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Springfield Highlights – May 27, 2016

Legislative Session Continues over Memorial Day Weekend

With only four days left in the scheduled spring legislative session that is poised to conclude on May 31, the House and Senate are leaving town this afternoon and plan to return to the Capitol on Sunday afternoon.  Several lawmakers plan to remain in town over the weekend to see if it’s possible to reach consensus on a budget deal that includes revenue, budget cuts, and economic development reforms.

As the leader of the business community in workers’ compensation discussions, top IMA staff has spent hours in negotiations every day this week with the Governor’s office, lawmakers, insurance industry, medical community, and organized labor.  It is our hope that substantial reforms will be enacted as part of a possible “grand bargain” at the end of session.  Other reforms under consideration are collective bargaining, pensions, property tax relief, and government consolidation.

Earlier today, citing the difficulty in achieving a comprehensive deal, Senate President John Cullerton proposed a temporary, short-term budget lasting through the November election.  Governor Rauner and Republican leaders who are pushing for a permanent solution to the budget impasse summarily dismissed the idea of delaying action until the fall.

Budget Games Continue

Tempers flared in the House of Representatives on Wednesday night when House Majority Leader Barbara Flynn Currie (D-Chicago) filed an unbalanced, 500-page budget amendment that was adopted by the full House in a partisan vote during which debate was cut short and Republicans were denied the opportunity to verify the roll call vote.  In the surprise move, Democrats sent the amendment straight to the floor of the House for a final vote without first holding a hearing in an Appropriations Committee.

Governor Bruce Rauner and legislative Republicans excoriated Speaker Michael J. Madigan and Democrats for passing a $39 billion budget that added seven billion dollars in state debt.  No additional revenue was contained in the budget package so spending far exceeds the estimated $32 billion in revenue that Illinois is estimated to receive in the coming fiscal year.  If this proposal was enacted, Illinois’ short-term backlog of bills would skyrocket to more than $16 billion and the payment cycle would be extended by months.

On Thursday morning, Democrats reconsidered the vote and allowed Republicans the opportunity to ask further questions and raise concerns about the unbalanced budget.  SB 2048 (Currie, D-Chicago) passed on a vote of 60-53-1 but was not called for a vote in the Senate.

Proposed New Tax on Financial Transactions

The House Revenue Committee heard testimony the week on a proposal to tax contracts traded on the Chicago Mercantile Exchange (CME).  Sponsored by Rep. Mary Flowers (D, Chicago), HB 106 is being referred to as “the LaSalle St. tax” because it would impose a $1 per trade fee on all agricultural products and $2 per trade on all other transactions. Proponents claimed that the tax would only be a small fraction of the overall cost of trades but that it would raise between $10-$12 billion annually to fund education and anti-violence programs in Chicago.

CME testified that the average profit or loss on a given trade is around $30 and commodities are traded multiple times and only a small fraction of contracts go to final delivery.  They noted that this would be an 800 percent increase in fees on traders and would likely discourage traders from using the CME that helps support 2,000 high paying jobs.  Exchanges like CME are technology companies that can move very easily if a tax on financial transaction is imposed.

The hearing was subject matter only and no vote was taken.  The House Revenue Committee will hear additional testimony at a hearing on July 7 in Chicago.

Updated Framework for Captive Insurance Regulation Proposed

An IMA proposal (SB 465) to re-write the captive insurance section of the Illinois Insurance Code was approved unanimously in the Senate Insurance Committee this week.  In 2014, then Governor Pat Quinn imposed a massive tax hike on captive insurance companies domiciled in Illinois.  As a result many companies have spent millions of dollars moving their captives to other states.  According to the Illinois Department of Insurance, there are only 3 captives insurance companies currently domiciled in Illinois.

Last year, the IMA championed legislation (SB 1573) to repeal the tax increase that was unanimously approved by the Senate but ultimately stalled in the House of Representatives.  This spring, the IMA worked with retailers and hospitals on a comprehensive re-write of the law to make it friendlier for companies to maintain captive insurers in the state.  SB 465 is based on the Vermont law and includes elements of Tennessee, Missouri and Connecticut laws.

The IMA appreciates the efforts of Senator Bill Haine (D-Alton) for sponsoring this important legislation in the Senate.  Summer meetings are planned to finalize the proposal.

Multiple Employee Leave Bills Moving Through the Legislature

Nearly a dozen legislative proposals were filed in the House or Senate this year mandating increased employee leave (paid and unpaid).  The proposals ranged from seven days of paid sick time to a FMLA insurance program funded by employer taxes.  Three of these proposals were taken up for consideration this week including SB 2613 (Bertino Tarrant/Manley) that requires ten days of unpaid leave for parents following the death of a child. The provisions of SB 2613 would run concurrently with leave available under the Family Medical Leave Act (FMLA).  While the legislation would not increase time off available under FMLA (12 weeks), it does offer new legal protections for employees.

The House of Representatives approved a measure sponsored by Rep. Andy Skoog (D-Peru) that would allow employees to use sick days to care for sick family members including children, parents and grandparents.  HB 6162 only applies to existing employee sick leave benefits and doesn’t require employers to offer any additional sick leave.  The mandate does however greatly expand the list of reasons an employee could opt to use sick time.

A new mandate targeted specifically at small employers would require employers with 14 or fewer employees to provide 4 weeks of FMLA leave to employees who are victims of violent crimes under the Victims Economic Safety and Security Act (VESSA).   These small employers are currently exempt from the law.  Sponsored by Sen. Toi Hutchinson (D-Chicago Heights) and Rep. Camille Lilly (D-Chicago), HB 4036 eliminates that exemption and makes those employees eligible for 4 weeks (20 days) of unpaid leave.  Under current law, employers of 15-49 employees must allow 8 weeks for leave and employers over 50 must provide 12 weeks of FMLA.  The provisions on medium and large employers remain unchanged.

The IMA has been steadfast in opposing the onslaught of employee leave mandates proposed this year. Employers should be free to choose HR policies that work best for their particular business and employees. One size fits all mandates from Springfield limit an employer’s ability to provide compassionate HR programs tailored specifically to the best interest of their individual employees.

IMA Bill Capping Right-of Way Fees Moves Ahead

Legislation capping fees that land management companies can charge for crossing a railroad right of way has been approved unanimously in the House Revenue & Finance Committee and final passage is expected soon.  This IMA initiative is necessary because Illinois companies and projects are being held up by demands for fees in the tens to hundreds of thousands of dollars to build conveyers crossing small strips of land adjacent to railroad tracks.  Multi-million dollar projects are being held hostage over a simple conveyance that may cover 20 to 40 feet on either side of railroad tracks.  In response to similar abuses, Iowa enacted caps last year and lawmakers in Minnesota are moving forward on similar legislation.

SB 2241 imposes a $1,500 cap on fees that land management companies can charge for access for the conveyance of grain, aggregate, construction materials or other commodities across right-of-ways located in enterprise zones.  This is identical to a legislative cap that utilities are charged for accessing these rights of way.

The IMA appreciates the leadership of Sen. Bill Haine (D-Alton, Rep. Jay Hoffman (D-Belleville) and Rep. Andy Skoog (D-Peru) for their leadership in sponsoring this legislation on behalf of manufacturers.

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