With 2017 just days away, Illinois is set to welcome the new year the same way it did last year – without a state budget.
At the beginning of the year, the state’s pension crisis sent legislators on a quest to solve the then $111 billion unfunded pension liability and close the approximately $5 billion budget deficit, which had left the state without a spending plan.
What emerged was a rare agreement, announced in January, between Republican Gov. Bruce Rauner and state Senate President John Cullerton (D-Chicago) that would have offered workers a choice in retirement benefits as an avenue to reduce the state’s pension crisis. The bill went largely unsupported by House Democrats.
Now, almost a year later, the state's unfunded pension liability has blown up to nearly $130 billion, making it the third-worst-funded pension system in the nation.
“The way forward for Illinois necessarily includes adjusting what we’re doing with compensation packages for state workers on a perspective basis,” Dan Proft, host of “Illinois Rising” presented by the Illinois Policy Institute, said. “We just have to bend the cost curve.”
The state’s financial condition was so severe it frightened off businesses that could have brought thousands of jobs to Illinois. In fact, Chicago was one of the top cities General Electric considered when relocating its headquarters. The move would have brought 800 jobs to the city. But the state’s pension problem and the condition of Chicago Public Schools (CPS) were huge strikes against the city, and GE opted to select Boston as its home, the Chicago Tribune reported.
CPS further tanked the city by striking a bond deal in February that incurred a lot of new debt for taxpayers by transferring CPS wealth to capital markets through borrowing $725 million to remedy the school district's cash flow crisis, which included a $1 billion deficit. Many dubbed the move as a band-aid approach because it provided temporary financial relief to the school district, but locked CPS into payments on the new debt until 2044 -- at an interest rate of 8.5 percent. In a plea to come to some financial resolution, Rauner delivered the Fiscal Year 17 Budget Address a few weeks later to encourage lawmakers to work together to create “real reform” to create jobs and save taxpayer dollars. The governor also told legislators to stop sending spending plans that they know would be vetoed.
Many praised the governor for taking a firm stand against House Speaker Michael Madigan, and attempting to loosen the firm grip the longest-serving House speaker in Illinois history has had over the state since he began his tenure as House Speaker in 1983, with the exception of two years when Republicans gained control over the House in 1995.
Madigan demonstrated his influence over the General Assembly once again in early March, when an attempt by House Republicans to prevent a month-long recess was quickly dismissed before debate on the issue could ensue. The motion was brought forth by state Rep. Tom Demmer (R-Dixon), and despite it being in line with House rules, Demmer’s motion was ruled out of line with the rules and the month-long break was announced, upsetting Demmer’s fellow Republicans and many Illinois taxpayers who wondered why legislators deserved a break when the state’s finances had not been resolved in the least. Since Madigan determines the session schedule, some questioned whether his decision to place a month-long gap in March was politically driven – given that the primaries were less than two weeks away.
Meanwhile, the state’s bills were not being paid, with 90 percent of state spending being paid out through court orders, consent decrees and continuing appropriations. The idea of lawmakers continuing to collect pay checks while the taxpayers continued to suffer gravely because the state couldn’t pay its bills didn’t sit well with Illinoisans.
To add salt to the wound, a report by the Illinois Policy Institute revealed that Illinois legislators make $68,000 annually – far more than lawmakers in neighboring states and more than double the amount lawmakers in Iowa and Indiana earn – for what many view as, essentially, part-time work since the regular legislative session only runs from January to May each year.
Then-Comptroller Leslie Geissler Munger announced in April that legislators’ pay checks would be placed at the back of the line. In essence, they would get paid when the state had money -- just like every other vendor or group the state owed money to.
The State Journal-Register reported that there were 126,000 unpaid bills totaling more than $10.3 billion on Munger’s last day in office on Dec. 2, the same day six Chicago-area Democratic state representatives sued the Comptroller’s office for back pay that has been held up since August.
A key reason why Madigan has maintained so much control over the state is due to the district maps. An initiative to strip Madigan of his power over the way districts are drawn gained steam this year.
Championed by Independent Maps, a non-partisan statewide coalition pushing to place the Independent Map Amendment before voters this November, the amendment sought to assign redistricting to an independent entity, which advocates said would level the political playing field and ensure fairness in voting for elected officials and issues. In May, Independent Maps delivered more than 560,000 signatures to the Illinois State Board of Elections, surpassing the 290,216 valid signatures mandated by law to place the amendment on the November ballot.
“The idea that 60 percent of the state legislative races last time around has only one candidate going into November of (2016),” Dennis FitzSimon, chairman of Independent Maps said during a news conference on the day the organization turned in the 65,200 pages of petition signatures to ISBE. “Sixty-seven percent, as of this moment, that are uncontested. And part of that is because, a big part of that is because the maps are drawn by politicians for politicians.”
But Madigan fought back.
The Democratic Party’s general counsel, Michael Kasper, filed a lawsuit in Cook County Circuit Court that month, claiming the amendment violated rules governing the participation of citizens in amending the constitution. Despite ISBE validating Independent Map’s petition, Cook County Circuit Judge Diane Larsen struck down the proposal in July.
After months of disagreements regarding the state budget, Illinois lawmakers successfully negotiated a stopgap budget in July to temporarily fund the state’s schools and basic human services through January. However, the damage had already been done.
Moody’s Investors Service downgraded 15 of Illinois’ 27 community colleges after announcing in June that it had placed the University of Illinois and six other state universities on review for downgrade after downgrading the state of Illinois from Baa1 to Baa2 -- affecting about $26 billion of debt. A bad bond rating means taxpayers have to pay more in interest whenever the state borrows money.
“Our recent rating actions reflect colleges’ exposure to the fiscally challenged state of Illinois for operating support, program and scholarship grants and pension funding,” Moody’s said in its report. “This exposure will continue beyond passage of a state budget. We would consider reviewing the credits in a positive direction if the state’s credit quality were to improve.”
Meanwhile, legislators tackled another issue that had been brewing since the beginning of the year – corruption allegations against the state’s auditor general.
In July, 20 Republican legislators filed a joint House resolution, HJR 158, calling for Madigan to have Auditor General Frank Mautino removed from office amid a federal investigation into questionable campaign spending during his tenure as state representative. Mautino’s disclosure reports showed over $200,000 on gas and vehicle repairs over the span of 11 years to Happy’s Super Service in Spring Valley, which is Mautino’s hometown, and over $200,000 in irregular payments to Spring Valley City Bank since 1999.
After a series of delays, and virtually no explanation from Mautino, the campaign finance hearing has been scheduled for Feb. 3. As the budget impasse dragged on, local governments looked to taxpayers for financial relief. According to Americans for Prosperity Foundation (AFP) – Illinois, there were 103 tax-related referenda on ballots around the state in November.
Perhaps a sure sign that Illinoisans were fed up with state officials was the outcome of the general election.
While Republican lawmakers faced an uphill battle against Springfield Democrats going into the November election, Republicans gained four seats in the House – breaking the Democrat supermajority and stripping the party of its veto power -- and gained two Senate seats.
During the fall veto session, the General Assembly passed a controversial bailout bill for Exelon that provides $2.35 billion in subsidies to prevent two Exelon nuclear power plants from closing.
But what stands out the most when looking back over 2016 is that many issues have remain unresolved:
- Rauner and the American Federation of State, County and Municipal Employees union are still at odds over a new contract for state employees. On Nov. 15, the Illinois Labor Relations Board declared the negotiations had reached an impasse, meaning Illinois taxpayers would not be on the hook for an extra $3 billion over the course of the contract.
- The state still doesn’t have an operating budget. When the stopgap budget expires Saturday, Illinois will be right back where it was a year ago.
- The state is still behind on its bills. According to the State Journal-Register, the bill backlog is more than $10 billion owed to social service agencies and businesses that provide goods and services to the state. That figure is projected to increase to $13.5 billion by the end of the fiscal year.
- Illinois is throwing away taxpayer dollars on late fees. As of March, the state had spent over $900 million over the past six years on late fees and penalties due to the state's inability to pay its bills on time, the State Journal-Register reported.
- Illinois lost more jobs in 2016 than any other –a grim trend Illinois has set for the past three years. In 2016, the state lost 37,508 people, according to the Chicago Tribune.
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