Legislators Making Headway: Spring Session Wrap-Up

 Last week Gov. Pat Quinn signed a number of bills into laws making serious and substantial reforms to the state’s overburdened Medicaid program. The measures included a $1.6 billion spending cut that will help rescue the program from collapse, and keep it viable for future generations.

The bill signing marked the end of a productive legislative session that also saw the establishment of a state tax tribunal and the overhaul of Illinois’ heavy-handed procurement code.

We’re disappointed that public employee pension reform – a crucial action that is necessary to lay a solid fiscal foundation and stabilize our state budget for the long term – remains unfinished. But the Chamber applauds the governor and state lawmakers, who made significant headway this spring on other fronts.

The reforms they passed will not only go a long way toward improving Springfield’s reputation, but will help the tarnished image of our entire state, which for too long has been derided as inefficient, inept and unfriendly to employers.

Lawmakers’ resolve to get Illinois’ fiscal house in order, strengthen its economy and bring its high-cost, high-growth programs under control will not go unnoticed. Our legislators must now continue working in this bipartisan spirit to bring the public employee pension systems into line. If we fail to act, long-term solvency of the pension plans is at risk, further descent of the state’s bond ratings is likely and future investment and job creation are threatened.

Action Item: Now is the time to send letters to Governor Quinn regarding pending legislative matters that passed the General Assembly and await his signature, veto or amendatory veto. The following summary highlights major items of interests to Illinois employers. We encourage you to write the Governor regarding any measure that may be important to you or your company. Send letters to the attention of Governor Pat Quinn, Room 207, State House, Springfield, Illinois 62706.

Next Step: The Illinois Chamber is now engaged in bill reviews and compiling a legislative scorecard analysis of how individual legislators voted on matters that are important to employers. You may wish to make note of some of the measures explained below in order to question your local legislators about how they voted when you see them in the coming months as they are busy campaigning for election or re-election. The Illinois Chamber Scorecard may prove a valuable tool for you and your employees as you seek to educate yourself prior to casting ballots this fall. When completed, the Illinois Chamber’s Legislative Scorecard will be available on the Illinois Chamber web site.  

Pensions

In the final hours of the session Speaker Madigan turned over sponsorship of SB1673 to Leader Cross. Cross provided a new amendment that did not include the cost shift to downstate and suburban school districts. The amendment passed committee 8-1 and many were left wondering about the roll call. Later in the day, Speaker Madigan claimed he would not be voting for the new proposal and therefore, most of the 30 Democrat votes dropped off. Both sides of the aisle had previously agreed to put 30 votes each on the issues for a bipartisan agreement. Once it was clear there weren’t enough votes, representatives decided to adjourn without a vote.

Over in the Senate, some progress was made. The Senate approved HB1447 which includes state employees and General Assembly retirement systems. The language in this package is similar to that in SB1673 in regards to COLA and access to health care. Not included in HB1447 was the teachers’ retirement system so therefore, no cost shift language to vote on. The House has not voted on HB1447. Legislation to change state university and community college employee retirements remained in limbo.

The Chamber testified in supported SB1673 as amended by Cross to remove the cost shift language. It does not appear that it will be a long, brutal summer full of useless summer session days, but there is still a lot to be negotiated. A three-fifths majority vote is now required for any legislation approved that has an effective date before January 1, 2013. It remains to be seen if the legislators will find agreement on how to address the pension burden, whether the Governor will call a special session or whether legislators are even willing to vote on this matter prior to Election Day. The Illinois Chamber will continue to push for substantial pension reforms.

Budget

The Senate voted on the House’s budget bills on the final day of adjournment and proposed a new one of its own. According to Senate Democrats, the final budget spends $671 million less than FY12. Senate Republicans claim that spending will rise to almost $400 million and $1.4 billion over the current budget once the $1 increase in cigarette taxes is included.

Some highlights in the package include:

• Spending will fall within the $33.7 billion revenue estimate
• $1.3 billion is set aside to pay down the backlog of old bills
• Medicaid reductions resulting in $2.7 billion in savings
• Pension obligations are fully funded

The budget bills that passed both Houses are SB2332, SB2378, SB2409, SB2443, SB2413, SB2348, SB2454 and SB2474. The Senate then proposed its own bill to supplement education in SB2365. This has not yet been voted on by the House.

Medicaid

The government kept to the plan to restrain Medicaid spending, the fastest growth budget item. While it was difficult to do, legislators understood the importance to do so. The final package ended up being three bills tied together so that if one of the bills failed, the whole package failed.

SB2840 House amendment 4 contained $1.6 billion in Medicaid reductions by way of eligibility and benefit reforms and utilization controls (the remaining $300 million comes from paying off old FY 2012 bills).

Read the Department of Healthcare and Family Services’ chart outlining the provisions in SB2840. HB5007 authorizes Cook County to apply for a federal waiver to collect federal match for adults 133% of federal poverty level (FPL) in the Medicaid program. House amendment 1 to SB3397 will require the Department to pay down outstanding Medicaid liabilities by limiting the amount of unpaid Medicaid bills the state can roll over to $700 million this upcoming fiscal year (which starts July 1) and $100 million less for each fiscal year thereafter, starting in FY 2014. SB 2194 contains the remaining $800 million in revenue needed to achieve the $2.7 billion in Medicaid reductions for FY 2013.

The bill contained a $1 per pack increase in the state cigarette tax and other tax increases on tobacco products, as well as provisions enhancing the hospital assessment program and provisions defining charity care requirements for maintaining property tax exemptions for non-profit health care providers.

The Illinois Chamber’s Health Care Council was deeply involved with all aspects of the Medicaid proposals and the continued effort on the part of the state to prematurely advance an insurance exchange. The Chamber was an articulate and stalwart advocate on behalf of our hospital members and was allied with the Illinois Hospital Association, with the exception of the increases in tobacco taxes.

Tax Tribunal

After months of negotiations with the Department of Revenue and legislative sponsors, the Chamber’s Tax Tribunal initiative by the Illinois Chamber’s Tax Institute finally started moving at the end of session. Illinois taxpayers will now be able to seek independent administrative review of a DOR assessment without first pre-paying the tax, penalties and interest assessed by the Department.

The Tribunal will be staffed with knowledgeable administrative law judges who will review and rule on protests to DOR tax assessments. The legislation will provide more consistency and transparency along with more taxpayer guidance and predictability and improve access to an impartial decision-making process. There were no opponents to this legislation and this is a major legislative win for the Chamber’s Tax Institute and Executive Director, Connie Beard who personally wrote and handled the negotiations necessary to craft such noteworthy legislation. The House passed the HB5192 and the Senate followed.

Procurement

Another major win for the Chamber are the changes to the Procurement code seen in House Amendment 2 to SB2958. Some highlights include:

• Transfers state employer workers’ compensation responsibilities away from CMS to private vendor and grants authority to the state’s Chief Procurement Officer (CPO) to procure this vendor.
• Clarifies that the CPO has the authority to access and review all records pertaining to procurements to ensure they all comply with the Code (the only exception is matters that may violate attorney-client privileges).
• Subcontract definition changes included in SB 3511 with further limitations placed on disclosure of Tier 2 subs only when the subcontract exceeds $50,000.
• Provides for a request for hearing and response by contractor/sub when there is alleged conflict of interest not already disclosed. The due process provisions included in this amendment are substantially similar to those put forward in SB 3511 with changes proposed by PPB to which we agreed.

This is another issue the Chamber was at the forefront on for several years and special kudos to Illinois Chamber Director of Policy Laura Minzer for steering this through passage in the General Assembly. Procurement reform passed both the House and Senate unanimously and is expected to be signed by the Governor.

Gaming

Another year and another gaming proposal was introduced. The new proposal would allow slot machines at horse racetracks; and adds new casinos in Lake County, Chicago, the south suburbs, Rockford and Danville. Governor Quinn has previously stated his opposition to slots at the tracks. After many months of debate, the sponsors included many of Quinn’s requests in the new proposal: no slots at the fairgrounds or airports and tightened oversight provisions. However, Quinn came out in opposition again due to the bill not including a ban on campaign contributions from gaming groups. Proponents claim that the new casinos would generate $300 million to $1 billion in revenue each year. It will also raise a one-time $1.1 billion in license and gaming position fees as well as create more jobs and economic development. SB1849 passed the House 69-47-2 and the Senate 30-26-3.

Capital Plan

HB4568 provided $1.6 billion in bonding authority to continue funding the Illinois Jobs Now capital improvement plan adopted in 2009. The projects funded in HB4568 have already been approved through the Jobs plan and will keep the projects on schedule for updating. The proposal was supported by the Chamber and President and CEO Doug Whitley provided testimony. This legislation was approved by both chambers and sent to the Governor.

Smoke Free Privacy Exemption

A smoke free privacy exemption passed both Chambers that exempts a cancer treatment hospital from certain prohibitions against discrimination towards any employer that, as its primary purposes or objectives, provides medical or hospital treatment to patients who have a cancer condition. The Chamber’s Healthcare Council led the charge in this exemption.

Air Regulation Standards

One of the Chamber’s environmental initiatives passed this legislative session. SB3672 expands existing rulemaking authority that is currently used at the state level to adopt federal land regulations: ambient air quality regulations. When the U.S. EPA adopts certain federal regulations, the IL Pollution Control Board uses a streamlined process to adopt those same standards at the state level. This will now be applied to ambient air quality regulations.

Tenaska/Leucadia

Tenaska proponents attempted yet again to get their Taylorville facility passed by the legislature. The original legislation contained language for a new clean coal facility that would be too costly to taxpayers and force consumers to buy their product for 30 years while producing electric generation that isn’t needed. A new proposal would have dropped the clean coal aspect completely and be based around a natural gas plant. This new plan would not have made much more sense and was never heard in committee. SB678 floundered in House committees and was never approved.

The Leucadia proposal, however, came back swinging in the final few days of session. After passing the Senate in March, things quieted down a bit before it jump to the forefront with a new amendment in the House which was approved in SB3766, passed in the House and then concurred by the Senate a little later. If signed by the governor, this bill will place an undue burden on Illinois consumers and businesses, who will be forced to subsidize the synthetic gas plant’s construction at a time when natural gas prices are plummeting.

Enterprise Zones

Enterprise zones finally got taken up with House amendment 1 to SB3616 which passed both Houses. Overall the bill provides that as existing enterprise zones expire their zone designation becomes available to all local labor markets that want to apply for the enterprise zone designation. The Department of Commerce and Economic Opportunity will establish, by rule, a process for applying for open enterprise zone designations. New zones will have a possible 25 year life-with initial designation for no more than 15 years, with a possible 10 year renewal.

Fracking

The onerous fracking amendment by Speaker Madigan was not called for a vote on the House floor. The amendment would essentially kill the fracking industry after negotiated disclosure and regulations were agreed upon in SB3280. We expect this matter to be revisited in the coming months.

Expedited Foreclosures on Abandoned Property

The Illinois Chamber joined with the Illinois Bankers Association in opposition to an amendment to SB3522 that would have imposed new judicial sale fees on large banks in cases seeking to expedite foreclosures on abandoned properties. House Amendment #2 to SB 3522 emerged late in the legislative session countering a compromise made between housing advocates, the entire financial industry, and the governor’s office on how to handle an increasing number of abandoned properties that are blights on communities, particularly urban communities. The compromise, which was contained in SB2534, passed out of the Senate by a vote of 38-3-13 with the support of the Chamber. The legislation, however, hit a roadblock in the House and SB 3522 was later amended to include most of the compromise language with the exception of the increased judicial sale fee on only a certain class of banks rather than the entire financial industry. While SB 3522, as amended, cleared the House by a vote of 67-48-2, the crowded legislative agenda and a limited amount of time left before the midnight deadline prevented a Senate floor vote on the bill. Legislation, like SB 3522, that have an immediate effective date must garner a 3/5th majority vote after May 31st. The Chamber will continue to work closely with the IL Bankers Association on this issue as it could resurface in the fall veto session.

Subrogation in Self-Funded Plans

The House concurred on legislation that could increase litigation costs for employer self-funded – ERISA – health plans and Medicare Plans. HB5823, as amended, counters a 7th Circuit Court of Appeals decision that in subrogation cases where an ERISA or Medicare plan is involved, those plans that have specifically directed the allocation of attorney’s fees within their contracts cannot have attorney fees deducted from any amounts received. The Illinois Chamber and several health insurance carriers raised concerns that the legislation could force subrogation cases involving ERISA and Medicare plans to pay increased litigation costs to move these cases out of the state courts and into federal courts where ERISA and Medicare are exempt from state regulations. Despite the opposition and several rejected efforts to strike a compromise, the legislation, which was supported by the Illinois Trial Lawyers’ Association, passed the House by a vote of 66-52-0. The measure previously passed the Senate by a vote of 35-20 after failing to garner enough votes the first time.

Appeal Bonds

The House approved SB1355, as amended, to place a cap on appeal bonds in civil litigation cases involving cigarette manufacturers and tobacco companies where large settlements are at stake. The Illinois Chamber has been pushing for appeal bond cap legislation for some time and while this legislation was narrowly drafted to only impact a specific industry, the Chamber hoped the passage of SB 1355 would have provided leverage for expanding the appeal bond cap to include other industries. While the measure cleared the House by a vote of 71-40-1, it stalled in the Senate. The Senate could, however, take up the legislation in the fall veto session.

Quick Highlights on Other Legislation

• The DNR fees package in SB1566 that included increased license plate fees did not pass out of the Senate. The bill was called for a vote after midnight on May 31 which meant that they were technically in overtime and could not get the three-fifths majority votes.
• HB3934 requires EDGE agreements to be posted online and passed both Houses.
• HB3859 requires sales tax sharing disclosure, passed both Houses.
• The workers’ compensation bill containing redefinitions of shoulder and arm injuries that the Chamber supported in Amendment 3 to HB2891was not called in the Senate.
• The tax credit for hiring veterans in SB3241 passed both Houses. This is Governor Quinn’s initiative.
• The recyclable metal purchases language in HB3825passed both Houses.
• A new incentive package for businesses that invest $1 billion passed both Houses. SB184 is targeted for a potential fertilizer plant in Peoria County.
• The ban on new landfills in Cook County in HB3881 was concurred by the Senate and awaits the Governor’s action.
• HB5071 passed both Houses which contains the electric car charging station definitions and regulations.
• SB3722 contains language for rules and regulations for Independent Expenditure PACs.
• HB1084 was approved by both Houses and will be going to the Governor for his consideration. It requires arbitrator appointments to be subject to the advice and consent of the Senate.

Bills on Chamber’s Key Legislation Opposition List Killed

• Bill: HB1666 Tanning Facility Ban Sponsor: Rep. Gabel (D-Evanston) Description: Tanning facilities may not permit anyone under the age of 18 to use the facility even if they have parent’s consent.
• Bill: HB4018 Business Registration Sponsor: Rep. DeLuca (D-Crete) Description: Allows municipalities to force businesses to register with the municipality and if they don’t, charge a $200 fine.
• Bill: HB5369 Liquor Pricing Sponsor: Rep. Berrios (D-Chicago) Description: Creates a state-regulated minimum price on liquor.
• Bill: SB3200/HB5258 Consumer Contract Plain Language Sponsor: Sen. Noland (D-Elgin) Description: Creates the Consumer Contract Plain Language Act. Requires consumer contracts to be written in a simple, clear, understandable, and easily readable manner. Establishes the requirements necessary for compliance with the Act. Authorizes the Attorney General to enforce the Act.
• Bill: SB3203/HB5259 Consumer Contract Right to Know Sponsor: Sen. Silverstein (D-Chicago) Description: Creates the Consumer Contract Right to Know Act. Requires certain disclosures to be made by a person who utilizes standard form consumer contracts in the usual course of business. Provides that consumers must be given access to standard form consumer contracts
  before a sale to enable the consumer to comparison shop. Authorizes the Attorney General to enforce the Act.
• Bill: HB4497/SB1844 Automatic IRA Sponsor: Rep. Sente (D-Lincolnshire) Description: Creates the Illinois Automatic IRA Program Act. Provides that the Illinois Automatic IRA Program shall be administered by the State Treasurer and that the Treasurer shall adopt regulations to implement the Program. Allows employees of certain employers that have not offered a qualified retirement plan for 2 years to set aside a percentage of their wages to be deposited into an IRA trust fund administered by the State Treasurer’s office. Sets minimum requirements for the operation of the Program. Sets forth duties and authority of the State Treasurer in relation to the Program. Limits State and employer liability.
• Bill: HB4617 One Day Rest in Seven Penalty Sponsor: Rep. Hernandez (D-Cicero) Description: Changes the violation for a penalty in the One Day Rest in Seven Act from a petty offense to a civil penalty.
• Bill: HB4724 Illinois FMLA Sponsor: Rep. Cassidy (D-Chicago) Description: Creates the Illinois Family Medical Leave Act with provisions similar to the ones currently in the federal FMLA.
• Bill: SB1565 Minimum Wage Law CPI Sponsor: Sen. Lightford (D-Westchester) Description: Amends the Minimum Wage Law to include limitations on the definition of “employee.” Provides a procedure for increasing the minimum wage annually to restore the minimum wage to its historic level and thereafter increasing the minimum wage by the increase in the cost of living during the preceding year. Deletes language pertaining to temporary or irregular employees and employees under the age of 18.
• Bill: SB2643 Prevailing Wage Public Works Sponsor: Sen. Noland (D- Elgin) Description: Adds burdensome requirements to the prevailing wage act including straight-time work hours without consideration of delays and does not provide definition of “journeyman” or “apprentice” needed to execute the contract.
• Bill: SB2847 Equal Pay Act Liability Sponsor: Sen. Steans (D-Chicago) Description: In addition to an individual who is deemed to be an employer, any officers of a corporation or agents of an employer who knowingly permit such employer to violate the provisions of the Act shall be deemed to be the employers of the employees. The Chamber worked with the sponsor on an amendment, changing our position to neutral.
• Bill: SB3695 Prevailing Wage Filing Sponsor: Sen. Frerichs (D-Champaign) Description: Requires contractors to include in recording keeping the gross and net wage, hourly overtime rate, fringe benefit rates, and the sponsor and administrator of fringe benefit plans. Authorizes that Department to require electronic filing. Requires that Department to create and provide a form for the filing of certified payrolls. Allows any interested party to bring an action under the Act. Our position paper
• Bill: HB4113 Toxic Chemical Safety Act Sponsor: Rep. Nekritz (D-Des Plaines Description: Requires the IEPA to publish a list of chemicals of high concern and designate those as priority chemicals. Manufacturers and distributors of children’s products that contain those designated chemicals to provide that information to the IEPA. The Director of the IEPA may then prohibit the sale and distribution of those products containing a propriety chemical.
• Bill: HB4986 EPA Recycling Sponsor: Rep. May (D-Highwood) Description: Currently, certain materials used in pollution control devices are exempt from the solid waste tipping fee. Under this legislation, all materials would be made non-exempt. Amended to become a recycling task force bill to which we removed our opposition.
• Bill: HB5373 BPA Paper Ban Sponsor: Rep. May (D-Highwood) Description: Prohibits the manufacture, distribution, and use of paper containing bisphenol A for the making of business or banking records.
• Bill: SB2950 BPA Ban Sponsor: Sen. Silverstein (D-Chicago) Description: No manufacturer or wholesaler shall sell or offer children’s food and beverage containers containing bispenol-A
• Bill: SB2892 Single-Payer Health Care Act Sponsor: Sen. Noland (D-Elgin) Description: Creates the Single-payer Health and Universal Care System Act in that the Departments of Insurance and Healthcare and Family Services shall examine the feasibility of creating and implementing a health care access plan that accomplishes certain goals.
• Bill: HB2064/HB5010 State Community Bank Sponsor: Rep. Flowers (D-Chicago) Description: Establishes a state-run community bank of Illinois.
• Bill: HB3934 EDGE Grants Sponsor: Rep. Franks (D-Woodstock) Status: Passed House, Senate 3rd Reading Position: Neutral with amendment Description: Amended, would require DCEO to post the terms of each EDGE agreement on its website.
• Bill: HB5167 Ammunition Tax Sponsor: Rep. Cassidy (D-Chicago) Description: Imposes a 2% surcharge on firearms ammunition.
• Bill: SB1829 Tobacco Tax Sponsor: Sen. Kotowski (D-Park Ridge) Description: Allows municipalities to impose a tax on tobacco.

Members interested in becoming more involved in the legislative process can keep up on issues of the day by subscribing to valuable Chamber communications such as the Rail Report, Two-Minute Warning and Government Affairs newsletter.

For more information about the Chamber’s Government Affairs efforts, contact Illinois Chamber VP of Government Affairs Todd Maisch at tmaisch@ilchamber.org or (217) 522-5512. You can also learn more about the Chamber’s Government Affairs efforts on the Chamber website.