IVCA Provides Updates for State and Federal Legislative Issues - 03.15.17

IVCA Provides Updates for State and Federal Legislative Issues

 

UPDATE provided by Stricklin & Associates on March 15, 2017:
 
The budget stalemate continues in Illinois, with an unpaid bill backlog of over $12 billion, and few signs of optimism around the Capitol.
 
The “Grand Bargain” of 14 bills to end the budget stalemate negotiated in the Senate between Senate President Cullerton and Senate Minority Leader Radogno has been at least temporarily derailed.  Consensus at one time was thought within reach, but when members started voting, Leader Radogno informed the chamber that her caucus did not have the votes to agree to the package as it was.  The Senate was able to pass the spending authorization for FY17, procurement reform, local government consolidation, gaming expansion, and pension parity for Chicago Teachers’ Pension Fund, but on other issues consensus was elusive.
 
The Governor’s office recently took a more hands-on approach in the negotiations and this caused some Senate Republicans to decide to wait for further changes, specifically in terms of workers comp reform.  Top Senate Democrats have indicated they’ve gone as far as they can on that and other issues, and the impact of how specific districts would fare in school funding reform added further reluctance to the mix. 
 
The Governor has repeatedly stated he will support a permanent income tax increase only if accompanied by a permanent property tax freeze, or a property tax freeze of 5 years would cap the income tax increase at 5 years.  An agreement on pension reform remains elusive as well, which is crucial because the bills in the “Grand Bargain” are linked so that if one fails they all fail.  The uncertainty and frustration in the Senate has steadily increased, especially considering it is unclear if the House would even consider whatever the Senate may ultimately approve.
 
With a deadline for substantive bills to move out of committee set for March 17th in the Senate, and March 31st in the House, there has been increased action on legislation not specifically connected to the budget negotiations.
 
SB 778, from Senator Daniel Biss, to make private equity investments of pensions funds FOIA-able under statute, has been assigned but not called for a hearing in the Senate Committee on Licensed Activities and Pensions.  That is also the status of SB 779, Senator Biss, a version of which was introduced in the last session, which requires public retirement systems to disclose various expenses and fees that are paid to investment funds.
 
SB 2091 (Sandoval) and HB 3061 (Guzzardi) mirror legislation from late last session and would require the Illinois Investment Policy Board to identify companies that contract to build a border wall and include those companies in the list of restricted companies for public retirement systems. HB 3061 passed out of committee 7-4, and is now on 3rd reading in the House. As of this writing, SB 2091 has yet to be heard in committee. 
 
Representative Camille Lilly introduced HB 775 to require pension funds to create a climate change risk minimization policy, and to consider investments’ impact on climate change.  This bill has yet to be heard in committee.
 
Senator Majority Leader James Clayborne introduced SB 1714, which requires a consultant to annually disclose to the board of the retirement system, board of the pension fund, or the investment board searches for investment services from minority owned businesses, female owned businesses, and businesses owned by persons with a disability.  The bill passed unanimously out of committee, and is on 2nd reading in the Senate. 
 
There are numerous bills that relate to the angel tax credit--all focused on extending the credit’s expiration, and raising the cap on investment.  It is our understanding that Lieutenant Governor Evelyn Sanguinetti is looking to facilitate a collaborative discussion amongst the sponsors and stakeholders in order to come to an agreed bill.  It is unclear which bill will be amended and move forward, but it is likely that the angel tax credit will be expanded this session.
 
Outside of the legislature, the conflict of state workers pay and contracts continues.  Shortly after the budget impasse began, a temporary court order compelled continuing payments to state workers.  In January, Attorney General Lisa Madigan filed a motion to reverse this order, citing the Illinois Constitution language that requires appropriations prior to payments.  On February 16th, AG Madigan’s motion was denied.  She has since asked the Illinois Supreme Court to intervene.
 
A judge did rule in favor of Comptroller Mendoza, allowing her the discretion to use any of the funds at her disposal to pay state employees.  This ruling came after a challenge by the Governor to prevent the Comptroller from using certain funds.  Mendoza wants to pay the workers from revolving funds that have approximately $90 million in them; Governor Rauner wanted employees to be paid from the state's General Revenue Fund.  As noted previously, payments owed to vendors and providers from the GRF totals over over $12 billion.
 
The State and its largest state workers’ union- AFSCME- have been without a contract since since July 2015.  In mid-2016, after stalled negotiations, Governor Rauner declared an impasse.  AFSCME filed a motion against this move, which allows the Governor to provide a 'final offer'. However, the court had sided with the Governor. AFSCME and the Governor disagree over a number of provisions, including changes Governor Rauner sought to health insurance for state workers, overtime rules and limits on privatization.  AFSCME members have voted to authorize a strike, though it is unclear if the union will strike, and what that means for the state or the budget impasse.