insight magazine

Capitol Report | Summer 2019

Illinois’ New Government Goes to Work

With partisan gridlock largely dislodged, Illinois’ new governor and General Assembly score early victories in their first legislative session.
Marty Green, Esq. Senior VP and Legislative Counsel, Illinois CPA Society

In my spring column (at the beginning of the spring legislative session), I openly questioned if newly installed Gov. J.B. Pritzker would maximize the “honeymoon” period and goodwill associated with being a new Springfield politician to pass his comprehensive legislative program aimed at balancing the state’s finances. I got my answer. Pritzker easily scored early victories, signed executive orders, and muscled an impressive legislative agenda through the Democrat-controlled House and Senate.

Included in the governor’s victories are passage of Senate Joint Resolution Constitutional Amendment 1, which allows for the amending of the Illinois Constitution to move from a flat income tax rate to a graduated income tax rate; Senate Bill 687, which establishes income tax rates if Illinois voters approve amending the Constitution in November 2020; House Bill 62, which puts in motion a $45 billion vertical and horizontal capital infrastructure program; Senate Bill 262/Senate Bill 1814, which establish the state’s FY 2020 “balanced” state operating budget; House Bill 1438, which legalizes recreational cannabis; and Senate Bill 690, which expands gaming and sports betting throughout the state.

The General Assembly also passed legislation to pay for Pritzker’s $45 billion infrastructure plan with the passage of Senate Bill 1939 and House Bill 142, which raise the gas tax and vehicle fees to pay for the horizontal program of roads and bridges. The vertical portion will be funded through the expanded gaming legislation, which restructures taxes on video gaming terminals and allows for expanding gaming terminals throughout the state and building six new casinos. This is an impressive list of monumental accomplishments for a first-term governor, let alone it all came during Pritzker’s first legislative session.

The Illinois CPA Society also had a good legislative session with the passage of Senate Bill 1806, an ICPAS initiative to amend the Municipal Audit Act, County Audit Act, and the Governmental Audit Act. This trailer legislation updates the cited audit acts to reflect contemporary accounting and audit practices and terminology and follows ICPAS’ success in the 2018 spring legislative session where legislation was passed to grandfather units of local government who use cash basis accounting for financial reporting to the Local Government Division of the Illinois Comptroller’s Office.

We also monitored over 6,000 bills filed during the spring session. Here are a few highlights:

• Senate Bill 1379 – Cook County Assessor Data Reporting – A coalition of stakeholders attempted to work with the Cook County assessor to address our concerns about terminology and confidential taxpayer information and proposed making the data reporting program a pilot to evaluate the legislation’s impact. Downstate counties would have had an opt-in option. Ultimately, the stakeholder coalition prevented this legislation from being called for a vote.

• Senate Bill 1881 – Local Government Recapture – As amended, this comprehensive legislation would allow counties and municipalities to contract with third-party vendors to perform analysis on business sales tax payments to the Illinois Department of Revenue and remit it to local governments. The third-party vendors would have gained access to confidential taxpayer information. ICPAS worked with a large stakeholder group, including the Taxpayers’ Federation of Illinois, Illinois Retail Merchants Association, State Chamber of Commerce, Illinois Department of Revenue, and the Chairman of the House Revenue Committee, Mike Zalewski, to include adequate safeguards for taxpayer information, registration of third-party vendors, and creation of a certified audit program for businesses to utilize in rebutting IDOR referrals. There was a general agreement on legislative language during the closing days of the spring session when the proponents filed a last-minute amendment changing the effective date, thus moving us and the stakeholder group from neutral to opposed. The bill was not called for concurrence of the amended language in the House and was not passed.

• House Bill 2975/Senate Bill 1829 – Arbitration – As originally introduced, provisions in these bills would have prohibited pre-employment arbitration agreements. Many firms use arbitration clauses to resolve employment disputes and client disputes. The U.S. Supreme Court also has recently opined that states cannot place restrictions on arbitration agreements. In both instances, ICPAS worked with respective sponsors to generally preserve arbitration as a venue for resolution of employment disputes.

• House Bill 2127/Senate Bill 1326 – State Procurement Vendor Spyware – These bills would require firms and professionals who provide services to the state through the procurement process to install spyware on their IT systems. The spyware software monitors computer keystrokes to measure the amount of time a vendor employee spends on a state contract. It is our position that this legislation is a solution looking for a problem (i.e., to ferret out procurement fraud). There are adequate safeguards to address procurement fraud in state contracting. This legislation is also opposed by the Computing Technology Industry Association, National Association of State Chief Information Officers, and Illinois State Chamber of Commerce. This bill was not called in committee for a hearing.

The business community also got a win with Senate Bill 689. This legislation gradually repeals the Corporate Franchise Tax and expands the Manufacturing Machinery Credit Exemption and other specific tax credits.

Initially, it was doubtful that the General Assembly would be able to pass this long list of transformational legislation. However, Pritzker and the legislative leaders did something we haven’t seen in some time — they collectively worked together. They passed an imperfect but balanced state operating budget and other legislation that marks the end of partisan gridlock under the Capitol Dome. Now, let’s hope that the passed transformational legislation will allow the governor to restore fiscal stability in Illinois and position the state to be a Midwest leader again.
Author’s Note: This column includes my personal observations of the evolution of the legislative environment and are not necessarily the views of the Illinois CPA Society.

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