April 16, 2010—Issue 11
Pension Reform Bill Signed by Governor
SB 1946, sponsored by Senate President John Cullerton (D-Chicago) and House Speaker Michael Madigan (D-Chicago) was signed into law this week by Governor Pat Quinn. The measure creates a two-tiered pension plan for newly hired state and local government employees, including teachers. Sponsors of this bill indicated in committee testimony that further pension changes affecting policemen and firemen may be forthcoming before the end of the Spring Session. There were also rumors that further revisions to SB 1946 may be forthcoming in a “trailer bill” at some point this spring but Speaker Madigan, President Cullerton and the Governor all indicated this week that would not happen. A link to SB 1946 is here: click here
A summary of the key pension system changes in SB 1946 are also listed below:
· Affects pensioners in the State Employees Retirement System, the Teachers Retirement System and the State Universities Retirement System.
· Applies only to people hired after the bill goes into effect in January.
· Requires an employee to be 67 years old with 10 years of service in order to qualify for full benefits. A person could retire at age 62 with 10 years of service, but with a reduction in benefits of 6 percent per year.
· Caps the salary used to determine benefits at $106,800.
· Bases benefits on the highest average salary earned during eight consecutive years of the last 10 years of service. Currently, the benefit is based on four years of service.
· Stops the compounding of annual cost-of-living benefit increases; those increases would be based on 3 percent or one-half of the consumer price index, whichever is less.
· Limits participation in the “alternative formula,” which provides enhanced benefits for high-risk state jobs, to correctional officers, state police and state firefighters.
· Does not allow a person to draw a pension from one system while working a full-time job covered by another pension system. Pension payments would be suspended during such a period.
Department of Revenue Tax Rulemaking Information
The Department of Revenue has recently adopted one new administrative rule and has proposed one new rule. The first adopted rule change amends the Income Tax (86 Ill Adm code 100; 33 Ill Reg 17289), effective 3/12/10. The amendment allows taxpayers to avoid being charged penalty fees if they make good faith efforts to compute their tax liability for tax shelter transactions plus interest to pay their liability after determination by DOR rather than within the voluntary compliance period. The applicable voluntary compliance period is from 10/15/04 through 1/31/05. The new rule change can be accessed at this link starting on page 17289: click here
The second proposed administrative rule amends the Retailers’ Occupation Tax (86 Ill Adm Code 130; 34 Ill Reg 4610) and affects the various exemptions from the tax and the manufacturer’s purchase credit. The proposed rule changes can be accessed at this link starting on page 4610: click here
Other Recently Released Reports
The Commission on Government Forecasting and Accountability (COGFA) has released their “FY 2011 Capital Plan Analysis”. A link to the report can be found here: click here
The Joint Commission on Administrative Rules (JCAR) 2009 Annual Report has also been released and can be accessed at this link: click here
And Finally…
The Committee Deadline to hear all bills in their opposite chamber of origin is next Friday April 23rd. All Senate Bills currently pending House committee approval and all House Bills currently pending Senate committee approval must be heard by next Friday’s deadline. Final bill action will then shift to the full House and Senate in the remaining two weeks before the tentative May 7th Adjournment. Budget negotiations will also kick into high gear as the Governor and the four caucus leaders begin meetings in an effort to hash out a state fiscal plan. Governor Quinn remains committed to passage of his 1% surcharge to raise the personal and corporate income tax and has indicated a willingness to surpass the May 7th adjournment date, if necessary, to secure its final passage. Skepticism abounds as to whether the votes to pass this tax increase can be found during an election year and TFI will keep you updated as we head into the final stretch…..stay tuned!
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