A “surprise” one-time surge of state income tax revenues received in April helped stem the tide, but Illinois still owes a staggering $6 billion worth of payments to tens of thousands of vendors statewide, including those in Southwestern Illinois.
Before an additional $1.3 billion came in during the month of April, the backlog had grown to more than $8 billion.
Among those is Collinsville’s public school district. As of June 24, the state of Illinois owed Collinsville CUSD $1.42 million from the General Fund. Superintendent Bob Green, who heads the district of more than 6,300 students, says that in his 30-plus years of working in education, he’s never seen a more dire financial scenario.
“We’ve spent the last couple of years in deficit spending and we’ve taken action this spring to correct that,” said Green. “Unfortunately, we’ve cut approximately 19.5 full-time-equivalent positions in our district. When someone has retired, instead of being able to consider a candidate with experience, we’re forced to look at who is going to cost us the least. And in negotiations with the (teachers’) union, it’s hard to get an agreement on the table when there’s no money to put on the table. It’s as tough as I’ve ever seen. Do you do what’s best for the kids, or do you do what’s best for the bank account? The continued, long-range effects of what’s going on at the state level are going to be devastating,” he added.
Green remembers back in the 1980s when the state of Illinois - and specifically Southwestern Illinois - endured a brief period of time, four years, when school districts did not receive any new money from the state. “But that was different. We weren’t cut. And we were being paid on time, for the most part,” he said. “Also, the state mandates weren’t what they are now. When you have healthcare costs that are continually going up, utility costs going up, fuel costs going up, plus an increasing number of state mandates - even if they’re good mandates - being imposed upon educators - they take time and money to put into place. And we just don’t have it,” said Green.
Schools in Southwestern Illinois and across the state aren’t the only ones waiting to be reimbursed by the state. Hospitals are waiting patiently for their share of Medicaid reimbursements. Memorial Hospital in Belleville, for example, as of June 24, was owed just over $3 million, according to the Illinois Comptroller’s Office.
Danny Chun, spokesman for the Illinois Hospital Association, says the state’s backlog of overdue payments owed to healthcare-related vendors needs to be considered in context with several factors on the federal level that are or will impact Illinois’ ability to pay in a timely fashion.
“Between the effects of the Patient Protection and Affordable Care Act, the 2 percent cuts due to the sequestration and the fiscal cliff crisis, Illinois hospitals are facing more than $11 billion in Medicare cuts over the next 10 years,” said Chun. “And Medicare is one of the largest sources of revenues for hospitals...in many cases, as much or more as 40 percent.”
Business and industry leaders are hailing the passage of Illinois’ fracking law as a model for the rest of the nation to emulate. Environmental groups say the compromise legislation was a compromise since a moratorium wasn’t achievable.
On June 17th, Gov. Pat Quinn signed into law SB 1715, legislation that secures protections associated with high-volume, horizontal drilling known as fracturing or fracking. The process of extracting natural gas from shale reservoir formations, which has been around since the 1950s, has gained great momentum the past year or two but had been unregulated. Because Southern Illinois sits atop a good portion of the New Albany Shale formation, fracking was already drawing scores of landowners, drillers and investors to the state for a piece of the action. Experts estimate the state could be home to as many as eight trillion cubic feet of natural gas reserves.
Given this scenario, Illinois legislators grappled over the past two years to carve out an agreeable bill to satisfy the oil and gas industry, environmentalists and both political parties - one that would give citizens a proactive voice in the process, particularly concerning potential threats to surface and groundwater contamination.
Co-sponsor and State Sen. Michael Frerichs (D-Champaign), who teamed with Rep. John Bradley (D-Marion)on the bill, says SB 1715 represents the most comprehensive set of fracking regulations yet among any of the U.S. states and includes staunch protections for surface and groundwater quality. “I’m proud to say these are the strongest, most effective drilling safeguards enacted by any state in the nation,” Frerichs said.
U.S. Rep. John Shimkus, a member of the U.S. House Energy and Commerce Committee, says Illinois’ new fracking law spells progress in an effort to empower states with the ability to balance the interests and needs of business and industry while protecting citizens and the environment, rather than asking the US EPA to intervene and exert its authority. “We’re always seeking to make the argument here in Washington that the states are well qualified to strike that balance on their own and to be accountable to their communities without the EPA stepping in,” said Shimkus. “This is really a market-driven opportunity. If you involve the EPA and create additional layers of cost and liability, the individuals who are raising the capital to explore, identify and recover these natural resources are going to go elsewhere. It’s a fine balance, but it’s one that the states are capable of achieving,” he added.
Ann Alexander, senior attorney, Midwest program, Natural Resources Defense Council, was one of the four individuals from the environmental coalition who participated in negotiations on the fracking legislation in Springfield. Alexander says although the NRDC’s first choice would have been to see a complete moratorium on fracking, the final bill that was signed into law by Quinn represents a “reasonably strong compromise.”
“We have never said this is a model bill. It does not consistently represent best practices,” said Alexander. “But it is indeed the strongest package of regulations on the books today as far as horizontal fracturing is concerned. Just because it’s the strongest yet out there doesn’t mean it represents best practices.”
One of the strongest provisions - and one that indeed makes Illinois’ new fracking law unique to other states, says Alexander - is its citizens’ lawsuit provision. “Citizens can sue a driller, the Illinois Dept. of Natural Resources, the service provider and pretty much anyone who is in violation of the act,” Alexander said. “We consider this to be the crown jewel of the legislation. Regardless of any shortcomings, these provisions provide the opportunity for citizens to shed light on the process. These are essentially a safety hatch for the public to oversee and watchdog fracking in their communities.”
Another provision added to the final version of the bill, says Alexander, requires operators to disclose the specific chemicals they are going to be using in the fracking process 21 days before using them. “Only two other states require this,” said Alexander. “It’s terrifically important. As a landowner, you’re going to want to know what to baseline test for those before drilling near your property begins.”
In addition, the IDNR has to approve any secret trade labels that drillers plan to use in connection with their chemicals in the fracking process. Alexander says there is yet another requirement in SB 1715 that allows health providers to obtain this pertinent information if necessary, and share it with appropriate other persons if need be, without being constrained by a gag order.
Bill Anaya, a partner and member of the Legislative and Public Policy Group at the law firm of Arnstein & Lehr LLP, specializes in mineral rights and environmental law. Anaya’s 30 years of experience in environmental enforcement actions and liability claims in air, water and soil provide him with a national perspective on states’ regulatory climates relative to fracking.
“Before Illinois’ fracking law became official last month, we were a wildcat state,” Anaya said. “Fracking in Illinois had been going on since the 1950s. There are an estimated 20,000 fractured wells currently in Illinois. Now we’ve got a regulated process. It’s a really good thing. In this act (SB 1715) you will see all kinds of data - all kinds of evidence about potential receptors within the area. As to an alleged violation, the act provides for a rebuttable presumption, which means that if you can prove that there’s a fracking operation within a certain distance of water, enforcement officials may not have to prove causation. To rebut the presumption, the operator has to prove the cause of the violation has another cause, by clear and convincing evidence. With this new law, everyone gets something: the operators and the regulated community get to use evidence - not simply unsupported anecdotes, which makes preparing the administrative record in this new, regulated program critical. That’s huge. That’s what makes Illinois different than every other state out there,” he added.
Ohio, Pennsylvania and to a lesser extent Indiana and Rhode Island, according to Anaya, are semi-regulated states in terms of fracking laws on the books at this time. “But Illinois is the only state with legislation that has provisions for data gathering,” he said.
With regard to the environmental lobby for a moratorium on fracking, Anaya says it was not a realistic position. “Remember, fracking has been going on for more than 50 years but it hasn’t been profitable until recently,” he said. “It’s silly to suggest that the Illinois General Assembly was ever going to enact a moratorium for a process that was going on for half a century and has finally begun to become extremely profitable and has the potential of being a economic engine and jobs creator for the state. Legislators did their jobs and wrote a tight, good bill. It’s also a bill that says, ‘Operators, come to Illinois, but please bring good science, sound engineering and your checkbooks, too.’ It’s remarkably good politics.”
Alexander says those who suggested that the passage of SB 1715 was a “green light” for the fracking industry in Illinois were wrong, since fracking was completely legal in Illinois before the legislation was passed.
“It was really frustrating to hear people saying that this legislation would ‘green light’ fracking in Illinois,” Alexander said. “The reality was that the lights were already blazing green. Before this law was enacted in June, the IDNR was required to grant a fracking permit within 48 hours to anyone who plunked down $100 and a detail-free application that was as easy to get as a dog license. It was a slender threat and it was untenable. It was critical that Illinois pass this legislation, not to ‘green light’ fracking, but to establish some rules of the road.”
Illinois Senator Andy Manar (D-Staunton) hopes Gov. Pat Quinn will sign his bill to restructure the Illinois Dept. of Commerce and Economic Opportunity. The legislation will put a strategic development plan in place for the very first time, introduce an advisory board filled with business experts and establish measurable goals for the agency.
HB 1544 got the nod from both the Illinois Senate and the House and was sent to the governor on June 19, awaiting his signature. Manar, a Southwestern Illinois native, whose resume includes eight years as chairman of the Macoupin County Board and one term as mayor of his home town of Bunker Hill - says this legislation is the “first step” in attacking what is undoubtedly the root of all Illinois’ financial crises: an unacceptable level of unemployment.
“If we’re going to get at the heart of our state’s budget woes, we’ve got to get a grip on lowering unemployment,” said Manar, noting that although unemployment in Sangamon County overall is lower than the state average, unemployment in portions of the city of Springfield, Ill. are two and three times the state average. “Rural communities are especially struggling with generationally high unemployment,” he added. “This scenario not only applies to Macoupin and Sangamon counties, but to other counties across Illinois, too. That tells me that DCEO is disconnected and out of touch. This bill is intended to begin the process of dealing with this huge issue that’s at the root of it all.”
Manar praises DCEO’s new director, Adam Pollet, who was officially confirmed by the Senate on May 31. Pollet is the agency’s third director in approximately 3.5 years. Manar and Illinois Chamber of Commerce President Doug Whitley agree that Pollet, a Harvard Law School grad and former deputy director for the Illinois Office of Trade and Investment, is the right choice to lead DCEO’s reorganization from within.
“I think Adam’s intentions and his heart are in the right place,” said Whitley. “One of the major points we’ve been making (the Illinois Chamber) since we published our Jobs Agenda more than two years ago is that the Dept. of Commerce and Economic Opportunity had become too involved as a conduit for federal dollars and for energy efficiency and workforce development programs, and not involved enough in the most important issue facing Illinois: jobs creation. To me, HB 1544, our Jobs Agenda and other initiatives that have come forth are saying essentially the same thing: DCEO is not performing at the peak of its ability, and at the level that the public expects. We need to recalibrate this agency’s role, more closely monitor it and recommunicate its role. Right now we need a laser focus, and that laser focus needs to be on solving our state’s unemployment problems.”
HB 1544 does not include any change or reduction in the number of employees working for DCEO. It does require that DCEO develop and update the new strategic plan on an annual basis. Manar says the creation of the Illinois Business Development Council ensures private-sector involvement in the economic development functions of the agency, where competition is fierce between states to attract relocating and expanding business and industry to Illinois. HB 1544 also requires businesses receiving financial incentives from DCEO to report quarterly and annually specified data related to job creation.
It will be effective immediately once signed into law by Quinn. July 1, 2014 is the deadline by which the initial DCEO strategic development plan must be put into place, according to Manar.
“We will see Director Pollet begin to put the provisions in place soon,” Manar said. “Appointments to the Business Development Council, the beginning of soliciting local government and business input to the strategic development plan and more. It’s going to be vital for us to seek input from organizations in the Metro East such as the RiverBend Growth Association and other local entities who can provide valuable economic development perspective.”
Manar credits Quinn’s administration, DCEO, business leaders and others for their dialogue and work in reaching a consensus on the issues driving HB 1544 and the subject overall. A total of three public hearings were held - one in Alton - to solicit public input on the topic of creating measurable accountability in the agency.
“I’m not interested in talking about what’s wrong,” said Manar. “I want to talk about ways we can fix the problem. The core issue in this state is unemployment. DCEO is an agency that has been disconnected from this issue. This bill (HB 1544) refocuses the agency on the issue, and creates tools and resources to equip it and to hold it accountable in working toward achieving solutions to the problem. Once this bill becomes law, we’ve got everything we need to move forward.”