Next session dates: March 4-6, 2008
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This week...
Governor's Health Care Plan Defeated Again
For the third time in less than a year, members of the General Assembly dealt a stinging rebuke to Governor Blagojevich and his ill-advised attempt to implement a massive new government-run health care program in Illinois. Originally proposed during the 2007 spring legislative session, the proposal would have imposed a new 3 percent payroll tax and Gross Receipts tax to fund the multi-billion program designed to provide free or subsidized health care for families earning up to $82,000 per year.
When the Governor could not muster enough votes to pass the health care plan in the General Assembly, he attempted to circumvent the entire legislature and create his program through the administrative rulemaking process. Under the procedures of the Joint Committee on Administrative rules, which is composed of three members from each of the four legislative caucuses, administrative rules take effect unless 8 of 12 members vote to prohibit or suspend the rule. In effect, it takes a bipartisan group of Republicans and Democrats to block rules proposed by the Governor and his agencies.
Hoping that the third time would be a charm, Governor Blagojevich again sought approval from JCAR this week despite overwhelming defeats by the entire General Assembly in the spring, and JCAR last fall. His latest proposal would have created the health care program albeit without a funding source which would have placed extreme pressure on the state budget. Thankfully, a majority of legislators again realized that the Governor's program is too big and too expensive for the state which is facing a nearly $3.6 billion deficit and defeated it on a vote of 8-2.
The IMA would like to recognize the leadership and courage of Senators Maggie Crotty (D-Oak Forest), Brad Burzynski (R-Sycamore), Randy Hultgren (R-Wheaton), Dan Rutherford (R-Pontiac), and Representatives David Leitch (R-Peoria), John Fritchey (D-Chicago), Lou Lang (D-Skokie), and David Miller (D-Dolton). Republican representatives who sided with the Governor over the concerns of the business community were Representatives Brent Hassert (R-Romeoville) and Rosemary Mulligan (R-Des Plaines).
Income Tax Hike Possible
Appearing to gain some momentum, similar proposals to hike the income tax moved forward in both the House and Senate this week. In the Senate Education Committee, Democrat legislators approved SB 2288 (Meeks, D-Chicago) on a partisan roll call over the objections of Republicans who argued that the tax increases would hurt Illinois families and make it tougher for employers to compete in a slowing economy. The legislation raises the individual income tax from 3 percent to 5 percent while hiking the corporate income tax rate from 4.8 percent to 8 percent in order to generate nearly $7.2 billion according to fiscal estimates. With this increase, the corporate income tax rate in Illinois would reach 10.5 percent (Including the 2.5 percent Personal Property Replacement Tax) and become the second highest income tax in the United States. Illinois would jump past a number of state including Massachusetts, Minnesota, and Pennsylvania meaning only Iowa would have a higher tax rate at 12 percent.
According to testimony in committee, the revenue from the income tax increase would be used to provide property tax relief, education funding, and capital infrastructure. Following is the revenue distribution:
- $2.9 billion for property tax relief which equates to a reduction of only 20 percent of the education portion of a property tax bill. There is no language in the bill that would prohibit a school district from immediately raising its property tax.
- $1.7 billion to pay down current Medicaid bills and reduce the payment cycle
- $1 billion for capital debt service which would allow for a multi-billion infrastructure program
- $720 million to pay the state's FY10 pension payment increase
- $633 million for elementary and secondary education
- $600 million in tax credits for low-income taxpayers to offset the impact of the tax hike
- $300 million for higher education
Similar legislation (HB 750) sponsored by Rep. David Miller passed the House Elementary & Secondary Education Committee in March 2007 on a vote of 12-3. Last week, the measure was released from the Rules Committee and sent directly to the floor where it could be considered for final passage at any time. HB 750 provides for similar increases in both the individual and corporate income tax rates but revenue is only expended for property tax relief and education. No dollars are dedicated for capital infrastructure or paying state debt.
Typically, it would be tantamount to political suicide for any politician to publicly support, let alone actually vote in favor of an income tax hike in an election year. This year, however, could be different. Illinois is facing a very serious financial crisis with a debt approaching $3.6 billion according to Comptroller Dan Hynes. However, many of the core constituencies of Democrat lawmakers are "tax eaters" and would not be happy if the General Assembly actually tried to balance the budget through spending reductions or other financial and pension reforms. So, many legislators are looking to increase revenues to match their appetite for spending and they believe that the likelihood of Democrat Barack Obama on the presidential ticket would negate any possible impact of an income tax vote.
Senate President Emil Jones is a co-sponsor of SB 2288 and Speaker Michael J. Madigan has previously indicated support for an income tax increase. So, if the two legislative leaders can agree on an income tax proposal, it is possible that it will move forward.
Cook County Budget on the Clock
Cook County President Todd Stroger and the County Board have until midnight tonight to pass a new county budget or face a shutdown of county services. Since the beginning of the county's fiscal year on December 1, Cook County has been funded through a continuing resolution but state law mandates a budget must be passed by March 1. Stroger has been seeking a 2 percent sales tax increase in order to help erase a $283 million hole in the county's $3.2 billion budget while commissioners have balked and suggested budget cuts or other revenue enhancements.
In recent talks, Commissioners tried unsuccessfully to convince Stroger to lower his sales tax increase from 2 percent to 0.75 percent and make budget reductions. Members of the County Board also rebuked efforts by Commissioner Maldonado to raise taxes on airline fuel, alcohol consumption, SUVs, and hotel rooms. So, on the final day of debate, it appears that Stroger and commissioners are playing a game of political chicken to see who blinks first. If the day passes without a new budget, all non-essential services will stop and County officials would likely seek a court order allowing them to spend money on essential services such as the jail, criminal courts, law enforcement and hospital services.
ETIP Bill Advances
An IMA initiative to stop the state from collecting the name, address and social security number of every person receiving training through the Employer Training Investment Program (ETIP) passed the House Labor Committee unanimously this week. HB 4470, sponsored by Rep. Fred Crespo (D-Hoffman Estates), would protect workers from possible ID theft by allowing a business to submit a legal signed affidavit to the Department of Commerce & Economic Opportunity (DCEO) instead of social security numbers. HB 4470 now moves to the House for final consideration and the IMA will continue working with DCEO to ensure that the integrity of the program is protected.
Senator Todd Sieben....A True Gentleman
Last summer, longtime legislator Todd Sieben (R-Geneseo) announced his decision not to seek reelection after dedicating nearly two decades to public service in the Capitol. This week, Senator Sieben announced his resignation effective on March 6, ending a long and storied career in which Todd earned the distinction as a true gentleman with a sense of dignity. Sieben grew up in Geneseo, graduated from Western Illinois University, and served in the Vietnam War and a lieutenant in the U.S. Navy. Before winning a seat in the Illinois House of Representatives and finally the State Senate, Sieben managed his family's seed business.
At a time when partisan bickering has increased and tensions run high, Todd Sieben is a model of civility who worked equally well with all sides. Todd was a friend of the business community and more importantly a genuinely nice person. The IMA offers Todd our best wishes as he undertakes new endeavors with his wife, three children, and seven grandchildren.
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