Adjournment deadline passes, no agreement on budget
The House adjournment deadline came and went Wednesday night without an agreement on a budget for either the current fiscal year or the next fiscal year. Both the House and Senate will now be in “continuous session” over the summer. With the passing of the May 31 adjournment deadline, it will now take a three-fifths majority, or 71 votes to pass a bill in the House and 36 votes in the Senate.
Monday night, Democrats on a House committee passed an income tax increase on a party-line vote. Senate Bill 9 would raise income taxes by almost $5 billion to help close the budget deficit for the current fiscal year and the projected deficit for next year. However, the tax increase alone will not solve the state’s problems. It needed two additional factors: improvements to our jobs climate and reforms to our broken political system. The first would create jobs and generate more tax revenue, thus helping us out of the deep budget hole we are in. The second would reduce the kind of waste, inefficiency and mismanagement that have plagued state government for decades.
A stand-alone tax increase is a short term solution which guarantees we will revisit this issue again the near future. These reforms would actually start fixing the flaws in state government that make it so hard for us to solve our long-term problems.
The General Assembly will now go into overtime for the third consecutive year. As I mentioned, it now takes three-fifths supermajorities to pass legislation, so it is now impossible for one party to pass bills on its own. It will now require negotiation and compromise in order to get anything done.
Several more of the “grand bargain” bills passed the Senate and made it at least part of the way through the House process, but did not get called for a vote. Those bills are still alive and are expected to form the basis of our activity in the upcoming June session days. In addition to the budget, we also need to see action on workers compensation reform and property tax relief. The discussions will continue and will hopefully lead to an acceptable compromise in time.
This is all incredibly frustrating. It shows the folly of Speaker Madigan and the Democrats who control the General Assembly in their decision to waste so much time in May when we could have been working on a budget compromise. Cancelled session days or days in which the House only met for 45 minutes were far too common this past month. Meanwhile, schools, service providers and everyday Illinoisans wait and wonder when we will get our work done. This is unacceptable.
School funding reform bill still needs work
Earlier this year, a bipartisan commission presented the General Assembly with a series of recommendations for reforming the way Illinois funds its public schools. I was eager to read their report and review their suggestions for getting us to a more equitable and adequate funding formula for public schools. One of the bills in the Senate “grand bargain,” Senate Bill 1, was devoted to reforming the school funding system. Unfortunately, this bill still has a number of flaws and shortcomings that should have been addressed before it was brought up for a final vote.
Senate Bill 1 makes big promises to local schools, but they are promises that cannot be kept. Right off the bat, the bill includes a bailout of Chicago Public Schools which forces schools in the rest of the state to divide up whatever is left. Schools outside Chicago enroll 77% of the total public school students in Illinois, but under Senate Bill 1 they receive only 30% of the new funding. The bill also promises more funding for school districts, but without an appropriation from the state that is just another empty promise. We need to work to improve this bill and produce a better, fairer system for funding our schools.
Lack of budget leads to impending crisis in Illinois debt market
Market prices in late May for Illinois-issued securities, including but not limited to general obligation debt, indicated a significant belief among market traders that Illinois’ credit status could continue to decline in the near future. Recently, the interest rate paid by Illinois taxpayers to lenders willing to purchase 10-year Illinois General Obligation (G.O.) bonds rose to 4.43%, far above the interest rates on those that are rated triple-A (AAA).
Currently, the nation’s three largest credit-rating agencies rank Illinois G.O. debt at the equivalent of BBB with a negative outlook. That is only two notches above “junk bond” territory. Implementation of the “negative outlook” posted by Fitch Ratings the other firms could lead to Illinois’ G.O. debt being cut to BBB-, the lowest rank available for investment-grade securities, and then to the junk-bond-level BB+. The fact that Illinois taxpayers are paying interest rates more than double the rates charged against AAA borrowers suggests a real belief in credit markets that this was a serious possibility facing the state. Market analysts have told clients of key lending coordinator Citigroup that the 4.43% interest rate currently being paid by Illinois and its taxpayers already anticipates, or “prices in,” a further cut in the Illinois G.O. credit rating from BBB to BBB-.
Illinois’ decade-and-a-half of structural deficits are a major factor in the current credit rate crisis, which also affects many private-sector entities in Illinois, including those who are owed a portion of the $14.5 billion backlog of unpaid bills.
Also affected are public sector entities, including state universities, who are depending upon funding from the state. Many public universities have seen cuts in their credit ratings in recent months that track the cuts imposed on the state. Credit ratings of units of Illinois local government and public school districts are also seen as being at risk from Illinois’ current budget impasse.
Police training and land stewardship bills passed both houses
Two bills which I sponsored passed both houses in the last week. House Bill 305 is a bill which changes the training requirements for hiring police officers to allow departments to hire those who have completed two years of a four-year degree, instead of requiring applicants to have completed a two-year associate degree program. The Senate made a small change to the bill. If the House concurs in the Senate’s change, the bill will be on its way to the Governor. Senate Bill 1029, which offers matching grants for stewardship of public lands, also passed both houses and is now awaiting action from the Governor.
Overall, five of my bills passed the House this spring, and three have reached the Governor’s desk.
Did You Know?
Illinois became the first state to ratify the 19th Amendment to the U.S. Constitution; which granted women nationwide the right to vote; on June 10, 1919. The House vote was 132-3 and the Senate voted 46-0. Illinois was the first state by a narrow margin: the vote in Springfield occurred just one hour before Wisconsin’s General Assembly made it the second state to ratify the amendment.