CAPITOL RECAP: February 11, 2023
Gov. JB Pritzker preparing for fifth state budget address next week
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BUDGET: Gov. JB Pritzker’s second-term legislative agenda will kick off in earnest next week as he proposes his fifth annual state budget to lawmakers in the General Assembly.
But while a governor’s proposal usually provides the framework for the state’s annual spending plan, it rarely makes it through the General Assembly untouched by lawmakers who have their own spending priorities.
The monthslong negotiating process involves dozens of budget hearings and behind-closed-doors meetings, eventually culminating in the budget’s passage – in normal years – sometime before the end of the legislative session, which is May 19 this year.
Here’s what to watch for ahead of Pritzker’s Feb. 15 address.
REVENUE ESTIMATES: Illinois is coming off a record-high $50.3 billion in base general revenues for the fiscal year that ended June 30 – about $8 billion more than had been anticipated when the Fiscal Year 2022 budget was initially approved in the spring of 2021.
Following that strong performance, lawmakers budgeted for an 8 percent decrease in the current fiscal year that began July 1. But in the seven months that have already passed in FY 2023, revenues are outpacing even last year’s strong performance by $2.3 billion, according to the Commission on Government Forecasting and Accountability’s January report.
The strong revenue performance led COGFA to up its projections by $4.9 billion in a November forecast revision. The agency now anticipates revenue receipts will top last year’s totals by $259 million.
As the economic forecasting agencies mull the likelihood of a recession, we’ll be watching to see if Pritzker plans for a downturn in revenue or if the current-year projections for a surplus are updated in either direction.
SPENDING GROWTH: In his second inaugural address last month, Pritzker telegraphed a few areas where he’d like to see increased state investment: child care, preschool and higher education.
That included making preschool “available to every family throughout the state,” and making college tuition “free for every working-class family.”
Details on those plans are lacking, so one thing to watch will be whether the governor proposes spending amounts or any specifics as to how such plans would be implemented.
Spending growth is important to watch because the Governor’s Office of Management and Budget’s five-year budget analysis projected Illinois could be in for a deficit of about $384 million and growing beginning in Fiscal Year 2025. Generally, that means the state must increase base revenues, cut expenditures or pass some combination of both.
It remains to be seen what, if any, new revenue sources or structural spending reforms the governor might offer in his address next week.
PENSIONS: At about $9.9 billion, the state’s GRF pension payment was its single biggest expenditure for the current year, topping the $9.8 billion spent on K-12 education.
While that number reflects the payment required by law, a recent COGFA report outlined another annually repeated criticism of the state pension funding formula: accountants say it comes up short. The report estimated the state would have to increase its contribution by $4.4 billion this year to stave off continued increases in unfunded liabilities.
While such a large infusion is unlikely – and the governor has staunchly resisted calls for a constitutional amendment to change pension benefits – we’ll be watching to see if he’ll propose any changes to the payment level required in law.
RECEPTION: How easy a path the governor’s budget will have can often be gleaned from the initial response to it. And with Democrats dominating both chambers of the General Assembly, the response from the governor’s own party will likely be a stronger indicator.
Democratic comptroller Susana Mendoza, for example, said in a recent interview with Capitol News Illinois she’d be opposed to new ongoing spending initiatives. While she has no formal vote on the matter, her voice has proven an influential one at the Capitol.
But Republicans will also make their voices heard. The House GOP laid out its asks for the budget year last month, including greater GOP involvement, an earlier adoption of a revenue estimate and more time to review the budget.
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MEDICAID FUNDING: As many as 700,000 Illinoisans may lose Medicaid coverage in the months following March 31, but the Department of Healthcare and Family Services says it is working to reduce that number and help those affected find health insurance elsewhere.
Medicaid is a health insurance program for poor and disabled people that is jointly funded by the federal government and the states.
Congress passed a spending bill in December that puts a March 31 end to a pandemic-era rule that paid states that kept Medicaid patients continuously enrolled in the program through the end of the public health emergency.
Those individuals did not have to go through the normal process of reapplying every 12 months to determine whether they were eligible, even if there were changes in their income or household that would normally make them ineligible.
The change in law means many who have been receiving continuous coverage will have to reapply for benefits, potentially leading to loss of coverage if the individual would no longer qualify for benefits or if they fail to complete a reapplication.
Nationwide, the federal government estimates that 15 million people, or 17.4 percent of Medicaid and Children’s Health Insurance Program enrollees, will lose their coverage as a result of the change. That would translate to roughly 700,000 people in Illinois, but DHFS officials believe they can mitigate the impact to “roughly 384,000” individuals through outreach efforts.
The department also noted that those individuals will be subject to redetermination over a staggered timeline over the next 12 months, not all at once when the program ends.
“The truth is, nobody knows for sure. What we do know is that we are committed to ensuring everyone who is eligible maintains their coverage, and that those who are not are given information about alternative coverage,” DHFS spokesperson Jamie Munks said in an email.
To avoid losing coverage, DHFS strongly urges Medicaid enrollees to fill out their renewal forms as soon as possible. The agency will resume regular verifications starting in late April, and people with a June renewal date will be the first to go through the restarted process. Those people will need to submit their renewal forms before June 1 so they can maintain coverage.
Customers can complete their renewal by phone, although online is the preferred method. She also said it is important for enrollees to update their contact information with the Medicaid program.
Munks said people who are found to be ineligible may still have other options for low-cost insurance, including individual plans sold through the Affordable Care Act marketplace, Get Covered Illinois. People who meet certain income guidelines can receive tax credits to pay all or part of their premiums.
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CHILD TAX CREDIT: A group of Democratic lawmakers on Tuesday, Feb. 7, called for creating a state-level child tax credit that would give low- and middle income families up to $700 per child each year in tax relief.
But whether Gov. JB Pritzker includes such a plan in his budget proposal, scheduled to be delivered Feb. 15 – and whether it receives the endorsement of top Democratic leaders in the General Assembly – remains an open question.
Erion Malasi, director of policy and advocacy at the advocacy group Economic Security for Illinois, pegged the plan’s cost at somewhere between $700 million and $800 million annually.
State Sen. Mike Simmons, D-Chicago, said passage of such a measure would benefit about half of all children in Illinois.
Illinois already offers an earned income tax credit, or EITC, which is available to people who meet certain income guidelines, even if they have no children. A child tax credit would be an additional payment to parents. Like the EITC, the child tax credit would be refundable, meaning if the amount of the credit exceeds the filer’s total tax liability, the excess amount would be repaid to the taxpayer.
The language of the proposal is contained in Senate Bill 1444, which Simmons introduced Tuesday. Under the legislation, individuals with income below $50,000 and married couples filing jointly with incomes below $75,000 would be eligible for a $700-per-child tax credit.
For tax filers with incomes above those limits, the amount of the credit would be reduced by $24 for each $1,000 of additional income.
But the idea comes at a precarious time for Illinois, and it could face resistance due to its estimated annual price tag. Although the state has been running multi-billion dollar surpluses in each of the last two years, the Governor’s Office of Management and Budget has projected that state finances could start running deficits as soon as Fiscal Year 2025.
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PAID LEAVE: A coalition of advocacy and labor groups is pushing for a state law to give Illinois workers 26 weeks of paid leave if they need to recover from an illness, domestic or sexual violence, or take care of a sick family member or new child.
The coalition’s initial proposal – encapsulated in Senate Bill 1234 and House Bill 1530 – would cover all employers in Illinois and all employees who earn at least $1,600 annually. Paid leave would also apply to contract workers.
The benefits to workers would be paid out of a newly created special state fund. The law would require employers to pay 0.73 percent of the wages for their employees and contractors into the Family and Medical Leave Insurance Fund, similar to the state’s Unemployment Insurance Trust Fund. An additional fee of up to 0.05 percent could be imposed through administrative rules for administering the program.
Those who need paid leave would be required to provide documentation of pregnancy, adoption or guardianship of a new child, their own injury or illness, or that of a sick family member. The leave policy would also cover military-related time off and time needed to recover from sexual assault or domestic violence.
Those workers, if approved for leave, would receive 90 percent of their average weekly wages for their leave period, up to a maximum of $1,200 per week. Eventually that maximum would be adjusted to 90 percent of the average weekly wage in Illinois.
Those potential payouts are in line with the policies of the 11 other states with paid leave laws, although no other state’s law is quite as permissive as the proposal being pushed in Illinois. For example, although Massachusetts allows for up to 26 weeks of total paid leave in one year, it provides for only 12 weeks of paid leave for new parents and those caring for a sick family member, and 20 weeks for those who can’t work due to a long-term illness.
But business groups aren’t engaging with the proposal yet. Rob Karr, President and CEO of the influential Illinois Retail Merchants Association, turned the focus back to last month’s legislative agreement to created five days of paid leave after years of negotiation.
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HIV/AIDS DISPARITIES: Illinois lawmakers and advocates commemorated National Black HIV/AIDS Awareness Day Tuesday, Feb. 7, calling attention to the disproportionate impact the disease has on Black communities.
State Sen. Mike Simmons, D-Chicago, and other members of the Illinois Legislative Black Caucus were joined by members of the Black Leadership Advocacy Coalition for Healthcare Equity, or BLACHE, a coalition of Black-led organizations that work to prevent and treat HIV and AIDS in the Black community. The lawmakers and advocates called for the state to invest more money in organizations treating the disease in communities of color.
The advocates called attention to the fact that Black people make up a disproportionate number of new HIV diagnoses. Data from AIDSVu, an interactive data tool presented by Emory University’s Rollins School of Public Health, showed in 2020 Black people comprised 52.1 percent of HIV diagnoses in Illinois despite making up roughly 15 percent of the population.
They also called for greater investment in a 2006 law known as the African American HIV/AIDS Response Act, which created a fund to specifically address the disproportionate impact the disease has on the Black community. The Illinois Comptroller’s state fund database showed it had a balance of about $4.2 million as of Thursday.
Of the Illinois Department of Public Health’s total budget for HIV services, less than a third, or roughly $29.6 million, was used for grants last year, according to an agency spokesperson, and Black-led organizations received $2.5 million, or about 8 percent.
The budget, primarily funded by the federal government, contains another $70 million to be allocated toward required services including rapid test kits that are distributed to grantees and professional service contracts.
At the news conference, the BLACHE representatives included leaders from various Black-led organizations aimed at HIV/AIDS prevention and treatment. They all said they had applied for grants from the program but were denied over the years.
If they had the funding, Creola Kizert Hampton of BLACHE said, the organizations would focus on prevention. That includes PrEP, a medication used to reduce an individual’s chances of getting HIV. In addition, Hampton said they need to make sure HIV-positive individuals are on the necessary medication to avoid infecting others through intercourse.
Because of the lack of awareness that comes with minimal funding, Hampton said, a large part of the Black community is unaware of the steps they can take to protect themselves from HIV/AIDS.
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PRIVACY RULING: People who’ve been subject to fingerprinting, face or retinal scans as either employees or customers of Illinois companies have five years to file lawsuits if they believe the business violated a stringent state privacy law, the Illinois Supreme Court ruled last week.
It’s the latest in a handful of cases that have reached Illinois’ high court in recent years, all refining the state’s Biometric Information Privacy Act. Also known as BIPA, the first-of-its-kind law has, since 2008, made Illinois the only state that grants a private right of action to sue over the improper collection and mishandling of biometric data.
The justices on Thursday ruled BIPA has an unequivocal five-year statute of limitations on all claims under the law – not a one-year window as employers and business groups had hoped for.
In this case, logistics company Black Horse Carriers Inc., which has since been acquired by trucking giant Penske, faced a class action lawsuit. A former employee initiated the suit, alleging the company violated BIPA by requiring time clock fingerprint authentication without maintaining a publicly available policy on how the company would treat employees’ biometric data.
The suit also claimed Black Horse failed to provide notice to employees that the timeclock was collecting their fingerprints, and didn’t explicitly get employees’ consent. The company argued the court should’ve applied the one-year statute of limitations under Illinois’ Right of Publicity Act. But the court unanimously disagreed.
In issuing a blanket five-year statute of limitations for all BIPA claims, the 5-0 majority of the court emphasized that “the full ramifications of the harms associated with biometric technology is unknown.” Without the law, the court wrote, individuals whose biometric data was improperly collected or disseminated might never even know it – at least until they felt the consequences.
Thursday’s opinion was another legal victory for proponents of BIPA – especially a handful of law firms specializing in filing class action cases over biometric data. Those attorneys have made the same basic argument in thousands of lawsuits over the last several years: if someone’s identity is stolen, they can obtain a new social security number. But if their biometric data is stolen, it’s impossible to get a new fingerprint or face.
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MEGASITE GRANTS: Gov. J.B. Pritzker on Monday, Feb. 6, announced the creation of a $40 million grant program to incentivize the creation of large development-ready areas known as “megasites” across the state.
Megasites are large swaths of land, developed to attract businesses such as manufacturing plants, warehouses and distribution centers. Pritzker said developing these sites will help make Illinois more competitive, especially as sectors including clean energy and manufacturing are rapidly expanding in the U.S.
The Megasites Development Program announced Monday uses Rebuild Illinois capital funds aimed at providing the necessary infrastructure improvements to develop these megasites. Other eligible costs include various land acquisition, clean-up and development expenses.
“The new megasites investment program grants will help communities innovate their own business attraction efforts and will spur economic development in communities across our great state,” Pritzker said at a news conference.
The program is open to private entities, nonprofits and local governments, and the application portal is open through April 6. Those receiving the grant must match each dollar granted by the state with other private or local funding.
Grant allotments would range from $250,000 up to $5 million, depending on the acreage of the site. Eligible sites must have at least 200 contiguous acres and applicants must own or have an agreement in place to acquire the property when they apply.
Kristin Richards, acting director of the Department of Commerce and Economic Opportunity, said the investment-ready sites may lure manufacturing and distribution hubs, or large scale one-stop shops that produce multi-part products within one location.
“I like to think of megasites as turn-key houses: move-in ready, with zero hassle, which is exactly what fast-growing businesses are looking for,” Richards said.
Capitol News Illinois is a nonprofit, nonpartisan news service covering state government. It is distributed to more than 400 newspapers statewide, as well as hundreds of radio and TV stations. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.