Spring Session Update 2019

BUDGET PACKAGE PASSED

The Fiscal Year (FY) 2020 Budget was made up of seven different pieces of legislation. I voted NO on all of those components. Following is information on parts of this legislation that many of you have contacted me to learn more about:

  • Budget passed after House Republicans insisted that key business reforms be included in the budget and capital plan. These reforms are intended to make Illinois a better place to create jobs and grow capital investment and were strongly backed by the Illinois Manufacturers’ Association, the National Federation of Independent Business, the Illinois Retail Merchants Association and other business groups.

After the legislative leaders and Governor Pritzker reached an agreement on the inclusion of these reforms, the House took action on May 31 to pass a $40.6 billion Fiscal Year 2020 budget.

Senate Bill 262 contains the operating budget for FY20, including a total GRF spend of $40.6 billion which matches the available revenue from FY20. It includes $1.2 billion to pay down the backlog of bills and makes the full FY20 certified contribution to the state pension systems.

The FY20 budget does the following:

  • Puts an additional $375 million into the Evidence-Based Funding Formula ($25 million more than statutorily required)
  • Puts an additional $50 million towards early childhood education
  • Contains a 5% increase to university and community college operations
  • Adds an additional $50 million for MAP grants
  • Adds an additional $10 million towards AIM HIGH scholarships ($35 million total)
  • Includes additional funding for the Home Services Program, Supportive Mental Health Housing, Community Based Services for Developmentally Disabled, Developmentally Disabled/Mental Health, Addicted Treatment Related Services, and Early Intervention Program
  • The budget contains $29 million for census participation
  • Includes funding to complete two ISP cadet classes, of approximately 170 sworn officers

SB 262 passed the House by a vote of 83-35-0 and passed the Senate on Concurrence by a vote of 40-19-0. It was signed into law by the Governor on June 5 as Public Act 101-0007.

Business Reforms include:

  • Creation of the Blue Collar Jobs Act – intended to attract large-scale construction projects.
  • Creation of a Data Center Tax Incentive – intended to enhance the state’s ability to locate data centers in Illinois by providing tax incentives.
  • Reinstatement of the Manufacturer’s Purchase Credit – to encourage further investments in manufacturing in Illinois.
  • Elimination of the antiquated Illinois Franchise Tax over 5 years
  • Elimination of cap on the Retailer’s Discount.
  • Tabling of Senate Bill 1407 – a bill that aimed to impose wage and regulatory requirements on refineries, ethanol plants, and chemical facilities.

Senate Bill 689 contains the FY20 operating budget revenue and key business reforms. It passed the House by a vote of 107-9-0 and passed the Senate on Concurrence by a vote of 49-8-1. SB 689 was signed into law as Public Act 101-0009.

Senate Bill 1814 creates the FY20 Budget Implementation Act (BIMP bill) which makes the changes in State programs that are necessary to implement the FY20 budget recommendations. SB 1814 passed the House by a vote of 97-17-1 and passed the Senate on Concurrence by a vote of 52-6-0. It was signed into law as Public Act 101-0010.

CAPITAL PROGRAM

  • First capital infrastructure program in a decade passed by the General Assembly.  Many groups and special interests will be happy for more money, but at what cost to the middle class families and poor who will be force to pay higher gas taxes and increased fees. I believe this added tax burden will force more people and businesses to leave Illinois.

Senate Bill 690 includes the vertical capital revenue, gaming expansion and sports betting components of Rebuild Illinois. It enacts comprehensive FY20 tax language, gaming expansion, and authorizes sports betting, including (a) language governing collections of online Illinois sales taxes, (b) a new tax on motor vehicle parking lot services, (c) language to grant an income tax credit for the construction of data centers sited in Illinois, (d) language capping the motor vehicle trade-in sales tax credit at $10,000, (e) an increase in the Illinois state cigarette tax from $1.98/pack (current law) to $2.98/pack, (f) the new Illinois Works Jobs program, (g) sports wagering, (h) slots and table games at tracks, (i) a 4,000-gaming-position Chicago casino, (j) five new riverboat licenses at Danville, Rockford, South Cook County, Walker’s Bluff, and Waukegan, (k) authorization for increased gaming positions at existing casino riverboats, (l) an authorization for riverboat casinos to move to on-land locations, and (m) video gaming expansion.  SB 690passed the House by a vote of 87-27-0 and passed the Senate on Concurrence by a vote of 46-10-2.

Senate Bill 1939 includes revenue for the horizontal capital components of Rebuild Illinois. It provides for $2 billion in annual funding for transportation infrastructure across the state by making the following changes:

  • Motor fuel tax (MFT) increase of 19-cents per-gallon on gasoline and 24-cents per-gallon on diesel. (Rates are indexed to inflation).
  • Sales Tax on Motor Fuels: beginning July 1, 2021, proceeds are incrementally transferred to Road Fund over 5-year period (1% of the 6.25% in the first year, then 2% in the second year, up until 5% starting July 1, 2025). Retains 1.25% sales tax portion to local governments.
    • Revenues from increase to special fuels deposited into Road Fund.
    • Revenues from increase to gasoline deposited into new Transportation Renewal Fund.
  • Creates the Transportation Renewal Fund that is funded by proceeds from increase in MFT.
  • 80% for roads and bridges; of that:
    • 60% to State Construction Account Fund.
    • 40% to Local Governments (identical to existing distribution to local governments).
  • 20% for transit (90% RTA, 10% downstate).
  • Passenger Vehicle Registrations increased by $50, with $49 of proceeds deposited into Road Fund ($1 to State Special Services Fund) for a total registration fee of $151 per-year.
  • Electric Vehicle Registrations: equal to other passenger vehicles plus a $100 additional fee for a total registration fee of $251 (currently $17.50).
  • Truck Vehicle Registrations: Increased by $100, with $99 of proceeds deposited into Road Fund ($1 to State Special Services Fund).
  • Certificate of titles: Increase by $55 for standard vehicles, but reduces fee for duplicate certificates by $45; adds other fees for salvage certificates, junking certificates, and motor home certificates.
  • Commercial Distribution Fee: repealed on July 1, 2020.
  • Provides that Cook County may impose a local motor fuel tax up to 3-cents per-gallon by local ordinance.
  • Adds Lake and Will County to the list of counties that may impose a local motor fuel tax. The local motor fuel tax may be up to 8 cents.
  • Provides for a $50 million annual IDOT program for pedestrian and bicycle facilities and the conversion of abandoned railroad corridors to trails.

SB 1939 passed the House by a vote of 83-29-1 and passed the Senate on Concurrence by a vote of 48-9-1. 

TAXES

  • Democrats advance Gov. Pritzker’s graduated tax hike.  On Memorial Day, the Democrat super-majority passed a graduated income tax amendment out of the Illinois House of Representatives, over strong Republican objections.

SJRCA 1 was adopted by the House on a partisan vote of 73-44, with all Republican members voting ‘No.’ As the constitutional amendment resolution was previously adopted by the Illinois Senate, it will be placed on the November 2020 general election ballot for voter approval or disapproval.

House Republican Leader Jim Durkin released the following statement on the passage of the graduated tax amendment (SJRCA 1) from the House Chamber:

“Today’s vote on the graduated tax amendment is another step in robbing the pockets of Illinois businesses and families. For more than 30 years, the House Democrats and Speaker Madigan have controlled the finances of our state which has resulted in Illinois having the highest overall tax burden in the entire nation. The House Republicans will continue to stand united against the majority party’s insatiable desire for higher taxes that has caused businesses and families to flee the state in droves.”

Democrats also passed Senate Bill 687, which contains their proposed graduated income tax rates. It amends the Illinois Income Tax Act to impose a graduated income tax rate structure on individuals and increase the income tax rate on corporations. Provides that on or after January 1 2021 (pending voter approval of SJRCA 1), the following income tax rates apply:

We cannot trust Democrats in Springfield at their word on this because they’ve lied to Illinois families and businesses over, and over and over again. Illinois families can’t afford to give Democrats a blank check. 

RADICAL ABORTION LAW

  • Democrats pass massive abortion expansion bill.  One day after advancing Governor Pritzker’s tax hike, House Democrats passed legislation that will massively expand abortion in Illinois.

Senate Bill 25, the so-called “Reproductive Health Act,” includes sweeping changes to Illinois’ abortion laws, making Illinois one of the most extreme states on abortion access.

The Reproductive Health Act would establish abortion as a fundamental right in Illinois law. It further provides that a fertilized egg, embryo, or fetus does not have independent rights under the law. It repeals the Illinois Abortion Law of 1975, the Partial-birth Abortion Ban Act, and the Abortion Performance Refusal Act, which specifies that a medical professional who declines to recommend or perform an abortion procedure cannot be held liable for damages. The legislation contains intentionally vague definitions that will provide for a significant expansion of post viability abortions and establishing abortion as a fundamental right will mean Illinois will not be able to enforce its parental notification law that requires parents of minor children to be notified if their daughter seeks and obtains an abortion.

During the debate last Tuesday, Rep. Avery Bourne led the House Republican opposition to the bill, leading debate and asking questions on the bill for over an hour. Bourne, who is 7 ½ months pregnant, and her Republican colleagues stood throughout the debate as a sign of respect for the unborn.

“This bill is being twisted as a way to keep abortions legal in Illinois if Roe v. Wade is overturned. However, unfortunately, with the passage of House Bill 40 last session, abortion, even late-term abortions in instances of the life and health of the mother will remain legal in Illinois. What this bill really does is give abortion providers expansive interpretation power with new broad definitions of when late term abortions are allowed. This bill also repeals certain safety standards, repeals the prohibition on sex-selective abortions, mandates Illinois insurance plans must cover abortions for free, takes away the requirement that coroners investigate maternal deaths due to an abortion, and takes away the requirement that only doctors perform abortions. These extreme, expansive changes to Illinois abortion laws put mothers and viable unborn babies at risk,” Rep. Bourne said.

“The extreme deregulations written in this legislation are out of step with what most Illinoisans support and the sponsors are doing so under the guise of reproductive health,” Rep. Bourne continued.  “Calling it the Reproductive Health Act is dishonest. This bill will deregulate the abortion industry, eliminate the rights of all unborn babies, and eliminate restrictions on late term abortions.”

Senate Bill 25 passed the Illinois House by a vote of 64-50-4 with every House Republican voting ‘No.’ The Senate concurred by a vote of 34-20-3, with every Senate Republican voting ‘No.’ The bill has been sent to Governor Pritzker for his expected signature.

GUNS – House Democrats pushed legislation which infringes upon Second Amendment gun rights.  The Democrat-controlled House of Representatives passed legislation last week that would increase costs and red tape for law-abiding gun owners in Illinois. We worked hard and your calls helped to have the Senate

Senate Bill 1966 requires mandatory fingerprinting for all FOID and Concealed Carry License applications and renewals. It requires universal background checks through federally licensed dealers for all firearm transfers, with exceptions for family members and law enforcement. Changes to the FOID Act include the following:

  • Limits the FOID card length to 5 years (currently 10 years)
  • Doubles the FOID card fee to $20 (from $10)
  • Provides that a live scan fingerprint vendor may not charge more than $30 per set of fingerprints
  • The Illinois State Police can charge an additional fee for background checks (State and FBI background checks through live scan vendor are $28.25)

Law-abiding citizens should not have to submit to fingerprinting, doubled FOID card fees and bureaucratic red tape to exercise their right to keep and bear arms. A person who wants a FOID card to legally own a gun in Illinois may have to pay more than $100 just to exercise their Second Amendment rights. They may have to drive several hours just to find a fingerprint vendor. These limitations on the constitutional rights of our citizens will do little to keep guns out of the hands of violent criminals. Many House Republicans pointed out that if SB 1966 were to become law, it would face a certain legal challenge and likely be ruled unconstitutional by the courts.

Senate Bill 1966 narrowly passed the House by a vote of 62-52-0. However, the Illinois Senate did not take action on the concurrence motions prior to adjourning the spring session. The bill remains in the Senate on the Order of Concurrence.

MARIJUANA

  • Illinois General Assembly passes bill to legalize recreational marijuana.  On the final day of the regular spring session, the House of Representatives passed legislation legalizing the recreational use of marijuana in Illinois.

House Bill 1438 creates the Cannabis Regulation and Tax Act. It allows for the recreational use of cannabis by individuals over the age of 21. Illinois citizens may possess up to 30 grams of cannabis and out of state individuals may possess up to 15 grams. Medical cannabis patients may grow up to 5 plants in their residence.

It expunges arrest records for possession of cannabis up to 30 grams. For individuals who have convictions for possession of up to 30 grams, the Governor will pardon those individuals and the Attorney General will file a petition to expunge. For those individuals convicted of possession between 30-500 grams, they may file a motion to vacate or expunge their records.

HB 1438 also creates the Recovery, Reinvest, and Renew (R3) grant program, which will invest in communities hit by economic disinvestment and violence. 25% of revenue generated by the Act will go to the R3 program.

It allows for additional dispensaries (in addition to medical cannabis dispensaries) and cultivators, and adds licenses for craft growers, infusers, and transportation organizations. Local governments may reasonably zone where craft growers and dispensaries may be placed. Local governments may opt out of having cannabis-related businesses within their borders.

Taxation on cannabis: 7% on cultivators, 10-25% on purchase of cannabis, up to 3% excise tax by municipalities, up to .75% for counties, and up to 3.75% for unincorporated areas.

As more and more states move toward legalizing the use of recreational cannabis, proponents argued that HB 1438 is a reasonable answer to the question how do we tax and regulate this emerging industry. While many are uncomfortable with the concept of legalizing cannabis, the fact is that this is the direction the nation is moving.

This legislation provides for public safety, taxpayer protections, workplace protections, and local control. It contains similar provisions to laws regulating the consumption of alcohol, like a prohibition on driving a car under the influence.  It incorporates laws that will deter and punish use by minors – including a zero tolerance policy for those under 21 who drive under the influence of cannabis. Employers are given the strongest policy protections in the nation, allowing for a “drug free” workplace. Local municipalities and counties may opt out at any time and can tax cannabis up to 3.75%.

Opponents pointed out that nothing in this legislation changes the fact that cannabis is still a Schedule 1 Controlled Substance which remains illegal under federal law. They argued that the bill will not raise nearly as much revenue as proponents expect; instead, it will place additional burdens on taxpayer dollars to pay for drug treatment and the negative health effects of chronic marijuana use. Opponents believe that legalizing marijuana is a terrible way to raise money for the State and that it will cause more harm than good.

House Bill 1438 passed the Senate by a vote of 38-17-2 and on May 31, the House concurred with Senate Amendment 2 by a vote of 66-47-2.

REVENUE

  • May 2019 State revenue numbers come in flat year-over-yearThe May 2019 report from the nonpartisan Commission on Government Forecasting and Accountability (COGFA) covers the next-to-last month of State Fiscal Year 2019. Revenue numbers make clear that the FY19 budget, in contrast to previous years, will end the year in the black. State general revenues, earned from sources such as income and sales taxes, continued to come in at the healthy level established one year earlier. Sales tax revenues, which benefitted from the State’s imposition of sales taxes upon distance purchases made over the Internet, were particularly strong during this 31-day period, with revenues rising by $107 million in May 2019 as opposed to May 2018. This rate of year-over-increase is expected to drop off sharply in the near future as the State “annualizes” its new Internet sales tax collection apparatus. Credit rating firms such as Standard & Poor’s have said mildly good things about Illinois’ revenue numbers in recent months, although Illinois’ credit rating continues to be negatively affected by its many years of structural deficits and uncontrolled spending.