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On Policy: Money for Special Interests, Straight from Your Paycheck

Note: This new blog series will address, from a Libertarian perspective, policy issues facing Champaign County residents, and those of Illinois state more broadly. It will examine upcoming or recently passed laws, and inform you about how your elected officials voted on them.

Campaign season 2020 is underway in Champaign County: mailers are arriving by foot carried by the faithful letter carriers, political swag is beginning to fly off tables at local events, and yard signs will soon begin sprouting in lawns all around town. At least one such mailer detailing Rep. Carol Ammons’ agenda and key legislative record has already been making the rounds. I thought this would be a good chance to reflect on her representation and voting record over the 2019-2020 term to date.

Rep. Ammons’ recent mailer.

Rep. Ammons has been an ally on two issues that Libertarians care about deeply; namely, criminal justice reform and legalization of recreational marijuana use (see Sec. 1.7 of the LP party platform here). I applaud her efforts to provide transparency of public complaints of policing (HB2503), work to improve independent legal review of the polygraph process (HB2569), support for lowering the burden of appearing in court for persons held in State confinement (SB1890), and creation of criminal ramifications for law enforcement officials guilty of fraud (HB2112, HB2111). She also co-sponsored the recently passed bill legalizing recreational marijuana use in Illinois (HB0902), which was a landmark achievement in US legalization efforts in that it provides provisions to free non-violent drug offenders.

Bills co-sponsored or voted for by Rep. Ammons.

That said, much of her voting record has been in opposition to the values of liberty, freedom to operate, personal choice, smaller government, and fiscal responsibility. As evidence, I will briefly review bills she has supported — and explicitly calls out in her flyer — as they represent examples of the worst type of government.

Rep. Ammons supported the “Prescription Drug Pricing Transparency Act” which places new regulations on the healthcare industry within the State of Illinois at a time when health insurance costs continue to rise at rates greatly outpacing income and GDP growth. HB 156 burdens insurance provides with reporting requirements related to prescription drug coverage. Additionally, the law requires drug manufactures to provide justifications for increases in drug prices. While on the one hand this legislation does not change the right of manufacturers and insurers to price costs of insurance, it is clearly meant to publicly shame companies for their business practices.

Enter HB 471, a bill that amends the “Illinois Insurance Code” which empowers the State to reject ACA health insurance premium rate increase. By nebulously defining “unreasonable rate increases” it essentially allows the state to impose price controls on health insurance plans. Many might think this is good policy considering the rapidly rising health insurance costs; however, this bill will likely decrease choice among an already sparsely populated market. Insurer participation in the health exchange marketplace has continually dropped since the passage of the ACA from a peak of 5 insurers on average in 2015 to 2.35 in 2019, and as things stand today 15% of Illinois enrollees only have a single insurer option [1]. This is unsurprising considering the high costs of compliance. Price controls will only exacerbate the problem. As a case study, Land of Lincoln Health closed operations in 2016 after $7.1M in losses, despite $160M in government grants [2]. Along with decreasing choices, enrollment in the exchange has been declining at a rate between 7% and 9% per year from 2016 to 2018 [3]. I highly doubt adding price controls will solve these problems, and my prediction is that HB 471 will eventually require further Illinois subsidies to prop up failing marketplace plans.

In economic policy areas, Rep. Ammons voted for efforts that will weaken employment in Illinois, while raising overall State spending. She supported the “Lifting Up Illinois Working Family Act” (SB 1) that increases the minimum wage to $15/hour over 5 years, the bloated appropriates bill (SB 262) which adds between $574M and $1.3B to the state deficit [4], and an amendment to the Illinois tax code (SB 687) that raises corporate tax rates by a percentage point and creates a steep progressive income tax. While individuals and families making less than $100K per year will see similar or slightly reduced tax rates, higher earners will face steep taxes ranging from 7.75% to 7.99%. This is the second tax increase in four years, after the increase from 3.75% to 4.95% in 2017.

Ramifications of Illinois corporate and individual taxes have been felt for years. Corporations have been leaving Illinois for years [5] due to high costs of business as have individuals [6]. In fact, Illinois has the second highest rate of emigration surpassed only by New Jersey, based on data from moving companies [7,8]. This trend will likely continue given the increased corporate and individual tax rate increases, resulting in worsening financial situation within the state.

To put a cherry on the cake, Rep. Ammons supported broad subsidies for R&D and apprenticeships via SB 1591 and SB 191. The former amends the Illinois tax code to extend R&D tax credits to 2027 of up to 6.5% for certain expenses and creates and Apprenticeship Tax Credit of $3500 per employee (up to $5M per company!). While innovation is important, rather than increasing tax rates followed by subsidies, why not just let businesses keep more of their money? The latter bill creates a “21st Century Employment” grant program for community colleges that requires the state to pay at least 60% of proposed training costs. While no specific dollar amount is allocated for the training program—which is itself irresponsible governance—we can estimate the deficit due to the apprenticeship tax credits of up to $48.7M (based on the 13,900 apprenticeships identified in a 2016 report [9]). Rather than require the State to sponsor apprenticeships, why not let the plethora of unions in Illinois pay for them? That is part of their raison d’etre after all.

Overall, these hallmark proposals supported by Rep. Ammons are misguided. They include bad governance, increased regulations and price controls, tax hikes, and payments to special interests. I expect this will result in decreased competition, further flight of taxpaying corporations and individuals alike, and a worsening condition in Illinois. I give Rep. Ammons a D- for the 2019-2020 term so far.

Detailed Notes on Policy

IL HB 156 – “Prescription Drug Pricing Transparency Act”

  • Status: Passed June 21, 2019
  • Bill Specifics
    • Requires health insurer to disclose to Illinois Department of Public Health:
      • all covered prescription drugs
      • % of premium attributable to drug costs
      • % spending change in year over year spending on drugs
    • IDPH will publish list of drugs for which it pays significant amounts
    • Require manufacturer to report:
      • Justification for increase in drug cost
    • Good: Does not change manufacturers right to change drug price

IL HB 471 – Amendment to the “Illinois Insurance Code”

  • Status: Passed May 24, 2019
  • Bill Specifics
    • Added a nebulous definition of “unreasonable rate increase” which subjectively determined by a State committee
    • Requires all ACA healthcare exchange plans to file rate increase proposals with the Illinois Department of Public Health which will then determines whether to allow or deny them

IL SB 1 – “Lifting Up Illinois Working Families Act”

  • Status: Passed February 19, 2019
  • Bill Specifics
    • Bill raises minimum wage to $15 over 5 years
    • Minimum wage increases to:
      •  $9.25/$10 in 2020
      • $11 in 2021
      • $12 in 2022
      • $13 in 2023
      • $14 in 2024
      • $15 after 2025
    • Credit for companies with <= 50 employees if average wage is <$55K
      • 25% in 2020, 21% in 2021, 13% in 2022, 9% in 2023, 5% in 2024
    • Penalty for underpayment increase from 2% to 5%

IL SB 262 – Appropriations Bill

  • Status: Bill Passed as of June 5
  • Bill Specifics
    • Increases spending across the board
    • Estimated deficits between $574M and $1.3B

IL SB 687 – Amendment to the “Illinois Income Tax Act”

  • Status: Passed June 5, 2019
  • Bill Specifics
    • Raises corporate income tax rate from 7% to 7.99% on Jan. 1 2021
    • Raises income tax rates:
      • For individuals:
        • 4.75% up to $10K
        • 4.9% from $10K to $100K
        • 4.95% from $100K to $250K
        • 7.75% from $250K to $350K
        • 7.85% from $350K to $750K
        • 7.99% for anyone making $750K or more
      • And married couples:
        • 4.75% up to $10K
        • 4.9% from $10K to $100K
        • 4.95% from $100K to $250K
        • 7.75% from $250K to $500K
        • 7.85% from $500K to $1M
        • 7.99% for anyone making $1M or more
    • Adds a tax credit equal to 6% of real property taxes
    • Adds a tax credit for each child <18 years old
      • $5 for each $2K up to $60K (joint; total $150) or $40K (single; total $100)
    • Changes married filing jointly to be spouse instead of husband and wife (good!)
    • Transfers General Revenue Fund to Local Gov. Dist. Fund:
      • Down from 6.06% to 5.32% revenue from income taxes
      • Down from 6.85% to 6.16% of revenue from corporate taxes

IL SB 1591 – Amendment to the “Illinois Income Tax Act”

  • Status: Passed June 6, 2019
  • Bill Specifics
    • Extends Tax credit for R&D of 6.5% of qualifying expenditures for research to 2027 (from 2022)
    • Creates an Apprenticeship Tax Credit of $3500 for employers (Up to $5M per company)

IL SB 1919 – Amendment to the “Public Community College Act”

  • Status: Passed June 21, 2019
  • Bill Specifics:
    •  Creates a “21st Century Employment” grant program for community colleges
      • Colleges create a training plan and budget to work with local development partners
      • Private public partnership where development partners pay maximally 40% of the costs
      • Creates an advisory panel for grant program
    • No Dollar amount is given; based on appropriations

Referenced Materials

  1. R. Fehr, C. Cox, L. Levitt, “Insurer Participation on ACA Marketplaces, 2014-2019”, Kaiser Family Foundation, Nov. 14. 2018. Accessed: Aug. 8, 2019.
  2. L. Norris, “Illinois Health Insurance”, Health, Dec. 17, 2018. Accessed: Aug. 8, 2019.
  3. C. Gaba, “UPDATE: 2018 ACA Open Enrollment: FINAL TOTAL: 11,760,533”,, Feb. 7, 2018. Accessed: Aug. 8, 2019.
  4. A. Schuster, “Pritzker Signs Illinois Budget Out of Balance By Up to $1.3 Billion”, Illinois Policy, Jun. 11, 2019. Accessed: Aug. 8, 2019.
  5. A.M. Kukec, “Illinois Loses Out as Companies Move Out: Budget woes and political chaos have businesses and workers fleeing Illinois”, U.S. News, Mar. 15, 2018. Accessed: Aug. 8, 2019.
  6. D. Keene, “Fleeing the Land of Lincoln”, The Washington Times, Mar. 13, 2018. Accessed: Aug. 8, 2019.
  7. J. Barnas, “Moving Company Ranks Illinois 2nd in Nation for Outbound Moves”, Illinois Policy, Jan. 7, 2019. Accessed: Aug. 8, 2019.
  8. United Van Lines, “2018 National Movers Survey: New Jersey Tops List of Outbound Moves while Western ad Southern States Lead Inbound Moves”, Jan. 2, 2019. Accessed: Aug. 8, 2019.
  9. Illinois Department of Labor, “2016 Apprenticeship Survey Report “, Mar. 1, 2017. Accessed: Aug. 8, 2019.