Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
With about a week and a half left in this state legislative session, legislators are pushing bills to the finish line as they work at the same time on the budget proposal of Governor Pritzker. It seems as if the big items that are still in question are the adjustment of a sports gaming tax rate increase and the operating loss cap that businesses can claim on their taxes.
The message coming from the Governor is that state agencies will need to go through their budgets and look at cuts if the revenue coming from these proposals doesn’t come through.
See below for further updates.
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Approve Revenue Proposals or Make Budget Cuts
In February, Governor JB Pritzker unveiled his budget proposal for the upcoming fiscal year, seeking legislative approval to generate over $1 billion through various tax code adjustments. This included $526 million from extending a cap on corporate tax loss claims and $200 million by increasing the tax on sportsbook revenues from 15 percent to 35 percent.
However, recently one of Pritzker’s top aides issued a directive to state agency heads to identify $800 million in potential budget cuts, anticipating that lawmakers might not approve these revenue measures. Deputy Governor Andy Manar’s letter, dated May 7, highlighted the significant opposition to the proposed revenue changes and instructed agencies to prepare for spending reductions if the tax proposals are not passed.
Manar’s letter also served as a message to legislators, particularly those in the Democratic supermajority. With the legislative session nearing its May 24 adjournment, the directive underscores the need for either cutting spending or rallying support for the governor’s revenue plan.
Despite this directive, recent financial updates were positive. The Governor’s Office of Management and Budget (GOMB) revised its General Revenue Fund estimate for fiscal year 2025 upward by $295 million to $53.3 billion. This increase, along with a $250 million boost for the current fiscal year, usually signals potential for new spending.
Nevertheless, Manar’s letter outlines the possibility of budget cuts, particularly targeting grant programs and discretionary spending that have grown in recent years. These areas are often popular with lawmakers, who celebrate the impact of these funds in their districts through media events.
The directive became a topic of discussion on “Illinois Lawmakers,” a program by Capitol News Illinois. Sen. Elgie Sims, D-Chicago, the lead budget negotiator, described the letter as a prudent planning measure rather than a cause for alarm. House Assistant Majority Leader Jay Hoffman, D-Swansea, affirmed that Democrats aim to pass a balanced budget, though he expressed skepticism about the necessity of all proposed revenue enhancements.
Deputy Minority Leader Norine Hammond, R-Macomb, noted that the letter’s implications were unsurprising, given the budget pressures from competing interest groups. She also pointed out the lack of bipartisan involvement in the budget negotiations so far.
Pritzker’s plan includes other revenue-generating measures, such as a $101 million cap on a sales tax discount for retailers and shifting some mass transit costs to the state’s Road Fund to raise $175 million. Additionally, a proposed cap on a personal income tax deduction and redirecting real estate transfer taxes from parks and recreation to the General Revenue Fund would collectively generate $118 million.
While Manar’s memo marks a pivotal moment in the budget negotiations, budget debate continues to be a standard aspect of legislative proceedings in Springfield.
House Approves New State Agency for Early Childhood Programs
On Thursday, the Illinois House passed a bill to establish a new cabinet-level state agency dedicated to early childhood development and education. The new Department of Early Childhood will act as a centralized hub for services currently managed by three separate agencies, and it is set to be fully operational by 2026.
This new department will consolidate the Early Childhood Block Grants for preschools, currently administered by the State Board of Education; subsidized child care, home visits, and early intervention services managed by the Department of Human Services; and daycare provider licensing, now handled by the Department of Children and Family Services.
Rep. Mary Beth Canty, D-Arlington Heights, the bill’s chief House sponsor, emphasized the need for a more streamlined approach. “We want to make a better Illinois,” Canty said during the debate. “Our current system scatters federal and state funding across three agencies, leading to duplicated efforts and inefficiencies, which means fewer dollars reach the necessary programs.”
Governor JB Pritzker first announced the formation of the new agency in October, as lawmakers began their fall veto session. He signed an executive order to initiate the consolidation process and appointed a transition director. Senate Bill 1, which has now passed the General Assembly, provides the legal framework to establish the new agency. It mandates hiring a director and administrative staff to oversee the two-year transition of programs, personnel, and funding.
The initial cost of setting up the department is estimated at $13.1 million, to be included in the next fiscal year’s budget. However, some Republicans expressed concerns about the lack of clarity on the long-term costs of running the new agency. “We’re creating an entire government agency here,” said Rep. Blaine Wilhour, R-Beecher City. “This is a cabinet-level agency, and we have no idea what it’s going to cost.”
Supporters of the bill argued that the new agency will primarily administer existing programs that are already funded and that consolidating these programs could lead to efficiencies and potential cost savings. “We may make better use of federal funds that support these programs,” Canty noted.
The bill passed the House with a 93-18 vote, following a unanimous 56-0 vote in the Senate on April 12.
Illinois Agency Struggles with Professional License Delays
The Illinois Department of Financial and Professional Regulation (IDFPR) continues to face significant delays in issuing professional licenses, impacting over a million workers across more than 100 professions, including nurses, barbers, roofers, social workers, and dentists.
The agency was supposed to contract with a technology vendor by March 7 to develop a new software system aimed at expediting the licensing process. However, the delays persist, causing frustration among professionals awaiting their licenses.
At a recent subject matter hearing, Holly Woodruff of the Illinois Nurses Association highlighted the plight of nurses stuck in limbo after passing their final exams. “They take boards, they get prepared, they find out within a couple of days whether they pass or not, and then they have to just wait,” Woodruff explained. “Sometimes the wait is excruciating, especially when you have to start paying your student loans within a couple of months.” She also noted that the delays are driving quality medical professionals to neighboring states like Missouri and Iowa.
State Representative Bob Morgan, D-Deerfield, emphasized the broader impact of these delays. “A number of associations continue to experience delays and challenges in getting their members licenses timely,” Morgan said. “It impacts not only the individual licensee but also our economy, our health care system, and everything that we are trying to achieve as a state.”
The acting director of the IDFPR attributed the delays to a substantial backlog that has accumulated in recent years. Governor J.B. Pritzker has requested a 20% increase in funding for the agency to address these issues. However, this request may be jeopardized by an $800 million shortfall in the proposed 2025 budget.
Illinois Legislators Consider New Tax Credits
Illinois legislators are evaluating several new tax credit proposals, while some are advocating for the renewal of the recently expired Invest in Kids program. At a recent House Revenue and Finance Committee meeting, discussions focused on a tax credit for affordable housing. State Rep. Dagmara Avelar, D-Bolingbrook, stressed the necessity of the measure to increase housing availability. “The $20 million annual program over six years will generate up to 1,150 affordable homes and apartments per year, more than $650 million in economic benefits over a decade, and more than 7,000 jobs,” Avelar said.
The committee also reviewed a tax credit for live theater production. Advocates noted that Chicago is becoming a testing ground for productions bound for New York, bringing significant economic activity to the community and boosting government revenues. Another proposed tax credit aims to cover 50% of the installation costs of fire sprinkler systems in residential units, up to $10,000. Erik Hoffer from the Northern Illinois Fire Sprinkler Advisory Board explained, “If we cap this at 2,000 homes based on an average cost of $4,095 per income tax credit, it will result in about an $8.2 million cost.”
In the Senate, legislators are considering additional tax credits, including those for the music industry, donations to community foundations, and foundations assisting with employees’ student loans.
However, State Rep. Chris Miller, R-Oakland, criticized the legislature for neglecting the renewal of the Invest in Kids school choice scholarship tax credit program. “Supporting children, offering a chance at a better education, and a better life to kids in poverty should be a bipartisan issue,” Miller stated on the House floor. Teachers unions opposed Invest in Kids, which provided private donors with a 75% Illinois income tax credit for donations to scholarship-granting organizations. The program expired at the end of last year, leaving many families and private schools uncertain about future educational opportunities. “This is an easy decision to bring back the Invest in Kids scholarship program, and I encourage my colleagues to do so,” Miller urged.
Illinois Could Be Next to Restrict ‘Captive Audience Meetings’ on Labor Issues
The proposed legislation would prevent retaliation against employees who opt out of meetings about political and religious issues, though it wouldn’t ban the meetings entirely. “Employees should be able to walk away from these meetings without fear of retaliation or punishment and just do their job,” said Illinois AFL-CIO President Tim Drea.
The Democratic-controlled state Senate passed the bill along party lines earlier this month, with amendments allowing exceptions for explicitly religious or political employers, such as Catholic schools. Illinois business groups, including the Illinois Chamber of Commerce, Chicagoland Chamber of Commerce, and the Illinois Retail Merchants Association, oppose the legislation.
Similar laws in other states have prompted lawsuits from business coalitions, which remain unresolved. Seven states have enacted similar legislation, according to the Economic Policy Institute (EPI). The trend has grown in state legislatures over the past two years, with about 15 states introducing similar bills since 2022, EPI reports.
Illinois Chamber President and CEO Lou Sandoval argued that the measure represents government overreach into business and sets the stage for increased union organizing efforts. “It’s a slippery slope toward restricting employer speech,” Sandoval said.
Supporters of captive audience laws, including Jennifer Abruzzo, general counsel at the National Labor Relations Board, argue that mandatory meetings on labor issues unfairly advantage anti-union employers during union elections. Corey Wade, a member of the International Association of Machinists Local 701, shared that mandatory anti-union meetings at a former job hindered a union drive. “Workers would have walked away if they had legal protections,” Wade said.
Business groups argue that the bill infringes on employers’ ability to communicate with their workers, potentially leading to monetary penalties for violations. Noah Finley, Illinois state director at the National Federation of Independent Business, warned that the legislation could chill employer speech.
The bill exempts training sessions on harassment and discrimination from the restrictions. Sandoval noted that interfering with employees’ right to organize is already illegal under the National Labor Relations Act. While the Illinois Chamber is in talks with the bill’s sponsors, Sandoval was unsure if there would be an opportunity to introduce pro-business amendments. The National Federation of Independent Business is already part of lawsuits challenging similar laws in Minnesota and Connecticut.
Sen. Robert Peters, D-Chicago, who sponsored the bill in the Senate, emphasized that Illinois is joining a national movement to protect workers’ rights. “Illinois is next on the list to join other states that have fought to protect workers’ rights,” Peters said.
Stay well,
Mike Paone
Executive Vice President
Joliet Region Chamber of Commerce & Industry
mpaone@jolietchamber.com
815.727.5371 main
815.727.5373 direct