The Morrison Memo: November 2, 2015

Governor Rauner to Chair Public Meeting with Legislative Leaders on November 18
As Illinois enters its fifth month without an approved budget in place, an announcement was made last week that the Governor and the four legislative leaders will return to the negotiation table for a meeting on November 18. At the meeting, the group is expected to examine the delayed FY16 budget process. Although the FY16 fiscal year began on July 1, 2015, a constitutional balanced budget has not been enacted by the Illinois House and Senate. The State has continued to operate under consent decrees, court orders, continuing appropriations, and school appropriations, but this has created many operational problems. Recipients of State services, and providers of goods and services to the State, have been affected by the lack of a legal budget document.

Spokespersons for all four legislative leaders, including House Republican Leader Jim Durkin, expressed positive interest in the meeting. The gathering was requested by a consortium of nonpartisan advocacy groups. Sponsors of the request included the Better Government Association, the League of Women Voters, and the Illinois Campaign for Political Reform.

Chicago City Council Approves Largest Property Tax Hike in City History as Part of FY16 Budget
The new budget includes $755 million in property tax, other tax, and fee increases. The City Council voted on Mayor Emanuel’s budget and revenue measures on Wednesday, October 28. Although many aldermen expressed dismay at the tax and fee hikes, the final outcome of the vote was not in doubt. The Council vote was 35-15 in favor of the tax-increase package.

Concerns were expressed that even the significant taxes approved this week would not be enough to see the city and its troubled school system through the 2015-16 school year and calendar 2016 budget cycle. The debt rating of Chicago Public Schools has been reduced to junk-bond status, and entities related to the city’s government continue to rely on $800 million in additional financial aid and fiscal relief measures from the equally-troubled state government in Springfield.

Rep. Morrison Visits Fremd High School as “Principal for a Day”

On Friday I had an opportunity to step into the shoes of school principals and experience a day in the life of a top school administrator at Palatine’s Fremd High School. This was my fourth year participating in the program and I enjoy visiting local schools and talking with the students and staff. At Fremd, I met with the principal and his department heads and fellow administrators. I also spoke to a government class, social studies classes, and I did a ride along with driver’s education students. I also spent a period in the teacher’s lounge and discussed issues with staff.
The “Principal for a Day” program is a statewide initiative to provide state and federal elected officials with an opportunity to observe, interact, and serve as an administrator in schools within their legislative districts. Tomorrow I will be visiting Palatine’s Sanborn Elementary School.

September 2015 Unemployment Rate Declines to 5.4%; Few New Jobs Created Statewide
The Illinois Department of Employment Security (IDES) reported this month that the statewide jobless percentage for September was 5.4%, down 0.2% from the August 2015 total of 5.6%. However, this drop in the jobless rate was not caused by net new hiring. Illinois seasonally adjusted nonfarm payroll employment actually dropped by 6,900 jobs on a month-to-month basis in September, with sector weaknesses continuing in manufacturing, trade, transportation, and utilities. Strong sectors included education services, health services, and government.

Illinois unemployment rates remain higher than rates in neighboring states. According to the U.S. Bureau of Labor Statistics, seasonally adjusted jobless rates for September 2015 were 4.5% in Indiana, 3.6% in Iowa, 5.0% in Kentucky, 5.3% in Missouri, and 4.3% in Wisconsin. In addition, these states (unlike Illinois) were producing net new jobs. September 2015 unemployment was lower than the statewide average in greater Chicago (4.9%) and remained at above-6.0% recession levels in the three historically manufacturing-oriented cities of Danville (6.4%), Decatur (6.4%), and Rockford (6.2%).

Lucas Museum of Narrative Art to be built south of Soldier Field
The Lucas Museum of Narrative Art, a $700-million museum and endowment spearheaded by filmmaker George Lucas, will specialize in narrative art and the art of visual storytelling. The Lucas Collection, which is expected to be housed in the new Chicago museum, contains pieces by N.C. Wyeth, Maxfield Parrish, Norman Rockwell and other well-known painters and illustrators, as well as rights to intellectual property connected with Lucasfilm Ltd. Moving images, digital images, and movie memorabilia, including images from Hollywood, are expected to be featured. The new museum will be built on landfill property reclaimed from Lake Michigan to build the Century of Progress world’s fair in 1933-34. In more recent years, the space has been used as a surface parking lot for Soldier Field and McCormick Place.

Hurdles faced by the new museum included the need to win planning permission from the State of Illinois and the City of Chicago. Illinois granted permission to construct the new museum with the enactment of HB 373 (P.A. 99-3) in May, and the Chicago City Council approved a rezoning designation for the museum on Wednesday, October 28. The City Council action was seen as one of the final goals that developers of the 300,000-square-foot museum needed to meet before construction can begin.

Illinois’ State Employees Retirement System (SERS) Asks to Withdraw $225 Million
The withdrawals, which will be completed on December 10, will cover retiree benefits to be paid in November and December of this year. SERS believes this is the largest cash withdrawal it has ever made. Pension checks to existing beneficiaries are expected to go out on schedule.

The withdrawal was made necessary by the inability of the State of Illinois to meet its statutory obligation to SERS, and to parallel State-managed pension funds that cover the retirement needs of education professionals, for the payments of money in FY16 from general funds. Payments by the State to the pension funds are one of the areas where, in the absence of specific appropriations authority, the money cannot flow. In other areas of the State’s FY16 budget, money is flowing as a result of a cobbled-together combination of continuing appropriations, school appropriations, consent decrees, and court orders. The withdrawal of money from SERS’s deposited investments is expected to further deplete its funds and add to its long-term unfunded liability.