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2014 - Legislative Update August 1
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Illinois Section AWWA Members
Legislative Update
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No Action Yet on Tap In Fee Bill

The Governor has yet to take action on Senate Bill 3507, legislation that provides townships with the authority to collect tap-on fees, but it also, inadvertently or otherwise, caps those fees for townships and municipalities to 1/6 of the annual estimated charges for the user. Consequently, it replaces the current actual cost required for installation and annual usage municipalities now charge for actual cost.

During the last month there have been discussions with the Governor’s Office explaining the deficiencies in the legislation and the unfairness and negative impact of the newly imposed cap. Additionally, phone calls and letters objecting to the language of the bill and asking for a total veto have been forward to the Governor and his staff. The final deadline for the Governor to act is August 24.

ISAWWA has also has been working with township and municipal groups to coordinate the appropriate, focused messaging to the Governor’s Office so that the his office has no doubt that there is unity in opposition and clarity as to the action we wish him to take.

Fracking Rules Still Stalled

While there has been no announced schedule for when the Joint Committee on Administrative Rules (JCAR) might finally have the opportunity to weigh in on the final proposed rules that would govern hydraulic fracturing in the state of Illinois, proponents who feel they negotiated a fair deal and saw their legislation approved in May, 2013 are getting restless and angry.

Earlier in July a number of labor and business leaders held a press conference criticizing the Quinn administration for the now-400 day delay in producing a final version of fracking administrative rules. According to the Illinois Department of Natural Resources (DNR) process has been stymied by having to respond individually to the over 35,000 comments to the initial rules filing that were initiated by environmental groups opposed to fracking. No update has been issued by the DNR as to the status of that response program. Pervasive rumors hint that the administration would prefer to wait until after the November election to release the final version of the rules so as not to take the chance of alienating supporters the Governor may need in his reelection efforts.

Once DNR does finalize the fracking rules they will be forwarded to JCAR for final action. Normally, JCAR decisions come fairly swiftly, by in cases where policies they are to consider are controversial additional time may be taken. That being the case, it appears that it maybe next spring before any final, final rules are approved.

Holy Sinkhole, Batman!

No one saw it coming. No one. In golf, they would have called it a "chip shot”. But the Illinois Supreme Court had other ideas and took a baseball path instead by "throwing a curve in the strike zone” earlier this month and ruling legislation that required all state retirees to pay for a portion of their health care benefit unconstitutional and catching the batter flatfooted. The 6-1 ruling, in the opinion of many, sets the stage for a similar ruling on Senate Bill1, the comprehensive pension reform bill enacted last year, after which the gnashing of teeth will begin.

When Senate Bill 1313 (maybe they should have chosen a slightly luckier number) was successfully considered by the General Assembly in 2012 they prevailing legal opinion based on pretty thorough research was that health care benefits were not part of any constitutionally protected retirement benefit "contract” as is stipulated in the Illinois Constitution. It was such a given that the state began collecting premiums from retirees over a year ago without waiting first for a Supreme Court ruling.

In the majority decision the Court stated that any changes to a pension statute "must be liberally construed in favor of the rights of the pensioner.” With what was thought to be the "low hanging fruit” of the health care benefit now being excluded from elements of reform, a lot of wheels will be turning in the upcoming months as the powers that be grapple with the impact of this issue and the larger reform issue ruling that loom in the not too distant future. The attorneys for the objectors to Senate Bill 1 have already been before the judge in Sangamon County asking for an expedited hearing as a result of the Senate Bill 1313 decision. At this point many feel the sooner the better so whatever else happens to be in the statutory bag of tricks that can provide pension reform and the associated fiscal relief can be discussed. But one of the disheartening factors about this action by the court to those trying to craft a solution was that it left very little in the way of openings for further pension reform actions by the legislature … on top of having to probably pay back the money that’s already been collected from retirees. Ironically, the Department of Central Management Services issued an emergency rule in July seeking to double the amount that state retirees paid for their health care. The court decision has put the kibosh on that.

As a way to justify the need for the Supreme Court to take positive action on Senate Bill 1 the preamble to the bill cites numerous negative factors resulting from the pension morass that require the use of state emergency powers. That would be the justification, it was thought, the Court could use to justify the reforms even if they crossed the constitutional line of contractual guarantee. It appears from the Senate Bill 1313 decision that argument just isn’t going to fly. What’s worse, is that the legislature’s second line of defense, the theory of "consideration” … giving up certain benefits to retain or secure others (for example, giving up the free health benefit in exchange for a compounded COLA) would also be in deep trouble. So, it’s going to take some real creative thinking to figure out a way around this one. As for making the argument that there should be pension relief provided because of the state’s teetering fiscal condition the majority opinion stated, "In light of the constitutional debates, we have concluded that the provision was aimed at protecting the right to receive the promised retirement benefits, not the adequacy of the funding to pay for them.” So much for those ideas. Senate President John Cullerton has also apparently floated an idea that would offer current state union employees a choice of a taking pay raises or retirement COLAs rationalizing that younger workers would take the raises and older workers would take the COLAs so the state would save oodles over time that would have been set aside for future COLA payments. There is no telling whether or not such a play would fly with the courts.

So far, there hasn’t been much public discussion about possible alternatives to provide some fiscal relief that Senate Bill 1313 and Senate Bill 1 would provide. If Senate Bill 1 were to be held to be constitutional it was estimated that the cost to the pension systems would have decreased by $1.5 billion in FY 2016. Now, somehow, there’ll be a need to absorb that into the budget unless some other means can be found. Are there alternatives? A number of obvious ones have been suggested by observers such as extending the temporary income tax and dedicating a portion to pension costs, extending the pension schedule from the current 30 year full funding goal to some longer term that could cost extra billions over the long term but provide much needed relief now, and reviving the proposal to make local school and community college districts responsible for paying their portion of pension costs rather than the state. But, whatever the alternative solutions may be there is hope that discussions of possible solutions take place sooner rather than later.

Tax Talk On The Table

As far as statewide campaigns go July is normally a quiet month with candidates positioning themselves for the fall stretch run, but July, 2014 has been anything but quiet as far as gubernatorial candidates are concerned. And interesting that "fireworks month” has been the one where the state’s fiscal condition has been a major focus and a major candidate’s tax proposals have been released for public consideration.

Illinois has been in the fiscal dumps for years. Up until this last session of the legislature efforts have been made to trim the debt which at one time was upward of $10 billion and it has been cut in half. While the legislature reverted to their old ways in 2014 that will carry over $1.5 billion in debt to the next fiscal year, for the previous four years there was both a focus on reducing outstanding bills and a recovering economy that helped narrow the gap. In fact a few weeks ago the Governor announced that the state’s unpaid bills had dropped just under $4 billion. Comptroller Judy Topinka put the number at approximately $4.5 billion because of the way the Governor’s Office was counting health care billings. Nevertheless, there has been an improvement but there’s still a long, long way to go.

The next big question facing the General Assembly and the next governor is the fate of the temporary income tax increase enacted four years ago. The Governor has made making the tax permanent a linchpin of his re-election efforts and pushed the legislature to enact the extension during the spring. That move failed but he has continually pressed for the need this summer arguing that the Illinois can ill afford to lose the $3.6 billion in annual revenues that would make efforts to make deficits disappear almost impossible in the shorter term.

Up until mid-July Quinn’s November opponent, Bruce Rauner, has been coy about plans to address Illinois’ fiscal issues, relating that plans were in the works and would be released in due time. That time arrived, at least partially, two weeks ago when the first part of his plan was announced. Most expected that Rauner’s plan would contain the mantra of letting the temporary income tax increase expire as scheduled next January. Instead, his plan called for a phase-out of the extension over four years, meaning he is willing to see the higher tax rate renewed for a limited time. His plan did not provide a phase-out schedule. Rauner’s plan also includes a freeze on local property taxes and the extension of service taxes to include 26 various services. His campaign predicted that the new service taxes that cover such things as interior design services, janitorial services, attorneys, computer programming, personal property rentals, printing, and golf club memberships would raise approximately $600 million per year. If/when the temporary income tax expires there would be a revenue gap of $3 billion to overcome, but there no doubt will be more information and discussion about the various plans of both candidates to set the state on a course for solvency as the campaigns progress.

There is one interesting aspect to all this. Over the last twelve years that Democrats have controlled the legislature and the Governor’s Office legislative Republicans have generally been content to let the majority party do any heavy lifting regarding revenues and budget reductions. Should their candidate win in November he is going to expect cooperation from his own party’s legislative delegation to support his initiatives, including his revenue plans. Convincing any to vote for tax initiatives would not be easy and would not be pretty, but would certainly be fascinating to watch.

Who Gets What

For decades various Illinois state administrations have looked for ways to maximize the return of federal dollars back home and parity has never been achieved. In fact, it’s remained fairly stagnant over the years, and Illinois has never been a state that receives more than it sends to Washington. Last month a group known as "Wallet Hub” did a study on how well states did as to various aspects of federal largess and Illinois didn’t fare too well. If there is good news it’s that we’re a not a state dependent on the federal government, ranking second overall as one of the least dependent. The bad news is that we only get $.56 back for every dollar we send … and are listed as the third worst in that category. Delaware was ranked as the least federally dependent state, followed by Illinois, Minnesota, New Jersey and Connecticut.

The five states who receive the most federal monies coming back to them? The leader is South Carolina ($7.87) followed by North Dakota ($5.31), Florida ($4.57), Louisiana ($3.35), Alabama ($3.28), Hawaii ($3.19) and Mississippi ($3.07). Ironic that those states that feel the strongest about cutting federal spending and balanced federal budgets have the most to lose should that occur.

July Rulemakings of Note

  • IEPA adopted an amendment to "Permits" effective 6/30/14 that allows EPA to issue construction permits to a community water supply even if it is in violation of the Environmental Protection Act or regulations when the requested permit is for construction or installation of equipment necessary to meet general public water supply requirements in 35 Ill Adm. Code 601. Municipal water supplies may be affected.

  • IEPA also adopted amendments to "Testing Fees for Analytical Services" that implement provisions of Public Act 97-220 eliminating requirements that EPA determine drinking water program analysis fees in consultation with the Community Water Supply Testing Council. Instead, EPA must base its annual fee determination on actual and anticipated testing costs. The rulemaking further updates the program's notification and participation process. Small businesses or small municipalities that test or operate public drinking water supplies are affected by this rulemaking.

Questions/requests for copies of these two EPA rulemakings: Rex L. Gradeless (217/524-3332) for Part 652 and Sara Terranova (217/782-5544) for Part 691, EPA, 1021 N. Grand Ave. E., Springfield IL 62794-9276.

  • DPH has proposed amendments to "Water Well Construction Code" adding a definition of "storm sewer"; reflecting the agreement between DPH and closed loop and water well drilling industries regarding the setback requirements between such wells and sources of contamination, specifically sewers. This rulemaking may have an effect on closed loop well contractors.

Questions/requests for copies/comments on the proposed DPH rulemaking until 9/8/14: Susan Meister, DPH, 535 W. Jefferson St., 5th Fl., Springfield IL 62761-0001, 217/782-2043, e-mail: dph.rules@illinois.gov.

Legislative Transition

Rep. Sheri Jesiel (R-Gurnee) has been appointed to replace Rep. JoAnn Osmond who resigned.

Rep. Chuck Jefferson (D-Rockford) has resigned. No replacement has yet been named.

Session Schedule/Deadline Dates

Here are relevant dates for the legislative session:

  • November 19, 20, 21 – first veto session week
  • December 2, 3, 4 – second veto session week

Bills of Interest

Bills listed are those that have been sent to the Governor for final action.

HB 3635 – Rep. W. Davis /Sen. Sandoval - Provides that the Illinois Commerce Commission shall require all gas, electric, and water companies with at least 100,000 customers under its authority, all local exchange telecommunications carriers with at least 35,000 subscriber access lines, and a person or entity providing cable or video service to submit an annual report by April 15, 2014 and every April 15 thereafter, in a searchable Adobe PDF format, on all procurement goals and actual spending for female-owned, minority-owned, veteran-owned, and small business enterprises in the previous calendar year. Provides that each participating company shall include certain specified information in its annual report. Provides that each annual report shall include as much State-specific data as possible. Provides that the Commission and all participating entities shall hold an annual workshop open to the public in June of 2014 and every year thereafter on the state of supplier diversity to collaboratively seek solutions to structural impediments to achieving stated goals. (Status – Sent To Governor)

HB 5785 – Rep. Franks/Sen. Biss - Amends the following Acts and Codes to provide that, upon a majority vote of the boards of the entities created under the following Acts and Codes in favor of the proposition to annex or consolidate, then that entity shall cease: Property Tax Code, Counties Code, Cemetery Maintenance District Act, Civic Center Code, Conservation District Act, Downstate Forest Preserve District Act, Public Health District Act, Tuberculosis Sanitarium District Act, Museum District Act, Illinois International Port District Act, River Conservancy Districts Act, Solid Waste Disposal District Act, Street Light District Act, Surface Water Protection District Act, Water Service District Act, Water Authorities Act, Water Commission Act of 1985, and the Illinois Highway Code. Provides that on the effective date of the annexation or consolidation, all of the rights, powers, duties, assets, liabilities, indebtedness, obligations, bonding authority, taxing authority, and responsibilities of the entity shall vest in and be assumed by the governmental unit assuming the former entity's functions. (Status – Sent To Governor)

SB 2770 – Sen. Althoff/Rep. Tryon - Amends the Public Water Supply Operations Act. Provides that every community water supply in Illinois, with specified exemptions, shall have on its operational staff, and shall designate to the Agency in writing, either (i) one Responsible Operator in Charge who directly supervises both the treatment and distribution facilities of the community water supply or (ii) one Responsible Operator in Charge who directly supervises the treatment facilities of the community water supply and one Responsible Operator in Charge who directly supervises the distribution facilities of the community water supply. Defines "Responsible Operator in Charge". Establishes duties of Responsible Operators in Charge. Provides that a violation of the Act by a Responsible Operators in Charge shall be enforceable by administrative citation. (Status – Sent To Governor)

SB 2780 – Sen. Kotowski/Rep. Nekritz - Amends the Environmental Protection Act. Removes a provision requiring rule to include a requirement for a local match of 30% of the total project cost for projects funded through grants. Adds to the definition of "treatment works". Provides that the Water Pollution Control Loan Program shall be used and administered by the Environmental Protection Agency to provide any financial assistance that may be provided under a specified provision of the Federal Water Pollution Control Act for any projects eligible for assistance under that provision. (Status – Signed By Governor – PA 98-782)

SB 2928 – Sen. Link/Rep. Osmond - Creates the Lake County Prescription Drug Disposal Pilot Program. Provides that the program shall facilitate the collection, transportation, and disposal of pharmaceuticals by law enforcement agencies. Requires the Director of the Illinois Department of Public Health to submit a report on the collection efforts and overall effectiveness of the program to the General Assembly and the Governor by January 1, 2016. (Status – Sent To Governor)

SB 2966 – Sen. Steans/Rep. Cassidy – Creates the Urban Flooding Awareness Act. Defines "urban flooding". Provides that, by June 30, 2015, the Department of Natural Resources, in consultation with the Illinois Emergency Management Agency, the Illinois Environmental Protection Agency, the Illinois Housing Development Authority, the Department of Commerce and Economic Development, the Department of Insurance, the Federal Emergency Management Agency, the Metropolitan Water Reclamation District of Greater Chicago, the Illinois State Water Survey of the University of Illinois, and other State, regional, and local storm water management agencies, thought leaders, and interested parties, shall submit to the General Assembly and the Governor a report that reviews and evaluates the latest available research, laws, regulations, policies, procedures, and institutional knowledge concerning issues of urban flooding. (Status – Sent To Governor)

SB 3055 – Sen. Biss/Rep. Fortner - Amends the Illinois Water Well Construction Code. Changes the definitions of "modification" and "closed loop well". Makes other changes. (Status – Sent To Governor)




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