Bill Text: IL SB1223 | 2013-2014 | 98th General Assembly | Introduced

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Bill Title: 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.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2015-01-13 - Session Sine Die [SB1223 Detail]

Download: Illinois-2013-SB1223-Introduced.html

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

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

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calculated separately for the following categories: General
Fund; Road Fund; and all other funds.
(b) The following may not be counted in calculating
expenditure limitations or, if applicable, revenue
limitations:
(1) Amounts returned to taxpayers as refunds of amounts
exceeding the expenditure limitation in a prior year.
(2) Amounts received from the federal government.
(3) Amounts collected on behalf of another level of
government.
(4) Pension contributions by employees and pension
fund earnings.
(5) Pension and disability payments made to former
government employees.
(6) Amounts received as grants, gifts, or donations
that must be spent for purposes specified by the donor.
(7) Amounts paid pursuant to a court award.
(8) Reserve transfers.
Section 15. Approval of expenditure increases.
(a) In order to adopt an increase in State spending beyond
the limitation set forth in Section 10, the 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. Voter approval is not required if the
spending is as a result of an increase in State revenue under

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

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(3) For the first full fiscal year of each proposed
spending increase, estimates of the maximum dollar amount
of each increase and of fiscal year spending without the
increase.
(d) Ballot questions for spending increases must begin:
"Shall State spending increase by (amount of first or, if
phased in, full fiscal year dollar increase) annually for the
purpose of . . .?".
(e) The State shall reimburse municipalities and counties
for the costs of a special election.
Section 20. Approval of revenue increases.
(a) In order to adopt an increase in State revenue, the
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. Voter approval is not
required if annual State revenue is less than annual payments
on general obligation bonds, required payments relating to
pensions, and final court judgments or if the measure is an
emergency tax.
(b) The question of whether to adopt legislation to impose
an increase in revenue of the State must be submitted to the
voters for approval at the next general election. If the
General Assembly determines by a three-fifths supermajority
vote that legislation to increase revenue via an emergency tax
should take effect sooner than the next general election, the

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

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

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

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

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

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(b) By March 1 of each year, the State Comptroller shall
take the total annually required pension payment for the
upcoming fiscal year (beginning on July 1) and divide that
number by 12. This amount becomes the monthly pro rata pension
payment for each month of the upcoming fiscal year.
If, during the fiscal year, the Commission on Government
Forecasting and Accountability adjusts the annually required
pension payment for the current year upward, the State
Comptroller shall recalculate the monthly pro rata pension
payment upward accordingly and allocate the increase evenly
over the remaining months to ensure that the full annual
pension payment is made for the fiscal year.
If, during the fiscal year, the Commission on Government
Forecasting and Accountability adjusts the annually required
pension payment downward, the original payment schedule shall
be maintained. Payments in excess of the revised payment
schedule shall be allocated to any existing unfunded pension
liability.
If, during the fiscal year, the Commission on Government
Forecasting and Accountability adjusts the annually required
pension payment downward, and if there is no remaining unfunded
pension liability as calculated by the Commission on Government
Forecasting and Accountability in compliance with generally
accepted accounting principles, then the State Comptroller
shall recalculate the monthly pro rata pension payment downward
accordingly and allocate the reduction evenly over the

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

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(30 ILCS 105/5.826 new)
Sec. 5.826. The Past Due Paydown Fund.
(30 ILCS 105/5.829 new)
Sec. 5.829. The State Budget Stabilization Fund.
(30 ILCS 105/5.830 new)
Sec. 5.830. The Taxpayer Relief Fund.
Section 99. Effective date. This Act takes effect upon
becoming law.
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INDEX
Statutes amended in order of appearance