April 27, 2018

This Week in Illinois 

Just two weeks after the Illinois House Republican Leader Jim Durkin (R - Western Springs) introduced a non-binding resolution ( HR 975opposing the implementation of the of a graduated income tax, House Speaker Michael Madigan (D - Chicago) introduced a counter resolution ( HR 1098) yesterday  supporting the implementation of a graduated income tax in Illinois.  The dueling resolutions are signs that the battle and polarity of the two parties on the issue has commenced. 

Illinois currently has a flat tax system, which taxes individuals at a flat rate of 4.95% and corporations at 7%.  Any change to the current flat system would require an amendment to the Illinois Constitution. Amending the Constitution is not easy.  Any change requires a three-fifths approval from both the House and Senate and then the voters would need to approve the measure in any upcoming election.  It is also important to note that Constitutional amendment's bypass the governor's desk.   A bill would also have to be approved in addition to the Constitutional amendment to establish the brackets and rates for a new tax structure. 

Given the drop-dead deadline for any passage of a resolution amending the Constitution is next week (and given the House is not in session next week), it is difficult for the Democratic majority to run an attempt to implement a graduated income tax proposal this year.   Therefore, the earliest we could see a graduated income tax system is on the 2020 ballot. 

For the time being, the Speaker will run his non-binding resolution as a battle cry for the growing progressive constituency in which they represent.  Next week in Chicago, the House Revenue and Finance Committee will hold a subject matter hearing on Madigan's resolution in favor of a graduated income tax.  

The two gubernatorial candidates for governor are at odds on the issue.  Gov. Rauner is opposed to the idea as it would increase taxes on businesses and middle-class earners.  Democratic nominee JB Pritzker has come out in favor of implementing a graduated rate (aka as a "progressive income tax"), saying the so-called rich need to "pay their fair share."

Given the clock will run out on approving Constitutional amendments to the voters for this year and given that there are currently not enough votes in the House to approve a graduated income tax; these dueling resolutions set the stage for what appears to be a front burner issue in the race for governor.   Expect to hear plenty about a graduated income tax over the next 2 years.  

The Chamber is opposed to a graduated income tax and will be testifying in next week's committee hearing in Chicago.  

A proposal that would undue a newly enacted law in Illinois is bouncing around the Illinois House.  Public Act  100-0585, was signed into law by Governor Rauner on April 12.  This new law provided for small cell 5G internet deployment  throughout Illinois (outside of Chicago).  HB 1187 (Zalewski)  includes provisions that would derail 5G deployment, the next broadband wireless technology, and kill thousands of jobs and billions of infrastructure investment.  

The Illinois General Assembly spent a year negotiating and passing small cell legislation that will bring huge noticeable investment and benefits to both Illinois consumers and businesses.  In that extensive year-long negotiation, the wireless industry agreed to dozens of changes to address the concerns of local governments, resulting in a fair and balanced regulatory framework.  

HB 1187 would effectively eliminate the benefits of the recently signed into law, which establishes a uniform statewide process intended to streamline the deployment of small cell wireless facilities to avoid a patchwork of unreasonable and impending regulations.

Statewide deployment of 5G internet will -- over seven years -- will create nearly 100,000 jobs in the state and attract nearly $8.9 billion in investment to Illinois.  Realizing these benefits requires an updated regulatory framework that promotes and facilitates small wireless facilities.  HB 1187 blocks the way.  

Tyler Diers director of legislative relations spoke in favor of HB 5864 (K. Wheeler) at a press conference on Thursday.  This bill would create the Blue Collar Jobs Act offer businesses a 50% tax credit of the cost of labor cost of a capital improvement project in Illinois.  To be eligible for the credit, businesses must use Illinois workers.  The bill also contains a credit sweetner for construction that is done in "underserved areas" of the state.  The bill has support of both business groups and labor.  

On Thursday, Chamber President and CEO Todd Maisch testified in a House subject matter hearing on Enterprise Zones.  Maisch talked about how the Illinois Chamber supports efforts to streamline the Enterprise Zone selection process. to end the current "Hunger Games" competition between existing zones and new zones. The legislation eliminates the cap on the number of Enterprise Zones.

Maisch highlighted the Chamber's proposal, SB 2840 (Althoff) as a fresh approach to much needed reform to the state's Enterprise Zone Act. The Chamber believes that the Enterprise Zone Act should be amended to make the scoring of enterprise zone applications more objective and to add points for any existing or former zone that demonstrates success in addressing the criteria in Section 4 of the Act that formed the basis of the most recent approved application for enterprise zone designation. 

Under the Chamber proposal, the Act is amended to provide that the Enterprise Zone Board shall approve any application that receives at least 200 points. The bill adds standards for Board review of a new application of any applicant zone that was previously decertified for cause. New zones must continue to comply with the statutory requirements for zone designation e.g. demonstrate that the proposed zone is a "depressed area" as that term is defined in the Act.

As opposed to his predecessor, House Revenue and Finance Chairman Zalewski has been more receptive towards looking into Enterprise Zones.  We look forward to working with members on both sides of the aisle to look into ways to reform the Enterprise Zone selection process.  

A proposal opposed by the Illinois Chamber failed to pass by one vote in the Illinois Senate yesterday.  SB 2213 (Biss) would require that Illinois environmental laws and regulations, as well as workplace safety laws, remain as strict or more stringent than federal laws in place before January 19, 2017. The amendment sunsets the bill after three years from the enactment date and removes the citizen suit and private right of action. While the amendment makes the bill better, it is still bad policy for Illinois and could make our state less competitive among our neighbors if certain environmental regulations were modified and Illinois could not comply.

The sponsor pulled the bill and placed it on postponed consideration where he will have one more shot at passing the bill.  The Chamber remains opposed.  For more questions, please reach out to Katie Stonewater

A proposal that would have forced original equipment manufacturers (OEMs) to give up proprietary diagnostic and repair documentation to third-party vendors and repair shops is not moving this session.  The bill as introduced would apply to everything from televisions to tractors, tablets to refrigerators.  The Chamber has deep concerns with forcing manufacturers to give up their intellectual property to anyone.  Warranties, public safety and emissions are critical to a device or piece of equipment.  

HB 4747 (D. Harris) received an amendment earlier this week that would exempt off-road equipment such as tractors and backhoes.  The sponsor noted that it is his intent to not move the bill this session.  Rep. Harris is retiring after his term expires in January.  This issue will likely resurface in the future.  The Chamber remains opposed.  

Business Regulation
SB 2332 (Morrison), which would raise the age to purchase tobacco products to 21, passed out of the Senate 35-20. The Chamber opposes this legislation as it punishes businesses for the decisions of individuals.

HB 2617 ( Gabel) passed the House today.  This  is an insurance mandate to cover standard fertility preservation services when a necessary medical treatment may directly or indirectly cause iatrogenic infertility. Chamber opposed.

HB 4146 (Fine) passed the House yesterday 071-027-000 This legislation  prohibits the modification of a health care plans coverage of a drug during the plan year if the drug has previously been approved for coverage. Chamber opposed.

Energy and Environment 
HB 5689 (Costello) puts certain state regulations regarding coal mining in line with federal requirements. The bill passed the House with no opposition. The Chamber supported the bill.

SB 3101 (Castro) passed out of Senate 31-21-0. This bill amends the Environmental Protection Act. Contains provisions requiring the Environmental Protection Agency to create a State beneficiary mitigation plan in accordance with specified consent decrees. Provides that the Agency shall establish the Volkswagen Settlement Task Force. Given the absence of business-industry on the task force, the Chamber opposed.

HB 4146 (Fine) prohibits the modification of a health care plans coverage of a drug during the plan year if the drug has previously been approved for coverage. Chamber opposed.

HB 4236 (Phillips) passed out of House Agriculture on Tuesday and is on 2nd reading in the House. HB 4236 would require the inclusion of sourcing agreements between "clean coal facilities" and both utilities and alternative retail electric suppliers as part of each annual procurement plan from the IPA and ICC. We oppose this legislation.

SB 3174 (Koehler) passed the Senate 32-17-0. The bill would prohibit small drilling wells from classifying as confidential. This is a local initiative of Senator Koehler's. The Chamber opposed the bill.

Employment Law
HB 4595 (Fine) passed the House 62-43-0. The measure is identical to legislation vetoed by Governor Rauner last summer. The measure includes a $10 million loan from the IWCC Operations Fund. The fund is supported by fees paid by employers thru their WC insurance policies or directly by self-insured employers. $10 million represents one third of the Commission's budget! 

HFA 1 to HB 1593 (Harper) passed the House Labor and Commerce Committee 17-6-0.  This bill would Creates the Hotel Employee Safety Act. Provides that each hotel shall equip an employee who is assigned to work in a guest room or restroom, under circumstances where no other employee is present in the room, with a panic button or notification device.  The Chamber opposes this legislation. 

SB 2999 (Van Pelt) passed the Senate. This bill amends the Illinois Wage Payment and Collection Act to require an employer to reimburse an employee for all necessary expenditures or losses incurred by the employee directly related to services performed for the employer. The Chamber was originally opposed to the bill but worked with the sponsor on an amendment to remove our opposition.

HB 4572 (Rep. Guzzardi) passed 64-37-0. This bill amends the Illinois Human Rights Act to redefine "employer" to include any person employing one (currently 15) or more employees within Illinois during 20 or more calendar weeks within the calendar year of or preceding the alleged violation.

HB 4324 (Welch) received an amendment this week that removed the Chamber's opposition.  This bill amends the Illinois Wage Payment and Collection Act. Provides that the Department of Labor shall adjudicate claims under the Act within 30 days. Provides that the Department of Labor the shall request that an employer deposit up to 10% of a disputed wage claim with the Department pending adjudication of the claim. Increases the administrative fees imposed upon an employer who has been demanded or ordered by the Department of Labor or a court to a pay wage settlement. Authorizes the placement of a judgment lien upon and employer's real estate and authorizes action under the Code of Civil Procedure for a citation or a supplementary proceeding to discover assets.

HB 2717 failed in the House.  The Chamber opposed this bill.  The bill amends the Retailers' Occupation Tax Act and provides that, subject to certain restrictions, if the Department of Revenue may disclose confidential financial information to a municipality or county, then the Department of Revenue may also disclose that financial information to an independent third party who is authorized in writing by that municipality or county to receive the information.

HB 5778 passed the House.  The bill amends the Illinois Income Tax Act. Provides that the credit for wages paid to qualified veterans also extends to wages paid to a qualified veteran's spouse.

SB 3238  passed the Senate. This bill amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act and provides that the exemption for coal and aggregate exploration, mining, off-highway hauling, processing, maintenance, and reclamation equipment sunsets on June 30, 2023 (currently, the exemption is subject to the Acts' automatic sunset provisions). 

SB 3302 passed the Senate. The legislation amends the Angel Investment Credit in the Illinois Income Tax Act and changes the definition of "applicant" and "related member". Provides that the annual allowable amounts shall be allocated by the Department of Commerce and Economic Opportunity if any portion of the unused allocated amount at the end of the first 3 calendar quarters of a calendar year (rather than 2 calendar quarters) are rolled into the total allocated amount for the next calendar quarter. Provides that the annual allowable amounts shall be allocated by the Department if tax credits for investments in minority-owned businesses, women-owned businesses, businesses owned by a person with a disability, or a business in a county with a population of 250,000 or less are limited to the first 3 calendar quarters of a calendar year and after which investors may claim the tax credits of any qualified new business venture.

SB 3291 (Clayborne) passed unanimously out of the Senate.  This bill Amends the Illinois Aeronautics Act. Defines "unmanned aircraft systems". Provides that regulation of unmanned aircraft systems is an exclusive power and function of the State. Restricts home rule power (outside of Chicago). Chamber supports.  
SFA 1 to SB 575 (Raoul) was called in Senate Judiciary.  This bill would create the Keep Internet Devices Safe Act and would regulate any device with a microphone.  The amendment would require notification and consent to users that the device contains a microphone.  While the Chamber testified in opposition to the bill, it was not called for a vote.  The sponsor agreed to have a deadline extension added to the bill to work out further details.  

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2017 Government Affairs Report | Tyler Diers, Editor