On behalf of all members, the Illinois Economic Development Association is dedicated to tracking and advocating for and against legislation that is directly related to economic development in the State of Illinois. McGuireWoods Consulting (“MWC”) handles our legislative and lobbying efforts in Springfield. Both IEDA and MWC are here to provide the necessary resources and support for our members.

The General Assembly continues to advance through the truncated session, with adjournment scheduled for April 8th. There is some speculation that lawmakers might return to Springfield during the last week of May to finalize the FY23 budget, but most of the legislative issues should be wrapped up by the April deadline. At this point, the third reading deadline has passed in both the House and Senate, meaning bills are now advancing through the opposite chamber. As the universe of legislation narrows, IEDA leadership wanted to provide members with an update on the issues that will impact them directly.

Both IEDA and MWC have been involved with the data center incentive program since its inception in 2019. The program has exceeded all expectations, with projects totaling more than six billion dollars either completed or in development. Cushman & Wakefield, in their annual report for 2022, ranked the greater Chicago area as the fourth best market in the world for data center growth. As part of the negotiations in 2019, the proponents of the bill agreed to language that requires the use of Project Labor Agreements (“PLAs”) during the construction of the data center facilities. During the past year, Local 399 (an operator’s union), has pushed to require Labor Peace Agreements (“LPAs”) for the internal and permanent jobs in a qualifying facility. LPAs are a relatively new concept, but in general they restrict how companies can communicate with their employees and more importantly they limit a company’s ability to make their own hiring decisions. Dozens of data center companies have indicated the inclusion of LPAs would cause irreparable damage to the program, with growth slowing down immediately. Companies are unwilling to relinquish control over who they trust to manage and operate these highly secure facilities and many of them would start to look elsewhere. Thirty-two other states offer a similar data center incentive, and the Illinois program is already the most pro-labor incentive in the country, given the requirement for PLAs and for wages at or above 120% of the average county wage.

Local 399 has made this issue their top priority in 2022 and they are placing a tremendous amount of pressure on the legislature to get this signed into law. MWC is coordinating with the Chicagoland Chamber and other industry representatives to keep the current program in place, but negotiations are ongoing. If your economic development group plans on using this incentive to attract projects, please reach out to your local officials to remind them of the importance of this program (construction jobs, property tax revenue, etc.). Legislation has not been filed yet, but the intention is to advance something before April 8th. The concept of requiring LPAs for applicants of an incentive program will continue to gain momentum and programs like EDGE will be targeted next. Please reach out to IEDA leadership if you would like additional details. 

In positive news, the Manufacturing Illinois Chips for Real Opportunity (MICRO) Act passed out of the Senate by a unanimous vote. SB 3917 now advances to the House where Representative Halpin will carry the bill. The MICRO Act creates various tax incentives for manufacturers of semiconductors, microchips, and components parts, with DCEO administering the program. This proposal is very similar to the electric vehicle manufacturing incentive (REV Act) that passed during veto session last November. Typically, a new incentive program will take a year or two to gain traction, but with the national shortage of microchips this issue has quickly gained bipartisan support. IEDA will notify membership when the bill is scheduled for a committee hearing in the House so members interested in the program can file a witness slip in support of the bill. The MICRO Act was introduced by the Illinois Manufacturers’ Association (“IMA”) and last month IEDA and MWC hosted a round table discussion with the IMA to help support the initiative.

As discussed in last month’s legislative update, MWC continues to closely watch the negotiations surrounding HB 4093, which expands the definition of “environmental justice” communities and creates onerous and burdensome regulations that will inhibit development in these areas. Last week, the business community submitted a counteroffer to the proponents of the bill, but those changes were not adopted before the bill advanced out of the House by a vote of 64-38-0. Discussions will continue in the Senate, with Senator Peters sponsoring the bill. The business community views this initiative as a top priority for the last month of session. If you would like additional details on the status of the negotiations, please reach out to IEDA leadership.

HB 4116, sponsored by Representative Morgan, deals with the use of cannabis in the workplace. HB 4116 replaces the employment-related provisions in the 2019 Cannabis Act. The legislation provides that it’s unlawful for an employer to refuse to hire, discharge, or take adverse employment actions because an employee tests positive for cannabis or an employee uses cannabis outside the workplace during nonworking hours. These provisions do not apply for employees that work in ‘safety sensitive’ positions as defined by the bill, demonstrate impairment on the job, or have a positive test that exceeds the legal limit set forth in the Illinois Vehicle Code. MWC has met with the bill sponsor and various business groups, as this proposal will have a significant impact on development across the state. Remaining concerns involve the limited definition of ‘safety sensitive’ positions and employees that drive as part of their employment. The bill passed out of the House last week by a vote of 61-41-1, but negotiations will continue in the Senate, with Senator Peters sponsoring this bill as well. 

IEDA members might remember the “good corporate citizen” bill that passed out of the House last year before slowing down in the Senate. This proposal requires companies to prove their standing as a “good corporate citizen” and allows DCEO to revoke pre-existing incentive agreements for companies that do not comply. In addition, the agency may seek revocation of any credits or exemptions that were earned or used during a time when the business or its corporate parent or affiliate was not in compliance. While this sounds like a reasonable requirement, the language is very broad and gives DCEO significant discretion in enforcement. For instance, if a corporate officer is arrested for driving under the influence the company is at risk of losing their incentive and could potentially owe the state millions of dollars in earned credits. MWC has spoken to numerous companies that have unequivocally stated this bill would have a chilling impact on development, as most companies would not be willing to accept this level of risk in their investments. HB 5543 (Amendment 1) was filed last week by Representative Edgar Gonzalez. The bill did not advance out of the House before third reading deadline; however, HB 4826  sponsored by Representative Margaret Croke is scheduled for a hearing in the House Revenue & Finance Committee this Thursday, March 10th. HB 4826 contains the same language as House Amendment 1 to HB 5543. MWC spoke to Representative Croke this morning and she indicated she will not advance the bill this week. Hopefully that means the issue will not be considered until next session.

As mentioned last month, one of the primary concerns at the beginning of session was SB 3038, which would prevent the state, or a unit of local government, from using non-disclosure agreements in economic development deals. IEDA, working in conjunction with other business groups, launched an educational campaign against the bill and was successful in preventing it from advancing. SB 3038 never advanced out of committee and should not pass this session. MWC and IEDA will continue to watch the issue closely, as there is a good chance the bill will be filed again next year.  

HB 5255 is the primary EDGE extension bill filed by the business community. It contains a ten-year extension of the credit, along with other ‘sweeteners’ like transferability of the credit. Unfortunately, HB 5255 did not advance out of the House before third reading deadline, but an extension of the credit is still under consideration. HB 5510, which is sponsored by Representative Mark Walker, contains a five-year extension of the program. HB 5510 will be discussed during a subject matter hearing on Thursday, March 10th in the House Revenue & Finance Committee. Typically, these program extensions will be negotiated in conjunction with other issues at the end of session and will be included in a larger omnibus bill. Legislative members are now being appointed to various working groups that will introduce a comprehensive package of bills at the end of session. At this point, there will be at least three proposals: public safety, property taxes and economic development. MWC and IEDA will continue to watch the economic development group closely and will let membership know what is being considered once the discussions take shape. In terms of EDGE, it sounds like a simple five-year extension is the most likely outcome. IEDA and MWC will continue to advocate for additional ‘sweeteners’ to the program.

In addition, there have been positive conversations regarding an expansion of the Illinois film tax credit. SB 3944 is sponsored by Senator Elgie Sims. The bill provides for an expansion of the tax credit to allow for a limited number of non-resident wages, up to $500,000, to count towards the credit, in addition to creating a workforce development fund. Currently, only Illinois resident wages under $100,000 count towards the credit. SB 3944 increases the wage cap for Illinois residents to $500,000 as well. Hopefully these changes will be included in an omnibus bill at the end of session.

As members are keenly aware, the $4.5 billion deficit in the unemployment insurance trust fund continues to be one of the most pressing issues this session. A working group of legislators and stakeholders have been meeting twice a week on this issue, with the goal of reaching an agreed bill by April 8th. MWC has met with members of the working group that have said the conversations are ramping up with a sense of urgency. Hopefully that trend continues because if the deficit is not addressed before adjournment, it will result in tax increases for every employer in the state.

Here is a link to the IEDA Monitor List: [HERE]