Rep. Wheeler's Weekly Roundup: March 31

Budget – Lack of progress
·         No progress on Illinois budget; Moody’s warns Illinois of further downgrades.  While the Illinois House has held a series of “pro forma” hearings on the budgetary requests and needs of Illinois state agencies, there are no State budget numbers for FY17 or FY18.  FY17 is ending on June 30, 2017, without a written budget, and FY18 will start on July 1, 2018.  Under State law and the Constitution of Illinois, the General Assembly is mandated to approve a balanced budget that will guide State spending for the approaching fiscal year.  The Constitution requires that this budget not commit to spend more money than is expected to come in during the fiscal year.  The legislature did not fulfill this mandate for FY17, and is not making progress to do this for FY18.  As March 2017 ended, Illinois had more than $12 billion in unpaid bills on file with or under the supervision of the Office of the Comptroller of Illinois.

House Republican Leader Jim Durkin, and members of the House Republican Caucus and leadership team, joined this week to call for the House to take action on the State budget in fulfillment of its responsibilities.  Durkin and his team pointed out that progress toward a budget is still possible if the public sector undertakes serious structural reforms, including pension reform, to reduce its long-term commitments.  Moody’s Investors Service warned this week that continued non-action by Illinois on the current budget situation risks further downgrades of our State’s credit rating, possibly down to or below “junk bond” level.  The warning was issued on Thursday, March 30.

Continued decline in Illinois’s demographic standing relative to other states, continued cuts in the credit rating that governs the interest rates paid by State institutions, and concerns in the worldwide business community about Illinois’ future make immediate action necessary.  “The Spring legislative session is now almost half over, with no movement toward a budget resolution,” said freshman Representative Ryan Spain.  “Little in the way of meaningful reforms have been debated, and there is dwindling time for substantive action on behalf of those we serve.”

Chicago – Outmigration
·         Online data shows Chicagoans are considering moving to Sunbelt.  In the wake of recent U.S. Census data showing Chicago as the largest metropolitan region in the country that lost population in 2015-16, real estate professionals all over the country are looking to new data platforms for hints on where the former Chicagoans are going.  Quantitative, although partial, data can be gleaned by following moving vans as they drive away from Illinois, and looking at the locations of self-storage lots where services are bought by Chicagoans.

Information from Moving.com, an online aggregation firm that matches customers with moving truck operators, and from self-storage marketplace SpareFoot indicates that the four metropolitan areas drawing the greatest level of interest from Chicago households are Phoenix, Los Angeles, Atlanta, and Dallas.  The four Sun Belt locations are seen as steps up for many Illinoisans in terms of both climate and job prospects.  Over the past 16 years since September 2000, an ongoing count by the Illinois Department of Employment Security (IDES) indicates that Illinois has created almost zero net new jobs.

Cybersecurity – Vendor hack
·         Possible hack of data shared by Illinois Department of Employment Security.   The possible intrusion into the computer server or server network of an IDES contractor could have affected data submitted by approximately 1.4 million Illinoisans who are enrolled in the IDES JobLink database.  The potentially-hacked data includes names, birthdates and Social Security numbers.

Under current IDES practice, Illinois unemployed men and women who are eligible for unemployment insurance (UI) benefits are required to enroll in IDES JobLink as a condition of receiving benefits.  The JobLink system is supposed to help unemployed Illinoisans find new jobs by matching their credentials with the qualifications posted by available employers.  As part of enrolling in JobLink, the unemployed person is required to submit personal identifying information.

As part of its implementation of the JobLink system, IDES affiliated itself with a Kansas private-sector service vendor, America’s Job Link – Technical Support, which operates software code needed to maintain the Job Link systems operated by ten U.S. states.  The data breach occurred in the database operated by this vendor.  IDES’s own data security was not breached, but JobLink was affected because IDES shared all of its JobLink data with the Kansas vendor.

In its press release describing the vendor data breach, the Department called for allocating adequate assets to cybersecurity and the protection of data gathered by the State of Illinois.  Cybersecurity project billings currently submitted to or under the control of the office of the Comptroller of Illinois have not been paid.

Agriculture – Farmland appraisal values
·         Farmland appraisal values fall with price of motor fuel.  Data presented at the 2017 Illinois Land Values Conference showed that prices paid for Illinois agricultural real property, including cropland, continued to fall in 2016 from all-time highs notched a few years earlier.  The data presented at the conference was generated from the annual survey results returned by members of the Illinois Society of Professional Farm Managers and Rural Appraisers.  The conference was held on March 23 in Bloomington-Normal.

Data presented at the conference indicated a trend line movement toward achievement of a secure floor in price of cropland per acre, as the rate of decline slowed significantly in calendar years 2016.  Cropland rated by Bulletin #811 as excellent quality arable land dropped from a median of $11,600 per acre to $11,000 per acre.  Corresponding drops were notched in the values of lands of lower quality, with Illinois farmland rated as excellent, good, average, or fair.  As in previous years, changes in the prices achievable for corn and soybeans were key factors in determining the movements of land towards new price points, with the use of corn as an ethanol feedstock being one of the major drivers in these price movements.

Farmland values were seen as negatively impacted by continued advances in crop productivity, with Illinois farmers responding to continued improvements in ag technology by harvesting a series of bumper crops of corn and soybeans.  The same values were seen as positively impacted by the tightly-held nature of much Illinois farmland, with an exceptionally high percentage of this non-replaceable asset held closely by family trusts that enjoy significant underlying liquidity and do not put parcels of land up for sale if they can avoid doing so.

General Assembly – House committee deadline
·         House observes deadline for moving bills out of committee.  As of this week, more than 4,000 bills have been filed by House members for the 2017 spring session.  Only a fraction of these bills can be approved in House committee and sent to the House floor for further discussions and debate, and House members learned this week how many of their bills have survived this stage of the process.

People following specific bills are welcome to consult the Illinois Legislative Information System website, which has a master type-in box to look up the current status of each bill before the House or Senate.  In some cases, key elements of a bill that has died or been blocked in committee can be saved for further consideration later in the spring session as amendments to surviving bills.

Jobs – Unemployment rates decline
·         Jobless rates decline in many Illinois metropolitan areas.  Current figures for February 2017, reported by the Illinois Department of Employment Security (IDES) on Thursday, March 30, cover many major Illinois metropolitan areas.  These numbers show continued year-over-year declines in Illinois joblessness both statewide and in key urban areas.  Urban areas covered in this week’s report included greater Chicago, Lake County, the Elgin area, and eastern metro St. Louis.

The February 2017 figures, which were calculated on a non-seasonally-adjusted basis and cover nonfarm positions, show that 5.5% of the enrolled labor force of Illinois is unable to find work of any kind.  Including persons who have dropped out of the labor force, or who are only able to find part-time work, would generate higher jobless numbers for Illinois.  Many Illinoisans continue to feel the impact of the major recession of 2009-2010.

Within the 5.5% overall statewide jobless figure are individual numbers for local areas within Illinois.  The jobless rate for greater Chicago, which for the purpose of unemployment calculations is defined as Chicago, Cook County, DuPage County, and some immediately adjacent areas, is 5.1%.  In nearby Lake County, which is calculated separately as an area that straddles a state line and also includes greater Kenosha in Wisconsin, the rate is 5.6%.  West of Chicago, the rate for an area centering on Elgin is 6.0%.  These figures indicate the continuing movement of Chicago-area job positions back from the suburbs toward and even into the area’s largest city.

Many Downstate metropolitan areas have higher unemployment rates, signaling the continuing impact of the 2009-10 recession and its impact on industrial employment within Illinois.  Areas with significant joblessness include Danville (7.2%), Peoria (6.7%), and Rockford (9.0%).  House Republicans continue to push for reforms to workers’ compensation laws and other limiting conditions that discourage the creation of jobs throughout Illinois, including Downstate.

Local government – Grant announcements
·         Department of Commerce and Economic Opportunity announces infrastructure grants.  The Community Development Block Grant (CDBG) moneys will have forty Illinois communities further develop their water, drainage and sewage infrastructure.  The grant announcement was made on Wednesday, March 29.

The nonpartisan grant program will help communities in 29 counties across Illinois.  Successful grant applicants stretch from Mount Carroll in Illinois’ northwestern corner to Shawnee Township in southern Illinois’ Gallatin County.  CDBG-eligible municipalities must have a population of 50,000 or less, must not be located in an urban county, and must submit an application that includes a commitment to provide matching funds.

Pensions – Unfunded liabilities
·         General Assembly nonpartisan office issues annual report on unfunded status of State pension systems.  The Commission on Government Forecasting and Accountability (COGFA), a nonpartisan budget watchdog office within the Illinois General Assembly, watches over and annually updates the General Assembly on the condition of Illinois’ State-managed pension systems.  These five systems oversee the defined-benefit pensions paid to many Illinois public-sector workers and professionals, including the teachers employed by individual school districts.  State workers and university personnel are also enrolled in defined-benefit, State-managed pension systems.

Previous surveys and audits of State-managed pension systems, carried out by COGFA and other entities with actuarial expertise, have shown that these systems are all severely underfunded.  This underfunding, which now totals almost $130 billion for all State-managed pension systems – a debt owed by all Illinois residents and taxpayers – was partly caused by the State’s failure in previous years to make the annual deposits required to properly pay these obligations.  Another large chunk of this underfunding is attributable to major changes in worldwide interest rates.  The success of saving for retirement through the use of fixed-income securities is dependent on these securities paying significant interest rates and generating compounded returns for investors and pension managers.  Under current global economic conditions, which are characterized by very low international interest rates  and a shift in investment returns to publicly-traded and private equities, successful pension fund management has taken on additional challenges.  Investment professionals have advised Illinois pension funds to make repeated cuts in recent years to their prospective annual rates of return.

These and other challenges facing Illinois’ state-managed pension funds are discussed in COGFA’s annual pension report.  As of the conclusion of the most recent fiscal year, June 30, 2016, these pension systems’ unfunded liabilities were calculated to be $129.5 billion.  This total of unfunded liabilities takes into account the actuarial lifespans of vested Illinois pension beneficiaries, the protected annual future rates of return on Illinois pension fund assets, and the ability of current assets to meet legal commitments.  The report found that as of last June 30, the systems were only 39.7% funded. The report summarizes the current challenges to Illinois’ state-managed pension systems.  The report was released by COGFA on Tuesday, March 28.

State government – Springfield
·         In wake of House Republican action, administration tells State agencies to move vacant jobs to Springfield.  Illinois’ state capital is the home of a smaller percentage of State workers these days.  Over the past fifteen years, the Springfield area has lost approximately 3,800 State jobs.  Some of these positions have been transferred to the Chicago area, where higher housing costs and a higher cost of living compel the public sector to pay out more taxpayers’ money in pay and benefits. 

With the goal of helping her community and fighting back against this trend, Representative Sara Wojcicki Jimenez took action last year.  She and Representative Tim Butler cosponsored HJR 133, a 2016 resolution urging the State and each of its agencies to prepare a report on the preferred locations of their permanent staff employees.  The resolution stated that State jobs should be in Springfield unless there was some sort of special reason for them to be somewhere else.

After HJR 133 was adopted by both houses, the Rauner Administration took action in response.  The Department of Central Management Services (CMS), the State agency that acts as a personnel department for the State, issued a report last week in compliance with the resolution.  The report identified nearly 390 State job positions that could be moved from elsewhere in Illinois to Springfield.  Many of these identified positions are currently located in greater Chicago.

The report has now been followed up by an interagency memo outlining the procedures to be followed by agencies to transfer vacant or currently occupied jobs to Springfield.  CMS Acting Director Michael Hoffman credited Jimenez, Butler, and HJR 133 with spurring the State to take action.

Transportation – Interstate 55
·         Durkin, Rauner call for action on I-55 congestion.  A disproportionate share of the remaining manufacturing jobs of Illinois are concentrated on both sides of Interstate 55 north of Braidwood.  However, sharp growth in commuter traffic, shopping runs, and goods transportation to and from factories and warehouses have created daily traffic jams along many stretches of this section of I-55.   The problem is especially harsh in the city of Chicago and its inner suburbs north and east of I-355.

The existence of right-of-way space, including space in the I-55 median, has made this a soluble problem.  House Republican Leader Jim Durkin joined with Governor Rauner on Monday, March 27 to call for General Assembly approval of the construction of new access-controlled express lanes in both directions of I-55.  The proposed I-55 express lanes would stretch from I-355 in Bolingbrook-Woodridge to I-90/I-94 near downtown Chicago.  The express lanes would be built by the private sector and would charge a toll for users other than emergency response vehicles.   The toll lanes are projected to generate about $24 million in annual revenue, which would service the $500 million in bond sales required to finance the infrastructure project.

The I-55 express-lanes proposal was first proposed by Republicans more than one year ago.  Like other Illinois legislative initiatives, including initiatives for growth-oriented infrastructure spending, the proposal has been blocked by the majority party in the Illinois House.

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