98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
SB1223

 

Introduced 1/30/2013, by Sen. Matt Murphy

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Creates the Pension Funding and Fairness Act. Provides that the maximum annual percentage change in State fiscal year spending may not exceed the inflation adjustment factor plus the population adjustment factor. Provides that, in order to adopt an increase in State spending beyond that limit or an increase in State revenue, the measure must be approved by a three-fifths supermajority vote of each chamber of the General Assembly and must be approved by a majority of voters. Provides for the imposition of an emergency tax. Establishes the Past Due Paydown Fund, into which the Comptroller shall transfer any amount necessary up to the total past due operating debt owed by the State, and provides that the General Assembly may authorize transfers, appropriations, and allocations from the fund to fund only the costs of paying down the remaining past due debt. Requires any remaining funds to be transferred into the State Budget Stabilization Fund. Establishes the State Budget Stabilization Fund to fund the costs of State government up to the expenditure limit in years when State revenues are less than the amount necessary to finance expenditures. Limits the fund from exceeding 8% of the total General Fund revenues received in the immediately preceding fiscal year, and requires the transfer of any excess into the Taxpayer Relief Fund. Establishes the Taxpayer Relief Fund, and provides that, if the amount in that fund exceeds 1% of General Fund expenditures, then the General Assembly shall enact legislation to provide for the refund to taxpayers of amounts in the fund. Contains provisions concerning annual pension payments. Amends the State Finance Act to make conforming changes. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning public employee benefits.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the
5Pension Funding and Fairness Act.
 
6    Section 5. Definitions. As used in this Act:
7    "Emergency" means extraordinary circumstances outside the
8control of the General Assembly, including catastrophic
9events, such as a natural disaster, terrorism, fire, war, and
10riot, as well as court orders or decrees
11    "General Fund" means the General Revenue Fund, Common
12School Fund, and Education Assistance Fund.
13    "Increase in State revenue" means any net gain in State
14revenue of at least 0.01% of General Fund revenue in at least
15one fiscal year that results from (1) enacting a new tax or
16fee; (2) increasing the rate or expanding the base of an
17existing tax or fee; (3) repealing or reducing a tax exemption,
18credit, or refund; or (4) extending an expiring tax increase or
19fee.
20    "Inflation adjustment factor" means the annual percentage
21increase in the Chicago Metropolitan Statistical Area Consumer
22Price Index for the most recently available calendar year as
23calculated by the United States Department of Labor, Bureau of

 

 

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1Labor Statistics. The inflation adjustment factor may not be
2less than zero or more than 10%.
3    "Monthly pro rata pension payment" means the average
4monthly pension payment calculated by dividing the total fiscal
5year annual pension payment by 12 months.
6    "Pension payment" means the total annual required pension
7payment for each fiscal year as defined by the Commission on
8Government Forecasting and Accountability following generally
9accepted accounting principles.
10    "Population adjustment factor" means the average annual
11percentage increase in population for the 3 most recent years
12for which data is available, as determined annually by the
13United States Department of Commerce, Census Bureau. The
14population adjustment factor may not be less than zero.
15    "Revenue" means taxes and fees collected by the State.
16    "State spending" means any authorized State appropriations
17and allocations.
18    "Tax" means any amount raised for the general support of
19government functions.
 
20    Section 10. Spending Growth Index.
21    (a) Beginning with the fiscal year that starts after this
22Act takes effect, the maximum annual percentage change in State
23fiscal year spending in the categories specified may not exceed
24the inflation adjustment factor plus the population adjustment
25factor. This limitation, the Spending Growth Index, must be

 

 

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1calculated separately for the following categories: General
2Fund; Road Fund; and all other funds.
3    (b) The following may not be counted in calculating
4expenditure limitations or, if applicable, revenue
5limitations:
6        (1) Amounts returned to taxpayers as refunds of amounts
7    exceeding the expenditure limitation in a prior year.
8        (2) Amounts received from the federal government.
9        (3) Amounts collected on behalf of another level of
10    government.
11        (4) Pension contributions by employees and pension
12    fund earnings.
13        (5) Pension and disability payments made to former
14    government employees.
15        (6) Amounts received as grants, gifts, or donations
16    that must be spent for purposes specified by the donor.
17        (7) Amounts paid pursuant to a court award.
18        (8) Reserve transfers.
 
19    Section 15. Approval of expenditure increases.
20    (a) In order to adopt an increase in State spending beyond
21the limitation set forth in Section 10, the measure must be
22approved by a three-fifths supermajority vote of all members of
23each house of the General Assembly and must be approved by a
24majority of voters. Voter approval is not required if the
25spending is as a result of an increase in State revenue under

 

 

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1Section 20.
2    (b) The question of whether to adopt legislation to allow
3an increase in State spending beyond the limitation set forth
4in Section 10 must be submitted to the voters for approval at
5the next general election. If the General Assembly determines
6by a three-fifths supermajority vote that legislation to
7increase spending beyond the limitation should take effect
8sooner than the next general election, the General Assembly may
9provide for submission of the question to the voters at any
10regular or special election.
11    A measure submitted to the voters must include an estimate
12as set forth in the legislation of the spending increase
13resulting from the measure for the first 3 fiscal years of its
14implementation.
15    (c) At least 30 days before an election at which voter
16approval of an increase in State spending is sought, the
17Secretary of State shall mail, at least once, a titled notice
18or set of notices addressed to all registered voters in the
19State at each address of every registered voter. Notices must
20include all of the following information and may not include
21any additional information:
22        (1) The election date, hours, ballot title, and text.
23        (2) For each proposed spending increase, the estimated
24    or actual total of fiscal year spending for the current
25    year and each of the past 4 years, and the overall
26    percentage and dollar change.

 

 

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1        (3) For the first full fiscal year of each proposed
2    spending increase, estimates of the maximum dollar amount
3    of each increase and of fiscal year spending without the
4    increase.
5    (d) Ballot questions for spending increases must begin:
6"Shall State spending increase by (amount of first or, if
7phased in, full fiscal year dollar increase) annually for the
8purpose of . . .?".
9    (e) The State shall reimburse municipalities and counties
10for the costs of a special election.
 
11    Section 20. Approval of revenue increases.
12    (a) In order to adopt an increase in State revenue, the
13measure must be approved by a three-fifths supermajority vote
14of all members of each house of the General Assembly and must
15be approved by a majority of voters. Voter approval is not
16required if annual State revenue is less than annual payments
17on general obligation bonds, required payments relating to
18pensions, and final court judgments or if the measure is an
19emergency tax.
20    (b) The question of whether to adopt legislation to impose
21an increase in revenue of the State must be submitted to the
22voters for approval at the next general election. If the
23General Assembly determines by a three-fifths supermajority
24vote that legislation to increase revenue via an emergency tax
25should take effect sooner than the next general election, the

 

 

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1General Assembly may provide for submission of the question to
2the voters at any regular or special election.
3    A measure submitted to the voters must include an estimate
4of the amount to be raised by the measure for the first 3
5fiscal years of its implementation.
6    (c) At least 30 days before an election at which voter
7approval of a revenue increase is sought, the Secretary of
8State shall mail, at least once, a titled notice or set of
9notices addressed to all registered voters at each address of
10every registered voter. Notices must include all of the
11following information and may not include any additional
12information:
13        (1) The election date, hours, ballot title, and text.
14        (2) For each proposed revenue increase, the estimated
15    or actual total of fiscal year spending for the current
16    year and each of the past 4 years, and the overall
17    percentage and dollar change.
18        (3) For the first full fiscal year of each proposed
19    revenue increase, estimates of the maximum dollar amount of
20    each increase and of fiscal year spending without the
21    increase.
22    (d) Ballot questions for revenue increases must begin:
23"Shall (description of the tax increase) to increase State
24revenues by (amount of first or, if phased in, full fiscal year
25dollar increase) annually for the purpose of . . .?".
26    (e) The State shall reimburse municipalities and counties

 

 

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1for the costs of a special election.
 
2    Section 25. Emergency taxes.
3    (a) The State may impose emergency taxes only in accordance
4with this Section.
5    (b) The tax must be approved for a specified time period by
6a three-fifths majority of the members of each house of the
7General Assembly.
8    (c) Emergency tax revenue may be spent only after other
9available reserves are depleted and must be refunded 180 days
10after the emergency ends if not spent on the emergency.
11    (d) The tax must be submitted for approval by the voters at
12the next regular election.
13    (e) If not approved by the voters as provided in subsection
14(d), the emergency tax expires 30 days following the election.
 
15    Section 30. Past Due Paydown Fund. The Past Due Paydown
16Fund is established as a special fund in the State treasury and
17must be administered for the purposes identified in this
18Section. At the close of the lapse period of each fiscal year,
19the State Comptroller shall identify the amount of General Fund
20unappropriated surplus above the Spending Growth Index
21limitation and transfer to the fund any amount necessary up to
22the total past due operating debt owed by the State as of the
23close of that fiscal year.
24    The General Assembly may authorize transfers,

 

 

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1appropriations, and allocations from the fund only to fund the
2costs of paying down the remaining past due debt until such
3debt is zero. Any remaining funds shall be transferred to the
4State Budget Stabilization Fund.
 
5    Section 35. State Budget Stabilization Fund. The State
6Budget Stabilization Fund is established as a special fund in
7the State treasury and must be administered for the purposes
8identified in this Section. At the close of the lapse period of
9each fiscal year, the State Comptroller shall identify the
10amount of General Fund unappropriated surplus above the State
11Spending Growth Index expenditure limitation and above the
12amount necessary to fully fund and pay down the past due
13operating debt to zero. The fund may not exceed 8% of the total
14General Fund revenues received in the immediately preceding
15fiscal year.
16    The General Assembly may authorize transfers,
17appropriations, and allocations from the fund to fund only the
18costs of State government up to the expenditure limit
19calculated under Section 10 in years when State revenues are
20less than the amount necessary to finance the level of
21expenditures permitted under Section 10. Transfers require a
22three-fifths supermajority vote of the General Assembly.
23    The money in the fund may be invested as provided by law,
24with the earnings credited to the fund. At the close of every
25month during which the fund is at the 8% limitation, the State

 

 

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1Comptroller shall transfer the excess to the Taxpayer Relief
2Fund.
 
3    Section 40. Taxpayer Relief Fund. The Taxpayer Relief Fund
4is established as a special fund in the State treasury and must
5be administered for the purposes identified in this Section. At
6the close of the lapse period of each fiscal year, the State
7Comptroller shall identify the amount of the General Fund
8unappropriated surplus above the State expenditure limitation
9and above the amount necessary to fully fund the Past Due
10Paydown Fund and the Budget Stabilization Fund.
11    By August 1st annually, the State Comptroller shall notify
12the Commission on Government Forecasting and Accountability
13and the Department of Revenue of the amount in the fund as a
14result of the transfers.
15    If the amount in the fund exceeds 1% of General Fund
16expenditures, then the General Assembly shall, by November
1715th, enact legislation to provide for the refund to taxpayers
18of amounts in the fund. Refunds may take the form only of
19temporary or permanent broad-based tax rate reductions.
20    If the General Assembly does not enact legislation by
21November 15th to provide refunds, then the State Comptroller
22shall, by November 30th, notify the Department of Revenue of
23the amount in the fund. The Department of Revenue shall
24calculate a one-time bonus personal exemption refund. The
25amount of the personal exemption refund must be calculated by

 

 

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1dividing the amount in the fund identified by the State
2Comptroller by the number of personal exemptions claimed on
3income tax returns filed for the tax year beginning in the
4previous calendar year. The Department of Revenue shall issue a
5refund by December 30th to a taxpayer who filed an income tax
6return by April 15th of the same calendar year based on the
7number of exemptions claimed (times refund per exemption) on
8the taxpayer's return without regard to the taxpayer's tax
9liability for the year.
 
10    Section 45. Pension payments.
11    (a) Notwithstanding any other law, beginning with fiscal
12year 2014 and for each budget year thereafter, the General
13Assembly's first appropriation each year must be directed to
14make the full annual pension payment defined by the Commission
15on Government Forecasting and Accountability, acting in
16compliance with generally accepted accounting principles. This
17appropriation must be made first, and executing it (making the
18actual payments required by it) shall take precedence over any
19other appropriation or expenditure.
20    Exceptions may be made to the pension payment requirement
21in this subsection (a) if authorized by a law approved by a
22three-fifths vote of each chamber of the General Assembly and
23approved by the Governor. Any exceptions made by the General
24Assembly shall specify the dollar amount and purposes of
25appropriations that shall be made prior to the pension payment.

 

 

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1    (b) By March 1 of each year, the State Comptroller shall
2take the total annually required pension payment for the
3upcoming fiscal year (beginning on July 1) and divide that
4number by 12. This amount becomes the monthly pro rata pension
5payment for each month of the upcoming fiscal year.
6    If, during the fiscal year, the Commission on Government
7Forecasting and Accountability adjusts the annually required
8pension payment for the current year upward, the State
9Comptroller shall recalculate the monthly pro rata pension
10payment upward accordingly and allocate the increase evenly
11over the remaining months to ensure that the full annual
12pension payment is made for the fiscal year.
13    If, during the fiscal year, the Commission on Government
14Forecasting and Accountability adjusts the annually required
15pension payment downward, the original payment schedule shall
16be maintained. Payments in excess of the revised payment
17schedule shall be allocated to any existing unfunded pension
18liability.
19    If, during the fiscal year, the Commission on Government
20Forecasting and Accountability adjusts the annually required
21pension payment downward, and if there is no remaining unfunded
22pension liability as calculated by the Commission on Government
23Forecasting and Accountability in compliance with generally
24accepted accounting principles, then the State Comptroller
25shall recalculate the monthly pro rata pension payment downward
26accordingly and allocate the reduction evenly over the

 

 

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1remaining months to ensure that the full annual pension payment
2is made for the fiscal year.
3    By no later than the 5th of each month, the Comptroller
4shall disburse funds as authorized by the pension payment
5appropriation to the various State retirement systems so that
6the total payment equals the monthly pro rata pension payment.
7The payments shall be allocated proportionally to each
8retirement fund as calculated by the Commission on Government
9Forecasting and Accountability.
10    There shall be no exceptions to this subsection (b) except
11as authorized by a law approved by a three-fifths vote of each
12chamber of the General Assembly and approved by the Governor.
13    (c) If for any reason the monthly pro rata pension payment
14is not made by the 5th of the month, or if for any reason the
15accumulated payments for the year do not equal the sum of the
16monthly pro rata pension payments for the months having passed
17during the fiscal year, then the State Comptroller shall cease
18all payments from State resources until such time as the
19pension payment is brought current for the year.
20    There shall be no exceptions to this subsection (c) except
21as authorized by a law approved by a three-fifths vote of each
22chamber of the legislature and approved by the Governor.
 
23    Section 90. The State Finance Act is amended by adding
24Sections 5.826, 5.829, and 5.830 as follows:
 

 

 

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1    (30 ILCS 105/5.826 new)
2    Sec. 5.826. The Past Due Paydown Fund.
 
3    (30 ILCS 105/5.829 new)
4    Sec. 5.829. The State Budget Stabilization Fund.
 
5    (30 ILCS 105/5.830 new)
6    Sec. 5.830. The Taxpayer Relief Fund.
 
7    Section 99. Effective date. This Act takes effect upon
8becoming law.

 

 

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1 INDEX
2 Statutes amended in order of appearance
3    New Act
4    30 ILCS 105/5.826 new
5    30 ILCS 105/5.829 new
6    30 ILCS 105/5.830 new