Thursday, April 15, 2010

They're Back!

After their two week spring break the Senate and House returned this week. Each chamber started its second round of committees dealing with bills passed by the chamber of origin.

There must be something in the air, because both the House and Senate have hit the ground running. They have been taking up the bills coming out of committee very prudently and expeditiously. Maybe it’s the spring air or just a desire to move quickly and not be trapped in the Capital in yet another overtime session.

The spring air does bring an optimistic view, but just lying under the surface is the ever present potential for the blooming of amendments. This is the time of year that proposals that did not see much action have the chance to or new ideas sprout and bloom into a legislative measure. So just as the process of spring brings rejuvenation, we dust off our skills of "amendment reading" to see how these new ideas fit with the goals of policy.

Budget

The Senate and House continue to proceed through their "informational" hearings on the state budget. The budget process has changed dramatically over the past 15 years. In the late 1980's and into the early 1990's appropriation bills were introduced for each state agency and commission separately. The bills were looked at, discussed, amended and voted on. Over several years this process was consolidated and underwent a metamorphosis into the current process of just one massive appropriation bill rolled out and voted on in just a few hours.

We expect the same progression for the passage of the state appropriation process to occur again. We have been talking to many legislators about when we expect to see a state budget and we are being told it will be in May. Many of you ask if the General Assembly will adjourn by its May 7th scheduled date, and we are optimistically hopeful, but realistically we expect it will be the end of May.

The outcome of a budget continues to look like the same as last year. The General Assembly will pass an appropriation bill that will make some cuts, but not sufficient to balance the $13 billion shortfall. There will most likely be no significant tax increases, like the income tax increase for education the Governor continues to call for. The "feeling" is that the problem will be addressed after the November 2nd election.

Illinois Department of Agriculture and Pass Through Ag Appropriations

The Illinois Department of Agriculture proposed budget has now been heard by both the Senate and House Appropriations Committees. In a House Appropriations hearing held on Wednesday April 14th, Director Jennings testified on their proposed budget and answered questions posed by legislators on the committee. The discussion highlighted the challenges posed by the current state budget difficulties and the unfortunate progression that has taken place for many years now. Employee head count and budget dollars are a fraction of what they were just a few years ago and this year's budget scenario will further exacerbate that issue.

Representative Frank Mautino, Chairperson of the Committee, placed special emphasis on the fact that the current budget challenges placed on IDOA are not any fault of the agency but instead the consequences of a much larger state budget problem. He complemented Director Jennings for his leadership and management of the agency under these difficult circumstances. Unfortunately it does not look as though there is a will or a way to comprehensively address the State's budget woes prior to the November election. Therefore, the consequence is diminished funding for all state agencies including IDOA.

Director Jennings' testimony included discussion of the impact that the budget woes will have on entities that receive pass through funding from the Department. Representatives from Extension Partners testified on the impact this will have on their organization. They then shared with the Committee the proactive actions that Extension is taking to consolidate and cut overhead costs in an attempt to stay viable and still provide an acceptable level of service. Director Jennings commended extension for its proactive approach and willingness to work with the Department during these challenging times

A legislative representative of the county fairs also testified regarding the cuts and to the line items that help fund Illinois County Fairs. The fairs have been cut in similar fashion to Extension and other pass through entities. It was suggested during the hearing that all pass through funded entities, like County Fairs, may want to consider a proactive approach similar to Extension in order to ride out these challenging budget times.

Fuel Standards in Illinois

Over the past couple of weeks there has been increasing discussion about Illinois adopting new fuel standards that would help ensure the quality of pure gasoline that Illinois is receiving, blending with ethanol and is selling at its gas stations to the consumer. Other states have been working on adopting similar standards as the oil companies work towards the anticipation of future increasing levels of ethanol in retail gas. These standards have been put on hold for the time being as the oil companies have expressed some concern about being able to meet these new pure gasoline specifications and whether or not they should be producing fuel at these new specs for Illinois when in May of 2012 there will be a national standard for all U.S. oil companies to produce pure gasoline that will meet the same specifications for all states in the U.S.

The biggest concerns come from the major refineries in Illinois and the oil and pipeline companies that supply fuel coming from the Gulf of Mexico. These companies are informing legislators and the Department of Agriculture that if these new standards are adopted, then they would need to produce fuel specifically for Illinois and store it in the Gulf and send it through the pipelines that supply Illinois. Just for clarification, the Illinois Department of Agriculture is in charge of fuel inspection in Illinois and ensuring its quality. Oil refineries in Illinois, which do not receive oil from the pipelines, are also informing the Department of Agriculture that if Illinois adopts these new standards then they will also have to produce gasoline that meets these new specs for Illinois and store it onsite. These companies also supply to other states that would not have the same fuel standards as Illinois. Now you can see the issue that they are proclaiming. They too are saying that they would need to refine their fuel more to meet the new Illinois specs and to add storage to their facilities in order to store the Illinois specific fuel. This would add to their facility costs. These Illinois based refineries are also saying that if we wait until 2012 when the national standards are adopted, then they will be producing the same fuel not only for Illinois but anyone else that they may supply fuel to.

During this time period members of the General Assembly, Department of Agriculture, The Petroleum Marketers Association, American Petroleum Institute, Illinois Corn Growers, Illinois Renewable Fuels Association, Illinois Farm Bureau, and others have met several times to discussed the options for addressing this situation. We will keep you informed as this issue develops further.

Pension Reform Now Law

The Governor this week signed into law SB 1946 (President Cullerton/Speaker Madigan) that makes numerous changes in the different pension systems. We discussed some of the major provisions in the March 25th issue of QuickView. The immediate savings in the upcoming state fiscal year is estimated to be $500 million to $1 billion in FY 2011. The total amount of the changes to future pension recipients versus the current system is estimated to reduce the projected costs by at least $100 billion over the next 50 years.

The legislation will not immediately address the $77.8 billion of unfunded pension liability. The total state pension liability is $126.5 billion.

The union representing the state employees and teachers covered under the affected pension systems have been calling for changes in the legislation in a "trailer bill." Speaker Madigan has been quoted several times in the media that no trailer bill would be dealt with and this week the Governor eluded the same.

QuickLook

The following is a short description of bills with the current status and position on each bill.

Questions

If you have any questions on the items listed in this edition of QuickView or on other state legislative matters please contact us. The State Legislative Team can be reached at (309) 557-2308 or by e-mail at statelegislation@ilfb.org.