This Week in Springfield – 99-26

In this Issue:

PRESIDENT OBAMA
VENDOR COLLECTION ALLOWANCE
BUDGET ADDRESS PREVIEW
LEGISLATIVE INTRODUCTIONS

This Week In Springfield

This Week In Springfield the President of the United States Barack Obama spoke to the Illinois General Assembly about political civility; Representative Jack Franks legislation to reduce the vendor collection allowance, among other provisions,  was posted to a committee but was not called for a hearing; and the Governor prepares for his Budget Address next week.

President Obama

On the nine year anniversary of his speech upon the Old State Capitol steps announcing his Presidential bid, President Obama returned to Springfield to address a Joint Session of the Illinois General Assembly where he had served as a State Senator from 1997 until his election to the US Senate in 2004.  It was the first time a sitting President addressed the General Assembly since President Jimmy Carter in 1978. The theme of the speech was to “build a better politics” where civility and patience outweighs extreme partisan posturing so that common ground can be found amid polite discourse.

The President’s message of political civility comes at a time when Illinois is entering its 8th month without a budget and both parties are gearing up for contentious March primaries and November general elections. As such, the President offered both parties talking points for the upcoming election. The President reiterated his support for redistricting but fell short of addressing term limits. He reminded the audience that he is a progressive Democrat who supports collective bargaining, minimum wage increases, campaign finance reform and voter registration reform. The President proclaimed that despite the continuous deadlock in Washington, and by inference Illinois, he “still believes in the politics of hope.”

President Obama finished his Springfield visit by hosting 250 of his friends at the Hoogland Center for the Arts.

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Vendor Collection Allowance

As TWIS readers are aware, during the summer, Representative Jack Franks, (D-Woodstock) filed HB 4300 seeking to impose over $2 billion in tax increases primarily on Illinois employers. Most egregiously, his proposal includes reducing the vendor collection allowance which is a partial reimbursement for the expenses retailers experience for administering and collecting the sales tax on behalf of the state and units of local government. One of the other more egregious provisions would impose a 1% tax on every health insurance claim.  In response, IRMA and the Illinois Manufacturers’ Association (IMA) informed voters of the negative impacts of this proposal. HB 4300 has been posted to the House Revenue and Finance Committee where it could be heard at any time.

IRMA is actively opposed to HB 4300 and continues to educate members of the Assembly as to the truth underlying the vendor collection allowance as well as the negative impact of many of the other provisions.

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Budget Address Preview

On the heels of the State of the State Address on January 27th, Governor Bruce Rauner will be presenting his much anticipated Budget Address next week. This address comes at a time when the impasse over Illinois’ fiscal 2016 budget has stretched into the eight month and has pushed Illinois $6.2 billion deeper into debt. With revenue down $5 billion due to the January 1, 2016 sunset of the temporary income tax rates imposed during the Quinn Administration in 2011, and courts requiring some health and social service spending at fiscal 2015 levels or higher, the impasse is eroding Illinois’ already deteriorating finances. It is estimated that Illinois’ bill backlog will grow from $7 billion currently to as much as $12 billion when fiscal 2016 ends on June 30th. The Governor has continued to push for reforms he believes are necessary to ensure Illinois doesn’t continue to simply tax-and spend before he will entertain a tax increase for the budget.

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Legislative Introductions

This week was the deadline for House bill introductions. As such there has been a flurry of new introductions this week. Below is a snapshot of initiatives that will have a direct impact on retail.

LABOR

Workplace PrivacyHB 4999 (Rep. Will Guzzardi, D-Chicago) makes it unlawful for an employer or prospective employer to (1) request or require an employee or applicant to authenticate or access a personal online account in the presence of the employer, (2) to request or require that an employee or applicant invite the employer to join a group affiliated with any personal on line account of the employee or applicant, (3) or join an online account established by the employer. Additionally, it prohibits retaliation against an employee or applicant.

Employee Sick LeaveHB 6162 (Rep. Andrew F Skoog, D-Spring Valley) creates the Employee Sick Leave Act and provides that employees may use personal sick leave benefits provided by the employer for absences due to an illness, injury, or medical appointment of the employee’s child, spouse, sibling, parent, mother-in-law, father-in-law, grandchild, grandparent, or stepparent, for reasonable periods of time as the employee’s attendance may be necessary, on the same terms upon which the employee is able to use sick leave benefits for the employee’s own illness or injury.

REGULATIONS

Retail TheftHB 6192 (Rep. Michael J. Zalewski, D-Riverside) relaxes the penalties for retail theft by increasing the threshold for enhanced penalties. Specifically, it increases the threshold amounts for enhanced penalties for theft (from over $500 to over $1,000) and for retail theft (from over $300 to over $500). Additionally it provides that enhanced penalties for theft and retail theft apply to third or subsequent convictions rather than for second or subsequent convictions.

Animal Abuse RegistryHB 5005 (Rep. Christine Winger, R-Bloomingdale) requires the Department of Agriculture to create and maintain an Animal Abuse Registry that is funded by an Animal Abuse Registry Fund. Any person 18 years of age or older that has been convicted of cruel treatment, aggravated cruelty, or animal torture shall register with the Department of Agriculture within 30 calendar days after the date of conviction to be placed on the Animal Abuse Registry. The registry will be publicly accessible. The bill also prohibits a registered person from owning a companion animal or being employed at an animal shelter, pound, pet shop, zoo, or other business where companion animals are present.

Biometric Data CollectionHB 6025 (Rep. Sam Yingling, D-Grayslake) provides that except to the extent necessary for an employer to conduct background checks or implement employee security protocols, a private entity may not require a person or customer to provide his or her biometric identifier or biometric information as a condition for the provision of goods or services. The new provisions do not apply to: (i) companies that provide medical services; (ii) law enforcement agencies; or (iii) governmental entities.

PHARMACY

Medicine Locking BottleHB 5949 (Rep. Mike Zalewski, D-Riverside) would extend the medicine locking bottle pilot program from 2017 to 2018.  The original legislation created a pilot program where pharmacies had the option of use a prescription locking bottle for new or refilled Schedule II prescription that contains hydrocodone. The legislations funding is subject to appropriation and is aimed at supporting one company.

Pharmacy Dispensing Error MandateHB 6180 (Rep. Michael P. McAuliffe, R-Chicago)requires pharmacies to establish and maintain a quality assurance program designed to prevent dispensing errors as well as a process designed to detect and identify dispensing errors. It also requires pharmacies to commence an investigation into any detected dispensing errors within 2 days after the date the dispensing error is discovered. Requires that if an investigation into a dispensing error indicates that the dispensing error is attributable, in whole or in part, to the pharmacy or its personnel, that a quality assurance review be performed. Provides requirements for the quality assurance review and its records. Provides that the records of the quality assurance review shall not be subject to discovery in any arbitration, civil, or other proceeding, except in certain circumstances. Effective 12 months after becoming law.

TOBACCO

E-Vaping – HB 2404 (Rep. Kathleen Willis, D-Northlake) originally banned e-vaping indoors everywhere cigarettes are prohibited.  She has amended the bill to ban e-vaping in schools/child care centers as well as government buildings only.

“Beer Garden” Smoking ClarificationHB 5029 (Rep. Dwight Kay, R-Edwardsville) provides that smoking is allowed in facilities (such as outdoor beer gardens, patios, decks, etc.) constructed prior to August 14, 2015 for the purpose of compliance with the Act. It requires that such facilities have signs clearly stating that the building or area is used for smoking.

E-Cigarette Marketing LimitsHB 6026 (Rep. Kathleen Willis, D-Northlake) limits the advertising and marketing of electronic cigarettes and electronic cigarette liquids targeted at persons under the age of 18 by manufacturers and retailers of such products. It also discontinues and prohibits the outdoor advertising and transit advertising of electronic cigarettes and electronic cigarette liquids by manufacturers and retailers of such products.

FOOD

Egg Lot ConsolidationHB 6287 (Rep. Elaine Nekritz, D-Buffalo Grove) provides that no eggs may be offered for sale for consumer use 45 days or more after candling (rather than after the original 30-day candling date). It extends the expiration date labeling requirement for grade A and AA eggs to no later than 45 days after candling. Additionally, it provides that eggs may be repackaged only when the retailer performs a lot consolidation where the lot consolidation is performed by or under the supervision of a registered lot consolidator. It requires that eggs be consolidated in a manner consistent with the specified training, every lot consolidation shall be documented using an Egg Lot Consolidation Log form, and that registered lot consolidators shall work at one physical location only.

Meat Labeling ActHB 5526 (Rep. Mike Smiddy, D-Port Byron) creates the Meat Labeling Act and requires that any person selling meat in this State must package the meat with a label indicating the country in which the meat was produced.

Local Food Scrap MandateHB 6029 (Rep. Carol A. Sente, D-Vernon Hills) requires that county waste management plans shall include a food scrap composting program. The program shall provide for separate collection and composting of leaves and food scrap, shall include a report to the Environmental Protection Agency about the capacity and availability of food scrap composting infrastructure in or near the county, and shall include a plan for access to food scrap composting by all county residents within 5 years.

ENVIRONMENT

Plastic Bag Recycling—SB 2224 (Sen. Terry Link, D-Gurnee) creates the Plastic Bag and Film Recycling Act and has been assigned to the Environment and Conversation Committee. It requires manufacturers of plastic carryout bags to register with the Illinois Environmental Protection Agency and pay to the Agency an initial registration fee and annual registration renewal fee. It prohibits a manufacturer from selling or offering to sell plastic carryout bag in the State unless the manufacturer is registered with the Agency and its name is printed on the plastic carryout bags it manufactures. Additionally, it requires each manufacturer to develop, and submit to the Agency, a plan to support the collection and recycling of plastic carryout bags and plastic film product wrap and prohibits retailers from purchasing plastic carryout bags from manufacturers under certain circumstances.

Coal Tar BanHB 5578 (Rep. Laura Fine, D-Glenview) prohibits the sale and use of a coal tar sealant product in the State of Illinois. Specifically, it prohibits the application of a coal tar sealant product on any surface, except for highway structures, in the State of Illinois including but not limited to a driveway, parking area, playground, sidewalk, bike trail or roadway.  It also allows a city or county to adopt an ordinance to enforce the requirements of the legislation in prohibiting the sale of coal tar sealant.

TAXES

Consumption Gross Receipts TaxHB 6208 (Rep. Carol Ammons, D-Champaign) requires when a retailer who is engaged in the business of selling seeds or plants sells those seeds or plants to a purchaser who uses the seeds or starter plants in raising lawn grass, vegetables, fruits, nuts, crops, or other plants which they will use or consume and not resell, those retailers are engaged in the business of selling tangible personal property to purchasers for use or consumption and are required to remit the tax imposed under the Act on those gross receipts. Requires a retailer who sells seeds or plants to a purchaser who uses those seeds or plants in raising vegetables, fruits, nuts, crops, or other plants for sale is selling those seeds or plants to purchasers for purposes of resale and is not required to remit the tax imposed under the Act on those gross receipts.

Retail Property AssessmentHB 6240 (Rep. Michael P. McAuliffe, R-Chicago) provides that, for the purposes of the definition of 33 1/3%, the fair cash value of property is determined by the lesser of: (1) the Department of Revenue’s sales ratio studies for the 3 most recent years preceding the assessment year; or (2) the valuation of the property in the year immediately preceding the assessment year (under the current law, the fair cash value is based on the sales ratio studies).

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This Week in Springfield – 99-25

This Week In Springfield, Governor Bruce Rauner presented the annual State of the State Address and the Illinois Senate assigned a plethora of bills to standing committees.

State of the State Address

In the midst of budget standoff that has lasted over seven months, Governor Rauner delivered Illinois’ annual State of the State address Wednesday. During the address, the Governor briefly touched upon his administration’s accomplishments in his first year in office which they believe saved Illinois $938 million. According to the Governor, these savings were achieved by reducing state spending by $500 million; saving $188 million through unemployment insurance fraud reduction; and saving $250 million through reforms within the Department of Healthcare and Family Services. The Governor also touted implementing a revolving door ban on state officials becoming lobbyists and reforming the EDGE credit to eliminate special deals.

The Governor noted that in order to improve the quality of life for all residents, Illinois needs to increase the economic opportunity for all individuals. This requires excellent education and vocational training combined with multiple career opportunities made available by companies competing to hire workers.  The Governor stated that despite the natural benefits that Illinois has to offer, including economic and strategic viability, Illinois is failing its citizens by promoting an economic status quo that benefits politicians, trial attorneys and unions at the expense of the middle class. This failed economic policy forces people and businesses out of Illinois which exacerbates the middle class deterioration while depleting the state of much needed taxes dollars that could be used to promote and protect infrastructure and programs for the most vulnerable citizens.  The Governor’s proposal to address these problems is his Turnaround and Transformation agendas.

TWIS readers are well informed of the Governor’s “Turnaround Agenda” that has evolved from a long list to now encompass workers compensation and redistricting reform; term limits and property tax relief. During the State of the State, the Governor introduced a new agenda labeled the “Transformation Agenda”. This agenda focuses on many new initiatives.  The Governor unveiled a 10 point education reform plan that he believes will produce a high quality fully integrated  education from cradle to career that will eliminate bureaucracy and hold schools accountable for results.  His administration is also working to transform a broken health and human services system that relies on a “broken patchwork of reactive, expensive, and ineffective interventions”, by focusing on “evidence based and data driven decisions” coupled with “value and outcome rather than volume and services”. The administration plans on streamlining and updating the Illinois’ antiquated IT system through a new executive agency dubbed the Department of Innovation and Technology. Additionally, the administration plans to reform the Illinois’ procurement procedures which he believes will save the state $500 million a year. Unlike the Turnaround Agenda, the Transformation Agenda appears to include some initial bipartisan agreement. This includes 14 criminal justice reform ideas suggested by a bipartisan Criminal Justice Reform Commission and the Governor’s support for a pension reform proposal crafted by Senate President Cullerton that will save Illinois $1 billion a year.

The Governor’s speech was not without a verbal barrage against primarily public sector unions, particularly AFSCME with whom his administration is in heated contract negotiations.  The Governor took the opportunity to chide AFSCME for demanding $3 billion in increased benefits while schools and the most vulnerable citizens of Illinois are suffering.  Additionally, the Governor promised to reform unfair work rules that he believes the unions have abused and that have created hidden costs at the expense of Illinois’ taxpayers.

In closing, the Governor admitted that the last year was difficult but wants to build off the bipartisan progress that resulted in Criminal Justice Reforms, Police Reforms, and Unemployment Insurance changes to jumpstart mutual participation to achieve a grand compromise to move Illinois forward.

As is always the case, immediately after the State of the State, each caucus leader spoke to the media. Senate Republican Leader Christine Radagno and House Republican Leader Jim Durkin made it clear that Illinois requires the structural reforms contained within the Governor’s Turnaround and Transformation Agenda rather than relying on just raising taxes. They echoed the Governor’s belief that raising taxes without real institutional reform will continue Illinois’ political, structural and financial downward spiral.  House Speaker Michael Madigan organized some human service program advocates to present their concerns regarding the lack of a state budget to the media during his press conference.  Speaker Madigan reiterated that he is willing to work with the Governor, but he believes that discussions should only include budget matters and he has doubts about the Governor’s sincerity of bipartisanship when he continues to advocate for changes that are in direct conflict with Democratic Caucus core principles. During the State of the State, Governor Rauner trumpeted his tentative bipartisan agreement to support Senate President John Cullerton’s pension proposal. In somewhat of a surprise development, the Senate majority caucus voiced their hesitancy to pass their pension proposal with the Governor’s support before a budget solution is in place.

Senate Committee Bills of Interest

The Senate Assignment Committee released a great number of bills to Senate Standing Committees. The Senate standard operating procedure is to release all bills from Assignment to standing committees. This does not necessarily mean they will have a hearing and a subsequent vote, but it does not preclude the possibility either.  As such IRMA members should be aware of the following initiatives and bills that have been assigned to committees.

LABOR

Minimum Wage: SB 2145 (Sen. Kimberly A. Lightford, D-Chicago) has been assigned to the Executive Committee and increases the minimum wage from $8.25 to $9.00 beginning July 1, 2015 and increases it by $0.50 each July 1 until July 1, 2019, at which point the minimum wage will be $11.00. It provides that the establishment of a minimum wage that employers must pay their employees is an exclusive power and function of the State and is a denial and limitation of the home rule powers and functions, except that the limitation on home rule powers does not apply to a specified ordinance adopted by the City Council of City of Chicago. Additionally, it creates a credit against the withholding tax liability of employers with fewer than 50 employees, calculated based on the increase in the minimum wage.

Paid Sick Leave: SB 2147 (Sen. Toi W. Hutchinson, D-Chicago Heights) has been assigned to the Executive Committee and creates the Healthy Workplace Act. The legislation requires employers to provide up to 7 days of paid sick leave to employees. The employees may use the sick time to care for themselves, their family, their child upon school closings, and in response to being a victim of domestic assault.

ENVIRONMENT

Plastic Bag Recycling: SB 2224 (Sen. Terry Link, D-Gurnee) creates the Plastic Bag and Film Recycling Act and has been assigned to the Environment and Conversation Committee. It requires manufacturers of plastic carryout bags to register with the Illinois Environmental Protection Agency and pay to the Agency an initial registration fee and annual registration renewal fee. It prohibits a manufacturer from selling or offering to sell plastic carryout bag in the State unless the manufacturer is registered with the Agency and its name is printed on the plastic carryout bags it manufactures. Additionally, it requires each manufacturer to develop, and submit to the Agency, a plan to support the collection and recycling of plastic carryout bags and plastic film product wrap and prohibits retailers from purchasing plastic carryout bags from manufacturers under certain circumstances.

Recycled Materials: SB 2202 (Sen. Pamela J. Althoff, R-McHenry)has been assigned to the Environment and Conversation Committee and provides that material that is intended or collected to be recycled is not garbage, refuse, or ashes. This bill prohibits residents from putting plastic bags in the garbage with the idea that consumers would take the bags back to the retailer.

Oil Filter Landfill Ban: HB 4029 (Rep. Elaine Nekritz, D-Buffalo Grove) has been assigned to the House Environmental Committee and would ban all oil filters from the landfill with the expectation that consumers would take the oil filters back to the retailer.

REGULATION

Healthcare: SB 2177 (Sen. Michael Noland, D-Elgin) has been assigned to the Executive Committee and Creates the Illinois Universal Health Care Act. It provides that all individuals residing in the State are covered under the Illinois Health Services Program for health insurance. It sets forth the health coverage benefits that participants are entitled to under the Program and sets forth the qualification requirements for participating health providers.

Toy Guns: SB 2166 (Sen. Ira I. Silverstein, D-Chicago) has been assigned to the Judiciary Committee and provides that it is a Class B misdemeanor for a person to purchase, possess, conceal, use, sell, give away, or otherwise transfer, or to engage in the business of selling or to exhibit for sale, a replica firearm, paint pellet, or paint pellet gun in the State. It provides that each replica firearm shall have as an integral part, permanently affixed, a blaze orange plug inserted in the barrel of the replica firearm and provides that the plug shall be recessed no more than 6 millimeters from the muzzle end of the barrel of the firearm. Additionally, it mandates that each purchase, use, sale, gift, or transfer of any replica firearm, paint pellet, or paint pellet gun in violation of this provision shall be deemed a separate and distinct offense, and each day a person unlawfully engages in the business of selling or exhibits for sale any replica firearm, paint pellet, or paint pellet gun in violation of this provision is a separate and distinct offense.

Auto Insurance: SB 2208 (Sen. Jacqueline Y. Collins, D-Chicago) has been assigned to the Insurance Committee and provides that an insurer authorized to do business in the State shall not use a consumer’s credit information or credit report to calculate an insurance score for private passenger automobile insurance policies amended, delivered, issued, or renewed on or after the effective date of the amendatory Act.

Amusement Rides:  SB 2179 (Sen. Ira I. Silverstein, D-Chicago) has been assigned to the Public Health and provides that “amusement ride” includes any water slide, as defined by the Swimming Facility Act.

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This Week in Springfield – 99-23

This Week in Springfield the Illinois General Assembly convened Tuesday to appoint Representative Frank Mautino (D- Spring Valley) as the next Illinois Auditor General and consider in committee a legislative proposal to shift more of Mayor Emanuel’s property tax increase onto employers.

Emanuel’s Property Tax Hike

Mayor Rahm Emanual’s 2016 budget is predicated on a $540 million property tax increase allegedly to pay the City’s substantial pension payments. In order to try and quell a potential revolt by residential tax payors, the Mayor has proposed doubling the homestead exemption from the current $7,000 to $14,000. The result of this expansion would be to shift even more of the property tax burden in Cook County onto the backs of employers who already pay 2.5 times more than residential property owners. The Mayor’s theory is that employers can afford the increase.

“The lion’s share of the increase will be borne by our thriving central business district and commercial areas,” said Deputy Mayor Steven Koch. “We’ve heard the feedback from our residents on everyone paying their fair share, and believe that this proposal does just that.”

The Mayor’s proposal requires the approval of the Assembly and Governor. This week, the House Revenue and Finance Committee voted, on a partisan roll-call, to send the proposal to the floor of the House for further consideration. During the hearing, IRMA and a coalition of business groups including the Chicagoland Chamber and the Building Owners and Managers Association, made it clear that this plan would place an unjust burden on businesses and residential renters. Although the plan purports to protect residents from a tax increase, realistically the majority of residents in Chicago will see increased cost as a result of the tax increase. For instance, approximately 56% of people who live in Chicago live in apartment buildings. The vice president of the Building Owners and Managers Association (BOMA) testified that building managers would have to pass on the increased property taxes to tenants and would make cuts in maintenance and other tenant services. Additionally, BOMA said the mayor’s plan would add roughly $24,000 in annual costs to the average small or mid-sized business downtown, because landlords would pass on the tax increase to their business tenants.

IRMA and the Chicagoland Chamber testified that businesses in Chicago are currently paying two more times in property tax than their residential counterparts under Chicago’s unique and archaic classification system. As such, the proposed plan would increase this burden even more. Additionally, it was pointed out that the business climate in Chicago is already burdened with other oppressive initiatives that include but are not limited to a Chicago only minimum wage, an increased sales tax, and consideration of paid sick leave, vacation pay, and scheduling mandates. Moreover, the additional property tax will further exacerbate the lack of business development in food deserts and other blighted areas.

Not surprisingly, over the last four years the Illinois Department of Revenue statistics show the number of businesses within Chicago has decreased 1.59% while the collar counties have seen businesses increase within their borders by up to 9%. These same statistics show that ten years ago 11,000 more businesses resided and paid taxes in Chicago and twenty years ago 26,000 more businesses resided and paid taxes in Chicago.  The business community is concerned that this property tax increase will continue this dangerous trend.

While the Mayor’s office points to the ‘thriving’ downtown area of Chicago, it ignores the savage impact this tremendous property tax shift will have on employers in the neighborhoods outside the central business district. The Mayor’s proposal ensures already undeveloped and under-developed neighborhoods will stay that way.

Representative Frank Mautino Named Illinois Auditor General

The House and the Senate appointed Representative Frank Mautino to replace retiring Illinois Auditor General Bill Holland. Representative Mautino has served in the legislature since 1991 when he replaced his father Richard Mautino who was first elected to the House in 1974.  He represents the 76th District which includes Spring Valley, Hennepin, Oglesby, Ottawa, LaSalle, Streator and Peru.  He serves as the chair of the House Democratic Downstate Caucus and also as the Deputy Majority Leader.  More importantly, Representative Mautino is a husband and father of three children.

During his tenure, Representative Mautino earned the respect of his peers on both sides of the aisle, in both Chambers and from many Illinois industries.  His opinion is widely sought after due to his fair and reasonable approach to any discussion, topic or negotiation.  As a result of this respect, Representative Mautino facilitated bipartisan legislation across a plethora of issues including but not limited to liquor, labor, tax, workers’ compensation, unemployment insurance, healthcare, etc.  The Illinois General Assembly will lose a great representative and an exemplary individual but those characteristics will serve him well as Auditor General.

IRMA would to thank Representative Mautino not only for his tireless representation of his constituents but for his consistent support of Illinois retailers. We wish him every success in his new role.

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This Week in Springfield – 99-22

                                                                                                                                  Jack Franks Job Killing Tax Plan

Representative Jack Franks, (D-Woodstock) filed HB 4300 on Thursday of last week.  Representative Franks provided a copy to IRMA, IMA and the Chamber asking us to keep it confidential and discuss any concerns with him.  Additionally, while Rep. Franks has commented on the floor about closing corporate loopholes, incorrectly including the vendor collection allowance, he assured IRMA that he would not file any legislation.  Despite these assurances, last Friday, without the discussion he claimed to seek, Rep. Franks filed HB 4300 that includes reducing the vendor collection allowance in some instances and eliminating it in others.  It also includes the elimination of many economic development tools that might appeal on the “populist” front but would actually do grater economic harm to Illinois.  Below we have provided a list of the “reforms” included int he legislation with some estimated impacts.

Reduction or Elimination of Reimbursements Page Numbers(s) IMPACT
Reduces the Retailers Vendor Collection Allowance 468-550 $90 million
Reduces or Eliminates other Vendor Discounts $47.80 million
·         Cigarette 565-587
·         Hotel 587-595
·         Motor Fuel 595-605
·         Telecommunications 605-610
·         Liquor 611-617
Reduction or Elimination of Tax Incentives
Eliminates the sales tax exemption for print ink 617-657 $32 Million
Eliminates the sales tax exemption for online booking 659 $9 million
Eliminate foreign & domestic dividend deduction 69 $235 million
Eliminates Single Sales Factor 124-125 $150 million
Decouple from the federal Qualified Production Deduction 37 $65 million
Repeal the non-combination rule 211 $20 million
Eliminates the continental shelf exemption 24-268 $25 million
Eliminate Enterprise Zones after bill becomes law 462-468
Eliminate the E-10 incentive 440-462 $120 million
Eliminates the New Market Development Program 24 $3.8 million
Eliminates the rolling stock exemption 398-440 $74 million
Eliminates the waters’ edge “offshore tax haven” 173-177 $108 million
Eliminates the rail carrier sales tax exemption 345-398 $3 million
Health insurance claims assessment act (Michigan) 14-24 $50 million
Caps the film tax credit at $20 million 661-662 $25 million
New or Increased Tax Incentives
Research & Development tax credit (permanent, 50% base) 663-697
Merge the MPC into the MME (permanent) 697-750
New tax incentive for data centers 757-831
Depreciation for small businesses (<$10 million gross sales) 47-173
Angel investment tax credit (5 year extension 2021) 750-757 (prev. $10) $20 million
Tax amnesty period (Oct 1, 2016 – Nov 8, 2016) 222 $25 million
Reduce LLC filing fees 237-240
State Spending
Increase lottery revenues by up to $1 billion 662-663 $1 billion
Cut the LGDF by 10 percent 177-217 $127 million
Eliminates DCEO 14-Feb $45 million GRF
$771 million other
Eliminate local government official’s stipend 224-237 $5.2 million
Reform OT at the Department of Corrections 922-935 $37 million
Decouple university procurement from CMS $100 million
Managed care for wards of the state 892 $25 million
Reduce care coordination fees (50 percent move from ACE/CCE) $30 million
Durable medical equipment supplies 853 $30 million
Medicaid Savings 888 $160 million
Federal funds pursuant to ACA 888-891 $200 million
OIG savings pursuant to SB 788 912-921 $21 million
Medicaid redetermination 892-897 $53 million
Nursing home audits pursuant to SB 788 887 $40 million
Medicaid federal revenue cost reduction 897-912 $75 million
Eliminate salaries, per diems,-Boards/Commission 268-346 268-346 $3 million
Reduces mileage reimbursement state employees 659-661 $10 million
TOTAL REVENUES $2,839,761,000
TOTAL POTENTIAL ADDITIONAL REVENUE $1,063,000,000
TOTAL $3,902,761,000

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This Week in Springfield – 99-21

IN THIS ISSUE:

CHICAGO PROPERTY TAX SHIFT
RETAIL DISCOUNT, HEALTH INSURANCE TAX & OTHER ANTI-JOB PROPOSALS
IRMA’S ANNUAL LUNCHEON

This Week In Springfield, IRMA testified in opposition to a legislative effort by the City of Chicago to shift the vast majority of a $550 million property tax increase onto City employers. Additionally, retailers were once again shown a complete lack of respect as the Retail Discount/Vendor Collection Allowance once again came under assault.

CHICAGO PROPERTY TAX SHIFT

During his budget address Tuesday morning, City of Chicago Mayor Rahm Emanuel proposed the largest property tax increase in Chicago history – $550+ million. The Mayor intends to use the revenues to make pension payments as well as close some of the City’s structural deficits. The City has reached a critical point and steps must be taken. Unfortunately, the Mayor’s proposal would shift the vast majority of this tax increase onto the backs of employers in the City. In order to do this, however, the Mayor must gain the approval of the General Assembly and either Governor Bruce Rauner’s signature or the super-majorities in the Assembly necessary to override a gubernatorial veto.

While a specific proposal has not yet been introduced, the House Revenue & Finance Committee held a subject matter hearing at which the Deputy Mayor of the City of Chicago, Steve Koch, presented the City’s case for the property tax increase and shift.

During his testimony, Mr. Koch noted that the city’s motivation is to protect the neediest residents of the city from the impact of this property tax increase. In order to do so, the Mayor wants to amend state law to change the homestead exemption to allow Cook County to hold all households under $250,000 in value from experiencing any tax increase. Those above that amount would still experience an increase but it would still be a smaller increase than if no change was made.

When the Mayor delivered his budget address, he cited the City’s “thriving business district” as proof that employers could afford to shoulder more of the burden. Mr. Koch built on that theme claiming the City has the fastest growing business district in the nation. While a clever attempt to justify their proposed tax shift, it fails on a number of levels.

First, Chicago employers already pay more than their fair share of property taxes. Under the classification system, which only Cook County has, employer property is assessed at 2.5 times the level of residential property. That means employers are paying their share as well as part of the residential share.

Second, in a further effort to mask the impact of their proposal, proponents claim the City has a lower tax rate than many other suburban locations. This is true but ignores the fact that due to the classification system, employers in the city pay FAR more in real dollars than their peers in the suburbs surrounding Chicago. Employers measure impact by actual expenses.

Third, the Mayor’s proposal does not just apply to the central business district. Every employer in every neighborhood of the city would carry the same burden. The effect would be to further hollow out neighborhoods and make it even more difficult to attract development to city neighborhoods. The progress made on food deserts during the Mayor’s first term will be reversed. Neighborhoods hungry for development will continue to struggle.

Fourth, the “Great Property Tax Shift” is not occurring in a vacuum. City employers are already struggling with the effects of an $10 minimum wage which will climb to $13, the highest sales tax in the nation, plastic bag ban, numerous permit and license fees the city has consistently raised, and the city’s well-earned reputation for excessive regulation. This does not include additional labor mandates (paid leave, scheduling, etc.) that the City is seriously considering imposing on employers.

There are reasons that over the last five years, the number of business taxpayers in Cook County have steadily fallen while those in the surrounding counties have increased substantially. The classification system is one and a complete lack of regard for employers is another. Assembly approval of this expansion of Cook County’s classification system will further erode economic development in the city and further stain Illinois’ economic reputation. The City will continue to struggle with the chronic unemployment that plagues most of its neediest neighborhoods.

If the city is going to impose a property tax increase, no property owner should be spared since all benefit from the services funded by the increase. The inequities of that system should not be made worse. Further, spending restraints must be imposed and the City must be saved from itself in terms of their propensity for imposing additional costs on employers. If Chicago is the economic engine of Illinois, then state government has a direct interest in ensuring Chicago government does not completely wreck the Chicago economy.

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RETAIL DISCOUNT, HEALTH INSURANCE TAX & OTHER ANTI-JOB PROPOSALS

As the state faces its own structural budget disaster, some continue to rely on gimmicks as opposed to enacting real tax and spending reform. Sponsored by Rep. Jack Franks (D- Woodstock), HB 4300 proposes reducing the Retail Discount/Vendor Collection Allowance by over 57% from 1.75% to 0.75%. It continues to ignore the fact that the Discount is a reimbursement to retailers for the day-to-day costs they experience while serving as the state’s sales tax collectors and remitters.

In addition to the disrespect shown specifically to retailers, HB 4300 impacts Illinois employers of every type including retailers, manufacturers, transportation companies, etc. It also impacts Illinois consumers through more costly health insurance and higher prices at the gas pump.

IRMA will provide its members with a comprehensive overview of the legislation.

OCTOBER 1st

IRMA’s Annual Luncheon is Thursday, October 1st at the Palmer House Hilton in Chicago. Festivities start with a reception at 11:30 a.m. and the luncheon at Noon. We are pleased the Illinois Comptroller Leslie Geissler Munger will keynote sharing her unique insights as her office sits at the crossroads of the state’s budget crisis. We will also recognize the 2015 Illinois Retailer of the Year. Limited seats remain. Reserve your spot here.

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