IN THIS ISSUE:
This Week In Springfield, legislative committees began their work while the week was dominated by Governor Bruce Rauner’s first budget address.
Wednesday, Governor Bruce Rauner delivered his first budget address. The much-anticipated proposal attempts to close the deficit in the current budget, balance the Fiscal Year 2016 budget while attempting to restore Illinois’ fiscal health in the long-term. He laid the blame for the current condition on “years of bad decisions, sleight-of-hand budgeting and giveaways we couldn’t afford.”
Stating that Illinois has “been living beyond our means-spending money that Illinois taxpayers could not afford”, Governor Rauner’s proposed budget cuts over $1.6 billion in spending to close the deficit in the current budget. He then proposed an additional $6.1 billion in spending reductions to bring Illinois’ spending in line with anticipated revenues while leaving room to pay off an additional $500 million in unpaid bills.
The Governor’s proposal did not include tax increases. He stated that “asking for more of the taxpayers’ hard-earned money without fundamentally reforming the structure of state government would further erode public confidence and accelerate our decline.”
Illinois’ largest-in-the-nation pension obligation backlog of over $110 billion is the Governor’s first target. While he plans to protect benefits that have been earned to date, Governor Rauner desires to ensure that future workers are pushed to a 401K-type of retirement plan. He made note that because of the dangerous nature of police and fire who put their lives on the line every day for our safety, he would exempt those groups from the proposed changes. He also would allow employees hired before 2011 a buyout option which would include a payment and defined contribution plan in exchange for a reduction in COLA. The Governor estimates these reforms would save over $2 billion. However, it is a virtual certainty that even if such reforms were to pass the Assembly, they would be immediately challenged in court by unions representing state employees.
Governor Rauner then turned his attention to local governments. Claiming that some had cash reserves and that payment to local governments in general had been increasing over the years, Gov. Rauner noted that they would experience a reduction equal to 3% of their revenue. Local governments could then consolidate and restructure compensation packages and employment in order to adjust to the cut. Cuts are also on the horizon for transportation agencies and Medicaid although the details here will be forthcoming in a separate package set to be introduced on Monday. For now, we know that he proposes to save $75 million by conducting an aggressive eligibility review campaign and re-instituting SMART Act reforms that could save an additional $320 million.
The entire speech was not about spending reductions, however. Governor Rauner is proposing additional funds for early education and K-12 education in the neighborhood of $300 million. While universities were included in the budget cuts, community colleges and vocational schools were not.
Of immediate concern to Illinois’ pharmacy community, the Governor’s budget proposes $1.5 billion in cuts to the Medicaid program. Of this cut, approximately $42 million will fall on Illinois pharmacies through a reduction in the dispensing fee. This is particularly hurtful to Illinois pharmacies who experienced a 9% cut during the last round of Medicaid reform in 2011 while other providers only realized a 3% reduction. IRMA released the following statement in response to the budget address in general and the proposed pharmacy reimbursement cuts in particular:
“Governor Rauner inherited an enormous budget crisis and pension obligation that presents many fiscal challenges to our state. IRMA applauds his desire to balance the budget and help turn the state’s economy around. Our members – which include retail and mom and pop pharmacy providers- are more than a little concerned with the cuts to Medicaid. We hope to work closely with Administration and the legislature on issues impacting Medicaid in general and pharmacies in particular. Pharmacists, one of the nation’s most trusted professions, have seen two rounds of cuts and three times more than any other provider is asking more than a fair share of pharmacy providers,” said Rob Karr, President/CEO, Illinois Retail Merchants Association.
In an effort to push economic growth, the Governor has plans to achieve additional reforms to workers compensation, tort reform, pensions and taxes. In an additional nod to the high costs of doing business Illinois, he wishes to freeze property taxes as well.
By making the government run more efficiently, cut where he is able and invest where it is necessary, Governor Rauner stated that he hopes his budget will ignite the spirit of President Abraham Lincoln who called for everyone to “think anew and act anew” and will put Illinois on the path “…to a more prosperous future.”
BUDGET ADDRESS REACTION
Reaction to the Governor’s first budget address fell along party lines. Senate President John Cullerton (D- Chicago) immediately noted that predicating the budget on the proposed pension reform was not realistic and declared that immediately put a $2 billion-plus hole in the Governor’s proposed budget.
The normally reserved and understated Speaker of the Illinois House Michael J. Madigan (D- Chicago) also stated his disagreement with the pension reform proposal and stated that he disagrees with the belief that Illinois can simply cut services and resolve the problem. “I think that the elimination of the deficits will require a blend of service cuts plus new revenue,” stated Madigan.
Senate Republican Leader Christine Radogno and House Republican Leader Jim Durkinboth cautioned that the budget address is just the start of a long processs. Leader Radogno noted that “we absolutely have to change the way we do things” while Leader Durking noted that ‘everything in that speech is subject to negotiation”.
SB 1259 (Sen. James F. Clayborne, Jr., D-East St. Louis) and HB 2450 (Rep. Dan Burke, D-Chicago) provides that it is an unlawful practice for a manufacturer or distributor of prescription contact lenses to prevent a retailer from selling or advertising contact lenses below any specified price.
CREDIT AND FINANCE
HB 2541 (Rep. Monique Davis, D-Chicago) provides that a credit card issuer may not automatically renew a credit card that has not been used to perform a credit card transaction within the 12 months immediately preceding the renewal.
ENVIRONMENT AND UTILITIES
SB 1261 (Sen. Linda Holmes, D-Aurora) mandates that manufacturers add an extra fee on all architectural paint sold in Illinois and pass it down the line. Retailers are required to pass the tax on to consumers. Retailers are also encouraged to become voluntary collection sites. This tax is mandated, assessed, and retained by PaintCare, which is a non-governmental entity comprised of paint manufacturers for the collection, transportation, and recycling of paint. PaintCare may increase the tax and products that are taxed may be expanded at any time.
SB 1300 (Sen. Toi Hutchinson, D-Chicago) creates the Smart Phone Kill Switch Act. It requires that any smart phone manufactured on or after July 1, 2016 that is sold or purchased in Illinois must be equipped with preloaded anti-theft functionality or be capable of downloading that functionality and requires the functionality to be available to purchasers at no cost. Additionally, it requires wireless communications device dealers to maintain a written record of every purchase or acquisition of a used wireless communications device for resale. And further requires the installation of video security cameras at a dealer’s physical location. Finally it provides exemptions from the application of the Act, including wireless telephone providers who acquire devices for trade-in or for repair and refurbishment programs.
HB 2607 (Rep. Elaine Nekritz, D-Buffalo Grove) requires the Planning and Procurement Bureau to establish a long-term renewable resources procurement plan that includes all renewable energy credits necessary to meet specified goals (replacing the current renewable portfolio standards). It sets forth guidelines for what shall be included in the procurement plan. It makes changes concerning nondiscrimination, energy efficiency and demand-response measures, natural gas efficiency programs, real-time pricing, infrastructure investment and modernization, the Illinois Smart Grid test bed, and on-bill financing programs for electric and gas utilities and Adds provisions related to renewable energy credit procurement. Amends the Environmental Protection Act. Finally, it provides that upon promulgation by the U.S. Environmental Protection Agency of a final rule regulating carbon dioxide emissions from existing electric generating units, the Illinois Environmental Protection Agency shall be authorized to implement a cap and invest program or similar market mechanism to regulate carbon dioxide emissions.
SB 1363 (Sen. Ira Silverstein, D-Chicago) creates the Workplace Bullying Prohibition Act and provides that bullying is prohibited in the workplace. The legislation applies to employers that employ 3 or more individuals but excludes the State, State agencies, and units of local government. It requires an employer to establish a policy regarding workplace bullying and file the policy electronically with the Department of Labor. Additionally, it provides that a violation of the Act by an employer constitutes a business offense subject to a fine of not less than $1,000 and not more than $2,000.
HB 2549 (Rep. Esther Golar, D-Chicago) creates the Best Candidate for the Job Act that provides that private employers shall properly consider for employment persons previously convicted of one or more criminal offenses. It prohibits discrimination against such persons unless there is a direct relationship between the offense and the specific employment sought. It also establishes criteria for evaluating convictions. Provides that an employer that demonstrates that it has hired an individual pursuant to the Act, except for a willful or wanton act in hiring an individual, shall not be liable for acts or omissions by the employee. Exempts law enforcement agencies.
HB 2496 (Rep. Will Guzzardi, D-Chicago) changes the additional amount of damages that may be recovered by the merchant from an amount not less than $100 nor more than $1,000 to an amount equal to the lesser of $500 or 3 times the full retail value of the merchandise. It also provides that a merchant may recover civil damages for retail theft by bringing suit in a circuit court or by executing a settlement agreement. It specifies form of settlement agreement. It requires the settlement agreement to include a statement that nothing in the agreement shall constitute an admission of guilt for purposes of criminal law and that if the agreement is signed and payment is made in full within 60 days, no police report or criminal complaint will be filed by the merchant relative to the incident. Nothing in the agreement can or will bar the State from instituting the criminal prosecutions as it deems necessary.
SB 1359 (Sen. Linda Holmes, D-Aurora) provides that a health plan that provides coverage for prescription drugs shall ensure that any required copayment or coinsurance applicable to drugs on a specialty tier does not exceed $100 per month for up to a 30-day supply of any single drug and a beneficiary’s annual out-of-pocket expenditures for prescription drugs are limited to no more than fifty percent of the dollar amounts in effect under specified provisions of the federal Patient Protection Affordable Care Act. It also provides that a health plan that provides coverage for prescription drugs and uses a tiered formulary shall implement an exceptions process that allows enrollees to request an exception to the tiered cost-sharing structure. Finally, it provides that a health plan that provides coverage for prescription drugs shall not place all drugs in a given class on a specialty tier.
HB 2525 (Rep. Mike Tryon, R-Crystal Lake) provides that over-the-counter medications that are prescribed to a recipient of medical assistance by a physician, a physician’s assistant, a nurse practitioner, or any other medical care provider qualified to prescribe medications shall be covered under the State’s medical assistance program. It also provides that pharmacies providing prescribed over-the-counter medications shall be reimbursed at the same rate determined by the Department of Healthcare and Family Services for prescription medications covered under the State’s medical assistance program. Additionally, it requires the Department to establish guidelines and standards by administrative rule on the documentation, if any, a medical care provider must submit when prescribing an over-the-counter medication to a recipient of medical assistance. Effective immediately.
REGULATION AND LICENSING
HB 2513 (Rep. Marcus Evans, D-Chicago) provides that a person who is both a licensed distributor and a licensed retailer shall be issued a single license number by the Department of Revenue. It also provides that records may be kept electronically and may be kept at an out-of-state location so long as those records are made available upon reasonable notice for the purpose of investigation and control by the Department of Revenue. Amends the Prevention of Tobacco Use by Minors and Sale and Distribution of Tobacco Products Act. In provisions that provide for increased penalties for retailers that do not have training programs, provides that those training programs may be conducted electronically. If a retailer has a training program in place prior to the effective date of the amendatory Act, has a training program approved by another state, or follows the guidelines set forth by the federal Food and Drug Administration, then that training program shall be deemed to meet the minimum standards in this State.
HB 2589 (Rep. Silvana Tabares, D-Chicago)provides that a person over the age of 18 found guilty of certain animal abuse offenses shall register with the national Do Not Adopt Registry within 10 days after the conviction and shall register annually for 10 years after the conviction. Further it provides that failure to properly register as required under the Act shall be a business offense with a fine of $100 for the first offense, $500 for the second offense, and $1,000 for the third or subsequent offense. Additionally, it provides that any animal shelter, pet store, animal breeder, or person shall conduct a search of the national Do Not Adopt Registry prior to selling, transferring, delivering, or placing for adoption a companion animal to another person.
HB 2667 (Rep. Robyn Gabel, D-Evanston) creates the Healthy Eating Active Living (HEAL) Act and imposes a tax on distributors of bottled sugar-sweetened beverages, syrups, or powders at the rate of $0.01 per ounce of bottled sugar-sweetened beverages sold or offered for sale to a retailer for sale in the State to a consumer. It requires those distributors to obtain permits. Additionally, it provides that 2% of the moneys shall be deposited into the Tax Compliance and Administration Fund for the administrative costs of the Department of Revenue, and 98% of the moneys shall be deposited into the Illinois Wellness Fund to be used for wellness programs and for expanded obesity prevention and treatment services for Medicaid beneficiaries. Finally, it creates an Advisory Council to govern the distribution of Illinois Wellness Fund moneys.
SB 1333 (Sen. Linda Holmes, D-Aurora) provides that neither a group health plan nor an accident and health insurer offering group or individual health insurance coverage shall discriminate with respect to participation under the plan or coverage against any health care provider who is acting within the scope of that provider’s license or certification under applicable State law.
HB 2711 (Rep. Dan Brady, R-Normal) provides that insurers may not set reimbursement rates in a manner that discriminates against a class of eye care providers. It also provides that eye care coverage insurers may not preclude obtaining eye care directly from a licensed provider on a health care panel or promote a class of providers to the detriment of another class of providers. It requires that all providers on a provider panel be included in any publicly accessible list and requires the inclusion of ophthalmologists and optometrists in provider panels.