* From Rep. Scott Drury…
From my vantage point in the House, it has become increasingly clear that neither Governor Rauner nor House Speaker Mike Madigan wants a budget. Each is more concerned with the upcoming election and preserving power than the best interests of the public. Had both sides been forced to simultaneously submit truly balanced budgets back in 2015 – as I publicly called for – all of this would have been avoided. That is type of honest change Illinois yearns for.
…Adding… Morty in comments…
The first sentence is fairly true….the rest is Drury being Drury (insufferable, egotistical, and self-serving)
Drury can be correct on a small matter and ultimately lose on the message because…he wouldn’t be Drury otherwise.
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* Press release…
Governor Bruce Rauner today released the following statement regarding the General Assembly’s budget negotiations:
“If the legislature fails to send a balanced budget package to my desk by Friday, we will have no choice but to keep them in session until they get the job done.”
*** UPDATE 1 *** Tina Sfondeles got the Madigan response…
Illinois House Speaker Michael Madigan’s spokesman Steve Brown called extra special session days “not surprising.”
“All he [Rauner] needs to do is understand that the Legislature has gone way past middle ground to compromise,” Brown said. “We’ve been working on his reforms.”
*** UPDATE 2 *** Press release…
Democratic candidate for governor Daniel Biss released the following statement in response to Governor Rauner’s threat to extend special session if the legislature does not pass a balanced budget by Friday.
“The Senate did its job and passed a budget. Instead of holding the state hostage to costly stunts, demands, and political manipulation, he needs to sit down with Speaker Madigan, make hard decisions and find compromise, and end this madness.”
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* I received this photo earlier today…
* Along with this text message…
The Senate janitors told me that they have to take the trash to the Stratton now because the dumpsters were just removed because state didn’t pay? Might want to check
I’ve since seen some tweets and Facebook posts about it.
* So, I checked with Secretary of State Jesse White’s spokesman Dave Druker. The SoS controls the Statehouse, so they’re in charge.
Dave told me that the contract is expiring with the current garbage collection provider, so it’s now removing its dumpsters. The new provider, which submitted a lower bid, is starting on Monday.
In the interim, janitors will have to take the trash to the Stratton Building.
* It would’ve been a great story, though.
*** UPDATE *** I’ll bow to popular demand and make this a caption contest.
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We really are horrible at this governing thing
Wednesday, Jun 28, 2017 - Posted by Rich Miller
* From NCSL…
Illinois is currently the only state ever to go two years without passing a state budget
I probably knew that already, but, man. It just hit me how long states have existed and yet we’re still the first ever to (not) do this. Mind blowing.
* And, of course, there’s this…
Neither S&P nor Moody’s has ever downgraded a U.S. state to “junk,” a rating that signals heightened risk of default.
No state. Ever.
Brace yourselves.
[Hat tip: Elizabeth Campbell and John McCormick.]
* Related…
* Also…
* As lawmakers spar over education funding reform, some local schools fear they lack cash to open in August: When State Sen. Dale Fowler, R-Harrisburg, hosted a meeting Tuesday to discuss cash flow issues with 22 Southern Illinois superintendents from the 59th Senate District, he found that at least four school districts may not have enough working cash to open their doors in August.
* Budget impasse could have ‘accreditation consequences’ for Illinois colleges and universities
* Community Colleges Brace For Third Year With No State Budget
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Did Madigan really make a “demand”?
Wednesday, Jun 28, 2017 - Posted by Rich Miller
* Brian Mackey…
House Republican Leader Rep. Jim Durkin says Madigan is insisting that Rauner sign off on a bill to let Chicago raise cell-phone fees.
“Three-and-a-half days out before the close of the fiscal year, and new demands from the speaker over-complicates closure to this process,” Durkin said.
If Chicago raises the fees, the money would be used to pay for 911 services. The bill would also extend funding for downstate 911 centers, and would let AT&T phase out traditional landline telephone service.
The legislation passed with bipartisan support, but Rauner prefers a so-called “clean” bill that would allow current 911 services to continue.
House Democratic spokesman Steve Brown said he’s not sure he’d call Madigan’s position on the legislation a “demand.” He says Republicans outlined Rauner’s objections to the Chicago mobile phone fee hikes that would be allowed by the legislation, and Madigan responded that the governor should just sign the bill.
Senate GOP Leader Radogno is a hyphenated co-sponsor of the bill.
…Adding… Relevant press release…
Paul Caprio, Director of Family-Pac, today urged Governor Rauner to veto S.B. 1839.
Caprio said, “We strongly oppose S.B. 1839 for two important reasons. First, we oppose the increase in the 911 telephone tax. Illinois does not need another tax increase on this essential service which hits hardest on those least able to afford it.”
Caprio continued, “Secondly, we strongly object to the provision in this bill that would effectively end telephone land lines and create a cell phone monopoly in the state. This is reckless intervention by government with the freedom to choose which Illinois consumers should have. S.B. 1839 is a classic example of state government promoting ‘crony capitalism’ as opposed to responsibly regulating public utilities.”
Caprio added, “Without land telephone lines in the state of Illinois, our 1st Amendment right to redress grievances through communication with our legislators will be greatly impeded. This is not a time when Illinois should be passing legislation that reduces communication between voters and their Representatives.”
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*** UPDATED x1 *** State gets a brief reprieve
Wednesday, Jun 28, 2017 - Posted by Rich Miller
* The plaintiffs are Medicaid managed care providers operating under a federal consent decree. They’re demanding the state pony up at least $500 million a month. The state simply doesn’t have the money…
*** UPDATE *** AP…
A lawyer has told a federal judge in a civil case surrounding billions of dollars in unpaid Medicaid bills that trying to squeeze money out of Illinois as it heads into a third year without a budget is like trying to squeeze “blood out of a stone.” […]
State attorney Brent Stratton said Illinois can’t come close to finding a spare $500 million. He said it could pay $150 million at best, half paid by federal funds.
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* ICPR…
Right now, the oldest bills held by the Illinois Comptroller’s office date back to July 1, 2015, when the budget impasse began. Bills being paid on a day-to-day basis still date back to October of 2016. The Comptroller estimates that there are over 188,000 bill requests from state agencies waiting for payment in her office.
Whew.
Just let that sink in for a bit. The oldest bills date back to 7/1/2015.
Unreal.
…Adding… From the Wall St. Journal…
The state owes Illinois dentists $225 million, and some of those bills go back 23 months, according to the Illinois State Dental Society. Some dentists in college towns or other areas with lots of state workers are selling their receivables to keep their heads above water. Others are asking state employees to pay in cash, says Ronald Lynch, a dentist in Jacksonville.
“There are dentists who have to do this just to survive,” says Dr. Lynch. “It’s very stressful.” Dr. Lynch, who hasn’t asked for such cash payments, says he is owed about $250,000, forcing him to forgo a salary so he can continue to pay bills and his employees.
Health care is the capital’s biggest employer apart from the state itself. Springfield’s two hospital systems — Memorial Health and HSHS St. John’s — say they together are owed more than $200 million by the state. Edgar Curtis, Memorial Health’s chief executive, says he has put off a $100 million capital-expansion project because of the uncertainty. “We hate to see projects being shelved because of what is going on at the state level,” he says.
* Onward…
When payments to vendors are not completed on time, there are financial consequences for the state. The Illinois Prompt Payment Act is a state law that sets mandatory penalty interest payments for most bills over 90-days past due. For most expenses, the interest penalty is 12% per year.
Since the beginning of the year, Illinois has paid $181 million in interest on late payments alone from debts created in previous years. An estimate from the Illinois Comptroller’s office says the state will have accrued $800 million in penalty interest this year that must be made in future fiscal years. The state must pay interest on every bill from the backlog, leaving less revenue left over for other bills in the queue.
That’s $800 million that can’t be spent on social services, schools, universities, public safety, you name it.
* A look at other states…
Habitually paying “late fees” through interest rates is not a practice used in other highly populated U.S. states. Other states have similar “prompt payment” laws that set late payment dates and penalties for debts in those states. These laws generally give states between 25 and 45 days to pay bills, and penalties range from 5% to 10% annually.
However, no current significant bill backlogs have been reported in California, Texas, New York, Florida, or Pennsylvania. While they each have their share of financial challenges, Illinois’ unprecedented lack of a budget has created a concept that simply does not exist in other states: $15 billion in unpaid bills.
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* Tribune…
Rauner wants a statewide property tax freeze and a major overhaul of the workers’ compensation insurance program to cut costs on businesses, which he views as key to economic growth. Madigan, who long argued Rauner should not hold the budget process “hostage” to political demands, now says he has “reluctantly” given in on the need for some changes in order to end the impasse. Still, Madigan warned that Democrats will not simply give Rauner everything he wants, repeatedly calling on the governor to be “reasonable.”
To that end, Madigan said Democrats planned to vote on several pieces of legislation Wednesday designed to meet the governor part of the way, though Republicans said they feared the proposals would be “watered down” to the point they would achieve little in the way of change.
“I can’t determine whether they are sincere or not,” said House Republican Leader Jim Durkin of Western Springs.
The GOP pointed to a Madigan pattern of offering up versions of legislation he knows they can’t support, then blaming them when a deal falls apart. Democrats countered that Republicans were unable to recognize a fair bargain when offered, saying Rauner was immovable.
* Leader Durkin on today’s votes…
“Only three days remain in this fiscal year, time is running out. So after today’s political theater and ‘gotcha’ votes have finished, I’m calling on the legislative leaders to resume meeting and continue negotiations to bring this to a conclusion,” said House Republican Leader Jim Durkin.
That’s a very good response. Nobody should allow somebody else to derail the train.
Also, it’s decent political cover in case this whole thing does crash and burn beyond repair.
…Adding… From Durkin’s spokesperson via text…
Leader Durkin has offered his office for leaders to meet at 2 pm today
…Adding More… From the House GOP…
Leaders are meeting at 12:30 pm in Speaker Madigan’s office
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* Remember when I warned you there would be blow-ups this week? The first big one happened today.
Senate President John Cullerton emerged from today’s leaders’ meeting saying it was a “very positive meeting. Very productive.” Click here for a transcript of his remarks.
Speaker Madigan told reporters later, “We had a very calm and reasonable meeting today. And everybody understands the gravity of the situation. I think (Republicans) understand that it’s their responsibility to persuade the governor.” Madigan said his chamber will start voting on his reform proposals tomorrow. “There is substantial compromise contained in the positions which will be advanced by the House tomorrow.”
* But a clearly agitated House Republican Leader Jim Durkin told reporters later that Madigan had once again “moved the goal posts.”
Madigan, Durkin claimed, added a fresh demand that Gov. Rauner sign the AT&T bill, which includes a mobile phone fee hike to subsidize 911 emergency call centers. Rauner has said he will veto the bill.
Durkin said that while Madigan expects him to convince the governor to accept reasonable demands he can’t ask the governor to get behind these things unless he can first convince his own members to support them.
Leader Durkin insisted that Madigan “show his cards” on a tax hike and produce a budget implementation bill to show exactly where he’s cutting. “Unless we see revenue, we cannot determine whether it’s a balanced budget,” he said.
And he characterized tomorrow’s floor votes on Democratic reform bills as just that: Democratic bills without bipartisan compromises. He has negotiators working on deals with Democrats - some of whom were meeting with each other during the leaders’ meeting - but none of the talks are yet finalized.
“It’s a two-way street,” Durkin said. “I can’t determine if they’re sincere or not.”
“We need to resolve this in a bipartisan manner by the end of the week,” Durkin said.
* Meanwhile, Rep. Greg Harris (D-Chicago) outlined the House Democrats’ budget plan. Here are a few dot points…
* The state is currently spending $39 billion. Rauner’s introduced budget was $37.316 billion. The House plan is $36.489 billion
* HDems wanted to take the “best ideas” from SDems and GOP plans and accommodate requests of the governor
* $1.850 billion for group health insurance. Full payment for next year.
* 5 percent reduction to operating lines for most agencies. Give directors lump-sum flexibility.
* HDem plan is a five percent cut to higher ed as opposed to a 10 percent cut in the GOP plan.
* Goal is to “live within the confines” of the revenue set by SB 9. But is not ready yet to release an actual revenue proposal.
* There are no new programs in the HDem budget…. But they’ve decided to supplement existing programs.
* Transferring money from new computer software projects, which totaled about $900 million.
* “We are showing a teeny, tiny surplus.”
* $7.394 billion for pensions. Full payment.
* Borrow money to pay off bill backlog, saving hundreds of millions in interest penalties to providers, but there’s no set plan yet
…Adding… Hmm…
…Adding More… I’ll have to watch her broadcast, but I was just told this by a Republican spokesperson…
No blow ups, just frank discussion.
..Adding More… From Durkin’s office…
Talk going around that Madigan may have ‘blown a gasket’ during leaders meeting: Leader Durkin says he did not witness it.
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* One of the big objections the governor and some Republicans have to the new House Democratic property tax freeze proposal is how the HDems exempt pension payments from their four-year freeze.
The Illinois chapter of Americans For Prosperity use Springfield as an example for why this exemption could blow a big hole in a freeze…
Exempting pensions from a property tax freeze would fail to address a substantial contributing factor to our highest-in-the-nation property taxes. Take Springfield, for example. Here in our fair capital city pension payments consume 80% of all property taxes paid to the city.
The first image is from Springfield’s FY2016 CAFR [Comprehensive Annual Financial Report] (pg. 10) showing property tax revenue of $27.9M. The second image is a Sangamon County Clerk’s Office 2016 Levy and Rate Report showing the city’s property tax extensions for pensions totaled $22M, or 80% of all property taxes paid by Springfield residents to the city. Clearly exempting pensions from a freeze will have little effect on ever-increasing property taxes.
* You can click on the images for the original documents…
* So, what does this mean? Well, in Springfield, at least, including pension payments in a freeze could create a serious squeeze at the local level. While polls shows that people hate their property taxes, they’re probably not gonna love reduced services, either.
And there is a real problem with the unfunded liability levels for police and fire pensions. Those funds weren’t subjected to the same requirements as other municipal pension funds, so lots of local governments skimmed and skipped payments. Taxes will have to rise to pay for that and/or governments will have to cut.
* Meanwhile, here’s an AFP press release on the HDem proposal…
“This legislation is a step backwards if we are to deliver true property tax relief to Illinois homeowners and small businesses. Exemptions for debt service and unpaid pensions render meaningless any promises of taxpayer relief,” said AFP-IL Director Andrew Nelms. “Our property tax burden is driving families and jobs from our state. Illinoisans acknowledge that their sky-high property taxes are a problem and legislation to implement a meaningful freeze would be a welcome sign that our lawmakers understand the gravity of the problem. Illinois lawmakers should instead pass a long-term property tax freeze with no exceptions. Beleaguered Illinois homeowners and businesses deserve true tax relief.”
* And for the other side, here’s Phil Kadner…
House Speaker Michael Madigan was the latest to join the chorus. Madigan over the weekend said he would agree to a property-tax freeze, if the governor were prepared to spend more state money on the Chicago Public Schools.
Madigan is largely responsible for creating this problem. He has never been a champion of spending on public education outside of Chicago. And his law firm has made a fortune on property-tax appeals cases.
This state is rotten to the core. Instead of addressing the real problem, the state budget and state debt, Rauner and Madigan want to appease taxpayers by freezing their property taxes, which will hurt public schools.
It’s a bait-and-switch tactic to make voters feel better about a state that can’t pay its bills. With the ship of state taking on water, elected officials want to throw your children overboard.
*** UPDATE *** From Springfield’s budget director William McCarty…
Rich,
Our pension obligation issue is more pronounced than that 80% calculation would lead you to believe. The nonmajor governmental portion of property taxes collected are from SSAs and the increments from TIF districts. Absent SSAs and TIF, most of that money would go to other taxing districts, not Springfield.
It is likely that in the next fiscal year, police and fire pension obligations will exceed the city’s General Fund property tax revenue for the first time ever (i.e. 100%+) Even if we were to include the city’s true portion of the tax increment monies, I would venture to guess we would still be at or near the 100% level next year. In the past, we paid for the library, debt service and other items from property taxes. Those days are gone.
One other thing, the City of Springfield component rate of total property taxes has not been increased since 1984. Our taxes have increased due to development and increases in valuation, not a change in the rate.
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* A friend of mine read the post yesterday about Family Focus laying off 100 employees and slashing its services. The group provides parenting classes for DCFS families, “drastically reducing the percentage of parents that reengage with the system.”
My friend said she couldn’t sleep last night and explained why via text message this morning…
I was playing out all the awful scenarios. DCFS is already WAY over capacity in terms of caseloads. Without Family Focus and other similar organizations, those numbers go up. That means more and more children who are being neglected and abused who are just waiting for a grown up to step in and save them will die. That’s not hyperbolic. That’s what actually happens.
Remember when Rauner said Quinn owned the consequences of his dysfunctional DCFS?
We’re talking about getting to a point where there’s a tangible body count. Of children.
* And it’s not just DCFS children. Here’s Mark Brown…
Operators of group homes across Illinois say they are facing a staffing crisis because they can’t pay high enough wages to attract workers.
And they say they can’t pay workers more because for nearly 10 years the state has not increased the reimbursement rates it provides for the care of individuals residing in their homes.
As a result, 13 group homes across Illinois have closed in the past year while another 22 have consolidated, according to the Illinois Association of Rehabilitation Facilities.
That translate into fewer group home openings for the Lenza twins and thousands of other families in a state that was already regarded as woefully short of housing opportunities for disabled adults.
Illinois has more than 8,500 individuals with developmental disabilities on a waiting list for residential services. Even when approved for funding, they often have trouble finding a group home in their area that will accept them.
Go read the whole thing.
…Adding… Pritzker campaign…
Family Focus, an early childhood development center with seven locations across the Greater Chicagoland area, has announced a “mass layoff” amid the historically-long budget crisis manufactured by Bruce Rauner. A stunning 71% of their staff is being let go to end a “severe cash flow crisis” as they wait for $2.7 million in state payments. That amounts to another 100 jobs lost under Rauner’s failed leadership.
Meanwhile, Bruce Rauner spent his day yesterday visiting Iowa to attend a ribbon-cutting ceremony and is the happiest he’s been in 20 years.
“For two and a half years, Bruce Rauner has been utterly tone deaf, saying that ‘we’ll take short-term pain for big long-term gain.’ But these are people we’re talking about, not line items on a budget,” said JB Pritzker. “This is not short term. These are children. You can’t unhurt a child. You can’t redo childhood. The children and families who lose access to these services will be permanently affected. Is Rauner’s special interest agenda worth endangering the lives and well-being of the 17,000 families Family Focus serves?”
…Adding More… From the DGA…
Late last Friday, Governor Rauner’s administration announced the appointment of Beverly Walker to head the state’s troubled Department of Children and Family Services after the resignation of George Sheldon.
Governor Rauner has not, however, gone into any details about the scandals that engulfed DCFS and played a part in the Sheldon’s resignation. Nor has Rauner explained to the public what it was doing to correct the mistakes of the past and prevent future tragedies. In his only public comments on Sheldon’s resignation, Rauner said his administration was “investigating everything” pertaining to the ex-Director’s tenure, yet the public has seen nothing.
All he public knows is that Bruce Rauner did not ask for George Sheldon’s resignation and does not think his hiring was a mistake. That is worrisome for future reform.
“Governor Rauner cannot simply wish away the crisis at the Department of Children and Family Services,” said DGA Illinois Communications Director Sam Salustro. “Governors lead by showing the public they are actively working to address issues, but Bruce Rauner has failed the leadership test by hiding from accountability. The public deserves an acknowledgement from Governor Rauner that his administration failed to protect children and a full accounting of past mistakes.”
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* Reuters…
A U.S. judge should order Illinois to pay Medicaid providers about $1 billion a month to ensure medical care continues for the three million recipients of the health program after talks with the state reached an impasse, according to a court filing on Monday.
The move would cause a huge problem for the cash-strapped state, which has accumulated a $15 billion bill backlog due to a budget stalemate between its Republican governor and Democrats who control the legislature. It could force Illinois to stop making full payments on other state-mandated or court-ordered spending such as pensions and payroll.
The filing in U.S. District Court by attorneys representing Medicaid recipients asked Judge Joan Lefkow to order the state to pay $500 million a month for four months to start reducing a $3.1 billion pile of unpaid bills owed to managed care organizations that turn pay doctors and others.
As long as Illinois remains without an enacted budget, the proposed order calls for the state to spend an additional $586 million a month to cover Medicaid-related bills incurred after June 30, 2017.
The proposed order noted that federal reimbursements for Medicaid would reduce Illinois’ outlay to $543 million a month.
Oh, this is so not good. As we’ve already discussed, Illinois will barely have enough cash to make its “core” payments in July and will fall $185 million short of having enough money in August for those payments.
A court hearing is scheduled for later today tomorrow at 9:45. (For some reason, I keep thinking today is Wednesday. Maybe it’s because we worked over the weekend.) Stay tuned.
The legal motion is here.
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