Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
Anticipation builds here on what will be in the Governor’s address tomorrow. That’s if the address happens with session being canceled already and there’s that snowstorm on the way. A good portion of the roundup is dedicated to info leaks.
Additionally, we have a great speaker and topic lined up for our February Member Luncheon. On February 16th, Doug Pryor from the Will County Center for Economic Development is going to join us in person! We know you’re itching to get back out and not only enjoy a nice lunch, but learn something as well. Let’s pack the house and listen to Doug talk about what is going on locally concerning our economy with a focus on transportation, housing, and much more. You can find full details and a registration here: http://jolietchamber.chambermaster.com/events/details/2022-member-lunch-february-16-economic-outlook-6383
*Government Affairs Roundup brought to you by CITGO & Silver Cross Hospital*
A Glimpse of What May be Announced Tomorrow in Governor Address
Governor J.B. Pritzker’s reelection-year budget proposal on Wednesday reportedly will dangle the prospect of delivering relief on food, gasoline and property taxes to voters in a spending plan buoyed by an improved state financial outlook and federal coronavirus relief.
Despite recent credit upgrades and higher-than-expected revenue, however, Illinois still faces massive pension debts and other long-term fiscal challenges. And rising inflation and turmoil in the stock market raise the possibility of stronger economic headwinds ahead as the federal government eases off the stimulus programs that helped states avoid some of the most dire forecasts from the early days of the pandemic.
In a combined budget speech and State of the State address, Pritzker will face a dual task: outlining his spending plan to kick off negotiations in the Democratic-controlled legislature, and making the case to voters that his handling of the state’s chronically shaky finances, his pandemic public health policies and his efforts to reach out to long-neglected minority communities have earned him another four years in office.
Through his tax relief proposal he will be attempting to show he understands the squeeze inflation — an issue Republican campaigns are hammering across the country — is putting on the average person. “The governor believes it’s important to focus on the cost of groceries, the cost of gas and the property tax burden and bring relief to families across the state,” Deputy Gov. Andy Manar, one of Pritzker’s top budget aides, said in an interview.
Pritzker’s nearly $1 billion tax relief proposal, which requires legislative approval and wouldn’t take effect until the state’s new budget year begins July 1, would suspend the 1% sales tax on grocery items, freeze the scheduled inflation-based increase to the gasoline tax, and offer homeowners a property tax rebate of up to $300.
Because the sales tax on groceries goes exclusively to local governments, Pritzker will propose that the state make up the difference, at an estimated cost of $360 million. The governor’s office estimates the state would forgo about $135 million in revenue for transportation improvements by freezing the gas tax and would pay $475 million in property tax rebates to homeowners.
While he declined to give a complete overview of Pritzker’s plan, including how much revenue the state expects to collect in the coming year or what total expenditures would be in the proposed operating budget, Manar said the governor will present a balanced proposal Wednesday to lawmakers. The current operating budget is roughly $42 billion. “We’ve restored fiscal stability to the state budget,” Manar said. “We have balanced budgets. We have paid off debts, and we’ve controlled spending and caught up on our bills. “That has not been the easiest task over the past several fiscal years. But the governor remains committed to introducing, negotiating and passing balanced budgets that meet his priorities and priorities of the people of the state.”
The task of stabilizing the state’s finances during the pandemic has been bolstered by multiple waves of federal relief money, but Wall Street ratings agencies have acknowledged the progress made during Pritzker’s term. Last summer, two of the three major ratings agencies upgraded the state’s credit for the first time in more than two decades, though it remains the lowest rated of all 50 states. For the first time in recent memory, the state is paying its bills within a normal 30-day cycle, and earlier this month, it made the final payment on $3.2 billion in coronavirus emergency loans taken from the Federal Reserve, two years ahead of schedule. David Merriman, an expert on state finances at the University of Illinois at Chicago, said that while the state’s fiscal condition certainly has improved in recent years, a good deal of the credit can go to actions taken by the federal government and to a booming stock market.
At the end of the current budget year, Illinois expects to have about $3.6 billion remaining from the $8.1 billion it received from President Joe Biden’s American Rescue Plan. So far, ratings agencies have given credit to Pritzker and lawmakers for spending the one-time windfall on items that won’t create ongoing obligations, though Republicans in the legislature’s minority have raised objections about how those decisions have been made. How the remaining money is spent will be one of the crucial elements of Pritzker’s proposal, Merriman said. “To me, the big issue that I’ll be listening for is the extent to which the federal money is being spent … in sustainable ways, or is it promising things that once the federal money dries up we won’t be able to continue and will leave big holes,” he said.
State Sen. Elgie Sims of Chicago, a lead budget negotiator for the Senate Democrats, said spending the federal relief money responsibly is a top priority. “We’ve got a big opportunity with these resources to address areas that we’ve not been able to address,” Sims said, pointing to one-time expenditures on infrastructure projects, health care initiatives and violence prevention efforts.
Violence prevention and public safety also are expected to play a key role in Pritzker’s budget proposal, as Republicans have sought to use rising crime rates and the criminal justice overhaul approved last year as a campaign cudgel against Democrats who control both chambers of the legislature and all statewide offices.
“It’s a daily issue that people are waking up and reading about,” said state Rep. Tom Demmer, the House GOP’s budget point man and a candidate for state treasurer. “People are, themselves, or their loved ones, being directly impacted as (a) victim of a crime. And the governor’s talked about additional money that he’s put into these programs, but what are the results? Why are we not seeing the budget rhetoric from the governor match up with the actual results that people are dealing with every day?”
Pritzker signed an executive order last fall declaring gun violence a public health crisis and pledged $250 million toward anti-violence programs, including $100 million in the coming year. At an unrelated news conference last week, the governor touted previous efforts that included funding for a new Illinois State Police crime lab, hiring more state troopers, adding more cameras and increasing patrols on Chicago expressways, while hinting at more to come.
“That is taking place even now. We’ve got to do more. There’s no doubt about it,” Pritzker said. “We need more cameras. We need more police. It’s why you’ll be hearing more about what my intentions are.” Manar declined to offer more specifics about what additional plans for violence prevention and public safety will be included in Pritzker’s budget proposal. “The totality of all of the proposals, including violence-prevention investments, all of that will be laid out on Wednesday,” Manar said.
Republicans also have hammered Pritzker and the Democrats for not yet proposing a plan to deal with the state’s $4.5 billion outstanding debt to the federal unemployment insurance trust fund, largely racked up when unemployment surged during the early days of the pandemic. Illinois and other states have asked the U.S. Treasury Department to freeze interest on the debt — which has been accumulating at a rate of 2.27% since Sept. 6, but the federal government has yet to respond.
“This budget should absolutely address that debt,” Demmer said. “That debt is directly a result of COVID and the economic closures and shutdowns that we had during COVID.” Other states used a portion of the federal relief money to repay those debts, he said. “If the governor does not prioritize repayment of unemployment debt, we’re going to see a huge tax increase on every single employer in the state of Illinois,” Demmer said. “And we’re going to see (a) reduction in benefits for every single person on unemployment.”
The Pritzker administration is promising to inject “substantial” amounts of federal COVID relief cash into the state’s cash-short unemployment insurance program, an action that will reduce and perhaps virtually eliminate the need for sharp tax hikes on employers and/or benefit cuts for workers.
In the first public comments after weeks of behind-the-scenes negotiations, Deputy Gov. Andy Manar said “very productive” talks have advanced enough that Gov. J.B. Pritzker will dangle a big carrot during his speech tomorrow on what will be in his proposed fiscal 2023 budget.
The carrot: allotting a chunk and maybe most of the $3.5 billion the state still has left over from the American Rescue Plan Act of 2021 to begin paying off the roughly $4.5 billion in loans from the U.S. Treasury that kept the unemployment insurance system operational. Manar would not give a number, saying only that, “The governor believes that a substantial portion of remaining ARPA funds should be used to pay off UI borrowing.” But Manar did give a tantalizing hint, saying states like Illinois that borrowed from the U.S. Treasury at the height of the pandemic have typically used one quarter to one third of their ARPA funds for such a purpose.
Illinois overall got $8.1 billion in ARPA funds, some spent already and some remaining to be allotted. One quarter to one third of that would be $2 billion to $2.67 billion. Even that amount would require significant concessions by employers, labor or both, at least for a few years, says Rob Karr, president of the Illinois Retail Merchants Association, one of the groups in negotiations as part of the “agreed bill” process. But it would help, he said.
“’Substantial’ is a good word for what’s needed,” Carr said in a phone interview. “It’s going to have to be substantial.” Karr declined to categorize the state of the talks, saying only that “they are proceeding” and that “all of the parties are at the table.” Asked if a salable deal is within reach, he replied, “It’s too early to say for sure.”
Manar underlined the administration position that it will take agreement on a larger package to get the federal funds. Another major party, House GOP Leader Jim Durkin, was much more guarded. “I’ll wait and see what (Pritzker) comes up with and whether it’s sincere,” Durkin told me in a phone interview. Whatever others say, Republicans “have not been involved in any substantial negotiations over how to rescue the trust fund.”
Manar said the unemployment insurance fund already has improved its situation a little. With new unemployment claims now running less than they were before the pandemic, the fund’s cash flow has turned positive, he said.
However, financing the remaining debt is costly, with the state shelling out roughly $2 million a week in interest charges.
The governor’s proposal is the start of a monthslong negotiating process that typically culminates with the passage of a budget in late May or early June. This year, with the primary election moved to June 28 and renovations scheduled at the Capitol, lawmakers are scheduled to adjourn April 8. But so far they’ve met in Springfield for only a single day, with other in-person days canceled over concerns about the latest COVID-19 surge. And even with Democrats in full control of the legislature, there’s no guarantee of full support for everything Pritzker proposes.
Senate Republicans file legislation they say will provide ‘common sense’ ethics reforms
Demanding what they call “common sense ethics reform,” Senate Republicans plan to take action in addressing unethical behavior by elected public officials.
Upon introducing the ethics reforms package, Senate Republicans called for the legislative inspector general position to be filled through an independent search committee. Republicans said Democrats need to end the “political games” and hire a legislative watchdog.
“It is not OK to have the legislative inspector general’s seat empty, and it is not OK for the majority party to play political games with an issue as important as legislative ethics, and it is not OK for legislators to think they can police themselves,” Sen. Don DeWitte, R-St. Charles, said during a virtual news conference.
The position has been vacant since LIG Carol Pope left the position on Jan. 6. Since exiting, a 45-day countdown started to find an interim LIG but the commission is currently at an impasse. If the position is still vacant in six months, the Illinois auditor general will choose the next LIG.
Republicans also filed legislation to increase LIG’s power that would allow the person in that position the ability to subpoena lawmakers and make the Ethics Commission meetings open to the public.
To address the shortcomings Republicans felt were not properly addressed in the last reform bill, Sen. Jil Tracy (above), R-Quincy, introduced Senate Bill 3636, which takes “meaningful action” to address corruption within the state government. The legislation would build on SB 539, which was passed in 2021.
Congress in jeopardy of missing shutdown deadline
Congressional negotiators are in danger of missing the Feb. 18 deadline for passing an omnibus package of the annual appropriations for fiscal year 2022. A shutdown is unlikely, but members of the Senate Appropriations Committee from both parties warn that if negotiators blow through the mid-February deadline, it increases the likelihood that Biden will have to settle for a yearlong stopgap funding measure to keep the government open. That would prevent him from putting his own stamp on department and agency budgets while Democrats control Congress.
As a result, Senate Democrats right now are prioritizing passage of the omnibus spending bill ahead of the Build Back Better Act, which the House passed in November but then stalled last month because of opposition from Sen. Joe Manchin (D-W.Va.).
The growing concern that Biden might not have a chance to put his stamp on the nation’s spending priorities while Democrats control both branches of Congress comes amid a wave of Democratic retirements in the House and expectations that Republicans will flip the lower chamber in the midterm elections. But the prospects of getting the omnibus passed in the next three weeks is slipping. One Democratic aide said it be “extraordinary” if the omnibus package gets wrapped up by Feb. 18 while Republican aide said “it’s gonna be hard to get it done” by that date.
Some Democratic and Republicans senators were told earlier this month that Senate Appropriations Committee Chairman Pat Leahy (D-Vt.) and Sen. Richard Shelby (Ala.), the ranking Republican on the panel, had a deal in principle. But a call between Leahy and Shelby over the January recess didn’t go well, according to a source briefed on the discussion.
A disagreement between Democrats and Republicans over how much to increase funding for domestic, non-defense social programs compared to the military is a major sticking point, according to sources familiar with the discussion. There are also disagreements over policy riders, in particular the so-called Hyde Amendment, which was first passed in 1976 and bans federal funding for abortion.
Senate Majority Leader Chuck Schumer (D-N.Y.) will meet with key appropriators today to discuss the ongoing (but slow going) negotiations towards a federal government spending deal. Senate Appropriations Chair Patrick Leahy (D-Vt.) told reporters Monday that despite the pressure of a Feb. 18 deadline, there’s no deal yet on an omnibus spending package and it might not come together this week. “We’re going to workday and night to bring a funding package together, avoid a shutdown and make sure Congress fulfills this basic duty to the American people,” Schumer said in a Monday floor speech.
Back in Session, What’s Next?
In the House, expect to see tunnel vision on the economy after weeks of rising concerns from battleground Democrats. The chamber will spend the week on a massive industrial policy bill — similar to the Senate-passed one from last June that focused largely on competing with China. The House version, however, has some big changes to adjust to economic crises that have worsened in the last six months, such as snarled supply chains and a semiconductor shortage.
It’s a response to rising jitters among House Democrats, who’ve been hearing loudly from folks back home about those rising prices, shipping snafus and sparse grocery shelves. “The pinch we are all feeling on inflation is significant,” Rep. Abigail Spanberger (D-Va.) told constituents at a town hall last week.
Rep. Susan Wild (D-Pa.) is one of two dozen vulnerable Democrats mounting a public push for the party to put the manufacturing bill “at the top of the agenda.” At her own town hall last week, Wild told constituents she was “somewhat shocked” by grocery prices. “There is a lot of work that needs to be done to build an economy that works for everybody,” Wild said.
Dems will need nearly their entire caucus on board, since it’s unclear if any House Republicans will back the bill, which they say is weak on China and overly focused on issues like climate.
Democrats hoping to revive BBB talks are coming to terms with the fact that this may take a while. Last week, the Congressional Progressive Caucus called on the party to pass the bill by the SOTU — a deadline White House press secretary Jen Psaki and Pelosi both dismissed.
Progressives aren’t alone in trying to up the urgency. A group of 250 left-leaning business leaders and nonprofit groups will call on the Senate to get moving on BBB, according to a copy of the letter. Senior Democrats have no idea what they can get Sen. Joe Manchin (D-W.Va.) to agree to and how long it will take. Because of that, Democratic leaders are loath to set another deadline.
Even if BBB talks commence soon, there are complications afoot and while the Progressive Caucus leader did indicate that her members would swallow a smaller version of the bill than they want, she also insisted that Manchin is on board with the framework the party agreed to in October. “I believe that, even from his conversation with me after he went on Fox News [to announce he was a ‘no’], that those are still the things that he supports,” she said.
That’s news to us and pretty far from what Manchin and his allies have indicated to reporters. Not only did Manchin turn his back on that framework a long time ago, he also walked away from an even narrower deal he offered to the White House in December (pre-K, health care and climate). Yet still many on the left are struggling to accept the new reality. The businesses on the BBB letter, for example, are also still pushing for the expanded child tax credit and paid family leave, which are pipe dreams at this point.
The disconnect underscores just how much work the party still has to do on BBB — and the fact it will have to compete for attention with a SCOTUS confirmation process that will take center stage in a matter of weeks.
Bipartisan Elections Reform Group Meets
The bipartisan group of senators working on potential updates to the Electoral Count Act met Monday afternoon. The group, led by Sen. Susan Collins (R-Maine), met over Zoom during the recess and has expanded in size since its inception. Among the reforms the group is discussing is clarifying that the vice president’s role in overseeing the certification of an election is ministerial. The group is also considering raising the threshold for members of Congress to challenge election results and protecting poll workers.
Stay well,
Mike Paone
Executive Vice President
Joliet Region Chamber of Commerce & Industry
mpaone@jolietchamber.com
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