December 1, 2011

Threatened closures of seven state facilities were averted when lawmakers returned to Springfield Nov. 29 and approved a compromise plan that rearranged the state budget but did not increase total spending for the cash-strapped state.

However, no agreement could be reached between the Senate and House on a legislative package designed to provide tax benefits for major Illinois corporations that have threatened to leave Illinois unless the state offers compelling financial incentives.

In other major legislative action during the week, lawmakers passed targeted pension reforms aimed at ending abuses by some union officials and approved a series of critical work-rule changes at Chicago's McCormick Place exhibition authority.

The budget plan approved by lawmakers Nov. 29 reallocates state revenues from other areas of state government, and redirects the money to finance the operation of the facilities. The supplemental appropriation will finance operation of the facilities through the current fiscal year, which ends on June 30, 2012.

However, Senate and House lawmakers were unable to reach an agreement on a business incentive package intended to provide relief for major Illinois companies, CME Group Inc., CBOE Holding Corp. and Sears Holding Corp. All three companies have threatened to leave Illinois unless lawmakers provide tax incentives to offset what the companies contend are burdensome state tax obligations that undermine the desirability of remaining in Illinois. The CME Group and CBOE Holding Corp. were hard hit by the state's 67% tax increase that passed in January with only Democrat votes. At the time, Republican lawmakers warned that the huge tax hike would have a negative effect on employers and jobs in Illinois – a prediction that has proven to be all too accurate as numerous companies have sought incentives and other offsets to remain in Illinois.

Legislation was proposed in both the House and the Senate, with the Senate introducing a plan that offered more generous tax relief for workers—particularly low-income workers. Though both proposals would have given approximately $100 million in tax relief annually to CME, CBOE and Sears, House and Senate lawmakers could not come to an agreement on the amount of relief for other groups. As a result, House Bill 1883 was passed by Senate lawmakers but did not advance in the House. 

Negotiations on a tax-break plan are anticipated to continue. The package is expected to not only provide relief for high-profile companies and low-income workers, but for other businesses as well. The measure approved by the Senate included a research-and-development credit, and other tax breaks to help smaller companies.

Other issues lawmakers picked up on Nov. 29 included long-anticipated reforms to work rules at Chicago’s McCormick Place convention center and exhibition facility (McPier).

Senate Bill 1992/PA 97-0629 was approved by the General Assembly to address labor union concerns associated with a 2010 law that sought to ease stringent labor rules at McPier, after high labor costs forced several conventions to leave Illinois for more cost-effective locations. Labor unions protested the initial reforms, arguing the law interfered with the negotiating rights of private-sector employees.

State and local leaders worked with labor unions to negotiate a compromise settlement to address the legal concerns surrounding the work rules. As an economic engine crucial to the economic vitality of the state’s hospitality industry, not only in Chicago but out into the suburbs and throughout downstate Illinois, parties at all levels worked in earnest to come to an agreement. By codifying the compromise agreement into law, SB 1992 ensures McPier remains a leading national and global convention facility destination.  The bill was quickly signed into law on Nov. 30.

Legislation targeting abuses of the state and Chicago pension systems was also approved by Illinois lawmakers and now heads to Gov. Quinn for approval. House Bill 3813 was sponsored following numerous reports by the Chicago Tribune highlighting loopholes in state law that allowed union employees to collect lucrative pension benefits.

Previously, some union staffers were allowed to apply their union work to their public pension credit. House Bill 3813 halts this practice for newly hired union staffers collecting from most state and Chicago funds. The measure also targets “double-dipping,” by prohibiting Chicago union workers from collecting a City of Chicago pension and a union pension for the same period of service. Additionally, the legislation seeks to eliminate pension benefits for two Illinois Federation of Teachers lobbyists who spent just one day substitute-teaching, and who now qualify for teacher pension pay-outs.

Finally this week, the Generally Assembly approved legislation that is an extension of the state’s ongoing Medicaid reform efforts. Senate Bill 1762 allows the Department of Healthcare and Family Services (HFS) to hire 20 employees with specific knowledge in the areas of healthcare administration, healthcare finance, healthcare data analytics or information technology. This could include personnel with a background in medicine, dental and pharmaceutical services, to those with experience in data analytics or highly complicated Internet technology and computer systems.

HFS Director Julie Hamos noted that the state needs to find very qualified people, since it is a specialized skill set that is required to manage the state’s $15 billion Medicaid budget. Senate Bill 1762 allows HFS to forego entering into costly outside contracts, and instead hire full-time employees at less expense to the state.

Once signed into law, the measure will help HFS cut down on Medicaid fraud, reduce costs through better analysis and improve patient care. Expending resources upfront to hire qualified personnel will help the state lower program costs and attract private sector experience to state business. At this time Medicaid is the state’s largest expenditure—at $15 billion annually, Illinois spends more on Medicaid than on education.