Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
The condensed Illinois legislative session continues this week as lawmakers still plan to adhere to their early, April 8, adjournment. Both the House and Senate will be in, with a House deadline for moving bills out of committee scheduled for Friday. While last Thursday was a deadline in the Senate for moving bills out of committee, things can move quickly when they’re tacked onto other bills as an amendment, so we’ll be watching. Check out a number of items below in today’s Roundup.
Chambers All In for Economic Recovery’s bill HB 5320 to restructure the Minimum Wage Tax Credit’s phase-out is scheduled for committee TODAY at 5:00 p.m. This committee hearing starts momentum for our bill to be passed into law. A committee hearing is the first vetting process for any bill, and it sets the stage for future discussion.
*Government Affairs Roundup brought to you by CITGO & Silver Cross Hospital*
Springfield Bill Activity Heats Up
Since the start of the year, legislators have introduced an average of just more than 76 bills every day, 2,368 in total. About one in four bills introduced since the start of last year were introduced in January, according to records from the General Assembly. These bills aren’t likely to become law. Since 2010, 10.32% of bills introduced have been signed by the governor.
Not counting bills that are technical changes or appropriations, lawmakers have introduced 201 bills having to do with health care or COVID-19, 191 bills involving state government reforms and 182 bills about education, according to an SJ-R analysis of General Assembly records. The most-popular category of bills for lawmakers has been criminal justice and policing. Since Jan. 1, lawmakers have introduced at least 240 bills tackling the topic. Aside from crime, bills have been introduced tackling the pandemic, LGBT rights, long-term care facilities and aging and more.
Bill seeks pay raise for tipped workers
A bill in the Illinois House would do away with the sub-minimum wage paid to waitresses, bartenders and other tipped service workers. Rep. Camille Lilly, D-Chicago, introduced House Bill 5139 last month. If the bill becomes law, workers who supplement their wages with tips will receive the state’s minimum wage starting on Jan. 1, 2025, in addition to their tips.
Its passage may be a tall order, however, as the Illinois Restaurant Association successfully lobbied when lawmakers overhauled the minimum wage schedule in 2019 to allow businesses to continue to pay less than minimum wage to employees who earn tips. Lilly’s bill has currently not received a full committee assignment and has no cosponsors.
In 2019, Illinois Gov. JB Pritzker signed legislation into law providing a path to increase Illinois’ minimum wage rate to $15 per hour and $9 for tipped workers by 2025. Servers and bartenders who receive tips are currently subject to a $7.20 an hour minimum wage. At a bill signing for that 2019 law, Sam Toia, president of the Restaurant Association, appeared alongside Pritzker and praised the law for maintaining the credit which allows employers to pay tipped workers 60 percent of the minimum wage if tips make up the other 40 percent.
Since 2020, more than a million workers have left the hospitality industry nationwide. In Illinois, about 90,000 workers have left the industry since 2020, according to the Bureau of Labor Statistics.
Can the State Save Millions on Pensions by Adding a Date to a Law?
Pensions take up 26% of Illinois’ budget, more than double the national average. Despite spending more on pensions than any other state, Illinois holds the most pension debt in the nation. But it can take a significant first step in fixing the pension mess by adding a start date to an existing state law.
Essentially, all pension debt stems from Tier 1 benefits promised to state employees hired before 2011. Tier 2 employees hired after 2011 will likely pay more than their benefits will be worth to subsidize Tier 1 benefits. The General Assembly passed Tier 3 plans during the fiscal year 2018 budget process. A technical error left an implementation date out of the language, and it hasn’t been corrected since. Lawmakers could fix this oversight for fiscal year 2023, which begins July 1, 2022.
Tier 3 features:
- Employees contribute up to 6.2% of their salary toward a defined-benefit pension. They must also contribute at least 4% toward a defined-contribution component.
- Employee contributions vary automatically with the calculated cost of their benefits, so they can fall below 6.2% but cannot rise above that level.
- Employers must contribute at least 2% and up to 6% of salary toward the defined contribution.
- Tier 3 receives the same annual cost-of-living adjustment as Tier 2, equal to one-half of the increase in the consumer price index. The full retirement age is 67, just like Tier 2.
- Costs for Tier 3 pensions are paid directly by the employer, aligning responsibility for setting benefit levels with responsibility for paying them.
Tier 3 plans are optional for employees. They would save the state an estimated $577 million in fiscal year 2023. They also give state employees the freedom to handle their retirement based on their individual needs.
House Bill Could Lower Property Taxes Through Government Consolidation
Illinois state Rep. Jonathan Carroll has introduced a bill to empower taxpayers to pursue local government consolidation at the ballot box, with the aim of cutting property taxes. House Bill 5276 would let local voters petition for a ballot referendum to dissolve a unit of government, giving citizens direct control over how many layers of government they want.
Illinois is home to more than 6,000 units of local government, excluding school districts, which is nearly 1,000 more than Indiana, Iowa and Kentucky combined. It is more than any other state. Illinois’ excessive number of local governments is a major contributor to its second-highest in the nation property taxes.
Removing unnecessary and redundant layers of government could offer residents much needed property tax relief as well as streamline services. While public employee pension reform would offer the greatest relief to property taxpayers, the elimination of unnecessary layers of government is also essential to lightening the burden.
Illinois is an extreme outlier, as Illinois local governments serve only around 2,000 people on average, the fewest served among the 10 most populous states. By contrast, California has 3,433 local governments, which serve more than 11,000 people per unit on average. Florida has a population about 70% larger than Illinois but manages to get by with 1,617 units of government, only one-fourth the Illinois number and serving more than 13,000 people per unit on average. Homeowners only pay half as much in property taxes as do Illinoisans, on average, even though Florida has no income tax.
How would the Citizens Empowerment Act help Illinois streamline government and lower property taxes? The Citizens Empowerment Act, HB 5276, would empower Illinois taxpayers by giving them an important tool to lower the cost of their government and rein in property taxes by:
- Allowing taxpayers to petition for a referendum to dissolve or combine duplicative or unnecessary units of local government, rather than relying on the Illinois General Assembly for permission.
- Providing for the transfer of all real and personal property and any other assets, together with all personnel, contractual obligations and liabilities of the dissolving unit of local government to the receiving unit of local government.
- Increasing transparency for local taxpayers as duplicative and often overlapping layers of local government are eliminated by voter mandate.
The act would require a citizen-initiated petition to obtain signatures from registered voters equivalent to 5% of those voting in the preceding general election before a referendum to dissolve a unit of local government could appear on the ballot. The referendum would need to be approved in each of the dissolving and receiving communities – either by three-fifths of those voting on the measure or by a majority of voters in the election. The bill reflects recommendations proposed in 2016 by the bipartisan Local Government Consolidation and Unfunded Mandates Task Force to streamline government.
Democrat Crime Package
One thing to watch, as crime remains an issue ahead of the 2022 elections, is a group of moderate Democrats introducing a package of proposals to “support, fund and provide law enforcement officers with resources to serve and protect communities.” Republicans have been continually attacking Democratic supermajorities in the General Assembly and the governor for a rise in violent crime that’s been seen in Illinois and nationally.
A group of downstate and suburban lawmakers announced that they’d be finalizing the bills in the near future, and members of the Illinois Sheriffs’ Association and the Illinois Fraternal Order of Police Labor Council were quoted in a number of news releases sent by the Democratic lawmakers.
Those are groups that have typically been pictured alongside Republicans in recent weeks in a push to repeal a criminal justice reform law known as the SAFE-T Act and create stricter sentencing guidelines for violent offenders.
The senators named in the news release include Meg Loughran Cappel, Scott Bennett, John Connor, Rachelle Crowe, Tom Cullerton, Bill Cunningham, Suzy Glowiak Hilton, Mike Hastings, Linda Holmes, Patrick Joyce, Steve Landek, Julie Morrison, Tony Munoz, Laura Murphy, Steve Stadelman and Doris Turner.
The legislation is “expected to be finalized in the coming days,” according to the news release, which gave a description of some of what’s to be included. That includes “assisting departments with new grant opportunities, providing departments with additional tools to investigate crimes and helping departments utilize resources to address inmate mental health concerns.”
One initiative would require counties to pay sheriffs at least 80 percent of the county’s state’s attorney’s salary. In one proposal similar to a Republican-backed “Fund the Police Act,” the Democrats are backing an unspecified amount of grant funding “in support of hiring, retaining and training law enforcement officers as well as mental health and substance abuse counseling for incarcerated and recently discharged individuals.”
Grants would also be available for departments to provide mental health care for officers, to purchase safety equipment and to improve jail facilities. Other provisions would expand the list of crimes for which a convicted person must submit DNA and would allow law enforcement officers to continue using conversation recording equipment for violent crime investigations, according to the news release. The Democrats are also looking to expand use of expressway cameras to an additional 15 counties outside Cook, including the Metro East.
Will Sales Tax on Services Be on the Table Once Again?
The pandemic will end, bringing a return to something like pre-COVID normalcy. We can expect consumer spending patterns to follow suit. That means more spending on services and less on goods.
In a sign the reversion has begun, spending on services rose in December while shoppers spent less on goods. As people feel comfortable going out again, more discretionary income will flow to travel, gyms, movies, spas and concerts. Illinois doesn’t collect sales tax on those services.
Inflation isn’t likely to keep lifting sales tax revenues indefinitely, either. Eventually, supply chains will get unsnarled, easing shortages that push prices up. And even if inflation keeps running hot, price hikes will start to dampen spending at some point, as Mondelez International CEO Dirk Van de Put acknowledged Jan. 28.
A rebalancing of consumer spending away from goods and toward services wouldn’t threaten Illinois’ finances if the state taxed a significant number of the services that are taxed elsewhere. Illinois sales tax applies to only 17 services, most of them related to utilities. Neighboring Iowa, by contrast, levies sales tax on more than 100 services ranging from dry cleaning to limo rides. Wisconsin and Indiana also tax significantly more services than Illinois.
COGFA has estimated that a sales tax on services would generate between $1 billion and $3 billion in additional revenue for Illinois, depending on the number of services taxed. More importantly, revenues from a sales tax on services would likely grow over time, as it tracks the direction of the economy.
This possibility has surfaced numerous times in the past as a sustainable revenue source, but has not moved very far. We’ll continue to monitor the situation to see if it picks up steam.
Federal Government Funding Update
The Senate isn’t staring down a shutdown just yet, but the deadline to clear a short-term funding bill is at the end of the week. Six conservatives — Sens. Mike Lee (Utah), Roger Marshall (Kan.), Cynthia Lummis (Wyo.), Mike Braun (Ind.), Rand Paul (Ky.) and Ted Cruz (Texas) — say they won’t vote for the continuing resolution unless they get a floor vote on an amendment to block federal government vaccine requirements. (The Senate has already considered — and rejected — a similar proposal.)
Sen. Marsha Blackburn (R., Tenn.) said that she will hold up a bill to keep the government funded until the Biden administration responds to her questions about whether a program intended to help people with substance-abuse disorders could be used for pipes to smoke illicit substances.
Her position injects uncertainty into the government’s ability to avoid a partial shutdown this week. While a single senator can’t stop legislation, he or she can slow the process by declining to consent to cutting out procedural hurdles. The Senate is aiming to pass a three-week government funding bill by Feb. 18, when a current funding bill expires.
Inflation Check
Prices that suppliers charged businesses and other customers are expected to have accelerated in January, pushed up by pandemic-related disruptions and continued strength in consumer demand.
Economists surveyed by The Wall Street Journal estimate the producer-price index, which generally reflects supply conditions in the economy, rose a seasonally adjusted 0.5% in January from the prior month, a pickup from December’s 0.3% rise, which was the smallest monthly gain in 13 months.
Economists are watching the producer-price numbers closely for signs that inflation might be peaking. The consumer-price index rose to a four-decade high of 7.5% in January, the Labor Department said last week.
Inflation is hitting American farmers, who are paying much more for their weed-killing chemicals, crop seeds, fertilizer, equipment repairs and seasonal labor, eroding some of 2021’s windfall from rising crop prices. Higher farm costs could help push up grocery bills further in 2022, analysts say, following a year in which global food prices rose to decade highs. A rally in prices for agricultural commodities such as corn and soybeans, which kicked off in mid-2020, pushed up incomes for U.S. farmers and led them to spend more freely on farmland and machinery.
Building Blocks of Success: IDOT announces February dates for DBE program workshops
The Illinois Department of Transportation is hosting free virtual workshops in February as part of its continuing Building Blocks of Success series for firms interested in participating in the Disadvantaged Business Enterprise program, strengthening their skills and bidding on state construction projects.
The workshop dates and topics are:
Feb. 22, 10 a.m. to noon: What Banks Look for: Basic Requirements
Feb. 23, 10 a.m. to noon: Understanding How Banks Make Lending Decisions
Future topics covered include financing, QuickBooks training, estimating and bidding, insurance, management, steps needed to be certified as a DBE firm and more.
Building Blocks of Success will continue through April. Workshop information, including dates and times, is available through Eventbrite at bit.ly/DBEworkshops. Advance registration is required.
Questions can be directed to IDOT’s DBE Resource Center at (312) 939.1100.
As part of Gov. Pritzker’s historic and bipartisan Rebuild Illinois program, IDOT is helping to deliver the largest capital program in state history. IDOT strives to promote diversity, equity, and inclusion in the implementation of this program, including contracting and workforce participation.
Administered by IDOT, the DBE program provides minorities, women and other eligible small businesses opportunities to participate in highway, transit and airport contracts that are federally and state funded. For more information on becoming a certified DBE and learning more about IDOT resources that are available, visit www.idot.illinois.gov/dbe.
Stay well,
Mike Paone
Executive Vice President
Joliet Region Chamber of Commerce & Industry
mpaone@jolietchamber.com
815.727.5371 main
815.727.5373 direct