“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
Today’s roundup has information on a few interesting topics that have popped up since the last update such as an election law change, the possibility of a service tax, and a number of additional pushes for new legislation. On a positive note, April revenue was on track in the state leading to forecasts to remain for a $2 billion surplus.
*Government Affairs Roundup brought to you by CITGO*
State Budget Meeting Expectations According to Forecasting Agency
Roughly three weeks remain until the Illinois General Assembly wraps up its spring legislative session as financial analysts observed that state revenues are staying on target. April traditionally plays a critical role in determining the state’s financial health, with income tax filings often bringing either pleasant surprises or unexpected shortfalls, impacting the current budget deliberations as lawmakers devise a spending plan for the forthcoming year.
For the fiscal year 2024, ending on June 30, revenues are generally aligning with the projections outlined by Governor JB Pritzker’s administration in February. Consequently, as negotiations on the budget enter their final phase, any additional state expenditures would primarily rely on reallocating funds from the governor’s proposed budget, rather than newfound revenues.
The Commission on Government Forecasting and Accountability (COGFA), responsible for fiscal predictions, reported that April revenues exceeded last year’s by $373 million. However, this increase is partly attributed to two additional weekdays for tax collection processing this year.
Eric Noggle, Revenue Manager at COGFA, stated in the monthly report that while the revenue growth is welcomed, it aligns closely with the commission’s latest forecast, implying no significant surprises that would alter the revenue outlook for the year.
COGFA’s current forecast anticipates total revenues of $52.6 billion by the end of the fiscal year, surpassing the projections made by lawmakers last May by about $2 billion and Governor Pritzker’s estimate by $374 million in February.
However, this doesn’t imply an unexpected surplus for lawmakers to spend freely. Governor Pritzker had already factored in excess revenues in his budget proposal, planning for $1.2 billion in supplementary spending. Noggle suggested that while adjustments to individual revenue streams are possible, they might not warrant an official revision as the overall revenue totals are unlikely to see significant modifications.
Governor Pritzker expressed encouragement over the revenue performance, indicating satisfaction with the current trajectory and downplaying concerns about the state’s fiscal health deteriorating, emphasizing that it’s not a year for panic despite being tight.
Looking ahead to the fiscal year 2025, the governor’s office projects revenues of around $53 billion, factoring in proposed tax law changes. This estimate closely mirrors COGFA’s latest projection.
Lawmakers are slated to adjourn on May 24, with the option to extend the session until May 31 if needed to pass a budget before the start of the fiscal year on July 1.
General Assembly Pushes Through Amendment to Change Election Law & Adds Three Non-Binding Questions to Ballot in November
Governor J.B. Pritzker has signed an election bill which received final approval from Senate Democrats last Thursday following its passage in the House, further fortifying Democrats’ position in the upcoming General Assembly. Presently, Democrats hold significant majorities in both the Illinois House and Senate.
The new legislation abolishes the practice whereby local political party organizations could appoint candidates to fill out legislative ballots in instances where the party did not present a primary candidate. Previously, this appointment process was permissible within 75 days of the primary.
Governor Pritzker signed the bill mere hours after acknowledging to reporters that he hadn’t thoroughly reviewed all its details. Nonetheless, he endorsed it as an “ethics” bill, emphasizing its role in ensuring transparency and averting backroom deals in candidate selection. The measure takes immediate effect.
In the 59-member Illinois Senate, Democrats currently hold a 39-19 advantage over Republicans, with one Democratic vacancy. A simple majority of 30 votes is necessary for control, while a supermajority requires 36 votes.
This year, 23 Senate seats are up for grabs. Republicans failed to field candidates in eight seats held by Democrats, and 20 other Democratic seats are not on the ballot. Consequently, even before any votes are cast, Democrats stand only two seats away from maintaining Senate majority and require just eight seats to retain a supermajority, thanks to the new law.
Under the new law, Republicans will at least preserve the 19 seats they currently hold, as Democrats did not challenge four Republican incumbents in the primary, and 15 other GOP-held seats are not up for election in November. Of the 23 Senate seats on the ballot, only 11 feature contested races, all of which are held by Democrats.
In the House, where all 118 seats are up for election, Democrats hold a record 78-40 advantage over Republicans. A minimum of 60 votes is needed for control, while a veto-proof supermajority requires 71 votes.
In March, Republicans failed to field primary candidates against 42 House Democrats. Consequently, Democrats need only 18 more votes to maintain majority status and 29 votes for supermajority status following the enactment of the legislation. Additionally, Democrats did not contest 24 House Republican seats. This leaves 52 seats with partisan competition, 36 currently held by Democrats and 16 by Republicans.
The legislation shields Democratic House Speaker Emanuel “Chris” Walsh and House GOP leader Tony McCombie from general election challengers. Republicans criticized Democrats for employing the appointment ban to safeguard certain incumbents, notably Democratic state Rep. Katie Stuart of Edwardsville.
After the bill’s passage in the House, Stuart’s slated Republican challenger, Jay Keeven, promptly collected required petition signatures and filed with the State Board of Elections to appear on the November ballot. However, a Republican from Northbrook, Daniel Behr, filed to challenge Democratic state Rep. Tracy Katz Muhl at 8:41 a.m. on Friday, just six minutes after Pritzker’s signing of the measure preventing his candidacy was recorded with the Illinois secretary of state’s office.
Senate GOP leader John Curran decried the measure as an example of “election manipulation,” accusing Democrats of hastily altering rules mid-election cycle to favor incumbent candidates.
The new law will also introduce three nonbinding advisory proposals on the November ballot, addressing insurance coverage for in vitro fertilization, additional taxation for earners of a million dollars or more per year to fund property tax relief, and potential civil charges for candidates attempting to interfere with election workers.
Could a Service Tax Emerge to Fund Mass Transit?
Last week, Governor J.B. Pritzker unexpectedly shifted his stance on taxing services, expressing openness to considering it as lawmakers seek solutions to fund and reform the Chicago region’s mass transit system.
Facing a looming $730 million “fiscal cliff” in 2026 when federal COVID-era subsidies expire, the region’s mass transit agencies are grappling with declining ridership, rising operating costs, and falling average fare prices.
A report by the Chicago Metropolitan Agency for Planning suggests that implementing a service tax could help bridge the funding gap. The report indicates that adding a service tax to the state’s existing 6.25% tax rate could generate between $1.1 to $1.9 billion in 2026, aligning with some legislators’ proposals for a $1.5 billion annual funding increase as part of a consolidation effort.
During a media event, Pritzker, who had previously opposed the service tax, acknowledged the need to explore revenue sources but refrained from categorically ruling out the service tax, stating, “I really don’t want to start saying, ‘We’re not going to do this, we’re not going to do that.’” His shift in stance was welcomed by some legislative Democrats advocating for transit agency consolidation and reform, signaling a seriousness in addressing the issue.
While Pritzker reiterated his stance of not endorsing specific reform proposals yet, he emphasized the necessity for change in transit funding and service upgrades. He clarified that by “cuts,” he meant efficiencies to save money rather than service reductions.
However, transit agencies, including the Chicago Transit Authority, strongly oppose consolidation. Additionally, the Illinois Chamber expressed hope that Pritzker maintains ambivalence toward the service tax, citing concerns about its impact on small businesses, particularly those in counties bordering other states.
Implementing a service tax would pose logistical challenges and take time, as many affected businesses are not currently equipped to handle sales taxes. The Chamber emphasized the need for pragmatic discussions to address budget gaps, but asserted that taxing services is not a viable solution from the perspective of Illinois businesses.
Illinois Announces Rivian to Receive $827 Million to Expand Factory and Workforce
Rivian Automotive Inc. announced that it has received $827 million from the state of Illinois to expand operations at its plant in Normal. Rivian said that the money will go toward factory expansion, as well as improvements in public infrastructure and job training for its workforce as the plant gears up to make the company’s next generation of electric vehicles. Shares of Rivian rallied more than 9% after the announcement.
Rivian said in March that it would make its R2, a much-anticipated all-electric midsize SUV, at the Normal plant. The facility will also continue to produce Rivian’s R1S, a full-size SUV, the R1T, a full-size pickup truck, and Rivian’s commercial electric delivery vehicles.
In a surprise move, Rivian also said that it had paused construction on its $5 billion factory in the state of Georgia. Keeping R2 production at the existing downstate Illinois plant earned praise from Wall Street, as it was expected to keep costs in check and ensure Rivian is funded through the start of the R2 production — likely without having to raise further capital this year.
Updates to the facility will begin in the coming months, Rivian said. Illinois Gov. J.B. Pritzker said the California-based company was making a $1.5 billion new investment in Normal. Shares of Rivian have lost 57% to date in 2024, compared with gains of around 6% for the S&P 500 index SPX.
Employer and Landlord Regulations Advance
The Illinois House has pushed forward several measures imposing additional regulations on the state’s employers. One such measure, House Bill 3763, proposed by State Rep. Will Guzzardi, D-Chicago, would expand employee rights by allowing their legal representatives, including attorneys or translators, to request access to their personnel records directly from the employer. Guzzardi argues that this streamlines the process, particularly in cases of workplace hostility, where tensions might impede direct communication between employer and employee. However, critics, including State Rep. Patrick Windhorst, R-Metropolis, question the necessity of such a measure, expressing concerns about potential burdens on businesses.
The National Federation of Independent Business Illinois (NFIB) voices opposition, citing the cumulative impact of such regulations on small businesses, which could lead to increased administrative burdens and potential legal liabilities.
Additionally, House Bill 5371, which expands the Human Rights Act, passed the House. However, it faced opposition from some Republicans like State Rep. Brad Halbrook, R-Shelbyville, who raised concerns about the potential financial risks posed to landlords by requiring them to enter into lease agreements with individuals whose legal status might be uncertain. On the other hand, State Rep. Jeff Keicher, R-Sycamore, supported the bill after collaboration with industry stakeholders to address their concerns.
Sponsored by State Rep. Ann Williams, D-Chicago, the bill aims to align the state’s Human Rights Act with federal standards, strengthening relief for discriminatory practices. Despite initial opposition, both the Illinois Realtors and the Illinois Bankers Association have shifted to a neutral stance on the bill.
These measures now await further consideration in the Senate.
New Legislation Proposed to Update Process for Receiving a Teaching License
Proposed legislation, specifically House Bill 5057, introduced by Rep. Sue Scherer, D-Decatur, aims to modify the process of obtaining a teaching license in Illinois. The bill seeks to authorize the State Board of Education to develop a specialized content test tailored for individuals seeking to teach grades one through six. This test would assess foundational teaching skills and methods appropriate for this grade range.
Specifically, the test would cover areas such as biliteracy, bilingualism, oral language development, and foundational literacy skills. Furthermore, the bill permits candidates to retake specific sections of the test if they previously scored low, although they must pass the entire test before being eligible to teach.
Scherer emphasizes that the bill’s objective is to alleviate the teacher shortage in Illinois by refining the elementary education test, which is currently deemed overly broad. She argues that this adjustment will enable passionate and qualified teachers to enter elementary school classrooms more easily, addressing concerns that the existing test acts as a deterrent for aspiring teachers, particularly those from diverse backgrounds.
According to Scherer, the revised test could also enhance opportunities for people of color, who may have faced barriers with the previous test format.
Having cleared the House, the bill now advances to the Senate for further deliberation.
K-12 School Funding Push
Illinois education advocates are currently pushing the General Assembly to put $550 million more into the evidence-based funding formula that provides funding to K-12 schools. The formula distributes money to school districts based on the enrollment numbers of students from low-income students, English learners, and students with disabilities.
Since the evidence-based funding formula was established in 2017, the legislature has been adding $350 million more a year. But advocates say that it will take larger annual increases to fully fund schools by 2027.
Grants for Schools Seeing Influx of Migrant Students
Since the spring of 2022, CPS and suburban school districts have enrolled students who have migrated from countries around the globe facing war and economic insecurity, such as Ukraine, Russia, and Venezuela. Many schools lack bilingual resources and staff to support these students.
Rep. Fred Crespo, a Democrat representing suburbs northwest of Chicago, proposed a bill (HB 2822) that would create a New Arrivals Grant to be distributed through the Illinois State Board of Education. An earlier version of the bill proposed allocating $35 million, but lawmakers have increased that number to $188 million.
Illinois Child Tax Credit
During the pandemic, Congress expanded the child tax credit, providing families with monthly payments of between $250 and $300 per child, depending on their age. The program reduced child poverty rates temporarily, but it ended in 2021.
Now, Illinois lawmakers along with other state legislatures are proposing a state child tax credit. In Illinois, families could receive up to $300 per child for children under the age of 17. Married couples who make less than $75,000 and single people who make less than $50,000 would be eligible.
Stay well,
Mike Paone
Executive Vice President
Joliet Region Chamber of Commerce & Industry
[email protected]
815.727.5371 main
815.727.5373 direct