snyder and Associate Publisher Lisa Emerick—are leaving over a split with the owners of the parent company on the publication’s growth strategy.
Snyder and Emerick, both longtime employees of Crain’s, will stay on through year-end to help KC Crain, executive vice president and director of operations at Crain Communications, with the transition to new leadership. Editorial operations of Crain’s Chicago Business will continue to be run by Editor Michael Arndt. […]
The company does not break out results for its individual titles, but KC Crain told the Crain’s staff today that the publication is solidly profitable. Separately, Snyder said Crain’s has been profitable every year within a few years of its launch in 1978, including the Great Recession.
Snyder, 55, has been with Crain’s his entire career, starting as a researcher in its Washington, D.C., bureau a week after he graduated from college in 1983. He moved to the Chicago office in 1984. He was an award-winning reporter and editor from 1993 to 2000, when he was promoted to associate publisher. He was named publisher in 2010 and a vice president of Crain Communications the next year.
“I could not have asked for a more exciting or fulfilling career than the one I’ve had at Crain’s over the past 33 years—I literally grew up with the publication,” said Snyder. “But in business, like in life, reasonable people can disagree.
I talked to Arndt yesterday and I still have a column there. So, that’s a relief.
I wasn’t sure at first if I’d be a good fit at the publication, but I’ve been nothing but pleased with the way things have turned out. It’s a fantastic magazine and I’m proud to be a tiny part of it.
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* From The Hill…
Sen. Chuck Schumer (D-N.Y.) on Wednesday was elected Senate Democratic leader, succeeding retiring Sen. Harry Reid (D-Nev.).
Schumer appointed two women to high-ranking posts on his team, tapping Sen. Patty Murray (Wash.) to serve as assistant Democratic leader and Sen. Debbie Stabenow (Mich.) to chair the Democratic Policy and Communications Center. […]
Sen. Dick Durbin (Ill.) was re-elected as Senate Democratic whip.
So, that pretty much seals it. Highly, highly doubtful there will be a gubernatorial bid in his future.
*** UPDATE *** And he confirms it…
After the vote, Durbin was asked how staying on as his party’s Senate whip would affect the prospects of challenging Rauner.
Durbin said: “I kept telling people of Illinois, I’ve got a pretty important job working in the United States Senate in the No. 2 Democratic position.
“It was interesting to me that the day after the (Nov.  election, many of them came up to me and said, ‘Stay in the Senate. We need you.’”
Asked by a reporter whether that was his choice, Durbin replied, “That’s my choice.”
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Republican alternative AVR proposal criticized
Wednesday, Nov 16, 2016 - Posted by Rich Miller
* Monique…
Meanwhile, an effort to override Rauner’s veto of a bill that would automatically register people to vote if they get a new or updated driver’s license was delayed in the Senate on Tuesday after not enough Senate Democrats showed up. Democrats hope to push the issue again Wednesday, saying it could amount to a test of Rauner’s influence over the GOP following overwhelming bipartisan support for the measure in the spring.
We talked a bit yesterday about a new Republican alternative proposal to give GOP legislators some political cover for voting with the governor on the override motion.
That bill has now been introduced (HB 6627 and SB 3452).
* From Abe Scarr at Illinois PIRG…
Rich,
We are still working through the language, but here are a couple comments on the Republican AVR bill:
1. The biggest change is to the way people opt out. In SB250, when an eligible voter interacts with Drivers Services they will be automatically registered, and given the opportunity to opt out after the fact. In the new bill, eligible voters must first decline to opt out, then must attest to their qualifications to vote with a signature. So you just showed a passport that documents you are a citizen and over 18, but you still have to legally attest that you are eligible. This is not that different than the system we have now.
2. The second change is to which agencies are covered. SB250 includes all 5 agencies that currently provide voter registration services under federal law. Theirs just includes Drivers Services. Both bills included a process for adding new agencies - their process is more articulated, but starts with less agencies.
In sum these changes mean less people would be registered to vote than through SB250, meaning less list accuracy and security, less costs savings, and less eligible voters added to the rolls.
Abe
* He added this PS…
There does not appear to be an implementation date. The bill is implemented immediately - to authorize the creation of the program. There is a date for a public hearing on creating the program, but no date for the program to actually be implemented. So it could take years to implement.
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What’s next for AFSCME?
Wednesday, Nov 16, 2016 - Posted by Rich Miller
* From the Illinois Policy Institute’s news service…
[Illinois Policy Institute Staff Attorney Mailee Smith] was at the [Illinois Labor Relations Board] hearing in Chicago. She said the labor board wasn’t willing to go into uncharted territory recommended by the Administrative Law Judge, which said in September there was impasse on some issues, but not on others.
“The board rejected that outright with actually very little discussion,” Smith said. None of them were interested in discussing that because it was really a more of a renegade approach to determining whether or not the two parties are at impasse.”
Rauner’s administration said they’re hopeful AFSCME will partner with the state on how to best implement the contract. AFSCME vowed to appeal the decision to the appellate court.
An appeal to the courts could take months, Smith said.
* SJ-R…
Springfield-area lawmakers said the contract should be resolved at the bargaining table.
“I maintain my earlier calls for both sides of the negotiation, which includes the administration and the union, to go back to the table and negotiate a fair contract,” said Rep. Sara Wojcicki Jimenez, R-Leland Grove.
“I think both sides should sit at the table and negotiate,” said Rep. Tim Butler, R-Springfield. “Obviously that was not going to happen once it got appealed to the labor board, but now that we’ve got a ruling from the labor board and the union knows very squarely now that the governor can implement the last, best and final offer that they put down there, I would urge both sides to get back to the table and negotiate a contract that’s fair to all sides.”
The Labor Relations Board is appointed by the governor. Rauner appointed two members and reappointed two others who were initially appointed by then-Gov. Pat Quinn. The fifth member is also a Quinn appointee.
* Tribune…
At the crux of that dispute is Rauner’s desire to make it easier for the state to subcontract to the private sector for services ordinarily performed by state workers. Rauner’s team initially wanted unlimited ability to subcontract, saying it needed flexibility to find cost savings to get the state’s finances in order. AFSCME rejected that proposal outright.
The Rauner administration came back with a modified proposal for what’s known as “managed competition,” where the union would compete with private companies in bidding for contracts. The two sides spent months trading language on the idea, discussing it over the course of 21 bargaining days.
On the day that the Rauner team decided the talks were deadlocked, AFSCME had proposed adding language requiring that bids from private contractors would have to “meet the standard of greater efficiency, economy or other related factors” — language that the administration already had made clear it opposed.
“Subcontracting was the insurmountable issue that really got to the heart of the beliefs of both parties,” said labor board member Keith Snyder, a former mayor of Lincoln appointed by Rauner last year. “Dealing with what the state is trying to deal with in terms of financial crisis, and AFSCME trying to deal with protection of jobs and members’ jobs and things like that.”
* Now, remember this quote from yesterday?…
“The contract, mirroring agreements we have already reached with eighteen other unions, includes merit pay for the vast majority of AFSCME employees and the same forty-hour work week requirement that applies to most employees outside state government,” Rauner spokeswoman Catherine Kelly said in a statement. “It will also allow individuals to volunteer their time to help fellow Illinois residents through things like assisting social services agencies, cleaning up state parks, or training state employees.”
* I asked the administration about that “volunteer their time” stuff…
At the Department of Veterans Affairs, the Manteno facility had volunteers which were performing receptionist duties, such as answering the phone and directing visitors. The union grieved erosion and after an expedited arbitration, the DVA is no longer permitted to use volunteers to perform these duties.
At the Department of Natural Resources, there was an issue with volunteers at the Visitors Center at Ft. Massac. Volunteers manning the visitor center while Site Technicians were outside in the unfavorable weather. The employees were displeased with the treatment of the volunteers and filed a grievance for erosion. The site had to cease the use of volunteers.
More background is in this Chicago Tribune editorial.
* Meanwhile…
The election of Donald Trump is likely to mean big changes for the National Labor Relations Board, which could begin to roll back the Obama administration’s agenda of expanding employee and union rights, according to employment litigators.
The NLRB now has a 2-1 Democratic majority with two empty seats. “I expect [the two vacancies] will be filled by Republican, employer-friendly nominees as soon as the President-elect nominates them and their nominations are confirmed by the Senate,” Jennifer Platzkere Snyder, an employment attorney at Dilworth Paxson LLP in Philadelphia, told Law Blog.
The NLRB supervises union elections, referees disputes between employers and employees and interprets the National Labor Relations Act, the federal law that governs labor-management relations for most private sector workers.
In a wave of rulings and legal determinations, the NLRB under the Obama administration has rejected class-action waivers in employment arbitration; made it easier for contract workers and other temporary employees to unionize; paved the way for student unionization on campuses nationwide; potentially made it easier for unions to organize fast-food workers and hold franchisers in a range of industries to greater liability in labor matters.
“A new Board with a Republican majority is likely to revisit” all these issues, says Jackson Lewis PC, a firm that represents employers.
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JB Pritzker considering gubernatorial bid
Wednesday, Nov 16, 2016 - Posted by Rich Miller
* Shia Kapos…
J.B. Pritzker, once rumored to be in line for a Cabinet job in a Hillary Clinton presidency, has been approached by Democratic leaders about running for Illinois governor.
The Chicago venture capitalist is a billionaire and wouldn’t be burdened by financial concerns in competing with Gov. Bruce Rauner, another wealthy Chicago businessman. Rauner spent $65.3 million to become governor in 2014. Money like that could scare off some opponents but not Pritzker, who Forbes lists as having a $3.4 billion net worth. […]
I hear Pritzker is considering the idea because he sees Rauner as failing in his job to manage the state. Pritzker is an active and vocal philanthropist particularly concerned about early-childhood education and is especially sensitive to how Rauner’s leadership is affecting under-served communities.
Pritzker hasn’t said yes — or no — to running in 2018. He may be considering how a political campaign might affect his family. He and his wife, M.K., have a son and daughter, both school age. Pritzker is a familiar face at his daughter’s cross country meets.
He and Chris Kennedy aren’t particularly close, so we’ll see how this plays out. But as I’ve already told subscribers Kapos is right that he is considering a bid after being approached by top Dems.
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[The following is a paid advertisement.]
It just keeps…Getting…BIGGER!
FIRST Exelon demanded a $2.6 billion Low Carbon Portfolio Standard, then they increased the cost to $8 BILLION with the “Next Generation Energy Plan.” Now, Exelon demands legislators pass the LARGEST RATE HIKE IN US HISTORY – the $24 BILLION “Future Energy Jobs Bill”, adding BILLIONS for downstate Dynegy plants that burn Wyoming coal – not even Illinois coal.
The $24 BILLION rate increase will provide a subsidy for nuclear and coal plants that would have otherwise closed because they are no longer competitive in the Illinois market. Last year Illinois generated 41% more power than we needed even as demand continued to shrink.
As Crain’s recently pointed out in their editorial, “Illinois ratepayers will effectively be paying more so ratepayers in other states who use our surplus power will pay less. And that’s just another incentive for commercial and industrial consumers – and employers – to jump the border.”
This $24 BILLION energy tax on the Illinois economy will hurt consumers and businesses. It is opposed by Illinois’ leading consumer groups including AARP and the Attorney General’s office.
Illinois can’t solve the budget crisis but it’s considering a $24 billion energy tax????
JUST SAY NO TO THE EXELON BAILOUT
BEST Coalition is a 501C4 nonprofit group of dozens of business, consumer and government groups, as well as large and small businesses. Visit www.noexelonbailout.com.
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* More in a bit…
*** UPDATE 1 *** Catherine Kelly at the governor’s office…
“Today’s decision is fair for taxpayers and state employees. As a result of this agreed-to process, the state can now implement its contract, saving the taxpayers more than $3 billion over four years.
“The contract, mirroring agreements we have already reached with eighteen other unions, includes merit pay for the vast majority of AFSCME employees and the same forty-hour work week requirement that applies to most employees outside state government. It will also allow individuals to volunteer their time to help fellow Illinois residents through things like assisting social services agencies, cleaning up state parks, or training state employees.
“We thank the Labor Board for its careful work and hope AFSCME will partner with us as we consider how best to implement the contract.”
*** UPDATE 2 *** This is a full impasse, I’m told. So the governor can impose his last, best and final offer. According to the Illinois Policy Institute, it was a 5-0 decision. Three of those five were appointed by Pat Quinn.
From Treasurer Frerichs…
“The governor’s labor board decision today is disappointing. Illinois workers have stated clearly their desire to work while negotiating in good faith. The good news is this: The governor could choose to return to the bargaining table. I urge him to do exactly that.”
*** UPDATE 3 *** AFSCME…
The state panel of the Illinois Labor Relations Board, whose members are appointed by Governor Rauner, today issued a verbal ruling that contract negotiations between the Rauner Administration and AFSCME Council 31—the largest union of state employees, representing some 38,000 Illinois state workers—are at an impasse.
“Our union strongly disagrees with this ruling,” AFSCME Council 31 Executive Director Roberta Lynch said. “We have consistently made clear that we are prepared to continue negotiating, while the Rauner Administration’s extreme demands, unfair labor practices and refusal to meet have sabotaged the collective bargaining process.”
The board’s ruling in effect rejects the recommended decision and order advanced in September by its own administrative law judge who presided over months of hearings in the case last spring.
“The judge who heard the facts in this case found there was no impasse on key issues and urged the board to order Governor Rauner back to the bargaining table. The board is wrong to ignore her findings,” Lynch said.
Rauner is demanding that employees pay 100% more for health care even as he would freeze their wages for four years. He also wants to do away with standards that prevent unaccountable outsourcing of public services for private profit.
An impasse ruling from the board opens the door for Governor Rauner to try to unilaterally impose his demands, but does not require him to do so.
“The governor is trying to force state workers to accept his unfair terms or go out on strike,” Lynch said. “Rauner’s path of conflict and confrontation is unfair to workers and wrong for the people of Illinois.”
Instead, Rauner could opt to renew the negotiations he broke off more than 10 months ago. His representatives walked away from the bargaining table on Jan. 8 and have refused to meet with the union’s bargaining committee ever since.
“The governor should negotiate, not dictate,” Lynch said. “Public service workers in state government deserve fair treatment and they want to do their jobs. They know that a strike would hurt every Illinoisan. That’s why our union has said repeatedly that we want to work constructively toward a settlement. We have not seen the same commitment from the governor.”
Rauner cannot seek to implement his terms until the board issues a final written ruling—not just today’s verbal order—in the days or weeks ahead. Once the order is issued, the union will appeal it in state court.
Illinois state employees represented by AFSCME Council 31 protect kids from abuse and neglect, care for veterans and individuals with developmental disabilities, keep prisons safe, respond to emergencies, maintain state parks and historic sites and provide many other vital public services statewide every day.
Emphasis added.
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Don’t kid yourself, Rauner loves this stuff
Tuesday, Nov 15, 2016 - Posted by Rich Miller
* Count me as a Pat Gauen fan, but on this we’re gonna have to agree to disagree…
My big question for 2018 is whether Rauner, a very rich businessman and not a politician, will want to stick around. This mess cannot be fun for a guy who certainly can afford happier diversions.
It reminds me a bit of Peter Fitzgerald, another rich Republican who in 1999 put his money behind winning what is now to be Duckworth’s Senate seat. He alienated a lot of Republicans, seemed to bore of his prize and just walked away at the end of his term.
And hey, Fitzgerald didn’t need smoke and mirrors to keep the statehouse lights on, or have to wake up every morning and face Madigan.
All true about Fitz. But Rauner seems to love his job, and he clearly relishes this fight with Madigan.
He isn’t going anywhere unless he loses his reelection bid.
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* From the Illinois Policy Institute…
The regulatory cost of doing business in Illinois remains the highest in the Midwest for workers’ compensation, according to the 2016 Oregon Workers’ Compensation Premium Rate Ranking study. Illinois’ out-of-balance workers’ compensation laws contribute to the Land of Lincoln’s loss of industrial investment and blue-collar job opportunities. Illinois manufacturing firms often cite workers’ compensation as a primary reason for the loss of rewarding industrial job opportunities in Illinois. And taxpayers cover the cost of workers’ compensation for government employees and for workers on public construction projects, making workers’ compensation an important government budgetary issue.
The Oregon study ranks all 50 states plus Washington, D.C., for average workers’ compensation costs. According to the study, Illinois ranks as the most expensive state in the region, and ties with Oklahoma as the seventh-most-expensive state in the country. Illinois’ average cost is $2.23 per $100 of payroll, though costs within Illinois vary substantially among different industries. Other states in the region ranged from 12th-most-expensive in the country (Wisconsin) to 50th-most-expensive (Indiana).
Illinois has ranked as the most expensive state in the region every year since the 2010 Oregon study. While a state’s average cost per $100 of payroll is the best overall indicator of each state’s relative competitiveness, the average gives only a partial view of the situation within each industry. Industry-specific cost comparisons provide a more complete view of the regulatory cost differences between states, and reveal that Illinois is especially uncompetitive with surrounding states in several blue-collar industries.
Background
The state of Oregon began producing its biennial study in 1986 as a way to assess and address problems within its workers’ compensation system. Oregon has continued producing the report in all even-numbered years since 1986, and the most recent iteration of the study is based on workers’ compensation premium rates in effect as of January 2016. The study produces an index rate for each state, which is a type of weighted average of workers’ compensation costs across industries using a consistent mix of 50 occupation classifications for all states. This control of occupation classifications allows for an apples-to-apples comparison between state averages without having to worry about the various weightings of different industries in each state. As a result, the interstate variance in industrial composition and occupational hazards does not skew the rankings.
Furthermore, comparing the cost of workers’ compensation per $100 of payroll controls for different wage rates in different areas of the country. Just because a state has higher wages does not mean that state should have higher premium rates. That’s because premium rates are taken as a percentage of wages, which factors in how high or low wages are. In other words, a premium rate of $2 per $100 of payroll on an $80,000 worker produces twice the amount of premium as the same premium rate does on a $40,000 worker. Thus, the difference in wage rates between states is not a factor in the Oregon comparisons because the rates are essentially a percentage of overall payroll, which accounts for whether wages are high or low.
Illinois’ position in the rankings has varied significantly over the last dozen years, and has been especially uncompetitive since 2008. As recently as 2004, Illinois ranked in the middle of the pack nationally with the 23rd-most-expensive system in the U.S., nearly equal to the study’s median rate and lower than regional competitors Ohio, Kentucky, Minnesota and Missouri.
However, former Gov. Rod Blagojevich’s 2005 legislation contributed to higher costs in Illinois, making the state significantly less competitive. Illinois rose to the 10th-most-expensive state by 2008 and third-most-expensive in 2010. Despite enacting cost savings legislation in 2011 – legislation that fell far short as a measure to put Illinois in line with surrounding states – Illinois was the fourth-most-expensive state for workers’ compensation costs in 2012. In the 2014 study, Illinois ranked seventh-most-expensive, and has tied for the seventh-most-expensive state in the 2016 rankings.
That 2005 bill was a killer, which is why I agree with Louis Atsaves that we should roll back at least some of the increase that year for permanent partial disability.
Anyway, you should read the whole thing. And click here for the full Oregon study.
*** UPDATE 1 *** Sean Stott at the Laborers Union disagrees…
With all of the shortcomings of the Oregon study (how many logging companies are in Illinois?), one of the biggest is that it does not incorporate the most current data and the most recent trends.
Illinois’ overall recommended WC insurance rates have dropped 29 percent since the pro-employer WC law changes of 2011, including a whopping 13% rate cut for the upcoming year. In large part, those reductions are due to plummeting medical costs (which represent about half of all WC claims’ costs). The Oregon study does not take those facts into account. The question then becomes, are the insurance companies passing these savings along to Illinois employers?
Obviously, the Oregon report conveniently fits into the IPI/Rauner narrative. The facts don’t. Lawmakers should not take the “causation” cleaver to the Workers Comp system (and injured workers) as the Governor has proposed. Let the 2011 changes continue to lower our costs and/or hold the feet of the insurance industry to the fire.
*** UPDATE 2 *** From ITLA and the Illinois AFL-CIO…
Reduced benefits for injured workers, lowered medical reimbursements, denied claims, costs dropping and insurance company profits skyrocketing - this is the reality of Illinois workers’ compensation today.
To lower costs for businesses, workers gave up longstanding rights as part of the 2011 changes to the state workers’ comp law; insurance companies, in return, were to be transparent with pricing and pass savings along to employers. As it turns out, only the injured workers have kept up their end of the bargain.
It is undeniable that costs for insurers in Illinois are dropping and profits are dramatically rising. The Illinois Department of Insurance’s 2016 Workers’ Compensation Insurance Oversight Report reveals insurers in Illinois saw profits increase by 1.7 percent in 2015, which is better than the national average. Profits in the insurance workers’ compensation market in Illinois have significantly increased - up by 21.6 percent since 2010.
The same report reveals that in Illinois the workers’ compensation loss ratio – the difference between claims paid by an insurer to the premiums collected - has drastically improved since 2011. The loss ratio decreased by 7.2 percent in 2015, well ahead of the national average. This drop brings Illinois’ loss ratio below that of the national average.
The National Council on Compensation Insurance (NCCI – an insurance industry rate making agency which provides workers’ compensation information) has issued its workers’ compensation advisory rates for 2017. If insurers follow the guidance provided by NCCI, Illinois employers should see a 12.9 percent cut in their workers’ compensation premiums this year alone. This is the third largest cut in the nation and totals more than Kentucky and Missouri combined. While the NCCI recommended a rate increase for Indiana in 2017.
It is irrefutable that costs in Illinois are dropping for insurers and they are not passing along the savings to employers. The business community continues to cry out for more changes to the workers’ compensation system; however, any further changes to workers’ compensation laws in Illinois must focus on insurance reform and oversight because despite significantly lowered costs, the insurance industry is keeping those savings for themselves, rather than sharing them with employers in the form of premium decreases or refunds. Instead there are demands more “reforms” that only further erode the medical and lost income rights of injured workers and will boost the insurance industry’s bottom line profits by shifting the burden to care for the injured onto the taxpayers.
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* House Speaker Michael Madigan emerged from today’s leaders meeting to say the four tops would meet with the governor again tomorrow.
Madigan said he would appoint Rep. Greg Harris (D-Chicago) to head a new budget negotiating team. Harris chairs an approp committee. “I’m sure there’ll be a more open discussion” at tomorrow’s meeting with Rep. Harris leading negotiations, Madigan said.
* But the Republican leaders emerged afterward to say they’d watched the live video of Madigan’s chat with reporters and they were “confused” by Madigan’s plan to appoint a budget negotiator.
“There was no agreement that there would be another round of negotiating teams,” said Senate GOP Leader Christine Radogno. She said Madigan raised the subject, but nothing was agreed during the meeting. “Another round of working groups at the mid-level was not part of the agreement.”
“We are not interested in reconstituting the working groups,” House Republican Leader Jim Durkin said, adding that it’s now up to the leaders and the governor to cut a deal. The budget working group, he said, appears to be an attempt by Madigan to once again “run out the clock.”
“The rank and file Democrats are desperate for a comprehensive budget,” Durkin claimed, saying Gov. Rauner may end up putting off some of his Turnaround Agenda in order to get a deal.
Radogno said the plan is to return tomorrow and negotiate off the framework devised by the budgetary working group earlier this year. But there would have to be adjustments, particularly in pension funding.
* Madigan, by the way, said the governor talked about pension reform and new revenue.
Senate President John Cullerton didn’t talk to reporters.
Make sure to follow our live coverage post for instant updates.
…Adding… Raw audio of Speaker Madigan’s comments…
* And here’s raw audio of the Republican leaders’ comments…
*** UPDATE *** The Tribune’s take…
Democratic Speaker Michael Madigan on Tuesday indicated there won’t be a state budget unless Republican Gov. Bruce Rauner sets aside his economic agenda, prompting the governor’s allies to accuse the House leader of placing the state “in peril.”
Madigan’s comments followed a closed-door meeting with Rauner and legislative leaders as a temporary stopgap budget to keep government afloat through the end of the year is set to expire. It was the first time the group has been in a room together in several months and followed tens of millions of dollars in campaign attack ads on both sides that sought to demonize Madigan and Rauner as the cause of the record impasse.
The speaker emerged from the half-hour meeting on the first day of the fall session saying another deal to get state government through the end of its budget year in July could happen if Rauner follows “the framework” for previous stopgap agreements. That’s Madigan-speak encouraging Rauner to set aside his so-called Turnaround Agenda, which the governor has made a prerequisite of a larger budget deal.
“If you use the same framework, the odds are you’ll get a budget to finish off this fiscal year, you’ll be able to provide a good level of funding for education, you’ll be able to provide for public safety, you’ll be able to provide for the seniors and the vulnerable in our society,” Madigan said.
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Dart continues call to abolish cash bail
Tuesday, Nov 15, 2016 - Posted by Rich Miller
* Sun-Times…
Cook County Sheriff Tom Dart is calling for abolishing the state’s cash-bond system, saying it’s unfair to low-level defendants who can’t afford to pay and puts society in danger when defendants with violent backgrounds have the money to post bail and are freed until trial.
Dart is believed to be the first elected official in Illinois to propose that the General Assembly scrap the system, said Cara Smith, his top policy official. It would require a change to Illinois’ bail statute — a daunting political challenge.
Currently, judges set bail for most people charged with crimes. Defendants typically need to pay 10 percent of that amount to obtain a bond to get out of jail before trial. In some cases, judges allow for a “recognizance bond,” in which no payment is required.
Dart is proposing a system in which a judge would decide whether a defendant should be released from jail until trial based solely on an intensive background investigation by the court’s staff.
“It would be similar to the investigation that is done on the federal level,” Smith said, adding that it would be more extensive that what is currently being done in Cook County.
* Tribune…
Even advocates acknowledge a switch from the cash-bail system won’t be easily accomplished, in part because of necessary legislative changes and significant cost shifting.
The cash bonds are often used as payment to criminal defense lawyers once a case has been concluded — and to cover part of the fines or fees assessed by judges as well as the 10 percent that goes to cover the expenses of the circuit court clerk’s office. If defense attorneys lose that key revenue source, more cases could go to the taxpayer-funded public defender’s office.
“From the judicial point of view, I think the argument is compelling,” said Winnebago County Chief Judge Joseph McGraw, who chairs the Illinois conference of chief judges. “Looking at the other side of the coin … a lot of other costs will be shifted if we don’t have cash bond.”
Thoughts?
* Related…
* Lawsuit Challenges High Bonds Set by Judges in Chicago
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It all becomes clear
Tuesday, Nov 15, 2016 - Posted by Rich Miller
* Maybe now we know why Speaker Madigan isn’t going to Rome with Gov. Rauner this week. Madigan is a White Sox fan…
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* Tribune…
Community groups, many aligned with the Chicago Teachers Union, are reviving demands to toss out Mayor Emanuel’s appointed school board and replace it with a body selected by voters.
Supporters of an elected school board want state senators to take up a House bill that would do just that. In its current form, the measure would provide for an election for the Chicago Board of Education on a separate ballot in 2018 and divide the city into 20 electoral districts for each seat. Candidates would have to be registered voters and residents of the city for at least one year preceding their election.
The House legislation passed by a 110-4 margin in March, as Speaker Michael Madigan tweaked Emanuel, who opposes an elected school board. Now, a coalition of groups that operate under the umbrella of the Grassroots Education Movement say they want the Senate to have the bill on Gov. Rauner’s desk by the end of the fall session that starts Tuesday.
The bill’s Senate co-sponsors include Sens. Kwame Raoul, Mattie Hunter, William Delgado and Heather Steans. But there’s no indication the bill is going anywhere anytime soon — the chamber is run by Senate President John Cullerton, a top Emanuel ally.
* Sen. Kwame Raoul press release from earlier this month…
Raoul discussed plans to amend the legislation to alleviate some of the concerns he shares with the parents and other stakeholders. This would include reducing the board to 15 members to bring it more in line with other major school boards across the country and including a run-off provision that would put the two highest vote earners head-to-head.
Raoul anticipates a hearing on the legislation when the Senate returns for its fall session later this month.
So far, though, no hearing has been posted and no amendments have been filed. Click here to track the bill.
*** UPDATE 1 *** No amendment was filed, but the Senate just posted it for the Education Committee tomorrow.
*** UPDATE 2 *** The amendment has now been filed. Click here to read it.
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*** UPDATED x1 *** Vrdolyak indicted again
Tuesday, Nov 15, 2016 - Posted by Rich Miller
* Jon Seidel with the scoop…
Onetime powerhouse Chicago alderman Edward R. Vrdolyak, who went to prison after pleading guilty to a high-profile financial scam in 2008, has been indicted on charges of impeding the IRS and income tax evasion.
Vrdolyak had surfaced last year in a federal indictment that accused Daniel Soso, a Chicago attorney, of evading nearly $800,000 in income taxes.
Vrdolyak wasn’t identified by name in the Soso indictment but was revealed in court to be the unnamed “Individual A” in that indictment.
* More…
*** UPDATE *** It was about the tobacco settlement…
The indictment alleges Vrdolyak collected attorney fees in connection with the record $9.2 billion settlement in 1998 between the Illinois attorney general and a number of tobacco companies, even though Vrdolyak was never authorized to perform any work for the state on the lawsuit.
Vrdolyak’s lawyer, Michael Monico, said he is dismayed by the government’s decision to again charge Vrdolyak. He said the former longtime alderman will plead not guilty to the two-count indictment in federal court next Tuesday.
Monico said Vrdolyak had set aside the amount he believes he owes in taxes — more than $250,000 — in an escrow account and was waiting to turn it over when the government formally requested it.
“We have been waiting for the government to request it in the appropriate way,” Monico said. “This is an old case. The government made a mistake in the way they did this levy notice, and we’ve had this money in escrow — for years.”
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ILRB impasse ruling could happen today
Tuesday, Nov 15, 2016 - Posted by Rich Miller
* Kim Geiger…
A nearly two-years-in-the-making labor dispute between Republican Gov. Bruce Rauner’s administration and the largest state worker union is set to come to a head Tuesday when the Illinois Labor Relations Board meets to weigh in on the issue. […]
For months, an administrative law judge at the labor board took testimony and collected paperwork on the case, ultimately producing a 400-page decision that left the situation even murkier. The judge found that the parties were at impasse on some issues, but not on others. She recommended that the administration be allowed to impose its final offer on the impasse issues and return to the negotiating table on the others.
Both sides objected to the decision.
Now it’s up to the labor board, whose members are appointed by the governor, to deliver the final word. Tuesday’s hearing in Chicago will feature a presentation from the labor board’s executive director followed by an expected oral ruling from the panel of appointees. The board can decide to uphold the administrative law judge’s recommendations, or it can issue a different decision.
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* From Abe Scarr, the director of Illinois PIRG, on the coming override of the governor’s automatic voter registration veto…
Rich,
We expect SB250 to be called in the Senate today and for it to pass that chamber. I also just heard that the Senate Republicans will be introducing a competing AVR bill, with the blessing of the Governor. This makes me think it will be harder to get R’s on board to override the veto. We hope to have at least a handful of Republicans on in the Senate and may still be able to override in the House with just Democrats, but of course that super-majority has not held and we have attendance issues to contend with during veto.
I will withhold any judgment of their bill on the merits until I have a chance to read it, but it is certainly late in the game to introduce an alternative measure, and it’s hard to read as much more than cover to not support the override. No member of our coalition or the bill sponsors were consulted for input in the drafting of this counter-proposal.
I can share more as I learn more.
Abe
*** UPDATE *** As expected…
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A look at the exit polls
Tuesday, Nov 15, 2016 - Posted by Rich Miller
* Pearson digs into exit polling…
Nationally, white voters made up 70 percent of the electorate and they went strongly for Trump — 58 percent, to 37 percent for Clinton. In Illinois, whites represented 65 percent of the vote and they split equally between the two contenders at 47 percent. […]
Nationally, white men made up 34 percent of the vote and sided with Trump at a 2-to-1 rate: 63 percent to 31 percent for Clinton. In Illinois, white males represented 32 percent of the vote, but the split was much closer: 49 percent for Trump to 41 percent for Clinton. […]
National exit poll results showed white females making up 37 percent of the vote and favoring Trump 53 percent to 43 percent, despite Clinton’s theme of seeking to become the first woman president. In Illinois, Clinton won the white female vote. That group made up 33 percent of the electorate, but 52 percent sided with Clinton to 45 percent for Trump. […]
White women with a college degree, thought to be Clinton’s base, represented about one-fifth of voters nationally. But Clinton failed to run up the score, taking 51 percent of these voters to 45 percent for Trump.
However, in Illinois, where white college graduate women represented 18 percent of the vote, Clinton nearly doubled up Trump at 64 percent to 33 percent.
You can delve into the exit polling numbers yourself by clicking here. Tell us what you find.
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Corporate tax hike proposal slammed by IMA
Tuesday, Nov 15, 2016 - Posted by Rich Miller
* From the Illlinois Manufacturers Association…
Late today, Rep. Will Davis (D-Crestwood) filed a 581-page amendment to HB 293 that is posted for a hearing in the House Revenue & Finance Committee on Tuesday, November 15. This massive amendment would RAISE TAXES ON EMPLOYERS BY MORE THAN $2.5 BILLION to help balance the state’s budget.
The amendment reflects language that we have previously seen on several occasions, most recently in HB 4300 (Franks) that was never called for a vote.
The proposals included in the amendment as described by the proponents include the following:
* Increase the corporate income tax rate from 5.25 percent to 6 percent
* Create alternative minimum corporate tax based NH model
* Eliminate the Manufacturing Machinery & Equipment exemption
* Eliminating the Single Sales Factor (adds property & payroll tax on manufacturers)
* Eliminating the foreign & domestic divided deduction
* Eliminate the Research & Development credit (it is currently expired)
* Decoupling from federal Qualified Production deduction
* Repeal the Estate Tax exemption increase
* Repeal the non-combination rule
* Eliminate the continental shelf exemption
* Eliminate Enterprise Zones
* Eliminate EDGE tax credits
* Reform the Retailer¹s Discount (KY model)
* Reform other collection discounts
* Eliminate E-10 incentive
* Eliminate rolling stock exemption
* Eliminate the water¹s edge credit
* Eliminate rail carrier sales tax exemption
* Treat online hotel booking the same as telephone
* Cap the Film tax credit
* Extend sales tax to Internet downloads
* Eliminate subsidies for coal companies
* Enact a 5 percent severance tax on coal gross production value
* Repeal the CME/CBOE tax incentive
* End the for profit hospital tax break
* Eliminate the High Impact Business investment credit and dividend subtraction
* Require world-wide reporting or water¹s edge with full inclusion of foreign dividends and foreign tax havens
* Require airlines to pay tax on all of their taxable income
The legislation is here.
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More finger-pointing
Tuesday, Nov 15, 2016 - Posted by Rich Miller
* Tina Sfondeles at the Sun-Times…
Madigan spokesman Steve Brown said the responses from Republican leaders on Monday have all been heard before: “Clearly it was nothing new. We’ve already heard this 30 times before. Maybe tomorrow they’ll have a budget to propose.”
Background is here.
Brown is right that the governor has yet to propose a real budget as the state Constitution requires. But the General Assembly is also required by that very same document to pass a balanced budget, and it has not done so in a long while.
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