This Week In Springfield both chambers continued with committee action and IRMA testified before the House Jobs Creation Task Force.
JOB CREATION
In response to the woeful job climate in Illinois, the House created a Jobs Creation Task Force chaired by State Representative Lou Lang (D-Chicago). The goal of this task force is to elicit testimony from concerned parties about what can be done to foster a job-creating environment in Illinois. This week, IRMA joined with three other business associations to share a few thoughts.
There is no ‘magic bullet’ that will instantly transform Illinois from an economic sloth to an economic tiger. Not only must Illinois make comprehensive and fundamental policy changes, it must stand by them for the long term in order to truly alter the well-earned reputation as an unfriendly State for employers. That reputation, formed over decades, will take many years of consistent effort to re-form. Nevertheless, it must be done if Illinois is going to reverse the economic rip-tide in which it is caught. What follows is a brief overview of some suggestions IRMA offered. It must be emphasized that this is not a comprehensive list but a few thoughts to stimulate the process.
It was noted that policies that create Illinois-only disparities put Illinois employers at a disadvantage with their competitors in neighboring states, not to mention the world. Consistent with that theme, IRMA joined with their compatriots in mentioning the need for workers compensation reform. We also noted that the Illinois minimum wage has, as we predicted when it was first proposed, led to this recession having an unusually disparate impact on youth employment. Three other policy areas IRMA noted under this broad theme were energy, product regulation, and telecommunications.
Job creation has been a driving rationale behind recent State efforts to support renewable energy projects. While these projects may brings some new jobs, reduce our energy dependence, and provide more affordable energy at some point in the distant future, the costs for these projects should not be considered in a vacuum. Illinois has attempted to pick green energy winners and losers which always reduces competition and innovation. Worse, these projects benefit everyone but Illinois has taken a path of imposing the costs of these projects only on the commercial and industrial ratepayers. This substantial cost increase on a retail employers’ second largest expense line-item, is a substantial disincentive to invest in Illinois.
Product regulation has long been the exclusive purview of the Federal Government. Over the past few years, numerous proposals have been put forth that would grant Illinois agencies the authority to regulate content of products or impose Illinois-only labels on particular products. The State is not equipped to make the substantial scientific evaluations required to support such decisions and ceding that authority to non-governmental organizations undermines accountability and transparency. These proposals, if enacted, will add significantly to the cost of distributing products in Illinois. These increased costs will impact operations in distribution centers such as those located in Rockford, Romeoville, Mt. Vernon, LaSalle/Peru, and Dekalb.
Furthermore, if products are removed from Illinois stores, not because they are unsafe but because it is cheaper to not sell in Illinois than to test each product to meet some arbitrary Illinois-only standard, Illinois consumers have less choice and sales tax revenues are diminished as Illinois consumers move to purchase these products on-line.
Telecommunications reform must take place sooner rather than later as other states have leapt far ahead of Illinois whose regulatory scheme is still grounded in cooper wires instead of broadband, voice-over-Internet- protocol, and other modern telecommunication tools. Retail is the most competitive economic sector where profit margins are razor thin and efficiencies are measured in percentages of a penny. Technology is essential to the entire operation from the supply line to the point-of-sale. Illinois must have a modern telecommunications policy that encourages and supports innovation.
In terms of making it easier to conduct business in Illinois, IRMA is suggesting a few minor policy changes. First, make the process of obtaining a Food Service Sanitation Manager’s Certificate (FSSMC) less bureaucratic. This will in no way impact food safety, will not cost the State any money, but it will make it just a bit easier on the grocery stores and restaurant employees who must obtain an FSSMC. Second, Illinois is the only state requiring retailers to report their television sales in order for manufacturer recycling goals to be determined. Illinois needs to join the other twenty-plus states with e-waste laws and calculate responsibility by national sales data extrapolated to population. Third, a recent finding by the Auditor General may require the Illinois Department of Revenue to re-impose a bonding requirement on anyone seeking to start a small business. The bonding requirement was suspended decades ago and clearly is not needed. Why allow the additional cost to be imposed?
All of the above must be seen within the contest of investment. Every business has only so much money to invest. Based on all of the available cost factors, employers must decide where their investment will generate the best return. They have seemingly endless choices of where to invest. Every time Illinois adds a cost-factor, it is putting a rock on the cost side of the scale. Perhaps it is time to simply remove the rocks from the cost side of the scale and ignite an Illinois miracle.
PHARMACY REIMBURSEMENT
Illinois owes its Medicaid providers, especially pharmacies, billions of dollars. The State has engaged in periodic short-term borrowing in an effort to periodically pay some of these obligations. The Governor may engage in short-term borrowing so long as he has the approval of the State Treasurer and State Comptroller -something Comptroller Dan Hynes refused to do during his gubernatorial primary battle with Governor Pat Quinn. With that primary now decided, another short-term borrowing effort is afoot in the form of Senate Amendment #1 to S.B. 416 (Sen. Donne Trotter, D- Chicago). It would approve approximately $250 million in State funds to secure additional Federal matching funds.
Usually,State monies spent on Medicaid are matched by the federal government at a rate of 50 percent. Until December 31st, Illinois is eligible for an enhanced match of 61.88 percent. Obviously, this establishes a strong incentive to leverage as much Federal assistance as possible. S.B. 416 is now on 3rd Reading in the Senate.
UNEMPLOYMENT INSURANCE/WORKERS COMPENSATION
This week, Governor Quinn initiated an ‘agreed bill’ process on Unemployment Insurance (UI) and Workers Compensation (WC) issues. The process, initiated in 1982 by former Governor James R. Thompson, brings together the stakeholders, employers and unions, to address issues and avoids putting political leaders in the difficult position of having to choose winners and losers in each system. While not giving either side everything they may desire, the process avoids wild and destabilizing swings based on which side can muster a majority of political support as opposed to what is in the best interests of the mutual stakeholders. The process is built upon the foundation that if one side disagrees with a proposal, all sides disagree, and vice-versa. Unfortunately, this sometimes means legislative proposals amending the UI or WC systems, but not having any real impact, do not advance through the legislative process if only because an agreed bill meeting was not convened.
At the first meeting this week, the Governor’s Office provided a list of legislation and gave both sides two weeks to provide their position, if any, on the UI and WC proposals that have been introduced this Spring. IRMA will continue to keep you posted as the agreed bill process moves forward.
BUSINESS DAY
Mark your calendars now and plan to attend the annual Business Day 2010 on Wednesday, May 5th, in Springfield. This is a unique opportunity to join with your peers from throughout the State to make your collective voices heard on the issues of the day. Watch for additional information in the very near future.
Rob Karr, Senior Vice President
Government & Member Relations
