SPRINGFIELD – A bill to raise Illinois’ minimum wage passed the state Senate on partisan lines on Feb. 7 after Gov. J.B. Pritzker made a personal appeal to Democratic lawmakers at a private caucus prior to the vote.
Senate Bill 1 received only Democratic votes as it passed by a 39-18 margin, putting the onus on the Illinois House to get the bill to Pritzker’s desk by his requested deadline of Feb. 20, when he is scheduled to give his budget address.
While no Republicans voted for the bill – and several spoke against it on the floor citing concerns about businesses leaving the state, unforeseen costs on schools and universities, and the potential for job loss for low-wage employees – Pritzker said conservative voices helped shape the legislation.
“I talked personally with several senators to make sure their ideas were incorporated. I talked with many of the interest groups that represent businesses, and Republican interests, to incorporate those into the bill,” Pritzker said during a news conference in his office at which no elected Republicans were present.
Interest groups are expected to continue to lobby for changes when the bill is heard in the House – particularly for an amendment to include a regional rollout of the minimum wage for lower rates downstate. But Rep. Will Guzzardi, a Chicago Democrat and SB1’s House sponsor, said as far as he’s concerned, his chamber should approve the current Senate version.
“I feel very confident that we will pass Senate Bill 1 as the Senate passed it,” Guzzardi said. “I don’t see the need for us to make any further changes to the legislation right here before us.”
If approved as is, the minimum wage will be phased in over six years, starting with an increase from $8.25 to $9.25 on Jan. 1, 2020, before increasing to $10 on July 1, 2020, and $11 on Jan. 1, 2021. After that, it would increase by $1 every year until it hits $15 in 2025.
Kimberly Lightford, a Maywood Democrat and the bill’s Senate sponsor, said compromise is reflected in the six-year rollout and in a small business tax credit which won’t affect Chicago businesses until the wage exceeds Chicago’s minimum, which is currently $12.
The tax credit is available to businesses with fewer than 50 “full-time equivalent” employees, which means businesses that pay less than 2,000 employee hours in a one-week period.
The credit would start at 25 percent of the difference between the current minimum wage and an employee’s wage in the final quarter of the previous calendar year. It would decrease by 4 percent each year until it hits 5 percent in the final two years.
Employers with 2,000 or fewer employee hours will be able to take advantage of the credit for 7 years, while employees with 200 or fewer employee hours will be able to take advantage of the credit for 8 years.
But Senate Republicans said those assurances are not enough for businesses, and the wages would force property tax hikes by increasing costs for K-12 schools, and will lead to greater requests for state appropriations from colleges and universities.
Sen. Jason Barickman, a Bloomington Republican, said he was told by Illinois State University the bill would cost $600,000 in year one alone due to the campus’s employment of 5,000 to 6,000 student employees.
“That same story, I believe, is going to be told by countless community colleges and four-year institutions around our state,” Barickman said. “We all know they are going to come here and ask Illinois for more money. They were going to do that before this proposal. Now they are going to have to ask for even more.”
Sen. Chapin Rose, a Mahomet Republican, said when fully implemented, the wage increase would represent a 17 percent cut to the general revenue fund for Eastern Illinois University, and a 12 percent cost for University of Illinois systemwide, with a $57 million effect on the Champaign-Urbana campus alone.
But Pritzker said during his news conference that higher wages for people in college towns increases economic activity, and Lightford said universities are in poor financial situations as a residual effect of a budget impasse presided over by Republican Gov. Bruce Rauner.
Sen. Dale Fowler, a Harrisburg Republican, said he surveyed about 15 companies from his district and invariably heard three words: “layoffs, closures and cutbacks.”
Sen. Dale Righter, a Mattoon Republican, said he feared businesses in his district would move across state lines to Indiana, which has a lower minimum wage than Illinois’ current one.
Rose said several school districts in his district said they would have to cut employees or aids or pass expenses on to families with raised fees.
“If people think this is going to be, somehow, magic beans for central Illinois, it’s not,” he said. “There’s going to be real repercussions.”
A ‘Moral Issue’
Democratic senators, including Toi Hutchinson of Olympia Fields, said the vote was a moral one and $8.25 is a poverty wage.
“In 2019, if you have ever said nobody that works full time should ever live in poverty, today is your day to do something about it.
Don’t tell me what you believe in. Show me,” she said.
Lightford, who has sponsored four minimum wage bills since 2010, painted the vote as a moral one too, while emphasizing that business interests were part of conversations throughout.
“The business credit is important because Democrats care about business too,” she said. “A $15 minimum wage increase actually creates economic activity. It decreases the reliance on government.”
As an olive branch to the Illinois Restaurant Association, which became a proponent of the bill, a tip-credit will remain in the law. It allows employers to pay 60 percent of the minimum wage to tipped employees.
It will be accompanied by provisions to guard against wage theft, including increasing the amount that can be recovered when wages are underpaid.
A Balanced Budget?
Pritzker’s office anticipated yearly increases to the state budget from $82 million to $270 million until the cost is about $1.1 billion each year by the time the wage hits $15 in 2025. This is because the bill accounts for increased appropriations by 3 to 5 percent to some human service programs and direct service providers as well as costs for state employee raises.
This increase does not account for increased demands for extra funding for nursing homes, hospitals, colleges, universities and some other state agencies and human services providers.
There is also more anticipated revenue from income taxes to help offset those costs.
Between 2020 and 2026, income tax revenues are expected to increase by varying amounts between $20 million and $96 million each year, even when accounting for increased income tax credits the bill would make available to businesses. By 2026, income taxes revenue will have increased by nearly $400 million from 2019.
Despite added revenues being less than the costs, Pritzker said he will present a balanced budget on Feb. 20.
“We are going to be presenting a balanced budget that includes the cost of the minimum wage,” he said, offering no further details as to how that would be accomplished.