Next session dates: House & Senate in continuous session
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This week...
Judge to Illinois; pay employees
In an unprecedented and outrageous ruling, a circuit court judge today in downstate Christian County approved a request by Comptroller Dan Hynes (D), Attorney General Lisa Madigan (D) and the state's largest employee union, AFSCME, which assures that state workers will not miss any paydays due to the budget impasse at the Capitol. In signing the order, the judge threw out the Illinois Constitution's requirement that the General Assembly pass and the Governor approve, by law, the state's authorization to spend taxpayers' dollars. While the judge made it clear that his order is temporary and expires at the end of August, today's actions means the court can assume a power that is not given it under the Constitution. Many expect an appeal will be made immediately to restore sanity to state government.
State Budget Passes House
After months of regular session and more than two months of overtime session, members of the Illinois House voted 98-8-0 and the Senate 52-5-0 to approve a $27.875 billion state operations budget for FY08. The agreement came to fruition only after the four legislative leaders chose to exclude Governor Rod Blagojevich (D) from the budget meeting and work out a bipartisan compromise. The IMA is extremely pleased that the final budget solution does not contain a Gross Receipts Tax, payroll tax, or elimination of important tax incentives.
Under HB 3866 the FY08 budget, general funds spending increases from $25.76 billion to $27.875 billion, a boost of nearly $2.1 billion or 8 percent. General funds are discretionary funds, generated from income taxes and sales taxes primarily, that are used by the Governor and legislators to fund their legislative priorities. In the FY08 budget, the largest funding increase will be allocated to education ($575 million) with additional dollars ($59.5 million) going to the state's higher education system. The state fully funds its obligation to both the current labor contracts and pension systems in the spending plan. Finally, a dramatic increase ($400 million) in Medicaid spending will allow for enhanced health care services for Illinois families.
Unfortunately, after nearly 60 days of overtime session, legislators chose to once again feed at the trough and included hundreds of millions of dollars in pork projects in the state budget. While many of these taxpayer-funded projects are important to local communities, this closed-door budget process and use of pork projects to solicit votes is unsavory at best. However, we do applaud Speaker Michael Madigan (D-Chicago), Senate Republican Leader Frank Watson (R-Greenville), House Republican Leader Tom Cross (R-Oswego) and their respective caucuses who fought for transparency and openness by including specific line-items in the budget as opposed to lump sum funding that hides member projects from public scrutiny.
In the end, common sense and wisdom displayed by the four legislative leaders prevailed over the grandstanding, threats, and political games played by Governor Blagojevich that cost taxpayers nearly $1 million according to press reports. It is a sad statement that the final budget passed only by excluding the state's chief executive officer from negotiations.
HB 3866 now goes to the governor who has not indicated whether or not he will approve the legislature's agreement.
Capital projects bill stalls
The last time the State of Illinois passed a capital expenditure bill to fund bridges; road and school construction was in 2002. Since then there has been a general reluctance on the part of legislators to approve massive infrastructure proposals because lawmakers have been unable to rest assured that the administration would follow through with implementation. A late night proposal put forward by Senate President Emil Jones (D-Chicago) on behalf of the administration fell two votes short of passage after Senate Minority Leader Frank Watson (R-Greenville) opposed moving the legislation without giving lawmakers the opportunity to thoroughly review nearly $400 million in proposed spending.
Assessment freeze bill goes to governor
After more than a year of battles in the legislature, members of the General Assembly renewed the controversial "7 Percent Solution" that will shift the property tax burden from residential homeowners to commercial and industrial taxpayers. Under the terms of HB 664, sponsored by Majority Leader Barbara Flynn Currie (D-Chicago) and Sen. Terry Link (D-Vernon Hills), many residential homeowners in Cook County will see their property tax assessments capped at either 7 percent or 10 percent based on income.
If the legislation is signed into law, beginning next year homeowners in Cook County who have been in their homes for 10 years and have a household income of $75,000 of less would have their assessments limited to 7 percent while households with incomes of up to $100,000 would see their assessment limited to 10 percent annually. As part of the legislation, the homestead exemption for each home would rise to $33,000 next year and then decrease to $26,000 and $20,000 in each of the following two years. The maximum exemption for Chicago homeowners could rise to $40,000 for properties where the value increased by more than 100 percent during the last two assessment cycles which includes nearly fifty percent of Chicago's eligible properties.
Similar measures failed several times in the past due to opposition from the business community, education sector, and taxpayer advocates. This year, in order to help secure the necessary votes for passage, the sponsors of the legislation included many new politically-popular property tax breaks for military veterans, disabled people, and senior citizens that made it difficult for legislators to oppose.
The IMA strongly opposed the renewal of the so-called "7 Percent Solution" because it will result in commercial and industrial taxpayers footing an increased share of the property tax burden in Cook County where they already face an unfair classification system and extremely high costs of doing business. Unfortunately HB 664 just represents one more costly burden that manufacturers must pay in order to operate a business in Cook County.
Cigarette tax increase passes Senate
The Senate approved legislation nearly doubling the cigarette tax in Illinois in order to help generate nearly $352 million in new revenue. In addition, at the request of DuPage County Board Chairman Bob Schillerstrom, language was added in Amendment #6 to HB 556 that would allow the five collar counties (DuPage, Kane, Lake, McHenry and Will) to impose their own $1 per pack cigarette tax to raise revenue for their operating budget.
HB 556, as amended, would increase the state tax on cigarettes from 98 cents to $1.88 per pack, an increase of 90 cents. Of the $352 million in new revenue, $250 million would be dedicated to a pension stabilization fund while an additional $100 million (to be matched by $100 million in federal funds) will fund the new Health Care Provider Relief Fund to help pay down the debt owed to health care providers. Twenty-six new auditors will be hired at the Department of Revenue with the final $2 million in order to help stop illegal cigarette trafficking.
Each county board in the five collar counties would be allowed to impose a new $1 tax per pack to raise local revenue without going to the voters with a referendum.
More House members announce retirements
Two more long-time members of the Illinois House of Representatives announce their intentions to retire this week.
Rep. Bill Black (R-Danville) has served admirably for twenty-two years and is a Deputy Minority Leader in the House. Rep. Black was a fierce advocate for his district and championed efforts to expand economic opportunities for businesses knowing his efforts would ultimately benefit Illinois workers. Most of Rep. Black's time in the House was spent leading Republican debate on legislation, and he is widely respected for his thoughtful probing on the details of proposed legislation.
Rep. Jim Meyer (R-Naperville) also announced he would not seek reelection next year. Rep. Meyer has served the 48th district since 1993 and currently serves as the Minority Spokesperson on two House Committees; Smart Growth and Regional Planning, and Telecommunications.
Both gentlemen were consistent supporters of Illinois industry and the IMA wishes them all the best in their future endeavors.
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