$15 Minimum Wage Hike Passes General Assembly
On Thursday, Democratic lawmakers in the House of Representatives passed a massive hike – 82 percent – in the state’s minimum wage over objections from the IMA and business community. Phased in over a period of five years, the law will begin taking effect on January 1, 2020. Action in the House followed approval by the Senate last week.
Democrat Governor JB Pritzker and many Democrats campaigned on a minimum wage increase so action was inevitable after the election. The IMA and business community offered reasonable solutions to help mitigate the impact including a geographic wage that recognized the cost of living is different in Chicago, Rock Island, and Carbondale. Additional proposals included a longer phase in and a more robust tax credit for small employers. Unfortunately, Democratic lawmakers ignored pleas from thousands of employers that included manufacturers, retailers, farmers, colleges, municipalities, and non-profits and dismissed these ideas.
Following the vote, IMA President and CEO Mark Denzler issued the following statement:
“This is an unfortunate outcome for Illinois manufacturers and businesses, many of which will now be forced to make some tough decisions that could impact the lives of their employees and the ability to keep their lights on. The IMA and the business community offered real alternatives to help mitigate the negative impact of increasing the minimum wage by 82 percent, but lawmakers ignored our suggestions and concerns. Moving forward, there must be room for serious compromise on issues directly impacting employers to prevent Illinois from losing businesses and residents to our neighboring states.”
SB 1 will increase the minimum wage in Illinois on the following schedule:
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
SB 1 now heads to Governor Pritzker, who plans to sign it prior to his State Budget Address that is scheduled at noon on Wednesday, February 20. Please click to see how your representatives in the House and Senate voted.
IMA Focuses on Woman in Manufacturing with STEP Forward
The Illinois Manufacturers’ Association, in conjunction with the Manufacturing Institute, is hosting STEP Forward: Illinois on Thursday, February 21 in Schaumburg. This sold-out networking event was created to advance women in manufacturing. Manufacturing faces a serious skills gap with nearly 500,000 open jobs in the sector today. Meanwhile women, who make up more than half of the total workforce, comprise less than one-third of the manufacturing workforce. The IMA and Manufacturing Institute are partnering to help develop and grow the number of women employed in manufacturing.
STEP Forward is part of the Manufacturing Institute’s larger STEP Ahead initiative to empower women in science, technology, engineering and production (STEP) careers. The IMA is very proud to be the first state in the nation to bring this program outside of Washington D.C., offering companies a unique opportunity to strengthen their diversity strategies.
STEP Forward: Illinois is a half day program designed to build networks, drive collective thinking around increasing manufacturing career opportunities, increase awareness of manufacturing within younger generations, and bridge the skills gap in our local communities. Through an industry-based panel discussion, we will tell the stories of real women who represent the changing faces of manufacturing. By demonstrating the opportunities available in manufacturing, we can inspire the next generation of talent to pursue careers in the industry.
Buy American/Illinois Bills Advance
This week, House Assistant Majority Leader Jay Hoffman (Belleville-D) advanced HB 356 and HB 357 though the House State Government and Administration Committee on a partisan vote of 7-4-0. Dubbed the “Buy American/Buy Illinois” bills, these bills amend Illinois’ procurement law to incentivize the purchase of Illinois or American-made products. While the concept and intent behind the bills appear to support businesses and industry in Illinois, the bills could potentially harm Illinois companies more than they help. If other states retaliate and pass similar laws, Illinois companies could potentially see a negative impact based on their sales footprint across the country and the globe. In addition, the bill’s allocation of certain percentage for a product to be considered “Illinois or U.S. made” would be a logistical nightmare for companies who would have to reevaluate and place worth on certain parts of products.
Rep. Hoffman passed similar bills out of the House last year in order to create an issue for candidates to use in their campaigns.
IMA Files Initiatives to Boost R & D Tax Credit
Senator Melinda Bush and Representative Mike Zalewski filed legislation (SB 1905, HB 3411) this week on behalf of the IMA to modernize and extend the State’s Research and Development Tax Credit. Under the two pieces of legislation, the R&D tax credit would be made permanent and modernized using a base calculation of 50% of the three-year base period (currently 100%). This legislation would help boost R & D in the state while providing stability for companies who rely on the tax credit on a yearly basis.
Grow Your Own STEM Introduced
Over the past several years, the number of graduates in STEM and vocational education disciplines being produced by Illinois colleges and universities has declined while the need for a qualified workforce in the manufacturing sector has increased substantially. The lack of qualified educators has contributed to the lack of students in programs that would properly prepare them for STEM positions in manufacturing sectors.
In order to tackle this issue, Senator Andy Manar (D-Bunker Hill) introduced, on behalf of the IMA Education Foundation, an initiative known as the Grow Your Own STEM Teachers Act. The Grow Your Own STEM Teachers Act proposes to invest state resources to increase the number of men and women pursuing careers as Vocational Educators. Under the proposal if a person: 1) is willing to major in vocational education; 2) attend an Illinois college or university offering vocational education as a major; 3) obtain the degree in no more than five academic years for a Bachelors or six years for a Masters; and, 4) agree to teach in an Illinois high school for a minimum of three years or community college for a minimum of five years – Illinois will pay the tuition, fees, books, room and board (on-campus housing only) on behalf of the participating student.
The bill, SB 1930, is similar to legislation Senator Manar carried for the IMA Education Foundation last year that passed out of the Senate overwhelmingly but was held in the House of Representatives because of cost concerns.
Ethylene Oxide Legislation Introduced
Senator John Curran (R-Woodridge) and Representative Mike Zalewski (D-Riverside) introduced several pieces of legislation this week aimed at addressing the use of ethylene oxide both in the manufacturing process and as a commercial sterilizer for medical products. The IMA and other business groups have been working with several companies who use ethylene oxide (EO) as concerns grow from local residents over the safety of EO emissions. Last year, the USEPA published an update to its risk calculations to reflect the updated 2016 inhalation unit risk estimate (IRE) for EO that led to an alleged public health crisis. The risk published by the USEPA was much greater than they previously stated and the science behind the risk calculations are being debated to this day. Still, communities around EO using facilities have called for change to the way EO is used, handled and emitted.
The bills filed this week approach the issue of ethylene oxide in several different manners. SB 1852 (Curran) requires that in the event of an ethylene oxide leak, a facility shall issue a notice to all affected property owners and local government within 2,500 feet of the leak site. SB 1853 (Curran) calls on the Illinois Environmental Protection Agency to reevaluate the current air pollution operating permit of any facility emitting ethylene oxide and conduct a 90-day public hearing process on such permits. The bill goes on to state that no air pollution operating permit shall be renewed if the facility is in violation of any federal or State standards or current studies pertaining to ethylene oxide. SB 1854 (Curran) provides that no facility shall have fugitive emissions of ethylene oxide above zero and that frequent inspections and testing be done to ensure that no fugitive emissions of ethylene oxide exist. Meanwhile, HB 3409 (Zalewskii) calls on the Office of the State Fire Marshal shall adopt new rules for the storage, handling, and use of ethylene oxide for sterilization and fumigation.
Trial Bar Seeks to Ban Interrogatories
At the behest of the Illinois trial bar, Rep. Andre Thapedi (D-Chicago) introduced legislation (HB 2233) this week that would simply repeal the use of special interrogatories in verdicts. These interrogatories have nearly a one-hundred-year history in the state’s civil justice system and help courts ensure the propriety of a jury’s verdict. Further, in cases with confusing legal and factual issues, these interrogatories allow counsel for both sides to make sure that the jury is coming to the correct conclusion.
Under current law in Illinois, the jury can be questioned on material issues of fact in addition to the offering a verdict. When the jury verdict is inconsistent with the answer to the special interrogatory, the court will find that the interrogatory is the controlling factor and will rule accordingly. In a recent case (Simmons v. Garcia), the plaintiffs alleged that a physician’s negligence contributed to an infant’s death by dehydration and the jury awarded significant damages. However, when asked in a special interrogatory “did dehydration contribute to the cause of death”, the jury answered “no.” Therefore, the trial court ruled in favor of the defendant and it was upheld by the Illinois Supreme Court.
If enacted into law, HB 2223 could have a significant impact on the manufacturing sector that faced a barrage of litigation. It eliminates a long-standing tool uses by attorneys on both sides to essentially poll the jury to make sure that they understood and ruled correctly in the case. This will make it far more difficult for manufacturers, health care professionals, and other entities to defend themselves in lawsuits.
The IMA strongly opposes HB 2233.
Democrats Seek to Repeal “Water’s Edge” Deduction
As the IMA reported earlier in the week, Democrats in the House of Representatives and Senate have filed legislation (HB 2085, SB 1115) that would impose worldwide reporting the default method in Illinois while simultaneously reducing the dividend deduction from 100 percent to 75 percent. This legislation would essentially codify current Montana law by apportioning worldwide income into Illinois and then taxing Illinois’ share based upon the unitary business principle. Montana is the only state in the nation with this system that unfairly taxes corporations who already pay taxes on income in these other locations.
For example, if ABC corporation (an IL taxpayer) is in a unitary business relationship with MNO corporation ( Delaware corporation) and XYZ corporation (a Canadian corporation), then ABC will file a combined report in Illinois reflecting its activities in all three locations. Companies could then elect to use the “water’s edge” tax provision. The Illinois legislation also adds a list of nearly fifty countries as “tax havens” including Ireland, Switzerland, and the Netherlands that requires the inclusion of unitary subsidiaries in these locations.
Proponents recently released a report that erroneously argued that Illinois could see $1.3 billion in new tax revenue from this scheme. However, more than a decade ago, Illinois lawmakers tightened up the statute regarding the taxation of income. If enacted, this would make Illinois an outlier and discourage global companies from locating in Illinois.
Representative Davis Files Sustainability Investing Act
Environmental advocates initiated legislation (HB 2460) that was filed by Rep. Will Davis (D-East Hazel Crest) creating the Illinois Sustainable Investment Act. Under this proposal, the State of Illinois, any local government, retirement systems, pension funds, or any public agency must create and implement sustainable investment policies. The legislation would mandate that investments must include factors such as a company’s environmental or social impact in the world along with their corporate governance and leadership. Investment advisers have a fiduciary responsibility and this could upset the balance by prohibiting investment in certain sectors and companies particularly in the energy sector.
The legislation has an extensive list of items that must be considered including human rights, customer welfare, customer privacy, labor practices, diversity and inclusion, greenhouse gas emissions, air quality, energy management, water and wastewater management, and ecological impact.
The IMA is opposed to this far reaching legislation that could severely hamper the ability of investment advisors to invest in manufacturing.
Freshman Senator Introduces Bill for Forced Unionization
Newly elected Chicago Senator Ram Villivalam (D) introduced legislation this week that could force employees, private and otherwise, into unions. SB 1474 creates the Collective Bargaining Freedom Act and provides that employers and labor organizations may execute and apply agreements requiring membership in a labor organization as a condition of employment. The bill goes on to prevent local units of government from adopted regulations that restrict unionization. This legislation comes on the heels of a 4-year battle between former Governor Rauner and labor unions who fought both at the state level and in municipalities across the state over the role of unions in the workforce.
Right to Repair Legislation
Rep. Michelle Mussman (D-Schaumburg) has filed “right to repair” legislation that requires manufacturers to provide confidential coding information to owners or any independent repair shops. The IMA is opposed to this legislation and is leading a coalition in opposition to the legislation that jeopardizes public health and safety while also threatening the loss of confidential and proprietary information. HB 2026 fails to make an appropriate distinction between (1) the access to software encoded in machines or devices and (2) access to diagnostic tools and repair information.
Manufacturers currently provide repair guides to their dealers and other interested parties. However, people who lack proper training could accidentally, or intentionally, change coding resulting in the unsafe operation of products, violation of emission controls, voiding of warranties, disruption of machine capabilities, and lessen the optimal operation. In the event of an incident, the original equipment manufacturer will likely face a lawsuit despite having no liability.
This legislation will impact products ranging from consumer electronics to large industrial equipment.
Bills take Aim at Restrictive Drug Pricing
House Prescription Drug Affordability Committee Chair, Representative Will Guzzardi (D), has introduced several pieces of legislation taking aim at restricting the price of prescription drugs. HB 2880 imposes a tax on each establishment that makes the first sale of a covered outpatient drug within the State, while HB 2882 attempts to prevent price gouging by allowing the Attorney General to issue subpoenas or examine under oath any person to determine whether a manufacturer or wholesale drug distributor has partaken in price gouging. The two bills will be sent to the Sponsor’s own committee for a vote.
Nearly 6,000 Bills and Resolutions Filed Before Deadline
The bill filing deadline was this afternoon, and the members of the General Assembly managed to file nearly 6,000 bills and resolutions, many of which could affect business and industry. Here are a sample of bills that were filed this week:
HB 2300 (Morgan-D) – An IMA initiative, this bill melds 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.
HB 2318 (Slaughter-D) – Allows local authorities, with respect to highways under their jurisdiction, to limit the operation of trucks or other commercial vehicles in areas with poor air quality.
HB 2343 (Gordon-Booth-D) – Requires employers to provide specified paid sick days to employees.
HB 2404 (Spain-R) – Repeals the Estate Tax.
HB 2435 (Flowers-D) – Provides that a health insurance carrier, health maintenance organization, or other managed care entity for a health care plan are liable for damages for harm to an enrollee proximately caused by their failure to exercise ordinary care.
HB 2443 (Gabel-D) – Allows a county to prohibit the sale of and the use of coal tar sealant product and high polycyclic aromatic hydrocarbon sealant product.
HB 2651 (Ramirez-D) – Requires a 5-cent deposit on all beverage containers in sold in the state that can be redeemed by returning the container to a redemption center. The bill also prohibits snap-top beverage containers and the manufacture of certain plastic metal beverage containers. Finally, the bill prohibits the disposal of beverage containers at sanitary landfills.
HB 2728 (Mah-D) – Provides that the Environmental Protection Agency shall ensure that possible adverse economic, social, and environmental effects on environmental justice communities relating to any permit or permit renewal have been fully considered prior to publishing a draft permit or permit renewal for public comment. The bill further requires a permit applicant for permitted activity sited in an environmental justice community shall enter into a community benefits agreement to mitigate the environmental and public health impact of the permitted activity.
HB 2801 (Welch-D) – Requires the Department of Commerce and Economic Opportunity, the Illinois Commerce Commission, the Illinois Environmental Protection Agency, and the Illinois Power Agency to work jointly to design a broad-based policy to decarbonize Illinois’ electric sector to phase out polluting power plants by 2030.
HB 2839 (Gong-Gershowitz-D) – A any person access to the courts to challenge administrative permits issued by five state agencies (EPA, Ag, DNR, DPH, and IDOT). The bill provides no limit on who may weigh in as long as they feel that they are “adversely impacted” by the permit.
HB 2864 (Evans-D) – Creates a pilot program for a per-mile road usage tax of $0.021 per mile.
HB 3056 (Harper-D) – Provides that if two employees are equally qualified for a position and one has an arrest record, the employer shall not take an adverse action against the employee with the arrest record.
HB 3335 (Williams-D) – Places a 10-cent fee on all carryout bags–plastic, paper or compostable–used at a retailer by a consumer outside of the City of Chicago.
HB 3379 (Mussman-D) – Creates the Plastic Straw Ban Act and prohibits businesses from providing a customer a single-use plastic straw unless requested by the customer.
SB 1352 (Fine) – Creates regulations for the State of Illinois similar to those found in the Waters of the United States federal regulation.