Senate Week in Review: December 9-13
The nation’s three major bond rating agencies weighed in less than a week after lawmakers approved major changes designed to save up to $160 billion in public pension costs over the coming decades, State Senator Sue Rezin (R-Morris) said.
The conclusion from Standard and Poor’s, Fitch Ratings and Moody’s Investors Service was one of cautious optimism but no change was made for the state’s worst-in-the-nation credit rating yet.
The agencies also fired a warning shot on the most significant financial issue that will face the state in the coming year – what to do about the expiration of a major portion of the 67% income tax increase adopted in 2011.
State’s credit rating unchanged
All three agencies left Illinois’ credit rating unchanged, although Standard and Poor’s modified the state’s outlook from “negative” to “developing.” Both, Moody’s and Fitch retained a “negative” outlook, meaning they expect the state could see further downgrades in the future.
The agencies praised the state for finally tackling the pension issue, but tempered their enthusiasm by reserving final judgment until a formal financial assessment can be completed. They cautioned an expected lawsuit could reverse the gains and warned that the state’s pension underfunding is only a symptom of deeper financial mismanagement.
Moody’s: weak management in Illinois
Moody’s for example listed among Illinois’ challenges, “long-term weak management practices reflected in pension under-funding, bill payment delays and chronic GAAP-basis negative fund balances.” (GAAP is a type of accounting system used to determine the financial health of a government or business.)
Fitch Ratings said, “…the state will need to find a more permanent solution to the mismatch between spending and revenues.”
Tax money not used as promised
Sen. Rezin said Senate Republicans have warned since the passage of the 67% income tax hike that unless Governor Pat Quinn and his fellow Democrats took major steps to cut spending, the state would face a major financial cliff when the tax was promised to expire.
Although the tax increase was sold to the public as a way to pay off old bills and get the state’s financial house in order, much of the money has instead been used to expand state programs.
Illinois has embarked on a major expansion of Medicaid, including an early and optional expansion in advance of the implementation of the federal Affordable Care Act, commonly known as Obamacare.
House and Senate Republicans have expressed concerns that the Quinn administration is not aggressively implementing Medicaid reforms needed to save the state millions.
Attorney General’s Christmas toy warnings
Each year the state’s Attorney General releases a Safe Shopping Guide—hoping to address the growing concerns of recalled children’s products being sold on secondhand websites such as eBay, Craigslist and Amazon.
As the holiday season nears, Attorney General Lisa Madigan warns consumers about the dangers of buying toys that have been found by the U.S. Consumer Product Safety Commission (CPSC) to be choking, noise or chemical hazards. Although recalled products must be removed from store shelves, many of these products can be found online – posing risks for children.
The 2013 Safe Shopping Guide features nearly 100 different children’s products that have been recalled due to defective components.
Countdown to new laws
The countdown continues to January 1, when more than 200 new laws will go into effect. But, not all laws going into effect will have a positive effect on the state.
The process of having a criminal record expunged (or wiped clean) is the focus of one controversial new law. During the past week, the problem was highlighted when the Chicago Sun-Times ran a two-part story on a Quinn administration official who holds a six-figure position, despite two dozen arrests and having been fired for lewd and inappropriate emails.
The individual had been able to have much of his criminal record expunged. House Bill 2470, which passed with no Republican support in the Senate would make the process easier for convicted criminals. The measure passed despite concerns raised by the Illinois State Police during committee hearings about its potential impact on public safety.
Small businesses opposed bills
A trio of measures opposed by small businesses also will go into effect January 1. All were approved despite unanimous Republican opposition in the Senate.
Opponents raised concerns because all three measures impose new regulatory burdens on smaller employers, while exempting large unionized companies from having to meet the same requirements.
They fear increased regulatory burdens will further harm the state’s small businesses at a time when Illinois has the second highest unemployment rate in the country and questioned why regulations were being applied unevenly. The state’s major small business organization, the National Federation of Independent Business (NFIB), opposed all three bills.
House Bill 923 requires construction companies to report payments to nonemployees for construction services. Proponents argued it would ensure that contractors are properly funding workers’ compensation and unemployment insurance by paying related taxes. However, the legislation offered an exemption that can only be met by union contractors.
Kim Clarke-Maisch who is the Illinois State Director for the NFIB, said her organization fears innocent employers could be hurt for honest mistakes.
“Organized labor contends contractors are erroneously making employees independent contractors in order to escape paying workers’ compensation, unemployment insurance and other related taxes. Unfortunately, the reporting comes with a debarment clause that could put many contractors, which make honest mistakes, out of business,” she said.
House Bill 2649 makes changes to Illinois’ Employee Classification Law and requires hearings for those employers accused of wrongly classifying workers as independent contractors. As with HB 923, proponents argue employers are attempting to evade payroll taxes. But again, the measure was crafted to offer an exemption only to union employers.
House Bill 3223, which requires additional employee information to meet certified payroll requirements under the Prevailing Wage Act, could result in ending an employer’s ability to secure future state work merely for paperwork mistakes, according to Clark-Maisch.
“The new requirements are troublesome not only for the sheer amount of extra work, but the likelihood that mistakes could be made. Mistakes under the Prevailing Wage law are costly. Two violations in five years and a contractor is barred from state work, potentially taking away someone’s livelihood and the jobs they create,” she said.
Child Deaths Probed
Finally, a special Senate Subcommittee held a hearing in Chicago to quiz the state’s child protection agency on recent media reports that show a record high number of child deaths from abuse and neglect under the Quinn administration.
In the last fiscal year (which ended July 1), 111 children died in Illinois from abuse or neglect, the most since annual records began in 1981. Senators were particularly interested in the cases of 68 children in Fiscal Years 2011 and 2012 who died despite the fact that DCFS had been involved in their cases.
Assistance Available for Tornado Victims
For those affected by the November 17 tornadoes, federal assistance is available.
Types of Assistance:
1. FEMA Individual and Household Assistance Program (IHP)
- This is a Federal assistance program can provide constituents with up to $32,400 to help with expenses such as temporary housing repair, medical and dental expenses, and semi-permanent and permanent housing construction.
2. In coordination with the Illinois Department of Human Services (IDHS) and the U.S. Department of Agriculture, constituents will be offered food assistance in all 15 counties that were declared State and Federal Disaster areas
- Began on Wednesday, December 11th.
- Individuals that lived in the following counties when the disaster occurred are eligible for the Disaster Supplemental Nutrition Assistance Program (SNAP): Champaign, Douglas, Fayette, Grundy, Jasper, LaSalle, Massac, Pope, Tazewell, Vermillion, Washington, Wayne, Will and Woodford.
- Individuals are only eligible if they had damage to a home or business and paid disaster expenses that were not reimbursed. Or if they experienced a loss of income.
- Bring proof of identity, residence in disaster area prior to 11/27/13, and any unreimbursed expenses
3. Business Physical Disaster Loans through the Small Business Administration (SBA) and the Federal Government:
- SBA can make physical disaster loans up to $2 million to qualified businesses and non-profit organizations.
- Interest rates will not exceed 4 percent if a business cannot obtain credit elsewhere. For businesses that can obtain credit elsewhere, the interest rate will not exceed 8 percent.
- Applicants must submit a completed application that can be found online at www.sba.gov/disaster and have a signed and dated IRS form 8821. This IRS form gives the IRS permission to provide SBA with tax return information.
4. There is a program through the State Treasurer’s Office called the Disaster Recovery Linked Deposit Program. Here is how it works:
- A constituent will apply for the loan from a local financial institution
- Once the loan is approved, the state will make a deposit to their creditor, which will then lower the interest rate to about 3%.
- The money can be used for anything from fixing a submerged car or cleaning up a waterlogged home.
- Here is the link to that information. It will have information on the application, etc. for guidance on walking constituents through the process.
To find out more information or to apply call:
- FEMA toll free number – 1-800-621-FEMA(3362), or 1-800-462-7585 for the hearing/speech impaired.
- Small Business Administration (SBA) loan applications – 1-800-659-2955, or e-mail firstname.lastname@example.org
Where to Apply:
Officials encourage constituents to apply for assistance online if possible. The process can be started at www.disasterassistance.gov. The website allows constituents to:
1. Apply and register online
2. Check the status of disaster assistance
3. Locate necessary forms for the different types of assistance that they may be eligible for.
Disaster Recovery Areas:
Tazewell County – Festival of Lights East Peoria, 2200 E. Washington St., East Peoria, IL 61611
Open 8am-7pm, 7 days a week (until further notice)
Massac County – Brookport Library, 7415 S. US 45, Brookport, IL 62910
Open 8am-7pm, 7 days a week (until further notice)
Tazewell County is also providing a Small Business Administration (SBA) Recovery Center
Washington Library, 380 N. Wilmor Rd., Washington, IL 61571
Open Monday-Thursday from 9am-6pm
Open Friday-Saturday from 9am-5pm