New plan would make sure contractors get paid sooner by the state

SPRINGFIELD, Ill. (WAND) — Small businesses and contractors often struggle with delayed payments and limited job growth due to state retainage policies. Lawmakers could pass a plan this spring to end the practice of withholding payments for contractors and adopt federal standards for project payment.

"Many of these contractors are fulfilling 100% of their work," said Sen. Willie Preston (D-Chicago). "Yet, they're having 10% of their contracts withheld for months and sometimes years. Imagine doing all the work, finishing the job, and not getting paid fully."

Preston and other Democratic lawmakers argue the state should adopt federal standards that impose retainage only when certain project issues arise. This change would only apply to state agencies and public universities. However, advocates said it is critical for thousands of workers and businesses.

"As a former banker, I sat across the table from many contractors who were denied loans not because they lacked the work, but because their accounts receivable stretched beyond 90 days," said Jaemie Neely, executive director of the Federation of Women Contractors.

Neely said many contractors see their cash flow crippled, limiting access to capital and reducing bond capacity. She stressed that this combination stifles business growth and workforce development for many minority contractors.

"This is not removing any responsibility from any contractor to fulfill their obligation," said Rep. Will Davis (D-East Hazel Crest). "When they sign and take on the responsibility of doing their part on a contract, they're doing that work and they should be paid accordingly."

Senate Bill 74 has been assigned to the Senate Executive Committee. Senators could discuss the plan when they return to Springfield this week. Identical legislation, House Bill 1224, is currently in the House Rules Committee. 

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