Download this document in .pdf format
Next session dates: House: May 15-18 & Senate: May 14-18, 2007
House unanimously opposes GRT after Committee of the Whole
On the day following a rare Committee of the Whole hearing, House lawmakers voted unanimously against a non-binding resolution (HR 402) that asked legislators to indicate their support for a gross receipts tax. Not one legislator voted in support of the GRT while 107 lawmakers went on record in opposition. Prior to the vote on Thursday, members of the Illinois House debated the Governor's proposed $8 billion gross receipts tax for more than eight hours. This week's vote sends a strong message directly to the Governor, who appeared personally in an effort to bolster support for his lagging initiative. The daylong hearing also featured several panels of speakers representing business, labor, teacher unions and economists.
In his remarks at the hearing, Governor Blagojevich continued to vilify the business community by calling them "fat cats" and accusing businesses of not paying their fair share in taxes despite a recent study by Ernst & Young that shows the business community pays nearly 50 percent of all state and local taxes. Blagojevich noted that there are three possible outcomes this session — impose a gross receipts tax, increase the sales or income tax, or pass a maintenance budget with no tax increase — while indicating that he would oppose and veto any increase in income or sales taxes.
During the business panel, IMA president & CEO Greg Baise testified about the potential job loss that would result from businesses closing or moving out-of-state. He noted that many companies have begun receiving letters from economic development teams in other states, including a recent letter from the Governor of Wisconsin. Baise noted that more than 200,000 manufacturing jobs have been lost since 2000 — equivalent to Illinois losing a city larger than Rockford. During the question and answer period, Rep. Mary Flowers (D-Chicago) quoted extensively from a recent edition of the IMA's magazine, The Illinois Manufacturer, about the need to work together.
In further testimony, representatives from organized labor and the teacher unions indicated their support for the GRT. However, during questioning, many of the union leaders indicated that they would support enhanced revenue for state programs and were not necessarily particular about the source of the funds.
The IMA appreciates Speaker Madigan for scheduling a hearing that allowed a full debate on this critical issue, as well as the leadership of Minority Leaders Tom Cross and Frank Watson, who with their caucuses, continue to seek what is needed for state government to meet the needs of the taxpayers while living within the state's means. We also salute the bipartisanship of House Revenue Chairman John Bradley (D-Marion) and Spokesman Bob Biggins (R-Elmhurst) in coordinating the effort. The IMA appreciates the members of the House for voting against the GRT.
Since the governor announced his tax plan just over two months ago, the IMA and other business groups have appreciated the near unanimous show of support from elected officials who understand the state can not simply tax and spend to move Illinois forward. We look forward to continuing to work with state officials on both sides of the aisle to forge a sustainable future for Illinois.
Senate Executive Committee passes enhanced gross receipts tax plan
Just one day prior to the high-profile hearing in the House, members of the Senate Executive Committee passed legislation (SB 1) that will actually increase the rates of the gross receipts tax and its cost. Acting in a partisan fashion with notice of only one hour, the Democrat members of the committee voted to impose a tax of one percent on goods (manufacturing, retail, agriculture, construction and mining) and a tax of two percent on services (financial, legal, etc). In addition, the plan as adopted by the Senate committee will create a $2,000 credit per full time employee that will be capped at $50,000 for production industries (25 employees) and $100,000 for service companies (50 employees).
Despite the magnitude of the plan and its critical importance to the Illinois economy, Senate President Emil Jones and the Democratic majority on the Committee allowed only two opponents to testify and offer remarks on the new version of the GRT. After releasing the amendment for public view, the Senate Committee voted to pass the largest tax hike in Illinois history with scarcely more than two hours of debate. The measure now moves to the full Senate.
The IMA greatly appreciates the leaders who stood up and opposed the GRT including Sen. Frank Watson (R-Greenville), Sen. Chris Radogno (R-LaGrange), Sen. Dale Righter (R-Mattoon), Sen. Brad Burzynski (R-Sycamore), and Sen. Todd Sieben (R-Geneseo). Sen. Lou Viverito (D-Burbank) supported the original GRT proposal but opposed the increased rates called for in amendment two.
Legislators who voted in favor of the $8 billion gross receipts tax included Senate President Emil Jones (D-Chicago), Sen. Debbie Halvorson (D-Crete), Sen. James Clayborne (D-East St. Louis), Sen. Jim DeLeo (D-Chicago), Sen. Ricky Hendon (D-Chicago), Sen. Iris Martinez (D-Chicago) and Sen. Donne Trotter (D-Chicago).
Illinois Legislative Manufacturing Caucus opposes GRT
Members of the bipartisan and bicameral Illinois Legislative Manufacturing Caucus officially announced their opposition to the gross receipts tax after polling their membership. Formed in 2006 upon a recommendation from the Illinois Manufacturers' Association, the Caucus was created to help provide leadership in public policy issues that impact the manufacturing sector. In deciding to oppose the GRT, members noted the negative impact that it would have on manufacturing including higher costs and job loss.
The IMA appreciates the membership of the Manufacturing Caucus, and its leadership consisting of Rep. Ruth Munson (R-Elgin), Rep. Will Davis (D-Homewood) and Sen. Dave Syverson (R-Rockford) for their leadership on this critical issue.
Senate panel defeats fast track trade authority resolution
This week, members of the Senate State Government and Veterans Affairs Committee narrowly voted down a resolution calling on the President and Congress to replace the current fast track system for U.S. trade agreements. Initiated at the request of the Illinois AFL-CIO, Senator Ed Maloney (D-Chicago) offered SJR 32 that contends the current system "eliminates vital checks and balances" and "curtails state regulatory authority" on many issues. The resolution calls for Congress to create a program that requires informed consent by state legislatures prior to engaging in trade agreements. The IMA believes in competition and access to world markets for Illinois-based companies and opposed this resolution.
Senate passes energy tax relief for manufacturers
By unanimous vote (55-0), members of the Illinois Senate this week passed legislation proposed by the IMA that creates a tax exemption for energy used in the manufacturing process. Outside of personnel costs, energy remains one of the largest expenses incurred by manufacturing companies. Under the legislation (SB 1697) sponsored by Sen. Mike Jacobs (D-Rock Island), manufacturing companies will receive a credit for energy (natural gas, electricity, gas) used in the manufacturing or assembling of tangible personal property for wholesale, retail sale, or lease.
SB 1697 now moves to the House of Representatives where it faces an uphill battle. Traditionally, tax exemptions and credits are held in the House Revenue Committee until a final budget agreement is reached. The IMA will continue working with members of the House to pass this legislation.
The IMA appreciates Senate sponsors Mike Jacobs (D-Moline), Dan Rutherford (R-Pontiac) and Randy Hultgren (R-Wheaton) and all senators who supported this measure designed to improve the manufacturing economy. Manufacturing has seen more than 200,000 jobs lost since the year 2000.
Facts of the week:
More than 200,000 manufacturing jobs have been lost in Illinois since the year 2000. For a comparison, it would be like eliminating the city of Aurora or Rockford, the state's second and third largest cities.
The Governor's $8 billion tax hike will cost the average Illinois family nearly $2,500.
Other Springfield Highlights available online
