Tyler Diers
Director, Legislative Relations
630-400-3439
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June 6, 2018
Good morning Illinois Chamber Tech Council members!
The Illinois General Assembly wrapped up the Spring legislative session on May 31st with an approved budget and spending plan - on time! On Monday, the Governor signed the FY 2019 budget intended to create financial stability for Illinois. Lawmakers indicate that the $38.5 billion budget is balanced through a combination of higher revenue and almost $600 million in cuts.
It includes $350 million in new funding for public schools, as established in the new, evidence-based formula passed last year, and an additional $50 million for early education. Higher education institutions receive a 2 percent increase in funding, and MAP grants are extended to four years and $25 million has been set aside for a new grant program, AIM HIGH, that will provide additional tuition assistance.
For an overall summary of the Chamber's legislative session, check our End of Session Report
here. In addition to the tech recap below, I have also
included a pdf. of all tech bills I tracked this session. Let's dive in!
DATA PRIVACY ROUNDUP
Despite warnings of a potential rough year for tech, the industry fared pretty well. There were many talks early on that legislators would be eager to adopt European-style privacy regulations here in Illinois. While that never came into fruition there were still several attempts to enact laws that would have made Illinois an outlier.
Democratic Attorney General nominee and State Senator Kwame Raoul (D-Chicago) introduced two bills opposed by the Illinois Chamber.
SB 575 would have sought to regulate microphone enabled devices. The proposal would prohibit any private entity from turning on or enabling a digital device's microphone to listen for or collect information, such as, spoken words or other audible or inaudible sounds, unless the user agrees to a written policy made available to the public. This would have applied to everything from tablets, refrigerators, cars, and tablets. I testified in opposition to the bill when it was before the Senate Judiciary Committee, arguing that the amendment was substantively flawed and would have made it impossible for IoT devices to work in Illinois.
Sen. Raoul also introduced
SB 3007, which
would amend the state's data breach law (otherwise known as PIPA) to require a data collector to report data breaches of more than 100 Illinois residents to the Attorney General (AG) within 14 days.
This is contrary to current law which requires a data collector to only notify the resident "in the most expedient time possible and without unreasonable delay." The Senator never called this bill for a committee vote.
BIOMETRIC MEASURES FALL SHORT
The Chamber's proposed amendment to the state's Biometric Information Privacy Act (BIPA) fell short this session. SB 3053 (Cunningham) and HB 5103 (Thapedi)
would have amended the state's biometric law, established in 2008, to provide employers the ability to use biometric information for internal employment purposes including timekeeping, human resources, fraud prevention, and security purposes, as long as the employer is not using the information for commercial purposes.
Biometric data is becoming more common in the workplace and dozens of employers have been blind sighted by class action lawsuits recently filed. Under current law, roughly 97 Biometric Information Privacy Act (BIPA) cases have been filed in Illinois and of those 97 cases only 10 appear to allege the collection of biometrics data for reasons other than employment or timekeeping purposes.
The suits target many industries, including restaurants, hospitality, grocery stores, gas stations, nursing homes, logistics and building management companies.
Despite the original law's passage in 2008, Illinois remains one of the only state's that have a biometric statute. Texas and Washington's biometric statutes limit the scope to commercial purposes and do not contain a private right of action.
The goal of SB 3053 was to find a balance between consumer privacy and business innovation. While we fell short, we believe we sent the message to employers that Illinois wants businesses to be able to grow by allowing them to use innovative technologies, as long as, the approach is balanced for both employers and employees. SB 3053 would have given our small businesses and tech innovators reason to invest in Illinois. Biometric data affects more than just Illinois' big tech giants, it affects our small and medium size businesses that are constantly being made vulnerable to frivolous lawsuits from policies that overregulate our job creators.
It is also worth mentioning that
HB 4330 (Yingling) did not move this year. This bill would amend the Biometric Information Privacy Act to prohibit a private entity from requiring a person or customer's biometric information as a condition for the provision of goods or services. This bill would have outlawed many of the functions and features that we enjoy using daily. For example, a clothes shopping service that collects body measurements to show you virtually how outfits might look on you. Or a service for athletes that analyzes your running motion to diagnose problems with your form. Or an exercise band that collects information about your body movements so you can keep track of your daily activity.
DRONES, DRONES, DRONES
Currently, unmanned aerial systems (UAS), also known as drones, are heavily regulated at the federal level and a proposal, deserving of our support, recognizes this authority. In Illinois, the state has passed a variety of common sense drone laws and regulations. However, at the local level a series of ordinances have left a patchwork of inconsistent and invalid drone regulations.
If signed, SB 3291 (Clayborne/Evans) will preempt these local ordinances in order to simplify and streamline drone regulations and ensure that Illinois law complies with federal guidelines. This is of particular concern to commercial and public operators that routinely operate drones in multiple locations throughout the State and across municipal boundaries. The patchwork of laws often leads to local ordinances that conflict with federal law. The Chamber supported SB 3291 and will be requesting the Governor's signature on the bill.
Another drone bill that received a considerable amount of attention failed to pass both houses this session. SB 2562 (Sandoval/D'Amico) would authorize law enforcement to use drones at large scale events (i.e. Lollapaloza, Taste of Chicago, etc.). The bill was the center of another privacy debate between the City of Chicago and civil liberty groups. The Chamber did not weigh in on this bill.
20% INVESTMENT MANAGEMENT TAX DEAD - AGAIN
For the second straight year the Chamber was successful in defeating the progressive flank's efforts to impose a new 20% tax on partnerships and S corps engaged in the business of conducting investment management services.
Illinois has benefited from being a top ten globally-recognized financial hub and many tech start-ups depend on a lively venture capital environment. Start-ups continually face shortages of capital, and raising taxes on investment management services provided to Illinois based start-ups would reduce investment options for private companies, innovators and small firms getting off the ground.
This bill has resurfaced twice within the last two years. However, given both Gov. Bruce Rauner and Democrat gubernatorial candidate JB Prtizker both oppose this tax, we expect this issue to be laid to rest.
"RIGHT TO REPAIR" NOT RIGHT FOR ILLINOIS
HB 4747 (D. Harris) would have created the so-called "Digital Fair Repair Act." This legislation would mandate direct access to machine repair and diagnostic tools, or access to embedded software code to everyone; risking the release of proprietary information. The bill as introduced would have applied to everything from televisions to tractors, tablets to refrigerators. The Chamber had concerns with forcing manufacturers to give up their intellectual property to just about anyone. Warranties, public safety and emissions are critical to a device or piece of equipment. The Chamber worked with other groups to soundly defeat the bill from advancing in the House.
CALL CENTER BILL DEFEATED IN SENATE
The Chamber was successful in leading a coalition of industry trade groups in defeating a bill that would have placed monetary fines on businesses who relocate call centers.
HB 4081
(Halpin/Bennett) would create the Call Center and Consumer Protection Act by requiring employers who operate call centers of more than 50 employees (i.e. technical support, IT support, troubleshooting, financial planning, customer service, sales, etc.) to notify the state 120 days in advance if they intend to move jobs out of the state. Employers who do not notify would be subjected to a civil penalty of up to $10,000 per day. Among other provisions, it also r
equires an employer that relocates a call center from Illinois to another state or a foreign country to repay grants, loans, and tax benefits that may have been received.
I testified in opposition to the bill in both the House and Senate committees, arguing
that the Illinois WARN Act and the ability of DCEO to currently claw back state incentives in certain situations provide adequate protection that the legislation seeks. The sponsor indicated to me that he will be working with interested parties over the summer to attempt to remove opposition to the bill.
DoIT DOES IT!
HB 5611 (Andrade/Martinez) passed both Houses and is now on its way to the Governor's desk. This bill codifies Governor Rauner's executive order creating the Department of Innovation and Technology (DoIT). DoIT yields innovation by providing statewide information technology and telecommunication service to all state government agencies, boards and commissions. In addition to these services, DoIT also delivers policy and standards development, life cycle investment planning, enterprise solutions, privacy and security management, and leads the nation in Smart State initiatives. The Illinois Chamber supported HB 5611 and applaud the work of this new and very important state agency.
BILL SEEKS TO BRING SCOOTER SHARING TO IL
Upon my last visit to Santa Monica, CA, I noticed that everyone was riding around town on electric low-speed scooters. The scooters were everywhere! It was quite fascinating to witness. Well,
an amendment was filed late this session to SB 513 (Munoz) to grant this business model and mode of mobility to Illinoisans. This proposal would allow stand-up foot scooters,
such as Bird, to allow access to Illinois public streets and bike paths. The amendment was never adopted in the Senate and therefore failed. However, we will continue to monitor this bill as it may resurface in the future.
BILL SEEKS REGULATION FOR RENTAL-CAR SHARING
A bill that received a lot of attention towards the end of session passed both houses.
SB 2641 (Munoz/Turner) that would seek to apply the same statutory and regulatory obligations on
non-traditional car rental companies (such as Turo) as
traditional car rental companies.
The bill as passed both houses would apply the same standard of regulations on personal car facilitation such as liability, loss or injury and the ability for local units of government to apply a rental service tax on vehicles. The Chamber ended up taking no position on the bill.
KIM FOXX PUSHES SUSPECT BILL LAST MINUTE
An amendment to
HB 3648 (Mulroe/C. Mitchell) was introduced in the final days of session. This bill, backed by Cook County State's Attorney Kim Foxx, would codify existing practices of permitting state's attorneys from appointing private counsel to serve as Special Assistant State's Attorneys when the public interest so requires.
Proponents argue that state's attorneys currently have the authority to appoint private counsel to serve as special assistants and that this bill would simply codify existing practice in the Counties Code.
To those not familiar with the antics of Illinois state government, bills introduced this late in the session are most often highly suspect. I've been around the legislature long enough to know that if you want to sneak an initiative through with little public inspection, you do so in the final days of session.
Our precautionary opposition primarily revolves around the Cook County State's Attorney's recent activity in appointing private lawyers to serve as "special state's attorneys" in cases that are on a contingency fee basis. If this is already current practice, then why was the bill being pursued on the last day of session? Could it possibly complicate some of the cases currently pending in which the Cook County State's Attorney has hired special assistants on a contingency fee basis? These questions were never answered.
Unfortunately, the bill passed unanimously and we were unable to slow the bill down. If you have any thoughts on the matter, please let me know.
RESOLUTION URGES COMPUTER SCI CURRICULUM
A non-binding resolution to encourage Illinois school districts to teach computer science and coding was adopted by the Illinois House. You may recall, the sponsor originally
introduced a bill earlier this year that would have mandated computer science courses as a prerequisite for high school graduation.
This resolution may be a sign of future efforts for the state to mandate school districts to provide computer science curriculum for public schools. Stay tuned.
ANYTHING RELATED TO TECH IN THE BUDGET?
Gov. Rauner yesterday signed into law a full, fiscal year budget. The budget and budget implementation bills (BIMP) are lengthy bills that contain several hundred pages. Oftentimes, substantive language not directly related to the budget is inserted into the BIMP (
HB 3342)
. This makes the job of a lobbyist a little difficult. We're tasked with skimming through these large bills with little time to act and bring concerns to legislators. Luckily there was nothing concerning hidden in the BIMP. However, a few tech and internet-related issues were inserted into the final budget agreement, .
HB 3342 amends the nexus provisions of the Use Tax Act to adopt the language currently before the U.S. Supreme Court in South Dakota v. Wayfair, Inc. This particular provision is scheduled to become effective beginning October 1, 2018. The Chamber suspects that by making the language effective October 1, it is anticipated that the U.S. Supreme Court will have ruled on the constitutionality of the South Dakota language in Wayfair. The legislation provides that a retailer making sales of tangible personal property to Illinois purchasers from outside the state will Property of Last Updated 6/1/2018 be required charge and collect Illinois use taxes if the cumulative gross receipts from sales of tangible personal property to Illinois purchasers are $100,000 or more or the retailer enters into 200 or more separate transactions for the sale of tangible personal property to purchasers in Illinois.
The BIMP bill also included cyber security efforts aimed at supporting the efforts of election authorities to defend against cyber breaches and detect and recover from cyber attacks.
CHICAGO CLOUD TAX
Last week, the Circuit Court of Cook County issued an opinion in a case involving the Chicago "cloud tax."
Michael Labell, et al. v. City of Chicago. The court ruled on motions for summary judgment filed by both parties denying the plaintiffs challenge to the tax and granting the City's motion for summary judgment.
The plaintiff sought to enjoin the ruling extending the Chicago amusement tax to cover Internet-based streaming services on a number of grounds - (1) as a violation of the federal Internet Tax Freedom Act, (2) as a violation of the U.S. Commerce Clause, (3) as a violation of the uniformity clause of the Illinois Constitution, and (4) as an extraterritorial application of the City's taxing power.
ARTICLES OF INTEREST
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