Upcoming House Vote on Governor's Role In Negotiating AFSCME Contract Defining Moment in Springfield Political Struggle

This Tribune story covers a very significant issue percolating in the General Assembly, as the Legislative Branch contemplates whether to remove, at least temporarily, what has historically been a prerogative of the Executive Branch. 

The Senate already voted 38-15 (36 votes required) to strip away much of the Governor's negotiating authority over the labor contract with state employee unions. Existing law provides that the Governor can declare an impasse, and at such time the union can accept the State's final offer or elect to strike. 

This process would change if the General Assembly successfully overrides the Governor's veto of SB 1229. The potential change in law would vest an arbitrator with final decision-making authority over the terms of the contract. Illinois arbitration law restricts arbitrators to a choice between the employer's final offer, or the offer put forward by the union. The contract involves billions of dollars in taxpayer money. The House will attempt to override the Governor's Veto during the upcoming week. 

The contest over the scope of the Governor's involvement and authority to negotiate the labor contract is perhaps the most significant political issue that's arisen during the Governor's first few months in office. In some ways, it's more symbolically important than the ongoing budget impasse, which is playing out according to an existing process contemplated within the Illinois Constitution. 

This is not to suggest that the Governor's authority and role in the labor contract negotiation is a constitutional matter, but it is an historical prerogative that is currently threatened by the decision of another branch of government to change long-standing rules that affect the powers of the Executive Branch over a matter involving billions in taxpayer dollars.

$754 Million

Decades of growing financial problems are coming to a head for the City of Chicago. Per the Chicago Tribune:

Mayor Rahm Emanuel must come up with at least $754 million in new revenue and budget cuts to balance the city's books, according to preliminary 2016 budget estimates the administration released Friday.

Almost half of this debt $328 million is owed for pensions.

The inclusion of "at least" with the reference to the dollar amount reflects potentially higher costs that would result if Governor Rauner vetoes SB 777. This legislation would provide some immediate financial relief by tacking on an additional 15 years to the police and firefighter pension amortization schedule. Chicago's obligation to these funds would increase by an estimated $221 without the financial relief from the bill.

The Tribune story also mentions the anticipated budget deficit for the following fiscal year:

The $426 million budget gap projected for next year breaks down into three parts: $233 million for day-to-day city operations, a $93 million increase in payments to all four city pension funds and $100 million to pay down debt instead of push it off into the future at higher cost.

Illinois' political culture has grown accustomed to deferring painful financial reforms and kicking the can down the road. Sometimes a problem can become so large that it becomes impossible to avoid the consequences of difficult solutions. The heat generated from the current budget battle in Springfield are the birth pangs one would expect from a serious attempt to address very serious structural problems.

Laurence Msall of the Civic Federation prescribes a general outline of solutions for Chicago that are also relevant to the State of Illinois:

"What this report is a clear indication of is that the City Council and the administration have to move forward on reduced spending, elimination of unnecessary expenditures, greater efficiencies, but also a reality that they are going to need new tax revenue," he said.

Big financial problems require equally big solutions. Piecemeal reforms are no longer viable options.

Property Tax Freeze Vote More About Politics Than Policy

The Illinois House of Representatives recently took up a monumental public policy issue, but didn't really act on the measure in a manner befitting a monumental public policy issue.

All is forgiven if you are confused!

Sometimes a hot ticket item is voted on for political purposes instead of on its merits. That was the case with the May 15 vote on a bill to freeze residential and commercial property taxes.

HB 695 (Representative Franks, D-Woodstock) was amended to expand the existing property tax cap law (PTELL) to include every taxing district in the state that is reliant on property taxes. Under current law, only non-home rule taxing districts are subject to tax caps, and only if the taxing district imposes the cap on itself or is located within a county that has adopted tax caps.

The current law "caps" property taxes by limiting the extension rate to the lesser of 5 percent or inflation. This allows taxing districts to, at a minimum, automatically collect inflationary increases to keep up with the rising cost of goods and services.

This would change under HB 695. If enacted into law, the bill would cap the extension limitation of every taxing district in the state (including Chicago) at 0 percent. The only way to increase the extension limitation would be to get the approval of voters via referendum. Getting such approval is not always an easy thing to do.

The House opted to vote on the bill for two reasons, neither of which had anything to do with passing it.

First and foremost, the Democrats wanted to embarrass Governor Rauner with a roll call that demonstrated weak support for the bill. Only 37 votes were cast in support, and none of them were from Republicans. The Governor's Office urged the Republicans to vote "present" as a way to protest the theatrical nature of the vote and to underscore that the bill was not the Governor's exact property tax freeze proposal.

Secondly, the vote created an opportunity for the House Democrats to accuse the Republicans of not supporting property tax relief. It didn't take very long for the first negative mailer to hit following the vote. Most of the Democratic targets made sure to vote in favor of the bill.

Procedurally, the vote was only to adopt the amendment onto the bill. This only required a simple majority. Actually passing the bill over to the Senate would require a supermajority of 71 votes because the bill preempts home rule powers. There simply isn't enough support for HB 695 to attain this threshold.

The Governor filed his own property tax freeze proposal late last week. It remains to be seen if the General Assembly will hold a vote on the legislation next week. There may be plenty of time to consider the Governor's bill because all signs point to an overtime session.

Workers' Compensation Reform Being Teed-Up at the Statehouse

Bruce Rauner has been talking about the need for changes to Illinois' Workers' Compensation Act ever since he declared himself a candidate for Governor. Illinois has one of the most expensive comp systems in the nation, and the high costs impose significant barriers to recruiting businesses and job growth.

Even though the data is beyond dispute, organized labor and its allies in the General Assembly are pushing back by arguing that the comp reforms enacted in 2011 provided plenty of savings. The problem, they contend, is that insurance companies and doctors aren't passing the savings along to employers. But this argument ignores the fact that the 2011 reforms, while a step in the right direction, were never viewed by employers as substantial enough to really solve the problem of excessive comp costs.

Part of the problem was that the 2011 reforms were crafted based upon the realities of interest group politics. Savings can be wrung out of the comp system using different mechanisms. One way is by addressing benefit levels and eligibility. This approach is opposed by labor unions and trial lawyers. Both of these groups are supporters of the Illinois Democratic Party. Cost reductions can also be found by addressing medical costs and reimbursement rates. This approach is opposed by insurance companies, hospitals, and doctors. These groups typically support the Illinois Republican Party.

So when it was time to pass workers' compensation reform back in 2011, the majority-Democrats protected their supporters with a bill that squeezed some savings out of groups that support Republicans. The resultant reforms therefore fell short and left a great deal of savings on the table. This isn't intended to be a criticism of the Democrats as much as a lament about what can happen during periods of single party rule. 

Flash forward to 2015. Illinois still has high workers' compensation costs (one study ranks us as 7th highest in the nation) and a Republican Governor determined to extract savings with the passage of reforms that will rile traditional Democratic constituencies. Probably the most significant reform being sought is a change to the causation standard. The Governor and business community want to require that an injury actually occur on the job as a prerequisite for comp benefits. Under current law, someone can injure themselves playing softball on a weekend, and successfully file for comp benefits if they later aggravate the injury while at work. The Governor, Republican legislators, and employer groups want to change this policy. And this change needs to happen.

One might appropriately consider any enacted reforms in 2015 as "Workers' Compensation Reform 2.0," or a natural continuation of the 2011 reforms with Republicans having a much more prominent seat at the table. 

It's Already the Law

One of the bills that emerged from the House for Senate consideration involves a website posting mandate on local governments. 

HB 2717 would require that any public body with an annual budget of at least $1 million must maintain a website and include specific information on that website. Public bodies, represented by organizations like the Illinois Municipal League (my employer), contend that the bill represents another unfunded mandate imposed by the state onto local governments. Advocates of "open government" counter that the bill provides for much-needed transparency to insure that the public has essential information about their local governments. 

Most would agree that reducing unfunded mandates, or at least requiring the state to fund them, is good public policy. Most would probably also agree that transparency is a good thing. Reducing unfunded mandates and fostering transparency need not be mutually exclusive. The critical question for policymakers is how to best balance the public's "right to know" with the need to shield local governments from the annual accrual of one unfunded mandate after another.

The solution is to develop a singular and seamless mechanism for providing information. Transparency has become politically popular and legislators are looking to jump on board with transparency legislation of their own. Some of these bills have already become law. What we end up with is a mishmash of posting and reporting requirements. Local governments must abide by the posting requirements within the Open Meetings Act and are also subject to the Freedom of Information Act. Information also has to be printed in newspapers, provided to the State Comptroller, and forwarded to the Department of Central Management Services (CMS) for inclusion on the Illinois Transparency and Accountability Portal (ITAP). And now HB 2717 is proposing that information be included and updated on the website of the public body. The bill does allow for some of the ITAP postings to satisfy the requirements within the bill, but that still doesn't fully address the multiple existing reporting requirements. In fact, the bill specifically says that the posting requirements in the legislation are in addition to any other posting requirements established by law or ordinance. 

Somebody has to do all of this work, and some of it is unnecessarily duplicative. And somebody has to pay for it. This would be Illinois taxpayers. So the real public policy question shouldn't be "how can we make more information available to the public?" The better question is "how we can provide the information most efficiently and inexpensively?"

The primary advocate for HB 2717 is the Illinois Policy Institute (IPI). And the IPI appears to agree that reducing local government costs should be an objective of good transparency law. In fact, here's what the IPI offers as an argument for the passage of HB 2717:

This bill is also a big cost-saver for cash-strapped local governments, as it will save countless hours of paid staff time fulfilling Freedom of Information Act, or FOIA, requests. If this bill becomes law, an agency would be able to legally deny all FOIA requests asking for information already posted on the agency’s website. 

In addition to saving time, it would also limit costly lawsuits – paid for by taxpayers – arising from mishandled FOIA requests.

The IPI says that HB 2717 is terrific because it will ease the burden and expense of complying with FOIA requests since, under the bill, the information required to be posted on the internet will be exempt from FOIA. 

But this is a deeply flawed argument for advancing the bill. FOIA exemptions for information posted on local government websites is already the law in Illinois. Here's the relevant language from Public Act 98-1129, which became law in December of 2014:

Since website posting already exempts the information from FOIA unless a taxpayer can make the case that they don't have a way to access the information on the website (a rare occurrence in an era of computers and smartphones), the argument that HB 2717 would reduce taxpayer costs rings hollow. In the end, the bill only adds to the multifarious and inefficient web (pun intended) of reporting requirements on local governments. This costs taxpayers more. 

Rather than layer additional reporting requirements on local governments, transparency advocates should focus their efforts on the lack of transparency in the state legislative process. For example, local governments cannot take action on an item unless it was posted for a continuous 48 hour period. The General Assembly can vote on legislation after it has been posted for an hour. 

Did the "Fair Share" Order Contribute to Governor Rauner's Court Criticism?

I haven't been blogging with any consistency as of late (my bad!). I do want to comment on a couple of recent developments that may be related.

Earlier this week, certain media outlets and blogs were positively atwitter about a comment made by Governor Rauner that called into question the, ahem, purity of the judicial system. The Governor stated the following:

Asked by the newspaper if he believes the state's high court is part of a "corrupt" system, Rauner said: "Yes, correct. Yes. Yes. We have a system where we elect our judges, and the trial lawyers who argue cases in front of those judges give campaign cash to those judges. It's a corrupt system."

The Governor isn't suggesting that the justices are somehow individually corrupt or of poor moral character, only that a system where judges accept financial donations in order to fund campaigns to obtain their seats might have a less than ideal effect on the ability of a justice to be as impartial as possible. It's a fair point. And there's a strong argument to be made that justices should be appointed for life to best insulate them from politics.

Anyway, the point of this post isn't to address that particular issue. Rather, I wanted to contextualize the Governor's comments by considering why he may have opted to criticize the court this week. Some believe that his comments were intended to apply pressure to the Illinois Supreme Court as it deliberates over the fate of SB 1 (pension reform). If his comments don't succeed in nudging the court to find the pension reductions constitutional (and I don't believe that his comments would), then he can always fall back on the "see, I told you so" response if the court sides with the unions.

There was, however, another judicial development this week that may have contributed to the Governor's comments. We learned the following on Friday:

A judge has issued an order requiring Illinois government agencies to immediately reinstate mandatory union dues for nonmembers. 

Friday’s order by St. Clair County Associate Judge Christopher Kolker requires the Rauner administration to “remit fair share fees . . . pending the resolution of the case” and to transmit “the correct payroll information” regarding gross pay for affected employees to Illinois’ comptroller. The order is based on an agreement between the administration and unions.

Note the bolded sentence, which indicates that the order was not a surprise to the administration. The decision simply says that, while the legal battle over "fair share" works its way through the court system, the state won't withhold "fair share" dues.

I don't know enough about how this process works to be able to tell if the administration found it necessary to work something out with the unions ahead of a perceived unfavorable ruling on the matter, or if they really did have an incentive to do so. The following statement by the administration suggests it was the latter:

A spokesman for Rauner said the move was part of an agreement the administration struck with unions to give them access to the money in exchange for an expedited timeline to move the case along.

Again, I really don't know. I can see why the administration would want an expedited consideration of the broader "fair share" question. It is surprising that they would concede the restoration of the "fair share" collections after working so diligently to find a "workaround" to withhold the dues at the agency level when the plan to have the Comptroller withhold them fell through. 

But I do wonder if the administration's foreknowledge that the court was going to temporarily reinstate the "fair share dues," pending an ultimate decision on the broader issue, contributed to the Governor's statement about the objectivity of the judiciary. 

Another Day, Another Rally

Another group visited the Statehouse today to advance their cause. This time it was a group of Second Amendment proponents wanting to expand the number of locations where firearms are permitted. Illinois law includes a couple dozen locations that are exempt from concealed carry. Here's a picture of the marchers on their way to the Statehouse.