This Week in Springfield – 100-32

IN THIS ISSUE:

BUDGET
PHARMACY BENEFIT MANAGER
EQUAL PAY

The House and Senate have adjourned until Monday afternoon but there will be a lot going on this weekend as scheduled adjournment is May 31st.

Budget

A great deal of focus is on a potential budget for the 2019 fiscal year. Last year, a budget that included a $5 billion tax increase was adopted over the veto of Governor Bruce Rauner (R) when 15 House Republicans voted for the override. That budget ended a two-and-a-half year period in which Illinois had no budget. This year, there appears to be a mutual interest in putting place a budget. The alignment appears to come in the form of the Governor wanting a budget so the state continues to operate and the Democrats wanting a budget so social service agencies and schools receive funding. Additionally, both sides seem to want a deal so that no matter who is victorious in November, the winner is not immediately facing a crises upon their inauguration in early January.

While they appear to continue to make progress in discussions, they are scrambling to find sufficient revenue to pay bills, $350 million for schools as required by the education funding bill enacted last year, and $65 million in back wages owed to state workers as a result of the period where there was no budget. Additionally, Democrats have suggested additional spending on certain programs. This has members of both parties looking for additional revenues. However, neither side wants to enact something that has the appearance of a tax increase. While the retail discount, the 1.75% that retailers are allowed to retain as a partial reimbursement for their costs of serving as the sales tax administrator and collector for the state, has been under pressure for several years, given the pressures noted above, the danger has never been greater. IRMA has been working non-stop, including suggesting other alternatives, in an attempt to retain the discount.

We will be in touch with leaders and staff throughout the weekend. We will keep you posted as events warrant but we are not likely to have a definitive answer until any budget that is ultimately agreed to is introduced.

Pharmacy Benefit Managers

An intense debate has been simmering just below the surface for some time now over the State’s transition to managed care for Medicaid and the roles of pharmacy benefit managers. This is particularly true of reimbursements within managed care and the State’s apparent lack of ability to ensure accountability citing the fact the State’s contracts are with the managed care organizations and not the PBMs.  Additionally, there have been historic concerns over certain PBM practices most notably audits.

The House had previously approved HB 3479 (Rep. Sara Feigenholtz, D- Chicago/Sen. Andy Manar, D- Bunker Hill) with the understanding the bill would undergo further revisions in the Senate. As originally passed by the House, HB 3479 would have rewritten the State’s contracts with managed care organizations – a legally dubious proposition – and was estimated to cost the state at least $200 million if enacted.

This week, Senator Manar filed Senate Amendment #5 to HB 3479. This amendment seeks to create State oversight of PBMs by requiring the reporting of specific information to the Illinois Department of Insurance (IDOI) and requiring PBMs to be licensed by IDOI. Additionally, the amendment creates audit protections long-sought by the pharmacy community. Finally, the amendment allows pharmacists to share the contents of their contracts with whomever they choose and would prohibit the practice of forcing pharmacists to accept other contracts in order to participate in one or more other contractual programs. The provisions of Senate Amendment #5 apply to the State’s employee insurance program as well as Medicaid.

The amendment was filed late Friday morning and has not yet been assigned for a hearing. It is anticipated it will be heard early next week in the Senate. If it were to pass the Senate, it would still have to go to the House for concurrence and then the Governor for his consideration. In short, it has a long way to go and a short time to get there.

Equal Pay

Similar legislation that was vetoed by the Governor and failed to be overridden by the Senate last year has once again passed the Senate Labor Committee. Despite an avenue for compromise offered by the business community the advocates chose disagreement. In the meantime additional jurisdictions have passed the compromise offered by the business community.

HB 4163 (Rep. Anna Moeller, D-Elgin/Sen. Christine Castro, D-Elgin) prohibits an employer from asking an employee about previous wage, salary and other compensation. It also limits the current statutory defenses for Illinois employers while expanding the statutory penalties. While IRMA has, from the beginning, agreed to prohibit the question as long as there are common sense exemptions, IRMA remains opposed to arbitrarily restricting Illinois’ employer’s current limited defenses and increasing current statutory penalties.

Illinois currently only has three defenses to an unequal wage claim (1) seniority system; (2) merit system; and (3) a system that measures earnings by quantity or quality of production. The advocates argue that limiting the current defenses and increasing the penalties will deter employers from violating the Equal Pay Act. In the past 11 years (excluding 2010 and 2011 where there is no available data), under the current limited defenses, there have been only 51 recorded violations of the Equal Pay Act. In that same time period approximately 707 investigations were conducted by the Illinois Department of Labor. Less than 7.5% of all claims in the last 11 years have resulted in a violation. 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 11 years. This is a 99.9999575% compliance rate.

Despite this compliance rate some business associations are willing to take a proactive step to support expanding the current Equal Pay Act to prohibit an employer from asking about a prospective employee’s wage and salary. A year ago, these associations suggested using a compromise that was accepted by all parties in Massachusetts that included an affirmative defense for employers. Since that time, Oregon, Delaware, California, and Puerto Rico have passed legislation prohibiting asking about an employee’s previous wage and salary. Oregon and Puerto Rico have adopted the Massachusetts model. So three of the five major jurisdictions support a compromise model. Additionally, this model has been introduced in Rhode Island, Connecticut, Montana, Georgia, and Texas. Despite over 700 investigations over the past 11 years of available data 99.99% of all Illinois employers have already proven to be compliant with the current law.

HB 4163 now awaits consideration by the full Senate.

This Week in Springfield – 100-31

In This Issue:

RETAIL DISCOUNT & BUDGET
TOBACCO 21
DRONE
WORKERS’ COMPENSATION
HUMAN RIGHTS EXPANSION
BUSINESS DAY THANK YOU

This Week in Springfield both chambers met to discuss legislation from the opposite chamber while lawmakers continued to discuss the budget in working groups.

RETAIL DISCOUNT & BUDGET

There are 13 scheduled days of regular legislative session remaining on the calendar. If the Assembly has not adjourned by midnight on May 31st, a super-majority in each chamber is required to pass anything. At the very least, that would give Republicans in the House serious leverage.

A bi-partisan, and relatively large, Budget Working Group has been meeting for several weeks. They have shared ideas on how to close the gap between revenue and spending and discussed estimating how much revenue there is to spend for Fiscal Year 2019.

Last year, a $5 billion income tax increase was utilized to help pay down approximately half of the bill backlog which had grown as high as $16 billion, as well as to get monies flowing again to agencies and the myriad programs they operate. While another tax increase is unlikely in an election year, policymakers are casting about for other pots of money. That means the Retail Discount is once again being discussed.

A few years ago, IRMA prepared this overview of the Discount. We have updated it and are once again sharing it with members of the Budget Working Group, legislative leaders, staff, and the Governor’s Office. One of the options that was discussed was a Kentucky-style approach to reducing the discount. In short, retailers would receive 1.75% of the first $1,000 in sales taxes collected and 1.5% of any amount over $1,000 but the total received would be capped at $50 per reporting period (i.e. per month). IRMA has prepared and shared an overview of the annual sales a business would reach before being capped under a Kentucky-style methodology.

This issue was raised in meetings directly with three of the four legislative leaders and the Governor last week during Business Day 2018. IRMA will continue to advocate to protect the partial reimbursement that is the Retail Discount in Illinois.

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TOBACCO 21

SB 2332 (Sen. Julie Morrison, D-Deerfield/Rep. Camille Lilly, D-Chicago) prohibits anyone below the age of 21 from purchasing tobacco from a licensed Illinois retailer while removing any penalties for the underage possession or consumption of tobacco.  The initiative passed the Senate with a vote of 35-20-0 and passed the House Health & Healthcare Disparities Committee by a 3-1 vote.

As currently drafted SB 2332 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.  Additionally, the bill protects unlicensed, unregulated, and, untaxed individuals selling tobacco to minors while prohibiting licensed retailers from selling tobacco products to anyone below the age of 21.

Advocates argue that the brain is still developing until the age of 21 and a person under that age cannot be expected to fully understand the decision they are making when choosing to use tobacco products. This makes an interesting argument since persons under age 21, among other things, are allowed to vote, join the military, enter into legally binding contracts, drive, serve on a jury, sue someone, get a tattoo or piercing, become a blood or organ donor, adopt a child, etc.

Raising the age from 18 to 21 may not make as big of a difference as lawmakers hope, given that most smokers — nine out of 10 according to the Surgeon General— have already begun smoking by the age of 18. Additionally, the vast majority obtain their tobacco products from older family and friends. Three out of four minor smokers will become adult smokers.  Ironically, SB 2332 may actually encourage this behavior by removing the current statutory penalties for underage use and consumption of tobacco.  And if it is a good idea to remove underage penalties for tobacco products should the state also remove underage use and consumption penalties for other age restricted products such as alcohol?

IRMA is opposed to the bill which will drive sales away from licensed retailers to illegal sellers and to out-of-state retailers.

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DRONES

 SB 3291 (Sen. James Clayborne, D-East St. Louis/ Rep. Marcus Evans, D-Chicago) would preempt home rule municipalities from passing regulations on the use of drones or unmanned aerial systems (UAS).  The Federal Aviation Authority (FAA) retains the authority to regulate private and commercial drone use. Despite this authority local municipalities have been introducing ordinances that regulate drones.

The Federal Aviation Authority (FAA) has created rules for both commercial and private drone use and has made it clear that the FAA’s rules preempt local and state jurisdiction regarding the regulation of drones. Additionally, in 2015, Illinois created the Illinois Unmanned Aerial System Oversight Taskforce, which IRMA was appointed, to provide oversight and input in creating comprehensive laws and rules for the operation and use of drone technology within Illinois. The taskforce’s final report indicated that the state should be provide guidance within the FAA guidelines and however well-intentioned, overly burdensome local regulations that discourage or unnecessarily obstruct the otherwise safe and lawful use of UAS should be avoided.

SB 3291 passed the Senate by a 52-0 vote and the Transportation: Regulation, Roads & Bridges Committee by a 11-0 vote. IRMA supports SB 3291.

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WORKERS’ COMPENSATION

The State Medical Society is introducing legislation that will increase workers’ compensation rates for Illinois employers. SB 904 House Amendment #1 (Sen. Michael E. Hastings, D-Frankfurt/Rep. Jay Hoffman, D-Belleville) will result in increased interest rates of 24 percent per year on medical claims for businesses and insurance companies.  Additionally, employers and insurers will also face penalties of up to $1,000 per claim for failure to comply with the electronic billing requirements under the proposal.  The amendment will be heard next week in the House Labor Committee.  IRMA is opposed.

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HUMAN RIGHTS EXPANSION

Currently, the Illinois Human Rights Act only applies to businesses with 15 or more employees. HB 4572 (Rep. Will Guzzardi, D-Chicago/ Sen. Cristina Castro, D-Elgin) expands the coverage of the Act to apply to any business with one or more employees. The legislation passed the House with a 64-37 vote and the Senate with a 33-13 vote. It now goes to the Governor for his consideration.

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THANK YOU

IRMA would like to publicly thank those who helped make Business Day 2018 a tremendous success again this year. On behalf of all the members of IRMA, thank you for your generous support!

This Week in Springfield – 100-29

In This Issue:

PLASTIC BAGS
PROMPT PAYMENT
ENERGY
BUSINESS DAY

PLASTIC BAGS

In 2012, under the sponsorship of Sen. Terry Link, D- Gurnee and former Rep. Mike Tryon, R- Crystal Lake, the General Assembly approved legislation that would have imposed a uniform statewide recycling program for plastic bags and plastic wrap. Plastic wrap makes up 85% of plastic in the waste stream. The fees collected would have been used to fund household hazardous waste operations statewide and the definition of household hazardous waste was expanded to allow for the collection of many more items, including polystyrene. The legislation passed both chambers. However, at the last moment, environmental groups switched their position, convinced then-Governor Pat Quinn to switch his, and he ultimately vetoed the bill. Illinois missed a golden opportunity to divert hundreds of tons of plastic each year from landfills.

 

Two weeks ago, Sen. Link filed Senate Amendment #3 to SB 1597. Under the proposal, a $0.05 fee would be collected by the retailer for every plastic or paper bag used by the consumer. The fee would not apply to reusable bags which are bags with handles, specifically designed for reuse with a minimum lifetime capability of 125 or more uses, carrying 22 or more pounds over a distance of at least 175 feet, and capable of being washed so as to be cleaned and disinfected at least 100 times. Two-cents of the fee would be retained by the retailer as a partial reimbursement for their carrying and administrative costs. One-cent would flow into the state’s General Revenue Fund. The remaining $0.02 would go into a new fund called the Carryout Bag Fee Fund to the county where the original $0.05 was paid. That county could use their funds to implement a county or municipal join action agency solid waste management plan. SB 1597 was reported out of the Senate Environment and Conservation Committee.

 

This week, the sponsor held a meeting to try and bring the sides together. The environmental groups are once again the obstacle as they want to impose a statewide fee but want to allow local governments to continue to impose additional fees on myriad items. Additional discussions are expected in the coming weeks.

 
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PROMPT PAYMENT

 

This week, Senate Amendment #1 to SB 44  (Sen. Laura Murphy, D-Des Plaines) was filed and originally scheduled to be heard in the Senate State Government Committee. As filed, Senate Amendment #1 would allow the state to lower the interest rate the state owes vendors for the state’s failure to pay its vendors on a timely basis. Under the proposal, the Comptroller would have been given the authority to determine the interest rate on late payments from July 1st using the following formula: the greater of (a) 0.25% per month/3% annually; or (b) an annual rate of 2 times the percentage increase, if any, in the Consumer Price Index during the 12-months immediately preceding July 1st. This would remove the incentive for the state to pay its vendors on time while turning vendors into unwilling banks thereby encouraging the state to continue fiscal mismanagement. Currently, vendors who are owed money don’t start earning interest until at least 90-days.

 

In short, should something like this be adopted, the state will have fiscally abused its vendors and escaped responsibility for the mismanagement. The floor amendment was not heard in the Senate’s State Government Committee but we expect further consideration at some point.

 
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ENERGY

Project Next Grid is a study launched by the Illinois Commerce Commission. Its purpose is to proactively address issue Illinois’ electric utilities will confront in the future. The focus will be on technological advancements, contributions to economic development, and environmental impacts. The stated goal is not to provide specific recommendations but layout concepts that could be used by policy makers in future decisions. IRMA is involved with Project Next Grid.
Eight working groups have been formed to help facilitate effective discussion.

 

The first study update will be held on Jun 14th from 1:00 – 3:30 p.m. at the ICC’s offices in Chicago (160 N. LaSalle, Room C-800) or via teleconference at the ICC’s Springfield offices (527 East Capitol). The agenda for the update can be found here. A public comment session will be included. Interested participants need to register in advance. Those wishing to testify must also register in advance. IRMA members can also provide feedback to IRMA who will be happy to submit it.
 
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BUSINESS DAY SOLD OUT

We look forward to seeing everyone next Wednesday, May 9th, for another sold out Business Day 2018 hosted by IRMA and the Illinois Manufacturers’ Association. Business Day 2018 is the largest annual gathering of Illinois employers and gives you the opportunity to network with fellow business leaders, meet directly with your legislators, and directly share the impact policies they are considering have had or will have on your investment, employees, and customers. The day will start with the opening luncheon keynoted by Jim VandeHei, the founder and CEO of Axios and the founder of POLITICO.

 
We would like to thank our sponsors for their support!
 
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This Week in Springfield – 100-30

BUSINESS DAY 2018

Over 350 employers converged on Springfield Wednesday for Business Day 2018 co-hosted by IRMA and the Illinois Manufacturers’ Association. These employers from throughout Illinois were eager to share their concerns over the direction of the state and the future of employment in Illinois directly with policymakers on both sides of the aisle.

 

This year, the opening luncheon featured Jim VandeHei, the founder and CEO of Axios and the founder of POLITICO. Mr. VandeHei argued that with the exception of the bluster and seemingly perpetual crisis that pervades the White House, the accomplishments of the Trump Administration to-date are not small and not outside what would be expected from a more traditional Republican nominee. VandeHei particularly focused on the way President Trump uses social media to end-run main-line media and actually control their narrative. He also noted that voters on both sides of the political divide are getting the politics they desire as everyone consistently isolates themselves and seek only opinions that affirm their opinions. He noted that of the 20 top stores shared on Facebook last year, 19 were fake and 60% forwarded stories without even reading them. The way Facebook is designed, it reinforces how we use it meaning Facebook users wound up with even more content that simply reinforced opinions.

 

Mr. VandeHei does not believe President Trump acts without thinking. In fact Mr. VandeHei explains that Trump is quite adept at manipulating the media. He explained that Trump uses a very specific formula for manipulating the media and hijacking the Twitter/cable/conventional media industrial complex. Trump sets this formulaic trap increasingly often and news organizations keep falling for it. In the end, they are talking about him and keeping his base active as reflected consistently in polling.

 

After the luncheon, attendees made their way to an afternoon at the Statehouse to share insights on specific issues with legislators. Members of IRMA’s Board met with three of the legislative leaders and Governor Bruce Rauner. Each shared their insight into the ongoing budget and reform impasse in addition to hearing concerns of attendees. IRMA would like to thank Governor Bruce Rauner, Senate President John Cullerton, Senate Republican Leader Bill Brady and House Republican Leader Jim Durkin for their time and insights.

 

The day ended with the themed Party Under the Tent where policy makers, staff, and employers mixed in a casual atmosphere enjoying the many food and drink offerings provided by IRMA members and the outstanding live band covering an array of 80’s and 90’s hit songs.
IRMA would like to thank the co-hosts, sponsors, and reception caterers who made Business Day 2018 possible and an outstanding success.

 
 

 
 

 RESTRICTIVE SCHEDULING

A second subject matter hearing on the restrictive scheduling mandate was held this week in a joint House and Senate Labor and Commerce Committee. A subject matter hearing was already held in the House in April. As introduced, HB 5046 (Rep. Chris Welch, D-Westchester) and SB 202 Floor Amendment #1 (Sen. Cristina Castro, D-Elgin) would, among other provisions, require a 72-hour notice of an employee’s weekly schedule and would impose statutory penalties if any part of the employee’s schedule is reduced or canceled after the notice. It applies to part time, full time, non-salaried, and salaried employees. Over 40 different employer sectors which include but are not limited to, retail, agriculture, accounting, manufacturing, energy, security, education, automotive, distribution, construction, hospitality, law enforcement, et., all oppose a restrictive scheduling mandate that negatively impacts employers and employees.

 

Restrictive scheduling assumes that every employer can schedule or operate in the exact same manner and that every employee wants the same schedule. Different employers have unique business, employee, and regulatory variables to consider when providing schedules that promote and support their employees while still allowing the business providing the jobs to operate effectively and efficiently. These proposals undermine the ability of each employer to properly manage their business and support the various flexibility preferences of employees.
The issue will certainly re-emerge in November or next year.

 

121 CRMA Report – May 2018


The following proposals of interest to retail have been introduced before the Chicago City Council.

EXPANSIVE DATE REGULATION
CELL-PHONE AND MOBILE DEVICE MERCHANTS
OFFICE OF LABOR STANDARDS
WATER COST SHIFT

EXPANSIVE DATA REGULATION

An ordinance introduced by Aldermen Ed Burke, Brian Hopkins, and Brendan Reilly seeks to regulate websites, data breaches, data brokers, cell phone and mobile device sellers, and geolocation information.

It seeks to prohibit anyone who owns a website from using, disclosing, selling or permitting access to customer personal information and includes additional requirements for data breaches and data brokers and mobile phone privacy. “Customer personal information” includes:

  • name and billing information;
  • government-issued identifiers;
  • information that would permit the physical or online contacting of an individual such as physical address, email, phone, or IP address;
  • demographic information such as date of birth, age, gender, race, ethnicity, nationality, religion, or sexual orientation;
  • financial information;
  • health information;
  • information pertaining to minors;
  • geolocation information;
  • information from use of the service including web browsing history, application usage history, content of communications, and origin and destination IP addresses of all traffic;
  • device identifiers, such as media access control (MAC) address or Internet mobile equipment identifier (IMEI);
  • information concerning a customer or user of the customer’s subscription or account that is collected or made available and is maintained in personal identifiable form.

However, if the customer gives the operator prior opt-in consent. The customer can revoke this option at any time and the operator must provide a clearly available option to do so at all times. The request for consent must disclose the following:

  • the types of customer personal information for which the operator is seeking customer approval to use, disclose, sell, or permit access;
  • the purposes for which the customer personal information will be used;
  • the categories of entities to which the operator intends to disclose, sell, or permit access to the customer personal information.

Interestingly, the operator cannot refuse to serve a customer, or in any way limit services to a customer, who does not provide consent or charge a customer a penalty, or penalize a customer in any way, or offer a customer a discount or another benefit based on the customer’s decision to provide or not provide consent.

An operator can use, disclose, or permit access to customer personal information without customer consent, but only to the extent necessary to achieve the stated purpose, in the following circumstances:

  • to provide the operator service from which information is derived, or services necessary to the provision of that service;
  • to comply with legal process or other laws, court orders, or administrative orders;
  • to initiate, render, bill for, and collect for the operator’s service;
  • to protect the rights or property of the operator, or to protect customers of those services and other operators from fraudulent, abusive, or unlawful use of, or subscription to, those services;
  • to provide location information concerning the customer in emergency situations.

Data breaches must be reported, without delay, to the Chicago Department of Business Affairs and Consumer Protection and affected Chicago residents.

Data brokers that maintain personal information shall register with the Chicago Department of Business Affairs and Consumer Protection.

In terms of cell phones and mobile devices, the proposed ordinance, requires retailers who sell cell phones or mobile devices to provide notices to customers with a notice that customers can disable such services. The notice must also be prominently displayed at any point of sale where phones or mobile devices are sold or leased. The content of the notice is proscribed in the proposed ordinance.

Finally, the proposed ordinance seeks to regulate the collection, use, storage, or disclosure of geolocation information without affirmative express consent. It does provide some exemptions from affirmative express consent.

In all the above instances, there are various penalties and courses of action available and regulatory authority is granted to the Chicago Department of Business Affairs and Consumer Protection. The ordinance will take effect 180-days after passage.

Please share with us your thoughts on these various proposals as soon as possible.

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CELL-PHONE AND MOBILE DEVICE MERCHANTS

Several years ago, the City of Chicago enacted an ordinance regulating food trucks including how far they had to be from an existing restaurant. Mayor Rahm Emanuel has proposed an ordinance to regulate mobile merchants. A few years ago, temporary regulations were put in place. To date, only six licenses for such truck have been issued. This proposal would formalize that licensure and regulation. Regulations include truck size restrictions, when and who can operate, and where they can park and for how long (2 hours). The major difference is unlike the regulations for food trucks there are no provisions restricting how far such trucks have to be from a retailer selling similar merchandise.

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OFFICE OF LABOR STANDARDS

Currently, there is no one agency responsible for the enforcement of labor laws within the City of Chicago. Alderman Ameya Pawar has introduced a proposal to combine such enforcement under an Office of Labor Standards. The new office would be empowered to:

1.     Promote Chicago’s labor standards through outreach, education, technical assistance and training for employees and employers;

2.     Collect and analyze federal, state, and local data on workforce and workplaces and coordinate enforcement;

3.     Engage in worker education, safety, and protection;

4.     Recommend efforts to achieve workplace equity for women, communities of color, immigrants, refugees, and other vulnerable workers;

5.     Otherwise enforce labor laws.

The Office will generate reports regarding complaints, cases, results of cases and enforcement actions, and anything else the Director deems appropriate. To the extent allowed by law, civil penalties and fines shall be allocated to the Office.

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WATER COST SHIFT

Alderman Carlos Ramirez-Rosa has introduced a proposal to provide discounted or free water for residents of Chicago called “Water-For All”. The credit will vary by resident and will depend on a formula based on the resident’s income. Like property taxes, these costs will be universalized over the other rate-payers.

 

Rob KarrROB KARR
President & CEO
217-544-103-03
rkarr@irma.org