Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
President Biden delivered his second State of the Union address last night amid the customary pomp and circumstance. Next Wednesday, Governor Pritzker will deliver both his Budget and State of the State Address.
Locally, in bridge news, IDOT announced that the McDonough Street bridge over the Des Plaines River, in Joliet, will reopen, weather permitting, Monday, Feb. 13. Shortly after the reopening of McDonough Street bridge, the Jefferson Street (U.S. 30) bridge will be closed until, weather permitting, the evening of Friday, Feb. 17.
*Government Affairs Roundup brought to you by CITGO & Silver Cross Hospital*
Takeaways from President Biden’s 2023 State of the Union Address
President Joe Biden used his visit to Congress last night to tout his party’s accomplishments, but he also spoke directly to Republicans who oppose his priorities, calling for cooperation and asking for help on key to-do list items including raising the debt limit.
President Biden took a moment at the top of his speech to offer an olive branch to House Speaker Kevin McCarthy (R-Calif.). “Speaker, I don’t want to ruin your reputation, but I look forward to working with you,” he said to laughs from his audience and even McCarthy himself as he turned back to look at him.
He also took a jab at GOP members who are willing to vote against bills like the bipartisan infrastructure package, but are happy to reap the rewards: “To my Republican friends who voted against it but still ask to fund projects in their districts, don’t worry. I promised to be the president for all Americans. We’ll fund your projects. And I’ll see you at the ground-breaking,” he said with a smile. And although some of his Biden’s remarks angered his GOP detractors, Biden continued to make his appeal to work with them throughout his speech.
The president spent 73 minutes delivering his speech from the House rostrum Tuesday night and then another hour-plus afterwards chatting, shaking hands with lawmakers and Supreme Court justices, facetiming with members’ kids and posing for selfies. The man loves to schmooze
President Biden used his State of the Union speech to portray the U.S. as a country in recovery, and he is right that there has been a lot of good news lately. Price increases have slowed. Covid deaths are down about 80 percent compared with a year ago. Ukraine is holding off Russia’s invasion. Congress passed legislation addressing climate change, infrastructure and gun violence, and some of it was bipartisan.
What Biden did not emphasize last night was that the U.S. also faces a lot of uncertainty. Depending on what happens over the next few months, the current moment may end up looking like a temporary high point for the country and Biden’s presidency — or another step toward better times.
Governor Pritzker Announces $40 Million Grant Opportunity to Develop Megasites
Governor Pritzker joined state and local leaders, along with the Department of Commerce and Economic Opportunity (DCEO), the Chicago Neighborhood Initiatives (CNI), and Intersect Illinois in Pullman to announce $40 million in Rebuild Illinois Capital Funds to supercharge the development of megasites – large, developed sites ready for occupancy for manufacturers, distribution centers, industrial centers, and more. The competitive grant opportunity is open to governments, private businesses, or non-profits to support site development in order to attract large-scale industrial investments in underutilized areas and former industrial sites.
“Major job creators are consistently looking for investment-ready sites they can get up-and-running in a short amount of time – and Illinois is home to some of the largest such sites in the country, all ripe for fresh development,” said Governor JB Pritzker. “The new Megasites Investment Program grants will help communities innovate their own business attraction efforts and will spur economic development in communities across our great state.”
With sectors like clean energy and manufacturing rapidly expanding in the U.S., major job creators are looking for large, investment-ready sites to locate their growing businesses. By providing grants that enable entities to create investment ready sites, Illinois is increasing its competitiveness for large-scale investment.
The Megasites Investment Program funding will be issued through a competitive Notice of Funding Opportunity (NOFO) and is open to private entities, non-profits, or local governments. Grants will range from $250,000 to $5 million, with the grant award amount determined by acreage (up to $5,000 per acre). Eligible sites must contain at least 200 contiguous acres and applicants must own or have an agreement in place to acquire the property at the time of the application. The NOFO opportunity also requires 1:1 capital investment match.
Underserved areas and areas located in Opportunity Zones are prioritized through the application process, which allows for the developed sites to market additional incentives to potential business prospects.
Funding can be used on a variety of site development expenses, including infrastructure expenses such as roads, electricity, water, broadband and other utilities; site development expenses like grading and drainage, rehabbing existing structures, remediation and cleanup; and land acquisition and related expenses. A link to the application – including information on an informational webinar on February 21 – can be found here. Applications will be accepted through April 6, 2023.
Illinois is a national leader in manufacturing, warehousing, and distribution – serving as home to three of the top ten industrial sites in the country, with the largest industrial park in America located in Elk Grove Village (2022 Business Facilities Rankings). As Illinois invests in areas in need of revitalization and further grows its economy, new megasites will serve as a major draw for job creators.
“Megasites are a major draw for companies looking to locate or expand in Illinois and given our superior infrastructure and workforce there’s boundless investment opportunities throughout the state,” said DCEO Acting Director Kristin A. Richards. “Megasites are akin to a turn-key house: move-in ready with zero hassle – which is exactly what fast-growing businesses are looking for.”
Site selection is a critical component of Illinois’ business attraction efforts. Intersect provides hands-on support for companies looking for locations in Illinois, and has a variety of online resources, including a property finder featuring more than 150 investment-ready sites in Illinois as well as a standalone guide featuring megasites above 1,000 acres – designed for large job creators.
One of the goals of the Megasites Program is to attract jobs creators and revitalization for areas that are underutilized, such as former industrial sites, brownfields, and agricultural sites. Whether it’s an industrial park featuring various businesses, or a large facility dedicated to manufacturing soup to nuts, megasites are designed to spur development and create jobs in Illinois’ communities.
“As companies act on needs to ramp up large-scale production quickly, the availability of sites that can handle their requirements – from electricity, to water, to rail access – is critical to winning deals,” said Intersect Illinois CEO Dan Seals. “We’re fortunate to have many quality sites in Illinois and are working to make sure they are ready for companies to set up rapidly.”
Over the past several years, Illinois has launched new business attraction incentives while making improvements to its existing suite. Recent programs and improvements to business attraction include:
- Reimagining Energy and Vehicles (REV Illinois)
- Provides up to 100 percent income tax withholding for new jobs created and other benefits for manufacturers of Electric Vehicles, component parts, and related clean energy manufacturers.
- Manufacturing Illinois Chips for Real Opportunity (MICRO)
- Provides up to 100 percent income tax withholding for new jobs created for manufacturers of microchips and semiconductors and associated component parts.
- Economic Development for a Growing Economy (EDGE):
- With more than $1 billion in investment from companies receiving EDGE credits in 2022, EDGE is Illinois’ premier incentive program. EDGE provides competitive tax incentives to businesses in all industries locating or expanding in Illinois.
- Enterprise Zones (EZs):
- Designated zones designed to stimulate economic growth and neighborhood revitalization in economically depressed areas of the state through state and local tax incentives, regulatory relief, and governmental services.
- High Impact Businesses (HIB):
- Supports large-scale economic development activities by providing tax incentives to companies that make substantial capital investments in operations and create or retain a large number of jobs.
Illinois’ biometric privacy law strengthened by latest high court ruling
People who’ve been subject to fingerprinting, face or retinal scans as either employees or customers of Illinois companies have five years to file lawsuits if they believe the business violated a stringent state privacy law, the Illinois Supreme Court ruled this week.
It’s the latest in a handful of cases that have reached Illinois’ high court in recent years, all refining the state’s Biometric Information Privacy Act. Also known as BIPA, the first-of-its-kind law has, since 2008, made Illinois the only state that grants a private right of action to sue over the improper collection and mishandling of biometric data.
The justices on Thursday ruled BIPA has an unequivocal five-year statute of limitations on all claims under the law – not a one-year window as employers and business groups had hoped for.
In this case, logistics company Black Horse Carriers Inc., which has since been acquired by trucking giant Penske, faced a class action lawsuit. A former employee initiated the suit, alleging the company violated BIPA by requiring time clock fingerprint authentication without maintaining a publicly available policy on how the company would treat employees’ biometric data.
The suit also claimed Black Horse failed to provide notice to employees that the timeclock was collecting their fingerprints, and didn’t explicitly get employees’ consent. The company argued the court should’ve applied the one-year statute of limitations under Illinois’ Right of Publicity Act. But the court unanimously disagreed.
In issuing a blanket five-year statute of limitations for all BIPA claims, the 5-0 majority of the court emphasized that “the full ramifications of the harms associated with biometric technology is unknown.” Without the law, the court wrote, individuals whose biometric data was improperly collected or disseminated might never even know it – at least until they felt the consequences.
“We find that a longer limitations period would comport with the public welfare and safety aims of the General Assembly by allowing an aggrieved party sufficient time to discover the violation and take action,” the court ruled.
Danielle Kays, an attorney with Chicago-based firm Seyfarth Shaw LLP with experience in cases involving biometric information, said employers like her clients were already working under the assumption that a five-year statute of limitations was likely to prevail. But this week’s ruling, she said, provides more clarity in a law that’s still taking shape in a sea of legal challenges.
Nearly 1.5 million Illinoisans were eligible for their share of a $650 million class action settlement with Facebook under BIPA in 2020, a five-year case that was one of the first among thousands of suits filed under the law, with the trend really taking off around 2018, Kays said.
She said she advises clients to stay on top of compliance that may evolve with each major decision, including this week’s, which solidifies a five-year statute of limitations. “Many cases have been stayed waiting for those decisions,” Kays said. “So there are many factual and legal defenses that have not been litigated still.”
Thursday’s opinion was another legal victory for proponents of BIPA – especially a handful of law firms specializing in filing class action cases over biometric data. Those attorneys have made the same basic argument in thousands of lawsuits over the last several years: if someone’s identity is stolen, they can obtain a new social security number. But if their biometric data is stolen, it’s impossible to get a new fingerprint or face.
So far, Illinois’ high court has agreed – as did a federal jury in October, granting $228 million in damages in a class action BIPA case against BNSF Railways, the first jury test of the law.
The Black Horse Carriers case was argued in front of the court in September, but Kays and other attorneys involved in BIPA litigation are waiting on an even more consequential decision in a class action suit against fast food chain White Castle.
In that case, the court is being asked to decide whether each time an employee clocks in and out using his or her fingerprint constitutes a separate violation of BIPA. Such a ruling could prove extremely costly to employers, as damages under the law start at $1,000 for negligent violations and $5,000 for violations deemed “reckless.”
Execs pitch 10-year income tax hike to cover pensions
Asserting that Illinois’ financial stability remains at risk, the organization that represents Chicago’s biggest corporations is pitching a plan it says would save taxpayers tens of billions of dollars in the long run by adding a 0.5% surcharge to the state’s income tax for the next decade.
In a report being issued today that already has been run by top Springfield leaders, the Civic Committee of the Commercial Club of Chicago claims that a recent improvement in state finances, while real, is “not sustainable” so long as the state faces a backlog of pension bills that now totals at least $135 billion.
“Now more than ever, it is crucial to build on our positive momentum,” says the report, helmed by retired PricewaterhouseCoopers executive Jay Henderson. “Acting now will secure Illinois’ future and lay a foundation for long-term growth. It will also signal to individuals and businesses that Illinois has turned a corner on its finances and demonstrate what we know to be true—that Illinois is a wonderful place to live, work and do business.”
The committee has rolled out a series of tax-stability plans in recent years only to see them fail to get very far amid Springfield squabbles over tax rates, spending cuts and fiscal priorities. This time, with a governor now in his second term who has had some fiscal success, the organization is floating a more narrowly focused proposal in hopes that Gov. J.B. Pritzker is interested in more success.
The core of the new plan is that, much like paying off your home mortgage early to avoid interest costs later, the state can save money—a projected $40 billion—by moving to fully finance underfunded employee retirement systems years earlier than the state now intends.
Under current law, the state’s pension plan will not reach the 90% level of assets to liabilities until 2045, even though the taxpayers are paying more than $10 billion a year now. Under the committee plan, the state would reach its target about a decade earlier and be 100% funded.
The state would reach that goal faster because it would be contributing an extra $2.9 billion a year for 10 years. That’s the anticipated revenue from bumping up the individual income tax rate 0.5%, to 5.45%, and the corporate rate 0.7%, to 10.2%.
Committee members emphasized that every penny of the revenue from the tax hikes would be earmarked in a legal lockbox of sorts for the pension systems. Any surplus would go to the state’s rainy-day fund, which the report urges be tripled to $6 billion, a figure it said will be in line with other states. Doing so will allow the Illinois credit rating, which still is the lowest of the 50 states despite recent increases, to hit the AA level within five years, the report says.
“The Civic Committee recognizes that there may be other ways to address the state’s fiscal challenges,” said Derek Douglas, who recently took over as president of the group. In fact, the report also urged consideration of taxing retirement income and expanding the sales tax to cover more services. But the income tax surcharge is the heart of the new proposal. It comes as both Pritzker and Chicago Mayor Lori Lightfoot have begun to advance payments to their pension funds, arguing that earlier payments will save money.
The proposal notably does not seek any cuts in promised pension payments to retirees. “Our approach in this report is based on the conclusion that we must accept the (Illinois) Supreme Court’s rulings on pension reforms and should instead focus on how to most effectively fund the plans.” Nor does it particularly push spending cuts, perhaps a political nod that Democrats hold the governorship and supermajorities in the Legislature. The report merely urges “more extensive work to identify opportunities for implementing cost discipline.”
Also likely to draw fire is a section in the proposal advocating that the state eliminate its estate tax, something that would particularly benefit corporate CEOs. Henderson said the levy puts Illinois at a competitive disadvantage to the 37 states that do not have such a levy.
Pritzker, Senate President Don Harmon and House Speaker Emanuel “Chris” Welch had no immediate comment on the proposal. Douglas said leaders he spoke with “appreciate the flexibility” in the proposal. “I left optimistic that at least we can engage in a dialogue,” he said, adding, “There were no commitments.”
What to know ahead of Governor Pritzker’s budget proposal to lawmakers
Governor JB Pritzker’s second-term legislative agenda will kick off in earnest next week as he proposes his fifth annual state budget to lawmakers in the General Assembly. But while a governor’s proposal usually provides the framework for the state’s annual spending plan, it rarely makes it through the General Assembly untouched by lawmakers who have their own spending priorities.
The monthslong negotiating process involves dozens of budget hearings and behind-closed-doors meetings, eventually culminating in the budget’s passage – in normal years – sometime before the end of the legislative session. This year, lawmakers are scheduled to adjourn on May 19.
Here’s what to watch for ahead of Pritzker’s Feb. 15 address:
While there are hundreds of funds in the state treasury with statutory requirements for how the money is spent, the most scrutinized is the General Revenue Fund, or GRF. That pool of money – which last year topped $50 billion for the first time – is the state’s main discretionary spending account, meaning lawmakers have the greatest authority to move it around.
Generally, about 80 percent of GRF spending is allocated between pension payments (roughly 21 percent in the current fiscal year), K-12 education (21 percent), human services (19 percent) and health care (17 percent). The fund’s main revenue sources are personal and corporate income tax and sales tax, along with some federal revenues and other state sources.
Since each budget allocates money collected over a future 12-month period, lawmakers generally base their spending proposals on economic estimates provided by the state’s two main forecasting agencies.
Those are the legislative Commission on Government Forecasting and Accountability, also known as COGFA, and the Governor’s Office of Management and Budget, also known as GOMB. Each provides sophisticated economic projections laying out pessimistic, optimistic and middle-of-the-road looks at how state revenues may perform.
Illinois is coming off a record-high $50.3 billion in base revenue for the fiscal year that ended June 30 – about $8 billion more than had been anticipated when the Fiscal Year 2022 budget was initially approved in the spring of 2021.
Following that strong performance, lawmakers budgeted for an 8 percent decrease in the current fiscal year that began July 1. But in the seven months that have already passed in FY 2023, revenues are outpacing even last year’s strong performance by $2.3 billion, according to COGFA’s January report.
The strong revenue performance led COGFA to up its projections by $4.9 billion in a November forecast revision. The agency now anticipates revenue receipts will top last year’s totals by $259 million. GOMB, meanwhile, was more conservative, projecting revenues to spike by about $3.6 billion over initial estimates. That was the basis for a supplemental spending plan that included $2.7 billion in debt repayment and savings measures approved in the January lame duck session.
As the economic forecasting agencies mull the likelihood of a recession, we’ll be watching to see if Pritzker plans for a downturn in revenue or if the current-year projections for a surplus are updated in either direction.
In his second inaugural address last month, Pritzker telegraphed a few areas where he’d like to see increased state investment: child care, preschool and higher education. “I propose we go all in for our children and make preschool available to every family throughout the state,” he said in his speech. “And let’s not stop there. Let’s provide more economic security for families by eliminating child care deserts and expanding child care options.”
On higher education, Pritzker said he’d like to make college tuition “free for every working-class family.” Details on those plans are lacking, so one thing to watch will be whether the governor proposes spending amounts or any specifics as to how such plans would be implemented.
The governor’s K-12 education funding proposal is worth watching as well. The state’s school funding formula, revamped in 2017, calls for an added $350 million each year until all districts reach a point of funding adequacy.
The budget met that mark in three of four years during Pritzker’s first term, keeping funding flat in only the fiscal year that coincided with the beginning of the COVID-19 pandemic. It bears watching to see if another $350 million will be added to that in accordance with statute.
Spending growth is important to watch because GOMB’s five-year budget analysis projected Illinois could be in for a deficit of about $384 million and growing beginning in Fiscal Year 2025. Generally, that means the state must increase base revenues, cut expenditures or pass some combination of both.
While Illinois’ base sales and income tax rates have not changed in Pritzker’s time in office, the governor has taken credit for increasing revenues by eliminating some corporate tax exemptions and streamlining the way the state levies an online sales tax.
It remains to be seen what, if any, new revenue sources or structural spending reforms the governor might offer in his address next week.
At about $9.9 billion, the state’s GRF pension payment was its single biggest expenditure for the current year, topping the $9.8 billion spent on K-12 education. And yet unfunded pension liability grew to $139 billion last year, despite the state having upped its pension contribution by $500 million beyond required levels over two years, including $200 million in the current year.
Due to that added funding, COGFA predicted in a special November pension briefing that the required pension payment for the upcoming fiscal year will decrease by about $38 million from the current year.
While that number reflects the payment required by law, the COGFA report outlined another annually repeated criticism of the state pension funding formula: accountants say it comes up short. The report estimated the state would have to increase its contribution by $4.4 billion this year to stave off continued increases in unfunded liabilities.
While such a large infusion is unlikely – and the governor has staunchly resisted calls for a constitutional amendment to change pension benefits – we’ll be watching to see if he’ll propose any changes to the payment level required in law.
How easy a path the governor’s budget will have can often be gleaned from the initial response to it. And with Democrats dominating both chambers of the General Assembly, the response from the governor’s own party will likely be a stronger indicator.
Democratic comptroller Susana Mendoza, for example, said in a recent interview with Capitol News Illinois she’d be opposed to new ongoing spending initiatives. While she has no formal vote on the matter, her voice has proven an influential one at the Capitol.
Republicans will also make their voices heard. The House GOP laid out its asks for the budget year last month, including greater GOP involvement, an earlier adoption of a revenue estimate and more time to review the budget. In recent years, state spending plans have frequently passed in the dead of night, leaving lawmakers mere hours to review their language.
The GOP’s specific policy asks include eliminating the corporate franchise tax – a plan Pritzker approved in 2019 before he and Democratic lawmakers backtracked on it in future budget years. They also called for property tax relief and “reducing the harmful impacts of the estate tax on family farms.”
Will County Employers – Join Chicagoland Recruiting Effort!
H1B Connect invites Chicagoland businesses to join together to attract highly skilled workers to the region. Created jointly with the Greater Chicagoland Economic Partnership, World Business Chicago, and regional partners, this campaign will attract international tech talent to the Chicago region.
The campaign is centered on its job board, which is available for H1-B visa holders all over the country who are interested in relocating to Chicago, providing them with more opportunities to find suitable employment. More than 164,000 tech jobs listings were posted in Chicagoland in 2022!
If you are interested in connecting, spreading awareness, or participating in the job board opportunity for positions within your organization, please reach out to the Will County Center for Economic Development first and they will connect you with everything you need.
Many talented international workers around the nation have been impacted by recent layoffs in the tech industry. H1B Connect promotes awareness and signals that Chicagoland is an affirming, welcoming place and H-1B visa holders are a valuable part of our workforce.
Executive Vice President
Joliet Region Chamber of Commerce & Industry