This Week in Springfield – 100-28


IN THIS ISSUE:

SALES TAX INFORMATION
PHARMACY BENEFIT MANAGERS
WAGE LIEN
PLASTIC BAGS
TOBACCO 21
LIQUOR
WORKERS’ COMPENSATION

This Week In Springfield (TWIS), both chambers of the Illinois General Assembly reached their first Third Reading Deadline. Unless a bill has its final consideration deadline specifically extended, the legislation will be considered ‘held’. However, any idea could emerge later in the session as an amendment to another bill.
 

SALES TAX INFORMATION

The latest chapter in a multi-year debate over whether or not to grant a private company access to the confidential financial information of businesses was closed this week when the House decisively defeated HB 2717 (Rep. Chris Welch, D- Westchester). The vote was 42-61-3.

When the debate began just over two years ago, a private company, Azavar, was advocating for the bill. Within the last six months, the company faded into the background and was replaced by a new organization called the Illinois Coalition of Local Governments. The primary rationale behind HB 2717 was that the Illinois Department of Revenue is making mistakes in the locating of businesses within the proper municipality. As a result, the municipality in which the business is actually located goes without the sales tax collected and remitted by that business. However, those problems are solved by simply providing the municipalities with the business name and address. They can share that information with anyone. Access to financial information is simply not needed. Three compromises offered by the opponents, led by IRMA, to help local governments address this problem were rejected by the proponents.

Last Monday, a coalition of groups, including IRMA, revealed the results of a request for documents under the Freedom of Information Act (FOIA) from a limited number of municipalities. This request uncovered incidents of municipalities breaking current law by providing the financial information of businesses to third parties as well as Azavar directing municipalities on how to break the law and evade detection.

 

This is the third time this issue has been addressed and subsequently defeated by the Assembly. The Senate twice rejected a similar proposal last year. IRMA would like to thank the members of the House who took the time to thoroughly understand a very complicated issue and voted “no” or “present”. IRMA would also like to thank our members, and those of the very broad coalition of opponents, who took the time to contact their elected officials and express their opposition.

While this was a substantial accomplishment, we remain vigilant for its return.

 
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PHARMACY BENEFIT MANAGERS

A confluence of developments has ignited a debate over the treatment of retail pharmacies by PBM’s and the fair reimbursement of pharmacies independently as well as within the confines of Illinois’s recent move to Managed Care Organizations (MCO) for Medicaid. HB 3479 (Rep. Sara Feigenholtz, D- Chicago) would require MCOs to have fair and reasonable reimbursement rates for prescriptions as well as patient care services. The reimbursement rates could not be below the acquisition cost of the pharmacy and the current reimbursement rate utilized for fee-for-services under Medicaid. HB 3479 was approved by the House 87-16-1 and now moves to the Senate for additional consideration.

 

On a directly related front, a Medicaid Working Group has been formed comprised of legislators from both chambers. This group has indicated PBMs, reimbursement, and MCOs will be considered. IRMA has already begun discussions with the members of this group.

WAGE LIEN

An agreement was reached to address wage theft. As introduced, HB 4324 (Rep. Chris Welch, (D-Westchester) would have allowed any employee to file a lien against an employer’s current and future acquired real and personal property based on a wage dispute—not an administrative or judicial finding of guilt. The wage lien would also take priority over any other financial obligation, debt, or mortgage. It is meant to address the situation where unscrupulous companies, usually temporary businesses, dissolve and reorganize before a wage claim is brought or adjudicated.

 

A business and banking coalition led by IRMA worked with Rep. Chris Welch and Rep. Jay Hoffman, (D-Belleville) to reach an agreement adopted in Floor Amendment #2 that addresses the issues presented by the advocates. Currently, the Illinois Department of Labor (DOL) is taking 18 months to adjudicate a claim. The agreed upon language requires the DOL to adjudicate wage claims within 30 days of receiving the claim. This would address the issue of companies dissolving, reorganizing, or disappearing before a claim is adjudicated. If the company is found guilty, exhausts its appeals, and still does not pay, a lien will be placed on it assets according to current lien practices. Finally, if a claim is verified an employer will be required to submit an escrow of 10% of the claim for the duration of the 30 day adjudication. If, after the 30 days the employer is found innocent, the funds will be returned to the employer. This agreement passed the House by a vote of 88-3. IRMA would like to thank Representative Chris Welch and Representative Jay Hoffman for their efforts in reaching this agreement.

 
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PLASTIC BAGS

 

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

 

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

 

The sponsor told IRMA he intends to hold additional discussions in the coming weeks.

 
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TOBACCO 21

SB 2332 (Sen. Julie Morrison, D-Deerfield) prohibits anyone below the age of 21 from purchasing tobacco from a licensed Illinois retailer while removing any penalties for the underage possession or consumption of tobacco. The initiative passed the Senate with a vote of 35-20-0 and moves to the House for further consideration.
As currently drafted SB 2332 makes it legal, subject to no penalties, for a person under the age of 21 to: (1) possess tobacco, (2) consume tobacco, (3) sell tobacco, (4) buy tobacco from an unlicensed Illinois retailer or individual, or (5) buy tobacco from a licensed out-of-state retailer or online. Additionally, the bill protects unlicensed, unregulated, and, untaxed individuals selling tobacco to minors while prohibiting licensed retailers from selling tobacco products to anyone below the age of 21.

 

Advocates argue that the brain is still developing until the age of 21 and a person under that age cannot be expected to fully understand the decision they are making when choosing to use tobacco products. This makes an interesting argument since persons under age 21, among other things, are allowed to vote, join the military, enter into legally binding contracts, drive, serve on a jury, sue someone, get a tattoo or piercing, become a blood or organ donor, adopt a child, etc.
Raising the age from 18 to 21 may not make as big of a difference as lawmakers hope, given that most smokers — nine out of 10 according to the Surgeon General— have already begun smoking by the age of 18. Additionally, the vast majority obtain their tobacco products from older family and friends. Three out of four minor smokers will become adult smokers. Ironically, SB 2332 may actually encourage this behavior by removing the current statutory penalties for underage use and consumption of tobacco. And if it is a good idea to remove underage penalties for tobacco products should the state also remove underage use and consumption penalties for other age restricted products such as alcohol?
IRMA is opposed to the bill which will drive sales away from licensed retailers to illegal sellers and to out-of-state retailers.

 
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LIQUOR

Senate Amendment #1 to SB 3022 (Sen. Tony Munoz, D- Chicago) seeks to undo a reform made by former Governor Rod Blagojevich who undertook a reorganization of several agencies that included moving the Illinois Lottery, Gaming Commission, and Liquor Control Commission (ILCC) under the Illinois Department of Revenue (IDOR). Today, only the ILCC remains under IDOR. Retailer and others long-chaffed under an ‘independent’ ILCC believing it was strongly tilted toward the interests of the wholesale tier of the three-tier system. There is a belief that by having ILCC under the auspices of IDOR has restored some semblance of balance which is appropriate as the ILCC is supposed to be a neutral arbiter and regulator.

 

Senate Amendment #1 to SB 3022 was adopted and passed 43-2-3 by the full Senate and now heads to the House for additional consideration.

 
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WORKERS’ COMPENSATION

Lawmakers passed HB 4595 (Rep. Laura Fine, D-Glenview) out of the House Chamber by a vote of 62-43 that would take $10 million from the Workers’ Compensation Commission Operations Fund to create a state-run Illinois Employers Mutual Insurance Company to compete with the over 300 private insurance companies already competing in Illinois. Illinois has the most competitive workers’ compensation insurance market in the nation.

 

Illinois changed its workers’ compensation system in 2011 by limiting payments for carpal tunnel syndrome and for employees who can still work but whose injuries force them into lower-paying jobs. There was also a 30 percent cut to payments for doctors, hospitals and pharmacies treating those injured on the job. As a result, Illinois experienced a 13 percent decline in workers’ compensation medical costs between 2010 and 2014. Despite these changes, Illinois insurers’ companies paid an estimated $2.75 billion in workers’ compensation benefits in 2014, according to the National Academy of Social Insurance. Additionally, Illinois is tied for having the eighth-most expensive premiums in the nation. The experience of the commercial companies was mirrored by the reports from the self-insured companies indicating the insurance companies experience is real.
 
Supporters of HB 4595 argue that workers’ compensation costs are still high for companies because insurance companies have not passed on the savings realized from the 2011 changes. They argue that in 2015, 332 insurance companies underwrote workers’ compensation policies in Illinois, more than in any other state, collecting $2.83 billion in premiums. In 2010, insurers reported losses of nearly 11 percent; four years later, they reported the same in profits. The insurance companies contend that while the 2011 changes likely decreased the insurers’ losses, insurers in Illinois only averaged 6.1 percent profit annually between 2011 and 2014.

 

An identical bill passed last year that was vetoed by the Governor. HB 4595 now goes to the Senate for consideration.

 
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