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October 16, 2009
Volume 23 - Issue 23
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STATE’S BUDGET PROBLEMS WORSEN
Just when you thought Illinois’s budget problems couldn’t get any worse, Governor Quinn announced this week that the state faces a new $900 million budget deficit because of declining revenues, $850 million in personal income tax receipts linked to high unemployment and $50 million in gaming receipts because of a fire at Joliet’s casino. This is in addition to the billions the state’s budget is already in the red. Quinn’s budget director said fixing the deficit will require more spending cuts, additional borrowing and quick action to raise income taxes early next year. The state budget already depends heavily on debt, unpaid bills and shortcuts to close a deficit that had topped $11 billion.
In the meantime, however, Chicago’s Mayor announced Thursday he would hold the line all taxes, fines and fees in 2010 and find another way to plug a revised, $550 million budget gap in the city’s finances. Mayor Daley pledged no property tax increase and no new taxes or fees in the 2010 city budget, instead opting for sweeping city reserve funds generated by asset sales. |
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COOK COUNTY SALES TAX REPEAL FAILS, VETO POWERS PASS
There won’t be an immediate roll back of Cook County’s penny-on-the-dollar sales tax hike as the Illinois House failed to advance that measure, HB 4624 (Walker, D-Arlington Heights), by a vote of 65 “YES” to 51 “NO”. However, the House did approve a measure, HB 4625 (Walker, D-Arlington Heights), this week that reduces the number of votes needed for a veto override from a 4/5s to a 3/5s majority, sending the proposal to the Senate. The Cook County Board has been unable to override President Todd Stroger’s continued vetoes of the sales tax rollback proposal. A new ordinance has even been introduced again to accomplish this sales tax increase roll back.
As always, CICI will keep you informed on any efforts to roll back this sales tax hike but more importantly, any attempts to make up for lost revenue through other business taxes and fees. |
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NATURAL GAS TAX EXEMPTIONS PASS HOUSE
The House today passed a CICI-supported measure, HB 4599 (Gordon, C., D – Coal City), exempting certain business enterprises designated by Standard Industrial Classification from the state’s natural gas taxes. Specifically, gas used by any business enterprise that is properly assigned or included within one of the following Standard Industrial Classifications, as designated in the Standard Industrial Classification Manual prepared by the federal Office of Management and Budget: 10; 12; 13; 14; 15; 16; 17; 20; 21; 22; 23; 24; 25; 26; 27; 28; 29; 30; 31; 32; 33; 34; 35; 36; 37; 38; or 39
The measure now moves to the Senate where its future is uncertain. CICI will keep you updated on this bill’s progress in the Senate. |
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REPEAL OF REPLACEMENT TAX FOR PARTNERSHIPS ADVANCES
The Senate this week took the first steps in repealing a 50% income tax increase for LPs, LLPs and some LLCs that elect to be taxed as a partnership. The measure, HB 2239 (Madigan, D-Chicago), passed the Senate unanimously and without any fanfare. The bill is currently awaiting action today in the House, which is expected to pass and be sent to Governor Quinn. The governor is expected to sign this measure into law.
This tax increase was the subject of a CICI memo detailing this snafu. According to business tax experts, the change amends the Illinois Income Tax Act to subject most personal service income of partnerships, LLC's and LLP's to a 1.5% Illinois replacement income tax. Regrettably unless you are a tax expert, the change is almost impossible to decipher in the language of the bill, which appeared as a floor amendment on July 15th, the last day of the extended legislative session. The bill passed both the House and Senate with no dissenting votes and was signed into law by Governor Quinn. The measure took effect on July 15 for the 2009 tax year.
The reason for the change was represented as a technical “clean-up”. The 1.5% replacement tax is in addition to the personal income tax of 3% paid by each partner receiving his or her distributive share of partnership income, resulting in a 50% increase in tax. Illinois’ current 2.5% replacement tax for corporations remained unchanged. |
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NEW LOBBYIST BILL INTRODUCED
New language regulating and taxing lobbyists have been introduced in the Illinois House. The measure, SB 2109 (Clayborne, D-E. St. Louis), is currently on the House Floor after receiving a unanimous vote today in the House Executive Committee. The bill changes some of the provisions of a newly enacted law regulating lobbyists’ activities but, at this time, retains the annual $1,000 fee for all registered lobbyists and their entities. This is a drastic increase from the current $350 fee for trade associations, law firms, businesses, etc., and $150 for non-for-profits (501C(3)). Negotiations are currently underway concerning this excessive fee.
Other notable changes to the new law include limiting lobbyists reporting to bi-monthly from the current weekly requirement beginning July 1, 2010. CICI will keep the membership abreast of any developments concerning the negotiations on the fee. |
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GOVERNOR RECALL TO GO BEFORE THE VOTERS
The Senate approved of a Constitutional Amendment this week to let voters choose whether they want the power to recall Illinois’ governors in the future. This vote means a constitutional amendment will be placed on the ballot in the November 2010 election as the House as already approved of this measure. If it passes in November, the state can then adopt a mechanism for recalling governors.
The recall proposal would only cover the governor. The recall process could not start unless 30 lawmakers - 15 from each party - sign affidavits in support. Proponents of a recall would have to collect hundreds of thousands of signatures on a petition. The exact number would be 15% of the votes cast in the previous election for governor.
If all those conditions were met, a special election would be held to decide whether a governor is removed from office. A new governor would then be chosen later in another special election.
Please note that the Chemical Industry Council of Illinois Legislator is not intended to convey legal advice or set forth all legal requirements applicable to particular circumstances.
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