Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
We hosted a very informative luncheon today with speaker Doug Pryor from the Will County Center for Economic Development. Doug shared insights and statistics (including graphs) covering the housing market in Will County. We’re looking forward to how the topic of more affordable and diverse housing options in the area progresses this year.
As you all likely know, President Trump took office Monday, marking the beginning of a new era in Washington. The changing of the guard was, perhaps, marked most significantly by sweeping new executive actions. More on that below along with some additional topics.
*Government Affairs Roundup brought to you by CITGO*
Reforming Tier 2 Pensions Could Cost Illinois $30 Billion, Actuary Warns
A proposed Illinois pension reform bill could require nearly $30 billion in additional contributions to the state’s three largest retirement systems through fiscal year 2045, according to an actuarial study conducted by Segal Group. The study, commissioned by the state Legislature’s Commission on Government Forecasting and Accountability, was prompted by the introduction of HB5909, a bill aimed at closing the gap between the pensionable salary cap for Tier 2 employees and the Social Security wage base.
The Tier 2 pension system was established in 2010 by the Illinois General Assembly as part of an effort to address a longstanding funding shortfall while adhering to the Illinois Constitution’s prohibition against reducing existing benefits. This system applied to state and local employees hired on or after January 1, 2011, and introduced several changes, including raising the retirement age from 60 to 67, changing the final average salary calculation from the highest four consecutive years to the highest eight, and imposing a cap on pensionable earnings.
Over time, the Tier 2 system has increasingly failed to meet federal “safe harbor” requirements for public employees not covered by Social Security. According to the Illinois Policy Institute, a right-leaning think tank, the gap between Tier 2 benefits and the minimum benefits required to avoid Social Security taxation has more than doubled in the last five years. This growing discrepancy has prompted the push for reforms to enhance Tier 2 benefits.
The proposed reforms under HB5909 include aligning the Tier 2 salary cap with the Social Security wage base, retroactively applying the adjustment to earnings received since January 1, 2011, and before January 1, 2025. The bill also revises the average salary calculation back to the highest four consecutive years, modifies the cost-of-living adjustment to a non compounded 3%, and aligns Tier 2 retirement age and service eligibility with Tier 1 standards for both current and future participants.
The Segal Group’s study focused on the financial impact of these enhancements on the three largest retirement systems: the Illinois Teachers’ Retirement System, valued at $73 billion; the Illinois State Employees’ Retirement System, valued at $25.7 billion; and the Illinois State Universities Retirement System, valued at $24.7 billion. These systems collectively reported smoothed funding ratios of 45.8%, 44.7%, and 46%, respectively, as of June 30, 2024. However, the analysis excluded the Illinois Judges’ Retirement System, valued at $1.4 billion, and the Illinois General Assembly Retirement System, valued at $91 million, due to data limitations.
The cumulative unfunded actuarial accrued liability across all five state retirement systems was $143.7 billion as of June 30, up from $142.3 billion the year before. The state’s required contributions to these systems are already projected to rise, with estimates of $11.4 billion for fiscal year 2025, $11.6 billion for fiscal year 2026, and $12.7 billion for fiscal year 2030. If HB5909 is enacted, the fiscal year 2027 contribution for the three largest systems alone would increase from $11.6 billion to $12.8 billion. The Segal report estimates that the enhancements proposed under HB5909 would add a total of $29.8 billion in costs through fiscal year 2045.
These projected increases underscore the financial challenges associated with addressing compliance and adequacy issues within the Tier 2 system. As Illinois lawmakers consider HB5909, the long-term fiscal implications of the proposed reforms will play a central role in the debate over the state’s pension obligations and financial stability.
Illinois Revenues Steady This Year but Challenges Loom for Next Budget
Illinois’ revenue collections are on track midway through the current fiscal year, but concerns about a looming deficit in the next budget cycle have emerged as a key challenge for state leaders. The Governor’s Office of Management and Budget (GOMB) has projected a $3.2 billion deficit for the fiscal year beginning July 1, 2025, setting the stage for a critical task ahead for Governor JB Pritzker and the newly seated General Assembly.
Governor Pritzker, who is scheduled to present his budget address on February 19, faces the largest projected deficit entering a spring session since 2021. That year, the pandemic caused a significant drop in state income, though federal stimulus funds and a strong economic recovery eventually bridged the gap. Since then, Illinois has enjoyed steady revenue growth with limited reliance on new revenue-generating measures. However, the current-year budget, passed in May, included approximately $1 billion in additional revenue through measures such as tax hikes on sportsbooks and businesses.
The state’s revenue collections for this fiscal year remain in line with projections. According to the December report from the Commission on Government Forecasting and Accountability (COGFA), Illinois brought in $52.6 billion in fiscal year 2024. As of December, revenues for this fiscal year are $35 million, or 0.1%, ahead of the halfway mark. December was particularly strong, with revenues up $327 million compared to the same month in FY24, driven by a 9.2% increase in income tax receipts. Sales tax revenues also rose for the third consecutive month, boosted by holiday shopping, marking a 1.2% increase for the year.
Despite these stable revenues, there are concerns about the lack of growth. GOMB has warned that flat revenue projections, combined with rising expenditures, will make crafting the next budget especially difficult. The absence of one-time federal funding and a slowing economy further complicate matters.
As the new General Assembly begins its work, it remains unclear how lawmakers and Governor Pritzker plan to address the projected deficit. Republican lawmakers have expressed concerns that Democrats might resort to tax increases to generate additional revenue, a move they strongly oppose. Representative CD Davidsmeyer, a Republican and co-chair of COGFA, criticized the current spending trajectory, arguing that the state is already spending nearly $20 billion more than it did eight years ago.
Governor Pritzker, however, has signaled reluctance to pursue tax increases, stating that his focus is on balancing the budget within existing means. “That’s certainly not the first thing on my list,” Pritzker said. “I’m looking at how we can balance the budget within our means.”
Tensions over the budget approach extend to some Democrats as well. Last May, the revenue plan for FY25 passed the Illinois House with the bare minimum 60 votes, despite Democrats holding a 78-seat majority. Representative Fred Crespo, a Democrat who voted for the state’s spending plan but opposed the revenue bill, has called for greater fiscal discipline. Crespo advocates setting firm revenue benchmarks based on projections from GOMB and COGFA to prevent overspending.
Crespo also criticized the practice of passing legislation “subject to appropriation,” which allows new programs to be created without guaranteed funding. He argued that such measures place unnecessary pressure on the state’s budget, complicating long-term fiscal planning.
Adding to the uncertainty, federal policies under the Trump administration could significantly affect Illinois’ finances. Governor Pritzker has voiced concerns about potential reductions in federal funding or changes to federal healthcare programs like Medicaid, which could increase state costs or limit services. Additionally, Trump administration actions targeting sanctuary states, such as blocking grant funding, could have financial repercussions for Illinois.
As lawmakers prepare for the spring session, they face the dual challenge of addressing the immediate fiscal year deficit and navigating potential financial impacts from federal policy changes. With revenues steady but growth limited, the debate over spending cuts, revenue increases, and fiscal discipline is likely to dominate discussions in the months ahead.
Presidential Executive Orders, Memos, Proclamations, and Withdrawals
President Trump issued a series of executive orders on various issues. Key orders include ending birthright citizenship, pausing refugee admissions, and designating certain cartels as Foreign Terrorist Organizations. He reinstated the “Remain in Mexico” policy and called for increased vetting and screening of migrants entering the U.S.
Additionally, Trump signed an executive order recognizing only two sexes, male and female, and terminated diversity, equity, and inclusion (DEI) programs in the federal government. Another order restored the death penalty, recognizing it as the “only proper punishment for the vilest crimes.”
President Trump addressed federal censorship and free speech with an executive order and established the “Department of Government Efficiency” (DOGE). He initiated the U.S. withdrawal from the World Health Organization (WHO) and began the withdrawal from the 2015 Paris Agreement.
Several memoranda also accompanied these orders, setting up an “America First Trade Policy,” establishing a regulatory freeze pending review, instituting a hiring freeze for nonmilitary government positions, and requiring all government employees to return to work in person full-time.
In addition to executive orders, Trump issued important proclamations and memos:
- Jan. 6 Pardons: Trump pardoned and commuted the sentences of roughly 1,500 defendants charged in connection with the Jan. 6, 2021, attack on the Capitol.
- Southern Border: Trump declared the situation at the southern border as “an invasion” and a national emergency.
- American Flag: Trump proclaimed that the American flag be flown at full staff on all future Inauguration Days, returning to half-staff after the day’s conclusion in recognition of former President Carter’s death.
President Trump rescinded numerous Biden-era executive orders, including:
- Transgender Military Service: Trump revoked an order allowing transgender people to serve in the military, reversing a 2018 ban from his first term.
- DEI Efforts: Multiple orders promoting DEI efforts across the federal government were canceled, as well as orders aimed at preventing discrimination based on gender identity or sexual orientation.
- Climate Change: Many climate change initiatives were rescinded, including an order strengthening Medicaid protections and making it difficult to institute work requirements.
- Cuba: Trump put Cuba back on the list of state sponsors of terrorism, reversing Biden’s decision to remove it.
Repeal Beneficial Ownership Reporting Requirements
The beneficial ownership reporting rule would require businesses with 20 or fewer full-time employees to register all beneficial owners. The new beneficial ownership information reporting law would have required business owners to register personal information in a federal database through the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) by January 13, 2025. Failure to register would have resulted in criminal penalties of up to 2 years in prison and civil penalties of $500 per day, up to $10,000.
So what’s the latest in the courts?
On December 26, 2024, a federal appeals court reversed the previous decision and put reporting requirements on indefinite hold while the courts consider NFIB’s lawsuit, which means businesses are not required to comply with the BOI reporting requirements.
Is BOI reporting dead or alive?
As of December 26, 2024, small business owners are not required to file beneficial ownership information. The Department of Justice can appeal the decision, and this case could go all the way to the Supreme Court.
The court reinstated a nationwide injunction, which means that the rule is on indefinite hold and the government can’t enforce it against any individual or business in any state. So, for now, if you haven’t filed the form, you can hold off — but don’t ignore it entirely. There’s a chance that the courts could lift the hold again. As before, it’s a good idea to prepare beneficial ownership information just in case.
What else can businesses do?
With the future of this rule in the hands of the courts, now is the time to keep the pressure on Congress to fully repeal the beneficial ownership reporting. Send them a message: https://www.nfib.com/advocacy/now/?vvsrc=%2fcampaigns%2f107617%2frespond
DCEO Small Business Grants
Small Business Capital and Infrastructure Grant Program
Program Details: This program will support small businesses with capital resources that can be used for infrastructure improvements, acquisition of essential equipment, or purchase of new property. Please see attached Program flyer in both English and Spanish, as well as a copy of the Notice of Funding Opportunity (NoFO).
Award range: $10,000 – $245,000, per award
Eligible Applicants: Businesses owned by Socially Economically Disadvantaged Individuals (SEDI) with a maximum of 25 full-time permanent employees OR Very Small Businesses (VSB) with less than 10 employees. Note: Only applicants who are GATA pre-qualified will be eligible for awards under this Program.
Application Deadline: April 7, 2025, at 5:00 p.m.
Federal Grant Match Support Program
Program Details: This program will make funding available to Illinois-based businesses and organizations seeking competitive federal grants. This match program will encourage more applicants to apply for federal grant opportunities, provide critical assistance to meet the minimum match eligibility requirements, increase the competitiveness of applications, and provide the State of Illinois with an opportunity to make a firm commitment and demonstration of support for projects that are well aligned with the State’s economic development goals and priorities.
Eligible Applicants: Nonprofits, educational institutions, local governments, and businesses.
Application Deadline: General announcement open with no specific application due dates.
Stay well,
Mike Paone
Executive Vice President
Joliet Region Chamber of Commerce & Industry
[email protected]
815.727.5371 main
815.727.5373 direct