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June 1, 2009
Volume 23 - Issue 17
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NO INCOME TAX INCREASE - BUDGET HALVED - LEGISLATURE ADJOURNS
Governor Quinn’s new version of his income tax plan failed in the House this weekend, only garnering 42 Democratic votes and no Republican votes. The governor’s new tax increase plan, SB 2252, sponsored by House Majority Leader Barbara Flynn Currie of Chicago, would have temporarily increased the personal income tax rate from 3% to 4.5% and corporation income tax from 7.3% to 9.7%, including the personal property replacement tax. In addition, the new version would have raised the personnel exemption to $3,000 instead of $6,000 as in the previous version. The new version would have also doubled both the earned income tax credit and the property tax credit, which is now capped at $500.
To see how your state Representative voted on SB 2252, follow this link.
This new income tax proposal would have produced $3.7 billion to $4 billion which could be used for state programs. The Governor’s original proposal netted about $3.2 billion. Please note that the state’s budget deficit is hovering around $12 billion.
The State Senate also advanced their version of an income tax increase in HB 174,sponsored by Senate President John Cullerton of Chicago but this measure was never even called for a vote in the House. The Senate proposal would have permanently increased the personal income tax rate from 3% to 5% but only increased the corporate income tax rate from 7.3% to 7.5%, including the personal property replacement tax. The bill would have also increased the residential real property tax credit from 5% to 10%, increased the education expense credit from $500 to $1,000, increased the earned income tax credit from 5% of the federal tax credit to 15% for 2009 and thereafter. Additionally, the bill also extended the state sales tax, which can be as high as 10% in Chicago, to numerous services, including warehousing/storage, membership fees in private clubs, laundry services, dry cleaning, video rentals, etc. It was estimated that this tax plan could bring in as much as $7 billion in new revenue.
To see how your State Senator voted on HB 174, follow this link.
With both income tax proposals failing to advance, the legislature proceeded to pass a state budget funded at 50% of what the governor requested earlier in the year. This budget plan would call for adequately funding government employees’ salaries and health insurance while significantly cutting grants and programs. This budget would also be coupled with skimming pension fund payments and enacting new fund sweeps for close to a billion dollars in additional revenue. There may even be some provisions for short-term borrowing to get the state at least half the way through the new fiscal year, which starts July 1, 2009. Most of the cuts and any potential borrowing would be left up to the governor’s office. At the start of 2010, after candidates for all the statewide and legislative offices have been filed, the General Assembly may once again take up the issue of increasing taxes to fund the state.
It should be noted that while the General Assembly adjourned until the Fall Veto Session, Governor Quinn made it abundantly clear that he will not sign a partial budget such as the one that was passed to him and that the legislature needs to work until a full budget is on his desk. The four legislative leaders and the governor are still continuing to meet. CICI will keep you abreast of any developments that may occur, particularly if the governor calls for any special sessions to deal with the budget and tax increases.
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EXTENSION OF TAX INCENTIVES HEADS TO QUINN
A proposal that has been languishing in Springfield since the beginning of session got new life this week under an agreement between the legislative leaders to extend certain tax incentives for businesses. The proposal, SB 1691 (Althoff, R-Crystal Lake), extends the exemption for graphic arts machinery and equipment, the manufacturer's purchase credit, and the replacement tax investment tax credit until August 30, 2014. These economic incentives have either expired or are due to expire on July 30, 2009.
The manufacturer’s purchase credit allows manufacturers to use tax credits earned by purchasing manufacturing machinery and equipment for use in Illinois to reduce their sales tax on the purchase of manufacturing consumables, which are things that are used up in the manufacturing process and not resold.
The graphic arts machinery and equipment exemption exempts the sales of machinery, equipment, and chemicals used in graphic arts production from the state’s sales tax.
The replacement tax investment tax credit is a 0.5% income tax credit that can be claimed on capital investments by manufacturers, coal or fluorite miners, retailers, or by taxpayers making a capital investment in a River Edge Redevelopment Zone. It also allows for an additional 0.5% for taxpayers who increase their employment in Illinois.
The bill passed both Houses this weekend unanimously and now heads to Governor Quinn for his consideration. CICI and many business groups worked to pass this important piece of legislation and will ask to governor for his signature on the bill. |
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ENERGY EFFICIENCY BILL ADVANCES TO GOVERNOR
The Illinois Attorney General’s office, the City of Chicago, regulated natural gas and electric utilities, the Illinois Commerce Commission (ICC), various environmental and low-income advocates, industrial energy user and various business groups including CICI have been working on legislation regarding energy policy in Illinois.
This measure, SB 1918 (Lightford, D-Chicago), would create an Energy Efficiency Portfolio Standard (EEPS) for regulated natural gas utilities, similar to a program that already exists for electric utilities. The proposed bill establishes an energy efficiency program for natural gas utilities that is designed to reduce natural gas usage by 8.6% by 2020. The measure also includes a pilot program for on-bill financing of energy efficient measures that will be reviewed by the ICC after 3 years. The legislation also creates a Percentage of Income Payment Plan (PIPP) to help low-income, seniors, and other fixed income households manage their utility bills, complementing the current Low-Income Heating and Energy Assistance Program (LIHEAP). Customers participating in the PIPP will pay no more than 6% of their income and use their LIHEAP benefits to maintain affordable year-round utility service.
Various groups in favor of this measure have estimated that by 2030 natural gas utilities could cumulatively save over 10 billion therms of natural gas, approximately $10.4 billion in savings for natural gas customers and a resulting reduction in carbon dioxide emissions that could total over 53 million metric tons.
The bill passed both Houses this weekend and now heads to Governor Quinn for his consideration. |
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UTILITY TAX INCENTIVE HEADS TO GOVERNOR
This measure, SB 1448 (Trotter, D-Chicago), allows a business located in an economically depressed area such as an Enterprise Zone to apply for a utility tax exemption from the Department of Commerce and Economic Opportunity. Businesses applying for the exemption must also meet one of the following requirements: (1) create at least 200 full-time jobs; (2) invest at least $175 million and create at least 150 full-time jobs; or (3) retain at least 1,000 full-time jobs. The bill additionally allows businesses retaining at least 300 full-time jobs in economically depressed manufacturing sectors, i.e., in areas that have at least 9% unemployment, to be eligible for utility tax exemptions.
This bill was specifically written for the A. Finkl Steel company to enable them to move to the south side of Chicago from their current north side neighborhood and not move out of state, but other businesses could take advantage of this proposed measure as well.
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LEG/REG MEETING AT MCGUIREWOODS THIS THURSDAY
CICI will be having a Legislative & Regulatory Affairs Committee meeting this Thursday, June 4, 2009, at McGuireWoods, located at 77 West Wacker Drive, Suite 4400, in downtown Chicago. Picture ID is required due to security. For those who would like to attend, RSVP to Lisa Frede in the Des Plaines Office at (847) 544-5995 or at lfrede@cicil.net. Many topics of interest for the membership including air and water issue updates and an end-of session report.
Please note that the Chemical Industry Council of Illinois Legisletter is not intended to convey legal advice or set forth all legal requirements applicable to particular circumstances.
Headquarters: 1400 E. TOUHY AVE., SUITE 110, 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 |
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