Grand Bargain Vote in Senate?
While members of the Senate were in their districts this week, Senate President John Cullerton (D-Chicago) and Republican Leader Christine Radogno (R-Lemont) continued meeting behind the scenes to craft a “grand bargain” mixing budget cuts, additional tax revenue, and economic development reforms. The leaders have publicly expressed a desire to vote next week on the package designed to help end the nearly two-year budget impasse.
As the IMA has reported previously, the “grand bargain” includes thirteen different proposals that include (1) $1.8 billion in spending reductions, (2) $6.5 billion in increased tax revenue, (3) refinancing $7 billion of old bills at a cheaper interest rate; (4) pension reform saving $1.75 billion, (5) economic development reform including changes to the workers’ compensation system, (6) procurement reform, (7) property tax relief, and (8) a K-12 education funding reform including the payment of adequacy grants to school districts with high poverty rates. It includes a hard spending cap of $38.5 billion with a provision for tax rollbacks if the cap is breached.
The IMA has been actively engaged in discussions with the Senate leaders and members of their caucus. It’s imperative that any solution must actually fix the problem, restore fiscal stability and restraint, and contain real and meaningful economic development reforms that will help the business community prosper. Simply throwing more money into a broken spending system is not the answer to solving Illinois’ financial problems that have resulted in an $11 billion backlog of debt and the worst-funded pension system in the nation.
Report Details Stark Economic Outlook, Mirrors IMA Message
The House Revenue & Finance Committee convened a hearing about Illinois’ economic forecast prepared by Moody’s Analytics for the Commission on Government Forecasting and Accountability (COGFA). The Revenue Committee is responsible for studying the forecast and passing a revenue estimate for the coming fiscal year to serve as a basis for the state budget.
The economic forecast was issued in January and has been reported on previously by the IMA. The summary provides a stark picture of Illinois noting that the state “is one of the Midwest’s weakest links, reflecting both on soft job creation and the state’s descent into fiscal quicksand. The state trails the nation in most metrics and political gridlock is imposing significant economic costs.”
With regard to manufacturing specifically, the report notes “manufacturing’s struggles and dismal public finances will keep Illinois an underperformer.” It notes that manufacturing weakness has become more pronounced, however, with employment declining not only downstate but also in Chicago, where it has hit a record low.
For the last year, Greg Baise, IMA president & CEO, has been traversing the state touting the IMA’s five-point Middle Class Manufacturing campaign. In dozens of speeches and editorials, the IMA has repeatedly pointed out that the industrial sector has lost 309,000 jobs since the turn of the century and nearly 2,000 jobs since the end of the recession in June, 2009. While Illinois has lost manufacturing jobs in the last eight years, all of our neighboring states have added tens of thousands of good, high-paying manufacturing jobs.
The IMA continues to call on the Governor and lawmakers to adopt our five point plan that includes (1) passing a budget to restore fiscal integrity and reform the pension system, (2) adopt real and meaningful economic development reforms including workers’ compensation changes, (3) reform the tax code to ensure a broad-based, low-rate approach, (4) reduce crushing property taxes, and (5) strengthen the education and workforce development system to ensure that manufacturers have a qualified pipeline of workers.
If you would like Greg Baise, Mark Denzler, or an IMA representative to speak at a local event, please feel free to contact us. We are always looking for new opportunities to spread the manufacturing message across Illinois.
Worker Adjustment and Retraining Notification (WARN) Act
Democrat members of the House Labor Committee muscled through changes to the Worker Adjustment and Retraining Notification (WARN) Act on a partisan vote this week with 16 Democrats voting in favor of the measure and 11 Republicans opposed. Sponsored by Rep. Jay Hoffman (D-Belleville), HB 813 lowers the threshold to trigger reporting requirements while increasing the amount of time that notice must be given under the Act.
Under current law, an employer who employs 75 or more employees must give 60 days notice of layoffs, relocation or lost employment that is defined as (1) at least 33 percent of the employees and at least 25 employees or (2) at least 250 employees. The new legislation will both lower the threshold to companies with 65 or more employees and extend the notice period to 90 days. Employers are barred from laying off or dismissing employees unless they give written notification as required under the law.
The IMA is opposed to these changes because they create different reporting requirements than are mandated under federal law and employers are subjected to a civil penalty of up to $500 per day for a violation.
HB 813 is an initiative of the United Steelworkers Organization of Active Retirees (SOAR) and now moves to the full House of Representatives for consideration.
Wage Liens
House Majority Leader Barbara Flynn Currie (D-Chicago) is once again sponsoring legislation that allows employees to file presumptive liens against employers they believe are committing wage theft. Under the provisions of HB 2351, the Illinois Department of Labor would be required to file a lien against the company and personal assets of an employer at the request of an employee making a wage theft claim. Liens would be filed without a finding of guilt and would freeze assets of the business.
In a meeting with Leader Currie, the IMA along with other members of the business and banking community expressed serious concerns about the legislation. It would be extremely difficult and expensive for companies to fight false claims and remove presumptive liens on property. Additionally, the law pierces the corporate veil and allows employees to directly file liens on corporate officers.
Leader Currie acknowledged that the bill as drafted has significant flaws. She was able to get approval for the bill in the House Labor Committee on a partisan vote of 16-12-0 but only after committing to hold the bill while she works on an amendment. The bill will not receive a vote in the House of Representatives in its current form.
International Trade Task Force
The House International Trade Committee approved the creation of the Trade Policy Task Force to “analyze important issues relative to the growth of international trade from and to Illinois” and make recommendations to Congress, the United States Trade Representative, and the White House Trade Council. Additionally, the Task Force will help promote the export of goods and services from Illinois.
HJR 3 was approved on a vote of 5-0-0 despite concerns raised in committee by labor unions that were unhappy with their limited representation on the Task Force. There are 28 members of the Task Force including the Illinois Manufacturers’ Association and five additional members of the business community (IL Petroleum Council, Illinois Chemical Association, Illinois Coal Association, Chamber of Commerce, and Farm Bureau) but only one union representative.
The Task Force is an initiative of Rep. Andre Thapedi (D-Chicago) who is interested in bringing together groups to discuss trade policies including TPP, NAFTA and the Export-Import Bank.
Illinois is a large exporting state and fair trade is an important issue for manufacturers because ninety-five percent of the world’s consumers live outside of U.S. borders. However, the authorizing resolution also recognizes problems in international trade such as subsidies and dumping by certain countries.
The IMA testified at the hearing and will participate in the Task Force if it’s created by the General Assembly.
AFSCME Authorizes State Employee Strike
The State Council of the American Federation of State, County, and Municipal Employees (AFSCME) authorized a strike when votes were counted this week and released publicly. This represents the first time in more than four decades of collective bargaining by the largest union representing state employees that they have voted to authorize a strike. Nearly eighty percent of the union’s 28,000 members who were eligible to vote cast a ballot with 81 percent voting in favor of a strike.
Despite the strike authorization vote, AFSCME leaders have not called for an actual strike that would require a 5-day notice. While twenty separate labor unions have reached agreement with the Rauner Administration, the battle with AFSCME has reached an impasse according to the state’s Labor Relations Board. The Governor then issued the “last, best, and final offer” according to the law but it has since been challenged in court.
The Governor’s last offer would require state employees to work 40-hour weeks (currently 37.5 hours), implement a four-year wage freeze, mandate higher insurance co-pays, and adopt merit pay that ultimately will save the state nearly $500 million annually.
The strike vote was released about ten days following a lower court ruling that continues to allow state employees to be paid despite the lack of a state budget. Attorney General Lisa Madigan plans to appeal the ruling by the St. Clair County judge that seems to be at odds with another Supreme Court ruling that state workers are not entitled to back pay because of the lack of appropriation authority in a budget.
