Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
Our update took a week off last week as I traveled to Springfield with our Community Leadership School group. We had a fun filled day seeing some action in the capitol.
Some good news to share without going into much detail – we’ve avoided again a Federal Government shutdown with a last-minute agreement. The devotes $459 billion to the departments of Agriculture, Commerce, Energy, Housing and Urban Development, Interior, Justice, Transportation, and Veterans Affairs, as well as the Environmental Protection Agency and Food and Drug Administration, for the rest of the fiscal year, which ends Sept. 30. The House passed the measure on Wednesday.
But a larger, trickier deadline for the rest of the government — including the Defense, State and Homeland Security departments — looms just two weeks away, and negotiators are still far apart on spending amounts and policy provisions necessary to fund those agencies.
*Government Affairs Roundup brought to you by CITGO*
Latest State Revenue Forecast
The state’s two main fiscal forecasting agencies agree: Illinois’ finances will see a strong close in the final 3 ½ months of the fiscal year before things tighten a bit next year. It’s a picture laid out in Gov. JB Pritzker’s budget proposal last month, and it got a vote of confidence Tuesday from the legislature’s fiscal forecasting body, the Commission on Government Forecasting and Accountability.
“So looking into fiscal year 25, what are we seeing? There is some concern going forward that the economy, or not necessarily the economy, but the revenues are slowing down,” COGFA revenue manager Eric Noggle said at the annual revenue briefing to the bipartisan commission of lawmakers.
Still, COGFA staff noted general nationwide fears of a recession have subsided, and the scope of the potential slowdown is reflected in Pritzker’s proposed spending plan for the upcoming fiscal year. “During our last annual revenue meeting, we mentioned that many of the economic firms were still forecasting such a chance of a recession,” COGFA executive director Clayton Klenke said. “But we mentioned that the data that we saw coming in month to month gave us greater confidence that the economy would continue to chug along. And that is what we have continued to see.”
COGFA’s revised revenue estimates expect the current fiscal year to end with $52.6 billion in revenue, or about $2 billion ahead of what lawmakers budgeted for last May. That estimate tracks closely with the revenue estimate released by the Governor’s Office of Management and Budget in February. The GOMB estimate was about 0.7 percent, or $374 million, below COGFA’s updated projection.
Current-year revenue estimates have been driven upward by strong economic performance, as seen by an annual transfer from the state’s income tax refund fund that exceeded expectations by $255 million. Larger than expected transfers from that fund are a general indicator that individual household incomes are performing strongly, driven by such factors as strong stock market or interest gains in the previous fiscal year.
But state coffers also saw about $881 million in unexpected one-time revenues this year, according to COGFA. That includes $633 million received from the federal government as reimbursement for Medicaid services the state failed to collect in previous fiscal years.
Because those one-time sources are not expected to repeat, COGFA is expecting revenues to decrease to about $52.1 billion in the fiscal year that begins July 1.
That’s $916 million below GOMB’s estimate that was included in Pritzker’s budget proposal. But Pritzker’s plan also anticipates raising more than $1 billion in additional revenue through tax law changes, including more than doubling the state tax on sports betting and extending a cap on a tax credit for net operating losses that businesses can claim.
Factoring in those changes, COGFA’s estimate would be about $182 million above what the governor’s office projected in February – a difference of just 0.3 percent. Benjamin Varner, COGFA’s chief economist, said the state’s economic projections are largely based on data from the financial analytics group S&P Global.
S&P projected a 55 percent likelihood that the economy will progress “with firm but slowing growth.” It projected a 30 percent likelihood of a “pessimistic” scenario which would entail “a short, two-quarter recession.” A more optimistic scenario, marked by “stronger consumer demand and more banking support,” was given a 15 percent likelihood.
Noggle noted sales tax revenues are a main area of concern, driven by a slowdown in “big item purchases.” He said that was a result of the federal reserve keeping interest rates high, which discourages borrowing.
Growth in sales tax has also slowed as federal stimulus funds have waned, he said, and consumers are slowly moving back toward pre-pandemic trends of spending more money on untaxed services than on taxable goods. Wages and employment are still growing in Illinois, but at a slower pace than one year ago.
Sen. Elgie Sims, D-Chicago, noted Illinois’ recent string of revenue overperformance is at least partially attributable to the fact that lawmakers have adopted conservative revenue estimates.
“In these times of uncertainty, if things go bad, it could go really bad,” Noggle responded. “And I think it’s our responsibility to not provide a number that is too optimistic or too pessimistic.”
Caution, Noggle noted earlier in the meeting, is one reason COGFA did not update its personal income tax estimates for the current fiscal year. April and May have generally been volatile and difficult to predict as far as state revenues go, he noted. But Noggle said his “gut” tells him an upward revision in that category could still be on the horizon.
“Just personally doing my own taxes and talking to my father-in-law and my dad, that all three of us have had to pay more taxes than we expected,” he said. “But the good news is, that’s because the higher interest income that we’ve gained from our savings accounts and our CDs and stuff like that. So if that is the same case throughout the state, which it probably will be, I think revenues will turn out to be pretty good from final tax payments in this fiscal year.”
Transportation leaders urge Pritzker to not divert road funds to Chicago transit
Transportation industry leaders are urging Gov. J.B. Pritzker and legislative leaders to keep their promise to Rebuild Illinois and stop the diversion of road funds to fill funding gaps in Chicago public transit. Kevin Artl, president and CEO of the American Council of Engineering Companies of Illinois, said he doesn’t think it’s a shock to anyone that work travel has changed post pandemic.
“It’s not right, at this point, to begin diverting funds from the Road Fund, designed for roads and bridges … to fund a system that I think everyone has concerns with and is going to be going through some sort of major reform over the next couple of years,” Artl said, referring to Chicago public transit.
Pritzker’s budget proposal calls for a diversion of $175 million in state taxpayer money committed to fund things like bridge repair and road improvement. Those taxpayer funds will be diverted to primarily Chicago-based public transit systems.
“Illinois is in the crossroads of America. For us to have a 21st century economy we have to have 21st century infrastructure,” Artl said. “We are really moving towards that now, and there’s great progress being made by [the Illinois Department of Transportation], Capital Development Board and others to modernize our state’s infrastructure.”
In 2019, a bipartisan group of state lawmakers approved Pritzker’s Rebuild Illinois plan. The multi-year plan came at a cost to taxpayers of $45 billion, including a doubling of the state’s motor fuel tax with annual increases linked to inflation. The money is for rebuilding and modernizing the state’s infrastructure and transportation network.
Artl said the Rebuild Illinois program is in line with Pritzker’s calls for developing electric vehicle infrastructure. “We’re talking electric vehicle lanes, charging stations, to prepare us for that next phase in the economy,” Artl said. “There’s great alignment here and it would be a real disappointment if we had to take a step back.”
According to the Transportation for Illinois Coalition, the $175 million loss in road funding would multiply to more than a $1 billion impact in lost road and bridge improvements over the next few years. Artl said diversions rarely end. He anticipates that this diversion will occur throughout the remainder of the Rebuild Illinois program. “A billion dollars in road and bridge repairs are significant that will be left undone,” Artl said.
Industry leaders are proponents of funding public transit systems, but leaders said operating costs cannot come at the expense of the existing Rebuild Illinois program.
The American Council of Engineering Companies of Illinois, in conjunction with the Illinois Road and Transportation Builders Association, the Illinois Asphalt Pavement Association, the Illinois Association of Aggregate Producers and the Associated General Contractors of Illinois all are urging the governor and legislative leaders to not divert funds.
Governor Pritzker Highlights Health Insurance Reform Initiatives
Today, Governor JB Pritzker joined doctors, patients, stakeholders, and legislators to highlight efforts to reform predatory health insurance practices and protect patients. The Healthcare Protection Act (HPA), first introduced in the governor’s FY25 Budget Address in late February, aims to put power back into the hands of patients by banning step therapy, banning prior authorization for crisis mental health care, improving network adequacy, and ending unchecked rate increases for large group insurance companies.
“Illinoisans who are suffering should not have to jump over hurdle after hurdle to get the care they need to survive,” said Governor JB Pritzker. “The only people who should be making decisions about patient care are doctors and patients themselves — not an insurance employee with no medical background. Thank you to my partners in the general assembly who are fighting with me towards healthcare reform, and with it, and saving lives across Illinois.”
“People seeking medical care should not have to worry that the best course of treatment determined by their trusted doctor will be denied by an insurance agent who has never met them,” said Lt. Governor Juliana Stratton. “Insurance companies are supposed to ease the burden of accessing healthcare, not create further obstacles. Here in Illinois, we are done with predatory practices and insurance overreach.”
HPA is targeting utilization management, which often forces consumers to obtain permission from their providers before receiving care that doctors have already determined necessary. This boosts profits for insurance companies and creates barriers to care for patients and their doctors. Utilization management also includes a practice called “step therapy,” which forces patients to move through less effective treatment options before eventually gaining access to the treatment that doctors recommended initially.
HPA will ban “step therapy” processes in Illinois, and require insurance companies to align definitions of medical necessity to match that of doctors.
HPA also addresses prior authorization. Illinois will soon become the first state in the nation to ban prior authorization for in-patient adult and children’s mental health care. This way, those experiencing crises have access to care immediately to ensure safety for themselves and others, without having to gain permission from insurance providers.
Additionally, HPA will mandate all insurance companies post treatments that require prior authorization, making it easier for consumers to compare plans when shopping for coverage. Short Term Limited Duration insurance plans, or “junk insurance,” will also be prohibited, as twelve other states have already done. These insurance plans are not ideal for consumers because they do not have to comply with ACA key provisions such as coverage for preexisting conditions.
The second part of the Healthcare Protection Act calls for improved network adequacy and transparency standards. Insurance companies will be held to stricter standards when updating their in-network care directories to reflect actual availability- indicating whether or not doctors and specialists are able to accept new patients, and removing those who are not in-network any longer or are no longer practicing.
In June 2023, Governor Pritzker signed HB 579, which ended unfair rate hikes in the fully-insured individual and small group insurance market. The final HPA initiative focuses on eliminating unchecked rate increases in fully-insured large group insurance carriers as well.
“For far too long, insurers have used unnecessarily complex and inconsistent prior authorization processes to deny and delay necessary healthcare to patients in Illinois,” said A.J. Wilhelmi (former Joliet Chamber Board Chair), President and CEO of Illinois Health and Hospital Association (IHA). “These burdensome practices are a top challenge for hospitals in delivering timely and appropriate healthcare. IHA and the hospital community are pleased to support Governor Pritzker’s prior authorization reforms to eliminate barriers to healthcare and streamline access to patient care in Illinois.”
Proposed Gambling Tax Impact
An industry expert says Gov. J.B. Pritzker’s budget proposal to increase the sports betting tax by 20% could cause ripple effects in the industry. If approved by the legislature, the tax for sports book operators would go from 15% to 35%, one of the highest percentages in the country. If enacted, the higher tax would take effect July 1, the start of the new fiscal year. Pritzker’s office estimates it could generate $200 million in increased tax revenue.
Dan Holmes with the gambling information website PlayIllinois said a huge increase in the tax could possibly prompt some operators to scale back operations. “There have been situations like in New York where Caesars and BetMGM both came out and said ‘the cost of acquiring customers is so high, we’re going to reduce our market spend,’” said Holmes. New York has a 51% tax on mobile sports betting revenue.
Holmes said big operators like DraftKings and FanDuel should have no problems with the increased operational taxes, but may choose to offer less perks to Illinois sports bettors. But there is speculation that smaller sports books may suffer and close up shop in Illinois.
Illinois sports bettors wagered about $10 billion in 2023, placing the state third in the country behind New York and New Jersey. Operators set a monthly sports betting revenue record in December at more than $128 million.
The state collected just over $150 million in taxes from sports betting last year, a $32 million increase from 2022.
Win in NLRB Joint Employer Lawsuit is a Legal Victory
A U.S. District Court vacated the National Labor Relations Board (NLRB) joint employer rule late last week before it went into effect, securing a major legal victory for the U.S. Chamber and the business community. This is good news for businesses of all sizes, including contractors and franchise owners, who would have faced new liabilities related to workplaces they don’t control and workers they don’t actually employ. It is another win for the business community in stopping government micromanagement.
The court vacated the new rule and reinstated the prior Administration’s rule. The ruling applies nationwide, benefiting businesses across the country. This is the third major legal victory the Chamber has secured in the past seven months in its fight against the Administration’s far-reaching and aggressive regulatory agenda.
“This ruling is a major win for employers and workers who don’t want their business decisions micromanaged by the NLRB,” said Chamber President and CEO Suzanne P. Clark.
Save the Affordable Connectivity Program
The Internet empowers businesses to reach new customers, efficiently provide critical services such as banking and healthcare, recruit workers, increase productivity, and boost exports, while allowing consumers access to innovative products and services.
Moreover, broadband access is intertwined with economic growth. One study found that increased broadband adoption and higher internet speeds accounted for $1.3 trillion of 2020 GDP.[1] In rural areas, the Federal Reserve Bank of Richmond discovered that broadband access leads to more jobs, news business starts, higher home values, and population growth.[2] Finally, for small businesses, Internet access is essential. A 2023 U.S. Chamber of Commerce study found that 67% of small businesses believe that broadband Internet adoption is important to their firm, and nearly three quarters of small businesses stated that digital tools helped them compete with larger companies and hire more workers.[3]
The bipartisan Infrastructure Investment and Jobs Act (P.L. 117-58) created the Affordable Connectivity Program (ACP), to provide a monthly benefit for lower-income Americans to purchase Internet service. For many Americans, Internet affordability is a barrier to broadband access limiting its economic and competitiveness benefits. Today, more than 22.5 million American households have enrolled in the program, particularly benefiting seniors, veterans, and both rural and urban communities.
However, funding for the ACP is projected to be exhausted by April, putting the Internet service for millions of Americans at risk. A February 2024 survey found that 77% of ACP recipients stated that a lapse in funding would disrupt their Internet service.[4] Therefore, Congressional action is needed to maintain certainty for program recipients and enable the private sector to reap the benefits of increased Internet adoption.
We strongly support the Affordable Connectivity Program Extension Act and ask that it be enacted expeditiously to ensure millions of Americans remain connected.
Recurring Business:
Will County Long-Range Transportation Plan: Our Way Forward 2050
Will County Executive Jennifer Bertino-Tarrant and the Will County Division of Transportation announced that the county is embarking on a long-term planning effort to guide the next 25 years of transportation projects. The Plan will incorporate public feedback in evaluating future priorities, including through an online survey and workshops.
During the development of the plan, the county-wide infrastructure for all modes of transportation will be assessed, including walking, biking, driving transit, and freight. Once completed, the plan will be used to identify transportation investments that align with the public’s goals for the county, such as improved safety and quality of life, reduced congestion, and enhanced economic development.
Add your insights to the map at www.ourwaywill.co
Stay well,
Mike Paone
Executive Vice President
Joliet Region Chamber of Commerce & Industry
mpaone@jolietchamber.com
815.727.5371 main
815.727.5373 direct