121 Report – CRMA – June 2015

Issue 4             

In This Issue

COOK COUNTY SALES TAX
CITY COUNCIL COMMITTEE
COUNCIL ACTION

CHICAGO TAKES INITIAL STEPS TO ADDRESS

UNCERTAIN FINANCIAL FUTURE

The new City Council has been in office for one month and as they settle in to set up their offices, hire staff and meet with constituents, they are also keenly aware that a tough budget season looms overhead.  In order to balance the budget and fund the various pension systems, the Aldermen will be asked to take some hard votes.  This month, the Council approved a measure by the Mayor to restructure some of its debt by issuing over $1 billion in bonds.  The city argued that it was necessary to restructure the debt so that it could move from a variable interest rate, which it cannot control, to a more favorable, fixed interest rate.

The city has found itself under the critical and watchful eye of Moody’s in recent months.  Last month, the credit rating firm reduced Chicago’s rating to junk status.  This move was punishment for not having a sufficient fix for the pension crisis in place, and it gave lenders an edge by allowing them to call up payments on existing lines of credit.  Instead of following through with an immediate demand for payment, the banks agreed to keep the status quo if the city took reasonable steps to reduce its risk.  Therefore, the Mayor sought permission from the Aldermen to restructure the debt.  The city is confident that it will find buyers interested in its debt as interest in other recent bond deals has been heavy.

While this move was criticized by some members of the Progressive Caucus because it restructures debt without providing for new revenue, the measure passed overwhelmingly in committee and on the Council floor.

The city is under pressure to make a nearly $550 million balloon payment to its police and fire pensions required by state law.  To date, it does not have a viable way to make the payment outright and is counting on the General Assembly to help it restructure the payment into something more manageable.  One thing it won’t be able to do is reduce benefits in order to increase funding to the pensions.  The Illinois Supreme Court has ruled that such measures are unconstitutional.  As the General Assembly continues to debate how it will address its own underfunded pensions, the city looks on with some angst.

In the meantime, members should note that an ordinance to increase property taxes is not only possible, it’s probable.  And a property tax increase would come on top of the 30%-40% average increases in property tax assessments that commercial property owners are already experiencing in Cook County.  Other ideas to raise revenue such as a gas tax and city income tax have been floated as well.

While the official kick-off to the budget season usually starts in October, given the city’s uncertain financial future and the gridlock in discussion in Springfield, Mayor Emanuel announced that the city will move up its budget discussions to September.  The Mayor will publish his ideas of how to fill the $1 billion budget gap at that time.   The Mayor also plans to have a budget passed a month early as well.  Passage will likely occur prior to November 1, 2015.

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DÉJÀ VU:  

COOK COUNTY BOARD PRESIDENT TALKS OF

INCREASING THE SALES TAX

After running on a platform to reform government ethics, restructure the health and hospital system and repeal the 1% increase in the sales tax, Cook County Board President Toni Preckwinkle handily won her election in 2010.  Since then, she made good on her promise to repeal the increase and did so over a period of 3 years, with the tax returning to its current rate of 0.75% in 2013.  She also made cuts in staff over the years to reduce her overall budget.  In the interim, she raised the cigarette tax by $1.00, instituted a tax on other tobacco products (OTP), increased the liquor tax and imposed a non-titled personal property use tax (which was subsequently defeated in court) to help replace the revenue from rolling back the sales tax increase.

Now, as President Preckwinkle faces her own significant budget issues related to under-funded pensions, a crowded county jail and the health and hospital system, it is being widely reported that she will seek to increase the sales tax by 1% just two years after she repealed the tax increase.  If such a measure were to be introduced and passed, Chicago would have the highest sales tax in the country at 10.25%.  While the President’s office will not confirm whether these reports are true, Republican Commissioners have stated that she has met with them separately to discuss the idea and Democratic Commissioners have warned that additional sources of revenue were on the table for 2016.  Early reports indicate praise for President Preckwinkle’s cost cutting measures to eliminate waste at the County and concern about a property tax hike which could make a sales tax increase a more viable option.

CRMA has been very clear.  An increase in the sales tax is wrong for the County, especially around its borders.  Shoppers are mobile and have shown that if prices and taxes are lower elsewhere, then they will drive in search of ways to save money.  Cook County’s commercial districts, especially in South Suburban Cook, are struggling with high vacancy rates and increased property tax assessments.  At a time when many of the local mayors are looking for more investment, a sales tax increase discourages development inside the border.  Furthermore, there has been some discussion of saving residents and businesses from a property tax hike by agreeing to an increase in the sales tax.  But this is likely a false premise as the city of Chicago will very likely attempt a property tax hike at the same time that the County Board will introduce the sales tax increase.  If you live in Chicago, that’s a double whammy.  CRMA will remind Commissioners and the President’s office of these facts, if a proposal actually surfaces.

We are hearing that a proposal could come as early as July 1 and be approved by the end of that month.  This measure would most likely run separate and apart from the budget in an effort to encourage Springfield to act on the County’s pension relief bill.  On behalf of members who have made the decision to invest inside the Cook County border, we would oppose any measure that drives our customers over the border.

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SHIFTING COMMITTEE ASSIGNMENTS

The City Council has announced the Committee Chairmen and members for this new term. CRMA generally interfaces with three committees, although we occasionally will have agenda items that affect the industry sent to other committees.  To that end, you should know which Council Members sit on the Committees on Finance, Health and Environmental Protection and License and Consumer Protection.  They are listed below:

Committee on Finance (35 members)

Chair:  Ed Burke (14)

Vice Chair:  Patrick O’Connor (40)

John Arena (45)

Carrie Austin (34)

Anthony Beale (9)

Howard Brookins, Jr. (21)

Walter Burnett, Jr. (27)

Will Burns (4)

George Cardenas (12)

Willie Cochran (20)

Pat Dowell (3)

Jason Ervin (28)

Toni Foulkes (16)

Leslie Hairston (5)

Michelle Harris (8)

Margaret Laurino (39)

Roberto Maldonado (26)

Gregory Mitchell (7)

Emma Mitts (37)

Joe Moore (49)

Proco “Joe” Moreno (1)

Ricardo Munoz (22)

Matt O’Shea (19)

Harry Osterman (48)

Marty Quinn (13)

Ariel Reboyras (30)

Brendan Reilly (42)

Roderick Sawyer (6)

Debra Silverstein (50)

Daniel Solis (25)

Nicholas Sposato (38)

Patrick Thompson (11)

Tom Tunney (44)

Scott Waguespack (32)

Michael Zalewski (23)

Committee on Health

Chair:  George Cardenas (12)

Vice Chair:  Harry Osterman (48)

Carrie Austin (34)

Walter Burnett, Jr. (27)

James Cappleman (46)

Willie Cochran (20)

Toni Foulkes (16)

Leslie Hairston (5)

Brian Hopkins (2)

Deborah Mell (33)

Gregory Mitchell (7)

Emma Mitts (37)

Joe Moore (49)

Proco “Joe” Moreno (1)

Carlos Ramirez-Rosa (35)

Ariel Reboyras (30)

Tom Tunney (44)

Gilbert Villegas (36)

Michael Zalewski (23)

Committee on License and Consumer Protection

Chair:  Emma Mitts (37)

Vice Chair:  Debra Silverstein (50)

John Arena (45)

James Cappleman (46)

Willie Cochran (20)

Michelle Harris (8)

Roberto Maldonado (26)

Gregory Mitchell (7)

David Moore (17)

Matt O’Shea (19)

Marty Quinn (13)

Ariel Reboyras (30)

Roderick Sawyer (6)

Michael Scott, Jr. (24)

Michele Smith (43)

Chris Taliaferro (29)

Tom Tunney (44)

Scott Waguespack (32)

The City also has 2 new Commissioners of departments that interface often with the membership:

Commissioner Ginger Evans

Department of Aviation

Commissioner Judy Frydland

Department of Buildings

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CITY COUNCIL ORDINANCES AND RESOLUTIONS   INTRODUCTIONS

Ordinance to Issue Permits for Litter Baskets on the Public Way

Sponsor:  Alderman Joe Moreno (1st Ward)

Committee on Finance

This proposal would require privately-owned litter baskets that are placed on the public way to be permitted.  Designs for the baskets must be approved by the city.  Standard refuse containers and other commercial refuse containers are exempt from the proposal.  The owner is responsible for removal of trash from the basket.  Violators will be subject to a fine. 

Ordinance to Ban the Sale of Food Products Derived from an Animal that was Administered Antibiotics

Sponsor:  Alderman Edward M. Burke (14)

Committee on Finance

This proposal is a re-introduction of the Chairman’s proposal from last term.  It proposes to ban the sale of any food product derived from an animal that was administered a medically important antimicrobial for a non-therapeutic use.  If animals were administered the drug for the purpose of treating an active disease or infection, then the proposal would not apply.  But if the antimicrobials are used generally to promote growth or generally prevent diseases that are not active in the animal or necessary to control diseases, then any food products made from such animals will not be allowed for sale in Chicago.  The proposal would allow the Board of Health to promulgate rules for enforcement purposes. Sidewalk Cafe EnforcementSponsor:  Alderman Brendan Reilly (42)Committee on License and Consumer ProtectionThis proposal would allow for a sidewalk café to be temporarily shut down by the city if they have been issued notices of violation on three different days regarding breaches of public safety.  Such citations, if sustained, can result in the denial of a renewed permit or a renewed permit with conditions. Outdoor Patio Hours of OperationSponsor:  Alderman Brendan Reilly (42)Committee on License and Consumer ProtectionThis proposal would temporarily allow for the sale or service of alcohol until midnight from Sunday through Thursday for permitted outdoor patios in the Central Business District.  Currently, sales and service must stop at 11pm during those days.  Friday and Saturday sales and service will remain unchanged.  These extended hours would expire on December 1, 2015.

 

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Contact Information

TanyaTriche

Tanya Triche

Vice President & General Counsel

312/726-4600

Retail Register No. 360, June 2015

IRMA'S Alec Laird, Rob Karr and tanya Triche at the Capitol on a busy session day.
IRMA’S Alec Laird, Rob Karr and Tanya Triche
at the Capitol on a busy session day.

IRMA’s Top Legislative Accomplishments in 2015

IRMA was at the forefront of a number of issues before the Illinois General Assembly this spring fighting to protect the interests of the retail industry and ensuring that legislation was passed that strengthens Illinois’ business climate.

On May 31, the General Assembly adjourned with no agreement between the governor and legislature on the FY16 budget. The House and Senate leaders have scheduled the legislature to be in session throughout June. IRMA will continue to watch issues closely throughout the summer and keep you apprised of any significant developments.

Here’s an overview of some of IRMA’s legislative successes this past spring:

WORK SCHEDULES

IRMA was successful in getting both business and labor groups to oppose to HB3554. The bill initially required a two-week notice for scheduling and payment provisions if a person was called in unexpectedly or had their shift changed. A later amendment required an employer to enter into negotiations regarding an employee schedule if an employee requests a schedule change. IRMA pushed back on the basis that the legislation effectively mandated a collective bargaining scheme upon private employers. This bill did not pass through the General Assembly, but we fully anticipate it will return.

DATA SECURITY

An initiative of Illinois Attorney General Lisa Madigan, SB1833 is intended to protect consumers by providing notice when certain personal information gets in the wrong hands. Such notice is already required for breaches of a person’s credit information, social security number and certain medical information related to diagnosis.  The bill expands the state’s data breach notification law by adding new categories of information that will be considered personal and sensitive and by including notification to the attorney general’s office so that certain breaches can be posted on her website. After several months of negotiations with the attorney general’s office, SB1833 was amended to address the concerns of IRMA’s members.  As a result, IRMA removed its opposition and took a neutral position on the bill. Some of the more important changes obtained by IRMA include: narrowing the definitions of consumer marketing and geolocation information to more closely target specific behavior of concern to the attorney general, removing the requirement to notify the individual when geolocation and consumer marketing information is breached, raising the threshold that triggers notification requirements and expanding the time allowed for businesses to notify individuals and/or the attorney general when information is breached. The bill now awaits the governor’s approval.

PRIVATE LABEL CREDIT CARDS

SB507 was reintroduced after Governor Quinn amendatorily vetoed the bill during his last few hours in office with unrelated language. SB507 allows a retailer to get a refund on the sales tax they pay on the bad debt created by consumers who use store-branded private label credit cards and fail to pay their bills either in part of in full. Over the last few years, IRMA worked with the Illinois Department of Revenue to address their procedural concerns including: ensuring proper documentation would be available, placing limits on the transactions that are available for a bad debt refund, and providing a clear line of accountability. As a result, SB507 passed the legislature and has been sent to the governor.

HEROIN

HB1 will create one of the nation’s most comprehensive approaches to combating heroin and prescription drug abuse. This legislation will expand specialized drug courts that center on treatment so that drug addicts can get rehabilitation services. It will also require schools and police and fire departments to stock naloxone, a drug that quickly counteracts heroin overdoses. IRMA fought for a significant change in this bill—it originally would have required pharmacies to serve as drug take-back sites for unused prescriptions. The amended version requires the state to provide information on how to properly dispose unused prescriptions, and requires the Illinois Environment Protection Agency to establish prescription take-back programs. The bill passed both chambers with the support of IRMA and a broad coalition and awaits the governor’s approval.

RETAIL THEFT

SB202 will establish a pilot program for Cook County to provide an accelerated route to adjudication for people accused of misdemeanor retail theft or criminal trespass. This bill will permit qualifying persons accused of the aforementioned crimes to either have a final judgement of their case within 30 days of arrest or be allowed to bond out of jail on their own recognizance until their hearing date. IRMA supports this bill because it addresses the crime of retail theft in a way that is fair to the victim without undermining the severity of retail theft, and also substantively addresses the concerns of taxpayers and criminal justice reform advocates. The bill passed the legislature and has been sent to the governor for his signature.

TOBACCO

HB2513 is a trailer bill that clarifies the provisions passed in P.A. 98-1055, requiring retailers to obtain a license to sell cigarettes. IRMA worked closely with IDOR on the following provisions to P.A. 98-1055:

  1. Allow a waiver for records to be kept out of state;
  2. Broaden the employee training requirements;
  3. Allow the employee training to be conducted electronically;
  4. Provide an avenue to mitigate retail tobacco citations;
  5. Provide a waiver for closed loop distribution invoice record keeping requirements.

The bill passed unanimously through both chambers and is expected to be signed by the governor.

        Business Day: A Great Success in the Capital City

IRMA and thBusiness Day Luncheone Illinois Manufacturers’ Association (IMA) hosted a very successful Business Day in Springfield on May 6, 2015. More than 400 business leaders from around the state participated in Business Day 2015.

 On the eve of Business Day, Illinois Governor Bruce Rauner spoke to the IRMA and IMA Boards at Saputo’s Italian Restaurant about the importance of a strong business economy in Illinois. He expressed the urgency to make Illinois a competitive state in terms of business investment and development.

Business leaders met with various lawmakers at the Capitol to share their concerns and discuss various legislative proposals that would affect the Illinois business community. Lawmakers on both sides of the aisle were encouraged to create a long-term path to economic growth through sound fiscal policy, tax reform, workers’ compensation reform along with opposition to new costly and burdensome regulations like a minimum wage hike, paid sick leave, new taxes on gasoline and soda and cuts to pharmacy Medicaid reimbursement.

At the Business Day luncheon, the keynote speakers were Illinois Senate President John Cullerton and Illinois House Minority Leader Jim Durkin; Congressman Adam Kinzinger (R-16th District) was also a featured speaker at the event.

DSC_0067Topping off the day was an 80s-themed Party Under the Tent which is a can’t-miss event. As always, the party featured live music and IRMA’s generous food and beverage members. Many thanks to Anheuser-Busch, Coca- Cola Company, Diageo, Dr. Pepper/ Snapple, E.J. Gallo Winery, KFC, McDonald’s, MillerCoors, Outback Steakhouse, PepsiCo, Saputo’s and Schnucks Markets for once again making this event an astounding success!

   

Commentary: A Path to Reforming Our Broken Sales Tax System

The following appeared June 2nd in the Washington, D.C. news outlet Roll Call

The ingenuity of the American entrepreneur has created an accommodating and diverse consumer marketplace over the past two decades. Through the rise of the Internet and emerging payment-processing innovations, countless businesses have been able to supplement their brick-and-mortar storefronts with an online sales presence. Unfortunately, our country’s sales tax system has not adapted to the convergence of digital and physical commerce. This has resulted in harsh consequences that have lingered on for nearly 20 years in the form of the unfair tax collection advantage that online-only retailers — such as eBay and Overstock — hold over millions of stores on Main Street.

Thankfully, this wrong can still be righted. With renewed bipartisan momentum now in the Senate, it is time for all of our elected officials in Congress to work toward expeditiously passing the Marketplace Fairness Act of 2015. This bill is a path to reforming our broken sales tax system.

To illustrate the anti-competitive elements of today’s marketplace, think about your own shopping experience. When you pay for a new pair of shoes, it is considered a sale — regardless of whether you make that purchase in-person at a local shopping center or online through a boutique’s website.

But unlike your local stores, online-only retailers do not collect sales tax at the moment of purchase. Believe it or not, the onus is on you to report and pay any necessary tax to your state’s department of revenue. It is easy to see why you and the brick-and-mortar stores in your neighborhood — which are legally required to collect sales tax if the state imposes one — bear the brunt of an unfair system.

As someone who has spent close to 40 years in the commercial real-estate sector, I am increasingly concerned about the inequities in our marketplace. This sentiment is fortunately shared by the group of senators — Michael B. Enzi, R-Wyo.; Dick Durbin, D-Ill.; Lamar Alexander, R-Tenn.; and Heidi Heitkamp, D-N.D., as well as others — that introduced the latest Marketplace Fairness Act. They know, much like the rest of us on Main Street, that we cannot accept a sales tax system that hinders American shoppers, businesses and local communities.

For consumers, maintaining the current system prolongs an archaic legal burden and a major shopping inconvenience. Shoppers will remain responsible for tracking purchases made online and then calculating the proper sum owed to their respective states. A failure to follow this process translates to breaking the law under our current system. Additionally, consumers stand to lose over the long-term when local businesses — which offer necessaries, specialty goods and custom items — cannot carry as much inventory or are ultimately forced to close due to the uncompetitive climate.

For brick-and-mortar businesses, the continuation of today’s system is akin to a death sentence. Local stores that must collect a sales tax increasingly function as showrooms for shoppers, who want to examine items and then order the same products online to save 5 percent to 10 percent in taxes. If this trend continues, we will see more businesses closing in our neighborhood shopping centers and town squares; our teenagers will be unable to find traditional part-time work; our neighbors will be unable to find that second job; and our communities will lose time-honored traditions such as Santa Claus sitting in the local department store every December.

For our communities and states, congressional inaction will bring additional economic and social impact. When brick-and-mortar businesses downsize or shutdown due to the marketplace, existing employees face both reduced job security and stagnant wages — plus the community endures weak job growth and an across-the-board reduction in tax revenue. This loss of tax revenue forces communities to make painful decisions, the most common being raising property taxes or cutting back on popular educational, recreational and public works services.

Last but not least, let us not forget the social downside that also comes when businesses can no longer sponsor little league teams, and organizations like the Salvation Army have no stores to stand in front of when advocating for society’s most needy. These are voids that online-only retailers will never be able to fill.

In the coming months, Congress will have ample time to debate the clear merits of the Marketplace Fairness Act and then pass a suitable version of the bill. Our responsibility during this time is to remind elected officials on Capitol Hill just how crucial this legislation is to American shoppers, businesses and communities. This action can go a long way to supplementing the current efforts of the International Council of Shopping Centers, Marketplace Fairness Coalition, NAREIT and hundreds of other local and national trade associations.

With deep experience purchasing and managing large retail shopping centers, I know the central role that commerce plays in supporting our shared American dream. Restoring fairness to our marketplace is an important step toward making that dream a reality for more of us in 2015 and beyond.

Daniel L. Goodwin is Chairman and CEO of The Inland Real Estate Group of Companies, Inc.

 IRMA Members Encouraged to Write Letters in Support of Remote Transaction Parity Act of 2015

IRMA has long fought to level the playing field between brick-and-mortar retailers and remote selling competitors outside of Illinois who don’t collect the sales tax and use that loophole as a competitive advantage.  Our consistent efforts have positioned Illinois to close this loophole. However, to bring our efforts to a successful conclusion, we need your help in getting Congress to act.

Formerly known as the Marketplace Fairness Act, the newly introduced Remote Transaction Parity Act (RTPA) would give states the right to impose a sales tax obligation on remote sellers. Because of this loophole that pre-dates the Internet, online-only companies can achieve as much as a 10 percent price advantage over brick-and-mortar retailers by not collecting state sales taxes. This special treatment means government is picking winners and losers in the marketplace, and local businesses simply cannot compete long-term with online giants that enjoy a government-sanctioned competitive advantage.

IRMA President and CEO Rob Karr is asking all IRMA members to write letters to our Illinois congressmen encouraging them to co-sponsor and actively support RTPA. “We need Illinois legislators to stand with and for our local retailers on this issue,” said Karr.

IRMA recently emailed a sample letter in support of the RTPA to members that you are welcome to adjust and use. If you need us to send that to you again or if you have any other questions on the matter, please call us!

Illinois This Week in Springfield 99-17

CONSUMER FRAUD & PROTECTION
CREDIT & FINANCE
ENVIRONMENT & UTILITIES
FOOD & LIQUOR
LABOR
LOSS PREVENTION
PHARMACY
REGULATION & LICENSING

 

With no deal in place on a Fiscal Year 2016 budget, and an escalating war of words between Democrats and Republicans, the General Assembly did not adjourn on May 31st. Both chambers have been meeting and will continue to meet in regular session throughout the summer or until a budget agreement is reached. It is important to note that since the May 31st deadline has been reached, a 3/5ths super-majority is required to pass any legislation that requires an immediate effective date.

To date 6,735 bills have been introduced in the 99th General Assembly.  Additionally, nearly 1,800 amendments were filed. Of those, 495 bills were passed by both Chambers and have been, or will be, sent to the Governor for his action.  The chamber in which the bill originated has 30-days from the date the bill passed both chambers to transmit the bill to the Governor. The Governor has 60-days from the date his office receives the bill to sign, veto, or amendatorily veto the legislation.

The following is a list of bills by subject matter of potential consequence to retail that passed the Assembly and sent to the Governor for his consideration. For your convenience, each bill number is hyper-linked so TWIS readers can easily read each bill in the form in which it was sent to the Governor. Additionally, the position IRMA took on each bill is noted.

As always, should you require additional information or assistance, please do not hesitate to contact IRMA.

CONSUMER FRAUD AND PROTECTION

Powdered Caffeine—SB 9 (Sen. Jennifer Bertino-Tarrant, D-Plainfield/Rep. Stephanie A. Kifowit, D-Aurora) creates the Powdered Caffeine Control and Education Act. It prohibits any person from selling, offering to sell, giving away, or providing free samples of powdered pure caffeine to any person under age 18 located in the State or to any person under age 18 making the purchase from within the State.  While IRMA is generally opposed to most product bans as consumers can just make the choice not to purchase a product and the FDA should be the ultimate arbiter of which food products are safe, IRMA was neutral on this bill as the product in question was not sold by IRMA members.

IRMA POSITION: NEUTRAL

Powdered Alcohol—SB 67 (Sen. Ira Silverstein, D-Chicago/Rep. Laura Fine, D-Glenview) prohibits the sale of powdered alcohol in Illinois.  While IRMA is generally opposed to most product bans, IRMA was neutral on this bill that bans a product that was already not available for sale in Illinois.

IRMA POSITION: NEUTRAL

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CREDIT AND FINANCE

Private Label Credit Cards—In the 98th General Assembly both the Senate and House unanimously passed an IRMA-initiative that allowed for a refund on bad debt established through a Private Label Credit Card (PLCC) administered by a third party. Former Governor Pat Quinn decided to use the bill, and a few others, as a vehicle for unrelated amendatory vetoes in his final moments in office effectively killing the bill. The initiative was reintroduced in the form of SB 507 (Sen. Daniel Biss, D-Skokie/Rep. Anthony DeLuca, D-Chicago Heights).

If a consumer does not pay for the merchandise they purchase on credit, and efforts to collect fail, a bad debt is declared and the sales tax is refunded to the retailer. This happens because in the eyes of the law, a sale is deemed not to have occurred. However, several years ago, the Illinois Department of Revenue (IDOR) issued a controversial opinion that a bad debt refund did not apply to PLCC’s administered by a third party. SB 507 takes into consideration this modernization and corrects this inequity by allowing a refund of sales tax on the bad debt created by consumer using a store branded PLCC. Over the course of last year and again this year, IRMA worked with IDOR to address their procedural concerns to ensure proper documentation would be available; limited the transactions that are available for a bad debt refund; and provided a clear line of accountability.

IRMA POSITION: SUPPORT

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ENVIRONMENT AND UTILITIES

Telecom Modernization and 9-1-1 FundingSB 96 (Sen. John Sullivan, D-Quincy/Rep. Brandon Phelps, D-Harrisburg) funds the deteriorating 9-1-1 infrastructure and contains important changes to modernize Illinois telecommunications and the video competition laws. Currently, there are three surcharges that help fund the current 9-1-1 systems and network. One of these charges includes a 1.5% tax that is collected by a retailer on the sale of any prepaid wireless telecommunications service.  The retailer must include a line item on the receipt to show the surcharge. The retailer remits the surcharge to the Illinois Department of Revenue where they place it in the Wireless Service Emergency Fund. In order to fund the Illinois Telecommunications Access Corporation (“ITAC”), which provides equipment for hard of hearing and deaf people, SB 96 adds an additional 1.5% surcharge on the purchase of any prepaid wireless telecommunications service. Similar to current law, the retailer will collect the 3.0% surcharge from the consumer. To remain consistent with current law the retailer may combine both surcharges in one line item on the receipt. The 3.0% tax will be remitted to the Illinois Department of Revenue where it will be divided between the Illinois Telecommunications Access Fund and the Wireless Service Emergency Fund. SB 96 also implements a statewide $0.87 tax per landline, wireless, VOIP, and cable provided telecommunications which will be collected by telecommunication carriers and remitted to the Illinois Department of Revenue.

IRMA POSITION: NEUTRAL

Electronics Recycling—Public Act 97-0287 created the Electronic Products Recycling & Reuse Act (“Act”) that established a statewide system for recycling and/or reusing certain electronic devices discarded from residences by requiring electronic manufacturers to participate in the management of discarded and unwanted electronic products. The Act does not require local government funding or participation, instead requiring manufacturers to set up and pay for the collection, transportation, recycling and or reuse of obsolete electronic products.  As manufacturers were reaching their statutory goals earlier in the year, and municipalities were not budgeting for this foreseen reality, the municipalities were not able to keep open their operation because they are not self-sustaining. In response, the municipal waste facilities wanted to renegotiate for more funds and higher collection goals.  In HB 1455 (Rep. Emily McCasey, D-Romeoville/Sen. Pamela Althoff, R-McHenry) the manufacturers and waste facilities reached an agreement that would: (1) divide the collection goals up between two different groups of manufacturers at two different rates including television and monitors (80%) and all other electronics (50%); (2)the goals would be based on market share of TV/monitor and electronic sales; (3) the overall goal would not exceed 50 million pounds; and (4) a pilot program for a 25% credit carry over for one year.

IRMA POSITION: NEUTRAL

Prohibition on Mixing Sharps—SB 793 (Sen. Linda Holmes, D-Aurora/Rep. Ann Williams, D-Chicago) prohibits a person from knowingly mixing sharps, including, but not limited to, hypodermic, intravenous, or other medical needles or syringes or other medical household waste containing used or unused sharps, including, but not limited to, hypodermic, intravenous, or other medical needles or syringes or other sharps, with any other material intended for collection as a recyclable material by a residential hauler.  The bill was passed to protect sanitation workers from inadvertent injuries, infections, and diseases from syringes found in the garbage. Residents are encouraged to drop the needles off at voluntary drop off sites.

IRMA POSITION: NEUTRAL

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FOOD AND LIQUOR

Food Handling—Last legislative session, after a couple of years of negotiations, changes were made to the Illinois Food Code to ensure that every person who is preparing food in Illinois has training in food handling and safety procedures.  As part of that initiative, persons seeking Food Service Sanitation Managers Certifications (FSSMC) have to take a nationally accredited exam with a passing score of at least 75%.  SB 46 (Sen. Iris Martinez, D-Chicago/Rep. Kelly Burke, D-Oak Lawn) changes that language to allow FSSMC exam takers to receive whatever passing score is recommended by the test preparers.  These minimum scores are set nationally.  This change preserves the integrity of the certification while giving FSSMC seekers the flexibility that they need to get certified and transfer certification from another state.  In addition, the bill allows more restaurants that have corporate food handling programs certified in other states to transfer those programs to Illinois.

IRMA POSITION: SUPPORT

Brew PubsHB 3237 (Rep. Sara Feigenholtz, D-Chicago/ Sen. Antonio Munoz, D-Chicago)  provides clear guidance on the use of social media for advertising alcohol as well as increases the number of gallons a brew pub may sell directly to the public.

IRMA POSITION: SUPPORT

Liquor “Of Value” ProvisionsHB 4018 (Rep. Frank Mautino, D-Spring Valley/Sen. Antonio Munoz, D-Chicago) clarifies that alcoholic liquor can be packaged in combination with non-alcoholic products without violating the three-tier system.  In addition, it makes clear that manufacturers and distributors can furnish non-alcoholic merchandise to retailers for free as long as the merchandise is not tied to an alcoholic product.  The Illinois Liquor Control Commission had previously taken the heavy-handed position that furnishing items such as coolers to promote non-alcoholic products (e.g. sports drinks, bottled water, etc.) violated the Act.  Therefore this change was sought to clarify that such practices will not be considered as violating the prohibition of giving something “of value” to retailers to sell or promote the sale of alcoholic products.

IRMA POSITION: SUPPORT

Happy Hour, 100ft Rule Exemptions and Sunday SalesSB 398 (Sen. Antonio Munoz, D-Chicago/Rep. Sara Feigenholtz, D-Chicago) will give businesses some flexibility to have traditional happy hours and will clarify that meal and party packages with unlimited drinks for a set price are allowed by law.  The city of Chicago wrote tickets to hotels and restaurants on New Year’s Eve for violating Trade Practice Policies (TPP) written by the Illinois Liquor Control Commission (ILCC).  The TPPs have always been issued to describe “best practices” and have never been given the force of law.  A number of the restaurants and hotels that were cited for the practice have since sued the city and all of the cases that have reached a final decision have been decided in favor of the business.  SB 398 was written to address this issue and to allow licensees to serve discounted drinks for up to 4 hours/day for no more than 15 hours/week.  The bill will also include the following measures: (1) prohibits TPPs; (2) allows hotel restaurants under the same ownership to have one license and transfer liquor from one location to the other as long as the restaurants are in the same hotel; (3) deletes the Sunday sales prohibition, but will allow local jurisdictions to prohibit Sunday sales through local ordinances; (4) grants the local liquor commissioner the authority to provide an exemption to the 100 ft. rule so that businesses don’t have to seek the exemption from the state legislature, but preserves the business’ right to seek the exemption from the General Assembly if desired; (5) requires that all servers of alcohol be BASSET certified; (6) prohibits licensees from selling drinks “2 for 1”, from increasing the volume of a drink without proportionately increasing the price and from allowing drinking games. The changes to this bill represent agreements made between everyone involved in the 3-tier system.  They are common sense changes that allow retailers and restaurants to have flexibility and certainty in the sale of alcohol and, most importantly, to sell and serve it responsibly.

IRMA POSITION: SUPPORT

Food Establishment Self-InspectionsSB 1800 (Sen. Heather Steans, D-Chicago/Rep. Sara Feigenholtz, D-Chicago) will allow the City of Chicago to implement a self-inspection program for low-risk food establishments.  Qualifying food establishments would perform their own health inspections every two years which would then be randomly audited by the Department of Public Health.  The department will develop the inspection form and fines for noncompliance will be assessed.  The city has run a successful pilot program for the past couple of years, so this bill would make the program permanent and allow them to expand beyond current program participants.  Allowing low-risk food establishments to perform their own inspections allows the city to use its limited inspection resources wisely and cover more ground to ensure the safety of the food residents consume.  IRMA members have participated in the pilot program and we look forward to having more members qualify for the expanded program.

IRMA POSITION: SUPPORT

Snap EligibilitySB 1847 (Sen. Daniel Biss, D-Skokie/Rep. Robyn Gabel, D-Evanston) will allow more people in Illinois to qualify for SNAP benefits.  It is estimated that the bill will add 40,000 more SNAP cases (cases include individuals and families) to the program. Prior to 2013, Illinois had one of the most favorable SNAP distribution schedules in the country because it distributed benefits throughout the month.  After making some software changes in 2013 that were allegedly necessitated by the Affordable Care Act (ACA), the Department of Human Services (Department) elected to change SNAP distribution to the first 10 days of the month. Having a SNAP distribution system that is not spread throughout the month and creates substantial difficulties for grocers in high-SNAP areas, their employees, and customers. This change was particularly baffling because it was made after the USDA (the federal Department that issues SNAP benefits to the states) wrote a letter to all of the states encouraging them to distribute benefits throughout the month.  In response to the letter, a number of states began expanding their distribution beyond the first few days of the month.  Illinois was the only state to move in the opposite direction.  If the state were operating with a SNAP distribution system that worked for everyone involved, IRMA would not be opposed to adding more cases to the program.  Considering the present way that the Department is choosing to distribute benefits, we are opposed to adding more cases until a permanent solution to distribution is adopted.

IRMA POSITION: OPPOSE

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LABOR

Veterans Employment Preference—HB 3122 (Rep. Robert Pritchard, R-Sycamore/Sen. Michael Hastings, D-Matteson) creates the Veterans Preference in Private Employment Act. A private employer may adopt and apply a voluntary veterans’ preference employment policy if: (1) the veterans’ preference employment policy is in writing; (2) the veterans’ preference employment policy is publicly posted by the private employer at the place of employment or on any website maintained by the private employer; (3) the private employer’s job application informs all applicants of the veterans’ preference employment policy and where the policy may be obtained; and (4) the private employer applies the veterans’ preference employment policy uniformly for all employment decisions regarding the hiring or promotion of veterans or the retention of veterans during a reduction in force. A private employer who maintains a veterans’ preference employment policy may require and rely on an applicant’s or employee’s Department of Defense DD214/DD215 forms or their predecessor or successor forms, an applicant’s or employee’s NGB-22 discharge form or its predecessor or successor forms (if a member of the National Guard), and a U.S. Department of Veterans Affairs award letter (if the applicant or employee is claiming a service-connected disability) to establish eligibility for such policy.

IRMA POSITION: NEUTRAL

Equal Pay—The Equal Pay Act of 2003 (“Act”)prohibits employers with four or more employees from paying unequal wages to men and women for doing the same or substantially similar work, requiring equal skill, effort, and responsibility, under similar working conditions.  HB 3619 (Rep. Cynthia Soto, D-Chicago/Sen. Michael Noland, D-Elgin) would extend the requirements of the Act to include all employers. It also creates a two-tiered civil penalty that would subject employers with fewer than 4 employees that violates the Act is subject to penalties of $500 for a first offense; $2,500 for a second offense; and $5,000 for a third or subsequent offense. An employer with 4 or more employees is subject to penalties of $2,500 for a first offense; $3,000 for a second offense; and $5,000 for a third or subsequent offense.

IRMA POSITION: NEUTRAL

Small Business Regulatory Review—HB 3887 (Rep. Keith Wheeler, R-Aurora/Sen. Jennifer Bertino-Tarrant, D-Plainfield) requires each State executive agency to scrutinize its rules, administrative regulations, and permitting processes as they pertain to small businesses in order to identify those rules, regulations, and processes that are unreasonable, unduly burdensome, duplicative, or onerous to small businesses. Each State agency must submit its reports containing the results of its review to the Office of Business Permits and Regulatory Assistance, the Governor, and the General Assembly.

IRMA POSITION: SUPPORT

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LOSS PREVENTION

Accelerated Court ResolutionSB 202 (Sen. Bill Cunningham, D-Chicago/Rep. Michael Zalewski, D-Riverside) establishes a pilot program for Cook County which would provide an accelerated route to adjudication for persons accused of misdemeanor retail theft or criminal trespass.  This measure comes out of concerns raised by Cook County Sheriff Tom Dart about jails overcrowded with non-violent offenders who remain in jail for long periods of time awaiting trial because they cannot afford to bond out.  This bill will permit qualifying persons accused of the aforementioned crimes to either have a final adjudication of their case within 30 days of arrest or be allowed to bond out of jail on their own recognizance until their hearing date.  IRMA supported this bill because it addressed the crime of retail theft in a way that is fair to the victim without undermining the severity of retail theft.  Additionally, this bill substantively addresses the concerns of criminal justice reform advocates who want to ensure that persons sitting in jail awaiting trial are there because they are a potential threat to society and not simply because they are poor.

IRMA POSITION: SUPPORT

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PHARMACY

HeroinHB 1 (Rep. Lou Lang, D- Chicago/Sen. Dan Kotowski (D- Park Ridge) creates the nation’s most comprehensive approach to combating heroin and prescription drug abuse. HB 1 includes, but is not limited to, the following provisions: allows pharmacists to dispense opioid antagonists to someone claiming a heroin overdose pursuant to policies and procedures developed by the Illinois Department of Public Health; expands authority of the Illinois EPA to distribute grants for drug take-back programs; provides training for law enforcement, school officials, fire fighters, and others to administer opioid antagonists; IEPA shall establish a statewide medicine take-back program; the Department shall develop a poster and brochures for display and distribution in pharmacies regarding take-back information/events; expands utilization of the Prescription Monitoring Program (PMP); creates a peer review committee for prescribers and dispensers; and lowers the threshold where someone is potentially considered to be shopping for medicine from six prescribers or six pharmacies in one month to three prescribers or three pharmacies in one month.

IRMA POSITION: SUPPORT

BiosimilarsSB 455 (Sen. Tony Munoz, D- Chicago/Rep. Edward Acevedo, D- Chicago) regulates how and when biosimilars are substituted and notification provided to prescribers and patients. In short, a biologic can only be substituted with a biosimilar if the FDA has approved the biosimilar for substitution, the prescriber has not indicated “do not substitute’, and the patient is informed of the substitution. Additionally, within five business days of dispensing a prescribed biologic, the pharmacy must input the information into an interoperable electronic medical records system, an electronic prescribing technology, a pharmacy benefit management system, or a pharmacy record that can be electronically accessed by a prescriber. Entry into one of these systems is presumed to be notice to the prescriber. If the prescriber does not have electronic access, he/she must notify the pharmacy and the pharmacy must then transmit by other means.

IRMA POSITION: Support

Pharmacy Transfer to Physician Assistant—SB 689 (Sen. Matt Murphy, R-Palatine/Rep. Grant Wehrli, R-Naperville) allows a pharmacy or pharmacist to deliver prescription drugs to a licensed physician assistant who provides hospice services to a hospice patient or who provides home health services to a person, at the residence or place of employment of the person for whom the prescription was issued or at the hospital or medical care facility in which the patient is confined, or may drop off the prescription at a designated area determined by the patient or the patient’s agent. The physician assistant may possess controlled substances prescribed for an ultimate user if the physician assistant provides hospice services to a hospice patient who is the ultimate user or provides home health services to a person who is the ultimate user.

IRMA POSITION: NEUTRAL

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REGULATION AND LICENSING

Data SecuritySB 1833 (Sen. Daniel Biss, D-Skokie/Rep. Ann Williams, D-Chicago) changes what is currently considered “personal information” for the purposes of requiring notification to the consumer and/or the Attorney General if the information is breached.  Specifically, the bill charts new territory by requiring notification for breaches of “consumer marketing” and “geolocation” information.  After months of discussions with the Attorney General’s office, IRMA was able to negotiate several changes to the bill which, in total, removed IRMA’s opposition.  Some of the more important changes include:  narrowing the definitions of consumer marketing and geolocation information to more closely target specific behavior of concern to the Attorney General, removing the requirement to notify the individual when geolocation and consumer marketing information is breached, raising the threshold that triggers notification requirements and expanding the time allowed for businesses to notify individuals and/or the Attorney General when information is breached.  There were a number of other changes made in a good faith effort by the Attorney General’s office to address IRMA’s concerns.

IRMA POSITION: NEUTRAL

Data Security ResolutionSR 142 (Sen. Mattie Hunter, Chicago) recognizes that all industries including but not limited to financial, public, government, retail, manufacturing, medical, utilities, etc., suffer from data breaches. The resolution urges the federal government to focus on increased security measures for credit card data kept by all affected industries. As originally introduced, SR 142 left the impression that data breaches were largely a retail problem which would have left a false impression but was amended by the sponsor at the request of IRMA.

IRMA POSITION: NEUTRAL

Tobacco Retail Licensing Trailer BillHouse Bill 2494 was introduced and passed last year as P.A. 98-1055 and requires retailers to obtain a license to sell cigarettes. The legislation was introduced to reduce the sales of cigarettes to minors, illegal sales of contraband tobacco, and the illegal smuggling of cigarettes in Illinois. The license includes an annual fee that is intended to help fund the interdiction of smuggling and retail inspections. P.A. 98-1055 also included an employee training program, a merchant citation mitigation provision, and record keeping provisions.  HB 2513 (Rep. Marcus Evans, D-Chicago/ Sen. Julie Morrison, D-Deerfield) is a trailer bill that clarifies the provisions passed in P.A. 98-1055. Specifically, the legislation: (1) allows a waiver for records to be kept out of state; (2) broadens the employee training requirements; (3) allows the employee training to be conducted electronically; (4) provides an avenue to mitigate retail tobacco citations; and (5) provides a waiver for closed loop distribution invoice record keeping requirements.

IRMA POSITION: SUPPORT

Contraband CigarettesSB 509 (Sen. Antonio Munoz, D-Chicago/Rep. John Cabello, R-Loves Park) will allow cigarettes without the tax stamp of the local jurisdiction to be considered contraband and thus make retailers subject to penalties outlined in the Cigarette Tax Act.  The City of Chicago sought the change because the sale of cigarettes without the Chicago/Cook County tax stamp is on the rise and they wanted the option to impose stronger fines on retailers who are caught selling such unstamped packs of cigarettes.  The rise in the illegal sale of cigarettes is not only relegated to bad actors in the retail community, but increasingly, such sales are occurring in person-to-person sales controlled by local gangs.  The rise in the illegal sale of cigarettes seems to correspond to the tax increases that have occurred at the state and local levels over the past couple of years.  These tax increases have made the price of cigarettes more expensive than any other city in the country; a fact that is not lost on the growing underground market for unstamped cigarettes.

IRMA POSITION: NEUTRAL

Smart Phone Anti-Theft ActSB 66 (Sen. Ira Silverstein, D-Chicago) creates the Smart Phone Theft Protection Act and requires wireless communications device dealers to maintain a written record of every purchase or acquisition of a used wireless communications device for resale. The legislation provides that a law enforcement agency that has probable cause to believe a device has been stolen or is evidence of a crime may place an investigative hold on or confiscate the device. Additionally, the legislation requires the installation of video security cameras at a dealer’s physical location. Retailers with 25 or more locations are exempted from the requirements of this legislation.

IRMA POSITION: NEUTRAL

Drone Taskforce—As drones make their way from military application to commercial and personal uses, some foresee the need to plan for their widespread adoption. SB 44 (Sen. Julie Morrison, D-Deerfield/Rep. Brandon Phelps, D- Harrisburg) seeks to create the Unmanned Aerial System Oversight Task Force Act. The purpose of the Task Force is to “provide oversight and input into creating comprehensive laws and rules for the operation and use of drone technology within this State subject to federal oversight and regulation”. Assuming the bill is signed into law, the Governor has 90-days to complete the appointments to the Task Force. Currently, 17 people will serve on the Task Force including a representative of IRMA. The members of the Task Force must ‘consider commercial and private uses of drones, landowner and privacy rights, as well as general rules and regulations for the safe operation of drone, and prepare comprehensive recommendations for the safe and lawful operation of [drones] in this State”.  The Task Force must issue a report no later than July 1, 2016.

IRMA POSITION: SUPPORT

Conceal CarrySB 836 (Sen. John Sullivan, D-Quincy/Rep. Brandon Phelps, D-Harrisburg) amends the conceal carry law which went into effect last year.  Since the bill was signed into law, there have been a number of interested parties on both sides of the issue looking to amend the bill in any number of directions.  While it did not seem that there was much desire to actually change the law this soon after passage, SB 836 will make two changes that should be noted. First, the bill allows a person to purchase a firearm with a conceal carry license instead of the FOID card. We can expect the Illinois State Police to promulgate administrative rules implementing this new provision. Second, it also allows a person to transfer a loaded firearm from their person or inside the vehicle to the trunk while in a parking lot. Currently, the weapon must be unloaded prior to exiting the vehicle for placement into the trunk.

IRMA POSITION: NEUTRAL

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Illinois This Week in Springfield – 99-16

PROPERTY TAX
WORKERS’ COMPENSATION
OTHER ACTION
SCHEDULE

This Week In Springfield, both chambers convened on Tuesday per their plan to meet once-a-week while there is no state budget. The Senate convened a Committee of the Whole to discuss the impact of a property tax freeze and in the Judiciary Committee to discuss workers’ compensation.  The House met to debate and vote on property tax freeze legislation and process two concurrence motions in other committees.

PROPERTY TAX

 

As part of his Turnaround Agenda, Governor Bruce Rauner has called for a multi-year freeze of property tax extensions at the 2015 level. Beyond that, a local unit of government can increase property taxes only upon voter approval. Local school districts, units of local government, etc. are universally opposed to this proposal. According to Governor Rauner’s Turnaround Agenda, Illinois has the second-highest property tax in the nation. With few exceptions, two-thirds of school revenues come from locally imposed property taxes.

The Senate convened a Committee of the Whole consisting of several panels of witnesses to discuss the anticipated implications of such a freeze. While the Senate discussed the issue in a Committee of the Whole, the House undertook two legislative proposals intended by the House Democrats to represent the Governor’s proposal as they understood it from his Turnaround Agenda.

HB 690 (Rep. Jack Franks, D-Woodstock) sought to limit property tax increases to zero percent. Currently, in jurisdictions under the Property Tax Extension Limitation Law (PTELL), increases are limited to the rate-of-inflation or five percent, whichever is less. Those not under PTELL have no such limitations. Under HB 690, increases in every jurisdiction would be limited to zero percent unless the local voters approve any increase. After much debate, HB 690, as amended by House Amendment #1, failed to receive the 3/5ths super-majority required for passage.

House Amendment #1 to HB 691 (Rep. John Bradley, D-Marion) was nearly identical to House Amendment #1 to HB 690 with minor differences and the major difference that it pre-empts home rule units of government and does not apply to bonds approved by voters in a referendum.

House Amendment #2 to HB 691 would prohibit collective bargaining around the issues of third party contractors, health insurance benefits, curriculum and student discipline, pay increases, the use of employee time for the business of the labor organization, staffing levels, and procedures, processes, forms, and criteria for personnel evaluations.

Like HB 690, HB 691 failed to obtain the super-majority needed for passage.

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WORKERS’ COMPENSATION

 

Last week, the Illinois House approved HB 1287 (Rep. Michael J. Madigan, D-Chicago)/ Sen. John Cullerton, D-Chicago) containing the House Democrat’s version of workers’ compensation reform. Briefly, the proposal codifies the current ‘any cause’ standard; the expanded liability of employers for traveling employees; requires self-insured entities to report data to the Department of Insurance; requires the Department of Insurance to approve insurance premium rates; and introduces joint and several liability of employers when assessing fault for repetitive motion injuries. Presently, the current employer bears the full cost regardless of how long the employee has been with the employer. Under this proposal, the current employer would still bear the full cost but could sue other employers to capture their percentage of the injury.  Employer groups, including IRMA, oppose HB 1287 believing it will increase the cost of workers’ compensation instead of lowering the costs on the seventh most expensive system in the nation.

HB 1287 was heard in the Senate Judiciary Committee as subject-matter only and no vote was taken.

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OTHER ACTION

 

The House Health Care Licenses Committee approved a motion to concur with Senate Amendment #1 to HB 3219. As originally introduced, HB 3219 (Rep. Michael Zalewski, D-Riverside/ Sen. Iris Martinez, D-Chicago) contained an unfunded mandate on pharmacies requiring all Schedule II substances containing hydrocodone be dispensed in a locking bottle made by one manufacturer. IRMA opposed the legislation and the sponsors amended the legislation to make it a voluntary pilot project. The Committee unanimously approved the motion to concur and it is anticipated the House will act on the motion when they return next week.

The House Executive Committee approved a Motion to Concur with Senate Amendments #1 and #2 to HB 3237 (Rep. Sara Feigenholtz, D-Chicago/ Sen. Antonio Munoz, D-Chicago)  providing clear guidance on the use of social media for advertising alcohol as well as increasing the number of gallons a brew pub may sell directly to the public. HB 3237 was approved in committee and the entire House voted to concur.

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SCHEDULE

As previously noted, the Assembly is planning to meet once-per-week while the budget stand-off continues. It is anticipated that each week will largely be dedicated to one issue (e.g. property tax freeze). The first two weeks, the Assembly has met on a Tuesday.

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A Path to Reforming Our Broken Sales Tax System

by Daniel L. Goodwin

 June 2, 2015

By Daniel L. Goodwin

The ingenuity of the American entrepreneur has created an accommodating and diverse consumer marketplace over the past two decades. Through the rise of the Internet and emerging payment-processing innovations, countless businesses have been able to supplement their brick-and-mortar storefronts with an online sales presence. Unfortunately, our country’s sales tax system has not adapted to the convergence of digital and physical commerce. This has resulted in harsh consequences that have lingered on for nearly 20 years in the form of the unfair tax collection advantage that online-only retailers — such as eBay and Overstock — hold over millions of stores on Main Street.

Thankfully, this wrong can still be righted. With renewed bipartisan momentum now in the Senate, it is time for all of our elected officials in Congress to work toward expeditiously passing the Marketplace Fairness Act of 2015. This bill is a path to reforming our broken sales tax system.

To illustrate the anti-competitive elements of today’s marketplace, think about your own shopping experience. When you pay for a new pair of shoes, it is considered a sale — regardless of whether you make that purchase in-person at a local shopping center or online through a boutique’s website.

But unlike your local stores, online-only retailers do not collect sales tax at the moment of purchase. Believe it or not, the onus is on you to report and pay any necessary tax to your state’s department of revenue. It is easy to see why you and the brick-and-mortar stores  in your neighborhood — which are legally required to collect sales tax if the state imposes one — bear the brunt of an unfair system.

As someone who has spent close to 40 years in the commercial real-estate sector, I am increasingly concerned about the inequities in our marketplace. This sentiment is fortunately shared by the group of senators — Michael B. Enzi, R-Wyo.; Richard J. Durbin, D-Ill.; Lamar Alexander, R-Tenn.; and Heidi Heitkamp, D-N.D., as well as others — that introduced the latest Marketplace Fairness Act. They know, much like the rest of us on Main Street, that we cannot accept a sales tax system that hinders American shoppers, businesses and local communities.

For consumers, maintaining the current system prolongs an archaic legal burden and a major shopping inconvenience. Shoppers will remain responsible for tracking purchases made online and then calculating the proper sum owed to their respective states. A failure to follow this process translates to breaking the law under our current system. Additionally, consumers stand to lose over the long-term when local businesses — which offer necessaries, specialty goods and custom items — cannot carry as much inventory or are ultimately forced to close due to the uncompetitive climate.

For brick-and-mortar businesses, the continuation of today’s system is akin to a death sentence. Local stores that must collect a sales tax increasingly function as showrooms for shoppers, who want to examine items and then order the same products online to save 5 percent to 10 percent in taxes. If this trend continues, we will see more businesses closing in our neighborhood shopping centers and town squares; our teenagers will be unable to find traditional part-time work; our neighbors will be unable to find that second job; and our communities will lose time-honored traditions such as Santa Claus sitting in the local department store every December.

For our communities and states, congressional inaction will bring additional economic and social impact. When brick-and-mortar businesses downsize or shutdown due to the marketplace, existing employees face both reduced job security and stagnant wages — plus the community endures weak job growth and an across-the-board reduction in tax revenue. This loss of tax revenue forces communities to make painful decisions, the most common being raising property taxes or cutting back on popular educational, recreational and public works services.

Last but not least, let us not forget the social downside that also comes when businesses can no longer sponsor little league teams, and organizations like the Salvation Army have no stores to stand in front of when advocating for society’s most needy. These are voids that online-only retailers will never be able to fill.

In the coming months, Congress will have ample time to debate the clear merits of the Marketplace Fairness Act and then pass a suitable version of the bill. Our responsibility during this time is to remind elected officials on Capitol Hill just how crucial this legislation is to American shoppers, businesses and communities. This action can go a long way to supplementing the current efforts of the International Council of Shopping Centers, Marketplace Fairness Coalition, NAREIT and hundreds of other local and national trade associations.

With deep experience purchasing and managing large retail shopping centers, I know the central role that commerce plays in supporting our shared American dream. Restoring fairness to our marketplace is an important step toward making that dream a reality for more of us in 2015 and beyond.

 

Daniel L. Goodwin is Chairman and CEO of The Inland Real Estate Group of Companies, Inc.

The 114th: CQ Roll Call’s Guide to the New Congress

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ABOUT BELTWAY INSIDERS

 

Follow Roll Call’s top experts on the Washington scene as they offer inside analysis on politics, procedure, ethics, money and lobbying.

DonWolfensbergeris a resident scholar at the Bipartisan Policy Center, a senior scholar at the Woodrow Wilson Center and former staff director of the House Rules Committee.

C.Simon Davidsonis an attorney with the law firm McGuireWoods.

ElizaNewlin Carneyis a senior writer covering political money and election law for CQ Roll Call.

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Kate Ackleyis a staff reporter for CQ Roll Call covering lobbying and finance. @kackleyZ