‘Grand bargain’ on the ropes; more jobs created

‘Grand bargain’ talks hit a snag
Since the beginning of the year, the Illinois Senate has been in bipartisan talks to work out a deal on both the budget and the structural reforms that have been under consideration for more than two years. At the start of the 100th General Assembly in January, Senate leaders introduced 13 bills dealing with the budget, taxes, workers compensation reform, procurement reform and a handful of other issues. Then a bipartisan group of Senators tried to work out the differences between them to get the bills passed and sent over to the House.

While a few bills did pass, several are still stuck in the Senate. Because the intention was to have a comprehensive agreement, each bill’s enactment is conditioned upon the others being passed: in other words, no one bill can become law by itself, they must all pass. As of this week, the so-called “grand bargain” remains stuck, as negotiators have not been able to come together on an agreement. I will keep you updated should an agreement be reached in the Senate and the bills arrive in the House.

Revised job numbers show more jobs created in December
Initial unemployment numbers for December indicated that Illinois had lost 16,700 jobs during the month, but a recent revision from the Illinois Department of Employment Security showed that the state actually gained more than 2000 jobs in the last month of 2016. The change was due to updated information received from the U.S. Bureau of Labor Statistics. Overall, unemployment remains at 5.7%, which is still above the national average. In January, Illinois employers added another 1700 jobs.

State revenue forecast decreases The Commission on Government Forecasting and Accountability (COGFA) is the nonpartisan budget forecasting group for the General Assembly. COGFA reported to the legislature last week on trends in state revenues for the reminder of the current fiscal year, which ends on June 30, and also for the upcoming fiscal year. COGFA reported on patterns of modest year-over-year gains as well as some declines in many categories of revenue that are closely tied to overall economic activity. Areas where revenue growth was weak or absent altogether included individual income taxes, corporate income taxes, sales taxes, public utility taxes, cigarette taxes, and corporate franchise taxes. This finding resulted in COGFA lowering Illinois’ expected revenue forecast by $657 million.

All of this modest or absent growth is another warning sign of the state’s worsening fiscal situation. This pattern of slowing revenue, while state spending continues to increase, is one of the main reasons the state cannot pay its bills on time. The state’s ledger currently shows more than $12 billion in unpaid bills.

House Republican offers free alternative for translating General Assembly websiteOn Tuesday the House debated a bill which would require the creation of a Spanish language General Assembly website. The cost of the new website and the translation service was estimated by the bill’s sponsor to be a minimum of $60,000 and potentially much more. During the discussion, Rep. Keith Wheeler (R-Oswego) offered a different alternative that is both free and more inclusive as it would translate the General Assembly website (www.ilga.gov) into any of more than 57 languages. Rep. Wheeler has posted links to the translation service for multiple languages on his website. The translation service can be found at www.translate.google.com.

Science and Technology Coalition reports record number of university-supported startups In a report released earlier this month, the Illinois Science and Technology Coalition announced that 804 entrepreneurial technology startups have been launched with help from coalition public and private higher education institutions during the past five academic years. More than half of these firms remained active with headquarters operations in Illinois.

This innovative activity did not concentrate on any one specific industry. Those firms reporting to the coalition on the focus of their work said that they were engaged in innovations in “biomedical and healthcare,” software, “apps and information technology,” finance and business services, and “agricultural and food technology.” No single industrial area was the focus of more than 17% of the whole. All of these fields are areas that have been designated as potential hubs of entrepreneurial activity for the state.

It appears that startup activity is accelerating in Illinois. The full report shows that 285 qualifying startups were launched by coalition-affiliated entrepreneurs in the 2015-16 academic year, up from 146 in the previous years and 158 the year before that. The coalition is a consortium of Illinois public and private universities, and the venture-capital wing of the private sector.

Illinois’ 2016 deficit pegged at $9.6 billion last fiscal yearThe Office of the Illinois Comptroller released the Fiscal Year 2016 deficit number in the Comprehensive Annual Financial Report last week. The deficit figure is believed to represent the largest deficit in Illinois’ history. According to the report, contributing factors to the deficit include the expiration of much (although not all) of the temporary state income tax hike which was enacted in January 2011, poor revenue numbers from the remaining tax streams, and very high growth rates in continuing state expenses such as pensions and health care costs.

Illinois is the only state in the nation which has lacked a complete budget for two consecutive fiscal years. Some state government operations which have been seen by courts as essential have continued under court orders. Some additional spending is protected by continuing appropriations. This pattern of continuing to spend while relying on inadequate revenues has combined to reduce Illinois’ credit rating to BBB, giving the state the weakest such rating awarded to any of the 50 states.  When Illinois sells 10-year notes to borrow money, it has to pay an interest rate that is 213 basis points higher than the rate paid by a borrower that is triple-A-rated.

Did You Know?

Illinois’ first state capital, Kaskaskia, almost became a part of Missouri. The issue was not settled until the U.S. Supreme Court issued a ruling a century and a half after the capital city was relocated. The seat of government was moved out of Kaskaskia shortly after statehood due to frequent flooding. Finally, in 1881, a flood of such severity struck that the entire town was destroyed and the Mississippi River cut itself a new course east of the town – separating it from the rest of Illinois. Missouri claimed the land west of the Mississippi, but Illinois refused to relinquish its claim. After decades of back and forth, the Supreme Court ruled in 1970’s case of Illinois v. Missouri that the boundary of Illinois included the town, regardless of the changes to the river’s course.