Illinois This Week in Springfield – 99-14

SNAP DISTRIBUTION
WORKERS’ COMPENSATION
GOVERNOR’S AGENDA
RETAIL THEFT
TORT REFORM
DATA SECURITY
MILLIONAIRE TAX
SERVICE TAX
WEEK AHEAD

This Week In Springfield, the House continued bringing components of Governor Bruce Rauner’s Turnaround Agenda to the floor for debate and vote. Additionally, with the scheduled date of adjournment looming, both chambers were busy moving and debating legislation including, data breach, heroine abuse, SNAP, and millionaire’s tax.

 SNAP DISTRIBUTION

 

A large problem for grocers, their employees, and their customers will soon get a lot worse. Unfortunately, it is being portrayed by some as a win-lose proposition when it can easily be a win-win situation.

SB 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.  While IRMA generally would not be opposed to such a measure, when we consider the current manner in which SNAP benefits are distributed in this state, IRMA feels compelled to oppose this bill at this time as it simply inserts more eligible participants into a distribution system that fails recipients, grocers, and employees of grocers. While these outcomes are not the desire of the sponsors of SB 1847, these outcomes will occur as a result of unnecessary unilateral changes made by the Illinois Department of Human Services during the administration of former Governor Pat Quinn.

Prior to 2013, Illinois had one of the most workable 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 also elected to change SNAP distribution to the first 10 days of the month.  This change was not required by ACA and 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.

Amidst IRMA’s strong objection, the Department moved forward with the distribution change.  A few months later, IRMA submitted proof that changing the distribution caused job loss and a significant reduction of employee hours and store traffic in the latter half of the month.  Presented with that data, the previous administration agreed to temporarily add additional dates beyond the 10th of the month to relieve the pressure on the independent grocers that largely serve communities in need and to put their employees back to work.  As this was a temporary compromise, a resolution was passed that required everyone to come back to the table in 2015 and hammer out a permanent fix to SNAP distribution that was fair to everyone involved in the program.  Before the group reconvened, SB 1847 was introduced to add more people to the SNAP program and further exacerbate the existing distribution problem.

IRMA has proposed a permanent solution that will allow customers, regardless of how they pay for their groceries, to be served with dignity, offered healthy, perishable items at all times of the month, put our employees back to work throughout the month and allow for grocery stores that are operating in areas where there is high SNAP usage to remain viable.  In order to turn this into a win-win proposal, all that is needed is an amendment requiring the Department to make permanent the temporary fix by February 1, 2017.

WORKERS’ COMPENSATION

 

The last few weeks, Speaker of the House Michael Madigan has put before the House for consideration parts of Governor Bruce Rauner’s Turnaround Agenda.  As reported in previous issues of TWIS, the House has considered amendments regarding right to work, property tax freeze, and budget cut initiatives. This process is being used by the House Democrats to publicly debate and attempt to frame components in Governor Rauner’s Turnaround Agenda.  In response, the House Republicans largely voted ‘present’ on the proposals as a way of protesting the process which they see as a ‘sham’.

Following the same format, and as a follow up to the Workers’ Compensation Committee of the Whole last week, Speaker Madigan introduced four workers’ compensation amendments to HB 1287 (Speaker Michael Madigan, D-Chicago) for consideration and debate. The amendments largely provided for business friendly reforms to the workers’ compensation system.

House Amendment 1 to HB 1287 included a heightened ‘causation’ standard that would require the workplace be the major contributing cause of injury (at least 50%).

House Amendment 2 to HB 1287 would have allowed the determination of permanent or partial disability to be corroborated by independent medical examinations and treating medical records (such as AMA Guidelines).

House Amendment 3 to HB 1287 proposed a significant reduction in the medical fee schedules. These schedules are used to determine what medical providers will be paid for the procedures they perform related to workers’ compensation injuries. Despite a 30% reduction in 2012, Illinois still has the fourth highest medical fee schedule in the nation.

House Amendment 4 to HB 1287 would have subjected insurance companies to a rate approval process.

Similar to the past debates, the House Republicans referred to the process as disingenuous. As a result, Republicans voted ‘present’ on the four amendments while Democrats voted ‘no’ on the first three amendments. Consequently, the first three amendments failed. On the fourth amendment, the Democrats voted ‘yes’ contending the amendment would force insurance companies to pass workers’ compensation savings to businesses. Consequently, the fourth amendment was adopted to the bill but was held on the order of Second Reading and was not called for a vote.

Prior to the votes in the House, a coalition of employer representatives, including IRMA, issued the following statement calling on all members to vote present: “At this time, we are asking all House lawmakers to vote present on the workers’ compensation amendments filed today until our elected officials have reached comprehensive agreement on reform.  Illinois employers stand ready to work with leaders on both sides of the aisle.”

TORT REFORM

 

Speaker Madigan continued to submit pieces of Governor Rauner’s Turnaround Agenda to the full House. This week, tort reform was considered.  As TWIS readers are aware, a Tort Reform Committee of the Whole was convened last week to discuss tort reform in Illinois. The committee was stacked with witnesses that suffered from a variety of injuries from negligent or other tortious actions. As mentioned above, this process is being used by the Democrats to frame the discussions around the Governor’s initiatives.

According to the Turnaround Agenda, the Rauner Administration is seeking, among other things, to limit joint and several liability, and limit damage awards as a result of medical expenses to those expenses that are actually paid.

In response to the Tort Reform Committee of the Whole debate, and Governor Rauner’s Turnaround Agenda, Speaker Madigan has filed House Joint Resolution Constitutional Amendment 37 (HJRCA 37) (Speaker Michael Madigan, D-Chicago) that would limit awards for damages for certain tort claims. Specifically HJRCA 37 limits punitive damages to no greater than three times the amount of compensatory damages awarded or $50,000. Additionally, HJRCA 37 limits the total amount recoverable for an injury or death of a patient as a result of medical malpractice to no more than $1,250,000; limits a health care provider’s liability for medical malpractice to $250,000 per occurrence; and limits the damages for the loss of consortium to no more than $300,000.

HJRCA 37 is scheduled to be heard in the Judiciary Civil Law Committee next Tuesday.

 GOVERNOR’S AGENDA

 

TWIS noted several weeks ago that the Governor had created a number of working groups comprised of representatives of each of the four legislative caucuses, the Governor’s office, and key staff. The working groups were decided to facilitate compromise in the following subject areas: tax reform, infrastructure, economic development, ethics, state budget, and pensions. While those groups have met, progress has been minimum at best.

Friday morning, six pieces of legislation were filed in each chamber by Republicans on behalf of the Governor’s office containing most of the Governor’s desired goals. These proposals are as follows:

  • Senate Amendment #1 to SB 1046/HB 4224 contain property tax freeze proposals, changes to collective bargaining with public sector unions, and prevailing wage reforms.
  • HB 4214 allows municipalities to declare bankruptcy.
  • SJRCA 14/HJRCA 39 contain proposed term limits. These are proposed constitutional amendments. In order to be placed on the ballot they must pass each chamber with a 3/5ths majority and then be approved by 60% of the voters voting on the question in a general election (November 2016).
  • SJRCA 15/HRJRCA 40 contain a proposal to establish a non-partisan redistricting commission to draw the boundaries of legislative districts every ten years. Currently, if one party holds both chambers of the Assembly as well as the Governor’s Office, that party will draw the boundaries. If one of the two legislative chambers or the Governor’s office is held by a different party, the tie-breaker goes to a drawing. The winner of the drawing gets to draw the maps. Again, these are constitutional amendments and must follow the process noted above.

RETAIL THEFT

SB 202 (Sen. Bill Cunningham, D-Chicago/Rep. Michael Zalewski, D-Chicago) passed out of the House Judiciary Criminal Committee this week on a 9-1-0 vote.  The bill is an initiative of Cook County Sheriff Tom Dart to institute an accelerated resolution court pilot program for misdemeanor retail theft cases as well as criminal trespass to real property and/or state supported land.  This measure comes out of concerns raised by the Sheriff about jails overcrowded with non-violent offenders and the housing of non-violent offenders in jail who cannot afford to bond out.  Persons accused of the aforementioned crimes, if they qualify, will 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.

The State’s Attorney’s office has expressed some concern about their ability to adjudicate cases within 30 days and there has also been some conversation about whether felonies should be included.  An amendment was introduced this week to address some of those concerns.  It is unclear at this writing whether the amendment will come back to committee or whether it will be agreed to on the House floor.

IRMA would like to thank Sheriff Dart, State’s Attorney Anita Alvarez, Rep. Zalewski and Sen. Cunningham for including us in this important conversation.  Reducing the taxpayer burden in Cook County while ensuring that non-violent offenders get a speedy trial is sound public policy that IRMA supports.

DATA SECURITY

The House Judicial Civil Committee passed the data security bill out of committee this week with a party-line vote of 7-4-0.  SB 1833 (Sen. Daniel Biss, D-Skokie/Rep. Ann Williams, D-Chicago) changes what is currently considered “personal information” for the purposes of requiring notification if the information is breached.  Specifically, the bill charts some new territory by requiring notification for breaches of consumer marketing and geolocation information.  After months of negotiations with the Attorney General’s office, IRMA was able to negotiate several key changes to the bill which, in total, will remove our opposition and place IRMA in a neutral position.  Some of the significant 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.  The bill has been sent to the House floor where it will be considered next week.

IRMA would like to thank Attorney General Lisa Madigan, Rep. Williams and Sen. Biss for their earnest efforts to address many of our initial concerns as this bill has moved through the legislative process.

MILLIONAIRE TAX

In 2014, voters were asked if they would support a higher tax on personal income over $1 million to help fund schools.  The results of that non-binding ballot initiative revealed that 60% of the voters were indeed in favor of the additional 3% tax.  Armed with that information, Speaker Madigan renewed his bid for a change to the Illinois Constitution that would permit such a tax to help fund schools.  After a hearing in the House Revenue Committee, HJRCA 26 (Rep. Michael Madigan, D-Chicago) was passed on a vote of 8-5-0.  This week, that measure was debated on the House floor.

A long, heated debate ensued regarding several points including:  whether higher earners should pay more in taxes, the reasons why businesses are leaving the state and taking jobs with them, how Illinois’ tax structure compares with neighboring states and whether the state’s current system of taxing personal income is “fair.”  In the end, the measure failed to receive the necessary number of votes for passage, falling three votes short, and it was postponed for further consideration.  If the measure had passed, it would have put forth a ballot question in the next general election (November 2016) where it would have to be approved by 60% of those voting on the question. “Postponed Consideration” is a procedural maneuver that allows a proposal to be voted on one more time should the sponsor so desire. If it again fails to receive the required number of votes, in this case 71, the measure is considered ‘lost’.

SERVICE TAX

A report advocating for the expansion of the Illinois sales tax to services was jointly issued this week by the Taxpayers Federation of Illinois and the Center for Tax and Budget Accountability. According to the report, their proposal would generate an additional $2 billion in tax revenues. Business-to-business transactions would be exempt because such taxes would result in taxes being paid on taxes – a process known as ‘pyramiding’.

WEEK AHEAD

Both chambers have adjourned for the Memorial Day weekend and will reconvene Monday afternoon. When they reconvene, we will be six days from the scheduled adjournment of May 31st. If the Assembly has not adjourned by midnight on June 1st, 3/5ths is required to pass any item including a budget.

As noted above, the Governor convened working groups to attempt a compromise. He has also had several pieces of legislation introduced containing his reform agenda. The Democrats are reportedly working on a budget with cuts not as severe as those proposed by the Governor. The Governor has signaled a willingness to consider additional revenues but only in exchange for some of the reform items noted previously.

If the Assembly passes a budget to the Governor, he could sign it (unlikely), either reduction veto certain line-items to bring it into balance with anticipated revenues, or outright veto the budget. The Governor will then have to call the Assembly back into Special Session to consider the budget and any other items he specifically designates in his call.

This week, the Springfield State Journal-Register carried a letter from the Governor telling everyone associated with the legislative process to “expect a very long extra session” if the Assembly passes a budget but not his reforms.

robtanyaalec

Illinois This Week in Springfield – 99-13

TORT REFORM COMMITTEE OF THE WHOLE
RIGHT TO WORK
PROPERTY TAX
FOOD HANDLING
BAD DEBT
CRIMINAL BACKGROUND RECORDS IN HIRING
DATA SECURITY

 

This Week In Springfield, the House continued what it started the week before by bringing to the floor for debate, a vote, or both, pieces of Governor Bruce Rauner’s Turnaround Agenda.

TORT REFORM COMMITTEE OF THE WHOLE

TWIS readers will recall that last week, Speaker Michael Madigan convened a Committee of the Whole in the Illinois House. This week, the House once again met as a Committee of the Whole, this time to debate tort reform. This tool is being used by the House Democrats to publicly debate and attempt to frame reform components in Governor Rauner’s Turnaround Agenda.

According to the Turnaround Agenda, the Rauner Administration would like to limit venue shopping, restore jury composition to 12, limit joint and several liability, and limit damage awards as a result of medical expenses to those expenses that are actually paid. According to the Turnaround Agenda, these reforms would end abusive lawsuits “that have made Illinois uncompetitive as a result of the increased premiums required to practice in Illinois and improve the litigious nature within Illinois’ boundaries”.

Very similar to last week’s workers compensation hearing, the panels were dominated by witnesses that suffered from a variety of injuries from negligent or other tortious actions. The witnesses suffered from medical malpractice, product deficiencies or other accidents. These included witnesses from Illinois, Indiana, and Missouri. The witnesses cautioned against adopting reform measures, particularly caps, as they would never be fully compensated for the injuries they sustained and such measures are ultimately unfair to victims.

Republicans questioned why no employers, insurance companies, or related witness were invited to offer testimony on the detrimental effect that malpractice premiums and liability have on Illinois’ ability to attract businesses and doctors.  Democrats answered that these groups are heard from regularly at the Capitol and this was an opportunity to hear from individuals directly affected by tortious actions and the civil justice process.

Governor Rauner’s office did not comment on the specifics of the testimony but did say that he is pleased that lawmakers are opening discussions that could lead to reforming one of the worst lawsuit climates in the country.

No votes were taken during the committee as no bill was being considered.  Subsequent to the hearing, House Speaker Madigan announced his intent to put before the House a vote on both workers’ compensation and tort reform next week.

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RIGHT TO WORK

As reported in TWIS, last week Speaker Madigan announced his intent to put before the House for a vote Right to Work legislation that mirrors Governor Rauner’s proposal in his Turnaround Agenda. Governor Rauner’s Turnaround Agenda prominently features the creation of ‘empowerment zones’. These zones would allow local units of government that choose to do so to become right to work zones. This week, Speaker Madigan followed through by filing and sending directly to the floor House Amendment 2 to HB 1286.

House Republican Leader Jim Durkin referred to the process as a ‘sham’. As a result, the House Republicans voted ‘present’. The only exception was Representative Raymond Poe (R-Springfield) who voted ‘no’. Every Democrat voted ‘no’ meaning the proposal did not receive a single ‘yes’ vote. This was the same strategy employed last week by the House Republicans when the Democrats sent to the floor the Governor’s proposed $2 billion in cuts in Medicaid and Human Services as well as other amendments restoring the cuts.

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PROPERTY TAX

In a move to debate and vote on another portion of Governor Rauner’s Turnaround Agenda, HB 695 Amendment #1 (Rep. Jack Franks, D-Woodstock) was called on the House floor for a vote Friday morning.  The amendment would freeze automatic property tax extension increases for local governments that are currently guaranteed regardless of whether the value of the property has decreased.  The freeze would be in effect for two years and then local voters would have to approve subsequent increases. While property tax extension limitations (PTELL) are generally a protection for property owners when the value of their property rises, opponents of PTELLs warn of the cost to property owners when property values are decreasing.  PTELLs are a guarantee that local governments will continue to receive revenue regardless of the status of home values in the area.  This bill, along with bills on right to work and budget cuts, were called to the floor with similar language to the points contained in the Governor’s Turnaround Agenda.  After much debate, the House was split on whether the amendment was a fully developed attempt at real reform, but it passed with a vote of 37-23-38. It only takes a simple majority of those voting to adopt an amendment. It remains to be seen whether or not it will be called for a final vote in the House where 60 votes would be required for passage.

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FOOD HANDLING

Last legislative session, after a couple of years of negotiations, changes were made to the 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 a passing score allowed at the national level.  This change preserves the integrity of the certification while giving FSSMC seekers the flexibility that they need to get certified.  In addition, the bill allows more restaurants that have food handling programs certified in other states to transfer those programs to Illinois.

SB 46 passed unanimously out of the Consumer Protection Committee and will now be sent to the House floor.  It is a common sense bill that removes hurdles to receiving the FSSMC certification in Illinois.

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BAD DEBT

TWIS readers are already aware that last year, the Assembly unanimously approved an initiative to return fairness to the refunding of sales tax on bad debt. Former Governor Pat Quinn decided to use the bill as a vehicle for meaningless political posturing in literally his final moments in office effectively killing the bill. The initiative has been reintroduced in the form of House Amendments 1 and 2 to SB 507 (Sen. Daniel Biss, D-Skokie/Rep. Anthony DeLuca, D-Chicago Heights) and have no known opponents.

As a refresher, if a consumer does not pay for the merchandise they purchase on credit, and efforts to collect fail, a bad debt is declared and sales tax is refunded to the retailer. This happens because in the eyes of the law, a sale is deemed not to have occurred.

Private Label Credit Card’s (PLCC’s) are cards emblazoned with the logo of a store and can only be used at that store unlike multipurpose cards (e.g. cards that may carry a logo but can be used anywhere) or general use cards (e.g. VISA, MasterCard, etc.). In the past, using an in-house credit model, the retailer itself approved the credit line, issued the card and administered the financing, billing, and payment functions as well as collections. When a customer pays for a purchase using that store’s PLCC, the amount of the purchase, including merchandise and sales tax, is added to the cardholder’s outstanding account balance, to be paid off over time. The retailer remits the entire amount of sales tax on its monthly return, directly to the State, even though the purchaser has not yet made any payment to the retailer for the purchase. Under current law, when a sales transaction is completed using a PLCC and the customer subsequently defaults on the payment, the retailer is allowed a refund on the sales tax it paid to the State on the purchase. This is because no sales is deemed to have occurred.

As modern retailing has evolved and become more complex, the desire for consumer credit has increased exponentially and has required merchants to partner with third-party lenders to administer their PLCC programs. 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 then benefits that accrue to consumers and the state, and corrects this inequity by specifically allowing a refund of sales tax on the bad debt created by consumer using a store branded PLCC. Over the course of the last year and again this year, IRMA worked with IDOR to address additional procedural concerns that arose. These concerns centered on ensuring proper documentation would be available; further limiting the transactions that are available for a bad debt refund; and providing a clear line of accountability.

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CRIMINAL BACKGROUND RECORDS IN HIRING

SB 567 (Sen. James Clayborne, Jr., D-Belleville/Rep. Esther Golar, D-Chicago) seeks to regulate the use of criminal backgrounds in employment decisions.  In 2012, the Equal Employment Opportunity Commission (EEOC) issued guidance for both employers and employees/applicants on how a person’s criminal background can be considered in making employment decisions without running afoul of Title VII of the Civil Rights Act of 1964.  The guidance is meant to highlight best practices, explain relevant court rulings and help all interested parties skillfully navigate the often complicated hiring process.  SB 567 proposes to allow an employer to make an adverse employment decision based on an applicant’s or an employee’s criminal background as long as the background was job-related and consistent with business necessity. These factors are consistent with how the EEOC determines whether an employer has violated Title VII.

In addition, the bill addresses forum shopping by plaintiffs with the Department of Human Rights by prohibiting plaintiffs from filing cases in multiple jurisdictions.  After the bill passed the Senate it was amended in the House to allow plaintiffs to file in multiple jurisdictions until a jurisdiction decides to allow the case to proceed to the litigation phase.  IRMA is opposed to this amendment which would allow plaintiffs to essentially shop their case for the same proposed violation.

While IRMA is supportive of the right to seek remedies for alleged unlawful employment practices, the plaintiff should choose where to bring the case and commit to follow that case to its favorable or unfavorable conclusion.  The bill, without the House amendment, affords them this right while protecting employers from answering to the same charges with the department, with a local jurisdiction and with the EEOC.  It is possible that the bill will be further amended and return to the House Judiciary Civil Committee for further debate.

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DATA SECURITY

SB 1833 House Amendment #1 (Sen. Daniel Biss, D-Skokie/Rep. Ann Williams, D-Chicago) passed out of the Judiciary Civil Committee this week.  The amendment changed the definitions of two of the most controversial parts of the bill which are consumer marketing and geolocation information.  The definitions were narrowed in an attempt to more accurately address the concerns of the Attorney General and without unduly burdening businesses that are not engaged in the targeted activity.  The amendment also addresses notification required by units of government and limits notification requirements for consumer marketing and geolocation information to the Attorney General’s office.

Another amendment to the bill, House Amendment #2, was released today which addresses more concerns voice by IRMA.  With the passage of that amendment, IRMA will remove its opposition to the bill and take a neutral position.  IRMA would like to thank the Attorney General Lisa Madigan, Senator Biss and Representative Williams for their patience in working through the many issues surrounding this complicated issue.

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 robtanyaalec

Illinois This Week in Springfield – 99-12

BUSINESS DAY 2015 SETS RECORD
ILLINOIS PENSION REFORM UNANIMOUSLY RULED UNCONSTITUTIONAL
BUDGET VOTES
WORKERS COMPENSATION
TORT REFORM & RIGHT TO WORK

 

This Week In Springfield witnessed record-breaking attendance at Business Day 2015 and a noteworthy, but not unexpected, ruling by the Illinois Supreme Court.

BUSINESS DAY 2015 SETS RECORD

Business Day 2015 drew its largest crowd yet of employers as over 400 employers came to Springfield to meet with legislators and tell share with them the challenges and rewards of owning a business in this state.  At a time when the Assembly is looking to cut budgets, increase revenue and restructure pensions, employers are concerned about how all of it will affect the success of their businesses and their workforce.

The event actually started Tuesday night with a combined dinner of IRMA and IMA’s respective Boards of Directors. Governor Bruce Rauner stopped in to mix with the crowd and welcome them to Springfield. The Governor echoed his consistent theme that he is focused on achieving structural reforms (e.g. tort, workers’ compensation, property tax, etc.) prior to any discussion of new tax revenues.

Wednesday’s event began with a luncheon where a standing-room-only crowd heard directly from two people who are heavily involved in determining the outcome of budget discussions, Senate President John Cullerton (D-Chicago) and House Republican Leader Jim Durkin (R-Burr Ridge).  After hearing about Illinois’ current financial condition and diametrically opposing viewpoints for how to address that financial condition, the crowd had the added bonus of hearing from Congressman Adam Kinzinger (R-16th District) as he was home to tend to the matters of his district.

Sen. Cullerton focused his remarks on the importance of passing a state budget and criticized the Governor’s proposed budget as being substantially out-of-balance particularly as it relates to his proposed pension reforms.  While the Governor has set up a series of working groups to discuss various aspects of the budget, he has not yet said what he will cut, and what revenue, if any, he will raise.  The Senate President believes the state’s budget problems cannot be fixed by cuts but will require additional revenues. To that end, Sen. Cullerton addressed the state’s income tax stating that Illinois’ rates were favorable when compared to the income tax structures of neighboring states, even those of Indiana and Wisconsin, both states with Republican Governors. According to the Senate President, Illinois would have an additional $5 billion in revenue if we had Indiana’s income tax structure and an additional $10 billion if we had Wisconsin’s. As the May 31st deadline looms closer, it is clear that both sides are still very far from agreement and while these issues can be considered beyond that date, it will take a super-majority to pass any initiative beyond the deadline.  President Cullerton noted that the Senate Democrats would not pass a budget all on their own – that significant votes from Republican legislators would be required. The final solution, according to Sen. Cullerton, would need to be bipartisan and would, ultimately, need to raise revenue.

Illinois House Minority Leader Jim Durkin urged business to keep their faith in the State and General Assembly.  He thanked the employers present for remaining in Illinois and keeping the residents of Illinois’ employed while facing high costs and cumbersome regulations.  Despite the combative tone being set at the Capitol, Leader Durkin expressed optimism in the Governor and the ability to reach a bi-partisan consensus on the budget negotiations.  Although the State’s revenue is projected to be the same as in 2011, Durkin made it clear that raising taxes is not a viable solution and stated that Republicans are trying to repair 12 years of Democratic mismanagement. He explained that history has shown a tax increase has not worked by pointing to continued unemployment and $9 billion in unpaid bills despite an additional $31 billion in revenue. He believes the General Assembly has an opportunity for the Assembly to truly balance the budget and this does not require a wholesale increase in taxes but a fundamental change in how the State spends revenue.

Subsequent to Leader Durkin’s presentation, Congressman Adam Kinzinger addressed attendees. He provided an overview of the environment in Washington D.C. and commented that the new Republican controlled House and Senate has accomplished more in the new term than the previous years combined. He stated the Illinois has advantages that other states do not have such as, infrastructure; transportation hubs that include airports, and river access; diverse industries that include manufacturing, agriculture, and a booming tech industry; one of the top cities in the nation; and a diverse population that is highly educated, skilled and motivated.

After lunch, over 400 employers made their way to the Capitol to touch base with their representatives to talk about the issues that are important to them and Illinois. During their visit to the Capitol, IRMA’s Board heard from Speaker of the House Michael J. Madigan who spoke about pension reform and the need for a bi-partisan solution to the state’s fiscal situation. He also stated that while he would listen to ideas on workers’ compensation reform, he believes the 2011 reforms were a significant step forward. Additionally, he noted there were not yet the votes in his caucus to pass minimum wage.

Senate Republican Leader Radogno stated that the Senate Republican Caucus is able and willing to make the tough votes that will be required as the price for once again being a part of the process as a result of the election of a Republican governor. Leader Radogno also noted that the financial needs of the City of Chicago will also play into the budget debates that will soon ensue.

Finally, Senator Cullerton welcomed the IRMA Board to his offices for more intimate discussions where he reiterated the need for additional revenues to meet the service needs of Illinois.

The day concluded with the not-to-be-missed Party Under the Tent where expectations were once again exceeded and attendees and policy makers had the opportunity to mingle in a relaxed and fun atmosphere.

IRMA would like to thank the following Co-Hosts, Sponsors, and Reception Caterers for their generous support. Without their participation, Business Day would not be the success that it has become.

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ILLINOIS PENSION REFORM UNANIMOUSLY RULED UNCONSTITUTIONAL

Efforts to address the financial situations of both the state and City of Chicago hit a significant but not unexpected speed bump Friday morning when the Illinois Supreme Court (“Court”), in Heaton vs. Quinn, unanimously struck down Public Act 98-599 that sought to address Illinois’ pension crisis. The seven justices unanimously declared the law violates the state constitution because it would leave pension contracts “diminished or impaired.”  This ruling was predictable after the Illinois Supreme Court struck down an attempt in Kaverva vs. Weems to force government retirees to pay more for their subsidized state health insurance. Although the case only focused on retiree healthcare subsidies, the opinion made it clear that any changes to pension benefits will face a tough time passing constitutional review.

Similar to Kanerva vs. Weems, three issues were presented for their review: (1) does a reduction of retirement annuity benefits owed to members of retirement systems violate the pension protection clause; (2) if so, can the law’s reduction of those benefits nevertheless be upheld as a proper exercise of the State’s police power; and (3) if not, are the invalid provisions severable from the remainder of the statute?

As to the first issue regarding reducing benefits, the Court clearly stated that there is no wiggle room to the clause that provides that “[m]embership in any pension or retirement system of the State shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”  Specifically, they stated:

“…the new legislation directly reduces the value of retirement annuities for those members in no fewer than five different ways. While we presume statutes to be constitutional and must construe enactments by the legislature so as to uphold their validity whenever it is reasonably proper to do so there is simply no way that the annuity reduction provisions in Public Act 98-599 can be reconciled with the rights and protections established by the people of Illinois when they ratified the Illinois Constitution of 1970 and its pension protection clause. Those provisions contravene the clear requirements of article XIII, section 5, as set forth in the provision’s plain and unambiguous language and construed by the legion of cases we have just discussed. In enacting the provisions, the General Assembly overstepped the scope of its legislative power.”

After the Court decided that Public Act 98-599 improperly impaired and diminished pension benefits, it took aim at the State’s argument that the reduction in retirement annuity benefits under Public Act 98-599 is a valid exercise of police power because it is necessary and reasonable to secure the State’s fiscal health and the well-being of its citizens. It pointed out that the circumstances presented by this case are not unique as economic conditions are cyclical and expected, and fiscal difficulties have confronted the State before. In the midst of previous downturns, the State has attempted to reduce or eliminate expenditures protected by the Illinois Constitution. Whenever those efforts have been challenged in court, the Court has clearly and consistently found them to be improper. The Court stated:

Throughout the past century, market forces have periodically placed significant pressures on public pension systems. The repercussions of underfunding those pension systems in such an environment have been well-documented and were well-known when the General Assembly enacted the provisions of the Pension Code which Public Act 98-599 now seeks to change. The General Assembly had available to it all the information it needed to estimate the long-term costs of those provisions, including the costs of annual annuity increases, and the provisions have operated as designed. The General Assembly understood that the provisions would be subject to the pension protection clause. In addition, the law was clear that the promised benefits would therefore have to be paid, and that the responsibility for providing the State’s share of the necessary funding fell squarely on the legislature’s shoulders. Accordingly, the funding problems which developed were entirely foreseeable. The General Assembly may find itself in crisis, but it is a crisis for which the General Assembly itself is largely responsible.

The court reasoned that to allow such authority on the legislature through judicial fiat would require the Court to ignore the plain language of the constitution. Accepting the State’s position that reducing retirement benefits is justified by economic circumstances would require the Court allow the legislature to do the very thing the pension protection clause was designed to prevent it from doing.

The Court summarily rejected the severability issue. The Court argued that the reduction provisions in Public Act 98-599 are the very reason for its construction. Without the reduction provisions, the legislature would not have enacted the legislation. The Court reasoned that it would make no sense to allow the legislation to stand once the very heart of the language was stripped away along with the legislature’s intent.

This leaves very few options for Governor Rauner the General Assembly, and the City of Chicago as they seek to address both the state and city’s substantial pension obligations. Realistically, many believe severe cuts to services, raising taxes significantly, amending the Illinois Constitution, or a combination of all these are the only options available.  As we have seen this last week, House Democrats are reluctant to vote for additional cuts to human services and Governor Rauner has stated that no additional revenue will be considered until his “Turnaround Agenda” is considered.  This leaves Illinois in a precarious predicament with no clear path in sight.

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BUDGET VOTES

In a surprise move Wednesday afternoon Speaker Madigan introduced and moved to the floor for immediate consideration legislation containing Governor Rauner’s budget for human services and other programs that would cut close to $2 billion in Medicaid and other social services for Fiscal Year 2016. Additionally, sixteen amendments were offered restoring the cuts to certain human service programs while remaining under the target revenue estimate of $32 billion for FY 2016.

As a way of signaling their displeasure with the lack of notice and reflect their contention that the process was not authentic, the House Republicans all voted ‘present’ on the proposals. Conversely, the Democrats voted ‘no’ on the Governor’s proposal and ‘yes’ on the restoration amendments thereby signaling to the Rauner Administration that they are not prepared to make these cuts.

This action by the House Democrats establishes negotiation markers as budget discussions begin in earnest.

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WORKERS COMPENSATION

This week, the House met as a Committee of the Whole to discuss the current state of Illinois’ Workers Compensation system.  With Illinois having one of the most expensive workers compensation systems in the nation, changes were made to provide some relief to the employer community in 2011.  While the relief provided in 2011 was important and a significant step forward, it was also emphasized to be a starting point by the employer community. Prior to the 2011 reforms, Illinois had the third most expensive workers’ compensation system in the country and only fell to seventh upon implementation of the reforms. Governor Rauner has made addressing the causation standard one of the cornerstones of his tenure and expects that such reforms will be made as part of a larger budget package.  In addition, he has tied any discussion of raising revenue to these types of changes.

During the Committee of the Whole, the House heard from witnesses that had been hurt on the job, employers and members of the medical community.  A series of nine panels of guests were invited with seven of the nine featuring workers from Illinois and Indiana who had been hurt on the job.  The workers and their attorneys cautioned against using Indiana as a model for workers compensation reform alleging that they could never be fully compensated for the injuries they sustained under a system that, according to them, was unfair to employees.  The business community, represented by the Illinois Manufacturers’ Association, noted that although much of the day’s testimony centered on whether employees were fairly compensated for their losses, no one was talking about reducing employee benefits and the goal of employers was to achieve savings in other areas of workers compensation.  Namely, savings could accrue from attacking fraud in the system, reducing fees to medical providers, and strengthening the use of American Medical Association standards to gauge impairment.

No votes were taken during the committee as no bill was being considered and the purpose of the meeting was to hear from affected parties in order to later determine whether more reform is actually needed and what reform can be achieved.  IRMA expects more discussion to come.

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TORT REFORM & RIGHT TO WORK

Friday afternoon, Speaker of the House Michael J. Madigan announced a Committee of the Whole to explore the topic of tort reform. Reforms to Illinois’ tort system are one of the oft-mentioned priorities of the Rauner Administration. This Committee of the Whole will convene at noon on  Tuesday, May 12th.

Additionally, the Speaker announced his intent to put before the House for a vote Right to Work legislation. TWIS readers will recall that Governor Rauner’s Turnaround Agenda prominently features the creation of ‘empowerment zones’. These zones would allow local units of government that choose to do so to become right to work zones. The Turnaround Agenda also envisions eliminating ‘fair share’ requirements for state employees. Fair share requires employees who work in a unionized work setting but are not members of the union to pay fees from the paychecks for the portion of the union’s efforts that benefit those employees.

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robtanyaalec

Chicago Retail Merchants Alert

CHICAGO ENERGY BENCHMARKING REPORTING

DEADLINE  AUG. 1, 2015

Owners of certain commercial buildings located within the City of Chicago must comply with the new City of Chicago Building Energy Use Benchmarking Ordinance by August 1, 2015.

Who must comply?

The Ordinance requires commercial and municipal buildings with between 50,000 – 250,000 square feet and residential buildings with over 250,000 square feet to submit verified reports on whole-building energy use and specific building attributes. The City has issued “2015 Notice of Upcoming Obligation to Comply” notices to applicable property owners over the past few weeks.

When must buildings comply?

Property owners must file their 2015 reports by August 1, 2015. Starting in 2016, annually updated reports must be filed before June 1st.

What are the direct costs associated with compliance?

In addition to time needed to gather energy and property data, in 2015, the first year (and every third year thereafter), buildings must have data reviewed by a City-certified in-house or third-party professional engineer, licensed architect, or other trained individual to verify data have been tracked and reported correctly. The costs for this service varies according to the number and complexity of the buildings under consideration.

    • For IRMA members with in-house staff who can be assigned to gather and report required building attributes and energy usage, and also have in-house staff who hold licenses or certifications required by the City to verify data – there may be no direct costs.
    • For members who do not have in-house staff who hold accepted credentials designated by the City to verify reported data, they, minimally, may incur out of pocket costs to hire a 3rd party to verify data.

 

Where can I find more information about benchmarking requirements?

Visit www.cityofchicago.org/energybenchmarking. If you own a commercial building located in the City of Chicago that is 50,000 sq ft or larger and you did not receive notice from the City of Chicago, contact the Help Center at:

info@chicagoenergybenchmarking.org or call (855) 858-6878.

IRMA Members Request Assistance

IRMA has received a number of inquiries surrounding Chicago’s Energy Benchmarking Reporting Requirements. In response, IRMA has asked Mark Pruitt, principal of The Power Bureau, to be available to help assist members with a wide range of services related to reporting requirements, including arranging for 3rd party professionals required for building and usage data verification. Mark has agreed to provide services at reduced rates for IRMA members, starting with a $50 hourly rate for site visits and data verification for single gas/electric account buildings. IRMA’s Utility Program Coordinator, Maggie Murphy, will be “on call” to assist Mark with this effort. You can contact Mark and/or Maggie directly.

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*One of the country’s most respected and innovative energy experts, Mark Pruitt served as the first Director of the Illinois Power Agency – the state agency responsible for securing wholesale electricity and renewable energy for the 4.7 million residential and small commercial accounts located in Illinois. He now advises energy managers (and others) in cities, businesses, non-profits, and universities, including providing insight into the deregulated (or not) market, legislation and regulation that is unique to them and the industry. Mark was selected by the City of Chicago to assist in establishing and implementing the country’s largest aggregation purchasing programs of its kind, and has worked tirelessly on behalf of energy buyers and consumers to force suppliers to adopt transparent bidding and contractual protocols in rates negotiations. His efforts include participating in dialogues with regulators, elected officials, advocates, utilities, and wholesale market operators to ensure stable rates for the future in environments which consumers are assured fairness and transparency.

Contact Information:

 TanyaTricheTanya Triche
Vice President & General Counsel
312/726-4600

 ttriche@irma.org