Full Text of HB3708 103rd General Assembly
HB3708 103RD GENERAL ASSEMBLY |
| | 103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024 HB3708 Introduced 2/17/2023, by Rep. Debbie Meyers-Martin SYNOPSIS AS INTRODUCED: |
| 65 ILCS 5/8-12-2 | from Ch. 24, par. 8-12-2 | 65 ILCS 5/8-12-3 | from Ch. 24, par. 8-12-3 | 65 ILCS 5/8-12-4 | from Ch. 24, par. 8-12-4 | 65 ILCS 5/8-12-4.5 new | | 65 ILCS 5/8-12-10.5 new | | 65 ILCS 5/8-12-21.5 new | | 65 ILCS 5/8-12-23 | from Ch. 24, par. 8-12-23 |
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Amends the Financially Distressed City Law of the Illinois Municipal Code. Provides that, if a financially distressed city or the city's Financial Advisory Authority is awarded a State grant, any moneys the financially distressed city or Authority would be required to match under the grant are waived unless the moneys under the grant come from federal moneys that require the match. Provides that a municipality's status as a financially distressed city may not negatively impact a decision of whether or not to award a State grant to the municipality or negatively impact the amount of moneys received by the municipality from a State grant. Provides that, in addition to a request by the corporate authorities of a municipality to be certified and designated as a financially distressed city, the State Treasurer may conduct a preliminary review of the municipality's finances and establish a review team to make recommendations to the Governor for a municipality to be certified and designated as a financially distressed city. In the provisions concerning review by the State Treasurer, review team, and Governor, expands the categories allowing a municipality to become a financially distressed city. Includes provisions allowing the municipality's Financial Advisory Authority to commence an action in circuit court to enforce the Law if the corporate authorities or employees of the municipality materially violate the provisions of the Law. Makes conforming and other changes.
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| | A BILL FOR |
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| 1 | | AN ACT concerning local government.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Municipal Code is amended by | 5 | | changing Sections 8-12-2, 8-12-3, 8-12-4, and 8-12-23 and by | 6 | | adding 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 | 9 | | Assembly to provide
for the public health, safety and welfare, | 10 | | the General Assembly hereby
finds and declares that it is the | 11 | | public policy and a public purpose of the
State to offer | 12 | | assistance to a financially distressed city so that it may
| 13 | | provide for the health, safety and welfare of its citizens, | 14 | | pay when due
principal and interest on its debt obligations, | 15 | | meet financial obligations
to its employees, vendors and | 16 | | suppliers, and provide for proper financial
accounting | 17 | | procedures, budgeting and taxing practices, as well as
| 18 | | strengthen the human and economic development of the city.
| 19 | | (b) It is the purpose of this Division to provide a secure | 20 | | financial
basis for the continued operation of a financially | 21 | | distressed city. The
intention of the General Assembly, in | 22 | | enacting this legislation is to
establish sound, efficient and | 23 | | generally accepted accounting, budgeting and
taxing procedures |
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| 1 | | and practices within a financially distressed city, to
provide | 2 | | powers to a financial advisory authority established for a
| 3 | | financially distressed city, and to impose restrictions upon a | 4 | | financially
distressed city in order to assist that city in | 5 | | assuring its financial
integrity while leaving municipal | 6 | | services policies to the city, consistent
with the | 7 | | requirements for satisfying the public policy and purposes | 8 | | herein set
forth.
| 9 | | (c) It also is the purpose of this Division to authorize a | 10 | | city which
has been certified and designated as a financially | 11 | | distressed city under
the procedure set forth in Section | 12 | | 8-12-4 , and which has by ordinance
requested that a financial | 13 | | advisory authority be appointed for the city and
that the city | 14 | | receive assistance as provided in this Division, and which
has | 15 | | filed certified copies of that ordinance in the manner | 16 | | provided by
Section 8-12-4, to enter into such agreements as | 17 | | are necessary to receive
assistance as provided in this | 18 | | Division and in applicable provisions of the
Illinois Finance | 19 | | Authority Act.
| 20 | | (Source: P.A. 93-205, eff. 1-1-04.)
| 21 | | (65 ILCS 5/8-12-3) (from Ch. 24, par. 8-12-3)
| 22 | | Sec. 8-12-3. As used in this Division:
| 23 | | (1) "Authority" means the "(Name of Financially Distressed | 24 | | City) Financial
Advisory Authority".
| 25 | | (2) "Financially distressed city" means a home rule any |
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| 1 | | municipality which is a home
rule unit and which (i) is | 2 | | certified and designated by the Department of Revenue as being
| 3 | | in the highest 5% of all home rule municipalities in terms of | 4 | | the aggregate
of the rate per cent of all taxes levied pursuant | 5 | | to statute or ordinance
upon all taxable property of the | 6 | | municipality and as being in the lowest 5%
of all home rule | 7 | | municipalities in terms of per capita tax yield, and (ii)
is | 8 | | designated by joint resolution of the General Assembly as a | 9 | | financially
distressed city under Section 8-12-4 .
| 10 | | (3) "Home rule municipality" means a municipality which is | 11 | | a home
rule unit as provided in Section 6 of Article VII of the | 12 | | Illinois
Constitution.
| 13 | | (4) "Budget" means an annual appropriation ordinance or | 14 | | annual budget
as described in Division 2 of Article 8, as from | 15 | | time to time in effect in
the financially distressed city.
| 16 | | (5) "Chairperson" means the chairperson of the Authority | 17 | | appointed
pursuant to Section 8-12-7.
| 18 | | (6) "Financial Plan" means the financially distressed | 19 | | city's financial plan
as developed pursuant to Section | 20 | | 8-12-15, as from time to time in effect.
| 21 | | (7) "Fiscal year" means the fiscal year of the financially | 22 | | distressed city.
| 23 | | (8) "Obligations" means bonds, notes or other evidence of | 24 | | indebtedness
issued by the Illinois Finance Authority in
| 25 | | connection with
the provision of financial aid to a | 26 | | financially distressed city pursuant to
this Division and |
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| 1 | | applicable provisions of the Illinois
Finance Authority Act.
| 2 | | (Source: P.A. 93-205, eff. 1-1-04.)
| 3 | | (65 ILCS 5/8-12-4) (from Ch. 24, par. 8-12-4)
| 4 | | Sec. 8-12-4. Certification and designation as financially | 5 | | distressed city. | 6 | | (a) In order to be certified as a financially distressed | 7 | | city and receive assistance as provided in this
Division : , | 8 | | (1) a home rule municipality shall first, by ordinance | 9 | | passed by its
corporate authorities, request (i) that the | 10 | | Department of Revenue certify
that it is in the highest 5% | 11 | | of all home rule municipalities in terms of
the aggregate | 12 | | of the rate per cent of all taxes levied pursuant to | 13 | | statute
or ordinance upon all taxable property of the | 14 | | municipality and in the
lowest 5% of all home rule | 15 | | municipalities in terms of
per capita tax yield, and (ii) | 16 | | that the General Assembly by joint
resolution designate it | 17 | | as a financially distressed city. A home rule
municipality | 18 | | which is so certified and designated as a financially
| 19 | | distressed city and which desires to receive assistance as | 20 | | provided in this
Division shall, by ordinance passed by | 21 | | its corporate authorities, request
that a financial | 22 | | advisory authority be appointed for the city and that the
| 23 | | city receive assistance as provided in this Division, and | 24 | | shall file a
certified copy of that ordinance with the | 25 | | Governor, with the Clerk of the
House of Representatives |
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| 1 | | and with the Secretary of the Senate ; or . | 2 | | (2) the State Treasurer may conduct a preliminary | 3 | | review to determine the existence of probable financial | 4 | | stress within a home rule municipality if one or more of | 5 | | the following occur: | 6 | | (A) the State Treasurer requests that the | 7 | | Department of Revenue certify that the municipality is | 8 | | in the highest 5% of all home rule municipalities in | 9 | | terms of
the aggregate of the rate per cent of all | 10 | | taxes levied pursuant to statute
or ordinance upon all | 11 | | taxable property of the municipality and in the
lowest | 12 | | 5% of all home rule municipalities in terms of
per | 13 | | capita tax yield, and the Department certifies the | 14 | | same; | 15 | | (B) the city council or the mayor of a | 16 | | municipality or school board makes a written request | 17 | | for a preliminary review and that request identifies | 18 | | the existing or anticipated financial conditions or | 19 | | events that make the request necessary; | 20 | | (C) the State Treasurer receives a written request | 21 | | from a creditor with an undisputed claim against the | 22 | | municipality that exceeds the greater of $10,000 or 1% | 23 | | of the annual general fund budget of the municipality | 24 | | and that remains unpaid 6 months after its due date | 25 | | provided that the creditor notifies the municipality | 26 | | in writing at least 30 days before its request to the |
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| 1 | | State Treasurer of its intention to submit a written | 2 | | request under this paragraph; | 3 | | (D) the State Treasurer receives, not earlier than | 4 | | 60 days before the next municipal election, a petition | 5 | | containing specific allegations of municipal financial | 6 | | distress signed by at least 25% of the electors within | 7 | | the municipality who voted at the last general | 8 | | election at which a Governor was elected; | 9 | | (E) the State Treasurer receives written | 10 | | notification that a municipality has not timely | 11 | | deposited its minimum obligation payment to the | 12 | | municipality's pension fund as required by law; | 13 | | (F) the State Treasurer receives written | 14 | | notification that the municipality has failed for a | 15 | | period of 7 days or more after the scheduled date of | 16 | | payment to pay wages and salaries or other | 17 | | compensation owed to employees or benefits owed to | 18 | | retirees; | 19 | | (G) the State Treasurer receives written | 20 | | notification from a trustee, paying agent, bondholder, | 21 | | or auditor engaged by the municipality of a default in | 22 | | a bond or note payment or a violation of one or more | 23 | | bond or note covenants; | 24 | | (H) the State Treasurer receives a resolution from | 25 | | either chamber of the General Assembly requesting a | 26 | | preliminary review; |
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| 1 | | (I) the municipality is delinquent in the | 2 | | distribution of tax revenues, as required by law, that | 3 | | it has collected for another taxing jurisdiction, and | 4 | | that taxing jurisdiction requests a preliminary | 5 | | review; | 6 | | (J) the municipality has been assigned a long-term | 7 | | debt rating within or below the BBB category or its | 8 | | equivalent by one or more nationally recognized credit | 9 | | rating agencies; or | 10 | | (K) the existence of other facts or circumstances | 11 | | that, in the State Treasurer's sole discretion, are | 12 | | indicative of probable financial stress. | 13 | | Before commencing the preliminary review under this | 14 | | paragraph (2), the State Treasurer shall provide the | 15 | | municipality written notification that he or she intends | 16 | | to conduct a preliminary review. Elected and appointed | 17 | | officials of the municipality shall promptly and fully | 18 | | provide the assistance and information requested by the | 19 | | State Treasurer for that municipality in conducting the | 20 | | preliminary review. The State Treasurer shall provide a | 21 | | preliminary report of his or her findings to the | 22 | | municipality within 20 days after the date the preliminary | 23 | | review begins. A copy of the preliminary report shall be | 24 | | provided to each State Senator and State Representative | 25 | | who represents that municipality. The municipality may | 26 | | provide comments to the State Treasurer concerning the |
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| 1 | | preliminary report within 5 days after the preliminary | 2 | | report is provided to the municipality. | 3 | | If the State Treasurer believes there is probable | 4 | | financial stress after his or her preliminary review and | 5 | | any input from the municipality, the State Treasurer shall | 6 | | establish a review team under Section 8-12-4.5. A copy of | 7 | | the preliminary report shall be provided to the review | 8 | | team and each State Senator and State Representative who | 9 | | represents that municipality, and the review shall be | 10 | | posted on the State Treasurer's website. The review team | 11 | | shall examine the financial situation of the municipality | 12 | | and complete a final report as provided in Section | 13 | | 8-12-4.5. | 14 | | If the Governor believes that probable financial | 15 | | stress exists for the municipality to be certified as a | 16 | | financially distressed city under this Section after | 17 | | reviewing a final report prepared under Section 8-12-4.5, | 18 | | the Governor may, by proclamation, certify and designate | 19 | | the municipality as a financially distressed city and | 20 | | authorize appointment of the municipality's Authority | 21 | | under Section 8-12-7. The proclamation shall be filed with | 22 | | the Secretary of State and the corporate authorities of | 23 | | the municipality. | 24 | | (b) Upon the
filing of the certified copies of the that | 25 | | ordinance under paragraph (1) of subsection (a) or upon the | 26 | | written proclamation by the Governor filed with the Secretary |
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| 1 | | of State and corporate authorities of a municipality under | 2 | | paragraph (2) of subsection (a), as required by this
Section | 3 | | this Division and all of its provisions shall then and | 4 | | thereafter
be applicable to the financially distressed city, | 5 | | shall govern and control
its financial accounting, budgeting | 6 | | and taxing procedures and practices,
and, subject to the | 7 | | limitations of subsection (a) of Section 8-12-22, shall
remain | 8 | | in full force and effect with respect thereto until such
time | 9 | | as the financial advisory authority established under Section | 10 | | 8-12-5
is abolished as provided in subsection (c) of Section | 11 | | 8-12-22.
| 12 | | (Source: P.A. 86-1211.)
| 13 | | (65 ILCS 5/8-12-4.5 new) | 14 | | Sec. 8-12-4.5. Review team powers and duties. | 15 | | (a) If the State Treasurer believes there is probable | 16 | | financial stress after his or her preliminary review and any | 17 | | input from the municipality under Section 8-12-4, the State | 18 | | Treasurer shall establish a review team for the municipality | 19 | | consisting of: the State Treasurer, or his or her designee; | 20 | | the Director of the Governor's Office of Management and | 21 | | Budget, or his or her designee; a member appointed by the | 22 | | Senate President; a member appointed by the Minority Leader of | 23 | | the Senate; a member appointed by the Speaker of the House of | 24 | | Representatives; and a member appointed by the Minority Leader | 25 | | of the House of Representatives. The State Treasurer may |
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| 1 | | appoint other State officials or other persons with relevant | 2 | | professional experience to serve on the review team. The State | 3 | | Treasurer shall provide administrative support and other | 4 | | support to a review team established under this Section. | 5 | | (b) In conducting its review, the review team may: | 6 | | (1) examine the books and records of the municipality; | 7 | | (2) use the services of other State agencies and | 8 | | employees in conducting the financial review; or | 9 | | (3) both examine the books and records of the | 10 | | municipality and use the services of other State agencies | 11 | | and employees in conducting the financial review. | 12 | | The review team shall meet with city council and employees | 13 | | of the municipality as part of its review. At this meeting, the | 14 | | review team shall receive, discuss, and consider information | 15 | | provided by the municipality concerning the financial | 16 | | condition of the municipality. In addition, the review team | 17 | | shall hold at least one public meeting in the jurisdiction of | 18 | | the municipality at which the public may provide comments. | 19 | | (c) The review team shall submit a written final report of | 20 | | its findings to the State Treasurer within 60 days following | 21 | | its establishment or earlier if required by the State | 22 | | Treasurer. Upon request of a majority of the review team, the | 23 | | State Treasurer may grant one 30-day extension to the 60-day | 24 | | limitation. A copy of the final report shall be forwarded by | 25 | | the State Treasurer to the Governor, mayor and city council of | 26 | | the municipality, the Speaker of the House of Representatives, |
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| 1 | | the Senate President, and each State Senator and State | 2 | | Representative who represents the municipality. The final | 3 | | report shall be posted on the State Treasurer's website within | 4 | | 7 days after the final report is submitted to the Governor. The | 5 | | final report shall identify the existence, or an indication of | 6 | | the likely occurrence, of any of the following if found: | 7 | | (1) a default in the payment of principal or interest | 8 | | upon bonded obligations, notes, or other municipal | 9 | | securities for which no funds or insufficient funds are on | 10 | | hand and, if required, segregated in a special trust fund; | 11 | | (2) a failure for a period of 30 days or more beyond | 12 | | the due date to transfer one or more of the following to | 13 | | the appropriate agency: | 14 | | (i) taxes withheld on the income of employees; | 15 | | (ii) taxes collected by the municipality as agent | 16 | | for another unit of local government; and | 17 | | (iii) a contribution required by a pension, | 18 | | retirement, or benefit plan; | 19 | | (3) a failure for a period of 7 days or more after the | 20 | | scheduled date of payment to pay wages and salaries or | 21 | | other compensation owed to employees or benefits owed to | 22 | | retirees; | 23 | | (4) the total amount of accounts payable for the | 24 | | current fiscal year, as determined by the State Treasurer, | 25 | | is in excess of 10% of the total expenditures of the | 26 | | municipality in that fiscal year; |
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| 1 | | (5) a failure to eliminate an existing deficit in any | 2 | | fund of the municipality within the 2-year period | 3 | | preceding the end of the municipality's fiscal year during | 4 | | which the review team final report is received; | 5 | | (6) a projection of a deficit in the general fund of | 6 | | the municipality for the current fiscal year in excess of | 7 | | 5% of the budgeted revenues for the general fund; | 8 | | (7) a failure to comply in all material respects with | 9 | | the terms of an approved deficit elimination plan or an | 10 | | agreement entered into pursuant to a deficit elimination | 11 | | plan; | 12 | | (8) the existence of material loans to the general | 13 | | fund from other municipal funds that are not regularly | 14 | | settled between the funds or that are increasing in scope; | 15 | | (9) the existence after the close of the fiscal year | 16 | | of material recurring, non-budgeted subsidies from the | 17 | | general fund to other major funds; | 18 | | (10) the existence of a structural operating deficit; | 19 | | (11) the use of restricted revenues for purposes not | 20 | | authorized by law; | 21 | | (12) the likelihood that the municipality is or will | 22 | | be unable to pay its obligations within 60 days after the | 23 | | date of the review team's final report; and | 24 | | (13) any other facts and circumstances indicative of a | 25 | | municipal financial emergency. | 26 | | (d) The review team shall include one of the following |
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| 1 | | conclusions in its final report: | 2 | | (1) a financial emergency does not exist within the | 3 | | municipality; or | 4 | | (2) a financial emergency exists within the | 5 | | municipality. | 6 | | (e) The review team may, with the approval of the State | 7 | | Treasurer, appoint an individual or firm to carry out the | 8 | | review and submit a report to the review team for approval. The | 9 | | State Treasurer may enter into a contract with an individual | 10 | | or firm respecting the terms and conditions of the | 11 | | appointment. | 12 | | (f) For purposes of this Section: | 13 | | (1) A financial emergency does not exist within a | 14 | | municipality if the final report concludes that none of | 15 | | the factors in subsection (c) exist or are likely to occur | 16 | | within the current or next fiscal year or, if they occur, | 17 | | do not threaten the municipality's capability to provide | 18 | | necessary governmental services essential to public | 19 | | health, safety, and welfare. | 20 | | (2) A financial emergency exists within a municipality | 21 | | if any of the following occur: | 22 | | (A) the final report concludes that one or more of | 23 | | the factors in subsection (c) exist or are likely to | 24 | | occur within the current or next fiscal year and | 25 | | threaten the municipality's current and future | 26 | | capability to provide necessary governmental services |
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| 1 | | essential to the public health, safety, and welfare; | 2 | | (B) the municipality has failed to provide timely | 3 | | and accurate information enabling the review team to | 4 | | complete its final report; or | 5 | | (C) the mayor of the municipality concludes in | 6 | | writing to the review team that one or more of the | 7 | | factors in subsection (c) exist or are likely to occur | 8 | | within the current or next fiscal year and threaten | 9 | | the municipality's current and future capability to | 10 | | provide necessary governmental services essential to | 11 | | the public health, safety, and welfare, and the mayor | 12 | | recommends that a financial emergency be declared and | 13 | | the State Treasurer concurs with the recommendation. | 14 | | (65 ILCS 5/8-12-10.5 new) | 15 | | Sec. 8-12-10.5. State grants. If a financially distressed | 16 | | city or Authority is awarded a State grant, any moneys the | 17 | | financially distressed city or Authority would be required to | 18 | | match under the grant are waived unless the moneys under the | 19 | | grant come from federal moneys that require the match. A | 20 | | municipality's status as a financially distressed city may not | 21 | | negatively impact a decision of whether or not to award a State | 22 | | grant to the municipality or negatively impact the amount of | 23 | | moneys received by the municipality from a State grant. | 24 | | (65 ILCS 5/8-12-21.5 new) |
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| 1 | | Sec. 8-12-21.5. Noncompliance by corporate authorities or | 2 | | employees of a municipality. If a financially distressed city, | 3 | | including its corporate authorities or employees, materially
| 4 | | violates the requirements of this Division, the Authority may | 5 | | commence action in the circuit court within any county in | 6 | | which the municipality is located if the Authority has given | 7 | | the corporate authorities of the city written notice that | 8 | | includes: a detailed explanation of the material violation; a | 9 | | statement of the Authority's intention to enforce the | 10 | | provisions of this Division by commencing an action; a | 11 | | statement giving the corporate authorities at least 15 days to | 12 | | correct the violation before the Authority may commence an | 13 | | action.
| 14 | | (65 ILCS 5/8-12-23) (from Ch. 24, par. 8-12-23)
| 15 | | Sec. 8-12-23.
A financially distressed city to which this | 16 | | Division
applies shall remain subject to all other applicable | 17 | | provisions of law this
Act , except as limited by this | 18 | | Division; provided, however, that in case of
a conflict | 19 | | between the provisions of this Division and any other | 20 | | provision
of law this Act , the provisions of this Division | 21 | | shall control.
| 22 | | (Source: P.A. 86-1211.)
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