Advocacy efforts from the Chamber’s public policy team push Chicagoland towards a more business-friendly environment
During the end of 2022 and beginning of 2023, the Chicagoland Chamber’s Government Relations team was incredibly active in Springfield. Legislators gathered back in November for the first time since adjournment in April 2022 for a two-week Veto Session. The two-week term was rather quiet, with legislators opting to leave many of the “bigger” issues unresolved until the Lame Duck Session, which ran from January 4 through January 11.
With numerous proposals being considered during that time, the Chicagoland Chamber worked to ensure that the interests of the Chicago business community were well represented.
Chamber and Business Groups Negotiate Successful Resolution of Historic $4.5B Unemployment Insurance Trust Fund Deficit
During the 2022 fall Veto Session and January 2023 Lame Duck Session, the Chamber, working with business partner organizations, labor representatives, the Governor’s Office, and the General Assembly, agreed to a package that eliminates the $4.5 billion Unemployment Insurance Trust Fund deficit that accumulated during the early days of the pandemic, saving employers nearly a billion dollars in higher unemployment insurance taxes.
In the spring of 2022, the Chamber and other business groups successfully negotiated the utilization of $2.7 billion of federal American Rescue Plan Act (ARPA) funds to be applied to the $4.5 billion Title XII debt incurred during the pandemic—largely in 2020, when government-mandated closures and operating restrictions were imposed on businesses. At the time, almost every other state used ARPA funds for repaying UI trust fund debt. Per federal law, when a state Unemployment Insurance Trust Fund drops to a negative balance, federal funds are automatically borrowed. If the borrowing occurs for a period of two or more years, employers lose credit against their federal unemployment insurance tax—meaning employers will pay higher taxes.
In September 2022, the Pritzker Administration swapped $450 million from the state UI Trust Fund balance to further pay down a portion of the $1.8 billion federal Title XII debt left outstanding after the $2.7 billion payment was made in mid-2022. Then in December, Governor Pritzker signed SB 1698 (P.A. 102-1105) to provide for the substantive language of the deal, which (1) authorizes the State to use surplus revenues to pay the remaining $1.36 billion Title XII debt and (2) provides for the substantive agreement reached between business and labor groups. The final deal will mitigate tax increases on employers, improve predictability for employers, and bring greater stability to the UI Trust Fund, which was an initial ask of the labor groups. The deal is fair for both employers and workers. In the January Lame Duck Session, SB 2801 passed both the Illinois House and Senate to provide for the appropriation language necessary to finalize the agreement. It is expected that the Governor will sign the bill soon.
The UI deal is significant for Illinois employers and negates roughly $913 million in additional taxes that employers would have had to pay over the next five years. Perhaps, just as importantly, the deal and bipartisan roll call that ensued preserves the Unemployment Insurance Agreed Bill process, which has been in place since the 1980s and informally requires any legislation impacting the Unemployment Insurance System from advancing without an agreement from both business and labor groups. Without the agreed bill process, we most certainly would see annual employer tax increases. You can find the Chamber and business coalitions fact sheet on the agreement here.
Business Development Proposal Passes with Chamber’s Strong Support
Every year, the Chicagoland Chamber of Commerce advocates for more State funding, support, and investment by the State in business development. Although the State has many programs and services in place that are meant to help employers throughout the state, amendments are often required.
The Government Relations team successfully managed to secure transformational changes to some of these state programs, including the following:
- Governor’s “Invest in Illinois” Program: Given the State received an unexpected amount of tax revenue in 2022, due in large part to the lingering positive impact of the pandemic on consumer spending and business earnings, the Governor proposed the creation of a “closing fund”, which would grant the State the ability to offer new or existing businesses that are relocating, expanding, or making substantial investments in Illinois the ability to offer one-time cash grants to incentivize the projects. Other states, such as Ohio, Texas, among others, have perennial closing funds that they use to attract projects to their states. This year, the General Assembly headed the call and created the Invest in Illinois Program. $400 million were allocated to the program this year.
- EDGE Tax Credit Program. The bill (1) increases EDGE credits in projects located in underserved areas equal to 50% of the tax attributed to retained employees, (2) erodes the ‘but for” clause requiring EDGE credit applicants from demonstrating other State offers and cost differentials; and (3) reduces the requirement to self-certification. The EDGE program is one of the State’s biggest economic development tools used to attract and retain jobs in Illinois through a series of income and payroll tax credits.
- Film Tax Credit Program. Extends the sunset date of the program from January 1, 2027 to January 1, 2033 to allow prospective film or TV productions to have reliability in the program. The Film Tax Credit Program each year helps sustain the rapid growth of the film and TV industry in Illinois by offering productions with several tax incentives to film in Illinois.
- Expands Enterprise Zones. Expands the allowable square mileage of a Zone. The EZ program allows for various tax benefits to be offered to businesses that are activated in a Zone.
- Improves High Impact Business Program. Doubles the length of an allowable designation of a HIB and removes the requirement for businesses to prove that the incentive is needed. HIB is a tool that the State offers large business expansions or investments in new projects in the State.
- REV Credit Program. Expands the Reimagining Energy and Vehicles (REV) in Illinois Act (currently, Reimagining Electric Vehicles in Illinois Act) to allow renewable energy product manufacturers to be eligible for REV credits, in addition to changing eligibility requirements to allow small-to-mid size businesses to apply for the credit. REV was first created in 2021 to incentivize new electric vehicle manufacturers and component part manufacturers to build in Illinois.
- Makes changes to the MICRO Act to grant DCEO the ability to determine criteria for the renewal of incentives provided under the Act. Increases the amount of MICRO credits for projects meeting retained employee goals to match new employee incentives. Allows for MICRO credits to be renewed for a total of either 20 or 30 years.
- Creates a sustainable aviation fuel (SAF) purchase sales tax credit from fuel purchased in Illinois by an air carrier from June 1, 2023 to January 1, 2033 in the amount of $1.50 per gallon of sustainable fuel. Prohibits the collection of the credit on soybean oil-derived SAF until air carriers collectively purchase SAF containing 10 million gallons of soybean oil feedstock.
“Paid Leave for All Workers Act” Passes, Chamber Negotiates Deal
Paid Leave is an issue that has been hotly debated for over five years in the Statehouse, with advocates typically leading the way to push for convoluted, onerous, and punitive proposals on employers. An agreement was finally brokered last week—with the Chamber playing a key role in making sure the best deal for business was reached.
Once it was clear that advocacy groups, unions, and Democratic leadership were eager to pass a bill in the last week of Session before the start of a new term, the business community came to the negotiating table seeking two main provisions: (1) require that any paid leave law passed by the General Assembly would be clear, easily implemented, and require no more than five days of leave and (2) prohibit the City of Chicago or Cook County (both jurisdictions that already have paid sick leave mandates in place) from enacting their own version of paid leave. In the end, through much negotiation, the final bill that has been sent to the Governor for his signature will contain the following:
- 5 days of paid time off a year
- There is no requirement for an employee to qualify why their leave is being taken, easing the administrative burden on employers
- The employer may establish a specific process by which an employee may request time off if the request is made prospectively
- The time may be front loaded or rolled-over
- Exempts collective bargaining agreements
- Requires employers to maintain proper records for no less than three years
- For employers that already have a leave policy in place that meets the requirements of this new law, no policy change is required
- Prohibits retaliation
- Allows the Illinois Department of Labor (IDOL) to investigate any claims alleging a violation of the Law, and allows the IDOL to impose fines ranging from $500-$1000 for violations of the act, in addition to legal awards and additional civil penalties.
- The new Law will go into effect on January 1, 2024 and does not apply to any employer that is currently subject to the paid sick leave ordinances that are in effect in the City of Chicago or Cook County.
Other Notable Action
- SB 1720 (Sims/Harris) – FY23 BIMP 2.0, which has passed both Chambers and needs to be signed into law by 12 p.m. on January 16 in order for the salary increases to go into effect. Notable provisions include:
- Provides for increased salaries for Constitutional Officers, Agency Directors, and members of the General Assembly
- The establishment of the Warehouse Safety Standards Task Force
- $5 million to DCEO to administer a Local Chamber Recovery Grants program
- Allows the Illinois Law Enforcement Training Standards Board to make grants to local units of governments and schools for the purpose of hiring and retaining law enforcement officials
- Increases the cap on the Budget Stabilization Fund from 5% to 7.5% of total general funds estimated for the fiscal year and transfer $850 million from GRF to the Budget Stabilization Fund
- Provides the authorizing language to appropriate $460 million to hospitals throughout Illinois as hospital pandemic recovery stabilization payments
- Provides that, if and only if House Bill 4285 of the 102nd General Assembly becomes law, then the small purchase limit in the Procurement Code is reduced from $250,000 to $100,000
- HB 969 (Harris/Harmon) – FY23 Supplemental Appropriations package
- SB 2801 (Holmes/Welch) – Finalizes the agreed-bill Unemployment Insurance Trust Fund deal to (1) appropriate $1.37 billion from GRF to UI Trust Fund to pay the remaining outstanding federal UI Title VII debt and (2) appropriate $450 million to the UI Trust Fund as a loan to be repaid over a 10-year period. The bill as amended by the House Exec Committee unanimously is awaiting House Floor action before going back to the Senate for concurrence.
- SB 1001 (Belt/Zalewski) – Eliminates state and local fees for liquor delivery throughout Illinoi and brings parity for liquor delivery between home-rule and non-home rule municipalities to regulate liquor delivery.
- HB 240 (Jones/Gillespie) – Hospital and health care omnibus package
- HB 4412 (Willis/Cunnningham) as amended by SA #1 – Limited changes to various energy-related provisions. The most controversial changes pertain to facility siting changes opposed by some units of local government.
- HB 268 (Williams/Feigenholtz) as amended by SA #1 – Creates the Tourism Preservation and Sustainability District Act, otherwise known as Tourism Improvement Districts. Similar to Business Improvement Districts, the legislation allows hotel owners to opt into a districts whereby special surcharges are assessed to be used only for the development, services, and benefits of the businesses contained in the Tourism Improvement District. The Chamber continues to discuss a similar model known as Business Improvement Districts with the City of Chicago and other stakeholders.