CHICAGO — Illinois lawmakers return to work Tuesday for their annual fall veto session with a full plate that includes a proposed income-tax hike, a pension borrowing plan, and a gaming expansion bill — all to help address the state’s fiscal crisis.
Lawmakers also likely will be asked to give the Illinois Sports Facilities Authority authorization to sell more than $200 million of revenue bonds to help finance renovations at the Chicago Cubs’ 96-year-old Wrigley Field ballpark.
With the November election as a backdrop against the regular spring session earlier this year, lawmakers put off tough decisions on spending cuts and ways to raise new revenues until the veto session. Some believe many decisions will again be delayed until January when a new session begins.
Illinois has pushed off $6 billion in bills and primarily relied on one-shots like an upcoming $1.46 billion tobacco bond issue to manage through fiscal 2011, but an up to $15 billion deficit looms in fiscal 2011. Already stung by a series of rating downgrades, the state’s credit could slide further if lawmakers don’t take steps to chip away at the budget’s structural problems.
Moody’s Investors Service rates Illinois’ $25 billion of GOs A1 with a negative outlook, while Fitch Ratings rates them A, both with longer-term negative outlooks. Standard & Poor’s rates the state A-plus, but it has the credit on short-term negative watch for downgrade.
Democratic Gov. Pat Quinn, who was re-elected earlier this month, is pressing lawmakers to first tackle an income tax hike that would boost the state’s flat rate to 4% from 3%.
He has characterized the measure — which could generate an additional $3 billion annually for state coffers — as an “education surcharge” that would allow the state to avoid education cuts.
The Senate last year passed a 2% increase along with property tax relief and Senate President John Cullerton is waiting on the House to act first. Both chambers are controlled by Democrats.
The plan’s fate remains uncertain as House Speaker Michael Madigan has said Republican votes would be needed and there is little stomach among most minority GOP members to embrace any tax hikes.
Quinn also will press for a vote on a bill authorizing the sale of $3.8 billion of eight-year general obligation bonds to fund Illinois’ 2011 pension payment. SB 3514 stalled in committee during a special one-day post-election session of the Senate earlier this month.
“The Senate president has maintained all along that this will require bipartisan support,” said Cullerton spokesman John Patterson.
Earlier this year, the House approved a $3.7 billion pension-borrowing plan but the Senate did not vote on it before adjourning its regular spring session. The revised legislation calls for borrowing up to $3.8 billion through the sale of eight-year GO bonds with no principal payments in the first two years.
A three-fifths supermajority vote of 36 is always needed in the Senate for any new state borrowing. Measures approved during the fall veto session also require a supermajority to take effect immediately. Quinn will face a tougher road to winning passage for controversial measures once the new General Assembly takes office in January as several Democrats lost their House and Senate seats.
Sen. Terry Link, D-Waukegan, will sponsor a massive expansion of gaming that could generate an additional $1 billion annually for education and to support the state’s capital budget.
SB 3970 would allow additional slot machines at horse-racing tracks and pave the way for a land-based casino in Chicago and four riverboat casinos in several other cities.
The governor has not ruled out expanded gaming as a means to raise revenue, but his reaction has been cool.
“Gov. Quinn will continue to work with the General Assembly to examine revenue-generating ideas, but is not interested in making Illinois the Las Vegas of the Midwest,” spokeswoman Kelly Kraft said recently.
The owners of the Chicago Cubs will ask lawmakers to authorize the ISFA to issue more than $200 million of revenue bonds to help finance renovations to Wrigley Field, the Cubs longtime home on the city’s north side. Cullerton will sponsor the legislation.
“This preserves a valuable landmark and tourist attraction and ensures the Cubs will remain at Wrigley Field for years to come,” Patterson said.
Cubs executive chairman Tom Ricketts is trying to build support for the proposal by promoting it as the best means to finance much-needed renovations to the aging ballpark without burdening taxpayers. The Cubs also would match the financing with private funds.
The plan calls for the tax-exempt 35-year bonds to be repaid with anticipated growth in Chicago and Cook County amusement taxes.
The city and county would continue to receive the roughly $16 million they currently collect from the tax, but future growth — which would come from higher ticket prices — would be diverted to repay the bonds. To bolster the appeal of the debt to investors, the Cubs want the ISFA to provide its local 2% hotel tax as a backup security. A Cubs spokesman said any hotel revenues tapped would be repaid by the Cubs.
Before the Ricketts family bought the team last year from the Tribune Co., ISFA chairman James Thompson floated several plans for the state to purchase Wrigley and finance renovations with bond proceeds, but they all failed to muster much support.
The sports authority was established in 1987, while Thompson was governor, to manage the financing and operations of a new ballpark for the Chicago White Sox.
The ISFA’s $150 million of bonds, sold in 1989 for the project, are backed by a state appropriation and repaid with hotel taxes. The authority issued $400 million in 2001 to finance the renovation of the Chicago Bears’ Soldier Field. The bonds are repaid with the same tax-revenue stream.