Weekly Senate Update 7-25-2014

A $1.1 billion plan to accelerate road construction was signed into law July 22, putting in place the final piece of the state’s annual budget.

House Bill 3794, which received bi-partisan support in May, will allow the state to accelerate its multi-year road construction plan. All of the projects affected are “shovel ready” and were selected by the state’s transportation department.

With the additional road funding program, the majority of about 200 projects are expected to involve resurfacing short segments of roads throughout the state, as well as some bridge repairs. The Capital infusion includes $1 billion for State roads and bridges and $100 million for local governments. 

S&P Issues “negative” outlook

Coincidentally, a major credit rating agency changed their outlook for Illinois credit from “developing” to “negative” the following day.

Standard & Poor’s decision to issue a credit warning was not related to the road construction legislation and was not an official downgrade in the state’s credit rating of A-. But it does signal that the company believes the state’s financial management is headed in the wrong direction and a downgrade is likely to occur in the future. Ultimately, it could cost the state more in interest payments when financing road and other construction projects.

Illinois has long held the worst credit rating in the country among the three major bond agencies and Governor Pat Quinn has seen more downgrades under his administration than all previous Illinois governor’s combined.

Medical marijuana, school closures and more

A number of other measures have been signed into law in recent days as well, including SB 2636, which extends the state’s medical marijuana pilot program to add seizures to the list of “debilitating medical conditions” that medical marijuana may be used to treat.

Also approved was HB 3199 that encourages schools that are used as polling places to either close or hold a teachers’ institute day on election day, so that no students would be in attendance. Proponents argued that it is difficult, if not impossible, for a school to maintain security and simultaneously allow easy public access to the school building for voters on election days.

Another measure, SB 2780, is aimed at making it easier for local governments to take on clean water projects. It eliminates a local government’s 30% (of total project cost) matching requirement on grants given by the Illinois Environmental Protection Agency (IEPA) for public water supply facilities. It also allows more types of water pollution control projects to qualify for financial assistance including storm water runoff and treatment systems, industrial waste systems, and combined storm water and sanitary sewer systems.

Road projects to be accelerated

With the additional funds included in HB 3794, the Fiscal Year 15 Road Program will total $3 billion. Many lawmakers said that while this is a needed boost to the annual program, it is clearly a Band-Aid approach to a long-term problem needing a long-term solution. 

The $100 million in local assistance will be distributed through the existing Motor Fuel Tax distribution formula as follows:

–  $49.1 million for Municipalities.

–  $16.7 million for counties over 1 million population (Cook).

–  $18.3 million for counties under 1 million population.

–  $15.9 million for local road districts.

 

The $1.1 billion borrowing is not expected to result in an increase in bond payments, but rather it will be covered by a reduction in debt service costs due to repayments of other borrowing. Over half of the bonds sold in 1999 for the Illinois FIRST capital program have been repaid and revenues have grown sufficiently to free up sufficient revenues to cover the new debt payments.

The new bonds are to be paid down in equal amounts each year, with final payments in 25 years.  Debt service is expected to be $30-40 million in FY16, and peak at $80 million in FY18 at $90-100 million.  Interest rates are projected at 4% to 4.5%. The authorization to sell the bonds was included in a companion measure also signed into law, SB 3224.

Last piece of $35 billion budget

Most of the state budget was signed June 30, just before the beginning of the state’s 2015 fiscal year. Out of a $35.4 billion General Funds budget, the Governor issued only one cut, vetoing out $250 million for state Capitol Building restorations that were not expected to get underway in the coming year anyway.

Fiscal conservatives have criticized the Governor for leaving intact a number of undefined earmarks, special projects and lump sum allocations. That includes a $20 million appropriation to the state’s Labor Department for what appears to be a resurrected and rebranded version of the Governor’s politically-charged and failed 2010 anti-violence initiative that is currently under investigation by federal prosecutors and others.

List of recent legislation

Legislation signed into law in recent days includes the following:

Schools and Elections (HB 3199/PA 98-0773): Schools that are being used as polling places are encouraged to either close or hold a teachers institute on Election Day with no students in attendance. Also says that government agencies which make a public building available for a polling place shall allow the election authority to administer the election as authorized by the Election Code.

“Ban the Box” Criminal Records (HB 5701/PA 98-0774): Prohibits private employers with 15 or more employees from asking a job applicant about their criminal history until the applicant has been selected for an interview or, if there is not an interview, until after a conditional offer of employment is made. It has been called “ban the box” after the check-box that appears on some employment applications asking if the individual has been convicted of a crime. Advocates argue that the legislation allows applicants to have the opportunity to address questions about their past criminal records in person, during an interview.

Opponents say the legislation interferes with the ability of private employers to pre-screen applicants, will waste the time of applicants and employers and is not likely to result in more ex-convicts actually receiving a job offer. They point out that many employers have legitimate reasons for not hiring convicted felons, and some are even required to take an applicant’s criminal history into consideration when making hiring decisions.

Marijuana and Epilepsy (SB 2636/PA 98-0775): Adds seizures (including those characteristic of epilepsy) to the list of “debilitating medical conditions” that medical marijuana may be used to treat. Also allows the Illinois Department of Public Health (DPH) to adopt rules authorizing “other” minors with medical conditions covered by current law to become registered users.

The stated purpose of this legislation was to authorize the use of CBD Oil for children with Epilepsy or conditions that cause seizures. Limits cannabis use by minors (with parental consent) to only infused forms.

However, it also broadens use by minors by allowing DPH to adopt rules authorizing “other” minors with medical conditions covered by current law to become registered users.

Corporation Dissolution (SB 1098/PA 98-0776): Provides that the dissolution of a corporation shall not take away any civil liability at the time of or after such dissolution if action is commenced within five years after the date of such dissolution.

Clarifies that this provision does not extend any applicable statute of limitations.  Also provides standards of liability for directors when a corporation is dissolved. 

Vehicle Registration (SB 3130/PA 90-0777): Defines “autocycle” in law and provides for the issuance of provisional three-year titles for these vehicles. An autocycle is a three-wheeled vehicle that uses a steering wheel and seating that does not require the operator to straddle or sit astride the seat.

Student Trustee Residency (HB 4284/PA 98-0778): This legislation is an effort to draw a distinction between residency requirements for a student to serve as a student trustee on the University of Illinois Board, and residency requirements to qualify for in-state tuition.

It would allow a student to qualify as a resident for purposes of serving as a student trustee, but still be considered a non-resident for tuition purposes.

Code of Conduct (SB 3552/PA 98-0779): Permits Lake, Kane, Will, and DuPage Counties to establish a code of conduct by ordinance for appointees appointed by the county board chairman or county executive. Permits removal of appointees for violating the code of conduct with a 2/3 majority approval of the county board at a hearing. Exempts the county superintendent of highways or county engineers due to provisions already in existence for removal due to neglect, malfeasance, or incompetence.

Capital Bond Authorization (SB 3224/PA 98-0781): Allows the Governor to sell $1.1 billion in new general obligation bonds for State and local road projects. This bond authorization and the road capital appropriations in HB3794 are the two pieces of legislation needed for the road capital program.

These new bonds will be repaid with an ongoing stream of excess capital revenues originally enacted in 1999 for the Illinois FIRST capital program.  About 90% of those capital revenues are road-related and included increased license plate fees. Some of those revenues are no longer needed now that over half of the bonds sold for the 1999 program have been paid off. No new or increased fees or new revenues are enacted in this bill.

Clean Water Initiative (SB 2780/PA 98-0782): Eliminates a local government’s 30% (of total project cost) matching requirement on grants given by the IEPA for public water supply facilities. Adds systems that can qualify for financing from IEPA. Allows more types of water pollution control projects to qualify for financial assistance through the Governor’s Clean Water Initiative (e.g., stormwater runoff and treatment systems, industrial waste systems, and combined storm water and sanitary sewer systems).

Charter School Accountability (HB 3232/PA 98-0783): Intended to increase transparency in charter schools. Requires that lotteries be used to fill available student slots when demand exceeds capacity. The lotteries must be videotaped by the charter school. Also allows charter schools to undertake additional intake activities; requires charter schools to include a disclaimer in any advertisements that are paid for with public funds; and requires that charter school governing bodies must be separate and distinct from any Charter Management Organizations or Educational Management Organizations.

Credit Union Charity (HB 5342/PA 98-0784): Provides that a credit union may establish one or more charitable donation accounts. Also adds a technical change that the Illinois Department of Financial and Professional Regulation (IDFPR) shall adopt rules to ensure the consistency and due process in examinations of State banks.

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