IVCA Provides Updates for State Legislative Issues – 12/18/2024
Illinois Venture Capital Association Illinois Legislative Report
David Stricklin / Stricklin & Associates
Wednesday, December 18, 2024
MADIGAN PROSECUTORS REST
The federal government has ended its case in chief against former Illinois House Speaker Michael J. Madigan. The defense is now making its case and in a few more days the decision could be in the hands of the jury, though a verdict is not expected until 2025.
MADIGAN TRIAL UPDATES / HIGHLIGHTS
CITY PASSES BUDGET
- Greg Hinz | Will Johnson learn from his budget fiasco?: Overall, this budget process was the bonehead amateur hour, be it initially proposing a $300 million property tax that was a deal breaker and not a conversation starter, moving to gut enforcement of the police department consent decree that is critical to achieving racial justice in Chicago, or trying to pass the budget tab to Chicago Public Schools, Springfield or the business community — anyone except Johnson’s labor allies, who suffered neither job nor pay cuts.
LEGISLATIVE LEADERS WARN BRACE FOR IMPACT
Illinois Senate President Don Harmon and House Speaker Chris Welch engaged in a wide-ranging question and answer before a packed house hosted by Crain’s and they addressed the forecast of a $3B budget gap in the fy 26 budget and a host of other topics, copied here and well worth a quick review:
December 10, 2024 01:55 PM
This is not the year to come to Springfield with your hand out.
Harmon and Welch said the estimate is likely overly bearish, but the reality is the state will need to look for ways to spend less, not more.
“We have to tell the caucuses there’s not going to be any new spending,” Welch said. “Don’t come in the door looking to spend more money. . We’re going to go line by line through this budget, like we have in the past, and if we can find efficiencies, we will.”
Both leaders rejected the idea of making another attempt to increase revenue with a variable income tax that would charge a higher rate to those making the most money. It was rejected by voters four years ago.
“We got thumped on the graduated income tax proposal four years ago, and we can’t ignore that thumping,” Welch said. “I don’t think we should be looking to do things voters tell us we don’t want.”
With the state facing one of its toughest budgets in recent memory as the last of pandemic-relief money fades away, legislative leaders are practicing how to say no. That starts with the Chicago Bears and the White Sox, each of which are looking for state money to build new stadiums.
“I don’t know anyone who wants us to give billionaires a tax-funded stadium,” Illinois House Speaker Emanuel “Chris” Welch said this morning during Crain’s Chicago Business’ Power Breakfast. “People are talking about groceries and rent. For us to give billionaires taxpayer money to fund a stadium would be the last thing voters want us to do.
Senate President Don Harmon added: “There is absolutely no appetite in Springfield to spend taxpayer dollars to subsidize billionaire sports franchises — plural. If this investment should be made, it should be made privately. Both the White Sox and the Bears are playing at perfectly serviceable facilities that the taxpayers have paid a large chunk for, and we haven’t even paid them off yet.”
The Bears have asked for $900 million in public subsidies upfront for a lakefront stadium along with $1.5 billion for infrastructure improvements. The Sox also are seeking roughly $1 billion for a new stadium.
Welch, however, encouraged the Bears to pursue a stadium at the former Michael Reese site — on their own dime.
“I would love for the McCaskeys to give us two Christmas presents: A winning football team and a privately funded stadium, probably on the Michael Reese site, and invest in a Black neighborhood that’s long been underinvested in, like Bronzeville,” Welch said. “I just think publicly funding a stadium makes no sense in this economy.”
But he didn’t totally close the door on public support. When event moderator and Crain’s political columnist Greg Hinz asked if the state should contribute funding for infrastructure near a stadium, Welch replied: “The state has infrastructure dollars. That’s a different conversation. The conversation right now is focused on (Illinois Sports Facilities Authority) dollars, and I think that’s a misplaced conversation.”
Public subsidies for infrastructure were the centerpiece of the Bears’ 2022 pitch for a new stadium and entertainment campus on the former Arlington International Racecourse property in Arlington Heights.
Neither Welch nor Harmon brought up Arlington Heights, which the Bears are keeping alive while they remain focused on a downtown stadium plan. A Bears spokesman declined to comment on statements made today by Welch and Harmon, which echo comments by Gov. JB Pritzker.
The state’s budget situation has gotten worse since the Bears and Sox first floated the ideas of seeking taxpayers’ help to build new stadiums. The state faces a potential $3.1 billion deficit after next year, according to a forecast from the Governor’s Office of Management & Budget.
The two legislative leaders also were cool to the idea, advanced by Mayor Brandon Johnson and the Chicago Teachers Union, that the state is $1 billion short in the amount of state funding due to Chicago Public Schools under a new “evidence-based funding formula” passed in 2017.
“There are 800 school districts across the state that would say we owe them more money,” Welch said when asked about the likelihood of coming up with $1 billion more for CPS.
The state has been adding $350 million a year in funding for local schools.
“I owe the bank a fair amount of money on my mortgage, but they’re not getting more than the monthly payment that’s due this month,” Harmon said.
The same goes for pensions and labor. The state created a Tier 2 pension in 2011 for new hires that has less generous benefits, with the aim of reducing the massive pension shortfall in Illinois, currently estimated at $144 billion.
The state is likely to have to boost those benefits soon, however, because they’re at risk of falling out of compliance with federal law that requires benefits to match the minimum offered by Social Security. Some labor groups have suggested undoing Tier 2.
“There’s some talk about getting rid of Tier 2 and going back to Tier 1,” Welch said. “That’s not a real option. There’s been a lot of improvements made (to reduce the cost of pensions), and we don’t want to undo those.
“Are there more improvements that can be done? Absolutely. But I think it’s important to listen to everyone involved. I’ve had meetings with the Civic Federation and the Civic Committee and listened to their proposals, and I’ve listened to labor’s proposals.”
Asked whether the state will help the city of Chicago, which is in the middle of its own budget woes, Harmon and Welch said they haven’t been asked. But it also could prove to be a tough sell.
“We are committed to the success of the city,” Harmon said. “At this point, the city hasn’t asked for anything specific, and anything the city asks for we have to put through the filter of how are we equitably dividing state resources among all municipalities in the state.”
PENSION REPORT
Pension costs, benefits and payments are perhaps the most ubiquitous policy issues in Illinois (see above) and the Committee on Government Forecasting and Accountability just published its most recent evaluation:
IPI ON PENSION DEBT OF $144B
In their report, the Commission on Government Forecasting and Accountability points toward their concern the payments, while meeting legal standards, are still below what is actuarily necessary for these obligations. While accurate, that analysis only tells part of the story. The problems run deeper.