Rep. LaToya Greenwood

Filed: 3/1/2022

 

 


 

 


 
10200HB0726ham001LRB102 10072 AWJ 37006 a

1
AMENDMENT TO HOUSE BILL 726

2    AMENDMENT NO. ______. Amend House Bill 726 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Illinois Municipal Code is amended by
5changing Sections 8-12-2, 8-12-3, 8-12-4, and 8-12-23 and by
6adding Sections 8-12-4.5, 8-12-10.5, and 8-12-21.5 as follows:
 
7    (65 ILCS 5/8-12-2)  (from Ch. 24, par. 8-12-2)
8    Sec. 8-12-2. (a) Pursuant to the authority of the General
9Assembly to provide for the public health, safety and welfare,
10the General Assembly hereby finds and declares that it is the
11public policy and a public purpose of the State to offer
12assistance to a financially distressed city so that it may
13provide for the health, safety and welfare of its citizens,
14pay when due principal and interest on its debt obligations,
15meet financial obligations to its employees, vendors and
16suppliers, and provide for proper financial accounting

 

 

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1procedures, budgeting and taxing practices, as well as
2strengthen the human and economic development of the city.
3    (b) It is the purpose of this Division to provide a secure
4financial basis for the continued operation of a financially
5distressed city. The intention of the General Assembly, in
6enacting this legislation is to establish sound, efficient and
7generally accepted accounting, budgeting and taxing procedures
8and practices within a financially distressed city, to provide
9powers to a financial advisory authority established for a
10financially distressed city, and to impose restrictions upon a
11financially distressed city in order to assist that city in
12assuring its financial integrity while leaving municipal
13services policies to the city, consistent with the
14requirements for satisfying the public policy and purposes
15herein set forth.
16    (c) It also is the purpose of this Division to authorize a
17city which has been certified and designated as a financially
18distressed city under the procedure set forth in Section
198-12-4, and which has by ordinance requested that a financial
20advisory authority be appointed for the city and that the city
21receive assistance as provided in this Division, and which has
22filed certified copies of that ordinance in the manner
23provided by Section 8-12-4, to enter into such agreements as
24are necessary to receive assistance as provided in this
25Division and in applicable provisions of the Illinois Finance
26Authority Act.

 

 

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1(Source: P.A. 93-205, eff. 1-1-04.)
 
2    (65 ILCS 5/8-12-3)  (from Ch. 24, par. 8-12-3)
3    Sec. 8-12-3. As used in this Division:
4    (1) "Authority" means the "(Name of Financially Distressed
5City) Financial Advisory Authority".
6    (2) "Financially distressed city" means a home rule any
7municipality which is a home rule unit and which (i) is
8certified and designated by the Department of Revenue as being
9in the highest 5% of all home rule municipalities in terms of
10the aggregate of the rate per cent of all taxes levied pursuant
11to statute or ordinance upon all taxable property of the
12municipality and as being in the lowest 5% of all home rule
13municipalities in terms of per capita tax yield, and (ii) is
14designated by joint resolution of the General Assembly as a
15financially distressed city under Section 8-12-4.
16    (3) "Home rule municipality" means a municipality which is
17a home rule unit as provided in Section 6 of Article VII of the
18Illinois Constitution.
19    (4) "Budget" means an annual appropriation ordinance or
20annual budget as described in Division 2 of Article 8, as from
21time to time in effect in the financially distressed city.
22    (5) "Chairperson" means the chairperson of the Authority
23appointed pursuant to Section 8-12-7.
24    (6) "Financial Plan" means the financially distressed
25city's financial plan as developed pursuant to Section

 

 

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18-12-15, as from time to time in effect.
2    (7) "Fiscal year" means the fiscal year of the financially
3distressed city.
4    (8) "Obligations" means bonds, notes or other evidence of
5indebtedness issued by the Illinois Finance Authority in
6connection with the provision of financial aid to a
7financially distressed city pursuant to this Division and
8applicable provisions of the Illinois Finance Authority Act.
9(Source: P.A. 93-205, eff. 1-1-04.)
 
10    (65 ILCS 5/8-12-4)  (from Ch. 24, par. 8-12-4)
11    Sec. 8-12-4. Certification and designation as financially
12distressed city.
13    (a) In order to be certified as a financially distressed
14city and receive assistance as provided in this Division: ,
15        (1) a home rule municipality shall first, by ordinance
16    passed by its corporate authorities, request (i) that the
17    Department of Revenue certify that it is in the highest 5%
18    of all home rule municipalities in terms of the aggregate
19    of the rate per cent of all taxes levied pursuant to
20    statute or ordinance upon all taxable property of the
21    municipality and in the lowest 5% of all home rule
22    municipalities in terms of per capita tax yield, and (ii)
23    that the General Assembly by joint resolution designate it
24    as a financially distressed city. A home rule municipality
25    which is so certified and designated as a financially

 

 

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1    distressed city and which desires to receive assistance as
2    provided in this Division shall, by ordinance passed by
3    its corporate authorities, request that a financial
4    advisory authority be appointed for the city and that the
5    city receive assistance as provided in this Division, and
6    shall file a certified copy of that ordinance with the
7    Governor, with the Clerk of the House of Representatives
8    and with the Secretary of the Senate; or .
9        (2) the State Treasurer may conduct a preliminary
10    review to determine the existence of probable financial
11    stress within a home rule municipality if one or more of
12    the following occur:
13            (A) the State Treasurer requests that the
14        Department of Revenue certify that the municipality is
15        in the highest 5% of all home rule municipalities in
16        terms of the aggregate of the rate per cent of all
17        taxes levied pursuant to statute or ordinance upon all
18        taxable property of the municipality and in the lowest
19        5% of all home rule municipalities in terms of per
20        capita tax yield, and the Department certifies the
21        same;
22            (B) the city council or the mayor of a
23        municipality or school board makes a written request
24        for a preliminary review and that request identifies
25        the existing or anticipated financial conditions or
26        events that make the request necessary;

 

 

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1            (C) the State Treasurer receives a written request
2        from a creditor with an undisputed claim against the
3        municipality that exceeds the greater of $10,000 or 1%
4        of the annual general fund budget of the municipality
5        and that remains unpaid 6 months after its due date
6        provided that the creditor notifies the municipality
7        in writing at least 30 days before its request to the
8        State Treasurer of its intention to submit a written
9        request under this paragraph;
10            (D) the State Treasurer receives, not earlier than
11        60 days before the next municipal election, a petition
12        containing specific allegations of municipal financial
13        distress signed by at least 25% of the electors within
14        the municipality who voted at the last general
15        election at which a Governor was elected;
16            (E) the State Treasurer receives written
17        notification that a municipality has not timely
18        deposited its minimum obligation payment to the
19        municipality's pension fund as required by law;
20            (F) the State Treasurer receives written
21        notification that the municipality has failed for a
22        period of 7 days or more after the scheduled date of
23        payment to pay wages and salaries or other
24        compensation owed to employees or benefits owed to
25        retirees;
26            (G) the State Treasurer receives written

 

 

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1        notification from a trustee, paying agent, bondholder,
2        or auditor engaged by the municipality of a default in
3        a bond or note payment or a violation of one or more
4        bond or note covenants;
5            (H) the State Treasurer receives a resolution from
6        either chamber of the General Assembly requesting a
7        preliminary review;
8            (I) the municipality is delinquent in the
9        distribution of tax revenues, as required by law, that
10        it has collected for another taxing jurisdiction, and
11        that taxing jurisdiction requests a preliminary
12        review;
13            (J) the municipality has been assigned a long-term
14        debt rating within or below the BBB category or its
15        equivalent by one or more nationally recognized credit
16        rating agencies; or
17            (K) the existence of other facts or circumstances
18        that, in the State Treasurer's sole discretion, are
19        indicative of probable financial stress.
20        Before commencing the preliminary review under this
21    paragraph (2), the State Treasurer shall provide the
22    municipality written notification that he or she intends
23    to conduct a preliminary review. Elected and appointed
24    officials of the municipality shall promptly and fully
25    provide the assistance and information requested by the
26    State Treasurer for that municipality in conducting the

 

 

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1    preliminary review. The State Treasurer shall provide a
2    preliminary report of his or her findings to the
3    municipality within 20 days after the date the preliminary
4    review begins. A copy of the preliminary report shall be
5    provided to each State Senator and State Representative
6    who represents that municipality. The municipality may
7    provide comments to the State Treasurer concerning the
8    preliminary report within 5 days after the preliminary
9    report is provided to the municipality.
10        If the State Treasurer believes there is probable
11    financial stress after his or her preliminary review and
12    any input from the municipality, the State Treasurer shall
13    establish a review team under Section 8-12-4.5. A copy of
14    the preliminary report shall be provided to the review
15    team and each State Senator and State Representative who
16    represents that municipality, and the review shall be
17    posted on the State Treasurer's website. The review team
18    shall examine the financial situation of the municipality
19    and complete a final report as provided in Section
20    8-12-4.5.
21        If the Governor believes that probable financial
22    stress exists for the municipality to be certified as a
23    financially distressed city under this Section after
24    reviewing a final report prepared under Section 18-12-4.5,
25    the Governor may, by proclamation, certify and designate
26    the municipality as a financially distressed city and

 

 

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1    authorize appointment of the municipality's Authority
2    under Section 8-12-7. The proclamation shall be filed with
3    the Secretary of State and the corporate authorities of
4    the municipality.
5    (b) Upon the filing of the certified copies of the that
6ordinance under paragraph (1) of subsection (a) or upon the
7written proclamation by the Governor filed with the Secretary
8of State and corporate authorities of a municipality under
9paragraph (2) of subsection (a), as required by this Section
10this Division and all of its provisions shall then and
11thereafter be applicable to the financially distressed city,
12shall govern and control its financial accounting, budgeting
13and taxing procedures and practices, and, subject to the
14limitations of subsection (a) of Section 8-12-22, shall remain
15in full force and effect with respect thereto until such time
16as the financial advisory authority established under Section
178-12-5 is abolished as provided in subsection (c) of Section
188-12-22.
19(Source: P.A. 86-1211.)
 
20    (65 ILCS 5/8-12-4.5 new)
21    Sec. 8-12-4.5. Review team powers and duties.
22    (a) If the State Treasurer believes there is probable
23financial stress after his or her preliminary review and any
24input from the municipality under Section 8-12-4, the State
25Treasurer shall establish a review team for the municipality

 

 

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1consisting of: the State Treasurer, or his or her designee;
2the Director of the Governor's Office of Management and
3Budget, or his or her designee; a member appointed by the
4Senate President; a member appointed by the Minority Leader of
5the Senate; a member appointed by the Speaker of the House of
6Representatives; and a member appointed by the Minority Leader
7of the House of Representatives. The State Treasurer may
8appoint other State officials or other persons with relevant
9professional experience to serve on the review team. The State
10Treasurer shall provide administrative support and other
11support to a review team established under this Section.
12    (b) In conducting its review, the review team may:
13        (1) examine the books and records of the municipality;
14        (2) use the services of other State agencies and
15    employees in conducting the financial review; or
16        (3) both examine the books and records of the
17    municipality and use the services of other State agencies
18    and employees in conducting the financial review.
19    The review team shall meet with city council and employees
20of the municipality as part of its review. At this meeting, the
21review team shall receive, discuss, and consider information
22provided by the municipality concerning the financial
23condition of the municipality. In addition, the review team
24shall hold at least one public meeting in the jurisdiction of
25the municipality at which the public may provide comment.
26    (c) The review team shall submit a written final report of

 

 

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1its findings to the State Treasurer within 60 days following
2its establishment or earlier if required by the State
3Treasurer. Upon request of a majority of the review team, the
4State Treasurer may grant one 30-day extension to the 60-day
5limitation. A copy of the final report shall be forwarded by
6the State Treasurer to the Governor, mayor and city council of
7the municipality, the Speaker of the House of Representatives,
8the Senate President, and each State Senator and State
9Representative who represents the municipality. The final
10report shall be posted on the State Treasurer's website within
117 days after the final report is submitted to the Governor. The
12final report shall identify the existence, or an indication of
13the likely occurrence, of any of the following if found:
14        (1) a default in the payment of principal or interest
15    upon bonded obligations, notes, or other municipal
16    securities for which no funds or insufficient funds are on
17    hand and, if required, segregated in a special trust fund;
18        (2) a failure for a period of 30 days or more beyond
19    the due date to transfer one or more of the following to
20    the appropriate agency:
21            (i) taxes withheld on the income of employees;
22            (ii) taxes collected by the municipality as agent
23        for another unit of local government; and
24            (iii) a contribution required by a pension,
25        retirement, or benefit plan;
26        (3) a failure for a period of 7 days or more after the

 

 

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1    scheduled date of payment to pay wages and salaries or
2    other compensation owed to employees or benefits owed to
3    retirees;
4        (4) the total amount of accounts payable for the
5    current fiscal year, as determined by the State Treasurer,
6    is in excess of 10% of the total expenditures of the
7    municipality in that fiscal year;
8        (5) a failure to eliminate an existing deficit in any
9    fund of the municipality within the 2-year period
10    preceding the end of the municipality's fiscal year during
11    which the review team final report is received;
12        (6) a projection of a deficit in the general fund of
13    the municipality for the current fiscal year in excess of
14    5% of the budgeted revenues for the general fund;
15        (7) a failure to comply in all material respects with
16    the terms of an approved deficit elimination plan or an
17    agreement entered into pursuant to a deficit elimination
18    plan;
19        (8) the existence of material loans to the general
20    fund from other municipal funds that are not regularly
21    settled between the funds or that are increasing in scope;
22        (9) the existence after the close of the fiscal year
23    of material recurring, non-budgeted subsidies from the
24    general fund to other major funds;
25        (10) the existence of a structural operating deficit;
26        (11) the use of restricted revenues for purposes not

 

 

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1    authorized by law;
2        (12) the likelihood that the municipality is or will
3    be unable to pay its obligations within 60 days after the
4    date of the review team's final report; and
5        (13) any other facts and circumstances indicative of a
6    municipal financial emergency.
7    (d) The review team shall include one of the following
8conclusions in its final report:
9        (1) a financial emergency does not exist within the
10    municipality; or
11        (2) a financial emergency exists within the
12    municipality.
13    (e) The review team may, with the approval of the State
14Treasurer, appoint an individual or firm to carry out the
15review and submit a report to the review team for approval. The
16State Treasurer may enter into a contract with an individual
17or firm respecting the terms and conditions of the
18appointment.
19    (f) For purposes of this Section:
20        (1) A financial emergency does not exist within a
21    municipality if the final report concludes that none of
22    the factors in subsection (c) exist or are likely to occur
23    within the current or next fiscal year or, if they occur,
24    do not threaten the municipality's capability to provide
25    necessary governmental services essential to public
26    health, safety, and welfare.

 

 

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1        (2) A financial emergency exists within a municipality
2    if any of the following occur:
3            (A) the final report concludes that one or more of
4        the factors in subsection (c) exist or are likely to
5        occur within the current or next fiscal year and
6        threaten the municipality's current and future
7        capability to provide necessary governmental services
8        essential to the public health, safety, and welfare;
9            (B) the municipality has failed to provide timely
10        and accurate information enabling the review team to
11        complete its final report; or
12            (C) the mayor of the municipality concludes in
13        writing to the review team that one or more of the
14        factors in subsection (c) exist or are likely to occur
15        within the current or next fiscal year and threaten
16        the municipality's current and future capability to
17        provide necessary governmental services essential to
18        the public health, safety, and welfare, and the mayor
19        recommends that a financial emergency be declared and
20        the State Treasurer concurs with the recommendation.
 
21    (65 ILCS 5/8-12-10.5 new)
22    Sec. 8-12-10.5. State grants. If a financially distressed
23city or Authority is awarded a State grant, any moneys the
24financially distressed city or Authority would be required to
25match under the grant are waived unless the moneys under the

 

 

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1grant come from federal moneys that require the match. A
2municipality's status as a financially distressed city may not
3negatively impact a decision of whether or not to award a State
4grant to the municipality or negatively impact the amount of
5moneys received by the municipality from a State grant.
 
6    (65 ILCS 5/8-12-21.5 new)
7    Sec. 8-12-21.5. Noncompliance by corporate authorities or
8employees of a municipality. If a financially distressed city,
9including its corporate authorities or employees, materially
10violates the requirements of this Division, the Authority may
11commence action in the circuit court within any county in
12which the municipality is located if the Authority has given
13the corporate authorities of the city written notice that
14includes: a detailed explanation of the material violation; a
15statement of the Authority's intention to enforce the
16provisions of this Division by commencing an action; a
17statement giving the corporate authorities at least 15 day to
18correct the violation before the Authority may commence an
19action.
 
20    (65 ILCS 5/8-12-23)  (from Ch. 24, par. 8-12-23)
21    Sec. 8-12-23. A financially distressed city to which this
22Division applies shall remain subject to all other applicable
23provisions of law this Act, except as limited by this
24Division; provided, however, that in case of a conflict

 

 

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1between the provisions of this Division and any other
2provision of law this Act, the provisions of this Division
3shall control.
4(Source: P.A. 86-1211.)".