Illinois Venture Capital Association Illinois Legislative Report
David Stricklin / Stricklin & Associates
Wednesday, January 5, 2022
COVID SLOWS LEGISLATIVE ROLL
This was to be the first week of front-loaded legislative session in Springfield. Not so fast. Rising COVID cases and a cautious approach to brining legislators and the public together in an enclosed Capitol building has resulted in a very brief one day session this week and the likelihood that next week will be canceled entirely. More and more it appears the actual start of the session will be when Governor JB Pritzker delivers his budget address February 2.
IVCA BILLS IN QUEUE
IVCA is evaluating the opportunity to move ahead with legislation to make formal changes to the Technology Development Account which have been agreed to with the Office of the Illinois Treasurer, and legislation under discussion with the Illinois Department of Revenue concerning the definition of investment partnerships. These preparatory measures are being taken to be in position to act when the opportunity arises. Legislative leaders are sending the message they want a short, sweet, agreeable session. Our bills would seem to fit that description. We will keep you posted.
Republican Mark Batinick and Democrat Mike Zalewski are two knowledgeable, hard-working legislators who pass a lot of bills and are in on the discussions of generally where the legislature is headed on big-picture issues. They provided this perspective for 2022:
With a shorter than usual legislative session expected this spring with the impacts of the ongoing pandemic, Rep. Mike Zalewski (D-Riverside), the chair of the House Revenue and Finance Committee, says he doesn’t expect the legislature to move a budget that includes wild new spending programs.
“That doesn’t necessarily mean we won’t have our disagreements with the Senate and it doesn’t necessarily mean we won’t have disagreements with the Governor, and it doesn’t necessarily mean we won’t have disagreement with [Republicans],” Zalewski said. “But I don’t see it being a monumentally difficult budget year.” Rep. Mark Batinick (R-Plainfield), the second ranking Republican in the House, says he thinks if Democrats stick to a budget that doesn’t try too much, it may not be a difficult year.
“I think a maintenance budget this year will be really easy,” Batinick said. “We need to be a little bit more diligent on what we’re doing with [extra revenue].” Batinick pointed to existing ideas to use revenue to fund the state’s pension deficit as one way to use extra revenue.
Many Republicans criticized Democrats for attempting to pass expensive new programs and pay for them with one-time federal revenue last year. Zalewski says he wants fellow Democrats to slow down on new programs this year. “My sense is, the temptation to add programming is probably going to be renewed among our caucus,” Zalewski said. “We have a relatively [inexperienced] caucus, and there’s always an incentive for them to want to add programming and do something that would cost the state treasury. The challenge is going to be convincing everyone that, in a year like this, there’s not going to be a lot of new revenues so you’re going to pretty much have to keep a maintenance budget into 2023.”
Read more about our conversation here. (The Illiinoize – 1-4-22)
FEDERAL LOAN PAID BACK
When Illinois was one of if not the only state in the nation to access a loan program created by the federal government to ease expected cash crunches from the COVID pandemic it was not entirely clear it would work out well. Today, Comptroller Susana Mendoza announced the state has paid back the loan ahead of schedule:
STATE REVENUES HOLD STEADY
The Commission on Government Forecasting and Accountability is relied upon by Illinois policy makers for revenue estimates and big picture economic trends. The December report released today will guide final decisions in the governor’s budget for February 2 (watch for the governor to emphasize improved credit ratings) and legislators who are preparing their wish lists:
On December 1, Illinois sold $400 million of General Obligation bonds competitively. Series of December 2021A received 12 bids and 2021B received 10 bids. The true interest costs were 1.299% and 2.495% respectively. “In the 10-year maturity, the winning bid has a credit spread of +54 basis points to the tax-exempt benchmark with a 5 percent coupon, a 66 basis point improvement from the State’s GO March 2021 sale and a 214 basis point improvement from the State’s GO October 2020 sale. The State’s continued improving credit and strong investor demand allowed the State to lock in an extremely attractive overall borrowing rate of 2.15% on a bond issue that has a 20-year final maturity…Approximately $175 million of the bonds will help finance the state’s ongoing accelerated pension benefit buyout program. The remaining proceeds, after cost of issuance, will fund ongoing construction projects, largely for Rebuild Illinois, the state’s $45 billion capital program.” [SOURCE: Strong Bids, Large Participation, Low Rates in General Obligation Bond Competitive Sale, Paul Chatalas, Director of Capital Markets, State of Illinois, Dec. 1, 2021 press release.]
REPUBLICANS SENSE STATEWIDE OPPORTUNITY
When the most popular elected official in Illinois is the person who has managed your experience getting a driver’s license or license plates, they must be doing a pretty good job in a famously frustrating environment. Illinois Secretary of State Jesse White is not running for re-election, setting off a vigorous Democratic primary battle. This week U.S. Senator Dick Durbin endorsed Chicago City Clerk Anna Valencia over her rivals including former State Treasurer and U.S. Senate candidate Alexi Giannoulias.
Some Republican leaders expressed their support for prosecutor John Milhiser
Already in the race is Illinois State Rep. Dan Brady, a member of the House Republican leadership, who responded to the Milhiser announcement with statements of support and endorsements from Republican office holders and party officials.
Lots of money will be spent as the SoS office is considered a platform for higher office and Republicans see an opportunity statewide, with the SoS and elsewhere as they currently hold none of the constitutional offices. The #2 House Republican, Rep. Tom Demmer, is also expected to announce he’s running for Treasurer.