As we turn the calendar page to June, decisions continue to be made at the local, state, and national level that will impact you and your business.
Local Issues
Here in Naperville, the new city council has been sworn in and will have 2 significant issues that will require immediate attention.
Grocery Tax v. Sales Tax – First, a decision will need to be made as to how to best deal with the revenue shortfall created when Governor Pritzker made the decision to suspend the 1% tax on groceries. The move was controversial, as the revenue generated by the tax went to the municipalities not the state. For this reason, the suspension language allowed municipalities to re-enact the tax. Beginning in 2026, the decision will result in a $6.1 million budget hole for Naperville, with limited options to make up the revenue. Essentially, the choice will be to 1. re-enact a grocery tax. 2. Increase the home rule sales tax by .25% across the board, or 3. reduce programs and services which could include staff layoffs including public safety positions like police and fire.
IMEA Contract – In addition to the revenue issue, the council will need to make decisions about the future of their municipal electric service. The Illinois Municipal Electric Agency (IMEA) is a not-for-profit organization of 32 municipal electric systems throughout the state to which Naperville belongs. To better plan future demand and to incorporate more alternative energy into their portfolio, the IMEA is asking member cities to extend the length of their contracted involvement. The long-term commitment has drawn concern from some, especially among hardline environmental activists who advocate for an immediate net-zero carbon energy supply (IMEA currently relies on a mix of energy sources with a plan to be net-zero by 2050). As a business community, we have a responsibility to advocate for an electric delivery system that prioritizes reliability and provides predictable and affordable costs. Councilman Josh McBroom has suggested a city council “workshop” be held to publicly and transparently discuss the available options as it pertains to extending the IMEA contract, and the concept will be discussed at the next council meeting,
State Issues
In the early morning hours of Sunday, June 1st, the Illinois General Assembly adjourned their spring legislative session. It was a mixed bag of results for the business community.
FY26 State Budget – A record high $55.2 Billion FY26 budget was passed by the General Assembly on the final evening of the session. It should be noted that the state budget has grown dramatically over the last several fiscal years from $39 billion in FY2019, to $55 billion in FY2026.
According to the Illinois Chamber, the omnibus revenue package (HB2755) seeks to raise $880 million in new revenues. Several items will create significant tax liabilities for Illinois businesses. Among the proposed revenue enhancements, there includes over $350 million in new, broad, and anti-competitive income tax increases that limit the 80/20 exemption, reduce the GILTI income tax deduction, and changes related to combined apportionment. In addition, the revenue package creates a new sports wagering tax, expands the State’s hotel-motel tax to short-term rental platforms, increases and expands several tobacco product taxes, creates a new telecommunications surcharge, and imposes several new EPA (environmental) fee increases. Lastly, Tax Amnesty programs and many provisions of the FY26 Economic Development package were also included.
Additional Bond authorizations were made by HB3374, and the FY26 Appropriations bill (SB2510) passed to make appropriations and reappropriations for capital and operating expenditures and other purposes. The budget contains $55.4 billion in projected revenue and a $55.2 billion spending plan.
Finally, in this incredibly polarized political climate, it should also be noted that not a single republican representative or senator voted for any of these bills on final passage (third reading or concurrence).
Mass Transit Reform (HB3438) – passed the Senate 32-22-0 but did not advance in the House. With a fiscal cliff looming, discussions will continue over the summer, but it is expected to have a difficult path to passage in its current form. As you are probably aware mass transit systems in Illinois face a $771 million budget gap, and will need to solve the issue by January 1, 2026. Several concerns remain on the overall effectiveness of the new governance structure, lack of any significant efficiencies, and the new revenue proposed. These revenue sources include a $1.50 “climate impact fee” (really a per-package delivery fee on all deliveries); A new ground transportation tax (rideshare tax) of 10% of a gross trip fare in Chicago, Cook, and the Collar Counties.; a new Real Estate Transfer Tax in Cook County (excluding Chicago) and the collar counties of $1.50 per $500 of property value; and a new EV Charging Tax imposed at the rate of $0.06 per kilowatt hour of electric vehicle power. It also redirects interest earned from the Road Fund to Mass Transit Funds.
Energy Omnibus (SB40) – Despite a last-minute flurry of activity, the long-awaited energy package of legislation did not advance.
Tip Wage (HB2982) – This bill passed the House Executive Committee, but was not called for a vote on the House floor.
Warehouse Tornado Response (HB2987) – passed the House 99-15-0 on concurrence. This bill provides that the operator of a warehouse should coordinate with the warehouse’s local emergency services and disaster agency and fire department or fire protection district to create plans that, when implemented, will be consistent with the local jurisdiction’s response activities. Provides that copies of the plan and all updates made to the plan must be filed with the fire department or fire protection district in the jurisdiction in which the warehouse is located and the local emergency services and disaster agency in the jurisdiction in which the warehouse is located. Provides that warehouse facilities constructed after the effective date of the Act must provide the means, through modification, installation, or demonstration via rational analysis, to meet a life-safety performance level for tornado loading that is equivalent to, or exceeds, the life-safety performance level for the most onerous of other building code-prescribed extreme environmental loading events. Sets forth provisions concerning that evaluation. Provides that, in lieu of a risk-targeted approach, the evaluating design professional may elect to follow prescriptive methods as outlined in the Federal Emergency Management Agency standard P-431, Tornado Protection: Selecting Refuge Areas in Buildings and the Best Available Refuge Area Checklist to ensure that shelter areas designated in tornado safety plans are qualified as the best available refuge areas. Requires that the county keep on file a copy of the certifications of the persons doing inspections or examinations on its behalf. Provides that a building inspector may have a grace period of one year from the date of hire to acquire the certification required under these provisions. Amends the Illinois Municipal Code to add similar requirements for building inspectors.
Extreme Workplace Temperatures (HB3762) – After passing the House Labor & Commerce Committee on a partisan roll call, the bill was not called for a vote on the House floor.
Disposable Food Container Ban (SB1531) – This legislation would ban the sale or distribution of disposable food service containers composed in whole or part of polystyrene foam (exempted egg cartons). The bill passed the Senate on a vote of 32-22-0, but was not called for a final vote in the House.
Workplace Confidentiality Agreements (HB3638) – passed the House 93-22-0 on concurrence. This bill provides that no contract, agreement, clause, covenant, waiver, or other document shall prohibit, prevent, or otherwise restrict an employee, prospective employee, or former employee from engaging in concerted activity to address work-related issues. With the amendment, removes a requirement that settlement or termination agreements that prevent an employee or former employee from working or from applying to work for an employer in the future must expire within 7 years. The IL Chamber was the lead on this issue and negotiated the bill to neutral.
Federal Issues
Legislation – “the Big, Beautiful Bill” – According to the US Chamber, this legislation will enhance America’s global competitiveness, fuel long-term economic growth, and avoid the largest tax increase in U.S. history. It is particularly important to the continued success of America’s small businesses, with data showing small businesses in districts across the country benefiting substantially. Earlier this year, the U.S. Chamber led nearly 500 business organizations in urging Congress to permanently extend the TCJA pro-growth tax reforms that help workers and businesses achieve their American dream and this legislation largely achieves that goal. The impact of a more competitive and stable tax code on businesses of all sizes, in communities all across the country, cannot be understated.
The legislation has passed the U.S. House of Representatives and has moved to the U.S. Senate. Of particular interest to Illinois residents and businesses, the House version increases the State and Local Tax (SALT) maximums from $10,000 to $40,000, and contains the Business SALT (B-SALT)language requested by the U.S. Chamber.
U.S. Supreme Court – An interesting case that could have implications for Illinois elections will be considered by the U.S. Supreme Court in its next term which begins in October. Primarily, it will seek to resolve the question of standing, but could impact the way absentee ballots are counted. US Representative Michael Bost (R-12) is from Southern Illinois. In the case of Bost v Illinois State Board of Elections, he challenged an Illinois law that allows mail-in ballots to be received and counted up to 14 days after the election. In Illinois, the US District Court and the 7th US Circuit Court of Appeals in Chicago ruled that Bost and 2 presidential electors lacked legal standing to bring the case. In contrast, the 5th Circuit found standing on a related issue regarding absentee ballots in Mississippi. The Supreme Court will attempt to reconcile these conflicting rulings.
