Illinois’ Treasurer says the Governor needs to stop holding the budget hostage for non-budget issues while the he continues to push his reform items as things to grow the economy.
Democratic Treasurer Michael Frerichs reiterated what he said in a letter last month that if the budget impasse continues there’s a possibility banks may cut ties with the state which could mean a loss of investments on more than $10 billion.
“We are a revenue generating office and if they don’t pass a budget then we can’t work with banks and we can’t operate our Unclaimed Properties Division,” Frerichs said. “Because of those problems it’s going to mean less revenue coming in to the state.”
Frerichs says his office’s problems aren’t nearly as grave as people reliant on state services he said are quote “being held hostage to non-budgetary issues.” During a stop in McLean County Monday Republican Governor Bruce Rauner said his agenda, including a property tax freeze, workers comp and tort reforms, are budget items because the status quo impacts economic growth.
“They all contribute to our deficit because it doesn’t allow us to grow our economy and to fix our deficit long term we gotta grow.”
The Governor said lawmakers have voted on hundreds of bills this year and only a fraction have been about the actual budget. He’s asking lawmakers to take up six of his bills he says will help the state grow with more jobs and in turn more revenue for programs to help the most in-need Illinoisans.
Insurance companies sue to keep books closed
Three insurance companies are telling the Treasurer the state can’t access their records.
Frerichs’ office says the Kemper insurance companies filed a lawsuit in Sangamon County to block an audit Frerichs says would help identify life insurance policies belonging to deceased people with benefits that still have not been paid to beneficiaries.
Frerichs says 22 other insurance companies have complied with the requested audits which has brought in millions in unclaimed benefits.
“Well it’s uncertain but it’s probably millions of dollars, I think we have brought in already with insurance companies that comply with us about $195 million dollars.”
The Treasurer says some companies try to avoid handing over unclaimed property so they can profit from someone else’s assets. His office says part of their role is to return unclaimed property, which includes insurance proceeds, to the rightful owner or heir.
But before the Treasurer could file suit against those three insurance companies over a requested audit of life insurance policies, the insurance companies filed a suit against him.
The suit says in early October Treasurer Frerichs’ office sent a “Final Demand Letter” saying that if the three insurance companies didn’t agree to an audit quote “the Treasurer will take the necessary legal steps to compel production.”
The suit says the obligation lies with the insured’s estate or their beneficiaries to notify the insurer that the insured passed away and to provide proof of death.
The three Kemper holding are seeking several counts against the Treasurer, including that the insurers have no obligation to use the DMF, that the insurers can’t be compelled to provide policy records, and that the audit would violate the companies’ Fourth and Fourteenth Amendment rights.
Treasurer Frerichs has requested that Illinois Attorney General Lisa Madigan represent the state in the case.
The three companies that filed suit are United Insurance Company of America in Illinois, Reserve National Insurance Company in Oklahoma and The Reliable Life Insurance Company of Missouri, all subsidiaries of Kemper Corp.
Comptroller: $38 million owed so far from LGDF
Around $38 million in Local Government Distributive Funds (LGDF) are tied up during the ongoing budget impasse which is now into Month No. 5.
The LGDF is broken into two parts — income tax and sales tax. The Comptroller’s office says the income tax portion is paid monthly as a continuing appropriation during a budget impasse and is required to be paid within two months.
Currently the Comptroller’s office says they are up-to-date with a total of $287.6 million in current fiscal year funds for local governments with a payment made Friday of $74.6 million from the income tax payouts.
However the sales tax portion of LGDF remains held during the impasse. The Comptroller’s office says to date there is $38 million in sales tax money accumulated that can’t be paid without a budget.
Freeport Mayor Jim Gitz says his community typically gets upwards to $600,000 from motor fuel tax money via the LGDF, but because of the state budget impasse they’re going to feel the pinch.
“The lack of pay over puts us in an extreme predicament this winter and next year as to how we’re going to fund projects and how we’re going to maintain our streets and for that matter how we’re going to do basic maintenance functions like plowing and patching.”
Illinois Municipal League Executive Director Brad Cole says his group is undertaking an effort to unify local governments to urge the state to release various funds owed.