Capitol Report | Summer 2024
Lights, Camera, Fiscal Action Ahead
With the latest state operating budget over the finish line, the stage is now set for a challenging 2026 fiscal year.
Marty Green, Esq.
Senior VP and Legislative Counsel, Illinois CPA Society
The Latest on Advocacy and Legislation
Four days beyond its self-imposed May 24 deadline, the Illinois General Assembly finally concluded the spring 2024 legislative session. During the process, legislative leaders built in seven budget contingency days wherein the threshold for passage of legislation changed from majority vote to extraordinary vote.
From January to May, the House and Senate passed a total of 466 bills, with 288 of them being passed during the last two weeks of session. Included in the passed legislation is a $52 billion state operating budget for fiscal year (FY) 2025—the largest budget in the state’s history.
Of course, the conclusion of the spring session wasn’t without hiccups. While many members of the super Democratic majority were willing to vote for the appropriations bill (Senate Bill [SB] 251), budget implementation bill (House Bill [HB] 4959), tax omnibus bill (HB 3144), and bonding authority bill (HB 4582), it took the House three separate votes and suspending its own rules to finally pass the revenue omnibus bill (HB 4951), which included $750 million in business tax increases to fund the increased spending levels.
Despite these hurdles, the Illinois CPA Society (ICPAS) fared well in executing its advocacy initiatives during the spring session. Working with State Treasurer Mike Frerichs, we were successful in passing SB 3343, which amends the Revised Uniform Unclaimed Property Act. Of particular interest to CPAs and CPA firms, the private investigator licensure requirement for entities that perform recovery services to business clients was remedied. This legacy requirement was an oversight in certain carryover provisions of the Unclaimed Property Act. With the passage of this provision, we’ve written to Gov. J.B. Pritzker, asking him to sign the legislation. Since the measure passed unanimously in both chambers, we anticipate the governor will sign the bill. Once signed, we’ll work with Frerichs’ staff in drafting administrative rules to implement the statutory changes.
In addition, we were also successful in working with other business association stakeholders in mitigating numerous bills that enhanced workplace compliance on employers and businesses (one of the continued themes of the 2024 spring session).
Stage Set for 2026 Fiscal Challenges
Of course, now with the FY 2025 state operating budget over the finish line, the stage is set for an acutely challenging FY 2026 budget.
First, revenue reports indicate revenues are tightening. Second, the General Assembly has continued COVID-era programs without COVID-era federal funding. Third, despite warnings from House Appropriations Committee Chair Fred Crespo, progressives have embarked upon the practice of passing spending measures “subject to appropriation,” which means that new programs are being introduced and passed without an identified revenue stream. Ultimately, either the money to fund the new program is taken out of the General Revenue Fund to pay for the program or the program goes unfunded (this, of course, would be tantamount to “robbing Peter to pay Paul”).
Continuing the Fight on Professional Services Taxes
Along with the fiscal challenges identified above, Chicago Mayor Brandon Johnson and members of his administration have been openly talking to audiences about a city tax on professional services to broaden the city’s tax base to provide funding for various programs and operations. However, at this time, it’s uncertain if city officials and others are aware that the city would need state legislative authority to impose a city tax on professional services. Therefore, I suspect Johnson’s hand will be played out in this area.
Separate and apart from Johnson’s tax push, a professional services tax to fund the public transit crisis is also emerging. Legislation has been introduced to create a Metropolitan Mobility Authority, which consolidates the Chicago Transit Authority, Pace Suburban Bus, Metra, and the Regional Transportation Authority into one centralized governing authority. Included in the legislative package is $1.5 billion from the state’s General Revenue Fund to support Chicagoland’s public transportation. Over the summer months, legislative sponsors will be holding public hearings on this matter.
For many reasons, taxing professional services belies good tax policy and threatens the already struggling economic vitality of Chicago. Therefore, ICPAS has always been poised to oppose a tax on professional services on behalf of the CPA profession. In 2017, we worked with the Illinois General Assembly on the Senate’s grand bargain, which included an expanded tax base but not on professional services. In 2019, along with a broad-based coalition, we worked with the General Assembly’s legislative leaders in response to former Chicago Mayor Lori Lightfoot’s campaign proposal to tax “large law firms and international accounting firms.” Fortunately, no legislative proposal ever surfaced from the Lightfoot administration.
In the coming weeks, proposals, if any, will likely play out on this matter, and we’re prepared to respond on multiple levels. We’ll keep you informed on proposals and may call upon you to reach out to your elected officials to oppose any legislative proposal to tax professional services.
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