May 31, 2018 Update

The General Assembly adjourned the spring session well before the midnight deadline. It is the first time in several years that both chambers finished business early in the evening. The need to pass a full fiscal year’s budget prior to heading home to face voters in the November elections dominated the 2018 Spring Legislative Session. The past three years have been marked by political bickering between the first-term Republican Governor and the Democratically controlled General Assembly. Last summer, Illinois emerged from a record budget stalemate with the General Assembly passing a budget and an income tax increase over the Governor’s veto. Prior to that, the state operated without a budget for the two fiscal years.
For the first-time since the Governor took office, Governor Bruce Rauner and the four legislative caucuses reached a bipartisan agreement on the state budget prior to the May 31st adjournment deadline. The deal is the result of weeks of closed door negotiations between the four causes and the Governor’s Office. Legislators on both sides of the aisle praised the bipartisan process. Governor Rauner , who remained relatively quiet regarding budget talks, indicated today that the budget is a step in the right direction and he intends to quickly sign the budget into law.
The Fiscal Year 19 budget allocates $38.5 billion in General Revenue Funds and $80.26 billion All Funds, which represents funding for a full fiscal year. The budget deal also contains $1.5 billion in supplemental appropriations for Fiscal Year 18 which includes $402 million for the Department of Corrections to pay old bills, $442 million for HFS to process Medicaid vouchers-including vouchers associated with accelerated processing of pending long-term care applications, $63 million for union back pay and funding for all Court of Claims special awards. Lapse period spending for FY 18 is extended by one month. The FY 19 budget also includes $7.7 billion in new capital appropriations and $13.06 billion in re-appropriated capital projects. The budget contains a 5% cut to the Local Government Distributive Fund, which is down from the 10% cut recommend by the Governor. The new fiscal year begins July 1st.
The FY 19 budget represents an increase of $1.1 billion over FY 18. The budget relies on revenue from the income tax increase passed last year, $600 million in cuts, savings generated from pension changes, and the sale of the Thompson Center in Chicago. Lawmakers on both sides of the aisle have been working collaboratively with the Governor’s office for weeks to craft what they called a “balanced” budget. The budget makes the mandatory pension payment and fully funds state employee group health insurance. Pension cost shifts were not included in the final budget, nor were any of Governor Rauner’s previous demands for term limits or reforms to property taxes, worker’s compensation or pensions. The budget also does not provide a way to pay down the state’s bill backlog which currently stands at nearly $7 billion. Three cost saving changes were made to the pension program. Inactive vested employees will be given a pension buyout option ($41 million savings), Tier 1 members who file an application to retire will be given a COLA buyout option ($382 million in savings), and the 6% salary rule will be lowered to 3% ($22 million savings). The Governor’s Office of Management and Budget is authorized to issue $1 billion in General Obligation bonds to fund the two buyouts.
The Human Services budget includes a six percent increase for the Department of Healthcare and Family Services and a one percent increase for the Department of Human Services. The budget includes a new pharmacy critical access rate and increases rates for ambulance services, Specialized Mental Health Rehabilitation Facilities, child care and TANF benefits. Adult dental is added into the Medicaid budget for next fiscal year. Wage increases for DSP workers are also funded in the FY 19 budget. Previous tax credits granted to for for-profit hospitals will be extended for five years. The budget also transfers $200 million GRF to the Healthcare Provider Relief Fund to assist Long-Term Care Facilities with their backlog of Medicaid determinations. The budget includes $53 million to address the needs of the Quincy Veteran’s Home.
Funding for Elementary and Secondary Education is increased by $400 million over FY 18. The budget includes $350 million in funding for the new evidenced based funding model for K – 12 education and includes a $50 million increase in funding for Early Childhood Education. Funding for higher education is increased $60 million over FY 18. Higher education institutions receive a two percent increase in funding, and MAP grants are extended to four years. The budget also allots $25 million to a new grant program, AIM HIGH, that will provide additional tuition assistance.
Funding for public safety remains relatively flat and reflects most of the Governor’s introduced budget. The budget includes funding for a new State Police cadet class and funds the two cadet classes from FY 18.
The FY 19 budget provides for $7.7 billion in new capital appropriations and $13.06 billion in re-appropriated capital projects. The new spending includes:
  • Transportation: $2.9 billion for FY 19 multi-year plan and other capital projects;
  • Capital Development Board: $1.7 billion for capital improvements on various state facilities;
  • Department of Commerce and Economic Opportunity: $1.4 billion for grants to local communities for capital improvements;
  • EPA: $1.1 billion for grants to local communities for wastewater and drinking water projects;
  • DoIT: $400 million to implement the Governor’s information technology upgrades at state facilities;
  • State Board of Education: $81 million in school construction and maintenance grants;
  • Military Affairs: $55.5 million in construction and maintenance of National Guard facilities;
  • Architect of the Capital: $20 million for maintenance of the Capital building;
  • Public Health: $16.1 million for health-related capital projects;
  • SOS: $13.7 million for grants to local governments for construction and maintenance;
  • IEMA: $6.6 million for safety and security improvements; and
  • Agriculture: $2.6 million for improvements to the two state fair grounds.
As usual, the final days of the spring session were busy. A motion in the House to override the Governor’s veto of SB193(Raoul/Hoffman) failed by a vote of 67-49. The bill creates the Worker Protection Unit within the Office of the Illinois Attorney General to intervene in, initiate, enforce, and defend all criminal or civil legal proceedings on matters and violations relating to the Prevailing Wage Act, the Employee Classification Act, the Day and Temporary Labor Services Act, and the Wage Payment and Collection Act.   The bill is now dead.
Omnibus gaming legislation, SB7 (Link/Rita) was briefly revived at the end of session but quickly stalled. Gaming legislation from last year was assigned to committee and subsequently amended. The legislation failed in committee. The bill would authorize 6 new casinos in Chicago, the south suburbs, Lake County, Rockford, Danville, and unincorporated Williamson. The bill also authorizes video gaming at racetracks; and extends advance deposit wagering. The measure does not address fantasy sports betting, internet gaming or sports betting. The House sponsor indicated that he expects to address those industries and their regulations in the coming months. The sponsor plans to work on the bill over the summer and revisit the issue in the Fall Veto Session.
The General Assembly considered two wage history bills in the final days of session. HB 4163 (Moeller/Castro) passed out of the Senate 31-16-1.  This bill would prohibit employers from inquiring about salary and wage history by adding new standards that limit employer defenses and adding new compensatory and punitive damage penalties on businesses who are not compliant.  While the bill passed the Senate, the sponsor placed a procedural hold on the legislation preventing it from being sent to the Governor at this time. SB3100 (Bertino-Tarrant) passed the Illinois Senate.   This bill only prohibits the inquiry about or using of a job applicant’s wage, salary, and benefits history. It does not diminish employer defenses or enhance and expand legal remedies and fines as HB 4163 does.  SB 3100 now heads to the Illinois House for Consideration.
Illinois became the 37th state to ratify the Equal Rights Amendment to the United State Constitution with the passage of SJRCA4 by a vote of 72-45.
The Illinois House approved HB 4165 (G. Harris/Koehler) which requires legislative authority before the state can apply for any federal waiver that would reduce or eliminate any protection or coverage required under the Patient Protection and Affordable Care Act (ACA) that was in effect on January 1, 2017, including, but not limited to, any protection for persons with pre-existing conditions and coverage for services identified as essential health benefits under the ACA. Critics of the legislation argue that the legislation reduces the state’s flexibility. The bill now heads to the Senate for consideration.
The Illinois House narrowly approved HR1025 (Madigan), by a vote of 61-52, which supports the implementation of a progressive income tax in Illinois. The measure is non-binding. Any change to the state’s income tax structure would require the passage of a constitutional amendment. Passage of constitutional amendment requires a 3/5 vote of both the House and Senate and approval by voters.
The House approved SB 482 (J. Cullerton/Zalewski) which is jet fuel sourcing legislation that allocates the portion of the sales tax at issue, based on enplanements.   A new amendment was filed and adopted in the House. The Senate adjourned before considering the legislation.
The Illinois House considered SB1531 (Raoul/Greg Harris) which increases oversight of alternative retail electric and gas suppliers (ARES and ARGS). The legislation, which was requested by Attorney General Lisa Madigan, provides various consumer protections and increases transparency around rate pricing by requiring ARES and ARGS to include a “price-to-compare” utility supply rate on all marketing materials, during phone or door-to-door solicitations and on every customer’s utility bill. It also requires disclosure of price changes and prevents suppliers from automatically renewing a customer’s contract without the customer affirmatively opting-in to new terms. Suppliers will also be required to submit their rates to the ICC and the Attorney General’s Office quarterly. Additionally, the legislation seeks to protect public energy assistance funds by ensuring that LIHEAP and PIPP (Percentage of Income Payment Plan) funds do not go toward paying the higher prices for electric and gas supply that ARES and ARGS charge. Critics of the legislation argued that the recent rules enacted by JCAR need time to take effect and have an impact. The bill failed on the last day of session by a vote of 56-54-1. The sponsor put the bill on postponed consideration and the bill can be taken up at a later time.
Below is a listing of legislation that passed this week and will be heading to the Governor:
  • Worker’s Compensation: The Illinois General Assembly overwhelming approved a handful of changes to the worker’s compensation system, SB904(Hastings/Hoffman). The bill creates a new right of action to allow medical providers to file claims for interest due on late payments in Circuit Court. The amendment raises the interest rate on late payments from 1 to 2 percent prospectively and requires workers’ compensation insurers to use electronic billing, already in law. SB 904 now heads to the Governor’s desk.
  • State Employee Back Pay: The General Assembly approved HB4290 (Costello/Manar) which provides back pay to state employees.
  • Omnibus Insurance Legislation:  The Illinois General Assembly approved omnibus insurance legislation SB 1737 (Hoffman/Munoz). The comprehensive legislation includes the Allstate and CNA Guarantee Fund Bill, reinsurance collateral, limited plans, and a negotiated version of Worker’s Compensation Rate Review. SB 1737 now heads to the Governor’s desk.
  • Car-jacking: In the final days of session, the General Assembly made changes (HB 1804 J. Cullerton/Andrade) to a law that allows persons arrested for car -jacking to avoid accountability in court.  Both bills passed and are now headed to the Governor’s desk.
  • Medical Cannabis: The Illinois General Assembly approved SB 0336 (Harmon/Cassidy) which requires the Department of Public Health to establish the Opioid Alternative Pilot Program to allow the use of medical cannabis for persons diagnosed with a condition where an opioid has been or could be prescribed. The pilot program sunsets on July 1, 2020. The bill now heads to the Governor’s desk.
  • Tobacco 21: A measure to raise the legal age to smoke from 18 to 21 years of age, SB2332 (Morrison/Lilly), narrowly passed by a vote of 61-49-1 in the Illinois House this week. The bill now heads to the Governor’s desk for consideration.
  • Gun Dealer Licensing: The General Assembly approved compromise legislation, SB337 (Harmon/Willis), to create the Gun Dealer Certification Act. The final bill was extensively negotiated and received bi-partisan support in both chambers. A motion to reconsider the vote was filed. Governor Rauner amendatorily vetoed previous versions of the Gun Dealer Licensing Act. The sponsor filed trailer legislation on HB5913 (Willis). HB 5913 is currently pending in the House Rules Committee.
  • Firearm Restraining Order:The Illinois Senate approved HB2354 (Willis/Morrison) which creates the Firearms Restraining Order Act to provide a mechanism to confiscate firearms from persons who pose immediate danger to themselves or others. The bill now heads to the Governor’s desk.
  • Firearm Waiting Period: The Illinois House approved legislation SB3256 (Sims/Carroll) which requires a 72-hour waiting period for delivery of all guns after purchase. SB 3256 passed both houses but the Senate sponsor placed a procedural hold on the bill to keep it from being sent to the Governor.
  • Omnibus Medicaid Legislation: The General Assembly approved legislation, SB1851 (Hunter/Greg Harris),which makes several changes to the Medicaid program. The bill creates a Healthcare Advisory Working Group to address transition of DCFS wards. The legislation also addresses ambulance industry payment concerns, increases rates for Medically Complex children and creates a new rate for psychiatric hospitals. The legislation guarantees for safety-net hospitals in the event that neither the new assessment, nor the bridge, are approved by July 1st. The amendments require the Department of Healthcare and Family Services to make monthly advances to safety-net hospitals in the full amount of their current total assessment payments.
  • PACE projects:The House approved (SB2773/Althoff/Lang) which amends the Property Assessed Clean Energy Act to provide that a unit of local government may sell or assign assessment contracts. The legislation clarifies that the term “energy efficiency improvement” includes energy efficiency projects as defined in the Illinois Finance Authority Act. The Term “energy project” includes new construction. The House also approved legislation (SB43 / Bertino-Tarrant) which amends the Illinois Finance Authority Act to add PACE projects to the list of projects under the Act. Both bills now head to the Governor’s desk.
  • Vendor Payment: Both chambers approved SB2858(Steans/Greg Harris), which authorizes the State Treasurer to invest in account receivables from state vendors awaiting payment for 90 days or longer and makes the State Treasurer a qualified purchaser under the Vendor Payment Program. The sponsor said the issue is still under negotiation and will be amended in the House. The sponsor indicated that this legislation would allow the state to pay down $1 billion in the state’s bill backlog and allows the state to earn $1 million in interest. SB 2858 now heads to the Governor’s desk.
  • Mental Health Parity: The General Assembly approved a bipartisan compromise, SB1707   (Raoul/Lang) , to further mental health parity in Illinois. The legislation makes several changes for persons with mental health and substance abuse needs including creating new definitions, implementing new tracking requirements for the Department of Insurance and the Department of Healthcare and Family Services, data sharing with the General Assembly and removing barriers to treatment. SB 1707 now heads to the Governor’s desk.
This week, Governor Rauner announced a plan to spend $11 billion on Illinois’ roads and bridges over six years, including $2.2 billion in state and federal funding for fiscal 2019. The proposed 2019-2024 highway improvement program would improve 1,945 miles of road and 525 bridges maintained by the state, based on existing funding levels. The program also includes money for upgrades to more than 750 miles of local roads and 922,933 square feet of local bridges. More than 80 percent of that money is expected to come from the federal government. The six-year program calls for $1.34 billion in state funding, primarily from Illinois’ gas tax and vehicle registration fees.
WellCare Health Plans announced plans this week to acquire Medicaid insurer Meridian Health Plan for $2.5 billion. The deal is expected to be finalized by the end of the calendar year. The acquisition will increase WellCare’s Medicaid business. Meridian currently serves 1.1 million Medicaid, Medicare Advantage and health insurance marketplace members in Michigan, Illinois, Indiana and Ohio; including 508,000 Medicaid members in Michigan and 565,000 Medicaid members in Illinois as of May 1. It also covers 27,000 Advantage members, and 6,000 Michigan health insurance exchange members. The merger will increase WellCare’s Medicaid membership of 4.3 million at the end of the first quarter by 40% and give the insurer the number one market share in six states. In addition, WellCare will add Meridian’s in-house pharmacy benefit manager, MeridianRx, to its portfolio.
Attention is expected to turn to the November elections. All constitutional offices, including the Governor, all 118 House seats and 39 of the 59 Senate seats are up for election in November. First-term Republican Governor Bruce Rauner is facing a challenge from billionaire businessman J.B. Pritzker. The upcoming election is expected to be a bitter and expensive battle. The fall veto session dates were announced. Session will be November 13, 14, 15th and then November 27, 28 and 29th. Here is the Veto Session Calendar. As always, we will continue to keep you updated on any developments.