SENATE ADJOURNS, BUT BUDGET NOT DONE

The Senate wrapped up a two-day trip back to Springfield May 27 by advancing budget bills, approving tax amnesty legislation and overriding an amendatory veto of McPier reform legislation, but did not consider a measure to borrow $4 billion that would be used to finance the state’s pension obligations.

The state budget—in House Bill 859 and Senate Bill 1215— has been advanced by the House of Representatives and will now be sent to Governor Pat Quinn.

The measures will increase state spending by $1 billion over the previous year, spending about $6 billion more than the state will take in. In addition, more than $6 billion in bills from the current fiscal year will be left unpaid.

No Senate Republicans supported the deficit budget.

BILL GIVES QUINN EVEN MORE AUTHORITY

Another bill, Senate Bill 3660, would give Quinn more discretionary authority on spending state revenue. Proponents claim it could result in as much as $300 million in savings, but others are skeptical—noting that Quinn promised to shave $1 billion from spending last year, but failed to do so.

The legislation would also allow the state to take out a loan against money it is slated to receive from a national tobacco settlement, which could produce $1.2 billion. That move is controversial because the state already uses money from the tobacco settlement to fund other state programs.

Senate Bill 3660 also allows Quinn to divert money—about $1 billion—from restricted state funds, a tactic often used by the Blagojevich Administration to subsidize general state spending. Though the legislation mandates the money be replaced with interest, some lawmakers are skeptical it will be repaid.

PENSION BORROWING BILL LACKS VOTES

Though the budget measures were advanced, a key component of Quinn’s budget agenda was not called for a vote in the Senate. The legislation, Senate Bill 3514, would allow Quinn to sell up to $4.1 billion in general obligation bonds to finance payment to Illinois’ five state retirement systems.

Though the measure narrowly passed the House, not enough Senate lawmakers supported the measure and no vote was taken.

Senate Republicans opposed the proposal, noting that the pension bonding scheme is worse than previous bonding plans approved in 2009 and 2003. The payments on Quinn’s 2010 borrowing measure are heavily “back-loaded,” meaning that none of the debt would be paid down for the next three years. In 2009, the borrowing was “front-loaded” so payments would decrease over time, becoming more affordable with each passing year.

As a result, over the course of the loan taxpayers would pay $1 billion in interest charges alone. Annual payments would skyrocket from $125 million to $1 billion in just eight years. In comparison, the 2003 Blagojevich plan would reach the same $1 billion in annual payments in 30 years that Quinn’s plan reaches in just eight years.

LAWMAKERS OVERRIDE GOVERNOR’S VETO

In other business, lawmakers overwhelmingly rejected changes the Governor made to the bipartisan McPier reform package.

Senate Bill 28 seeks to ensure that the Metropolitan Pier and Exposition Authority (McPier) and its convention facilities continue as an economic engine for the state. The legislation was introduced this spring after several lucrative trade shows left Illinois for more desirable locations. Additional shows threatened to leave Chicago if steps weren’t taken to address exhibitor complaints relating to the high cost of doing business at McPier. After months of public hearings and discussions with stakeholders, the General Assembly passed the reform package to ease stringent labor rules and costs associated with exhibiting at McPier.

By making changes to this legislation, the Governor was playing a pretty risky political game with the 66,000 jobs associated with McPier and the convention facilities. I am pleased that we were able to quickly override his amendatory veto.

Some concerns about the initial legislation were addressed in follow-up legislation (Senate Bill 3215) that was approved by lawmakers the same day.

OTHER MEASURES PASSED BY SENATE

Additional measures approved by the Senate May 27 include:

Sales Tax Holiday (SB 3658): Establishes an annual sales tax holiday for clothing and school supplies. The holiday will begin on August 6, 2010 and extend through August 15.

STAR Bonds (SB 2093): Creates a sales tax and revenue (STAR) bond to spur job creation in Marion, by giving the sales tax revenue to developers to finance large destination and entertainment businesses. Though the measure is expected to stimulate much-needed development in the Marion area, other southern Illinois communities strongly opposed the legislation. Opponents argued that the bill will hurt their regions, as developers will be naturally drawn to expand in Marion because of the associated revenue benefits.

Tax Amnesty (SB 377): Establishes a tax amnesty period, which is expected to raise $250 million. The measure abates all interest and penalties incurred between June 30, 2002, and July 1, 2010, on unpaid taxes. I did not support the legislation because it “rewards” people who fail to pay their taxes; however, the measure was ultimately approved by the Senate. A 2003 tax amnesty initiative brought in $500 million.

Video Gambling (SB 744): Follows legislation relating to last year’s expansion of video gaming that was included in last year’s capital plan. The measure allows restaurants and bars that are attached to off-track betting locations to have video gambling machines. I did not support this bill.