An email from State Rep. Mike Tryon:

At a time when Illinois’ unemployment rate is second only to the State of Nevada and businesses continue to flee our state, the importance of creating a business-friendly climate in Illinois has never been more critical.

Unfortunately, the majority party in Springfield has all but declared open season on Illinois businesses with a slew of anti-business bills that have passed in the House this year.

As you will see, the bills that are passing are very union-friendly, but severely limit and penalize private businesses.

As more and more business-unfriendly bills are approved, neighboring states like Indiana, Wisconsin and Kentucky become increasingly more attractive to Illinois business owners.

Included in the list of bills that do nothing to improve the economic climate in Illinois are:

HB 922 – Extends the amount of time contractors must keep certain records like payroll records when they are engaging in “public works” (prevailing wage) projects from 3 years to 10 years. Opponents believe HB 922 generates an excessive amount of documentation for all public works project records. Most companies have limited storage space for certified payrolls, job files, personnel files, labor fringe benefit files, etc, and multiplying by over 3 the storage space needed to keep certified payrolls would be a hardship on any contractor as these certified payrolls require hard copies with original signatures.

HB 923 – Requires most non-union contractors to report all payments made to an individual, sole proprietor or partnership if that entity has performed construction services for the contractor and is not classified as an employee of the contractor. The report is to be submitted annually to the Dept. of Labor. This legislation does not apply to contractors who meet responsible bidder requirements (unionized contractors). Most non-union businesses do not meet responsible bidder requirements because they do not participate in certified apprenticeship programs.

HB 924 – Requires contractors and subcontractors to comply with “responsible bidder” requirements as defined under the Procurement Code. The definition under the Procurement Code was designed to apply to much larger bidders such as road builders. In order to be considered a responsible bidder, a contractor must participate in a United States Dept. of Labor Apprenticeship and Training program. Many non-union businesses do not participate in DOL apprenticeship programs due to the cost. Many believe it is more practical, applicable, and cost-effective to perform on-the-job training on their own terms.

HB 2649 – Provides that any officer of a corporation that knowingly violates the Employee Classification Act can be held individually liable for violations and penalties assessed by the Dept. of Labor. Makes other changes to the Act including raising the fines an individual could pay for violation of the Employee Classification Act.

HB 3223 – Requires contractors that do not utilize union-controlled fringe benefit funds (non-union contractors) to keep records of much more additional information than currently required when bidding for public works projects. Business groups oppose the bill strongly, believing it imposes a great deal of costs and unnecessary work on non-union contractors and it harshly penalizes contractors for one small mistake in this record keeping.

Other noteworthy bills that have either passed in the House or are currently pending include:

HB 2509 – Applies prevailing wage requirements to projects in TIF districts that derive a direct financial benefit from loans, grants, subsidies, incentives or other direct financial benefits made available pursuant to the TIF district. The bill has not yet been heard in the House.

HB 2562 – Authorizes the Dept. of Labor to assess civil penalties on employers in violation of the Personnel Record Review Act. The Department of Labor is concerned that there is not enough strength in forcing employers to comply with the Act. By giving DOL the ability to impose a penalty, this would give them more authority to force employers to comply with the Act, rather than waiting for a potential court action. Business groups are strongly opposed to HB 2562. HB 2562 is currently on Third Reading in the House.

HB 1421 – An initiative of labor groups, HB 1421, among other things, applies Prevailing Wage and Project Labor Agreement (PLA) requirements to the Leaking Underground Storage Tank (LUST) program. The LUST Program was created in 1985 to assist gas station owners and other land owners whose property once had an underground storage tank with the cost of cleaning up contaminated soil and remediating the site. The IEPA administers the program, which is currently funded through storage tank registration fees and a $0.011 environmental fee per gallon of motor fuel sold in Illinois. IEPA estimates $70-75 million is generated annually from the motor fuel tax for this fund. HB 1421 is currently waiting to be heard in the House.

A few other issues that have the potential to affect our business climate:

Minimum Wage Increase:

As it stands right now, there has not been movement on the minimum wage increase bill. Here’s what we do know however at this time:

In the House, a sub-committee within the Labor committee has been created called the Wage Reconciliation sub-committee. Democrat staff has refused to give a reason for the sub-committee and has stated that one bill will be sent here. No bill has been sent here yet but it will most likely be a minimum wage bill in this sub-committee in the coming weeks.

SB 68 remains in the Senate and has not been acted upon yet. The bill raises the minimum wage $0.50 for 4 years plus CPI leaving the minimum wage at $10.86 after 4 years. The minimum wage thereafter would be linked to the year increase in the CPI (Consumer price index). The bill also eliminates the “tip credit” which allows employers to pay employees who receives tips (waiters/bartenders, etc.) 60% of the minimum wage. An amendment has recently been filed to remove the “tip credit” language.

The Governor has called for the minimum wage to be increased to $10 over the next 4 years.

EDGE Tax Credit Overhaul – HB 1336

A joint Revenue / State Government subject matter committee was held on May 9th to discuss HB 1336 which makes several major changes to the EDGE Tax Credit Program.

The EDGE program is designed to offer a special tax incentive to encourage companies to locate or expand operations in Illinois when there is active consideration of a competing location in another State.

The program can provide tax credits to qualifying companies, equal to the amount of state income taxes withheld from the salaries of employees in the newly created jobs.

The non- refundable credits can be used against corporate income taxes to be paid over a period not to exceed 10 years.

To qualify a company must provide documentation that attests to the fact of competition among a competing state, and agree to make an investment of at least $5 million in capital improvements and create a minimum of 25 new full time jobs in Illinois. For a company with 100 or fewer employees, the company must agree to make a capital investment of $1million and create at least 5 new full time jobs in Illinois.

The major changes HB 1336 makes include;

1. Removes certain capital investment requirements applicants must make in order to qualify for the tax credit
2. Provides that the tax credit amount may not exceed $10,000 per new job
3. Changes the qualifications needed to become eligible for the tax credit
4. Changes the duration of the credit from 10 years to 5 years
5. Makes business engaged in “professional services” eligible for the tax credit. Currently, these types of firms are not eligible.
6. Provides that no more than $100,000 in credits may be awarded in FY2014 and links the amount thereafter to the Consumer Price Index
7. Creates independent oversight for approving applications by creating a bipartisan board of 9 individuals from the finance and accounting sectors to approve or reject EDGE applications.

Fracking

HB 2615 is the agreed hydraulic fracturing bill which has stalled in the House. Reps. Bradley and Reis filed the regulatory bill after months of negotiations between the oil and gas industry, business groups, environmental advocacy groups, the Attorney General’s Office, IDNR, IEPA, and the IL Farm Bureau.

An amendment was also filed to set permitting fees and a severance tax structure, and these provisions were agreed to by the oil and gas industry.

A further amendment, filed at the request of the Operating Engineers Local 150 and the Indiana, Illinois, Iowa Foundation for Fair Contracting, would require well contractors to be obtain an Illinois license in order to drill wells and conduct high volume horizontal hydraulic fracturing. This controversial amendment, opposed by the oil and gas industry and business groups, has indefinitely postponed the bill’s movement, and HB 2615 has been re-referred to the House Rules Committee.

I will continue to update you as pro and anti-business bills move through the House, and as always, if my staff or I can assist you in any way, please do not hesitate to call my Crystal Lake office at 815-459-6453.