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 bipartisan 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 funding infusion includes $1 billion for state roads and bridges and $100 million for local governments.
S&P issues ‘negative’ outlook
A major credit rating agency changed its outlook for Illinois credit from “developing” to “negative” on July 23.
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-. However, it does signal that the company believes the state’s fiscal management is headed in the wrong direction and a downgrade is likely to occur in the future.
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 governors combined.
Medical marijuana, school closures and more
A number of other measures have been signed into law in recent days.
Senate Bill 2636 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.
House Bill 3199 encourages schools that are used as polling places to either close or hold a teachers’ institute day on Election Day, so 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.
Senate Bill 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 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 House Bill 3794, the Fiscal Year 2015 Road Program will total $3 billion. Many lawmakers said that while this is a needed boost to the annual program, it is clearly a piecemeal 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 Fiscal Year 2016, and peak in Fiscal Year 2018 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 (Senate Bill 3224) also signed into law.
Last piece of $35 billion budget
Most of the state budget was signed June 30, just before the beginning of the state’s Fiscal Year 2015. The Governor issued only one cut in the $35.4 billion General Funds budget, vetoing $250 million for state Capitol Building restorations that were not expected to get under way 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.
Bills signed into law
Bills continue to be signed into law as the annual deadline for Governor’s action approaches. Each year, the General Assembly has 30 days to send legislation to the Governor’s desk and he has 60 days to act on the bills. Because the Legislature adjourned at the beginning of June, all measures must be either approved or vetoed by the end of August.
Information about the bills signed into law during the week of July 21-25 is available by clicking here.