Senate Passes Minimum Wage Hike
On Thursday, the Illinois Senate passed a $15 per hour minimum wage bill over opposition of the Illinois Manufacturers’ Association and a broad coalition of business community partners. The bill, SB 1, passed 38-18-2 with all Democrats supporting the measure while Republicans opposed. The legislation, which now heads to the House for a vote likely next week, presents an 82 percent increase in the minimum wage.
With Governor JB Pritzker and supermajority Democratic majorities in both legislative chambers, it is certain that some minimum wage bill will be enacted into law this year. For that reason, the IMA and business community are working to mitigate the economic impact on businesses by calling on Representatives to adopt changes to the current legislation when the bill reaches the House. Such changes include:
- Include geographic wages because the cost of living in Chicago is higher than it is in Quincy, Mt. Vernon, or Rock Island.
- Increase the phase in time from the current five years to 10 years
- Create a more robust tax credit for small employers impacted by the wage hike
- Pre-empt local governments from imposing an even higher minimum wage
The current legislation sets the following schedule for a minimum wage hike:
- January 1, 2020 $ 9.25
- July 1, 2020 $10.00
- January 1, 2021 $11.00
- January 1, 2022 $12.00
- January 1, 2023 $13.00
- January 1, 2024 $14.00
- January 1, 2025 $15.00
It is important to note that Chicago and Cook County have already passed and are working towards a $15 minimum wage, so the majority of the impact of SB 1 will be on businesses, educational institutions, health care facilities, park districts, non-profits, and other employers outside of Cook County. It is also important to note that employers in Chicago and Cook County will essentially have 10 years to phase in the higher wage while employers in the collar counties and downstate Illinois will have only five years, with a $2.75 increases in just the first year.
According to testimony, the minimum wage hike will cost the State of Illinois more than $1 billion over the next five years.
IMA members are strongly encouraged to call lawmakers in the House of Representatives and encourage them to oppose the bill or advocate for changes that will mitigate the increased cost on employers.
Governor Pritzker has expressed a desire to sign a minimum wage hike into law before his Budget Address on February 20.
IMA Introduces Legislation to Create New MPC
This week, Senator Pat McGuire (D-Joliet) filed an initiative of the IMA under SB 1390. The bill takes the former Manufacturers Purchase Credit (MPC) and melds it into the current Manufacturing, Machinery & Equipment exemption and makes it permanent. This legislation simplifies the tax reporting process and exempts manufacturers from paying sales tax on tangible property used or consumed in the manufacturing process.
Lawmakers failed to extend the Manufacturers Purchase Credit several years ago, meaning companies no longer receive a tax credit for the purchase of tangible products used or consumed in the manufacturing process. In a year where manufacturers may see increased costs due to an increased minimum wage and additional new regulations, reinstating the MPC would be a positive step.
Tobacco 21 Passes Senate Committee
Legislation that raises the age for the legal purchase of tobacco from 18 to 21 while simultaneously decriminalizing underage possession of tobacco products cleared its first hurdle this week as it passed the Senate Public Health Committee on a partisan vote of 8-4. The bill, SB 21, is being carried by Senator Julie Morrison who also sponsored identical legislation last year. Senator Morrison was able to get her measure passed in both chambers last year but the bill was vetoed by Governor Rauner and an attempt to override the Governor’s veto failed 62-45-0 in the House of Representatives.
Proponents argued that increasing the age of purchase would reduce tobacco usage and improve health. Opponents have stated that younger consumers will simply buy the products elsewhere, resulting in less revenue for Illinois coffers and 18-year-olds can buy guns, join the military, or get married so they should be free to make the decision to buy tobacco.
Checkout Bag Tax Filed
Senator Terry Link introduced SB 1240 this week that imposes a tax of $0.07 on paper and plastic bags used by a customer at a retail establishment in Illinois. The bill then prohibits a municipality or county from banning, taxing or further regulating paper and plastic bags.
The environmental community argues that bag taxes are an alternative to bag bans and will change customer behavior to reduce the number of bags that find their way into the waste stream. Tax revenue would be distributed to retailers to offset collection costs (2 cents), the State of Illinois (2 cents), and the remaining 3 cents would be deposited into the Checkout Bag Tax Fund that could then be used by to counties and municipal joint action agencies to collect household hazardous waste, fund education programs that support recycling, host programs to collect and recycle auxiliary containers, and implement solid waste management plans.
The legislation as introduced by the Solid Waste Agency of Lake County after Senator Link convened two stakeholder meetings that included manufacturers, retailers, and local governments. Another bill is expected to be filed by environmental advocates that will simply impose a 10 cent tax on all bags without prohibiting local governments from further taxing or regulating consumer products.
Number of Bills Filed Nears 4,000
In only a matter of weeks, the Illinois General Assembly has introduced nearly 4,000 bills and 300 resolutions. With the bill filing deadline of February 15th quickly approach, there will likely be a large number of bills filed next week. Here are a sample of bills that were filed this week:
HB 2076 (Villa-D) – Prohibits the manufacture, distribution, or use of paper containing BPA for the making of business or banking records.
HB 2085 (Harris-D) – Provides that, with respect to foreign corporations that make a water’s edge election, the deduction for dividends is limited to 75%.
HB 2095 (Morgan-D) – Provides that every bill which may impact the environment or natural resources, shall have prepared for it by the IEPA a brief explanatory statement or note that states the bill’s anticipated environmental impact. Provides a statewide environmental organization representing the environmental issue may assist the IEPA in drafting the note.
HB 2180 (Stava-Murray-D) – Increases the minimum age for students in a work study or internship program.
HB 2217 (Davis-D) – This proposal from Cook County Assessor Fritz Kaegi, requires Cook County taxpayers to submit income and expense data related to their property annually to the chief county assessment officer. The bill provides that counties other than Cook may adopt similar regulations.
SB 1184 (Fine-D) – Provides a county may prohibit the sale of and the use of coal tar sealant product and high polycyclic aromatic hydrocarbon sealant product on any surface, with exception.
SB 1186 (Koehler-D) – Provides strenuous regulations surrounding antibiotics given to food-producing animals.
SB 1328 (Holmes-D) – Creates an income tax credit in an amount of 1% of the expenses claimed by the taxpayer as a federal income tax deduction; provides limitations to credits awarded.
HR 0072 (Bristow-D) – Expresses support of American steel workers and urges the purchase of American and Illinois manufactured steel.