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2014 - Legislative Update Sept 8
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Illinois Section AWWA Members
Legislative Update
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Governor Amends Connection Fee Bill

During the past three months ISAWWA has been very active in its attempts to have the Governor either veto or correct provisions of Senate Bill 3507 which severely restricts connection fees. In response to numerous complaints about the overreaching nature of the legislation, especially related to municipalities, The Governor used his amendatory veto power and suggested changes to the legislation. The original bill as approved by the General Assembly capped those fees for townships and municipalities to 1/6 of the annual estimated charges for the user. The Governor’s amendment deletes the municipal restriction.

The Governor’s amendatory veto message said, in part, “A potential consequence of the bill is a severe limitation on the amount municipalities and townships can charge in connection fees, which could force them, in order to make up for the loss of revenue in connection fees, to increase water and sewer rates for all users of the system.” He added, “The sponsors of Senate Bill 3507 requested an amendatory veto to strike the language covering municipalities.  Efforts will be undertaken later this year to reach an agreement with representatives of municipalities on trailer legislation providing for ‘fair connection charges.” It is true that discussions have taken place on the trailer legislation the Governor mentioned but no agreement has yet been reached and there are many roadblocks that could arise that may stall an agreement on language in time for the fall veto session.

As far as the original bill is concerned, the next stop for Senate Bill 3507 will be the fall veto session in late November and early December. If the General Assembly accepts the Governor’s suggested changes the bill will become law. If, however, either legislative chamber does not approve of the recommended changes the bill will be dead.  It is also safe to assume that during veto session the sponsors will try to move forward a trailer bill but without an agreement successfully moving any further changes may face tough sledding.

Fracking Rules Issued

The Illinois Department of Natural Resources (IDNR) has finally issued its revised rules on hydraulic fracturing. The final rules were issued this past Friday and the notice will be published in the Illinois Register next week.

There had been speculation that the final version of the rules would be held until after the November election but over the summer there has been mounting pressure put on the administration get things moving. The original legislation was approved by the legislature in May, 2013 and approved by the Governor with great fanfare. The process of finalizing the rules was stalled partly because of a provision in the law that requires an agency to respond individually to public comments. Environmental groups who oppose hydraulic fracturing produced an avalanche of 35,000 comments and severely crimped IDNR’s ability to move forward in a timely manner.

The speculation has been that the hydraulic fracturing rules may be given final approval by the Joint Committee on Administrative Rules (JCAR) at its meeting on September 16, but because this entire process has been so contentious that is no guarantee. It really depends how much the final version of the rules placates the dissenters.

The period where proposed rules move from the agency to JCAR is called “Second Notice” and last for 45 days but can be extended for 45 days by agreement of the agency and JCAR. During this time JCAR staff reviews the rules and also consults with JCAR members (a group of twelve bipartisan legislators, six from each party). During the review process there can be opportunities to further modify the rules and that’s where the process can get sticky and further delayed. Hydraulic fracturing opponents are most assuredly not going to be happy with whatever final rules suggest regardless, so there might be lots of pressure on JCAR legislative members to consider further rules changes. JCAR does not conduct public hearings where testimony is taken or comment is received, but they do often try to negotiate agreements when possible and applicable. Such circumstances do delay any final action. The question for JCAR members and staff will be whether or not anything other than killing the rules will satisfy opponents. If it looks like they can’t then they might just move them through quickly.

The revised rules, public hearing transcripts and IDNR’s response to comments can be found at http://www.dnr.illinois.gov/OilandGas/Pages/PublicHearingTranscriptsAndComments.aspx.

Governor’s Bill Action Completed

It appears that the scheduled fall veto legislative session won’t have much to consider by way of addressing actions of the Governor. Of the 511 bills that the General Assembly approved and sent to him for his consideration he signed 500, vetoed six, amended four and used his item veto on another. The legislature could dispose of that light workload in a few hours if needed. But, over the years the fall session and the January lame duck session have proven to be the place where some major decisions are made and that may well be the case in 2014.

Tough Road Ahead

When it comes to state finances, the situation in Illinois it seems directly contrasts that passage in the song “Home On The Range”. Illinois seems to be the place where “never is heard an encouraging word” and where the skies are continuously cloudy. Until last week, that is, when Governor Quinn announced that the level of the state’s unpaid bills had reached a recent low of $3 billion. Just a few years ago the level of unpaid bills stood at $10 billion plus so it looks as if some significant progress has been made to get everything back to even keel. Well, maybe.

There is no doubt that there had been a significant reduction in outstanding warrants to state vendors and providers over the last number of years. Until this past session most of that fiscal discipline was a product of the determination of the General Assembly leadership to try to get state finances under control after experiencing spiraling pension costs and a devastating recessionary period that sent state revenues reeling. From establishing a process where pension, health care and other fixed costs were considered first and what remained was available for operating expenses to allowing appropriations committees some leverage to make budget decisions for most other discretionary items the General Assembly, often without the Governor’s Office input. They made tough decisions and on a number of occasions actually created workable budgets while being able to save programs that the Governor’s initial budget had zeroed out. And, by fixing a set spending ceiling each year the legislature created the opportunity for excess revenues, such as a few billion in additional income tax receipts, to be used to bring down the debt. So, after all that we can see the light at the end of the tunnel, right? Not so fast.

The Governor’s announcement trumpeted the good news as a sign that progress has been made and provided a “glass half-full” assessment of the problem. Quinn’s opponent, Bruce Rauner, saw the news as a “half-empty glass” because $3 billion in outstanding debts is still nothing to sneeze at. So, who’s right? Half-empty or half-full? Actually, both.

There is no doubt that things have been on the uptick. Illinois’ economy and tax receipts have been improving over the past few years allowing the state to close the gap on unpaid bills. And it wasn’t easy. But it what lies ahead that poses a huge dilemma.

Political rather than fiscal prudence was the after effect of the last legislative session. Among other things, some high ticket spending items were deferred, $650 million in inter-fund borrowing was approved and will have to be paid back, and revenue estimates were tweaked to make the budget balance on paper. Of course, the huge factor that caused all of this deferral and borrowing was the upcoming sunset of the temporary income tax increase that left a $1.6 billion budget void. Looking to the future, not only will the next governor and legislative session have to come up with a way to pay for this year’s shortfall but when trying to put together the next budget they’ll also face a full year, an added 1.6 billion, of lost revenue due to the tax sunset. Oh, and they might also get an adverse pension reform ruling from the Illinois Supreme Court that undoubtedly would force a search for additional resources.

So yes, over the past few years a pathway to solvency has been cleared, by the road ahead is strewn with thicket that will make travel very difficult. It’s going to take leadership and cooperation in order to take the next steps. In the next ten weeks Illinoisans will decide which of the gubernatorial candidates they feel can take the reins and clear the rest of the path.

Pension Lawsuit Update

When the first lawsuits relating to Senate Bill 1, the massive pension reform package, were filed after the bill was signed into law, the expectation was that it might take up to two years to get a final ruling from the Illinois Supreme Court. But, with the Court’s ruling last month on retiree health care the Court seemed to send a strong signal that the provisions of Senate Bill 1 could be on life support a coalition of opponent groups have asked the Sangamon County Circuit Court hearing the case to expedite its deliberations so that a final determination could occur quicker.

While it’s foolhardy to predict what any court will do with any question of importance that it is considering, the 7-1 July 3 Illinois Supreme Court ruling on Senate Bill 1313 seemed to send a pretty clear signal that those defending the law had better be able to pull a rabbit out of their hats or the whole pension reform question will head back to the drawing boards. Since it took almost three years of blood and sweat to hammer out an agreement that barely squeaked by there’s no telling how long, and even if, an alternate package can be worked out.

In order to persuade the courts that their rationale was sound in light of the perceived constitutional limitation on modifying pension benefits already in force, the General Assembly inserted a preamble to their reform language justifying their actions as a necessary and allowable use of the state’s police power used in dire circumstances, those circumstances being the state’s fiscal quandary. Many observers were of the opinion that the legislature’s rationale just might work, especially since the judges and justices read the newspapers and are aware of the state’s horrific fiscal plight. There was a feeling that the courts would find a way to make the provisions of Senate Bill 1 for “fit” within the context of the provision of the Constitution that seemingly bar what the reform package was allowing. That balloon has seemingly been popped. Seven Justices out of eight agreed that any changes to a pension statute "must be liberally construed in favor of the rights of the pensioner.” And, since the provision they were overturning, health care benefits, have always been considered outside the realm of an actual pension benefit the skies are darkening on the chances of Senate Bill 1 holding its own when the Supreme Court finally gets the case.

At this point it makes absolute sense for the expedited request. The Governor and the General Assembly have some pretty heady budget decisions to make in the next year or two and they shouldn’t be done with such an important factor hanging out there are an unknown.

“If It Walks Like A Duck …”  

Last week both the Illinois Appellate Court and the Illinois Supreme Court put the final nails in the coffin of the proposal to have a constitutional amendment on term limits placed on the November ballot via citizen initiative. Earlier this summer a circuit court judge ruled that the term limits question went beyond the constitutional limitation of “structural and procedural” changes to the Legislative Article. Late last week the Appellate Court by a 3-0 vote unanimously agreed with the circuit court judge and then, a few days later, the Illinois Supreme Court denied a request to hear the case.

Were the decisions of the courts unexpected? Well, no. In 1984 the Illinois Supreme Court rejected a citizen initiative Constitutional Amendment regarding term limits saying it violated the “structural and procedural” provision. Structure issues, such as the successful 1980 Cutback Amendment that reduced the size of the Illinois House, and procedural issues, for example the number of voted required to approve a tax increase, are very limited in their scope. The 1894 Supreme Court ruling specified that term limits did not fall within the allowable definition.

In retrospect, should the proponents of term limits have expected any other result? Well, twenty years have passed and there are new member of the Court so maybe they thought they had a shot in that regard. They also tried a different approach by adding a number of other initiatives that definitely were “structural and procedural” hoping that courts would look at the whole instead of the various parts. For instance, they also included provisions to reduce the size of the Illinois Senate, increase the size of the Illinois House, change Senate terms of office, and increase the number of votes required to override a veto. But, as they were putting all of this together they had to know that the previous term limit ruling would weigh heavily against them, and in the end it did. The Appellate Court ruling stated that the other provisions included in the package “might well have complied” with the constitutional requirements but decided that the entire proposal was invalid due to the term limits piece. As it turned out the bad apple spoiled the entire barrel.

Governmentally, those in favor of term limits were very disappointed. Politically, however, it just may be a different story since it just so happens that the prime mover of the 2014 term limit drive was Bruce Rauner. And, since 600,000 signed those petitions to have the question on the ballot, it provides a whole lot of names that the Rauner campaign can access over the weeks leading up to the election. Ironically, the accumulation of names and compilation of databases was a hallmark of Pat Quinn when he headed the Coalition for Political Honesty.

In the meantime, the November ballot will be loaded with ballot questions, both Constitution Amendments and advisory questions, which will give Illinoisans a chance to express their opinions … and also serves as motivation for some to encourage others to get to the polls. Those questions relate to voting rights, raising the minimum wage, the 3% millionaire surcharge, and whether or not health care insurers should offer contraceptive coverage.

 

Legislative Transition

Sen. Chris Nybo (R-Westmont) has been appointed to replace Sen. Kirk Dillard who resigned.

Rep. Litesa Wallace (D-Rockford) has resigned been appointed to replace Rep. Charles Jefferson who resigned.

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

The Governor has now completed action on all bills sent to him for his consideration.

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 – Signed By Governor – PA 98-1056)

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 – Signed By Governor – PA 98-1002)

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 – Signed By Governor – PA 98-856)

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 – Signed By Governor – PA 98-857)

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 – Signed By Governor – PA 98-858)

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 – Signed By Governor – PA 98-951)



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Illinois Section AWWA

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St. Charles, IL 60174
Ph: 866-521-3595 x2 | Fax: 866-521-3591 | lisa@isawwa.org
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