State Fiscal Year Starts Without Budget, Blame Game Starts
After months of wrangling, finger pointing and political theater over competing budget proposals, Illinois started its new fiscal year on July 1 without a state budget in place.
As the IMA reported previously, Democrats in the General Assembly approved a $36 billion state budget in the final days of May while publicly acknowledging that the budget was unbalanced. Their budget had a multi-billion dollar deficit because state revenues are estimated to be only $32 billion following the expiration of the “temporary” income tax at the beginning of the year.
Governor Bruce Rauner vetoed the Democrat budget (excluding the K-12 budget) comprised of nineteen bills noting that they “combine to create a deficit of nearly $4 billion.” In his veto message, Rauner stated that “for too long, the State of Illinois has made spending promises that exceed available revenues, relied on accounting gimmicks to make budgets appear balanced, used borrowing and cost deferral strategies to push costs into the future, and delayed payments to vendors.”
The Governor has offered to compromise and find additional revenue to fund essential state programs but only if Democrats will negotiate on key items of his Turnaround Agenda including Workers’ Compensation reform, tort reform, property tax relief, term limits and redistricting reform. Other issues such as Right to Work zones have been taken off the table for discussion. Speaker Michael J. Madigan (D-Chicago) has continued to indicate that they will not negotiate or link “non budget” items with the budget resulting in the current stalemate.
Governor Rauner did sign the K-12 education budget into law as Public Act 99-0005 because “improving education is his highest priority.” The budget measure increases funding for elementary and secondary education by $244 million for education along with $25 million more for early childhood education. HB 3763 was signed into law to avoid a potential political landmine that would occur if schools were not able to open in August because of a protracted budget fight. However, the Governor’s action rankled Republican lawmakers who voted against the K-12 education budget bill in May at the Governor’s request.
Early in the week, Governor Rauner sent an email to all state employees noting that “state employees will be paid for their work” even if a budget is not enacted into law and noted that all state employees must come to work. At the same time, the largest state employees union AFSCME vowed to take legal action to ensure that state employees are paid for their work during the budget impasse. In 2007, the Comptroller, Attorney General, and unions voluntarily agreed that the state must continue to pay state employees to avoid violating state and federal wage laws.
In a strange twist, Governor Rauner and AFSCME are on the same page while Democrat Attorney General Lisa Madigan provided a memo to the Governor and lawmakers indicating that “the state cannot continue to fund government operations and services in the absence of a budget passed by the legislature and signed into law by the Governor.” Late yesterday, the Attorney General filed legal action in Cook County Circuit Court seeking an order clarifying whether or not the Comptroller and State of Illinois can make payments to state employees to comply with the Fair Labor Standards Act.
The budget impasse continues to play out with lawmakers returning to the State Capitol weekly with very little substantive work occurring and little progress in budget meetings. Each side is attempting to blame the other side and seeking to win in the court of public opinion.
Temporary Budget Bill Debated
The House of Representatives and Senate debated identical bills on Thursday that would create a temporary one-month, $2.3 billion funding plan for some “essential” spending but would not fund operations for all of state government. A supermajority vote is required for passage of all legislation in the overtime session and the results were split. Senate Democrats muscled SB 2040 (Steans, D-Chicago) through the Senate on a partisan vote of 37-0-11 while Democrats in the House came up four votes short on HB 4190 (Madigan, D-Chicago) that failed on a vote of 67-1-32.
Prior to the vote, the Governor’s Office of Management & Budget issued a memo noting that the short-term spending plan was “unconstitutional” because it would lead to an unbalanced budget. During debate in the House and Senate, Republicans expressed strong opposition calling it a crass political vote while indicating that it didn’t include funding for important programs like domestic violence shelters and critical health care programs.
SB 2040 now moves to the House of Representatives that is scheduled to be in session on July 8-9. If Republicans remain unified in opposition, all 71 Democrat members will need to be present and vote to approve the short-term measure. Even if passed, it’s likely that Governor Rauner will veto the measure.
Governor Seeks to Eliminate Legislator Pay Raises
Every year, the General Assembly passes “budget implementation bills” or “BIMP bills” that make necessary statutory changes in order to implement the state budget. This week, Governor Bruce Rauner amendatorily vetoed a BIMP bill (SB 1354) by writing a new section that prohibits lawmakers from receiving a Cost of Living Adjustment (COLA) and freezes the per diem and mileage reimbursement rates because the budget requires a “shared sacrifice.”
Under current law, the Compensation Review Board meets and recommends changes to legislative salaries. These pay increases automatically take effect unless both the House and Senate vote to prohibit the pay raises from taking effect. Several times over the past few years, lawmakers voted to stop these raises from going into effect. However, the General Assembly failed to act this year giving Governor Rauner the ability to make a political statement in the face of a budget impasse.
For decades, the House and Senate have generally failed to adhere to amendatory veto messages that “rewrite” the bills that were vetoed unless the changes are specifically related to the underlying bill. In most cases, the House and Senate override these vetoes or take no action meaning that the entire bill dies.
IMA Testifies Before Senate on Workers’ Compensation
IMA president & CEO Greg Baise testified this week before the full Senate in a rare “committee of the whole” to discuss the need for workers’ compensation reform. He noted that Illinois has the 7th highest cost of workers’ compensation in the United States and is often cited by manufacturers as a major impediment for operating in the state.
The IMA has joined Governor Bruce Rauner in calling for major reforms of the workers’ compensation system including creation of a primary cause standard, strengthening AMA guidelines, and reducing medical costs to bring Illinois into line with other states. The IMA and business community have not called for reductions in payments to injured workers and believe that legitimately injured workers should have access to the system and receive quality health care treatment.
Democrat lawmakers continue to express the sentiment that no additional changes are needed and that the Governor’s reforms will “hurt” injured workers.
In addition to the IMA, the Senate heard from injured workers, trial lawyers, labor unions, doctors, hospitals, academics, insurance sector, and national rating organizations.