A press release from State Rep. David McSweeney about a bill to make it tougher for tax districts to issue bonds without a referendum.
It was inspired by McHenry County College’s consideration of issuing non-referendum bonds to build a health club and health sciences classrooms. College officials said they would not have to go to referendum to build a health club and health sciences classrooms.
Tougher Local Borrowing Bill Becomes McSweeney’s First Enacted Piece of Legislation
David McSweeney
McHenry County – After months of leading bipartisan negotiations, State Representative David McSweeney (R-Barrington Hills) got the General Assembly’s approval in May to modify the alternate revenue bond law, encouraging local taxpayers to exercise their rights to approve or disapprove local borrowings.
McSweeney’s House Bill 983 will be signed into law today by Governor Quinn, allowing taxpayers to more easily organize a referendum to oppose local borrowing proposals.
The bill addresses the ease at which alternative revenue bonds are issued.
Alternate revenue bonds are backed up by property taxes if project revenues don’t materialize.
“Property taxes are skyrocketing while local governments keep borrowing for what they cannot afford and often pass the bill on to the taxpayer,” said McSweeney.
“Now we have a more reasonable process for residents to organize a referendum and put it to a vote.”
In most cases, current law requires that 7.5% of registered voters must sign a petition to require a backdoor referendum on the issuance of alternate revenue bonds.
McSweeney’s bill applies new requirements to local governments with less than 500,000 in population.
It gives the residents 45 days instead of 30 days to file a petition for a backdoor referendum to accept or reject the issuance of alternative bonds.
In instances in which governmental units have more than 4,000 registered voters, it permits the lesser of 5% or 5,000 registered voters to file the backdoor referendum petition.
The plan also calls for an independent accountant or feasibility analyst to determine if the revenues will support the borrowing.
“I want local government units to think twice before borrowing for bad projects,” added McSweeney. “Local borrowing should be voter-approved because property taxes are at stake.”
State Sen. Pam Althoff (R-McHenry) served as chief sponsor of HB 983 in the Senate and state Sen. Dan Duffy (R-Lake Barrington) and state Rep. Jack Franks (D-Marengo) served as lead co-sponsors in their respective chambers.
The law will take effect January 1, 2014.
Cal – So if MCC is close to unveiling a new building sometime this year.
Are there enough votes on the board to stop the building using the double barrel bonds?
I would think Jenner and Wilbeck would be no votes.
Molly Walsh ran as a “no” note, but she did work for the college previously.
I would think you need Parrish and Walsh to stop this project using “double barrel bonds”.
You are not going to get the others to vote NO.
If Walsh or Parrish switch to the YES side.
Does MCC have time to organize the bonds before Jan 1st when the rules for a referendum change?
So is it possible for them to get the bonds under the tougher referendum changes?
Finally, do you think they need a new building for all of these new programs?
Thank you, Rep. McSweeney and Sen. Althoff (the Senate sponsor).
You have saved McHenry County tens of millions of dollars.
To Brent Steffans: Parrish, Walsh, Jenner & Wilbeck are all adamantly opposed to trying to issue bonds without a vote.
Of greater concern is that MCC has been running big surpluses every year and squirreling away the money so they can undertake big capital projects without bonds.
Jenner, Wilbeck & Walsh are working to stop this.
I haven’t spoken with Parrish about this, but he has been explicit about not building unless a need is proven.
McHenry County has a population of about about 300,000.
The MCC boundary is slightly different than the McHenry County Boundary, but not a 200,000 population difference.
So while the law today benefits McHenry County, when the population grows to 500,001, this new law, derived
from House Bill 983 (HB 983), will no longer apply to McHenry County.
The new law does not apply to the following counties.
Cook County population is about 5 million, so the new law does not apply to the county itself.
DuPage County population is about 900,000 so the law doesn’t apply to DuPage County itself.
Lake County population is approximately 700,000 so the law doesn’t apply to Lake County itself.
Will County population is almost 700,000 so the law doesn’t apply to Will County itself.
Kane County population is over 500,000 sot he law doesn’t apply to Kane County itself.
All other counties in Illinois have a population less than 500,000.
Noteworthy is the new law only applies to alternative revenue bonds.
The law does not apply to other types of non-referendum government bonds. The new law once again illustrates the dysfunctionality in Illinois state government.
The law was passed to pacify McHenry County while maintaining the status quo as much as possible.
Special interests rule Illinois state government with an iron fist.
Non referendum bonds should not be allowed unless there is some sort of emergency.
Building a new life sciences center is not an emergency.
You shouldn’t be able to obligate millions of dollars of taxpayer money to build a building unless there is a referendum.
In addition to the 500,000 population exception, and the law only applying to alternative revenue bonds, there are other exceptions to the new law as it applies to alternative revenue bonds.
Chapman & Cutler point out the following types of alternative revenue bonds are exempt from the new law in a Client Alert dated May 23, 2013.
The title of the Client alert is, “House Bill 983, as amended by Senate Amendments 1 and 2. Amendments to the Alternate Bond Provisions Contained in the Local Government Debt Reform Act.”
May 23 is the same day the Bill based the House.
“Alternate bonds payable solely from enterprise revenues that finance or refinance projects concerning public utilities, public streets and roads or public safety facilities, and related infrastructure and equipment.”
“Alternate bonds payable in whole or in part from a revenue source. ‘Revenue source’ means a source of funds, other than enterprise revenues, received or available to be received by a governmental unit and available for any one or more of its corporate purposes.”
http://www.chapman.com/media/publication/167_alert.pdf
As of this second the Public Act number is not yet listed.
http://www.ilga.gov/legislation/billstatus.asp?DocNum=983&GAID=12&GA=98&DocTypeID=HB&LegID=71368&SessionID=85
To Mr. Wilson,
“Parrish, Walsh, Jenner & Wilbeck are all adamantly opposed to trying to issue bonds without a vote.”
Until the actual vote is taken and Parrish and Walsh vote against an alternative revenue bond will I believe them.
I look at Walsh/Parrish like Justice Kennedy.
If only one of these two switch sides.
The vote passes and the alternative revenue bond will be authorized.
The college is sitting on over $40 million in the bank.
It would be easy to get the bonds with this sizeable stock pile.
In addition I could see Walsh being the one who crosses over.
Look at her comments when the trustes wanted to look at outsourcing jobs earlier this year.
This is going to be a tight rope for the college to pass.
However all it takes is a promise by the leadership of some great plan (Master Building Plan or new programs) and a 4 to 3 vote.
Alternative revenue bonds (alternate revenue bonds) have been used for water and sewer projects and TIF districts, amongst other uses.
Mark – a very interesting comment about community colleges in the largest counties.
As for the counties themselves, under Illinois law, any county with a population of more than 500,000 is a “home rule” unit of government with the unlimited authority to raise taxes and issue bonds without a referendum.
To Brent Steffans – I admire your skepticism.
You are correct that we will not know the outcome until it occurs.
I base my opinion on first-hand conversations with Parrish and Walsh.
I do not agree with everything Walsh does, but remember that she vigorously and publicly opposed the minor league baseball stadium.
She has stated many times that she will not vote for bonds without a referendum.
You are also correct about the cash pile hidden in “Fund 03” for capital projects, the result of years of taxing more than the college spent, to the tune of about $5 million per year.
That practice needs to stop.
THe line should not merely be held, taxes should be cut unless a strong case can be made for keeping them at the current level, and running $5 million surpluses to squirrel the money away for capital projects is strong evidence they can cut the tax levy by several million dollars.
I would love the opportunity to discuss the 2015 election with you.
We need to make sure Mary Miller is not re-elected, should she choose to run again.
Thank You Mr. McSweeney, you are doing the work!