Observations and comments about state government by State Representative Robert W. Pritchard.
June 24, 2013
In this issue:
· Pension Reform Takes a Positive Turn
· Governor, Attorney General Need to Make a Decision
· More Credit Downgrades; Increase Cost of Borrowing
· Job Picture Improves for Downstaters
· Housing Report Shows Drop in Foreclosures
· Grants Available for Rural Home Repairs
· Another Advisory Committee on Education Funding Takes Shape
Pension Reform Takes a Positive Turn
I admit that I’m an optimist when it comes to the legislature. Perhaps it’s my religious upbringing or my granddad’s philosophy but I believe everyone wants to do the right thing at some point. I believe the legislature is at that point regarding pension reform.
President Cullerton and Speaker Madigan have finally realized the reforms they have each been championing won’t pass both chambers. Consequently they were willing to step back and let members of the General Assembly form a Conference Committee to see if they can resolve the impasse and craft a reform that is constitutional, fair, reduces the state’s annual payments and sustains the pension system.
Though Conference Committees are common place in Washington, they haven’t been used in Illinois for well over a decade. Therefore, I offer the following schematic to explain the process and the first four steps that the legislature took in Springfield last week.
The leaders have appointed the ten members to the committee who are knowledgeable about the many pension options that have been proposed and several who have consensus building skills. As they meet over the next several weeks, I hope and encourage them to look at all the reforms that have been proposed and focus on the critical goals of the legislative leaders so the conference report will pass the General Assembly.
Governor Quinn is impatient and doesn’t appreciate the time necessary for difficult negotiations. He has set July 8 or 9 for the next special session to vote on a recommendation. I think setting a milestone for measuring and forcing progress is appropriate but if the Conference Committee needs more time, they should get it.
A prankster apparently was also impatient with pension reform progress during the Special Session and set off the fire alarm in the capitol, to get legislators moving. As everyone exited the building I heard another comment that maybe someone was just trying another tactic to delay pension reform.
As for the committee’s solution, I hope the reforms don’t make retirees shoulder the burden for the legislature’s decades-old practice of underfunding, and focus on the options that are fair to all parties. The growth in unfunded liability and annual payments has to stop. Employee annual payments should be commensurate with the benefits and the employer must make the annual payment.
Governor, Attorney General Need to Make a Decision
It seems two key players in the Second Amendment debate can’t make up their minds. The Governor had representatives involved in the negotiations to permit citizens to carry firearms. He knows the provisions of HB183 so why has he taken over three weeks to decide if he will sign the legislation? The federal appeals court has given Illinois until July 9 to pass legislation or allow unregulated firearm conceal carry. Governor, sign the legislation which passed both chambers with overwhelming support and allow Illinois to join the other 49 states in complying with the Second Amendment.
Meanwhile Attorney General Madigan can’t make up her mind if she will appeal the court ruling regarding Second Amendment rights. She has had 195 days since the ruling to make a decision whether she will appeal the ruling to the Supreme Court. Last week Attorney General Madigan requested and received a second extension of time to decide her actions. This second delay extends the time she has to make a decision until July 24.
Illinois desperately needs strong leaders who will uphold the Constitution and act decisively.
More Credit Downgrades; Increase Cost of Borrowing
When the General Assembly adjourned on May 31 without approving meaningful pension reform, it took two of the nation’s top three credit agencies only a few days to downgrade Illinois’ credit rating. Fitch Ratings responded on June 3 with a credit rating downgrade from “A” to “A-” and Moody’s Investors Service responded four days later with a downgrade from “A2” to “A3,” a level that is only three steps above junk bond status. Both companies pointed to the legislature’s inability to enact pension reform as the basis for the downgrades. Standard & Poor’s, the third main credit rating agency, downgraded Illinois’ status in January of this year.
These downgrades send a significant message to lenders and companies who are considering whether to come or expand in Illinois. They also directly affect the interest rates that are paid when the state or units of local government seek to borrow money through bond sales for capital improvement programs.
This month Illinois will finalize two separate bond sales. The first is a $604 million “Build Illinois” bond sale which will be used to refinance bonds previously issued at a higher rate. On June 26 Illinois will sell $1.3 billion in General Obligation Bonds to finance projects from the 2009 capital program. Citizens should continue to contact legislative leaders to urge a resolution to the pension payment issue and get our state back on a sound fiscal track.
Job Picture Improves for Downstaters
The wheels of job creation began spinning as Governor Quinn signed legislation that allows for controlled hydraulic fracturing, or “fracking”. Public Act 98-0022 was the result of extensive negotiations between legislators pushing for job creation and environmental groups concerned about air and water quality in Illinois.
The approved bill could pump more than $9 billion into the Illinois economy and provide as many as 47,000 new jobs mainly downstate where the oil and gas are located. The environmental protections written into this new law are the strictest in the nation. The economic activity will generate hundreds of millions of dollars of tax revenue for the state and local units of government. As I have been saying for years, growing the economy is a better alternative than taxing more from current taxpayers.
Immediately after signing the fracking bill, Governor Quinn also signed into law a measure that amends the definition of “new property” in the Property Tax Extension Limitation Law (PTELL). The change allows an increase in the assessed value of property due to oil or gas production resulting from a well that is used for fracking and which was not accounted for during the previous levy year. That bill is now known as Public Act 98-0023.
Housing Report Shows Drop in Foreclosures
The Illinois Housing Development Authority (IHDA) recently issued a report that shows housing foreclosures trending down nearly 17 percent from the high point but still the fifth highest in the country. According to the report, 4.5 percent of all mortgaged homes end up in foreclosure. (See table below.)
Every Illinoisan has been affected in one way or another by the declining housing market. As a result, the IHDA created the Illinois Foreclosure Prevention Network last year to provide assistance and keep struggling homeowners in their homes. The program provides free counseling services, legal advice, tips on how to avoid mortgage fraud, and mortgage payment assistance.
Properties in Foreclosure
Source: Illinois Housing Development Authority First Quarter Report, 2013
Illinois also has a “Hardest Hit” program which provides monthly mortgage payment assistance and reinstatement assistance to those struggling with income loss due to unemployment or underemployment. Eligible home owners can receive up to $35,000 in mortgage assistance. Homeowners that are having trouble paying their mortgage are encouraged to visit the web site www.keepyourhomeillinois.org, or call the hotline toll free at 1-855-KEEP-411.
Grants Available for Rural Home Repairs
The U.S. Department of Agriculture is accepting applications for grants to help low- and very-low-income rural residents repair their homes. A recent announcement said despite the federal budget uncertainty, the agency will continue efforts to strengthen the rural economy.
Grants are provided to qualified intermediaries such as town or county governments, public agencies, non-profits and faith-based organizations. The grants are then distributed to qualified homeowners or owners of multi-family rental properties who rent to low- and very-low-income residents.
The money can be used to weatherize and repair existing structures, install or improve plumbing or provide access for people with disabilities. In addition, the program assists rental property owners in repairing and rehabilitating their units if they agree to make such units available to low- and very low-income persons.
For information on Section 533 Housing Preservation Grants, go to the June 18, 2013 Federal Register. Applications are due by August 2 at the Rural Development State Office in Champaign (217-403-6225).
Another Advisory Committee on Education Funding Takes Shape
There are plenty of skeptics that creation of the Advisory Committee on Education Funding in Senate Joint Resolution 32 will be as unsuccessful as efforts over the past several decades. Nevertheless the distribution and declining amount of state funding for our PK-12 schools demands attention. Today 67 percent of our school districts are deficit spending.
The resolution calls for the appointment of three members from each caucus in the House and Senate who will meet over the next six months, develop recommendations and report to the General Assembly by February 1, 2014. So far, Republican Leader Tom Cross has appointed me along with Representatives Sandra Pihos (Glen Ellen) and Dwight Kay (Glen Carbon).
The committee is charged with examining state education funding distribution and adequacy for preparing students for college and careers. It is to consider the number of students in each district, the special needs of students, the district’s ability to provide local resources to pay for a basic education and revenue predictability to support sound planning and budgeting by local school boards.
I invite you to share your thoughts and information with me so that the committee can have productive discussions and develop useful recommendations.
District Office 815-748-3494 or E-Mail to bob@pritchardstaterep.com
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