SPRINGFIELD — The sick will suffer.CTA riders could face fare hikes or cuts in services. State employees won’t get paid.
Those and other doomsday scenarios have been thrown around the Capitol this week as Illinois began its new fiscal year Wednesday with no operating budget in place — and no sign of a compromise between Republican Gov. Bruce Rauner and the Democratic Legislature.
At the same time, one Republican promised “the Earth isn’t going to stop its rotation” and “the sun is going to rise.”
So it’s not entirely clear amid the political rhetoric exactly what a shutdown of state government will look like if lawmakers can’t reach a deal.
But some state officials have laid out more pragmatic predictions in recent weeks as an impasse seemed ever more likely. For example, Comptroller Leslie Geissler Munger said last month that state employees will start missing paychecks July 15 if there’s no budget deal.
Munger, whose office cuts the checks to state workers and vendors, said new fiscal year 2016 payments to Medicaid providers and state vendors will stop. So will expedited payments to nonprofits and small employers.
Meanwhile, Attorney General Lisa Madigan’s office said state payroll was an uncertainty because state laws “severely constrain the state’s authority to make payments to fund operations and services” without a budget in place.
Gov. Bruce Rauner’s office has said state employees will continue to get paid and most services — other than those outlined in cuts issued last month — won’t be affected.
His budget director, Tim Nuding, told lawmakers Tuesday that state employees are expected to show up at work.
“I know the word ‘shutdown’ has been thrown around a lot, and I think it’s used, frankly, cavalierly in order to scare people, but we are going to try to manage this thing as best we can,” Nuding said.
But Madigan’s office cited a 1991 appellate decision saying there could be no paychecks without a budget.
And Munger is expected to lay out her plans for dealing with the shutdown at a Thursday afternoon news conference in Chicago.
Of course, lawmakers had their own predictions for a government shutdown this week.
“The shutdown looks like children without child care services, parents who aren’t able to go to work and ultimately will end up on public subsidy programs,” Rep. Carol Ammons, D-Champaign, said. “It really looks like seniors without food services to their home, it looks like people with disabilities left to care for themselves in situations that are untenable.”
It’s a situation of life and death, some said.
“Not having a budget on July 1 will kill people,” Rep. Lou Lang, D-Skokie, said.
Republicans saw it differently.
“The Earth isn’t going to stop its rotation. The sun is going to rise and, thankfully, we will get there,” Republican Rep. Ron Sandack, of Downers Grove, said. “I do not believe there will be an immediate impact though I know there are lots of understandably worried and discombobulated people.”
Without the Medicaid payments Munger said might end, hospitals may have to lay off workers or not pay them, reducing services offered to patients, Illinois Hospital Association CEO Maryjane Wurth told senators Wednesday. Especially affected may be “safety net hospitals” that serve poor or rural communities, she said.
Lawmakers heard from her and others who said those in state care, such as state prisoners, may not get the medical services they need for illnesses such as diabetes or for mental health conditions.
“A government shutdown does not mean the loss of luxuries,” said Alice Johnson, the executive director of the Illinois Nurses Association, which represents nurses that work for state agencies. “A government shutdown would mean the loss of vital health care services that are necessary — not optional.”
The situation is just as dire for transit officials, officials from Metra, Pace and the CTA explained.
CTA President Dorval Carter told House members the agency could fund operations for a short time.
But eventually there would be “severe impacts” on riders, possibly including fare increases or service cuts, though more clarity from the state is needed, he said.
“We don’t have any sort of magic place we can go to substitute the funds we expect from the state,” Carter said. Source: http://chicago.suntimes.com/news/illinois-shutdown-looms-what-it-means/
One of the main suppliers of the boxes for the iconic Frango Mints is shifting a portion of its operations to Wisconsin, taking advantage of government incentives worth up to $1.6 million.
Colbert Packaging will relocate about 65 jobs from a facility in Lake Forest 25 miles north to Kenosha, Wis. The company plans to add another 40 to 45 jobs there over the next two years. President Jim Hamilton said the move allowed Colbert to keep the same skilled employees and easy interstate access while reducing taxes and real estate costs.
"Wisconsin rolled out the welcome mat," said President Jim Hamilton. "This state has no welcome mat. It's like, 'You're here. Good.'"
Colbert's main production plant, which employs about 145, will remain in Illinois. Another 125 work at a facility in Elkhart, Ind. It manufactures folding cartons, rigid setup boxes and paperboard specialty products for customers in 37 states and 12 countries, including Wrigley and AbbVie, generating $70 million in revenue last year.
The packaging company traces its roots back to Kroeck Paper Box, founded in 1892. It was one of the first companies to make heart-shaped boxes for Valentine's Day; it got out of the business in the 1970s when work either moved to China or customer's switched to plastic packaging. ("Plastic is our enemy," Hamilton jokes.) It also helped invent the packaging for the first birth control container in the 1960s.
Colbert is moving its flexographic packaging operation and warehouse—the fastest growing part of its business—to a 173,000-square foot building in suburban Kenosha. Since 2013 Amazon, ULINE and Meijer all have added new facilities in the county.
While Wisconsin offered incentives, Colbert faced the expiration last year of a useful Illinois tax credit Illinois that applied to the purchase of printing presses. A new press costs the company $3.5 to $5 million, Hamilton said, and the company would have had to pay sales tax on that purchase if it was made in Illinois.
Wisconsin's economic development arm has authorized up to $850,000 in state tax credits over the next three years, contingent upon hitting job creation and capital investment numbers. City and county officials are kicking in $750,000 in grants, driving the total package to a maximum of $1.6 million. A statement from the Wisconsin Economic Development Corporation says altogether the jobs created by Colbert's move, both directly and indirectly, "are expected to generate up to $1.5 million in state income tax revenue over a five-year period."
During a 10-month period starting in November 2015, four firms qualified by Illinois Governor Bruce Rauner’s administration purchased $1.12 billion in unpaid bills due scores of vendors providing critical goods and services. In return, the firms stood to pocket at least $118 million in state-funded late-payment penalties as of late September.
Firm Receivables acquired* Late-payment penalty*
Vendor Assistance Program $707.2 million $82.4 million
Illinois Financing Partners $275.4 million $18.6 million
Vendor Capital Finance LLC $145 million $16.9 million
Payplant $475,330 $39,530
*As of Sept. 28, 2016
Source: Illinois Department of Central Management Services
Vendor Assistance Program (VAP)
VAP’s February 2014 disclosure, its latest available, identifies six funding sources and 12 owners, including Citibank N.A. and the consulting firm owned by Democratic political strategist Patti Solis Doyle, Hillary Clinton's 2008 presidential campaign manager.
Another VAP investor listed on that document is Manchester Securities, which is owned by billionaire hedge fund manager Paul Singer and had a 4 percent stake. State records show Singer donated $250,000 to Rauner in September 2014, two months before Rauner's election and 14 months before the launch of the Rauner administration's Vendor Support Initiative.
Argentina dubbed an affiliated Singer-owned company a "vulture" investor for its hardball tactics in a decade-plus legal battle with the South American nation over defaulted sovereign debt. At one point, the Singer firm had an Argentine naval training vessel briefly impounded by Ghana in an attempt to extract money from Buenos Aires.
Illinois Financing Partners (IFP)
Illinois Financing Partners, LLC's involvement in the program is backed by a $500 million Bank of America commitment, according to an IFP filing with the state in April. IFP’s purchases have consisted entirely of overdue Health Alliance bills. The group's president, founder and majority investor is Lindsay Trittipoe, who holds a 58 percent stake in the company.
IFP's minority investors include former two-term Illinois Republican Governor Jim Edgar, who is IFP's board chairman, and former U.S. Representative Jerry Costello, an Illinois Democrat. Both hold 1 percent stakes in the company.
Vendor Capital Finance LLC
A February 2014 disclosure to Illinois, the most recent available, lists New York municipal finance consultant Le Chen as VCF's chief executive officer. LeRose, LLC, of which Chen is identified as the lone member in state business records, reported a 6 percent ownership stake in VCF. With a nearly 94 percent stake, VCF's largest owner was ER Illinois LLC, based at the same New York address as Richmond Hill Investment Co., LP, VCF's filing showed.
The Palo Alto, California-based firm was co-founded by Ronjon Nag, an inventor and smartphone pioneer, and Neerav Berry, a computer engineering expert and co-founder of a mobile app store platform acquired by Blackberry. A February 2014 filing with Illinois showed Nag and wife Sally Ann Rudd committing $5 million to Payplant with another $5 million coming from the Berry & Pandey Living Trust.
HOW IT WORKS
The program targets invoices from contractors providing vital state services 90 or more days overdue. To date, Illinois has designated a variety of vendors, including some that supply state employees and retirees with medical services, feed prison inmates and keep Illinois’ computer systems functioning.
The outside groups front unpaid vendors 90 percent of the face value of their receivables. Whenever Illinois eventually pays those bills, vendors keep the remaining 10 percent of what they are owed, then forward the balance and late-payment penalties to the lenders.
SOURCES: Illinois Department of Central Management Services REUTERS
Property taxes in Illinois keep going up, but homes themselves have yet to recover their value years after the housing crisis.
A new study found that Illinois homes purchased in 2008, right before the housing-market recession, still have not gained back their pre-recession value. In fact, Illinois is one of only seven states where this is the case. And one reason home values are struggling to increase is because of high property taxes. As property taxes increase, the cost of homeownership also increases, which means taxpayers are able to put less money toward paying for their homes, and homes don’t appreciate strongly. Sometimes high property taxes cause home values to go down because homebuyers do not want to pay a high price on a mortgage if the property taxes are also high. Illinois is taxing the value out of its homes.
This is bad news for Illinois homeowners paying some of the highest property taxes in the nation. Not only are high property taxes a heavy burden on taxpayers, but they also deter other potential homebuyers from buying property in Illinois. Because of this, many Illinois homeowners are struggling to sell their homes, and are stuck paying a high property tax bill in the meantime.
Many Illinoisans also cite high taxes as the reason they want to move out of the state. This is no surprise considering that – in addition to having the highest property taxes in the nation – property taxes in Illinois are also growing 3.3 times faster than median household incomes.
How to bring tax relief
Struggling home values are an example of why Illinoisans need protections from tax increases. Illinois taxpayers need both immediate and long-term tax relief. To achieve this, legislators need to immediately implement a property-tax freeze so property taxes do not continue to increase.
Legislators also need to implement a property-tax cap to limit how much property taxes can be raised on homeowners. A property-tax cap can prevent property taxes from increasing on individual homes or across an area. Also, if a unit of government wants to collect more money than the cap allows, then the government must first receive permission from voters via a referendum.
The high-tax environment is hurting both taxpayers’ wallets directly, and also their home property values. Illinoisans will continue to be financially overwhelmed until steps are taken to bring crucial tax relief.
Almost half of Illinoisans who live here wish they didn't, with a stunning 84 percent saying the state is headed in the wrong direction.
That, on a day when the Cubs could wrap up the first step toward the World Series, is the not-so-cheery news from the Paul Simon Institute of Public Policy at Southern Illinois University.
In the latest round of its new poll, the school found that 47.2 percent of those questioned said they would like to move to another state if they could, with a bare majority of 51.2 percent saying no. Another 1.6 percent were undecided.
Institute Director David Yepsen noted that the results mirror those found by the Gallup organization three years ago, which reported that 50 percent would like to leave the Land of Lincoln.
But particularly troubling is that younger groups are most inclined to split, with nearly 60 percent of those under age 35 and 35-50 saying they'd like to leave. Only among the elderly, age 66 plus, is continued residence here desired.
Taxes are the single biggest reason, cited by 26.9 percent of the sample. Illinois' lovely weather comes in second as a reason for departure, with 16.3 percent citing it. “Government" gets 15 percent. Oddly, "job/education" is fourth, at just 12.7 percent, despite the state's relatively weak job growth in recent decades.
Only 9.9 percent of those polled say the state is headed in the right direction, with 83.7 percent saying things are getting worse. That's the highest negative figure in the eight years the institute has asked about that. In comparison, a mere 58.6 percent said the country is headed in the wrong direction, compared to 32.9 percent for the right direction.
If there's a silver lining to the survey, it's that people feel much better about their city or neighborhood.
Just under half, 49.5 percent, said their area is headed in the right direction, with 42.7 percent saying it wasn't. If you add "average" to the right-direction side—the institute included it in the unhappy count—83.7 of those polled indicate at least some satisfaction with how their town is doing. Only 10 percent replied “not so good," and 6.3 percent replied “poor." But people in the suburbs and downstate are somewhat happier than Chicagoans.
The phone survey of 1,000 registered voters was conducted Sept. 27 to Oct. 5 and has a margin of error of plus or minus 3.1 percentage points.
The individuals include those who have suffered injury or monetary damage as a result of the state’s actions and have won their cases against the State of Illinois in the Court of Claims, which serves any citizen with a claim of monetary damages or personal injury against a state agency orstate employee.
Rich Carter, spokesman for the Illinois Comptroller’s Office, said the office has no input on who receives payments or when.
"The Comptroller's Office doesn't make any decisions on who gets paid and who doesn't; it's just a matter of when we get a voucher from an agency, then we make a payment," Carter said.
Once a state agency approves the funding, they send a voucher to the Comptroller’s Office, which the office then pays.
Carter said that because the General Assembly has yet to pass a balanced budget, the office has been unable to pay out any bills on time.
"We have, right now, more than 83,000 unpaid vouchers that are sitting in our system that we don't have the money to pay because we are more than $8 billion in bill backlog," Carter said.
People seeking compensation from the state through the Court of Claims will have to continue to wait for a while for payouts.
“Revenue comes in the form of taxes… comes into the State of Illinois every day. It averages about $100 million a day,” Carter said, “but when you have over $8 billion in unpaid bills, you obviously don’t have enough (money) to pay.”
Currently, the Comptroller’s Office is working on paying vouchers from June. The problem will continue until the Assembly can pass a balanced budget, which will allow the Comptroller’s Office to receive more money and help them be able to make payments quickly and catch up on the backlog of vouchers.
Carter said the state first makes payments it is required to by law and court order before finally making payments to average citizens.
"In general, everything else that is not required by law to be paid on certain dates or not required by court order to be paid on certain dates comes in at the back of the line," Carter said.
Citizens cannot collect their awards until the Illinois General Assembly approves the payment.
Each year, approximately 8,500 cases are filed against the State of Illinois with the Court of Claims, according to the Illinois Secretary of State's office.
Several Illinois universities this year have drastically smaller freshman classes than last year. It’s almost certainly the result of the Illinois budget crisis, which has cut higher education funding by nearly half and shows no sign of ending.
Bottom of Form
In Fiscal Year 2015, the last year Illinois had a full budget, higher education received $1.9 billion. In the 18-month period that will end Dec. 31, it will have received $1.6 billion.
Included in that figure is funding for the Monetary Award Program, the biggest state financial aid program for students.
When students are unsure whether they can receive state financial aid and when public colleges are laying off staff and — in the case of Chicago State University last year — struggling just to keep their doors open, confidence in the state’s public higher education system is damaged.
That’s an immediate problem that’s represented by the declining enrollment seen this year but also presents a more serious problem in residual damage to the institutions’ ability to attract students and staff in the years after the budget impasse is resolved.
Meanwhile, Chicago State University President Thomas Calhoun this week was ousted by the school’s board of trustees after a nine-month tenure that included some of the most dire times in the school’s history. In another example of problems with higher education in Illinois, Calhoun is expected to receive a severance payout of $600,000. This news came only a week after the University of Illinois awarded a $100,000 bonus to its president, Thomas Killeen, and $75,000 to the chancellor of its Chicago campus, Michael Amiridis.
Excessive administrator pay has been a sore spot with Gov. Bruce Rauner throughout his time in office, and he’s been especially critical of low graduation rates and episodes of corruption in Chicago State’s previous administrations.
These are trying times for Illinois’ public colleges. That’s our topic on this week’s “Only in Illinois.”