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Legislative Update: Illinois Municipal League Statehouse Briefing - June 26, 2017

June 27, 2017 | Legislative briefs

Illinois Municipal League Statehouse Briefing
June 26, 2017

The House and Senate returned to the Capitol on Wednesday, June 21, as a result of Governor Bruce Rauner’s proclamation calling legislators into special session to address budget and reform legislation. The House and Senate will convene every day through the end of June with the intent being to approve a budget prior to the start of the new state fiscal year beginning on July 1, 2017.

Illinois Municipal League (IML) staff has and will continue to maintain an active presence at the Capitol during the entirety of the special session to advocate on behalf of municipal interests.

Governor Intends to Veto Emergency 9-1-1 Funding Bill: Your Immediate Action is Requested

IML requests that our members promptly contact the Governor’s Office and urge that he enact SB 1839 into law rather than issue a veto. Because time is of the essence, we request that our members contact the Governor’s Office today by phone at (217) 782-0244 or by e-mail by using the form available via this link.

Governor Rauner has indicated his intent to veto IML-supported legislation that would extend the authority to collect a surcharge on phone bills for 9-1-1 system funding. Under current law, the Emergency Telephone System Act is scheduled to be repealed on July 1, 2017. Without this legislation, state funding for 9-1-1 systems will cease.

SB 1839 (Sen. Cunningham, D-Chicago/Rep. Phelps, D-Norris City) proposes to increase the monthly 9-1-1 surcharge from 87 cents to $1.50 for each network and wireless connection for non-Chicago 9-1-1 systems. Chicago would receive a $5 surcharge if the bill were enacted into law.

The bill was overwhelmingly approved by the House and Senate on May 31, 2017.

If the sunset is allowed to expire, no new surcharge money would be collected as of July 1, 2017. Money will, however, continue to be dispersed by the state to local 9-1-1 systems through the FY2017 lapse period in August. While the Governor has indicated support for an extension of the surcharge, his anticipated veto will be based upon the surcharge increases included within the bill. In a letter from the Governor’s Policy Advisor for Energy and Environment to the Statewide 9-1-1 Administrator, Jason Heffley indicated the Governor will sign a “clean” bill that simply extends authority to collect the existing surcharge. An extension of this critical surcharge authority may be amended onto SB 1381 in the House.

In addition, the bill proposed to extend the sunset for the Cable and Video Competition Act and provides that AT&T may be relieved from the mandate of providing land line services. Without a sunset extension, the Act will completely expire on July 1, 2017, and will need to be reauthorized through a future legislative enactment.

Once again, IML requests that our members promptly contact the Governor’s Office and urge him to enact SB 1839 into law rather than issue a veto. IML President and Village President of Barrington, Karen Darch, sent a letter to the Governor on June 7, 2017, requesting that he sign the bill into law. The letter is available by clicking on this link. We request that our members contact the Governor’s Office today by phone at (217) 782-0244 or by e-mail by using the form available via this link.

Republican Budget and Reform Plan Includes Provisions Harmful to Local Revenues

Governor Rauner’s special session proclamation specifically referenced a Republican budget and reform legislative package. IML reviewed the bills included within the Republican budget and reform package and, following the direction of our Executive Committee, decided to oppose three of the bills within the package.

IML Executive Director Brad Cole conveyed IML’s opposition to these three bills in a letter sent to the Governor and four legislative leaders last week. In total, these provisions would result in substantial revenue reductions to municipal governments.

Following is a summary of the IML-opposed bills within the Republican budget and reform package:

SB 2217 – LGDF, Sales Tax and Public Transit Funding Distribution Reduction

Local Government Distributive Fund (LGDF) revenue is the portion of state income tax revenue shared with cities and counties. At present, cities and counties receive 8% of all income tax revenue collected by the state. An IML Fact Sheet is available here for more information about LGDF.

SB 2217 (Sen. Brady, R-Bloomington) includes a sunset date that removes LGDF as a continuing appropriation. IML identified this threat, and while raising the issue through our advocacy against it, learned the provision was a drafting error that will be addressed with an amendment.

While our concerns about the removal of the continuing appropriation provision will be addressed, the Republican budget plan would reduce LGDF distributions to cities and counties by 10% beginning in July 2017. According to House Republican staff, the estimated loss to cities and counties would total $130 million in state fiscal year 2018 (beginning July 1, 2017). Using current IML state-shared revenue estimates as a baseline, a 10% reduction equates to a $10 per capita loss for municipalities.

Another provision in SB 2217 concerns a reduction to state-shared sales tax revenue. Beginning in state fiscal year 2018, this bill provides that 2% of sales taxes collected on behalf of municipalities by the state will be transferred to the Tax Compliance and Administrative Fund. This would essentially be a service fee imposed by the state on local governments for the collection and remittance of sales tax revenue owed to local governments.

A third provision in SB 2217 concerns the amount of revenue transferred by the state to the Downstate Public Transit Fund for operating expenses. Current transfers would be reduced from 65% to 55%. There would also be a reduction in the amount of sales tax revenue shared with downstate public transit. The calculation for deposits of these sales tax monies would be reduced from 9.4% to 8.6%. IML opposes SB 2217.

SB 2214 – Corporate Personal Property Replacement Tax (CPPRT) Revenue Diversion

CPPRT was instituted in 1979 to replace a local tax on the personal property of corporations, partnerships and other business entities that was eliminated by the General Assembly at the time. Not all municipalities receive CPPRT revenue, but it remains an important revenue source for many municipalities.

SB 2214 (Sen. Brady, R-Bloomington) includes CPPRT diversions totaling hundreds of millions of dollars. Most of these diversions are carried over from prior years. According to House Republican staff, SB 2214 includes $115 million in diversions during FY2018 for higher education funding purposes. This diversion is on top of diversions being carried over from previous years. IML has consistently advocated against any diversions from CPPRT. IML opposes SB 2214.

HB 4066 – Four-Year Property Tax Freeze

HB 4066 (Rep. Durkin, R-Western Springs) would impose a four-year property tax freeze upon all units of local government. The freeze period would be applicable to tax levy years 2017-2020. According to House Republican staff, this bill provides for a freeze on the rate, not the actual levy. This means that, if a unit of local government increases its aggregate extension due to new construction or higher property values, the new levy will be based on that higher value.

The proposal creates an exemption for costs associated with bonded indebtedness. It does not exempt other costs such as pension contributions and public safety costs, which IML has advocated for in our interactions with the General Assembly. Without all of these exemptions in place, HB 4066 will impair the ability of municipalities to protect the health, safety and welfare of local residents.

Through a petition and referendum process, voters would be allowed to lower levies, raise levies or renew the freeze in increments not to exceed four years. The petition threshold for extending the property tax freeze only requires the signatures of 5% of voters who cast ballots in the last gubernatorial election. A resolution approved by a unit of local government initiating a referendum question regarding whether to continue an existing property tax freeze could be submitted at any time from 2017 through 2021.

The House convened a Committee of the Whole hearing on Friday, June 23, to hear subject matter testimony on the impact of a property tax freeze. A Committee of the Whole hearing occurs when the entire House convenes to focus on a particular issue or issues. IML Board Member and Mayor of Diamond Theresa Kernc and Urbana Mayor Diane Marlin participated on a panel that provided testimony against a property tax freeze. IML opposes HB 4066.

Governor Signs Bipartisan Legislation Addressing Violent Crime

On Friday, June 23, Governor Rauner signed a bill into law intended to provide additional tools to law enforcement and the courts to address violent crime. SB 1722 (Sen. Raoul, D-Chicago/Rep. Durkin, R-Western Springs) will strengthen sentencing guidelines for repeat gun offenders, expand probation eligibility for first-time drug offenders and give the Department of Corrections additional discretion in awarding sentencing credit. The newly-enacted law is now P.A. 100-0003.

Additional Special Session Legislative Activity

The House convened over the weekend (June 24-25) for regular committee hearings as well as Committee of the Whole hearings. On Saturday, June 24, the House held a Committee of the Whole hearing to hear testimony on education funding reform. On Sunday, June 25, the House held another Committee of the Whole hearing to hear testimony on reforms to the state pension systems. A House Committee of the Whole hearing is scheduled for Monday, June 26, to hear testimony on local government consolidation. The Senate has convened each day as well, but most of the hearings have occurred in the House.

As always, IML staff will continue to monitor legislative activity and aggressively advocate on behalf of our membership. Thank you.

Should you have any questions, please contact our legislative team at IMLLegislation@iml.org.

Illinois Municipal League 
Phone: 217-525-1220 
Email: IMLLegislation@iml.org 
Web: www.iml.org 
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The IGFOA thanks the IML for its ongoing commitment to providing the IGFOA with timely and relevant information on legislative issues important to the IGFOA membership.

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