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Springfield Highlights

Springfield Highlights – Feb. 22, 2019

The Governor’s Budget Address
  Democratic Governor JB Pritzker offered his inaugural Budget Address to a joint session of the General Assembly this week, officially kicking off budget negotiations with legislators on both sides of the aisle.   The FY2020 budget assumes revenue of $38.93 billion, a $1.493 billion, or a 4 percent increase over FY19. After spending, the budget has an estimated surplus of $155 million but is not balanced because it continues the structural deficit.   The FY2020 budget estimates $1.1 billion in new revenue that includes legalization of sports wagering, legalization and licensing of recreational marijuana, a cap on the “retailer’s discount,” a cigarette tax increase, a tax on plastic bags and a Managed Care Organization assessment, to name a few.   Illinois faces a crushing $130 billion pension debt with the annual payment approaching $8 billion or 20 percent of the state budget. Rather than addressing the root cause such as the compounding COLA, the Governor’s plan kicks the can down the road by extending the payment cycle by seven years, thereby reducing the state’s annual pension payment by $878 million. In addition, the Governor calls for issuing $2 billion in new pension bonds to infuse the system with new revenue and extend the current buyout program for pensioners. A previous pension bond authorized by former Governor Pat Quinn will be paid off this year freeing up money to pay for the new pension bonds.   On the spending side, Governor Pritzker’s budget prioritizes education primarily with other increased spending spread throughout the budget. However, the largest combined spending increase of $172 million is attributed to the minimum wage hike that does not take effect until January 1, 2020, six months into the state’s new fiscal year. Some of the spending hikes in the budget include pay increases in human services, early childhood education, map grants, and the construction of a Chicago Veteran’s home, to name a few.   With regard to capital infrastructure, the Governor’s budget includes $1.8 billion for a “pay go” Road Program along with $600 million to the Capital Development Board for deferred maintenance. Higher education will see $150 million in capital money while $20 million will be directed to the new Department of Innovation and Technology for statewide broadband.  
Governor Pritzker Signs Massive Minimum Wage Hike into Law
  On Tuesday of this week, Governor JB Pritzker signed SB 1 into law which will drastically increase the State’s minimum wage by 82%, to $15 an hour by 2025.   The Democratic Governor campaigned on a minimum wage increase and the results of the last election gave him plenty of support from his Democratic colleagues to pass the bill through both chambers of the General Assembly in less than two weeks.  Despite the inevitable increase in minimum wage, 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. The business community also proposed a longer phase in and a more robust tax credit for small employers.  Unfortunately, Democratic lawmakers ignored the business community and gave Governor Pritzker the ability to raise the minimum wage across the state in justfive years.  The first increase in minimum wage goes into effect on January 1, 2020 and additional increases will progress 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
Wage History Bill Passes House Committee
  The House Labor & Commerce Committee passed Representative Anna Moeller’s gender equity bill (HB 834) this week that is identical to a bill that passed both the House and Senate last year before being vetoed by Governor Rauner and failing a vote to override.  Under the bill that now heads to the House, an employer is not allowed to ask about a person’s previous wage history, previous salary and benefits.  The legislation is an attempt to tackle the issue of gender discrimination in the hiring and promoting process.    The IMA supports anti-discrimination policies and opposes discrimination in any form including gender. Unfortunately, Representative Moeller’s legislation goes on to eliminate the affirmative defenses that are provided in current law while exposing employers to compounding penalties. The bill also allows employees to double down by bringing action in both state and federal courts potentially doubling both fines and wages.  Other legislation, such as HB 881, has been introduced which would also prevent an employer from asking a person about their wage history while also providing affirmative defenses to employers.
Human Rights Act Applicable to Small Employers

Representative Will Guzzardi passed HB 252 though the House Labor & Commerce Committee this week on a partisan vote of 17-10.  The bill makes the Human Rights Act applicable to all employers in Illinois. Currently, the Human Rights Act only applies to businesses with 15 or more employees. Over the past few decades, Illinois lawmakers generally exempted small employers from laws that created costly and burdensome mandates.  Reducing the requirement from 15 or more employees to one or more employees would require small businesses with only a handful of employees to suddenly have to comply with onerous rules and regulations designed for larger employers.
House Holds Subject-Matter Hearing on Ethylene Oxide
  The House Energy and Environment Committee held a subject-matter hearing on Tuesday to discuss alleged health concerns surrounding the use ethylene oxide (EO) on the heels of a recent seal order issued by the Illinois EPA to shut down operations at the Sterigenics facility in Willowbrook. The State’s decision to shut down a facility that is operating within its permit and meets state and federal emissions standards is unprecedented and has many industries wondering if they will be the next target of the new Administration.   The IMA and Chemical Industry Council of Illinois (CICI) provided testimony on behalf of industry and focused not only on the science behind ethylene oxide, but again, on the dangers of shutting down facilities that are operating in the state in accordance to state and federal laws.  Environmental groups are using this issue in an attempt to give the State the power to reopen permits at any time when they feel there is a need. 
Governor Pritzker Announces More Agency Leaders
  Governor Pritzker continues to make new appointments (which will need to be confirmed by the Senate) to the top positions of state agencies.  The most recent announcements include: Linda Chapa LaVia – Director of the Illinois Department of Veterans’ Affairs.  Chapa LaVia recently served as State Representative to the 83rd District. Grace Hou – Secretary of the Illinois Department of Human Services.  Hou recently served as the president of Woods Fund Chicago, a foundation that funds organizations that fight poverty and racism. Colleen Callahan – Director of the Illinois Department of Natural Resources.  Callahan, having previously served as state director for USDA Rural Development in Illinois, most recently managed her own communications consulting firm. Deborah Hagan – Secretary of Illinois Department of Financial and Professional Regulation.  Hagan recently lead the Consumer Protection Division in the Office of the Illinois Attorney General.
IMA Hosts First STEP Forward Event for Women in Manufacturing
  Manufacturing faces a serious skills gap with nearly 500,000 open jobs in the sector today. Meanwhile women – half of the total workforce – comprise less than a third of the manufacturing workforce. As women are one of the largest pools of untapped talent, we need to do more to bring more women into manufacturing, and the IMA is taking action.   This week we proudly hosted STEP Forward: Illinois, a networking event in Schaumburg for manufacturers. STEP Forward is part of The Manufacturing Institute’s larger STEP Ahead initiative to empower women in science, technology, engineering and production (STEP) careers and brought this national initiative to Illinois, offering companies a unique opportunity to strengthen their diversity strategies.   Sponsored by BKD and Illinois Manufacturers’ Association, STEP Forward: Illinois was a half day program designed to build networks, drive collective thinking around increasing manufacturing career opportunities and increase awareness of manufacturing within younger generations. In conjunction with this program, the IMA is kicking off a brand-new Women in Illinois Manufacturing Council. Please let us know if you’d like to join.