* This story is making the rounds on social media, but it’s not accurate…
When state lawmakers approved the Illinois budget last week that included a provision to raise the state income tax rate to one of the highest rates in the history of Illinois, state lawmakers, under the direction of Illinois House Speaker Michael Madigan (D), snuck in another tax increase, that will hit you every time you fill up your car or truck.
Yes, a gas tax increase of 5 cents a gallon. Rockford Senator Dave Syverson, took to social media on Monday night to remind his constituents that “back door gas tax increase” was approved. So how does this work, according to Syverson, the back door gas tax is:
a tax at the wholesale level, which raises the retail price. This move will add approximately 5 cents a gallon. ($95 million total)
Yet another reason why this budget plan was wrong.
So, if you fill up a 20 gallon tank when you go to fill up, it will add a $1.00 on to the average fill up. If you fill your car. If you fill up once a week, this new back door tax will add about $52 to you gasoline bill, every year. Truck divers and transportation companies will notice it even more as their gas consumption levels are much higher. Those costs, of course will be passed on to the cost of good the consumer will pay.
* This new law is actually about ethanol blends, not “pure” gasoline.
Current state law taxes “gasohol” (10 percent ethanol blends) on only 80 percent of the sales price. Biodiesel and E85 (85 percent ethanol) are exempt from all sales taxes.
All three sales tax incentives were scheduled to expire on December 31, 2018. If no legislative action was taken by then, all three fuels would be taxed at 100 percent of sale price.
The new law accelerates the sunset of the gasohol tax break to July 1 of this year. So, from here on out, 10 percent gasohol blends are taxed at 100 percent of purchase price.
So, if you don’t use gasohol (E10), you won’t see any price increase.
According to the Department of Revenue, 4.6 billion gallons of gasoline were sold in Illinois last year, compared to 5.1 billion gallons of gasohol and 517 million gallons of E85. Thanks to an eagle-eyed commenter, I now realize I misread that particular chart. That’s the fuel blending amounts. Thanks!
* The new law also extends the total sales tax exemption on biodiesel and E85 through the end of 2023. The ag community understandably likes the idea of extending these exemptions…
“One of those being that the biodiesel sales tax incentive was extended until 2023,” said Mark Gebhards, Illinois Farm Bureau’s executive director of governmental affairs and commodities. “The E-85 sales tax incentive was extended as well until 2023.”
The revenue bill also included a sunset provision on the E-10 sales tax incentive.
“So that was the trade-off of giving up something that at least from the renewable fuel industry, they feel that E-10 is well on its way and didn’t need the incentive that was needed for E-85 and biodiesel,” Gebhards said.
The city of Chicago may be able to end junk status on much of its debt—potentially saving $100 million or more in interest charges each year—thanks to a clause that was quietly tucked into the state’s new budget.
The provision will allow home-rule entities such as Chicago to separate out money they get from the state from other receipts and use that dedicated revenue to pay for new debt, or to pay for retiring old debt.
The city now gets well over $1 billion from the state each year, including $630 million in sales taxes collected by the Illinois Department of Revenue on the city’s behalf, the $368 million city share of local income tax receipts, and $71 million in motor fuel taxes.
City officials hope the provision will allow them to save as much as 3 full percentage points—300 basis points—compared to what junk-level city general-obligation debt now costs. With more than $8 billion in outstanding general-obligation debt, the city would save $30 million a year on each $1 billion that could be refinanced, assuming it indeed can sell such “statutory lien” debt at the lower rates. […]
The Illinois Municipal League was aware of the provision and “didn’t have any issue with it,” according to Brad Cole, the league’s executive director. The provision mostly will affect Chicago, though some other large cities around the state could take advantage of the clause, he added.
Built into legislation that passed last week is a $293 million increase in the bonding capacity for the Metropolitan Pier & Exposition Authority. The agency maxed out its borrowing limit two years ago.
Despite a gargantuan long-term debt burden that totaled $3.7 billion as of June 2016, McPier officials plan to take advantage of the new line of credit immediately to change the way they pay for the 1,205-room Marriott Marquis hotel going up on the Near South Side convention campus.
The agency plans to sell the bonds “as soon as possible” and will use $250 million of the proceeds to repay its construction loan for the Marriott, said McPier Chief Financial Officer Larita Clark.