Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
Big movement this week on the Unemployment Insurance Trust Fund payment as it moved through the House and back to Senate quickly and now signed by Governor Pritzker today. Full recap below. Just a heads up for you loyal readers, the Roundup will be back the week of April 4th as I’ll be out on vacation next week.
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Lawmakers direct $2.7 billion in federal funds toward $4.5 billion unemployment fund deficit
The Illinois House on Wednesday advanced a measure to allocate $2.7 billion in federal American Rescue Plan Act funds to pay down more than half of Illinois’ outstanding $4.5 billion Unemployment Insurance Trust Fund debt.
The measure, an amendment to Senate Bill 2803, also included over $1 billion in general revenue fund spending to pay down other state debts. Debate lasted nearly an hour and became contentious at times as the bill passed 68-43 with only Democratic support. The Senate was expected to take it up when they returned Thursday.
The trust fund is the pool of money paid into by businesses that funds unemployment claims. The debt accrued as the state borrowed from the federal government at the height of the pandemic to keep the trust fund solvent amid an unprecedented crush of claims.
When states accrue trust fund debt, the ways to pay it down have historically included raising insurance premium rates paid by employers, decreasing unemployment benefits, or seeing a new influx of cash, such as federal, state or private funds.
Rep. Jay Hoffman, a Swansea Democrat who is a lead House negotiator on unemployment issues, said discussions continue with business and labor interests on addressing the remaining $1.8 billion. But at least $2.5 billion was needed to keep those negotiations moving forward. Governor Pritzker’s office says negotiations on how to fill the remainder are continuing, but business sources say talks have broken off indefinitely and that, in the absence of renewed negotiations, employers will be hit with an additional $509 million a year in tax hikes until the deficit is completely eliminated.
Republicans said Democrats should have paid down all of the debt, while Democrats defended the move as one that makes the deficit manageable while allowing for other needed ARPA expenditures. Springfield Republicans say the figure agreed to in the bill is too stingy and would force a “back-door tax increase.” And with negotiations between labor and business groups over how to refill the remaining $1.7 billion hole at least temporarily stalled, the money will have to come from a combination of tax hikes on employers and benefit cuts for workers, they contend.
SB 2803 – Full bill & amendment information
Governor Pritzker’s Statement on the House Passage of SB 2803
Illinois is putting our fiscal house in order and paying off our debt. I applaud House Democrats for prioritizing legislation that will use our resources in the most fiscally responsible way: SB2803 will pay down more than $4.1 billion in debt. I especially appreciate the tireless work to dedicate additional revenues to one-time efforts that will produce a stronger budget for years to come, and I extend my gratitude in particular to Leaders Greg Harris, Marcus Evans and Jay Hoffman and Reps. Will Davis, Robyn Gabel, Lisa Hernandez and Michael Zalewski for advancing this priority.
I’m disappointed that Republicans are putting their politics ahead of fiscal responsibility while Democrats in the General Assembly are taking the lead to put our fiscal house in order.
SB 2803 Key Facts
- As amended in the House, SB 2803 accomplishes several key goals the Governor laid out in his State of the State and budget proposal, paying off $4.1 billion in debt:
- Dedicates a substantial amount of remaining ARPA recovery fund dollars to ($2.7 billion) to stabilize the state’s unemployment insurance trust fund, helping small businesses
- Eradicates unfunded liabilities in the College Illinois! program, which has been on the brink of insolvency
- Pays of nearly $900 million in legacy debt for employee health insurance
- Makes an extra payment of $300 million to the state’s pension funds, reducing liabilities over $1 billion
Governor Pritzker Signs Landmark Legislation Paying Off $4.1 Billion in Debt
Governor Pritzker today signed SB2803, which pays off $4.1 billion in debt and saves taxpayers hundreds of millions of dollars in interest payments. The Governor and Democratic leaders in the General Assembly gathered Thursday to celebrate the passage of the unprecedented measure, noting that watchdog groups like Civic Federation are praising the fact that Illinois is “in a much stronger financial position than it has been for many years” under Governor Pritzker’s prudent leadership and partnership with the General Assembly.
“Today we mark yet another milestone in getting Illinois’ fiscal house in order — paying down $4.1 billion in debt for health insurance, college programs, pensions and unemployment,” said Governor JB Pritzker. “These actions are saving Illinois taxpayers hundreds of millions of dollars in interest payments and reducing the burden that would fall onto businesses and workers over the next decade. Democrats in the General Assembly are overcoming the difficult circumstances of our past and putting working families first.”
“The Civic Federation commends the Governor and other state leaders for moving to further reduce the State’s outstanding labilities and thereby improve its financial condition,” said the Civic Federation in its Illinois FY23 Analysis and Recommendations Report. “Illinois is now in a position where it can make plans to support budgetary stability, including increasing budgetary reserves and avoiding future bill backlogs.”
SB2803 builds on Governor Pritzker’s commitment that working families see the benefits of federal recovery fund dollars through responsible fiscal management, the Back to Business support program, workforce development, rental relief, childcare support, rebuilding Main Streets, public health projects including vaccination clinics, jumpstarting capital projects and infrastructure jobs, rejuvenating the tourism industry and investing in violence prevention.
“We are continuing our responsible use of federal dollars by providing $2.7 billion in tax relief to businesses and benefit protections for workers,” said Senate President Don Harmon (D-Oak Park). “At the same time, our investments in college savings, health insurance and the retirement security of teachers, prison guards, state troopers and university workers will again demonstrate strength through stability for the hard-working people of our great state.”
“This is what fiscal responsibility looks like,” said House Speaker Emanuel “Chris” Welch (D-Hillside). “We’re putting $4 billion toward our state liabilities and saving taxpayers more than a billion dollars. It’s disappointing that every Republican voted against this responsible legislation, but I’m proud Democrats are united in building a strong financial future for Illinois.”
Statewide Unemployment Rate Down, Payroll Jobs Up in February
The Illinois Department of Employment Security (IDES) announced that the unemployment rate fell -0.2 percentage point to 4.8 percent, while nonfarm payrolls increased by +19,600 in February, based on preliminary data provided by the U.S. Bureau of Labor Statistics (BLS) and released by IDES. The January monthly change in payrolls was revised from the preliminary report from +8,600 to +10,800 jobs. The January unemployment rate was unchanged from the preliminary report, remaining at 5.0 percent. The February payroll jobs estimate and unemployment rate reflects activity for the week including the 12th.
In February, the industry sectors with the largest over-the-month gains in employment were: Trade, Transportation and Utilities (+8,300), Manufacturing (+4,800), Leisure and Hospitality (+4,800) and Educational and Health Services (+4,300). The industry sectors that reported monthly payroll declines were: Professional and Business Services (-3,400) and Financial Activities (-400).
“Illinois’ economic outlook remains positive,” said Deputy Governor Andy Manar. “The Pritzker Administration and IDES are dedicated to helping employers and workers connect across any industry and in every corner of the state. To find the latest opportunities and resources, businesses and job seekers can visit Get Hired Illinois or IllinoisJobLink.com today.”
The state’s unemployment rate was +1.0 percentage points higher than the national unemployment rate reported for February, which was 3.8 percent, down -0.2 percentage point from the previous month. The Illinois unemployment rate was down -2.1 percentage points from a year ago when it was at 6.9 percent.
Compared to a year ago, nonfarm payroll employment increased by +244,800 jobs, with gains across all major industries. The industry groups with the largest jobs increases were: Leisure and Hospitality (+96,600), Trade, Transportation and Utilities (+41,400), and Professional and Business Services (+41,300). In February, total nonfarm payrolls were up +4.3 percent over-the-year in Illinois and up +4.6 percent in the nation.
The number of unemployed workers was down from the prior month, a -2.8 percent decrease to 308,600, and was down -28.8 percent over the same month for one year ago. The labor force was up +0.4 percent over-the-month and up +2.0 percent over-the-year. The unemployment rate identifies those individuals who are out of work and seeking employment. An individual who exhausts or is ineligible for benefits is still reflected in the unemployment rate if they actively seek work.
Push to Extend Student Loan Zero Interest Loans
Around 37 million federal student-loan borrowers were spared $195 billion in loan payments since the government froze their payments at the onset of the pandemic, and many of them are likely to struggle with their debts when the moratorium is lifted, according to a report released Tuesday by the Federal Reserve Bank of New York.
Borrowers haven’t been required to make payments on so-called direct federal student loans, and interest rates on those loans have been set at zero, since Congress passed emergency legislation in March 2020, a pause that has since been extended through May 1 and could be extended further.
The bank found borrowers with a certain type of federal loan that is held privately, who didn’t have their payments frozen or had it frozen only briefly by their banks, had a 33% higher delinquency rate on their nonstudent, nonmortgage debt since late 2020 compared with the direct federal borrowers who remained in forbearance. The authors said they expected federal borrowers who had their payments frozen to have similar trouble managing their debts when the freeze ends.
The analysis comes as the Biden administration considers its next steps for dealing with the roughly $1.6 trillion federal student-loan portfolio. The administration is under pressure from many congressional Democrats and supporters who want the freeze extended beyond May 1 for what would be the fourth time under President Biden, and the sixth time since it was adopted.
Many of those lawmakers, including Senate Majority Leader Chuck Schumer, of New York, and Massachusetts Sen. Elizabeth Warren, also want the administration to move forward with plans to cancel tens of thousands of dollars’ worth of debt per borrower, though Mr. Biden has been reluctant to pursue that policy in the belief that it would be more appropriate for Congress to settle the issue of debt cancellation.
Building Blocks of Success: IDOT announces dates for Disadvantaged Business Enterprise program workshops
The Illinois Department of Transportation is hosting free virtual workshops 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:
April 5, 10 a.m. to noon: Understanding Insurance & Bonding Requirements, Part 1
April 6, 10 a.m. to noon: Understanding Insurance & Bonding Requirements, Part 2
April 12, 10 a.m. to noon: Scheduling Work
April 21, 10 a.m. to noon: Avoiding Pitfalls
May 4, 10 a.m. to noon: How to… IDOT Electrical Work
Workshop information 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