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Next session dates: House June 12-14 & Senate June 14, 2007
Budget Debate Continues
For the second time in Governor Rod Blagojevich’s five-year tenure, the General Assembly has reached overtime session when it could not reach a budget accord. Late last week, members of the House upheld their obligation and passed a nearly $58 billion state budget that provided an overall 3 percent increase in spending that included nearly $400 million in new funding for education. While the House passed a budget that included $300 million in new tax revenue from the elimination of certain "tax loopholes" the Senate failed to introduce or pass their version of a budget.
Senator Emil Jones (D-Chicago), in meetings with his Democrat Caucus, has indicated support for $5 billion in new state spending funded by enhanced gambling and onerous new taxes on the business community. Included in Senator Jones’ proposal are creation of an alternative minimum tax (0.25 percent of gross receipts) on companies with no income tax liability, expansion of the corporate tax rate to Subchapter S corporations and LLCs, and the closure of $650 million in tax incentives including Single Sales Factor, R & D credit, and manufacturers purchase credit. In addition, Senator Jones is calling for the imposition of the 6.25 percent sales tax on computer software.
With no budget passed by the May 31 deadline, the General Assembly began the overtime session that requires a supermajority vote to pass a spending plan for the state. In essence, this means that Democrats who control the Governor’s office and both Houses of the legislature need Republican votes to enact a plan. Republican Leaders Tom Cross (R-Oswego) and Frank Watson (R-Greenville) continue calling for an austere budget containing no tax increases.
All the while, the Governor continues to call for record spending increases, funded by a gross receipts tax, to pay for a massive new health care expansion, increased education funding, and limited property tax relief.
Governor, Legislative Leaders Meet
The week, the Governor and four legislative leaders began their first face-to-face budget talks of the spring legislative session. The leaders, who met on three consecutive days, appeared to be no closer to reaching consensus on any type of spending plan.
According to reports, the Governor is now pushing for an additional $100 million in state spending to bail out the Chicago Transportation Authority (CTA) and Regional Transportation Authority (RTA), the entities that run the buses and trains in the Chicagoland area. The Governor called for closing business loopholes to fund the new spending program.
The House returns next Tuesday followed by the Senate on Thursday. At this time, there is no set date for next leaders meeting.
"Seven Percent Solution" Passes House
In the waning days of session last week, the Illinois House amended and passed legislation extending artificial assessment cap on residential property in Cook County. Dubbed the "seven percent solution" by proponents, the measure seeks to impose caps on residential assessments that will be phased out over a period of three years. In order to gain enough votes for passage, the sponsor added new property tax assistance to veterans and disabled Illinoisans. Unfortunately, this artificial cap on residential property only serves to shift the property tax burden onto commercial and industrial property in Cook County. SB 13 (Link/Madigan) passed overwhelmingly and now moves to the Senate for concurrence.
Electrical Rate Negotiations Continue
Representatives from the Attorney General’s office and all four legislative caucuses continue to meet behind closed doors in an effort to secure rate relief for residential customers. With two bills pending that would impose an actual rate freeze and include rebates to customers, the negotiators are meeting with utility companies to pressure them to provide immediate rate relief to customers. The utility companies would be face financial distress and possible bankruptcy if the legislature imposed a new rate freeze. Under that scenario, the utility transmission companies would be forced to sell power at a loss because they are locked into contracts to buy power from generation companies.
The IMA continues to be engaged to ensure that manufacturers continue to have access to a safe, reliable and efficient source of energy to power their facilities.
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