After passing a number of transformational laws last spring — from cementing women’s abortion rights to legalizing recreational pot — the General Assembly returns to action this week under the cloud of an ongoing federal corruption probe and facing pressure from Chicago Mayor Lori Lightfoot for help in plugging her city’s $838 million budget hole.
Looming over all the action this fall is a series of political corruption scandals that have occupied much of almost the past year from Chicago to the statehouse and touched on a number of high-profile Springfield players, from utility giant ComEd and its army of lobbyists to influential state Sen. Martin Sandoval and the ultimate powerbroker, Illinois House Speaker Michael Madigan. Whether they are all connected remains unclear, but Chicago Ald. Edward Burke is the only elected official charged with wrongdoing.
At the same time, Gov. J.B. Pritzker is pushing legislators to begin addressing soaring public pension debt as they gather for the first half of their scheduled six-day fall veto session. The governor is calling for lawmakers to pass legislation that would consolidate roughly 650 pension funds for suburban and downstate police and firefighters into two statewide investment pools.
Lightfoot has a lot riding on the veto session, which will serve as a major test of her influence in Springfield. When she unveiled her budget plan at a special City Council meeting Wednesday, Lightfoot said the math only works if state lawmakers and Pritzker give Chicago permission to implement a graduated tax on real estate transactions. She also called on the General Assembly to rework the tax structure for a proposed city casino to make it more attractive to potential investors and to “develop a statewide pension reform package.”
But Lightfoot’s $11.65 billion 2020 budget plan doesn’t count on any revenue from the casino or any savings from pension changes at the state level, which could allow the mayor’s office to focus its lobbying efforts on pushing through the real estate transfer tax before the legislature adjourns for the year in mid-November. Her plan calls for raising the tax on the sale of residential and commercial properties worth more than $1 million.
Lightfoot had been saying for months that her spending plan would rely on help from Springfield, but she long left many key people in the dark on the specifics. Her office didn’t brief Pritzker’s staff on the details until a week before she publicly unveiled her budget and four days after she laid out her proposals for rank-and-file lawmakers who represent the city. After her Wednesday budget address, Republican leaders said they were still waiting for details.
Pritzker and legislative leaders have put the onus on Lightfoot to marshal support for her proposals. The mayor’s office declined to comment on its legislative strategy.
As with any legislation, it’s incumbent on the backers to go out and make their case to lawmakers and address any questions and concerns that might arise, House Majority Leader Greg Harris said. “They’re out working their roll call right now. This is their proposal,” the North Side Democrat said, referring to the process of rounding up the votes needed to pass a bill.
Convincing lawmakers to give the city permission to raise its real estate transfer tax won’t necessarily be an easy sell, especially after they approved a host of new and increased taxes and fees in the spring — including doubling the gas tax, increasing license plate fees and creating a new parking tax — to pay for road and building projects under Pritzker’s $45 billion “Rebuild Illinois” infrastructure plan. They also voted to place a constitutional amendment referendum on a graduated income tax on the November 2020 ballot.
“Everyone knows that they have a difficult mountain to climb,” Harris said.
While Madigan and Senate President John Cullerton, both Chicago Democrats, oversee supermajorities in their respective chambers and are typically amenable to helping the city’s mayor, they also historically have sought some Republican votes in support of tax increases.
Madigan spokesman Steve Brown said the mayor’s proposals are under review and wouldn’t make any predictions about their fate.
“We’re going to have to see where the caucus stands on all those issues,” Cullerton spokesman John Patterson said. That goes for Pritzker’s pension proposal as well, Patterson said.
There’s a feeling among some Democratic lawmakers that the mayor’s office has been slow to reach out to provide details of its plans to lawmakers whose support they’re seeking.
“You really have to be firing on all cylinders to get stuff like that through the legislature. It doesn’t just happen,” said Sen. Robert Martwick, a Chicago Democrat who gave up his House seat this summer to fill a vacancy in the Senate. “I would suggest that maybe they’re not firing on all cylinders.”
Martwick backed Cook County Board President Toni Preckwinkle in the mayoral race and publicly clashed with Lightfoot at a news conference, but he said he wants to help the mayor address the city’s financial challenges and acknowledges “they’ve got a lot on their plate.”\
GOP leaders expressed interest in working with Lightfoot when she visited Springfield after winning the April mayoral runoff, but Republicans are unlikely to cast a vote that could be portrayed as a tax increase, even if it’s one that won’t affect their constituents. It also might be difficult to convince some suburban Democrats to support the plan for similar reasons, especially heading into an election year following all the tax votes lawmakers took in the spring.
Lightfoot has raised the specter of a property tax increase if she doesn’t get the help she’s requesting from Springfield. She told the Chicago Tribune Editorial Board on Wednesday that staving off a property tax increase in the city is a compelling reason for lawmakers, “particularly those ones that are based here in Chicago,” to support her proposal.
“Nobody wants to raise property taxes. It’s become absolutely the third rail,” Lightfoot said. “We heard it across every single budget town hall, in our surveys, online, people stopping us in the street saying, ‘Mayor, please don’t raise my property taxes.’ … That’s certainly part of the message we’re communicating to state legislators and the legislative leaders and the governor, and they all understand that.”
But her case might not be so compelling for suburban and downstate lawmakers in either party, many of whom have seen towns in their districts raise property taxes to rates higher than Chicago’s to relieve their own budgetary pressures.
Republican state Sen. Dave Syverson of Rockford sought to form an alliance with Chicago this spring as both cities lobbied for legislation to authorize long-proposed casinos, but he’s not on board with Lightfoot’s latest requests for help from Springfield, particularly revisiting the casino tax structure.
The same state tax structure is in place for all 10 of Illinois’ existing casinos and the six new ones authorized in the gambling expansion package Pritzker signed into law in June. However, the law gives Chicago a one-third share of the revenue from its casino to help pay down the unfunded liabilities in its police and firefighter pension funds. Other towns get 5%, and some have to split that with neighboring communities.
“Chicago’s going to have to do the same things that Rockford and every other community has to do, and that is make tough financial decisions and/or, if they need to, look at raising property taxes,” Syverson said.
Although a feasibility study required by the new law found that the combined city and state taxes on the Chicago casino are so high that the project would likely fail to attract a developer, Syverson is among those who believe the city should solicit proposals anyway to test that premise.
Sen. Terry Link, a Waukegan Democrat who helped craft the gambling package, expressed similar sentiments in August following the release of the study. Link, who has said he’s had discussions with the mayor’s office about potential changes, couldn’t be reached for comment.
Lightfoot has put forth two options for reworking the casino law, both of which involve lowering the tax rates. One of her ideas involves joint city-state ownership of the casino, a setup akin to the Metropolitan Pier and Exposition Authority, which owns McCormick Place. The idea of public ownership has been met with skepticism from the governor’s office.
Sponsors of the gambling package have said they want to work with Lightfoot to help a city casino succeed, but they’ve also expressed reservations about making major changes to one aspect for fear of opening the door to renegotiating the whole thing.
Already, Churchill Downs Inc. has said it won’t add slot machines and table games at Arlington International Racecourse as allowed under the new law because it would have to put too much of the revenue into the purses won by horse owners. In written comments to the Illinois Gaming Board, meanwhile, horse owners have expressed displeasure that they weren’t given a cut of the revenue from newly legal sports betting.
There’s a chance lawmakers could strike a deal on the Chicago casino in the coming month, but Lightfoot’s call for “statewide pension reform” that would include the city is bound to go nowhere this fall.
Instead, Pritzker wants lawmakers to take up his plan to help address the mounting pension debt of nearly every city and village other than Chicago.
Rather than addressing the $134 billion in unfunded liabilities in five statewide funds or the nearly $30 billion across Chicago’s four funds, the governor is homing in on the $11.5 billion in unfunded liabilities shared by nearly 650 local pension funds covering suburban and downstate police and firefighters.
The governor’s plan, released earlier this month, would combine those local funds into two statewide funds, one for police and one for firefighters, theoretically allowing them to reap better returns on their investments. He pitches the plan as a way to address two of the next big issues he faces: soaring pension liabilities and rising property taxes.
There is widespread support from Democrats and Republicans for consolidation, Pritzker said Monday at an unrelated news conference. He contends his proposal would bring about measurable improvement in the financial position of municipalities across the state.
“There are many people who understand that if we want to keep property taxes down, if we want to bring them down, if we want to stop the hikes that are occurring everywhere, we’ve got to attack property taxes every way we can,” Pritzker said. “One of them is to attack it by making sure that our police and fire pensions are reasonably well-funded.”
Many previous attempts to consolidate the public safety pension funds into larger funds have fallen short as pension boards have fought against those proposals in an effort to retain local control. Pritzker’s effort has the key backing of the state’s largest firefighters union, but police unions and an association representing the boards of the local pension funds remain opposed.
The Illinois Public Pension Fund Association contends that easing restrictions on pension fund investments is a better proposition than consolidation. Consolidating local pension funds can be risky and “may not generate the expected cost savings,” IPPFA President James McNamee said in a statement.
Pritzker has said the task force that recommended the consolidation plan would next turn its attention to state and city pensions.
“What the governor has assured me, and I think (what) he’s said publicly, is phase one is dealing with the downstate police and fire pension system. Phase two will be addressing other pension issues including Chicago,” Lightfoot said. “So I feel confident based upon what he said to me privately and what he said publicly that we will be in the next phase of discussions around pension reform.”
The city’s requests and Pritzker’s pension plan have gotten much of the attention in the weeks leading up to the fall session, but with only a handful of vetoes to consider from the spring, lawmakers may take action on several other issues that have come to the fore since they adjourned in early June.
The outbreak of a mysterious vaping-related lung illness that has sickened more than 1,600 people across the U.S. and killed 34 in 24 states, including two in Illinois, has policymakers looking for an answer.
Rep. Deb Conroy, a Villa Park Democrat, is sponsoring legislation that would ban the sale of all flavored tobacco products — including menthol cigarettes, which are exempt from a federal ban on flavored cigarettes. Conroy believes the flavor ban would help greatly reduce vaping among teens, many of whom are attracted by liquid nicotine flavored like candy or fruit, she said.
Opponents note the federal Centers for Disease Control and Prevention has tied most of the vaping-related lung injuries to products bought off the street that contain THC, the psychoactive chemical in marijuana.
Pritzker, who supports a ban on flavored e-cigarettes, “looks forward to reviewing the bill,” spokeswoman Jordan Abudayyeh said.
The governor is backing a proposal from Sen. Andy Manar, a Democrat from downstate Bunker Hill, that would cap out-of-pocket costs for the diabetes drug insulin at $100 per month.
The backdrop to everything happening in Springfield will be the ongoing federal corruption investigation that was thrust into the spotlight last month when federal agents raided Sandoval’s Capitol office, seeking a host of information about lobbyists, campaign contributors, construction companies, Illinois Department of Transportation officials and ComEd, among other entities, according to a federal search warrant. In the weeks since, Sandoval stepped down as chairman of the Transportation Committee but hasn’t responded to requests for comment.
On Monday, a source told the Tribune that a federal search warrant and subpoena executed at the Michigan Avenue office of the City Club of Chicago in May sought information about Madigan.
Brown, the speaker’s spokesman, wouldn’t comment on the report but said Madigan would be in Springfield for the veto session.
“He plans to fully participate,” Brown said.