The House kicked things off over the long holiday weekend by first approving the revenue increase bill (SB 9), the fiscal year 18 budget proposal (SB 6), and the budget implementation bill (SB 42) on Sunday. Most notably 15 Republican representatives voted in favor of the tax increase.
The Senate then came in two days later on July 4th to concur with the Senate’s motion on the three bills, prompting Gov. Rauner to immediately veto all three bills in their entirety. With remarkable efficiency we rarely see in Springfield, the Senate then promptly overrode the Governor’s veto in under an hour.
As many of you are well aware, the Illinois House then came in yesterday to override the governor’s total veto on the three pieces of legislation. However, this time several Republican representatives switched their votes on the revenue proposal from yes to no. Republican representatives that switched their votes include Reps. Cavaletto, Davidsmeyer, Meier and Reis. This prompted Democrats, who previously voted against the increase to vote in favor. Democratic reps who flipped include Reps. Halpin, Manely, Mayfield, and Scherer.
As much as the Chamber wanted to see a resolution to the impasse, the Chamber ended up opposing the package as numerous problems existed in each proposal. Most notably, there are no economic reforms. No workers’ compensation reforms, no property tax relief and no small business investment incentives. The state’s $15 billion bill backlog appears to get lip service, but not much else. Fund sweeps and interagency borrowing provide only $1.5 billion to throw at the backlog, assuming that the budget is balanced.
The budget doesn’t look balanced. It relies on dubious savings and accounting maneuvers (some of which have been endorsed by Republicans in the past). As we have seen, authorizing spending is not the same thing as actually having the funds to pay the bills. Other aspects of the package unnecessarily burden specific industries including transportation, agriculture, petroleum and insurance. Not to mention, the Senate left town with out taking any action on extending the EDGE tax credit proposal as laid out in HB 162.
There are certainly positives to the pending budget package. The long impasse is finally at an end, granting a temporary reprieve from national embarrassment. Avoiding junk bond status. Higher education and others can finally get in line to be paid. The Chamber also accomplished some important policy goals. As the most prominent opponent of the service tax, we are gratified it was dropped. We quickly killed the stunningly bad “Jobs Tax” and it never came back, nor did a 20% gross receipts tax on financial transactions. A few important tax savings provisions were included in the tax increase legislation.
However, the outlines of another major battle are already forming. Baked into the budget package is a poison pill in the appropriation for K-12 education. The appropriation for schools is authorized only if the Governor signs one of two bills that change the way education is funded in Illinois. The only bill that has passed the legislature on the issue is one the Governor has threatened to veto, which would set up another veto showdown in the coming weeks. More on this issue later, as its implications become clearer.
So what were exactly included in these bills that are now law of the land in Illinois? Below you will find a brief synopsis of the package of bills. These do not include every aspect (keep in mind these bills are several hundred pages long), but do provide a snapshot of each proposal.
REVENUE OMNIBUS DETAILS
Below are are some pertinent highlights of what is law and what was left out in the revenue portion of the package laid out under SB 9:
It should also be noted that the tax rate increase mandated by SB 9 will require employers to change the rate of income tax withholding for their employers immediately.
BUDGET BILL DETAILS
The budget bill, SB 6, spends roughly $36 billion. Most notably it would provide the first full year funding appropriation in two years. Major highlights are below:
BUDGET IMPLEMENTATION BILL (BIMP)
The budget implementation bill (aka BIMP), SB 42, is what makes the budget work. Or in other words, the paperwork in order to implement the spending. Nothing major to note in this proposal, but here are a few major highlights:
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