General Assembly Adjourns
The General Assembly adjourned on Wednesday, May 31 but their work is not done because of their failure to pass a state budget. The IMA will be providing a more complete summary in the coming days but following is a brief update on major issues from the final few days.
Lawmakers Fail to Pass a State Budget
For the third year in a row, the Democrat-led General Assembly failed to pass a balanced budget by the end of the spring legislative session. During the ongoing 700 hundred-day budget impasse, Illinois’ backlog of bills has continued to spiral out of control and now exceeds $14 billion. Legislative leadership has indicated that negotiations will continue throughout June with legislators returning to the Capitol on occasion with the goal of passing a budget before the start of the state’s fiscal year on July 1. It will now take a supermajority three-fifths vote to pass legislation with an immediate effective date.
Senate President John Cullerton (D-Chicago) and the Senate Democrat caucus previously muscled through a $37.3 billion spending plan fueled by $5.4 billion in new tax revenue primarily with increased income and sales taxes. This budget plan (SB 6, SB 9, SB 42) passed solely on the basis of Democrat votes but included little, if any, economic or fiscal reforms that would change Illinois’ current trajectory.
In the House of Representatives, Speaker Michael J. Madigan and the Democrat caucus met frequently behind closed doors but were unable to reach consensus on a balanced tax and spending plan. A number of tax increases were considered including an increase in the individual and corporate income tax rates, expansion of the sales tax on services, imposition of a new one percent tax on all health care claims, and a new $5,000 fee on all corporations for the privilege of doing business in Illinois. After failing to reach agreement, the House concluded its businesses without taking a budget vote.
Members of the Senate recognized the importance of the manufacturing sector and included permanent extensions of the Research & Development tax credit, Manufacturers Purchase Credit, and the Graphic Arts exemption in their revenue package. House Democrats ignored the industrial sector and its 570,000 workers by excluding these critical tax incentives from their discussions.
The Governor and state legislators need to pass a state budget that will restore stability and predictability. However, simply throwing more tax money without reform will not solve the underlying problems that include deficit spending, out of control pension costs, and a morose economic climate that discourages job creation and capital investment in Illinois.
Worst Legislative Session for Employers in Decades
The IMA spearheaded a joint business community press conference on the last day of session to outline the litany of anti-employer initiatives that will further devastate the business community in Illinois at a time when businesses and families are migrating out of state at record levels. While Governor Bruce Rauner laid out an economic development agenda and attempted to negotiate this session, Democrat lawmakers refused to compromise and instead moved forward on numerous bills adding new costs and regulations on employers.
At the press conference, the IMA along with the Illinois Retail Merchants Association, State Chamber of Commerce, Chicagoland Chamber of Commerce, and NFIB outlined the “dirty dozen” bills that will harm the economy. These bills included a $15 per hour minimum wage, paid family leave mandate, massive property tax shift to commercial and industrial taxpayers, and a $5 billion tax hike.
Business organizations also outlined key issues that were not addressed in the spring legislative session including reigning in pension costs, reforming workers’ compensation, reducing the property tax burden or strengthening the education and workforce development system. No restraints were placed on local governments that continue to impose new and costly mandates on employers in a patchwork fashion.
The IMA will be asking Governor Rauner to veto the anti-business bills that have passed the General Assembly.
General Assembly Passes $15 Minimum Wage Hike
In less than a week, Democrats in the General Assembly introduced and passed a massive 82 percent increase in the state’s minimum wage. Under SB 81 (Guzzardi/Lightford), Illinois’ current $8.25 wage will spike to $15 per hour over the next five years resulting in a substantial cost increase for businesses.
SB 81 narrowly passed the House of Representatives (61-53-2) and Senate (30-23-2) on the final day of session over the opposition of the Illinois Manufacturers’ Association and general business community. It will head to the Governor’s desk where it faces a likely veto. Governor Bruce Rauner has expressed a willingness to sign a wage hike only if coupled with other economic development reforms.
Under the plan, a new two-tiered system is created based on age and experience. Employees over the age of 18 years or younger employees who have worked at least 650 hours will receive a $15 wage while employees under the age of 18 who have worked less than 650 hours will receive a smaller $12 wage when fully phased in.
|18 years or older or 18 years and younger with more than 650 hours of work||Younger than 18 years with less than 650 hours of work|
|January 1, 2018||$9.00||$8.00|
|January 1, 2019||$10.00||$8.50|
|January 1, 2020||$11.25||$9.25|
|January 1, 2021||$13.00||$10.50|
|January 1, 2022||$15.00||$12.00|
The legislation also includes a complicated credit for small businesses with less than 50 employees. By including this provision, Democrats admitted publicly that increasing the minimum wage will have a cost impact on employers.
The IMA opposed SB 81 and will ask the Governor to veto the legislation.