Sen. John McCain’s amendment to the National Defense Authorization Act (NDAA) that would have increased military spending failed to pass the Senate yesterday. Sen. McCain’s amendment would have broken the bipartisan budget agreement reached last year by using the Pentagon war fund, which is not subject to spending caps, to increase military spending. In response to this amendment, Democrats filed an amendment that would match the military increase with increases in domestic spending, like funding Zika virus initiatives and opioid abuse. The Senate voted against considering both amendments. Read more in Morning Consult.

Over 40 Republican senators are behind a resolution to block the Department of Labor’s rule expanding overtime pay to salaried workers earning under $47,476 per year. Sen. Lamar Alexander, who introduced the resolution, frames it as an effort to protect “mid-management and professional employees” from reduced hours. Legislators could also use the appropriations process to remove funding for the rule, though President Obama would veto either attempt if it passed both houses. Read more in Morning Consult.

President Obama vetoed a resolution to block another Department of Labor rule, known as the ‘fiduciary rule’ affecting retirement investment advice. As mentioned here last week, the US Chamber of Commerce and several other financial interest groups want to prevent the new regulations from expanding the types of retirement investment advice covered by fiduciary protections, which require advisors to put their clients’ interests first. President Obama said the new regulation “reflects extensive feedback from Members of Congress, and has been streamlined to reduce the compliance burden and ensure continued access to advice, while maintaining an enforceable best interest standard that protects consumers.” Opponents like Republican Rep. Phil Roe, on the other hand, feel that the rule “threatens the retirement security of millions of working families.” Read more in Morning Consult.

Legislation to overhaul chemical regulations passed the Senate. The bill reauthorizes the 1976 Toxic Substances Control Act and gives the Environmental Protection Agency more oversight authority over potentially toxic chemicals. The bill will affect thousands of chemicals, most of which the average American is not even aware come with risks, Sen. Jeff Merkley pointed out. Sen. David Vitter, who co-authored the bill, said, “I’m so very glad to have passed a law that strengthens our country’s international competitiveness, provides desperately needed regulatory certainty for industry and mandates that the federal government use better science and provide more transparency.” Read more in the Washington Post.

The House passed a bill to address Puerto Rico’s debt crisis, and the White House is urging the Senate to pass it quickly. The Wall Street Journal calls it a “technically complex compromise measure” that allows a federal oversight board “to determine whether and when to initiate court-supervised debt restructuring” for the country. Puerto Rico is in a difficult spot, unable to go to the International Monetary Fund for aid because it is not an independent country, and unable to file for federal bankruptcy protections because it is not a US state. This bill, which passed with majorities from both sides of the aisle, should help reduce Puerto Rico’s debt burden and prevent “a messy courtroom brawl between different creditors and the government.” Read more.

Sen. Rand Paul plans to introduce legislation to end the selective service, the federal government program that replaced the draft. He is billing it as a tribute to the late Muhammad Ali, who famously refused to serve in Vietnam. “One of the things I liked about Muhammad Ali is that he would stand on principle even when it was unpopular,” Sen. Paul said. “Selective service had a racial disparity, because a lot of rich white kids either got a deferment or went to college or got out of the draft. So I’m opposed to Selective Service.” Read more in the Washington Post.

The National Center on Addiction and Substance Abuse surveyed Affordable Care Act (ACA) benchmark insurance plans and found that over two-thirds of them do not meet federal requirements for coverage of addiction disorder treatment. The plans they surveyed are known as Essential Health Benefits plans, which represent the minimum level of coverage in state exchange plans. These plans are required to cover addiction treatment without restrictions, but the law leaves many of the specifics up to states. Even taking into account state discretion for treatment options, many plans are in direct violation of the ACA. Read more in Modern Healthcare. 

The governor, mayor of Chicago, and legislative leaders have all been involved in exaggerated rhetoric and even name-calling this week, while a group of rank-and-file legislators continues to try to pull together a term budget compromise. Mayor Emanuel and Chicago legislators were livid when Gov. Rauner referred to some Chicago public schools as “crumbling prisons” that should not receive any more money. Senate President John Cullerton admitted it has been difficult to work with the governor “when he’s embarked on a scorched earth tour of Illinois,” and his rhetoric has been hampering budget negotiations. Speaker Madigan has lately taken to accusing the governor of putting “office supplies” over “life-saving services” because of his insistence that state operations be included in the stopgap budget. Needless to say, campaign season has started, and budget negotiations are taking a hit because of it. Read more in the State Journal Register.

Speaking of campaigns, Gov. Rauner’s chief of staff Mike Zolnierowicz is moving over to direct Republican legislative campaigns. He will be replaced by the governor’s current chief legislative liaison, Richard Goldberg, who has earned an unfavorable reputation among Democratic legislators for his scathing public comments. As Natasha Korecki writes in Politico Illinois today, “Shifting into war mode now doesn’t bode well for what’s up ahead over the next few months.”

Moody’s Investors Service downgraded Illinois’s credit rating again, leaving it only two notches above junk status. This means the state will need to pay more to borrow the $550 million it plans to seek this month. Moody’s wrote in its report, “The rating downgrade reflects continuing budget imbalance due to political gridlock that for more than a year has kept Illinois from addressing revenue lost due to income tax cuts that took effect in January 2015.” Standard & Poor’s Financial Services also downgraded the state’s credit. Unsurprisingly, Gov. Rauner and Speaker Madigan each blame the other for the downgrade. Read more in the Tribune.

Illinois owes the FBI $3 million for fingerprint and background checks, and this debt may soon be taken up by the US Treasury Department. According to the Associated Press, the state has already set aside more than enough money to cover the debt, but there is no legislative appropriation allowing the money to be paid. The FBI does not plan to stop serving Illinois, calling it “a public-safety issue,” but the agency will be looking for “alternative collection and processing options.” Read more in the State Journal-Register.

Democrats may have a Kennedy to endorse against Gov. Bruce Rauner in 2018: businessman Chris Kennedy. Kennedy recently met with Mayor Emanuel, Cook County Board President Toni Preckwinkle, and Senate President John Cullerton, and he shows more interest in running than he has in years past. Former Gov. Pat Quinn, Attorney General Lisa Madigan, US Sen. Dick Durbin, state Treasurer Mike Frerichs, state Sen. Heather Steans, and businessman JB Pritzker may also run. One of Kennedy’s draws, especially in a competition with the famously wealthy Gov. Rauner, is his extensive family wealth and network. Because of Kennedy’s long history of showing interest but failing to run for office, however, Politico reporter Natasha Korecki warns, “Kennedy has potential to be a formidable Rauner opponent, but Democrats would be wise to wait until he actually files paperwork with the state board of elections before getting too excited.” Read more in Crain’s.

Polls show that Chicago is the only part of the state that blames Gov. Rauner over Speaker Madigan for the ongoing budget impasse, while in the rest of the state a majority of voters from all parties blames Speaker Madigan.

US Sen. Mark Kirk rescinded his endorsement of Donald Trump this week, saying, “”I have spent my life building bridges and tearing down barriers – not building walls… It is absolutely essential that we are guided by a commander-in-chief with a responsible and proper temperament, discretion and judgment… After much consideration, I have concluded that Donald Trump has not demonstrated the temperament necessary to assume the greatest office in the world.” Read more.

Gov. Cuomo ordered state agencies to divest from organizations that support a boycott against Israel, known as the Boycott, Divest and Sanctions (BDS) movement. “If you boycott against Israel, New York will boycott you,” the governor said in a speech last weekend. There is pending legislation that would have a similar effect, but Gov. Cuomo wanted to take “immediate action” on the issue. Read more in the New York Times.

Mayor de Blasio and City Council Speaker Melissa Mark-Viverito came to an agreement on the city budget. The Mayor said, “This budget is a real achievement in terms of the things it will do for the people of New York City, but also because it represents government that’s cooperative and productive and respectful.” Lawmakers are expected to pass the $82.1 billion budget next week. Read more in City & State.

Senate Majority Leader John Flanagan cited the investigations into Mayor de Blasio’s campaign financing as a reason he will not heed the mayor’s request to extend mayoral control over New York City public schools for more than one year. “In light of the questions that remain over how Mayor de Blasio intends to lift up failing schools . . . not to mention the multiple investigations into the mayor and his administration — I have deep reservations over signing off on a longer extension,” Flanagan said. Read more.

Although the legislation has been signed, Atlantic City has yet to receive a bridge loan from the state. Mayor Don Guardian said unless the money comes in soon, the city will need to take money out of its capital and terminal-leave funds, which requires state permission. Read more.

The state Supreme Court ruled in favor of Gov. Christie’s 2011 pension reforms, which froze retirees cost-of-living adjustments (COLAs) to save over $17 billion. Several public unions had argued that the state was contractually obliged to pay the annual increases because it was a “nonforfeitable” right, but the court decided that there was no clear legislative intent to guarantee this right. Although this ruling is certainly a victory for the state and will save considerable money for the pension system, the fund still faces difficulties. Read more in Politico New Jersey.

Republican Sen. Steve Oroho proposed a plan to fund the Transportation Trust Fund (TTF) with a 20-cent gas tax hike, offset by an income tax credit for gasoline purchases. Democrats have been calling for a solution to TTF funding for quite some time, but Gov. Christie and most Republican legislators have opposed raising the gas tax. Sen. Oroho points out that raising the gas tax will share the burden with out-of-state drivers, who pay over 30% of the tax, according to AAA New Jersey. Sen. Oroho’s proposal could be the compromise that saves the state’s transportation infrastructure, though some Republicans are still campaigning against any increase to the gas tax. Read more details here.

Inpatient treatment for substance abuse is in crisis in New Jersey. The state Division of Mental Health and Addiction Services reports that the state is funding barely half of the inpatient substance abuse treatment beds for the poor as it did in 2010, despite a growing waitlist. State-funded outpatient treatment has increased, and the state cites “national trends and best practices” that encourage outpatient treatment over inpatient treatment, though the efficacy of one over the other has yet to be agreed upon. Meanwhile, more and more inpatient treatment options are run by for-profit entities that target wealthy individuals. Heroin users seeking treatment are more likely to be poor, homeless, and unemployed, and thus dependent on the state to provide treatment. Gov. Christie proposed raising the reimbursement rate for long-term residential treatment, which could make providing inpatient services to the poor more attractive to for-profit providers. In the meantime, though, indigent addicts face few options. Read more.

Yeshiva Gedolah Na’os Yaakov in Lakewood filed a complaint with a federal judge over Ocean Township’s second denial of its application to renovate an existing day school into a yeshiva. The school currently serves kindergarten through fifth grade day students, and Yeshiva Gedolah Na’os Yaakov has applied to turn it into a boarding academy for 96 men. The group accuses the Ocean Township Zoning Board of violating its constitutional rights, the Religious Land Use and Institutionalized Persons Act, and the Fair Housing Act in denying the request. According to the Zoning Board, the application was denied because of the number of adults the group wants to house on the property, and because the restrictions placed on the students would place an undue burden on the township to enforce them. A federal judge is expected to have final say on the matter in July. Read more.

Sens. Nicholas Scutari and Joseph Vitale introduced S 2345 to add PTSD to the list of medical conditions treatable with medical marijuana.

A proposal to raise Cleveland’s minimum wage to $15 an hour is not going over well with local, state, or national officials. Cleveland Mayor Frank Jackson and City Council President Kevin Kelley have sent letters to state and federal legislators asking them to denounce the proposal, which would leave the rest of the state’s minimum wage at $8.10 per hour and could hurt Cleveland’s economic prospects. The letter states, “We continue to support a minimum wage increase if mandated by the state or federal government but not just for the City of Cleveland.” US Sen. Sherrod Brown expressed support for a move toward a $15 minimum wage, but he did not specifically support or denounce the Cleveland proposal.Read more.

Ohio is $503.3 million, or 2.5%, behind its revenue projections for the fiscal year ending next month. May collections came in almost 17% below projections, though budget director Tim Keen says things are not as bad as they seem. Some tax deadlines were extended until next month, when he expects the numbers to even out. Spending will also decrease by 1% for most of the next fiscal year, primarily from reduced Medicaid spending. Read more in the Toledo Blade.

The Ohio Department of Transportation (DOT) stands to gain about $38 million in previously-unusable earmarks, funding included in federal budgets for very specific purposes in legislators’ home states. Earmarks have been banned since 2010, but much of this funding has simply been in limbo since then, already allocated in previous budget bills but not distributed. For example, $6 million was allocated for a ferry terminal in Cleveland, but the ferry terminal was never built and thus the money never spent. Thanks to a law passed at the end of last year, the federal DOT can now redirect the $2 billion it has in unspent earmarks, provided that new projects meet federal transportation-funding rules. State DOTs will decide which projects to apply for, based on location and need. Read more.

Tea Party candidate Warren Davidson won the special election for former US House Speaker John Boehner’s seat after beating 14 other Republicans in the March primary. Amber Phillips writes in the Washington Post, “Congressional conservatives and their outside backers can now reasonably claim they won two battles against Boehner: They played a role in forcing his retirement last fall, and then they won the seat he vacated this spring.” Rep. Davidson was sworn in yesterday and invited into the House Freedom Caucus, the hardline conservative group that reportedly has about 40 members. Read more.