Buckle up. This week's mailbag is one of the bleakest I've written. It's Quarantine Day 537, it's snowing in Chicago, the XFL folded (RIP St. Louis BattleHawks) and based on the President's timelines we are in for more of this for a while.
The House and Senate were not in session this week. It is very unclear when the General Assembly will return to Springfield. Chamber leaders have said to expect a very limited agenda when they do return, one that focuses on the budget and COVID-19 relief.
There has even been talk that the General Assembly may not meet until November for a very robust veto session. The budget year ends June 30th, so this would require operating without a budget for several months. If you'll recall, the state went without a budget for several years during the Rauner administration. Around 90% of a typical budget was still spent with continuing appropriations and consent decrees. State revenues have cratered during the pandemic (more on this in a bit).
Punting on a budget would allow lawmakers the advantage of avoiding a difficult vote on a budget that decreases prized, and politically popular, spending items in an election year. Waiting until after the election would also allow them to know whether they could count on the tax increases from Governor Pritzker's progressive tax hike amendment. Further complicating matters, if legislators can't return to Springfield by June 1st, a supermajority would be required to pass a budget. This would strengthen the bargaining power of the two minority leaders. The Chamber will continue to keep you informed on timelines.
More on the Budget
The COVID-19 pandemic has devasted state revenues. Other midwestern states have several months of revenues set aside for a time like this. In no surprise to anyone paying attention, Illinois has a laughably small emergency fund ($58,000 at last check).
Let's take a look at exactly how deep a revenue hole the state is facing. Experts predict a $2.7 billion loss in revenues for the fiscal year ending in June. That's about a 6% reduction but because we are so late in the fiscal year, that would require slashing budget lines by 30% for the remainder of the year. Governor Pritzker says to expect between $6.2-$7.4 billion for the fiscal year beginning in July. That assumes a relative return to normalcy, however, and the longer the state remains shuttered for business the less confident we can be about this return to normal. Some of our small businesses are likely to never reopen without relief, and soon.
What about the CARES act? The federal government did provide money for the state but only for COVID-19 related costs. Nothing was provided for shrinking revenues.
Impacts on Transit Funding
With the Governor's stay at home order, the state's revenues from motor fuel taxes are plummeting even faster than general revenues. People are driving so much less than normal that auto insurance companies are issuing credit on policies of up to 25%. This reduction in motor fuel income will hit the Road Fund and slow construction projections without an infusion of cash. State DOTs have asked the feds for more than $50 billion distributed amongst them according to the normal formula. Senior IDOT sources have indicated that without this additional funding, the 5-year plan can be more realistically called the 7.5-year plan.
Adding to the difficulties is that the bond rating companies continue to look at Illinois with suspicion. Fitch downgraded Illinois debt once again to BBB-. That is one step away from junk bonds. Fitch also lowered the outlook from "stable" to "negative" which indicates that "junk" status may not be too far on the horizon. This makes borrowing for construction, as President Trump has favored at the federal level thanks to historically low rates, not much of an option for Illinois.
Certified Payroll Training Sessions
As of April 1, all contractors working on prevailing wage projects are required to provide certified payrolls to IDOL electronically. The Illinois Department of Labor has posted a prevailing wage certified payroll portal on their website. We would like to invite contractors to a series of webinar training sessions on using the new portal and filling out the information the department needs. The subject matter and presentation for each session will be the same, so you need to only attend one. This is designed to share with your members, everyone will need to register to get on a call.
The trainings will be offered on:
- Monday, April 20th at 2 pm.
- Tuesday, April 21st at 2 pm
- Thursday, April 23rd at 11 am
- Monday, April 27th at 10 am
Illinois Workers Compensation Committee Emergency Rules Unfairly Impact Businesses
Many of you are aware of a massive overreach in administrative rule-making undertaken by the Illinois Workers Compensation Commission (IWCC). Just last evening, the commission voted to approve a rule that would all but guarantee workers compensation benefits for any worker who claims a COVID-19 related illness. This is an unprecedented expansion of the Illinois Occupational Diseases Act. This expansion was undertaken without consultation with the employer community, is clearly beyond the statutory authority granted to the WCC, and was rushed through in clear violation of other statutes.
The Chamber is consulting closely with our partners in the business community in determining an appropriate and aggressive response to this government overreach. We have drafted a letter to the members of the Joint Committee on Administrative Rules urging JCAR to suspend the IWCC Emergency Rules. You can see the full letter here If you would like to sign on to the letter, please contact email@example.com