Legislative Update - Fall 2023
The Illinois General Assembly concluded the spring 2023 legislative session in May. In total, more than 6,500 bills were introduced this year, and Gov. Pritzker spent the summer reviewing all that were presented to him for approval. In total, he signed 561 into law: 343 House bills and 218 Senate bills. The Governor issued vetoes on six bills, including an amendatory veto on HB 2878. Among other provisions, HB 2878 included IMSCA’s legislative initiative seeking retainage reduction on public construction projects.
As SMACNA Greater Chicago members know, IMSCA has worked tirelessly for many years seeking retainage reform in Illinois. In 2019, IMSCA was successful in getting a law approved that reduced retainage on private construction projects. This spring, we focused our efforts on seeking a reduction in the amount of retainage that can be withheld on public construction projects. Some local governments, such as the City of Chicago and Cook County, have voluntarily reduced or eliminated the withholding of retainage on their projects. Other state agencies, like the Illinois Capital Development Board have voluntarily reduced retainage to 5% for the second half of their projects. Most other states restrict the amount of retainage that may be withheld on public projects, but Illinois is not one of them.
For these reasons, IMSCA engaged in hard-fought negotiations with stakeholders, including the Illinois Bankers Association, Illinois Municipal League and the Illinois Association of School Boards. Our negotiations resulted in an agreement on legislation to provide that retainage may be withheld at a rate of 10% for the first half of a public construction project but reduced to 5% upon 50% completion.
This provision was included in HB 2878. In addition to including IMSCA’s retainage reduction language, HB 2878 also included provisions that made significant changes to the Illinois Procurement Code, Public Construction Bond Act, expanded the use of Public Private Partnerships (P3s) and other statutes important to contractors. On August 11, Gov. Pritzker issued an amendatory veto on HB 2878, citing concerns with the expanded use of P3s in Illinois, “while not providing proper oversight.”
His message further stated:
“… As written, the bill creates a pathway for private industry to enter P3 agreements locally that skirts transparency and anti-corruption requirements established in state statute, including ethics, BEP, campaign finance, and procurement laws. The potential in this bill for opacity and corruption is too great. In addition, the bill as written puts the state at greater risk of project failure because it decreases competition and reduces the opportunity for public input into project planning and implementation currently required for other P3 developments under state law …”
What Does this Mean and What Are the Next Steps?
The Illinois General Assembly will return to Springfield for a fall veto session from October 24-26 and November 7-9, to provides them the opportunity to respond to the Governor’s veto actions.
When lawmakers convene for the veto session, the House will consider HB 2878 first, and can respond to the Governor’s veto action in the following ways:
1: The chamber can vote to override the Governor’s suggested change and to enact the bill the way it was originally passed. A 3/5 majority (71 votes) is required for this action.
2: The chamber can vote to accept the Governor’s specific recommendation for change. A simple majority (60 votes) is required for this action.
3: The chamber can take no action; in which case, HB 2878 is dead.
If the House votes either to override or accept the Governor’s specific change, then the bill and motion must be considered by the Senate within 15 days of the House’s action. Thereafter, the same procedure will happen in the Senate. If both the House and Senate override, then HB 2878 will become law as it was approved by the Illinois General Assembly in May 2023.
If the House and Senate both accept the Governor’s specific recommendation for change, then HB 2878 will again be presented to the Governor for certification of said action, and HB 2878 will become law as amended by the Governor.
Your IMSCA staff and lobbying team looks forward to working alongside members and lawmakers this fall to ensure retainage reduction on public construction projects becomes a reality in Illinois.