Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
It is hard to believe that we’re in the last days of February. Time continues to move quickly. Many are waiting for the mask mandate to be lifted on Monday to see how/if anything changes with their business. Supply chains, inflation, and labor continue to be issues facing many organizations.
Thanks to all that participated last evening (attendees, sponsors, etc.) as part of our Annual Dinner & Celebration of Success. It was a great evening! Next, please draw your attention to our March luncheon on the 9th as we welcome Joliet Mayor Bob O’Dekirk as he delivers his State of the City address. More information here: http://jolietchamber.chambermaster.com/events/details/2022-member-lunch-march-9-state-of-the-city-6381
*Government Affairs Roundup brought to you by CITGO & Silver Cross Hospital*
Congress races to clinch government funding deal
Congressional negotiators are moving quickly to try to finalize work on a sprawling package to fund the government through the remainder of the fiscal year, though sticking points remain. Lawmakers have roughly three weeks to finish crafting — and ideally pass — a bill to fund the government through Sept. 30, after advancing the latest stopgap last week.
That bill, which extends funding through March 11, marked the third time Congress has had to pass a continuing resolution to keep the government funded in the 2022 fiscal year. And while leaders have struggled to reach a broader, bipartisan agreement, negotiators are hopeful it’ll be the last short-term fix.
“Oh god, no,” Sen. Patrick Leahy (D-Vt.), chair of the Senate Appropriations Committee, said last week when asked about the prospect of a fourth funding Band-Aid. “Good lord, no.”
Until just weeks ago, negotiators struggled to find their way out of a months-long stalemate over top-line numbers, how to divide funds and legislative riders dealing with thorny issues like abortion. And while negotiators have made strides in recent weeks after top leaders announced a bipartisan framework deal for an omnibus package, which would fund the government through September, appropriators have made clear there is still much more work to be done.
Sen. Richard Shelby (Ala.), ranking Republican on the Senate Appropriations Committee, told The Hill that if negotiators continue to work in bipartisan fashion, Congress could finally put a bow on the package by early March. But nothing is final, he noted, until the legislation “is sealed and signed.”
A new omnibus package would afford the Democratic-led Congress and President Biden a major chance to shape government funding for the current fiscal year. Under the continuing resolution passed on Thursday, funding levels are still set at those previously enacted under the Trump administration.
Democrats have already outlined their wants for a number of party-backed priorities in the annual spending legislation, including for boosts in education, efforts aimed at combating climate change, improving health care and affordable housing. And while Republicans aren’t on board with all their colleagues’ wish-list items, they are pushing for more funding in areas like defense.
Leahy said in remarks on Thursday that the agreed-upon framework for the omnibus package would include the “biggest increase in nondefense programs” seen in four years. But it remains to be seen what funding will look like for those programs, as leaders continue to keep spending details close to the vest amid ongoing negotiations.
Pressed about Leahy’s comments shortly after, Shelby told reporters last week “that’s the Democrat agenda,” while adding Republicans are focused on national security. “But, in anything bipartisan trying to get a bill through, we’re gonna have to give and get, to get,” he added.
Small Businesses Continue Struggle with Supply Chain
Small businesses are bearing the brunt of supply-chain pressures and rising prices, with many tapping their cash reserves or taking on debt just to compete with larger rivals. Most smaller firms don’t have the heft and sophistication to thrive in an environment of booming demand and short supply—the same forces that many of America’s biggest companies have been able to ride to higher earnings. High inflation, a tight labor market, stressed supply chains and dwindling liquidity are straining many small businesses, exacerbating the existing power imbalance between small and big firms.
It all deepens the challenges that small companies have faced since the onset of the Covid-19 pandemic. And stresses will mount for those that take on more debt as the Federal Reserve raises interest rates. Many large corporations have used their scale to successfully navigate the twin threats of supply-chain disruptions and rising prices, with some reporting 2021 sales and profits exceeding 2019 levels.
Small-business owners—those who serve consumers and those that sell to other businesses—say demand remains strong. But they face a longer-term impact on sales if their businesses cede customers to larger rivals with the resources to serve them.
Two-thirds of small businesses impacted by supply-chain constraints said suppliers are favoring large businesses because of the volume of orders, according to a recent Goldman Sachs survey of more than 1,400 businesses. Eighty-four percent of small businesses said inflationary pressures had worsened since September, according to the Goldman survey, with more than three-quarters reporting that inflation had hurt their business’s financial health.
“Larger firms have been able to weather rising costs and labor shortages better than smaller firms, which is likely a function of larger workforces, greater pricing power and stronger margins that have allowed them to absorb economic pressures more easily,” said Mahir Rasheed, U.S. economist at Oxford Economics.
Some small businesses are confronting their most precarious financial situation since the pandemic’s initial impact, as government aid has waned. Mr. Rasheed said he expects the squeeze on small firms to ease over the next year as sidelined workers return to the labor force and spending on services picks up, taking pressure off supply chains. But the longer it takes to return to normal, the harder it will be for small firms to compete for business and grow their workforces, he added.
More than 12% of small companies surveyed from late November through mid-January said their business will never return to previous levels of output, according to the Census Bureau, the highest share since the survey began in April 2020 and up from 7.1% in June 2021.
Large companies regularly use strategies that help cushion the impact of sudden price jumps, such as signing fixed-price contracts or putting a collar on price increases by tying them to the producer-price index or other measures, said Robert Handfield, a professor of supply-chain management at North Carolina State University. Small companies typically don’t have large, sophisticated purchasing teams. They often purchase on the spot market or from distributors who pass along cost increases from major suppliers.
Truck convoy on track to DC
A series of truck convoys is headed to the DC area in the coming days — the first expected Wednesday, Feb. 23 just before afternoon rush hour. The goal: to create gridlock on the Beltway.
Bob Bolus, a Scranton, Pa. truck driver, said he’s leading a convoy to protest federal COVID-19 mandates, inflation, and illegal immigration. “We’re not going to camp there. Let me put it that way,” Bolus replied. “We’re not camping on the Beltway. We’re gonna have our voices heard and let them understand this is only the tip of the iceberg.”
Right now, local news knows of at least two more convoys planned in the DC region. The People’s Convoy is expected to be in town on March 5. The group is expected to leave Adelanto Stadium, CA on the morning of Feb. 23 with stops in eight cities before arriving in Hagerstown, Maryland on the evening of March 4.
“it’s time for elected officials to work with the blue-collar and white-collar workers of America and restore accountability and liberty –by lifting all mandates and ending the state of emergency – as COVID is well-in-hand now, and Americans need to get back to work in a free and unrestricted manner,” the group said in a press release.
Comptroller calls for ending penalties on late payments
Illinois Comptroller Susana Mendoza is calling for repealing a law that imposes a 12 percent interest whenever the state is late paying its bills, along with a program that allows private investors to purchase the debt owed to vendors and collect that interest penalty. Speaking to a Senate budget committee Tuesday, Mendoza said the state is nearly caught up on its bill backlog and that those two programs are no longer needed.
“This program has allowed private lenders to loan money to state vendors, then rake in the 12 percent interest that state taxpayers were on the hook for with these late bills,” Mendoza said. “Now happily the days of connected private lenders profiting off the state’s financial problems can and should be over.”
Mendoza was referring to a 1993 law known as the Prompt Payment Act, which says that whenever the state fails to pay a bill within 60 days, the state must pay an interest penalty of 1 percent per month, or 12 percent per year.
During the height of the two-year budget impasse that stretched from 2015 to 2017, the backlog of past due bills climbed to as high as $16.7 billion, with interest penalties accruing on those bills. So in 2016, lawmakers authorized the Vendor Payment Program, which authorized “qualified purchasers” – typically, wealthy investors – to purchase the bills by paying off the principal owed to those vendors, then collecting that money back from the state with 12 percent interest. In 2020, however, some of the investors taking part in the payment program criticized Mendoza for paying off the principal owed to the vendors, but not paying off the interest owed to the investors.
Mendoza’s spokesperson, Abdon Pallasch, said Tuesday that more than $665 million in interest penalties have now been paid to those investors and that about only $41 million is still owed to them.
Meanwhile, the state’s bill backlog is now down to about $3.6 billion as of Tuesday. That includes about $900 million in late health care bills from the state’s group health insurance plan, which Gov. JB Pritzker has proposed paying off in next year’s budget. Bills paid out of the state’s General Revenue Fund, Mendoza said, are now paid, on average, within 17 days of being received by her office.
With the state’s cash flow problems now largely ironed out, Mendoza said, she believes it is time to phase out the Vendor Payment Program, and she said she believes the Prompt Payment Act has failed to achieve its purpose.
“I understand that the intent of the act is supposed to have a deterrent effect on budget makers that forces them to keep a budget living within its means,” she said. “However, I would argue that this interest expense is not penalizing state government, it penalizes taxpayers.”
She said that during the budget impasse, the state paid out more than $1 billion in interest penalties, something she said was proof that the penalties did not force lawmakers or other state officials to be more disciplined with their budgets.
“The days of taxpayers being on the hook for billions of dollars in late payment interest penalties should be over at a time when we finally have our heads above water,” she said. “It is now when we need to take a hard look at what happened and to reform our policies so that taxpayers are not having to pay for these exorbitant costs.”
Illinois Department of Labor Continues Helping Large Businesses Comply with Equal Pay Act Reporting Requirements
The Illinois Department of Labor (IDOL) is incrementally notifying large businesses in Illinois regarding compliance with the Equal Pay Act reporting requirements. The registration deadline for the second tier of businesses is June 22nd.
In 2021, the Illinois General Assembly passed and Governor Pritzker signed legislation updating the Equal Pay Act of 2003, requiring private businesses with 100 or more employees in the State of Illinois to report certain payroll information to IDOL (see PA 101-656 and PA 102-36).
IDOL is communicating directly with businesses regarding registration to help them with the process. Each business will receive no less than 120 days advance notice of their registration deadline. It is important to note that some businesses may not receive their assigned registration date for over a year. Public employers are exempt from these reporting requirements.
Building Blocks of Success: IDOT announces March dates for Disadvantaged Business Enterprise program workshops
The Illinois Department of Transportation is hosting free virtual workshops in March 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:
• March 16, 10 a.m. to noon: Force Account (T&M) Work
• March 17, 10 a.m. to noon: Contracts
• March 21, 10 a.m. to noon: Materials A to Z
• March 22, 10 a.m. to noon: Getting Paid
• March 24, 10 a.m. to noon: Daily Documentation
Future topics covered include understanding insurance and bonding requirements, scheduling work, avoiding pitfalls, 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.
Executive Vice President
Joliet Region Chamber of Commerce & Industry