as of May 24, 2012
Illinois Senate considering freeze on municipal share of the State’s income tax
We have been informed by our legislative consultant that the Illinois Senate Democrats are supporting a budget proposal that would freeze the municipal share of the State’s income tax at current levels. If this proposal is ultimately successful, communities could lose out on millions of dollars (in aggregate) of income tax revenue. IGFOA members may wish to consider whether or not to contact their legislators to weigh in on this proposal. Read more at IML . . .
IGFOA Members – Our legislative consultants have advised us (see below) of pending legislation that will likely be of concern to many organizations. Please review the information below and consider whether or not to advise your elected officials and/or contact your legislators.
Speaker Madigan has filed three amendments to HB 3637, each raiding the Personal Property Replacement Tax Fund to fund Teacher's Retirement System. It appears that Madigan's amendments provide 3 options to the GA for TRS fundinG. The first amendment removes $536,379,100 from the PPRT Fund to the retirement system but exempts any funds being removed from Chicago School system; the 2nd amendment takes $982,356,435 from the PPRT and allocates the money to TRS but once again exempts Chicago School system from the raid; and the 3rd amendment allocates the entire PPRT fund to TRS.
Among the bills IGFOA is monitoring in the Illinois General Assembly that have seen action in March are:
PTELL Limits: The Senate unanimously passed SB410 which changes the definition of “aggregate extension base” under the Property Tax Extension Limitation Law. The intent behind this amendment is to base the tax cap on what the taxing district could have levied in the prior year if it had levied at the maximum rate rather that what it actually levied. This change will allow taxing bodies that are subject to the tax cap to reduce their tax rates in a given year without jeopardizing their taxing authority for future years. Passed Senate and Placed on House Calendar Order of First Reading 3/29/2012
Competitive Sale Bonds Only An amendment of SB2978 would require that, “bonds sold by a governmental unit shall be sold pursuant to notice of sale and public bid”. The amendment would limit exercise of home rule power. Referred to Senate Local Government Subcommittee on Amendments 3/27/2012.
Sales Tax Rebate Agreements: The House Revenue and Finance Committee approved an amendment to HB3859 which requires municipalities to file reports concerning sales-tax rebate agreements. The bill would require municipalities and counties to file a report on rebate agreements within 90 days for existing agreements and within 30 days after a new agreement is executed. Held on House Calendar of Second Reading 3/28/2012.
Extend Non-Home Use of Sales Tax Proceeds: The House approved HB5362 that provides that the corporate authorities of a non-home rule municipality may, until December 31, 2020 (now, December 31, 2015), use the proceeds of its sales taxes for expenditure on municipal operations, in addition to or in lieu of any expenditure on public infrastructure or for property tax relief. Passed House and Placed on Senate Calendar Order of First Reading for March 30, 2012. 3/29/2012.
SB 2073 described in the February 21, 2012 has not seen any action in the House during March. Sponsor State Senator Terry Link announced that he would not move the bill as amended through the Senate (read letter to IML). A similar bill,
SB2862, sponsored by State Senator Martin Sandoval is in the Senate Revenue Committee.
as of February 21, 2012
Please be aware that the Illinois House approved SB 2073 with amendment #6 today: “Amends the Property Tax Extension Limitation Law in the Property Tax Code. Provides that, if the total equalized assessed value of all taxable property in the taxing district for the current levy year (excluding new property, recovered tax increment value, and property that is annexed to or disconnected from the taxing district in the current levy year) is less than the total equalized assessed value of all taxable property in the taxing district for the previous levy year, then the extension limitation is (a) 0% or (b) the rate of increase approved by voters (instead of the lesser of 5% or the percentage increase in the Consumer Price Index during the 12-month calendar year preceding the levy year or (b) the rate of increase approved by voters). Effective immediately." The Senate approved this bill, though not as amended back in April. The General Assembly found this "does not create a State mandate". The bill passed 74-39-2. Watch for updates from the IGFOA Legislative Committee.
as of November 11, 2011
The General Assembly concluded the regularly scheduled Fall Veto Session on Thursday, November 10. The House is scheduled to return on Tuesday, November 29, 2011.
CPPRT-SB 2147 passed and sent to Governor
The senate voted to pass SB 2147 which would divert CPPRT (Corporate Personal Property Replacement Tax) from locals to pay for the offices of ROE for the current fiscal year by a vote of 38-16. The bill will now head to the Governor's desk, where his administration first proposed the diversion. Read more at IML . . .
as of November 9, 2011
Anderson Legislative Update
CPPRT-SB 2147 was passed out of the Senate education committee and will be called for a vote tomorrow in the Senate.
As reported earlier the House managed to narrowly pass SB 2147 that will allow a one year diversion of the local personal property replacement tax to pay regional school superintendents. The bills final amended was limited to only school superintendents (other county official stipends were removed) and has a provision that will sunset the diversion at the end of the current fiscal year. The legislation also creates a task force to look at the office of regional school superintendent and make recommendations on their duties, possible mergers or even elimination of superintendents. These changes limiting the scope of the legislation secured enough votes to pass the bill over the objections of all local governments. New calculations estimate that the one year diversion will be approximately .008% of a local governments share of PPRT funds.
Pension Reform- A few pension bills have been moved out of committees in both the House and the Senate. SB 512 which would affect the future benefit accruals of most state employees and some Chicago and Cook County employees barely made it to the House floor but it is still up in the air if this bill will receive a floor vote as support for it is currently thin (This bill does not affect IMRF, SLEP or the downstate police and fire pension funds). Also today the Senate Pensions and Investments Committee approved two bills (HB 3813 and HB 3815) that intend to close the loopholes that have allowed certain employees to inflate their government pensions through their service with a labor union. Neither of these two bills affects IMRF.
Gaming- The revised gaming plan which failed to receive enough votes and has been placed on postponed consideration. There has also been talks circulating of the General Assembly having to convene a special session in order to finish all of its business. They have yet to announce the date(s) but word is legislators may be back in Springfield 11/21/11.
as of November 9, 2011
Anderson Legislative Update
House votes on SB2147 ROE/CPPRT bill- The bill failed with 70 yes
votes and 43 no votes. But a motion was made to reconsider the bill
and received 74 votes and passed out of the House.
as of November 8, 2011
Anderson Legislative Update
Subject: HB 3828/SB 2147
In addition to HB 3828- which would divert PPRT funds away from locals to pay for the salaries and expenses of regional school superintendents, Representative Mautino has recently filed an amendment to SB 2147. Amendment #7 to SB 2147 is identical to HB 3828 which only received 59 votes in the House two weeks ago.
As you are aware, amending a Senate bill in the House at this stage of the game could possibly speed up its passage. If the amendment passes in the House, it only needs a concurrence vote in the Senate. This can be accomplished in a single day vs. multiple days as would be the case if HB 3828 were adopted in the House and then sent over to the Senate. Please contact your legislators and urge them to vote against any bill containing this diversion language.
as of October 26, 2011
Additional Property Tax Levy Limitations Considered during Illinois General Assembly Veto Session
Yesterday the Illinois House Revenue and Finance Committee approved a bill that will significantly limit local property tax revenues for governments subject to the Property Tax Extension Limitation Law (PTELL), commonly referred to as property tax caps, HB 3793.
(Franks, D-Woodstock) would limit taxing districts to zero growth if property values are declining overall. Specifically, it provides that, if the total equalized assessed value (EAV) of all taxable property in the taxing district for the current levy year is less than the total EAV of all taxable property in the taxing district for the previous levy year, then the extension limitation is (a) 0% or (b) the rate of increase approved by voters.
The bill was approved on a 6-1-1 vote in the committee and was sent to the full House of Representatives for consideration. A vote will likely be taken on the bill today (Wednesday) or Thursday.
Resources for IGFOA members to help elected officials understand this bill can be found at:
IASBO talking points: http://www.iasbo.org/files/public/HB3793_SB2073Call2Action-2.pdf
IAPD legislative alert: http://www.ilparks.org/
IML update: http://iml.org/page.cfm?key=7472
Status and text of HB3793: http://www.ilga.gov/legislation/billstatus.asp?DocNum=3793&GAID=11&GA=97&DocTypeID=HB&LegID=61913&SessionID=84
CALCULATE THE IMPACT TO YOUR GOVERNMENT
as of June 2, 2011
Anderson Legislative Update
Although the LGDF was left untouched in SB 335, House Amendment 2, pp. 108-150, there was a change to the Personal Property Replacement Tax (PPRT) Fund. Its estimated that about $15 million were taken from the fund but reduction was framed as a change in how several county costs are paid i.e. Salaries of County supervisors of assessment, local assessment officers, public defenders, county treasurers, state's attorneys, coroners, county clerks, recorders, auditors, and sheriffs. The payment they had received from the state General Revenue Fund, will now come out of the PPRT fund. Also of note it that while the previous law made these payments on a continuing basis and many of them are now "subject to appropriation" meaning the legislature will have to annually appropriate the money. SB 335 as well as the many other budget bills will be sent to the Governor to wait for his approval.
as of May 31, 2011 11 pm
Anderson Legislative Update
As we approach the final hours of the spring session the action is picking up in the Statehouse. The House has adjourned with nearly an hour to spare after rapidly moving through many of the large issues that were left on the table and even managed to find enough votes to pass the workers compensation reform package (HB 1698) that failed earlier in the week. The Senate decided to go along with the budget that was sent over by the House, which was $1 billion less their there own proposal. Also it seems that local governments will not suffer any reductions to the LGDF as the BIMP Bill (SB335) keeps the fund intact. There is still an hour left under the dome and we will send a final report as well as the end of year report which will include your user file later this week. Below is a highlight of a few things that have been sent to the Governor's office and some of the issues still left on the table.
Workers Comp-HB 1698-Passed Both Chambers
Below are some of its Highlights:
-estimated to yield in excess of $500 million in annual savings.
- (1) a reduction in the medical fee schedule of 30%, (2) application of the AMA permanent disability standards; (3) creation of employer health care provider networks; (4) strengthened utilization review; (5) reduction in carpel tunnel syndrome awards; (6) appointment of new workers compensation arbitrators who must be approved by the Senate and held to judicial ethics standards; and (7) a new rebuttable presumption for no compensation if injured while under the influence of drugs or alcohol.
Gaming BIll-SB 744-Passed Both Chambers
FOIA Reform-HB 1716-Passed Both Chambers
as of May 30, 2011
Anderson Legislative Consultants forwarded statement released regarding Pension Reforms:
STATEMENT REGARDING PENSION REFORM
We are absolutely committed to reforming Illinois’ public pension system for current employees. It must be done to stabilize our systems and address long term financial issues for both the public employee pension systems and state government.
We believe passage of legislation addressing this issue is essential to the state’s well being.
It was made very clear during the May 26th hearing in the Personnel and Pensions Committee that both those who support pension reform and those who are opposed to Senate Bill 512 acknowledge we have a problem and something must be done.
Our goal is to enact reforms to our pension systems that provide a long term solution for both those who are members of the pension systems and those who fund them.
We will convene meetings over the summer to address the issues and concerns that have been raised and work toward a solution in this year’s Fall Veto Session.
-Illinois House Speaker Michael J. Madigan
-Illinois House Republican Leader Tom Cross
-Tyrone Fahner, President, Civic Committee of the Commercial Club of Chicago
Bill Impacting IMRF, Police and Fire Funds Approved by Committee
SB 1831 was amended by House Amendment 1 (Representative May, D-Highwood) and approved by the House Executive Committee on Wednesday, May 25. The bill includes the same language as originally introduced by Representative May within HB 3474 as well as some other provisions that were introduced in legislation requested by IMRF.
EDUCATION REFORM BILL SENT TO GOVERNOR
SB 7 (Lightford, D-Maywood) contains education
reform provisions regarding teacher tenure, teacher dismissal, teacher seniority, teacher strikes, and
mandatory school board member training. A comprehensive summary of the bill can be found at: http://www.iasb.com/govrel/sb7analysis.pdf.
CHANGES TO LOCAL GOVERNMENT PUBLICATION REQUIREMENTS SENT TO GOVERNOR
SB 1686 passed the House unanimously on May 26, 2011 with a unanimous Senate concurrence on May 28, 2011. The bill as passed contains numerous changes to newspaper publication statues as the result of continued negotiations with the Illinois Press Association.
The Public Funds Statement Publication Act is amended to clarify that, in circumstances where an audit has been performed, publication of an annual financial report is not required. This Act applies to units of local government other than schools and municipalities (which require the publication of financial statements under their respective codes).
See all details of SB1686
as of March 24, 2011
Delays and Reductions in LGDF Receipts
The IGFOA Legislative Committee encourages you to learn about the delays in payment of the local share of income tax. The Illinois Municipal League provided the an update today at http://iml.org/page.cfm?key=4783 explaining the factors that are dragging down LGDF receipts and projections. Per IML, “We predict that LGDF revenue that was $79.38 per capita last year (MFY 2010), will fall to somewhere between $75 and $79 per capita this year (MFY 2011), and will fall further to about $73 per capita next year (MFY 2012). In addition there are legislative proposals under serious consideration to reduce LGDF by 30% (to $51 per capita) or by 100%!” IML also explains (see below) how the increase in the income tax rate and LGDF formula were not well synchronized in the legislation enacted this January.
START TIME FOR LOWER LGDF PERCENTAGE DISTRIBUTION
The increase in Illinois regular income tax rates from 3% to 5% on individuals and from 4.8% to 7% on corporations took effect on January 1, 2011 and the LGDF distribution formula was reduced from 10% to 6% on revenue from individuals and from 10% to 6.86% on revenue from corporations on February 1. The income tax increase was not signed by the Governor until January 13, so most individuals and corporations paying income taxes to the state in January did so at the old, lower rates. Based on March 2011 receipts, it appears that more than a few employers also withheld income tax at the old tax rates in February. The net result of this delay in remitting the higher tax rates is that the per capita distribution for February, March and until perhaps June will drop by up to 40% compared to the same month in the prior year. That loss will be eventually be paid back as taxpayers fix the shortfall by paying more when they file their income tax returns after January 1, 2012. Some corporations and a few individuals could "true up" these underpayments earlier as they make estimated tax payments at the end of each quarter.
IGFOA understands that the Illinois Department of Revenue is working with the Governor’s Office due to concern about larger than expected decrease in LGDF allocations in February and March and IDOR is not currently displaying distribution information for February and March at their website. The IGFOA Legislative Committee will continue to monitor this conundrum.
as of January 13, 2011
SB2505 enacting the increased State of Illinois income tax rates, was signed into law by Governor Quinn as Public Act 96-1496. The new income tax rates are now in effect.
From Illinois Department of Revenue: Questions and Answers for Employers about implementing the increased State income tax
What do I do if I already paid a January payroll and withheld at the 3 percent rate?
It is up to you and your employee.
- Your employee may request an additional amount withheld to catch up, and if you agree, you can withhold the additional amount from a future paycheck. However, you are not required to do this.
- As always, your employee may adjust his withholding amount by completing a new Form IL-W-4, Employee’s Illinois Withholding Allowance Certificate.
When the employee files his 2011 tax return next year, he may receive a smaller refund or owe a little more if the withholding is not caught up.
When must I begin withholding at the 5 percent rate?
You must immediately begin to withhold at the 5 percent rate.
For more information, see http://www.revenue.state.il.us/Businesses/TaxIncrease.htm
as of January 12, 2011
The Illinois General Assembly passed SB2505 to raise income tax rates. The bill requires the Governor's approval and would be effective as of January 1, 2011.
The current income tax rates are 3% for individuals and 4.8% for corporations. The legislation includes a number of increased tax rates:
- In 2011 - 2014, the individual tax rate increases from 3% to 5%; and the corporate rate increases from 4.8% to 7%:
- In 2015 - 2024, the individual rate is 3.75%, and the corporate rate is 5.25; and
- In 2025 and thereafter, the individual rate is 3.25%, and the corporate rate is 4.8%.
IML reports on changes to LGDF Distributions:
The legislation does not provide municipalities with any share of the increased taxes. Instead, the legislation seeks to maintain the shared revenues at their current levels. The distributions to LGDF are as follows:
- From February, 2011 through January, 2015, the distribution is 6% of the net revenue received from the 5% individual rate and 6.86% of the net revenue received from the 7% corporate rate;
- From February, 2015 through January, 2025, the distribution is 8% of the net revenue received from the 3.75% individual rate and 9.14% of the net revenue received from the 5.25% corporate rate; and
- From February 2025 and thereafter, the distribution is 9.23% of the net revenue received from the 3.25% individual rate and 10% of the net revenue received from the 4.8% corporate rate.
A potential problem is that this distribution scheme fails to account for a situation where the income tax rates could be reduced by State spending limits. The legislation attempts to maintain the status quo for LGDF distributions. It gives municipalities a lower distribution percentage of a higher tax rate in an effort to maintain the same level of funding. The legislation also provides for a mechanism for the tax rates to revert to current levels if the State overspends, but it does not provide for a mechanism to restore the LGDF distributions to their current levels. Therefore, if the tax rates fall due to the State's overspending, then municipalities will have a lower distribution percentage of a lower tax rate. For example, if the individual tax rate reverts to 3%, then instead of receiving 10% of the 3% rate (under the status quo), municipalities would receive only 6% of the 3% rate. In that case, municipalities will lose out on LGDF money.
Read more from the Illinois Municipal League: http://legislative.iml.org/page.cfm?key=6661
as of January 11, 2011
prepared by Anderson Legislative Consultants
Lawmakers are down to the final hours of the 96th General Assembly and many high profile items remain on the docket.
* Income Tax Package: The latest proposal to emerge includes increases in both the individual and corporate tax rate. Under the new proposal, the individual rate would increase from 3 to 5 percent while the corporate rate would rise from 4.8 to 7 percent. After four years a portion of the income tax rate would disappear leaving final tax rates at 4 and 5.6 percent respectively. This version, which has still not been filed to a bill, represents a decrease from the original proposal that sought to increase the corporate rate to 8.4 percent which would have been the highest rate in the US when including the replacement tax.
However, in order to decrease the corporate rate, the Governor and lawmakers are proposing the elimination of the Net Operating Loss provision in Illinois law.
* Workers’ Compensation: The business community is supporting the final Workers’ Compensation bill contained in SB 1066. It includes wage differential, physician choice, drugs & alcohol language, utilization review and a 15 percent across the board cut in the Medical Fee Schedule. Opponents include trial lawyers and labor unions.
The 96th General Assembly must end before Wednesday at 12:00.
Update as of January 5, 2011
prepared by Anderson Legislative Consultants
The General Assembly's lame duck session convened this week (House convened Jan 3rd, Senate convened Jan 4th) and it has been extremely busy with small and large bills alike being worked on. That said some of the biggest issues of the year have yet to be presented and details are still being hashed out behind closed doors. Below are just a handful of the issues being worked on during this lame duck session.
Income Tax Increase
The Governor and Democratic leaders met this week and are expected to reach a deal sometime soon on a new State income tax increase proposal. However the size, duration and use of funds have not been worked out and the devil is in the details.- There has also been talks about expanding other taxes as well including expanding the sales tax to include services, Increasing MFT and a $1 cigarette tax
Workers Compensation Reform
Both the House and the Senate have held numerous committee hearings and meetings to deal with this issue. Though we have yet to see a bill number for what possible vehicle either chamber will use the Senate released their draft version today (if you did not receive a copy and would like one please contact us). The House moved SB 1066 out of Executive Committee today and word is this could be a possible shell bill.
Employer groups have advocated for a revised lower fee schedule, adoption of the AMA's schedule for permanent disability, allowing employers to select treating physicians, and excluding coverage for injuries resulting from drug and alcohol use.
House Joint Resolution Constitutional Amendment 62- Limits to Pension Benefit Increases
Speaker Michael Madigan has proposed a constitutional amendment that would require a three-fifths vote of the General Assembly to increases any benefit under any pension or retirement system of the State, including any unit of local government or school district. It would also require a local ordinance, resolution, or other action of any unit of local government or school district to pass by a three-fifths vote if the action would increase a benefit under any pension or retirement system for officials or employees of that unit of local government or school district. There is some confusion on how the terms of this amendment would be applied and interpreted. This proposal is awaiting final action in the House, and if passed, would have to be approved by the Senate, and ultimately approved by Illinois voters in 2012.
Other Bills of Note
SB 2485 passed House but failed in the Senate; however the bill had enough votes to be placed on the order of Consideration Postponement which means the Senate sponsor will have a second bite at the apple, most likely tomorrow, to try and push for its passage.
Affiliate Nexus Legislation- The “Amazon.com Bill”
HB 3659 Senate Amendment 3. Nicked named after the laws largest target, this legislation would require retailers that have contracts with “affiliates”-independent persons within the state who post a link to an out-of-state business on their website and get a share of revenues from the out-of-state business, to collect the state’s sales tax. Currently they exist in New York, Rhode Island, North Carolina, and Colorado. Proponents of the measure claim it could raise as much as $150 million dollars annually while others including the Tax federation say such laws in other states have produced no increase in revenues and in some cases have actually produced a decrease. Bill has passed the Senate and is now in the House.
IGFOA Joins Pension Fairness Coalition
At the February 26, 2010 meeting, the IGFOA Executive Board agreed to join the Pension Fairness Coalition. Monitor the Coalition's progress at http://www.pensionfairness.org/index.html