After big wins last year, Gov. J.B. Pritzker and Democratic legislature start new session facing major challenges on pensions, property taxes and ethics

Chicago Tribune (IL)

Illinois lawmakers return to Springfield on Tuesday for a spring session that will be a test of whether Gov. J.B. Pritzker and the Democratic-led General Assembly can address issues at the root of the state’s long-running problems with fiscal instability and political corruption.

Remedies for the state’s notoriously high property taxes, soaring public pension debt and weak government ethics laws top the agenda for lawmakers and the second-year governor. All figure to be especially tough tasks in an election year and under the cloud of an ongoing federal corruption probe. Pritzker isn’t on the ballot, but voters in November will decide the fate of his signature initiative: a constitutional amendment that would shift the state to a graduated-rate income tax.

Further complicating the political dynamics are Chicago Mayor Lori Lightfoot’s continued push for help from Springfield on a Chicago casino, a new Democratic leader in the state Senate and the ongoing federal probe that has reached into House Speaker Michael Madigan’s inner circle.

Pritzker said in an interview with the Tribune earlier this month that passing a balanced budget is his top priority. He also said he needs to balance his “impatience” to get things done with “a desire to bring everybody along on this journey to fixing the challenges the state faces.”

“The fact is, I think we all want the same things in the end, and so I’m hopeful we’ll be able to get more done this year," he said.

Pritzker has the opportunity to set the tone for the spring session when he delivers his State of the State address Wednesday and his budget proposal next month. If his recent public appearances are any indication, Wednesday’s speech likely will focus on early childhood education and criminal justice issues in addition to property taxes, pensions and ethics.

The governor had great success in his first legislative go-round, working with the Democratic majority to pass all the major items on his agenda including recreational marijuana legalization, expanded gambling and a $45 billion infrastructure plan, in addition to a balanced budget.

This year’s budget may well be significantly more challenging than last year’s, which took advantage of an unexpected $1 billion April tax windfall. The governor’s budget office acknowledged the challenge in a five-year forecast released in the fall.

“Even with the balanced budget for fiscal year 2020, the underlying structural deficit of the state’s budget has not been addressed,” the report says. The administration already has asked agency heads to draft plans for a possible 6.5% cut to their budgets.

While the governor’s office estimates the graduated income tax would bring in $3.6 billion in annual revenue, it wouldn’t take effect until January 2021, halfway through the budget year. And its prospects at the ballot box are far from certain.

House Republican leader Jim Durkin, who opposes the governor’s income tax proposal, said he believes the budget can be balanced again without any new taxes.

“We do not need to seek additional revenue from Illinois taxpayers or Illinois employers," Durkin said. "This budget can be negotiated, and we can fulfill our responsibilities towards all Illinoisans who rely upon state government.”

In the Senate, Oak Park Democrat Don Harmon takes over as president after a bruising battle to succeed John Cullerton, who retired, that exposed divisions within the caucus. Harmon will need to navigate his supermajority through any potential additional fallout from the wide-ranging federal corruption investigation that has already ensnared three Senate Democrats.

The federal probe has spurred a push last year for a broad consideration of ways to strengthen the state’s ethics laws. Lawmakers in the fall passed a measure laying out more stringent rules for lobbyists, and tasked a new ethics commission with making additional proposals.

Pritzker plans to ask for changes in state law requiring more information be disclosed on statements of economic interest, and he wants the General Assembly to pass legislation barring lawmakers from lobbying other levels of government, because there’s “too much undue influence that a mayor can have on a state legislator or vice versa,” he said earlier this month

Republicans put forward a host of ethics proposals last fall in response to allegations that emerged from the federal probe. During the legislature’s brief fall veto session, lawmakers approved a measure requiring lobbyists to disclose more information and created a task force to recommend further changes by March 31.

Lawmakers must constantly ask themselves if they’re doing enough to safeguard the public’s trust in government, Durkin said.

“I can’t say with a straight face that we are in light of what we have learned and what we anticipate will be coming down the road,” he said.

Like Pritzker, Durkin supports a ban on legislators lobbying other units of government. He’s also sponsoring a measure that would require lawmakers and House and Senate candidates to disclose more information about their personal finances, bringing them in line with what’s required of judges.

Property tax reform is another huge hurdle. An effort last spring to couple the graduated income tax proposal with property tax relief fell short. The measure, which would have tied a property tax freeze to voter approval for the graduated tax amendment, didn’t get through the House, and a large legislative task force to study the issue was created instead.

The task force considered a range of ways to reduce the reliance on property taxes, including consolidation of school districts and other government units, and expanding the state’s sales tax. But the task force missed a Dec. 31 deadline to submit its recommendations.

A sales tax expansion is not something Pritzker is considering, but he said Friday the task force’s draft report contains some good ideas “and we’ll be pursuing those in the spring session.”

Republicans said their ideas were disregarded in the draft report written by Democrats. Durkin nonetheless said he believes there’s an opportunity to make meaningful changes to the property tax system -- “as long as there’s a willingness on behalf of (House Speaker Michael Madigan) and the new (Senate) president to do something that is not just nibbling around the edges.”

“We’re not real good at reducing taxes,” Durkin said. “The legislature is sadly good at raising taxes and spending more.”

While the House GOP rejects many of the ideas put forward by Democrats, if the majority party wants to seriously consider reducing the number of local governments, “they have a partner that is willing to take that up with them,” Durkin said.

Pritzker’s major accomplishment in the fall legislative session was pushing through a proposal to consolidate nearly 650 suburban and downstate pension funds for police and firefighters into two statewide investment pools.

But the governor acknowledged there is still much work to do to address the unfunded liabilities in the five pension funds for teachers, state workers, university employees, legislators and judges. Despite increased funding, the state’s unfunded liabilities grew by more than $3.5 billion, to $137 billion, from 2018 to 2019, according to the legislature’s bipartisan Commission on Government Forecasting and Accountability.

The administration last year put forward a five-pronged plan for addressing the state’s pension debt but so far has made little or no progress on major pieces of the plan.

Yet another task force assembled by Pritzker is supposed to issue recommendations for state assets that could be sold or transferred to the pension funds, though the state is moving on selling the James R. Thompson Center in the Loop. The surprise windfall of tax revenue last April allowed the administration to shelve its most controversial proposal: a seven-year extension of the deadline for the pension funds to reach 90% funding. That forestalled a possible confrontation with Democratic lawmakers and the labor unions that helped elect Pritzker.

Pritzker said that proposal isn’t off the table entirely but would need to be part of a multifaceted approach to the issue. He touted a measure that expands a pension buyout plan for state workers as another step his administration has taken.

“Ultimately, what I want to do is reduce the burden on taxpayers of having to pay this increasing burden of pensions and make sure that we’re not diverting funds from much needed services that people need, that working families across the state rely upon,” Pritzker said.

The spring will also serve as a test of Lightfoot’s ability to strike deals in Springfield after she came up empty in the fall despite a personal visit to the Capitol.

Back again is the casino tax fix the mayor says she needs to make the proposed Chicago casino profitable and the long-shot real estate transfer tax change she tapped as the source of $50 million in her 2020 budget by charging more for expensive property sales. A state lawmaker involved in the talks said negotiations over devoting a portion of that revenue toward alleviating homelessness have stalled and the measure appears unlikely to move this spring.

Lightfoot’s City Council floor leader, Northwest Side Ald. Gilbert Villegas, 36th, said the casino license will be the primary focus.

“Our main priority, numbers one, two and three on the agenda, is the casino. It’s just so important, because the pension payments for police and fire are tied to it,” Villegas said.

The real estate transfer tax and changes to cannabis rules remain part of the city’s agenda, Villegas said, and the administration plans to talk to lawmakers about how to move those items as well. “But what we didn’t want to do was to go down there with such a super heavy agenda that we can’t get anything done,” he said.

Those heavy lifts are joined this spring session by the pressure black aldermen are applying to Lightfoot and state legislators to make changes to the rules governing recreational cannabis sales.

African American members of the City Council have been complaining for months about the equity components of the marijuana dispensary ownership rollout and the strict standards for businesses to allow on-site smoking. They want Lightfoot to press lawmakers to do something about it.

Lightfoot held off on a vote on her plan to allow people to smoke pot in tobacco shops that pay a $4,400 fee for the privilege of hosting them. Members of the City Council Black Caucus pointed out few such businesses exist in primarily black South and West side neighborhoods.

With landlords allowed to ban weed smoking by renters in their units, aldermen worry thousands of Chicagoans won’t have anywhere in their communities to legally smoke, leaving them vulnerable to harassment by police.

“Where these are going to be allowed discriminates against the same community it was supposed to help,” said South Side Ald. Leslie Hairston, 5th.

The Lightfoot administration has said it would welcome changes to the marijuana rules, but the mayor’s team has stopped short of saying it would push hard for changes with so much else on the agenda.

Pritzker has worked with Lightfoot on the casino tax structure and has expressed a desire to find a way to make sure the project can succeed after a consultant found last summer that the taxes lawmakers approved are so high the project might fail to attract a developer. While the governor has said he wants the rollout of recreational marijuana to continue without substantive changes for the time being, a spokeswoman on Friday said the administration looks "forward to working with the city to consider ways to give local communities more options to regulate consumption within their borders.”

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