Update from the Capitol 5/6/2016



Redistricting amendment passes Illinois House, graduated income tax not called for vote

On Tuesday, the House passed a proposed Constitutional amendment which would change the way legislative district maps are drawn in Illinois. Currently, the map is drawn by incumbent lawmakers and then signed into law by the Governor. The proposal passed this week, HJRCA 58, would place redistricting in the hands of an eight-member commission appointed by members of the Illinois Supreme Court. The commission would be required to hold at least 15 public hearings throughout the state during the map-drawing process. The proposed amendment passed the House by a vote of 105-7.

Another proposed amendment which had generated a lot of discussion was the proposal to do away with Illinois’ flat-rate income tax and replace it with a graduated tax, under which the legislature could create separate rates for persons in separate income brackets, similar to the federal system. This proposed amendment was not called for a vote in time to meet the deadline for amendments, and thus will not advance any farther this year.

End of month sees payless payday for 118 members of Illinois House

The Illinois legislators were members of one the largest single groups of men and women affected by the decision of Comptroller Leslie Munger that she must shift the pay status of Illinois elected officials between payment queues.  House members from both parties are paid, by law, at the end of every calendar month.  Due to the State’s continued lack of a constitutional balanced budget, however, the Comptroller has determined that these payments to elected state leaders should be treated on a basis of equality with other budget-impacted State payments on an immediate basis.  The decision became effective during the end-of-April pay period.  The end-of-April business day was Friday, April 29.

Elected official pay commitments, including pay for Comptroller Munger, for other statewide elected officials and for members of the Illinois House and Senate have been shifted to a wait-queue that will generate payments when monies are available.   As with other providers of goods and services to the state, delay times are expected in the settlements of these commitments and claims.  While the move nominally affects Governor Rauner, he has announced that he is serving without pay.

Observers see the move as increasing internal pressure within the General Assembly to discuss budget issues seriously with the goal of generating new spending numbers before the legislature’s scheduled May adjournment. Comptroller Munger’s office is currently posting a backlog of official unpaid bills that exceeds $6.8 billion.

I have not collected a paycheck since the last budget expired on July 1, 2015, and I am co-sponsoring a bill that would require all legislators to work without pay until a budget is in place. If you agree that legislators should not be paid until we have a state budget, go to repbennett.com and sign our petition.

Budget negotiations ongoing

We began to see some movement toward a state budget last month when legislators from both parties got together on an agreement to partially fund higher education. Similar discussions have been going on this week, working toward the goal of having a state budget before the May 31 adjournment deadline.

The meetings have included the chairpersons and Republican spokespersons of the appropriations committees in the House and Senate, as well as the Governor’s office. There is much work to be done and many differences to be resolved, but I am cautiously optimistic that we will see more movement soon, and a state budget before adjournment.

Task force against health care fraud organized

The task force, created in April by executive order, has been asked to look into possible fraud, waste, and abuse in state-administered health care programs.  Illinois taxpayers pay $19 billion a year to administer and pass through payments on state-run health care programs.  Most of this money is paid directly by taxpayers to Illinois, and a large subset is paid through federal taxes paid by Illinoisans to Washington, D.C.-based programs in which both Illinois and the federal government collaborate and provide funds.

Gov. Rauner has asked the task force to review the best practices currently used by the private sector to examine and control soaring health care costs.  Other states’ efforts to reduce Medicaid fraud and other forms of public sector health care abuse are also to be looked at.  The task force will work with data managers skilled at “big data” analytics to uncover statistical patterns indicative of non-optimal health care billing and spending.

The task force has been asked to write a report that will: (a) make recommendations for policy changes the State needs to look at, and (b) refer specific cases of wrongful reimbursements to authorities to seek recovery on behalf of Illinois taxpayers. 

New study finds that Illinois homeowners pay highest property taxes in nation

The study, published by CoreLogic, compares the total amounts billed with the value of the real property being taxed.  According to CoreLogic, the median property tax aggregate extension is 1.31% of the property being taxed, the median Illinois extension is 2.67% of value.  This measurement scale makes Illinois the highest-property-tax state in the U.S., with New York second at 2.53% of value. 

The CoreLogic data indicates that if an Illinois homeowner is occupying a house valued at $200,000, the homeowner will be paying a median annual property tax bill of $5,340. As always, individual homeowners’ experiences may vary.  Different localities within Illinois will have different property tax rates; and within localities, different property owners may enjoy the effect of specific property tax relief measures.  For example, senior citizen homeowners should be able to enjoy some relief from the Senior Citizens Homestead Property Tax Exemption, which automatically subtracts some of the value from the assessment number generated for an eligible senior citizen’s house before the tax bill is generated.    

According to CoreLogic, neighboring states have lower property tax rates than Illinois.  CoreLogic’s data, published this week, agrees with previously public state-by--state surveys by firms such as WalletHub, which have also found Illinois to be one of the worst states in the nation in which to be taxed.

Legislators call for answers from Auditor General

Back in February, questions arose about campaign spending by Illinois’ new Auditor General, former State Representative Frank Mautino. Newspapers raised concerns about hundreds of thousands of dollars of expenditures and reporting procedures from Mautino’s tenure as a representative. In February, Mautino told inquiring legislators that he would provide a response within a few weeks. Three months later, there have still been no answers.

On Thursday, I joined with several other legislators in publicly calling on Auditor General Mautino to comply with lawmakers’ request for answers in a timely manner. His office is a watchdog against fraud and abuse, and is essential to efforts to safeguard taxpayer money. Having these kinds of questions unanswered for months at a time casts a shadow over the important work of the Auditor General’s office. I hope we are able to get satisfactory answers soon.

Area superintendents concerned about budget, opening in the fall

I was honored to meet with several of our local school superintendents last week to hear their concerns about state government and education. Like so many others, they are worried about the lack of a state budget and the affect it will have on our local schools this fall. There have even been stories circulating suggesting that some schools will not be able to open their doors in the fall if a K-12 education budget is not in place.

Ultimately, time will tell if the two sides in the budget dispute can resolve enough differences to make sure our schools get the funding they need to keep their doors open. I intend to work each and every day in Springfield to see that an agreement can be worked out across the entire budget to produce the needed reforms, while balancing our budget and doing our best to fund important priorities like education. The next few weeks are going to be crucial to those efforts.

What is the Corporate Personal Property Replacement Tax?

An Illinois tax on corporations made big headlines over the past few weeks. A calculation error that began in 2014 resulted in overpayments from the state to local units of government throughout Illinois. Over 6500 taxing districts in Illinois received a total of $168 million in overpayments starting in 2014 because of a misallocation to the Personal Property Replacement Tax Fund.

The mistake was uncovered by an audit earlier this year, and the Department of Revenue has begun efforts to recoup the misallocated funds. For most taxing districts, the amount to be returned is less than $10,000, but some were much larger. The Department of Revenue is working with local governments to lessen their financial hit by allowing them to repay the money over an extended period of time. So just what is the tax at the root of all this?

The Corporate Personal Property Replacement Tax (CPPRT) was enacted in 1979. It is a supplemental income tax charged only on corporations (not on individuals) that do business in Illinois and owe income tax to the state under the “single sales factor” formula for apportionment of income. Both subchapter C corporations and subchapter S corporations pay the CPPRT.

When a business earns a profit, and the profit is attributable to sales activity domiciled in Illinois, the firm must file an Illinois state income tax return with the Department of Revenue. The CPPRT rate is 2.5% for subchapter C corporations, and 1.5% for partnerships, trusts and subchapter S corporations.

The CPPRT is collected on behalf of school districts and local governments that have jurisdiction over the home addresses of the corporations that have declared income in the previous year. All of this money is paid over to local entities by statutory formula, and the state does not keep any of it. In Fiscal Year 2015, approximately $1.8 billion was collected through the CPPRT.

Keeping in Touch

As always, you can contact me via webform at www.repbennett.com.