The Illinois Senate has embarked in what may be the first earnest attempt at passing a budget and getting some start on spending reforms since Gov. Rauner took office. The governor seemed to signal the Senate was headed in the right direction in his State of the State address when he went off script and urged them to stay strong in their deliberations. Speaker of the House Madigan may have added his powerful 2-cents to the Senate when his daughter announced as Attorney General she was seeking a court order to stop paying state workers until a budget was passed.
Senate Bills one through 13 is an omnibus attempt at passing a budget, some reform measures, borrowing money and paying some bills. Each of the thirteen bills is dependent upon all others to pass before any become law. Because a two-year property tax freeze includes home rule communities a vote of three-fifths of the members could be required under section 6 of article 7 of the state constitution. Madigan’s’ pressure could likely result in the removal of the home rule language so a simple majority vote is all that’s needed. That’s no small exemption: 7.8 million Illinoisans live in a home-rule municipality such Chicago, Naperville, Peoria, DeKalb, and Sycamore.
Speaker Madigan seems repulsed by any reforms and if not for those included in this proposed legislation everything else should quite please him. And the threat of delays in paychecks could muster enough support to override any veto of the final bill.
Compromises are being made. Already removed is a penny-per-ounce tax on sweetened beverages. Proposed language to raise the minimum wage to $11 by 2021 was also removed.
The plan is now to raise the income tax rate from 3.75 percent to 4.99 percent, also raise the corporate rate from 5.25 percent to 7 percent, create a new “business opportunity” tax on payroll, allow six new casinos and introduce a new sales tax on various services such as car repairs, dry cleaning, landscaping, storage of cars and boats, admission tickets sporting events and concerts, and cable and satellite services. Under the new “business opportunity” tax businesses with a payroll of up to $100,000 a year would pay $225 annually, while businesses with a payroll of $1.5 million or more would pay $15,000 a year. The state will also borrow an additional $7 billion to pay bills that are piling up.
Reform measures include the local property taxes freeze for two years, school districts gain the ability to scale back on mandates such as physical education and driver’s education courses and more power to outsource janitorial/maintenance services. Consolidating various taxing bodies, changes in workers’ compensation rules and the employee pension system and a change for how the state doles out money to schools is under consideration.
State Senator Dave Syverson (R-Rockford) said nothing has been finalized yet. He is strongly urging the tax increases be temporary to hold the General Assembly’s feet to the fire on the reform measures that are needed. The proposed language eliminates all pensions for any newly elected legislator and puts a cap on how high pensions can go with options to convert to 401(k) plans. Syverson believes the reform measures will reduce costs by $750 million a year.
Syverson and his colleagues in the General Assembly are on the hot seat to get a budget and reform passed. The power wielded by Madigan(s) has one arm tied behind their backs.
The exodus of Illinois residents due to oppressive tax rates and regulations continues to grow especially among the state’s higher income earners.
The stakes couldn’t be higher.