Week In Review: October 30

FY16 Budget

  • Governor Rauner to chair public meeting with legislative leaders on Nov. 18.  The meeting is expected to examine the delayed FY16 budget process.  Although the FY16 fiscal year began on July 1, 2015, a constitutional balanced budget has not been enacted by the Democrat supermajorities in the Illinois House and Senate.  The State has continued to operate under consent decrees, court orders, continuing appropriations, and school appropriations, but this has created many operational problems.  Recipients of State services, and providers of goods and services to the State, have been affected by the lack of a legal budget document. 
Spokespersons for all four legislative leaders, including House Republican Leader Jim Durkin, expressed positive interest in the meeting. The gathering was requested by a consortium of nonpartisan advocacy groups. Sponsors of the request included the Better Government Association, the League of Women Voters, and the Illinois Campaign for Political Reform.
 
Chicago

·         Chicago City Council approves 2016 budget, including largest property tax hike in city history.  The new budget includes $755 million in property tax, other tax, and fee increases.  The City Council voted on Mayor Emanuel’s budget and revenue measures on Wednesday, October 28.  Although many aldermen expressed dismay at the tax and fee hikes, the final outcome of the vote was not in doubt.  The Council vote was 35-15 in favor of the tax-increase package.

Concerns were expressed that even the significant taxes approved this week would not be enough to see the city and its troubled school system through the 2015-16 school year and calendar 2016 budget cycle.  The debt rating of Chicago Public Schools has been reduced to junk-bond status, and entities related to the city’s government continue to rely on $800 million in additional financial aid and fiscal relief measures from the equally-troubled state government in Springfield.    

·         Echo Global Logistics to relocate 550 jobs from suburbs to Chicago.  The logistics firm announced its plans on Thursday, October 29.  Echo Global Logistics specializes in the proprietary management of freight shipments through independent and private-fleet truck operators; it maintains ties with a network of freight-carrying vehicles capable of shipping 30,000 truckloads of goods at any given time. 

The Echo Logistics move did not add net new jobs to Illinois as a whole; the positions were scheduled to be moved from the suburbs to downtown Chicago.  The publicly-traded logistics firm recently acquired Skokie-based Command Transportation.

Economy – Unemployment

·         September 2015 unemployment rate declines to 5.4%; few new jobs created statewide.  The Illinois Department of Employment Security (IDES) reported this month that the statewide jobless percentage for September was 5.4%, down 0.2% from the August 2015 total of 5.6%.  However, this drop in the jobless rate was not caused by net new hiring.  Illinois seasonally adjusted nonfarm payroll employment actually dropped by 6,900 jobs on a month-to-month basis in September, with sector weaknesses continuing in manufacturing, trade, transportation, and utilities.  Strong sectors included education services, health services, and government. 

Illinois unemployment rates remain higher than rates in neighboring states.  According to the U.S. Bureau of Labor Statistics, seasonally adjusted jobless rates for September 2015 were 4.5% in Indiana, 3.6% in Iowa, 5.0% in Kentucky, 5.3% in Missouri, and 4.3% in Wisconsin.  In addition, these states (unlike Illinois) were producing net new jobs.  September 2015 unemployment was lower than the statewide average in greater Chicago (4.9%) and remained at above-6.0% recession levels in the three historically manufacturing-oriented Downstate cities of Danville (6.4%), Decatur (6.4%), and Rockford (6.2%).

Health Care – Affordable Care Act

·         Many providers of health care coverage under “Obamacare” announce significant rate hikes for 2016.  The Affordable Care Act, often called “Obamacare,” requires most U.S. adults who do not have employer-provided health care coverage to purchase health care coverage on the private market, and imposes tax penalties for the failure to make this purchase.  Private-sector providers of health care coverage are required to conform to a significant set of complex mandates, and many of them say these mandates drive up the prices they are required to charge.  Sharp increases are being seen in the costs of average Illinois health care policies offered across various tiers of coverage, with the average lowest cost Illinois silver plan going up 5.3% and the average lowest cost bronze plan increasing 11.3%. 

Mandated health care coverage can be expensive in Illinois.  According to the Illinois Department of Insurance, the price of a silver plan for a couple aged 55 can be as high as $1,033 in Sangamon County, which includes Illinois’ state capital of Springfield.  The ACA open enrollment deadline for 2016 coverage is set to begin to expire on December 15, 2015 (for coverage starting January 1, 2016), with the enrollment window completely closing on January 31, 2016.   

Higher Education

·         Moody’s reduces credit ratings for six State universities.  The downgrades reduced the credit ratings of, and increased the interest rates due and payable by, six Illinois universities.  The affected institutions were Eastern Illinois University (EIU), Governors State University (GSU), Northern Illinois University (NIU), Northeastern Illinois University (NEIU), Southern Illinois University (SIU), and Western Illinois University (WIU).  The New York-based credit rating firm attributed the decision to the budget turmoil facing Illinois.

Moody’s moved to cut Illinois state university credit ratings on Tuesday, October 27.  The move was a follow-up to its decision to cut the overall State of Illinois credit rating on Tuesday, October 22.  Moody’s did not downgrade the debt of the State’s flagship institutions, the University of Illinois (U of I) or Illinois State University (ISU), at this time.

·         State universities, students affected by lack of MAP grants.  The need-based, broadly awarded State of Illinois Monetary Award Program (MAP) financial aid grants are meant to supplement student loans, other scholarship money, and personal and family resources to help pay for the increasingly expensive cost of attending a public Illinois four-year institution of higher education or community college.  Because of the lack of a balanced budget for FY16, no MAP funding has been allocated for State universities or community colleges for the 2015-16 school year.  At this time, State universities and community colleges are accepting students with MAP grant awards, but cannot continue to do so indefinitely.

Northern Illinois University is one of the State universities affected by the lack of MAP grants and other State budgetary funding.  Approximately 5,000 MAP grant recipients are affected within the Northern Illinois University system.  The NIU Faculty Senate was prepared to move a resolution this week urging the General Assembly and Gov. Rauner to take budget action and fund MAP grants.   

Lucas Museum of Narrative Art

·         New art museum to be built south of Soldier Field.  The Lucas Museum of Narrative Art, a $700-million museum and endowment spearheaded by filmmaker George Lucas, will specialize in narrative art and the art of visual storytelling.  The Lucas Collection, which is expected to be housed in the new Chicago museum, contains pieces by N.C. Wyeth, Maxfield Parrish, Norman Rockwell and other well-known painters and illustrators, as well as rights to intellectual property connected with Lucasfilm Ltd.  Moving images, digital images, and movie memorabilia, including images from Hollywood, are expected to be featured.  The new museum will be built on landfill property reclaimed from Lake Michigan to build the Century of Progress world’s fair in 1933-34.  In more recent years, the space has been used as a surface parking lot for Soldier Field and McCormick Place.

Hurdles faced by the new museum included the need to win planning permission from the State of Illinois and the City of Chicago.  Illinois granted permission to construct the new museum with the enactment of HB 373 (P.A. 99-3) in May, and the Chicago City Council approved a rezoning designation for the museum on Wednesday, October 28.  The City Council action was seen as one of the final goals that developers of the 300,000-square-foot museum needed to meet before construction can begin.  

Mass Transit – CTA Yellow Line

·         CTA Yellow Line reopens after summer-long closure.  The withdrawal of service followed the collapse of an embankment in May 2015.  The electric-train line reopened for service on Friday, October 30.  The five-and-a-half-month hiatus on the “Skokie Swift” delayed the commutes of approximately 2,900 daily riders.  The CTA stated they would offer free rides on the line for the first eight days of renewed service, covering the first work week of November.

The Yellow Line, a spur of the CTA’s mass-transit system, is built on a section of right-of-way originally built for the North Shore interurban line early in the 20th century.  Spur trains shuttle back and forth between Dempster-Skokie and the Howard Street station of the Red Line.  The Skokie Swift provides electric-train access to Chicago workplaces for residents of close-to-Chicago north suburbs such as Morton Grove.

Pensions

·         Illinois’ State Employees Retirement System (SERS) asks to withdraw $225 million.  The withdrawals, which will be completed on December 10, will cover retiree benefits to be paid in November and December of this year.  SERS believes this is the largest cash withdrawal it has ever made.  Pension checks to existing beneficiaries are expected to go out on schedule.

The withdrawal was made necessary by the inability of the State of Illinois to meet its statutory obligation to SERS, and to parallel State-managed pension funds that cover the retirement needs of education professionals, for the payments of money in FY16 from general funds.  Payments by the State to the pension funds are one of the areas where, in the absence of specific appropriations authority, the money cannot flow.  In other areas of the State’s FY16 budget, money is flowing as a result of a cobbled-together combination of continuing appropriations, school appropriations, consent decrees, and court orders.  The Illinois General Assembly has still not passed a balanced budget for FY16.    

The withdrawal of money from SERS’s deposited investments is expected to further deplete its funds and add to its long-term unfunded liability.

Transportation – License Plates

·         New policy will change the way specialty license plates are displayed in Illinois.  By tradition, the advocacy and specialty license plates of Illinois are made from designs of stamped metal that are unique to each group identity and advocacy cause.  As the number of specialty license plate designs has passed 100, Illinois law enforcement has raised intensifying concerns about the use of license plates to identify and track motor vehicles. 

In response to these police concerns, the Illinois General Assembly passed a new law, HB 1081 (P.A. 99-483) to change the overall framework within which future Illinois specialty license plates will be designed and displayed.  In the new framework, which will affect most new specialty plates starting in 2016 and going forward, there will be one overall Illinois stamped-metal specialty license plate design.  Advocacy organizations and affinity groups that get permission from the General Assembly for their own license plate will have the right to work with the Secretary of State’s office on the design of a brightly-colored decal that will be attached to the license plate and which will be unique to each cause or group.  The bill was signed into law by Gov. Rauner on Friday, October 23.

Some new specialty stamped-metal plates will continue to be issued.  Illinois drivers who possess standing of honor, such as military service or receipt of a military medal or award, will continue to be eligible to apply for and receive specialty stamped-metal vehicle license plates.

Autumn in Illinois

·         Bison released in Midewin Preserve.  The national grassland south of Joliet, whose full name is the Midewin National Tallgrass Prairie, has been managed for some years as a potential home for the American buffalo – the dark-brown grass eater technically known as “bison.”  Almost extinct in the 1890s, the bison has been brought back from the brink.  A small herd of American buffalo bred true in Yellowstone National Park, where their descendants can be seen to this day.  About twenty-six bison from this bloodline were released into the 19,000-acre Midewin preserve on Friday, October 23.  Both bull and cow buffalo were released, and calves will be born in the spring of 2016. 

·         Scientists explain fall color season.  The Miracle of Fall,” by the University of Illinois Extension classifies common Illinois deciduous trees by their typical fall colors and matches these pigments with the chemicals in the leaves that produce their hues of red, gold, yellow, and tan.  Mature, healthy trees with plenty of sunlight and nutrients can secrete anthocyanins, a family of pigments associated with sweet sap.  Sugar maples, known for their sap, also often have bright colors at the end of October in Illinois.     

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