Fortunately, we did not have any legislation that adversely affected the Oil and Gas industry this session.  The General Assembly worked through Memorial Day weekend and wrapped up in the early hours of June 1^st.  The House adjourned at 2:40am and the Senate at 3:07am.  The Senate will reconvene at 10am this morning and the House recessed to the call of the chair.  Most of the major items were taken care of before the May 31^st simple majority deadline passed.  All votes taken now require a 3/5 majority, which is now 71 votes to pass the House and 36 votes to pass the Senate.  An omnibus energy bill is the only major piece of legislation looming over the legislature, which will be called when language is agreed upon between all parties.

ENERGY

At the heart of the session extension is a comprehensive energy bill pushed by the Clean Energy Jobs Act (CEJA).  House and Senate negotiators had been working with the Governor’s office to reach an agreed bill.  Key components are keeping the Exelon nuclear fleet in operation, extending a rate formula for utilities, extending credits for renewable energy and stronger ethics language in the wake of ongoing investigations regarding Commonwealth Edison.  CEJA wants a carbon tax but it was not included in the package that was moving forward.  Legislative leaders had an agreement on all major items except the Exelon incentives.  Language exempting coal-fired Prairie State Energy in Washington County was included in the legislative draft language.  Exempting coal-fired CWLP in Springfield was also being considered.  As staff was working on final language, the Governor’s office finally reached an agreement to keep the Exelon plants open.  This should have been the last major negotiated item.

CEJA and the Governor then demanded that all coal fired plants be shut down by 2035 and all gas fired facilities end by 2045. Organized Labor and coal interests objected, and the bill was not filed.

BUDGET

In the late hours of Memorial Day, the appropriation legislation was introduced in SB 2800. The budget for next year is $42.2 billion.  Illinois is scheduled to receive $8.1 billion from the federal government through the American Rescue Plan Act (ARPA).  The FY 22 budget has appropriated $2.5 billion from ARPA with the remainder subject to appropriation in Fiscal Years 2023-2025.

The bill was approved with 72 yes, 44 no, and 1 present votes in the House and the Senate approved it with 37 yes and 21 no votes.

In order to reach the necessary revenue to deal with the projected deficit from GRF, the governor’s office had proposed closing or reducing numerous tax incentives.  The Legislature’s budget incorporated only four from the original list:

• Eliminate accelerated depreciation allowed under the Federal Tax Cut & Jobs Act.The state estimates by removing this accelerated depreciation, it will generate $214 million for the state. The federal TCJA allowed a business to take 100% depreciation deduction in the year of purchase for qualifying assets.
• Cap Corporate Net Operating Loss (NOL) Deduction at $100,000 per year. This caps the amount a business can carry forward its NOL to future years. It is estimated the state will see an increase in tax revenues of $314 million.
• Align Treatment of Foreign-Source Dividends to treatment of Domestic Source Dividends.This was another tax incentive provided by the Federal Tax Cut & Jobs Act that allowed corporations to deduct foreign source dividends at 100% and global intangible low-taxed income at 50%. It is estimated the state will see an increase of tax revenue of $107 million.
• Stops the Corporate Franchise Tax phase out.In 2019 legislation was approved to begin the gradual phase out of the Corporate Franchise Tax by 2024. The BIMP bill eliminates the first $1,000 in Corporate Franchise Tax currently in place. It is estimated this will cost businesses $20 million.

ETHICS

SB 539 prohibits all fundraisers by a legislator or executive branch official statewide on or before session days. Currently, these events were only prohibited in Sangamon County on session days.  It would prohibit any legislator or executive branch officer to engage in lobbying for pay a unit of local government while in office. It provides that a violation will be a Class A misdemeanor. Also, any individual appointed to an executive agency, board or commission who controls a political action committee must freeze those funds while an appointee.

It further creates a 6 month ban for a legislator or executive branch official from becoming a lobbyist after leaving office. It also makes changes to make the Legislative Inspector General to be more independent in his or her operations and investigations.

It changes the way in which legislators are paid. If a legislator were to leave office, he or she would only be paid a pro-rated per day rate. Currently, a legislator can get paid a full month’s salary if he or she holds office for 1 day of the entire month.

The bill also requires anyone paid to be a lobbyist at the local level (municipal, county, township) to register with the Secretary of State, to be subject to all the requirements of being a state lobbyist.  The legislation requires consultants to subject to the same reporting requirements as lobbyists and register with the Secretary of State.

 2022 PRIMARY DATE CHANGE-REDISTRICTING

The General Assembly moved the 2022 Primary Election date to June 28th for this election cycle only. The bill delays the start of circulating petitions for candidates from established parties to January 13, 2022. The petitions would be submitted between March 7th through March 14th. The bill also lowers the number of signatures on petitions by approximately 1/3. Deadlines for mail-in ballot, early voting, and other voting requirements will be adjusted to match the new June 28th Primary Election Date.

The bill also makes other changes in the election code dealing with voting. It establishes the General Election Day of November 8, 2022, as a state holiday. Public schools would be closed and allowed to be used as public polling places. Curbside voting would be allowed not just on Election Day, but also during early voting. Election authorities will be required to have one common voting location open on election day either at the location of an election authority or in the authority’s largest municipality that will allow any registered voter to vote there instead of their polling place. Finally, it establishes the ability for a voter to request permanent mail-in ballot status.

Regarding local government redistricting, the bill makes several changes. It allows counties to use any data it wishes for redistricting of county board districts, including the US Census American Community Survey 5-year data. For most counties, it pushes the deadline back to complete their redistricting until December 31, 2021 vs. the current July 1, 2021, deadline. For counties with a voter elected county Chairperson or a County Executive, these individuals have until the third Wednesday in November 2021 to present their proposed redistricting plans.

The bill addresses the process for filling vacant seats in the General Assembly. Before the replacement of a State Senator or Representative, the committee making the replacement shall publicly make available the names of the committeepersons, the date, time, and location of the meeting, and how interested parties wishing to apply may do so. It also changes the process if a Senate or Representative District has a vacancy. The replacement committee will be the chair of the appropriate central committee and two appointees by the chair if the district is wholly within the County.

All 118 Representatives and 59 Senators will run in new districts in 2023.  New boundaries were established in HB 1777 to comply with the redistricting required after each census.  New Supreme Court boundaries were also established.  The Congressional maps will be voted on at a later date.  Illinois will lose one Congressional seat based on the U.S population.

TRAILER TAX

SB 58 creates a new class of small trailers. The new class of trailers will be classified as “Utility Trailer” (UT) are of one axel, weighing under 2,000 pounds, used primarily for personal or individual use, and not owned by a commercial business. The bill establishes a fee of $36 annually for the new UT plates and decreases the TA plate, which is a trailer of more than 2,000 but less than 3,000 pounds to $36 from $118 annually. The bill does increase the fee a certificate of title from $150 to $155 and all state revenues generated from this additional $5 will be deposited int the Road Fund.

The bill also changes the way in which the sales tax is collected on vehicle trade-in at $10,000 or more through a car dealership. The bill restores the full credit trade-in rates that had been capped at $10,000. The bill does put in place a new rate structure for person-to-person vehicle tax levels

Dan Reitz | IOGA Lobbyist

The House and Senate continue to meet in person. Both chambers have scheduled session at least 3 days per week through the end of May. Changes of status from the last update are in bold.

Partial Watch List

House Bill 74 (Flowers-D) requires employers to provide six weeks of paid leave for maternity/paternity or to care for a family member with a serious health condition. Re-referred to rules on 3/27/21.

House Bill 165 (Bennett-R) creates a Carbon Capture, Utilization, and Storage Legislation Task Force. Placed on calendar order of third reading on 4/16/21.

House Bill 166 (Bennett-R) creates a new Carbon Dioxide Geologic Storage program requiring reservoir permits by the Department of Natural Resources. Re-referred to rules on 3/27/21.

House Bill 3092 (Harper-D) requires the Illinois EPA to perform an environmental justice impact analysis prior to granting a permit. Currently, there is no actual environmental justice law; rather Illinois is operating via policy. It appears the Pritzker Administration is leaning toward a legislative solution. A large coalition of business groups are working on a strategy to have viable alternatives to present to the Governor should environmental justice advocate policies prove unworkable. Re-referred to rules on 3/27/21.

House Bill 616 (Costa-Howard-D) mandates 12-week leave for employees with paid health insurance coverage. Re-referred to rules on 3/27/21.

House Bill 804 (Williams-D) creates the Clean Jobs, Workforce and Contractor Equity Act.

House Bill 2493(Meier-R) Provides that moneys received under the Illinois Hydraulic Fracturing Tax Act shall be used only for the payment of pension obligations of the State of Illinois.   Re-referred to rules on 3/27/21.

Senate Bill 2514 (Rose-R) creates a permitting process and implement a fee of $0.08 per ton of carbon dioxide. All are opposed by environmental advocates. Assigned to Energy and Public Utilities committee on 3/23/21.

Dan Reitz | IOGA Lobbyist

Bridge Session Review: In early January, the Illinois General Assembly returned to Springfield for the first time in over 7 months. The Legislature used these final days to close out the end of the 101st General Assembly and address several unresolved issues before the start of the 102nd General Assembly. Listed below are a few items of that may affect our members. 

The biggest legislative item was a series of bills, developed through the Summer and Fall by the Illinois Legislative Black Caucus (ILBC) to address many of the social injustice and equity issues which predominated much of 2020. The ILBC worked around 4 pillars – Criminal Justice Reform, Education Reform, Economic Opportunity Reform, and Healthcare Reform. 

HB 3360 passed both Houses- it will allow for the recovery of prejudgment interest in personal injury cases. 

Leadership shift in the Illinois House-Despite all the legislative activity that was occurring during the lame duck session, the biggest shake-up was the decision by long-time House Speaker Michael Madigan to remove his name from consideration for the office. Although Madigan had the overwhelming support of majority the caucus, 19 caucus members refused to support him which made it impossible for him to get the 60 votes needed to be elected Speaker. Once he withdrew his name from consideration, Emanuel “Chris” Welch (D-Westchester), emerged as the caucus’ preferred candidate. Representative Welch was elected to the post of Speaker, making him the first Black to hold that position. Speaker Welch accepted the position and immediately called on both parties to work for common ground and most importantly respect each other. 

Speaker Welch announced his leadership team this week, it includes: Rep. Greg Harris (D-Chicago) – Majority Leader; Rep. Jehan Gordon-Booth (D-Peoria) – Deputy Majority Leader / Speaker Pro-Tempore; Rep. Mary E. Flowers (D-Chicago) – Deputy Majority Leader and Dean of the Caucus; Rep. Jaime M. Andrade, Jr. (D-Chicago) – Assistant Majority Leader; Rep. Robyn Gabel (D-Evanston) – Assistant Majority Leader; Rep. Elizabeth Hernandez (D-Cicero) – Assistant Majority Leader; Rep. Jay Hoffman (D-Belleville) – Assistant Majority Leader; Rep. Natalie Manley (D-Romeoville) – Assistant Majority Leader; Rep. Marcus C. Evans, Jr. (D-Chicago) – Assistant Majority Leader; Rep. Delia Ramirez (D-Chicago) – Assistant Majority Leader; and Rep. Carol Ammons (D-Champaign) – Democratic Conference Chair

In addition to the leadership appointments, Speaker Welch announced the creation of 6 Whips, they are as follows: Will Guzzardi (Progressive Caucus Whip); Kam Buckner (Black Caucus Whip); Theresa Mah (Asian Caucus Whip); Larry Walsh Jr. (Downstate Caucus Whip); Deb Conroy (Women’s Caucus Whip); and Aaron Ortiz (Latino Caucus Whip)

Senate Leadership-Don Harmon will continue to serve as the Senate President and Dan McConchie is the new of Minority Leader, filling the vacancy left when Bill Brady announced he was stepping down. Along with Senator Brady, Senators Heather Steans and Andy Manar have also retired since the new session started. 

Legislative Session: The legislative session is off to a slow start due to the change in leadership in the House and the uncertainty with scheduling session days at the Capitol in the middle of the pandemic. The past two sessions for the House have been held at the Bank of Springfield Center to provide enough space for 118 legislators and staff. It is cost prohibitive to keep meeting there. The House is formulating a plan to meet at the Capitol.

The Senate is scheduled to meet on March 2. The House adopted their Rules on February 10. The major changes in the Rules for the House included term limits for legislative leaders and a rule that allows for remote meetings. Both chambers have cancelled all other session days in February. The Senate has already adopted their Rules that allow them to hold remote committee hearings. The scheduled end of session is May 30.

Bill Introduction: The slow start to the new session has impacted bill introductions as well. There have been very few in the House or the Senate at the time of this report. None to date affect our industry directly. 

Committee Chairmen: Committee chair appointments were just released. Most are still in their old chairmanships. Sonya Harper remains chair of Agriculture and Conservation, Larry Walsh is still chair of Public Utilities, Marcus Evans remains chair of Labor and Commerce and Ann Williams is still chair of Environment and Energy. Bob Rita is the new chair of the Executive committee. 

Dan Reitz | IOGA Lobbyist

The Fall Veto Session is currently scheduled for November 17-19 and December 1-3, but given the pandemic, lawmakers will most likely only meet for a few days for one week rather than gather in Springfield over two separate weeks. With the rising number of COVID cases in Illinois, it is also possible that the General Assembly could forego the fall session and meet in January prior to the new legislature’s inauguration for a short “lame duck” session. If the General Assembly does convene, the top agenda items will focus on legislation prepared by the Legislative Black Caucus dealing with criminal justice, healthcare disparities, education, and economic opportunities.

Committee Hearings

The Senate has announced a series of committee hearings, all virtual, leading up to the fall session. The hearings align with the Legislative Black Caucus’ agenda for the upcoming fall and spring sessions.

• • November 6 – Healthcare: Diversity in Health Care Workforce and Culturally Competent Health Care
  • November 6 – Economic Development: Equity in Food Access, Agriculture, Cannabis, and Technology
  • November 9 – Healthcare: Policy Recommendations on Health Disparities, Access to Health Care, Behavioral Health, and Diversity in Health Care/Culturally Competent Health Care
  • November 10 – Criminal Justice Reform: Police Licensure
  • November 10 – Economic Development: Diversity in Procurement, BEP and DBE Policies and Labor Unions

The House Special Investigative Committee canceled its meeting this week. Chairman Chris Welch noted that the committee is waiting for documents from ComEd.

Caucus Leaders

Soon after Senate Republican Leader Bill Brady announced he would not seek reelection for the caucus leadership position, the Senate Republicans voted for a new leader, choosing Senator Dan McConchie of Lake Zurich. McConchie pledged to work for balanced budgets, smaller and smarter government, lower taxes, economic reforms, and a world-class education system. Senator Sue Rezin was named Deputy Leader. Brady’s announcement hints that he could consider a statewide run, possibly governor, in 2022. Senator Brady will continue serving in the Senate.

Representative Stephanie Kifowit of Aurora previously announced she would challenge House Speaker Michael Madigan for his leadership position. Representative Maurice West joined a few other Representatives in announcing that he would not be voting for Madigan as Speaker. Given the perception of several Democrat losses tied to Madigan’s ethics questions, the Speaker could face a challenge to his leadership in January. Madigan needs 60 votes of the likely 72 Democratic Representatives to remain Speaker.  I would expect Madigan to garner the 60 votes to remain Speaker.

US Senator Dick Durbin publicly blamed the ethics controversies surrounding House Speaker Mike Madigan for the Democrat losses this week, which included Kilbride’s failed Supreme Court retention, Betsy Londrigan’s defeat to Congressman Rodney Davis, the graduated tax amendment, and several House and Senate races in Illinois. Durbin said Democrats “paid a heavy price for the speaker’s chairmanship of the Democratic party” and that “his presence as chairman of our party is not helping.” Many pundits assumed that Madigan would win as many as 8 to 10 seats and gain the largest majority in recent history. Instead, House Republicans are in contention to have won 4 seats over versus the Democrats’ 2.

Governor Pritzker, when asked by the media if he agreed with Senator Durbin that the Democrat party needs new leadership, replied, “yes.” US Senator Tammy Duckworth has publicly said Madigan should no longer be House Speaker. Madigan responded by saying he looks forward to “continuing our fight for working families as chairman of the Democratic Party of Illinois.”

On the House Republican side, Representative Tony McCombie of Savanna reached out to colleagues for support as House Republican Leader, challenging Leader Jim Durkin, saying that the caucus wants change. Durkin says he has already secured the majority of votes. McCombie had been leader of the House Republican Organization for campaigns.

The Senate increased its Democratic majority by one, 41 D/18 R.

The House Republicans currently have a net gain of two seats, 72 D/46 R.

Both Democrat caucuses still have a supermajority.

Campaign Update:

Continuing with its 32-year streak in voting Democratic in presidential elections, Illinois supported Joe Biden for President of the United States over Donald Trump by a margin of 55%-45%.  Illinois voters also re-elected Democratic U.S. Senator Richard Durbin to a sixth term over token Republican opposition.  However, other than these two statewide races, Republicans consolidated their hold over rural, downstate Illinois and recouped some of their losses in 2018.  Republicans will pick up a Congressional seat (challenger Oberweiss is leading incumbent Underwood. Illinois House Republicans will pick up 2 seats. The current make-up of the Illinois House is 74D-44R. Illinois Senate Democrats will extend their super majority to 41-18, with the pick-up of the Oberweiss seat by Representative Villa (D).  In Illinois’ only Supreme Court race, Republican David Overstreet defeated democrat Judy Cates to replace retiring 5^th District Supreme Court Justice Lloyd Karmeier (R).  The 3^rd District voted not to retain Democratic Justice Thomas Kilbride.  The statewide ballot initiative to amend the Illinois Constitution to allow for a graduated income tax failed by a vote of 45% of those voting on the question in favor to 55% opposed, setting the stage for a Lame Duck Session income tax increase.  It appears that the ballot initiative could also have had a negative effect on state Democratic legislative races.  None of Illinois’ statewide offices, all held by Democrats, were up for election this year.

Votes are still being counted in a few races. Mail-in ballots postmarked by November 3 can be counted until November 17.

Congress:

13^th District– Incumbent Republican Congressman Rodney Davis easily defeated Betsy Londrigan in one of the most hotly contested races in the nation.

14^th District-Republican Jim Oberweis may succeed in a very close race against incumbent Lauren Underwood (D), possibly picking up a Congressional seat for the GOP.

Graduated Income Tax

Governor Pritzker blasted the opponents of the graduated income tax proposal following its 45-55% failure, saying they “lied about what would happen if it passed” and left “working people holding the bag,” blaming Republicans for “swearing their allegiance to the wealthiest interest in the state” and throwing “middle class families under the bus.” The graduated income tax was a keystone to Governor Pritzker’s 2018 campaign and necessary for the administration to balance its budget without cutting spending. He is now saying cuts will be “painful,” as much as 15 percent to agencies or legislators will be asked to pass an income tax increase as high as 20 percent increase. The flat income tax rate is now 4.95 percent.

Healthcare advocates are already asking for the administration to protect human services from any budget cuts. The governor had earmarked additional funding that would have been raised by the graduated income tax increase, including $400 million for contributions to the state employee health plan, $42 million for Medicaid provider rate increases, and $40 million for rate increase in the community care program.

The governor is reportedly telling agencies to oppose any bill introduced with a fiscal impact.

House Republican Leader Jim Durkin proposed that the administration begin with a 4 percent across-the-board cut to the state budget as a starting point for addressing the budget deficit.

Supreme Court

Justice Tom Kilbride became the first State Supreme Court Justice to have his retention vote fail, creating a question as to how a new justice is appointed to fill the empty seat. Kilbride’s term will end December 6, 2020. It is questionable as to whether Kilbride as the sitting justice, but whom voters chose not to retain, will have influence as to who replaces him. The Court is now 3 Republican and 3 Democrats. Kilbride’s replacement will tip the Court to either party, an important consideration as the Court will undoubtedly decide whether any new redistricting map is constitutional.

The state constitution requires the Court to appoint an interim justice by a vote of at least four justices until the next election in 2022. If the appointment is made by the Court before December 6, when Kilbride’s term expires, then Democrats, including the Kilbride vote, would have the 4 deciding votes on a successor.

Looking Ahead to Spring Session

Looking ahead to 2021, there are four topics that will dominate the discussion in Springfield.

The first is the political structure of Illinois. Despite still having supermajority Democrat control in both the House and Senate and a Democrat governor for another two years, Republicans were the winners in the 2020 election. They defeated a graduated income tax proposal pushed very hard by Governor Pritzker, they denied retention for a long-serving Democrat Supreme Court justice by tying him to House Speaker Michael Madigan, and they retain a whole bunch of suburban seats that nearly everyone expected Democrats to carry away. Speaker Madigan faces a challenge to his leadership with already one member openly seeking the leadership position and another pledging not to vote for Madigan. The political climate in Illinois is even more geographically divided now with Republicans holding strong downstate and Democrats maintaining the population-heavy Chicago and suburbs. Conversely, Senate Republican Leader Bill Brady has already been replaced with Senate Republican Leader-Elect Dan McConchie. The new General Assembly will be inaugurated on January 20.

The second is the state budget. With the sound defeat of the graduated income tax measure, the state’s dismal finances become even more of a top priority for the Pritzker administration, with Illinois already balancing a budget by borrowing as much as $5 billion from the Federal Reserve and a state economy reeling from the COVID-19 closures. The administration will depend heavily on a potential Biden administration subsidy, need to impose serious spending cuts, and/or possibly seek an income tax increase.

The third is COVID-19 and how the General Assembly convenes its next sessions. The fall Veto Session is tentatively scheduled for November 17-19 and December 1-3, but legislators will most likely forego two separate weeks of traveling to Springfield, and if they decide to have a fall session, will instead meet just a few days before Thanksgiving. That said, leadership could put off a fall session and wait until early January to meet during a “lame duck” session and then following the new inauguration. Depending on COVID-19 cases going into the new year, the session calendar could be condensed from the typical January to June schedule to meeting in committees virtually but not convening in Springfield until March or even April.

And finally, the last, and perhaps most politically hot, is the new district map for the 2022 elections. Essentially, every member just elected this week is now a lame duck moving into the 2022 cycle since each House and Senate District will be redrawn based on census data. The map must be voted on by May 31. With supermajorities in both chambers and a governor, the Democrats have considerable control over drawing districts; however, any map will be challenged in the courts and will eventually be presented to the State Supreme Court. With the Republican win of the 5^th Judicial seat and failure of Democrat Justice Tom Kilbride to gain retention in the 3^rd Judicial seat, Republicans could now have control 4-3 of the Supreme Court, giving the GOP some measure of play in the map-making process for the first time in decades.