May 28, 2010—Issue 15
Update - Legislature Finishes FY 11’ Budget Plan…..Almost
The Illinois General Assembly reconvened this week in an attempt to finish up the Spring 2010 Legislative Session. They had tentatively “adjourned” on May 7th with the intention to return to Springfield by the end of the month to put the finishing touches on the Fiscal Year 2011 Budget. The House returned on Monday and immediately began moving major pieces of the budget plan. All of the bills listed below would pass by the end of the week except for SB 3514, which was the $4 billion pension borrowing bill that lacked enough support to meet the requisite “supermajority” vote in the Senate for passage. Senate President John Cullerton tentatively adjourned his chamber on Thursday evening and informed them that he would call them back to Springfield if and when additional votes can be secured from the Senate GOP. As an alternative solution, rumors also abound that the House could return and pass the “pension skip” bill, HB 543, which would allow the General Assembly to simply defer this year’s pension payments until January 2011 (currently the payments are made monthly). How the pension funding issue will be resolved is anybody’s guess at this point so stay tuned! TFI from the Capitol will be back next week to highlight some of the other important bills that passed this week as well as to provide further analysis into the budget plan.
Notable FY 11’ Budget Components at This Point
SB 377 – Tax Amnesty
Allows delinquent taxpayers to pay owed back taxes that were accumulated between June 30, 2002 and July 1, 2009 without penalty or interest. The amnesty period will run from October 1, 2010 until November 8, 2010 and the State hopes to generate approximately $250 million to apply to the FY 11’ Budget. SB 377 also allows for the State to sell certain uncollected debt to private collection agencies. A link to SB 377 can be found here.
SB 3660 – Emergency Budget Act
Wide-ranging bill to allow Governor Quinn authority to adjust his executive agency budgets, as needed, and to securitize future tobacco settlement proceeds for an expected $1.2 billion in upfront budget revenue. Would also allow for “inter-fund borrowing” from various restricted state funds to free up approximately $1 billion in budget funds. These loans would have to be repaid, with interest, to their respective state funds at a later date. SB 3660 also includes a few smaller budget savings measures including requiring state lawmakers, constitutional officers and various top agency officials to take 12 furlough days, lowering legislators’ pier diem and mileage reimbursements, reviewing and renegotiating various state agency procurement contracts, and prohibiting cost-of-living increases for state lawmakers and constitutional officers in FY 11’. A link to SB 3660 can be found here.
HB 859 – Budget Spending Proposal
This is the $26.2 billion general fund spending plan for FY 11’ which is $400 million less than the current year’s budget and reflects a 5% across-the-board spending cut for state operations. This budget proposal would leave an approximate $6.5 billion plus structural gap to maintain FY 10’ spending levels thus requiring the borrowing authority in SB 3514 and SB 3660. A link to SB 859 can be accessed here.
SB 3658 - School Supply Sales Tax Reduction
Governor Quinn’s proposal to reduce the sales tax on school clothing and supplies from the current 6.25% to 1.25% from August 6, 2010 to August 15, 2010 passed the Senate on Concurrence this week. SB 3658 was pushed by its legislative sponsors as a way to save money for families buying “back to school” clothing and supplies. TFI opposed this legislation as a new exemption that, with the current condition of the state budget, are “sales” the state simply cannot afford to fund at this time. The bill now goes to the Governor for final consideration. A link to SB 3658 can be found here:
Recent JCAR Actions
The Department of Revenue has promulgated several regulations during the last few weeks of the legislative session. The links to some of these are listed below:
· Tax Shelter Voluntary Compliance Law (See page 3886) click here
· Retailer’s Occupation Tax (See page 4610) click here
· Sunshine Index (See pages 5931 and 5933) click here
· Retailer’s Occupation Tax (Food and Drugs) and Tobacco Products Tax Act (See pages 6000 and 6038) click here
· Income Tax Act – Estimated Payments (See page 6339) click here
· Income Tax Act (Withholding) and Property Tax Act (Low-Income Housing) – (See pages 6566 and 6921) click here
· Income Tax Act (See page 7189) click here
And Finally….
TFI will also be providing a complete review of the legislative session and other Illinois developments as part of our Annual Meeting on June 16th at Maggiano’s Little Italy in Chicago. Make sure to register now if you have not yet done so. A program and registration form can be accessed at this link: click here
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