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

Chamber members:

Things are moving fast in Springfield (targeting a May 19 adjournment on the calendar), with the House deadline for acting on House-sponsored bills having passed and the Senate deadline looming this Friday. So far, bills dealing with big financial issues — such as Comptroller Susana Mendoza’s plan to boost contributions to the state’s rainy-day and pension relief funds have not advanced. Nor has a measure to take another crack at enacting a graduated income tax or the Civic Committee’s pension-fix proposal. Perhaps that will happen in the final days or, more likely, this fall, after officials have a better idea of whether or not we’re headed into a recession.

As a reminder with election day being less than a week away, you can find a link to our mayoral and city council district forum podcasts along with filled out questionnaires from the candidates here:

*Government Affairs Roundup brought to you by CITGO & Silver Cross Hospital*

South Suburban Officials, State Lawmakers Renew Calls for Peotone Airport
Local officials in the south suburbs are renewing efforts to get a regional airport to take flight. The idea for a third Chicago area airport has been floated for decades, and not lightly — Illinois has spent close to $100 million to buy land that could host a south suburban airport.

“I’m wearing a lapel pin that says Airport 2000. This was an initiative 30 years ago. We’ve waited long enough,” state Sen. Patrick Joyce, D-Essex, said at a media conference hosted by advocates working to land the metaphorical plane.

An Illinois House committee this month easily passed a measure (HB2531) that would require the state transportation department to proactively seek out developers with the interest and potential of building out the state’s land into a cargo airport within six months of the proposal becoming law.

House Bill 2531, by Rep. Will Davis, D-Homewood, calls on the Illinois Department of Transportation to establish a process for prequalifying entities that could offer a public-private agreement to develop such a project. “Many people in the Southland feel that there is a developer who has the resources, the capacity and a desire to build it, and they would love to be able to respond to this document,” Davis said. “So what we’re asking is that IDOT put a document out there to see if there is a developer willing to respond.”

The bill changes a law the General Assembly passed in 2013 that gave IDOT permission to launch such a project. HB 2531 would require the agency to establish a prequalification process within six months of the bill becoming law. The bill also expands the potential scope of the project to include not just an airport, but a “cargo-oriented development” that includes both “multimodal nodes of freight transportation and centers of employment in logistics and manufacturing.”

At an unrelated press conference March 8, Gov. J.B. Pritzker signaled caution, noting that despite spending $97 million to buy about 90% of the land needed, the state would still have to procure the final 10%. He also said he wanted to be sure that cargo carriers would use the airport before he could fully get behind the concept.

“What you don’t want is: If you build it, they will come. Just building the thing and hoping that people will show up to essentially pay for the airport having been built,” Pritzker said. “You need to be sure that you’re building it because you have interest from cargo carriers who are committing to make that a cargo airport.”

Illinois’ rainy-day fund hits a record
Comptroller Susana Mendoza reports she transferred $150 million today into the state’s Budget Stabilization Fund, more commonly known as the rainy-day fund. With the new money, the fund now has $1.22 billion set aside for a recession or other downturn — a new record. As recently as April 2018, the fund had just $48 million in it.

In a statement, Mendoza noted that, as per prior agreement with the General Assembly, the fund is scheduled to get another $850 million by June 30, the end of the fiscal year. “It’s important we resist spending all of the forecast revenue surplus on new spending” Mendoza said. “We must instead a put as much as we can into the state’s reserves to prepare for economic downturns.”

While ratings agencies have cited the growth in the rainy-day fund in recently upgrading Illinois’ debt, the state still ranks at or near the bottom of the 50 states, with the agencies suggesting that the run still is relatively small compared to the overall budget.

Mendoza has been pushing legislation to automatically put more into the fund at any time operating revenues are rising more than 4% a year and the state is caught up on its current bills. Her bill failed to make it out of the House by last week’s deadline, but Mendoza hopes to get it included in the fiscal 2023 budget that lawmakers are still crafting.

Transit agencies look to the state to help make up projected $730 million budget gap
Officials with the state’s largest transit agencies met with lawmakers to sound the alarm for what Regional Transportation Authority Executive Director Leanne Redden called a “looming operational crisis.”

“By 2026, the region will face an annual budget deficit of nearly $730 million per year,” Redden told lawmakers. “That’s nearly 20 percent of our operating revenue.” The Regional Transportation Authority, or RTA, is the oversight organization for the Chicago Transit Authority, the Metra commuter rail system and the Pace suburban bus system.

The projected budget shortfall comes primarily from changes in the way people use public transit since the pandemic began. The number of passenger trips on the three Chicagoland transit systems was down last year to 50.5 percent of what it was in 2019, according to data from RTA.

State law requires that approximately half of the RTA’s revenues come from rider fares, but in recent years the agency has gotten statutory exemptions due to the COVID-19 pandemic. Redden told lawmakers that since 2020, fares have only made up “about 20 percent” of the needed revenue to operate the system.

“The RTA eventually will need a change in state law that stops the requirement that 50 percent of revenues come from fares,” RTA Board Chair Kirk Dillard said. “It’s an unsustainable funding model post-COVID.”

Advocates push for tax credit aimed at increasing affordable housing
Lawmakers are considering bills that would create a new tax credit for affordable housing, referred to as the “Build Illinois Homes Tax Credit.” The legislation, contained in the identical House Bill 2044 and Senate Bill 1737, would mirror a federal program administered by the Illinois Housing Development Authority and Chicago Department of Housing which helps finance affordable housing across Illinois.

The Illinois Housing Council, a non-profit membership association consisting of over 260 businesses and non-profits, has been advocating for the measure’s passage. “Our state is facing an affordable housing crisis, stemming from years of housing under-production,” Allison Clements, executive director of IHC, testified in a Senate committee. “Our state’s housing deficit has grown 64 percent since 2012, meaning we have more people needing homes than are available.”

A 2023 IHC report showed Illinois still has a deficit of low-income housing despite the federal program. According to the report, Illinois has lost 13 percent of its low-rent units since 2011. Additionally, while there are more than 450,000 extremely low-income renters in Illinois, there are only about 150,000 affordable and available rental units, creating a deficit of about 288,000.

“The dollars have actually filled a critical need but they are only a short-term solution to build affordable housing in Illinois,” Rep. Dagmara Avelar, a Democrat from Bolingbrook and lead sponsor on HB 2044, said in a House committee hearing Thursday. “The long-term, permanent solution is a state tax credit, the Build Illinois Homes Tax Credit that can sustain affordable housing construction over the next 10 years.”

If passed, the Build Illinois credit would cost the state $35 million annually for 10 years, which advocates say would help increase the number of housing units by 3,500 each year. Once investors construct the housing developments, they would be eligible for an income tax credit based on the development area. Clements emphasized that the state tax credit would only be issued after the construction of a unit is complete and qualified tenants are moved in.

“Private sector investors, not taxpayers, are going to bear the financial risk of a project not being completed or successful and they closely monitor and oversee each development where these credits are involved,” Clements said in the House committee. “Because the state tax credit is not claimed by an investor until the affordable housing is successfully built and completed, passing this state tax credit this year would not result in any budget impacts to the state until 2026.”

According to the IHC report, over 20 states currently use tax credits to attract private equity for building more affordable housing. Lawmakers in Kentucky and Ohio are also considering measures to enact such programs.

Gov. JB Pritzker proposed additional funds for housing in his budget address. The program, referred to as “Home Illinois,” would provide for a $50 million increase in homelessness services, including for emergency shelter, short-term rental assistance and the development of new permanent supportive housing units. If implemented, “Home Illinois” would bring the total funding in that area to $350 million.

In his budget address on Feb. 15, the governor estimated over 120,000 people experience homelessness annually and over 76,000 children live in overcrowded shared housing. “The faces of Illinoisans with no home to go to are not homogenous,” Pritzker said in his budget address. “They include single parents with infants and toddlers, 6th graders trying to complete their homework using toilets as a desk in temporary shared housing, and LGBTQ+ high schoolers who were kicked out of their homes by their parents.”

Illinois Payroll Jobs Up, Unemployment Rate Stable in February
The Illinois Department of Employment Security (IDES) announced today that the unemployment rate was unchanged at 4.5 percent, while nonfarm payrolls increased by +10,700 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 +14,300 to +12,300 jobs. The January revised unemployment rate was 4.5 percent, unchanged from the preliminary January unemployment rate. The February payroll jobs estimate and unemployment rate reflect activity for the week including the 12th.

In February, the industry sectors with the largest over-the-month gains in employment included: Government (+5,900), Leisure and Hospitality (+5,100), and Trade, Transportation and Utilities (+2,700). The industry sectors with the largest monthly payroll declines included: Professional and Business Services (-3,000), Information (-3,000), and Construction (-1,100).

“Job growth across nearly all sectors reflects the strength of Illinois’ economy,” said DCEO Director Kristin A. Richards. “Looking ahead, DCEO remains committed to providing workforce resources for employers and workers – strengthening communities and our employment landscape.”

The state’s unemployment rate was +0.9 percentage point higher than the national unemployment rate reported for February, which was 3.6 percent, up +0.2 percentage point from the previous month. The Illinois unemployment rate was down -0.1 percentage point from a year ago when it was at 4.6 percent.

Compared to a year ago, nonfarm payroll employment increased by +144,900 jobs, with gains across nearly all major industries. The industry groups with the largest jobs increases included: Leisure and Hospitality (+43,900), Educational and Health Services (+38,800), and Government (+22,000). Information was the only industry group to report a decline in payroll jobs, down -2,500 from a year ago. In January, total nonfarm payrolls were up +2.4 percent over-the-year in Illinois and up +2.9 percent in the nation.

The number of unemployed workers was 289,900, down -1.5 percent from the prior month, and -3.8 percent over the same month one year ago. The labor force was up +0.1 percent over-the-month and down -0.2 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.

Federal Debt Limit Update
Speaker Kevin McCarthy told President Joe Biden that he is “on the clock” to set a date for their next meeting to discuss the debt ceiling. Biden turned the tables Tuesday night and wants to see McCarthy’s budget proposal by the end of the week.

A key part of this equation is that McCarthy (R-Calif.) and Biden simply don’t talk outside of these formal sit down situations. Senate Majority Leader Chuck Schumer (D-N.Y.) doesn’t think there’s much for the pair to talk about until there’s a House GOP budget proposal. He took aim at McCarthy’s letter to Biden calling his target of $4 trillion in cuts “vague and amorphous” and saying “a number is not a plan.”

He dared McCarthy to put a GOP budget proposal on the floor. “The reason he doesn’t want to do it, in my judgment, my humble judgment, is because he can’t get 218 votes for any plan,” Schumer told reporters on Tuesday. But Senate Republicans found that rich, given that Senate Democrats haven’t put forth their own budget (and may not at all). “If they wanted to put the President’s budget on the floor, we’d be more than happy to vote on that,” Senate Minority Whip John Thune (R-S.D.) said.

Thune said the administration needs to handle the debt limit and “deal with the issue of spending reforms, which is what the House Republicans are trying to get on the table.”

Stay well,

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