Despite months of good-faith negotiations by Senate Republican lawmakers to pass a truly balanced budget and government reforms, the Senate adjourned May 31 without achieving this goal.
In the last week of the spring session, instead of coming together to pass bipartisan reforms like meaningful property tax relief and real Workman’s Comp reform, Democrat legislative leaders pushed through a bailout for Chicago Public Schools (CPS), a job-killing minimum wage increase, watered-down workers’ compensation reforms and more anti-job creation nonsense.
We need to get back to the negotiating table to reach the budget and reform compromise that was close to being achieved earlier this spring. The Senate is expected to return to Springfield later this month.
“End” of session déjà vu
It was “déjà vu all over again” at the State Capitol May 31 as the General Assembly adjourned, once again without passing a truly balanced budget or some of the critical structural reforms needed to bring jobs and financial stability back to Illinois.
Throughout the spring session, my colleagues and I participated in countless budget meetings, and remained willing to compromise on crucial reform measures like property tax relief, pension reform, and education funding reform. A “Grand Bargain” seemed within reach but instead of embracing these good-faith negotiations, Democrat leaders chose a go-it-alone approach to governing.
This go-it-alone style of governing means pushing an unbalanced budget accompanied by a massive income tax hike, a flawed and inequitable bailout for Chicago Public Schools (CPS), watered-down workers’ compensation reform, and no meaningful property tax relief.
There is still time to get this done before July 1, if both sides of the aisle are willing to come back to the table and continue working to reach the compromise that was so close this spring. However, passing any budget package becomes more difficult after May 31, as it now requires three-fifths majority support, as opposed to a simple majority, to pass legislation to the Governor. I believe this may have been Speaker Madigan’s plan all along. He did not even let the House vote on the tax increase because it would have been vetoed by the Governor. This way, any tax increase passed now (after May 31) will have to have some Republican votes to pass since it now needs 60% to pass. He knows that voters will hate the tax increase and doesn’t want to have too many Democrats and too few Republicans supporting it. The real battle is coming in 18 months when Illinoisans get to decide the fate of legislators and the Governor.
Republicans highlight inequity in newest Democrat school plan
Republican lawmakers continue to advocate for meaningful education funding reform, saying a newly amended Democrat school funding plan pushed through the Senate in the final hours of the regularly scheduled spring legislative session is based on flawed, misleading data that disguises a massive bailout for Chicago’s school system at the expense of every other district in the state.
According to data circulated by Democrats, CPS would receive an increase of just under $200 per student under the amended Senate Bill 1. In reality, the bill was crafted in such a way that massive increases were built into the base funding minimum for the district. Analysis shows that the actual gain for CPS would be $1,333 per student, far higher than any other district in the state.
Additionally, these results distributed by Democrats are based on previous school years and do not actually represent what schools would receive if the bill were to become law today. To fund this plan in the 2018 fiscal year, it would require an additional $705 million that hasn’t been appropriated in any budget that has passed either chamber.
Of this additional $705 million needed to make the Democrat plan work, $494 million (70 percent) would be given to CPS even though the declining number of students in Chicago means that they have only 20% of the state’s students, while the state’s other 851 school districts would have to share the remaining 30 percent. This big boost for CPS is achieved by twisting the Evidence-Based Model to make Chicago look much poorer than it is, while giving the district credit for making its own pension payment several times over.
Republicans pointed out this and other problems with the legislation, including underlying issues with CPS funding, a broken tax system, and a lack of local support. They noted that Chicago has an effective tax rate of just 1.71 percent for homeowners. The city contributes just 51 percent of its funding from local sources, compared to the state average of 67 percent. The Evidence-Based Model’s local contribution calculation says Chicago should be taxing at 4.2 percent, despite the District’s Operating Tax Rate of only 3.4 percent, suggesting the city has the property wealth available to increase local revenue by nearly 25 percent.
Senate Bill 1 passed in the Senate on May 31, though a parliamentary maneuver retains the measure in the Senate. That is a hopeful sign, meaning that Senate President Cullerton may be willing to compromise some parts of the plan so that it doesn’t get vetoed by the Governor.
General Assembly passes minimum wage increase
As the final day of the regularly scheduled spring legislative came to a close, Democrat leaders passed a minimum wage increase that critics worry would stifle job-growth, and hurt small businesses struggling to stay afloat in a difficult economy.
Illinois’ current minimum wage is $8.25 an hour, a full dollar above the federal level and higher than minimum wage rates paid in all of its neighboring states. Under Senate Bill 81, it would increase incrementally to $15 an hour by 2022, leading to at least an 82 percent increase in labor costs for Illinois employers. Once again, pure politics because most Democrats believe the Governor will veto the bill and they can then use his veto against him because he “vetoed a minimum wage increase.” In fact, several Democrat lawmakers told me privately that they are opposed to the bill but they voted for it for strictly political reasons, assuming that the Governor would veto it and his veto cannot be overridden.
Opponents of the bill contend that business owners, especially small businesses, cannot simply absorb the higher cost of doing business and will be forced to cut their work force, go out of business, or go out of state. Additionally, they argue that high minimum wages are killing opportunity in cities. For example, in the City of Chicago, which has a starting wage of $10.50, unemployment among residents with limited skills continues at historic levels.
Session bad for job-growth; state’s bond rating downgraded
As the regularly scheduled spring legislative session came to a close on May 31, a number of pro-business groups labeled it “one of the worst for employers,” citing a number of anti-employer and anti-job growth measures that cleared the Legislature this year, as well as a lack of progress on major reforms like workers’ compensation reform and property tax relief.
Groups including the Illinois Manufacturers’ Association, Illinois Retail Merchants Association, Chicagoland Chamber of Commerce, Illinois Chamber of Commerce and National Federation of Independent Businesses, pointed to legislation that they said would tax, over-regulate, mandate and constrict employers as contributing factors to a poor business climate in Illinois. They contend that while the many of these measures may in theory be aimed at increasing pay and hiring more employees, they achieve the opposite effect by stifling the business community’s ability to provide jobs with competitive pay and generate revenue to address Illinois’ fiscal woes.
And on June 1, the bond rating agencies of S&P and Moody’s Investor Services downgraded Illinois’ bond rating to just above junk status. S&P lowered the state’s general obligation bond rating to BBB-minus, the lowest investment-grade rank possible. Moody’s Investor Service also lowered Illinois’ rating to Baa2. Both moves will only make the state’s fiscal problems worse. Low bond ratings translate into the state paying increased interest rates on borrowed money.
THIS KIND OF POLITICAL NONSENSE MUST STOP OR ILLINOIS’S DESCENT INTO FISCAL OBLIVION WILL POISON THE FUTURE FOR ANY OF OUR CHILDREN WHO WOULD LIKE TO STAY IN THE LAND OF LINCOLN.