Budget, health insurance, economy & more

FY16 budget – CGFA
General Assembly watchdogs chart continued budget picture.  The nonpartisan Commission on Government Forecasting and Accountability (CGFA), the in-house budget agency of the Illinois General Assembly, released their October 2015 fiscal report this week. The CGFA “Monthly Briefing” covers ongoing State revenues, particularly key State General Funds revenue numbers, and ongoing trends likely to affect future State revenues. For example, the October briefing includes a discussion, based on nationwide trends and economic models, of the likely health of the 2015 Christmas retail selling season and its expected impact on State sales tax revenues.

CGFA, working in conjunction with the Illinois Department of Revenue, uncovered continued dismal trends in State revenues this October. Illinois general funds revenues were $319 million lower in October 2015 (fiscal year 2016) than they had been in October 2014. General Funds revenues come from income taxes, sales taxes, and other sources. As in previous months, the decline was paced by a year-over-year shortfall in State personal income tax revenues and corporate income tax revenues. The accumulated deficit for the four months of FY16 so far experienced is $1,456 million. The current fiscal year began on July 1, 2015.

Obamacare Premium Hikes
Double-digit hikes in some Obamacare insurance premiums.  The Affordable Care Act, the federal health-insurance mandate law passed in 2010 and often called “Obamacare,” requires most American households that include persons too young for Medicare, who do not get health insurance through their workplace, to obtain health insurance or pay a tax penalty. Complex regulations govern what kinds of insurance the households must buy and how to sign up for the policies. In addition, the required health insurance policies are often expensive. Prices of ACA-compliant Illinois health insurance policies are monitored by the Illinois Department of Insurance (DOI).

The costs of Obamacare-compliant health insurance policies have grown in the years since enactment of the law and imposition of the mandate. An increasing number of physicians and health care facilities are affiliated with only a limited number of health insurance providers. In many parts of Illinois, Obamacare customers have only a limited number of health insurers to choose from. These insurers re-price their policies annually, as allowed by law. Public documents show that providers of ACA-compliant health insurance policies are increasing their 2016 premium rates by 20 percent or more in parts of Northern Illinois.

Rate increases, as tracked by DOI, exceed 20% in a crescent-shaped group of counties in northern Illinois that stretches west and southwest from suburban DuPage County, in Chicago’s western suburbs, to Hancock and Henderson counties that border the Mississippi River. Metropolitan areas affected by this pattern of disproportionate price hikes include DeKalb, the Quad Cities, and greater Rockford metro areas, as well as DuPage and Kane counties in metro Chicago. The counties affected by these increases are closely correlated with areas where a particular firm, the Health Care Services Corporation (HCSC), made a major market push in calendar year 2015. In fall 2014 for calendar year 2015, HCSC offered cost-attractive bronze and silver plans in many affected counties. For 2016, however, HCSC has withdrawn some of their plans and raised prices on others. Other changes in market activity and pricing have affected ACA health care customers elsewhere in Illinois.

Economy 
Small-business growth tracked in Illinois.  The payroll-software firm Paychex, whose work includes continued nationwide monitoring of small business employer-employee job numbers, reported this week that Chicago ranks 7th among the 20 largest cities in the U.S., and Illinois ranks 7th among the 20 largest states, in job creation and growth so far in 2015. The Paychex numbers supplement informal perceptions of post-recession economic growth in Illinois, especially in booming neighborhoods and real estate immediately surrounding Chicago’s downtown and on the city’s North Side.

The Paychex numbers are reported on a year-over-year basis, and may not predict future trends. Furthermore, the small-business numbers generated by Paychex’ nationwide database do not reflect job activities among larger and more established U.S. firms; there have been major layoff announcements by large Illinois firms, such as Caterpillar, in recent months. Some sections of downstate Illinois may be underperforming Chicago at this time.

Future seen in high-tech food and agricultural science.  As Illinois moves towards its economic future, an increasing number of lenders and financiers are looking at the “Silicon Valley model” and seeking to pinpoint one or more areas where the greater Chicago area can demonstrate global economic leadership. One such area, leveraging Illinois’ existing position in farm production and technology, could be food production and agricultural science. The Chicago Tribune this week published a profile of one group of Chicago venture capitalists active in this sector. A Chicago emphasis on farm-to-table science and logistics could help “bring together” the economic interests of Downstate with Illinois’ largest city.

Illinois Historic Preservation Agency (IHPA) 
State preservation agency seeks new director.  Amy Martin, director of the IHPA since 2012, was terminated by vote of the Agency’s board of directors on Monday, November 2. The personnel move followed a sharp clash between former Director Martin and Eileen Mackovich, the former director of the Abraham Lincoln Presidential Library and Museum.

Although the Lincoln Presidential Library is the Historic Preservation Agency’s largest single asset by budget and personnel count, the IHPA also operates more than 50 memorials, retired courthouses, and state historic sites throughout Illinois. Key IHPA sites include Cahokia Mounds, the prehistoric Native American city east of St. Louis, and Lincoln’s New Salem, the reconstructed pioneer village northwest of Springfield.

Lottery – Neighboring States
As Illinois State Lottery hands out IOUs, neighboring state lotteries hand out winning ticket opportunities.  Based on the current lack of an enacted FY16 balanced budget, the Illinois State Lottery has ceased to make payouts on game tickets that bear prizes of $601 or more. Instead of cash, holders of winning Illinois tickets are being handed certificates of promissory scrip that bear a legal promise of future payment. Seeing opportunities, the operators of lotteries in neighboring states, such as Indiana, are increasing their advertising and selling activities. They are targeting Illinoisans, especially customers who live in counties that border state lines. Well more than half of Illinois’ 12 million people live within 25 miles of a border with a neighboring state.