Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
Happy 4th of July a day early! Thank you to not only our five local legislators that were able to join us last Thursday for our June member breakfast, but also to those chamber members that were able to be in attendance as well. Senators Ventura and Loughran Cappel along with Representatives Walsh Jr., Avelar, and Benton were able to cover a good amount of information in 45 minutes.
Here is an article recapping the event from the Herald News: https://www.shawlocal.com/the-herald-news/2024/06/28/will-county-legislators-share-report-on-illinois-budget-with-joliet-chamber/
*Government Affairs Roundup brought to you by CITGO*
New Legislation in Effect as of July 1st
Several new ordinances and laws toke effect in Illinois on Monday, July 1 include enhanced benefits for some workers in Chicago, protections for children of social media influencers, additional protections for independent contractors, changes to school assessment tests, the ability for undocumented immigrants to obtain an Illinois driver’s license, and new taxes/rates to help support budget revenue.
Freelance Worker Protection Act
The law adds protections for independent contractors against threats, intimidation, discipline, harassment, and discrimination.
The law requires companies to issue full payment for the services by the due date in the contract, or if the due date is not specified, within 30 days of completing the services outlined in the contract.
Changes to administration of school assessments tests
Illinois school boards must hold a public vote at a regular meeting prior to approving a new contract for any district-administered assessment tests given to students.
Video Gaming
Income from video gaming terminals will be subject to a heightened tax starting July 1. By increasing that rate from 34% to 35%, the state is anticipating an additional $35 million in tax revenues after receiving an estimated $818 million in FY24 ending on Sunday.
Funds from the tax mostly go to capital projects, but local governments where video gaming terminals are present also receive a cut. The 1% increase will go solely to the state.
Governor Pritzker has defended the tax hike, pointing to a law he signed in 2019 expanding the number of terminals an establishment can have from five to six, effectively allowing businesses to collect more revenue. Other locations, such as truck stops, can have up to 10 terminals.
Sports Wagering
Sportsbooks operators like DraftKings and FanDuel have expressed their displeasure with a staggered increase on the sports wagering tax.
The state was expected to receive $151 million in FY24 when the tax was at 15%. Supporters say the new graduated tax, ranging from 20% to 40% dependent on sportsbooks’ annual revenues, puts Illinois in correspondence with other states. About $350 million is expected from the bumped tax that will go to the state’s general fund and capital projects.
Asked by reporters in Chicago whether he feared sportsbooks leaving the state as a result, Governor Pritzker poured water on those claims. New York is home to a 51% tax and they have remained in the Empire State, he noted.
“We’re the third-largest sports betting market for sports betting companies,” the governor said. “We had a much lower tax rate than many of the largest of those markets. And we’re just kind of bringing ourselves more in line, but at a lower rate.”
Re-renters hotel tax
Online hospitality retailers that buy blocks of hotel rooms, sometimes at a discount, and resell them at a markup will now have to collect state hotel tax on the difference. Previously they paid tax only on the price the hotel originally charged. The state will collect an additional $25 million in tax revenue through the change.
Gas tax
While not changed as part of the budget package, Illinois motorists could see higher prices at the pump thanks to a scheduled increase in the state’s gas tax.
According to the Illinois Department of Revenue, the tax on motor fuel in the state of Illinois will increase to 47 cents a gallon and 55 cents per gallon for diesel. These are increases of over 3% from FY24.
Funds from the tax go towards the Rebuild Illinois capital plan, which put forth $45 billion to help rebuild the state’s roads and bridges.
Driver’s licenses available to undocumented immigrants
On July 1st, undocumented immigrants will be allowed to get a driver’s license.
The new law allows noncitizen residents to receive a standard driver’s license with the wording “Federal Limits Apply” printed on top. These licenses would replace the current Temporary Visitor Driver’s License (TVDL), which undocumented immigrants can use legally today, according to the Illinois Secretary of State.
“This legislation is a significant step in eliminating the barriers to opportunity that many undocumented immigrants face,” said Governor Pritzker upon the bill’s signing. “We’re ensuring every eligible individual can obtain a driver’s license, making our roads safer, decreasing stigma, and creating more equitable systems for all.”
Those eligible for a TVDL must have lived in Illinois for more than a year and do not have a Social Security number. Individuals must provide their U.S. immigration documentation, a passport or a consular card – requirements that remain the same under the new proposal.
Applicants for a standard driver’s license would be required to follow the same process as applying for a TVDL. Still, the license they receive would be the same as one issued to any other Illinoisan whose ID does not comply with federal REAL ID guidelines.
Illinois will join numerous states with similar processes, including California, Maryland, New Jersey, New York, Oregon and Colorado.
Child labor law change protects children
The law is designed to set up protections for children whose parents are social media influencers. The law also requires parents to set up a trust fund for their child if they earn income from their child’s likeness.
A blogger on YouTube, Twitter, TikTok, or another platform who features a child in 30% or more of their online content would be required to set aside 15% of the gross earnings from the video content into a trust, which would be held in the child’s name until they reach 18 years old.
The law also allows the child to request the deletion of any content they were featured in upon turning 18. Child actors have been protected under the Child Labor Law. The new measure alters the language of the law to now include social media influencers.
Chicago minimum wage increase
Beginning July 1st, the minimum wage in Chicago will rise to $16.20, up from $15.80. Although it only impacts the City of Chicago, many wonder if and when the general assembly will follow suit and talk about a statewide increase.
Statewide, the minimum wage is currently $14.00 an hour, which will increase to $15 an hour by January 1st, 2025. The beginning of 2025 will be the last time minimum wage is scheduled to increase. Tipped workers currently receive a minimum wage of $8.40, but employers are required to make sure they reach the regular minimum wage if their tips do not make up the gap in wage.
Governor Signs Bill Creating New Development Incentives Including a Quantum Zone
By signing a new business omnibus package during a ceremony in Chicago, Governor Pritzker believes it will boost the state’s economy by bringing in more cutting-edge jobs. The Governor stated that the legislation will “help Illinois businesses expand, create more well-paying jobs, cut red tape to expedite job creation, continue our successful attraction of high-growth industries, and incentivize new and existing businesses across downstate Illinois.”
The new law does several things, including extending the Reimagining Energy and Vehicles (REV) and Economic Development for a Growing Economy (EDGE) programs. It also extends tax credits for the film industry and research and development. Additionally, the law recodifies the eligibility standards for companies to access the Manufacturing Illinois Chips for Real Opportunity (MICRO) program while easing market entry for smaller businesses specializing in quantum computing, semiconductor production, and microchip production.
A significant feature of the legislation is the creation of a Quantum Enterprise Zone, aimed at establishing a quantum campus that could attract up to $11 billion in federal funding and $20 billion in private investment, according to the Governor’s Office. The law also cuts red tape for the Blue Collar Jobs Act (BCJA) program.
State Sen. Steve Stadelman, D-Rockford, the bill’s Senate sponsor, remarked, “The bill positions Illinois very well to take advantage of this technological advancement… expands the current incentives programs and updates our business development programs to make sure Illinois remains competitive for jobs and new capital investment.”
Governor Pritzker emphasized the broader impact of the law, saying, “Today is about more than just tax credits or incentive packages; it’s about the continued revitalization of our communities and our economy.”
The legislation also expands eligibility and incentives under the Grocery Initiative Act. Grocery stores in economically underserved areas, previously only allowed to apply for assistance under either the Grocery Initiative Act or the High Impact Business program, will now be eligible to apply for both.
This comprehensive package includes measures to facilitate growth in various sectors. It recodifies the eligibility standards for the MICRO program, making it easier for smaller businesses in advanced technology fields to thrive, and aims to foster significant federal and private investment in Illinois through the newly created Quantum Enterprise Zone.
Elimination of State Grocery Tax Gives Local Government More Taxing Authority
Governor J.B. Pritzker touts the elimination of Illinois’ grocery tax, but others say the plan eliminates taxpayer protections from local tax increases. Illinois’ 1% state grocery tax will go away Jan. 1, 2026, but local governments will be able to restore it locally without a referendum under a proposal awaiting Governor Pritzker’s signature.
In 2022 the Governor proposed a 12-month reduction of the state’s grocery tax from 1% to zero. Funds were increased in the budget for that period to assist local governments impacted by the lost revenue. The tax kicked back in for fiscal year 2024. In signing the $53.1 billion fiscal year 2025 budget that begins July 1, Pritzker heralded the end of the grocery tax.
“We eliminated the state sales tax on groceries, which helps every Illinoisan deal with the effects of higher prices in the checkout line and keeps food on the table,” Governor Pritzker said last week before signing the budget and budget implementation bill.
But the grocery tax provision in House Bill 3144 wasn’t signed with the budget package. It remains on Pritzker’s desk and won’t actually zero out the grocery tax for another 16 months. That’s also when local governments can impose their own tax without a local voter referendum, as explained by state Rep. Kelly Burke, D-Evergreen Park, at 3:45 in the morning on the final day the House was in session last month.
“The bill then gives local governments the ability to impose a local 1% grocery tax via ordinance,” Burke said. “The bill also allows non-home rule communities in Illinois to impose a local sales tax up to 1% in increments of quarter-percent via ordinance rather than by referendum.”
Municipal groups opposed Pritzker’s initial proposal to zero out the grocery tax with no backfill, an estimated cost of more than $300 million to local governments. But the Illinois Municipal League filed in support of the modified plan to allow local tax increases to bypass local voter referendum.
Supreme Court Ruling Impact
The U.S. Supreme Court issued a ruling last week that distinguishes “bribes” from “gratuities,” potentially affecting some Illinois corruption cases linked to former House Speaker Mike Madigan. Even former Governor Rod Blagojevich’s team is examining whether his conviction could be overturned.
In a 6-3 decision, the justices overturned the conviction of former Portage, Indiana, Mayor James Snyder, who accepted $13,000 from a local truck dealership after it had been awarded city contracts. The court ruled that it is not a crime for elected officials to accept gratuities — such as “gift cards, lunches, plaques, books, framed photos, or the like” — given as tokens of appreciation after an official act. Gratuities differ from bribes, which are typically payments made or agreed to before an official act to influence the public official, according to the ruling. The full SCOTUS opinion is available here.
Two ongoing Illinois cases could unravel due to this decision, given the role of “gratuities” in these cases. Former House Speaker Michael Madigan is awaiting trial on bribery charges in which ComEd allegedly gave him gifts in exchange for his legislative support. The trial, set for October, could be delayed because of the Supreme Court ruling. Additionally, the sentencing of the “ComEd Four,” Madigan allies convicted of bribing the speaker, has been delayed in anticipation of the SCOTUS decision.
An attorney involved in the cases commented, “I don’t think the entire case would be dismissed. But we will argue — I think successfully — that all of the convictions have to be reversed. And so, if that’s the case, the government would have to make a choice about whether they want to retry the case.”
Rod Blagojevich, who was imprisoned partly for soliciting political contributions from a CEO of a hospital receiving state funding, is also reexamining his case in light of the SCOTUS decision, according to his spokesman.
Stay well,
Mike Paone
Executive Vice President
Joliet Region Chamber of Commerce & Industry
[email protected]
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