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June 2008 Newsletter

Budget Battles

The wrap up of the 2008 spring legislative session brought with it both good news and bad news.  Personally, I am thrilled to be back in the district after almost seventeen straight months of travel to and from Springfield. The bad news, however, is that the Fiscal Year 2009 budget that was passed has serious flaws and I do not see a clear path to remedying those flaws.

Almost everyone agrees that the budget we passed is out of balance – meaning the expected revenues fall short of expenditures.  The $64,000 question (excuse the pun) is how much?  The Governor has said the budget is out of balance by approximately $2 billion.  Others I have spoken with say it is not anywhere near that much.

At this point, I do not have specific information on what revenue projections were used to develop the budget so I am unable to make my own determination.  But I can lay out for you some of the options that were on the table and how much new revenue they could be expected to bring in for FY 2009.  Those potential revenues include:

Natural revenue growth (from income, sales and other taxes)         $520 million

The sale of the long dormant license for the 10th casino                 $575 million

Increased enforcement by the Illinois Department of Revenue

(basically going after tax cheats)                              $ 47 million

Transfer of special purpose funds to General Revenue          $530 million

State issuance of Pension Obligation Bonds                                   $500 million (or so)

So what does it all really mean?

Basically, the House and Senate are waiting on the Governor to make a decision about how to handle the budget.  He can veto the entire budget – in which case we start from scratch except that now we need a super majority of votes in order to pass a FY 2009 budget (a repeat of the scenario from last year).  He can line item veto the spending that he believes is excessive or unnecessary and bring it into balance (or at least get it closer).  Or he can sign the budget “as is” and use his authority to spend or not spend during the upcoming fiscal year to manage the cash flow.

The Governor has proposed additional meetings with the legislative leaders to try and come to resolution. While I don’t anticipate that this will be successful, I am trying to be an optimist.  So stay tuned….

New Physician Profile Website to Help Illinois Families

Governor Blagojevich recently announced the launch of a new physician profile feature available to the public, the Department of Financial and Professional Regulation’s website.  The new feature allows health care consumers to review important information about the professional and disciplinary background of 44,000 physicians and surgeons licensed to practice in Illinois.

Over 85 percent of all licensed physicians and surgeons have provided the information necessary to create their profile in categories that include: the location and scope of practice, the type of insurance the physician accepts, specialties and certifications, legal and disciplinary actions taken against them, his or her educational background and any professional activities or honors the physician would like to add.  Physicians’ licenses are subject to renewal in July 2008.  Before a license is renewed, physicians must provide the information for their profiles

Results of the New Illinois Power Procurement Process

Illinois recently completed its first electricity procurement following the enactment of last year’s reform legislation, Senate Bill 1592.  I thought you might be interested in learning more about how that law has benefited Illinois consumers.

As you may recall, in 2006, after receiving approval from the Illinois Commerce Commission, ComEd and Ameren conducted so called “reverse auctions” to purchase electricity from wholesale markets.  The results of this approach were a disaster for Illinois consumers.  So, last year, we were able to pass legislation to fix this system.

This legislation had four components: 1) $1 billion dollars of rate relief refunds for ComEd and Ameren customers; 2) Replacement of the reverse auction with a new, more pro-consumer electricity procurement method; 3) Reform of the rate system to protect Ameren’s electric heating customers; and 4) Financial swaps, negotiated by the Attorney General and authorized by statute, that guaranteed consumers a fixed price for approximately half of the electricity to be purchased by ComEd and Ameren to serve their customers.

One year later, the evidence suggests that the new procurement method and financial swaps have worked, as intended, to benefit Illinois ratepayers.  Although wholesale electricity prices have increases since the 2006 reverse auction, Ameren and ComEd customers will pay lower prices for electricity during the coming yearthan the process established by the 2006 auction.

I am most pleased that we were able to include both short and long-term relief and reform for Illinois consumers through this legislation.


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