Welcome to the Chemical Industry of Illinois

ANOTHER TAX INCREASE ON THE HORIZON

Legislative efforts are under way in Springfield to implement a graduated income tax, which, if approved by the voters in November, would raise the income tax rate from 3% to 6% for taxpayers earning over $250,000 a year. All individuals currently pay at the rate of 3%. The proposal would not directly change the state’s corporate income tax, which under the existing constitution cannot exceed the tax imposed on individuals by more than a ratio of 8 to 5. The current corporate income tax in Illinois is 4.8%. This tax increase would bring in as much as $3 billion in new revenue.

The House version of the proposal, House Joint Resolution Constitutional Amendment (HJRCA) 42, (Smith, D-Canton), would need to be approved by a three-fifths margin in both the House and Senate, and then submitted to voters in a statewide referendum this November. Governor Blagojevich would not need to sign this to be approved.

The proposal goes on to require that a third of the additional proceeds go for elementary and secondary education, another third for infrastructure projects, and the remaining amount to help “working families.”

Meanwhile, another proposal, SB 2288 (Meeks, D-Chicago), is on the Senate Floor awaiting action that would raise the income tax rate on individuals from 3% to 5 % and for corporations from 4.8% to 8%. As this is a regular piece of legislation, the governor would have to sign this for it to become law. Governor Blagojevich has made a “no income or sales tax increase on individuals” a cornerstone of his campaign and administration. So far, he has held onto that position with veto threats.

As always, CICI will keep you abreast of any developments on this or any other attempts to raise taxes.

SENATE GOP INTRODUCE ECONOMIC STIMULUS PLAN

The Senate Republicans have unveiled an economic stimulus package aimed at revitalizing the state’s sluggish economy. It was reported that the state is 43rd in the nation in terms of job growth, 40th in personal income growth, and 46th in Gross Domestic Product growth. The stimulus plan being advocated would provide a $10 billion boost to the Illinois economy, and immediately create at least 40,000 high-paying jobs. Included in this plan are requests for a state capitol construction program, funded by the sale of the state’s dormant 10^th riverboat license and a call to end the “demonizing of businesses”.

The other parts of the economic stimulus plan include:

Abolishing the State’s Health Facilities Planning Board: Currently, there are about $3 billion worth of projects waiting for approval from the Board. Eliminating the Board would free up this funding, and provide billions of dollars worth of private healthcare development, 8,000 construction jobs, and thousands of additional permanent jobs for the state.

Expediting state certification and licensing processes: Streamlining state certification and licensing processes would help stimulate economic growth and free-up needed projects currently in the works. Every day that a project is delayed results in lost income and increased financing costs.

Remove the 5 % utility tax for manufacturing: The past few years have been tough for Illinois manufacturers, in part due to dramatic increases in energy costs. A 5 % utility tax holiday would provide an immediate boost for manufacturing companies in Illinois.

Restore the federal depreciation schedule: By restoring the federal accelerated depreciation provisions, Illinois could take full benefit of the federal stimulus program by encouraging greater investment.

Reduce the State sales tax on motor fuel: By reducing the State sales tax on gasoline to 2.25 percent, the average Illinois motorist could save up to $500 per year at the pumps – or about 16 cents on the gallon.

PESTICIDE REGISTRATION FEE TO INCREASE AGAIN

The Illinois Pesticide Act requires companies who distribute or sell pesticides in Illinois to register with the Illinois Department of Agriculture and pay an annual registration fee of $200 per product. The fee was $100 but was raised in 2004 to $200 (a 100% increase in the first wave of fee increases during the Blagojevich administration). The money from these fees is deposited into the Pesticide Control Fund, but in 2004 the extra revenue ($100 per product) was swept into the General Revenue Fund as directed by language in the budget implementation bill.

This year, the administration is proposing to raise the product registration fee from $200 to $320 – a 60% increase. There are approximately 11,000 pesticide products registered each year in Illinois, thus this fee increase will raise nearly $1.3 million in new revenue. It can safely be assumed that this new revenue will also be deposited into the General Revenue Fund although promises will likely be made to keep the increases it in the Pesticide Control Fund to help run the Dept of Ag. CICI will, of course, oppose this fee.

Synthetic Natural Gas/Coal Gasification – Passed to the House

This proposal, SB 2547 (Clayborne, D-E. St. Louis) provides that any gas utility may enter into a contract for up to 20 years of supply with any company for the purchase of synthetic natural gas (rather than a 20-year supply contract with any company for synthetic natural gas) produced from coal through the gasification process if the company has commenced construction of a coal gasification facility by July 1, 2009 (rather than July 1, 2008). Makes changes in factors used to determine whether the cost for synthetic natural gas is reasonable and prudent. The bill was amended in committee to provide that if the Illinois Commerce Commission determines that the cost for synthetic natural gas purchased under a specified contract during supply years 11 through 20 (rather than during years 11 through 20) is not reasonable and prudent, then the company shall reimburse the utility for a specified amount.

Renewable Fuels Assistance – Passed to the Senate

Another piece of legislation, HB 4696 (Smith, D-Canton), amends the Illinois Renewable Fuels Development Program Act to provide that facilities that produce ethanol for gasohol or majority blended ethanol fuel shall receive grants up to 10 cents per gallon of annual production capacity, not to exceed $10,000,000 for each facility. The bill also provides financial assistance for units of local government and petroleum distribution centers to install the necessary infrastructure for the use of majority blended ethanol. This is similar to SB 2681 (Demuzio, D-Carlinville).

Lake Michigan Notification Water Pollution Permits – Passed to the Senate

This bill, HB 5256 (Bellock, R-Westmont), requires the Director of the IEPA to seek negotiations with each state that borders Lake Michigan to establish a notification policy under which the states will notify one another when permitting new sources of water pollution or increased levels of pollution into Lake Michigan.

2008 LEGISLATIVE/REGULATORY DAY - 1 MONTH AWAY

Mark your calendars and reserve your rooms. CICI will be holding its Annual Legislative/Regulatory Day in Springfield, Tuesday, May 6, 2008, at the President Abraham Lincoln Hotel (formerly Renaissance Hotel), with an evening reception of legislators and key government officials at the Sangamo Club.

Illinois State Treasurer Alexis Giannoulias will be the keynote speaker at the Luncheon. Treasurer Giannoulias will speak about the current budget problems facing the State of Illinois.

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 2007 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 14, 2008, so please make your reservations accordingly.

You can register by following this link: http://www.cicil.net/Flyers/Legislativeday08.html

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.

Headquarters: 2250 E. DEVON AVE., SUITE 239, DES PLAINES, IL 60018 · TEL :( 847) 544-5995 · FAX :( 847) 544-5999

Springfield: 400 W. MONROE, SUITE 205, SPRINGFIELD, IL 62704 · TEL :( 217) 522-5805 · FAX :( 217) 522-5815