Illinois 2022 Legislative Session Review — Part I

The Illinois General Assembly adjourned an abbreviated 2022 regular session early in the morning hours on April 9, 2022. Leadership in both chambers pushed for a shorter session given the upcoming June 28 primary election. Adjourning at the beginning of April rather than the usual end date of May 31 gives members facing competitive primaries more time to campaign in their district.

Despite the shorter timeframe, the General Assembly accomplished a great deal, including passing the fiscal year (FY) 2023 budget, a $1.83B tax incentive package, a suite of bills to support law enforcement and reduce crime, a trailer to the 2021 Climate and Equitable Jobs Act (CEJA), a Medicaid omnibus, changes to the hospital assessment program, and a property tax omnibus, amongst many other passed bills.

The General Assembly will return to Springfield for a fall veto session and potentially a lame duck session before the 103^rd General Assembly begins in January 2023.

This alert is the first in a two-part series on the legislation that passed during the 2022 General Assembly session. This part covers legislation related to the FY 2023 budget, the FY 2023 budget implementation (BIMP) bill, the revenue omnibus, and the debt repayment package.

FY 2023 Budget

HB 900 (Welch/Sims) creates the FY 2023 budget, FY 2022 supplemental budget, and FY 2023 capital plan. It is a balanced budget with $46.494 billion in General Revenue Fund (GRF) spending, based on revenue estimates of $46.543 billion. Budget leaders in both chambers, Rep. Greg Harris (D-Chicago) and Sen. Elgie Sims (D-Chicago), stated that this budget builds upon Illinois’ strong fiscal position as the COVID-19 pandemic winds down while working to provide relief to Illinois residents who continue to struggle from the pandemic and inflation.

HB 900 passed the House in May 2021 as a budget shell bill. It was held on the order of second reading in the Senate until April 8, 2022, when it was amended to become the FY 2023 budget. Senate Floor Amendment 4 is the final version that was passed into law. Early in the morning on April 9, it passed the Senate by a partisan vote of 34-19-0, and the House passed a concurrence motion by a partisan vote of 72-42-0. The budget was signed into law by Gov. J.B. Pritzker on April 19. Here are some of the highlights:

Pensions

• $9.6B contribution to fully fund the FY 2023 pension obligation
• Includes an additional $200 million, above the required minimum pension contribution, to the Pension Stabilization Fund in the revenue omnibus (SB 157)

Education

• $12.023B for education
• $9.783 billion to the K-12 education evidence-based formula
• $350 million increase over FY 2022
• $12 million increase to Regional Offices of Education to address truancy and chronic absenteeism issues after the COVID-19 pandemic
• $2.24 billion for higher education
• $68 million increase over FY 2022
• $600 million for MAP grants
• $122 million increase over FY 2022
• $54.4 million increase over FY 2022 for early childhood education

Healthcare

• $8.84 billion to the Department of Human Services (DHS)
• $6.861 billion to the Department of Healthcare and Family Services (HFS)
• $450 million for the Healthcare Transformation Collaborative program for care in underserved areas
• $543 million for long-term care rate reform
• $69.8 million to safety net hospitals to improve health equity
• $14.5124 million for breast and cervical cancer screenings 

Public Safety

• $6.3 billion for public safety
• $2.2 billion in GRF spending for public safety
• $235 million from the State Coronavirus Urgent Remediation Emergency Fund to DHS for administrative expenses for the Reimagine Public Safety Act
• $19 million to fund three new Illinois State Police cadet classes, producing 300 new troopers
• $33 million for the law enforcement camera grant program
• $10 million for the officer recruitment and retention pilot program

Housing

• $150 million for construction of new affordable housing units
• $275 million for affordable housing development programs
• $130 million for legal assistance for those facing eviction as a result of the COVID-19 pandemic

Capital Budget

• $42.356 billion in capital reappropriations of unfinished projects from FY 2022
• Some changes at the request of members for projects that received appropriations in FY 2022 but were not started

Lead Service Line Replacement

• $113 million to the Illinois Environmental Protection Agency (IEPA) for lead service line replacement

American Rescue Plan Act (ARPA) Funds

• This budget appropriates almost all of Illinois remaining ARPA funds, after SB 2803 appropriated $2.7 billion in ARPA funds to pay off Unemployment Insurance Trust Fund debt.
• $320 million to the Illinois Emergency Management Agency (IEMA), Department of Corrections (DOC), DHS, and Illinois Department of Public Health (IDPH)
• $380 million to healthcare providers for pandemic support payments
• $150 million for affordable housing programs under the Illinois Housing Development Authority (IHDA)
• $83.4 million for violence prevention and interruption grants under the Illinois Criminal Justice Information Authority (ICJIA)
• $190 million to the Department of Commerce and Economic Opportunity (for various support programs
• $75 million to the hotel industry
• $50 million for restaurants and bars
• $50 million for arts and culture grants
• $15 million for tourism attraction development grants

Infrastructure Investment and Jobs Act (IIJA) Funds

• $2.5 million to the Department of Natural Resources (DNR) for well plugging projects
• $59.5 million to DNR to plug, remediate, and restore abandoned or leaking oil and gas wells
• $65 million to DNR to eliminate hazards created by abandoned mines
• $30.2 million to the Department of Information Technology (DoIT) to address cybersecurity risks and threats
• $5.7 million in GRF spending to the DoIT Special Projects Fund
• This appropriation will qualify for federal IIJA matching funds.
• $500,000 to IEPA for the Battery Labeling Guidelines Program
• $4.5 million to IEPA to provide assistance to local water districts

FY 2023 BIMP

HB 4700 (Harris/Sims) creates the FY 2023 budget implementation (BIMP) bill. It makes various revenue changes and transfers to implement the FY 2023 budget.

HB 4700 passed the House on March 4 as a gambling disorder bill before being amended into the BIMP in the Senate. It passed the Senate by a partisan vote of 37-18-0 on April 9, and the House passed a concurrence motion by a vote of 72-42-0. It was signed into law by Pritzker on April 19. Here are some highlights:

Climate Jobs Training Institute

• Creates the Climate Jobs Training Institute under the Illinois Board of Higher Education (IBHE) to produce research on labor, employment, and the broader social and economic impacts of decarbonizing the Illinois economy.
• Also establishes the associated Climate Jobs Advisory Council

Broadband

• Provides that at least 30 days before applying for federal broadband funds through the Infrastructure Investment and Jobs Act, the governor’s administration must provide its application and plan to the Legislative Budget Oversight Commission.

Tourism and Hospitality Support

• $75 million in federal ARPA or local Coronavirus Urgent Remediation Emergency (CURE) funds for the Hotel Jobs Recovery Grant Program
• $50 million in federal ARPA or CURE funds for the Restaurant Employee and Stabilization Grant Program
• Establishes the Illinois Creative Recovery Grant Program Act to provide grants to independent live venue operators, performing or presenting arts organizations, arts education organizations, museums, or cultural heritage organizations that experienced business interruption due to the COVID-19 pandemic.

Local Government Distributive Fund

• Beginning August 1, 2022, the Local Government Distributive Fund (LGDF) will receive the following transfers from funds received the previous month:
• 6.16% of individual income tax
• 6.85% of corporate income tax
• 6.16% of pass-through entity income tax 

Elections

• Requires proposed constitutional amendments to appear on a separate election ballot.
• This change will take effect after the November 8, 2022, general election.
• Requires Secretary of State to send a postcard to every mailing address in the state providing information that a constitutional amendment will be considered in the November 8 general election ballot.

Opioid Settlement

• Creates the Office of Opioid Settlement Administration in DHS to administer and implement opioid settlement programs, prevention, treatment, and recovery programs.

Statewide 9-8-8 Trust Fund

• Creates the Statewide 9-8-8 Trust Fund to administer a mental health response pursuant to the National Suicide Hotline Designation Act of 2020.

PATH Program

• Creates the Illinois Pipeline for the Advancement of the Healthcare (PATH) Workforce Program to expand opportunities for community college students to enter the healthcare workforce.

Revenue Omnibus

SB 157 (Hastings/Zalewski) creates the FY 2023 revenue omnibus. It provides $1.83B in tax relief to Illinois families and tax credits to Illinois businesses. This package is designed to help businesses and families cope with historic levels of inflation and fully recover from the COVID-19 pandemic.

SB 157 passed the Senate as an extension for the River Edge Redevelopment Zone program in April 2021. It was amended into the revenue omnibus in the House and passed by a vote of 110-0-4 on April 9. It returned to the Senate for a concurrence vote also on April 9 and passed by a vote of 55-1-0. It was signed into law by Pritzker on April 19.

Fiscal Stability

• $1 billion to the Budget Stabilization Fund (rainy day fund)
• $720 million in FY 2022 supplemental
• $280 million in FY 2023
• $200 million above the required minimum pension contribution to the Pension Stabilization Fund in FY 2023

Tax Rebates

• Property tax rebate equal to the lesser of the taxpayer’s Section 208 credit in 2021 or $300.
• $470 million appropriated for this purpose
• Individual income tax rebate providing $50 checks for single filers, $100 checks for joint filers, and an additional $100 per dependent up to three dependents
• These tax rebates only apply in FY 2023
• $685 million appropriated to the Income Tax Refund Fund for this purpose
• Earned income tax credit (EITC) increase from 18% to 20% of the federal EITC
• Removes age restrictions and makes taxpayers who only have an ITIN eligible

Grocery Tax

• Suspends the 1% state grocery tax in FY 2023
• $400 million appropriated to the newly created Grocery Tax Replacement Fund 

Motor Fuel COLA Suspension

• Suspends the cost-of-living adjustment for the Motor Fuel Tax Law until January 1, 2023
• The adjustment would normally occur on July 1, 2022
• Requires prominent placement of a sign noting that this inflation adjustment is the result of the Illinois General Assembly at each gas pump

EDGE Credits

• Extends the Economic Development for a Growing Economy (EDGE) Credit program for 5 years through June 30, 2027
• Expands the program to allow certain startup businesses to claim EDGE credits
• Changes the definition of “underserved area” in the EDGE Tax Credit Act and the River Edge Redevelopment Zone Act to require one or more of the following:
• Poverty rate of at least 20%
• 35% or more of families with children living below 130% of the poverty line
• 20% of households receive Supplemental Nutrition Assistance Program (SNAP) assistance
• Unemployment rate is 120% of the national average, or higher

Unemployment Insurance Speed Bump

• Follow up to SB 2803, passed on March 25, which appropriated $2.7 billion in ARPA funds to the Unemployment Insurance Trust Fund (UITF)
• This left the UITF approximately $1.8 billion  in debt for business and organized labor to resolve through tax hikes, benefit cuts, or borrowing
• This bill represents an agreement between business and labor to delay the scheduled unemployment insurance speed bump on July 3, 2022, through December 31, 2022
• Speed bumps temporarily increase taxes on businesses and cut benefits to force an agreement between business and labor
• Delaying speed bumps gives business and labor until December 31 to reach an agreement, likely occurring in the fall veto session
• Additionally, allows the Illinois Department of Employment Security (IDES) to accept funds deposited in the UITF from any other funding source
• The speed bump delay language was originally introduced in HB 4450

Organ Donation Employer Credit

• Allows private employers to take a credit against wage payments for an employee who takes at least 30 days of paid leave for the purpose of serving as an organ donor or bone marrow donor
• Maximum of $1,000 in withholding for each employee who takes organ donation leave

REV Act Expansion

• Expands the Reimagining Electric Vehicles in Illinois (REV) Act to include manufacturers of advanced battery components as EV component parts manufacturers

MICRO Act

• Creates the Manufacturing Illinois Chips for Real Opportunity (MICRO) Act to provide incentives to microchip and semiconductor manufacturing businesses looking to expand or relocate in Illinois
• Credits apply to semiconductor manufacturing, microchip manufacturing, or component part manufacturing
• Modeled after the REV Act
• The MICRO Act was originally introduced as a stand-alone bill, HB 4634 and SB 3917 

Film Production Tax Credit

• Allows a limited number of non-resident wages to be counted towards the Film Production Tax Credit, as long as the wages are still taxed in Illinois
• Creates the Illinois Production Workforce Development Fund to issue grants to organizations deemed appropriate to support efforts to recruit, hire, promote, retain, develop, and train a diverse and inclusive workforce in the film industry
• This fund will receive at most 0.25% of film production tax credits calculated on Illinois wages and 2.5% of film production tax credits on nonresident wages

Live Theater Production Tax Credit

• Doubles the Live Theater Production Tax Credit in FY 2023 from $2 million to $4 million.
• All credits given out in excess of the standard $2 million must go to applicants spending more than $2.5 million in Illinois each year

Coal Mining Equipment Credit

• Extends the sunset for the coal and aggregate exploration, mining, and reclamation equipment credit until July 1, 2028

School Supply Tax Holiday

• Creates a back-to-school school supply and clothing tax holiday from August 5 through August 14, 2022
• Provides for reduced rate sales tax rate of 1.25%
• Clothing items under $125 receive this reduced tax rate

Teacher Instructional Materials Credit

• Doubles teacher instructional materials credit to $500

Breast Pump Exemption

• Exempts breast pumps and breast pump kits from sales tax beginning on July 1, 2022

Agritourism Credit

• Creates a tax credit for 100% of the cost of agritourism liability insurance, up to $1,000, in FY 2022 and FY 2023

Debt Repayment Package

SB 2803 (Holmes/Harris) appropriates a total of $4.128 billion to pay down debts. SB 2803 passed the Senate by a vote of 33-15-0 as just an appropriation to the UITF. It was amended in the House to increase the UITF appropriation from $2 billion to $2.7 billion and add in additional appropriations as a part of the FY 2022 supplemental budget. It passed the House by a vote of 68-43-0, and the Senate passed a concurrence motion 39-16-0. Pritzker signed it into law on March 25, prior to the April 1 federal deadline for UITF appropriations. Here are the appropriations included:

Unemployment Insurance Trust Fund

• $2.7 billion in ARPA funds to the UITF
• Reduces UITF debt from around $4.5 billion to $1.8 billion
• Remaining debts will be paid though the agreed bill process between business and organized labor
• The FY 2023 revenue omnibus (SB 157) includes a provision to delay the scheduled UITF speed bump until December 31, 2022
• Business and labor will likely reach an agreement by the fall veto session

Group Employee Health Insurance Debt

• $898 million to pay of all debts to the old Group Employee Health Insurance system

College Illinois!

• $230 million to pay off all debt to the College Illinois! program

Pension Payment

• Additional $300 million pension payment beyond the minimum required contribution in FY 2022
• The FY 2023 budget (HB 900) provides for another additional $200 million pension payment above the minimum in FY 2023