But tying the budget to anti-worker reforms is wrong AND unnecessary. The Senate grand bargain includes the following 13 pieces of legislation:

Transcription

1 The Illinois State Senate is about to vote on a grand bargain that will make unconstitutional cuts to your pension and deliver large parts of Governor Rauner s so-called Turnaround Agenda in exchange for revenue. But tying the budget to anti-worker reforms is wrong AND unnecessary. We can tax the most wealthy and close corporate loopholes to help fund our state without harming working people. Call your State Senator now and tell them not to give in to Rauner s political demands. Urge lawmakers to VOTE NO on plans that balance the budget on the backs of families like yours. The Senate grand bargain includes the following 13 pieces of legislation: Senate Bill 1 Education Funding Reform While the exact legislation has yet to be filed, it s anticipated that SB1 will include a school funding plan referred to as the Evidence Based Model. This plan has two parts: 1) a way to define what would be an adequate level of school funding for each district; and 2) a formula for distributing state funds to districts. Under the plan, an adequacy target would be calculated for each school district, and every district would be guaranteed a base funding minimum, which is the per pupil amount the district would receive from the state. Based on the difference between a district s local capacity (the amount raised from property taxes) and the adequacy target, districts will be sorted into four tiers for the purposes of distributing additional state dollars. To fully fund every district at its adequacy target, the state would need to increase education funding by

2 $3.6 billion. One clear benefit of the Evidence Based Model is that, in the event of underfunding, the plan would push state dollars into the neediest districts first and wealthier districts last. The IFT will not take a formal position on SB 1 until the language is finalized and a report detailing how funds would be distributed by district is available from the Illinois State Board of Education. Senate Bill 2 Minimum Wage Increase This proposal would increase the minimum wage from $8.25 to $11 per hour over the next five years. While an increase in the minimum wage is necessary, the downside of this legislation is that it overrides minimum wage provisions adopted by certain local units of government, like Cook County and the City of Chicago. SB2 limits the minimum wage in both Cook County and the City of Chicago to $13 per hour as of July 1, Preemption of the City of Chicago Minimum Wage Ordinance actually results in a cut to the minimum wage in Chicago. Senate Bill 3 Local Government Consolidation This bill would require all local units of government to use consolidation procedures currently used by DuPage, Lake, and McHenry counties. SB3 would allow counties to dissolve local governments by referendum. Examples of various consolidations include two adjacent townships merging, the dissolution of a township within a municipality, or a township absorbing a township road district. The IFT does not have a position on SB3. Senate Bill 4 Bonding for Debt Restructure Illinois owes $11 billion to individuals and companies that have provided the state with goods and services. SB4 authorizes the state to sell $7 billion in bonds and use those proceeds to address the unpaid bill backlog. The bonds would have to be paid off within five years, which would increase the state s annual debt service of $1.1 billion.

3 Senate Bill 5 State Funding of Chicago Teacher Pensions Currently, the state funds the normal cost of teacher pensions through appropriations to the Teachers Retirement System (TRS). However, the state does not fund the normal cost of teacher pensions in the City of Chicago, which puts financial strain on the Chicago Public Schools that are already woefully underfunded. SB5 would correct this problem and provide state funding for all teacher pensions. This is a huge benefit for students in Chicago, because the money previously appropriated to the Chicago Teachers Pension Fund (over $215 million) can now be used for teaching and learning. The IFT supports SB5. Senate Bill 6 State Budget for January 1, 2017 to January 30, 2017 The one distinction of Governor Rauner s time in office is his failure to enact a state budget. Since taking office, Rauner has held the state budget hostage to his demands for passage of his anti-worker turnaround agenda. A series of stop-gap budgets and court orders that force the state to fund certain services have kept things from completely shutting down, but operating without a state spending plan is having a disastrous impact in many areas especially higher education, where funding for public universities has been cut by 70 percent. A six-month budget for the first half of Fiscal Year 2017 expired on December 31, 2016, and the state is once again without a budget. SB6 appropriates money for the remainder of this fiscal year. Senate Bill 7 Gaming Expansions Unfortunately, one place the state always looks to generate revenue without raising taxes is through gaming expansion. SB7 would establish five new casinos in the state located in the following cities/areas: Chicago, Lake County, the South suburbs, Rockford, and Danville. It also adds gaming positions at existing racetracks and riverboats. The state initially hopes to generate revenue through the sale of additional gaming licenses and positions, and then annually from increased gaming revenues.

4 Senate Bill 8 Procurement Reforms Includes a series of reforms intended to streamline the state procurement process. SB 8 would create a pilot program for heavy machinery purchases, create a pre-qualified pool of vendors, and allow Illinois to enter into joint purchasing agreements with other governmental entities. Senate Bill 9 Tax Increases, Closing Corporate Loopholes, and Tax Credits By increasing various taxes, closing corporate tax loopholes, and offering tax credits, the state hopes to generate additional revenue and address the ongoing budget deficit. While an increase in the individual and corporate income tax rates will generate more revenue, the IFT would urge lawmakers to approve legislation that would give voters the chance to approve a Constitutional Amendment to allow for a fair tax system. Under Illinois current flat tax, everyone pays the same rate regardless of how much they earn. A fair tax system would mean that those who earn less pay less, and the wealthy would pay their fair share. The IFT supports moving the state to a fair tax system. The various provisions of SB9 include: Increasing the personal income tax rate from 3.75 to 4.95 percent Increasing the corporate income tax rate from 5.25 to 7percent Implementing a one-cent per ounce tax on sugar-sweetened beverages, syrups, and powders Eliminating three corporate tax loopholes Increasing the Earned Income Tax Credit (EITC) Eliminating the corporate franchise tax Increasing the education expense tax credit Creating a tax credit for educators who purchase school supplies Reinstating a research and development tax credit Extending the film tax credit Reducing the filing fee for limited liability corporations

5 Senate Bill 10 Local Government Assignment of Receipts This legislation would allow local governments to get a better interest rate on bond sales by creating a bankruptcy remote borrowing structure. Doing so ensures that bond revenues are safe from diversion, which means the local government can borrow at a lower cost and save money on debt service. Senate Bill 11 Pension Reform The pension reforms contained in SB11 would apply only to Tier 1 employees in the Teachers Retirement System (TRS), State Universities Retirement System (SURS), the Chicago Teachers Pension Fund (CTPF), and the General Assembly Retirement System (GARS). Every Tier 1 employee would be required to choose between the following: Option 1: A reduced COLA (cost of living adjustment) in exchange for using future pay increases to calculate pension benefits, a refund of 10 percent of previously paid employee contributions, and a slightly reduced contribution rate going forward, or Option 2: The current COLA in exchange for future salary increases being excluded from pension calculations, essentially freezing an employee s pension based on his/her current salary. It is important to note the following: While this proposal applies to Tier 1 employees in TRS, SURS, and GARS, similar legislation could be introduced that applies to the State Employees Retirement System (SERS); For Tier 1 employees, there is no status quo option under which your pension benefit over the course of your lifetime would remain unchanged; There is no guarantee that any refund or reduction in contributions under Option 1 would offset the amount of pension benefit lost over the course of your life because of the reduced COLA; Because either Option 1 or Option 2 could result in a diminished pension benefit over the course of your lifetime, SB11 is a violation of the Pension Protection Clause of the Illinois Constitution. The IFT opposes SB11. Rather than trying to cut benefits for current employees which is a violation of the Illinois Constitution the Governor and lawmakers should focus on stabilizing the Illinois public employee pension systems by appropriately funding them.

6 Senate Bill 12 Workers Compensation Reform Senate Bill 12 reduces compensation to injured workers in two ways. First, it freezes the permanent and partial disability rate paid to injured workers for five years. Second, once the freeze is lifted, future increases start from the artificially frozen amount, preventing injured workers from ever catching up. The legislation also restricts access to medical care. SB12 makes reductions in the medical fee schedule that will limit access to high-quality medical treatment. The bill also restricts coverage for prescriptions, physical therapy, and chiropractic care. Senate Bill 13 Property Tax Freeze and Mandate Relief While Senate Bill 13 is intended to provide some property tax relief for local home owners, without any guarantee of additional state dollars for education, it actually erodes the funding base for our schools. SB 13 also rolls back protections for noninstructional employees whose job functions are contracted out to a private vendor and eliminates the requirement that schools provide drivers education and daily physical education. IFT opposes SB 13 which does the following: Includes a two-year property tax freeze (in 2017 and 2018) that will further erode already scarce revenue streams for schools and local governments. Allows school districts to privatize their driver education programs. Eliminates third party contracting protections that require vendors to provide comparable salary and benefits to non-instructional employees. Decreases physical education (PE) requirements, allowing school districts to excuse certain students from PE and reducing the scheduling requirement from daily to three times a week.