IMA Creates Advance Illinois Manufacturing Coalition, Pushes for Tax Incentives
Joined by Rep. Mike Zalewski (D-Chicago) and more than a dozen partners, the Illinois Manufacturers’ Association hosted a press conference this week to roll out the Advance Illinois Manufacturing (AIM) Coalition that will serve as the unifying voice pushing for permanency of four critical manufacturing tax incentives including the Research & Development tax credit and Manufacturers Purchase Credit.
The IMA formed the AIM Coalition to highlight the critical importance of manufacturing to the Illinois economy. The sector employs 570,000 workers in jobs that average more than $70,000 per year in wages and benefits. Last year, manufacturers produced more than $101 billion in total economic output, contributed the single largest share of the Gross State Product, and exported nearly $68 billion worth of goods.
Despite the fact that manufacturing is a key cog in the state’s economic engine, Illinois’ elected leaders have let key incentives expire in the past year that create instability for job creators. The IMA is pushing four proposals that include:
- Modernization and permanent extension of the Research & Development tax credit. This proposal will change the base calculation to 50 percent (now 100 percent) of the three-year average and extend the carry-forward to 20 years. R & D is the lifeblood of manufacturing companies that need to innovate and create products. The R & D credit has expired four times in the past thirteen years.
- Permanent extension of the Manufacturers Purchase Credit. The IMA proposal calls for streamlining the MPC to make it a straight sales tax exemption for the purchase of tangible property used or consumed in the manufacturing process. The MPC has expired four times over the past thirteen years.
- Permanent extension of the Graphic Arts sales tax exemption. The proposal moves the Graphic Arts exemption into the Manufacturing Machinery & Equipment exemption and makes it permanent. This exemption sunset in 2014.
- Permanent extension of the sales tax exemption for mining, aggregate, off-highway and coal machinery and equipment. This current incentive is set to expire in the next year
Despite the ongoing budget impasse, it is important that elected officials understand that a lack of predictability and stability undermine the state’s economy. Creating permanent tax incentives for manufacturers will help stabilize tax policy and provide a needed level of certainty for companies looking to invest in the state.
If your company would like to sign onto the AIM Coalition, please visit the website and add your name to the list of supporters.
COGFA Issues Daunting State of Illinois Economic Forecast, FY17 Revenue Estimates
The Commission on Government Forecasting and Accountability (COGFA), a bipartisan and joint legislative commission for the General Assembly released an economic forecast for Illinois this week that was compiled by Moody’s Analytics. COGFA’s mission is to provide the legislature with relevant information on the economy, taxes, revenue and debt obligations used to help make public policy. The stark reality of the state’s challenges is plainly laid out in the summary of the State of Illinois Economic Forecast:
“Illinois’ economy is the weakest of the underperforming Midwest. Poor public sector finances, an ailing downstate economy, and deteriorating demographics are hampering the state’s recovery. Job growth has run at less than half of the national average in 2015, and the payroll survey actually showed a year-over-year decline in December. Consequently, the unemployment rate has made a U-turn and is barely below year-ago levels in most metro areas… These widespread challenges will keep Illinois from narrowing its performance gap with the region and the nation in 2016.
Longer term, Illinois has a lot of what businesses need to thrive – talent, access to customers and capital, transportation – but painful fiscal reforms are needed before it can fully capitalize on these strengths. To be a solid performer longer term, the state must navigate its fiscal challenges without doing lasting damage to its business climate.”
In addition to the Economic Forecast, COGFA presented its FY 2017 Economic Forecast and Revenue Estimate to members of both the House and Senate Revenue Committees. Traditionally, this budget estimate is used by lawmakers to help negotiate a state budget bt setting the expected revenue estimate.
According to COGFA, Illinois is expected to generate $31.912 billion in general revenue funds in the coming fiscal year representing an increase of $215 million over current fiscal year revenue based on growth of 2.0 percent for personal income tax receipts and a paltry 1.5 percent increase in corporate income tax receipts. According to COGFA, the lackluster base growth “reflects weakness in jobs, wages, and increased likelihood of recessionary pressures.” The forecast represents growth that is only half of the previous five-year average of 4.2 percent (personal income) and 4.8 percent (corporate income).
The data and fiscal estimates compiled by Moody’s Analytics are abysmal and should serve as yet another warning to Illinois’ elected officials. Illinois is now entering its ninth month without a state budget and it’s time that Democrats and Republicans work together to enact a balanced state budget tied to major structural reforms that will serve to stimulate job growth and capital investment.
IMA Bill Capping Right-of-Way Fees Passes Committee
An IMA initiative sponsored by Senator Bill Haine (D-Alton) capping fees imposed by land management companies was approved unanimously (9-0) in the Senate Commerce and Economic Development Committee this week. SB 2241 imposes a $1,500 cap on fees that land management companies can charge for access for the conveyance of grain, aggregate, construction materials or other commodities across right-of-ways located in enterprise zones.
This legislation is necessary because Illinois companies and projects are being held up by demands for fees in the tens or hundreds of thousands of dollars. Multi-million dollar projects are being held hostage over a simple conveyance that may cover 20 to 40 feet on either side of railroad tracks. In response to similar abuses, Iowa enacted similar caps last year and lawmakers in Minnesota are moving forward on similar legislation.
The IMA would like to thank Sen. Bill Haine and Committee Chairwoman Sen. Linda Holmes (D-Aurora) for moving this legislation quickly to the Senate floor for consideration.
IMA Supports Federal GMO Labeling Pre-Emption Bill
With no time to spare, United States Senator Pat Roberts (R-KS) and members of the Senate Agriculture Committee passed the Biotechnology Labeling Solutions Act out of committee this week on a 14-6 vote and it moves to the full U.S. Senate for consideration. The IMA strongly backs this federal legislation that will preempt states from imposing their own GMO (genetically modified organisms) labeling requirements and regulations to avoid a confusing and costly patchwork of laws.
While the IMA has successfully led opposition defeating GMO labeling laws in Illinois for the past three years, the state of Vermont enacted a law that is set to take effect on July 1, 2016. In addition, more than one hundred different labeling laws have been introduced around the country. The Vermont law is requiring manufacturers in Illinois and around the United States to change their labels for one state and create new production lines to ensure that GMO and non-GMO goods are not mixed. According to a detailed economic analysis, the cost of compliance could run as much as $82 billion annually or approximately $1,050 per family.
Members of the U.S. House of Representatives previously passed the Safe and Accurate Food Labeling Act on a vote of 275-150 in 2015. Once the Senate passes its version, they can work out a final compromise with Congress and send a final bill to the President for signature before the Vermont law takes effect. It could include a national, voluntary GMO food labeling standard.
GMO food is safe and there is no credible evidence that foods produced with biotechnology pose any risk to health or safety according to studies by the American Medical Association and many other organizations.
General Assembly Passes AFSCME Bill Again
Setting up another certain gubernatorial veto, Democrats in the General Assembly once again passed legislation (HB 580) that could take collective bargaining out of the hands of Governor Bruce Rauner and send it to an independent arbitrator. An identical bill (SB 1229) passed the legislature last year and was vetoed by the Governor setting up a showdown where Democrats were unable to override the veto.
This legislation was initiated by the union (AFSCME) representing the largest number of state employees that is locked into a labor negotiation with the Rauner Administration. HB 580 would allow either the employer or the bargaining unit to declare an impasse and send the negotiation to binding arbitration. Under that scenario, neither side could declare a strike or lockout while waiting for a final decision. Showing the politics involved, this proposed legislation would only be effective during Governor Rauner’s term in office.
HB 580 passed the Senate on a vote of 38-17 after being approved by the House of Representatives by a 67-46-2 margin. Governor Rauner has pledged a veto and it’s unlikely that Democrats will be able to get the 36 and 71 votes needed to override the action.
Budget Battle Continues
As Illinois enters the ninth month without a state budget, House Democrats attempted to ramp up pressure this week by moving forward with two bills over objections from Governor Bruce Rauner and House Republican lawmakers. With only hours notice, Democrats passed two bills that appropriated more than $3.7 billion in funding for higher education and many human service grants (Meals on Wheels, mental health, autism, etc.) while providing only $450 million in revenue to pay for the increased spending by forgiving previous borrowing from special state funds.
Republicans charged that this was simply a political gimmick noting that Illinois has a budget backlog totaling more than $7.4 billion and this piecemeal approach would add another $3 billion in debt. Democrats passed the two bills on partisan votes and it’s extremely likely that this vote will show up in many campaign mail pieces in the fall general election.
HB 2990 (Currie) contained the new appropriation language and it passed on a vote of 70-43-1 with Rep. Reggie Phillips (R-Charleston) joining the Democrats in supporting the measure. The companion bill (HB 648) was also sponsored by Majority Leader Currie (D-Chicago) and passed on a narrow 61-52 vote. The House adjourned shortly after the vote and will not return until the first week in April.
Environmental Justice Commission
Environmental advocates are pushing forward on a proposal that would mandate that the Commission on Environmental Justice review and provide comments for any state implementation plan to comply with the U.S. EPA’s proposed Clean Power Plan rule. It further requires that the Illinois EPA respond to the comments and make modifications to the state’s plan before its submittal to the federal government. The IMA strongly opposes this overreach that places the interests on one group far above every other business, organization or individual that would like to provide input into the plan.
Under current law, the Illinois EPA may propose rules or laws to implement the Clean Power Plan rule unveiled by the Obama Administration. Any stakeholder or interested citizen has the ability during the regulatory process to attend a public hearing or submit comments. Each of these comments may be considered by regulators and could form the basis for modifications of the state’s response. HB 5946 and SB 2920 provide an unfair advantage for the Environmental Justice Commission because it would legislate that they must comment and the EPA must modify the proposal based on their comments.
The federal rule is currently on hold after the U.S. Supreme Court halted implementation based on a lawsuit filed by the National Association of Manufacturers and two dozen states alleging that the federal rule overstepped its authority and intruded on state’s rights. If the rule moves forward, Illinois will be forced to significantly reduce emissions (more than 33 percent) resulting in a massive energy shift that could result in enormous price spikes and eliminate Illinois’ advantage as an energy exporter.
The IMA supports an “all of the above” approach with respect to energy where competition drives efficiency and costs.
The IMA and dozens of stakeholders met this week to discuss potential changes to the Illinois Electronic Products Recycling and Reuse Act (E-Waste) for the first time in 2016. The group is seeking solutions to make the financially struggling e-waste collection system in Illinois more sustainable in the long term.
The Illinois Product Stewardship Council brought forth a proposal that was broadly rejected by the group. It sought to double manufacturers’ collection goals, greatly increase the number of products included in the program, give individual counties enforcement powers and mandated the creation of a producer responsibility organization. While discussions among stakeholders continue, the next formal meeting of the working group will not take place until the House of Representatives returns to Springfield in April.
The full e-waste working group approved a proposal (HB 6321, SB 2770) to make it easier for e-waste collectors to manage cathode ray tube glass by allowing storage in retrievable storage cells in Illinois landfills. Very few recycling options exist for older televisions and monitors. This approach was included in Public Act 99-0013 passed last year but a technical fix is needed to make it easier for recyclers to use the option.
HB 5920 is a measure that seeks to change the definitions of tablets, cell phones and smart phones in the Illinois Electronic Products Recycling and Reuse Act. The legislation’s sponsor Rep. Mike Fortner did to call the bill in the House Renewable Energy and Sustainability Committee as was expected this week. Instead he is seeking an amendment to further clarify the definitions. IMA is opposed to any effort to codify new definitions of electronics that have not been developed in conjunction with electronics manufacturers.