Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”

Chamber members:

Congress returns this week to debate access to abortion, more U.S. aid to Ukraine and new funding to combat Covid-19, taking up high-stakes domestic and foreign matters ahead of a late-May Memorial Day break.

The Senate is expected to clash over an abortion measure as Democrats and Republicans maneuvered following the leak of a draft Supreme Court opinion that suggested the court was preparing to overturn the landmark Roe v. Wade decision.

Locally, Eric Mattson was appointed to represent the 43rd state Senate in the seat that’s been held by former Sen. John Connor over the weekend. Senator Connor had announced he was stepping down to care for a family member. We thank Senator Connor for his service and working with us here at the chamber.

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What’s Happening
Inflation cooled off slightly in April as the pace of both yearly and monthly price growth dropped, according to data released Wednesday by the Labor Department. The consumer price index (CPI), the Labor Department’s closely watched gauge of inflation, rose 8.3 percent over the past 12 months and 0.3 percent in April alone. Economists expected annual inflation to drop to 8.1 percent in March and with a 0.2 percent rise in prices, according to consensus estimates.

Inflation slowed from an 8.5 percent annual rate in March and a whopping 1.2 percent month-over-month rise as gas and oil prices declined from a peak driven by the war in Ukraine.

Gasoline prices dropped 6.7 percent in April and energy prices on the whole dropped 2.7 percent last month after double-digit gains in March. Gas prices are still up 44.7 percent over the past 12 months, and energy prices remain 30.3 percent higher than they were in April 2021.

In Congress, the House passed legislation to send $40 billion in emergency aid to Ukraine and U.S. allies in the region

President Biden is scheduled to depart the White House at 10:20 a.m. for Illinois, where he is set to visit a family farm in Kankakee and give remarks about the impact of inflation on food supply. At 4 p.m. C.T. he is set to speak at the 40th International Brotherhood of Electrical Workers International Convention in Chicago.

Good News to Share
The U.S. added a robust 428,000 jobs in April, according to new data from the Labor Department.

A point of reference: Economists had expected roughly 300,000 jobs to have been created, so this was a great month. It also means almost all the roughly 21 million jobs lost at the beginning of the pandemic have been recovered.

How is inflation affecting this good news? Despite rising inflation, high gas prices, and a first-quarter decline in economic growth, consumer and business spending have continued to grow—even when adjusted for inflation.

What about the unemployment rate? It remained unchanged at 3.6 percent. That’s just 0.1 percentage point above the level in February 2020.

More Good News – Illinois Tax Revenue Soars
It may be the last big gush of money before the numbers shift, but state of Illinois tax revenues absolutely soared last month compared to a year ago. Personal income tax receipts in April, still the state’s largest tax-paying month, hit $5.440 billion, up 99.9% from the $2.721 billion collected in April 2021.

Corporate income tax growth was also peppy, soaring 63.5%, up from $1.13 billion a year ago to $1.847 billion now. For the year to date—Illinois’ fiscal year ends June 30—individual income tax receipts are up $3.91 billion, or 18.8%, and corporate income taxes are up $1.973 billion, or 56.5%.

The figures come from the Illinois Comptroller’s Office via the Commission on Government Forecasting & Accountability, the Legislature’s fiscal unit. And they explain why Illinois, in Gov. J.B. Pritzker’s new fiscal 2023 budget, has been able to boost spending on items such as social services and public schools while also offering taxpayers $1.8 billion in one-time cuts and rebates and paying off hundreds of millions of dollars in state health care and pension debt.

While reporting the good news, COGFA warned it may not continue much longer, with some of the revenue boost due to one-time factors. For one, changes in federal tax policy have encouraged some people to advance their payments, something that helps in one year and will hurt in another. Here in Illinois, the deadline for individual income tax payments was delayed a month last year, to May 17, meaning that April-to-April comparisons will be misleading.

COGFA also noted well-above-average stock market returns last tax year boosted state income from capital gains taxes, but do not appear in the offing to repeat so far this year; disappearing federal stimulus spending; and the impact of inflation and the war in Ukraine that could put a damper on state economic activity.

Still, sales tax receipts, which are less subject to some of the factors above, were up 5.5% last month and 14.2% year to date. Bottom line – the party’s not over yet, but the state might want to tread carefully as mentioned before in past budget articles.

Governor Pritzker Lowers Pension Liabilities Through Extended Buyout Opportunities, Additional Payments
Governor JB Pritzker signed House Bill 4292 into law, extending the pension buyout option for state employees to 2026. The bill authorizes $1 billion in additional general obligation bond funding to extend the buyout program. This action was another important step in the Governor’s mission to ensure fiscal responsibility and reduce overall liability costs placed on taxpayers and follows the inclusion of an additional $500 million contribution to the retirement systems above certified amounts across FY2022 and FY2023.

“Responsible fiscal management means taking every action possible to address our pension obligations while honoring promises made to current and retired workers – promises made by governors and legislators on both sides of the aisle,” said Governor JB Pritzker. “The expansion of this bipartisan pension buyout program builds on Democrats’ work this session to save taxpayers nearly $2 billion in pension liabilities by paying down our pension debt in advance.”

“I’m happy to see this bipartisan solution to address our state’s pension liability is being extended,” said Representative Mark Batinick (R-Oswego). “I have been working on this plan for years and am pleased to see it has been effective for our state. This is one of the ideas I am most proud of and it’s great that it will continue to help Illinoisans further into the future.”

“When legislators of both parties can come together on a plan to save taxpayers money by reducing the state’s pension shortfall, this is an occasion to celebrate,” said Illinois State Comptroller Susana A. Mendoza. “This is yet another example – along with a billion dollars for the Rainy-Day Fund and half-a-billion in additional pension payments – that show Illinois is saving, not spending, and earning credit upgrades.”

State employees will now have the opportunity to opt for a pension buyout for an additional two years, through June 30, 2026. $1 billion in bond authorization was approved to fund these buyouts. Previously the buyouts were offered only through June of 2024.

Governor Pritzker’s FY2023 budget authorized an extra $500 million payment to the state pension fund beyond the required annual contribution to reduce overall pension liabilities. The additional payment will save taxpayers an estimated $1.8 billion.

The bipartisan expansion of the buyout option honors the commitments made to state employees while giving them the flexibility to spend pension dollars when needed. State employees, downstate teachers, and university employees who meet certain eligibility requirements at retirement may opt for an accelerated pension benefit payment in exchange for forfeiting a portion of future cost-of-living increases on retirement benefits. Over 4,500 state and university employees and teachers have already opted for the buyout.

Illinois’ Earns Credit Upgrade from S&P: Illinois’ Sixth Credit Upgrade Under Gov. Pritzker
Governor JB Pritzker applauded S&P Global Ratings’ upgrade of Illinois bonds. This latest action means that Illinois has now received two-notch bond rating upgrades from the three major credit rating agencies in the last year – a total of six upgrades in less than a year. This fiscal progress was attained due to strong fiscal leadership by Gov. Pritzker and Democrats in the General Assembly, despite a global pandemic and the economic challenges left by previous administrations.

S&P Global Ratings announced on Friday its second upgrade of Illinois’ bonds since July 2021. Fitch Ratings upgraded Illinois’ bonds by two notches this week, the first Fitch upgrade for Illinois’ General Obligation bonds since June 2000. Illinois received an upgrade from Moody’s Investor Service last month, the second such upgrade by Moody’s in 10 months.

“These achievements bear repeating: balanced budgets four years in a row, paying the state’s bills on time, early repayment of pandemic-related borrowing, clearing out debts left by previous administrations, making higher-than-required pension payments, setting aside $1 billion in savings for a rainy day. After more than 20 years without receiving a credit upgrade, the rating agencies are taking notice of our tremendous progress,” said Governor Pritzker. “Along with our partners in the General Assembly and my fellow constitutional officers, we will continue to build on our success and lead this state in a fiscally responsible manner.”

“The upgrade reflects what we view as improvement in the state’s financial flexibility and monthly revenue reporting transparency, continued timely budget adoption and elimination of the bill backlog, as well as recent surplus revenues being used to promote what we view as longer-term financial stability, although credit pressures remain,” S&P Global stated.

S&P last upgraded the state’s bonds in July 2021, and today’s analysis credited stronger-than-forecast tax revenues and transparent reporting both from the Comptroller and the Governor’s Office of Management and Budget aiding in addressing longstanding credit weaknesses.

The Governor thanked House Speaker Chris Welch, Senate President Don Harmon, Leader Greg Harris, Senator Elgie Sims, Comptroller Susana Mendoza and Treasurer Michael Frerichs for their ongoing commitment to Illinois’ fiscal well-being.

The upgrades follow the enactment of the state’s fourth balanced budget in a row, while providing $1.8 billion in tax relief to the working families of Illinois and marked Illinois’ first contribution to a Rainy-Day Fund in 18 years, as well as a $500 million extra payment toward the state’s pensions. The historic budget places Illinois it its strongest financial position in a generation while funding key investments for education, human services, law enforcement and violence prevention.

S&P Global upgraded Illinois’ rating on its General Obligation bonds to BBB+ (stable outlook) from BBB (positive outlook), and also upgraded Build Illinois sales tax bonds to A- (stable outlook) from BBB+ (positive outlook).

Fitch upgraded Illinois’ rating on its General Obligation bonds to BBB+ (stable outlook) from BBB- (positive outlook), and also upgraded Build Illinois sales tax bonds to A (stable outlook) from BBB+ (positive outlook).

Moody’s upgraded Illinois’ rating on its General Obligation bonds to Baa1 (stable outlook) from Baa2 (stable outlook), and also upgraded Build Illinois sales tax bonds to Baa1 from Baa2 while maintaining their stable outlook.

The rating of a state’s bonds is a measure of their credit quality. A higher bond rating generally means the state can borrow at a lower interest rate, saving taxpayers millions of dollars.

Between 2015 and 2017, the State of Illinois suffered eight credit rating downgrades and sat at the top of many analysts’ lists of the worst managed states in the nation. At its worst, Illinois’ bill backlog hit nearly $17 billion.

New PACE Transit joins Joliet Gateway Center
U.S. Secretary of Transportation Pete Buttigieg gave an in-person boost to the expansion of the Joliet Gateway Center as the area’s most comprehensive public transportation hub. A ribbon cutting ceremony on Wednesday May 4 mark the opening. Secretary Buttigieg joined Illinois Gov. JB Pritzker and US Rep. Bill Foster, Joliet Mayor Bob O’Dekirk and other local officials at the opening. The new PACE Transit Center at 90 East Jefferson marks the newest expansion of the city’s Gateway Multimodal Transit Center. The center has all the most modern amenities, including real-time bus departure information, security lighting, and a climate – control waiting area.

Gov. Pritzker Announces $250 Million in Back to Business Grant Awards for Small Businesses
During National Small Business Week, DCEO announced the final awards for its Back to Business (B2B) grant program. Through the program, a total of $250 million was distributed to nearly 6,500 businesses in 475 cities and towns across Illinois. The B2B program focused on hard-hit industries and communities, and more than half of the awards went to businesses owned by people of color.

Stay well,

Mike Paone
Executive Vice President
Joliet Region Chamber of Commerce & Industry
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