GENERAL ASSEMBLY
Illinois General Assembly concludes Fall Veto Session. Week two of the Fall Veto Session was characterized more by what the Democratic Supermajority failed to deliver instead of what they did deliver.
Speaker Emanuel “Chris” Welch refused to call the Invest in Kids renewal legislation for a vote, essentially killing the program that helps underprivileged students throughout Illinois.
Democrats failed to deliver a solution to Chicago voters eager to elect their own school board.
The Illinois House, under Welch’s leadership, failed to take a stand affirming the State of Illinois stands with Israel and, tragically, remained silent on the terrorism perpetrated by Hamas.
And finally, not a peep was heard about corruption. In the middle of the Ed Burke Trial and in a week that saw a top Pritzker appointee plead guilty to charges related to mismanaging taxpayer dollars, the Supermajority didn’t feel the need to even pretend they care about ethics reform anymore.
Despite these failures to address critically important issues such as Invest in Kids, there were several matters passed by bipartisan action. A nuclear energy deal was passed to allow for future permitting and construction of small modular reactors (SMRs).
For months now, House Republicans have been demanding changes to the way professional licenses are issued to help address crushing workforce shortages. Temporary assistance was given to the Illinois Department of Financial and Professional Regulation (IDFPR) to accommodate a portion of professional licenses terribly delayed. While not a permanent fix, any forward progress gets more Illinoisans to work more quickly.
A critical fix was delivered for farm mutual insurance policyholders. Rural farm mutual policyholders (those insuring large agricultural equipment like tractors and combines) were successful in advocating for one of the few bipartisan fixes delivered during the Fall Veto Session.
Following the adjournment of the fall veto session, House Deputy Minority Leader Ryan Spain (R-Peoria) issued the following statement:
“While I’m pleased the General Assembly sent legislation to the Governor to end our 36-year moratorium on nuclear energy development, it’s extremely disappointing no action was taken on several other important issues during this veto session,” said Spain. “Nothing was done to address ethics reform, even as Ed Burke stands trial in federal court right now, nor anything to address tax and regulatory reform for families and small businesses.
“Most distressingly though, Speaker Welch refused to call legislation to preserve the Invest in Kids scholarship program. Come January, thousands of underprivileged students and their families across our state will be left behind because Democrats bowed to the wishes of special interest over the needs of children. It’s a shameful end to this program that gave hope to so many children.”
BUDGET
Major income tax infusion in October 2023, but clouds could lie ahead. The Commission on Government Forecasting and Accountability (CGFA) has surveyed Illinois’ tax flows from general revenues during the 31-day October 2023 period. Illinois took in a healthy increase in personal income taxes during the most recent monthlong period, with $2,260 million coming in on this line in October 2023. This was an increase of $233 million, or 11.5%, from the $2,027 million paid by Illinois taxpayers as individual income taxes in October 2022.
When coupled with parallel year-over-year net increases of $43 million in October 2023 sales tax revenues, and $48 million in increased interest paid to the State Treasurer for State funds invested in accounts during the same period, CGFA charted an overall increase of $322 million in Illinois state tax revenues in October 2023 allocated to general funds. October 2023 closed the first four months of Illinois’ FY24, and the overall Illinois state tax general revenues cash flow net increase for this four-month period was $848 million. This reflected the net changes in these revenue lines for July, August, September, and October of 2023, over the same four-month period in 2022.
Illinois tax revenues and employment data have shown relatively consistent gains since the pandemic of 2020-2021. A downturn is likely as interest rates rise and hard-pressed consumers feel the continuing bites of inflation, taxes, and housing costs. In the bellwether state of California, the budget-monitoring offices in the state capital of Sacramento have begun to see signs of a sharp decline in state tax revenues. The Pacific Coast downturn could be related to a growing signs of an overall downturn in East Asian economic activities and markets.
Fitch Ratings raises Illinois’ credit rating to ‘A-’ with Stable outlook. The Fitch move ends a multi-year period in which all three major global credit rating firms tabbed the State of Illinois and its General Obligation debt in categories marked ‘BBB,’ a family of categories one step above junk-bond level. Even after this week’s move, the New York-based Fitch Ratings service continued to rank State of Illinois debts at a level well below the debts of most other U.S. states. The neighboring state of Indiana, for example, enjoys the top-ranked ‘AAA’ credit rating.
Illinois’ ‘A-’ credit rating for General Obligation debt will grant Illinois taxpayers some much-needed relief from the overall pain of rising interest rates. General Obligation (GO) debt is the standardized format used when the State borrows money for a wide range of general purposes. In addition to GO debt, the State of Illinois also borrows money for capital projects such as those supervised by the Illinois Department of Transportation, for infrastructure purposes such as “Rebuild Illinois,” and for other reasons. The credit ratings awarded to these ancillary Illinois debts, and the interest rates paid on these debts, generally track the ratings awarded to and rates paid on GO debt.
Driven by overall public-sector deficit spending, inflation has enabled lenders to demand substantial interest-rate returns for money borrowed by government units. The principal and interest on these debts must be paid by taxpayers. Illinois, with nearly $200 billion in debts and unfunded obligations (including $140 billion in unfunded pension obligations) is heavily affected by rising interest rates and changes in its credit rating. The Fitch Ratings move was announced on Tuesday, November 7.
ENERGY
General Assembly approves construction of next-generation small modular reactors. Since the 1980s, the startup construction of new nuclear power plants has been banned in Illinois. The ban was originally meant to be temporary, based upon the failure of the U.S. government to open a permanent facility for the disposal of high-level waste products generated by the operations of a nuclear reactor. Nothing in this ban has prevented the continued operation of full-sized (1,000 MW and up) nuclear power reactors and plants, such as those operating at locations such as Dresden and the Quad Cities, for which construction began before this ban went into effect.
With growing support for both nuclear power and other forms of energy that generate electricity without releasing carbon dioxide, this ban or moratorium has come to be seen by some as obsolescent. Advocates point to the recent moves in research and development toward the operation of smaller, so-called “modular” nuclear power plants. These are plants, designed under the supervision of the International Atomic Energy Agency (IAEA), that can generate up to 300 megawatts of power. This is less than one-third of the size of the currently operating nuclear reactors of Central and Northern Illinois, which generate electric power and operate in locations such as Braidwood and Byron.
These small modular reactor (SMR) plants can be designed so they do not get hot enough to create a major nuclear meltdown, such as the events familiar worldwide at Chernobyl and Fukushima. In addition, a modular nuclear power plant is said to generate less radioactive waste, and in particular, they are said to generate much less high-level waste, than is generated by the same level of electricity produced by a traditional nuclear power plant. New legislation, HB 2473, authorizes the construction of new modular reactors in Illinois, with power outputs up to 300 MW, starting in calendar year 2026. The owners of the proposed new modular reactors that are authorized by this bill will have to have plans in place for reactor decommissioning, environmental monitoring, and emergency preparedness. The bill does not contain language authorizing the construction of full-size nuclear reactors in Illinois.
The House vote on HB 2473 was 98-8-0. The bill was approved on Thursday, November 9.
FIREARMS
State Police drafting permanent rules to implement statewide ban on certain firearms. The objects under the ban include not only certain types and definitions of firearms, but also many objects associated with these types of firearms.
Under State law, the Illinois State Police has the responsibility to move administrative rules forward to implement this new statute. Even though the law has faced a series of court challenges, the State Police has drafted and published a series of temporary “emergency” rules, and proposed permanent rules, as guides to implementation. Second Amendment advocates have pointed out many flaws in these new and proposed rules. These flaws have created an atmosphere of confusion as to what firearms and other objects are banned under the new law.
The State Police has created a webpage that tries to answer some of these questions, but many critics are not satisfied with the explanations and definitions provided by the enforcement State agency. A focus of discontent are the rules used to create the registration process that can be used by Illinois residents to register certain weapons and objects, and to affirm that they were legally owned prior to January 2023. Concerned Illinois residents, including gun owners, can submit comments to the State Police on the new rules. However, the State Police is not legally required to respond to comments submitted after Monday, November 13, 2023.
A bipartisan General Assembly panel, the Joint Committee on Administrative Rules (which Rep. Ryan Spain sits on), met on Tuesday, November 7, and won a commitment from the State Police that they would listen to and respond to concerns submitted by concerned Illinoisans. This pledge included informal language in which the State Police promised to listen to concerns submitted after November 13. However, in addition to submitting comments and focusing on these rules, many supporters of firearm rights are continuing their legal fight to strike the Illinois law down altogether. This legal fight may include an appeal to the U.S. Supreme Court.