Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
A week after the excitement of a memo to pause a number of federally funded programs, this week President Trump postponed imposing a 25 percent tariff on all imports from Canada and Mexico for a month, but only after the stock market had already declined. Meanwhile, he proceeded with a 10 percent tariff on China, which retaliated with its own tariffs. See below for more information along with a number of other topics on both the federal and state levels.
*Government Affairs Roundup brought to you by CITGO*
U.S. Defers Tariffs on Canada and Mexico, Imposes New Levy on China
Last week, President Donald Trump announced plans to impose steep tariffs on imports from Canada, Mexico, and China under the International Emergency Economic Powers Act (IEEPA), an authority never before used for tariff enforcement.
However, following discussions with Canadian and Mexican leaders, the Administration welcomed commitments from both governments to address key concerns, including fentanyl trafficking and migrant flows—issues that had prompted the tariff threat.
As a result, the Administration decided on Monday to postpone the proposed 25% tariff on Canadian and Mexican goods for 30 days. Meanwhile, a new 10% tariff on Chinese imports was enacted on Tuesday, to which China responded with its own countermeasures.
Trade is a cornerstone of the U.S. economy, supporting over 41 million American jobs. Positions in export-driven industries often offer higher wages than those in other sectors. Expanding exports of American-made goods and services benefits U.S. manufacturers, farmers, and workers. While addressing border security and the fentanyl crisis is critical, tariffs could lead to higher prices for American consumers and disrupt essential supply chains.
John Murphy, Senior Vice President and Head of International at the U.S. Chamber of Commerce, welcomed the temporary tariff suspension, stating: “It is good news that the U.S. has avoided an imminent trade war with Canada and Mexico, our two most important trading partners, and that the American people are spared the immediate economic harm that tariffs would inflict.”
Murphy emphasized the need for a long-term resolution, adding: “The Chamber and our members will be fully engaged to ensure this 30-day pause becomes a permanent lifting of the threat of tariffs and a trade war. We will continue to work with the Administration and Congress on solutions to secure our border, stop the flow of illicit drugs into America, and support a growing economy with reduced inflation for all Americans.”
New Report Analyzes How Illinois Stacks Up on Taxes, Spending, and Other Key Metrics
A new report from the Illinois legislature’s Commission on Government Forecasting and Accountability provides a detailed comparison of Illinois’ financial standing against the other 49 states. The report, based on data from the U.S. Census Bureau and the U.S. Bureau of Labor Statistics, evaluates Illinois’ tax revenues, government spending, employment, and other key financial indicators.
In addition to offering a national perspective, the 70-page report examines Illinois’ performance among eight Midwestern states and tracks historical trends over the past eight years.
Tax Revenue and Collections
Illinois ranked fourth in total tax revenue collected in 2023, bringing in $63 billion. However, when adjusted for population, Illinois placed 13th in per capita tax collections at $5,019 per resident. California led the nation in total tax revenue with $220.6 billion, while North Dakota had the highest per capita tax collection at $7,716 per person.
The report notes varying perspectives on these figures: “Some believe that if a state operates with lower per capita tax rates, it benefits residents financially. Others argue that lower per capita revenue represents missed opportunities for investment and public services.”
Illinois’ large population influences its high rankings in total revenue collections, with the state currently ranking sixth in population behind California, Texas, Florida, New York, and Pennsylvania.
Sales Taxes and Business Climate
Illinois ranked seventh in total sales tax receipts in 2023 but fell to 31st on a per capita basis. Unlike many other states, Illinois does not apply sales taxes to services, which affects the rankings. Some experts warn that the report does not always offer direct comparisons between states.
“When discussing sales tax, one cannot simply look at the state rate,” said Rob Karr, president and CEO of the Illinois Retail Merchants Association. “Illinois has substantial local tax rates, and different states tax different goods and services. These factors must be considered to get a truly accurate comparison.”
Illinois also ranked second in the nation for motor fuel tax rates at 66.5 cents per gallon as of January 1, 2024. The state was third in motor vehicle tax revenue, trailing only California and Texas.
Business leaders argue that such taxes impact the state’s economic climate. “The data should drive policy decisions that maximize business growth and job creation,” said Lou Sandoval, president and CEO of the Illinois Chamber of Commerce. “Unfortunately, no single metric in the report provides a definitive guide for attracting investment since business decisions consider a variety of costs and benefits.”
Unemployment and Economic Concerns
Illinois ranked third in unemployment as of October 2024, with a 5.3% unemployment rate—only Nevada and California had higher rates. Despite this, Illinois remains a critical economic hub.
“Illinois has tremendous assets that aren’t reflected in this report,” Sandoval said. “We have a strong transportation network, a skilled workforce, leading universities, and incentives for tech development. However, the report highlights areas where improvement is needed.”
Education Spending and Corporate Taxation
The report ranks Illinois fourth nationally in total spending on elementary and secondary education and sixth on a per capita basis. However, some experts argue that these rankings may be misleading. “Illinois includes pension debt costs in its education spending figures, while most states do not,” said Ralph Martire, executive director of the nonpartisan Center for Tax and Budget Accountability. “This makes it seem like Illinois spends more on classrooms than it actually does.”
Martire also criticized the way the report presents corporate income taxes, noting that it includes personal property replacement tax collections, which are distributed to municipalities. “This inflates Illinois’ corporate tax rankings and creates the perception that our state’s rate is artificially high,” he said. “While the numbers aren’t inaccurate, the comparisons are flawed.”
Sin Taxes and Additional Findings
The report also examined sin tax collections, including revenues from alcohol and cigarettes.
Liquor Taxes: Illinois collected $314.6 million in liquor tax revenue in 2023, ranking eighth nationally but 17th per capita.
Cigarette Taxes: Illinois’ $2.98 per pack cigarette tax was the 12th highest in the U.S., generating $800 million in 2023. That ranked seventh in total revenue but 19th per capita.
While the report offers a broad financial overview of Illinois, experts caution against drawing definitive conclusions without considering additional factors such as local taxes, cost structures, and economic competitiveness. As lawmakers and business leaders analyze the findings, the challenge remains balancing taxation, investment, and economic growth in a way that benefits residents and businesses alike.
Illinois Lawmakers Push for AI Regulations
Illinois legislators are introducing new measures to regulate artificial intelligence (AI), focusing on its impact on healthcare, insurance, education, and civil rights. State Rep. Bob Morgan (D-Deerfield) recently introduced House Bill 0035, which seeks to establish the Artificial Intelligence Systems Use in Health Insurance Act. The bill would prohibit insurance companies from using AI alone to deny, reduce, or terminate coverage plans, ensuring human oversight in critical healthcare decisions.
State Sen. Laura Fine (D-Glenview) introduced a companion bill in the Senate last Friday. Meanwhile, State Sen. Sally Turner (R-Beason) acknowledged the bill’s importance but said she and her team are still reviewing its details.
“As this legislation was just filed last Friday, my staff and I are still in the process of reviewing the bill’s specific language and its potential effect. I look forward to further discussions on this important issue once our review is complete and if the bill is assigned to a Senate committee hearing,” Turner told The Center Square.
State Rep. Amy “Murri” Briel (D-Ottawa) is proposing a separate bill aimed at regulating AI in government-run healthcare facilities. “My AI legislation ensures that state agencies and their contractors, such as county nursing homes, do not use AI systems that determine a person’s fate without human oversight,” Briel said.
Briel also voiced concerns about AI use in schools, referencing a troubling case in New York where school districts deployed AI monitoring software that incorrectly flagged students as security threats. “Three different children in two districts in New York’s homes were swatted for no real threat because the AI made that decision to alert authorities without human oversight,” Briel explained. She emphasized that while she is not opposed to AI or technology, ensuring human oversight in such systems is crucial to prevent unnecessary harm.
State Rep. Abdelnasser Rashid (D-Bridgeview) and State Sen. Robert Peters (D-Chicago) co-chaired the Illinois Generative AI and Natural Language Processing Task Force, which recently released its findings. Rashid described the report as “sobering,” highlighting AI’s role in algorithmic discrimination, job displacement, and the spread of misinformation.
“We’re witnessing profound changes, many of which are exacerbating existing inequities, from algorithmic discrimination that disproportionately affects marginalized communities to the displacement of workers as automation takes over jobs. Real people are being hurt,” Rashid said.
To address these issues, Rashid called for stronger protection against AI-driven discrimination and deepfake misinformation, as well as union-backed safeguards for workers affected by automation.
The task force’s report outlines several key recommendations:
- Protecting civil rights from algorithmic bias
- Regulating political deepfakes to safeguard democracy
- Ensuring AI-driven decisions in insurance and healthcare involve human oversight
- Establishing worker protection against AI-induced job losses
- Enhancing consumer privacy and rights
As Illinois lawmakers continue to explore AI regulations, the debate will center on balancing innovation with accountability to ensure AI benefits society while minimizing its risks.
Price Cap Proposed to Curb Rising Energy Costs
A new deal could ease the impact of rising energy costs, preventing steep electricity price hikes that were initially forecasted for consumers across multiple states. Last Tuesday, Pennsylvania Governor Josh Shapiro announced that PJM Interconnection (PJM), the operator of the region’s power grid, has agreed to support a new price cap to mitigate soaring energy costs. The decision follows a recent PJM auction that projected an 800% increase in grid costs, which would have translated into a 30% rise in utility bills.
Shapiro had previously filed a complaint with the Federal Energy Regulatory Commission (FERC), blaming PJM for the price surge and demanding changes to its auction process. Backed by Democratic governors from four other states and consumer protection organizations, PJM has now agreed to submit a price cap adjustment to federal regulators.
The proposal seeks to lower the cost from $500 per megawatt-day to $325, but it must receive official approval from federal regulators, transmission operators, and PJM officials before taking effect.
“When PJM’s next auction was set to result in historic price hikes, I filed a lawsuit to stop this price hike on consumers and defend Pennsylvanians,” Shapiro said. “PJM did the right thing by listening to my concerns and coming to the table to find a path forward that will save Pennsylvanians billions of dollars on their electricity bills.”
A special meeting is scheduled for Feb. 7 to discuss the price cap proposal, its implementation, and necessary tariff revisions.
PJM Interconnection is the regional transmission organization (RTO) that manages the electric grid for 65 million people across 13 states and the District of Columbia, including Illinois. The organization oversees the flow of electricity across high-voltage lines and ensures grid reliability.
Founded as a power-sharing pool among Pennsylvania, New Jersey, and Maryland, PJM evolved into the nation’s first fully functioning RTO in 2002. It now plays a critical role in planning future energy needs, including supporting data centers, electric vehicle infrastructure, and renewable energy storage.
However, PJM does not set energy policies. It operates within the parameters set by state and federal governments, which influence market dynamics through regulations, incentives, and tax breaks. Critics argue that government policies favoring renewables have accelerated the closure of fossil fuel plants faster than new renewable energy projects can be built, contributing to increased costs.
While nearly all new energy projects in PJM’s queue involve renewables—such as solar, wind, and battery storage—the transition is slow. Many projects face permitting delays, supply chain disruptions, and lengthy approval processes, extending construction timelines by years.
PJM has warned that many renewable replacements will not be operational for at least two to three years, leading to higher costs in the short term to maintain system reliability. Meanwhile, policy conflicts over energy generation continue to play out, particularly in Pennsylvania, which generates 25% of the energy used in the PJM grid.
The debate intensified when former Gov. Tom Wolf attempted to enroll Pennsylvania in the Regional Greenhouse Gas Initiative (RGGI), a multi-state program that charges power plants for carbon emissions. Critics argued that Pennsylvania’s status as a major energy exporter and natural gas producer made the program particularly harmful to the state’s economy.
In 2023, Commonwealth Court struck down the RGGI enrollment, ruling that it amounted to a carbon tax that required legislative approval. Shapiro appealed the decision but stated he would withdraw the appeal if lawmakers approved his alternative, Pennsylvania-specific energy plan.
While the proposed price cap could provide short-term relief, broader challenges remain in balancing renewable energy expansion with fossil fuel reliability. Each state in the PJM region has different priorities, ranging from aggressive renewable targets to increasing overall power generation to meet rising demand.
As lawmakers, regulators, and PJM officials navigate these challenges, the uncertainty in energy policy and investment continues to ripple across the entire power grid, shaping energy costs for millions of consumers.
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