This Week in Springfield a bipartisan framework for a budget compromise was proposed by the Senate leaders prior to the adjournment of the 99th General Assembly and reintroduced immediately after the 100th General Assembly officially began as starting point for discussions. The convening of the 100th Assembly also witnessed new members taking their seats and the election of Senate and House leaders.
EASY ON CRIME TOUGH ON ILLINOIS BUSINESSES
This week, the Illinois State Commission on Criminal Justice and Sentencing Reform (“Commission”) released a report recommending a series of proposals allegedly designed to decrease the population of state prisons by 25%. One of the Commission’s recommendations is raising the retail theft felony threshold from $300 to $2000—which would give Illinois the second highest felony threshold in the nation. Additionally, the recommendation provides that a retail thief could only be charged with a felony if they had a prior felony theft conviction. This means that an individual can repeatedly steal $1,999 worth of goods and only be charged with a misdemeanor.
The advocates argue this will keep people from state prison but admit it will shift costs to local counties and municipalities. For instance, reports estimate that U.S. retailers lost $60 billion worth of goods due to retail theft in 2015. Illinois accounts for 3.4% of that total which is over $2 billion worth of goods or $5 million worth of goods a day. This costs the state a minimum of $100 million in lost sales tax and local Illinois municipalities a minimum of $25 million in lost sales tax just based on their local share of the state sales tax. The loss is higher for local governments that impose their own sales tax. These numbers are extraordinarily conservative as they only take into account people actually apprehended and do not take into account the fact that shoplifters steal dozens of times before getting caught.
Lawmakers need look no further than the changes California made just two years ago where they changed the law via initiative to require a misdemeanor sentence, rather than a felony, for anyone stealing less than $950 worth of goods – less than half of what is being proposed in Illinois. According to FBI statistics, property crimes in California increased 8% while larceny crimes increased 11%. Locally, of the 66 California cities that the FBI number included, 49 experienced overall property theft with 24 experiencing double-digit increases. Moreover, at the end of the year, five California cities were ranked in the top 10 for the largest property theft increases in the U.S. Additionally, the Los Angeles Police Department reported retail theft increased 25% in 2015. Finally, the state was required to appropriate $250 million for local communities in follow up legislation due to the state cost shift and burden placed on local communities, law enforcement, and human services.
IRMA can agree that non-violent offenders, particularly first-time offenders, should not necessarily be sitting in prison. That is why IRMA worked with Cook County Sherriff Tom Dart’s office to pass the ‘Rocket Docket’ legislation not more than a year ago which requires an immediate hearing for retail theft offenders. It also requires them to be released on an I-bond or electronic monitoring. Oddly enough, this retail offender program was not considered or calculated in the Commission’s study. Moreover, while first time offenders should not be languishing in jail, the Illinois Sentencing Policy Advisory Council’s (SPAC) own statistics conclude that the average retail offender has seven previous felony convictions and eighteen previous misdemeanor convictions. Any suggestion that retail theft is committed solely by first time offenders or harmless individuals is simply incorrect.
IRMA looks forward to further discussion on this issue.
SENATE BUDGET COMPROMISE
Late last week, it was revealed that the Senate President John Cullerton and Senate Republican Leader Christine Radogno had been engaged in secret discussions on the framework of a deal to end Illinois’s long budget impasse. Neither Governor Bruce Rauner nor Speaker of the House Michael Madigan [DC1] were included in the discussions. No votes were taken on the framework before the 99th General Assembly adjourned Sine Die.
The package included many issues that are a concern of Illinois retailers. It increases the minimum wage from $8.25 to $11.00 by July 2020. While it did provide for partial preemption it fell well short of what is needed to return stability to Illinois. In a nod to the negative impact such an increase can have on hiring, they included a proposed tax credit for employers with fewer than 50 employees. All told, it includes revenues of $5.3 billion. Those revenues would be realized primarily from increasing the income tax from 3.5% to 4.9% for individuals and from 4% to 7% for corporations. A one-cent-per-ounce tax on sugar sweetened beverages has been proposed. This comes on top of the sugar sweetened beverages tax recently enacted in Cook County. They also increase state revenues by proposing the repeal of credits for domestic and foreign dividends and the outer continental shelf as well as repeal of the ‘non-combination rule’. Tax credits for R&D and film production in Illinois receive 10-year extensions. The corporate franchise tax would be eliminated and LLC fees for initial filings would be substantially reduced. During the nearly two years Illinois has not had a complete budget, the bill backlog has grown to approximately $11 billion. Unfunded pension liabilities have grown to nearly $120 billion.
Pension reform was also part of the package which included a proposal by President John Cullerton to offer state employees a choice between accepting reductions to cost-of-living raises in retirement in exchange for a higher future pensionable salary. Gaming was included to inject some revenue. Five new casinos were proposed. One each in Chicago, Cook County suburbs, Danville, Rockford and Lake County. It also expanded electronic gaming in select areas as well.
Some of Governor Rauner’s “Turnaround Agenda” was included in the package. Minor changes to the workers’ compensation system were considered. A two term limit on the Senate President and Republican Senate Leader was proposed and was later enacted within the rules that will govern the Senate for the 100th Assembly. Under these rules, a Senate leader can serve no more than five two-year terms. It also included a two year property tax freeze for all local governments, some local government consolidation and some school mandate relief. It included a stopgap budget providing monies for higher education and social programs. Other monies, such as those for Medicaid and elementary and secondary schools are being provided under a series of consent decrees. Finally, they propose issuing $7 billion in bonds to pay down part of the $11 billion debt. This would provide savings to the state as the interest rate on the bonds would be less than the interest rate the state pays under the Prompt Payment Act.
Many advocates believe the package was long on revenue and short on actual tangible reform, business or otherwise. Nevertheless, this will serve as a marker for additional negotiations in the 100th General Assembly. IRMA has already engaged with the leaders and will continue to do so as the discussion moves forward.
EMPLOYEE SICK LEAVE ACT CLARIFIED
Last year Illinois’ lawmakers passed legislation that would require any businesses that already offer paid sick time to employees to allow them to use that time to care for family members. Basically it converted any existing paid sick time policy to a paid time off policy. The legislation only impacts those companies who offered sick time to employees. It does not require companies to offer polices nor does it prohibit companies from reducing the time offered or eliminating their sick time policy to avoid the new legislative mandate. The legislation was drafted by the AARP and included language from the Illinois Chamber of Commerce that eventually helped AARP convince lawmakers to vote for the flawed bill over the objections of every other business group.
As passed by the General Assembly the language was unclear on whether law applied to paid rather than unpaid sick days and failed to exempt federally preempted industries. As a consequence, the Illinois Manufacturer’s Association (IMA) and IRMA worked to clarify the language during the lame duck session. Keeping in mind that IMA and IRMA had to work within the framework passed by lawmakers the clarifications included clearly articulating that short term and long term disability, insurance, workers’ compensation or similar benefits were excluded; clearly articulates that the legislation does not impact or alter the way an employer designs or enforces their sick time policy such as doctor verification, prior notice, etc.; exempts industries that are preempted by federal law such as the railroad industry; and exempts collective bargaining agreements.
Despite these changes, the unintended consequences of the legislation puts companies that currently voluntarily offer paid sick leave in a position to determine whether or not to continue offering employee sick time, paid or otherwise.
As is always the case, the convening of a new Assembly brings with it the departure of friends. IRMA would like to thank the following former members of the Assembly for their sacrifice and service throughout their careers:
|William Delgado (D- Chicago)||Darin LaHood (R- Dunlap)|
|Dan Duffy (R- Lake Barrington)||Dave Luechtefeld (R- Okawville)|
|Gary Forby (D- Benton)||Matt Murphy (R- Palatine)|
|Michael Frerichs (D- Gifford)||Michael Noland (D- Elgin)|
|Dan Kotowski (D- Park Ridge)||John Sullivan (D- Rushville)|
|Edward Acevedo (D-Chicago)||Frank Mautino (D- Spring Valley)|
|John Anthony (R-Morris)||Donald Moffitt (R- Gilson)|
|John Bradley (D- Marion)||Raymond Poe (R- Springfield)|
|Rich Brauer (R-Petersburg)||Pamela Reaves-Harris (D- Chicago)|
|Adam Brown (R-Decatur)||Wayne Rosenthal (R- Forsyth)|
|Katherine Cloonen (D-Bradley)||Ron Sandack (R- Downers Grove)|
|Monique Davis (D-Chicago)||Andrew Skoog (D- LaSalle)|
|Kenneth Dunkin (D-Chicago)||Mike Smiddy (D-Hillsdale)|
|Jack Franks (D-Woodstock)||Ed Sullivan (R- Mundelein)|
|Eddie Lee Jackson Sr., (D- E. St. Louis)||Mike Tryon (R- Crystal Lake)|
|Dwight Kay (R- Edwardsville)||Patrick Verschoore (D- Milan)|
|David Leitch (R- Peoria)|
CONGRATULATIONS AND WELCOME!
IRMA wants to congratulate all Representatives and Senators and welcome them to the 100th General Assembly. We look forward to working with each and every one of you. IRMA would also like to congratulate Senate President John Cullerton and House Speaker Michael Madigan on their selection to lead their respective Chambers and Senate Republican Leader Christine Radogno and House Republican Leader Jim Durkin on their selection to lead their respective caucuses. Finally, IRMA would like to extend congratulations to all new members of the General Assembly: