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Springfield Highlights

Springfield Highlights – March 31, 2017

Abysmal Job Numbers in Illinois

The Illinois Manufacturers’ Association publicly released jobs data to legislators and the media this week showing the Illinois has only created a net 100 jobs since September 2000. This means that Illinois has created an average of only one job every two months for the last seventeen years.

In contrast, our neighboring states have added an average of 115,250 jobs during this same time period. Missouri led the way with 134,400 new jobs followed by Wisconsin (116,300), Indiana (110,600) and Iowa (99,700).

The February jobs numbers from the Bureau of Labor Statistics (BLS) at the U.S. Department of Labor show that Illinois has hit a high water mark in terms of total non-farm job payroll at 6,055,000. The state’s previous employment high was 6,054,900 in 2000. While this total jobs number may be seen as a bright spot, the opposite is true because the state’s population grew by more than 400,000 residents during that same time period and manufacturers shed 309,000 jobs.

As the IMA has noted repeatedly, Illinois policymakers need to create fiscal stability, reform pensions, strengthen the education and workforce system, enact economic development reforms, and rewrite the tax code that reduces the high cost of property taxes. These are the key tenets of the IMA’s Middle Class Manufacturing Agenda because manufacturers are part of the solution to the state’s economic malaise.

 

Paid Family Leave Advances in Committee

Democrats in the House of Representatives and Senate muscled legislation out of committee on partisan votes that would mandate a new paid family leave law in Illinois. The legislation advanced over the opposition of the Illinois Manufacturers’ Association, general business community, and Republican lawmakers who objected to the costly and cumbersome mandate.

Sponsored respectively by Rep. Christian Mitchell (D-Chicago) and Sen. Toi Hutchinson (D-Chicago Heights), both HB 2771 and SB 1296 would require all employers regardless of size to provide at least five paid days of leave every 12 months to all employees (full and part time). Employees could use the time to care for themselves or a family member due to health or medical appointment, closure of schools or daycare because of a public health emergency, or in cases of domestic violence.

The period of time is calculated from the date of hire or subsequent anniversary date rather than on a calendar year basis. Employees will accrue one hour of paid sick leave for every 40 hours worked subject to a maximum cap of five days of leave. While the time may be carried over year to year, an employee can only use five days annually. Paid leave can only be used after an employee has been employed for 180 days.

Employers who currently have a paid time off (PTO) policy that complies with the minimum requirements of this Act would not be required to modify their policy. However, employers will be required to keep records for at least three years. Violations of the law could result in action taken by either a court or Department of Labor including payment of wages, penalties, and damages.

The irony of the legislation is that Democrat sponsors of the bill are exempting certain employers such as school districts and park districts.

The bills are on the floor of the House and Senate with votes expected in the near future. IMA members who are opposed to government-mandated paid leave are encouraged to call their legislators to express opposition.

 

House Democrats File Minimum Wage Bill

Acting on their pledge in the House Labor & Commerce Committee, House Democrat legislators led by Rep. Will Guzzardi (D-Chicago) filed a minimum wage hike this week on HB 198. The amendment would gradually increase Illinois’ minimum wage to $15 per hour in 2022 and impose significant new costs on employers of all sizes. This is an 82 percent spike in the minimum wage and would make Illinois’ minimum wage the highest in the nation when fully phased in.

For the first time, Democrats acknowledged that government-mandated wage hikes have an economic impact on employers. In an effort to reduce this impact, the legislation includes a tax credit for small businesses with less than 50 employees. It also maintains a training wage and tip credit but does not pre-empt local governments from imposing a higher wage.

If passed into law, Illinois’ current $8.25 wage would increase as follows:

January 1, 2018        $9.00

January 1, 2019        $10.00

January 1, 2020        $11.25

January 1, 2021        $13.00

January 1, 2022        $15.00

Amendment #1 to HB 198 has been assigned to the House Labor & Commerce Committee for a vote in coming days.

IMA members are encouraged to call their legislators and express opposition.

 

Autonomous Driving Bill Passes Committee

Transportation Committees in both the House of Representatives and Senate have now unanimously passed autonomous driving legislation. Sponsored by Rep. Mike Zalewski (D-Chicago) and Sen. Martin Sandoval (D-Cicero), HB 2747 and SB 1432 create a broad path for both auto manufacturers and tech companies to enter the marketplace.

The IMA supported the autonomous driving legislation that will create a pathway for technology and innovation in Illinois without imposing barriers. While the use of autonomous cars is many years down the road, this legislation places Illinois as a leader in the industry because of an attractive law.

Stakeholders including the insurance industry and trial lawyers are still reviewing the legislation and it’s impact on liability. The IMA is hopeful that a final agreement can be reached in the coming weeks and pass the General Assembly.

 

Employee Protective Orders

Despite strong opposition from the business community, the House Judiciary Civil Law Committee approved an additional mandate on employers when an employee is covered by a protective order. HB 647, sponsored by Rep. Stephanie Kifowit (D-Aurora) requires employers to make accommodations for employees covered by orders of protection including changing contact information, screening phone calls, restructuring job functions, changing work location and changing hours. Failure to comply would be considered a violation of the Illinois Human Rights Act.

Opponents to the bill had intended to point out that the provisions of the bill are very similar to existing state law were but not allowed to provide testimony in committee this week after testifying last week. The Victims’ Economic Security and Safety Act (VESSA) contains similar provisions requiring reasonable accommodation for employees under a protective order. HB 647 also makes significant changes that would leave employers in a position of having to comply with two separate contradicting laws. During her testimony, Rep. Kifowit acknowledged the conflict with current law and stated that she intends to amend the bill in coming weeks.

 

Alternative Fuels Act

An attempt to repeal the Alternative Fuels Act failed in the House Energy Committee on a vote of 7-6-2, with the measure falling one vote short of passage. Sponsored by Rep. Tom Morrison (R-Palatine), HB 667 eliminates an incentive program originally created in 1997 that imposes a $20 fee on fleet vehicles to fund rebates for consumers who are purchasing alternative fuel vehicles.

There were very few alternative fuel vehicles available 20 years ago when the incentive was created to encourage the fledgling market. Rep. Morrison argued that there is now a robust market for alternative fuel vehicles including natural gas, electric and hybrids making the incentive program unnecessary.

The Director of the Illinois Environmental Protection Agency (IEPA) testified that the fee generates about $1.8 million each year that is used to fund $4,000 grants for consumers buying certain vehicles. The program has become so popular that the Agency typically runs out of available funds and has to pull resources from other IEPA programs to cover the cost. Accordingly, the IEPA supports repeal of the program.

 

IMA’s Jerry Peck Appointed to Environmental Justice Commission

This week, Governor Bruce Rauner appointed IMA Director of Government Affairs Jerry Peck to serve on the Illinois Commission on Environmental Justice. The 24-member commission includes state agency directors, lawmakers, environmental advocates, organized labor, and the business community.

The Commission’s role is to make recommendations to the Governor and General Assembly on state policies concerning environmental justice (EJ) including what factors should constitute an EJ designated area and what policies should apply to the affected areas. Last year, the IMA successfully sought an amendment to the law to add more representatives from the business community to the Commission to provide appropriate balance.

The IMA appreciates Governor Rauner for appointing a manufacturing advocate to the Commission.

Jerry Peck also leads the Manufacturers’ Environmental Group (MEG). If you, or a member of your company is interested in participating in MEG, please contact Jerry at jpeck@ima-net.org.

 

Tax Hike Bill Filed in Senate

Senator John Mulroe (D-Chicago) filed an amendment to SB 472 this week that seeks to expand the sales tax base while eliminating or reducing nearly two-dozen tax incentives that would generate billions of dollars in new revenue for the state. It hits all sectors of the economy including manufacturing, retail, hospitals, and agriculture. The IMA opposes many of the provisions including a 50 percent cut in the current sales tax credit for manufacturing machinery and equipment purchased and placed in service in Illinois.

Key components of the bill include increasing the current 1 percent sales tax on food and medicine to a new rate of 3.625 percent. It also seeks to repeal the “retailers’ discount” providing an incentive for companies that collect and remit sales taxes to state government. HB 472 would eliminate both the EDGE credit and the Tech Prep Vocational Education tax incentive while reducing sales tax credits for the purchase of farm machinery and farm chemicals.

Senator Mulroe introduced this legislation to stimulate debate on a budget solution. It’s unlikely that this bill will be called for a vote or pass on its own.

 

ACA Health Insurance Mandates Approved

The House Consumer Protection Committee approved a package of bills intended to enshrine elements of the federal Affordable Care Act (ACA) into Illinois law. Rep. Laura Fine (D-Glenview) testified that she introduced the bills out of a fear that the ACA may potentially be repealed and she would like the policy to continue as a state program even if there was a lack of federal support.

The package consisted of two provisions including HB 2624 that would give the Illinois Department of Insurance the responsibility of conducting rate review and organizing the insurance market. A second measure, HB 2959, would ensure that health insurers would not be able to deny policies to consumers with pre-existing conditions.

The package was opposed by a large coalition of business and insurance interests including the IMA. Opponents noted that rate review in the ACA has led to fewer insurance companies in the marketplace including many states with only one option. Lack of competition ultimately leads to higher prices in the healthcare market. It was also noted that the federal government operates a large pool to spread the risks of insurance companies related to pre-existing conditions. The same safeguards would not be in effect in an Illinois only system.

Both bills were approved by the committee on partisan 3-2 votes and now move to the House floor for further consideration.

 

Buy North American Vehicles

Rep. Mike Halpin (D-Rock Island) successfully pushed legislation out of the House State Government Committee this week that would limit the State of Illinois’ options when purchasing fleet vehicles. Known as the Buy North American bill, HB 795 would require the state to only purchase or lease vehicles assembled in the United States and Canada. Vehicles assembled in other countries including Mexico and Australia would be barred that could have a negative impact on Illinois-based suppliers. Similar legislation passed the House of Representatives last year but ultimately failed in the Senate.

While the IMA supports American and Illinois production, this measure as drafted has potential negative consequences for Illinois manufacturers. Illinois is home to hundreds of auto suppliers who produce parts and components for the automotive industry. Many of those parts ultimately find their way into vehicles assembled outside of the United States. It is questionable public policy for the state of Illinois to prohibit itself from purchasing Illinois manufactured products.

The bill also has the potential to trigger retaliation from trading partners. Illinois is the fifth largest exporting state and largest in the Midwest with $63 billion in international shipments each year. Mexico, for example, is one of Illinois’ largest trading partners. Banning the purchase of vehicles assembled in Mexico could potentially lead to a retaliatory ban on exports including grain, finished goods and heavy equipment.

The bill passed out of the House Local Government Committee on a 4-3 vote.

 

Pyrolysis Process

The House Environment Committee approved legislation on a 13-3 vote that would ensure that a facility that separates, stores or converts post-use polymers into crude oil, fuels, or other products using a pyrolysis process is not considered a pollution control process. Sponsored by Rep. Larry Walsh (D-Joliet), HB 2860 is a work in progress that will allow a new process to be used to convert polymers into a beneficial use rather than being landfilled.

 

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