Senate Week in Review: Enterprise Zone Bill Passes Senate, Quinn Proposes Medicaid, Pension Reform

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.

SPRINGFIELD, IL – Legislation extending the state's popular Enterprise Zone economic development tool won unanimous support in the state Senate April 26. The week also included a scathing audit of the administration's management of the state's workers' compensation program and a comptroller's report that Illinois is more than $9 billion behind in paying its bills.

Scheduled for May 1 is the release of Commission on Government Forecasting and Accountability recommendations on several proposed closures of state facilities. 

Lawmakers focused mainly on reviewing bills in committees so they can be voted on by the full House and Senate. One measure drawing attention was a key campaign finance reform aimed at closing a loophole in existing state law.

Quinn's Medicaid and Pension Reform

Last week, Gov. Pat Quinn offered his own proposals for Medicaid and pension reform. His Medicaid proposal includes a cigarette tax and a rate cut to providers, while the pension proposal hinges on a higher employee contribution and a later retirement age. Sen. Ron Sandack (R-Downers Grove) said it is encouraging the governor is engaged in the process, and his proposals are a good starting place, but more work is needed in order to achieve a final reform.

“It shows promise that Gov. Quinn is engaged in this process of reforming two systems that are in serious trouble,” Sandack said. “We need some more specifics and options on these proposals to really reform these systems like they need to be. I’m hopeful that the governor will continue to work with the special working groups he’s appointed for each and that the end proposals will be sufficient to protect the solvency of the systems.”

Many lawmakers are pushing to pass Medicaid and pension reform this session, saying that the two systems will be unsustainable if nothing is done. There are now five weeks left of the scheduled spring session.

Key Economic Development Tool

The Illinois Senate unanimously passed Senate Bill 3688, a bill that extends the Illinois Enterprise Zone program for an additional 25 years. Since its inception the program has been credited with employment growth and aiding in economic development. The legislation now heads to the House.

The bipartisan Special Senate Committee on Enterprise Zone extensions, co-chaired by Sens. Pamela Althoff (R-Crystal Lake) and Michael Frerichs (D-Champaign) held statewide hearings this spring to gather testimony about the effectiveness of the zones. 

“Enterprise zones provide the path to success that we all want to see in our economy,” Althoff said. “After an extensive, bipartisan effort to hear from Illinoisans about the value of these zones, we can proudly say this bill is the right approach for our state and we encourage the House to take this up right away.”

In addition to the 25-year extension, the measure allows for the creation of 10 new zones and for increases in the geographic size of zones. The legislation also eliminates three obsolete tax incentives and increases transparency requirements.

Since they were first established, the zones have contributed to the creation of more than 900,000 jobs and led to nearly $50 billion in associated revenue.

More Budget Woes

The state's well-documented budget problems were highlighted again, Sandack said, when Illinois Comptroller Judy Baar Topinka’s office released its quarterly report, which noted that despite the additional revenues from the Democrats' 2011 tax increases, the state’s fiscal concerns persist.

In fact, according to the report “the bill backlog has increased in the most recent quarter, and payment delays are expected to persist for the foreseeable future.”

The Comptroller’s Office is reporting the backlog of bills on hand totals more than $5.5 billion; however, the report stressed that number only includes submitted requests for payment. When including bills that are being held by state agencies, including an estimated $2 billion in Medicaid bills pending at the Department of Healthcare and Family Services, the estimated backlog jumps to more than $9 billion.

Auditor Hits State Management of Workers' Compensation

Once again, poor management of state agencies was uncovered by the state's auditor general, this time in the workers' compensation system.

The audit identified “extensive problems” with the three agencies involved in handling state workers’ compensation issues: Central Management Services, the Illinois Workers’ Compensation Commission and the Attorney General’s Office. The audit noted the “problems have led to a program that is ill designed to protect the state’s best interests as it relates to processing and adjudicating workers’ compensation claims for state employees.

Among the findings of the auditor general was that the agencies:

• used data that was incomplete, inaccurate, and inconsistent 
• adjusted claims and made decisions without appropriate forms being submitted
• did not have formal policies for conflicts of interest for adjusters or other employees who process workers’ compensation claims
• negotiated settlement contract terms directly with the injured employee’s legal counsel
• did not evaluate arbitrator performance 
• did not have guidelines for arbitrators regarding awards and issued awards that were inconsistent in similar cases
• did not have a formal policy or specific procedures to identify fraud

Hearing on Closures

Following several months of public hearings on Gov. Quinn’s proposed closure of 10 correctional facilities, transitional centers and juvenile justice centers, as well as four state mental health and developmental centers, on May 1 the bicameral Commission on Government Forecasting and Accountability is scheduled to issue its recommendation on several of the proposed closures

The opinion issued by COGFA members is advisory; however, the governor is expected to take the recommendations into consideration when deciding the fate of the facilities.

The COGFA hearing will begin at 10 a.m. in Room 400 of the Illinois Statehouse. Commission members will be voting on the proposed closures of Tamms Correctional Center, Dwight Correctional Center, Illinois Youth Center at Joliet, Westside Adult Transition Center, Peoria Adult Transition Center, Warren G. Murray Developmental Center and the Skokie DCFS Office.

Campaign Reform

In an effort to further reduce the conflict of interest between politicians and special interests doing business with their offices, legislation has been introduced to prevent government employee unions from donating funds to candidates who may end up negotiating with them for raises and increased benefits.

The legislation, SB 2988, sponsored by state Sen. Matt Murphy (R-Palatine), was developed in conjunction with the Illinois Chamber of Commerce and Americans for Prosperity, a free-market advocacy group. 

It will apply the same restrictions on donations that were enacted two years ago for private companies that do business with state agencies.  A vendor that does over $50,000 of business with the state is now prohibited from donating any funds to a candidate who may oversee that company’s contract.  However, a loophole was left in the 2010 bill that allows government unions that negotiate employee contracts worth hundreds of millions to continue to donate huge amounts to politicians in charge of those contracts.

 “If a company that sells the state copiers can’t donate because it creates a conflict, how can you possibly allow unions negotiating these huge contracts to influence the politicians that approve these contracts,” said Murphy. “For the sake of our state’s fiscal future, we have to take politics out of labor contracts and start to focus on the financial interests of the taxpayers.”

Senate Action

In addition to the Enterprise Zone extension, several other bills were approved by the Senate during the week and sent to the House for further consideration. These measures, as well as a listing of bills that passed Senate committee and are now before the full Senate, can be found at the Senate Republican Website's "Senate Action" page.

Bill that passed the Senate included:

Autism (SB 679): Assures that persons diagnosed with autism using today's standards will retain access to insurance coverage, even if the standards change. Expires in 2014.

"Fracking" (SB 3280): Requires the State Department of Natural Resources to establish rules regarding hydraulic fracturing. Hydraulic fracturing or "fracking" is a new technology being used to release natural gas from beneath the ground. This new procedure has created a gas drilling boom in the United States, has drastically reduced natural gas prices and is seen by advocates as an important initiative in helping the U.S. move toward energy independence.

Health Care Groups (SB 2885): Expands the definition of groups that can qualify as a "Health Care Purchasing Group" to purchase health care services for members. This legislation would make it possible for more organizations and companies to qualify.

Professional Licenses (SB 275): Allows military service members to qualify for an expedited licensing procedure for professional licenses issued by the state, including teaching certificates. Applicants must hold a valid license for the occupation or profession issued by another state or country.

Party Buses (SB 968): Changes the definition of "commercial motor vehicle" to include vehicles designed to transport 9 to 15 people for compensation. This would include limousines and "party" buses. The state Department of Transportation sought this legislation in order to comply with federal law. Absent the change, the Department said Illinois could lose $6.7 million in federal funds.

Scott Air Force Base (SB 2761): Clarifies how property taxes are charged to private companies providing housing on military bases in Illinois.

TIF Districts (SB 548 and SB 3277): Senate Bill 548 extends the life of a tax increment financing (TIF) district created by the City of East Peoria for another twelve years. Senate Bill 3277 does the same thing for a TIF district in Glenwood.