Illinois House Republicans

12/11/2023 | News release | Distributed by Public on 12/11/2023 12:17

News from State Representative Dan Ugaste – December 11, 2023

News from State Representative Dan Ugaste - December 11, 2023

December 11, 2023

IMMIGRATION

Thousands of migrants crowd into Chicago without shelter as winter approaches. No plans exist for the more than 25,000 migrants now in the Chicago area who do not have permanent legal status in the United States. The word "migrant" often refers to people who cross the U.S. border, present themselves to law enforcement, and claim status as refugees under what is described as international law. Under the Biden administration, due to lax policies, the numbers have swelled and there are serious questions about whether most of these migrants qualify under international law as refugees. Hypothetically, refugees have a right to stay in the United States. In return for the right to stay temporarily in the United States, people in this category are supposed to be on call as their legal status to be classified as a refugee is adjudicated. The number of migrants claiming refugee status has overwhelmed the ability of U.S. courts of immigration law to adjudicate these cases. Persons in this category now number in the many hundreds of thousands throughout the U.S.

In Chicago, many migrants claiming status as refugees are homeless. The migrant crisis has become a catastrophe from both a humanitarian and budgetary aspect. Although the Chicago area has one of the highest tax rates in the country, there does not appear to be any structure in place under which some of these people can be housed for Chicago winter conditions and others can be sent elsewhere. After many weeks of press coverage, Chicago Mayor Brandon Johnson eventually prioritized the construction of what was described as a "migrant tent city" in a Brighton Park location on Chicago's South Side. The chosen location had been a railroad-adjacent vacant lot on a site previously used for the manufacturing and conversion of metal goods. Work started at the site, even though tests of the site revealed substantial levels of toxic chemicals.

This week, Governor JB Pritzker announced that the State of Illinois would not support construction of a camp for migrants at Brighton Park. The announcement meant that the 2,000 migrants who would have been housed at the Brighton Park site currently have no suitable place to shelter as winter approaches.

BUDGET

CGFA report was the appearance of a slowdown in Illinois personal income tax revenues. This line, which had generated $1.915 billion in State revenue in November 2022, dropped to $1.802 billion in November 2023. This decline of $113 million reflected not only job losses but also declines in ancillary tax payments submitted by individuals from income earned from investments and other non-paycheck pathways. Sales tax revenues also dropped by $20 million during the same period.

The one-month decline in personal income tax revenues reported by CGFA came after several months of strong tax payments to start off fiscal year 2024 (FY24). For the five-month period starting July 1, 2023, personal income tax revenues were up $510 million over the previous year. This healthy revenue gain helped power the heavy spending patterns mandated by the Democrats' FY24 State Budget. For FY24, Illinois is slated to spend $50.428 billion in new general funds, which include state programmatic spending, debt service, and pension payments. According to the CGFA Budget Summary, the State is expecting to bring in $50.611 billion. This spending plan will leave little margin for error should revenues come in below target during the second half of the fiscal year.

FIREARMS

Illinois' gun ban law before the U.S. Supreme Court. The ban on certain classes of firearms and magazines, called the Protect Illinois Communities Act, is being appealed through the federal courts. Plaintiffs assert that the measure, in addition to containing elements of unconstitutional vagueness, constitutes a violation of the Second Amendment rights of Illinois residents. The Act was passed by Democrats during a lame duck General Assembly session on January 10, 2023.

A recent decision rendered on the Act by a three-judge federal appellate panel opened the door for an appeal to the federal Supreme Court. A separate door was also opened by this decision to petition the appellate court for a rehearing of the case, with all of the judges of the appellate court asked to come together to render judgment, but this week's action centered on the U.S. Supreme Court appeal.

The Supreme Court can issue a preliminary injunction to suspend enforcement of the law. A preliminary injunction may be issued with respect to any legal case if a court finds that, in connection with that case, the infringement of a right or interest threatens an irreparable injury to a party with legitimate standing. A plaintiff filed appeal papers against the Act on the federal Supreme Court docket on Thursday, November 30, with a response required by the State of Illinois by Wednesday, December 6.

JOBS

Already the world's largest fast-food chain, Illinois-based McDonald's announces plans for 10,000 more restaurants. With 40,275 owned and franchised restaurants operating worldwide as of January 1, 2023, the "Golden Arches" chain feeds millions of people every day. At McDonald's Chicago headquarters this week, corporate spokespersons unveiled plans to move towards a global goal of 50,000 McDonald's locations by December 31, 2027.

The five-year expansion plan centers on international growth (7,000 new locations outside the U.S.) and expansion of the McDonald's loyalty program. This loyalty program, which enables repeat customers to accumulate loyalty points, currently enrolls 150 million customers worldwide and sells them $20 billion in annual goods and services. The program's end-of-2027 goal is 250 million loyalty customers and $45 billion in annual sales.

While many of the new stores will be owned or operated in locations that are distant from Illinois, continued maximization of the loyalty-program concept will require close attention to coordinated financial planning. Many of the professional personnel that will guide and promote this program will be Illinoisans or personnel that will rotate in and out of Illinois. McDonald's believes that its McDonalds System headquarters supports more than 5,800 jobs in Chicago and surrounding Cook County.

PENSIONS

CGFA files State pension report. One of the greatest fiscal challenges facing the State of Illinois and its taxpayers is presented by the five defined-benefit pension funds that are the responsibility of the State. While the public pension debts contracted by these five funds are not defined, in the formal sense, as "State debts," based on the legal standing of these pension funds and their vested beneficiaries, these debts are moral obligations of the State of Illinois. Illinois public pension-fund debts are legally called "unfunded liabilities." They represent future liabilities owed by these funds to contracted, vested future pensioners, even though these funds do not have money at this time to pay these future liabilities.

Under Illinois law, the State must set aside a rising annual sum of money (the pension "ramp") to close this unfunded-liability gap and pay these future pensions. The General Assembly has asked CGFA to audit the actuarial assumptions used to generate the current estimates of the unfunded-liability gap. This audit will enable Illinois policymakers to improve their estimates as to how much money will need to be set aside every year in the near-and-medium-term future for this purpose.

Based on currently accepted actuarial assumptions about future trend lines, particularly future interest rates on moneys already contributed and being invested by these five pension systems, Illinois' pension systems currently face an unfunded-liability gap of $141.4 billion. This figure represents the money that should have previously been deposited in these five pension funds, but was not there, on June 30, 2023. This is the second highest unfunded liability number in the history of Illinois public-sector pensions. The same gap was $144.2 billion in 2020 but has since fallen back a bit. The slight decline in this pension gap is attributed to the post-COVID-19 economic boom and an appreciation in the value of pension fund moneys that are invested in equity securities (the "stock market").

A large and growing chunk of this overall pension gap is represented by the largest of the five systems, the Teachers' Retirement System (TRS). Under Illinois law, Illinois educators are paid by their school districts, but the cost of their pensions is picked up by TRS. Defined-benefit pension outflows are determined by pay rates, because the pensions enjoyed by vested pensioners are tied to their pay scales when they retire. Analyzing Illinois teacher pension numbers, CGFA found that substantial pay increases granted to many Illinois educators over the past fifteen years (FY09 - FY23) have helped generate an increase in the size of unfunded TRS liabilities. This sum, which was $44 billion in FY09, has increased to $81.9 billion.

Other State pension funds apply to public-sector workers in State government, State universities, the judicial branch, and the Illinois General Assembly. All five pension funds have substantial unfunded liabilities.

WINTER ENERGY ASSISTANCE

LIHEAP application window opens for households struggling with high home energy costs. The Low-Income Home Energy Assistance Program (LIHEAP) provides federal assistance for persons who will need help paying their heating bills for natural gas or propane for the winter of 2023-2024. The LIHEAP application process is now underway.

A series of trigger events, combined with a household income that meets the LIHEAP program's eligibility ceilings, create the ability to submit a valid application for the program. The applicant must affirm that his or her household's income is below the LIHEAP cutoff point. Income is measured in relation to the federal poverty level (FPL), with 200% of FPL being the cutoff. The FPL goes up or down depending on how many people are in the household and is annually adjusted for inflation. For the winter of 2023-2024, the FPL for a four-person family is $2,500/month; and so, the LIHEAP eligibility ceiling would be $5,000/month (equivalent to an annual income of $60,000/year) for the same family. Income eligibility is calculated on a 30-day basis. Trigger events that complete LIHEAP eligibility include but are not limited to: (a) getting a shutoff notice from the natural gas company or other energy services provider; (b) getting disconnected from energy services; or (c) having an empty or near-empty propane tank. Applicants will have to submit documentation about their income and energy status to complete the application. Applications are submitted to the Community Action Agency with jurisdiction over the county where the applicant lives. More information about LIHEAP, and how to apply to each county's agency, can be found on the Community Action Agencies webpage within the Illinois Department of Commerce and Economic Opportunity (DCEO).