IADA Weekly Legislative Update  
Governor's Budget Address
This week, Illinois Governor J.B. Pritzker unveiled his first annual budget address. He declared that the state has a huge budget  deficit and without legislative action the state would continue down this path.

The Governor's budget includes revenue from big-picture items which need legislative approval, including legalizing marijuana and sports betting. It also incorporates putting off pension payments-extending the state's pension payment "ramp" by seven years to reduce short-term costs, which may worsen problems in the future.

Pritzker's proposed budget includes $38.9 billion in revenue and $38.75 billion in expenditures. He warned lawmakers the state would face $3.2 billion deficit without his recommendations. Illinois already faces a $900 million hole from the current budget that ends in late June. Below is a summary of how the Governor addresses the budget situation:

$1.1 Billion in Revenue Will Come From:  Sports betting ($212 million), recreational marijuana ($170 million), plastic bag tax ($20 million), vaping tax ($10 million) cigarette tax hike from $1.98 to $2.30 ($55 million), medical care organization (MCO) assessment ($390 million), closing corporate loopholes ($94 million), phasing out private school scholarship credit ($6 million), progressive tax for video gaming ($89 million) and capping retailers discount at $1,000 per month ($75 million).

Some spending priorities:  $100 million increase in early childhood block grant; $375 million for k-12 education; $2 million to fund AP testing fees for high school students; $52.2 million increase for public universities and $13.9 million for community colleges; $30 million increase for Child Care Assistance Program; $250 million for homelessness prevention; $65 million for support services for seniors; $2 million for community based violence prevention programs; $46.2 million to maintain Joliet and Elgin treatment centers.

Tackling Pensions:  Pritzker's No. 1 solution is a graduated income tax. That still requires a constitutional change.  So in the meantime, the state will extend the pension payment schedule by seven years - for a savings of some $878 million per year.  There's also a plan for pension funding bonds of $2 million.

Currently Illinois retailers receive a retailers' discount of 1.75% of the sales tax due.  The discount is intended to reimburse some of the cost of collecting taxes on behalf of the state. The discount costs state and local governments approximately $252 million per year. The Governor is proposing a $1,000 per month cap on the Retailers Discount, which would increase revenue deposits by $75 million for state general funds and $58 million for local governments. Under this $1,000 per month cap, the Governor claims that nearly 99% of retailers will see no change in their discount, as taxable retail sales are highly concentrated among a small percentage of high volume retailers. The cap will definitely hurt franchised new car dealerships. IADA is working to defeat this proposal.  

Other Legislative Proposals:
  • House Bill 360 - Increase the use tax rate for the private sales of motor vehicles - a sliding flat rate scale based on vehicles value will be used.
  • Senate Bill 22 - Opening franchised dealerships on Sunday.  Sixth year for Senator Oberweiss trying to pass this proposal.  IADA continues to oppose.
  • Senate Bill 1760 - Creates the New Car Buyers Protection Act of 2019.
IADA will give a full analysis on all legislation once the bill introduction deadline passes.