Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
Short, but informative roundup today. As a heads up, there will not be a roundup next Wednesday we’re going to take a week off.
Don’t forget about our June state legislative session recap luncheon on Thursday, June 29th. We’ll plan to cover not only the budget, but a number of additional topics with our local state senators and representatives. Here is the link to register: https://jolietchamber.chambermaster.com/events/details/2023-member-lunch-june-29-legislator-panel-6788
*Government Affairs Roundup brought to you by CITGO & Silver Cross Hospital*
Inflation falls to lowest rate since March 2021
Consumer prices rose just 0.1 percent in May and are up 4 percent over the past year, according to key inflation data released Tuesday morning by the Labor Department. Inflation as measured by the consumer price index (CPI) dropped sharply last month, bringing annual price growth down to its slowest pace since March 2021.
The drop in inflation will likely keep the Federal Reserve on track to pause its aggressive run of interest rate hikes Wednesday. The Fed has hiked interest rates in consecutive meetings dating back to March 2022, but is likely to announce a temporary halt on Wednesday following a two-day meeting in Washington, D.C.
The annual inflation rate has dropped sharply since peaking at 9.1 percent in June after the Fed raised its baseline interest rate range by 5 percentage points since March 2021. The broader U.S. economy has also slowed under the weight of rate hikes, but has continued to add jobs at a stellar pace and maintain a low unemployment rate of 3.7 percent — just 0.2 percentage points higher than the pre-pandemic low of 3.5 percent.
Even so, the annual inflation rate is still roughly twice the Fed’s target of 2 percent and several areas of the economy have yet to see slower price growth.
Illinois’s grocery tax suspension will soon end
Last year, on July 1, Illinois’ 1% grocery tax was suspended as part of a 2022 $46.5 billion state budget plan aimed at providing relief to families struggling with rising costs of goods and inflation. Officials said the extension, set to end July 1 of 2023, was predicted to save taxpayers upwards to $400 million through the fiscal year.
Currently, the suspension applies to “food for human consumption that is to be consumed off the premises where it is sold,” including bakery and deli items, cheese and fruit trays, prepackaged snacks and baby formula. Other items, like alcoholic beverages, food with adult-use cannabis, soft drinks, candy and food that prepared for immediate consumption are excluded from the suspension, as are drugs and medication. According to state documents, the final day of the tax holiday is June 30, 2023.
Illinois legislators warn of progressive income tax with unknown expenses in 2024 budget
Governor J.B. Pritzker signed the state’s $50.6 billion budget last week. However, one expense is unclear, leading some to question whether new taxes may be coming for Illinoisans as a result.
Illinois has a contract with the American Federation of State, County and Municipal Employees, or AFSCME, which expires at the end of June. The union covers many Illinois state employees. The new contract with AFSCME could cost up to an additional $300 million when finally settled, according to some lawmakers, but was not included in the state’s budget.
“We have a few state workers, mostly represented by AFSCME,” state Sen. Win Stoller, R-Germantown, said. “Well, their contract is coming up this year. I don’t know if you noticed, but I think we all know that it’s coming. That’s $200 to $300 million, maybe. That’s not included in this budget.”
During the budget signing, Pritzker said funding was available. “We built into the agencies’ budget. We have, as you know, we have quite a number of agencies. We built in what we thought might be the appropriate amount of money for what we expect from that AFSCME negotiation,” Pritzker said. The AFSCME contract is still being negotiated and there is yet to be a final number for the expense.
State Rep. Charlie Meier, R-Okawville, said that there is no way to prepare for the final cost and that if the contract is not fully funded in the 2024 budget, Democrats could offer a new tax on residents. “I’m still afraid this budget will have holes when it gets later into the year, and then you will hear the talk right after the first of the year that we are going to have to put the progressive income tax back on the ballot,” Meier said.
The Illinois Constitution requires a flat income tax. A progressive income tax proposal in 2020 would have brought a tiered income tax structure with increased taxes on higher-income earners, but voters rejected the idea.
Meier said many expenses not fully covered in the budget would leave the state needing more funding. “We will see on a bill promoting the progressive income tax again in the future,” Meier said. “It will be because they have reasons because they need the extra funds, whether that’s from the AFSCME contract or more money for the illegal immigrants’ Medicaid.”
The state’s 2024 budget goes into effect on July 1.
Stay well,
Mike Paone
Executive Vice President
Joliet Region Chamber of Commerce & Industry
mpaone@jolietchamber.com
815.727.5371 main
815.727.5373 direct