Illinois This Week in Springfield – 99-11

In This Issue:

BUSINESS DAY
UNEMPLOYMENT INSURANCE
WORKING GROUPS
REVENUE ESTIMATES
PHARMACY CUTS
TELECOMMUNICATIONS
DRONES

This Week In Springfield, both chamber began work on bills that have crossed over from the other chamber.

BUSINESS DAY 2015

Over 400 employers are attending Business Day 2015 next Wednesday, May 6th. As a result of the enthusiastic response of employers, Business Day will once again be the largest gathering of employers in Illinois. The opening luncheon will feature comments from Governor Bruce Rauner as well as Senate President John Cullerton. The luncheon is now standing room only. After spending the afternoon meeting with policy makers at the Capitol, attendees will mix with their peers, policymakers, and staff at the Party Under the Tent – a unique social opportunity that has become a not-to-be-missed event. IRMA would like to thank our event sponsors and receptions hosts for helping to make this day possible!

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 UNEMPLOYMENT INSURANCE

On Wednesday morning, Governor Rauner convened an ‘agreed bill’ process regarding Illinois’ unemployment insurance system.

Since the early 1980’s, Illinois’ unemployment insurance system has been governed by an ‘agreed bill’ process. This process periodically brings together representatives of employers and employees typically under the auspices of the Governor and monitored by representatives of the four legislative caucuses (i.e. Senate Democrats, House Democrats, Senate Republicans, House Republicans). The employee representatives are led by the Illinois AFL-CIO and the employer representatives are led by IRMA.

The process usually occurs when the Unemployment Insurance Trust Fund, the fund from which unemployment benefits are paid, is in crisis. The other time the process occurs is when ‘speed bumps’ must be addressed. ‘Speed bumps’ are intentionally inserted to incentivize both sides to return to the table to review the current agreement, whenever it may have been reached, and negotiate any changes that may be necessary or either side, or the Governor’s Office, desires. In this case, it is speed bumps that brings everyone together.

In 2011, then Governor Patrick Quinn convened an ‘agreed bill’ process to address the deficit in the Unemployment Insurance Trust Fund. Agreement was reached, ‘speed bumps’ were included and take effect January 1, 2016 if they are not removed. In this case, the ‘speed bumps’ take the form of a potential $470 million unemployment insurance tax hike on employers and a $300 million benefit cut for unemployed workers. These ‘speed bumps’ provide significant incentive for both sides to return to the table to review the current agreement.

As is always, all participants are abiding by a self-imposed agreement to not discuss the details of the negotiations until agreement is reached.

The agreed bill process for unemployment insurance in Illinois has worked successfully since its inception. It has brought stability and avoided the problems other states have seen in terms of wild swings in either benefit and tax increases or cuts or both.

IRMA appreciates the fact that Governor Rauner as well as Senate President John Cullerton, Speaker of the House Michael Madigan, Senate Republican Leader Christine Radogno, and House Republican Leader Jim Durkin continue to utilize and support the agreed bill process.

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WORKING GROUPS

The Rauner Administration has convened six working groups in addition to the unemployment insurance agreed bill process noted above. The six working groups are comprised of a bi-partisan mix of legislators from both the House and Senate as well as key legislative staff and representatives of the Governor’s office. The six groups are divided into the following subject areas: Economic Growth, Taxpayer Protection, Transforming Government, Pension Reform, Capital Plan, and Budget Implementation. The Economic Growth group will examine issues such as workers’ compensation reform, tort reform, and empowerment zones. Transforming Government will discuss issues such as combining the offices of the State Treasurer and Comptroller and term limits). The issue areas the other groups will discuss are largely self-explanatory.

These groups are an attempt by the Rauner Administration to construct a massive agreement that would secure some of the budget items Democrats in the Assembly may want (e.g. additional revenue, funding of certain programs, etc.) in exchange for reforms the Governor and Republicans in the Assembly may want (e.g. tort reform, workers’ compensation reform, tax reform, etc.).

These groups will meet at least weekly through the month of May.

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REVENUE ESTIMATES

Wednesday evening, the Commission on Government Forecasting and Accountability appeared before the Senate Revenue Committee to provide an update as to important state economic indicators. One important note is that state revenues in the exiting fiscal year are now predicted to be $300-$500 million more than initially predicted. This good news led the Rauner Administration to announce they will rescind the $26 million in cuts announced on Good Friday. These numbers will not impact the $1.5 billion in cuts made to just prior to Good Friday to balance the state’s current FY 15 budget.

Looking ahead to FY 16, COGFA estimates Illinois will have just over $32 billion in revenues. This means that without additional revenues, there will have to be cuts of $3-$4 billion, in addition to the cuts recently enacted to balance the FY 15 budget.

COGFA also noted that there is a $7.6 billion pension payment due next fiscal year. Additionally, the state’s unfunded pension liabilities now stand at $104.6 billion. Overshadowing action on pensions is the fact the Illinois Supreme Court is set to rule on whether or not the pension reform passed in 2013 is constitutional. If rules constitutional, the pressures on the budget for FY 16 change radically. If the reform is held to be unconstitutional, the pressures remain. On top of the pension liabilities, the healthcare costs for state employee health insurance is expected to increase 6.8 percent for a total of approximately $2.8 billion.

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PHARMACY CUTS

As part of the recently enacted budget cuts to close a gap in the state’s Fiscal Year 2015 budget. The solution was an across the board 2.5% annualized reduction effective the last two months of FY ’15 (May and June). The result was an effective cut of approximately 13% over these last two months.  The result for pharmacy was devastating. The Department of Healthcare and Family Services reduced the dispensing fee for brand and generics by $1.00 respectively. These cuts take effect Friday, May 1st.

These additional pharmacy cuts come on the heels of a 9% cut as a result of the SMART Act reforms of 2011 (other providers received a 3% cut) and additional cuts are being considered for the FY 2016 budget.

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TELECOMMUNICATIONS

IRMA joined a wide-array of entities from law enforcement to community groups in support of a modernization of Illinois’ telecommunications laws. Illinois law currently requires one company, AT&T, to continue to invest hundreds of millions of dollars in outdated technology – the old copper wires upon which the original telephone infrastructure was built. This obligation is a legacy of the Ma Bell break-up of 1984. These old copper wires have only one capability – to carry voice communication. They have no ability to multi-task by carrying data, streaming video, or any of the other functions of modern telecommunications. The monies being spent to maintain these old wires could be spent replacing them as well as more quickly expanding high-tech communication options. Those who want to keep their land-line phone will be able to do so. If a consumer wants a voice-only option, it will be available to them. The question isn’t about the types of phones consumer utilize, the question is the wires leading to them or, for that matter, the availability and development of additional or more wide-spread wireless options. Ensuring Illinois laws governing telecommunications do not discourage or impede technological development and implementation is essential if Illinois is to compete effectively.

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DRONES

As drones make their way from military application to commercial and personal uses, some foresee the need to plan for their widespread adoption. SB 44 (Sen. Julie Morrison, D-Deerfield/Rep. Brandon Phelps, D- Harrisburg) seeks to create the Unmanned Aerial System Oversight Task Force Act. The purpose of the Task Force is to “provide oversight and input into creating comprehensive laws and rules for the operation and use of drone technology within this State subject to federal oversight and regulation”. Assuming SB 44 passes both chambers of the Assembly and is signed into law by the Governor, the Governor has 90-days to complete the appointments to the Task Force. Currently, 17 people will serve on the Task Force including a representative of IRMA. The members of the Task Force must ‘consider commercial and private uses of drones, landowner and privacy rights, as well as general rules and regulations for the safe operation of drone, and prepare comprehensive recommendations for the safe and lawful operation of [drones] in this State”.  The Task Force must issue a report no later than July 1, 2016.

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