Road Fund Diversion Tops Illinois’ Legislative Agenda

Sat July 03, 2004 - Midwest Edition

The Illinois General Assembly adjourned on June 1, without approving a state budget for the upcoming fiscal year.

In broad terms, Senate President Emil Jones and the Gov. Blagojevich support a budget that includes roughly $1 billion in new spending. According to the IAAP, the Jones/Blagojevich budget is funded by a broad array of new business tax increases, looting additional State dedicated funds and some very creative accounting.

In contrast, House Democrats and the House/Senate Republicans favor a budget that raises spending solely to cover the increased costs of Medicaid and state employee health insurance.

The Illinois General Assembly is “on call” during the month of June while their leaders attempt to hammer out a budget. And it seems everyone is mindful that these negotiations needed to be concluded by June 30th to avoid a State government shutdown.

In addition, a budget passed after May 30 must be approved by at least 60 percent of both the House and Senate – a State constitutional requirement. Some of the key legislative issues include:

Rolling Back Road Fund Diversions

SB 2682 and SB 2215 amend the State Finance Act to prohibit the Governor’s Office of Management and Budget (GOMB) from diverting road funds to help pay the State’s operating costs. Last year, the exercise of the GOMB transfer authority appropriated $140 million from the road fund.

SB 2682 passed the Senate but got bogged down in the House due to in-fighting among House Democrats. SB 2215 passed the House but was put on hold by Senate Democratic leadership.

House Democrats and the Republicans seek to end the GOMB diversion and ensure that last year’s “one time” diversion of $50 million does not reoccur. These roll backs would restore about 50 percent of last year’s additional road fund diversions.

The remaining FY 2004 diversions –– support for the Secretary of State’s Office and State Police –– will probably not be restored in FY 2005.

The IAAP, as part of the Transportation for Illinois Coalition, is attempting to keep the pressure on legislative leaders. According to the association, it expects that House Democrats and Republicans will continue to push hard for a partial roll back of road fund diversions during these budget negotiations.

Preserving the Off-Road

Fuel Tax Exemption

The Governor’s proposed FY 2005 State Budget expands the State Motor Fuel Tax (MFT) to include fuel used by non-farm, off-road vehicles and equipment.

According to IAAP, this proposal would cost the aggregates industry over $6 million annually and thereby add roughly 6 cents a ton to the costs of producing crushed stone, sand and gravel in Illinois. This proposal would also have a serious economic impact on the state’s railroads, coal mines and construction companies, said IAAP.

Thanks to intense lobbying by the Illinois Coalition for Fair Fuel Taxes, a coalition composed of Illinois railroad, construction, aggregate and coal mining associations and their allies in organized labor, this new tax appears to be have been taken “off the table” during budget negotiations. (HB 853, the Administration’s off-road MFT bill, is dead in the Illinois Senate -- no off-road MFT bill is pending in the House).

Reducing NPDES fees

HB 3828 and HB 5095 attempt to reduce the excessive National Pollutant Discharge Elimination System (NPDES) fees put in place by the Blagojevich Administration. HB 3828 totally eliminates NDPES fees; HB 5095 reduces these fees to the levels necessary to pay for the IEPA’s water pollution control program.

Under the current system, only 25 percent of the permit fees collected go to fund IEPA programs – the remainder goes into the state’s General Revenue Fund to help reduce the deficit.

Both HB 3828 and HB 5095 passed the House but were put on hold in the Senate by Democratic leadership, at the Governor’s request, said IAAP. Senator John Sullivan (D-Rushville), the sponsor of HB 3828, has been meeting with the representatives from the Governor’s office, the IERG Environmental Fee Coalition, the Illinois Municipal League and the environmental community in an attempt to come up with a reduced NPDES permit fee schedule.

However, these negotiations are currently on hold while the FY 2005 State Budget is being hammered out.

Wetlands Legislation

Senator Terry Link (D-Vernon Hills) made a run at passing HB 422, the environmentalist’s isolated wetlands bill. The IERG Isolated Wetlands Workgroup strongly opposed the legislation, saying, HB 422: allows local units of government to operate their own, more stringent wetlands programs; and allows the state to set permit fees by rule, rather than limiting the amount of fees that may be charged.

After the legislation failed to get by the Senate Environment and Energy Committee, Sen. Link made a second attempt to pass the legislation.

He picked up HB 913, amended this bill to include the substantive provisions of HB 422 and proceeded to push this bill in the Senate. HB 913 passed out of the Senate Executive Committee but is not being brought to the Senate floor for a vote because a lack of support.

FY 2005 Budget Negotiations

The future of the Governor’s Opportunity Returns bonding program is up in the air given the lack of a new revenue stream to pay for debt service.

A big issue being raised by Senate Republicans is the fact that 70 percent of the road projects awarded during FY 2004 are located in districts controlled by Democrats. The Republicans want to de-politicize this process by letting IDOT District Engineers allocate road projects based upon need.

These and a host of other contentious issues are currently being negotiated by the Governor and legislative leaders. Stay tuned.


The IAAP’s legal challenge to the NPDES permit fees was dismissed by Circuit Court Judge Cadagin’s. The dismissal has been appealed and the state has until July 19 to file its brief. Oral argument is set for September with a decision issued prior to Christmas.

The Illinois Environmental Regulatory Group, the Chemical Industry Council of Illinois and the Illinois Municipal League have filed a joint “friend of the court” brief in support of the IAAP appeal.

According to the IAAP, these organizations support the position that the state’s new permit fees are instead taxes in violation of the Due Process, Uniformity and Equal Protection clauses of the Illinois Constitution, and in violation of procedural and substantive requirements of the Clean Water Act.

Federal Highway Funding Update

On June 9, House and Senate members of the SAFETEA/TEA-LU conference committee met to begin crafting an agreed federal highway funding bill.

The conference committee process is being used to resolve the significant differences between the House and Senate versions of this legislation. Judy Biggert (R-IL), Jerry Costello (D-IL) and William Lipinski (D-IL) are all participating in this process.

Senate Environment and Public Works Committee Chairman James M. Inhofe (R-OK) was voted in as chairman and members of the committee gave opening statements indicating their views on the legislation. Contentious issues included donor state equity, budget and finance provisions and the overall funding level.

Chairman Inhofe indicated that funding differences could not be solved immediately and directed staff to begin working on resolving provisions that could – those that are similar in both versions of the bill, other non-controversial sections and policy issues that were not related to the overall funding level.

The committee approved 12 non-controversial items at the meeting; however hundreds of issues remain to be reconciled. The next meeting will be held on June 23 and staff is expected to report progress on resolving some of the outstanding issues.

Outlook for Highway Funding Reauthorization

Congress passed yet another short-term extension on TEA-21 until July 23 – the beginning of the August recess.

It is conceivable that lawmakers could extend the existing programs to just beyond the election, to be handled in a post-election session, or simply extend TEA-21 through September 2005 to coincide with the beginning of the next federal fiscal year.