This Week in Springfield – 100-34

END OF SESSION REPORT
BUDGET
LABOR
TAXES
PHARMACY
CONSUMER PROTECTION
TOBACCO
LIQUOR
FOOD
LICENSING
CANNABIS
MISCELLANEOUS

IRMA END OF SESSION REPORT

 

Illinois lawmakers are gearing up for the general elections this November. It is midterm elections on the federal level and historically midterms are where the party that is not in control of the White House makes some significant gains. This often leads to a “wave” of enthusiasm of various strength at the state level.  Conventional wisdom believes an anti-Trump, and in Illinois an anti-Rauner, wave will bolster any national Democratic wave. In states like Illinois this means that Republicans could be pushed further into the minority. As such, Illinois Democrats have been introducing populist legislation and “wedge” issues that attempt to put Republican lawmakers on bad votes they can use against them in the November elections.  This election year tactic generally leads to ant-business initiatives and this year was no exception.

There have been over 12,000 bills filed this Assembly. This does not include amendments. In the past, a number of bills were held in the House Rules Committee. This General Assembly, every bill was assigned to a substantive committee in large part to blunt criticism from the Governor that Speaker Michael Madigan, D-Chicago did not allow the House or Senate to consider proposals.

Below are bills of consequence to the retail industry that passed both chambers and will now be sent to the Governor for his consideration.


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BUDGET

 

With rarely seen bi-partisan margins in favor, the Fiscal Year 2019 budget was approved by the Assembly as contained in HB 109 (Rep. Gregory Harris, D-Chicago/Sen. John J. Cullerton, D-Chicago) the appropriation bill, and HB 3342 (Rep. Gregory Harris, D-Chicago/Sen. Heather Steans, D-Chicago) the Budget Implementation Bill (BIMP). It is a full-year budget for FY ’19 and a supplemental budget for FY ’18 to cover the inadequacies of the current year’s budget. The budget contains no tax increases. Revenues come from anticipated higher tax revenues from a growing economy, $200 million in fund transfers, $800 million in sweeps from various administrative funds, and over $400 million in pension reforms.  Some lawmakers and pundits contend that it is actually $1.5 billion short.

The pension changes are voluntary so they rely upon an estimation of the number of people in the pension system who will exercise the options. The pension changes are: (1) a buy-out for vested, inactive members who are now employed somewhere other than the state but have not retired. They will be offered a buyout at 60% of the value of their pensions (estimated savings = $41 million); (2) A buyout of the 3% annual cost-of-living-adjustment for Tier 1 pensioners (estimated savings = $382 million over time); and, (3) reduced salary spiking cap from 6% to 3% meaning any salary increases over 3% will be covered by local government employers.

The budget negotiations started months ago with the formation of a bi-partisan budget working group including representatives of the Governor’s office. The framework agreed to by these legislators was then moved to the four leaders and the Governor who made some adjustments and finalized the budget.

It is an $80 billion budget, which includes federal monies, but the real focus is on the portion paid from General Revenue Funds which totals $38.5 billion. Here are some highlights:

  • Elementary and secondary education received an increase of $402 million as compared to FY ’18. TWIS readers will recall that last year, a comprehensive reform of the funding formula was enacted but it requires $350 million in additional monies each year for the next 10 years. Due to the fact a supplemental budget for FY ’18 was included in the budget deal, that $350 million threshold was met for the first two years.
  • Higher education received an increase of $60 million. In addition, a $25 million scholarship fund (AIM HIGH) was created to provide tuition assistance to in-state students wanting to continue their education at in-state institutions of higher learning. This $25 million must be matched by the various institutions.
  • Human service entities are funded including a 50-cent per hour wage increase for caregivers who work with developmentally disabled individuals, substance abuse providers, mental health providers, etc. Human service spending totals $13.835 billion of the GRF budget but even more goes to human services as a result of federal funds.
  • Public safety spending will cover two mental health treatment facilities and two life skills re-entry facilities as well as a new State Police cadet class.
  • A $2.9 billion pay-as-you-go capital program as well as nearly $9 billion to fund IDOT’s FY 19 road program.
  • Nearly $64 million in back wages owed to state employees. These cost of living increases were originally frozen by the Governor’s Office but a court ordered them to be paid.
  • A temporary reimbursement bridge for pharmacies with 10 or fewer locations in counties with less than 50,000 in population. This is a result of the shockingly low reimbursements being seen as a result of the Medicaid managed care rollout.
  • The sunset for on-line lottery is extended for another year. The new private lottery manager, Camelot, will assume control July 1st so this gives them time to put a program in place and recommend changes they would like to see. .
  • Prohibits cost of living increases for legislative and executive elected officials and appointees.
  • The bill backlog could be reduced by up to $1 billion under the provisions of SB 2858 producing additional interest savings to the state.

The Governor has already signed the budget into law.

IRMA POSITION: NEUTRAL

CANNABIS

SB 336 (Sen. Don Harmon, D-Oak Park/Rep. Kelly Cassidy, D-Chicago)  creates the Alternative to Opioids Act of 2018 which amends the Compassionate Use of Medical Cannabis Pilot Program Act by extending the legal use of medical marijuana to individuals who would conventionally be prescribed opioids. This would grant people who suffer from chronic pain, but not necessarily any of the conditions laid out in the current law, access to marijuana – with a prescription.

In addition to expanding medical marijuana access for patients and doctors seeking alternatives to opioid painkillers, SB 336 would also remove a barrier for Illinoisans who have a criminal record, a restriction put in place as part of Illinois’ original medical marijuana law. In the 2017 fiscal year, the Illinois Department of Public Health denied 635 requests for medical marijuana from qualifying patients. Some of these denials were made solely on the basis of failed background checks. SB 336 does away with such background checks and thus allows more individuals to access appropriate medical treatment. It also provides an avenue for a provisional card while an individual awaits a permanent card. This is in response to the nearly 6 month backlog for qualifying patients.

The bill passed with bipartisan majorities in the House with a vote of 72-38-1 and Senate with a vote of 44-3.

IRMA POSITION: SUPPORT


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CONSUMER PROTECTION

Rebate Cards Dormancy ChargesHB 4922 (Rep. Theresa Mah, D-Chicago/Sen. Cristina Castro, D-Elgin) which is intended to prohibit the issuance of product rebate cards that charge dormancy or other post-issuance fees. The initiative only applies to rebate cards that can be used at multiple merchants. It exempts those closed-looped merchant cards that are distributed and used at one retailer. The language only applies to multi-store cards utilized for rebates after the consumer completes the rebate submission process.

HB 4922 passes the House with a 67-44 vote and the Senate by a 35-17 vote.

IRMA POSITION: NEUTRAL

Credit FreezeHB 4095 (Rep. Greg Harris, D-Chicago/Sen. Bill Cunningham, D-Chicago) provides that a consumer reporting agency may not impose a charge on a consumer for placing a freeze, removing a freeze, or temporarily lifting a freeze. This is in the wake of the Equifax breach where reporting agencies were requiring consumers to pay a fee to lift the freeze on their reports.

IRMA POSITION: NEUTRAL

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FOOD

Food Service Sanitation Managers Certification (FSSMC)HB 5011 (Rep. Ryan Spain, R-Peoria/Sen. David Koehler, D-Peoria) grandfathers the FSSMC’s that were approved prior to last year’s passage of the legislation that removed the redundant state certification and fee on food retailers.  Last year, IRMA convinced lawmakers to remove the redundant state food certification and accompanying unnecessary fee on food retailers.  IDPH complied but has refused to acknowledge the expiration date of current FSSM certificates. This has required some employees to retake the federal tests before the expiration of the current 5 year certificates.  HB 5011 would grandfather those FSSM certificates approved before the change in the law.

HB 5011 was approved unanimously in the House by a vote of 111-0 and the Senate by a vote of 55-0.

IRMA POSITION: SUPPORT

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LABOR

Pay History—Similar legislation that was vetoed by the Governor and failed to be overridden by the Senate last year passed the House with by a vote of 87-24 and the Senate by a vote of 31-16-1.  Despite an avenue for compromise offered by the business community, the advocates chose to pursue the same path traveled before.

HB 4163 (Rep. Anna Moeller, D-Elgin/Sen. Christine Castro, D-Elgin) prohibits an employer from asking an employee about previous wage, salary and other compensation.  It also erodes the current statutory defenses for Illinois employers while expanding the statutory penalties.  While IRMA has, from the beginning, agreed to prohibit the question as long as there are common sense exemptions (e.g. employee already works for the business or salary is a matter of public record), IRMA remains opposed to arbitrarily restricting Illinois’ employer’s current limited defenses and increasing current statutory penalties.  Especially when the penalties provide more “protection” for prospective employees who would potentially be asked a question in violation of the proposed legislation than current employees who are paid less in violation of the current statute—a perplexing quirk that seems to undermine the proponents own stated purpose for the bill.

Illinois currently only has three defenses to an unequal wage claim (1) seniority system; (2) merit system; and (3) a system that measures earnings by quantity or quality of production. The advocates argue that limiting the current defenses and increasing the penalties will deter employers from violating the Equal Pay Act. In the past 11 years (excluding 2010 and 2011 where there is no available data), under the current limited defenses, there have been only 51 recorded violations of the Equal Pay Act. In that same time period, approximately 707 investigations were conducted by the Illinois Department of Labor. Less than 7.5% of all claims in the last 11 years have resulted in a violation.  According to the U.S. Small Business Administration there are over 1.2 million businesses in Illinois. Assuming that a different company was responsible for each violation only .0000425% of Illinois businesses have been responsible for an Equal Pay Act violation in 11 years.  This is a 99.9999575% compliance rate.

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

IRMA and a coalition of businesses went further and offered to remove the affirmative defense, passed in other states, from the legislation and just prohibit an employer from asking the question.  The current penalties would remain the same and apply to a violation of the new prohibition. This language is reflected in SB 3100 (Sen. Jennifer Bertino-Tarrant, D-Plainfield). This additional compromise was also rejected by the proponents.

It stands to reason that a reasonable compromise would be to take a proactive step forward by prohibiting the salary inquiry while recognizing the overwhelming majority of Illinois businesses have proven to promote and support both men and women in the workforce.

After the legislation passed the Senate, the sponsor filed a Motion to Reconsider. Therefore the Senate will hold the legislation and release it closer to the election in order to force the Governor to act. In other words, the Democrats are using HB 4163 as a “wedge” issue in an attempt to put the Governor in politically compromising position.

IRMA POSITION: OPPOSED

Employee ExpensesSB 2999 (Sen. Patricia Van Pelt, D-Chicago/Rep. Melissa Conyears-Irvin, D-Chicago) requires an employer to reimburse an employee for all necessary expenditures or losses incurred by the employee directly related to services performed for the employer. Necessary expenses” include all reasonable expenditures or losses including, but not limited to, uniforms, equipment, vehicle expenses, electronic devices such as cell phones, tablets, and computers, and any other expenditures or losses an employer requires an employee to incur in direct consequence of the discharge of employment duties. An employer is not liable under this Section unless the employer knew or had reason to know that the employee incurred the expenditure or loss.

This legislation is consistent with federal law. SB 2999 passed the Senate by a vote of 50-2 and the House by a vote of 114-1.

IRMA POSITION: NEUTRAL

Attorney General Worker Protection Unit SB 193 (Sen. Kwame Raoul, D-Chicago)/Rep. Jay Hoffman, D-Belleville) allows the Attorney General (AG) to simultaneously litigate or re-litigate an issue that is being investigated or has already been adjudicated by the Illinois Department of Labor (DOL).  This would include claims under the Prevailing Wage Act, the Employee Classification Act, the Minimum Wage Law, the Day and Temporary and the Labor Services Act, and the Wage Payment and Collection Act.  Under current law the (DOL) investigates and adjudicates claims under these Acts.  Once the claim is adjudicated, the DOL may forward the judgement to the AG for enforcement.  SB 193 would allow the AG the power to simultaneously investigate and bring suit against an employer. As such, an employer could be responsible for both a DOL and AG investigation and lawsuit. Additionally, the AG may re-litigate a case the DOL has already ruled upon.  For instance, if the DOL rules in favor of a business and closes the case and the AG is not satisfied with the outcome, the AG may independently open the case and re-litigate the complaint.

SB 193 passed the House with a 69-47 and the Senate with a 35-16 vote.  The Governor has already vetoed the legislation. Neither chamber reached the 3/5 majority required to override the Governor’s veto.

IRMA POSITION: OPPOSED

Nursing Mother’s ActHB 1595 (Rep. Katie Stuart, D-Collinsville/Sen. William R. Haine, D-Alton) requires an employer to provide for reasonable break time during the first year after the child’s birth each time the employee needs to express milk. The break time may run concurrently with any break time already provided to the employee. An employer may not reduce an employee’s compensation for time used for the purpose of expressing milk or nursing a baby. An employer shall provide reasonable break time as needed by the employee unless to do so would create an undue hardship as defined by the Illinois Human Rights Act.

HB 1595 passed the House by a vote of 104-0 and the Senate by a vote of 49-0.

IRMA POSITION: NEUTRAL

Equal Pay African Americans –HB 4743 (Rep. LaShawn Ford, D-Chicago/Sen. Kimberly Lightford, D-Chicago) provides that no employer may discriminate between employees by paying wages to an African-American employee at a rate less than the rate at which the employer pays wages to another employee who is not African-American for the same or substantially similar work on a job that requires equal skill, effort, and responsibility and is performed under similar working conditions.

IRMA supports ensuring that any individual regardless of gender, race, sexual orientation, etc. receives the same consideration as any other individual when it comes to equal pay. The issue, however, is one of textbook discrimination which is already illegal under the Illinois Human Rights Act, the Civil Rights Act of 1963, Equal Employment Opportunity Commission guidelines regarding compensation discrimination, and the current Illinois Equal Pay Act which covers all minorities while not singling out one race.

HB 4743 passed the House by a vote of 66-11 and the Senate by a vote of 53-0.

IRMA POSITION: OPPOSED as drafted.

 

Human Rights “Expansion”—Currently, the Illinois Human Rights Act only applies to businesses with 15 or more employees. HB 4572 (Rep. Will Guzzardi, D-Chicago/Sen. Christine Castro, D-Elgin) would expand the coverage of the Act to apply to any business with one or more employees. The “Act” prohibits discrimination in Illinois with respect to employment, financial credit, public accommodations, housing and sexual harassment, as well as sexual harassment in education.

The legislation passed the House with a 64-37 vote and the Senate by a 33-13 vote.

IRMA POSITION: NEUTRAL


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LICENSING

 

Barber Pre-Graduation TestingSB 2877 (Sen. Chuck Weaver, R-Peoria/ Rep. Rita Mayfield, D-Chicago)/ HB 4883 (Rep. Rita Mayfield, D-Chicago/ Sen. Chuck Weaver, R-Peoria) allows students to take their state barber or cosmetology licensure examination after completing 80% of their educational studies. If someone fails their licensure examination while still enrolled in school, they can more easily get the extra help they need to pass the exam the second time and be formally licensed. Even if choosing to take the pre-graduation examination, individuals would still be required to complete their educational studies to ensure they obtain all statutorily required hours of study similar to every other licensure applicant. This is an initiative of IRMA having been brought to it by members in this part of the retail industry.

SB 2877 and HB 4883 both passed the General Assembly unanimously.

IRMA POSITION: SUPPORT

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 LIQUOR

 

Liquor Control CommissionSB 3022 (Sen. Tony Munoz, D- Chicago/Rep. Lou Lang, D-Skokie) 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. Retailers 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 at least some semblance of balance which is appropriate as the ILCC is supposed to be a neutral arbiter and regulator.

Nevertheless, the legislation passed the Senate by a vote of 52-3 and passed the House by a vote of 92-12-1.

IRMA POSITION: OPPOSED

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MISCELLANEOUS

 

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

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

Per the Taskforce’s recommendations, SB 3291 would give the state, and specifically the Division of Aeronautics within the Department of Transportation, the authority to regulate drones in compliance with FAA guidelines.

The legislation passed the Senate by a 52-0 vote and the House by a 112-4 vote.

IRMA POSITION: SUPPORT

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PHARMACY

 

Pharmaceutical DisposalHB 1338 (Rep. Jonathan Carroll, D-Buffalo Grove/Sen. Julie A. Morrison, D-Deerfield) amends the Safe Pharmaceutical Disposal Act by providing that “unused medication” means any unopened, expired, or excess medication that has been dispensed for patient or resident care and that is in a liquid or solid form (rather than in just a solid form). It excludes medications contained in intraperitoneal solutions from language prohibiting a health care institution, or any employee, staff person, contractor, or other person acting under the direction or supervision of a health care institution, from discharging, disposing of, flushing, pouring, or emptying any unused medication into a public wastewater collection system or septic system.

With the rise of the opioid crisis, lawmakers are looking for new ways to combat the health epidemic.

IRMA POSITION: NEUTRAL

Pharmacy PrescriptionsSB 3170 (Sen. Steve Stadelman, D-Rockford/Rep. Litesa E. Wallace, D-Rockford amends the Pharmacy Practice Act and the Illinois Food, Drug and Cosmetic Act to provide that a prescription for medication other than controlled substances shall be valid for up to 15 months from the date issued for the purpose of refills, unless the prescription states otherwise.

The legislation passed the Senate by a vote of 46-0 and the House by a vote of 101-0.

IRMA POSITION: NEUTRAL

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TAXES

 

Online Sales Tax – SB 2577 (Sen. Christine Castro, D-Chicago/Rep. Anna Moeller, D-Elgin) provides that if a retailer or serviceman makes a sale to purchaser in Illinois from outside of Illinois, then that retailer or serviceman is considered to be “maintaining a place of business in this State” if (1) the cumulative gross receipts from sales of service to purchasers in Illinois are $150,000 or more; or (2) the retailer or serviceman enters into 200 or more separate transactions for sales of service to purchasers in Illinois.

The legislation was modeled after the South Dakota law that is currently being reviewed by the United States Supreme Court. SB 2577 passed the Senate by the 39-10-1 vote and has been sent to the House for consideration.

SB 2577 did not pass the House but it was included in the budget agreement that has been signed by the Governor.

IRMA POSITION: SUPPORT

 

Progressive Income Tax—On a partisan roll-call, Illinois House lawmakers narrowly passed a nonbinding resolution to replace Illinois’ current flat tax with a graduated or progressive income tax system.  Proponents argue that House Resolution 1052 provides for a fairer and progressive way for the state to generate revenue by reducing taxes on the middle and low class while increasing taxes on those some consider ‘rich’.  While the proponents of the resolution believe a graduated income tax is more equitable, the resolution did not provide for any suggested or specific rates.  Opponents of the resolution pointed out that the states that have progressive income taxes have higher rates for lower and middle class than Illinois’ current flat rate.

The nonbinding resolution passed the House with by a narrow margin of 61-52.

IRMA POSITION: OPPOSE

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TOBACCO

 

Tobacco 21SB 2332 (Sen. Julie Morrison, D-Deerfield/Rep. Camille Lilly, D-Chicago) prohibits anyone below the age of 21 from purchasing tobacco from a licensed Illinois retailer while removing any penalties for the underage possession or consumption of tobacco.  The initiative passed the Senate with a vote of 35-20-0 and initially failed to pass the House with a vote of 56-54-1.  But on a second try, the initiative passed the House by a vote of 61-49-1.

SB 2332 makes it legal  for a person under the age of 21 to: (1) possess tobacco, (2) consume tobacco, (3) sell tobacco, (4) buy tobacco from an unlicensed Illinois retailer or individual, or (5) buy tobacco from a licensed out-of-state retailer or online.  Additionally, the bill protects unlicensed, unregulated, and, untaxed individuals selling tobacco to minors while prohibiting licensed retailers from selling tobacco products to anyone below the age of 21.

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.

Moreover, 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 become a lawmaker, 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.  What makes this even more ironic is that some of the very same Illinois lawmakers that support this line of thinking also support lowering the age of voting to 16.

Finally, financially the “Tobacco 21” prohibition can easily be compared to what Illinois already knows about heavy handed regulation of tobacco products—it drives business and tax dollars to other states while creating a thriving black market in Illinois. For instance, Illinois has already experienced an outmigration of tobacco sales due to the high tobacco taxes. A Commission on Government Forecasting and Accountability (COGFA) report in 2006 found that after raising the tax on cigarettes the number of legal packs purchased in Illinois has fallen approximately 21% and prompted consumers to look elsewhere to purchase their cigarettes, such as bordering states, the Internet, or through illegal vendors.  Again in 2013, after another round of regulation, COGFA reported tobacco sales tax revenue was short of the projected return by $130 million as consumers purchased tobacco from bordering states, online, and illegal sources.  Not surprisingly, the Illinois Department of Revenue (IDOR) estimates $48 million in lost tax revenue to the state as a result of people finding alternative purchasing avenues (e.g. other states or the black market). Raising the age of the purchase of tobacco is just an additional incentive to exacerbate the current trend without any proven tangible benefit.

It is unclear whether the Governor will or will not sign the legislation.

IRMA POSITION: OPPPOSED

 

Tobacco Records and Unstamped CigarettesSB 3141 (Sen. Karen McConnaughay, R-West Dundee/Rep. Mike Zalewski, D-Riverside) prohibits a taxpayer from introducing into evidence any books or records within 5 days of a hearing.  It also shifts the burden on the retailer by creating a prima facie presumption that a retailer has violated the statute if the retailer cannot produce records upon request. It also shifts the burden on the retailer by creating a prima facie presumption that a retailer is dealing in unstamped cigarettes if unstamped cigarettes from an unlicensed distributor are found on the premises.  Finally, it prohibits the sale of ‘loosies’ by requiring that cigarettes be sold in packages of 20 or 25. IRMA reached agreement with the Sponsor and IDOR to remove IRMA’s opposition.  The legislation passed the Senate by a vote of 52-0 and the House by a vote of 78-35-1.

IRMA POSITION: NEUTRAL

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