ITA Legislative Report – June 3, 2019

The Illinois General Assembly concluded its 2019 legislative session following bipartisan approval of a $40 billion state budget and a $45 billion capital infrastructure plan for transportation projects and other state infrastructure needs. The House and Senate were scheduled to adjourn the spring legislative session Friday, May 31, but had to work two days into overtime to complete their agendas. The House adjourned Saturday, June 1 and the Senate returned to Springfield Sunday, June 2 to approve the measures the House passed on Saturday. Following the Senate's adjournment June 2, the General Assembly is not scheduled to be back in session until the fall veto session, October 28-30 and November 12-14.

$400 Million Included in Capital Infrastructure Plan for Broadband Grants & Loans

The capital infrastructure plan (HB 62) to address vertical construction projects (projects other than roads and bridges) includes $400 million for the Department of Commerce & Economic Opportunity to provide grants and loans for broadband deployment to expand and strengthen broadband network infrastructure. Improving broadband access throughout the state was one of Governor JB Pritzker's many big initiatives in his first legislative session of his first term. In addition to the funding for broadband grants and loans, the state budget for the upcoming fiscal year also includes $1 million for the administration of a broadband program within the Department of Commerce & Economic Opportunity.

Pritzker Gets Approval on Aggressive Legislative Agenda

Governor JB Pritzker laid out an aggressive and politically progressive agenda for his first legislative session and was able to work with the General Assembly to pass most all of his key initiatives including:

  • Raising the minimum wage in Illinois to $15 per hour, with the minimum wage increase being phased in over several years starting with the first increase January 1, 2020 (SB 1)
  • Approving a constitutional amendment for voters to consider in the 2020 election to move from the state's flat income tax to a graduated income tax (SJRCA 1)
  • Passing legislation to establish the tax rates for the graduated income tax (SB 687) should voters approve the graduated income tax constitutional amendment and establishing a property tax relief task force
  • Passing a $45 billion horizontal and vertical capital infrastructure plan to improve roads, bridges, mass transit, state facilities, hospitals, schools and broadband access (HB 62)
  • Expanding gambling by adding six new casinos in the state, adding slot machines and table games at horse racing tracks, and legalizing sports betting to pay for the vertical infrastructure program (non-transportation related). The legislation also increased the tax on cigarettes by $1/pack and created a new tax for parking garages (SB 690)
  • Doubled the current 19 cent motor fuel tax and increased vehicle registration fees to pay for the horizontal capital infrastructure program (transportation related spending) (SB 1939)
  • Legalizing the recreational use of marijuana with revenue used to help fund the upcoming fiscal year state budget (HB 1438)
  • Enacting business reforms that include tax credits for developing jobs in economically distressed areas, the elimination of the state franchise tax, reinstatement of the manufacturing tax credit (SB 689)

Telecom Legislation

The ITA did not propose any legislative initiatives this year. In all, the ITA tracked and worked on more than 40 bills this legislative session including 13 bills aimed at imposing new data privacy and data breach regulations, 6 bills creating new penalties or regulations for robocalls and spoofing, legislation imposing net neutrality regulations at the state level, and various bills affecting 911 services, technology, rights-of-way and underground facilities damage prevention.

Of all the telecom measures the ITA worked on along with industry partners, only a couple of bills passed both the House and Senate and will be sent to the Governor for his consideration.

Telecom Bills that Passed Both Houses:

Senate Bill 1624 amends the state's data breach notification law to require notification of a data breach of 500 or more residents to the Attorney General.  The ITA opposed the legislation as introduced. The bill was amended to increase the threshold for reporting to the Attorney General from 100 or more affected residents to 500 or more affected residents and the requirement to notify the Attorney General within 14 days was changed to require reporting to the Attorney General in the most expedient time possible and without delay (which is the current the requirement for reporting data breaches to affected consumers). As amended, the ITA moved to a neutral position on SB 1624.

Senate Bill 690 included language to create a tax incentive for new and existing data centers. Qualifying data centers in Illinois must meet a capital investment of at least $250 million over a 60-month period and have 20 full-time employees. The measure also includes an income tax credit of 20% of wages paid to construction employees for data centers that locate in economically distressed areas.

Budget & Capital Bill Highlights

Budget bills:

Illinois’ new fiscal year begins July 1 and runs through June 30, 2020. The $40 billion budget for fiscal year 2020 is broken into several pieces:

  • Illinois’ operating budget for fiscal year 2020: SB 262
  • The Budget Implementation Act, or BIMP: SB 1814
  • Revenue to support that operating spending plan – includes pro-business reforms: SB 689

 Budget Highlights include:

  • Industry Highlights:
    • $1 million for the Department of Commerce & Economic Opportunity for the ordinary and contingent expenses associated with the administration of the broadband program.
    • $10 million for the Department of Innovation & Technology for all costs associated with the Illinois Century Network and broadband projects
    • Re-appropriation of funding form the $16.3 million for e-Rate special construction program state matching grants
    • $20 million from the Capital Development Fund to the Department of Innovation and Technology for the Illinois Century Network, and other capital improvements including but not limited to those related to statewide broadband
  • A tax amnesty program, that’s expected to bring in $175 million to state coffers by getting delinquent taxpayers to pay up, with the incentive of a grace period that waives penalties
  • A new tax assessment on Managed Care Organizations (medical management clearinghouses for low-income residents on Medicaid)
  • Changes to state tax code (some of these are in SB 690) including initiatives sought by the business community like:
    • Requiring internet marketplaces like Amazon to collect and remit the 6.25% Illinois Use Tax
    • Requiring remote internet sellers to collect and remit the Illinois Retailers’ Occupation Tax that are in effect wherever the product is shipped to
    • Phasing out the Corporate Franchise Tax
    • Extends a tax exemption on manufacturing machinery and equipment
    • A tax incentive for data centers

Capital Infrastructure:

The $45 billion multiyear public works program branded “Rebuild Illinois” by Gov. J.B. Pritzker, is also broken into parts.

  • Authorization for the state to bond (finance debt) to help fund construction: HB 142
    • includes language authorizing bonds to be used for “the making of capital expenditures and grants for broadband development and for a statewide broadband development grant program.”        
  • An outline of the infrastructure Illinois will invest in, throughout the state: HB 62
  • Industry Highlights Include
    • $100 million, or so much thereof as may be necessary, is appropriated from the Build Illinois Bond Fund to the Department of Commerce & Economic Opportunity for grants and loans including but not limited to broadband deployment to expand and strengthen existing broadband network infrastructure, health information technology, telemedicine, distance learning, and public safety, including prior incurred costs.
    • $300 million, or so much thereof as may be necessary, is appropriated from the Rebuild Illinois Projects Fund to the Department of Commerce & Economic Opportunity for grants and loans including but not limited to broadband deployment to expand and strengthen existing broadband network infrastructure, health information technology, telemedicine, distance learning, and public safety, including prior incurred costs.
  • To pay for road, bridge and mass transit upgrades, lawmakers approved a set of new taxes and fees, in HB 1939 including:
    • Doubling the state tax on gasoline, from 19 to 38 cents a gallon
    • Increasing the vehicle registration fee for most cars by $50, to $148
    • Increasing the vehicle registration fee for electric cars by another $100, to $248

 

  • To pay for repairs and construction to “vertical” structures like clinics, nature centers, schools and university buildings, lawmakers approved other new taxes and fees in SB 690 including:
    • Raising the state tax on cigarettes by $1; the $2.98 state sales tax on cigarettes does not include any local taxes or fees on tobacco products
    • Imposing a 15% wholesale tax on electronic cigarettes
    • Creating a new state tax on rental parking, at 6% of the purchase price for parking spaces paid for on an hourly, daily or weekly basis, and 9% of the purchase price for parking space paid for on a monthly or annual basis
    • A massive expansion of gambling is also part of SB 690, with revenues intended to support infrastructure.
      • A mega casino in Chicago
      • Gambling machines at O’Hare and Midway airports
      • Illinois’ horse racetracks like Arlington and Hawthorne, which will become combination “racinos”; a new Standardbred horse track is authorized for an undetermined location in the south suburbs
      • New casinos in Waukegan, the south suburbs, Danville in east central Illinois, Rockford and the Walker’s Bluff vacation development in southern Illinois
      • Extra terminals/machines at video gaming parlors, restaurants, bars and other establishments with video gaming
      • Sports books at or near stadiums, like Soldier, Wrigley and Guaranteed Rate fields
      • Online sports betting applications (though initially, anyone who wants to be part of that has to sign up for the web apps in person at an established casino)