Amicus Brief Filed with US Supreme Court in Wayfair v. South Dakota

 FOR IMMEDIATE RELEASE                                                                                                          CONTACT:

March 6, 2018                                                                                                                                  Julie Larsen, 847-946-9332

julie@macstrategiesgroup.com

                             

Amicus Brief Filed with US Supreme Court in Wayfair v. South Dakota

Filing Seeks Fairness in the Collection of Sales Tax by All Retailers

 

The Illinois Retail Merchants Association (IRMA) issued the following statement from Rob Karr, president & CEO, regarding the filing of an amicus curiae brief with the United States Supreme Court in the case of Wayfair v. South Dakota by the Council of State Retail Associations, of which IRMA is a member and Mr. Karr is Vice-Chairman. Specifically, the brief requests the U.S. Supreme Court to revisit their decision in Quill Corp. v. North Dakota absolving retailers with no physical presence from collecting state sales tax.

“It has been over 25 years since the Quill decision and much has changed in our economy since 1992. The internet was in its infancy and consumers were still making more of their purchases in stores, not by clicking a link on their smartphone. Regardless of where a sale occurs, a sale is a sale, and sales tax should be applied to every sale made to an Illinois consumer. Main Street retailers – that employ your neighbors, pay property tax, and support the little league team and high school band – should be on a level playing field with out-of-state retailers that use our roads and landfills but do not have to collect the sales tax that is used to pay for this infrastructure. It is estimated that Illinois loses over $200 million in sales tax each year to remote sales where sales tax is owed but not collected. These are revenues that could be used to stabilize Illinois’ fiscal situation.

“IRMA is pleased the United States Supreme Court is revisiting the Quill decision by agreeing to hear the Wayfair case. We urge the United States Supreme Court to overturn Quill and recognize the global economy in which we live. Overturning Quill will reinstate some equity into our economy rather than continuing to reward companies with an unfair advantage as they compete with Illinois businesses while contributing nothing to Illinois’ economy.”

Tim Lehan, Chairman of the IRMA Board of Directors and a pharmacist and owner of Lehan Drugs said, “As a Main Street retailer with locations in DeKalb, Sycamore and Rockford, I can tell you that my commitment is to the communities we serve. I believe that the Supreme Court has an opportunity to level the playing field for me, and other retailers like me, who have been at a disadvantage compared to internet retailers who aren’t required to collect sales tax.” Lehan expressed his hope for the Supreme Court to reconsider its outdated decision.

About the Illinois Retail Merchants Association (IRMA)

One of the largest state retail organizations in the United States, IRMA serves as the voice of retailing and the business community in state government. Founded in 1957, IRMA represents more than 20,000 stores of all sizes and merchandise lines. From the nation’s largest retailers to independent businesses in every corner of the State, merchants count on IRMA to fight for the best possible environment in which to do business in Illinois.

 

 

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Retailers File Temporary Restraining Order and Preliminary Injunction to Block Cook County’s Sweetened Beverage Tax

FOR IMMEDIATE RELEASE CONTACT:
June 27, 2017

CONTACT

Ryan McLaughlin, 312-969-0255
ryan@macstrategiesgroup.com

Retailers File Temporary Restraining Order and Preliminary Injunction to Block Cook County’s Sweetened Beverage Tax

Vague regulations and policy’s lack of uniformity violate the state’s constitution

SPRINGFIELD – Today, the Illinois Retail Merchants Association, on behalf of Cook County retailers, filed a temporary restraining order and is seeking a preliminary injunction in the Cook County Circuit Court challenging the sweetened beverage tax saying it violates the uniformity clause of the Illinois Constitution and is impermissibly vague. The ordinance is designed to place a penny-per-ounce tax on sweetened beverages and is poised to go into effect in only a matter of days on Saturday, July 1st. The lawsuit was filed by the law firm of Horwood Marcus & Berk who specialize in state and local tax as well as business and finance law.

The sweetened beverage tax creates classifications of taxable sweetened beverages that violate the uniformity clause of the state’s constitution, which requires taxing bodies to draw reasonable classes of taxable categories and imposes a uniform tax within the classes. Specifically, the ordinance taxes ready-to-drink, pre-made sweetened beverages, but generally excludes sweetened beverages made on demand. Not only are these sweetened beverages the same other than how they are served, but when considering the purpose of the ordinance, to promote public health and decrease obesity rates, the classification bears no reasonable relationship to accomplishing those goals. The argument can be made that Cook County has failed to meet the minimum standards in creating classes of taxable sweetened beverages.

Example of a violation of the uniformity clause:
A ready-to-drink sweetened iced tea served out of a chilled beverage urn is taxable, but a sweetened iced tea that is shaken behind the counter before giving it to the customer is not taxable. The beverages are substantially similar, except for the “shake” before giving it to the customer.

Additionally, the ordinance is impermissibly vague and fails to provide precise application under the circumstances it is intended to operate, creating a burden on retailers to accurately calculate the proper amount of tax.

Example of vagueness in the ordinance:
A retailer is responsible for collecting the Sweetened Beverage Tax for fountain sodas based on the amount it will sell in a certain-sized cup. In practice, however, by adding ice, the retailer is actually serving less sweetened beverage than the tax which was collected from the customer. A similar problem is possible in the refill context when the tax could be under-collected based on additional ounces consumed, with either scenario leaving the retailer legally exposed in an untenable situation.

Causing further complication, there has been an unavailability of guidance on the issue with the County changing the rules just days before the tax goes into effect making it impossible for retailers to properly implement in such quick order.

Ever-changing rules for SNAP may result in retailers being pushed out of program
SNAP does not allow a state or local unit of government to collect local sales taxes on purchases made under this program. Many retailers may not be able to correctly charge the Sweetened Beverage Tax, especially since the rules have been changed approximately two weeks prior to the date retailers must begin collecting the tax. If retailers do not comply they might be in jeopardy violating the terms of their SNAP contracts. In some cases, SNAP represents a significant portion of their business.

“As it stands, this ordinance is incomplete and it’s a perfect example of the disaster that awaits when policies are hurried through without serious thought to how they might impact the businesses that have to try to comply with these policies. To implement this tax correctly by the July 1 deadline is inconceivable with rules and regulations that are so poorly defined and continually changing. If enacted, Cook County retailers would be unfairly exposed to lawsuits for failure to comply and that’s a situation we’re not willing to accept for the retailers in Cook County,” said Rob Karr, president and CEO of IRMA.

Retailers are urging the court to block implementation of the ordinance due to the lack of clarity in how to properly apply and administer the tax and its unequal application.

 

About the Illinois Retail Merchants Association (IRMA)
One of the largest state retail organizations in the United States, IRMA serves as the voice of retailing and the business community in state government. Founded in 1957, IRMA represents more than 20,000 stores of all sizes and merchandise lines. From the nation’s largest retailers to independent businesses in every corner of the State, merchants count on IRMA to fight for the best possible environment in which to do business in Illinois.
About Horwood, Marcus & Berk
Horwood Marcus & Berk is a Chicago law firm that represents a wide range of clients from Fortune 500 corporations, to mid-sized and closely-held companies. While serving a number of different industries, the firm is specializing in state and local tax as well as business and finance law. In recent years, the firm has fought on the side of retailers in Qui tam lawsuits, which whistleblowers have used to unfairly target companies under the False Claims Act.

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BUSINESS GROUPS LABEL 2017 SESSION “ONE OF THE WORST FOR EMPLOYERS”

FOR IMMEDIATE RELEASE

May 31, 2017

CONTACT:

Ryan McLaughlin, 312-969-0255 | ryan@macstrategiesgroup.com

Rachel Peabody, 217-753-1761 | rachel@macstrategiesgroup.com

BUSINESS GROUPS LABEL 2017 SESSION “ONE OF THE WORST FOR EMPLOYERS”

Litany of anti-employer, job-killing measures rock employers

 

SPRINGFIELD – The state’s premier business groups have labeled the spring legislative session as “one of the worst for employers”, citing lawmaker’s apparent “race to the bottom” and litany of anti-employer, anti-job growth measures considered this year.

At a press conference on the final day of session, the Illinois Manufacturers’ Association, Illinois Retail Merchants Association, Chicagoland Chamber of Commerce, Illinois Chamber of Commerce and NFIB joined together lamenting the continuous effort to tax, over-regulate, mandate and constrict employers at every turn by lawmakers in both chambers which has created one of the most crushing business climates in the nation. While this is not a new phenomenon in Springfield, the massive uptick in these anti-employer measures coupled with the accompanying rhetoric has exasperated an already hostile business climate.

Ironically, many of these measures – in theory – are aimed at increasing pay, hiring more employees or giving workers more certainty, yet they achieve quite the opposite. While the intention of our business community is to provide jobs with competitive pay and generate revenue to fix the state’s problems, the anti-employer narrative is having a chilling effect.

“My Democrat friends like to say we are in a race to the bottom. Unfortunately, I’m here to tell you we are winning but that means Illinois businesses and families are losing. The high cost of workers’ compensation is one of the biggest issues facing manufacturers but lawmakers fail to act because they continually side with wealthy trial lawyers. Their failure to act and create an attractive economic climate means that Illinois will continue to bleed jobs and remain a laughingstock of the nation,” said Greg Baise, president and CEO, Illinois Manufacturers’ Association.

“Every day seems to bring another report of another round of retail store closings. Instead of talking restraint and recovery for the retail community, the narrative out of Springfield, like the actual actions in Chicago and Cook County, is higher taxes, labor and regulatory burdens, and, in the case of Cook County, incentivizing theft. This ‘campaign against Main Street retailers’ will only hasten the continued job loss and store closings that have become all too familiar. Retailers have limited responses; reduce employee hours, lay people off, increase automation, or close. Passing legislation to mandate artificially higher wages when the jobs don’t exist doesn’t help anyone,” said Rob Karr, president and CEO, Illinois Retail Merchants Association.

“The ping pong of anti-employer policies coming from both Chicago and Springfield is unsustainable. At every corner, Chicagoland businesses are being asked to pay higher property taxes, soda taxes, and sales taxes while also being forced to implement countless mandates that do not grow the economy. Chicago has so much to offer but this economic death by 1,000 paper cuts does not create the jobs, quality of life and revenue Springfield should be seeking,” said Michael Reever, Vice President of Government Affairs, Chicagoland Chamber of Commerce.

“Time and again lawmakers have suggested policies that shift greater financial burdens to employers statewide. Whether it is during the budget impasse or after it is resolved, standing up against job-crushing legislation is crucial for our economy. Increasing minimum wage, passing “fake” workers’ compensation reform and proposing a significant arbitrary tax increase is far from the progress Illinois deserves. We need pro-growth economic policies to prevent the steady decline of Illinois’ economic competitiveness. And we need them now, that is, if we want to continue to attract the best and the brightest individuals to Illinois,” said Todd Maisch, President and CEO, Illinois Chamber of Commerce

“Our members aren’t surprised by the legislature’s anti-business antics this session, but they are disappointed and fed up. Illinois is broke and we haven’t had a budget in two years. We need leaders who are less focused on scoring easy political points and more on enacting good policies that benefit all Illinoisans. We need legislators who will act like adults, set aside their political differences, and make the difficult decisions that would make things better for working families and allow businesses to grow and create jobs,” said Mark Grant, Illinois State Director, NFIB

Springfield’s Dirty Dozen

  1. SB 81: Legislation that raises the minimum wage to $15
  2. HB 2771: A costly government mandate forcing employers regardless of size to provide paid leave to every employee regardless of hours worked.
  3. HB 160: A $5,000 fee on every employer for the “privilege” of doing business in Illinois
  4. HB 156: Massive property tax shift onto commercial and industrial taxpayers
  5. SB 1502: Trial lawyer supported legislation that burdens every e-commerce business, and every company with a credit card, loyalty program app or website, without providing any consumer protections
  6. HB 3449: Trial lawyer supported legislation that unfairly targets companies that share or store location data and requires ecommerce businesses to ask for permission before collecting location data from your device
  7. HB 3538: Penalizes business that move even one job out of state while discouraging future investment
  8. HB 2802: Government mandate forcing businesses to pay the transportation costs of their workers
  9. HB 2525: This bill codifies “a cause” workers’ compensation standard that mandates insurance rate review without providing any meaningful reform
  10. HB 2622: Legislation that would disrupt the private workers’ compensation insurance market without having a strong reason to exist
  11. HB 3337: A bill that allows someone to steal $2,000 of merchandise from a retailer
  12. SB 9: Imposes $5.4 billion in new taxes on Illinois businesses and families – *revenue without reforms

Ignored Reforms of the 2017 Legislative Session

  • Pension reform
  • Workers’ compensation reform
  • Tax reform
  • Restraint of local government
  • Property tax relief
  • Education and workforce development

 

About the Illinois Manufacturers’ Association (IMA)

The Illinois Manufacturers’ Association is the only statewide association dedicated exclusively to advocating, promoting and strengthening the manufacturing sector in Illinois.  The IMA is the oldest and largest state manufacturing trade association in the United States, representing nearly 4,000 companies and facilities.

About The Illinois Retail Merchants Association (IRMA)

One of the largest state retail organizations in the United States, IRMA serves as the voice of retailing and the business community in state government. Founded in 1957, IRMA represents more than 23,000 stores of all sizes and merchandise lines. From the nation’s largest retailers to independent businesses in every corner of the State, merchants count on IRMA to fight for the best possible environment in which to do business in Illinois.

About the Chicagoland Chamber of Commerce

The Chicagoland Chamber of Commerce represents over 1,000 member companies, their 400,000 employees, and over $24 billion in revenue. We combine the power of our membership with our legacy of leadership and business advocacy to drive a dynamic economy. We focus on delivering value for our members, making Chicagoland a world-class place to live and work. Visit ChicagolandChamber.org

About the Illinois Chamber of Commerce

The Illinois Chamber of Commerce has been the unifying voice for Illinois business since 1919. The Chamber advocates prosperity and a pro-business climate in Illinois. www.ILChamber.org

About the National Federation of Independent Business (NFIB) Illinois

The National Federation of Independent Business (NFIB) Illinois is a chapter of America’s leading small business association, promoting and protecting the right of our members to own, operate and grow their businesses. NFIB represents 325,000 small businesses in all 50 states and Washington, D.C., and is dedicated to leveling the playing field with Big Business, Big Government, and Big Labor in every key area – taxes, healthcare, regulations, and more.

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IRMA Responds to House Passage of the Minimum Wage Bill

May 30, 2017

  CONTACT

Rachel Peabody, 217-753-1761 | rachel@macstrategiesgroup.com

Ryan McLaughlin, 312-969-0255 | ryan@macstrategiesgroup.com

IRMA Responds to House Passage of the Minimum Wage Bill  

SPRINGFIELD – The Illinois Retail Merchants Association (IRMA) issued the following statement regarding the passing of the minimum wage bill out of the Illinois House that seeks to increase the minimum wage in Illinois to $15.00 per hour by 2022.
“The political campaign to raise the minimum wage to $15 per hour has already resulted in reduced hours and eliminated positions in major cities where this has been enacted, including the City of Chicago. In fact, we have seen automation and self-service alternatives replace jobs due to continued efforts to artificially increase wages through government actions instead of working with employers. Quite simply, the state cannot bear another proposal that eliminates what little opportunity exists in Illinois. We urge lawmakers to show more restraint when making decisions that significantly impacts a businesses’ bottom line.”

Facts about the minimum wage:

  • Illinois’ minimum wage is already the highest in the Midwest. Illinois is poised to add another anti-competitive burden to retailers’ ability to compete with retailers in border states.
  • Raising the minimum wage will continue to keep people, especially teens, out of jobs. According to a January 2016 report from the University of Illinois at Chicago’s Great Cities Institute, only 12.4 percent of African Americans, 15 percent of Hispanic or Latinos and 24.4 percent of Whites (non-Hispanic or Latinos), ages 16 to 19 years old, are employed in Chicago. This destroys what little opportunity exists.
  • Minimum wage salaries are a floor, not a ceiling. Workers are not locked into minimum wage jobs, they have the ability to garner the necessary skills to advance and earn higher wages. Retail ranks are filled with those who started in minimum wage jobs.
  • Penalizes brick-and-mortar retailers over internet retailers. The minimum wage hike will not impact internet retailers, but penalize those retailers that invest in a physical property, workforce, pay property and sales taxes, etc.

 

About The Illinois Retail Merchants Association (IRMA)
One of the largest state retail organizations in the United States, IRMA serves as the voice of retailing and the business community in state government. Founded in 1957, IRMA represents more than 23,000 stores of all sizes and merchandise lines. From the nation’s largest retailers to independent businesses in every corner of the State, merchants count on IRMA to fight for the best possible environment in which to do business in Illinois.

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CRMA – 121 Report – Election Edition

CHICAGO ELECTION RESULTS

For the first time in a very long time, Chicago voters went to the polls to vote for Mayor when there was no clear front-runner candidate and in a wide-open race. Choosing from a field of 14 contenders seemed to overwhelm even the most avid political watchers. The field was diverse ethnically, in age, by gender and in experience. And boy was it a wild race! There was an Alderman wearing a wire which tangled up a couple of candidates, there was a #MeToo accusation on one of the campaigns, cash giveaways in a church for property tax relief and a Kanye West appearance (no word yet on whether he arrived courtesy of the “iPlane 1”).

To be sure, there was significant discussion on the issues of the day, including police reform, support for public schools, crime reduction, holding the line on taxes, increasing taxes and implementing new taxes, building more affordable housing and supporting working families. Unfortunately for the business community, there didn’t seem to be much discussion on training and building a workforce capable of working in a technologically-advanced economy, attracting more employment opportunities, supporting commercial corridors or cutting red tape.

Maybe we’ll hear more about that in the run-off.

That said, in order to win an election outright in the city, a candidate has to secure 50% of the vote plus 1 vote. Tough to do in a field of 14. So the top two vote-getters win the chance to battle it out for the next election on April 2nd. And tonight, the people of Chicago have spoken…all 32% of them…and now our choice is between the current Cook County Board President who is Progressive, labor union-backed, and sweet on taxes against an independent, Progressive, no-nonsense attorney bent on reform. What is sure is that this race will be historic because it will guarantee that Chicago will have its first black, female Mayor.

Here are the vote totals:

MAYOR’S RACE – RUNOFF

Gery Chico:

Bill Daley:

Amara Enyia:

Bob Fioretti:

LaShawn Ford:

Jerry Joyce:

John Kozlar:

Lori Lightfoot:

Garry McCarthy:

Susana Mendoza:

Toni Preckwinkle:

Neal Sales-Griffin:

Paul Vallas:

Willie Wilson:

WARD REPORT

Lest you thought the race was over, all 50 Aldermanic seats are up at the same time. While we had a few Aldermen who announced their retirements, the majority of Aldermen ran for re-election. Most people were looking to see if Chicago was going to join the Progressive wave sweeping the nation, or if Chicago voters chose to move in a different direction, preferring to gravitate toward the center. And the result so far seems to be a bit of a mixed bag. While you have a Progressive candidate beating a long-term incumbent, you also have a more centrist candidate defeating a vocal Progressive Alderman. Mostly, we will have to see how some of the key runoff races shake out in April.

Winners and run-off races are bolded in green.

 

Ward 1

Proco “Joe” Moreno (I):

Daniel La Spata

Ward 2

Brian Hopkins (I) (uncontested)

Ward 3

Pat Dowell (I):

Alexandria Willis:

Ward 4

Sophia King (I):

Ebony Lucas:

Ward 5 – RUNOFF

Leslie Hairston (I):

William Calloway:

Gabriel Piemonte:

Ward 6

Roderick Sawyer (I):

Richard Wooten:

Deborah Foster-Bonner:

Ward 7

Gregory Mitchell (I):

Charles Kyle:

Jedidiah Brown:

Ward 8

Michelle Harris (I):

Jewel Easterling-Smith

Linda Hudson:

Faheem Shabazz:

Ward 9

Anthony Beale (I):

Cleopatra Watson:

Paul Collins:

Essie Hall:

Ward 10

Susan Sadlowski Garza (I):

Robert “Bobby” Loncar:

Ward 11

Patrick Daley Thompson (I):

David Mihalyfy:

Ward 12

George Cardenas (I):

Pete Demay:

Martha Yerania Rangel:

Jose Rico:

Ward 13

Marty Quinn (I):

David Krupa:

Ward 14

Edward M. Burke (I):

Jaime Guzman:

Tanya Patino:

Ward 15 – RUNOFF

Raymond Lopez (I):

Joseph Williams:

Rafael “Rafa” Yanez:

Berto Aguayo:

Otis Davis, Jr.:

Ward 16 – RUNOFF

Toni Foulkes (I):

Stephanie Coleman:

Latasha Sanders:

Kenny Doss II:

Jeffrey Lewis:

Eddie Johnson III:

Ward 17

David Moore (I):

Raynetta Greenleaf:

Ward 18

Derrick Curtis (I):

Chuks Onyezia:

Ward 19

Matthew O’Shea (I):

David Dewar:

Ward 20 – OPEN – RUNOFF

Jeanette Taylor:

Nicole Johnson:

Maya Hodari

Jennifer Maddox:

Andre Smith:

Dernard Newell:

Quandra Speights:

Kevin Bailey:

Anthony Driver, Jr.:

Ward 21 – RUNOFF

Howard Brookins (I):

Marvin McNeil:

Patricia Foster:

Joseph Ziegler, Jr.:

Ward 22 – OPEN

Michael Rodriguez:

Lisette “Liz” Lopez:

Richard Juarez:

Neftalie Gonzalez:

Ward 23

Silvana Tabares (I):

Paulino Villarreal, Jr.:

Ward 24

Michael Scott, Jr. (I):

Creative Scott:

Toriano Sanzone:

Traci Johnson:

Ward 25 – OPEN – RUNOFF

Hilario Dominguez:

Alexander Acevedo:

Troy Antonio Hernandez:

Byron Sigcho-Lopez:

Aida Flores:

Ward 26

Roberto Maldonado (I):

Theresa Siaw:

David Herrera:

Ward 27

Walter Burnett, Jr (I):

Cynthia Bednarz:

Ward 28

Jason Ervin (I):

Miguel Bautista:

Jasmine Jackson:

Beverly Miles:

Ward 29

Christopher Taliaferro (I):

Dwayne Truss:

Zerlina Smith:

Ward 30 – RUNOFF

Ariel Reboyras (I):

Jessica Gutierrez:

Edgar “Edek” Esparza:

Ward 31 – RUNOFF

Milagros Santiago (I):

Colin Bird-Martinez:

Felix Cardona, Jr.:

Ward 32

Scott Waguespack (I) (uncontested)

Ward 33 – RUNOFF

Deborah Mell (I):

Katie Sieracki:

R. Rodriguez Sanchez:

Ward 34

Carrie Austin (I):

Preston Brown, Jr.:

Ward 35

Carlos Ramirez-Rosa(I):

Amanda Yu Dieterich:

Ward 36

Gilbert Villegas (I) (uncontested)

Ward 37

Emma Mitts (I):

Tara Stamps:

Deondre Rutues:

Ward 38

Nicholas Sposato (I) (uncontested)

Ward 39 – OPEN – RUNOFF

Robert Murphy:

Samantha “Sam” Nugent:

Casey Smagala:

Joe Duplechin:

Ward 40 – RUNOFF

Patrick O’Connor (I):

Ugo Okere:

Dianne Daleiden:

Andre Vasquez:

Maggie O’Keefe:

Ward 41

Anthony Napolitano (I):

Tim Heneghan:

Ward 42

Brendan Reilly (I) (uncontested)

Ward 43 – RUNOFF

Michele Smith (I):

Derek Lindblom:

Leslie Fox:

Jacob Ringer:

Steven McClellan:

Rebecca Janowitz:

Ward 44

Tom Tunney (I):

Austin Baidas:

Elizabeth Shydlowski:

Ward 45

John Arena (I):

Marilyn Morales:

James “Jim” Gardiner:

Robert Bank:

Ward 46 – RUNOFF

James Cappleman (I):

Marianne Lalonde:

Erika Wozniak Francis:

Justin Kreindler:

Angela Clay:

Jon-Robert McDowell:

Ward 47 – OPEN – RUNOFF

Eileen Dordek:

Angela “Angie” Maloney:

Heather Way Kitzes:

Michael Negron:

Matt Martin:

Gus Katsafaros:

Thomas Schwartzers:

Kimball Ladien:

Jeff Jenkins:

Ward 48

Harry Osterman (I):

David Earl Williams III:

Ward 49

Joe Moore (I):

Maria Hadden:

Ward 50

Debra Silverstein (I):

Andrew Rowlas:

Zehra Quadri:

City Clerk – RUNOFF

Melissa Conyears-Ervin:

Ameya Pawar:

Peter Gariepy:

City Treasurer

Anna Valencia (I) (uncontested)

 

These results were printed before the final official tally from the Board of Elections, so there may be some adjustments.

Tanya TricheCONTACT:

Tanya Triche Dawood
Vice President, General Counsel
Illinois Retail Merchants Association
312-726-4600
ttrichedawood@irma.org

This Week in Springfield – 101-08

March 15, 2019

IN THIS ISSUE:

CONSUMER LIQUOR HOME DELIVERY PASSES COMMITTEE
TOBACCO 21 TO GOVERNOR
PERSONAL BULK FOOD CONTAINERS AT RETAIL
PAY HISTORY PASSES THE HOUSE, AGAIN
SNAP BENEFITS AT RESTAURANTS PASSES COMMITTEE
REBATE CARDS DORMANCY CHARGES PROHIBITION PASSES COMMITTEE
EMPLOYEE HUMAN RIGHTS “EXPANSION” ADVANCES

This Week in Springfield both Chambers were in session, Tobacco 21 was sent to the Governor, salary history made its way to the Senate for a third year in a row, and committee action started to heat up before the impending deadlines.

CONSUMER LIQUOR HOME DELIVERY PASSES COMMITTEE

SB 54 (Sen. Don Harmon, D-Chicago) expressly allows retailers to deliver liquor to consumers. The retail industry is ever evolving and growing as technology offers more conveniences for consumers.  One innovative step has included the use of mobile phone apps, telephone and internet orders, and curbside pickup to facilitate the purchase of groceries and alcohol.  Illinois currently allows this innovation to thrive and retailers have used various procedures to facilitate liquor delivery either through an independent contractor, employee, third party contractor delivery, or curbside pickup. Safeguards to verify the age and identity of the consumer are required at the point of sale and at the point of delivery.

Inconsistency has arisen as some local municipalities have been prohibiting it while others have been expressly allowing it through ordinance. In order to encourage continued innovation and establish a consistent policy, Sen. Don Harmon brought stakeholders together that include the IRMA, Associated Beer Distributors of Illinois (ABDI), Wine and Spirits Delivery Distributors of Illinois (WSDI) and the Illinois Beverage Association (ILBA) to work on an industry compromise. The legislation allows retailers to continue using the aforementioned delivery methods and ordering platforms while also inserting consumer safeguards.  The legislation also requires the liquor to be delivered during applicable hours of sales from an Illinois retailer to an Illinois consumer within a 30 mile radius.

The legislation passed the Senate Executive Committee by a unanimous vote with the agreement that Sen. Harmon will bring an amendment back to the Committee for consideration.

Return to Top

TOBACCO 21 TO GOVERNOR

Tobacco 21, HB 345 (Rep. Camille Lilly, D-Chicago/ Sen. Julie Morrison, D-Deerfield), passed the House with a vote of 82-31 and the Senate by a vote 39-16. Tobacco 21 passed the Senate and narrowly passed the House last spring with 61 votes before being vetoed by Governor Bruce Rauner. In the meantime more than 34 Illinois municipalities passed a Tobacco 21 measure.

HB 345 prohibits a licensed Illinois retailer from selling tobacco products to anyone below the age of 21, but removes the penalties for the purchase, possession, selling, or consumption of tobacco for the same individuals. It completely removes the specific prohibition of the possession of tobacco products by a minor.  And it only prohibits a minor from selling tobacco products, as an employee, at a licensed retailer. In fact, the only thing SB 21 penalizes a minor for is using a fraudulent identification.

As a result, since the Illinois statutes would no longer penalize a minor for any of the aforementioned, SB 21 makes it “legal” for a person under the age of 21 to: (1) possess tobacco, (2) consume tobacco, (3) sell tobacco, (4) buy tobacco from an unlicensed Illinois retailer or individual, or (5) buy tobacco from a licensed out-of-state retailer or online.  As such, the bill protects unlicensed, unregulated, and, untaxed individuals selling tobacco to minors while prohibiting licensed Illinois retailers from selling tobacco products to anyone below the age of 21.

The legislation has been sent to Governor Pritzker for his signature.  Part of the Governor’s budget relied on vaping and tobacco taxes. As of this writing, there has been no word on how this will impact those revenue estimates. If signed the changes will go into effect July 1, 2019.

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PERSONAL BULK FOOD CONTAINERS AT RETAIL

HB 3440 (Rep. Will Guzzardi, D-Chicago) permits retailers to allow consumers to fill personal containers with dry bulk foods and prohibits counties and municipalities from disallowing the practice.  This practice is already allowed in Illinois but is currently prohibited in Chicago.   IRMA is neutral on the legislation because it is permissive and maintains the current status quo of allowing retailers either to implement or prohibit the practice on their premise.

Most retailers do not currently allow the practice for many different reasons. Currently, Illinois law does not define what may be used for a personal container or who is liable if the consumer gets sick from an unsanitary personal container brought from home. Additionally, most retailers provide a uniform variety of single use containers in the store and the tare weights are pre-programmed into the point of sale and scale system. It would be impractical to allow a consumer to bring a random personal container for which the retailer does not have the weight pre-programmed into the point of sale.  Moreover, if the retailer cannot accurately ascertain the weight of the personal container prior to the consumer adding bulk food, then the retailer cannot accurately charge the correct price or proper tax for the item. This opens retailers up to frivolous lawsuits for imposing an improper tax.  Similar to the plethora of the lawsuits filed during the short run of the ill-fated sugar sweetened beverage tax in Cook County. Hence, the importance of allowing retailers to decide whether or not to allow the practice.

HB 3440 passed the House Energy & Environment Committee by a vote of 25-0-0. IRMA will remain neutral because HB 3440 is permissive and does not change the status quo. That being said, most retailers will continue to avoid the practice due to the aforementioned issues.

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PAY HISTORY PASSES THE HOUSE, AGAIN

HB 834 (Rep. Anna Moeller, D-Elgin) or the “Pay History” legislation passed the House by a vote of 86-28 and now moves to the Senate for consideration.

Two years ago, IRMA stated it would support a proposal prohibiting an employer from asking an employee about previous wage, salary, and other compensation. We proposed the model that was adopted in Massachusetts and supported by the advocates in partnership with the Massachusetts business community. Last year, IRMA stated it would support the legislation if it would just prohibit the question. The offer for compromise is once again before the General Assembly. Unfortunately, HB 834 does not contain either avenue for compromise.

While HB 834 prohibits an employer from asking an employee about previous wage, salary and other compensation, it also unjustifiably erodes the current statutory defenses for Illinois employers while expanding the statutory penalties.  The facts do not justify this approach.

According to Illinois Department of Labor statistics (“DOL”), in the past 13 years (excluding 2010 and 2011 where there are no available data), under the current limited defenses and exorbitant penalties, there have been only 51 recorded violations of the Equal Pay Act. In that same time period, approximately 707 investigations were conducted by DOL. Less than 7.5% of all claims in the last 13 years have resulted in a violation.  Moreover, according to the U.S. Small Business Administration there are over 1.2 million businesses in Illinois. Assuming that a different company was responsible for each violation only .0000425% of Illinois businesses have been responsible for an Equal Pay Act violation in 13 years.  This is a 99.9999575% compliance rate.

The reason is found in the fact that unlike other states, Illinois employers only have four defenses to an unequal wage claim. Those four defenses are: (1) seniority system; (2) merit system; (3) a system that measures earnings by quantity or quality of production; and (4) a differential based on a business necessity that does not include sex or race.  If an Illinois employer is found in violation of an equal pay claim, the employer is liable for damages under no less than seven state and federal statutes. Unlike most states, Illinois does not prohibit a claimant from ‘double-dipping’ in state and federal court.  These statutes include the: (1) Illinois Equal Pay Act of 2003, (2) Illinois Humans Rights Act, (3) Illinois Wages of Women and Minors Act, (4) Illinois Equal Wage Act, (5) U.S. Equal Pay Act of 1963, (6) Title VII of the U.S. Civil Rights Act of 1964, and most recently (7) the Lily Ledbetter Fair Pay Act of 2009.

Given the facts noted above, it is safe to conclude that the current state and federal statutory penalty scheme has served as a more than sufficient deterrent to pay discrimination – at least in Illinois. Hence the need to simply eliminate the question.

Since the facts do not support the need for the extreme measures proposed in HB 834, IRMA remains opposed to arbitrarily restricting Illinois’ employer’s current limited defenses and increasing current statutory penalties.  IRMA does, however, continue to stand behind its pledge to support legislation to prohibit an employer from asking about previous wage, salary, or other compensation.

For these reasons, IRMA stands opposed to HB 834 but stands ready to support HB 834 if genuine, fact-driven compromise is desired.

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SNAP BENEFITS AT RESTAURANTS PASSES COMMITTEE

HB 3343 (Rep. Sonya Harper, D-Chicago) requires the Department of Human Services to establish a Restaurant Meals Program to permit individuals who are elderly, persons with a disability, and homeless individuals to redeem their Supplemental Nutrition Assistance Program benefits at private establishments that contract with the Department to offer meals for eligible SNAP recipients at concessional prices.  HB 3343 passed the House Human Services Committee by a vote of 18-0-0.

IRMA supports the intent of the legislation but was awaiting a conversation with the advocates as to some common-sense changes that would reduce the bureaucratic impact on businesses. IRMA will continue to keep members posted.

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REBATE CARDS DORMANCY CHARGES PROHIBITION PASSES COMMITTEE

HB 2156 (Rep. Theresa Mah, D-Chicago) passed the House Economic Opportunity Committee by a 9-4 vote and SB 222 (Sen. Cristina Castro, D-Elgin) passed the Senate Commerce and Economic Committee by an 8-2 vote. Both bills are intended to prohibit the issuance of product rebate cards that charge dormancy or other post-issuance fees. The language only applies to multi-store cards utilized for rebates after the consumer completes the rebate submission process. It exempts closed-looped merchant cards that are distributed and used at one retailer—also known as “store cards”.

An identical bill (HB 4922) passed the House with a 67-44 vote and the Senate by a 35-17 vote last year. It was subsequently vetoed by Governor Bruce Rauner.  Due to the aforementioned focus of the legislation IRMA is neutral as currently drafted.

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EMPLOYEE HUMAN RIGHTS “EXPANSION” ADVANCES

Currently, the Illinois Human Rights Act only applies to businesses with 15 or more employees. HB 252 (Rep. Will Guzzardi, D-Chicago) expands the coverage of the Act to apply to any business with one or more employees.  HB 252 passed the house by a 74-40 vote. Last year, an identical bill (HB 4572) passed the House by a 64-37 and the Senate by a 33-13 vote before being vetoed by Governor Bruce Rauner.

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This Week in Springfield – 101-07

IN THIS ISSUE:

GRADUATED INCOME TAX
PROPERTY TAX
PLASTIC BAG TAX ADVANCES
E-CIGARETTES INCLUDED IN ILLINOIS SMOKE FREE ACT

This Week in Springfield both the House and Senate were in session and focused on committee work.  A plastic bag tax passed committee, Cook County Assessor Fritz Kaegi’s bill to assess value of a property based on its income passed the committee stage, and Governor Pritzker outlined the structure of the Progressive Income Tax for the Caucus leaders.

GRADUATED INCOME TAX

Throughout the general election campaign last year, then-candidate JB Pritzker advocated for the need for Illinois to amend its constitution to scrap the current flat-tax and, instead, allow the state to create and impose a graduated income tax. Throughout the campaign, he avoided questions as to what rates he would suggest repeatedly stating that such rates had to be negotiated with the Assembly. Today, the Governor’s Office released their suggested plan although the plan was not negotiated with the leaders – at least to this point.

According to the Governor’s Office, 97.2% of state income tax payers would not experience an income tax increase. Here is an overview of the proposal as it relates to income tax rates:

Adjusted Gross Income Marginal Rates %  of impacted taxpayers
$0 – $10,000 4.75% 27.20%
$10,001 – $100,000 4.90% 58.90%
$100,001 – $250,000 4.95% 11.10%
Total % of Taxpayers 97.20%

 

Here are the details on the 2.8% of state income tax payers who would experience an increase:

Adjusted Gross Income Marginal Rates %  of impacted taxpayers
$250,001 – $500,000 7.75% 1.90%
$500,001 – $1,000,000 7.85% 0.60%
over $1,000,000 7.95% 0.30%
Total % of Taxpayers 2.80%

 

Additionally, the Corporate Income Tax (CIT) rate would be set at 7.95%. Today, the CIT rate is currently 7.00%.

None of these rates include the Personal Property Replacement Tax (PPRT). Corporations pay an additional 2.5% on income meaning the effective CIT would be 10.45%. For pass-through entities (partnerships, trust, and S-Corps), the PPRT is 1.5%. That 1.5% is paid off the top from the federal Form 1065 Schedule K. Remaining monies are then distributed to partners who pay at the individual rate. Nevertheless, this plan will hit pass-through entities harder.

Let’s consider a few examples. First, let’s assume a single or joint filer with an adjusted gross income of $600,000.

Adjusted Gross Income $600,000
Tax on $500,000 @ 7.75% $38,750
Tax on $100,000 @ 7.85% $7,850
Total Income Tax Paid $46,600
Effective Rate 7.77%

Second, let’s assume a single or joint filer with an adjusted gross income of $1,000,000. This filer pays 7.95% (the top individual rate) on the entire amount for a total of $79, 500. That would be $30,000 more than they would pay today or 60.6%.

Finally, here is an example of how a corporation would be taxed under this plan:

Adjusted Gross Income $2,000,000
7.95% tax $159,000
2.5% PPRT $50,000
Total Income Tax Paid $209,000
Effective Rate 10.45%

These proposed rates would give Illinois the second highest income taxes on corporations in the nation behind only Iowa. In terms of personal income taxes, Illinois would be 7th highest in the nation for both the highest lowest rate (4.75%) and for the highest rate (7.95%). Again, it is not possible at this writing to calculate the impact on pass-through entities but they will certainly pay more.

There are a few proposed changes to credits as well. First, the Governor is proposing a 20% increase in the current property tax credit from $500 million to $600 million. Second, he is including a proposed $100 per child tax credit. For single filers the child credit is for those under $80,000 per year, but it phases out starting at $40,000. For joint-files, the child credit is for those under $100,000 per year but it starts phasing-out at $60,000.

The Governor’s Office estimates the net revenue from this proposal to be $3.4 billion annually.

It is vital to remember that this plan is a LONG way from becoming reality and there is nothing to say it can’t be changed. First, both chambers have to approve putting a constitutional amendment on the ballot. That requires a 3/5ths vote in both chambers. Second, if that happens, the question will then appear on the ballot in November 2020. Third, the question will then have to receive 50% support of ALL the people casting ballots in the election (will never happen because not everyone votes the entire ballot) or 60% of those voting on the question. Fourth, if they meet that threshold, the Assembly will have to approve the rates. Now, the Assembly could put into law these rates with a provision that states ‘if and only if the constitutional amendment is approved’ but that still would not preclude them from coming back and changing the rates. Bottom line: there is at least 19 more months before anything can happen.

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PROPERTY TAX

Newly-elected Cook County Assessor Fritz Kaegi is advocating for a significant change in the property tax assessment process. SB 1379 (Sen. Toi Hutchinson, D-Chicago Heights)/HB 2217 (Rep. Will Davis, D-East Hazel Crest) passed out of the Senate Revenue Committee but only upon the promise that the proponents would be back with a substantive amendment addressing the concerns raised.

As proposed, the legislation would require non-owner occupied income producing properties to disclose their income and expenses annually to the Assessor’s office. In its current form, the proposal does not apply to residential properties with 6 or fewer units or with a market value under $1 million. It also does not apply to commercial properties with a market value under $400,000. The argument of the Assessor is this information would lead to a more accurate assessment process. A coalition of interested groups including IRMA, have and continue to meet with the Assessor’s Office. We share the goal of a more accurate and transparent assessment process but believe the proposal in its current form is highly flawed.  Just to name a few, examples of issues that must be hammered out in detail include definitions, privacy, scope of data, program evaluation, etc. This is a highly technical area where the smallest omission or error can have grave consequences. These difficult questions must be addressed in the legislation and not left to arbitrary ‘rules’. Keep in mind, Cook County does not have an administrative rules process like JCAR.

It is likely the House Revenue & Finance Committee will have a subject-matter hearing next week and discussions will continue behind the scenes.

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PLASTIC BAG TAX ADVANCES

SB 1240 (Sen. Terry Link, D-Gurnee) creates the Checkout Bag Tax Act and imposes a tax of $0.07 on paper and plastic bags used by a customer at a retail establishment in Illinois.  As currently drafted the proceeds of the tax are distributed in the following manner: (1) the retailer retains $0.02 per bag to cover their costs; (2) $0.02 per bag is distributed to the General Revenue Fund; and (3) $0.03 per bag is deposited into the Checkout Bag Tax Fund. The $.03 from in the Checkout Bag Tax Fund is then distributed to local governments to use for funding the collection of household hazardous waste such as needles, paint, batteries and other common items such as mattresses, plastic bags, auxiliary containers, etc. It also provides funds to local governments for education and grant programs to increase the recycling and composting in the Illinois.

Municipalities that do not already have a plastic bag ban or tax would be prohibited from banning, regulating or taxing plastic or paper bags or auxiliary containers.  Chicago, Oak Park, and Evanston would be able to keep their current ordinances but could not change them unless to make them consistent with the proposed state law. This is to avoid both a municipal tax and a state tax.

IRMA and coalition of stakeholder including the Illinois Manufacturers Association (IMA), Solid Waste Agency of Lake County (SWALCO) and Solid Waste Agency of Northern Cook County (SWANCC) worked together to support this initiative because it: (1) provides consistency for retailers, manufacturers, municipalities, and counties throughout the state in regards to plastic bags and auxiliary containers; (2) addresses environmental concerns of plastic and paper bag usage; (3) provides additional funding for a significant expansion of recycling and composting infrastructure; (4) provides a non-discriminatory tax on bags regardless of material or industry, and (5) provides a consistent revenue stream for the state.

The legislation passed out of the Senate Revenue Committee unanimously by a vote of 7-0. The Sponsor agreed to hold it on Second Reading to continue the dialog with the Governor’s office who has proposed a 5-cent tax on just plastic bags. An approach IRMA opposes.  IRMA would like to thank Senator Link for his continued leadership on this issue and for bringing a diverse coalition together to collaborate.

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E-CIGARETTES INCLUDED IN ILLINOIS SMOKE FREE ACT

SB 1864 (Sen. Terry Link, D-Gurnee) include e-cigarettes in the Smoke Free Illinois Act (Public Act 95-0017). The Smoke Free Illinois Act prohibits smoking in public places and places of employment and within 15 feet of any entrance, exit, windows that open, or ventilation intake of a public place or place of employment. Places of employment are defined any area under the control of a public or private employer that employees are required to enter, leave or pass through during the course of employment. These areas include, but are not limited to, offices and work areas, restrooms, conference rooms and classrooms, break rooms and cafeterias and other common areas. Smoking also is prohibited in public conveyances, like taxis, buses, shuttles and any vehicle owned, leased or operated by the state or a political subdivision of the state.

The legislation passed out of the Senate Public Health Committee unanimously by a vote of 12-0.
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IRMA Announces New Vice President of Energy Services

FOR IMMEDIATE RELEASE                                                                                                

February 1, 2019

CONTACT: Ryan McLaughlin, 312-969-0255, ryan@macstrategiesgroup.com

IRMA ANNOUNCES NEW VICE PRESIDENT OF ENERGY SERVICES

SPRINGFIELD – The Illinois Retail Merchants Association (IRMA), which represents over 23,000 stores across the state including chains and family-owned and operated stores as well as pharmacy, grocery, hardware and restaurants, announced Brian Bowe as the new vice president of energy services.

In this role, Bowe will work directly with IRMA’s members on a number of services such as energy procurement, energy efficiency and sustainability initiatives, communication of important regulatory changes, and assisting with navigating both the regulated and deregulated environments in Illinois. IRMA has long worked with members on important energy legislation and continues to push for more efficient product development, pricing and contract transparency, and buying strategies for retailers across the state.

Bowe, has worked in the energy industry for more than a decade including, most recently with Constellation New Energy, where he managed its government aggregation business efforts across Illinois, Massachusetts, New York, New Jersey and Ohio. As a manager of a leading energy company, Bowe led a geographically diverse team, coordinated sales efforts and spearheaded financial and operational analysis on an annual basis.

Prior to CNE’s acquisition of Integrys Energy Services (IES), Bowe held a number of positions with IES including serving as the company’s Director of Gas Operations, heading up a geographically diverse team of natural gas forecaster and schedulers. Most recently with IES, Bowe was the Illinois Market Manager, coordinating all sales, pricing and contracting efforts for natural gas and power with both small commercial and residential customers in Illinois.  In this position, Brian interacted with many of IRMA’s members.  Brian holds a BS in Managerial Accounting and is a Certified Public Accountant.

“Brian’s expertise with the energy industry and state and national energy policy as a whole will serve as an invaluable asset for our members. We are very excited to announce Brian as the new vice president of energy services promoting greater transparency and cost savings options to retailers across the state,” said Rob Karr, president & CEO, Illinois Retail Merchants Association.  

About The Illinois Retail Merchants Association (IRMA)

One of the largest state retail organizations in the United States, IRMA serves as the voice of retailing and the business community in state government. Founded in 1957, IRMA represents more than 23,000 stores of all sizes and merchandise lines. From the nation’s largest retailers to independent businesses in every corner of the State, merchants count on IRMA to fight for the best possible environment in which to do business in Illinois.

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This Week in Springfield – 101-05

IN THIS ISSUE:

GOVERNOR PRITZKER DELIVERS BUDGET ADDRESS
GOVERNOR SIGNS $15
PAY HISTORY COMPROMISE IGNORED

GOVERNOR PRITZKER DELIVERS BUDGET ADDRESS

On Wednesday at Noon, Governor JB Pritzker delivered his first Budget Address in which he laid out his priorities for the Illinois Fiscal Year 2020 budget. While claiming ‘austerity’, there was nothing austere about it as there is plenty of new spending was proposed.

The Administration is assuming a General Revenue Funds (GRF) budget of $38.75 billion on GRF revenues of $38.9 billion. If all sources are included (e.g. Federal funds) the size of the proposed budget is $77 billion. The GRF proposal is a 4% increase over the current fiscal year budget.

New spending totaling at least $4.6 billion is proposed for early childhood programs ($140.8 million), K-12 education ($382.25 million), higher education ($161.4 million), health and human service programs ($437.85 million), criminal justice reforms ($10 million), public safety ($108.8) and infrastructure ($3.37 billion).

Governor Pritzker proposed over $1.1 billion in new revenues and claimed that if these revenues were not approved GRF spending would have to be cut 4% excluding employee healthcare, pensions, and debt service costs. The proposed revenue increases include:

  • Capping the Retail Discount/Vendor Collection Allowance at $1,000. This is a significant hit to retailers and shifts even more of the cost of administering the sales tax on behalf of state and local government onto the backs of retailers. ($70 million estimated)
  • Taxing e-cigarettes at 36% ($10 million estimated)
  • Increasing the cigarette tax by $0.32 per pack/$3.20 per carton ($55 million estimated). This would push Illinois’s cigarette tax to $2.30 per pack/$23.00 per carton, the City of Chicago’s to $3.48/$34.80 per carton, and Cook County’s to $5.30 per pack/$53.00 per carton. The chart below highlights how Illinois, Cook County, and the city of Chicago would compare on a per pack basis. To calculate the per carton cost, simply multiply by ten.

Imposing a plastic bag tax. At this writing, it is unclear if this would add to Chicago’s plastic bag tax of $0.07 or Chicago would be exempt. If it does not contain an allowance for retailers, it would be the first bag tax of its kind to ignore the extra costs imposed on retailers. ($20 million estimated)

  • Placing an assessment on Managed Care Organizations ($390 million estimated).
  • Creating a progressive tax structure for video gaming ($89 million estimated).
  • Decouple from the Federal Tax Credit for Repatriated Corporate Income ($94 million estimated).
  • Enacting sports wagering ($212 million estimated).
  • Enacting recreational cannabis ($170 million estimated).
  • Tax amnesty ($175 million estimated)

On the pension front, the most serious financial crisis confronting Illinois, the Governor proposed extending the current ramp by an additional seven year, to 2052, thereby avoiding an $878 billion pension payment. Additionally, the proposal includes an additional $2 billion in new pension bonds as well as extending the current buyout program.

In terms of infrastructure, the Governor is proposing over $2 billion including a pay-as-you-go program for roads.

This begins the budget discussions in earnest expected to result in a budget on or before May 31st. At this writing, the budget may be balanced but does not address the bill backlog.

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GOVERNOR SIGNS $15

Tuesday, Governor Pritzker signed SB 1 (Sen. Kimberly Lightford, D- Westchester/Rep. Will Guzzardi, D- Chicago) into law as Public Act 101-001 setting Illinois on a rapid rise to a $15 starting wage. Here are the details:

18 years and older Under 18 years of age*
YEAR WAGE YEAR WAGE
1/1/2020 $9.25 1/1/2020 $8.00
7/1/2020 $10.00 7/1/2020
1/1/2021 $11.00 $8.50
1/1/2022 $12.00 $9.25
1/1/2023 $13.00 $10.50
1/1/2024 $14.00 $12.00
1/1/2025 $15.00 $13.00

 

Tax credit: First, it is important to note that unless the language of the new law is changes, NO ONE qualifies for the tax credit. That is because as it was enacted, an employee has to work 90-consecutive days. Even if that is repaired before January 1, 2020, the following employer are NOT considered eligible for the tax credit:

  1. Any employer with more than 50 full-time equivalent employees in their entire operation is not eligible. Many employers including call and IT centers, a restaurant, grocery store, movie theater or other entertainment option, dry cleaner, etc. can easily have more than 50 at a single location. They would not be eligible for the tax credit.
  2. Any employer who has more than one franchised store or files taxes as part of a unitary group is not eligible. This demonstrates a fundamental lack of understanding between a franchisee and a franchisor.
  3. Any employer who pays more than the minimum wage at the time is not eligible. For example, if an employee is currently paid $9.50 per hour, and the wage increases January 1, 2020 from $8.25 to $9.25, that employer is not eligible.
  4. Any employer whose average wage is less in the current quarter vs the quarter the year before is not eligible. If an employer has to lay people off, close a store, or reduce hours, he/she would not be eligible for the credit.
  5. An employer cannot claim credit for more employees than the number of employees making less than the minimum or reduced wage for the current calendar year during the last reporting period of the preceding year. If an employer employees 100 people and 10 were making less than the minimum or reduced wage (i.e. teens) during the last reporting period of the preceding year (October – December), then the employer can only claim the credit for 10 employees.
  6. The effort to really help small employers by extending the credit an extra two years helps almost no one. IDOR is claiming 48% of all employers have fewer than 5 employees. In fact, that includes employers who work for themselves and are the only employee. They account for nearly 80% of all employers with fewer than 5 employees. IDES reports that in the City of Chicago 6.6% of all employers fit this category. When reduced by 80%, only 1.4% of all small employers would be eligible for the credit.

If an employer somehow manages to escape all of those disqualifications, then the following credit applies to employers with 50 or fewer employees:

  • Credit against withholding payments beginning on or after January 1, 2020 and ending on or before December 31, 2027.
  • The credit cannot exceed employer’s payroll withholding for that period.
  • Maximum credit allowed for reporting periods beginning on or after and ending on or before the following dates:
    • January 1, 2020 – December 31, 2020 = 25%
    • January 1, 2021 – December 31, 2021 = 21%
    • January 1, 2022 – December 31, 2022 = 17%
    • January 1, 2023 – December 31, 2023 = 13%
    • January 1, 2024 – December 31, 2024 = 9%
    • January 1, 2025 – December 31, 2025 = 5%

For employers with more 5 employees, these credits can continue to be claimed for reporting periods beginning on or after January 1, 2026 and ending on or before December 31, 2026.

For employers with fewer than 5 employees, these credits can continue to be claimed for reporting periods beginning or after January 1, 2026 and ending on or before December 31, 2027.

Tip credit remains at 60%/40%; training wage remains at $0.50 per hour lower than starting wage for first 90-days of employment; and penalties are increased substantially for wage-theft.

 

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PAY HISTORY COMPROMISE IGNORED

For a third straight year compromise has been ignored and HB 834 (Rep. Anna Moeller, D-Elgin) or the “Pay History” legislation passed the committee stage on a partisan roll call.

Two years ago, IRMA stated it would support a proposal prohibiting an employer from asking an employee about previous wage, salary, and other compensation. We proposed the model that was adopted in Massachusetts and supported by the advocates in partnership with the Massachusetts business community. Since that time, Delaware, Oregon, and Puerto Rico have also adopted the Massachusetts model.  Last year, IRMA stated it would support the legislation if it would just prohibit the question. Unfortunately, political considerations governed last year and a different proposal was passed which then-Governor Rauner vetoed. With those considerations behind us, and the stated desire of everyone to seek compromise this year, the opportunity for compromise is once again before the General Assembly. Unfortunately, as it sits before you, HB 834 does not contain either avenue for compromise.

While HB 834 prohibits an employer from asking an employee about previous wage, salary and other compensation, it also unjustifiably erodes the current statutory defenses for Illinois employers while expanding the statutory penalties.  The facts do not justify this approach.

According to Illinois Department of Labor statistics (“DOL”), in the past 13 years (excluding 2010 and 2011 where there is no available data), under the current limited defenses and exorbitant penalties, there have been only 51 recorded violations of the Equal Pay Act. In that same time period, approximately 707 investigations were conducted by DOL. Less than 7.5% of all claims in the last 13 years have resulted in a violation.  Moreover, according to the U.S. Small Business Administration there are over 1.2 million businesses in Illinois. Assuming that a different company was responsible for each violation only .0000425% of Illinois businesses have been responsible for an Equal Pay Act violation in 13 years.  This is a 99.9999575% compliance rate.

The reason is found in the fact that unlike other states, Illinois employers only have four defenses to an unequal wage claim. Those four defenses are: (1) seniority system; (2) merit system; (3) a system that measures earnings by quantity or quality of production; and (4) a differential based on a business necessity that does not include sex or race.  If an Illinois employer is found in violation of an equal pay claim, the employer is liable for damages under no less than seven state and federal statutes. Unlike most states, Illinois does not prohibit a claimant from ‘double-dipping’ in state and federal court.  These statutes include the: (1) Illinois Equal Pay Act of 2003, (2) Illinois Humans Rights Act, (3) Illinois Wages of Women and Minors Act, (4) Illinois Equal Wage Act, (5) U.S. Equal Pay Act of 1963, (6) Title VII of the U.S. Civil Rights Act of 1964, and most recently (7) the Lily Ledbetter Fair Pay Act of 2009.

Given the facts noted above, it is safe to conclude that the current state and federal statutory penalty scheme has served as a more than sufficient deterrent to pay discrimination.

Since the facts do not support the need for the extreme measures proposed in HB 834, IRMA remains opposed to arbitrarily restricting Illinois’ employer’s current limited defenses and increasing current statutory penalties.  IRMA does, however, stand behind its pledge to support legislation to prohibit an employer from asking about previous wage, salary, or other compensation.

For these reasons, IRMA stands opposed to HB 834 but stands ready to support HB 834 if genuine, fact-driven compromise is desired.

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