97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB3633

 

Introduced 2/24/2011, by Rep. Mike Bost

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Creates the Pension Funding and Fairness Act. Provides that the maximum annual percentage change in State fiscal year spending in the categories specified may not exceed the inflation adjustment factor plus the population adjustment factor and any increases attributable to specified measures. Provides that, in order to adopt an increase in State spending beyond that limitation or in order to adopt an increase in State revenue, a measure must be approved by a three-fifths supermajority vote of all members of each house 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 and provides that the General Assembly may authorize transfers, appropriations, and allocations from the fund only to fund the costs of paying down the remaining past due debt. Provides that any remaining funds shall be transferred to 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 the level of expenditures. Provides that the fund may not exceed 8% of the total General Fund revenues received in the immediately preceding fiscal year, and any excess shall be transferred to the Taxpayer Relief Fund. Establishes the Taxpayer Relief Fund, and provides that, if the amount in the 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. Amends the State Finance Act to create the Past Due Paydown Fund, the State Budget Stabilization Fund, and the Taxpayer Relief Fund as special funds in the State treasury. 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, and court orders or decrees
11    "General Fund" means the General Revenue Fund, Common
12School Fund, and Education Assistance Fund.
13    "Increase in revenue" means any legislation or tax levy
14that is estimated to result in a net gain in State revenue of
15at least 0.01% of General Fund revenue in at least one fiscal
16year, and (1) enacts a new tax or fee; (2) increases the rate
17or expands the base of an existing tax or fee; (3) repeals or
18reduces any tax exemption, credit, or refund; or (4) extends an
19expiring tax increase or fee.
20    "Inflation adjustment factor" means the increase in the
21Chicago Metropolitan Statistical Area Consumer Price Index for
22the most recently available calendar year as calculated by the
23United States Department of Labor, Bureau of Labor Statistics.

 

 

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1The inflation adjustment factor may not be less than zero or
2more than 10%.
3    "Population adjustment factor" means the average annual
4percentage increase in population for the 3 most recent years
5for which data is available, as determined annually by the
6United States Department of Commerce, Census Bureau. The
7population adjustment factor may not be less than zero.
8    "Revenue" means taxes and fees collected by the State.
9    "State spending" means any authorized State appropriations
10and allocations.
11    "Tax" means any amount raised for the general support of
12government functions.
 
13    Section 10. Spending Growth Index.
14    (a) Beginning with the fiscal year that starts after this
15Act takes effect, the maximum annual percentage change in State
16fiscal year spending in the categories specified may not exceed
17the inflation adjustment factor plus the population adjustment
18factor and any increases attributable to measures approved
19under Section 15. This limitation, the Spending Growth Index,
20must be calculated separately for the following categories:
21General Fund; Road Fund; and all other funds.
22    (b) The following may not be counted in calculating
23expenditure limitations:
24        (1) Amounts returned to taxpayers as refunds of amounts
25    exceeding the expenditure limitation in a prior year.

 

 

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1        (2) Amounts received from the federal government.
2        (3) Amounts collected on behalf of another level of
3    government.
4        (4) Pension contributions by employees and pension
5    fund earnings.
6        (5) Pension and disability payments made to former
7    government employees.
8        (6) Amounts received as grants, gifts, or donations
9    that must be spent for purposes specified by the donor.
10        (7) Amounts paid pursuant to a court award.
11        (8) Reserve transfers.
 
12    Section 15. Approval of expenditure increases.
13    (a) In order to adopt an increase in State spending beyond
14the limitation set forth in Section 10, the measure must be
15approved by a three-fifths supermajority vote of all members of
16each house of the General Assembly and must be approved by a
17majority of voters. Voter approval is not required if the
18spending is as a result of an increase in State revenue under
19Section 20.
20    (b) The question of whether to adopt legislation to allow
21an increase in State spending beyond the limitation set forth
22in Section 10 must be submitted to the voters for approval at
23the next general election. If the General Assembly determines
24by a three-fifths supermajority vote that legislation to
25increase spending beyond the limitation should take effect

 

 

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1sooner than the next general election, the General Assembly may
2provide for submission of the question to the voters at any
3regular or special election.
4    A measure submitted to the voters must include an estimate
5as set forth in the legislation of the spending increase by the
6measure for the first 3 fiscal years of its implementation.
7    (c) At least 30 days before an election, the Secretary of
8State shall mail, at least once, a titled notice or set of
9notices addressed to all registered voters in the State at each
10address of every registered voter. Notices must include all of
11the following information and may not include any additional
12information:
13        (1) The election date, hours, ballot title, and text.
14        (2) For each proposed spending 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    spending increase, estimates of the maximum dollar amount
20    of each increase and of fiscal year spending without the
21    increase.
22    (d) Ballot questions for spending increases must begin:
23"Shall State spending increase by (amount of first or, if
24phased in, full fiscal year dollar increase) annually for the
25purpose of . . .?".
26    (e) The State shall reimburse municipalities and counties

 

 

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1for the costs of a special election.
 
2    Section 20. Approval of revenue increases.
3    (a) In order to adopt an increase in State revenue, the
4measure must be approved by a three-fifths supermajority vote
5of all members of each house of the General Assembly and must
6be approved by a majority of voters. Voter approval is not
7required if annual State revenue is less than annual payments
8on general obligation bonds, required payments relating to
9pensions, and final court judgments or the measure is an
10emergency tax.
11    (b) The question of whether to adopt legislation to impose
12an increase in revenue of the State must be submitted to the
13voters for approval at the next general election. If the
14General Assembly determines by a three-fifths supermajority
15vote that legislation to increase revenue via an emergency tax
16should take effect sooner than the next general election, the
17General Assembly may provide for submission of the question to
18the voters at any regular or special election.
19    A measure submitted to the voters must include an estimate
20of the amount to be raised by the measure for the first 3
21fiscal years of its implementation.
22    (c) At least 30 days before an election, the Secretary of
23State shall mail, at least once, a titled notice or set of
24notices addressed to all registered voters at each address of
25every registered voter. Notices must include all of the

 

 

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1following information and may not include any additional
2information:
3        (1) The election date, hours, ballot title, and text.
4        (2) For each proposed revenue increase, the estimated
5    or actual total of fiscal year spending for the current
6    year and each of the past 4 years, and the overall
7    percentage and dollar change.
8        (3) For the first full fiscal year of each proposed
9    revenue increase, estimates of the maximum dollar amount of
10    each increase and of fiscal year spending without the
11    increase.
12    (d) Ballot questions for revenue increases must begin:
13"Shall (description of the tax increase) to increase State
14revenues by (amount of first or, if phased in, full fiscal year
15dollar increase) annually for the purpose of . . .?".
16    (e) The State shall reimburse municipalities and counties
17for the costs of a special election.
 
18    Section 25. Emergency taxes.
19    (a) The State may impose emergency taxes only in accordance
20with this Section.
21    (b) The tax must be approved for a specified time period by
22a three-fifths majority of the members of each house of the
23General Assembly.
24    (c) Emergency tax revenue may be spent only after other
25available reserves are depleted and must be refunded 180 days

 

 

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1after the emergency ends if not spent on the emergency.
2    (d) The tax must be submitted for approval by the voters at
3the next regular election.
4    (e) If not approved by the voters as provided in subsection
5(d), the emergency tax expires 30 days following the election.
 
6    Section 30. Past Due Paydown Fund. The Past Due Paydown
7Fund is established as a special fund in the State treasury and
8must be administered for the purposes identified in this
9Section. At the close of the lapse period for each fiscal year
10beginning in 2013, the State Comptroller shall identify the
11amount of General Fund unappropriated surplus above the
12Spending Growth Index limitation and transfer to the fund any
13amount necessary up to the total past due operating debt owed
14by the State as of the close of fiscal year 2012.
15    The General Assembly may authorize transfers,
16appropriations, and allocations from the fund only to fund the
17costs of paying down the remaining past due debt until such
18debt is zero. Any remaining funds shall be transferred to the
19State Budget Stabilization Fund.
 
20    Section 35. State Budget Stabilization Fund. The State
21Budget Stabilization Fund is established as a special fund in
22the State treasury and must be administered for the purposes
23identified in this Section. At the close the lapse period of
24each fiscal year, the State Comptroller shall identify the

 

 

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1amount of General Fund unappropriated surplus above the State
2Spending Growth Index expenditure limitation and above the
3amount necessary to fully fund and pay down the past due
4operating debt to zero. The fund may not exceed 8% of the total
5General Fund revenues received in the immediately preceding
6fiscal year.
7    The General Assembly may authorize transfers,
8appropriations, and allocations from the fund only to fund the
9costs of State government up to the expenditure limit
10calculated under Section 10 in years when State revenues are
11less than the amount necessary to finance the level of
12expenditures permitted under Section 10. Transfers require a
13three-fifths supermajority vote of the General Assembly.
14    The money in the fund may be invested as provided by law,
15with the earnings credited to the fund. At the close of every
16month during which the fund is at the 8% limitation, the State
17Comptroller shall transfer the excess to the Taxpayer Relief
18Fund.
 
19    Section 40. Taxpayer Relief Fund. The Taxpayer Relief Fund
20is established as a special fund in the State treasury and must
21be administered for the purposes identified in this Section. At
22the close of the lapse period of each fiscal year, the State
23Comptroller shall identify the amount of General Fund
24unappropriated surplus above the State expenditure limitation
25and above the amount necessary to fully fund the Past Due

 

 

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1Paydown Fund and the Budget Stabilization Fund.
2    By September 1st annually, the State Comptroller shall
3notify the Commission on Government Forecasting and
4Accountability and the Department of Revenue of the amount in
5the fund as a result of the transfers.
6    If the amount in the fund exceeds 1% of General Fund
7expenditures, then the General Assembly shall, by September
815th, enact legislation to provide for the refund to taxpayers
9of amounts in the fund. Refunds may take the form only of
10temporary or permanent broad-based tax rate reductions.
11    If the General Assembly does not enact legislation by
12September 15th to provide refunds, then the State Comptroller
13shall, by September 30th, notify the Department of Revenue of
14the amount in the fund. The Department of Revenue shall
15calculate a one-time bonus personal exemption refund. The
16amount of the personal exemption refund must be calculated by
17dividing the amount in the fund identified by the State
18Comptroller by the number of personal exemptions claimed on
19income tax returns filed for tax year beginning in the previous
20calendar year. The Department of Revenue shall issue a refund
21by October 30th to a taxpayer who filed an income tax return by
22April 15th of the same calendar year based on the number of
23exemptions claimed (times refund per exemption) on the
24taxpayer's return without regard to the taxpayer's tax
25liability for the year.
 

 

 

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1    Section 45. Pension payments.
2    (a) For the purposes of this Section:
3    "Actual expenditures" means the payment of State funds to
4satisfy any State financial obligation.
5    "First appropriation" means any legislation as part of the
6annual budgetary and appropriation process must be directed to
7authorize and require the full pension payment prior to any
8other appropriations or expenditures.
9    "First expenditure" means that any authorized State
10appropriation and subsequent actual payments must have the
11first payment be made toward the annual required pension
12payment.
13    "Monthly pro rata pension payment" means the average
14monthly pension payment calculated by dividing the total fiscal
15year annual pension payment by 12 months.
16    "Pension payment" means the total annual required pension
17payment for each fiscal year as defined by the Commission on
18Government Forecasting and Accountability following generally
19accepted accounting principles.
20    (b) Notwithstanding any other law, beginning with fiscal
21year 2012 and for each budget year thereafter, the General
22Assembly's first appropriation each year must be directed to
23make the full annual pension payment defined by the Commission
24on Government Forecasting and Accountability and in compliance
25with generally accepted accounting principles. This
26appropriation must be made first and executing it (making the

 

 

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1actual payments required by it) shall take precedence over any
2other appropriation or expenditure.
3    Exceptions may be made to the pension payment requirement
4in this subsection (b) if authorized by a law approved by a
5three-fifths vote of each chamber of the General Assembly and
6approved by the Governor. Any exceptions made by the General
7Assembly shall specify the dollar amount and purposes of
8appropriations which shall be made prior to the pension
9payment.
10    (c) By March 1 of each year, the State Comptroller shall
11take the total annually required pension payment for the
12upcoming fiscal year (beginning on July 1) and divide that
13number by 12. This amount becomes the monthly pro rata pension
14payment for each month of the upcoming fiscal year.
15    If during the fiscal year, the Commission on Government
16Forecasting and Accountability adjusts the annually required
17pension payment for the current year upward, the State
18Comptroller shall recalculate the monthly pro rata pension
19payment upward accordingly and allocate the increase evenly
20over the remaining months to ensure that the full annual
21pension payment is made for the fiscal year.
22    If during the fiscal year, the Commission on Government
23Forecasting and Accountability adjusts the annually required
24pension payment downward, the original payment schedule shall
25be maintained. Payments in excess of the revised payment
26schedule shall be allocated to any existing unfunded pension

 

 

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1liability.
2    If during the fiscal year, the Commission on Government
3Forecasting and Accountability adjusts the annually required
4pension payment downward, and if there is no remaining unfunded
5pension liability as calculated by Commission on Government
6Forecasting and Accountability and in compliance with
7generally accepted accounting principles, then the State
8Comptroller shall recalculate the monthly pro rata pension
9payment downward accordingly and allocate the reduction evenly
10over the remaining months to ensure that the full annual
11pension payment is made for the fiscal year.
12    By no later than the 5th of each month, the Comptroller
13shall disburse funds as authorized by the pension payment
14appropriation to the various State retirement systems such that
15the total payment equals the monthly pro rata pension payment.
16The payments shall be allocated proportionally to each
17retirement fund as calculated by the Commission on Government
18Forecasting and Accountability.
19    There shall be no exceptions to this subsection (c) except
20as authorized by a law approved by three-fifths vote of each
21chamber of the General Assembly and approved by the Governor.
22    (d) If for any reason the monthly pro rata pension payment
23is not made by the 5th of the month, or if for any reason the
24accumulated payments for the year do not equal the sum of the
25monthly pro rata pension payments for the months having passed
26during the fiscal year, then the State Comptroller shall cease

 

 

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1all payments from State resources until such time as the
2pension payment is brought current for the year.
3    There shall be no exceptions to this subsection (d) except
4as authorized by a law approved by a three-fifths vote of each
5chamber of the legislature and approved by the Governor.
 
6    Section 90. The State Finance Act is amended by adding
7Sections 5.786, 5.787, and 5.788 as follows:
 
8    (30 ILCS 105/5.786 new)
9    Sec. 5.786. The Past Due Paydown Fund.
 
10    (30 ILCS 105/5.787 new)
11    Sec. 5.787. The State Budget Stabilization Fund.
 
12    (30 ILCS 105/5.788 new)
13    Sec. 5.788. The Taxpayer Relief Fund.
 
14    Section 99. Effective date. This Act takes effect upon
15becoming law.

 

 

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1 INDEX
2 Statutes amended in order of appearance
3    New Act
4    30 ILCS 105/5.786 new
5    30 ILCS 105/5.787 new
6    30 ILCS 105/5.788 new