Despite the state’s ongoing credit woes, improved market conditions allowed Illinois to achieve a near record-low interest rate on construction bonds sold April 2.
That good news was tempered, however, by a report from the University of Illinois showing that the state’s economic growth continues to lag behind the rest of the nation and has slowed after three years of improvements,
State Sells Construction Bonds
Illinois sold $800 million in bonds for construction projects April 2, getting a 3.92% interest rate on $450 million of tax-exempt bonds, paying the same rate the state payed in January 2012 even though rates are generally lower today than they were at that time. On the second set of bonds, Illinois received a 4.97% rate on $350 million in taxable bonds, which was better than the 5.29% the state received in January 2012 on similar bonds. Despite the relatively low rates, Illinois continues to pay a higher interest rate than states with better credit ratings.
State’s Recovery in Peril?
Warning signs are showing up in the state’s economy, according to a University of Illinois “flash index” released at the beginning of April. The index showed that while the state’s economy continues to expand, the rate of that expansion slowed slightly in March.
The University’s report coincides with the latest unemployment report, which showed unemployment is higher in 10 out of 12 metropolitan areas, when comparing February 2013 to February 2012. Statewide, unemployment rose to 9.5% in February, from 9% the previous month and 8.9% in February 2012.
Local Governments Worried about Revenue Sharing
Governor Pat Quinn has suggested that the state could help close its budget gap by freezing local revenue-sharing dollars at the same level as 2012. Not surprisingly, a number of municipalities are gearing up to oppose the plan.
Recently, Arlington Heights officials warned they would lose as much as $863,000 in increased funding if the plan is adopted. The Quinn Administration estimates the freeze would reserve about $68 million for the state budget and amount to about $5.30 per resident for each municipality. However, the Illinois Municipal League, which represents many city governments, has put the cost at closer to $11.50 per resident and says it would allow the state to divert $148 million.
First Steps Toward Health Exchanges
Insurance companies have begun submitting plans to a state review panel in anticipation of the launch of the federal Affordable Care Act, sometimes known as “Obamacare.”
A key component of the federal healthcare law is the establishment of insurance “exchanges” designed to offer individuals and small businesses one-stop shopping for health insurance. Insurance plans are to be available for comparison beginning October 1 and coverage would start in 2014.
The state expects up to 400 different plans will be submitted for review and possible inclusion on the health exchange Web site. However, some of the state’s largest insurance companies are still weighing whether or not to participate in the Illinois exchange. Plans available through the exchange will be required to meet a base level of coverage and meet strict financial restrictions. The state estimates it will be September before the Web site goes live and consumers can begin comparing plans.
Medicaid Reform and Expansion
In a pair of recent editorials, the Chicago Tribune took a look at the state’s efforts to remove ineligible recipients from the state Medicaid program and then warned lawmakers not to rush to approve a massive Medicaid expansion.
The first editorial summarized early results of an audit ordered under bipartisan Medicaid reforms adopted in 2012.
The Tribune wrote: “The initial results of this audit are ... astonishing: Of the first 20,500 recipients screened by an outside contractor, the auditors recommend that 13,709 be removed from the rolls. Yes, that’s two-thirds of the first group screened, flagged as ineligible to receive their current Medicaid benefits.”
The editorial references a statement from the Department of Healthcare and Family Services Director Julie Hamos that this represented “low-hanging fruit,” because the individuals had already been red-flagged as suspicious.
So, the Tribune editorial asks: “Why didn’t state officials pluck this low-hanging fruit long ago?” It is a great question, but frankly it is hard to believe that it had to be asked. If these recipients were flagged as ineligible, why were they still receiving Medicaid benefits? I think hard-working taxpayers would like some answers.
The second editorial looks at a major Medicaid expansion contained in Senate Bill 26, which passed the Senate in February with no Republicans supporting it. The bill is currently before the House of Representatives.
Although the federal government is expected to pick up the bulk of the cost for the expansion, the state’s Department of Healthcare and Family Services has indicated the cumulative cost to the state could exceed $2.9 billion by 2020. The measure voluntarily expands the state’s Medicaid program eligibility to nearly 350,000 additional individuals between the ages of 19 and 64 who are under 138% of the Federal Poverty Level.
Town Hall meeting April 15
I will be hosting a Town Hall meeting April 15 at Messenger Library, 113 Oak St., North Aurora, with a focus on our pension problems. The meeting is scheduled to start at 7:00 p.m.
State legislators face a number of tough decisions in the coming months as we try to steer Illinois in a more productive direction. I want to talk with 25th District citizens and get their opinions on solving our state’s pension and fiscal problems. I hope they will be able to take time out from their busy schedules to come by and talk with me and other local leaders.
For more information, call my office at 630-800-1992.