Election Recap: 2018 Illinois Gubernatorial Primary

Illinois gubernatorial candidates Bruce Rauner and J.B. Pritzker will square off in the November general election after clinching their party’s respective nominations Tuesday night. Pritzker easily took the Democratic field, defeating his closest competitors by a 20-point margin. As the incumbent, Governor Rauner, narrowly fended off a challenge from his political right by State Representative Jeanne Ives. Rauner took 51.6 percent of the vote, while Ives had 48.4 percent, making it far tighter than pollsters had originally predicted. The Governor performed well in Cook County, while Ives picked up support in the counties outside Chicago and in rural regions.

However, Rauner’s primary performance could spell trouble. Illinois has a strong base of Democratic support, and a low-recognition candidate like Ives demonstrates the Governor’s political vulnerability.

Pritzker, who faced allegation surrounding his offshore banking accounts, as well as private FBI tapes, had outperformed expectations. With the support of powerful Illinois House Speaker Michael Madigan, and an energized Democratic base, Pritzker sailed to victory with 45 percent of the vote among five other candidates. State Senator Daniel Biss captured around 27 percent, while Chris Kennedy had 24 percent.

Rauner versus Pritzker, a multimillionaire and a billionaire, respectively, has the ability to become the most expensive gubernatorial race in American history. They have already flooded the Land of Lincoln with a combined $150 million in campaign cash, less than seven months before the general election (the record was set in 2010, when Democrat Jerry Brown defeated Republican Meg Whitman after they raised a combined $280 million to run for Governor of California).

For more information on the Illinois gubernatorial race, check out our primary preview.


2018 Illinois Gubernatorial Primary Preview

Primary: March 20, 2018

General Elections: November 6, 2018

The 2018 Illinois gubernatorial contest may become the most expensive governor’s race in American history. A multimillionaire incumbent and multibillionaire challenger have already flooded the Land of Lincoln with $180 million in campaign cash ahead of the primary. With eight months left until the general election, the current rate of spending will likely break the record before November (the record was set in 2010, when Democrat Jerry Brown defeated Republican Meg Whitman after they raised a combined $280 million to run for Governor of California).

Meanwhile, Illinois has serious budget issues, with nearly $9 billion in past due bills.

Governor Bruce Rauner

Republican Governor Bruce Rauner will seek re-election under dismal circumstances. He’s among the most unpopular governors in America, with a 31-percent approval rating, according to a February Morning Consult poll. Rauner defeated Democrat Governor Pat Quinn in 2014, after riding a business-friendly message focused on streamlining government. Rauner, a former private equity manager worth several hundred million dollars, has delivered on few campaign promises since then. He’s also antagonized the state’s financial woes by vetoing legislation from the Democratic-controlled state house. In 2015, he tried to close a $1.5 billion budget gap by cutting a number of government programs, which angered many Democrats. Currently, the Illinois credit rating remains one level above junk.

Fortunately for Rauner, his missteps might not cost the him office. According to a February poll from the Paul Simon Public Policy Institute at Southern Illinois University, Rauner leads State Representative Jeanne Ives, 51-31 percent. With a sample of 259 Republican voters, more than 18 percent remained undecided.

State Representative Jeanne Ives

Ives, a three-term assemblywoman from the western Chicago suburbs, has crafted a campaign targeting social conservatives in down state Illinois. She’s criticized Rauner for failing to deliver on spending cuts or holding government agencies accountable. In a controversial television advertisement, a pro-Ives group attacked Rauner on policies ranging from transgender bathrooms to sanctuary cities. The Republican Party has increased its presence in rural Illinois in recent years, which could benefit Ives. However, Rauner has far outspent Ives, raising more than $103 million, with more than half coming from his own fortune. Conversely, Ives has only reached $3.8 million, placing her in an uphill battle.

Illinois_JB Pritzker
J.B. Pritzker

The top Democratic nominee, J.B. Pritzker, is a multi-billionaire scion from a powerful Chicago family.  Pritzker has been a major figure in Democratic fundraising circles, while his older sister, Penny Pritzker, served as President Barack Obama’s Commerce Secretary during his second-term. With a personal wealth of $3.5 billion, Pritzker has used more than $63 million of his own money for the campaign. Yet his finances have become a point of contention: A March news story highlighted his offshore bank accounts, he has not yet released his tax returns, and he was caught on an FBI wiretap in 2008 discussing campaign funding and available statewide offices with former Illinois Governor Rob Blagojevich. Blagojevich, was sentenced to 14 years in jail on federal corruption charges after he tried to sell President Barack Obama’s vacant senate seat in 2008.

Pritzker also maintains a close relationship with Michael Madigan, Illinois House Speaker and Chairman of the State Democratic Party. Madigan is the longest-serving leader in any federal or state legislative body in U.S. history. He’s among the most powerful politicians in Illinois, known for steamrolling opponents and wielding heavy influence over legislation. His shadow looms large in this primary, even though allegations connecting him to impropriety have emerged.

Illinois_Daniel Biss
State Senator Daniel Bliss

In the SIU poll, which sampled 472 voters, Pritzker has 31 percent support among Democrats, with nearly a quarter undecided. Trailing behind the billionaire is State Senator Daniel Biss of Evanston, a progressive candidate who wants to collect tax money from financial transactions on the Board of Trade and Mercantile Exchange. He once ran a Super PAC for Madigan, whose funding apparatus gave Biss more than $220,000 to help him win in 2010. However, his liberal bona fides have come under fire after he cosponsored a bill limiting the growth of retirement annuities for state employee pensions. The Illinois State Supreme Court struck down the legislation on constitutional grounds in 2015. Biss said he regrets the co-sponsorship but he still wants to reduce debts in the state retirement system. With roughly $5 million in campaign funding, he falls well short of Pritzker’s resources.

With 17 percent in the SIU poll, Chris Kennedy has emerged as a dark horse contender. As the son of Robert F. Kennedy, and the nephew of President John F. Kennedy, Chris has made gun control and mental health a centerpiece of his candidacy. He also wants to reform the state property tax system, calling it “a racket” in public. He served as Chairman of the Board of Trustees for the University of Illinois from 2012 to 2015. He was President of Merchandise Mart Properties, a commercial management firm based in Chicago.

Three other candidates have received single digit polling numbers: Bob Diabler, a Madison County school superintendent located west of St. Louis; Tio Hardiman, director of the anti-violence group Cease Fire Illinois; and Dr. Robert Marshall, a radiologist and Vietnam veteran who wants to divide Illinois into three separate states—Chicago, Chicago suburbs and rest of the state.

The Cook Political Report has categorized the general election as a toss-up, while Inside Elections has it tilting towards Democrats.



Pennsylvania Special Election Recap

Conor Lamb

Democrat Conor Lamb has declared victory over Republican Rick Saccone in the special election for Pennsylvania’s 18th Congressional District, held Tuesday, March 13th. Less than 600 votes separate the two candidates in a race where more than 227,000 votes were cast. Saccone has not yet ceded the race, while absentee ballots continue to trickle in.

Republican Party officials have already said they will request a recount. They’ve also sought to impound all voting machines citing voter irregularities.

Pennsylvania_Rick Saccone
Rick Saccone

This special election—like others before—was billed as a litmus test for the GOP ahead of the 2018 midterms in November. The district, which encompasses part of Pittsburgh’s suburbs and stretches into rural southwestern Pennsylvania, supported President Donald Trump by 20 points in the 2016 election. Registered Democrats have a large presence, but the district was considered safely Republican for more than a decade. Republican congressman Tim Murphy held the seat since 2003, until allegations surfaced of an extramarital affair and texts urging his mistress to have an abortion appeared in the media. Murphy resigned from office in October 2017.

Lamb, a 33-year-old former Marine and U.S. Attorney, campaigned as a moderate Democrat who supported gun rights and promised to protect social safety nets. Throughout his campaign, Lamb said he wouldn’t support Nancy Pelosi to lead House Democrats, while promising to back the President when it benefited the district. As a state representative, Saccone ran as a staunch supporter of the Trump agenda. The former Air Force officer had become known in the region for his firebrand conservatism.

Lamb outspent Saccone by nearly a five-to-one margin. According to pre-special election FEC filings, Lamb spent $3.1 million while Saccone doled out roughly $615,000.  Outside groups spent more than $13 million, with more than 80 percent supporting Saccone.

A new court-ordered congressional map will eliminate the 18th district in November. As a result, Saccone and Lamb could run again in separate districts during the 2018 midterms.

DMGS will continue to monitor this and provide updates as they develop.

Election Preview: 2018 Ohio Gubernatorial Primary

 Primary Election: May 6, 2018

General Election: November 6, 2018

Republican Governor John Kasich will leave office at the end of 2018, as rumors of a potential 2020 presidential bid swirl. Governor Kasich’s pending departure creates an opportunity for several candidates in both parties to serve as chief executive of a bellwether state.

Two contenders have emerged in the Ohio Republican Primary, Attorney General Mike DeWine and Lieutenant Governor Mary Taylor.  According to a January poll form the 1984 Society, a nonprofit bipartisan group of former Ohio Senators and Senate employees, DeWine leads Taylor by 40 points in the GOP primary. The poll included a sample of 800 likely voters with 32 percent undecided. DeWine’s strong showing comes after U.S. Rep. Jim Renacci dropped out in December to pursue a Senate seat. Meanwhile, Ohio Secretary of State Jon Husted ended his campaign in November to join the DeWine ticket as the Lieutenant Governor.

DeWine has served in public office for more than 40 years.  As a former Senator, Congressman, Attorney General, Lieutenant Governor, and State Senator, DeWine’s name recognition will certainly prove advantageous in the primary. DeWine and Husted have already locked up large swaths of donors and support, netting $10.8 million in cash. Moreover, the Ohio Republican Party endorsed his campaign in February during their central committee meeting.

During her speech to the committee, Taylor called the conference “Mike DeWine’s living room” and said “This absolutely represents the good ole’ boy career politician establishment that wants to have things their way.”

As her speech illustrates, Taylor has positioned herself as a conservative outsider competing against a well-established Republican. She has tapped Cincinnati businessman Nathan Estruth to serve as her running mate and has enlisted Axiom Strategies, a public affairs company founded by Jeff Roe. Axiom gained notoriety working with Sen. Ted Cruz’s presidential campaign in 2016. While her chances remain slim, Axiom could prove valuable for identifying funding sources outside Ohio.

Taylor could also out flank DeWine from the right. The Attorney General has a long record of policy decisions, including some controversial stances on guns which Taylor could expose. She is also making hay over DeWine’s refusal to debate (the Democratic party has hosted four debates, while the GOP has provided none). An early endorsement from Kasich could turn Trump Republicans against her and without an open forum to attack DeWine’s record, it will become difficult to close the gap.

Cordray and Sutton

In the Democratic primary, four candidates from diverse backgrounds have emerged, but none have become the clear cut favorite. Richard Cordray, the former Consumer Financial Protection Bureau director, led all Democratic nominees with 24 percent in the 1984 Society poll, while 54 percent remain undecided. Prior to the poll, Cordray announced that former U.S. Rep. Betty Sutton would join his ticket. Sutton was viewed as Cordray’s biggest challenger, but the move did little to separate him from the pack. As a former Ohio Attorney General and Treasurer, Cordray worked in President Barack Obama’s administration and has a personal relationship with Massachusetts Senator Elizabeth Warren. His campaign has focused on kitchen table issues like jobs, consumer protection, and wages.

If Cordray does win the nomination, he faces a big challenge in defeating DeWine. According to the 1984 Society poll, Cordray is down 21 points to DeWine in a head-to-head matchup, with only 23 percent undecided.

Ohio_Tara Samples and Dennis Kucinich
Kucinich and Samples on the Campaign Trail

Trailing behind Cordray in the Democratic race is Dennis Kucinich, with roughly 16 percent. The former Cleveland Mayor and congressman has strong ties to Northeast Ohio, where much of the Democratic vote in Ohio is concentrated. His progressive record hinges on a populist economic message that could attract Democrats who voted for Trump. His liberal credentials could also prove beneficial in a midterm energized by the base. Kucinich has tapped Akron City Councilwoman Tara Samples to serve as his running mate.

Ohio_Joe Schiavoni.jpg
State Senator Joe Schiavoni

While he only has four percent in the 1984 Society poll, State Senator Joe Schiavoni remains a strong contender with a high ceiling. His campaign has focused on reforming charter schools, protecting worker rights, maintaining Medicaid expansion and implementing gun control measures. He is also pushing for more reliable internet access in rural Ohio.

A 38-year-old Democratic lawmaker from the Youngstown area, Schiavoni has blue collar appeal in an area popular with Trump. Schiavoni, a former Golden Gloves champion, is the only Democrat to serve in statewide office during Kasich’s second term. Moreover, being a candidate outside the “party establishment,” Schiavoni has portrayed himself as a fresh face for a party seeking relevance in Ohio again (Republicans have controlled the Governor, state house and senate since 2010). Yet, spreading his campaign’s message will require more exposure and resources. Schiavoni has selected Stephanie Dodd, a former member of the Ohio Board of Education and operator of a nonprofit that specializes in fundraising and event planning, to serve as his running mate.

Trailing behind Schiavoni is Ohio State Supreme Court Justice Bill O’Neill, a pro-life Democrat from Chagrin Falls. O’Neill wants to legalize marijuana and use the tax revenue to re-open state mental health hospitals. O’Neill created controversy in December when he posted on Facebook that he had slept with 50 women throughout his life. He currently has three percent support.

During a March 7 debate in Toledo, all of the Democratic candidates attacked Cordray as the party favorite for his decision to accept $200,000 from lawyers and lobbyists. Kucinich and O’Neil also attacked his “A” rating from the National Rifle Association. Schiavoni then went after Kucinich for meeting with Syrian Dictator Bashar Al Assad in 2017 after he had used chemical weapons to kill his own people. The former mayor defended the visit saying it was in the interest of peace.  All the nominees said they would veto any right-to-work legislation. Kucinich and O’Neill called for full legalization of marijuana, while Cordray said Ohio should only take that step with a statewide vote.

Every candidate said they would work with Trump when he is right and oppose him when he is wrong.

The Cook Political Report and Inside Elections has labeled the race as leaning Republican.


Election Recap: Texas Gubernatorial Primary

Primary Election: March 6th, 2018

Primary Runoff: May 22nd, 2018

General Election: November 6th, 2018 

Andrew White

Texas gubernatorial candidates Lupe Valdez and Andrew White finished first and second, respectively, in the state’s Democratic primary on Tuesday, March 7th. Because neither candidate finished with more than 50 percent, the two will have a run-off to determine who will receive the nomination before the general election. Valdez, a former Dallas County Sherriff, captured 42.9 percent of the vote, while White, an investment banker and the son of former Governor Bill White, received 27.4 percent. Several other Democratic candidates finished far behind Valdez and White.

Lupe Valdez

Valdez put up big numbers in the Dallas, Fort Worth and San Antonio areas. She collected all the southwestern counties where her campaign ran Spanish-language radio advertisements. White performed well throughout the Gulf Coast and Houston regions. Prior to the primary, White was buttressed by newspaper endorsements from The Houston Chronicle, The Dallas Morning News and The San Antonio Express-News. Valdez has countered with support from the Texas AFL-CIO, Planned Parenthood and U.S. Rep. Joaquin Castro.

Texas Democrats cast more than a million ballots, the highest primary total since 2002. The turnout fueled hopes for a blue wave in November, but the Democratic gubernatorial nominee will have an uphill battle usurping Republican Governor Greg Abbott. In the GOP race, Abbot received more than 90 percent support, with the closest challenger garnering only eight percent. The first-term governor remains one of the most popular in the country. Abbot currently has more than $41 million to help stem a Democratic challenger in the general election.

Meanwhile, Valdez’s campaign has only netted $125,000 since December. White has raised more than $1.5 million, much of which remains in his war-chest for the run-off primary later this spring.

Read more about the Texas gubernatorial primary and other races by visiting our Capitol Commentary Blog.

State Budget Showdown

By Danny Restivo and Brett Goldman (posted 7/10/17)

As the fiscal year ends on June 30th, nearly all 50 state governments across the United States (with the exception of Vermont) are required to maintain a balanced budged whether by statue/law, constitutional amendment, or judicial decision. From state to state, the requirements vary from the simple introduction of a budget, to a balanced budget, to budgets that are based off of the available cash on hand by the state.

There are three general kinds of state balanced budget requirements, according to the National Conference of State Legislatures:

  • The governor’s proposed budget must be balanced (43 states and Puerto Rico).
  • The legislature must pass a balanced budget (39 states and Puerto Rico).
  • The budget must be balanced at the end of a fiscal year or biennium, so that no deficit can be carried forward (37 states and Puerto Rico).

Unfortunately, 2017 has seen a situation where 11 states did not pass their budgets by the June 30th deadline. In some states, such as New Jersey or Rhode Island, political differences between legislators created a budget impasse; whereas in other states, such as Illinois, budgets have not been passed in nearly three years. We have compiled a breakdown of states that saw budget impasses in 2017. Please note that some of these are still undergoing budget negotiations and as such the situation may evolve.

New Jersey- (Status: Resolved)

On Monday, July 3rd, Governor Chris Christie signed a $34.7 billion budget ending a three-day government shutdown that sparked a backlash against the governor.

While the publicity focused on Christie’s Sunday trip to the beach, the shutdown stemmed from a plan to restrict the state’s largest health insurance provider, Horizon Blue Cross Blue Shield of New Jersey. Christie had approved of the Democratic-controlled Assembly and Senate’s other appropriations, including $325 million in additional funding from Christie’s proposed budget from February, which include $150 million in additional school funding. However, he wanted lawmakers to sign off on a bill capping Horizon’s reserves, while using the excess funding to pay for drug treatment and other care for the poor and uninsured. In the insurance industry, reserves are often called risked-based capital, which helps hedge against unexpected healthcare payouts.

Essentially, Christie wanted to cap Horizon’s reserves, and giving an estimated $300 million for the expansion of drug treatment programs. He also wanted to give the assembly the control to appoint two members to Horizon’s 15-member board. Assembly Speaker Vincent Prieto (D-Hudson) pushed back against Christie’s plan, calling it “extortion” as Horizon initially had nothing to do with the state’s budget.  As a result, Christie pledged to line-item veto democratic-backed spending if lawmakers didn’t pass the Horizon cap. Meanwhile, Senate President Stephen Sweeney (D. Gloucester) posted S4 (the “Horizon Bill”) to the Senate’s June 29th schedule, where it was passed. Speaker Prieto, however, refused to post S4 to the Assembly schedule and instead posted the budget (A5000) for a vote. The vote on A5000 became deadlocked, and Speaker Prieto refused to remove the bill resulting in the state-government shutting down.

Legislators worked through the holiday weekend to come to a resolution on the Horizon Bill and budget impasse. On Monday, July 3rd, Speaker Prieto, Senate President Sweeney, and Governor Christie emerged with a resolution and the state government reopened for business as usual.

The following is an excerpt that was sent to our NJ clients regarding the resolution of the shutdown:

“Part of this Budget compromise is contingent on a new Horizon bill— (S2) —that will address issues that were raised with S4. Horizon Blue Cross Blue Shield of NJ executives spent the weekend meeting with Speaker Prieto, Senate President Sweeney, and other legislators. Following tonight [July 3rd)’s budget vote on A5000, the Assembly then voted on S2, which resolved many of the issues with S4 including:

  • ​Establishing an appropriate range of reserves for Horizon, requiring a minimum of 550% of risk-based capital reserves and a hard cap maximum of 725%, sufficient to cover claims for all of its policy holders in the event of a catastrophic medical emergency such as hurricane Sandy, when regular premium payments from policy holders were delayed;
  • Requiring the state department of Banking and Insurance (DOBI) to commission independent annual audits to determine Horizon’s reserve level, which would be paid for by Horizon;
  • Creating a process for Horizon to submit a plan to DOBI to determine how excess reserves above the 725% level should be used to reduce future policy holder premiums or otherwise benefit policyholders.
  • Requiring the appointment of two additional public members with a background in healthcare, finance, or insurance to the horizon board—one each by the senate president and speaker—bringing the total board membership to 17, including 11 members currently appointed by Horizon and four by the Governor;
  • Requiring DOBI to establish requirements for health services corporations to provide detailed financial reporting information, including executive compensation, and to post this information on the department website.
  • Removing “insurer of last resort” language.”

 Pennsylvania- (Status: In Progress)

On June 30th, the Pennsylvania State Legislature approved a $31.99 billion budget for the 2017-2018 year. While the budget received bipartisan support, lawmakers have yet to agree on a funding package and remain in negations at the time of publication.

The bill awaits Governor Tom Wolf’s (D.) signature until lawmakers can solve a $2 billion deficit. If the Governor does not veto the bill, it will automatically become law without his signature. In 2016, Wolf vetoed the legislature’s budget, but the government kept spending money. As a result, schools, counties, and nonprofits began taking out loans to stay afloat, and not until local governments threatened to withhold taxes and schools said they would remain closed after the holiday break did lawmakers finally approve a budget.

This year, lawmakers have debated several options for funding the deficit, including borrowing up to $1.5 billion against future revenues from a 1998 multistate settlement with tobacco companies. While Wolf and Senate Republicans have supported the idea, House Republicans have opposed it adamantly. House Republicans have suggested leveraging 40,000 video gaming terminals at bars, taverns and other establishments for more tax revenue. Senate Republicans have pushed back, saying it will cut into casinos which already contribute a large sum to government coffers. Some Democrats have lobbied for a tax on Marcellus shale drilling, but the Republican majority has strongly refused to bring tax increases to a floor vote. Other options include expanding privatized liquor operations while reassessing the sales tax on purchases of alcoholic drinks. Senate President Joe Scarnati, (R. Jefferson) has said he’s working on legislation to expand casino gambling in the state, but few details have emerged.

The 2017-2018 proposed budget is roughly 1.6 percent higher than the $31.5 billion budget in 2016-2017. Unfortunately, the budget faced a $1.1 billion shortfall in 2016 due to an underestimation of human services and corrections needs. The budget became law without Wolf’s signature when lawmakers delivered a $1.3 billion package in additional funding centered on cigarette tax increases.

As of publication, the House and Senate were in session over the weekend to move various pieces of legislation needed to complete the budget process.  Both the House and Senate returned on Monday, July 10th at 11:00 a.m. for another long day of negations.

Other states with Budget Impasses

Connecticut (Status: Unresolved)

Democratic Governor Daniel Malloy took executive control of the state’s finances on June 30 after lawmakers failed to agree on a budget. Despite having one of the highest per capita incomes in the country, the nutmeg state could run a $2.3 billion deficit in 2017-2018, roughly 12 percent of the state’s budget. Lawmakers haven’t submitted a budget to Malloy who has requested a three-month provisional budget that includes cuts and modest tax hikes. Democrats have a 79-72 edge over Republicans in the House.

As Connecticut moves into day 10 of its budget crisis, state parks, beaches, campgrounds, and museums are beginning to feel the pinch.  Statements from Governor Malloy’s office indicate that a resolution may be found by the July 18th session of the legislature, but a path forward remains to be seen.

Delaware (Status: Resolved)

Budget gridlock had lasted for months over issues including a Democratic push to raise

the personal income tax and disagreement over changes to the prevailing wage for state construction projects. As a result, the Delaware legislature missed its June 30th budget deadline for the first time in decades. Spending the weekend hunkered down in the state house, legislators reached a deal that included a new spending plan on July 2nd. The budget restores cut funding to nonprofits, public health programs and schools, and raises taxes on real estate transfers, tobacco and alcohol. Gov. John Carney (D) signed the budget early on Monday July 3rd.

Illinois (Status: Resolved)

 The Democratic-controlled House overrode Republican Governor Bruce Rauner’s veto and implemented a $36 billion budget for 2018, which includes $5 billion in tax increases. The Democratic-controlled Senate sent the bill to Rauner on Tuesday. The Governor vetoed the bill before the Senate quickly overruled him. The bill then moved to the House where Democrats overrode the Rauner’s veto. With a $6.2 billion annual deficit and $14.7 billion in overdue bills, credit-rating houses have threatened to downgrade Illinois’s credit rating to junk. Meanwhile, the United Way has predicted the demise of 36 percent of Human services agencies within the state.

Massachusetts (Status: Resolved)

Slumping tax revenue has left the bay state with a $430 million hole. By July 6th, lawmakers said they had agreed upon a $40 billion budget but had not held a vote. The state approved an interim $5.2 million budget last month. Marijuana legalization remains a point of conflict among lawmakers. The Senate has proposed a 12-percent tax (which voters approved in November) while the state house has proposed increasing it to 28 percent.

On July 7th, both houses of the Massachusetts legislature approved the budget. The compromise trims spending by about $400 million to $500 million from spending plans previously approved by the House and Senate. It also takes other steps to account for a $733 million reduction in anticipated tax revenues for the 2018 fiscal year that began July 1,

Oregon (Status: Resolved)

State lawmakers have passed multiple bills to keep the government operating, however, a couple items remain unfunded. Lawmakers have debated ways to best solve a $1.8 billion budget gap, which threatens hundreds of thousands of people on Medicaid and child welfare services. Governor Kate Brown (D) has pledged to rein in spending by instituting a hiring freeze for state employees, as well as taxing hospitals and insurance plans. One proposal introduced by lawmakers would cut $424 million over the next two years by halting automatic inflation increases in the budget while eliminating unfilled government jobs; however, legislators failed to find votes to reform Oregon’s tax system and public pension costs, leaving the toughest decisions to future sessions.

Rhode Island (Status: Unresolved)

The Rhode Island assembly ended abruptly on June 30th with the state’s $9.2 billion budget in limbo.

Senate President Dominick Ruggerio (D) and House Speaker Nichoas Mattiello (D) aren’t on speaking terms and Gov. Gina Raimondo (D) says she has been in touch with both but isn’t getting into the middle of the rupture or offering to mediate it. While there be no state “government shutdown” due to a 2004 provision whereby the state operates on the previous year’s budget, tensions remain high. Most state beaches, parks and government agencies—including law enforcement—will remain open until a resolution is reached. According to a memo, state budget officials will meet with individual department leaders to help balance their books and find an additional $25 million in unspecified cuts called for in the proposed budget. However, hiring and staffing of agencies will not be impacted, assuming a budget is passed in the coming months.

Wisconsin (Status: Unresolved)

 After missing a June 30 deadline to pass a budget, Wisconsin lawmakers remain committed to approving a smaller budget. Republican lawmakers control the legislative and executive branch. They have asked for a smaller budget that increases support for rural school districts without raising taxes. Lawmakers have also struggled to reach a deal on how to plug a $1 billion transportation hole. Earlier this year, Governor Scott Walker (R) asked lawmakers for $500 million for road construction over the next two years. He later dropped that request to $300 million. In an effort to assuage lawmakers leery of transportation costs, Governor Scott walker released a proposal on July 6, which tapped federal spending to subsidize construction costs. Walker believes federal aid will allow the state to borrow an additional $300 million for the projects.


Danny Restivo and Brett Goldman Contributed to This Report

Net Neutrality 2017: The Battle Continues…

By Danny Restivo (posted 7/6/17)

On July 12, 2017, a number of website landing pages will display “blocked,” “please upgrade,” or “paying customers only” banners. Fortunately for active users, the banners will only last 24 hours. These protest banners (example below) will be part of The Day of Action”, which is supported by the likes of Netflix, Amazon, Facebook, Twitter, GitHub, Reddit, OKCupid, Etsy, and a broad coalition of tech, media/social media, e-commerce, and other companies that peg their livelihood to the internet. The campaign aims to raise awareness regarding the Federal Communication Commission (FCC)’s proposed plan to roll back net neutrality measures later this summer.

Just two years ago, the FCC classified internet service providers as carriers under Title II of the Telecommunications Act. The decision forced ISPs to face regulatory measures like public utilities, while ensuring all ISPs treat content equally. Under President Donald Trump’s guidance, the FCC has targeted the regulation, drawing a number of large companies into a fray that may decide how online audiences view content.

The FCC’s net neutrality establishes three rules:

  1. Broadband providers can’t block access to legal content, applications, services or non-harmful devices.
  2. ISP’s can’t impair or reduce lawful internet traffic on the basis of content, applications, services or non-harmful devices.
  3. They may not favor some internet traffic over other internet traffic in exchange for consideration of any kind—no paid prioritization or fast lanes.

“The Internet is the most powerful and pervasive platform on the planet. It’s simply too tom_wheeler_fccimportant to be left without rules and without referees on the field,” said Tom Wheeler, the former chair of the Federal Communications Commission, following the FCC’s 3-2 vote in favor of Net Neutrality in 2015. “Today is a red-letter day for Internet freedom, for consumers who want to use the Internet on their terms, for innovators who want to reach consumers without the control of gatekeepers.”

Since its implementation, the vote has drawn the ire of internet companies such as AT&T, Comcast, Oracle and Verizon. These industry leaders have cited government overreach, as well as limits to free speech and free market principles. Because net neutrality designates ISPs as “common carriers,” such as telephone companies, they are open to a host of other government regulations.

GOP leadership blasted the FCC ruling on similar grounds after it was approved in 2015.

“Overzealous government bureaucrats should keep their hands off the Internet,” Former House Speaker Rep. John Boehner (Ohio-R) said in a statement after the ruling. “More mandates and regulations on American innovation and entrepreneurship are not the answer, and that’s why Republicans will continue our efforts to stop this misguided scheme.”

Image result for net neutrality

Cable companies spent $44 million in lobbying efforts (including other issues besides net neutrality) during the 2015 showdown. Meanwhile, neutrality proponents like Amazon, Facebook and Alphabet Inc (formerly Google), paid $35 million in lobbying efforts that year.

Following his inauguration in January 2017, Trump enlisted the help of three net neutrality opponents to assist his FCC transition from Democratic to Republican control. On January 23, Trump appointed Ajit V. Pai to Chairman of the FCC. The former attorney for Verizon was one of two Republican votes against the 2015 decisions (Pai and Michael O’Rielly were the lone dissenters in the commission’s ruling).

Shortly after the transition, Congress overturned Obama-era internet privacy protections—a Republican bill removed regulations requiring individual permission before ISP’s could sell users data. Only a few days later, White House Press Secretary Sean Spicer announced the President’s goals for reversing net neutrality during a March 30 press briefing. A month later, Pai unveiled plans to loosen government oversight of the internet during a speech at the Newseum in Washington, D.C.

“Two years ago, I warned that we were making a serious mistake,” said Pai. “It’s basic economics. The more heavily you regulate something, the less of it you’re likely to get.”

On May 18, the FCC voted 2-1 in favor of moving forward with rolling back the Obama administration’s Net Neutrality regulation. “The Restoring Internet Freedom Notice of Proposed Rulemaking” does not include specific details on how the FCC will remove Net Neutrality regulations, however the proposal does allow for a 90-day public comment period. The FCC will stop receiving comments on July 18, but will allow a second 30-day commenting period for replies ending on August 18.

The FCC’s proposal includes three key tenants.

  1. Removes Title II classification from ISP’s
  2. Returns classification of mobile broadband internet carriers to private mobile service
  3. Eliminates “the catch all internet conduct standard created by the Title II order”

Mignon Clyburn, a Democrat who previously voted for net neutrality, remained the lone dissenter during the May 18 vote.

“If you unequivocally trust that your broadband provider will always put the public interest over self-interest or the interest of their stockholders, then the ‘Destroying Internet Freedom’ [proposal] is for you,” she said after the vote.

Since FCC announced its proposal, the President has tapped two more members to serve on the commission. On June 14, Trump nominated Democrat Jessica Rosenworcel, who previously served as commissioner until her term ended in 2016. Two weeks later, Trump nominated Republican Brenda Carr, a former FCC aide to chairman Pai.  Carr’s selection solidifies a 5-person commission. According to the rules, no more than three members of the commission may be of the same political party; if both Carr and Rosenworcel are confirmed, Republicans would have a 3-2 majority.

In conjunction with the commission’s plan, Sen. Mike Lee (Utah-R) introduced S. 993: “the Restoring Internet Freedom Act “in early May. With nine other cosponsors, the proposed legislation would prohibit the FCC from classifying Internet Service Providers as Title II carriers ever again. The bill—Lee introduced an identical version nearly a year ago—would require legislative action to implement net neutrality in the future. The bill has been referred to the committee on Commerce, Science and Transportation.

Lee, along with Senate cosponsors Ted Cruz (Texas-R) and Ron Johnson (Wisc.-R), penned an opinion piece about internet freedom in the Washington Post on May 4.

“We reject the idea that the federal government should control the Internet. That’s why we have introduced the Restoring Internet Freedom Act, which will complement Pai’s efforts to repeal the 2015 Internet takeover by preventing the FCC from issuing any similar regulations in the future.”

Meanwhile, 13 Democratic Senators signed a letter supporting the FCC’s Net Neutrality rules which was published in Tech Crunch on May 17.

“By proposing to take away the existing net neutrality protections, President Trump’s FCC is threatening to take away your ability to have free and open use of the internet. This proposal will have profound impacts on the way all of us watch movies, listen to music, do homework, talk to family, consult with a doctor, pay bills, and conduct business. Taking away these rules benefits no one except cable, telephone, and wireless broadband companies.”

The Internet Association, which represents Facebook, Google, Amazon, Netflix and other internet giants, released a white paper titled “Principles to Preserve and Protect an Open Internet” on June 21.  The paper outlined the “substance of the underlying rules” behind the FCC’s Net Neutrality. The paper contains “six principles and policies for preserving a free and open internet by which all proposals and potential changes to the rules will be judged.”

Principles to Preserve and Protect and Open Internet:

  1. Net neutrality rules preserve the success of the internet in driving economic growth.
  2. The FCC’s 2015 rules are working and the entire broadband internet ecosystem is thriving.
  3. Forecasting rules remain necessary to preserve and protect an open internet.
  4. Specific net neutrality rules are needed to preserve an open internet. These rules include: no blocking, no throttling, no paid prioritization, no unreasonable interference or disadvantaging of content by ISPs, and transparency and disclosure requirements.
  5. Open internet protections should apply to broadband internet access providers on a platform-neutral basis.
  6. Strong and effective enforcement by the FCC of net neutrality rules is critical to ensuring that the benefits of the rules are realized.

The paper also states, “a free and open internet remains vital to preserving and protecting the virtuous circle of broadband innovation that benefits edge-based innovators and entrepreneurs, businesses, ISPs, and, above all, consumers.”

It also said, “undoing the existing light touch rules will create uncertainty among edge providers, innovators, and consumers, and would threaten to unravel the most dynamic segment of our economy. Instead, policymakers should seek to preserve the current rules and ensure that they remain on a firm legal footing.”

In addition to large companies supporting net neutrality, more than 800 startups, innovators, entrepreneurs and investors from all 50 states sent a letter to Pai and the FCC.

“Without net neutrality, the incumbents who provide access to the Internet would be able to pick winners or losers in the market,” the letter reads. “They could impede traffic from our services in order to favor their own services or established competitors. Or they could impose new tolls on us, inhibiting consumer choice…Our companies should be able to compete with incumbents on the quality of our products and services, not our capacity to pay tolls to Internet access providers.”

If net neutrality gets abolished, companies like Verizon, Comcast, Oracle and AT&T have said they can now reinvestment on infrastructure and broadband technology in communities throughout the United States.

“We also support Chairman Pai’s proposal to roll back Title II utility regulation on broadband,” Kathy Grillo, Verizon senior vice president and deputy general counsel, public policy and government affairs, said in a statement released on April 26. “Title II (or public utility regulation) is the wrong way to ensure net neutrality; it undermines investment, reduces jobs and stifles innovative new services. And by locking in current practices and players, it actually discourages the increased competition consumers are demanding.”

AT&T Chairman and CEO Randall Stephenson echoed Grillo’s comments.

“AT&T continues to support the fundamental tenets of net neutrality. And we remain committed to open internet protections that are fair and equal for everyone,” he said. “The bipartisan, light-touch regulatory approach that Congress established at the internet’s inception brought American consumers unparalleled investment in broadband infrastructure, created jobs and fueled economic growth. It was illogical for the FCC in 2015 to abandon that light-touch approach and instead regulate the internet under an 80-year-old law designed to set rates for the rotary-dial-telephone era.”

While many Silicon Valley tech companies have voice opposition to the FCC plan, the multinational computer corporation Oracle has levied support. In a letter sent to the FCC in early May, Oracle said “the stifling open internet regulations and broadband classification that the FCC put in place in 2015 – for just one aspect of the internet ecosystem – threw out both the technological consensus and the certainty needed for jobs and investment.”

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Whether or not Pai and the FCC cement their proposal, the Net Neutrality rules will remain in effect through 2018.

Members of the public have until July 17 to comment on the FCC’s net neutrality proceeding. Reply comments will then be due on August 16, unless the FCC extends the process. After that, a final FCC decision on the net neutrality rollback could take several more months.

DMGS will continue to monitor this and provide updates as it develops.

Brett Goldman edited this report.