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State acts to partially retire unemployment debt


Gov. JB Pritzker on Friday signed a measure to allocate $2.7 billion in federal American Rescue Plan Act funds to pay down more than half of the state’s outstanding $4.5 billion Unemployment Insurance Trust Fund debt.

The measure, an amendment to Senate Bill 2803, also included over $1.4 billion in general revenue fund spending to pay down other state debts. Both houses passed it with only Democratic support this week.

Democrats repeatedly called out Republicans for voting against the debt retirement package.

Republicans, meanwhile, said that not allocating greater funding to the trust fund deficit will force some combination of tax increases on employers or benefit cuts to those on unemployment as a solution to paying down the remaining $1.8 billion in trust fund debt.

The trust fund is the pool of money paid into by businesses that funds unemployment claims. The debt accrued as the state borrowed from the federal government at the height of the pandemic to keep the trust fund solvent amid an unprecedented crush of claims.

When states accrue trust fund debt, the ways to pay it down have historically included raising insurance premium rates paid by employers, decreasing unemployment benefits, or seeing a new influx of cash, such as federal, state or private funds.

Discussions continue with business and labor interests on addressing the remaining $1.8 billion.

An employer group including the Illinois Retail Merchants Association, the Illinois Manufacturers’ Association, Illinois Chamber of Commerce, Chicagoland Chamber of Commerce, the National Federation of Independent Businesses of Illinois, and the Associated General Contractors of Illinois, issued a statement calling the measure a “positive step.”

“We’re hopeful that negotiations will continue to resolve the remaining balance of this unprecedented deficit,” the business group said.

Private bonding, benefit cuts and premium increases are all being considered.

As of Wednesday, the state had already accrued $41 million of interest on the debt and it continued to accrue at a rate of 1.59 percent. That interest was due to be paid by Sept. 30, according to the U.S. Treasury.

By November, without action, that interest was expected to grow to $80 million. Interest can’t be paid through ARPA, so it would require a General Revenue Fund allotment.

The measure also allocated $898 million in general revenue funds to pay off old group health insurance bills, an added $300 million to pension payments beyond statutory levels and $230 million to pay off the unfunded liabilities of the College Illinois savings program – all cornerstones of Gov. JB Pritzker’s debt retirement initiatives put forth in his budget proposal. Those allotments will come from the state’s General Revenue Funds from the anticipated Fiscal Year 2022 surplus.

The pension spending would create $1 billion in savings to the state’s pension system over its life, while the group health insurance payments would save over $100 million in interest and the College Illinois payment would create a $75 million savings, according to estimates from House Democrats.

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CAMPAIGN FUNDS FOR LEGAL FEES: The Illinois Supreme Court ruled Thursday that elected public officials and their campaign committees may, in limited circumstances, use campaign funds to pay criminal defense attorney fees.

The case involved a former Chicago city alderman, Danny Solis, who reportedly avoided federal prosecution by agreeing to cooperate with the FBI and Department of Justice in their investigation of another alderman, Ed Burke, who was indicted in 2019 on federal corruption charges.

Ed Burke is married to Chief Justice Anne Burke, who recused herself from the case. Two other justices, Mary Jane Theis and P. Scott Neville Jr., also did not take part in the decision, leaving only four justices to decide the case – the minimum number needed to issue a majority opinion.

Solis served on the Chicago City Council from 1996 to 2019 representing the city’s 25th Ward and for a time chaired the council’s powerful Zoning Committee. He did not run for reelection in 2019 and was succeeded in office by current Alderman Byron Sigcho-Lopez.

According to published reports, Solis had been under investigation as part of the federal government’s wide-sweeping probe into public corruption involving state and local elected officials. But in June 2016 he began cooperating with investigators by secretly recording conversations with other public officials.

When he first began cooperating with investigators, he retained the law firm of Foley & Lardner LLP. On May 21, 2019, the day after Sigcho-Lopez was sworn into office, the 25th Ward Democratic Organization – the committee that had backed his campaigns – paid the firm $220,000 for legal fees.

What is known now, but was not publicly known then, is that on Jan. 3, 2019, Solis entered a deferred prosecution agreement with the U.S. Attorney’s office. That was the same day the public first learned of a sweeping criminal complaint that had been filed against Burke for allegedly using his position to corruptly solicit business for his private law firms from companies involved in redevelopment projects in his 14th Ward.

In October 2019, Sigcho-Lopez filed a complaint with the Illinois State Board of Elections alleging that the expenditure violated provisions of the Illinois Election Code that regulate campaign disclosure and finance. Specifically, he argued, the payment was made to settle a personal debt that was not related to any of his campaigns or for governmental or political purposes directly related to his official duties or responsibilities.

The board, however, dismissed the complaint on the grounds that spending campaign funds for criminal defense was not specifically prohibited in the Election Code and that Solis’ legal bill was not a personal loan or debt. Sigcho-Lopez then appealed that decision to the First District Court of Appeals which upheld the board’s decision.

In the court’s 17-page ruling released Thursday, the remaining four justices partially rejected the committee’s argument that payment of criminal defense fees is always permissible solely because the General Assembly did not specifically include them in the list of prohibited expenses. But it also partially rejected Sigcho-Lopez’s argument that the legal fees were a prohibited “personal debt.”

Instead, they found that because the General Assembly had not specifically prohibited the payment of criminal defense attorney fees from campaign funds, it is reasonable for the Board of Elections to rule on a case-by-case basis.

And in Solis’ case, Justice David K. Overstreet wrote for the majority, the expense was permissible because Solis had not been indicted on criminal charges but had only worked with federal investigators “using his official capacity to expose public corruption.”

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FOID CONSTITUTIONALITY: The Illinois Supreme Court is being asked for a second time to decide whether a state law requiring gun owners to have a firearm permit is unconstitutional – a question the court previously declined to answer.

The case involves a White County resident, Vivian Claudine Brown, who was charged in March 2017 with possession of a firearm without a Firearm Owner’s Identification, or FOID card.

A circuit judge in White County threw out the charge, saying the Illinois law requiring potential gun owners to fill out a form, provide a picture ID, undergo a background check and pay a $10 fee to obtain a FOID card was unconstitutional, at least as it applied to Brown. The judge said it imposed a burden on Brown’s Second Amendment right to keep a firearm in her own home for self-defense.

The circuit court went on to say, even though Brown’s attorneys never raised the issue, that it is impossible to comply with the act in one’s own home. That’s because it would mean anybody who had knowledge of a firearm in the home and exclusive control over the area where it was kept could be construed as possessing the gun and therefore would have to have their FOID card on their person 24 hours a day.

The state appealed that decision directly to the state Supreme Court, but in April 2020, the high court declined to answer the question of the law’s constitutionality. Instead, it said the White County court had rushed to rule on the law’s constitutionality when it could have decided the case on other grounds, namely that the General Assembly never intended the FOID Card Act to apply in the home.

The Supreme Court then sent the case back to White County with instructions to enter a modified order that did not touch on the constitutionality question.

The White County court did that, but then in an unusual move, Brown’s attorneys asked the court to reconsider, arguing that the modified order forced Brown to take a position she didn’t want to take and one that would ultimately be overturned on appeal, thus delaying any final resolution of the case, possibly for years.

The circuit court agreed and reinstated the charges against her. Brown’s attorneys then filed a new motion to dismiss on constitutional grounds. The judge then upheld that motion, finding that “any fee associated with exercising the core fundamental Constitutional right of armed self-defense within the confines of one’s home violates the Second Amendment.”

The state then appealed that decision back to the Illinois Supreme Court. The court took the case under advisement and hosted oral arguments this week but did not indicate how long it might take to issue a decision.

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PRISONER REVIEW BOARD: The Senate Executive Appointments Committee moved six appointees to the Illinois Prisoner Review Board through committee on Tuesday, March 22, but the only appointee of Gov. JB Pritzker that came for a vote before the full Senate was rejected.

The 15-member Prisoner Review Board decides on the release and conditions of release for offenders from the Illinois Department of Corrections. The governor appoints the board, the Executive Appointments Committee votes on whether to recommend those appointments, and the full Senate determines whether the members will be approved.

On Tuesday morning, March 22, PRB member Jeff Mears was recommended by the Senate Executive Appointments Committee, but by late Tuesday afternoon he failed to reach the 30-vote threshold for approval by the full Senate.

In addition to 18 Republicans who voted no, 18 Democrats did not vote. Sen. Patrick Joyce, D-Essex, joined the GOP and voted no.

Mears is a former Illinois Department of Corrections employee from southern Illinois. He has voted on more than 40 cases for the PRB while awaiting Senate action.

Pritzker spokesperson Jordan Abudayyeh in an email blamed Republicans for the denial Tuesday and touted Mears’ resume.

“Republicans have set out on a mission to dismantle a constitutional function of government, just like the previous governor,” she said in a statement. “We remain committed to ensuring that highly qualified nominees fill these roles, especially because we must fulfill our constitutional obligations for justice and cannot jeopardize key public safety functions of the board like revoking parole for those who violate the terms of their release.”

The statement was referring to parole revocation hearings held by the PRB at locations around the state about 15 to 20 times per month. Three board members must be present at each hearing to render a decision on whether to terminate an offender’s parole, otherwise the offender would be released and deemed not in violation of parole.

Pritzker, in a letter last week, urged the Senate to act on appointments to address the potential of not having enough board members for the revocation hearings.

PRB members Ken Tupy, Jared Bohland and LeAnn Miller were also recommended by the committee, with Tupy and Bohland receiving unanimous support.

The Senate did not take up those appointees but has until the end of session on Monday to vote on them before they are automatically approved due to a provision in the Illinois Constitution that sets a 60-session-day timer for action.

Two other PRB appointees, Oreal James and Eleanor Kaye Wilson, were passed along for Senate consideration without recommendation from the committee. These appointments, too, must go before the Senate by end of session Monday for a vote or they will be automatically approved.

Last week, Pritzker withdrew his appointment of PRB member Max Cerda. Cerda was convicted of a double murder when he was 16 years old. He was released from prison when he was 35 and began working with offenders transitioning into life outside of prison.

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VOLUNTEER FIREFIGHTER TAX CREDIT: Members of the Illinois Firefighters Association joined state legislators at a news conference Wednesday, March 23, to outline a measure that they claim would recruit more long-term volunteer firefighters and EMS personnel by offering them a tax credit.

Senate Bill 3027 would provide a $500 tax credit to those who serve as volunteer firefighters or EMS personnel. To qualify for the tax credit, volunteers must work for a fire department or fire protection district for at least nine months and not receive more than $10,000 in compensation for those services during the taxable year.

Sen. Christopher Belt, D-Swansea, chief sponsor of the bill, said offering the tax credit would help address the shortage of firefighter and EMS personnel at departments that rely on volunteers.

“These individuals give up their personal time that could be spent with their families to ensure the well-being of our state’s residents with no monetary incentive,” Belt said.

The bill states that if the tax credit exceeds the tax liability for the year, the excess can be applied to the earliest tax year in which there is a tax liability. The credit will not reduce a taxpayer’s liability to less than zero.

During a news conference March 18, Belt noted that if the bill is approved, it would cost about $20 million to $22 million in lost revenue to implement it. Belt said the cost upfront pales in comparison to the lives lost without volunteer firefighters and EMS workers.

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INSURANCE DISPUTE: An ongoing contract dispute between a major health insurance company and a large health care provider in Springfield is drawing the attention of both state lawmakers and the state Department of Insurance.

Blue Cross Blue Shield of Illinois has been under scrutiny since July after it failed to reach an agreement with Springfield Clinic to be part of the insurance company’s network. As a result, policy holders who receive care at that clinic have been forced to change providers or pay higher out-of-network copayments.

Springfield Clinic is a private, independent, for-profit health care provider that serves people in central Illinois. About 55,000 of those are Blue Cross members, according to Blue Cross.

On Monday, the Illinois Department of Insurance fined BCBS’s parent company, Health Care Service Corp., $339,000 for failing to notify the agency of a material change in its network, the first such fine the agency has ever issued since Illinois enacted the state’s Network Adequacy and Transparency Actin 2017.

Under that law, insurers are required to report to the agency any material change to an approved network plan within 15 days after the change occurs.

The official break between BCBS and Springfield Clinic took effect July 1 for its Health Maintenance Organization plans, and Nov. 17 for its Preferred Provider Organization plans. The company, however, did not formally notify the department of that change until earlier this month, resulting in a $1,000 fine for each day the filings were late.

For its part, BCBS has said the contract dispute centers on reimbursement rates. It says Springfield Clinic was seeking a 75 percent increase in its rates, which the insurance company says are already above average for the region and the state.

A spokesperson for Springfield Clinic did not immediately respond to a request for comment.

In a statement, BCBS senior vice president Krishna Ramachandran characterized the late filings as a misunderstanding.

Meanwhile, both BCBS and Springfield Clinic were scheduled to appear Tuesday afternoon before the House Insurance Committee. But that meeting was canceled because regular floor action in the House was delayed that day due to an extended closed-door Democratic caucus meeting that lasted over three hours.

A spokeswoman for the House Democrats said in an email that the hearing would be rescheduled but that an exact time and day has not been arranged between all the parties.

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WATER RIGHTS: The Illinois Supreme Court is being asked to decide the extent to which property owners can block anyone else, including neighboring property owners, from accessing a river that runs through their property.

It’s a question of law that Illinois courts have not fully addressed before and one over which different states have vastly different policies.

The case involves two property owners who own land along the Mazon River, in Grundy County, a portion of which has been declared a National Historic Landmark because it has significant and unique fossil deposits dating back some 300 million years.

The Mazon River is designated as non-navigable under Illinois law, meaning it is not wide or deep enough to carry commercial traffic such as barges.

Adam Holm and his family own two noncontiguous parcels of land along the river, one of which is accessible by road and one of which is not.

Holm, who operates a fossil-hunting business, used a kayak to traverse down the river from one parcel of land to the other to gather fossils, passing through land owned by Peter Kodat, who also operates a fossil hunting business.

In September 2016, Kodat called the Grundy County Sheriff’s Office to report two people kayaking in front of his property. Sheriff’s officers responded and informed Holm that he was trespassing by kayaking on the river, even if he remained in the kayak and never went on land.

Holm then sued, asking the court to declare that as a riparian landowner, he had a right to access the full length of the river, even if that meant traversing across Kodat’s property.

Although there were allegations that Holm had, in fact, been taking fossils from Kodat’s property, that was never adjudicated in court.

At issue, according to Holm’s attorney Zachary Pollack, is whether a “civil law” principle should apply, allowing a riparian landowner to use the entire surface of a non-navigable river or whether courts should apply a “common law” principle that says riparian landowners have a right to exclude others from accessing the portion of a river that crosses their property.

Pollack noted that some states, like New Mexico, have laws that effectively make rivers and streams public property, thus prohibiting landowners from barring public access to those waters.

In Illinois, he said, courts have never directly addressed the question of the civil law principle that applies to accessing rivers, lakes and streams. Most decisions have dealt with access to lakes.

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government that is distributed to more than 400 newspapers statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.

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