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Preamble: The arrest and impeachment of Governor Rod Blagojevich are troubling moments in the State of Illinois’ history. The Metropolitan Mayors Caucus strongly believes that other State and local elected officials across Illinois cannot let this situation be its defining moment. While the Former Governor’s indictment and impeachment play out ove, the State and the nation face a more pressing issue: an economic recession. Federal, State and local elected officials need to focus on what needs to be done to deal with it. The Mayors of the Chicago region pledge to do their part in working with the federal and state governments to bring a swift end to the recession and minimize its impacts on Illinois’ citizens.
State Capital Program
The Metropolitan Mayors Caucus strongly believes that the State’s top priority ought to be a new capital infrastructure program. Maintaining and expanding our road, transit, and freight rail systems as well as committing funds to build and maintain water and sewage treatment facilities, schools, open space, and other necessary public infrastructure will stimulate the State’s economy, create jobs and be a wise investment in our future. The 273 Mayors of the Chicago area ask the Governor and the General Assembly to act on a new capital program for the State of Illinois immediately. They recommend that such a program embody the following features:
1. Make It Significant
The unmet needs for capital are substantial, and the opportunity to pass a capital bill is limited. Therefore, we should ensure that the program is large enough to meet forecasted needs. A limited program that meets very few of our capital needs will be detrimental to our State’s long-term funding outlook.
2. Make It Comprehensive
Surface transportation in metropolitan Chicago is made up of complex, interrelated systems. These include our transit system, which is an essential component of the overall network. It includes the freight rail system, which is essential to maintaining the region’s position as the freight capital of North America. And it includes maintenance and expansion of the road network. No part of the network can be neglected without affecting the whole. Additionally, other non-transportation infrastructure cannot be ignored. Improvements to our water and sewer systems, school buildings, recreational facilities, and open spaces are a basic ingredient to our competitive position. Ignoring these valuable assets would negatively impact our region’s economic prosperity and the quality of life of our residents.
3. Make the Project Selection Process Transparent and Results-Driven
Capital projects must be selected based on regionally approved evaluation criteria that produce agreed-upon results. We can no longer afford to select projects that do not meet the region’s basic needs to improve our transportation and other infrastructure systems in ways that strengthen our communities.
4. Support the Program with New Revenue
Any program should have an identifiable source of revenue to be used as a pay-as-you-go funding source as well as to pay off bonds. Increasing the State’s debt burden by enacting a program without a revenue source is not a sustainable method of supporting our basic infrastructure.
5. Set Aside Funds for Planning
The expenditure of capital dollars for transportation must be done through careful planning so that we can determine the most cost-effective investments. The public deserves to know that their dollars are being spent wisely, effectively and according to a well-thought out plan. Illinois should adopt a funding approach to planning that is structured much like the federal system of setting aside funding out of new capital revenues for metropolitan planning across the State.
Municipal Revenues and Unfunded Mandates
The economic recession which plagues the entire country has further strained the fiscal health of the State of Illinois. The Governor and State legislators will enter a new legislative session faced with the challenge of coming up with a combination of spending controls and revenue enhancements to resolve a multi-billion dollar deficit.
Governor Blagojevich proposed legislation in November 2008 which would give him emergency budget authority to hold back in contingency reserve as much as 8 percent of total appropriations and distributions from all General Funds, including the Local Government Distributive Fund. If granted this authority, he could in effect reduce the local share of the State income tax by as much as $7.60 per capita or nearly $92 million statewide.
Fortunately, the Governor’s proposal was never considered during the fall veto session. While the legislative leaders have assured the Mayors Caucus that it will not pass in its current form if it is reintroduced, it is imperative that mayors and other municipal officials be on guard against efforts in Springfield to erode local revenue sources. Local governments have their own budget challenges to address in these recessionary times. The State should not create added burdens for them by attempting to manage its budget deficit on their backs. The Mayors Caucus will strongly oppose any legislative proposals which try to reduce local revenues.
The State has also been known to impose unfunded mandates on local governments in the past to solve budget shortfalls. The Mayors Caucus is opposed to any legislation or regulation that creates unfunded or under-funded mandates.
Unfunded and under-funded mandates are intrusive and costly. They generally result in situations where local governments must either cut services or raise local taxes in order to pay for them. The Mayors of the Chicago region are extremely concerned that the State may choose to expand the use of mandates as one means of dealing with its budget deficit. We strongly urge them not to exercise this option.
Streamlined Sales Tax
In December 2007, the Governing Board of the Streamlined Sales Tax Project (SSTP) amended its enabling agreement to allow participating states to maintain origin or “point of sale” sourcing for intrastate purchases. It has been presumed that this amendment clears a significant hurdle in getting larger states like Illinois to join. However, there are still significant definitional issues with the context of the SSTP’s point of sale rules which, if not addressed, could have a substantial negative impact on Illinois municipalities.
The Mayors Caucus will work with the General Assembly, the COGs and the City of Chicago to pursue implementation of the Streamlined Sales Tax Project Agreement as amended provided the above-mentioned definitional issues are resolved. It also believes that any legislation authorizing the State’s participation in the Agreement must:
• authorize all municipalities to have access to sales tax collection records from the Illinois Department of Revenue;
• call for a detailed study by the Department of the impact on each municipality of both the SSTP’s sourcing rules and the potential increased revenues from an expanded tax base due to the collection of taxes on Internet, catalogue and other remote sales; and
• include a guaranteed mitigation plan (i.e. not subject to the annual appropriation process) which will hold-harmless any municipality which may possibly lose revenues from the effects of the sales tax changes.
Education Funding and Accountability Reform
Eighteen months ago, the local governments and councils of governments that participate in the Metropolitan Mayors Caucus adopted a comprehensive proposal to reform the State of Illinois’ education funding and fiscal and academic performance accountability systems. The reform package was well-received by the General Assembly’s Leaders and Education Caucus. Unfortunately, given the contentious environment which exists in Springfield, education funding and accountability reform were never considered.
The Mayors of the Metropolitan Mayors Caucus share a commitment to a quality education system in Illinois. They strongly believe that certain funding and accountability reforms need to be adopted to improve the system and increase opportunities for our children to succeed in school and later in life. The Mayors Caucus will continue to work with the legislative leadership and bill sponsors on such reforms.
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Vacant and Abandoned Properties
The recent mortgage foreclosure crisis, which many financial experts claim touched off the nation’s economic recession, has been most severe in the Midwest portion of the United States. Unfortunately, it is only expected to get worse in the coming months. This will have a debilitating impact on communities and neighborhoods throughout the Chicago region and the country.
The Metropolitan Mayors Caucus has been working with the Chicago Metropolitan Agency for Planning and several other regional organizations to assist local governments in developing strategies under the Federal Neighborhood Stabilization Program to combat the ill-effects of the mortgage foreclosure
problem. In convening municipal officials and other stakeholders, the Caucus and the regional groups have concluded that legislation is needed at the State level which will give municipalities enhanced authority to deal with mortgage foreclosures and the abandoned properties they create.
The Mayors Caucus supports legislation which:
• requires municipalities to receive notice of foreclosure initiation;
• requires municipalities to receive notice of completed foreclosure sales;
• requires municipalities to receive notice of completed tax sales;
• authorizes municipalities to create land banks either individually or jointly with other municipalities;
• authorizes municipalities to require responsible parties to maintain vacant properties;
• authorizes non-home rule municipalities to create vacant or abandoned property ordinances and charge registration fees and fine violators;
• authorizes municipalities to file abandonment liens for work done by a municipality to correct violations of vacant or abandoned property ordinances; and
• allow municipalities to collect on municipal liens in foreclosure proceedings.
Tax Increment Financing
Tax Increment Financing (TIF) is one of the last effective economic development tools available to local governments. Legislation has already been introduced to attempt to further reduce or even eliminate the use of TIFs by municipalities.
The current statutory limitations on the implementation of TIFs are extremely rigorous and serve to ensure that they are only created where appropriate. The Mayors Caucus will oppose any legislation that imposes a moratorium or greater restrictions upon the use and creation of TIF districts.
Public Safety Pension Reforms
In 2008, the General assembly adopted proposals a package of reforms proposed by the Illinois Municipal League and supported by municipal organizations across the State which brought improved accountability, professionalization of fund management, conflict of interest restrictions, public disclosure of pension board activity and other reforms to police and fire pension systems. These reforms were important and overdue, but more still needs to be done.
The Mayors Caucus supports the following reforms to further improve the operations of public safety pension boards:
• restore the rights of municipalities to intervene in all pension board matters;
• allow public safety pension boards to voluntarily elect to invest money with the Illinois Municipal Retirement Fund (IMRF);
• base final salary calculations for newly-hired police and firefighters on the blended salary average formulas employed by IMRF; and
• require pension boards to provide 48-hour notice of its meetings.
Catastrophic Injury
The definition of “catastrophic injury” under Section 10(a) of the Illinois Public Safety Employee Benefits Act has been interpreted in different ways by the courts. As a result, confusion exists as to
whether municipal employers should be awarding or denying the extra health insurance benefits and disability claims of those employees awarded line-of-duty disabilities.
The Mayors Caucus will work with the Illinois Risk Management Association, the City of Chicago, the suburban COGs and the Illinois Municipal League on legislation to clarify the term “catastrophic injury” and eliminate the abuses of the system that occur under its current interpretation.
Streamlining MFT Approval Proces
Motor Fuel Tax (MFT) funds are utilized by local governments to support the upkeep of local roads. However, in order to utilize these funds, road repair projects must be fully reviewed and approved in advance by IDOT, even if they are routine in nature. In light of the staffing situation at IDOT, this layer of approval needlessly adds delays to projects and forces both IDOT and local governments to incur the additional cost of navigating this process.
The Mayors Caucus supports streamlining the MFT approval process. Local governments that utilize engineering professionals for MFT funded routine maintenance projects should be allowed to do so without the required pre-approval. This would lead to faster and more efficient means to put these dollars to work repairing roads. As a condition of implementing this streamlined process, IDOT would require any local governments participating in this streamlined process to be subject to audits to demonstrate that the funding was utilized according to all existing requirements.
This particular change could be implemented by IDOT through amendment to their rules. Barring an internal change by IDOT, state legislation could require this streamlining.
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Economic Recovery and Reinvestment Act
President-elect Barack Obama and the 111th Congress are currently crafting legislation to jumpstart the nation’s depressed economy. It will invest in “ready to go” state and local infrastructure projects which will create jobs, improve the nation’s infrastructure and create lasting economic and environmental benefits.
The Metropolitan Mayors Caucus strongly supports the passage of an economic recovery bill which addresses our nation’s infrastructure needs and creates jobs for working Americans within the first 30 days of President Obama’s Administration. In the Chicago region alone, the Caucus has identified nearly $1.6 billion worth of local water and sewer, road and bridge, renewable energy and public housing projects that are construction ready, but are unable to be built due to a lack of available funds. The leadership of the Caucus has shared this list of projects with President-elect Obama’s Transition Team, Senator Richard Durbin and Representative Dan Lipinski to demonstrate the clear need for a stimulus here in the Chicago region.
Chicago’s mayors have also conveyed to the Transition Team and the Illinois Congressional Delegation that funds made available through the recovery plan should flow directly to municipalities through the existing Metropolitan Planning Organization/ Council of Mayors process. Allocating funds through the states will only result in unnecessary delay and increase chances that municipalities may never receive the needed funds. Cities and towns have worked for decades to allocate federal transportation dollars and are well equipped to divvy up recovery plan funds through their established Councils of Mayors. The process is in place. Cities and towns are ready to go and jobs can be created now!
CREATE Freight Rail Project Funding
The Chicago region is the nation’s rail hub. Goods traveling from coast-to-coast do not reach their final destination without coming to the region and being transferred to a west- or east-bound train. Unfortunately, given the antiquated equipment and technology currently in use, it takes just as long for train cars to get through the Chicago region as it does for them to arrive here from one of the coasts. Besides the obvious delays that occur in getting goods and product to their final destinations, the other negative effects of this situation include:
• ground traffic delays in the Chicago area caused by trains blocking the great number of grade level crossings in the region;
• added traffic congestion caused by the trucks needed to haul goods locally between train yards that support west- and east-bound trains;
• unwarranted delays in the movement of commuter rail traffic; and
• the loss of jobs and economic opportunity when distribution and warehousing businesses leave the region due to their frustrations with its existing freight-handling network.
This situation is only expected to get worse as freight train traffic is expected to increase by 80 percent over the next decade.
To address the region’s aging rail infrastructure and its negative effects, the Illinois Department of Transportation, the City of Chicago and the railroads proposed a funding plan called the Chicago Region
Environmental and Transportation Efficiency Project or CREATE. The Project includes many grade crossing improvements, technology upgrades and flyovers that will bring the region’s rail network into the 21st Century.
Caucus Position:
The Mayors Caucus thanks Congress for allocating $100 million in the last transportation reauthorization bill for the CREATE Freight Rail Project. These funds, along with $100 million that has been committed by the State of Illinois, another $100 million from the railroads and $20
million from the City of Chicago, are an excellent down payment on the $1.5 billion needed to fully fund all of the projects in the CREATE plan..
The Mayors Caucus intends to work with IDOT and the railroads to urge the members of the Illinois Congressional Delegation to:
• pursue funding opportunities for CREATE through the proposed economic recovery and reinvestment legislation;
• develop a coalition to lobby on the federal level to create a national rail policy as part of a new transportation bill; and
• lobby for full funding for CREATE in the next reauthorization bill.
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Reauthorization of SAFETEA-LU
While action is expected to be delayed due to the consideration of the Economic Recovery and Reinvestment Act, discussions are expected to begin this year on legislation which will reauthorize the federal funding programs established in the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users adopted in 2005 (SAFETEA-LU).
The 273 Mayors of the metropolitan Chicago intend to work with the Chicago Metropolitan Agency for Planning, the Regional Transportation Authority, the State of Illinois, various local governments and agencies and the Illinois congressional delegation to build consensus on a strategy to be pursued to secure funds for the state and the region. A major investment in highway, transit and rail systems will help stimulate economic growth. It will create jobs, promote business development and help ensure that cities, towns, regions and states across the country will be able to thrive.
The Metropolitan Mayors Caucus has identified the following strategic principles that its member Mayors recommend be included in any reauthorization legislation:
• increase federal funding levels overall to meet critical needs for rehabilitation
and new capacity;
• increase Illinois’ share of formula-driven funds;
• preserve the basic structure of SAFETEA-LU in the reauthorization legislation;
• ensure adequate CMAQ funding for northeastern Illinois;
• maintain the firewalls and guaranteed funding levels for transit, highway and safety programs;
• continue the cooperative sub-allocation of funds to municipalities, counties and transportation agencies through metropolitan planning organizations (MPOs); and
• maintain SAFETEA-LU’s innovative programs, such as flexible funding provisions.
Electronic Commerce
The Streamlined Sales Tax Project (“SSTP”) has been working for the last several years to simplify state and local sales tax systems and removes the burdens to interstate commerce that were of concern to the U.S. Supreme Court in the Bellas Hess and Quill cases. The decisions in these two suits prohibited state and local governments from collecting sales taxes on catalogue and remote sales.
The SSTP adopted an amendment to the sourcing rules in its enabling agreement a year ago which will allow local governments to continue to collect taxes at the point of sale for all intrastate purchases. Taxes on interstate purchases (i.e. those made over the Internet, via remote catalogue, etc.) will be based on the levies in effect at the location to which they are shipped. This is also called destination sourcing.
This amendment will likely clear the way for the State of Illinois and other states to adopt the agreement and become a participant in the SSTP. While states and local governments have been doing there parts to work together to eliminate the hurdles to taxing electronic commerce and create the justification for Congress to overturn the Bellas Hess and Quill decisions, Congress has yet to act.
The Metropolitan Mayors Caucus calls upon Congress to grant to those states that comply with the Streamlined Sales Tax Project Agreement as recently amended to allow point of sale sourcing the authority to require all sellers, regardless of location, to collect the relevant state and local sales and use taxes. By granting this authority, Congress will ensure the viability of the sales tax as a state and local revenue source. It will also level the playing field between Internet, catalogue and “brick and mortar” retailers.
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