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March 9, 2019 Update | Roger C. Marquardt & Co., Inc.

March 9, 2019 Update

Governor’s Highlights
Graduated Income Tax: Governor Pritzker released his plan to change the state’s tax structure from a flat to a graduated income tax. A copy of the Governor’s presentation, including proposed rates, is here.  The Governor projects the change in tax structure will generate $3.4 billion, and includes a new $100/child tax credit and a $100 million increase in the property tax credit. Illinois’ corporate income tax would increase from 7 percent to 7.95 percent under Gov. Pritzker’s plan.

Governor’s Proposed RateIncome
4.75%$0 – $10,000
4.90%$10,001 – $100,000
4.95%$100,001 – $250,000
7.75%$250,001 – $500,000
7.85%$500,001 – $1,000,000
7.95%Over $1,000,000

 The Governor argues the graduated income tax is the path forward for Illinois’ fiscal stability and challenged opponents, when negotiating the proposal, to share their specific “plan to address a $3.2 billion-dollar budget deficit, pay down $15 billion of debt from unpaid bills, and protect working families.”
Meanwhile, House Republicans filed House Resolution 153earlier in the week ahead of the Governor’s announcement stating their unified position against instituting any graduated income tax. Public relations campaigns by both proponents and opponents are now underway.
New Appointments

  • Paula Basta, Director of Illinois Department of Aging. Currently serves as director of senior services and health initiatives at Chicago Housing Authority and teaches at the Loyola University School of Social Work.
  • Ron Guerrier, Chief Information Officer of Illinois Department of Innovation and Technology. Guerrier has more than 20 years of experience managing IT in private sector and has served as chief information officer for large companies since 2012.
  • Robert Muriel, Director of Illinois Department of Insurance. Muriel is a civil and commercial lawyer with more than 20 years of experience representing small businesses and professionals in trials, appeals and arbitrations in state and federal courts. His core practice is civil and commercial litigation, including insurance coverage and bad faith claims, financial fraud claims, legal malpractice cases and consumer class action cases, including actions brought under the Fair Debt Collection Practices Act.

Bond Sale Schedule
The Governor will meet next week with rating agencies to discuss his pension and budget proposals. Illinois’ bond sale schedule per the Governor’s introduced FY 2020 budget is as follows:

  • April 2019 – $300 million in General Obligation Pension Acceleration Bonds
  • June 2019 – $1.5 billion in General Obligation Backlog Borrowing
  • August 2019 – $600 million in General Obligation capital bonds and $700 million General Obligation pension acceleration bonds
  • January 2020 – $500 million General Obligation capital bonds
  • March 2020 – $2 billion pension funding bonds. These bonds will either be General Obligation bonds or a new individual income tax bond requiring legislative approval.

Agency News
The Illinois State Police announced steps to improve operations, firearms services processes and information sharing to aid law enforcement officials statewide with enforcement of Firearm Owner’s Identification (FOID) card revocation laws. A list of ISP actions is here.101st General Assembly
Budget: The Commission on Government Forecasting and Accountability told Illinois lawmakers this week that they expect a $184 million revenue shortfall for the current fiscal year (FY 19). The Commission also warned that Illinois is likely to see an economic slowdown in 2020 which could further impact Illinois’ financial condition. GOFA’s revised estimates include $38.3 billion in revenue for FY 19 down slightly from the original predication of $38.5 billion in revenue. State income tax collections are projected to end the year $450 million higher than expected, and sales taxes are doing slightly better than expected. The state never sold the James R. Thompson Center which was projected to generate $300 million, and the state didn’t borrow money from special state funds which was authorized in the budget.
For next year, COGFA is predicting increases in both income and sales taxes, although the amount of growth isn’t expected to be as strong as it has been. However, some other taxes, like inheritance and insurance taxes, are expected to drop slightly. Without introduction of specific legislation, COGFA is unable to analyze or predict revenue estimates for portions of the Governor’s revenue proposals for FY 20 like sports wagering and recreational marijuana sales.
Plastic Bag Tax: SB1240 (Link) passed Senate Revenue Committee. The bill in its current form levies a 7-cent tax on plastic and paper shopping bags. 2 cents would be kept by retailer to cover   costs of implementing tax. The other 5 cents would be collected by the state, with 2 cents going directly to general revenue fund and another 3 cents deposited in the Checkout Bag Tax fund, which would fund solid waste management programs in the counties in which the tax was collected. The sponsor continues negotiating details of plastic bag tax with Governor’s Office, and the bill will likely be amended in the coming weeks. A plastic bag tax is one of the new revenue sources in Governor Pritzker’s proposed budget.
Capital Needs: Details have been finalized for a series of regional Illinois Senate hearings about local construction needs in communities around the state.

  • 3 p.m. Monday, March 4 – Southern Illinois University Edwardsville, Morris University Center, Madison Room, 6 Hairpin Drive, Edwardsville
  • 1 p.m. Monday, March 18 – Decatur Public Library, 130 N. Franklin St., Decatur
  • 3 p.m. Monday, April 8 – Bradley University, Peplow Pavilion inside the Hayden-Clark Alumni Center, 1501 W. Bradley Ave., Peoria
  • 1 p.m. Tuesday, April 16 – Bilandic Building, 160 N. LaSalle St., Chicago
  • 1 p.m. Monday, April 22 – Gail Borden Public Library, 270 N. Grove Ave., Elgin

Documents provided to senators during the hearing will be uploaded to a publicly accessible portal. Additional hearings and town hall meetings on statewide construction needs may be added to the schedule.
Pensions: The Commission on Government Forecasting and Accountability (COGFA), the General Assembly’s budget-watchdog arm, issued a  report this week on The Illinois Municipal Retirement Fund, the City of Chicago pension funds, and the Cook County pension funds and their liabilities. The unfunded liabilities of the eight Chicago-based pension funds covered in this February 2018 report is $41.8 billion. The comparable figure for Cook County is $6.9 billion and the comparable figure for the Illinois Municipal Retirement Fund (non-Chicago, non-Cook County, non-police, and non-firefighting public employees in suburban and Downstate Illinois) is $3.0 billion.
SB 1864 (Link) passed Senate Public Health Committee. Adds electronic cigarettes to Smoke Free Illinois law.  The sponsor agreed to continue to work on the bill.  
The Senate Transportation Committee passed SR 68 (T Cullerton).  This resolution rescinds Gov. Rauner’s executive order on Autonomous Illinois.  
SB 1596 (Sims) passed the Senate along partisan lines by a vote of 41-16-1. Amends Worker’s Compensation Act and Workers’ Occupational Diseases Act to provide that specified Sections limiting recovery do not apply to injuries or death resulting from an occupational disease as to which the recovery of compensation benefits under the Act would be precluded due to the operation of any period of repose or repose provision. Provides that, as to any such injury occupational disease, the employee, the employee’s heirs, and any person having the standing under law to bring a civil action at law has the nonwaivable right to bring such an action against any employer or employers.  The bill now heads to the House for consideration.
An amendment to create a Clean Jobs Act was filed this week in the Illinois House. Committee Amendment # 1 to HB 3624creates the Clean Jobs Workforce Hubs Act, the Expanding Clean Energy Entrepreneurship Act, the Community Energy and Climate Planning Act, and the Clean Energy Empowerment Zones Act to reduce emissions, promote renewable energy sources, improve energy efficiency, and reduce carbon pollution related to transportation. Requires the Department of Commerce and Economic Opportunity to administer a program to 1) increase employment opportunities related to clean energy projects, 2) provide for creation of a clean jobs curriculum to increase workforce skills, and 3) provide for promotion of opportunities for small and disadvantaged businesses in clean energy development. Establishes a framework to achieve 100% reliance on renewable energy. Repeals the Kyoto Protocol Act of 1998.
Representative Marty Moylan, along with 34 co-sponsors, filed a resolution this week (HR157) urging lawmakers to slow process of legalizing recreational marijuana in Illinois so that lawmakers, stakeholders, and experts alike have the chance to consider the societal impact of legalization and examine all the data from other states that have passed similar legislation. Resolution is pending in the House Rules Committee. Governor Pritzker is pushing for legalization and is projecting to use $70 million in new revenue from licensing to fund the FY 20 budget. Opponents rallied against legalization this week at the capitol.
Senator Hastings filed an amendment to SB44 to tighten gun ownership laws in Illinois and require law enforcement officers to confiscate weapons and ammunition from people who have had their firearms permits revoked. The amendment adds new language to the state’s gun laws to require the Illinois State Police to confiscate firearms and ammunition from any person whose FOID card has been revoked. It would also require state police to report that person’s name to the National Instant Criminal Background Check System. The amendment further adds several new categories of people who would be barred from owning guns in Illinois, including: people with outstanding felony warrants anywhere in the United States; people subject to a protection from abuse order; people dishonorably discharged from the military; and any fugitives from justice. Stricter reporting requirements would be imposed on local governments and prosecutors to report to the state police the names and other identifying information of anyone who has been convicted of a crime or judged to have a mental condition that would disqualify them from owning firearms so the state police could forward that information to the national criminal background database. The legislation is in response to the recent mass shooting in Aurora, Illinois.
The House Cities & Villages Committee will hold a hearing on March 12 at 4 p.m. in Room D-1 of the Stratton Building to discuss the sale of municipal power transmission lines.
The House Labor Committee is holding a hearing on March 13 at 2:30 pm in Room 114 to discuss nursing staff limits.
The House Appropriations-Capital Committee will hold a hearing on March 14th at 8:30 am in Room 114 to discuss transportation needs. The House Prescription Drug Affordability & Accessibility Committee will hold a hearing on March 13th at 10 am in Room 114 to discuss patient perspectives on drug prices. COMING UPThe Illinois General Assembly will reconvene on Tuesday, March 12 at noon. Both chambers will continue reviewing legislation at the committee level. March 22 is committee deadline in the Senate. March 29 is committee deadline in the House.
Key Session Dates
March 22- DEADLINE for substantive Senate Bills out of Senate Committee.March 29 – DEADLINE for substantive House Bills out of House Committee.April 2- Consolidated Election.April 12- DEADLINE for third reading of Substantive Senate Bills and Substantive House Bills.May 10- DEADLINE for Substantive Bills out of Committee in 2nd chamber.May 24- DEADLINE for third reading of Substantive Bills in 2nd chamber.May 31- ADJOURNMENT.