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May 6, 2019 Update | Roger C. Marquardt & Co., Inc.

May 6, 2019 Update

Governor’s Highlights:
Graduated Income Tax: Governor Pritzker’s graduated income tax plan cleared another hurdle last week passing the full Senate on a partisan roll call by a vote of 40-19. SJRCA1(Harmon) proposes to revise the state’s Constitution as follows: “The General Assembly shall provide by law for the rate or rates of any tax on or measured by income imposed by the state. In any such tax imposed upon corporations the highest rate shall not exceed the highest rate imposed on individuals by more than a ratio of 8 to 5.” The constitutional amendment now heads to the House for consideration. The approval process of the resolution requires a 3/5ths vote by both chambers of the Illinois General Assembly and voter approval in the November 2020 election by either 60% of the voters voting on the question or 50% of voters voting in the election.
Governor Pritzker appointed the following:

  • Thomas Chan was appointed the new acting director of the Illinois Department of Employment Security. Chan replaced Gustavo Giraldo, who was appointed to the position by Pritzker in March and then resigned two weeks later.
  • Barbara Flynn Currie will serve on the Illinois Pollution Control Board 
  • Anastasia Palivos will serve on the Illinois Pollution Control Board
  • David Arenas will serve on the Illinois Capital Development Board 
  • Martesha Brown will serve on the Illinois Capital Development Board 
  • Pamela McDonough will continue to serve on the Illinois Capital Development Board 
  • Glyn Ramage will continue to serve on the Illinois Capital Development Board
  • Eileen Rhodes will serve on the Illinois Capital Development Board
  • Vivian Robinson will serve as commissioner of the Illinois Civil Service Commission
  • Joseph Dively will continue to serve on the Board of Trustees of Eastern Illinois University 
  • Audrey Edwards will serve on the Board of Trustees of Eastern Illinois University 
  • Christopher Hicks will serve on the Board of Trustees of Eastern Illinois University 
  • Joyce Madigan will serve on the Board of Trustees of Eastern Illinois University 
  • Martin Ruhaak will serve on the Board of Trustees of Eastern Illinois University 
  • Phillip Thompson Jr. will continue to serve on the Board of Trustees of Eastern Illinois University
  • Pamela Davidson will serve as Chair of the Local Records Commission
  • Rita Athas will serve on the Board of Trustees of Northern Illinois University 
  • Dennis Barsema will continue to serve on the Board of Trustees of Northern Illinois University
  • John Butler will continue to serve on the Board of Trustees of Northern Illinois University
  • Montel Gayles will serve on the Board of Trustees of Northern Illinois University  
  • Veronica Herrero will continue to serve on the Board of Trustees of Northern Illinois University 
  • Robert Pritchard will continue to serve on the Board of Trustees of Northern Illinois University
  • Eric Wasowicz will continue to serve on the Board of Trustees of Northern Illinois University

101st General Assembly:
In addition to passing the graduated income tax constitutional amendment, Illinois Senate Democrats advanced a package of proposals to implement a graduated income tax, freeze property taxes and repeal the estate tax. The package of bills must be approved together, along with the graduated income tax constitutional amendment, or the bills die. If approved, the bills take effect January 1, 2021. This package does not represent a negotiated agreement with the Governor and the House.
Graduated Income Tax Rates:SB687 (Hutchinson) Proposes new graduated income tax rates for individuals and corporations (see below). The bill represents changes to the rates Governor Pritzker proposed in March. According to the sponsor, this bill addresses criticism of the “marriage penalty” in the Pritzker plan by creating different rates for married and single filers. Under this plan, the top rate would be 7.99% (7.95% in Pritzker’s plan) and apply to the entire income of single filers earning more than $750,000 annually or joint filers earning more than $1 million. These rates are estimated to generate $3.3 billion.

Individual RateJoint FilersSingle Filers
4.75%$0-10,000$0-10,000
4.85%$10,001-100,000$10,001-100,000
4.95%$100,001-250,000$100,001-250,000
7.75%$250,001-500,000$250,001-350,000
7.85%$500,001-1,000,000$350,001-750,000
7.99%1,000,000+ (includes all income)750,000+ (includes all income)

 The Corporate Tax Rate would increase from 7% currently to 7.99% (7.95% in Pritzker’s plan) generating a projected $350 million. In addition, individuals would receive a $100 income tax credit per child up to $80,000 in earnings for single filers and $100,000 in earnings for joint filers. The proposal also includes $100 million increase in LGDF funding. Passed the Senate 36-22 and heads to the House.
Estate Tax: SB689 (John Cullerton) Repeals the estate tax. Repealing this tax would result in about $300 million loss in revenue. Passed the Senate 33-24 and heads to the House.
Property Tax Freeze: SB690 (Manar) Freezes school property taxes in years that the state fully funds the new school aid formula ($350 million additional) and categorical spending ($300 million additional). The state has not fully funded categorical programs in almost a decade. The freeze is an annual freeze, reevaluated each year. The bill would take effect beginning with the Fiscal Year 2022 budget cycle. The freeze only applies to school property taxes. Passed the Senate 36-18-0.
SB471 (Lightford) requires employers with more than one employee to provide paid sick time to full and part-time employees. The sponsor pledged to continue to work on the legislation in the House. Passed the Senate 34-15.
SB651 (Lightford) HEAT Act – Legislation backed by the Attorney General to create consumer protections regarding alternative retail electric and gas suppliers. Passed the Senate 43-24 and heads to the House.
A group of lawmakers and stakeholders announced “Build Up Illinois”, a coalition advocating for building projects, also known as “vertical construction”, as part of a comprehensive capital plan. The coalition is composed of groups and associations representing P-20 education – including k-12 school districts and both private and public colleges – the Illinois hospital system and the Illinois AFL-CIO and affiliated building trades. In addition to traditional capital projects, the group is supporting $500 million in capital funding for the Hospital Transformation Capital Program and $2 billion in capital funds for the next fiscal year for state colleges and universities.
Representative Conyears-Ervin resigned her legislative seat prior to be sworn in as Chicago’s City Treasurer. Thursday was her last session day. Her replacement has not been named.
Coming Up:
Both chambers return to session at noon tomorrow Tuesday, May 7th. May 10th is the deadline to pass substantive legislation out committee in the second chamber. Four weeks remain in the Spring session.
Key Session Dates
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.