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Next session dates: House & Senate: June 5-7, 2007
Education and Political Coercion
Playing hardball in the political arena is not uncommon and differences of opinions are common, and even encouraged, in our legislative and political process. However, actions that allegedly took place late Friday afternoon by Governor Rod Blagojevich and his top allies against Sen. Mike Jacobs (D-Moline) are distasteful. After Jacobs expressed his opposition to the Governor’s 3 percent payroll tax and massive healthcare expansion (SB 5), the Governor reportedly called the president of Western Illinois University and withdrew a $14 million state grant from the college. In addition, at a meeting in the Governor’s office, Jacobs was reportedly threatened personally, financially, and politically according to press reports.
The Governor and Sen. Jacobs simply have different priorities – the Governor would like to expand health care while Jacobs supports job creation and more money for education. At no time, should any public official threaten students, teachers, and employees of a state university for political purposes. Sen. Jacobs is to be applauded for standing firm in his beliefs and opposing the $1 billion tax hike in the face of unparalleled pressure. The IMA encourages you to call or write Sen. Jacobs to show your support.
Overtime…
Late on Thursday, as the clock stuck midnight, the Illinois General Assembly went into overtime session for the first time since 2004 and for the second time in Governor Rod Blagojevich’s short five-year tenure. During the last overtime session, lawmakers ran up a $300,000 tab over a nearly eight-week period of time before finally passing a budget and adjourning on July 24. Based on current rhetoric and political undertones, it is a very realistic possibility that 2007 will see another extended overtime session as all sides continue to remain far apart.
Budget Battles
Meeting its obligation in a timely and responsible manner, the Illinois House of Representatives passed a comprehensive $58 billion state budget in the waning days of session. The budget, premised on nearly $800 million in natural revenue growth and the closure of $300 million in tax incentives passed on a party-line vote of 63-53. While the budget and its funding mechanism are not perfect, the IMA is very appreciative that lawmakers passed a budget that did not devastate the manufacturing community. The House budget is a low-growth budget that prioritizes education without funding massive expansions of health care or other state programs.
There were many tax issues debated and discussed that could have been a part of the budget including repeal of the Single Sales Factor, Research & Development Credit, Manufacturers Purchase Credit or the imposition of either a gross receipts tax , software tax, or extension of the corporate tax rate to Subchapter S Corps and LLCs.
Despite enjoying a 37-22 margin, Democrats in the Senate adjourned on Friday without passing a state budget. After initially supporting the Governor and his $9 billion gross receipts tax plan early in session, Senate President Emil Jones presented his caucus with a smaller $5 billion plan funded by gaming expansion, an alternative minimum tax, closing corporate loopholes, and expansion of the corporate tax rate to Subchapter C corporations and LLCs. Neither the tax proposal nor an actual state budget were ever introduced in bill form in the Senate.
Now, with the overtime session, the Governor and members of both political parties will have to work together to reach consensus on the state’s fiscal spending plan for FY2008.
Energy Costs
Members of the House and Senate continued their efforts to impose an extended rate freeze for electric utility customers while at the same time negotiating for immediate rebates behind closed doors. In the House, lawmakers are considering SB 1592 (Forby, D-Benton) that would impose a 1-year rate freeze coupled with a $2 billion tax on electric generation. At the same time, the Senate is reviewing HB 1750 (Scully, D-Flossmoor) that reduces rates to pre-deregulation levels and imposes a 3-year freeze on electric rates. Both measures require utility companies to provide billions of dollars in rebates to residential customers only.
Unfortunately, these bills only provide a brief political solution while creating more long-term problems. Utility companies have testified that the financial viability of their companies will be threatened because they will be forced to sell power at a loss. At present, their bond ratings have been lowered increasing their borrowing costs. If this legislation is enacted and the companies declare bankruptcy, it will endanger the electric marketplace in Illinois and impair the ability of manufacturing companies to obtain power during hot summer months. Manufacturers need to be able to rely on a safe, efficient and reliable source of energy for their operations and a rate freeze or generation tax could put this in peril.
According to news reports, the utility companies have offered to provide nearly $500 million in actual rebates to customers but the figure has been deemed too low by legislators. The IMA will continue to be engaged as the process moves forward to help protect the industrial sector.
"Deep Pockets" Bill Stalls in House
After months of wrangling for votes to tilt the judicial playing field in their favor, members of the trial bar abandoned their efforts to pass SB 1296 (Cullerton, D-Chicago) this spring. The legislation, an attempt to counter an on-going court case (Ready v. United/Goedecke) before the Illinois Supreme Court, changed the joint and several liability apportionment formula for all currently-pending and prospective cases. If passed into law, a defendant in a court case could be held liable for 100 percent of the damages even if they were only 1 percent at fault. Current law protects defendants with less than 25 percent liability from being held responsible for a majority of the damages.
SB 1296, which previously passed the full Senate and House Civil Law Committee earlier this spring by narrow margins, will remain on 3rd Reading in the House. It remains one step from the Governor’s desk and could be reconsidered in the fall veto session or next spring.
Cable and Video Competition Act Moves Forward
After months of negotiation by the IMA, business community, cable companies, telephone companies, labor unions, local governments, Attorney General Lisa Madigan, and Illinois Commerce Commission, the 2007 Cable and Video Competition Act of 2007 was unanimously passed by the House on a vote of 113-0. The measure creates a state authorization process at the Illinois Commerce Commission (as opposed to city by city negotiations) for entities seeking to provide video and cable competition to Illinois consumers. The agreed upon legislation, supported by the IMA, will result in new infrastructure investment, job growth, and technological innovation. As a general principle, the IMA supports open and fair competition in the marketplace.
Vehicle Emissions Bill Remains in House
An attempt to replicate California-style air emission regulations in Illinois failed to gain the support of a majority of House lawmakers and HB 3424 (May, D-Highwood) remains in the House. The initiative, supported by environmental groups and opposed by auto manufacturers, required the Illinois Environmental Protection Agency (IEPA) to propose, and the Pollution Control Board to adopt, a Clean Car Program by July 1, 2008. As part of the program, the EPA would establish vehicle emission standards and compliance requirements for 2011 model years and later. The Illinois Secretary of State would be prohibited from titling or registering any vehicle that does not comply.
Lawmakers noted that by linking to California standards, the legislature would cede its authority to another state and lose flexibility offered by federal regulations. In addition, concerns were raised about increased costs for American-made vehicles and reduced performance. HB 3424 was not called for a vote by the bill deadline was extended in the House.
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