Fall Veto Session Preview: Gaming, ComEd, McCormick Place, Pensions, Sears Incentives and More

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.

Lawmakers will return to Springfield Oct. 25 to begin the fall 2011 veto session, said State Sen. Ron Sandack (R-21st, Downers Grove). Though Gov. Pat Quinn used his veto powers to reject or alter 30 bills, the General Assembly is expected to address a number of other issues, which may include a new or modified gaming package, an agreement on McCormick Place work rules, and numerous business incentive proposals.

This week, Quinn publicly rejected the gaming package approved by lawmakers during the spring legislative session. The massive gambling bill (Senate Bill 744) has not been formally sent to the Governor for consideration; however, Quinn said in an Oct. 17 press conference that after careful review of the proposal, he believes it “has major flaws in it.”

According to the governor, Senate Bill 744 failed to provide adequate Gaming Board oversight of all aspects of the state’s gaming industry, including the proposed Chicago casino. Quinn also said the bill authorized too many gaming locations and gave what he believes to be unfair tax breaks to casinos, while short-changing Illinois’ education and infrastructure.

Quinn’s office produced a framework for a revised gaming package, stressing the need for greater oversight by the Illinois Gaming Board, and stronger procurement rules. The Quinn proposal would prevent gaming at Midway and O’Hare airports, and ban slot machines at racetracks and at the Illinois State Fairgrounds. Supporters of the measure say that eliminating gaming at Illinois racetracks would strip away support from downstate lawmakers that is needed to pass any gaming bill, as assistance to the ailing horseracing industry is considered essential. Removing that support would likely doom any alternative.

It’s anticipated that negotiations on either changes to Senate Bill 744, or a new gaming bill, could occur during veto session.

Lawmakers may also take up the governor’s veto of legislation to improve and modernize Illinois’ electric utility system. In September, Quinn vetoed Senate Bill 1652, which would allow utility rate increases to cover the cost of implementing so-called “smart-grid” technology to upgrade the state’s electric utilities.

Quinn sided with opponents of Senate Bill 1652, contending the plan allowed for excessive and burdensome cost increases for consumers. The governor also contended the bill gave ComEd and Ameren too much autonomy when it came to state oversight of utility regulation and rate increases. However, the Smart Grid bill had received support from lawmakers from both parties, who claimed it would reduce power outages and lead to better quality and more reliable electric service. The new system is also reportedly thought to be a draw for both new and relocating businesses, in addition to the 2,450 jobs Ameren and ComEd would be required to create. 

Sen. Sandack originally supported the legislation, citing his belief that reasonable infrastructure improvements were necessary, among other things. 

“Our society has become highly advanced, and our state should have the proper infrastructure support rather than a system that is outdated,” he said. “Secondly, I supported the measure because the promotion of Smart Grid and other green-initiatives will likely help reduce electrical use and therefore reduce expenses over time.” 

Reforms to work rules at Chicago’s McCormick Place convention center and exhibition facility (McPier) are also anticipated to be discussed during the fall session. In 2010, the legislature passed bipartisan legislation to ease stringent labor rules at McPier after high labor costs encouraged several conventions to leave Illinois for more cost-effective locations.

However, legal challenges have placed the 2010 labor changes in jeopardy. U.S. District and Appeals Courts have sided with labor unions that protested the initial reforms, finding that the law interferes with the negotiating rights of private-sector employees.

Lawmakers, the governor and Chicago Mayor Rahm Emanuel have been working with labor unions to negotiate a compromise settlement that satisfies the legal concerns surrounding the current work rules. On Oct. 21, Quinn and Emanuel announced agreements on labor rules at McCormick Place had been reached with the Teamsters and carpenters labor unions. Any agreement would likely need to be codified into law.

Other issues that may be considered during the fall veto session include:

Pension Reforms – Reforming the state’s retirement systems continues to be one of the top issues facing Illinois. Though pension reforms that would impact new hires were approved in 2010, legislation to address costs associated with current employees and retirees has met resistance.  Speculation continues over whether a major pension reform bill will be allowed to be voted on during the fall veto session.  Several other pension reform measures have recently been introduced, including a bill that will give more accountability to taxpayers by reconstituting the City of Chicago and Cook County pension boards. Legislation was also introduced to repeal a portion of a pension loophole that allowed union leaders to collect millions of dollars from publicly-funded state pensions based on their time working for the union, not the public.

“At the beginning of the year, we had the ‘temporary’ tax increase,” Sen. Sandack said.  “That increase is covering the ever-increasing pension obligations, and those pension obligations are crowding out human services, transportation and education ever-more.”

Sen. Sandack has been vocal about budget and pension reform for months, saying that tough action needs to be taken in order to revive Illinois.

“The state is broke, financially and culturally,” Sen. Sandack said.  “It is time to stop the vicious cycle of taxing and spending and borrowing, and borrowing again.  Living within our means is tough, but necessary.  So, too, is reasonably reforming public pensions.”

Budget Overrides – On June 30, Quinn cut $11.3 million from the state budget that was to fund regional superintendents’ salaries. A proposal has been floated to use the Personal Property Replacement Tax to finance salaries for regional superintendents, who have worked without pay since July 1.  

Legislative Scholarship Program – In August, Quinn amendatorily vetoed House Bill 1353, rewriting the legislation to veto the scandal-plagued legislative scholarship program in its entirety.  Despite widespread legislative support to eliminate the program, House Speaker Michael Madigan recently stated he would not call the bill for consideration during the veto session—stymieing efforts to do away with the long-abused program.

Sen. Sandack opted to suspend awarding scholarships shortly after he took office, and expressed disagreement upon hearing Speaker Madigan’s plans to not call the bill.

“In light of the state’s fiscal crisis, as well as the previous reports revealing impropriety relating to the program, there is no reason why this program should not end,” Sen. Sandack said.  “Additionally, the state is behind with its bills to colleges and universities and continuing this program will only place more of a burden on higher education institutions.  It should be called for consideration during this veto session to concur with the governor’s veto.”

CME and CBOE Incentives – The CME Group Inc. and CBOE Holdings Inc., which run the Chicago Mercantile Exchange and Chicago Board of Trade, are seeking tax incentives following the increase of the state’s corporate tax increase last January. CME and CBOE have threatened to leave the state if lawmakers don’t comply.  According to news reports, a legislative proposal could be considered as early as next week.

Sears Incentives – In 1989, the state approved a multi-million dollar incentive package intended to ensure Sears remained in Illinois. The company agreed to move to a new campus in Hoffman Estates, where the company says it currently employs approximately 6,000 workers. The deal will expire next year and Sears is asking legislators to extend the incentive package another 15 years. The company, which is reportedly directly and indirectly responsible for as many as 30,000 jobs statewide, says it has received competitive relocation offers from several other cities.

Research and Development Credit – The state’s R & D tax credit for businesses has expired. Lawmakers are looking at reinstituting the incentive before the end of the 2011 tax year.

Health Care Exchanges – A state task force continues to work on recommendations for the implementation of health insurance exchanges, which are required by federal law. The exchanges are intended as high-tech clearinghouses to assist individuals and small businesses in buying health insurance. Lawmakers are working on plans to govern the composition and oversight of both the exchanges and the supervisory board, with the goal of meeting federal deadlines necessary to ensure the state doesn’t lose any federal financial resources.