Progress Illinois

Two weeks ago, state lawmakers wrapped up the fall veto session and headed home with hopes that Illinois' financial crisis wouldn't follow them back to their own districts. So far, the bad budget news has trickled in slowly enough that many have been able to distance themselves from the severity of the state's financial situation. But they won't be able to dodge blame forever. For example, adding millions in school reimbursements to the growing pile of unpaid bills is weighing heavy on cash-strapped districts. And in places like the Central Illinois town of Pekin, the backlog -- coupled with other uncertainties and cutbacks -- is growing too big to sweep under the rug. The Pekin Daily Times explains:

The state has a multi-billion-dollar deficit. Inflation is down so far that school districts are limited in how much they can raise taxes to bring in new revenue. Corporate Personal Property Replacement Taxes and sales taxes are down.

General state aid funding for schools is running three months behind. Programs like special education and transportation will not be funded at the full levels. The state has not yet received an application for additional federal American Recovery and Reinvestment Act funding, which was used in lieu of state-generated general state aid payments.

Illinois State Board of Education Chair Jesse Ruiz summed it up best when warned that if the state doesn't generate new revenue for schools next year, "we fall off the cliff."

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An all too common sight in American politics these days is the fiscal conservative who works diligently to protect the interests of the wealthy -- no matter how costly those protections are. The fight over the estate tax (imposed on the assets of a deceased person) perfectly embodies this phenomenon. And that debate might bubble up in Illinois very soon.

First, let's review how the estate tax operates here in the Land of Lincoln. Prior to this decade, the federal and state estate tax laws worked in tandem. Taxpayers received a dollar-for-dollar credit (up to a specified amount) against their federal estate tax liability. Every state then applied their own estate tax, which was identical to the value of the credit. (Colloquially, it was known as a "pick-up tax.") Let's say you had an estate with taxable income totaling $2,000,000. The feds provided you with a credit of roughly $150,000. (See the state estate tax credit schedule here.) Illinois then levied its own tax equaling $150,000.  In the end, the combined Illinois and federal tax liability were the same as the total federal tax before the credit. But in the process, state legislatures earned a little bit of extra scratch

That all changed in 2001 when Congress enacted President Bush's first major round of tax cuts (legislation known as EGTRRA). That bill phased in a full repeal of the federal estate tax over a 9-year period (set to take effect in 2010). It also gradually increased the federal estate tax exemption -- the amount of money that the wealthy were allowed to shield from the tax. (It was raised to $1 million per individual in 2002, $1.5 million in 2004, $2 million in 2006, $3.5 million this year.) And it phased out the state credit, thereby depriving state governments of the "pick-up tax" revenue. If they didn't want to forgo that money, lawmakers were forced to decouple from the federal statue and establish their own, independent estate taxes.

In early 2003, Illinois did just that.

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Below are our daily picks from the Illinois blogosphere and media at large:

A Little Less Choice
Prairie State Blue's Jeff Smith writes about the exit of progressive activist Andrea Raila from the Cook County assessor's race.

Stalling Justice
The lead editorial in The Nation this week criticizes the Cook County State's Attorney's Office for subpoenaing the private notebooks and grades of Northwestern student journalists investigating a wrongful conviction.

What's Holding Up The Vote?
The Wonk Room's Igor Volsky looks at the last few obstacles to health care reform in the House.

To receive our “Around The Horn” update in your inbox every afternoon—along with links to our top stories and the breaking news of the day—sign up for the Progress Illinois Extra.  You can also learn what we're reading via our Twitter feed.

There are two new campaign ads out this afternoon.

First up, Democratic Senate candidate Alexi Giannoulias' campaign has a new web video slamming GOP frontrunner Mark Kirk for seeking Sarah Palin's support:

On a related note, the Sun-Times editorial board criticized the North Shore Republican this morning in a piece headlined "Moving right might cost Kirk election."

Next is 10th Congressional District candidate Julie Hamos, who released her first TV spot today. Health care is the theme. "Let's not let this moment in history pass us by," she says about the prospect of reform. Watch it:  

Speaking of health care, United Power for Action and Justice and the Sargent Shriver National Center on Poverty Law have published a new video featuring two physicians explaining why they believe reform is necessary.  Watch it:

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Just one week after President Obama signed into law a measure that adds sexual orientation and gender identity as protected classes under hate crime statutes, gay rights advocates were back on Capitol Hill yesterday pushing for additional civil protections. Among them was Illinois' own Attorney General Lisa Madigan, who testified in favor of the recently reintroduced Employment Non-Discrimination Act (S. 1584), which would finally bar most workplace discrimination based on sexual orientation or gender identity.

To the credit of state lawmakers, Illinois' own Human Rights Act was amended back in 2006 to include both sexual orientation and gender identity as protected classes under anti-discrimination laws. The fact that we are one of only 12 states to put such protections on the books underscores the need for a federal response, Madigan told the Senate's Education, Labor and Pension Committee. "Through the enactment of a statewide statute prohibiting discrimination based on sexual orientation or gender identity, Illinois has promoted tolerance, fundamental equality and the common humanity of all individuals in our state," Madigan said. "The benefits of such a message to the citizens of our state cannot be underestimated." Watch an excerpt from her testimony below:

Right on schedule, President Obama signed into law this morning H.R. 3548, a federal extension of unemployment insurance. The bill extends jobless benefits to unemployed Americans set to exhaust their insurance by December 31 in states (like Illinois) where unemployment rates are high. According to the Illinois Department of Employment Security, 28,000 unemployed individuals have already run out of benefits and 12,000 more will by year's end. The legislation also extends through June an $8,000 tax credit for new homebuyers. In a statement following the signing, the president said the bill "will help grow our economy, help create and save jobs, and help provide necessary relief to small businesses." The Illinois AFL-CIO's Michael Carrigan agrees. From the Sun-Times:

"With Illinois' unemployment rate still over 10 percent, many families need this extension," said  president of the Illinois AFL-CIO. "For most, their unemployment check is what keeps food on the table, and as we head into winter, their homes heated. Our economy is slowly rebuilding, but until the job market rebounds we have to protect those who have lost their jobs."

But Congress might not be done.

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This past spring, a new $16 million system implemented by the Chicago Department of Public Health (CDPH) turned out to be so flawed that patient mental health bills weren’t submitted to the state for six months in 2008. This so-called "glitch" led to a loss of more than $1million in state funding and almost resulted in the closure down four clinics on the city's South Side.  Back in July we took Daley administration officials at their word when they said that the problems were fixed.

Big mistake.

During the ongoing city budget hearings yesterday, it was revealed that the system is still not working properly. Outgoing CDPH chief Terry Mason told aldermen that fixing the $16 million Cerner system -- which was supposed to represent an upgrade -- remains "an active process."

To his credit, Ald. Rick Munoz (22nd Ward) pressed him on the matter: "You're saying that after 18 months you're unable to work out technical glitches that prevent us from billing the state?" "That is correct," Mason responded.

Budget Committee Chair Ald. Carrie Austin (34th Ward) assured Munoz that the Cerner system would be fixed within "months."

"Months?" Munoz asked.  Austin replied that she couldn't offer a "specific date."

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If he's to survive the rough-and-tumble Republican gubernatorial primary, State Sen. Kirk Dillard is going to have to appease his party's conservative base. That includes providing justification for his appearance in the first biographical television ad produced by then-Presidential candidate Barack Obama. "Sen. Obama worked on some of the deepest issues we had, and he was successful in a bipartisan way,” the Hinsdale lawmaker said in the ad. “His negotiation skills and an ability to understand both sides would serve the country very well.”

At a "tea party forum" in Homer Glen Wednesday night, one attendee wanted to know if Dillard still believed that his former colleague was "serving the country well." Dillard quickly said no before launching into a revisionist attack on the president, claiming that he doesn't like the "socialistic policies" that are being implemented in Washington and that he "warned people back then that [Obama] was a socialist." Watch it:

DILLARD: I disagree with Barack Obama on about 95 percent of what he stands for or is. One of the reasons I'm here tonight is I don't like those socialistic policies and I warned people back then that he was a socialist and took him on on socialized medicine on the floor of the Illinois State Senate.

This clip raises a few questions.

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Unemployment Tops 10 Percent
The national unemployment rate hit a 26-year high in October, reaching 10.2 percent according to the U.S. Labor Department. The jump, from 9.8 percent in September, reflects a sharp increase in the number of unemployed Americans, which rose to 15.7 million from 15.1 million one month earlier.

Durbin Calls For Veterans Hospital Takeover
Following the latest audit revealing mismanagement at a troubled veterans hospital in Marion, U.S. Sen. Dick Durbin is calling for a management overhaul of the facility.

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It's no secret that Illinois conservatives hate the Democrats' cap-and-trade legislation with a passion. Indeed, their intense opposition is likely what led U.S. Senate candidate Mark Kirk to backtrack from his earlier support for the House climate bill. So it's not surprising that the Republicans running for governor in Illinois would express reservations about the proposal in front of a packed "tea party forum" in Homer Glen last night.

But the GOP candidates didn't simply criticize cap-and-trade as the wrong way to address climate change -- four of them denied that humans have even contributed to global warming.

When asked whether they believe "climate change is caused by human activities," State Sens. Kirk Dillard (R-Hinsdale) and Bill Brady (R-Bloomington), DuPage County Board Chair Bob Schillerstrom, and commentator Dan Proft responded by rejecting that premise. Watch thevideo (pardon the shaky camera work):

Apparently Proft thinks that the 2,500 scientists and other climate experts who make up the Intergovernmental Panel on Climate Change (IPCC) qualify as "enviro-terrorists."

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Deluged by the thousands of foreclosure cases that have clogged the Cook County court system, Chancery Division Presiding Judge Dorothy Kirie Kinnaird made a bold move back in June when she called for a two-month reprieve on mortgage defaults. Despite her effort to buy homeowners time to seek mediation,  resources remain too scarce -- particularly for people from the low-income communities hit hardest by the foreclosure crisis.

With the county pulling in millions in foreclosure filing fees, some local housing advocates are calling on Cook County Board President Todd Stroger to get creative and start redirecting that money toward mediation services. The local community organization Action Now estimates that the spike in $300 foreclosure filing fees has generated an additional $15 million for the county's coffers. Still, the Stroger administration has yet to allocate any of that money toward foreclosure prevention. "Why not use some of that money for mediation?" Marsha Godard of West Lawndale asked at a rally outside Stroger's office this morning. "At least that would give people a fighting chance."

It's no secret that low-income and African American neighborhoods have seen the highest concentration of foreclosures here in Illinois. "We saw someone getting put out on our way down here," activist Michelle Young of Austin reported at the rally. "This is about people losing their homes -- people who are moving out in the middle of the night because they're ashamed to say 'I'm having trouble with my mortgage.'" Watch:

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Below are our daily picks from the Illinois blogosphere and media at large:

A Powerful Idea
The New York Times editorializes in favor of Chicago Public Schools chief Ron Huberman's anti-violence initiative.

Regressive Taxation
New data from the Center for Budget and Policy Priorities shows that 16 states taxed working-poor families deeper into poverty last year. Illinois was one of them.

Picking Pelosi's Pocket
The Huffington Post's Ryan Grim explains how Senate Majority Leader Harry Reid (D-NV) stole one of House Speaker Nancy Pelosi's revenue proposals for health care to pay for an amendment to the unemployment extension bill.

To receive our “Around The Horn” update in your inbox every afternoon—along with links to our top stories and the breaking news of the day—sign up for the Progress Illinois Extra.  You can also learn what we're reading via our Twitter feed.

Twenty-seven days after they first passed an unemployment benefit extension, the U.S. House is returning to the issue today.

Following the passage of H.R. 3548 in the Senate last night, House Majority Leader Steny Hoyer (D-MD) told reporters that he will schedule a vote on the more generous compromise forged in the Senate sometime today, which would grant 20 weeks of extra insurance to workers in high-unemployment states and 14 additional weeks everywhere else. One new point of contention is the carryback provision attached as an amendment to the bill, which allows all businesses to deduct income losses in five profitable years instead of two.  Progressive lawmakers view this an unnecessary giveaway to big business, but none are expected to peel off as a result.

Assuming that the House does pass the measure today, National Journal's Congress Daily reporter Daniel Friedman told C-SPAN viewers this morning that President Obama is "expected to sign it tomorrow."

As we post this, debate has started on the House floor.  We'll keep an eye out for the final roll call.

UPDATE (12:57 p.m.): The House is now holding a 15-minute vote on H.R. 3548.  We'll have the final roll call shortly.

UPDATE (1:20 p.m.): The House has passed the bill, with 403 members voting in favor and 12 Republicans voting nay. It's now off to the president's desk.  

UPDATE (2:30 p.m.): A statement from Rep. Phil Hare (D-IL):

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How federal health care reform will affect state finances is a concern held by many policy wonks across the country, especially those from states dealing with devastating budget shortfalls. It worries Illinois' own Rep. Phil Hare, as well. But speaking on C-SPAN's Washington Journalthis morning, the Quad City Democrat said he is confident that betweennow and 2013 -- when most of the major provisions of the bill will beimplemented -- reformers can develop safeguards to prevent any unfundedmandates on state governments.

Hare also talked up the high cost faced by American families andhealth care providers if no action is taken on this issue. Heillustrated the point by citing data from his own district, where anestimated 100,000 people lack insurance.He reported that, three years ago, Monmouth Hospital administered$400,000 worth of care to the uninsured. Two years ago,that number jumped to $1.3 million. Last year, the facility -- locatedin a town of 13,000 -- dolled out $2.8 million in charity care."If anybody doesn't think we have a financial problem out here onhealth care," Hare said, "they need to go to Monmouth, Illinois." Watchit:

If there's one thing observers of Illinois politics can agree on, it's that next year's state budget deficit is going to be extraordinary. Not only are billions in federal stimulus money scheduled to dry up, but state officials will soon have to pay out $3.5 billion in pension notes and cover $3.9 billion in unpaid obligations from the current fiscal year. Compounding the problem are tanking revenues and the need to pay back $205 million in short-term loans used to cover college aid.  Now the projected 2011 shortfall has hit a whopping $12.8 billion, according to the Voices for Illinois Children's (VFIC) latest policy memo.

VFIC puts the staggering deficit in perspective:

How much is $12.8 billion? This amount is equivalent to total state General Funds spending for the State Board of Education and the departments of Human Services, Children and Family Services, and Public Health. The entire General Funds budget — aside from mandatory spending for pension costs, debt service, and other statutory transfers — is about $26 billion. Closing a $12.8 billion gap without new revenue would require devastating spending cuts, on top of those enacted this year. If such reductions were applied across the board, they would slash 50 percent of funding from every state program; if not distributed equally, many specific cuts would run far deeper.

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