- State begins to implement program, pushed by House Republicans, to cut Medicaid costs. Unlike many other states, until 2012 Illinois had not yet encouraged state Medicaid recipients to move into the “managed care” model of coordinated care and cost savings. In spring 2012, Representative Patti Bellock persuaded her colleagues to enact new legislation, the SMART Act, to help enact approximately $1.6 billion/year in Medicaid cost cuts. The new law requires that the Department of Healthcare and Family Services (DHFS) move at least half of Illinois Medicaid recipients into managed care by 2015. On Friday, November 16, the State announced that they had passed a key SMART Act goalpost by selecting eight health-benefits coordinators. The firms will oversee the health care provided to 136,000 Illinois residents, mostly senior citizens, who are “dual eligible” patients with standing to receive both Medicare and Medicaid. The coordinators are major health insurance firms such as Aetna, Blue Cross/Blue Shield, and Humana; the health care of Illinois lawmakers and tens of thousands of State workers are already coordinated by these firms.
- House Revenue Committee hears dismal forecast for FY14 State budget, revenues. At a public hearing in Chicago on Thursday, November 15, the House’s chief committee on fiscal affairs heard projections of the State’s new revenues, new State expenses related to employee pay, and new State expenses related to actuarial deposits into State-managed pension funds. The Commission on Government Forecasting and Accountability, the budget arm of the General Assembly, presented a preliminary estimate of $767 million in total additional new General Funds revenues in FY14 from all sources (State sources, transfers, and federal).
Economic conditions remain slow in Illinois, even assuming no “fiscal cliff” imposed upon Illinois in spring 2013 due to changes in federal tax and budget policies. In the absence of further State tax increases, on top of the taxes already enacted and in place, this $767 million will have to cover all of the calls to be made upon the State in spring 2013 for new money in FY14.
At the same time, the actuaries who oversee Illinois’s five State-managed pension funds are reporting that current return-on-investment conditions indicate that the State’s general funds will be required to make an additional deposit of $965 million in these five pension funds in FY14, raising the annual mandated deposit from $5.87 billion to $6.83 billion. The combination of these two factors means that in the absence of pension reform, further cuts to the FY14 budget will have to be made on top of the slices imposed in the current fiscal year. These cuts will be required even if no additional net monies are spent on all of the existing non-pension general funds line items.
The Revenue Committee is considering a resolution that would clarify the responsibilities of the General Assembly with regards to informing both sides in current State labor negotiations of the House’s determination to continue to defend its current (FY13: $33.7 billion) and future (FY14) general funds budgets. HJR 45 would commit the State to budget no more than a certain amount to pay wage increases committed to union contracts. Adoption of this resolution would discourage or prevent union negotiators from pressuring the Quinn administration to offer pay hikes that would be financed by “moving money around” within the budget. Speaker Madigan, the chief sponsor of HJR 45, has signaled that he may ask the Committee to vote on this controversial labor/budget resolution in Springfield on Monday, November 26.
- Major layoff at coal mine in southern Illinois. On Thursday, November 8, the American Coal Company announced that 54 workers at their facilities in Galatia, Illinois, near Harrisburg, will be laid off. Mine owner Murray Energy has described the industry’s declining prospects in the wake of the November 2012 national elections. After his re-election, President Barack Obama told a press conference on Wednesday, November 14 that he is deeply concerned about what is described as man-made global climate change. Observers believe that the environmental policies of the second Obama administration will take aim at American coal and coal mining. A significant number of southern Illinois counties, including Perry, Franklin, and Galatia’s Saline, are closely tied to the coal industry. 4,400 Downstate Illinoisans work in coal production, with tens of thousands of additional Downstate jobs dependent indirectly upon the health of the coal industry.
- Commonwealth Edison touts $2.6 billion, 10-year “smart grid” plan. The “ComEd” plan, which would require approximately $100 million per year from Chicago-area electric ratepayers, could replace hundreds of thousands of electric meters in current use. The electric utility’s president told the City Club of Chicago on Monday, November 12 that today’s versions of these devices, in wide use throughout Illinois, only measure kilowatt-hour usage by commercial, industrial and residential electricity customers. These standard devices face replacement by new computer-chipped machines that will have their own automated cellular phone links to the electric company. The artificially-intelligent “smart grid” machines, of which 130,000 are already installed throughout the ComEd system, will be able to use these links to warn utility control rooms when an electrical circuit is under strain because of a thunderstorm or other event.
Under current “dumb grid” conditions, utility providers such as ‘ComEd’ often do not know of blackouts in their system until a customer calls them up to complain and report the incident; this is a recurring headache for electrical utilities, as many blackouts, especially in summer months, are cascading events in which a circuit goes down in such a way as to increase electrical loads on other, intertied circuits. On at least two occasions in the past 50 years, single catastrophic events like these have led to major blackouts throughout large swathes of the U.S. Northeast, affecting tens of millions of households.
The Illinois Commerce Commission, the State panel that oversees Illinois electricity rates, refused in October 2012 to grant permission to ComEd or other Illinois utilities to raise their rates to create a fund for mass replacement of Illinois electric meters. It is possible that utility firms led by ComEd may come to the Illinois General Assembly with proposed legislation to authorize them to adjust their electric rates for this purpose.
Illinois electrical utility firms like ComEd are also likely to seek separate rate relief in future years to continue a major rebuild of their electrical distribution system. The rebuilding efforts will include reconstruction of the substation transformer network, installing new underground electrical cables, and making remaining utility-pole electric service “tree-resistant.”
- As “video gaming” terminals sprout throughout Illinois, advocates prepare for another push to further expand legal gambling. While fiscal estimates differ, many experts believe Illinois could enjoy additional revenues of hundreds of millions of annual dollars from enactment of a comprehensive expansion package for gambling throughout Illinois. Plans outlined by supporters include installation of legal slot machines at Illinois horse racetracks, creation of four additional floating casino licenses at targeted locations throughout northern and central Illinois, and authorized additional electronic gaming devices at the ten existing licensed Illinois casinos. One key item in many expansion proposals is a land-based gambling center to be located within the city of Chicago. The Chicago mega-casino proposal, which could contain as many as 4,000 gaming positions, is supported by Mayor Rahm Emanuel.
The General Assembly has considered proposals of this type before; SB 1849, a “gambling expansion” bill narrowly enacted by both houses of the General Assembly in May 2012, was vetoed by Gov. Quinn in August. The sponsors have the right to bring this measure to the Senate and House floors during the approaching “veto session,” and it could become law over the Governor’s veto with a three-fifths vote in both chambers. The veto session is scheduled to begin on Tuesday, November 27.
- Illinois observes first statewide Diabetes Awareness Day. The day of observance, held Wednesday, November 14, is meant to call attention to the scourge of untreated, undiagnosed Type 2 diabetes throughout Illinois. While 800,000 Illinoisans have been diagnosed with the metabolic disorder, an estimated 500,000 are undiagnosed, and millions more have contracted metabolic syndrome. Often called “pre-diabetes,” metabolic syndrome often serves as a precursor to the incurable condition. “Type 2 diabetes is a metabolic disorder that can be prevented or delayed with a healthy lifestyle” including both diet and exercise, reports House Republican Leader Tom Cross. Cross, the sponsor of the measure (HB 5003) to create Diabetes Awareness Day, co-chaired the observance with Gov. Pat Quinn. Twenty-three free diabetes screening sessions were held throughout Illinois on Diabetes Awareness Day, co-sponsored by the Illinois Hospital Association, Novo-Nordisk, and the Illinois Legislative Diabetes Caucus.
- Quinn administration takes steps to bring Illinois into compliance with federal “Obamacare” law. As the Affordable Care Act enacted in March 2010 moves toward full operation in 2014, Illinois’ state government told the “Chicago Sun-Times” on Sunday, November 11 that they have sent out a request for proposals and are reviewing five responses. The respondents are private vendors who are seeking what is expected be a lucrative contract: the construction of an Illinois health-insurance exchange that Illinoisans will have the right to use if they are eligible to purchase private health insurance under “Obamacare.”
The Illinois exchange will have to comply with a long list of conditions imposed by the Obama administration by federal administrative rule. The Affordable Care Act contains numerous subsidies, incentives, and nudges intended to help persons under the age of Medicare eligibility find access to private-sector health insurance. Much of the cross-subsidy activity is expected to be paid for by sharply increased federal tax rates.
Up to 800,000 uninsured Illinoisans are expected to try to use the exchange to buy insurance. In addition, the exchange will contain an additional “window” for businesses with less than 50 employees; these private firms, which are partly shut out of the traditional employer-funded health insurance market, will have opportunities to buy health care coverage for their workers throughout this small-business insurance exchange window.
- Quinn points to action on pension reform in early January “lame duck” session. In the wake of failed attempts in spring and summer 2012 to line up votes for a major bill to overhaul the management and commitments of Illinois’ state-managed public sector pension funds, Gov. Pat Quinn has told the press that he will renew his push for reforms in the January 2013 legislative session. This session, tentatively scheduled to begin on Thursday, January 3, will include more than two dozen “lame duck” lawmakers from both parties who were defeated or who have announced their retirements. The implication is that these lawmakers will be available for tough votes that some of their colleagues may not be able to cast.
The Governor’s voice joined others, such as Chicago Mayor Rahm Emanuel; the Mayor has stated that pension reform will be his “number one” Springfield priority in the coming year. The Governor’s remarks were made on Friday, November 9. However, the Civic Committee of the Commercial Club of Chicago has begun to warn the Chicago business community that pension reform measures supported by key Democrats, such as Mayor Emanuel, will not be sufficient to close the gap between Illinois’s state-managed pension assets and pension responsibilities. In a memo circulated on Wednesday, November 14, the Committee’s president Tyrone Fahner stated that actuarial realities confirm that teachers and other affected workers will never get even the diminished benefits suggested by some Democrats, and that these beneficiaries must be realistic in their expectations about what remains.
- Possible Country Club Hills location revealed for proposed south suburban casino. Many proposals for “gambling expansion” throughout Illinois include provisions to grant four additional licenses for casino riverboats. Ten riverboats already operate throughout Illinois, and most proposals for additional licenses include a license set aside for what, up until now, has been an undisclosed location in Chicago’s south suburbs.
On Tuesday, November 13, a Nevada-based casino development firm announced plans to construct a $250 million gambling floor-hotel development in Country Club Hills, located near Interstate 57 and Interstate 80 in southern Cook County. The casino, if it is built, would meet the conditions set forth by Illinois statewide gambling expansion proponents. 200 hotel rooms would be a major component of the proposed development.
Other southern Cook County suburbs, such as Ford Heights, have also expressed interest in working with developers to apply for the proposed license. Further action on these proposals will await a renewed debate by the General Assembly on the overall issues of Illinois gambling, and location announcement like these could be seen as increasing pressure on specific local lawmakers to take positions in these discussions.
- Renewed push seen for drivers’ licenses for undocumented people living in Illinois. Under current Illinois law, illegal immigrants living in Illinois – they ask to be called “undocumented” rather than illegal – cannot present documentation of their lives to the Illinois offices operated by the Department of Driver Services. Although this Department, a division of the Secretary of State’s office, has distributed 8.5 million drivers’ licenses to residents throughout Illinois, they cannot test the driving skills of undocumented immigrants or license them to drive. If undocumented immigrants wish to drive around, they must do so without a license and cannot buy car insurance. Estimates suggest that approximately 250,000 illegal immigrants live and drive in Illinois without documents; the insurance industry, represented in the Highway Safety Coalition, counts an average of 80,000 accidents per year involving undocumented immigrant drivers. These accidents cause an estimated $660 million in annual property damage.
Some large states, such as California, have begun opening a pathway to a drivers’ license for some illegal immigrants. Many legal drivers and Illinois citizens continue to oppose granting drivers’ licenses to undocumented people. Advocates who presented a petition to the General Assembly on Tuesday, November 13 asking for undocumented immigrant drivers’ licenses did not conceal their simultaneous hope that these legal documents could become part of an overall push towards permanent U.S. residency for all of the individuals who would be helped by this policy move.