Week in Review for Week Ending 2/16/19

GENERAL ASSEMBLY

Representative Bourne leads appointment of new Legislative Inspector General.  Rep. Avery Bourne led a bipartisan, bicameral group of legislators in the selection of a person with trusted legal experience to take on the duty of examining allegations of misconduct within the General Assembly.  Significant allegations of misconduct, including allegations of sexual harassment, were made against General Assembly members and senior members of legislative staff during the 100th General Assembly (January 2017 – January 2019).  Under state law, allegations of these types must be referred to the office of an independent Legislative Inspector General for scrutiny and possible referrals for discipline.  This includes, in rare cases, referral of an allegation to law enforcement.

Representative Bourne, who serves as chairperson of the Legislative Ethics Commission, and her colleagues united around the appointment of Carol M. Pope as Legislative Inspector General.  With experience as a state circuit judge and as a state appellate judge, Judge Pope was seen by the Legislative Ethics Commission as an excellent candidate to serve as Legislative Inspector General for a term from March 1, 2019 through June 30, 2023.  Rep. Bourne was the lead House sponsor of the resolution of appointment, SJR 17, which was unanimously approved by the House on Thursday, February 14.

House committees begin legislative process.  The 39 standing committees of the Illinois House of Representatives began meeting for bill action this week.  The committees debated various pieces of legislation and approved measures to send to the House floor for further action.   Several of the House committees set up subcommittees to enable further discussion of key issues.      

BUDGET

Moody’s Analytics prepares overall State of Illinois economic forecast.  The Commission on Government Forecasting and Accountability (COGFA), the General Assembly’s nonpartisan budgetary monitoring arm, asked Moody’s Analytics to describe the current state and forecasts for Illinois’ economy.  The Moody’s numbers and analysis will help the Illinois House and Senate determine the tax revenue numbers for money that will come in during fiscal year 2020, the budget year that begins on July 1, 2019. 

Although unemployment in many local regions of Illinois remains above 4.0%, the Moody’s analysts describe the state’s economy as a whole as enjoying full employment.  Illinois’ economy is characterized by labor supply constraints, with insufficient workers in high-demand subsectors of the economy such as health care and professional services, and in the booming region of greater Chicago.  This, in turn, creates higher pay and income tax payments to the State of Illinois, but also generates wage and cost pressures on the private sector.  The current numbers posted on the Employment Cost Index for Chicago reflect these trends.   

Moody’s Analytics notes that in May 2018, the General Assembly enacted an on-time budget.  The action was seen as “an important step toward restoring private sector confidence.”  Chicago is strengthening its status as a super-regional location of transportation, professional, and financial services for the U.S. mid-states region.  “On a four-quarter moving average basis,” Moody’s Analytics notes, “Illinois’ personal income growth is now leading the regional pack.”

Areas of weakness noted by Moody’s analysts include a slowdown in the key housing market.  In Illinois, single-family home price appreciation is only about half the regional and national rates, which are being driven by red-hot housing markets in super-regions such as California and the East Coast.  Homebuilders are responding to this slowdown by reducing their rate of new Illinois housing construction.  This trend could generate effects on Illinois sales tax revenues down the road, due to the significant correlation between home-buying activity and the retail purchase of big-ticket durable goods such as furnishings and motor vehicles.

MINIMUM WAGE

House Republicans oppose costly, job-killing minimum wage hike.  Illinois has long had a reputation for being unfriendly to job creators. With our excessive workers’ compensation insurance costs, high minimum wage and higher taxes, we cannot afford to do any further damage to our business climate.

Unfortunately, Illinois Democrats continued their assault on small business by passing a large increase in the minimum wage this week. Senate Bill 1 will incrementally increase Illinois’ minimum wage to $15 an hour by 2025, which is an 82% increase in labor costs.

Illinois’ current minimum wage is $8.25 an hour, a dollar above the federal level. When SB 1 is fully enacted, Illinois will join New York and California with the highest minimum wage in the nation. Illinois already has a higher minimum wage than most of our surrounding states:

  • Indiana: $7.25 / increases tied to the federal rate
  • Iowa: $7.25 / increases tied to the federal rate
  • Kentucky: $7.25 / increases tied to the federal rate
  • Missouri: $8.60 / tied to annual cost of living factors determined by the CPI index and increasing, incrementally to $12.00/hr on January 1, 2023
  • Wisconsin: $7.25

While Democrats argue that it should be a “living wage,” the reality is that the majority of minimum wage jobs are held by those just entering the workforce. Numerous studies have demonstrated that increasing the minimum wage leads to job losses for low-wage workers. No wage is enough if there isn’t an opportunity for a job.

After Illinois raised its minimum wage in 2010, unemployment among teenagers and part-time workers went up. Business owners cannot simply absorb the higher cost of doing business. They are forced to cut their workforce or go out of business.

Businesses have a limited ability to raise prices to make up for the cost of a higher minimum wage. Two-thirds of Illinois’ population lives within a 40-minute drive of the state border. With higher gas, liquor, tobacco and sales taxes, this will create yet another reason for these people to shop across the border.

Democrats argued that the tax credit included in SB 1 will help offset the costs to Illinois businesses. However, this tax credit is not meaningful and is rather deceptive. Any employer that pays more than the minimum wage is not eligible for the tax credit. Any employer with more than 50 employees is not eligible. A single grocery store, restaurant, movie theater, etc. may have more than 50 employees, making them ineligible for the tax credit.

Beyond the lost jobs and higher costs to Illinois businesses, the Democrats’ minimum wage hike will have a massive fiscal impact to the State of Illinois.

The Pritzker Administration estimates the cost to the State to fully implement a $15 minimum wage at more than a BILLION dollars. Their estimates are less than the estimated cost increases for nursing homes alone. The billion dollar cost estimate also leaves out the massive costs to K-12 schools, higher education, counties, municipalities, park districts, etc. All of these costs will be passed along to Illinois taxpayers.

Increasing Illinois’ minimum wage will hurt our small businesses that are struggling to stay afloat in a difficult economy. We cannot afford to lose any more jobs. We cannot afford the billions of dollars in additional costs to the State and local governments. That is House Republicans unanimously opposed raising the minimum wage to $15.

It should be noted that four House Democrats joined with House Republicans in bipartisan opposition to SB 1, which passed the House Thursday on a vote of 69-47-1. The measure now goes to Governor Pritzker for his signature into law.

NATIONAL GUARD

Air National Guard unit deployed to U.S. southwest border.  The unit, which includes Illinois Republican Congressman Adam Kinzinger, will help guard our southern border with Mexico.  Lt. Col. Kinzinger, a pilot, has flown RC-26 aircraft for surveillance and reconnaissance.  Congressman Kinzinger’s spokesperson said that in carrying out his defense duties the congressman will stay within the borders of the United States.  Congressman Kinzinger is a veteran of the U.S. wars in Iraq and Afghanistan.  The deployment announcement did not say how long Kinzinger’s unit would remain on deployment.

PUBLIC UTILITIES

Exelon expresses concern about the future of Illinois nuclear power plants.  Utility holding company Exelon asserts that the total operating cost of nuclear-generated electricity is placing pressure on its mandate to generate and sell electricity to customers at reasonable rates.  Current natural gas supplies and the cost of gas-turbine-fired electricity could put three major Exelon nuclear-powered generating complexes, at Braidwood, Byron, and Dresden, at risk for early closure.

The three reactor complexes, all located in Northern Illinois, generate thousands of megawatts of electricity for feeding into the interstate grid that serves Chicago and adjacent metropolitan areas.  Exelon could ask Illinois for adjustments to state law to enable power generated by these three nuclear power complexes to be sold into the grid marketplace.  A similar change to state law, the Future Energy Jobs Act, became law in December 2016.  The adjustments made by this 2016 law to Illinois electricity markets are credited with saving two other Illinois nuclear-power complexes.  The Central Illinois reactor in Clinton, and the Northern Illinois reactor at Quad Cities, had their operational status stabilized following passage of the Future Energy Jobs Act.       

CAPITOL COMPLEX

New statues of Illinois leaders proposed for State Capitol.  The proposals came from House Republican Rep. Tom Bennett, who calls for Illinois to pay tribute to major figures of state history.  Names of people to be commemorated include Illinois-born President Ronald Reagan; President Barack Obama, who began his political career in the Illinois State Senate; Governor Jim Thompson, the longest-serving governor of Illinois; state representative and labor leader Reuben Soderstrom; Chicago pioneer Jean-Baptiste Pointe du Sable; and Harold Washington, the first African-American mayor of Chicago.

The statue proposals are contain in HB 168 and HB 169.  These measures contain language to provide for the private sector to raise funds for the monuments and to provide that the statutes be designed, cast, built, and raised without the use of taxpayer funds.  The bills have been assigned to the House Executive Committee for discussion and debate.