Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
Thanks for your continued interest in this weekly news update. I hope it continues to be beneficial to you and your organization. I appreciate your feedback and as always, your support for our chamber. Here’s a packed report to catch up on the last few days and enough to last you for a few more going forward. Also, don’t forget to support your fellow chamber members on Black Friday, Small Business Saturday, and Cyber Monday. In the wake of the global pandemic and rising inflationary pressures, small businesses are in need of our support now more than ever.
As friends and family gather and talk about how hectic their December will be, remember what Congress is facing in the final weeks of 2021. There is a laundry list of deadlines for high-profile legislative priorities ahead and just 38 days until 2022. When the Senate returns, they have the annual defense policy bill up first on the to-do list, which could take up plenty of that first week of December.
December 3: That’s when the current stopgap measure funding the government expires and those federal dollars keeping the lights on dry up. A deal on fiscal 2022 spending bills before this deadline is a pipe dream, leaving a continuing resolution (of an undetermined length) as the path forward. Democrats have been eyeing Dec. 17 for the length of the CR, but that’s not likely to get GOP backing.
December 15: Treasury Secretary Janet Yellen says that’s the new deadline for dealing with the debt ceiling to avert catastrophic default on the nation’s debt. There is still not a clear path forward, but Majority Leader Chuck Schumer and Minority Leader Mitch McConnell are talking. Republicans still want Democrats to tack the debt limit onto reconciliation and increase the debt limit on a party-line vote. But Democrats are still pushing for a bipartisan solution.
December 25: Democrats aren’t expecting the Senate to take up the social spending bill until the second week of December, at the earliest. With Christmas as the goal deadline for clearing the $1.75 trillion cornerstone of Biden’s domestic economic policy, which means crunch time is ahead.
*Government Affairs Roundup brought to you by Silver Cross Hospital*
Global Supply-Chain Woes are Beginning to Recede
As Asian economies reopen the backups are receding, but challenges are expected to persist into 2022. In Asia, Covid-related factory closures, energy shortages and port-capacity limits have eased in recent weeks. In the U.S., major retailers say they have imported most of what they need for the holidays. Still, strong consumer demand in the West, continuing port congestion in the U.S., shortages of truck drivers and elevated global freight rates continue to hang over any recovery. The risk of more extreme weather and flare-ups of Covid-19 cases can also threaten to clog supply chains again.
An easing of supply-chain choke points would allow production to move toward meeting strong demand and would lower logistics costs. If sustained, that, in turn, would help alleviate the upward pressure on inflation.
The number of ships waiting to unload at the ports of Los Angeles and Long Beach, the biggest U.S. gateway for imports from Asia, has improved but is still hovering near record levels. There were 71 container ships anchored offshore on Nov. 19, down from a peak of 86 three days before, according to the Marine Exchange of Southern California, and 17 more were expected to arrive within three days. Before the pandemic, it was unusual for any ships to anchor offshore.
Shipping and retail executives say they expect the U.S. port backlogs to clear in early 2022, after the holiday shopping season and when Lunar New Year shuts many factories for a week in February, slowing output.
Trans-Pacific freight rates have cooled in recent weeks as most big U.S. retailers have imported what they need for the holiday season, gradually opening up space on the front end of the trip. The cost to move a container across the Pacific fell by more than a quarter in the week ended Nov. 12, the biggest decline in two years. Rates rose about 5% this week to about $14,700 per 40-foot container and are still more than three times year-ago levels, according to the Freightos Baltic Index.
Any hiccups, such as a repeat of the temporary closure of China’s Ningbo-Zhoushan Port in August due to a single Covid-19 infection, could send freight rates soaring again.
Many big chains, including Walmart Inc., Home Depot Inc. and Target Corp., said this past week they are well stocked for the holidays, mainly because they imported goods earlier than usual this year. Some also chartered their own ships to get around bottlenecks.
Few executives said their problems are over, and in the most recent round of results, global companies continued to cite issues at ports and roads around the world. Several retailers reported lower profit margins, citing elevated freight costs to move their goods.
Jobless claims plunge to 199K, lowest level since 1969
New weekly claims for jobless aid plunged to the lowest level in more than 50 years last week, according to data released Wednesday by the Labor Department.
In the week ending Nov. 20, there were 199,000 initial applications for unemployment insurance, according to the seasonally adjusted figures, a decline of 71,000 from the previous week. Claims fell to the lowest level since November 1969 and are now well below the pre-pandemic trough of 225,000 applications received the week of March 14, 2020.
The steep drop in unemployment applications comes after several strong months of job growth and rising consumer spending heading into the holiday shopping season. While high inflation has stressed many household budgets, U.S. job growth, economic production, stock values and corporate profits have all steamed ahead.
“Getting new claims below the 200,000 level for the first time since the pandemic began is truly significant, portraying further improvement,” said Mark Hamrick, chief economic analyst at Bankrate.com.
“The strains associated with higher prices, shortages of supplies and available job candidates are weighed against low levels of layoffs, wage gains and a falling unemployment rate,” he continued. “Growth will likely be above par for the foreseeable future, but within the context of historically high inflation which should relax its grip on the economy to some degree in the year ahead.”
The U.S. added 531,000 jobs in October and job growth in the previous months was revised substantially higher after a string of what first appeared to be meager gains. While businesses have struggled to hire enough workers to meet surging consumer demand, the decline in jobless claims appears to be a sign of an improving labor market.
All Eyes on Senate Now
After House passage of the $2 trillion Build Better Back Act, the question now is how much the Senate will push to change the wide-ranging human infrastructure bill. One key item for many Illinoisans: Will the House’s provision to boost the cap on the state and local tax deduction, a.k.a. SALT, stay or go? It’s now capped at $10,000 a year. The House bill would bump that to a bit over $80,000 a year, enough to cover not only middle-class families but a lot of truly wealth folks, too.
Democrats are close to passing significant changes to international corporate taxation, moving toward a system that would reduce the gaps between nations’ tax rates and—if it all works as planned—making taxes a less important consideration for where companies put investments, profits and headquarters.
The international tax changes are included in the social-spending and climate-change bill passed by the House last week. They mark the U.S. contribution to the global tax talks that Treasury Secretary Janet Yellen accelerated this year and that culminated in October’s agreement for a 15% global minimum tax.
The Democratic plan, which builds on the 2017 GOP tax law, would help push tax rates into a narrower band, reducing companies’ opportunities to exploit gaps across borders. The higher taxes on U.S.-based companies would take effect in 2023, and the impact on companies would depend on whether and when other countries follow through on their promises to impose similar taxes.
In theory, if all contemplated changes go into effect, taxes will become a less important part of decision-making for multinational corporations. The resulting tax system would have significantly smaller incentives for them to enter deals that turn U.S. companies into foreign ones and start transactions that push profits from the U.S. into low-tax countries.
“The playing field is still tilted,” said Marty Sullivan, chief economist at Tax Analysts, the nonprofit publisher of Tax Notes. “It’s not a 70-degree angle anymore.”
U.S.-based companies would face a 6-percentage-point gap between earning income at home or abroad, down from as much as 35 points a decade ago. U.S. companies and foreign-based companies competing in a third country would face similar tax rates; now the U.S. company has a potential tax at home the other firm doesn’t. U.S. companies choosing where to put investments and profits would face a smaller spread of tax rates in various countries, because they would likely have a 15% minimum tax no matter where they go.
The U.S. piece stems from Ms. Yellen’s push for a global floor on tax rates and Sen. Kyrsten Sinema’s (D., Ariz.) insistence on a domestic ceiling on tax rates. This convergence means Democrats are likely to leave the GOP’s 21% corporate tax rate in place and create a system in which U.S. companies pay between 15% and 21% of their earnings in taxes no matter where they put jobs and profits.
“It’s a potential sea change in the landscape,” said Rosanne Altshuler, a Rutgers University economist and co-author of an influential 2013 paper outlining the benefits of minimum taxes on foreign profits. “It basically unwinds the incentive to put the profits in havens, because you’re going to have to pay 15” percent.
Getting there is no sure thing, and implementation is bound to be messy.
The U.S. changes are wrapped up in the broader fights over President Biden’s agenda. Because of Ms. Sinema, Democrats are leaving in place the 21% corporate tax rate that Republicans established in 2017. And they are using the basic international-tax architecture that Republicans set then.
The House bill would increase the minimum tax on U.S. companies’ foreign profits to 15% from 10.5%, impose that tax on earnings in each country and shrink an exemption for tangible assets abroad. But Democrats are also proposing to relax some rules that companies have complained about, giving them more ability to use losses and tax credits and removing rules that raised effective tax rates on companies operating in high-tax foreign countries.
If all that goes forward, it could temporarily increase tax-rate gaps by raising U.S. minimum taxes on companies starting in 2023 before other countries act. And on net, U.S. companies would pay higher taxes than now; Republicans and industry groups have warned about negative effects on investment and job creation.
International tax changes in the latest House bill would raise more than $200 billion over a decade. That is atop a separate 15% minimum tax on large companies based on their financial-statement income.
Biden administration asks court to revive workplace vaccine mandate
The Biden administration on Tuesday asked a federal court to reinstate a workplace vaccine mandate that was put on hold earlier this month. In court papers filed overnight, the administration urged a Cincinnati-based federal appeals court to lift a court order blocking the public health rule, which requires larger businesses to have employees receive the COVID-19 vaccine or undergo regular testing and mask-wearing.
Gov. Pritzker Signs Congressional Maps that Preserve Minority Representation
After reviewing the General Assembly’s congressional maps drawn with 2020 U.S. Census data, Governor JB Pritzker signed the new U.S. House district map that reflects Illinois’ diversity and preserves minority representation in Illinois’ delegation in accordance with the federal Voting Rights Act.
“These maps align with the landmark Voting Rights Act and will ensure all communities are equitably represented in our congressional delegation,” said Governor JB Pritzker.
A landmark achievement of the civil rights movement, the Voting Rights Act prohibits practices and procedures that discriminate on the basis of race, color or membership in a protected language minority group. Building on and strengthening that consequential law, the Illinois Voting Rights Act of 2011 ensures redistricting plans are crafted in a way that preserves clusters of minority voters if they are of size or cohesion to exert collective electoral power. The maps signed into law today meet those requirements by creating a second district of significant Latinx representation that reflects the community’s rapid growth on the west side of Chicago.
The district boundaries also account for population changes in the state, particularly in the regions that saw the most population loss as recorded by 2020 U.S. Census.
The Illinois Congressional Redistricting Act of 2021 (HB 1291) takes effect immediately.
Student test scores in Illinois plummet, offering first broad measure of the pandemic’s impact
Significantly fewer Illinois students met English and math standards on state tests this year, according to preliminary data released by the Illinois State Board of Education, providing the first broad look at the pandemic’s effect on academics.
Nearly 18% fewer students met grade-level standards in math than they did two years ago. For English, nearly 17% fewer students performed at grade level than two years ago. Black, Latino and low-income students showed the greatest academic losses. Enrollment in public schools also saw its largest drop since 2007, the last year the state provided records. Nearly 70,000 fewer students enrolled this year compared to last year.
“This impact, and the disproportionate impact on our Black and Hispanic students, along with English learners, is why we continue to do everything possible to keep our students learning fully in person this year,” Carmen Ayala, state superintendent of education, said during a briefing with reporters.
Educators blame the impact of the coronavirus pandemic for the lower scores, the enrollment decline and higher absenteeism. These declines mirror national trends, but this is the first statewide data available in Illinois. There were no standardized tests given in 2020.
Most students in third through eighth grade took the Illinois Assessment of Readiness exam this spring while 11th graders took the SAT college entrance exam. About 90% of school districts administered the elementary assessment; the remaining 10% chose to give the test this fall. Full state and school level results will be available in December.
Why scores are down
Ayala said Black and Hispanic students were disproportionately impacted by remote learning, a finding that tracks with what’s happening in other states and school districts. These are populations hardest hit by COVID-19 infections and in many cases economic disruption. Ayala also said students with limited English were heavily impacted by the remote learning. Learning from home meant that students weren’t using English as much as they would have at school, she said.
“You also have an assessment that is in English, which truly may or may not reflect what the students know and can be able to do,” Ayala said. “I think the pandemic really had an impact on the English learner because the environment in school from which they can learn English as a second language was interrupted.” In addition, many Illinois students were not learning in-person full-time when the spring assessments were given. It was up to schools how to navigate administering the in-person exams.
“Because there were no remote options, there were difficulties with … different situations locally with administering assessments,” said Sean Clayton, director of assessment for ISBE. “That may have impacted participation rates.”
Issues with enrollment and absenteeism
Public school enrollment statewide dropped by 3.6% this year, significantly higher than what the state expected. Given the historic declining enrollment trend in Illinois, state education anticipated a 1.1% decrease.
This year, the largest enrollment drop was in pre-K and kindergarten. Ayala said the state is working to boost enrollment in those younger grades. “The campaign will address barriers to enrollment and ensure that families know how important preschool and kindergarten are, and that it is safe for children to attend,” she said.
Statewide, families reported switching to private school or homeschooling during the pandemic. But the state couldn’t say if these trends had a significant impact on overall enrollment. Those factors, as well as families leaving for the suburbs or moving out of state, contributed to lower enrollment in Chicago Public Schools this fall.
Chronic absenteeism also went up across the state, from about 17% in 2019 to 21% in 2021. Students are considered chronically absent when they miss 10% or more of the school year with or without valid reasons. The state said the rates are calculated “with concern,” meaning standard attendance could not be applied given the varied learning options of the past year and a half.
Despite the grim academic picture, ISBE notes some bright spots. The teacher retention rate increased, and more school positions were filled. The state says the gains reflect its efforts to recruit more teachers within the state. “We continue to hear how difficult teaching during the pandemic is and continues to be,” said Ayala. “The Illinois State Board of Education has dedicated significant resources to meet teachers’ needs for more support.”
The average teacher salary saw a small bump from the previous year. Ayala said the state has offered teachers free virtual sessions on self-care and trauma-informed practices, as well as mentoring and coaching programs to increase retention.
In another highlight, more students are taking classes for dual college credit and enrolling in advanced placement and career technical education courses, according to ISBE. “Even in the midst of a pandemic, students took academically rigorous classes to prepare for college and career, considering the circumstances that schools were operating under,” said Brenda Dixon, research and evaluation officer at ISBE.
The state’s four-year graduation rate remained the same as in 2019, at 86%.
Ayala said having students in schools this year means they can begin to recover. The state received $7.9 billion in federal COVID-19 relief funds for schools. Districts have been using those funds to offer extra tutoring, after-school programs and additional mental health support.
Here’s the key to EV adoption in Illinois
If Gov. J.B. Pritzker wants the number of electric cars on Illinois roads to soar to 1 million from 33,000 by 2030, he’ll have to assure drivers that tapped-out batteries won’t leave them stranded on a lonely stretch of highway. “How do we deal with the range anxiety so people know if they buy this car, if I want to go from Rockford to Carbondale, I can get that done?” asks Christian Mitchell, Illinois’ deputy governor.
The answer is charging stations, and lots of them, along Illinois roadways. Experts estimate tens of thousands will be needed to support widespread use of electric-powered vehicles in Illinois. That makes a robust charging network critical to Pritzker’s clean energy plan to reduce pollution and spur economic growth by attracting research and manufacturing jobs connected to electric vehicles. He wants to get in on the land grab that’s underway as automakers shift from fossil-fuel vehicles to EVs over the next decade, helped by billions in infrastructure spending from the federal government.
Illinois will have about $400 million in state and federal funds to beef up its network of vehicle-charging stations over the next five years. Mitchell says it’s crucial “in terms of getting people to go out and buy electric vehicles — which drives every other part of this (strategy).”
The state will rely mostly on the private sector to build and operate the chargers. It plans to rebate 80% of the cost to private entities that install them, using $70 million in state capital-improvement funds, as well as $149 million from the federal infrastructure bill.
More is likely to come from a $2.5 billion federal grant program, but Illinois will have to compete with other states. Another $40 million a year or more from consumer utility bills will be available to reimburse utilities, such as Commonwealth Edison, for building infrastructure to support charging stations.
The road ahead offers both risk and reward. “The quicker you make the transition, the better,” says Adie Tomer, a senior fellow at Brookings Institution. “The states that move the fastest are likely to be seen as the most competitive. It’s going to take a decade for us to really get (EVs) into the household vehicle fleet. The charging infrastructure we build today isn’t what will be in place in a decade.”
Although the state has pulled together much of the money and a broad policy for spending it, the details—such as how many charging stations, what kind and where they’ll be built—haven’t been decided. “We know right now we don’t have enough,” Mitchell says.
Illinois has about 900 public charging stations, according to the Department of Energy. That’s in line with peer states, such as Ohio, Michigan and Pennsylvania, but a fraction of California’s 13,564.
“We’re far behind some of the leading states,” says Jason Navota, a director at the Chicago Metropolitan Agency for Planning. “We don’t have nearly enough charging infrastructure to serve the number of EVs we need.”
Andrew Barbeau, president of Chicago-based consulting firm Accelerate Group, which worked on the state’s clean energy bill, estimates that Illinois will need roughly 40,000 to 80,000 charging stations to support 1 million electric vehicles.
Not all charging stations are created equal. The most common, so-called Level 2 devices, charge a vehicle over several hours. They typically cost $2,000 to $6,000, Barbeau says. Fast-charging stations that can charge a vehicle in a half-hour or less cost $40,000 to $100,000. Installation expenses add to those costs.
Only about 100 of the state’s 900 charging stations have fast chargers. Barbeau figures Illinois needs 40,000 to 80,000 Level 2 charging stations and 1,700 to 4,500 fast chargers.
Using an 80% rebate, it’s possible Illinois could get to the numbers, Barbeau suggests, at a cost of about $450 million. The total price tag could be a half-billion or more.
The state will rely heavily on companies, such as ChargePoint, EVGo and Electrify America, which build and operate chargers often found in retail parking lots and parking garages. Justin Wilson, a regional public policy director for ChargePoint, calls the EV transition “the biggest upgrade in the built environment since air conditioning in ’50s, ’60s and ’70s.”
The company has installed chargers at several hundred Illinois retailers. “We’ve got crews lined up and ready to go to expedite installation of this infrastructure.”
Petroleum giant BP, which operates nearly 700 gas stations in Illinois, says it plans to install EV chargers in the state.
The road to widespread EV adoption is littered with political and operational challenges. The state has to make sure the charging network reaches across a state with widely divergent needs, from large cities to rural areas. Drivers are used to the ubiquity and convenience of gas stations, but much of electric vehicle charging will happen at home. That will present challenges in Chicago and other cities. “When people park on the street, that’s going to be a question,” says state Rep. Robyn Gabel, who helped negotiate the clean energy bill. “How do we figure out charging stations for those folks?”
Mitchell says the law includes additional rebate incentives above 80% for charging installations in “environmental justice” areas.
The process will be overseen by a yet-to-be-named EV czar from the Illinois Environmental Protection Agency, which will issue rebates and coordinate the charger buildout with the Department of Transportation and the Illinois Commerce Commission, which regulates electric utilities that also will play role.
“You are talking about something from a state government point of view that involves multiple agencies that haven’t worked together in the past,” says David Kolata, executive director of the Citizens Utility Board. “We’ve got a good structure. It’s a question of implementation.”
State of Illinois Urges Large Businesses to Remain in Compliance with the Equal Pay Act
As the year comes to a close, the Illinois Department of Labor (IDOL) is reminding Illinois businesses with over 100 employees to provide contact information to the department to remain in compliance with the Equal Pay Act of 2003.
The Illinois General Assembly passed and Governor Pritzker signed updated legislation earlier this year that requires private businesses with 100 or more employees in the state of Illinois to report certain payroll information to IDOL beginning in 2022 (see PA 101-656 and PA 102-36).
“The department wants businesses to remain in compliance with this law, and IDOL will provide them with the necessary guidance to do so. The collection of contact information is the first move toward creating a line of communication with large employers,” said Illinois Department of Labor Director Michael Kleinik.
The first step in this process is to collect contact information for businesses that are subject to the reporting requirements. IDOL is requesting three email contacts to ensure future communications will reach someone within a business. Contact information can be submitted here: IDOL Business Contact Information. IDOL will send additional instructions for future compliance efforts and deadlines via email.
If a business does not currently have 100 or more employees, contact information is unnecessary. If a business grows and their employees reach or surpass 100, the business will be required to submit their contact information to the department. The link to provide contact information to the department will stay open on the department’s website for businesses to enter their information to remain in compliance with the law.
Public employers are exempt from these reporting requirements.
Any questions, can be sent to Jason Keller at IDOL: Jason.Keller@Illinois.gov
IDES Prepares for Change to Unemployment Insurance Benefit Banking, Payment Methods
The Illinois Department of Employment Security (IDES) announced that in the coming weeks, unemployment insurance benefit payments will no longer be made by debit card. Beginning December 27, 2021, claimants who defaulted to a debit card option as their preferred method of payment will begin receiving paper checks instead of the benefits being placed on a debit card. The Department will continue to make benefit payments as normal to those claimants who chose to receive them via direct deposit.
The change comes after the Department’s vendor, KeyBank, made the decision to stop providing debit cards for unemployment insurance benefit purposes. To ensure there is no interruption or extended gaps in benefit payments to claimants, IDES has contracted with Chase bank. Benefit payments will be made via paper check rather than a debit card, or via direct deposit to the claimant’s banking institution. While claimants will still have access to remaining funds on their KeyBank debit card, no further payments will be made to those cards beginning December 27. KeyBank debit cards will continue to work normally until the card expires.
Claimants who currently receive benefit payments via debit card are strongly encouraged to switch to direct deposit. Doing so will result in quicker access to benefit payments. Claimants who switch to direct deposit can do so within their IDES account after they have successfully registered with and created an ILogin account. Step-by-step instructions on switching to direct deposit can be found in Direct Deposit Guide on the IDES website at ides.illinois.gov/payment.
Claimants who do not select direct deposit will receive benefit payments via paper check. Paper checks will be mailed to the address associated with the claimant’s account. It is important that claimants who do not enroll in direct deposit have an updated address on their IDES account. Address changes can be made on a claimant’s IDES account after they have successfully registered with and created an ILogin account.
IDES will provide more information directly to claimants via email about how this change may impact their benefit payments, detailed instructions about how to switch to direct deposit, and will work with stakeholders to provide information and resources to individuals who currently lack access to a direct deposit option. Information will also be available on the IDES website at ides.illinois.gov/payment.
ILogin is a new identity verification and multi-factor authentication (MFA) solution that has been integrated into the IDES unemployment insurance benefit system. ILogin creates a new, simple, more secure login process for claimants accessing their IDES accounts, including integrating MFA and identity verification software to protect claimants. More information, including how to create a new ILogin account, assistance with forgotten or resetting passwords, and assistance with setting up MFA, can be found on the ILogin FAQ webpage and at ides.illinois.gov/ilogin.
Vice President – Government Affairs
Joliet Region Chamber of Commerce & Industry