Chesney’s Weekly Roundup- week ending Sept. 21, 2019

JOBS

Amazon agrees to buy 100,000 electric vans from Rivian Automotive.  Although Rivian is a startup firm, its Central Illinois plant is experienced at motor vehicle assembly.  The Normal plant used to make Diamond-Star cars for Mitsubishi Motors before shutting down in November 2015.  The electric delivery vans will be operated under the firm’s Amazon Prime identity trademark, and will carry goods from Amazon warehouses for home delivery.  The first vans will go into operation in 2021, and the current goal is to operate 100,000 Rivian-made vans under the Amazon Prime name by 2024.  

Rivian is entering the electric vehicle market with a different business model from the better-known Tesla Motors.  While Tesla has entered the roadster/sedan market, the Michigan-based Rivian has gone directly into light trucks.  In November 2018, Rivian debuted electric-powered sport-utility vehicles (SUVs) and pickup trucks.  Their light-truck chassis has found favor with Amazon.  The online retailing firm’s controlling owner, Jeff Bezos, has said he wants to reduce Amazon’s significant carbon footprint.  The Amazon/Rivian announcement was made on Thursday, September 19. 

Statewide unemployment rate drops to 4.0%.  The four percent level is one traditional benchmark of what constitutes “full employment.”  It should be noted that there are some Illinoisans, classified as “discouraged workers,” whose potential employment status is negative enough that they have ceased to actively search for work.  In addition, it is highly likely that there are geographic locations within Illinois that have unemployment rates higher than the full-employment benchmark rate of 4.0%.  The Illinois Department of Employment Security (IDES), which released the statewide numbers for August 2019 on Thursday, September 19, will follow up with a report of August Illinois jobless numbers in key local metropolitan areas later this month. 

The drop in the statewide unemployment rate from 4.2% in July to 4.0% in August 2019 was spurred by good job creation numbers.  Illinois has approximately 65,000 more nonfarm payroll jobs than one year ago.  Many jobs are being created in traditional growth sectors such as educational and health services (up 17,900 year-over-year) and leisure and hospitality (up 14,300 year-over-year).  Many of these new jobs are concentrated in Chicago and in locations within Downstate Illinois that have large teaching hospitals or tourism industries.  Illinois as a whole, and locations within Downstate Illinois in particular, continue to have higher unemployment than the U.S. jobless rate as a whole.  The U.S. national unemployment rate was 3.7% in July 2019.   

ENERGY

Another Illinois coal-fired plant set to close down.  In August 2019, Vistra Energy announced plans to shutter four of its eight coal-fired electric-generating plants in Downstate Illinois.   Central Illinois facilities that face termination include facilities in Canton and Havana.  Vistra stated that these four plants will cease to burn coal and generate power by the end of calendar year 2019.  The action is associated with increasing pressure by the Pritzker administration and the environmental community against the burning of coal to generate electricity.

Now, another Vistra plant is set to shut down.  Environmental groups, which have commenced litigation proceedings against Vistra on various counts, including alleged violations of the Clean Air Act, announced a proposed settlement with Vistra this week.  Under a key provision of the settlement, the electric holding company will shut down operations at the coal-fired E.D. Edwards generating plant in Bartonville, Illinois, south of Peoria.

E.D. Edwards has three turbine generators with a capacity of 780 megawatts, making it a major power source for Illinois electric customers.  When operating at its day-to-day maximum of 585 megawatts, Edwards can power approximately 600,000 Central Illinois homes.  However, the increased use of power generated from natural gas is affecting the electricity industry across the United States.  The Edwards generating plant, which began burning coal in 1960, employs approximately 70 workers.

The proposed E.D. Edwards settlement agreement, which was announced on Monday, September 16, is a preliminary document.  It has yet not been approved by various authorities that will be required to approve and sign off on it.  Closure of the Edwards plant will not only affect the jobs of workers at the plant, but will also affect the budgets of school districts and other taxing bodies that collect revenues from property taxes paid by the plant.

ENVIRONMENT

Household hazardous waste collection sites announced.  One way that Illinois households can help the environment is by making sure that hazardous waste items from their personal property are turned in for safe disposal.  Tests of groundwater and surface water are finding significant quantities of chemicals, including pharmaceutical drugs, in the water used by Illinoisans for drinking and day-to-day life.

The Illinois Environmental Protection Agency has developed a network of collection sites for safe disposal of household hazardous waste.  Oil-based paints and paint thinners, household weed killer, motor oil, cleaning products and drain cleansers, and household batteries are among the types of chemicals to be safely disposed of.  Drop-off locations will be in operation in both greater Chicago and Downstate.  Some of the disposal points will operate seasonally in fall 2019, while others are permanent.  Households are urged to learn more about this drop-off program as a preferred alternative to tossing hazardous materials into the household waste stream.

GAMBLING

As sports betting approaches, COGFA report shows changes in existing gaming climate.  The “Wagering in Illinois” annual report, by the Commission on Government Forecasting and Accountability (OCGFA), dives into Illinois gaming cash flows for trendlines on what is happening in this key industry.   

Illinois’ casino gaming sites, and its video gaming machines and video gaming parlors, pay different tax rates.  The moneys they pay are kept separate from each other and are deposited into separate funds for use in separate ways.   COGFA’s analysis shows that the money bet by players at video gaming terminals (VGTs) is continuing to increase rapidly, while moneys bet at traditional casino gaming floors are shrinking.  VGTs may be winning some market share from casinos.  These trends are affecting the flow of tax moneys to the State. 

Illinois imposes heavy taxes on gambling activities in Illinois. In FY19, the fiscal year that ended on June 30, 2019, gambling proprietors paid $669 million in gaming taxes to Illinois.  More than half of this sum, $395 million, came from taxes paid by VGT terminal operators.  Furthermore, this $395 million was up 14% from the comparable level of taxes paid by VGT operators in the previous fiscal year.  By contrast, casino gaming tax payments actually dropped 1% in FY19, falling from $272 billion in FY18 to $269 million in FY19.  Casino owners submitted tax filings that showed the attendance patterns that led to these lower tax payments: casino admissions were down 5.9%, with falling customer counts at all of the casinos except the centrally-located Rivers Casino in Des Plaines, Illinois.

The rise in VGT tax revenues was driven by increasing availability of the machines to Illinois storefront customers.  As of June 2019, 32,033 VGTs were operating throughout Illinois.  In addition to State taxes, the VGTs paid $80 million to units of local government that license video machines and allow them to operate within municipal or county limits.  Some cities and counties, such as Chicago, do not allow VGTs to operate within their jurisdictions.    

TAXES

Tax amnesty announced.  From time to time, the State of Illinois announces tax amnesties, brief periods when people can pay past-due, unpaid taxes to the Department of Revenue (IDOR) and gain partial relief from penalties due.  In spring 2019, the General Assembly asked IDOR to briefly open a tax amnesty window.  In compliance with State law, IDOR has announced a six-and-a-half-week window for the payment of delinquent back taxes.  The 2019 tax amnesty period will begin on October 1 and will end on November 15.

The 2019 tax amnesty will cover past-due liabilities that accrued from July 1, 2011 through June 30, 2018.   Tax experts believe the tax amnesty may bring in as much as $175 million.  Rules to govern the 2019 Tax Amnesty were announced on Tuesday, September 17.

ILLINOIS HERITAGE

Push to change status of Ronald Reagan Boyhood Home.  The 40th President, an Illinois native, was born in Tampico in northwestern Illinois.  As a young boy with his family, Reagan lived in several locations throughout the state.  By far the most important of his homes was what is now the Ronald Reagan Boyhood Home, a modest 2-story frame house in Dixon, Illinois, where the future president attended high school, played football, and served as a lifeguard at what was then a swimming hole on the Rock River.

After Ronald Reagan was elected to the White House in November 1980, local Dixon residents and friends of the new President took care to preserve the historic home and open it to the public.  Hundreds of thousands of Americans have toured the home.  The residence’s physical structure has been carefully and affectionately preserved, but the home is losing money and is not interpreted by professionals in the same way as other presidential homes throughout the Midwest.  Two presidential homes in Illinois, the Lincoln Home in Springfield and the Grant Home in Galena, are staffed by federal and State of Illinois personnel trained in historical preservation and public interpretation.

After a lifetime of action and decades of public service, including eight years as President of the United States, Ronald Reagan died in June 2004.  Now the people of Dixon, Illinois who knew him, or met him, and who have been a bedrock of support for the Ronald Reagan Boyhood Home Preservation Foundation, are also passing from the scene.  Friends of the Reagan Home are hoping that the Home can change its status in such a way as to assure its preservation for future generations, in the same manner as other presidential houses and mansions throughout the United States.