Observations and comments about state government by State Representative Robert W. Pritchard.
News from the State House
January 14, 2013
In this issue:
· NIU Huskies Honored For Bowl Appearance
· Lame Duck Session Ends Quietly
· Pension Reform Stalls for Now
· Undocumented Residents May Get Drivers Licenses
· Bill Overturns Court Ruling on Commercial Mortgages
· Medicaid Expansion Bill Stumbles
· Other Bills Likely to be Reintroduced Would Raise Taxes and Fees
NIU Huskies Honored For Bowl Appearance
The Illinois House has passed a resolution and joined the State of Illinois in congratulating and celebrating the Northern Illinois University 2012 football program. The team’s efforts, which resulted in an appearance in the Orange Bowl on New Year’s Day, created treasured memories for students, alumni and fans across the state which will last a lifetime. In addition, the Bowl experience created positive national exposure for our state and NIU that too frequently only garner negative media attention.
It’s easy to focus on the negative and feel little is going right in our state but here is one of many examples of excellence, cooperation and hard work to achieve a goal. The legislature certainly needs the “Huskie spirit” as we begin a new legislative session and face many daunting issues.
Lame Duck Session Ends Quietly
Despite hopes that the final days of the 97th General Assembly might bring resolution to several critical social and fiscal issues, it ended on January 8 without floor debate or votes on them. Many expected the legislature, with so many members ending their service, would act on such controversial issues as pension reform, gambling expansion, same-sex marriage, legalizing medical marijuana and expanding Medicaid enrollment.
In addition, efforts to pass supplemental funding for such programs as mental health, human services, education and capital projects failed to garner enough support for action. The body seemed tired and responded to a lack of strong direction from legislative leaders.
As if to defend the productivity of the 97th General Assembly, Speaker Madigan recalled major legislation that did pass in the last two years during his inauguration speech to the House. He recalled the budget appropriation that was balanced for the second year in a row, workman compensation changes intended to lower costs to employers and major Medicaid reforms intended to reduce spending. However, many of those reforms are yet to be implemented by the agencies.
Pension Reform Stalls Again
While a bill to reform the state’s pension systems passed out of a House committee, it did not have enough legislative support to be called for a vote. The negotiations for reform still exclude representatives for employees and retirees whose support will be necessary for passage of any bill.
There now appears to be widespread agreement that the pension system cannot continue in its present form. Even though the pension payment schedule has been funded in full over the past few years, the unfunded obligations—now at over $96 billion—continue to grow at a staggering $17 million per day. Pension payments now command about 30 percent of the state’s budget and that share is rising every year.
Because no pension solution was passed during the lame duck session, the state’s bond rating has been lowered by one rating service which is expected to raise the cost of borrowing money for every unit of government.
There are many solutions being proposed that garner a lot of support. The annual pension costs must be paid each year and if not, employees should be able to find relief in the courts. Increased state funding could come by redirecting $2.7 billion in annual bond payments to the pension accounts as those bonds mature.
Abuses of the pension system must end such as large salary increases in the final years of employment, early retirement, pensions for non-state employees, and credit for unused sick days in salary calculations.
With everyone at the table, I remain optimistic that a fair pension solution can be found and passed during the spring session.
Undocumented Residents May Get Drivers Licenses
Probably the most controversial vote taken in the House during the lame duck session opened the door for undocumented residents to get driver’s licenses. The Illinois Senate had approved the measure with very little opposition back in May.
An estimated 200,000 to 250,000 undocumented residents are currently driving in Illinois and most don’t have insurance should they cause an accident. As a result, victims have to make the repairs and pay higher insurance premiums as a result. Since New Mexico implemented a similar law in 2003, its rate of uninsured motorists fell from 33 percent to just 9 percent.
A person applying for a “Temporary Visitor Driver’s License” must have lived in Illinois for over a year, know the rules of the road and pass a driving test, have auto insurance, and pay the required license fees.
While the bill does not require finger printing at this time, it does gather information that will allow the Department of Revenue to verify the individual is reporting income and paying taxes. The bill’s sponsor also promised to work for further driver verification this spring.
Many in law enforcement supported SB 957 believing the bill will improve public safety, aid in identifying drivers in a traffic stop, and provide insurance to pay for accidents. It was a pragmatic response for Illinois given the failure of the federal government to address the immigration issue.
Bill Overturns Court Ruling on Commercial Mortgages
By the slimmest of margins the House passed a bill that overturns a Supreme Court decision and 140 years of lending practice in the construction industry. HB 3636 amends the Mechanics Lien Act and addresses the distribution of proceeds from a commercial foreclosure between a construction mortgage lender and various mechanics lien holders.
The Court held in the Cypress Creek decision that subcontractors and the commercial loan institution split available proceeds equally. HB 3636 provides that subcontractors who filed mechanics liens will be paid in full first, before a commercial loan institution can try to recoup its line of credit funds used during a project.
Those who opposed the legislation, including the Illinois Bankers Association, argued that the bill will severely limit construction lenders from recouping the proceeds of their construction loans when a project falls into foreclosure. They also contend the bill will discourage construction lending, leading to fewer projects and the jobs that go with them.
Medicaid Expansion Bill Stumbles
A bill to extend Medicaid benefits to an additional 500,000 Illinoisans under the federal Affordable Care Act passed out of committee but failed to come to a vote in the House before adjournment. While the federal government would have paid for the expansion initially, many legislators were concerned that the state would have seen its cost for Medicaid increase by at least $240 million by 2020.
HB 6253 called for extending Medicaid benefits to people between 19 and 65 years of age who have incomes at or below 138 percent of the federal poverty level. In addition it would have overturned a four-year moratorium on any Medicaid expansion enacted just last year in the Medicaid Reform Act.
President Obama has already proposed shifting a greater share of the costs for the Medicaid expansion onto the states as a part of the federal FY 2013 budget. The most recent federal proposal would have replaced the various matching rates with a single “blended rate” for each state which would result in less federal funding. Nevertheless, another attempt to expand the enrollment will likely be made this spring.
Other Bills Likely to be Reintroduced Would Raise Taxes and Fees
Several other bills that passed out of committee but failed to come to a House vote will likely be reintroduced this spring. The Satellite Television Tax would impose a 5 percent tax on satellite television providers, like the Dish Network and DIRECTV.
Proponents of the bill claim the tax would level the playing field between cable TV providers–who pay franchise fees to counties and municipalities– and satellite TV providers, who do not. The cable companies utilize public right-of-way easements to run lines while satellite providers do not require any easements for their service.
The proposal would use the estimated $65 to-$70 million per year in tax revenue for education or capital projects.
Another bill likely to be reintroduced would set the medical profession up for a large fee increase in medical licenses and other costs. SB 2580 was proposed to keep the state’s Medical Disciplinary Fund solvent and avoid staff layoffs.
The medical profession argues that the only reason the fund is running out of money is because $8.9 million was transferred out of the fund for other government programs. While the Medical Disciplinary Fund would be replenished initially by a loan from the Local Government Fund, the loan would be repaid through additional fees on the medical profession.
Finally, I would like to thank citizens for the privilege of representing this district in the 98th General Assembly. I will be holding coffees around the new legislative district over the next month to hear your concerns and discuss state issues. I hope you will join me and help me represent your views in state government.
District Office 815-748-3494 or E-Mail to bob@pritchardstaterep.com
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