MORE ON GROSS RECEIPTS, PAYROLL TAX

Governor Blagojevich’s proposed Gross Receipts Tax (GRT) and 3% payroll tax is creating much opposition from just about everybody including Chicago Mayor Richard Daley, his own Lt. Governor and other statewide elected Democrats.  Lt. Governor Pat Quinn (D), who is no friend of the business community, publicly came out against the governor’s proposed tax this week.  In a press conference this week he stated that the $6 billion GRT would end up hitting ordinary people in the pocketbook through costs being passed on to consumers.  The Lt. Governor then went on to propose another tax plan that would urge lawmakers to drop Blagojevich's plans and instead approve a new "Taxpayers Action Board", crafted along the lines of a Citizens Utility Board (CUB) that would search the state tax code for “loopholes/incentives” that could be closed.  He said ending these “unfair tax breaks” could bring the state more than $1.5 billion in new revenue.

Meanwhile, State Treasurer Alexi Giannoulias (D) and State Comptroller Dan Hynes (D) have also publicly expressed their reservations about the governor’s tax plans.  Treasurer Giannoulias claimed that businesses would end up leaving the state, go out of business, or, if even possible, pass along the increased costs to consumers.  Comptroller Hynes also chimed in by stating that while he thinks there is a problem with a lack of fairness with the state’s tax system, he doesn’t think it’s as dramatic as the governor portrays it and added that the structural problems with the state’s budget must first be fixed.      

GRT Calculator: CICI has posted on its website a GRT and payroll calculator that should ease the efforts of calculating what these two tax proposals could cost.  CICI members can access this calculator by following this link: http://www.cicil.net/test/GRTPayroll%20Tax%20Calculator.xls

Under the Governor’s GRT proposal, manufacturers, mining, agriculture, retailers, construction and wholesalers would be charged 0.5% of their total revenues while all others would pay 1.8%.  Those paying both the Corporate Income Tax and the new GRT, supposedly will receive a 100% refund of the Corporate Income Tax paid, but no guarantee how long that will take, considering the state’s backlog of unpaid bills. 

Retail sales of food and drugs, insurance companies, gaming enterprises, exports, and businesses with less that $1 million in total gross revenue will be exempt from the GRT.  Further, combined entities, like parent and subsidiary companies, and non-profit organizations will not be subject to the tax.

This new tax is supposed to bring in $6 billion in new money and won’t be effective until January 1, 2008 if it is enacted.  The GRT is the linchpin of the governor’s budget.  If the GRT fails to pass the General Assembly the Governor’s proposed budget collapses.

The huge influx of new money this tax brings in is earmarked toward an increased education budget of $10 billion over the next four years.

3% Payroll Tax May Violate Federal Law
Unless you have 10 or fewer employees, a 3% payroll tax will be levied on every employer in the state.  The business community, regardless of an employer’s commitment to providing quality healthcare benefits to its employees, is being asked to front the expenses of a universal healthcare program. Over 200,000 Illinois employers will pay approximately $2.2 billion in payroll taxes.  However, if you already have a qualifying health insurance plan, and it’s deemed adequate by the state, i.e., spend at least 4% of your payroll on health insurance, you supposedly will get a refund of your 3%.  Again, there is no guarantee how long that will take, considering the state’s backlog of unpaid bills.  

Universal state sponsored healthcare will cost approximately $4 billion a year, with some of the money coming from the sweeping Gross Receipts Tax.

Recent news reports, however, claim that this particular aspect of the governor’s budget would violate federal law.  Legal experts claim that this approach could violate the 1974 Employee Retirement Income Security Act (ERISA), which dictates how companies structure benefit plans for companies that do business in other states won’t have to wrestle with other states laws.  This payroll tax is crucial to the governor’s health care plan, which aims to insure at least 500,000 of the state’s 1.4 million uninsured.   

FLAME RETARDANT BILL PASSES COMMITTEE

With a change in the make up of the House Environmental Health Committee from the last General Assembly, the environmental community got the votes it needed to finally win approval of a controversial bill CICI has been fighting for the last 3 years.  This bill, HB 1421 (Nekritz, D-Northbrook), would ban deca brominated diphenyl ethers (decaBDE), the most widely used of the brominated flame retardants, in mattresses, mattress pads, articles of furniture, televisions, computers, or other electronic devices.  The bill specifically exempts automobiles, not because decaBDE is any different in automobiles, but to lessen the bill’s opposition.  This measure was squeezed out of committee this week with 7 “yes” votes to 5 “no” votes.  All of the committee’s democrats except one voted ”yes” while all the republicans except one voted “no”. 

This product is widely regarded as safe by many health agencies around the globe and is a proven flame retardant that has been a component of diminished fire, injury, and casualty statistics around the country, saving the lives of those most vulnerable – children, the elderly, and, of course, firefighters.  CICI is aggressively fighting this junk science and fear mongering proposal along with many other business groups on the House Floor.  If Illinois can ban this safe and widely used product from existence, it can ban probably ban any chemical.       

“DEEP POCKETS” LEGISLATION PASSES SENATE

The Illinois Trial Lawyers Association (ITLA) were able to muster enough votes to pass this year’s coveted piece of legislation that would go after deep pocket defendants in SB 1296 (Cullerton, D-Chicago) out of the Senate this week on a roll call of 34 “yes”, 23 “no”, and 1 “present”.  The roll call was along party lines, with only one democrat voting “no”.  The bill now moves to the House where CICI and many other opponents will continue to fight this unfair piece of legislation.

This measure would provide that the apportionment of fault under joint liability only applies to the parties still remaining in the case at the time that a final determination is made. There is only one purpose for this bill: to enable personal injury trial lawyers to collect money from the defendant with the deepest pocket in a personal injury case, without regard to which of multiple defendants might be most at fault.  The trial lawyers can settle with those with the least financial resources -- even if they are most at fault – and go after the defendant with the most financial resources, even if that defendant had little fault.

FLOOR ACTION

NPDES Fees – Interest Free Quarterly Payments
This bill, SB 1422 (Sullivan, D-Rushville), provides that the IEPA shall at a minimum include provisions in its NPDES program rules pertaining to an annual payment schedule and an interest-free quarterly payment schedule.  This passed unanimously out of the Senate this week and heads to the House for further consideration. 

NPDES Fees – Exceptions
This piece of legislation, SB 1663 (Trotter, D-Chicago), creates a fee exception for construction site storm water discharges for which a new NPDES permit is issued during the months of January through June. The bill states that no annual fee shall be due for the 12 months beginning July 1 that immediately follow the period for which the initial annual fee was due.  The bill also allows the IEPA, by rule, to provide for the refund of permit fees. It further requires a Section 401 state water quality authorization applicant to submit the fee prior to certification, whereas now the fee must be submitted with the application.  This also passed unanimously out of the Senate this week and heads to the House for further consideration. 

Phosphorus in Detergents
This measure, SB 376 (Harmon, D-Oak Park), is identical to HB 819 (Joyce, D-Chicago), which passed unanimously out of the House this week.  This bill was long debated two years ago as the Metropolitan Water Reclamation District (MWRD) of Greater Chicago attempted to remove phosphorus in automatic dishwashing detergents.  An agreement between the MWRD and the detergent manufacturers produced this proposal which will reduce the amount of phosphorus in automatic dishwashing detergents from 0.8% to 0.5% by July 1, 2010.  The bill further prohibits home rule unit of local governments from regulating phosphorus in detergents.  SB 376 passed unanimously out of the Senate and now awaits further action as it heads to the House.

Green Cleaning in Schools
This proposal, HB 895 (May, D-Highwood), passed out of the House this week on a roll cal of 88 “yes” to 26 “no”.  The measure creates the Green Cleaning Schools Act to require the Illinois Green Government Coordinating Council (IGGCC), in consultation with other agencies and interested stakeholders, including representatives of cleaning products, to establish guidelines and specifications for environmentally-sensitive cleaning and maintenance products for use in school facilities.  CICI and the Consumer Specialty Products Association (CSPA), originally opposed to the bill, worked with the sponsor of the measure to include various avenues for which these types of products can become certified with the concern for allowing the use of disinfectants, sanitizers, and anti-microbial agents.  The bill now moves to the Senate for further consideration. 

MWRD – Water Quality Projects
This proposal, HB 679 (McCarthy, D-Orland Park), changes the Metropolitan Water Reclamation District (MWRD) Act to establish that the term "construction purposes" includes water quality improvement projects and that they may issue bonds for the purpose of replacing, remodeling, completing, altering, constructing and enlarging water quality improvement projects.  This legislation passed unanimously out of the House this week and heads to the Senate for further consideration.   

Mercury Thermostats and Added Products
This proposal, SB 1241 (Hunter, D-Chicago), prohibits the installation of thermostats containing mercury in new construction beginning July 1, 2008, prohibits the installation or sale of thermostats that contain mercury beginning July 1, 2010, and provides that, beginning July 1, 2008, thermostats that contain mercury must not be disposed of in a landfill or incinerated.  This is similar to HB 943 (May, D-Highland Park), which goes a little further in other mercury added products such as barometers, hydrometers but not button cell batteries.  The House version passed over to the Senate this week unanimously.  

COMMITTEE ACTION
 
Renewable Fuels
This measure, HB 1551 (Franks, D-Woodstock) amends the Illinois Renewable Fuels Development Program to provide that a grant recipient must be constructing, modifying, altering, or retrofitting a plant that has annual production capacity of no less than 5,000,000 gallons whereas it’s currently 30,000,000 gallons of renewable fuel per year.

Economic Development Standards
This proposal, HB 407 (Flowers, D-Chicago), provides that when the Department of Commerce and Economic Opportunity (DCEO) awards grants for any economic development purpose, they must consider (1) reserving and targeting state business incentives to areas with high unemployment or low income and (2) if the applicant seeking the grant is located in a metropolitan area and whether that metropolitan area meets location efficiency standards.

Great Lakes Compact
This legislation, HB 375 (Franks, D-Woodstock) creates the Great Lakes-St. Lawrence River Basin Water Resources Compact Act and authorizes the governor to enter into the compact between the states of Illinois, Indiana, Michigan, Minnesota, New York, Ohio, and Pennsylvania.  The bill also creates the Great Lakes-St. Lawrence River Basin Water Resources Council, which will consist of the governors of the parties to the compact ex officio and provides that all appointments by the governor would be subject to the advice and consent of the Senate.

This bill is just one aspect of a major initiative between the Great Lakes states and Canadian provinces designed to protect the integrity of the world’s largest fresh water supply.  The bill further provides for numerous specific requirements that would be contained in the compact and requires the Department of Natural Resources and other state agencies to perform, at the direction of the Governor, the functions and duties required of Illinois under the compact.  This bill is similar to SB 50 (Cullerton, D-Chicago).  Both of these bills advanced out of their respective committees this week and await further action on their chamber’s Floor.

Expedited Permits for Oil Refineries
This measure, HB 3671 (Meyer, R-Bolingbrook) requires a rulemaking processes of the Department of Natural Resources, the Department of Transportation, the State Fire Marshal, the Pollution Control Board, and the Environmental Protection Agency include a process for expediting the issuance of permits and licenses for oil refineries.  Applicants must request the use of the expedited process and pay for any additional costs.  This bill made it out of the House Environment and Energy Committee this week with 17 “yes” votes and 6 “no” votes and heads to the House Floor for further consideration.

LEGISLATIVE DAY A MONTH AWAY

Mark your calendars and reserve your rooms.  Only 10 days remain to reserve your rooms to receive the discounted rate.  CICI will be holding its Annual Legislative Day in Springfield, Tuesday, April 24, 2007, at the President Abraham Lincoln Hotel (formerly Renaissance Hotel), with an evening reception of legislators and key government officials at the Sangamo Club.  To register for the event, please go to: http://www.cicil.net/Flyers/Legislativeday07.html

Senate Environment and Energy Committee Chairman, Senator James Clayborne (D, E. St. Louis) will be the keynote speaker at the Legislative Luncheon. Senator Clayborne will discuss significant environment and energy legislation and issues of importance to Illinois’ chemical industry.

This event is a great opportunity to mingle and get to know the key people in state government, like members of the Illinois General Assembly, Constitutional Officers, IEPA officials, the members of the Pollution Control Board, and other key government officials.  At the 2006 reception, over 175 legislators and government officials attended. Come thank those elected officials who are friends of the chemical industry.

The President Abraham Lincoln Hotel has a discounted block of rooms reserved for CICI.  Reservations can be made by calling the hotel at 1-866-788-1860.  CICI’s block of rooms will be available until Monday, April 2, 2007, so please make your reservations accordingly.

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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