Chesney’s Weekly Roundup- week ending October 26, 2019

GENERAL ASSEMBLY

Fall veto session set to begin in Springfield.  The lawmakers of the Illinois House will gather on Monday, October 28, to consider new business and take action on the vetoes signed by the Governor.  The members of the Illinois General Assembly are mandated by the Constitution to meet for two three-day annual veto sessions every year.  The first veto session will be in the final week of October, and the second week of veto session will be in the second full week of November. 

This six-day period does not, typically, give legislators very much time to take up entirely new business.  Matters that have been left pending from the prior spring session can sometimes be taken up in the veto session.  In addition, lawmakers often find that the veto session is a good time to introduce new bills and start discussions about rising issues in order to get ready for the next full-length session, which will begin in January 2020.  All of the bills and other legislative activities considered by the Legislature during the 2019 veto session and full-length 2020 session can be found on the Illinois General Assembly website.

BUDGET

Illinois prepares to sell $750 million in new bonds in November 2019.  The general-obligation debt, backed by tax revenues such as income and sales taxes, will help cover the costs of the $45 billion infrastructure program approved by the General Assembly in the spring 2019 session.  The Infrastructure program includes both “horizontal” infrastructure such as roads and bridges, typically backed by motor fuel tax moneys, and “vertical” infrastructure such as roof repairs and building rehab jobs.  State-owned structures, including university classroom space, prison cellblocks, and State park visitor centers, need work.

The proposed debt sale comes despite the fact that Illinois has the lowest credit rating among the 50 states.  Although Illinois’ BBB ranking technically counts as “investment grade,” many nearby states have much higher ratings.  For example, neighboring Indiana, Iowa, and Missouri all have top-ranked AAA credit ratings.  The state’s population of 12.7 million is in slow decline, with almost stagnant rates of private-sector investment and job creation. 

Observers report that Illinois’ reputation as a free-spending, high-tax state with significant unfunded pension debts is reducing the ability of the State to sell its bonds at acceptable interest rates.  Illinois has run a “structural deficit” for many years, in which the budget has been “balanced” by letting bills pile up.  Illinois currently has an unpaid bill backlog of almost $6.7 billion, which could increase to $19 billion in 2024-25 under current projections.  Interest charges on Illinois general-obligation debts and unpaid bills are paid by the State’s taxpayers. 

DISASTERS

Spring flood disaster application rejected by Federal Emergency Management Agency (FEMA).   Illinois filed for flooding disaster assistance after rivers rose to high-water levels on the Mississippi River, the Illinois River, and many tributaries.  Many communities throughout Downstate Illinois, especially along the State’s western border, suffered historic damage.  However, FEMA has now decreed that the event does not meet the criteria needed to declare a disaster and provide aid.  The decision from Washington, D.C. is currently under appeal.  The Illinois Emergency Management Agency (IEMA) is gathering additional documentation of ongoing damages to individuals and community infrastructure, such as riverside parks and water treatment facilities, throughout Illinois.  An estimated 1.4 million Illinois residents were affected by the flooding event, including persons who suffered loss of jobs or business when key roads were closed or blocked off.

Nationwide damage from flooding and high water in spring 2019 is estimated to have topped $12 billion.  So far in 2019, FEMA has declared nine major U.S. disasters with individual assistance available, including seven declarations for flooding events.  The declarations were made for beneficiaries in the states of Alabama, Arkansas, Iowa, Nebraska, Ohio, Oklahoma, South Dakota, and Texas.  The Iowa declaration encompassed counties directly across the Mississippi River from Illinois. 

GAMBLING

Changes in video gaming laws being felt in many Illinois municipalities.  One of the changes enacted to the Illinois Video Gaming Act in spring 2019 was an authorization, in communities that allow video gaming, for the parlors, taverns, and other places that have these games to install more machines. In most non-truck-stop locations, the allowable upper limit will now be six machines (up from five), if the local municipality signs off on the increase.  The owners of the machines pay taxes to their local governments, and many of these cities and villages are supportive of the additional machines.  As an example of this trend, the Rockford City Council approved the sixth machine this week.  The new state law also authorizes the video gaming machines to offer bigger prizes and take in more money for each play pull.

JOBS

State report finds unemployment down in twelve Illinois metropolitan areas.  The report on Illinois cities and metro areas, published by the Illinois Department of Employment Security (IDES), covers September 2019 job trends in local regions throughout the state.  During this 30-day period, unemployment dropped throughout Illinois to 3.9%, signaling so-called “full employment.”  The IDES survey, which uses data sent to it by employers throughout Illinois, found full-employment below-4.0% jobless levels in many widely scattered regions of the Prairie State.  Metro areas with low unemployment included Chicago (3.2%), Champaign-Urbana (3.5%, Springfield (3.5%), Bloomington (3.6%), Carbondale (3.7%), and the Metro-East area east of St. Louis (3.8%).  These are all areas with either large-city settings or major State universities, or both.

Several metro areas in Downstate Illinois continued to have unemployment numbers that are significantly higher than the State average.  These metro areas included Kankakee (4.2%), Peoria (4.3%), Decatur (4.9%), Danville (5.0%), and Rockford (5.3%).  These are metropolitan areas with workforces traditionally oriented towards manufacturing and industry.  With a rate rising from 4.9% in September 2018 to 5.3% in September 2019, Rockford was the one major metro area of Illinois that has seen rising joblessness over the past 12 months.

SENIORS

Illinois named fourth-worst state to retire.  The nationwide rating, by financial services information aggregator Bankrate, looked at a variety of metrics in making its negative judgment.  Illinois’ high property taxes and winter weather appeared to be key factors in the negative ranking.  In subsets of the overall ranking, Illinois was ranked 40th in “affordability” and 49th in “wellness.”  Crime, culture, and weather were also used as metric data.  Other poorly-ranked states were high-tax environments in colder parts of the U.S., with Alaska, Maryland, and New York all earning rankings lower than Illinois.

TRANSPORTATION

Illinois to spend $23.5 billion for roads and bridges.  The Multi-Year Plan (MYP) was announced by the Illinois Department of Transportation on Monday, October 21.  Over the next six years, $23.5 billion will be invested in maintaining, preserving and expanding 4,212 miles of roadway and 9.2 million square feet of bridge deck statewide.  Much of the funding for this MYP will come from the motor fuel tax increase enacted by the General Assembly in spring 2019.  Under the Constitution, money raised from motor fuel taxes cannot be “swept” for other purposes, and must be spent on transportation. 

This new Multi-Year Plan represents a shift in Illinois’ approach to its roadways and bridges. Previously, the state waited to rebuild until projects had deteriorated so much that they presented safety hazards; under guidance from the Federal Highway Administration, Illinois will now prioritize maintaining its system over time, which is also a more cost-effective way to manage long-term capital needs. To achieve that, this plan dedicates more than 75% of the funds to reconstructing and preserving roadways and bridges, 16% to strategically expanding the system in areas where data have shown the investment will be highly effective and the remainder for necessary traffic and safety improvements.
 
Of the major categories of state investments in the plan, $7.58 billion will go toward roadway reconstruction and preservation, $4.99 billion for bridge replacements and repairs, $1.59 billion for safety and system modernizations like interchange reconstructions, $3.08 billion for strategic expansion of the system and $2.11 billion for system support like engineering and land acquisition.

A full list of road and bridge projects coming across the state can be found here. A list of projects in the 89th District only can be found here.