A union-backed pension reform proposal sponsored by Senate President John Cullerton was passed by the Senate on May 9, 2013 by a vote of 40 to 16. Senate President Cullerton believes that Senate Bill 2404 is a less risky option for the State than legislation discussed here, which was approved by the House on May 2. The Senate President is convinced that the House bill, sponsored by House Speaker Michael Madigan, will be found to violate the Illinois Constitution, while SB2404 will withstand…
UPDATE: On May 2, 2013, the House passed Speaker Michael Madigan’s pension reform proposal by a vote of 62 to 51. During the debate on the House floor, Speaker Madigan said that the changes are expected to reduce the State’s required contribution in FY2015 by $1.5 billion from FY2014. Total State contributions, including both General Funds and Other State Funds, are scheduled to be $6.8 billion in FY2014 and projected at $7.0 billion in FY2015. The Speaker’s statement suggests that FY2015…
An important first step in preparing a government budget is the preparation and publication of revenue estimates for the upcoming fiscal year. The estimates provide the basis for the spending decisions that are subsequently incorporated into the budget. Under Illinois law, the Governor begins the budget process by proposing a budget based on a revenue estimate for the coming fiscal year and the General Assembly then establishes its own estimate of available funds. For the past three fiscal…
Despite historically low interest rates, bonds recently sold by the State of Illinois continue to cost much more than debt issued by other states. Even when compared to similarly low-rated California bonds, the $450 million of tax-exempt bonds sold by Illinois appear to have cost the State at least $20.6 million more than what California might have paid for the same borrowing. On April 2, 2013, the State issued a total of $800 million of 25-year General Obligation (GO) bonds, including…
Faced with rising pension costs and modest revenue growth, Governor Pat Quinn has recommended a reduction in State of Illinois funding for local governments and statewide public transportation. In his FY2014 budget, the Governor proposed capping those distributions at FY2012 levels. Savings to the State are estimated at $143 million, according to State bond documents. The savings estimate is based on the difference between the proposed FY2014 payment and the projected payment under current law…
The State of Illinois has asked the federal government to extend Cook County’s Medicaid expansion plan to ensure that recipients remain covered after the end of 2013. In a letter on March 21, 2013, the Illinois Department of Healthcare and Family Services (HFS) told federal authorities that it still expects the State to pass legislation allowing Illinois to expand its entire Medicaid program beginning in January 2014. HFS stated that it was requesting an extension for the Cook County plan as a…
On March 21, 2013, the Illinois House passed a bill that would significantly reduce the State’s pension costs by limiting automatic annual benefit increases for retirees and employees. House Bill 1165, approved by a vote of 66 to 50, addresses the largest single factor driving the State’s pension costs. Current retirees and employees hired before January 1, 2011 receive annual compounded increases of 3% in their pension benefits. Although the increase is often referred to as a cost of…
On March 20, 2013, the Illinois Senate rejected a proposal designed to significantly reduce the State's burdensome pension costs but approved a narrower measure that applies only to active teachers outside of the City of Chicago. Senate Bill 35 was defeated by a vote of 23 to 30. The bill, sponsored by Senator Daniel Biss, is the Senate version of House Bill 3411, a measure sponsored by Representative Elaine Nekritz and House Minority Leader Tom Cross that was introduced with bipartisan…
Governor Pat Quinn has proposed eliminating several corporate tax incentives to help pay down the State’s backlog of unpaid bills that is expected to total $7.5 billion at the end of the current fiscal year. The Governor’s proposal would eliminate three rules that allow corporations to reduce tax liabilities and would increase State corporate income tax revenues by an estimated $445 million annually. The funds generated from the changes would then be deposited in a new special account and used…
On March 6, 2013, Governor Pat Quinn issued his recommended budget for the fiscal year that begins on July 1, 2013. However, the first major obstacle to the Governor’s proposed FY2014 budget emerged a day earlier, when the Illinois House approved a revenue projection that was significantly below the Governor’s revenue number. The Governor’s budget recommendation is based on projected FY2014 General Funds revenues of $35.6 billion. The House estimated that General Funds revenues in FY2014 would…
