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Wednesday, March 27, 2013

Deadline nears for Countrywide discriminatory lending settlement

By Jamey Dunn

Minority borrowers in Illinois may be eligible for compensation under a settlement with now-defunct Countrywide Financial over its discriminatory lending practices. But they have only a few days left to submit paperwork to get a piece of the settlement.

Bank of America, which bought Countrywide in 2008, has agreed to pay $335 million to customers affected by the racial discrimination committed by the former lender when making home loans. The U.S. Department of Justice sent letters and claim forms to the more than 200,000 people nationwide who are eligible for compensation. To receive a check, those eligible must submit their forms by March 29, this Friday.

“The relief obtained in this settlement is crucial for borrowers who’ve paid far too high a price for the risky, discriminatory lending practices Countrywide employed in the buildup to the housing collapse,” said Illinois Attorney General Lisa Madigan, who filed a discrimination suit against Countrywide in 2011. “I encourage anyone who has received information from the settlement administrator to act quickly to submit their claim before the deadline.” Madigan’s suit was ended by the federal settlement, which calls for at least $20 million to go to Illinois.

The DoJ says during that between 2004 and 2008, Countrywide lenders charged minority borrowers more in fees and other costs. According to the settlement, black and Hispanic borrowers were also more than twice as likely to end up with expensive subprime loans with ballooning interest rates than white borrowers with similar credit scores. “The steered Hispanic and African-American borrowers [who got subprime loans] paid, on average, thousands of dollars more for their loans and were subject to possible prepayment penalties, increased risk of credit problems, default, and foreclosure,” said the federal complaint.

The settlement applies to 41 states and the District of Columbia. But the DoJ focused in on Chicago as one of the examples used in its complaint against Countrywide. “In 2007, Countrywide charged a retail customer in Chicago borrowing $200,000 on average about $795 more in non-risk-based pricing adjustments if he were Hispanic, and an average of about $460 more if he were African-American, than the average amount charged to a non-Hispanic white borrower,” the compliant said. The DoJ said that at the same time, African-American and Hispanic borrowers in Chicago were also paying about $1,000 more in fees than white borrowers on the same kind of loan. The letters sent to those eligible for the settlement included a minimum amount that borrowers can expect to receive. The payouts range from $200 to $15,000. The higher amounts will go to the more than 12,000 people who were given sub-prime loans despite their solid credit histories. The final amount each borrower would receive will be determined by how many people respond by the deadline, after which the settlement will be sliced up among those that submitted to proper paperwork.

Borrowers who have questions, need help with their submission or need a new claim form should contact Independent Settlement Administrator Rust Consulting Inc, a contractor hired by DoJ to oversee the settlement. The administrator can be reached at (800) 842-5148 or by email at countrywide.settlement@usdoj.gov.

Illinois residents can also call Madigan’s Homeowner Helpline at (866) 544-7151. For more on the settlement, see Illinois Issues February 2012.

The Countrywide discriminatory lending settlement is not to be confused with the $26 billion foreclosure settlement approved in 2012. That agreement came in response to the nation’s largest lenders engaging in sloppy and sometimes fraudulent foreclosure practices, such as signing off on documents without verifying information, a practice known as robo-signing. Illinois is expected to receive $1 billion in that settlement, and most of the money is supposed to go toward keeping struggling borrowers in their homes.

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Thursday, March 21, 2013

House passes bill to cut COLAs
on public-employee pensions

By Jamey Dunn

Supporters of efforts to cut spending on public-employee pensions say they reached a turning point today, as the House approved reductions to cost-of-living increases for current and future retirees.

“The meat and potatoes of pension reform happened today,” House Minority Leader Tom Cross said after today’s vote. “And I think this was the toughest vote people are going to face.” Lawmakers approved House Bill 1165 on a vote of 66 to 50. The measure would cap the amount of salary on which retirees could earn the compounded 3 percent cost of living adjustment [COLA] at $25,000. Anyone earning more pension income would receive a flat COLA of $750 annually. Under the bill, retirees would not be eligible for a COLA until they have been retired for five years or they reach age 67, whichever comes first. The bill also would apply to current retirees who are now receiving COLAs.

“I know that this is a very difficult thing to do to retirees ... but unfortunately, we have let the problem get so big that that has to be the nature of the solution that we’re looking to,” said sponsor Rep. Elaine Nekritz, a Northbrook Democrat. The current COLAs are by far the costliest component of the pension plans. Nekrtiz and Cross said that they must be targeted to make a real dent in the $96 billion unfunded liability.

House Speaker Michael Madigan said today’s vote signals that the House is very close to a vote on a final comprehensive pension reform bill. “I think we’re in a position to finalize the preparation of the bill and then move a bill from the House to the Senate that treats all aspects of the problem.”

Opponents to HB 1165 say it is an unconstitutional reduction in employee benefits and unfair to retirees who planned their finances around the benefits they were promised when they left their jobs. “What’s not fair to do is to go to them and say, 'You have to make up the entire liability,' when over half the liability is because the state of Illinois never made its payments,” said Rep. David Reis, a Willow Hill Republican. He said lawmakers should instead accept a union coalition offer for employees to pay a larger percentage of their wages toward their pensions. “There are other avenues out there that have been negotiated with the various unions that may prevent a lawsuit, that I think would help us accomplish what we’re trying to do.”

Earlier this month, the House approved House Bill 1154, which would cap pensionable salary at the Social Security wage base, which is $113,700 in 2013, or the employee's current salary, whichever is greater. The same day, the chamber voted in favor of HB 1166, which would increase the retirement age for employees younger than 46. Employees from 40 to 45 would see a one-year increase, employees 35 to 39 would see a three-year increase and employees 34 and younger would see a five-year increase. All three bills are key pieces of HB 3411, the “comprehensive plan” pushed by Cross and Nekrtiz, and are now in the Senate. “We all recognize the enormity of this problem. The significance of the problem is not the issue. The issue is, how do we react to the problem? How do we move legislation that will solve the problem and do it in such a way that we have a reasonable chance of approval from the Illinois court system?” Madigan said on the House floor today. “We’ve taken three significant steps in a process to solve the problem.”

Cross and Nekritz both agree that a final package could contain tweaks and additional provisions. Their bill has a provision meant to ensure that the state would make its annual required payment and calls for money now going to pay off pension bonds to be used to pay down the unfunded liability after the bonds have matured. It would also require employees to pay 2 percent more of their salaries toward their retirement benefits. Both lawmakers agree that any of those proposals may end up in a final bill. “We’ve now passed the most challenging parts of the bill, in many ways, so putting together a comprehensive package from here, when you are talking about the funding guarantee and additional money going into the pension systems, those are things that are hardly controversial.” Cross said he is still not thrilled with the approach that the House took, voting on each part separately. And he said he does not know how he stands on any potential final bill until he sees what is in it. He said he would like it to be as close to complete as possible. “I’m not happy with the process. I’d like to see something in a more comprehensive package.”

While leaders of both parties in the House say the chamber made significant progress today, the Senate rejected a comprehensive proposal on Wednesday. Senate Bill 34, which is similar to HB 3411, fell seven votes shy of the majority needed to pass. The chamber instead approved a much narrower bill that would only apply to teachers. Senate President John Cullerton said that the measure was just part of an overall reform package he plans to present in the Senate. “The work of building a coalition of 30 votes is going to require more heavy lifting. I'm committed to this goal and look forward to passing a full reform plan this session,” he said in a prepared statement.

 Cross said the House vote today may shake things up in the other chamber. “I think any time that one chamber passes something of this significance, it changes the dynamic,” he said. “I would like to think that the Senate would take another shot. They can certainly do just this bill.”

 Gov. Pat Quinn said he plans to work with both chambers to try to get a bill to his desk. “I’m encouraged by the positive steps recently taken by the Illinois General Assembly toward comprehensive pension reform. In the past few weeks, the Illinois House has passed three pension reform bills, culminating with today’s major cost-saving measure, which reforms the cost-of-living-adjustment factor,” Quinn said in a prepared statement. “In addition, yesterday’s votes in the Illinois Senate indicate that there is support for pension reform. There's much more work to do, but I’m pleased to see progress being made. I will continue working with the leaders and members of both houses and both parties to get comprehensive pension reform legislation on my desk so that I can sign it into law.”

Union leaders said they would continue to fight against the changes, which they say violate the state's Constitution.“We remain opposed to measures passed by the House and Senate this week. We will continue to advocate for coalition-supported solutions that have been negotiated with the unions who represent those affected by pension changes," said a statement from the We Are One Coalition.  

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Lawmakers send bill allowing utility rate increases to governor

By Jamey Dunn

The Illinois House sent a bill to Gov. Pat Quinn today that could mean rate hikes for customers of the state’s two largest utility companies.

Senate Bill 9 would essentially overrule a decision from the Illinois Commerce Commission, a regulatory body that approves rate increases and is overseeing the implementation of the smart grid plan, which became law in 2011. Lawmakers say the ICC misinterpreted the law. They say the resulting ruling could cost Commonwealth Edison an estimated $100 million annually and forced Ameren to reduce its rates by just under $50 million. The utilities want the money back, plus interest.

Under the smart grid legislation, which became law after legislators voted to override a veto from Gov. Pat Quinn, Ameren and Commonwealth Edison committed to investing more than $3 billion in the state’s electrical grid over 10 years. Under the law, ComEd is required to create 2,000 new jobs, and Ameren is required to create 450 jobs over the same period. ComEd has already created 700 new jobs under the plan. The utility has also installed 500 “smart switches” that help to prevent power outages and completed 500 projects to strengthen the grid against storm damage. But the utility companies claim that they cannot move ahead with the investments and further job growth unless the ICC ruling is reversed. “ComEd is proceeding with a portion of the core grid modernization programs, while postponing the deployment of the remainder and all smart meters until 2015. SB 9 would allow us to get the Smart Grid program — and the related job creation — back on track,” said Anne Pramaggiore, ComEd president and CEO.

Unions are supporting the bill, hoping to see the job growth continue. “On behalf of the 6,300 hard-working men and women of northern Illinois who make up IBEW Local 15, we enthusiastically support this legislation because it allows utilities to invest in their systems, grow the local economy and create thousands of new jobs — something our state needs badly,” said Dean Apple, president and business manager of IBEW Local 15. “If we don’t find a solution to deploy ComEd’s Smart Grid program as planned, our state will face a great setback. We believe SB 9 is that solution.”

The rate increases are expected to be small, likely less than $1 for most customers. However, opponents say it is unfair to charge customers more for power that they have already paid for. “They’re getting the retroactive rate hikes with interest,” said Scott Musser, associate state director for AARP. “People are going to be paying for service that they have already used.” He said that the move is part of a disturbing trend of utility companies coming to the legislature for relief when the ICC issues an unfavorable ruling. ComEd appealed the ICC ruling, and the ICC issued another ruling after that appeal. The utility is also in court with a lawsuit over the ruling. “They didn’t like what the commission did. The commission’s decision was based on the law.” Musser said, adding  that the court case should be allowed to play out. “The issue hasn’t been resolved through the appropriate legal channels. If they don’t like in the end what the court decided and they want to come back to and tweak the law, fine.”

The House approved the measure with little floor debate today, and no lawmakers spoke out against the bill. Musser said that illustrates how much sway the utility companies, which spend millions each year to lobby lawmakers, hold in the state. “In the House and the Senate, a lot of it’s the clout the utility companies have. I think it’s unfortunate nobody’s getting up on the floor and speaking about it. You’re seeing people voting against it, but you’re not getting an actual dialogue.”

A spokesperson for Gov. Pat Quinn said he plans to “thoroughly review the bill.” A representative of the governor filed as an opponent to the bill at a House committee hearing Wednesday.

For more on Smart grid see Illinois Issues July/August 2011. 

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Wednesday, March 20, 2013

Senate approves changes in pensions for current teachers

By Jamey Dunn

The Illinois Senate rejected a comprehensive pension proposal today, opting instead to approve benefit changes that would apply only to teachers.

Senate Bill 35, which is similar to legislation being considered in the House, received bipartisan support but fell seven votes shy of the majority needed to pass. The bill would:

  • Allow cost of living adjustments [COLAs] on only the first $25,000 of a retiree’s pension, or on only $20,000 for those who receive Social Security benefits. COLAs would not kick in until a retiree turns 67 or five years after retirement, whichever comes first. 
  • Increase the retirement age for employees younger than age 46. Employees from age 40 to 45 would see a one-year increase, employees 35 to 39 would see a three-year increase and employees 34 and younger would see a five-year increase. 
  • Limit the amount of pensionable income to the Social Security wage base, which will be $113,700 in 2013, or the employee's current salary, whichever is greater. 
  • Guarantee that the state make required annual payments to the pension systems. 
Sponsor Sen. Daniel Biss, a Democrat from Evanston, said the proposal would cut the state’s required pension payment by about $2 billion, reduce the unfunded liability by almost $30 billion and reduce total payments by about $150 billion. The unfunded pension liability is currently estimated at $96 billion.

Opponents argued that the bill clearly violates the pension protection in the state’s Constitution but that for the state to uphold other constitutional obligations, such as funding education and ensuring public safety, the state must be allowed to reduce retiree benefits.

But Biss said:  “Article XIII Section 5 [the pension protection] is not the only part of the Illinois Constitution. The preamble of the Constitution says explicitly the whole point of the document is to provide for the health, safety and welfare of the people; to eliminate poverty and inequality; to ensure legal, social and economic justice.”

Chicago Democratic Sen. Kwame Raoul said the language in the Constitution regarding pensions is clear. “You really don’t have to be a lawyer to read the plain language of Article XIII [which describes membership in a public retirement system as] a ‘contractual relationship, the benefits of which shall not be diminished or impaired.’ It’s plain English. Read Article XIII, please read it.” He said that if Biss’ plan were approved, it would be tossed out by the courts, and lawmakers would be forced to revisit the issue. “We can’t ignore it. We can’t just say we ... think that the court is going to look at this unambiguous language and say, ‘Oh well, um, we think the exigency of the circumstance gives us the opportunity to say, 'Oh, the heck with Article XII.’ The court is not going to do that,” he said. “In order to kind of do that, they would have to kind of conclude that this is our only option. They would have to conclude that this is an emergency, and this is the only thing we can do. ... and that’s not our only option. There’s several bills that have been introduced. They will be of record. The court will not ignore that.”

Biss said he does not think that cutting benefits is fair, but he said it is necessary to get the system and the state on stable footing. “The argument that we’ve all heard may many times is that the employees, of whom we are asking a very real sacrifice in this bill, have done nothing wrong. And they haven’t. That they have made every payment. And they have. That they were made a promise. And they were. ... I have never used the word fair when talking about this because they were made a promise and it isn’t fair.” But Biss said his proposal would “enable us out of the ashes of that failure, to build a system going forward that we can truly afford and to build a state going forward that we can all be proud of.”

Republicans who spoke in favor of the plan agreed with Biss. “We all know what a vexing problem this is. And no matter what we do, it’s going to be painful to someone,” said Minority Leader Christine Radogno. “We have a lot of great ideas here, but I think at this moment, this is the best, most comprehensive plan that we’ve seen to date, that tries to treat everyone fairly.” A dozen Republicans and 11 Democrats voted in favor of the bill. Radogno said she was disappointed with the outcome.

However, Rep. Elaine Nekritz, who is sponsoring similar legislation in the House, said that she was not discouraged because the vote was somewhat close. “For a bill that is as challenging as that bill, I was not that upset about the roll call.”

The Senate did approve SB 1, which would only to apply teachers who are currently working. But Senate President John Cullerton, who sponsors the bill, said that bill is only the first part of a package of reforms he plans to propose. “The pension clause states that membership in the state pension system is an enforceable and contractual right. I believe that means that benefits cannot be changed unless the legislature offers public employees and retirees a choice and the opportunity to consider and accept that offer,” Cullerton said in a prepared statement after the proposal passed. No Republicans voted in favor of the bill. “I also acknowledge that there are other interpretations of the pension clause and various ways to structure a reform bill. While it’s our job to pass a bill that addresses this crisis, it will be up to the courts to rule on the constitutionality of the legislation. In an effort to capture the maximum amount of savings for the state, I have agreed to sponsor a package of reforms. We addressed part of that package today.”

Under SB1, current teachers would be offered a choice. They could opt to give up their compounded-interest cost-of-living adjustments (COLAs) for access to the state’s health plan and access to a cash balance retirement plan in addition to their current benefits. Employees who opted to keep their COLAs would have their pensionable salaries frozen, so no future raises could be considered for benefits. Cullerton said he removed retired teachers and those who have already given notice that they plan to retire, because most would not opt to reduce their COLAs. So, he said, including them would not produce substantial savings. “We’ve reached a crossroads. We’ve had enough debate on these issues. Now it’s time to pass a bill,” Cullerton said on the Senate floor.

Republicans said Cullerton’s bill is not comprehensive and would not save enough money. “If we’re going to do it, let’s do it. Sen. Biss’ bill saves us seven times more money than this,” said Palatine Republican Sen. Matt Murphy.

While he said leaving retirees out of any pensions deal would be a positive step, Dan Montgomery, president of the Illinois Federation of Teachers, said SB1 is unconstitutional. “It’s a positive that they took retired teachers out. That’s true. They should take retirees out of every system [changes]; we’ve said that for a long time. Not only [because] of the constitutional reasons but out of fairness. ... That’s a good thing that they did that. But the bill still is unconstitutional, and the impact on active teachers we still believe should fail in the courts.”

Nekritz said that the Senate passing SB 1 would likely not have any immediate effect on the House, which has been considering several pension provisions individually on floor votes. “I can’t imagine that this will change the program that we’re on in the short run,” she said. “The Senate is going down its path and the House is going down its path, and at some point, we will need to reconcile them. But I don’t think it is that time yet.”

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Tuesday, March 19, 2013

Advocates for children ask
for budget cuts to be restored

By Meredith Colias

Advocates for early childhood education, bilingual education and homeless student assistance programs appealed to Illinois lawmakers today to restore some funding cut in previous years.

Early childhood education advocates asked for the biggest restoration of funds, $25 million to an early childhood block grant. Under Gov. Pat Quinn’s proposed budget for Fiscal Year 2014, early childhood education would be spared further cuts like those enacted in prior years, and current funding levels would be continued.

Citing the importance of early childhood education, Morgan County Sheriff Randy Duvendack said the state was not providing adequate funding. Duvendack said early childhood education in schools was necessary for the development of “critical, early social skills” for young, disadvantaged children to discourage criminal activity later in life. He said cuts to state funding meant that about 22,000 children were dropped from state-supported preschool programs since 2009.

Marvin Torres of the Latino Policy Forum said as the state’s childhood poverty rate increases, funding for early childhood education is needed to bridge gaps for disadvantaged children in kindergarten who start school as much as six months academically behind their peers. Nancy Radner, director of policy for the nonprofit Ounce of Prevention program, told lawmakers that early childhood education was “an investment that pays off.” Radner said preparing students to do better in school sooner prevents unnecessary placements later in special education. It also reduces the number of students who have to repeat grades, and it lessens teacher turnover. Citing reduced funding in recent years, she said, “We would like to see some of the ground regained.”

Torres also testified in support of funding for bilingual education programs. He estimated 304 schools in 88 counties across the state had children who do not speak English as their primary language. In 2012, Torres estimated that the number of students in the state for whom English is a second language grew from 146,000 in 2004 to about 200,000 in 2012, while funding from state state government has remained flat since 2011.

Patricia Nix-Hodes of the Chicago Coalition for the Homeless asked for $3 million that is not included in Gov. Pat Quinn’s budget to provide support for homeless students to remain in school. She said the homeless student population is also growing, and that money to fund staff is needed to provide services to ensure that students are able to attend school on a regular basis.

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House and Senate take different approaches on concealed carry

By Jamey Dunn

While the Illinois House debates gun control issues each week on the chamber’s floor, the Senate is trying to tackle the issue in a more low-key fashion.

The House today rejected several amendments that would apply to the concealed carry of weapons in public. A federal court has given the state until June to approve concealed carry legislation. Today, House members voted down provisions that would require those with concealed carry licenses also to hold $1 million in liability insurance, limit licensees to carrying a single gun and require concealed carry applicants to complete training with the gun they plan to carry. The chamber approved a couple of amendments, including one that would ban guns in bars.

Republicans continue to voice frustration at the process, which has been dubbed a Weekly Order of Business. Under the process, amendments go directly to the floor for debate instead of being approved by a committee. The House is using a similar method to consider potential changes to public employee pensions.

The House has voted over the last few weeks to adopt several amendments relating to concealed carry or gun control to House Bill 1155 but has not passed a bill to the Senate dealing with either issue. Republicans have bemoaned the process, calling it a political game.

“What’s the end game? What are we doing here? Politics?” asked House Minority Leader Tom Cross when he stood up on the floor to rail against the process last week. “This is a joke. We’re all sick of it.”

But some House members say the approach is helping to sort through a large number of proposals on a politically difficult topic. “If the goal for the gun debates is to see what there’s support for in the chamber, then we’re accomplishing that goal. Obviously there’s things that pass and things that don’t, and that’s I think informing the ultimate goal,” said Rep. Elaine Nekritz, a Northbrook Democrat.

The Senate is working to address concealed carry, too — just a little more quietly. Chicago Democratic Sen. Kwame Raoul, who is working in his chamber to negotiate a concealed carry bill, says he is paying attention to the process in the House. However, he says votes such as those today do not mean any of the provisions that are up for consideration are off the table. “I don’t know how real those roll calls are. You don’t construct a bill by issues in isolation. And any bill that deals with an issue like this, if you vote in favor of it, there’s probably going to be some stuff in the bill that you don’t like,” he said. “Certainly, there could be an element that may be a deal breaker, and we’ll certainly look at what the House has done with some of these roll calls, but I don’t think they’re determinate by any means.”

Raoul said he and Dixon Sen. Tim Bivins, who was tapped by Republican legislative leadership to take up concealed carry, are working to try to find a bill “that can pass and can deliver to the citizens of the state of Illinois, with varying views, a gun public policy that’s acceptable.” According to his staff, Bivins is ill today and not available for comment. He was excused from legislative session today.

Raoul said he and Bivins are meeting with members of the Senate and looking to find common ground. “This debate in the past has been a very polarized debate, with the gun control groups on one side and the [National Rifle Association] on the other, and I think the vast majority of citizens in the state of Illinois are caught somewhere in the middle. And that group in the middle is the one that we’re trying to satisfy with the proposal coming out of the Senate,” Raoul said.

He said he hopes to have a resulting piece of legislation long before the spring legislative session is scheduled to adjourn on May 31. “I don’t anticipate taking a vote anywhere near the last week of session. I’m working to get a bill as soon as possible.”


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Thursday, March 14, 2013

Eastern Illinois University
looking for flat funding

By Jamey Dunn

After Gov. Pat Quinn asked for a 5 percent reduction in higher education spending, the first university to appeal to lawmakers during the budgeting process asked to avoid cuts.

For the past several years, funding for higher education has remained both static and slow in coming. The state delayed higher education payments owed to universities because it did not have the money to immediately pay them. Universities have been waiting in line for payments, as have K-12 schools, Medicaid providers and vendors that provided services to Illinois. With this in mind, Eastern Illinois University’s president, William Perry, said he came to the Capitol attempting to show good faith by asking to keep the university’s general state funding at the same level as last year, about $44 million.

Eastern is also asking for $80 million in capital funding to build a science center on campus. Perry said the university increased student fees to cover some of the construction costs. This request was not included in Gov. Quinn’s proposed budget, according to his office.

Perry said the university is trying to control its own costs by reducing some administrative positions. He also noted that students voluntarily increased some campus fees to raise money for a portion of the proposed building’s estimated cost. He said EIU has simply worked around the state’s delayed payments and that its first priority was continuing to offer its degree opportunities to students in a tightening fiscal climate. “The quality of our programs has not been diminished, so we’re managing it,” he said. Perry said the university had to pre-plan for some uncertainty with various sources of funding. “As with any state agency, you do what you can with where you are, and if state funding goes down, we’ll figure out a way to work with it and manage it,” he said.

The committee’s chairman, Sen. Dan Kotowski, a Park Ridge Democrat, said he was grateful the university “did their homework” and did not ask for extra appropriations from the state budget. “Unfortunately, we're in a really difficult position financially,” he said. "We are going to do our best to make sure that [avoiding cuts] happens. Education can't keep taking these hits that it has,” he said. “What is realistic is the level of support for funding, a stable level of funding for education."

Sen. Chapin Rose, a Mahomet Republican, said the pension issue was a "missing" piece to the discussion that would crowd out funding for items such as higher education if not properly addressed. “To be brutally honest, if the pension payment keeps going up … each year, it’s not just higher education, it’s everything [facing cuts],” he said.

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House approves pension changes

By Jamey Dunn and Meredith Colias

The Illinois House approved two changes to the public employee pension system, but supporters of pension reform say there is still work to be done to reach a comprehensive solution.

Over the past few weeks, the House took several test votes on various amendments that contained pension changes. Today, the chamber passed two bills and sent them over to the Senate, which is having its own debate over the constitutionality of proposals to cut benefits for state workers and retirees. A Senate committee approved two other pension bills yesterday.

The House passed House Bill 1154, which caps the amount of salary that will be considered for pension benefits. The bill would limit the amount of pensionable income to the Social Security wage base, which is $113,700 in 2013, or the employee's current salary, whichever is greater. HB 1166 also passed. The proposal would increase the retirement age for employees younger than 46. Employees from 40 to 45 would see a one-year increase, employees 35 to 39 would see a three-year increase and employees 34 and younger would see a five-year increase.

Republicans supported both measures, but House Minority Leader Tom Cross said he was concerned about the process of passing proposals individually instead of approving a comprehensive plan. “This is for all practical purposes, legislating by multiple choice. What I find troublesome about this process is that this is perhaps the biggest issue that has ever faced the ILGA from a financial perspective, and there’s no road map that’s been laid out for where we’re going,” Cross said on the House floor. “I hope that we’re not setting the stage where we’re sending a series of different bills to the Supreme Court, and not in one big package, which I think could cause a lot of mischief for this issue and this problem.” Cross voted in favor of both bills.

But Northbrook Democratic Rep. Elaine Nekritz said that the standard ways of getting legislation passed just aren’t working for pension changes. “Working this bill in a traditional way, we really have not been able to come up with a solution. I’ve served on pension task forces, and I was a member of the governor’s pensions working group last year, [I] sat through meetings with the leaders and stakeholder on this,” she said. “And all those very traditional kind of processes and the kinds of things that we actually kind of complain about here, where the leaders come together and [make] a solution and then put it on the members’ desks, those traditional processes have not worked. And so I think it really is important that we try to do something different and find out what members will support.”

Union leaders maintain that all the proposals the House is considering, and the two approved by the Senate committee yesterday, are unconstitutional. “We believe that the best approach to constitutionality is by negotiating with the stakeholders,” said John Cameron, political director for the American Federation of State Local and Municipal Employees Council 31.

Nekrtiz and Cross are co-sponsoring a comprehensive bill, HB 3441. Both of the bill’s the House passed today are components of the plan, and a House committee approved HB 3441 after today’s floor votes on the other two bills.

Nekritz played down the importance of committee votes on pension proposals before the hearing. “While the Senate has gotten those bills out of committee, I don’t know where that’s going to end up on the floor. We’ve done that numerous times in the House here, to the point where I think the pensions committee is a little tired of taking testimony on the same thing.” Nekritz said that today’s floor votes were not the hardest part of the plan to get passed. Proposed reductions to the cost of living adjustments given annually to retirees are another piece of her and Cross' plan. Such changes are controversial but would also produce the most overall savings. “I still think we have to put the whole package together in a way that hands the Supreme Court one piece of legislation to consider and hands the Senate one piece of legislation to consider.”

Nekritz said of today’s votes, “These are important milestones along the way, but they’re not the final package.”

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Wednesday, March 13, 2013

Senate still far from agreement on public employee pensions

By Jamey Dunn 

An Illinois Senate panel today approved two pension reform plans while the House continued to debate gun control issues. The constitutionality of both pension bills was argued from all sides during the hearing, which lasted more than three hours. But as the debate continued, one thing became clear: Supporters of pension changes are still a long way from having a plan that can pass in both chambers.

Sen. Daniel Biss, an Evanston Democrat, presented Senate Bill 35, which is the Senate version of a bill that was introduced with bipartisan support in the House last month. The legislation would:

  •  Increase public employee contributions by 2 percent of their salaries. The increase would phase in over two years.
  • Allow cost of living adjustments (COLAs) on only the first $25,000 of a retiree’s pension, or on only $20,000 for those who receive Social Security benefits. COLAs would not kick in until a retiree turns 67 or five years after retirement, whichever comes first.
  •  Increase the retirement age for employees younger than age 46. Employees from 40 to 45 would see a one-year increase, employees 35 to 39 would see a three-year increase, and employees 34 and younger would see a five-year increase.
  • Limit the amount of pensionable income to the Social Security wage base, which will be $113,700 in 2013, or the employee's current salary, whichever is greater.
  • Guarantee that the state make required annual payments to the pension systems.
The measure has the backing of the Civic Federation, a nonpartisan think tank in Chicago. “We believe it is a comprehensive and bipartisan pension reform proposal that would help the state of Illinois greatly. By any reasonable assessment, the state of Illinois is in an extraordinary financial crisis. The primary driver of this crisis is the state’s inability to pay for its huge and growing pensions cost,” said Laurence Msall, president of the Civic Federation.

Supporters of the bill say that the dire state of Illinois pensions systems, which are about 40 percent funded, justifies a move the reduce current workers' benefits to stabilize the system. The state Constitution protects the benefits from being “diminished or impaired.” They argued that the alternative to reducing benefits would be insolvency and an inability of the state to pay out future benefits.

Mark Rosen, a professor at Chicago Kent School of Law, said that for the argument to hold up, the state would have to prove that “there is a sufficiently important reason to justify” reducing benefits and that the reductions only go as far as needed to address the problem. “It doesn’t mean all of a sudden, it’s ordinary politics and that pension matters are just subject to ordinary horse trading. There has to be a very careful balancing of the Constitution promise ... against the very substantial problem that is being remedied.”

Senate President John Cullerton disagrees with this argument. He has his own proposal, SB 1, which the committee also approved. Cullerton believes that some consideration must be given to workers for any reduction in their benefits. SB 1 contains similar language to Biss’ bill. But it also has a proposal that passed in the Senate would have asked employees to choose between their compounded-interest cost-of-living adjustments or access to a retiree health care plan. Cullerton calls this second piece a Plan B to be considered by the Supreme Court if it finds the first portion unconstitutional. Cullerton has pitched the idea as a way to avoid having to revisit the issue at a later date. “We’re trying to pass the bill. But with the possibility that Part A would [be] declared unconstitutional, we have the backup already passed and already in front of the court. If we were to just pass Part A, or if Sen. Biss’ bill passes and it’s challenged as it undoubtedly will [be], and a year later the court throws it out, then we have to come back to the legislature, try to fashion another remedy, pass that bill if we could. That would be challenged, and we’d have another year in court.”

But opponents say SB 1 would not create enough savings and that the cost of employee health care is too much of an unknown. Cullerton said the measure would not guarantee that the state would pay future health care costs; the option being offered to workers is merely guaranteed access to the state’s group health insurance plan. Supporters of SB 35 say that SB 1 would muddy the legal argument behind their proposal. “We can’t let politics dictate this. We have to solve a problem but only go as far as necessary to solve the problem, and when you put them both in the same bill and one saves $28 billion off the unfunded liability and the other one saves $11 [billion], I would say under that construct that Plan A can’t survive because on its face, it looks like we’ve gone further than we need to," said Northbrook Democratic Rep. Elaine Nekritz. She is sponsoring the House plan that is the same as Biss' bill. She plans to present the proposal to a House committee tomorrow.

Union officials believe that both plans are unconstitutional. “What we have are questions of funding. The state takes in money. It spends money. What we’re witnessing is a change in fundamental priorities in how the state spends its money, ”said John Stevens, a lawyer advising the We Are One Coalition. He said that the pension clause was added to the 1970 Illinois Constitution to protect benefits at a time when they system was funded at level similar to what it is now. “Under Illinois law, it is not appropriate to diminish benefits” without engaging in bargaining with public employee unions. Stevens said the consideration in Cullerton’s bill is a false choice that does not offer workers something in exchange for a reduction in retirement benefits. “In either case, you’re giving up something on both sides of the equation. You do not get something for something,” he said.

More Republicans on the committee voted in favor of SB 35. Senate Minority Leader Christine Radogno was the only Republican to vote in favor of SB 1. But she cautioned that she did not know whether she would support the bill if it were called for a floor vote. Several senators on both sides of the aisle said that they also did not yet know how they would vote on either bill if faced with the decisions on the floor. “Clearly, there’s a lot of disagreement. I learned a lot today. Some things that I didn’t know,” Radogno said. “It makes sense to me to advance both of these measures so that we can get further input. This is not the final action, but this kind of discussion starts to narrow the field of what we’re talking about.”

 Biss said that there is still work to do. “It’s a hugely difficult, hugely complicated — ethically complicated, legal, complicated, mathematically complicated, economically complicated problem. So there’s different views, and we’re just going to work through it until we can all get to a bill” that can pass in the legislature, be signed by Gov. Pat Quinn and upheld by the courts. He said he is not expecting a floor vote on either proposal when the Senate is back in session Thursday. “It’s unclear at this point. My guess ... is they will not [be called for a floor vote tomorrow.] But a lot of discussion still has to happen."

Meanwhile, the House continued its long slog of taking test votes on gun control proposals. The House rejected a proposal that would have required Firearm Owners Identification (FOID) Card applicants to get a psychiatric evaluation as part of the application process. An amendment that contains a proposal that would require gun owners to report lost or stolen guns was approved. However, no legislation was passed out of the chamber.

The House has been taking these test votes on pension provisions and gun control proposals for the last few weeks under a process dubbed “Weekly Order of Business” . Republicans have refused to vote on several of the amendments, calling the process a game. “Five hundred adults last year killed in the city of Chicago, and we just spent three weeks, every Tuesday of the last three weeks, playing some political game, I guess, with no direction of solving any of the problems associated with that. I don’t know if it’s politics. I don’t know what it is,” House Minority Leader Tom Cross said during today’s debate on the House floor. “But I would argue, and I think most people in this chamber would agree, that 500 people being killed may be one of the biggest issues facing the city of Chicago and the state of Illinois that we have.”

Cross said Democrats refuse to consider Republican ideas. “They’re not all 'get tough on crime.' Some of them are -- some issues dealing with mental health; some legislation dealing with how to deal with conflict; social, emotional learning; funding; some comprehensive well-thought-out approaches.”

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Tuesday, March 12, 2013

ISBE: School districts struggling to keep their doors open

By Jamey Dunn

 Some Illinois schools are considering moving to four-day weeks to cope with budget cuts, according to the Illinois State Board of Education.

Only one school district, Meridian CUSD 101 in Mounds, has taken the steps to officially pursue a waiver to move to a four-day school week. But state officials say that the idea and other seemingly drastic options are on the table in many districts that are struggling with recent cuts and trying to plan for possible future ones. Christopher Koch, state superintendent, said that suburban districts have been calling the Illinois State Board of Education and inquiring about shortening their school weeks. “I think the problem is they’re without options, and they’re looking at what can [they] do to keep the doors open. And how quickly can they do it. These are real discussions that districts and boards are having across the state. ... It’s astonishing to be getting these requests, but that’s demonstrating what’s happening now,” said Koch. “It’s not only four-day school weeks, it’s high class size ratios, so you have a lot more students per teacher. You have all kinds of personnel being laid off across the state. [School] board after [school] board are approving that. It’s a number of things that are occurring that are no doubt going to erode the quality of instruction taking place.”

In its Fiscal Year 2014 proposed budget, the state board is requesting an increase of $874 million from the current fiscal year. According to the ISBE, pre-K through 12 education has been cut by $861 million since FY 2009. The board says general state aid to schools has been reduced by 7 percent, more than $320 million, since FY 2009.

Under Gov. Pat Quinn’s budget proposal for next fiscal year, K-12 education would be cut by more than $275 million from current fiscal year levels. Quinn has called for early childhood education to be spared from cuts. Quinn says the reductions are needed because of the growing costs associated with the state’s underfunded pension system. The state’s required pension contribution this year was nearly $6 billion. “Skyrocketing pension obligations leave our state with no choice but to continue reductions to our core priorities,” Quinn said in his budget speech last week.

Gery Chico, chair of the ISBE, said leaders in the state “have got to challenge the premise” that education must be cut under the next state budget. “That’s not the discussion. That shouldn’t be the discussion. That’s not what a great state’s about,” he said. “There’s not just one way to raise additional money, through pension [benefits] reduction. There’s other ways to raise money. And we need to have all those things on the table so that we don’t talk about four-day school weeks, we don’t talk about 40-plus-kid class sizes or more, we don’t talk about eliminating fundamental programs in schools.”

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Fracking opponents call for ban

By Jamey Dunn

A coalition of Illinois groups opposed to horizontal hydraulic fracturing is pushing for a ban on the practice in the state.

Hydraulic fracturing, which is commonly referred to as fracking, is achieved by pumping water mixed with sand and chemicals through a well into rock that holds a carbon fuel, such as oil or natural gas. The water creates pressure, which fractures the rock or opens up pre-existing cracks. The sand holds the cracks open so the gas and/or oil can be extracted. It has been done since the 1930s. But recently, fracking has been coupled with horizontal drilling, which allows gas and oil companies to drill down into the Earth and then permeate rock along a horizontal line, which is sometimes miles long. The marrying of the two technologies has allowed for projects that are much larger in scale. (For more on fracking, see Illinois Issues May 2012.)

Lawmakers, regulators and many environmentalists agree that it is coming to Illinois. Oil and gas companies and have spent hundreds of thousands of dollars leasing mineral rights in southern Illinois. House Bill 2615 seeks to regulate the practice and has a broad group of supporters.

“There’s kind of a gold rush mentality surrounding all of this isn’t there? But what happened after the gold rush? Ghost towns,” said Rich Whitney, who is on the legal committee for Southern Illinoisans Against Fracturing Our Environment (SAFE). A group of anti-fracking activists that rallied at the Capitol today say they reject the prevailing belief that fracking in Illinois is inevitable, and they are calling for a two-year moratorium on the practice. “Fracking is not inevitable, and it is offensive to suggest that is inevitable without hearing from the people first and hearing what their concerns are. They’re very legitimate concerns,” said Whitney. Senate Bill 1418 and HB 3086 both call for a two-year ban on fracking and the creation of a task force to study the issue.

Whitley, who ran as the Green Party candidate for governor in 2006 and 2010, took Gov. Pat Quinn to task for highlighting fracking in his budget address. "Hydraulic fracturing, commonly called fracking, is coming to Illinois, with the strongest environmental regulations in the nation,” Quinn said. “This legislation has the potential to create thousands of jobs in downstate Illinois. It will also ensure that our natural resources are protected for future generations.” Quinn encouraged lawmakers to approve HB 2615 this year.

“Gov. Quinn is wrong when he said. ...that this bill will be the strictest regulations in the country. No. New York has a moratorium. That’s the strictest regulation in the country. And what’s good enough for New York, we think is good enough for Illinois. We think that they had the wisdom. We need the wisdom,” Whitley said. Fracking opponents said that the process for appealing drilling permits in HB2615 would be overly burdensome on residents. They argue the Illinois Department of Natural Resources, which has seen deep cuts in recent years, is not prepared to properly regulate fracking. “Nobody listened to the people of southern Illinois” before HB2615 was introduced said Annette McMichael, a SAFE spokesperson. “I assure you southern Illinois was not represented in the closed door sessions [to negotiate the bill]. We are going to continue to educate our legislators that southern Illinois is not a playground for the oil and gas industry.”

Several environmental groups support HB 2615. However, the say they would also be open to a moratorium. Jack Darin, director of the Illinois chapter of the Sierra Club, said most groups just want to make sure that if fracking comes to Illinois, there is a regulatory plan in place. “In the environmental community, we have a lot of concerns about what fracking is going to bring to Illinois, and when we look at some of the controversies that have happened in other parts of the country, there’s a real need for us to prepare for that,” Darin said.

 However, Environment Illinois, which describes itself as a citizen-based environmental advocacy organization, has joined the call for a moratorium. Bruce Ratain, state policy associate for Environment Illinois, called fracking a “rolling environmental disaster” across the country. Ratain pointed to incidents that occurred in the last two months. A fracking well operator in Ohio was accused of illegally dumping thousands of gallons of chemical-laced wastewater and contaminating the Mahoning River. A broken well-head near the northern Colorado town of Windsor spilled an estimated 84,000 gallons of contaminated water. In a rural northeastern area of West Virginia, a worker was killed by an explosion on a drilling site. 

Lawmakers in support of HB 2615 say that potential environmental dangers are part of the reason they believe the bill is needed. “It does concern me — there’s no doubt about it — but now with these rules and regulations in this legislation,I think it’s going to help things. ... Some rules and regulations are better than none,” said Rep. Brandon Phelps, a Harrisburg Democrat. He said he does not think groups like the Sierra Club would support the bill if they thought it would be bad for his region of the state. “I just can’t for the life of me not vote for this knowing that there are companies that want to come to Illinois and spend millions of dollars, and in my area especially, where unemployment is high because we’ve had some layoffs in coal mines and things shut down, like the prisons. This is going to be a huge economic boon in my area.”

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Monday, March 11, 2013

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Sunday, March 10, 2013

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Friday, March 08, 2013

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Thursday, March 07, 2013

Quinn to sign increase in licensing fee for doctors

By Meredith Colias

Doctors will have to pay more in fees so a state agency can continue to investigate and license them.

Senate Bill 622 passed on a 65-49 vote today, with two voting present. The legislation has already been approved by the Senate, and Gov. Pat Quinn plans to sign it.

Because it was low on funds, the Department of Financial and Professional Regulation recently transferred 18 of the 26 staffers responsible for licensing physicians. Lower staffing levels created a backlog of applications and left fewer investigators to look into malpractice claims. If the licensing process remained funded at current levels, delays in processing were expected to be problematic for incoming medical students starting their residencies in July. “Right now, they are hard-pressed to do anything in the arena because there are not resources in the department,”said the House bill’s sponsor, Rep. Barbara Flynn Currie, a Chicago Democrat. She said without a fee increase, the wait time for licenses could be up to a year.

SB 622 would borrow $6.6 million from the Local Government Tax Fund to cover immediate costs. The money would be repaid by 2018. Currently. doctors pay $300 every three years to be licensed in the state. The measure raises fees to $700 paid every three years through 2018 to allow the department to rehire cut staff and be able to repay borrowed funds. At that time, fees would drop to $500 every three years. The increase would be the first time fees have been changed since 1987.

Currie cautioned that the plan might not be a long-term fix. She previously proposed increasing the fees to $750. Under her earlier plan, the fees would not have been reduced in 2018. “This will not be a long-term solution to the problem. It will certainly get us over the immediate crisis,” she said. “It is not the long-term solution that the department has requested of us.”

The fund that the fees go into has been swept to bolster previous state budgets. Rep Jack Franks, a Woodstock Democrat, said protections should be built into the bill to protect it from more sweeps. He said doctors would be punished having to pay higher fees to fund an agency where the same issue could reoccur. “There’s nothing protecting where these same monies won’t be swept again. …What we have here amounts to double taxation.”

Susan Hofer, spokeswoman for the Department of Financial and Professional Regulation, said the agency was “relieved” it would be able to start speeding up the application process.

In a prepared statement, the Illinois Medical Society said the legislation is shortsighted. “Better solutions were left on the table.” The group has acknowledged that a fee increase is needed but also wants the money from the sweeps paid back.

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House takes first affirmative vote on pension change for employees

By Jamey Dunn

The Illinois House voted today in favor of a cap on the amount of salary that can be used to determine benefits for public employee pensions.

The chamber approved the measure as an amendment to a bill but did not take a floor vote on the underlying legislation. The move came as part of a series of test votes on pension changes and is the first proposal that has won the approval of the majority of the chamber under the process, which is referred to as a “Weekly Order of Business.”

The proposal would cap the amount of salary that benefits are based on at the level of salary on which Social Security benefits are based. That number is tied to a federal measure of inflation. This year, it is $113,700. Employees who currently make more than that would see their pensionable salary capped at its current level. Supporters estimate the change could save $1 billion.

Northbrook Democratic Rep. Elaine Nekritz, who has been spearheading pension reform efforts in the chamber, said she was “thrilled” at the approval of the proposal, which is a component of legislation she is sponsoring. House Bill 3411, which Nekrtiz co-sponsors with House Minority Leader Tom Cross, would also require employees to contribute 2 percent more of their salaries toward their retirement, and cap the amount of pension benefits on which cost of living adjustments (COLAs) would be applied. Nekritz and Cross intend to present the bill in a House committee next week.

“I think it demonstrates that the process that we’re going through — we don’t have to be so cynical about it — it can get us to a solution,” Nekrtiz said of today's vote.

The House soundly rejected two other measures today. One would have frozen the cost of living adjustments for retirees for 10 years. It got two “yes” votes. Eleven House members voted in favor of the other proposal, which would have required employees to contribute 4 percent more of their salaries toward their retirement costs. House Republicans generally refused to participate in the process. All but two did not cast votes on any of the pension amendments considered today. They took the same approach last week when Democrats ran several other proposed pension changes through the same process. “We feel that this issue is far too important to try to piecemeal a bill together,” said Sarah Wojcicki Jimenez, a spokeswoman for Cross. She said Republicans instead prefer moving HB 3411 through the traditional legislative process.

House Speaker Michael Madigan accused Republicans of shirking their responsibilities by refusing to cast votes. “The Republicans, I think, made a mistake. So they’re elected, and their electors tell them to come here and to vote. They don’t tell them to come here and not participate,” Madigan told Jak Tichenor, host of public television’s Illinois Lawmakers.

Madigan explained the reason for the test votes: “To better educate the members of the House and the Senate, if they’re watching what we’re doing. Because my sense is — of the attitude of the members of the legislature — is that they’re not yet ready to take this difficult step. And so ... presenting these propositions on the floor where there’s a requirement that people vote will help them understand how grave the situation is [and] the difficulty of the proposed changes. And so, we’ll continue that process over the next several weeks.”

 Nekrtiz said she thinks the process is helping her colleagues understand the individual components that may eventually make up a plan to change pensions. “I think it’s working. I really do,” she said.

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Wednesday, March 06, 2013

Quinn pushes pension changes
in somber budget address

By Jamey Dunn

Gov. Pat Quinn laid out some concepts for changes to the state's underfunded pension systems in a budget that he says is the “most difficult” he has presented to lawmakers. However, the House has already decided that when a final budget is enacted, it will contain less spending than Quinn’s plan.

“This is the most difficult budget that I have ever submitted to you,” Quinn said in his budget address today. “But this is also an honest budget that reflects our fiscal challenges, pays down the backlog of bills and addresses funds that have been under-appropriated for too long, There are no gimmicks or fake numbers in this budget,”  He said the difficulty was a product of the legislature’s “inaction on pension reform.”

Pension Changes
Quinn took a stern tone when calling on lawmakers to pass a pension proposal that would change benefits for state workers, teachers outside of Chicago and university and community college employees. “Today, our budget is being squeezed more than ever, and that will continue until we put a stop to it. The most important thing we can do to repair Illinois finances right now is to reform our public pension systems,” Quinn said. “ We all know that we must reform the Illinois public pension systems. So, members of the General Assembly, what are you waiting for?”

Quinn said he was willing to work with lawmakers, but he emphasized that there is only so much he can do. “I stand ready to sign comprehensive pension reform immediately. Today. But I cannot sign what I do not have on my desk. The people of Illinois need your immediate action.”

“I thought he was pretty firm in his tone,” said House Minority Leader Tom Cross. He likened Quinn’s address to a parent giving a lecture. “His tone was fairly strong, and I think he focused on where he need to on the need to reform the pensions system. It is the issue of the day. ... I think he was right in making that the focus of his speech. I agree with him.” Senate Minority Leader Christine Radogno said that she “agreed with the governor” that it is “time to vote” on changes to the pension system. However, she said it was unfair of Quinn to lay the blame on lawmakers. “Most of the work that has been done on pensions has come out of the General Assembly, and not out of the governor’s office,” she said.

Union leaders said that creating an impression that the only choices out there are deep education cuts or reductions to retiree benefits is dishonest. “It is unfair for Gov. Quinn to present this false choice between pensions or pencils. Springfield lawmakers created the massive pension debt by skipping payments and borrowing more. To call that debt an education expense is not only a gimmick, but an insult to teachers everywhere. We are not to blame, and our students shouldn't suffer,” Illinois Federation of Teachers President Dan Montgomery said in a prepared statement.

Quinn laid out some concepts that he said should be part of a pension reform plan. He said he wants a funding guarantee that would require the state to make the annual contribution to the pension systems. He also wants money that is currently being used to pay off pension bonds, which were issued to make past payments, to go toward the unfunded liability once the bonds have been paid off. Such a move would direct almost $1 billion annually to the liability once the bonds expire in 2020. He said the plan should include an increased pension contribution from employees, but he did not give a specific figure on the increase. He also called for a freeze on cost of living adjustments for “those with higher pensions.” He called the current 3 percent compounded COLAs “unsustainable for taxpayers.”

Quinn also said lawmakers should “consider additional solutions to break the gridlock.” He said he would support a gaming bill with “tough ethical standards” and a ban on campaign contributions from casino operators. He has vetoed two gaming bills that he said did not have strong enough protections against corruption. Quinn has demanded for some time now that any money from gambling expansion be spent on education, but for the first time, today he brought up the idea of using gaming revenues on pension costs. “Any enhancement that we enact to gaming revenues this year should be dedicated to education, which could include teachers' pensions.”

Senate President John Cullerton said he plans to push members of his chamber to present pension reform proposals. “This reality reinforces why pension reform remains my top priority this session. For that reason. I have notified all pension reform Senate sponsors to present their bills before the Senate Executive Committee within a week,” Cullerton said in a prepared statement. “I am also working to identify new revenue sources for education and priority programs. I believe that a gaming plan that is structured to address the ethical and regulatory concerns of Governor Quinn can be part of a new revenue mix. I look forward to working with each caucus to advance more solutions for our funding shortfall.” A Senate committee approved a gaming bill after Quinn’s speech. According estimates from Senate Democrats, the proposal could bring in $200 million to $400 million in revenue for schools, more than $50 million each year for pension costs and almost $32 million in upfront licensing fees that could be spent on overdue bills. The plan calls for a ban on campaign contributions from gaming licensees. The proposal is also a massive expansion that would create five new casinos, allow slot machines at horse racing tracks and airports and create an online gambling system under the Illinois Lottery. Under the so-called i-gaming proposal, residents could bet online. In the past, Quinn has recoiled at large expansions. A spokesperson said that he is “reviewing” the proposal.

Northbrook Democratic Rep. Elaine Nekrtiz, who has been spearheading the pension issue in her chamber, said: “There’s a lot of finger pointing and blame game going on in this whole discussion, and we just need to stop all that and just get about the business of solving it.” She said she thinks that has happened in the House, where she and Cross have presented legislation. She noted that the changes Quinn said he would like to see in the pensions systems are in that plan. “Those are the pieces that are in the Cross-Nekritz bill. By no means are they in every proposal out there. I was very pleased to see that.”

Cuts
Quinn is proposing a $400 million cut to education, which includes K-12 and higher education. Under the proposal, K-12 spending would be cut by more than $275 million. The bulk of the reduction would fall on general state aid to schools, which would be reduced by $150 million. General aid was cut by $161 million under the current state budget. Higher education would take an $83 million hit. In his speech, Quinn did not focus on the details of what the reductions would mean for schools.

Children’s advocates were disappointed with the proposal. “Gov. Quinn’s budget proposal demonstrates that Illinois’ fiscal crisis is far from over and that children, families and communities continue to pay the price for a history of unwise fiscal decisions made by our elected officials. Nearly every area of the budget that impacts children has been subject to deep cuts over the past few years,” Gaylord Gieseke, president of Voices for Illinois Children, said in a prepared statement.

Quinn's plan would not cut early childhood education or Monetary Assistance Program (MAP) grants for low-income college students.

But the cuts may be even deeper in the plan that is ultimately approved by lawmakers because Quinn and the House started their budget planning from two different points. The governor’s budget office estimated the state would have $35.6 billion to spend, but the House yesterday approved a resolution intended to cap spending at $35.08 billion. Quinn’s plan also calls for lawmakers to reassess automatic transfers out of the General Revenue Fund “Our revenue estimates are based on real numbers. ... They’re based on facts. They’re based on evidence. They’re cautious numbers. They take a pragmatic and reasonable approach, and I don’t know where the governor’s numbers come from,” said Marion Democratic Rep. John Bradley, who chairs the committee that produced the House’s estimate.

Quinn’s budget staff said he plans to call on lawmakers to scrutinize money that is automatically transferred out of the General Revenue Fund before the budgeting battle begins. The largest transfer distributes income-tax revenues to local governments. Other transfers are spent on mass transit or are the result of budget deals made in past years. “We haven’t even considered that,” Bradley said. “When you talk about the transfers out, what you’re really talking about is the local government distributive fund. Fifty percent of the transfers out go to local governments, and the other [large] percentage of that goes to mass transit, both upstate and downstate. So that’s going to be a fight between him and the city of Chicago, and Cook County and all the local municipalities throughout the state.”

The idea has been floated in the past by Senate Democrats, and some support it again this year. “Nobody wants to see a $400 million reduction in education. ... We can’t let that happen,” said Park Ridge Democratic Sen. Dan Kotowski, who chairs a Senate budgeting committee. “People come to our state for a number of reasons, not just because we have good roads, because we have great schools. No business in their right mind will want to come to the state of Illinois if we don’t fund education at the level it should be funded. If we were to tell people out there in the general public that there’s $1 billion that’s out there that’s automatically spent, and it's not reviewed, and it doesn’t face the same kind of scrutiny as education, health care, human services and public safety, people would say, ‘That’s crazy.’ Well it is. And it needs to be fixed. It’s wrong. It’s broken.”

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Quinn urges lawmakers to close tax loopholes to pay old bills

By Meredith Colias

Gov. Pat Quinn’s proposed state budget would continue to chip away at Illinois' overdue bills, but he hopes lawmakers will agree to eliminate corporate tax breaks and use the proceeds to pay down some of the state’s current backlog.

Quinn said that under his plan, $2 billion in late bills would be paid down during the current fiscal year and the next. His budget projections estimate that the backlog, which is now more than $8 billion, would be $6.8 billion by the end of Fiscal Year 2014. He proposed further measures to make a larger dent in the backlog.

Quinn called on lawmakers to close corporate loopholes, which he estimated would bring the state $455 million per year in revenue, and place the money into a special fund to be used only to pay past obligations. “Suspending corporate loopholes like these until the bills are paid will be good for our vendors and good for our economy,” he said in his budget address. “Why should we give costly, ineffective loopholes to some of the biggest and most profitable corporations on Earth when he have bills to pay?”

Doug Whitley, of the Illinois Chamber of Commerce, opposes Quinn’s proposal. “I find it troubling that on one hand, the governor wants to improve the business climate ... [and then tells business], ‘Oh, and by the way, how about turning around and kicking in [more taxes],’” he said.

Members of the House seemed equally unreceptive. Rep. John Bradley, a Marion Democrat who chairs the House Revenue Committee, said it would be a nonstarter in the chamber. Those working on the budget in the House hope to pay down a portion of the bills in the same gradual way they have over the last two years. “We dedicated about $1.5 billion toward old bills last year, and we’re prepared and anticipate trying to do something similar to that this year. And we have to make that one of our spending priorities. But we’re living within reality.”

Republican leaders said they support making cuts and using the savings to chip away at the backlog over several years. “The only way to do this is to spend less money then we have coming in and begin to pay the bills off,” said Sen. Christine Radogno, a Lemont Republican and Senate minority leader . As far as closing loopholes, House Minority Leader Rep. Tom Cross, an Oswego Republican, said, “That’s not going to be on our table, but other ways to pay it, we’re clearly open to that.”

Rep. Ester Golar, a Chicago Democrat, said the focus should be on those who are waiting on payments from the state. “We have to pay the individuals who have not been paid,” she said. Golar said she plans to introduce a bill calling for the state to borrow money to pay down the backlog. She proposed $4 billion in borrowing at the end of the last legislative session. Quinn has backed such plans in the past but has since moved away from them after they failed to gain traction with lawmakers.

Illinois Comptroller Judy Baar Topinka’s office manages payments to vendors, and documents in quarterly financial reports how the backlog is being paid. “It’s our office’s job to patch. We use baling wire and bubblegum to hold the whole place together, and I’m now looking at the possibility of Silly Putty,” she said. Topinka said the bills needed to be prioritized. “Legally we can’t declare bankruptcy, so we’ve got to make something happen. As long as this goes on, we’re going to keep taking bad credit ratings, the costs [of borrowing] are going to go up. It has to get done now.”

 Topinka said another Quinn proposal to cut 5 percent from the budget of the General Assembly and constitutional officers and redirect it to the backlog is not feasible. “We’ve already cut 10 [percent] out of our [office]. We’re at 1997 operations in our office. So it can’t be done. It can’t be done.”

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Medical marijuana moves forward

By Meredith Colias 

Chronically ill residents would have another option to relieve long-term pain under a plan to legalize medical marijuana, which an Illinois House committee approved today.

The committee approved House Bill 1 on a 11-4 vote. The legislation’s sponsor, Rep. Lou Lang, a Skokie Democrat, cited the18 other states, plus Washington, D.C., that already legalize marijuana for medical use in some form. “We can help sick people have a quality of life,” he said. Lang said it was important that there were specific restrictions to the measure to limit participation to those with an actual medical need with “continual pain, nausea and discomfort.” Patients older than 18 afflicted with chronic or terminal ailments specifically listed in the bill, such as multiple sclerosis, cancer, Alzheimer’s disease and HIV/AIDS, would qualify to apply for a medical cannabis card issued by the Department of Public Health. Patients issued permits would be limited to possessing 2.5 ounces of marijuana every two weeks.

Opponents said the measure would set a bad example for children. “The law’s a teacher,” Ralph Rivera of the Illinois Family Institute said. He cited a study showing marijuana usage for those 25 and younger increased in states such as Colorado that previously legalized medicinal usage. If the measure becomes law, “the students, the children [will] think it’s OK.” Colorado voters recently approved a measure to legalize the possession of marijuana for recreational use.

Limey Nargelenas, a lobbyist with the Illinois Association of Police, said he was concerned that those who would be approved to use medical marijuana would be allowed to drive under the influence, giving them a “back door to get out of the situation.”

 But Lang said the law was not meant to open the door for those who smoke marijuana recreationally, who he says will smoke regardless of the law. “We know teenagers are going to smoke marijuana whether we pass this bill or not,” he said.

Lang said patients would also have to pass background checks, verify they are ill and demonstrate that other possible medical solutions had been tried. Licensed patients would have to prove that they are regularly seeing the doctor who prescribed medical marijuana. Caregivers and state employees overseeing growing and dispensary operations also would be required to pass a background test. Lang said the law would not spare legally impaired drivers: If caught, “the legal system will take its course.” He said that he thinks the committee’s approval of the legislation will help him as he lobbies for votes to pass the bill out of the House. Lang called bills to legalize medical marijuana for three floor votes in the House in 2011. All three times, the measures failed. “I think it will be easier to find the votes on the floor once it’s out of committee. Many members of the floor will say, let me know when it’s out of committee, and then I’ll commit to you,” Lang said before today’s committee vote.

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Tuesday, March 05, 2013

Quinn to propose education cuts and employee pension changes

By Jamey Dunn with Meredith Colias contributing

In his budget proposal tomorrow, Gov. Pat Quinn is expected to lay out substantial cuts to education and press lawmakers for changes to public employee pensions.

“This is a difficult budget. It holds the line on spending and reflects the state’s fiscal challenges. This budget doesn’t propose any new taxes fees or programs. It’s an honest budget that’s based on actual costs, and continues to eliminate gimmicks. This budget is a direct result of the inaction on stabilizing the pensions,” Jack Lavin, Quinn’s chief of staff, said at a briefing for reporters this evening. Quinn plans to propose a nearly $400 million cut to K-12 education. General State Aid to schools would be reduced by $150 million. Quinn also plans to call for cuts to transportation funding. Funding for higher education would be reduced by almost 5 percent. Early childhood education and Monetary Awards Program (MAP) grants for low-income college students would be safe from cuts. “Here we have a series of reductions that the governor does not want to do. These are outside of his vision of where we ought to be as a society. These reductions are a direct result of no action on pension reform,” said Jerry Stermer, director of Quinn’s budget office.

Quinn’s general revenue estimate of $35.6 billion comes in higher than the $35.08 billion that the House approved today. The House's number is based on analysis from the bipartisan legislative Commission on Government Forecasting and Accountability. Quinn's budget calls for a total of $62.4 billion, including federal revenue and spending from other funds, but the bulk of the appropriation process focuses on general revenue. Quinn’s budget is predicated on the idea that lawmakers would get on board with taking some money that is typically automatically transferred out of the General Revenue Fund (GRF) before the budget battle each year and instead toss it into the appropriations process. Quinn’s representatives at a budget briefing this evening said he does not intend to make specific suggestions about which transfers to tap into but will instead call upon lawmakers to assess all of the transfers out on an annual basis. “It is an autopilot kind of an appropriation. It just goes by itself without an annual review by the General Assembly. … It just goes out the door,” Stermer said. “All of those dollars in FY 13 are on autopilot, according to existing statutes. The only way you can make a change is to change the statute.”

The largest transfer, more than $1 billion, is of income tax revenues that are funneled to local governments based on their populations. In 2011, Quinn proposed delaying payments to local governments as part of a plan to cut some of the backlog of unpaid bills. That plan was met with vocal opposition and lobbying from local mayors and was quickly dropped. A budget plan that Senate Republicans proposed that same year called for a $300 million cut to revenues shared with local governments.

 Stermer said one fund at the Department of Revenue has a surplus that will be automatically dumped into the GRF at the start of the next fiscal year. “So that’s $150 million that COGFA did not account for.”

The budget calls for reducing the backlog by $2 billion over the current fiscal year and Fiscal Year 2014. The governor’s budget projection estimates the backlog, which is now more than $8 billion, will be $6.8 billion by the end of FY 14.
Quinn spokeswoman Brooke Anderson said the governor does not plan to propose billions in borrowing to pay down the backlog, an idea he has advocated in the past. However, she said, “He will propose a way to pay down the bills faster,” although she declined to share details. “We’ll leave that” for tomorrow’s budget address, she said. 

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House takes test votes
on assault weapons ban

By Jamey Dunn

The Illinois House took several votes on assault weapons bans today but did not approve a bill to send to the Senate.

The votes were held as part of a "Weekly Order of Business" on gun safety. Steven Brown, spokesman for House Speaker Michael Madigan, described the process last week, after the House took similar votes on pension reform: “The strategy is to test the gambit of ideas. ... Test every idea that’s out there. You’ve heard people complain over the years about not being able to vote. Well, here’s a chance to vote.”

The House approved four amendments today that call for the ban of the sales of several types of so-called assault weapons, including guns used in recent mass shootings in Connecticut and Arizona. Another amendment that passed would ban the possession or sale of high-capacity magazines, which hold more than 10 rounds of ammunition.

Opponents called the measures extreme, saying that they would severely limit residents’ access to guns. “What we have here today is just a full out attempt to ban every gun in this state,” said Harrisburg Republican Rep. Brandon Phelps. “This bans every rifle in this state.” They accused supporters of playing politics and trying to back them into controversial votes. “At the end of the day this is no about public safety this is all about politics,” said Elmhurst Republican Rep. Dennis Reboletti. “This is nothing but a political exercise to have that gotcha moment.”

But those in favor said that the weapons the amendments would ban are dangerous and should not be available to the general public. “This is not a game. We’re talking about human lives, innocent lives, and this need to be addressed first and foremost. Keep our communities safe,” said Chicago Democratic Rep. Luis Arroyo.

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House preempts Quinn and approves a spending cap the day before his budget speech

By Jamey Dunn

The Illinois House kicked off its budgeting process a day before Gov. Pat Quinn is scheduled to present his budget plan.

The House approved a spending cap of $35.08 billion today, preempting the estimate that will presumably be a part of Quinn’s plan. “It ... means that if the governor walks into this chamber tomorrow, walks up to that podium and proposed to spend more than $35.081 billion, then he puts himself at odds immediately with this chamber,” said Arlington Heights Rep. David Harris, the ranking Republican on the House Revenue and Finance Committee, which produced the estimate. Rep. John Bradley, who chairs the committee, said it moved ahead because Quinn’s budget office was “all over the place” with its revenue estimates. “If the House adopts this number today, the House will have already spoken,” he said before the floor vote.

The revenue estimates approved in the last two years have been the basis for the budgets that lawmakers ultimately sent to Quinn. Those estimates were approved, however, after Quinn presented his plan. “It’s the same process we’ve used for the last two years ... and it’s the first and most crucial step in beginning the budget process,” said Bradley, a Marion Democrat. The projection means lawmakers will have more to work with than last year, when the estimate was $33.7 billion. “The revenues are expected to be stronger this year than last year, and we have significant spending pressures that we’re going to have to deal with,” Bradley said. “I think we’re going to have close to $2 billion of additional pressures this year, and that’s not including whatever may or may not have happened with regards to the contract announcement.” He said that the committee was still working to estimate the cost of the new contract for state workers. The American Federation of State, County and Municipal Employees is in the process of ratifying the proposed three-year contract, which includes pay raises and requires employees to contribute more to their health care costs in retirement. He said the estimate also takes into account federal across-the-board budget cuts, known as the sequester, that went into effect on Friday.

The revenue committee’s estimate was created by the bipartisan legislative Commission on Government Forecasting and Accountability. “We drove down into the numbers of the COGFA report, and we determined that the COGFA numbers, unlike in previous years, we believed were accurate,” Bradley said. He said he thinks the estimate will be lower than Quinn’s projection. “I anticipate and I predict we’ll be below the governor’s number tomorrow.” Quinn’s office did not respond to questions about the House’s projection.

 Harris said that several issues before the legislature could bring in more revenue next fiscal year. “There certainly are unknowns out there, and maybe those unknowns will be favorable. Depending on what we do with hydraulic fracturing and gaming and telecommunications, maybe the revenue will be higher.” But he cautioned his colleagues not to expect new spending. “While the number is big, I believe that it’s reasonable, but let’s not plan to go out and spend it right away. Because my friends, we can’t spend it on education, or health care, or assistance to the developmentally disabled, or roads or any other needed service because our pensions payment alone goes up by $1 billion. So unless we make reforms to the pension system, this $1 billion increase in revenue goes to one place, and that’s for pensions.”

The next step in the House budgeting process will be to take fixed costs, such as debt service and the pension payments, off of the top of the estimate and then dole out spending numbers to the various appropriations committees. Members of those committees then make spending decisions in their specific areas of state government, such as education. “This was the first step of a long journey we have ahead of us this year,” Bradley said.

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Monday, March 04, 2013

Despite governor's vetoes, gaming expansion supporters
still hope for compromise

By Jamey Dunn

As expected, Gov. Pat Quinn today vetoed a gaming expansion bill that was sent to his desk more than a year and a half after the measure passed.

The Senate approved Senate Bill 744 on the last day of the spring legislative session in 2011. The proposal called for five new casino licenses, along with slot machines at horse racing tracks and the Illinois State Fairgrounds. Senate President John Cullerton put a procedural hold on the bill because Quinn had made his distaste for the plan public, calling it "top heavy." Quinn voiced a particular disdain for allowing slot machines at the fairgrounds. Cullerton and supporters of the plan had hoped to work out a compromise with the governor. But Quinn called for them to send the bill and let him rewrite it with his veto power. Instead, proponents of a gaming expansion backed away from SB 744 and threw support behind another bill that they viewed as a compromise. Legislators approved SB 1849 on the last day of the regular spring session of 2012. Quinn vetoed that bill, and lawmakers did not take a vote to override his veto.

“Everybody, including us, knew that he was going to veto [SB 744]. It was just when he was going to veto it,” said Waukegan Democratic Sen. Terry Link, who sponsored both bills. Quinn’s complaints about SB 744 and SB 1849 are similar. Quinn said in today’s veto message that he would not sign off on any gaming plan without “strong ethical standards, comprehensive oversight and dedicated resources for education.” According to the message, Quinn liked SB 744 even less than the gaming plan he previously vetoed. “Senate Bill 744 is even more significantly flawed than SB 1849. Senate Bill 744’s most glaring deficiency is the total absence of comprehensive ethical standards and regulatory oversight. The bill also lacks a ban on campaign contributions by gaming licensees and casino managers, which is essential to keeping corruption out of the gaming industry.”

Link said he plans to propose new legislation that he believes will meet Quinn’s requirements. “We will be introducing a bill that we feel that answers most of the governor’s requests or desires.” However, Link said he and other supporters have been trying all along to get a plan approved that Quinn could accept. “When the goal line keeps moving every time, it’s kind of hard to get to the goal line.”

SB 744 was kicked to Quinn when the 97th General Assembly ended in January. Because the two-year legislative session of the 97th General Assembly is over, lawmakers have no opportunity to try to override today’s veto.

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Sunday, March 03, 2013

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Saturday, March 02, 2013

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Friday, March 01, 2013

Sequester would make Illinois' bad budget situation worse

By Jamey Dunn

Days before Gov. Pat Quinn is scheduled to present his budget plan for the next fiscal year, the reality is setting in that federal spending will be cut across the board.

A plan, referred to as the sequester, to cut $85 billion from the federal budget is expected to kick in. The cuts were meant to force a compromise on deficit reduction measures that would have averted the draconian and widely unpopular reductions, but Congress and President Barack Obama’s administration were unable to work out a deal before today’s deadline. Obama today called the cuts “arbitrary” and “dumb.” The president told reporters in Washington D.C.: “Now, what’s important to understand is that not everyone will feel the pain of these cuts right away. The pain, though, will be real. Beginning this week, many middle-class families will have their lives disrupted in significant ways.”

U.S. House Speaker John Boehner said at a Washington, D.C,. news conference today that “there are smarter ways to cut spending.” However, he said that his chamber had done its part to avert the cuts. “The House has laid out a plan to avoid the sequester. I would hope that the Senate would act.” He added that “discussion about revenue .. .is over.”

Boehner said he would move next week to ensure that the government does not shut down when current spending authority is scheduled to end on March 27. “I did lay out that the House is going to move a continuing resolution next week to fund the government past March 27,” Boehner said today after a meeting with the Obama administration produced no solution to stop the sequester. “And I’m hopeful that we won’t have to deal with the threat of a government shutdown while we’re dealing with the sequester at the same time. The House will act next week, and I hope the Senate will follow suit.” Many hoping for a sequester deal had looked to the March 27 deadline as a potential opportunity for a compromise to avert the cuts.

If a deal is reached soon, much of the brunt of the cuts could still be avoided. However, if the sequester remains in place, Illinois would lose:

  • $33.4 million for primary and secondary education.
  • $24.7 million for educating children with disabilities.
  • $6.4 million in funds for environmental protection.
  • $3.5 million for substance abuse treatment.
  • $1.4 million for job placement programs.
  • $764,000 in food assistance for seniors.
  • $587,000 in law enforcement and public safety grants.
  • $357,000 for children’s vaccinations.
  •  $273,000 programs that serve victims of domestic violence.

According to the Obama administration, cuts to the Head Start program would mean that more than 2,700 children in Illinois could lose access to preschool. Education cuts would put more than 700 educator’s jobs at risk. The state will also be subject to national reductions in military spending. If federal layoffs kick in as scheduled in April, travelers at airports, such as Chicago’s O’Hare, could see long wait times. (For more information on Illinois and a comparison of all the states, see this handy breakdown from The Washington Post.)

 But Illinois will not be hit as hard as some states. According to an analysis from the Pew Center on the States, the cuts would be equal to of 2.5 percent of Illinois’ Gross Domestic Product. That compares with states such as Virginia, where the cuts would equal almost 20 percent of GDP. States such as Virginia, with high levels of defense spending, will be especially hurt by the $43 billion in defense cuts called for under the sequester. (For more information, see this analysis from Pew.)

While the federal cuts in Illinois may not be as dire as in some other states, Illinois is heading into an especially difficult budgeting year. Growing pension costs are putting pressure on other areas of spending. The pensions contribution for Fiscal Year 2014 would be more than $6 billion, and the state is projected to have more than $8 billion in unpaid bills by at the end of the current fiscal year. Quinn’s budget office did not return a request for comment on the sequester. Quinn is scheduled to give his budget address on Wednesday.

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