Closures Averted, Tax Break Deals for Businesses Fail, Pension Abuse Legislation Sent to Governor

Please note:  The Week in Review is written by a staff member of the Illinois Senate Republican Caucus and approved by legislators. It is meant to provide constituents with information about legislative action and activities during the week.

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

Lawmakers did, however, pass targeted pension reforms aimed at ending abuses by some union officials, approved a series of critical work-rule changes at Chicago's McCormick Place exhibition authority and approved a key bill related to Medicaid reform.

State Facility Closures Averted

Threatened closures of seven state facilities were averted when lawmakers returned to Springfield Nov. 29 and approved a compromise plan that rearranged the state budget but did not increase total spending for the cash-strapped state, State Sen. Ron Sandack (R-21st, Downers Grove) said.

Gov. Pat Quinn announced intentions to shutter the seven state facilities in September, a proposal that drew an outcry from employees, community leaders and the public. Sen. Sandack said closing the mental health facilities, developmentally disabled centers, and correctional facilities the governor selected for closure, would have put approximately 1,900 employees out of work.

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

No Agreement on Business Incentives

Senate and House lawmakers were unable to reach an agreement on a business incentive package intended to provide relief for major Illinois companies CME Group Inc., CBOE Holding Corp. and Sears Holding Corp. All three companies have threatened to leave Illinois unless lawmakers provide tax incentives to offset what the companies contend are burdensome state tax obligations that undermine the desirability of remaining in Illinois.

The CME Group and CBOE Holding Corp. were hard hit by the state's 67 percent tax increase that passed in January with only Democrat votes. At the time, Republican lawmakers warned that the huge tax hike would have a negative effect on employers and jobs in Illinois—a prediction that has proven to be all too accurate as numerous companies have sought incentives and other offsets to remain in Illinois.

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

“I am sympathetic towards CME and Sears, as I am other employers in our state,” Sen. Sandack said.  “I understand their situation; however, this legislation did not reflect good planning or good public policy.  The policies we should create need to be comprehensive and level the playing field for the businesses in the state—not favor one over the other. I believe HB 1883 would have established a precedent that would have encouraged other big businesses in Illinois to come to Springfield and ask for similar concessions.” 

Sen. Sandack said this legislation is symptomatic of the tax increase that was passed in January and Illinois’ continuing budget woes. 

“I’d much rather pass tax relief across the board for all taxpayers,” Sen. Sandack suggested.  “Picking winners and losers, which is essentially what the legislation did, is bad policy.  Enacting policy that will create favorable environments for employers and employees would help end the problems that Illinois seems to continue to create.  These problems will persist until a new mindset pervades Springfield.”

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

Work Rules at McPier

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

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

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

Pension Abuse Bill Headed to the Governor

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

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

Medicaid Reform

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

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

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

Children of Veterans Tuition Waiver

Sen. Sandack reminds students who are children of veterans to apply for the University of Illinois’ Children of Veterans Tuition Waiver.  This waiver provides a free four-year tuition waiver to any natural or adopted child of a veteran.  Up to six waivers per Illinois county are awarded each year, one for each of the following conflicts for which the Veteran served:  World War II, Korean Conflict, Vietnam Conflict, Southeast Asia Conflict, Operation Enduring Freedom, and Operation Iraqi Freedom. 

Eligibility is limited to permanent residents from any of Illinois’ 102 counties. Awards are limited to one per county and per conflict. The tuition waiver is good for any University of Illinois system school or degree program.

The deadline to apply for the waiver is March 1, 2012.  More information can be found on Sen. Sandack’s website or by calling the Office of Student Financial Aid at (217) 333-0100.