Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
The City of Joliet and City of Chicago wrapped up their long-term agreement for water to flow this way as soon as 2030. More information is below on the final agreement. Also, some interesting news out of Springfield since last week and always changing negotiations on the federal front regarding the debt ceiling.
*Government Affairs Roundup brought to you by CITGO & Silver Cross Hospital*
Weekly Budget Update
This past week news broke that nearly $1 billion in expected spending on health care for noncitizens will certainly add to state budget pressures. The state estimates an expansion of state-sponsored health care to individuals who are ineligible for Medicaid based on their citizenship status is expected to cost $990 million in the upcoming fiscal year, far outpacing the original price tag cited when the measures became law.
In 2020, Illinois made noncitizens aged 65 and older eligible for Medicaid-type coverage, becoming the first state to do so. The Health Benefits for Immigrant Seniors program is open to individuals whose income is below the federal poverty level. It’s a cost borne entirely by the state because the individuals are not eligible for the Medicaid program that is split roughly 50-50 between the state and the federal government.
The expansion was inserted into a late draft of what’s known as the budget implementation bill in the pandemic-shortened 2020 session. It was an initiative of the Illinois Legislative Latino Caucus and sponsored in the House by Rep. Delia Ramirez, D-Chicago, who has since moved on to the U.S. Congress. She and other advocates said providing health care, especially preventative care, to immigrant populations would be cheaper than making them dependent on emergency room visits. Ramirez pegged the program’s Fiscal Year 2021 cost at $2 million, according to the newspaper.
The source of the initial estimate is unclear, although Gov. JB Pritzker’s administration said it had not prepared its own estimate before the program became law because it was a lawmaker-driven initiative. Republicans noted at a news conference that it was not thoroughly vetted in committee before being added to the budget.
The actual cost of the program far exceeded that estimate, and the program exceeded its FY 2021 appropriation within the first month of implementation, according to a closed-door presentation by the Illinois Department of Healthcare and Family Services to lawmakers last month.
The cost of care for the 65 and over age group was nearly $188 million between March 2022 and February 2023, per that presentation. Since the program’s initial passage, lawmakers have expanded it twice, lowering the age limit to 55 in 2021 and 42 a year later. The expanded program is known as Health Benefits for Immigrant Adults.
Illinois’ bill backlog at lowest level in 15 years
Even as the economy shows signs of slowing down, the state of Illinois continues to make progress on getting its financial house in order. Comptroller Susana Mendoza today reported that the state’s accounts payable, essentially its backlog of unpaid bills for day-to-day government operations, was down to $943 million as of Monday morning. That’s the first time it’s been below the $1 billion mark in 15 years — specifically, since August 2008 — with the oldest bill in her queue all of 16 days.
Mendoza noted that unpaid bills hit a high mark of $16.7 billion when then-Gov. Bruce Rauner and state lawmakers were stalemated over passing a new state budget. She attributed the decline in part to making repayment of debt a priority and actively seeking out opportunities to get federal matching funds for spending programs, most in the health care area.
Other factors include a national economy that has spun off tax receipts because of COVID-related spending stimulus and the fact that April traditionally is the strongest month for the state treasury, with lots of annual tax payments arriving.
Mendoza’s good news likely will boost pressure on Gov. J.B. Pritzker to loosen spending reins for a wide range of programs pushed by lawmakers and Chicago Mayor-elect Brandon Johnson, such as boosting the share of income-tax receipts that are automatically sent to municipalities.
On the other hand, the latest monthly report on business conditions from the Federal Reserve Bank of Chicago hinted that a recession may be near, with future hiring and capital investment spending way off.
Illinois lawmakers consider increasing income tax money returned to local governments
Lawmakers from an Illinois House committee hosted mayors from all over the state to discuss a possible increase in the Local Government Distributive Fund. LGDF is a state and local funding partnership instituted as part of the state income tax.
Rockford Mayor Tom McNamara spoke before the committee and explained what he was seeking. “I am happy to support [House Bill 1116], which provides me an approach to restoring LGDF that is measured,” McNamara said. “It increases it up to 10%. By incrementally increasing the amount, this bill will allow both the state and municipalities to gradually adjust to these new rates.”
According to the Illinois Municipal League, as of 2011, 10% of total income tax collections were dedicated to LGDF for distribution to municipalities and counties. The percentage share of state income tax revenue to local governments was then reduced to 6%.
State Rep. Martin McLaughlin, R-Barrington Hills, said the state owes these townships this funding. “This was a promise that none of you have received. For the people who defend our public pensions as a promise, you guys have been cut in half. So those who defend our pensions like I do, or 40%, this actually goes directly to funding a lot of your pension obligations,” McLaughlin said.
Cary Mayor Mark Kownick said they hope to get the percentage up to 10% to help communities pay for what they need. “We need these funds to cover rising costs, including mounting public safety pensions, unfunded mandates, infrastructure, stormwater and community improvement are extremely limited,” Kownick said.
There was no final decision made by the committee to increase the funding but the measure received little push back. State Rep. Bob Rita, D-Blue Island, made it clear he will support the increase. “I understand the needs, and I am in support of it, and I will continue to be in support of it,” Rita said.
Illinois health care groups ask for Medicaid reimbursement rate increase
As hospitals and other health care providers continue to battle rising costs and labor shortages, industry groups were in Springfield this week pushing for legislation they say could help their members weather these challenges, many of which were worsened by the COVID-19 pandemic.
Boosting the rates Illinois pays for public insurance programs like Medicaid is among the most consequential policies that organizations like the Illinois Health & Hospital Association and the Illinois Primary Health Care Association lobbied for this week.
The Illinois Health & Hospital Association, or IHA, supports Senate Bill 1763, which calls for a 20% increase in hospital Medicaid reimbursement rates. The bill, sponsored by Sens. Ann Gillespie, D-Arlington Heights, and Dave Syverson, R-Rockford, would allow every hospital in the state to collect more money for patients on Medicaid, the state-sponsored insurance plan for low-income and disabled Americans. If the bill passes, it will provide the first Medicaid base rate increase for Illinois hospitals in 28 years, according to the IHA.
Meanwhile, the Illinois Primary Health Care Association, or IPHCA, supports a similar bill, House Bill 2298, which would raise Medicaid reimbursement rates for services at Federally Qualified Health Centers. Services would include medical, dental and behavioral health care. It is estimated to cost about $50 million each for Illinois and the federal government, but the IPHCA says the rate increase would help its members care for an additional 180,000 patients each year, hire 250 more health care providers and expand services.
Both the IHA and the IPHCA say that without additional state support, hospitals and FQHCs could be forced to close units and limit services, which would reduce Illinoisans’ access to health care. “We have felt the pressure and, candidly, the pain of a labor shortage and costs in terms of attracting and retaining and keeping positions filled in an environment where our reimbursement has not changed,” says Gerald “J.P.” Gallagher, CEO of NorthShore–Edward-Elmhurst Health and IHA board chair. “Many of our organizations, NorthShore included, were in the red last year. All of us are making difficult decisions around cost reductions and looking at more efficient ways of delivering care.”
Adding to budget pressure, particularly when it comes to Medicaid, is the fact that with the end of pandemic-era protections, Illinois, like other states, will begin kicking people off plans later this year if they no longer meet income requirements. That worries all providers, especially safety-net providers and FQHCs, because it likely means fewer patients will have insurance and be able to pay for care. “These health centers have been historically under-resourced, and due to the demand that we see in our communities for affordable and high-quality health care, this legislation is vitally important,” state Rep. Anna Moeller, D-Elgin, a sponsor of HB 2298, said at a news conference Wednesday.
Health care providers say higher Medicaid reimbursement rates are necessary as they deal with rising costs on equipment and medications. A report from the American Hospital Association shows hospital expenses grew 17.5% between 2019 and 2022. Even more challenging is keeping up with labor costs amid a nationwide health care worker shortage that has forced providers to spend more than ever on salaries and benefits. The same AHA report documents that hospitals saw labor costs grow more than 20% from 2019 to 2022.
The IHA has met with several lawmakers, including Gov. J.B. Pritzker, to advocate for the Medicaid legislation, says IHA CEO A.J. Wilhelmi. “I felt good about the conversations,” he says. “We look forward to further conversations with the Pritzker administration, the Senate, House leadership, and we are hopeful we can drive this home in the last month of session.”
Aside from Medicaid-focused legislation, the IHA is also advocating for Senate Bill 1863, sponsored by Senate Republican Leader John Curran of Lemont and Sen. Bill Cunningham, D-Chicago, which aims to levy more consequences on patients who become violent with health care workers.
“If you were in the room today, you would have heard some pretty shocking stories about violence against health care workers in our facilities,” Gallagher says. “The physical and verbal abuse of health care workers has escalated to a level none of us have seen.” In a nationwide survey of 2,500 nurses published last year by National Nurses United, nearly half of nurses reported an increase in workplace violence, up from about 30% the year before.
In addition to voicing support for certain bills, the IHA this week also spoke out against certain legislation, including House Bill 3338, which creates the Safe Patient Limits Act. The bill calls for limiting the number of patients assigned to one nurse at any given time. The IHA opposes the legislation, saying that a “mandatory, one-size-fits all” nursing ratio is an “excessive overreach.” Instead, Wilhelmi says hospitals should be able to retain flexibility to staff their facilities as they best see fit.
“We have nursing care committees established within in our hospitals that are made up of direct care nurses that are driving the staffing models across the state of Illinois,” Wilhelmi says. “It’s reflective of the acuity of the patients on a particular day in a particular unit, as well as the experience of the nurse.” Adding statewide staffing requirements would also be hard to meet during a labor shortage. However, proponents of the Safe Patient Limits Act, including nurse unions, say legislation like this makes patients safer.
Debt Ceiling Debate
President Joe Biden blasted the Republicans’ recently unveiled spending plan to raise the debt limit and cut spending, calling it “a reckless attempt to extract extreme concessions as a condition for the United States simply paying the bills it has already incurred.” The Biden administration’s Office of Management and Budget released the statement, making clear the president would veto the Republicans’ recently unveiled bill, “The Limit, Save, Grow Act.”
Republicans are rallying votes and moving forward with a markup of the legislation, which would cut federal spending by $4.5 trillion and raise the debt limit by about $1.5 trillion or until March 31, whichever comes first.
The bill would implement permitting reforms to formally block Biden’s student loan cancellation and remove energy and environmental tax credits implemented in Biden’s Inflation Reduction Act. The legislation would also put work requirements in place for some federal social programs, such as requiring Medicaid recipients to work 80 hours per month.
These measures have been touted by Republicans but were called “extreme” by the White House. Biden has said for weeks that he would not negotiate with Republicans in Congress. “The President has been clear that he will not accept such attempts at hostage-taking,” OMB said. “House Republicans must take default off the table and address the debt limit without demands and conditions, just as the Congress did three times during the prior Administration.”
For now, it seems Republicans and the president are far apart in negotiations, even with the deadline fast approaching.
Speaker Kevin McCarthy and Majority Whip Tim Emmer both insisted that the debt limit bill was locked and changes would not be made to satisfy naysayers within the GOP conference, but sometimes reality becomes clear in the dead of night. It was after 2 a.m. this morning when House GOP leaders relented to demands during the House Rules Committee markup. The changes are substantial.
Major portions of the Inflation Reduction Act signed into law last summer would be eliminated, including $1 billion to boost the adoption of building codes for energy-efficient construction, $5 billion for loans to back energy infrastructure projects, $1.9 billion in grants to improve transportation access to neighborhoods, $200 million for National Park System maintenance projects and $5 billion in grants for reducing climate pollution.
Speed up safety net cuts: Beginning in September, states would be barred from saving up unused exemptions under the SNAP food assistance program. Starting in October additional constraints on the Temporary Assistance for Needy Families program would kick in. These changes are aimed at satisfying consternation about increasing work requirements for safety net programs.
Fuel fight: The revised bill would still repeal the tax credits on clean fuels, but would now include an exception to allow the tax perk to continue for those in binding contracts or locked into investments for sustainable aviation fuel or for producing other “clean” fuel before April 19. The amendment would also kill changes in the incentive structure for renewable diesel, second generation biofuel, carbon dioxide sequestration and biodiesel. Yesterday McCarthy (R-Calif.) met with members from Iowa, Missouri and Minnesota on the ethanol and biofuels issue, which these changes address directly.
This whole raft of changes must be what McCarthy meant when he told reporters “We’re working through” issues with the bill hours before the changes were locked in. He promised that any delay wouldn’t be too long. “This week, we will pass,” he said.
Rules Committee ranking member Rep. Jim McGovern (D-Mass.) accused Republicans of hastily cementing a “disgraceful amendment that materialized from your midnight séance.”
All these changes to the bill won’t require an additional amendment vote. They are tucked into the rule for consideration of the bill. When the House votes to clear the rule, the sweeping changes to the debt limit measure would be deemed as approved, without the need for a separate vote.
The Congressional Budget Office weighed in on Tuesday, reporting that the debt limit and spending cuts package could put about $4.8 trillion toward deficit reduction over the next 10 years. But that’s for the bill without the overhaul executed at Rules.
Small businesses petition against Biden tax hikes
More than 11,000 small business leaders have rallied together in a petition to protest the tax hikes proposed in President Joe Biden’s latest proposed budget.
The National Federation of Independent Businesses organized the effort and recently launched a paid ad campaign against the tax increases. “Thousands of small business owners from across the nation signed the petition to say the proposed tax increases will be detrimental to their businesses,” said Kevin Kuhlman, NFIB Vice President of Federal Government Relations. “The White House is claiming they are ‘closing a loophole’ by subjecting small business income to a new 5% tax, but that claim is false and misleading. Small businesses are not a tax loophole and ask their elected officials to reject the proposed tax hikes.”
The budget includes several proposed tax increases, including a minimum 25% tax on anyone with more than $100 million, an increase of the top marginal income tax rate to 39.6%, a hike of the corporate tax rate from 21% to 28%, a billionaire’s tax, and more. President Biden’s tens of billions of dollars to beef up IRS auditing and enforcement has raised concerns as well with economists saying small businesses will likely be targeted heavily by the audits.
The Tax Foundation released an analysis of the proposed budget, saying it will lead to lower GDP and fewer jobs while raising about $2.5 trillion in revenue. “President Biden’s Fiscal Year 2024 Budget outlines several major tax increases that would add up to nearly $4.8 trillion in new taxes targeted at businesses and high-income individuals,” the group said. “After $833 billion in expanded tax credits, it would raise nearly $4.0 trillion in new taxes on net.”
Joliet Enters 100-Year Water Agreement with City of Chicago
The City of Joliet has entered into a 100-year agreement to purchase treated Lake Michigan water from the city of Chicago beginning in 2030, ensuring a high quality and sustainable water source for southwest suburban residents for the next generations.
The announcement of the agreement follows recent votes by the Joliet and Chicago City Councils and builds upon a preliminary agreement approved by the municipalities in 2021. Under the new long-term agreement, Chicago will supply water to Joliet and five other area communities joining the Grand Prairie Water Commission, which is currently in formation.
Under the agreement, Chicago will supply water to Joliet and the other Grand Prairie Water Commission members at a location on the southwest side of Chicago. Joliet and the Commission are responsible for the construction, operation and maintenance of the infrastructure required to move the treated water from Chicago to the southwest suburban region.
Rates to purchase water from Chicago will be calculated on a cost-of-service basis that requires Joliet to only pay for the cost of operating, maintaining, and administering facilities required to produce and deliver the treated water for Joliet. Joliet will not be responsible for other costs such as replacement of lead service lines in Chicago, replacement of water transmission or distribution mains in the Chicago system, or payment of pensions related to work performed prior to Chicago’s delivery of water.
Annual increases in Chicago water rates will be capped at the lesser of the calculated cost of service increase, the current rate of inflation, or a fixed 5 percent limit except under certain circumstances. The agreement is transferable from Joliet to the Grand Prairie Water Commission once the Commission is formed. In addition to Joliet, members of the Commission include Channahon, Crest Hill, Romeoville, Minooka, and Shorewood.
Residents and businesses are encouraged to learn more about Joliet’s Alternative Water Source Program at www.RethinkWaterJoliet.org, or by following the initiative through Facebook and Twitter. Visitors to the website can also sign-up to receive e-mail updates for the latest news on the Program.
Back to Business (B2B) Grants for Creative Arts, Hotels & Restaurants – Deadline Reminder
The State of Illinois is offering $175 million in grants for businesses in industries hardest hit by the pandemic, specifically, restaurants, hotels, and businesses in the creative arts industry. Applications are open from April 5 – May 10, 2023, and more than 100 community navigators are available across the state to support businesses as businesses prepare to apply.
Executive Vice President
Joliet Region Chamber of Commerce & Industry