Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
The House and Senate are pushing forward with their own, separate government funding plans today. The Senate on Tuesday unveiled and advanced a bipartisan measure that extends government funding through Nov. 17 and provides money for Ukraine and disaster relief. House Republicans, meanwhile, advanced four GOP-crafted full-year spending bills on Tuesday, a vote that gave Speaker Kevin McCarthy an incremental victory but will not help stave off a shutdown.
Government funding expires Sept. 30 and any bill to fund the government needs to be approved by both chambers and signed by President Biden.
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Bracing for the Impact of a Potential Government Shutdown
There’s a growing consensus that a government shutdown may occur when the new fiscal year begins on October 1, 2023. This impending government shutdown would mark the fourth in a decade, with policymakers from both sides of the aisle using the threat of a shutdown to advance their own policies—a strategy that has consistently proven ineffective. Throughout history, these shutdowns have concluded only when the party responsible for instigating the shutdown yielded to public pressure.
How long can we expect? The potential duration of this shutdown is uncertain, and reopening the government appears challenging due to the tight margins in the U.S. House of Representatives and threats of legislative chaos. While external pressures and the need for disaster aid funding might hasten its resolution, the overall conditions are unlikely to change significantly from the outset. In the current environment, as hard as it may be to avoid a shutdown, it would be even harder to get out of it.
Government shutdowns have significant microeconomic repercussions, impacting sectors such as clinical research, law enforcement, national parks, visa and passport processing, services for American veterans, and federal contractors. These shutdowns can often result in mass employee layoffs, disrupt national security operations, and inflict substantial and often unrecoverable financial losses on businesses.
What a Shutdown Would Mean for Businesses, Economy
With recent setbacks in negotiations and the deadline quickly approaching, emerging consensus among lawmakers, staff, the Capitol Hill news media and longtime Washington operatives is that the federal government is almost certainly heading for another government shutdown come Oct. 1, the beginning of the government’s fiscal year.
In 2019, the United States experienced the longest government shutdown in our nation’s history. For 35 days, the impact was felt by any person or entity that interacts with the federal government.
The 2019 shutdown by the numbers
- 35: the number of days the government was shut down
- 800,000: the number of furloughed federal workers
- $5,000,000,000: the damage to the U.S. economy
Individuals and businesses across the country felt the shutdown. The 2019 government shutdown brought business to a grinding halt for a century-old hotel in Georgia that serves thousands of people who visit Cumberland Island National Seashore each year. Due to a lack of federal funding, the National Park Service suspended ferry transport to Cumberland Island—a move that essentially evaporated the hotel’s customer pool overnight.
Unfortunately, they would not be alone in experiencing a negative impact if another shutdown occurs. Dining, leisure, hospitality, and service industries would feel the pinch if customers dried up due to a government shutdown.
Tourists who visit our nation’s national parks, monuments, and museums would find many closed or operating at reduced capacity, and local leisure and hospitality industries would see their customer bases shrink. Travelers would find federally run transportation services, including the Transit Security Administration (TSA), operating below normal staffing levels, creating headaches for business and leisure travelers alike.
Bottom line, these indirect effects would put an unwelcome damper on the economy as it continues to deal with inflation. The good news is that a government shutdown is not inevitable. It is a choice.
State Supreme Court Weighs Another BIPA Lawsuit
The Illinois Supreme Court recently conducted hearings for a pair of class action lawsuits, initiated by two suburban nurses. These nurses assert that their employers violated the state’s Biometric Information Privacy Act (BIPA), a pivotal legislation established in 2008. BIPA grants Illinois residents the right to take legal action against companies that mishandle biometric data, encompassing elements like fingerprints and facial scans. This law has previously been at the center of prominent legal battles, resulting in substantial penalties or settlements, such as the $650 million settlement Facebook agreed to pay Illinois users for alleged biometric data misuse.
The nurses’ allegations revolve around Northwestern Medicine, UChicago Medicine, and Becton, Dickinson and Co. (the manufacturer of medicine cabinets) requiring the use of fingerprint scanners to access medicine cabinets. According to court documents, these healthcare systems failed to obtain written consent to use fingerprint data, neglected to provide information about biometric data storage and destruction, and did not secure consent for disclosing such data to third-party vendors.
However, the defendants’ legal representatives argued that using biometrics for medicine management falls within an exemption under BIPA, as it is considered “healthcare treatment, payment, or operations under the federal Health Insurance Portability and Accountability Act (HIPAA).” This legal dispute centers on the interpretation of the law’s language and the term “under.”
Jim Zouras, the nurses’ attorney, emphasized the potential implications of this interpretation, stating, “If the defendant is correct, that means the General Assembly decided that as much as 10 percent of the Illinois workforce should have no biometric privacy protection whatsoever, simply by virtue of working in the healthcare field.”
Beyond the specifics of this case, the defendants’ lawyers also highlighted its potential far-reaching impact on the industry. They argued that healthcare providers could face substantial liability, referring to a previous Supreme Court ruling against White Castle. In that case, the Court ruled that each instance of requiring an employee to use biometric data constituted a separate BIPA violation, potentially costing the company billions in penalties.
The defendants stressed the widespread use of biometrics in healthcare settings and the significance of industry standards in this context. In 2022, a lower court sided with the nurses, emphasizing that lawmakers did not exclude healthcare employees’ biometric information from BIPA protections.
This case has garnered attention from the broader medical industry and the business community. Several advocacy and trade groups submitted amicus briefs supporting the exclusion of healthcare workers from BIPA protections. These organizations include the Illinois Health and Hospital Association, the Advanced Medical Technology Association, and a coalition of private hospitals.
On the opposing side, the Illinois Chamber of Commerce and the U.S. Chamber of Commerce submitted briefs warning of potential catastrophic liability for hospitals if the court rules in favor of the nurses.
The American Nurses Association also filed an amicus brief supporting the plaintiffs, arguing that exempting hundreds of thousands of healthcare workers from BIPA protections without explicit legislative language would contradict the law’s purpose.
The Supreme Court is now deliberating on the arguments presented, with no set timeline for a decision.
Mayors press Congress for big expansion of affordable housing tax credits
Chicago Mayor Brandon Johnson, the DuPage County board chair and several other Illinois mayors are urging Congress to pass legislation that would turbocharge a tax credit that spurs affordable housing development nationwide.
They say changes in the tax credit program could lead to an additional 2 million affordable rental units coming online nationwide in the next decade, on top of the roughly 1.25 million units that would get built without the changes.
“We lose Evanstonians every day, people whose families have been in Evanston for multiple generations but whose families can’t afford to stay,” the north suburb’s mayor, Daniel Biss, told Crain’s, “and we have people who can’t afford to move into Evanston” because of the cost of housing.
Biss signed the Sept. 21 letter to Congress, he said, because “if there were more tax credits, we’d have more affordable developments” than the two that are in the works in his town now. The letter, also signed by Chicago Mayor Brandon Johnson and others, asks Congress to pass the Affordable Housing Credit Improvement Act of 2023, introduced in May in the U.S. House by U.S. Rep. Darin LaHood, R-Ill.
“Affordable housing is vital for families throughout Illinois and the Low-Income Housing Tax Credit continues to be an important tool to drive investment in the affordable rental housing market,” LaHood said in a statement emailed to Crain’s. The bill, he said, “will help expand our housing supply.”
Tax credits give developers a financial incentive to build affordable housing, particularly in places private capital might otherwise avoid. Developers get a cut in their federal tax liability spread over 10 years. The credit is “an important tool to drive investment in the affordable rental housing market,” LaHood said in his email.
Since it was created in 1986 to give state and local governments the power to issue tax credits to developers of affordable housing, the federal low-income housing tax credit has spurred development of 3.7 million affordable rental units housing 8 million people, said Ayrianne Parks, senior director of public policy at Enterprise Community Partners, a low-income tax credit syndicator and affordable housing producer based in Maryland. Enterprise is a leader in the Action Campaign to expand affordable housing tax credits.
Parks and others say the tax credit has been fundamental to developing affordable rentals. “Nearly every large development of quality affordable housing in DuPage County in the past 30 years has been financed through the program,” Deborah Conroy, DuPage County board chair, said in an email to Crain’s. “Much of that has been for seniors, but we know we need quality housing for families as well.” DuPage County alone is short about 16,000 units of affordable rental housing, Conroy said in her email. “We know that we need quality affordable housing to help people who work in DuPage County be able to live here.”
A key piece in the proposed expansions is increasing the amount local and state authorities can grant in tax credits. This is needed in part to keep up with inflation, Parks said, but also to get more money out to rural and Native American locations that have been underserved. The dearth of affordable rental housing is especially big in rural areas, LaHood said in his email.
Also proposed is cutting in half the portion of a developer’s financing that is made up of tax-exempt private activity bonds. The existing program requires 50%; under the proposed legislation, it would drop to 25%, “which is actually what most of these projects can sustain in terms of debt,” Parks said.
Along with Johnson, Conroy and Biss, the letter was signed by the mayors of Chicago Heights, Rockford, Machesney Park (near Rockford) and Olmsted, at the far southern tip of Illinois. They were among 184 local government leaders from across the country who signed it.
Besides LaHood’s sponsorship, six U.S. House members from Illinois are co-sponsors. Neither senator from Illinois is a co-sponsor of the U.S. Senate version, also introduced in May.
Parks points out that sponsorship of both versions is split evenly between Democrats and Republicans, a rarity in this politically divided era, and says that indicates broad awareness of the demand for a big increase in development of affordable housing.
“It’s a consensus-driven issue,” she said.
Stay well,
Mike Paone
Executive Vice President
Joliet Region Chamber of Commerce & Industry
mpaone@jolietchamber.com
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