Chesney’s Weekly Roundup- week ending Sept. 28, 2019

GENERAL ASSEMBLY

Spain named House Republican Conference Chairman.  State Representative Ryan Spain was appointed by House Republican Leader Jim Durkin to the post of House Republican Conference Chairman, joining Durkin’s leadership team.

“I welcome Ryan to the Leadership team with great enthusiasm. Ryan is a young, thoughtful member whose vision strongly reflects the values of our caucus,” said Leader Durkin regarding the appointment.

“I want to thank Leader Durkin for this appointment. It is an honor to be selected as Republican Conference Chairman,” said Spain. “I have admired Leader Durkin’s approach to legislative issues and caucus management while serving in the Illinois House for the past three years. I look forward to contributing more as a part of his leadership team.”

As Conference Chairman and a member of the leadership team, Spain’s primary duty will be in an organizational role for meetings of the Republican Conference. He will also be helping coordinate the legislative agenda of the conference.

Spain was first elected to the Illinois House in 2016, after having served for more than a decade on the Peoria City Council. Since being elected to the Illinois House, he has led important negotiations for the House Republican Caucus on large budgetary items like Medicaid & Hospital Assessment Reform as well as serving as a liaison for the caucus on Census 2020 issues. He most recently undertook serving as a chief negotiator for House Republicans on the State’s Capital Infrastructure Investment Bill, which begins the work of rebuilding Illinois’ crumbling roads and bridges.

Spain moves into the leadership position formerly held by Representative Tim Butler, who is now an Assistant Republican Leader. The announcement was made effective Monday, September 23.

AGRICULTURE

Taiwan makes $2.2 billion commitment to purchase Illinois corn and soybeans.  The export agreements will be implemented over a two-year period.  Corn and soybeans are the most significant cash crops grown in Illinois, but Illinois corn and soybean exports have been hard-hit in calendar year 2019 by poor crop growing conditions, international trade disputes, and other factors.  The agreements, totaling $2.2 billion, were inked by the Illinois Corn Marketing Board and the Illinois Soybean Association, with assistance from the Illinois Department of Agriculture

Illinois is the top soybean producing state and second largest producer of corn in the nation, exporting more than 360 million bushels of whole soybeans annually and an average of 877 million bushels of corn.  Taiwan is Illinois’ third largest trading partner of agricultural products.

CANNABIS

Illinois local governments have power to reject cannabis dispensaries.  Under the law passed by the Illinois General Assembly in spring 2019, municipalities and counties do not have to grant licenses to businesses that want to sell marijuana within Illinois.  Many Illinois communities are exercising their legal right to “opt out” of the dispensary portion of the law.  Communities taking steps to opt out range from Marion, in southern Illinois, to Naperville near Chicago. 

Concerned citizens are pointing to the potential for health hazards and secondary lawbreaking, including but not limited to driving under the influence, associated with marijuana use.  The current vaping crisis is pointing a finger directly at the technology used by many people to consume THC, the active ingredient in psychoactive cannabis.  Concerned advocates, including law enforcement, say that some black market e-cigarettes contain marijuana derivatives.

The opt-out law extends only to the dispensary portion of the law.  Illinois municipalities are not given the power to prevent private consumption of marijuana if it was bought in some other location.  The 2019 cannabis law authorizes the opening of at least 110 dispensaries by entities that have already been granted separate legal permission to sell medical cannabis.  Current market conditions indicate that these licenses are very valuable.  A wide variety of dispensaries are expected to open on or soon after January 1, 2020, in those communities that agree to host them.

ENERGY

Illinois members of Congress respond to decision to close coal plants.  Vistra has announced plans to close five coal-fired electric generating plants in Illinois, with four of the facilities set for imminent closure and the fifth, near Peoria, set to shut down prior to the end of 2022.  While the coal-burning power plants located in Bartonville, Canton, Coffeen, Havana, and Hennepin have various challenges, a key economic factor cited by Vistra is the allowable price that the generating plant holding company can charge for coal-fired electricity sold into the interstate power market.  In addition, Vistra points out the hostility of the Pritzker administration to coal turbine operations.  These factors are threatening the continuance of 290 well-paid Illinois jobs.

Three Illinois congressmen – Mike Bost, Rodney Davis, and Darin LaHood – this week sent a letter to the Federal Energy Regulatory Commission (FERC), a federal regulatory agency with ultimate authority over interstate power pricing and each state’s energy policies, in defense of the threatened plants.  Citing the “politically driven anti-coal approach” of the Pritzker administration, the congressmen pointed out that FERC has authority over questions of “grid reliability, electricity costs, [and] job loss” that are raised by the closure actions.  

The congressional letter reminded observers that the plant closure action has not yet been finalized. FERC and other agencies have not yet signed off on the final documents to cement the action in place, and further monitoring of this fast-changing situation will continue to be warranted.  

FLOODING

Trump Administration approves disaster declaration for 27 Illinois counties.  The declaration followed the substantial flood damage to Downstate Illinois caused by the high water levels of late spring and early summer 2019.  River waters reached near-record levels along the Mississippi River, the Illinois River, and other major waterways in northern and western Illinois.  After a lengthy application process, Illinois was successful in winning the declaration.  The State of Illinois can now assure affected local governments that they will be eligible for packages of federal disaster aid and recovery resources.  Federal disaster aid includes access to low-interest loans and mitigation resources, including grants, for local infrastructure.  Affected items of local infrastructure include water intake plants, sewerage treatment plans, streets and roads, and parklands.

The 27 Downstate counties listed in the federal disaster declaration are counties with communities that were damaged by floods in 2019.  Seventeen of the 27 counties border the Mississippi River.  This was the first federal disaster declaration granted to Illinois since 2013.  Illinois local governments presented documented evidence of more than $19 million in financial damage from the disaster.  Local governments will now have a 30-day window of time to work with the Illinois Emergency Management Agency (IEMA) to submit documentation for funding.  As these local governments pursue their recovery efforts, the federal aid will lead to lower burdens on local taxpayers.       

HEALTH

House Mental Health Committee holds hearing on vaping crisis.  The House Republican delegation included Representative Grant Wehrli, who has introduced HB 3887 to ban the sale of flavored e-cigarettes, flavored nicotine products, and cannabis vapes in Illinois.  States are under pressure to take action on vaping, which has recruited millions of children and young adults nationwide.  Vaping cartridges are replacing traditional cigarettes as a favored method to ingest addictive nicotine.  Children and juveniles are prohibited from consuming nicotine, but the law is currently being broken by so many people that enforcement is becoming a challenge.  Educators are reporting that the number of high school students who “vape” with e-cigarettes is increasing at annual rates of more than 100% per year. 

Public health reports indicate that some vaping products are cannabis vapes: they are products that deliver THC, a chemical derived from marijuana, to their users.  Furthermore, some THC cartridges are “cut” with other chemicals that are dangerous, illegal in their own right, or both.

In its hearing on Monday, September 23, the House Mental Health Committee heard from the Illinois Attorney General and from the state’s attorneys of DuPage and Lake Counties.  The committee heard testimony from advocates, including advocates for a ban on flavored vaping products.  The health advocacy community was represented by the Illinois Department of Public Health and by high-ranking executives from the University of Illinois Hospital and Health System, the American Lung Association, the American Heart Association, and other health advocates.  Sellers and distributors of e-cigarettes and vaping supplies also offered testimony to the Committee.  Representatives Jeff Keicher and Deanne Mazzochi joined Wehrli as representatives of the House Republican Caucus.

JOBS/ECONOMY

Jobless rate down in 101 of Illinois’ 102 counties.  The local August 2019 numbers were published Thursday by the Illinois Department of Employment Security (IDES), which works with the U.S. Bureau of Labor Statistics and with employers throughout the State to track unemployment rates.

Twelve of Illinois’ 14 major metropolitan areas not only cut unemployment but also saw a net addition of new jobs.  The state as a whole added 61,500 net nonfarm payroll jobs in August 2019 as opposed to August 2018, with 46,600 of the new jobs added in Chicago, Lake County, and greater Elgin.  However, smaller Illinois metro areas also saw healthy increases in their payroll numbers.  Four-digit new job numbers were posted in Carbondale, Champaign-Urbana, the Metro-East, the Quad Cities, and Springfield.

The statewide unemployment rate was 3.8% in August 2019 prior to seasonal adjustments, signaling “full employment” – at least during the good-weather month of August 2019.  The rate in greater Chicago was only 3.6%.  Three pockets within Illinois continue to have unemployment rate that are significantly higher than the state as a whole: Danville (5.2%), Decatur (5.0%), and Rockford (5.5%).

Rep. Meier files resolution urging Congress to pass the USMCA.  State Representative Charlie Meier has filed House Resolution 527 urging Congress to approve the new United States-Mexico-Canada Agreement (USMCA). According to Rep. Meier, “the USMCA will help Illinois farmers, manufacturers, and small businesses compete with the global economy.”

The United States, Mexico, and Canada reached an agreement on November 30, 2018 to rebalance and modernize the North American Free Trade Agreement into a 21st century, high-standard trade deal. The new United States-Mexico-Canada Agreement (USMCA) will better serve the interests of American workers, farmers, ranchers, and businesses and support mutually beneficial trade leading to more free markets, more fair trade, and robust economic growth in North America.

“I urge Congress to pass the USMCA now in order to keep not only our state, but our nation competitive throughout the world,” said Rep. Meier. “The new USMCA represents a beneficial update to the three nations’ already strong trade relationship and will positively impact the State of Illinois. We need all the help we can get to stay competitive; this agreement is win for Illinois and a win for America.”

Canada and Mexico are the largest trade partners of the State of Illinois, purchasing $31.8 billion in goods and services from Illinois and supporting 491,700 jobs in 2017. Agricultural exports from Illinois to Canada and Mexico amount to $8.2 billion and support 68,500 jobs, which the USMCA will solidify as it will maintain Illinois farmers’ access to the corn, soybean, and pork markets in Canada and Mexico.

Rep. Meier added, “One-third of Illinois manufacturers’ export products to Canada and Mexico, and 69,400 manufacturing jobs rely on trade to these two countries. The USMCA will certainly boost the manufacturing base in our state. It’s time for Congress to stop stalling and pass the USCMA now.”

TAXES

House Republicans lead fight to repeal “trade-in” tax.  In a little-publicized move, the Illinois General Assembly enacted legislation in spring 2019 to cap the “trade-in credit” that has, up until now, partially relieved the burden of sales taxes on people buying new or used motor vehicles in Illinois.  This burden can be substantial.  In an Illinois jurisdiction where sales tax is imposed at a rate of 9%, for example, purchasing a new $40,000 motor vehicle will generate an additional sales tax of $3,600.  This bill is typically added to the financing package for the car or light truck, and the buyer must cover it in his or her monthly payments.

Until spring 2019, new-vehicle buyers and their dealers had a recourse to reduce this tax bill.  For purposes of calculating sales tax, the value of a vehicle being traded in was subtracted, or ‘credited,’ from the price of the purchase at the time of the transaction.  If the buyer of the $40,000 motor vehicle were trading in a vehicle with a trade-in value of $15,000, the transaction would generate a sales tax base of $25,000, not $40,000.  Trade-in credits could be used to reduce the sales tax burden on a new-vehicle purchase by hundreds of dollars per transaction.

An obscure provision written into the omnibus SB 690 capital revenue bill, has now capped the vehicle sales tax trade-in credit at $10,000.  Under the new law, if the buyer of a new vehicle presents a used vehicle with a trade-in value of $15,000, the trade-in credit for sales tax purposes is capped at $10,000.  Instead of being able to subtract $15,000 from the size of the transaction for sales tax purposes, the dealer and the purchaser can now only subtract $10,000.

Several House Republican members are sponsoring legislation to repeal the trade-in credit cap.  HB 3890 is sponsored by Rep. Tom Bennett, and HB 3891 is sponsored by Rep. Ryan Spain.  HB 3890 and HB 3891 would compel the State to value trade-ins at their true market value, and to allow dealers and their customers to subtract all of the trade-in credit from the price of the car for purposes of sales tax calculation.

TRANSPORTATION

Illinois drivers’ licenses switching to REAL ID compliance.  Starting on October 1, 2020, the security-compliant identification cards will be required by the federal REAL ID Act for many public activities, including entrance into federal buildings and entering the secure areas of a public airport.  The Illinois Secretary of State’s office announced this week that it has issued 300,000 federal-compliant REAL IDs during the first six months of active compliance.  REAL IDs are identified by a gold-circled star in the upper right-hand corner.  

The process of getting a State drivers’ license or identification card has become more cumbersome.  Applicants have to present additional documentation, as well as their address and old drivers’ license, when they apply for a REAL ID card.  In addition, the new cards are produced in secure facilities and cannot be handed out at the Secretary of State’s local offices.  Instead, the applicant is given temporary documentation.  If the application is in order, the compliant REAL ID card is mailed to the applicant in a sealed, unmarked envelope within 15 business days.