Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
As of today, Illinois lawmakers have just 11 calendar days — and only 8 legislative days — remaining before their scheduled adjournment on May 31. As has been the case in the past, the final days of the spring session are expected to stretch late into the night, and possibly into the early morning hours. Big-ticket bills and controversial issues often get pushed to the end of the session, with some of the most intense debates happening at the last minute. This year, the top priority remains the state budget.
Governor J.B. Pritzker proposed a nearly $55 billion spending plan in February — the largest in state history. Lawmakers are now working to finalize a version expected to come in closer to $54 billion. However, with revenues falling short of expectations and uncertainty at the federal level, this year’s budget will be tighter than in recent years.
Despite the financial pressures, Pritzker said last week that the state can balance the budget without raising taxes, pointing to the administration’s plans to manage within existing revenue projections. With just two legislative weeks left on the calendar, the details of the budget have yet to be fully unveiled.
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Weekly State Budget Update
With just days left in the legislative session, Illinois lawmakers are under pressure to deliver a balanced budget and while some leaders are expressing optimism others seem to be more cautious than confident.
“There’s a search to get revenue to fill the gaps. And there are a lot of gaps,” said one lawmaker who wished to remain anonymous. “No one has the answers — not the speaker, not the Senate president, and not the governor.”
A major complicating factor is instability in Washington. The shifting policies of the Trump administration — including proposed budget cuts, funding freezes, and tariffs — are causing headaches for Illinois budget planners. “We’re extremely concerned,” said a source familiar with the governor’s team. “It’s difficult to plan a budget when the actions in Washington keep shifting.”
State Rep. Kam Buckner echoed the concern but stressed resolve: “There’s a lot of noise coming from Washington, and plenty of uncertainty around federal dollars, but that doesn’t give us a hall pass. The people of Illinois didn’t elect us to flinch. They elected us to finish. We’re close. We’ll land it.”
Governor J.B. Pritzker has made clear that any new spending proposals must be offset by cuts elsewhere. “It’s a tight budget year, so no one’s going to get everything they want,” he said in an interview with ABC 7’s Craig Wall.
That message is resonating in the General Assembly, where leaders are exploring both spending reductions and potential revenue increases. “While there’s a search for revenue raisers, cuts will have to be made,” one lawmaker noted.
Still, there are glimmers of optimism. House Majority Leader Robyn Gabel said, “We’re in a very good place” with the budget. And in a rare bit of good news for Chicago, Pritzker praised Mayor Brandon Johnson’s team for making “somewhat reasonable asks” that lawmakers “should take into account.”
Illinois isn’t the only state grappling with fiscal uncertainty. California, for instance, is facing a staggering $12 billion deficit. Compared to that, Illinois’ challenges, while serious, are more manageable.
As lawmakers race toward the May 31 adjournment, here are some major legislative issues still in play:
- Transit Reform: Chicagoland transit agencies are warning of service cuts unless lawmakers address a $770 million shortfall. Discussions on structural reforms are ongoing, but funding solutions remain elusive.
- Energy Policy Overhaul: A broad legislative package is in the works to address rising electricity costs. Proposals include expanded nuclear power, stricter regulations on energy-hungry data centers, and new incentives for renewable energy.
- Community College Degree Expansion: Pritzker is pushing to allow community colleges to offer bachelor’s degrees. The proposal saw mixed reactions earlier this year but remains under consideration.
- Pension Reform: Lawmakers may revisit pension laws passed over a decade ago, as some provisions might conflict with federal rules.
- AI Regulation: With the federal government considering a freeze on state AI rules, Illinois lawmakers are moving forward with bills to regulate AI in education and allow individuals to sue over AI-related discrimination.
Illinois Swipe Fee Law Faces Final Legal Showdown
Financial institutions are entering what they call a critical phase in their legal battle against Illinois’ controversial Interchange Fee Prohibition Act (IFPA), a first-of-its-kind law that restricts how banks collect certain credit card fees.
The law, set to take effect July 1, bars banks from charging or receiving interchange fees on portions of credit card transactions related to taxes and tips. Industry groups argue this oversteps state authority and threatens both financial institutions and consumers.
In their latest court filing, plaintiffs — including the Illinois Bankers Association, Illinois Credit Union League, American Bankers Association, and America’s Credit Unions — urged a federal court to block the law. They’re asking for a summary judgment and permanent injunction, while opposing the state’s motion to uphold the law.
“We strongly believe that applying any part of this law to any party in the payment system, be it a bank, credit union, or card network, is fundamentally flawed,” said Ben Jackson, vice president of government relations for the Illinois Bankers Association.
The plaintiffs argue that the court has already acknowledged that the IFPA is preempted by federal law when it comes to national banks and federal savings associations. They maintain that:
- Out-of-state, state-chartered banks are entitled to the same legal treatment as national banks.
- Federal credit unions and out-of-state institutions are protected under federal law.
- Illinois cannot indirectly regulate these protected entities by targeting their service providers.
- They also contend that the law violates the Supremacy Clause of the U.S. Constitution, which establishes that federal law overrides conflicting state laws.
The plaintiffs urged the court to “reject the Attorney General’s effort to hollow out the Supremacy Clause” and to “enter a broad injunction that provides meaningful relief.”
U.S. Senator Dick Durbin (D-IL), a vocal supporter of the IFPA, has filed multiple amicus briefs in support of the law. In his most recent filing, submitted in April to the U.S. District Court for the Northern District of Illinois, Durbin reiterated his defense of the law, emphasizing its potential benefits for consumers and small businesses. However, Jackson pushed back on that narrative, warning of the practical fallout. “The biggest losers from this misguided state law will be small businesses and consumers, who will experience chaos and confusion every time they try to use their credit card to pay for gas, groceries, or dinner at a local restaurant,” he said.
The Illinois Attorney General’s office is expected to respond to the plaintiffs’ motion by the end of the month. Illinois is currently the only state in the nation to have passed legislation targeting the structure of interchange fees — making the outcome of this case one to watch closely, both in Springfield and across the financial sector.
Illinois Republicans Warn of Potential Service Tax Hike to Fund Public Transit
Illinois House Republicans are sounding the alarm over what they say is a Democratic plan to impose a broad new tax on services across the state. The proposal, they argue, is a last-minute effort to raise billions to address a looming financial crisis in Chicago’s Regional Transit Authority (RTA).
At a press conference this week, State Rep. Ryan Spain (R-Peoria) said that Democrats are preparing to expand the state’s sales tax — currently focused mostly on goods — to a wide array of services. The goal: generate an estimated $2.7 billion to help cover budget gaps, including nearly $315 million for the RTA, which oversees CTA, Metra, and Pace.
“We want you to be on alert,” Spain said. “It is time for taxpayers to guard your wallet in the state of Illinois. We are already taxed to the max.” Spain warned that the list of newly taxable services could include:
- Netflix and other streaming services
- Rideshares like Uber and Lyft
- Gym memberships
- Barbershops and beauty salons
- Car washes and auto repairs
- Plumbing, electrical, and general repair services
- Lawn care and landscaping
- Mini-storage and equipment rentals
Spain referred residents to StopILServiceTax.com, a website operated by Americans for Prosperity, which provides a full list of potentially affected services and encourages residents to voice opposition.
While no legislation has officially been introduced, Spain warned that shell bills and last-minute amendments could push the tax expansion through during the final days of the session, which adjourns May 31. State Rep. Joe Sosnowski (R-Rockford) criticized what he sees as out-of-control spending under Governor J.B. Pritzker, citing $3 billion in taxpayer-funded services for nonresidents. “Our money is going out the door,” Sosnowski said.
Local business owners are also raising concerns about the impact of service taxes on working-class trades. “Most of us aren’t huge corporations. We’re local employers trying to stay afloat. This tax punishes Main Street, not Wall Street,” said Jack Geiser, owner of Clean Cut Painting and Handyman in Springfield.
“In Illinois we talk about affordable housing,” added Dean Graven, owner of Dean’s Landscaping and Handyman Service. “This makes housing unaffordable. It’s just not going to work.”
Democratic lawmakers have not confirmed any specific tax proposal but acknowledged Thursday that previously discussed funding options — including raising the RTA’s sales tax rate or expanding the sales tax base — remain under consideration.
Currently, only Chicago residents pay a tax on streaming services. Republicans argue that extending service taxes statewide would burden local businesses already struggling under the nation’s third-highest corporate income tax rate and second-highest property taxes.
If enacted, the proposed service tax expansion could bring in:
- $1.98 billion for the state
- $50 million for county governments
- $390 million for municipalities
- $315 million for the RTA
With the session’s end looming, lawmakers are expected to debate how or if to move forward with the controversial measure in the final days before adjournment.
Proposed Illinois Payroll Tax Would Fund Paid Leave, Spark New Business Costs
A controversial payroll tax proposal in the Illinois General Assembly is drawing strong opposition as lawmakers prepare to finalize the state budget by May 31.
Senate Bill 2413, sponsored by Sen. Ram Villivalam (D-Chicago), would create a statewide payroll tax to fund a new paid family and medical leave program, providing up to 18 weeks of annual paid leave for employees and an additional 9 weeks for pregnancy-related issues.
If passed, the bill would take effect January 1, 2027, and impose a 1.12% payroll tax on eligible wages:
- Employees would pay 0.45% through automatic paycheck withholding.
- Employers would pay the remaining 0.67%, adding a mandatory labor cost that scales with payroll size.
The bill also allows for the tax rate to increase over time, raising concerns among critics that the cost burden could grow.
Opponents argue that the new payroll tax could hurt hiring and wage growth in Illinois:
- Payroll taxes have been linked to lower employment, wage stagnation, and increased under-the-table employment.
- Businesses may respond by automating jobs, outsourcing positions, or avoiding expansion in the state.
Some critics also question whether the proposal violates the Illinois Constitution, which requires a flat income tax. Since Illinois businesses already pay an income tax, the payroll tax could be interpreted as double taxation — something that might not withstand a legal challenge.
Lawmakers have twice extended the third reading deadline for SB 2413, with the new deadline now set for May 23. The delay signals ongoing negotiations, as legislators try to reconcile this proposal with a looming $3 billion budget deficit gap that narrowed somewhat due to recent revenue upticks.
Federal Spending Bill Nears House Vote After Breakthrough on SALT Deal
Speaker Mike Johnson may finally be on the brink of passing his long-promised “big, beautiful bill,” with a vote potentially happening as soon as today.
A key breakthrough came late Tuesday when Johnson and a group of blue-state Republicans reached a tentative agreement to raise the cap on state-and-local tax (SALT) deductions. The deal would increase the cap from $10,000 to $40,000 for individuals earning $500,000 or less annually, according to three Republicans familiar with the talks.
Under the deal, both the deduction cap and income eligibility threshold would rise 1% per year for the next decade—ending at $44,000 and $552,000, respectively. The provision is expected to provide at least $344 billion in tax relief over its lifespan.
The agreement hinges on three major conditions:
- President Donald Trump must endorse the changes via a manager’s amendment.
- Speaker Johnson must stand firm if the Senate pushes back.
- The SALT Caucus must actively campaign to convince Senate Republicans to support the compromise if necessary.
So far, the deal appears to be holding. Notably, the House Freedom Caucus—often resistant to tax relief perceived as favoring wealthier districts—has not immediately rejected the plan. Rep. Scott Perry (R-Pa.) said he personally prefers “zero SALT” but is waiting to see the full scope of trade-offs in the final deal.
To help win over conservative holdouts, Johnson’s team has added a major concession: accelerating the phase-out of clean energy tax credits included in Democrats’ 2022 climate legislation. House Majority Leader Steve Scalise confirmed Tuesday night that the bill would “dramatically limit” new clean energy projects funded through Inflation Reduction Act incentives.
Privately, several conservatives are looking for a way to vote “yes” while claiming victory on their core issues. Rep. Glenn Grothman (R-Wis.) said rejecting Trump’s bill on the House floor would “take guts,” adding, “It’s easy to say no in the Speaker’s office—it’s a lot harder to actually do it.”
Despite momentum, Johnson still has hurdles to clear before bringing the bill to the floor.
Fiscal hawks are pushing for deeper Medicaid cuts, a demand that may not sit well with moderates or Trump himself, who warned Republicans Tuesday not to “mess with” safety-net programs.
The final bill text incorporating all changes is still pending. The modifications will be bundled into a manager’s amendment, which the House Rules Committee began debating early Wednesday morning at 1 a.m. in hopes of clearing the way for a floor vote within hours.
A preliminary analysis from the Congressional Budget Office released Tuesday predicts the bill would increase assets for wealthy Americans while reducing resources for lower-income households—largely due to cuts in Medicaid and food assistance. The CBO’s findings are already drawing criticism from Democrats and are likely to become a flashpoint in the coming debate.
Even if Johnson manages to shepherd the bill through the House, the real test will come in the Senate, where opposition and procedural delays could derail the fragile coalition he’s built. Stay tuned—this vote could set the tone for how Speaker Johnson navigates the rest of his leadership tenure.
Opinion: Time for a bold growth strategy, Illinois
Last week, Illinois Chamber of Commerce President/CEO Lou Sandoval penned an op-ed for Crain’s Chicago Business on our state’s efforts to retain and attract business investment. Here is the full op-ed:
Illinois is a state with enormous promise. We are home to global companies, an unmatched transportation network, world-class universities, and one of the most diverse workforces in the nation. Yet, despite these assets, businesses — legacy employers and emerging innovators — struggle to find reasons to stay, grow, and invest here. (See Greg Hinz’s recent column: Yes, Illinois’ economy is lagging. So, what do we do about it?)
The reason? Illinois lacks a cohesive growth strategy, and recent policy decisions are making it harder, not easier, to do business.
Over the past several legislative sessions, we’ve seen a steady stream of regulations, tax hikes, and one-size-fits-all labor mandates that signal to employers: “You are not a partner in progress.” From sweeping paid-leave laws to proposed scheduling mandates, from ever-growing compliance costs to a tax environment that ranks among the least competitive in the nation, Illinois is sending the wrong message at the wrong time.
Our members repeatedly tell us that they love Illinois and want to stay, but they feel like they’re being legislated out of competitiveness.
This is not just a policy problem — it’s a growth problem. Without a strategy to stabilize and activate the business climate for existing employers, we risk losing the very backbone of our economy. The focus is skewed toward recruiting new industries — clean energy, advanced manufacturing, life sciences, digital logistics — and we risk falling further behind the states doing just that. Tax deferrals and incentives are future-based and create a natural gap in revenue for the immediate future until said new business establishes its footprint and hires. It starts paying taxes beyond the deferral period. This creates an ongoing gap in the short term and one that the existing taxpayers bear.
To change course, we need a clear and coordinated statewide growth strategy that prioritizes existing businesses’ needs while targeting new industries that can diversify and strengthen our economy. That means:
• Reforming our tax and regulatory environment to remove disincentives for growth and investment.
• Streamlining bureaucratic processes so businesses can spend less time navigating government and more time creating jobs.
• Aligning labor policy to promote fairness while keeping Illinois competitive in attracting and retaining employers.
• Launching an aggressive, data-driven recruitment strategy to court high-growth sectors like clean tech, logistics, life sciences, and advanced manufacturing.
• Strengthening partnerships between state government and the private sector to ensure policy decisions reflect economic reality, not political rhetoric.
Illinois has every reason to lead. We are the transportation hub of North America, home to world-class research universities, a diverse and skilled workforce, and a proud tradition of innovation. But potential means little if it’s stifled by inaction or hostility toward those creating jobs.
The Illinois Chamber of Commerce is ready to collaborate, and we have been working with lawmakers to meet halfway. We urge legislators to pause reactionary regulations and tax hikes and instead work with the business community to build a sustainable, forward-looking economy. Among fellow business associations, unity is key. United we win, divided we fall. It is time to pull away from the tribalism of the past and advocate for all our states’ employers.
Our goal is simple: to help our existing businesses grow and thrive, attract the ones we need, and make Illinois a place where opportunity flourishes. Achieving one goal without the others is not a growth strategy; instead, it exacerbates the budget gap in the short term, as most incentives for new businesses brought to the state take time to contribute to its revenue stream.
It’s not too late to change course. But the time for small fixes has passed.
We need to reduce unnecessary bureaucracy and regulatory overreach that delay projects and drive up costs. We need tax and fiscal policies that reward investment and reinvestment. We need labor policies that protect workers without undermining the employers who provide the jobs. And we need governmental leadership willing to partner, not posture, with the private sector to make these things happen.
This isn’t about partisanship. It’s about prosperity. It is a growth plan.
The Illinois Chamber of Commerce believes in this state. We believe in pro-growth solutions, the strength of businesses, and the possibilities of real collaboration. If we work together with business leaders, lawmakers, educators, and local communities, we can chart a path forward that puts Illinois back at the top of the map for innovation, entrepreneurship, and sustainable growth.
Let’s build a growth strategy that honors the businesses that call Illinois home, attracts the industries of tomorrow, and leaves no region behind.
Illinois doesn’t need to be a cautionary tale. With the right vision, it can be a model for other states to follow, and that is a story worth telling.
And that story starts today.
Bills of Note:
HB 2987, Tornado Prep/Facilities passed the House 83-28-0. This bill provides that the operator of a warehouse should coordinate with the warehouse’s local emergency services and disaster agency and fire department or fire protection district to create plans that, when implemented, will be consistent with the local jurisdiction’s response activities. Provides that copies of the plan and all updates made to the plan must be filed with the fire department or fire protection district in the jurisdiction in which the warehouse is located and the local emergency services and disaster agency in the jurisdiction in which the warehouse is located. Provides that warehouse facilities constructed after the effective date of the Act must provide the means, through modification, installation, or demonstration via rational analysis, to meet a life-safety performance level for tornado loading that is equivalent to, or exceeds, the life-safety performance level for the most onerous of other building code-prescribed extreme environmental loading events. Sets forth provisions concerning that evaluation. Provides that, in lieu of a risk-targeted approach, the evaluating design professional may elect to follow prescriptive methods as outlined in the Federal Emergency Management Agency standard P-431, Tornado Protection: Selecting Refuge Areas in Buildings and the Best Available Refuge Area Checklist to ensure that shelter areas designated in tornado safety plans are qualified as the best available refuge areas. Requires that the county keeps on file a copy of the certifications of the persons doing inspections or examinations on its behalf. Provides that a building inspector may have a grace period of one year from the date of hire to acquire the certification required under these provisions. Amends the Illinois Municipal Code to add similar requirements for building inspectors.
SB 58, DCEO Regional Manufacturing-Support passed the House 114-0-0. This bill provides that the Department of Commerce and Economic Opportunity may enter into grants, contracts, or other agreements to provide technical assistance in support of regional manufacturing partnerships in collaboration with the following: (1) employer associations representing manufacturers; (2) secondary and postsecondary institutions, including public universities and community colleges; and (3) workforce stakeholders, including local workforce innovation boards and local workforce innovation areas.
Stay well,
Mike Paone
Executive Vice President
Joliet Region Chamber of Commerce & Industry
[email protected]
815.727.5371 main
815.727.5373 direct