Legislative Wrap-Up....almost!

Despite a substantial advocacy effort from all sectors of Illinois, the General Assembly refused to take action on sorely-needed new revenues for human services, education, and public safety. Here, we present a summary of some noteworthy legislative successes we achieved in 2010, along with an explanation of the irresponsible budget the Illinois General Assembly approved in the final days of the session.

First, the Victories:

HB537 – Payday Loan and Consumer Installment Loan Reform Act
After years of negotiations between advocates, the Attorney General’s office and the lending industry in Illinois, HB537 closes the loophole in the Payday Loan Reform Act of 2005 and enacts a number of significant consumer protections. The bill sets interest rate caps of 36-99% on longer-term installment loans, limits monthly payments to no more than 22.5% of an individual’s gross monthly income, eliminates balloon payment plans, prevents frequent refinancing of loans, and requires that lenders enter information on all loans into a controlled consumer reporting database to ensure fair lending practices. HB537 passed both the Senate and the House almost unanimously and will be sent to the Governor’s desk for his signature. It is crucial that the Governor Quinn hear from advocates about this victory. Please take a moment to contact the Governor’s office (217-782-6830 in Springfield or 312-814-2121 in Chicago) and urge him to sign this important piece of legislation.

HB6462 – The Illinois Safe Children’s Act
This bill, which passed both chambers overwhelmingly, requires Illinois to remove juveniles (under the age of 18) arrested for prostitution from the purview of the criminal courts and into child protection services under the Department of Child and Family Services. It increases penalties for those who traffic and solicit juveniles, and it removes references to “juvenile prostitution” from the criminal code, recognizing that juveniles are victims and not offenders. HB6462 will also be sent to the Governor’s desk for his approval. The passage of this bill is an exciting first victory, but there will be more to follow as PCG and other members of the End Demand Illinois campaign moves forward over the next few years.

HB6202 – Illinois Solar Energy Ramp-Up
This is a major success for the environmental community, specifically the Illinois Climate Action Network. After lengthy negotiations throughout the session, HB6202 establishes annual benchmarks for solar production in Illinois, beginning in 2012, to ensure that we meet the requirements of Illinois Renewable Energy Portfolio Standard in 2015. Illinois is required to procure 6% of its total energy from solar sources by 2015, and interim goals will stimulate the Illinois solar economy, thereby guaranteeing success, i.e., compliance, by 2015.

The Not-So-Good News:

Despite significant work by PCG, and the entire Responsible Budget Coalition (RBC), our legislators failed to pass a budget that included new revenue. Instead, they’re relying on further borrowing and cuts and choosing to ignore the unchanging fact that we won’t be able to fix Illinois growing budget deficit without new revenue and tax reform. Here are the pieces of legislation that did pass:

HB859: Budget Appropriations Bill
Very similar to last year, the General Assembly passed legislation that provides lump sum allotments to the different departments and then leaves it up to the discretion of the Governor to determine specifically where the money will go. It budgets a total of $26.2 billion for FY11, down $400 million from the FY10 budget.

SB3660: Emergency Budget Act
Given that the governor has been given lump sum funding, the House and the Senate chose to pass the “Emergency Budget Act” which will give the Governor discretion not normally provided to the Executive branch. The Emergency Budget Act would extend “lapse spending” to December 31st (will delay payments to agencies even further), provides that the Governor can adjust services, rates, transfers and eligibility requirements for state agencies, gives the governor authorization over contingency reserves, and allows for inter-fund borrowing.

SB3514: Pension Borrowing Bill
This bill authorizes borrowing up to $4 billion to cover next year’s payments to the five state-funded pension systems. SB3514 was a hotly-debated issue during the last week of session, but it was approved in the House with exactly the 71 votes required for passage. The bill moved to the Senate but has not yet been called for a vote. Several “roll calls” indicated to the Senate sponsors that SB3514 did not have the 36 votes necessary for concurrence with the House vote. Senators must return to Springfield sometime in the coming weeks to complete their work. Since there is not enough revenue to meet the pension obligation, members of the General Assembly had to choose between SB3514 discussed above or HB543 (a pension holiday, where the state would forgo current requirements and not put any money into the pension fund). It is estimated that the borrowing plan, currently in limbo, will cost Illinois residents about $1 billion in interest while the pension holiday will force the pensions systems to sell assets to pay benefits, something that will cost at least $20 billion in lost investment income. We will keep you posted on developments on this issue.

Next Steps:

Our work is not done! Let us be clear that we are not satisfied with the results of the legislature’s budget decisions. PCG and the RBC will continue to push for revenue and reforms throughout the summer and fall. Illinois’ fiscal crisis is a complex problem and one that requires comprehensive change in our revenue structure. While it is true that funding cuts and borrowing might need to happen, we have opposed those measures as long as new revenue is missing. We will continue our efforts to convince legislators that new revenue is an essential ingredient of a long-term solution to the current crisis.

As we move into full campaign season, please speak with your legislators and tell them to take responsible action to generate new revenue for human services, education, and public safety.

As always, feel free to contact Courtney Eccles or Laura Dean Friedrich with any questions about our legislative work or for more information on specific bills.

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