SPRINGFIELD HIGHLIGHTS - February 10, 2012
Thursday, February 9, 2012 at 4:55PM Governor Quinn Previews Budget Message
With less than two weeks remaining before Governor Quinn unveils his budget that will set the tone for debate the remainder of session, a few details are starting to emerge including the closure of “tax loopholes.” With state debt exceeding $8.5 billion that includes payments owed to vendors, delayed corporate tax refunds, and deferred Medicaid payments, the 2012 Budget Address will be one of the most important speeches of the Governor’s tenure. It is absolutely imperative that Governor Quinn offers specific details about reforming pensions, reducing the spiraling cost of health care, and balancing the state budget so that the “temporary” income tax increase will expire in three years.
At the City Club luncheon, Governor Quinn stated that he wants to look at changes in the pension system, cut Medicaid expenses by $2 billion, and eliminate tax loopholes. In discussions with the Governor’s office, they have indicated that the Governor again plans to call for elimination of the “outer continental shelf exclusion” that will negatively impact companies with operations in Puerto Rico and other islands. Many companies invested in these areas in the 1970s when the federal government offered incentives to locate and expand in these areas.
While not offering details about how to reduce Medicaid, Governor Quinn has formed a pension committee and has suggested looking at all options for current state employees which could include lowering COLAs, raising the retirement age, and increasing employee contributions. Another idea that has been discussed by the Governor and both Democrat leaders is a shift in pension costs from state to local units of governments. If this occurs, local governments including cities, counties, and school districts, will be forced to make the pension payments. They have expressed opposition to this idea claiming that they will be forced to cut spending or increase property taxes. Without changes, the state’s required pension payment jumps from $4.3 billion this year to $5.9 billion in 2015.
The IMA strongly supports pension reform and has endorsed the IllinoisisBroke campaign and SB 512. Under this legislation, current state employees will be given three choices: (1) stay in the current pension system and pay a higher contribution, (2) move to a reduced pension system and pay the current contribution, or (3) transfer to a new 401K style system favored by private employers. In all three cases, the state’s contribution is identical.
Governor Quinn will address both chambers of the General Assembly and provide his budget plan on Wednesday, February 22.
IMA Opposes Joe Moore for EPA Director
The Illinois Manufacturers’ Association, along with a host of business and agriculture groups, has expressed public opposition to the potential nomination of Chicago Alderman Joe Moore as the Director of the Illinois Environmental Protection Agency. If nominated by Governor Quinn, Alderman Moore would have to be approved by the full Senate. This rare step by the IMA is in direct response to Alderman Moore’s direct words and actions while taken as a member of the Chicago City Council that include opposition to EPA negotiated agreements along with repeated wage and health care mandates on employers.
New Bill Introductions
Lawmakers continue filing hundreds of new bills seemingly on a daily basis before the deadline to file new bills passes. Below is a snapshot of some new pieces of legislation:
HB 4042 (Gordon, D-Peoria): Makes the Research & Development tax credit permanent in Illinois.
HB 4724 (Cassidy, D-Chicago): Creates an Illinois Family & Medical Leave Act that requires employers to provide time off for certain reasons without pay.
HB 5168 (Phelps, D-Harrisburg): Suspends the portion of the Illinois Pollution Control Board’s Multi-Pollutant Standard (MPS) rules that limits the sale or transfer of sulfur dioxide allowances under certain circumstances. Prohibits the Board or the Environmental Protection Agency from requiring the surrender or limiting the transfer of sulfur dioxide allowances issued by either the Agency or the USEPA.
HB 5373 (May, D-Highland Park): Prohibits the manufacture, distribution, and use of paper containing bisphenol A for the making of business or banking records. Requires paper manufacturers to, among other things, replace bisphenol A with an alternative chemical
SB 2523 (McCarter, R-Lebanon): Tax incentive bill that extends the R & D Credit, extends Enterprise Zones by five years, and eliminates the state sales tax on electricity used by manufacturers.
SB 3153 (Lauzen, R-Aurora): Provides that all EDGE tax agreements entered into on or after the effective date of the amendatory Act shall not exceed $500,000 for any taxable year, including any amount carried forward from a prior taxable year.
SB 3534 (Jones, R-Mt. Vernon): Creates a new provision in the Illinois Oil and Gas Act that regulates the extraction of hydrocarbons from shale using hydraulic fracturing. This is the industry proposal based on model legislation and supported by the IMA.