IL POLS LOOK TO SLASH BENEFITS OF TAX REFORM
The Governor and four legislative leaders met earlier this week to discuss the upcoming fiscal year budget.
The post-meeting interviews by the Governor and the two Republican leaders with the press focused on the need for a revenue estimate as an essential, and initial, part of the budget process.
Speaker Madigan did not speak with the press after the meeting. However, Senate President Cullerton spoke with the press after the meeting. The Senate President doesn't agree with the Republicans that there is a need for an agreement on a specific revenue number as a prelude to finalizing a budget agreement.
In response to questioning about the possible sources of additional revenues to finalize the budget, Senate President Cullerton indicated that "there are some things like federal tax law changes where we could make some modifications to bring in additional revenue."
As a result, the Chamber is predicting that as part of a budget proposal from the Democrats, we may see an attempt to decouple from various business friendly aspects of federal tax reform that flowed through to Illinois.
So what was Cullerton referring to in the post-meeting interview? During his interview, Cullerton provided very little details. However, we could anticipate an attempt to decouple from 100% expensing provision in the recent federal tax reform law. According to Illinois Department of Revenue estimates, 100% expensing results in an Illinois income tax revenue reduction of between $113 and $133 million for the current fiscal year, FY 2018, and between $365 and $406 million for FY 2019 - the fiscal year beginning July 1.
We could also see an attempt to obtain additional one-time revenues by taxing the deemed repatriated income taxed at the federal level. In the case of corporations, most of this income is not subject to Illinois income taxation because of foreign dividends subtraction. This is something Senate Revenue Chairwoman Toi Hutchinson has long fought to remove.
In order to tax this income at the state level, there would need to be a retroactive repeal of the subtraction to pick up the income subtracted during the 2017 tax year. The Chamber does not have an estimate of the potential fiscal impact of such a change, but expect this to be rather large.
Attempting to tax repatriated income would be complicated and controversial. The Illinois income tax rate on some of the repatriated income would be higher than the federal tax rate. The issue of retroactivity would likely be litigated.
At the federal level, taxpayers are granted the option of making payments on the repatriation tax over 8 years. Illinois would likely want all of the revenue upfront.
We will continue to monitor any attempts to increase revenue on the backs of businesses.
HOUSE HOLDS HEARING ON AUTONOMOUS VEHICLES
On Wednesday the Illinois House Transportation Vehicles and Safety Committee held a subject-matter only hearing on the topic of autonomous vehicles. The hearing consisted several panels ranging from automobile manufacturers, trade associations, and government entities. Benjamin Brockscmidt, vice president of policy and executive director of the Chamber's Infrastructure Council testified in support of Illinois developing a technology neutral policy toward autonomous vehicles. Additionally, the Chamber highlighted that this technology could help compliment existing transportation networks including transit. The Chamber believes that much of the policy regarding AVs needs to come from the federal level but that we as a state risk developing policies that prohibit this technology not only from being used here, but also prohibit Illinois companies from competing in this area.
Others testifying in support included automobile manufacturers Ford and General Motors, representatives from the blind, the trucking industry, manufacturing industry, and the Department of Transportation.
Opponents to the hearing included the Illinois Trial Lawyers Association (ITLA) and the American Association for Justice. ITLA's concerns mainly focused on the need for arbitration clauses in vehicle purchases and having the automobile manufacturer liable for any accident. Whereas the American Association for Justice mainly focused on why the Illinois should not rush into being a leader on autonomous vehicles.
The hearing also heard testimony from representatives from the motorcycle community (ABATE). Much of their concerns were legitimate, however they (motorcycles)
were mainly focused on being included in any final piece of legislation.
We do not expect movement on this issue this year. However, we anticipate hearings on autonomous vehicles to continue throughout the year and into next year. Rep. Mike Zalewski is the point person on autonomous vehicles and has been helpful in shepherding this process along.
The Chamber has been active in autonomous vehicles since last year when we
helped support the passage of a law that would prohibit local units of government from prohibiting autonomous vehicles from operating in local jurisdictions. The enactment of that law was an instrumental first step in precluding a patchwork of laws throughout the state.
The Chamber is leading a coalition of industry leaders in this space. If you are interested in being plugged into the autonomous vehicle debate, please reach out to
Benjamin Brockschmidt.
OTHER BILLS TO NOTE THIS WEEK
HB 4275 (Andrade/Steans) passed favorably out of the Senate Commerce and Economic Development Committee on Thursday. This bill would remove the arbitrary cap on how much fitness clubs can charge in yearly contracts. This bill moves Illinois more in line with 47 other states that have no such cap. The Chamber supports this bill.
SR 1534 (Rose) passed out of Senate Environment Thursday. This is a resolution requiring DNR to compile a report reviewing current regulations for gas pipelines in Illinois and make recommendations. The Chamber is monitoring that resolution.
HB 4508 (Sauer/Clayborne) passed out of Senate Executive Committee Wednesday. This bill
m
odifies the definition of "water or sewer utility" to remove language specifying
water or sewer service provided to 7,500 or fewer customer connections as provided by certain entities. Provides that appraisals of the fair market
value of the water or sewer utility. The Chamber supports.
A subject-matter only hearing was held on Wednesday on HB 4146 (Fine/Steans). This legislation prohibits the modification of a health care plans coverage of a drug during the plan year if the drug has previously been approved for coverage. Chamber opposes this bill.
HB 4743 (Ford/Lightford) passed the Senate Labor Committee Wednesday 15-1-0. This bill amends the Equal Pay Act providing that no employer may discriminate between employees by paying wages to an African-American employee at a rate less than the rate at which the employer pays wages to another employee who is not African-American for the same or substantially similar work on a job that requires equal skill, effort, and responsibility and is performed under similar working conditions.
HB 4572 (Guzzardi/Castro) passed the Senate Labor Committee 10-3-0. This bill amends the Illinois Human Rights Act to redefine "employer" to include any person employing one (currently 15) or more employees within Illinois during 20 or more calendar weeks within the calendar year of or preceding the alleged violation. The Chamber opposes.
HB 1595 (Stuart/Haine) passed the Senate Labor Committee unanimously. This bill provides paid break time for nursing mothers. The Chamber has some concerns with the way the bill is drafted.
HB 5689 (Costello) puts certain state regulations regarding coal mining in line with federal requirements. The bill passed the Senate committee with no opposition. The Chamber supported the bill.
