Archive for February, 2008
February 20th, 2008
Gov. Blagojevich today put aside his big-spending vision and proposed something of a maintenance budget for the fiscal year beginning July 1. Here is a copy of the governor’s budget plan.
But while the governor’s budget plan lacks the huge spending and tax increases he sought last year, it nonetheless rests of several tenuous assumptions and no doubt will meet stiff resistance from lawmakers.
For instance, Blagojevich is again seeking to privatize the state lottery to generate cash necessary to support his spending priorities. But this year, he wants to lease just 80 percent of the lottery — allowing the state to keep 20 percent — rather than part with the entire asset.
His budget assumes this 80/20 lottery lease would raise $7 billion for the state over the long term. Still, the governor’s lease/sale plan last year won little traction — if any at all — among lawmakers. These dollars would be the central revenue support for a capital construction plan the governor also proposed on Wednesday.
Here is the capital budget. Here are the highlights:
The governor’s plan provides $1.9 billion in state funds and $1.9
billion in local matching funds for construction and maintenance of
schools, including $1.75 billion in school construction projects and
$150 million for school construction maintenance projects, plus $30
million to fund a new early childhood facilities program. The program
proposes $642 million to expand and make capital improvements
and repairs at the state’s public universities, $200 million to support
the capital needs of the state’s private colleges and universities and
$250 million for the state’s community college system to construct
new buildings, repair existing facilities, and replace temporary
facilities.
The $14.4 billion highway portion of the Capital Budget funds bridge
repair needs, maintenance and improvements to the state’s system
of roads, highways and interstates, and provides for new system
expansion projects; $250 million of this will provide direct assistance
to local communities to make improvements to transportation
infrastructure. Funding for rail totals $160 million, which will be used
to improve rail tracks and signals, enhance Amtrak stations,
purchase new rail passenger equipment, and make improvements to
rail freight facilities. Capital funding for airport projects total more
than $300 million for airport improvements throughout Illinois.
Illinois Works Capital Program invests $2.7 billion in funding for mass
transit agencies to purchase buses and rail cars, build train stations,
bus garages and rail yards, and reconstruct commuter rail bridges
and elevated rail structures, among other projects.
Over $1.0 billion will provide access to capital in communities
throughout Illinois to stimulate job growth, provide affordable
housing, improve community healthcare centers, make investments
in energy, improve infrastructure, develop new industries and
technologies, and attract new businesses to Illinois.
The governor’s energy plan, a component of Illinois Works, will
reduce Illinois’ dependence on foreign oil and gas, stabilize gasoline
and home heating prices, create jobs, and reduce energy use while
protecting the environment. The energy plan includes the
development and construction of ethanol, cellulosic and biodiesel
production facilities, construction assistance for up to 10 new coal
gasification plants, and the addition of 900 more E-85 pumps at
fueling stations statewide by 2010.
The governor is not seeking an increase in the income or sales tax rate, but he does propose raising a series of user fees. For instance, the Department of Natural Resources would charge “a consultation fee … for performing threatened and endangered species or natural area reviews, which are currently done for free,” under his budget. “Another example will be charging for work done on processing floodway permits, which will allow the Water Resources Program to recover its direct costs.”
Blagojevich aides said during a morning briefing that they could not immediately produce a list of all fee increases in the governor’s budget plan.
The budget does not call for entrance fees at state parks, despite published reports indicating his budget might include them.
Blagojevich also proposes selling $16 billion in bonds to bolster public pension systems — another plan that failed to gain traction last year.
The governor proposed another $300 million in spending on Illinois public schools, but he did not specify how exactly he would like the state to allocate those dollars.
The governor’s plan acknowledges that the current budget, which runs through June 30, has a $750 million deficit. Blagojevich’s budget director went out of her way to blame lawmakers for this budget hole, saying their revenue forecast was too optimistic when they approved the budget last summer. The budget plan says this hole could be filled through “fund transfers and loophole closures.” Otherwise, said Blagojevich budget aide John Filan, the state will need to cut spending.
Nonetheless, the governor’s budget plan assumes new revenue totaling $1.7 billion in the next fiscal year, which begins July 1. Blagojevich aides could not provide an exact accounting of this figure, but said it includes $300 million in new revenue from higher taxes on riverboat casinos and $575 million from the sale of the state’s 10th casino license, which has long been mired in litigation. It also includes $140 million from closing corporate tax “loopholes” and $40 million from the sale of unspecified state assets.
UPDATE 1
There are two basis prongs of Blagojevich’s budget plan: tax breaks for families and businesses, and a capital plan for Illinois infrastructure. His plan for universal health care apparently is on hold; he offered no specific plan in this budget.
The address he just delivered was as modest as his actual budget proposal. It was the most conciliatory State of the State/budget address of his administration.
Gone was the super-charged rhetoric that defined his previous speeches. He did not vilify businesses for “not paying their fair share” in taxes, as he did last year. He did not attack the State Board of Education as a “Soviet-style bureaucracy,” as he did in a previous year.
Instead, he said he looked forward to working with lawmakers and highlighted the resounding defeat last year of his own legislative agenda. He joked that he now understands the meaning of the Hank Williams tune, “I’m So Lonesome I Could Cry.”
He told lawmakers, referring to his failed plan last year for a gross receipts tax, “Needless to say, I’m not asking you to do that again.”
At one point, the famously self-centered and single-minded governor had to this to say about how best to pay for a capital plan: “I’m flexible.”
He challenged lawmakers directly at just one point, saying it’s their responsibility to send him a capital plan he can sign.
UPDATE 2
Blagojevich’s critics are not impressed. Local Republicans called the governor’s budget more of the same — feel-good programs the state can’t afford (tax credits), borrowing (bonding to bolster public pension systems) and selling assets (the lottery).
Doug Whitley, president of the Illinois Chamber of Commerce, noted that the budget plan includes a new tax on business payroll — a tax Blagojevich unsuccessfully sought last year. Whitley said businesses would rather not pay the payroll tax than get the proposed tax credits.
The payroll tax is designed to fund the expanded health care, a program the governor calls Illinois Covered. From the governor’s budget:
Illinois Employer Assessment – The costs of
Illinois Covered will be fully funded in fiscal year
2009 and thereafter, entirely through its own
revenue sources including the enactment of an
employer healthcare assessment. The proposed
employer assessment, to commence January 1,
2009, will require that all employers of more than
10 employees who spend less than 4 percent of
their payroll costs providing healthcare to
employees pay an assessment of 3 percent each
pay period. The Employer Assessment is
estimated to generate $417 million in fiscal year
2009 and nearly $1 billion per year when fully
annualized.
February 19th, 2008
A downstate newspaper reported today that Gov. Rod Blagojevich may propose entrance fees at state parks as part of the budget he announces on Wednesday.
Rep. Dave Winters, R-Shirland, said if the governor proposes entrance fees for Rock Cut and other state parks, he would consider the proposal. He said such a user fee could help support the Illinois Department of Natural Resources, whose budget, he said, has diminished under Blagojevich.
Winters also said he would need to look around at Wisconsin and other neighboring states to see whether they charge fees at their state parks.
“I do know that Wisconsin does have entry fees to at least some of their state parks,” Winters said. “The first thing we want to do is look for comparables — see what other states do around us.”
He added, “It is a user fee, so those who don’t use state parks aren’t going to get hit with that increase. I’m certainly not against it to start with. It may well be a way to support DNR, and we have seen tremendous cuts in their maintenance budgets and staffing levels. It’s probably one of the agencies that has been hit the most, so it may be an appropriate fee.”
On the other hand, Sen. Dave Syverson, R-Rockford, said the idea of imposing entrance fees comes up almost every year when state officials consider a budget. Syverson said such fees would likely affect people wanting to visit Rock Cut State Park.
“The issue isn’t whether or not they can afford to do it this,” he said. “The issue is why does the taxpayer have to pay to fund and maintain the parks, and then (pay) fees over and above that to use their own parks?”
February 19th, 2008
The Capitol used to have a reliable rhythm.
Early each spring, the governor would announce his budget plan. Lawmakers would spend the spring debating the governor’s plan, as well as their own myriad plans. And by May 31, the official end of spring session, they all would either have a deal or be close to one. Once they finalized the deal, they would all go home for the summer. The budget they approved generally contained most of what the governor sought when the session began.
That rhythm is gone.
Gov. Blagojevich and lawmakers spent last year in a bitter fight over the budget and other matters that dragged session from the spring straight into this year. There were many firsts, from the governor suing the House speaker over procedural matters, to the Senate president violating an agreement he made with other legislative leaders to stick with them even if it meant overriding the governor’s wishes on the state budget, to the governor cutting more than $400 million in spending from that budget and claiming he could somehow unilaterally re-appropriate the spending on his own priorities.
This year promises to be yet another step toward the chaos of last year. The governor’s annual State of the State/budget address, the spring session’s formal kickoff, is Wednesday. But House Speaker Michael Madigan and Comptroller Dan Hynes, two of his fellow Chicago Democrats, have already moved to put the governor’s back against a wall — before he has a chance to get both feet on the ground.
Madigan and Hynes have attempted to redefine, or at least reframe, the spring session. Read more about Madigan’s strategy here, and about Hynes’ move here.
By the time state officials settled on a new state budget last fall, it little resembled the one Blagojevich introduced last spring. The governor’s ambitious plan for universal health care did not pass. Neither did his plan for a gross receipts tax on Illinois businesses (it would have been the largest tax hike in state history). Lawmakers took the budget in another direction. Blagojevich retaliated by cutting more than $400 million of their earmarks and other spending.
When Blagojevich announces his next budget plan on Wednesday, the question will be: How much does his budget plan even matter?
UPDATE 1
So much for keeping lawmakers in the loop on his budget plans. In a befuddling break from tradition, the governor’s office has not scheduled briefings for the staff of any legislative caucus.
Spokespersons for the four legislative caucuses — Senate Democrats, Senate Republicans, House Democrats and House Republicans — say the governor’s office has not alerted their budget staff to any briefing before the governor’s budget address on Wednesday.
In past years, budget staff for each of the four caucuses were briefed before the address. The staff are responsible for analyzing and explaining the governor’s budget plans to their respective lawmakers. Without a briefing, and the budget documents that come with a briefing, the staff obviously cannot do this.
Fascinating.
UPDATE 2
Cap Fax Blog weighed in on the no-budget-briefings fiasco, adding:
Reporters, legislators and a whole lot of others are pretty upset today because the governor will not hold any budget briefings tonight. Historically, off-the-record briefings are held the evening before a budget address, which allows reporters to get their stories ready (or simply break the embargo altogether) and allow appropriations staffs to prepare analyses for their respective caucuses.
So, no briefing means no analyses tomorrow, and no analyses means seriously grouchy legislators. I’ve talked to several today (in the House and the Senate in both parties) who all had about the same response: “This is not a good way to start off the session.”
Indeed.
February 18th, 2008
OK, so this probably isn’t the most important endorsement that U.S. Sen. Barack Obama has earned or will earn in his race for the White House. But it certainly is the creamiest.
That’s right, Obama won the endorsement of none other than Ben and Jerry, the co-founders of Ben and Jerry’s. So grab a spoon, people! If Obama wins, maybe they’ll spread some ice cream love.
From an Obama press release:
Ben Cohen and Jerry Greenfield, co-founders of Ben and Jerry’s, publically announced their endorsement of Barack Obama for President today. Joined by U.S. Senator Patrick Leahy, the former John Edwards supporters said they believe Barack Obama is the best candidate to unite America and finally tackle the challenges facing our nation.
“Barack Obama believes that the special interests in Washington shouldn’t drown out the voices and basic needs of Americans,” Greenfield said. “When Barack Obama is President, we will finally have a president who is committed to ensuring all Americans have access to affordable health care and our children get the education they deserve.”
What? Nothing about ice cream for everybody?
February 18th, 2008
You probably already know about U.S. Sen. Barack Obama’s concrete shoe, Tony Rezko.
Obama and Rezko engaged in a kinky real estate deal — Obama bought a mansion on Chicago’s South Side the same day that Rezko’s wife bought an adjacent lot — that is now all the talk on the presidential campaign trail. There’s even a blog dedicated to Rezko.
We may soon be hearing much more about Obama’s ties to Exelon, ComEd’s parent company, too.
A Baltimore Sun columnist reports:
A bigger question is how Obama’s Exelon links might influence his broader electricity policy at the most critical period for U.S. electricity since the 1930s. Exelon, the Illinois version of Baltimore’s Constellation Energy, is one of the country’s biggest megawatt producers, the largest nuclear plant operator and a huge Obama backer through its executives and employees.
Would a President Obama try to reform interstate electricity markets that have soaked consumers in Maryland and other deregulated states, inadequately invested in the future and unjustifiably enriched Exelon, Constellation and other companies? Or would he maintain the Bush administration’s blind eye toward evidence of wholesale-electricity market failure, irregularity and price gouging?
The columnist goes on to scrutinize Obama’s apparent ties to Exelon. Recommended reading, for sure.
UPDATE 1
Bloomberg and the Tribune have more on the Obama/Rezko land deal.
February 18th, 2008
A great pastime at the Capitol is speculating on the objectives and motives of House Speaker Michael Madigan, D-Chicago. Madigan seldom speaks in public and he generally is the last of state leaders to show his cards.
When he does show them, he tends to stake out a contrarian position. By positioning himself opposite other interests, he creates leverage to accomplish his goals — whatever they may be.
This spring session, Madigan was the first to show a card when he spread word last week that no major initiative will clear the House, the chamber that he controls, unless it contains language effectively pre-empting Gov. Rod Blagojevich from attaching rules elaborating on its thrust.
It’s uncanny for Madigan to announce such a radical position before the governor has a chance to set forth his own strategy Wednesday in his State of the State/budget address. Then again, Blagojevich and Madigan are great political adversaries. Together with Senate President Emil Jones Jr., a third Chicago Democrat allied with Blagojevich, the two last year faced off in a battle last so fierce that session literally dragged from the spring straight into this year.
But to truly understand the extraordinary nature of Madigan’s pre-emptive strike, you must consider the actual substance of his plan. By requiring all major bills to include language prohibiting the governor or his agencies from attaching administrative rules, the strategy could potentially shut down the legislative process.
In other words, Madigan has kicked off the session with a strategy that may do nothing but disrupt and delay the legislative process.
If Jones continues to side with Blagojevich through this session, he is unlikely to adopt Madigan’s strategy in the Senate. If the Senate rejects the strategy, and Madigan refuses to budge, it will be impossible for the two chambers to agree on legislation. And even if Jones does capitulate, and both the Senate and House do agree on legislation including the no-rules language, the governor could simply veto the language and send each bill back to lawmakers.
Lawmakers would then need to decide whether to override the governor. But I’m getting way ahead of myself here.
The bottom line is that Madigan does not often bluff. If he does bluff, he is not one to quickly go back on it.
Blagojevich and Jones, for their part, don’t tend to quickly swallow Madigan’s wishes.
UPDATE 1
Rep. Chuck Jefferson. D-Rockford, supports Madigan’s new strategy. Jefferson is a member of Madigan’s leadership team, so this is not surprising.
Jefferson echoed the speaker’s position, articulated last week by House Majority Leader Barbara Flynn Currie, that the governor directly assaulted the Legislature when he declared that the body’s Joint Committee on Administrative Rules, which reviews the governor’s administrative rules, lacks the power to reject his rules.
“I think it’s a good idea if in fact the governor is going to continue to try and pull the political maneuvers to undercut what JCAR is in place to do,” Jefferson said. “I think it’s to the governor’s advantage at this point, but he doesn’t seem to think so.”
UPDATE 2
Rockford GOP Sen. Dave Syverson also supports Madigan’s strategy, at least the concept, he said.
Syverson said state agencies have misinterpreted his bills when they write the rules, but he could not think of any examples. He said he is then forced to pass another bill to clarify the first legislation.
“I agree with the Speaker to the extent that we need to put more in there in regards to the major issues because the governor has taken more leeway to expand definitions … taking it way beyond what the intent was and we need to rein that in,” Syverson said.
“The House version may go too far but the what’s currently in place does not go far enough. There may be some room for compromise, which we hope we can do.”
UPDATE 3
In line with the House Republican party line, Rep. Dave Winters, R-Shirland, disagrees with the House Democrats’ plan. He said rule-writing needs to be done by people with the expertise in that bill, such as those at the state agencies.
“I think the administrative rules should be written by the agencies that are to administer them,” Winters said, “not by a bunch of legislators who are not bureaucrats.”
February 18th, 2008
As Gov. Blagojevich prepares to announce his budget plan on Wednesday, business groups are convinced he will propose a tax on carbon emissions to generate more dollars for state coffers. The State Journal-Register reports:
The (Illinois) chamber fears that Blagojevich will ask lawmakers to approve a tax on carbon emissions from power plants and other industries. While acknowledging it has no details about what Blagojevich plans to propose, the chamber thinks a “carbon tax” could be imposed to generate more than $2.6 billion for cash-strapped state government.
“We are planning as though this will be a major initiative,” Todd Maisch, vice president of the chamber, said Friday. “His (financial) needs are substantial.”
Blagojevich aides refused to confirm — but also did not flatly deny — the plan.
Since taking office in 2003, Blagojevich has looked to Illinois businesses as a source for the revenue he needs to support expanded state spending. That approach topped out last year when he proposed a multi-billion-dollar gross receipts tax on Illinois businesses to cover the cost of a universal health care plan and other spending priorities.
In the SJ-R story, the Illinois Chamber notes that the suspected plan for a carbon tax would be just the latest incarnation of Blagojevich’s desire to more heavily tax businesses:
Maisch said a carbon tax would have the same effect as the ill-fated tax on businesses’ gross receipts that was proposed by Blagojevich last year.
It’s difficult to imagine big-spending Blagojevich going a year without a big-spending initiative. Yet, before state officials consider one dime of new spending, they first must deal with a revenue hole in the existing budget. Crain’s Chicago Business has more.
In other words, the pressure is on Blagojevich, et al., to raise more money — and fast. Hold on to your wallets.
February 15th, 2008
State officials haven’t approved a major capital construction plan since 1999, the first year of former Gov. George Ryan’s administration.
Whether they pull it off this year — amid continuing, maybe growing, acrimony in Springfield — is anybody’s guess. But even if they manage to clear their political obstacles, they may an emerging financial one. As Stateline.org reports, bonding — the type of borrowing the state must do to support a capital plan — is getting more expensive.
The problem isn’t with cities or states issuing the securities but with the insurance carriers that promise to pay interest and principal on municipal bonds in the unlikely event that states or local governments default. In recent years, the insurance carriers also began guaranteeing securities based on car loans, commercial real-estate deals, credit card debt and mortgages, including subprime loans that are now defaulting.
Here’s where it may hit home:
The bad loans are threatening to cause securities ratings firms such as Moody’s Investors Service, Fitch Ratings Ltd. and Standard & Poor’s to drop the credit rating of the insurers, which in turn would drop the credit rating of bonds they insure.
A ratings drop would drive up costs for state and local governments, forcing them to pay higher interest rates to borrow, or could keep investors away in a time of tight credit.
The Wall Street Journal has more, but you must be a subscriber to read the whole thing.
February 14th, 2008
House Speaker Michael Madigan’s plan to pre-empt Gov. Rod Blagojevich’s renegade rule-making sent House lawmakers into a partisan frenzy on Thursday, a brawl that boded ill for a constructive, or even civil, spring legislative session.
Republicans threw a fit on the House floor over Madigan’s plan to include in most legislation considered by the chamber this spring language that would prohibit Blagojevich or his agencies from attaching administrative rules to those bills once they become law.
The Republicans said it’s past time for the House Democrats to learn to get along with the governor of their own party.
Yes, this all sounds arcane. But it’s significant for two reasons:
1) As a political matter, Madigan’s new strategy is a clear indication that his bitter feud with Blagojevich, a fellow Chicago Democrat, will continue into its second year. The prospect is both titillating (for us political junkies, anyway) and exhausting.
2) As a practical and legal matter, Madigan’s new strategy will make the already cumbersome and dynamic process of lawmaking downright insane. Again, fun to watch. But not so fun if you have an legislative agenda in Springfield and you actually hope to advance it.
Here is a copy of the language Madigan would like to see inserted into each bill. From this provision, you get the idea:
Notwithstanding any other rulemaking authority that may exist, neither the Governor nor any agency or agency head under the jurisdiction of the Governor has any authority to make or promulgate rules to implement or enforce the provisions of this amendatory Act of the 95th General Assembly. If, however, the Governor believes that rules are necessary to implement or enforce the provisions of this amendatory Act of the 95th General Assembly, the Governor may suggest rules to the General Assembly by filing them with the Clerk of the House and Secretary of the Senate and by requesting that the General Assembly authorize such rulemaking by law, enact those suggested rules into law, or take any other appropriate action in the General Assembly’s discretion.
Madigan’s new strategy could radically change the legislative process in Springfield. The AP has more background.
Writing and enforcing rules is a fundamental function of the executive branch in state government. Simply put, it’s how the governor and his agencies interpret and execute state law. But Blagojevich drew Madigan’s ire when he used an “emergency” administrative rule to implement part of his plan for universal health care.
The governor’s move was highly unusual, to say the least. Rules generally are not used to implement major spending initiatives which the Legislature has not approved. Moreover, after a special committee of lawmakers rejected the governor’s so-called “emergency,” the governor said he’d decided that the committee’s decisions were merely advisory and not binding.
House Majority Leader Barbara Flynn Currie, D-Chicago, said Thursday that the governor’s decision to sidestep the bipartisan oversight committee forced Madigan’s new strategy of attempting to pre-empt the governor rule-making authority. She called the governor’s actions “a direct challenge to the authority, to the prerogative of the Legislature.”
Currie said it is too risky to have faith that state agencies, which answer to the governor, will properly interpret the Legislature’s will in crafting its rules. Filling legislation with rule-like language, she said, is a way to ensure that the Legislature’s intent is truly reflected.
“Maybe (the governor) can be clear about what we do need, and we can put in the muscle so that we can tell the agency exactly what we mean,” she said.
The fight on Thursday stemmed from a raucous committee meeting the day before. A committee I was observing turned upside down when news of the new amendment emerged and Rep. Bill Black, R-Danville, began shouting at committee chairwoman, Rep. Karen May, D-Highland Park.
The meeting stalled for about 10 minutes as young staffers talked on cell phones and conferred with May, the committee’s chairwoman. Then May, following the orders she was given, announced the committee would not vote on any bills until next week.
Black, who was prepared to testify for one of the bills on the committee’s agenda, erupted as he began shouting at May and the committee staff, believing the announcement was disrespectful.
On Thursday, House Republican Leader Tom Cross of Oswego asked what it would really mean to take the governor’s rulemaking authority away.
“We will be bogged down in rules that (this special committee) has historically done for many, many years to the point that nothing gets passed and the people of the state of Illinois will not have their issues addressed in this session,” he predicted.
Cross said the people should not suffer because the House Democrats and the governor can’t get along.
February 14th, 2008
Cap Fax Blog today highlighted some of the more interesting but largely unnoticed points of state Comptroller Dan Hynes’ recent report on state finances.
Cap Fax noted the comptroller’s observation that the rate of uninsured people in Illinois has not dropped, despite Blagojevich’s repeated new health care spending initiatives:
While spending more on health care, the number of uninsured in Illinois has not changed significantly. According to the U.S. Census Bureau, approximately 1.76 million Illinoisans (13.9% of the population) were uninsured in 2003. In 2006, the estimate of uninsured was 1.78 million, or 14.0% of the state’s population.
Cap Fax added:
The governor’s office claims that the number of insured has increased since that Census report was issued, but the impact - while undoubtedly important to those who now have health insurance - hasn’t been huge overall, despite all the huffing and puffing from the guv.
I’d like to add one more point. Let’s not forget that Blagojevich actually cut Medicaid spending by $90 million when he vetoed more than $400 million from the state budget in August. In doing so, he constricted his own health care agency’s spending on his own top — priority.
In one section of the budget, lawmakers appropriated $2.706 billion in Medicaid spending on hospitals and Blagojevich reduced it to $2.666 billion — a difference of $40 million. In that same section, lawmakers appropriated $744 million in Medicaid spending on nursing homes, and Blagojevich reduced it to $694 million — a difference of $50 million.
If you’d like to see for yourself, the budget approved by lawmakers is here. The relevant hospital and nursing home funding is on page 436. Hospital spending is line 13 and nursing home spending is line 18.
Blagojevich’s veto message is here. The vetoes corresponding with the hospital and nursing home funding are on page 67 of the message. See the third and fourth lines of the page.
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