Full Text of HB0726 102nd General Assembly
HB0726ham001 102ND GENERAL ASSEMBLY | Rep. LaToya Greenwood Filed: 3/1/2022
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| 1 | | AMENDMENT TO HOUSE BILL 726
| 2 | | AMENDMENT NO. ______. Amend House Bill 726 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 5. The Illinois Municipal Code is amended by | 5 | | changing Sections 8-12-2, 8-12-3, 8-12-4, and 8-12-23 and by | 6 | | adding Sections 8-12-4.5, 8-12-10.5, and 8-12-21.5 as follows:
| 7 | | (65 ILCS 5/8-12-2) (from Ch. 24, par. 8-12-2)
| 8 | | Sec. 8-12-2.
(a) Pursuant to the authority of the General | 9 | | Assembly to provide
for the public health, safety and welfare, | 10 | | the General Assembly hereby
finds and declares that it is the | 11 | | public policy and a public purpose of the
State to offer | 12 | | assistance to a financially distressed city so that it may
| 13 | | provide for the health, safety and welfare of its citizens, | 14 | | pay when due
principal and interest on its debt obligations, | 15 | | meet financial obligations
to its employees, vendors and | 16 | | suppliers, and provide for proper financial
accounting |
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| 1 | | procedures, budgeting and taxing practices, as well as
| 2 | | strengthen the human and economic development of the city.
| 3 | | (b) It is the purpose of this Division to provide a secure | 4 | | financial
basis for the continued operation of a financially | 5 | | distressed city. The
intention of the General Assembly, in | 6 | | enacting this legislation is to
establish sound, efficient and | 7 | | generally accepted accounting, budgeting and
taxing procedures | 8 | | and practices within a financially distressed city, to
provide | 9 | | powers to a financial advisory authority established for a
| 10 | | financially distressed city, and to impose restrictions upon a | 11 | | financially
distressed city in order to assist that city in | 12 | | assuring its financial
integrity while leaving municipal | 13 | | services policies to the city, consistent
with the | 14 | | requirements for satisfying the public policy and purposes | 15 | | herein set
forth.
| 16 | | (c) It also is the purpose of this Division to authorize a | 17 | | city which
has been certified and designated as a financially | 18 | | distressed city under
the procedure set forth in Section | 19 | | 8-12-4 , and which has by ordinance
requested that a financial | 20 | | advisory authority be appointed for the city and
that the city | 21 | | receive assistance as provided in this Division, and which
has | 22 | | filed certified copies of that ordinance in the manner | 23 | | provided by
Section 8-12-4, to enter into such agreements as | 24 | | are necessary to receive
assistance as provided in this | 25 | | Division and in applicable provisions of the
Illinois Finance | 26 | | Authority Act.
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| 1 | | (Source: P.A. 93-205, eff. 1-1-04.)
| 2 | | (65 ILCS 5/8-12-3) (from Ch. 24, par. 8-12-3)
| 3 | | Sec. 8-12-3. As used in this Division:
| 4 | | (1) "Authority" means the "(Name of Financially Distressed | 5 | | City) Financial
Advisory Authority".
| 6 | | (2) "Financially distressed city" means a home rule any | 7 | | municipality which is a home
rule unit and which (i) is | 8 | | certified and designated by the Department of Revenue as being
| 9 | | in the highest 5% of all home rule municipalities in terms of | 10 | | the aggregate
of the rate per cent of all taxes levied pursuant | 11 | | to statute or ordinance
upon all taxable property of the | 12 | | municipality and as being in the lowest 5%
of all home rule | 13 | | municipalities in terms of per capita tax yield, and (ii)
is | 14 | | designated by joint resolution of the General Assembly as a | 15 | | financially
distressed city under Section 8-12-4 .
| 16 | | (3) "Home rule municipality" means a municipality which is | 17 | | a home
rule unit as provided in Section 6 of Article VII of the | 18 | | Illinois
Constitution.
| 19 | | (4) "Budget" means an annual appropriation ordinance or | 20 | | annual budget
as described in Division 2 of Article 8, as from | 21 | | time to time in effect in
the financially distressed city.
| 22 | | (5) "Chairperson" means the chairperson of the Authority | 23 | | appointed
pursuant to Section 8-12-7.
| 24 | | (6) "Financial Plan" means the financially distressed | 25 | | city's financial plan
as developed pursuant to Section |
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| 1 | | 8-12-15, as from time to time in effect.
| 2 | | (7) "Fiscal year" means the fiscal year of the financially | 3 | | distressed city.
| 4 | | (8) "Obligations" means bonds, notes or other evidence of | 5 | | indebtedness
issued by the Illinois Finance Authority in
| 6 | | connection with
the provision of financial aid to a | 7 | | financially distressed city pursuant to
this Division and | 8 | | applicable provisions of the Illinois
Finance Authority Act.
| 9 | | (Source: P.A. 93-205, eff. 1-1-04.)
| 10 | | (65 ILCS 5/8-12-4) (from Ch. 24, par. 8-12-4)
| 11 | | Sec. 8-12-4. Certification and designation as financially | 12 | | distressed city. | 13 | | (a) In order to be certified as a financially distressed | 14 | | city and receive assistance as provided in this
Division : , | 15 | | (1) a home rule municipality shall first, by ordinance | 16 | | passed by its
corporate authorities, request (i) that the | 17 | | Department of Revenue certify
that it is in the highest 5% | 18 | | of all home rule municipalities in terms of
the aggregate | 19 | | of the rate per cent of all taxes levied pursuant to | 20 | | statute
or ordinance upon all taxable property of the | 21 | | municipality and in the
lowest 5% of all home rule | 22 | | municipalities in terms of
per capita tax yield, and (ii) | 23 | | that the General Assembly by joint
resolution designate it | 24 | | as a financially distressed city. A home rule
municipality | 25 | | which is so certified and designated as a financially
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| 1 | | distressed city and which desires to receive assistance as | 2 | | provided in this
Division shall, by ordinance passed by | 3 | | its corporate authorities, request
that a financial | 4 | | advisory authority be appointed for the city and that the
| 5 | | city receive assistance as provided in this Division, and | 6 | | shall file a
certified copy of that ordinance with the | 7 | | Governor, with the Clerk of the
House of Representatives | 8 | | and with the Secretary of the Senate ; or . | 9 | | (2) the State Treasurer may conduct a preliminary | 10 | | review to determine the existence of probable financial | 11 | | stress within a home rule municipality if one or more of | 12 | | the following occur: | 13 | | (A) the State Treasurer requests that the | 14 | | Department of Revenue certify that the municipality is | 15 | | in the highest 5% of all home rule municipalities in | 16 | | terms of
the aggregate of the rate per cent of all | 17 | | taxes levied pursuant to statute
or ordinance upon all | 18 | | taxable property of the municipality and in the
lowest | 19 | | 5% of all home rule municipalities in terms of
per | 20 | | capita tax yield, and the Department certifies the | 21 | | same; | 22 | | (B) the city council or the mayor of a | 23 | | municipality or school board makes a written request | 24 | | for a preliminary review and that request identifies | 25 | | the existing or anticipated financial conditions or | 26 | | events that make the request necessary; |
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| 1 | | (C) the State Treasurer receives a written request | 2 | | from a creditor with an undisputed claim against the | 3 | | municipality that exceeds the greater of $10,000 or 1% | 4 | | of the annual general fund budget of the municipality | 5 | | and that remains unpaid 6 months after its due date | 6 | | provided that the creditor notifies the municipality | 7 | | in writing at least 30 days before its request to the | 8 | | State Treasurer of its intention to submit a written | 9 | | request under this paragraph; | 10 | | (D) the State Treasurer receives, not earlier than | 11 | | 60 days before the next municipal election, a petition | 12 | | containing specific allegations of municipal financial | 13 | | distress signed by at least 25% of the electors within | 14 | | the municipality who voted at the last general | 15 | | election at which a Governor was elected; | 16 | | (E) the State Treasurer receives written | 17 | | notification that a municipality has not timely | 18 | | deposited its minimum obligation payment to the | 19 | | municipality's pension fund as required by law; | 20 | | (F) the State Treasurer receives written | 21 | | notification that the municipality has failed for a | 22 | | period of 7 days or more after the scheduled date of | 23 | | payment to pay wages and salaries or other | 24 | | compensation owed to employees or benefits owed to | 25 | | retirees; | 26 | | (G) the State Treasurer receives written |
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| 1 | | notification from a trustee, paying agent, bondholder, | 2 | | or auditor engaged by the municipality of a default in | 3 | | a bond or note payment or a violation of one or more | 4 | | bond or note covenants; | 5 | | (H) the State Treasurer receives a resolution from | 6 | | either chamber of the General Assembly requesting a | 7 | | preliminary review; | 8 | | (I) the municipality is delinquent in the | 9 | | distribution of tax revenues, as required by law, that | 10 | | it has collected for another taxing jurisdiction, and | 11 | | that taxing jurisdiction requests a preliminary | 12 | | review; | 13 | | (J) the municipality has been assigned a long-term | 14 | | debt rating within or below the BBB category or its | 15 | | equivalent by one or more nationally recognized credit | 16 | | rating agencies; or | 17 | | (K) the existence of other facts or circumstances | 18 | | that, in the State Treasurer's sole discretion, are | 19 | | indicative of probable financial stress. | 20 | | Before commencing the preliminary review under this | 21 | | paragraph (2), the State Treasurer shall provide the | 22 | | municipality written notification that he or she intends | 23 | | to conduct a preliminary review. Elected and appointed | 24 | | officials of the municipality shall promptly and fully | 25 | | provide the assistance and information requested by the | 26 | | State Treasurer for that municipality in conducting the |
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| 1 | | preliminary review. The State Treasurer shall provide a | 2 | | preliminary report of his or her findings to the | 3 | | municipality within 20 days after the date the preliminary | 4 | | review begins. A copy of the preliminary report shall be | 5 | | provided to each State Senator and State Representative | 6 | | who represents that municipality. The municipality may | 7 | | provide comments to the State Treasurer concerning the | 8 | | preliminary report within 5 days after the preliminary | 9 | | report is provided to the municipality. | 10 | | If the State Treasurer believes there is probable | 11 | | financial stress after his or her preliminary review and | 12 | | any input from the municipality, the State Treasurer shall | 13 | | establish a review team under Section 8-12-4.5. A copy of | 14 | | the preliminary report shall be provided to the review | 15 | | team and each State Senator and State Representative who | 16 | | represents that municipality, and the review shall be | 17 | | posted on the State Treasurer's website. The review team | 18 | | shall examine the financial situation of the municipality | 19 | | and complete a final report as provided in Section | 20 | | 8-12-4.5. | 21 | | If the Governor believes that probable financial | 22 | | stress exists for the municipality to be certified as a | 23 | | financially distressed city under this Section after | 24 | | reviewing a final report prepared under Section 18-12-4.5, | 25 | | the Governor may, by proclamation, certify and designate | 26 | | the municipality as a financially distressed city and |
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| 1 | | authorize appointment of the municipality's Authority | 2 | | under Section 8-12-7. The proclamation shall be filed with | 3 | | the Secretary of State and the corporate authorities of | 4 | | the municipality. | 5 | | (b) Upon the
filing of the certified copies of the that | 6 | | ordinance under paragraph (1) of subsection (a) or upon the | 7 | | written proclamation by the Governor filed with the Secretary | 8 | | of State and corporate authorities of a municipality under | 9 | | paragraph (2) of subsection (a), as required by this
Section | 10 | | this Division and all of its provisions shall then and | 11 | | thereafter
be applicable to the financially distressed city, | 12 | | shall govern and control
its financial accounting, budgeting | 13 | | and taxing procedures and practices,
and, subject to the | 14 | | limitations of subsection (a) of Section 8-12-22, shall
remain | 15 | | in full force and effect with respect thereto until such
time | 16 | | as the financial advisory authority established under Section | 17 | | 8-12-5
is abolished as provided in subsection (c) of Section | 18 | | 8-12-22.
| 19 | | (Source: P.A. 86-1211.)
| 20 | | (65 ILCS 5/8-12-4.5 new) | 21 | | Sec. 8-12-4.5. Review team powers and duties. | 22 | | (a) If the State Treasurer believes there is probable | 23 | | financial stress after his or her preliminary review and any | 24 | | input from the municipality under Section 8-12-4, the State | 25 | | Treasurer shall establish a review team for the municipality |
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| 1 | | consisting of: the State Treasurer, or his or her designee; | 2 | | the Director of the Governor's Office of Management and | 3 | | Budget, or his or her designee; a member appointed by the | 4 | | Senate President; a member appointed by the Minority Leader of | 5 | | the Senate; a member appointed by the Speaker of the House of | 6 | | Representatives; and a member appointed by the Minority Leader | 7 | | of the House of Representatives. The State Treasurer may | 8 | | appoint other State officials or other persons with relevant | 9 | | professional experience to serve on the review team. The State | 10 | | Treasurer shall provide administrative support and other | 11 | | support to a review team established under this Section. | 12 | | (b) In conducting its review, the review team may: | 13 | | (1) examine the books and records of the municipality; | 14 | | (2) use the services of other State agencies and | 15 | | employees in conducting the financial review; or | 16 | | (3) both examine the books and records of the | 17 | | municipality and use the services of other State agencies | 18 | | and employees in conducting the financial review. | 19 | | The review team shall meet with city council and employees | 20 | | of the municipality as part of its review. At this meeting, the | 21 | | review team shall receive, discuss, and consider information | 22 | | provided by the municipality concerning the financial | 23 | | condition of the municipality. In addition, the review team | 24 | | shall hold at least one public meeting in the jurisdiction of | 25 | | the municipality at which the public may provide comment. | 26 | | (c) The review team shall submit a written final report of |
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| 1 | | its findings to the State Treasurer within 60 days following | 2 | | its establishment or earlier if required by the State | 3 | | Treasurer. Upon request of a majority of the review team, the | 4 | | State Treasurer may grant one 30-day extension to the 60-day | 5 | | limitation. A copy of the final report shall be forwarded by | 6 | | the State Treasurer to the Governor, mayor and city council of | 7 | | the municipality, the Speaker of the House of Representatives, | 8 | | the Senate President, and each State Senator and State | 9 | | Representative who represents the municipality. The final | 10 | | report shall be posted on the State Treasurer's website within | 11 | | 7 days after the final report is submitted to the Governor. The | 12 | | final report shall identify the existence, or an indication of | 13 | | the likely occurrence, of any of the following if found: | 14 | | (1) a default in the payment of principal or interest | 15 | | upon bonded obligations, notes, or other municipal | 16 | | securities for which no funds or insufficient funds are on | 17 | | hand and, if required, segregated in a special trust fund; | 18 | | (2) a failure for a period of 30 days or more beyond | 19 | | the due date to transfer one or more of the following to | 20 | | the appropriate agency: | 21 | | (i) taxes withheld on the income of employees; | 22 | | (ii) taxes collected by the municipality as agent | 23 | | for another unit of local government; and | 24 | | (iii) a contribution required by a pension, | 25 | | retirement, or benefit plan; | 26 | | (3) a failure for a period of 7 days or more after the |
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| 1 | | scheduled date of payment to pay wages and salaries or | 2 | | other compensation owed to employees or benefits owed to | 3 | | retirees; | 4 | | (4) the total amount of accounts payable for the | 5 | | current fiscal year, as determined by the State Treasurer, | 6 | | is in excess of 10% of the total expenditures of the | 7 | | municipality in that fiscal year; | 8 | | (5) a failure to eliminate an existing deficit in any | 9 | | fund of the municipality within the 2-year period | 10 | | preceding the end of the municipality's fiscal year during | 11 | | which the review team final report is received; | 12 | | (6) a projection of a deficit in the general fund of | 13 | | the municipality for the current fiscal year in excess of | 14 | | 5% of the budgeted revenues for the general fund; | 15 | | (7) a failure to comply in all material respects with | 16 | | the terms of an approved deficit elimination plan or an | 17 | | agreement entered into pursuant to a deficit elimination | 18 | | plan; | 19 | | (8) the existence of material loans to the general | 20 | | fund from other municipal funds that are not regularly | 21 | | settled between the funds or that are increasing in scope; | 22 | | (9) the existence after the close of the fiscal year | 23 | | of material recurring, non-budgeted subsidies from the | 24 | | general fund to other major funds; | 25 | | (10) the existence of a structural operating deficit; | 26 | | (11) the use of restricted revenues for purposes not |
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| 1 | | authorized by law; | 2 | | (12) the likelihood that the municipality is or will | 3 | | be unable to pay its obligations within 60 days after the | 4 | | date of the review team's final report; and | 5 | | (13) any other facts and circumstances indicative of a | 6 | | municipal financial emergency. | 7 | | (d) The review team shall include one of the following | 8 | | conclusions in its final report: | 9 | | (1) a financial emergency does not exist within the | 10 | | municipality; or | 11 | | (2) a financial emergency exists within the | 12 | | municipality. | 13 | | (e) The review team may, with the approval of the State | 14 | | Treasurer, appoint an individual or firm to carry out the | 15 | | review and submit a report to the review team for approval. The | 16 | | State Treasurer may enter into a contract with an individual | 17 | | or firm respecting the terms and conditions of the | 18 | | appointment. | 19 | | (f) For purposes of this Section: | 20 | | (1) A financial emergency does not exist within a | 21 | | municipality if the final report concludes that none of | 22 | | the factors in subsection (c) exist or are likely to occur | 23 | | within the current or next fiscal year or, if they occur, | 24 | | do not threaten the municipality's capability to provide | 25 | | necessary governmental services essential to public | 26 | | health, safety, and welfare. |
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| 1 | | (2) A financial emergency exists within a municipality | 2 | | if any of the following occur: | 3 | | (A) the final report concludes that one or more of | 4 | | the factors in subsection (c) exist or are likely to | 5 | | occur within the current or next fiscal year and | 6 | | threaten the municipality's current and future | 7 | | capability to provide necessary governmental services | 8 | | essential to the public health, safety, and welfare; | 9 | | (B) the municipality has failed to provide timely | 10 | | and accurate information enabling the review team to | 11 | | complete its final report; or | 12 | | (C) the mayor of the municipality concludes in | 13 | | writing to the review team that one or more of the | 14 | | factors in subsection (c) exist or are likely to occur | 15 | | within the current or next fiscal year and threaten | 16 | | the municipality's current and future capability to | 17 | | provide necessary governmental services essential to | 18 | | the public health, safety, and welfare, and the mayor | 19 | | recommends that a financial emergency be declared and | 20 | | the State Treasurer concurs with the recommendation. | 21 | | (65 ILCS 5/8-12-10.5 new) | 22 | | Sec. 8-12-10.5. State grants. If a financially distressed | 23 | | city or Authority is awarded a State grant, any moneys the | 24 | | financially distressed city or Authority would be required to | 25 | | match under the grant are waived unless the moneys under the |
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| 1 | | grant come from federal moneys that require the match. A | 2 | | municipality's status as a financially distressed city may not | 3 | | negatively impact a decision of whether or not to award a State | 4 | | grant to the municipality or negatively impact the amount of | 5 | | moneys received by the municipality from a State grant. | 6 | | (65 ILCS 5/8-12-21.5 new) | 7 | | Sec. 8-12-21.5. Noncompliance by corporate authorities or | 8 | | employees of a municipality. If a financially distressed city, | 9 | | including its corporate authorities or employees, materially
| 10 | | violates the requirements of this Division, the Authority may | 11 | | commence action in the circuit court within any county in | 12 | | which the municipality is located if the Authority has given | 13 | | the corporate authorities of the city written notice that | 14 | | includes: a detailed explanation of the material violation; a | 15 | | statement of the Authority's intention to enforce the | 16 | | provisions of this Division by commencing an action; a | 17 | | statement giving the corporate authorities at least 15 day to | 18 | | correct the violation before the Authority may commence an | 19 | | action.
| 20 | | (65 ILCS 5/8-12-23) (from Ch. 24, par. 8-12-23)
| 21 | | Sec. 8-12-23.
A financially distressed city to which this | 22 | | Division
applies shall remain subject to all other applicable | 23 | | provisions of law this
Act , except as limited by this | 24 | | Division; provided, however, that in case of
a conflict |
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| 1 | | between the provisions of this Division and any other | 2 | | provision
of law this Act , the provisions of this Division | 3 | | shall control.
| 4 | | (Source: P.A. 86-1211.)".
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