Illinois Makes Headway on Federal Funds, MetPier

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CHICAGO - The Illinois House unanimously passed a bill that authorizes $5.2 billion in federal funds spending and allows the Metropolitan Pier and Exposition Authority to make debt payments, after Democrats abandoned efforts to tack general fund spending onto the measure.

Passage of the package came amid a political stalemate between Republican Gov. Bruce Rauner and the General Assembly's Democratic majority over a fiscal 2016 budget. The bill generated much bickering, barbs, and accusations over motives immediately preceding the 98 - 0 vote.

The House action capped two days of committee and floor debate over the changes announced by House Speaker Michael Madigan to the $4.8 billion federal funds appropriation bill passed by the Senate last week. Madigan tacked on $1.4 billion of additional spending that included $600 million more in federal appropriations and $600 million in general revenue funds, and nearly $200 other state funds. The final bill passed added $435 million in federal funding to the original Senate-passed legislation.

The funding would support social service programs for children and the elderly and cancer screenings.

"We believe funding for these programs, which can be delivered despite the lack of a state budget in place, is needed before the measure is sent to the governor," Madigan said in a statement.

Rauner attacked the move, calling the GRF allocation a "poison pill" suggesting he would not sign a bill that was not "clean" of GRF spending.

"Gov. Rauner has supported and continues to support a clean federal pass-through appropriations bill," Rauner spokesman Lance Trover said in a statement. "Unfortunately, Speaker Madigan continues to play games with taxpayer money and is trying to force through higher state spending with no budget."

The vote Wednesday came after the Democratic majority and Republicans traded barbs over the initial Democratic sponsored changes to the bill, charging they had tainted a "clean" bill. Democrats countered that Rauner could use his line item veto powers.

Republicans also then accused Democrats of playing politics by pursuing a vote on the package even though Democrats lacked enough members in the chamber to reach the needed three-fifths majority vote of 71. Ahead of the failed vote on SB 2042 -- that netted just 54 votes -- a new amendment surfaced that cancelled out the additional GRF spending.

Republicans charged that Democrats wanted ammunition to appeal to supporters by pursuing the social service funding only to be blocked by Republicans. Democrats defended their efforts as needed to fund critical services and leverage federal dollars that require a state match.

Republican Minority Leader Jim Durkin told members his caucus and Rauner supported the new amendment and said clearly the bill with the GRF allocation would fail.

"It's nothing more than politics," he said. "People are sickened by this process…let's stop this nonsense."

The amended version now returns to Senate for a vote next week. That's because it does include some additional allocation of federal funds and includes a provision freeing a total of $167 million in MPEA project funds needed for debt service in fiscal 2016.

Rauner has previously indicated he supports both the MPEA measure and the federal funds appropriation.

The MPEA provision means bondholders can rest easy they will be paid on Dec. 15, but it won't restore the agency's high-grade ratings.

The authority issued a disclosure notice last week of its failure to make its monthly transfer of $20.8 million due on July 20 to a special trustee-managed debt service account as its revenue streams can't be tapped without a state budget appropriation.

The failed monthly payment represents a technical default, although MPEA's next debt service payment is not due until December. The authority lost its AAA rating from Standard & Poor's and its AA-minus rating from Fitch Ratings last week over the failed transfer. The credit is now seen as an appropriation risk, which limits the rating to one notch below the state's general obligation rating. Both rate the state A-minus. The two previously recognized the strength of a mechanism that traps revenues, preventing their use elsewhere and benefitting the likelihood of appropriation.

Moody's had already considered the credit an appropriation risk and rates the authority's debt Baa1 with a negative outlook, one notch lower than the state.

The authority's nearly $3 billion of bonds are backed by taxes on hotel stays, car rentals and other tourist services with statewide sales tax revenues allocated by statute to cover shortfalls between annual tourism tax revenues and debt service.

 

 

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