Mixed bag at biz lobby day
Thursday, May 2, 2019 - Posted by Rich Miller
* Gov. JB Pritzker spoke to the annual IRMA-IMA lobby day yesterday. And while sharp differences exist, they did their best to publicly try and get along…
The governor criticized the former administration for leaving the state in what he called a “dire fiscal situation”.
“After years of neglect, Illinois is finally getting its mojo back and we’re open for business,” he told a room full of business leaders from the Illinois Manufacturer’s Association and the Illinois Retail Merchants Association in Springfield.
Pritzker said his graduated income tax idea is the best solution to dig the state out of a $3.2 billion structural deficit. “There are people here, I know, who disagree with me about this proposal, and that’s in our democracy. But to be clear, doing nothing is not an option.” […]
Despite disagreeing on certain issues, Rob Karr, president and CEO of the Illinois Retail Merchants Association, said he welcomes the communication with Pritzker —something that wasn’t readily available with the previous administration.
“There are clear policy objectives that they [Pritzker’s administration] want to accomplish that we’re just simply not going to agree on – the graduated income tax being one of those. But there are other issues being discussed where we are clearly heard and listened to,” he said.
* Bernie…
MARK DENZLER, president and CEO of the IMA, said the organization has a long history of working with governors from both major parties.
“We didn’t always agree with Governor Rauner,” he said. “We’re not always going to agree with Governor Pritzker.” And while strongly disagreeing with the $15-per-hour minimum wage by 2025 already passed this year, and despite similar opposition to the progressive income tax, Denzler said the group likes Pritzker’s backing of workforce development, research and education.
ROB KARR, IRMA president and CEO, said there is “clear, open communication” with the Pritzker administration.
* But as Brenden Moore reports, it wasn’t all rainbows and unicorns…
“I think he thinks this is the best way to solve the state’s issues,” said Rob Karr, president of the IRMA. “Our problem is that as an association — we have twice in the past supported income tax increases, we have also put forward other ideas that would modernize our tax system and draw in more money from the state — we’re not convinced that the graduated income tax is in fact the way to go.”
IMA president Mark Denzler characterized Pritzker’s position and the Senate’s vote as “yet another sign that Illinois politicians are more concerned with increased spending rather than meaningful solutions to curtail costs, address growing property taxes, tackle ballooning pension debt and adopt reforms that make it easier for businesses to create jobs.”
Members of the business groups immediately following the governor’s address and those listening to a panel discussion on the graduated income tax later that afternoon expressed skepticism of the merits of a progressive tax and frustration with the possibility of having a higher tax burden.
“We cannot go quietly into the night,” said Jim Havey, president of Young’s Security Systems in Springfield. “We must continue to ensure that policymakers understand that there are consequences for their actions, to making Illinois even less job-creator friendly, and that we are a large and diverse state, we’re not just Chicago.”
* And…
SWD Inc. President Rick DeLawder, who is also a board member for the Illinois Manufacturers’ Association, said that will hurt his business.
“My income tax may look like I’m making a whole bunch of money, however, it’s actually flowing through from the business,” DeLawder said. “[Taxing that at higher rates] is a big problem on a personal level that I have.”
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Question of the day
Thursday, May 2, 2019 - Posted by Rich Miller
* SJ-R…
For a third time the state-owned James R. Thompson Center government building in downtown Chicago is on Landmarks Illinois’ Most Endangered Historic Places list. […]
“A troubling trend with this year’s Most Endangered sites is the number of historic places that face demolition despite strong and active community support for preservation,” said Bonnie McDonald, Landmarks’ CEO. “People all over Illinois are working to save special places that help tell the unique stories and history of their neighborhoods despite the many challenges that stand in their way.” […]
Preservationists love the design — Landmarks calls the center “Chicago’s best example of grandly-scaled, Postmodern architecture” — but tenants have complained of year-round temperature problems and the building has not been maintained. The building was first put on Landmarks’ endangered list in 2017.
Gov. J.B. Pritzker has signed legislation outlining a two-year plan to sell the Thompson Center. Landmarks says it only supports a sale if the building is reused.
* The Question: Do you have any “unique stories” about the Thompson Center?
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Hemp applications start to pour in
Thursday, May 2, 2019 - Posted by Rich Miller
* April 30th…
Illinois officials open hemp-growing applications despite having no processing facilities yet
With the growing season just about to begin, applications are now available for Illinois farmers to grow industrial hemp this year, and the state will be following up to make sure farmers are growing what they say they’re growing, but they’re likely going to have to send it out of state for processing for the time being.
Illinois Department of Agriculture Acting Director John Sullivan said applications are open now for what he said will be an addition to Illinois’ array of crops. The application costs $100. Licenses range from one year for $375 to three-year licenses for $1,000. There are no caps, Sullivan said, but there will be checks.
“You’re going to identify where the field is going to be and then our staff, our inspectors will be out there, periodically throughout the year,” Sullivan said. “We will be testing the crop to make sure that as you folks probably know hemp has to be under .03 on the [tetrahydrocannabinol or] THC, and so we’re going to be testing it throughout the year to make sure that it stays under those limits.”
Sullivan said because hemp can be planted in small footprints he expects it to be planted in not just rural areas, but also urban areas. He couldn’t immediately estimate how many jobs would be created from the new industry, but Sullivan said there would be “tremendous opportunities” for Illinois farmers.
There won’t be a cap on how many licenses will be approved to grow it, but Sullivan said Illinois is a bit behind the curve compared to some other states in the region.
* Today…
The Illinois Department of Agriculture received nearly 400 applications to grow or process industrial hemp in the first 24 hours after they became available.
Agriculture officials said Wednesday they received 295 applications to grow the plant on 7,100 acres (2,873 hectares). Another 74 applications to process the harvested crop arrived.
Still pretty small, but this could be big, campers. And processing will likely create jobs and ancillary businesses.
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Definitely worth a look
Thursday, May 2, 2019 - Posted by Rich Miller
* Sun-Times…
The developer of the One Central site near Soldier Field said Wednesday he is pushing for state legislation to expedite the massive project while leaving its financial risk with him and not the taxpayers.
Robert Dunn, president of Landmark Development Co., said the site is so attractive that he’s willing to pay upfront an estimated $3.8 billion for a transit hub that will improve access and business for adjacent attractions such as the museums and McCormick Place.
The transit hub would connect the CTA’s Orange Line, two Metra lines, Amtrak and a dedicated bus lane, now little used, that shuttles McCormick Place users to and from downtown.
On a deck he would build over the Metra tracks, Dunn foresees a high-rise collection of perhaps 10 buildings covering residential and commercial uses, almost a self-contained city for the Near South Side.
The resulting commerce and tax revenue should earn the project support from the Legislature, government agencies and a public that’s become critical of tax subsidies for developers, Dunn said.
This, in total, is a $20 billion project, which could be the largest in the city’s history…
A consultant’s report prepared for the Chicagoland Chamber of Commerce said One Central could support 70,000 permanent jobs and generate $120 billion in state and local tax revenue over 40 years of operation.
* There is a public funding component…
Under the proposed financing plan, the developer and investors would pay the upfront construction costs for the transit center, which is expected to take three years to build.
Afterward, the developer and the state would together pay off the cost of the station using new tax revenues and income generated from leases of restaurant, retail and entertainment spaces in the multi-level center, as well as parking revenue and other funds. After 20 years, the state would assume ownership of the transit center and would keep all revenues generated, Dunn said.
* Why the push to get this done during spring session?…
Landmark also plans to seek federal funding that could reduce the state’s financial obligation by more than $1 billion over 20 years, Dunn said.
The deadline for applying for those federal dollars is the end of this year, but he can’t do it unless the state is officially on board.
* Crain’s…
Still, asking Governor J.B. Pritzker or other Illinois leaders for anything these days seems like a long shot given the state’s precarious fiscal condition. They are more interested these days in selling properties, like the Thompson Center in the Loop, so they can raise money to balance the state budget.
That’s… not how this would work.
The state’s end would only come out of the new state tax revenues it would receive from the project. The developer told me the state itself would have to certify the actual revenues it realized. No state payments would be made while this massive project was being built over a projected three years, even though the state would likely reap some money from income and sales taxes.
So, the state wouldn’t lose money it would normally expect to receive because nothing exists at that site right now.
The state will eventually give up a chunk of income, sales and other tax revenues from the project in exchange for ownership of the property. And if the development goes bust and doesn’t generate tax revenues, the state wouldn’t have to pay another dime, according to the developer. After 20 years, the state would keep all tax money generated at the site.
* And that state ownership is key. The property would be valued at billions of dollars, and the state could conceivably transfer that value and the resulting income to, for instance, the pension funds.
I’d like to see the fine print first, especially as it pertains to the state’s responsibilities.
But this developer says he will invest billions of dollars of private money upfront into building a massive public transit hub, so he should be taken seriously for that reason alone.
More background on the developer is here. The glossy flier the developer is handing out to legislators is here.
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Missed It By That Much
Thursday, May 2, 2019 - Posted by Advertising Department
[The following is a paid advertisement.]
One of the most frequent arguments for enacting a progressive income tax hike in Illinois is to close an anticipated $3.2 billion budget shortfall.
But the progressive tax plan currently moving through the General Assembly would fall $175 million short of this goal, according to Senate Democrats’ own numbers.
The plan’s shortfall is likely much larger due to irresponsible growth assumptions and faulty math. Not only does the plan fall short of closing the budget deficit, it also means that there won’t be revenue to pay for additional spending priorities, like pensions, that Pritzker and others claim the progressive income tax can tackle.
Plus, the $3.2 billion budget deficit projection itself is likely understated: it doesn’t account for a new AFSCME contract, the costs of the minimum wage increase or additional pension costs.
Faulty assumptions and revenue shortfalls ensure one thing: further tax hikes.
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Senate income tax roundup
Thursday, May 2, 2019 - Posted by Rich Miller
* The Sun-Times headline was great today…
‘Stairway to Heaven’ longer than Senate debate before historic tax vote
You don’t usually hear much from proponents during a tax vote, but it was kinda weird that the Republicans didn’t put up more of a floor fight.
* From the Tina Sfondeles story…
After just seven minutes of debate, Senate Democrats took the first major step Wednesday in advancing Gov. J.B. Pritzker’s goal of revamping how the state taxes income — seeking the biggest change in the state income tax since it was enacted a half century ago.
The Illinois Senate passed its version of a graduated income tax package on strictly partisan lines — and its fate now lies within the Illinois House, where changes are anticipated. […]
Up next is a battle in the Illinois House, where not all facets of the plan may make it through. Legislators have just weeks to figure out a capital plan, approve a budget and try to pass another one of Pritzker’s priorities: legalizing recreational marijuana. It sets the stage for an action packed home stretch of the spring session.
Steve Brown, spokesman for Illinois House Speaker Mike Madigan, said the speaker will “continue to work with the governor and the Senate supporters to move that all to the governor’s desk.”
“Just a reminder that the speaker has supported it since November,” Brown said of the graduated income tax plan.
It’ll be tougher to pass this constitutional amendment in the House, but I do think it’ll still pass. If it goes down, the whole session will explode.
* Tribune…
House Democratic leader Greg Harris of Chicago said the concept of a graduated tax has broad support among his caucus, but before the House votes, Democratic leaders need to “carefully analyze” the Senate’s changes to Pritzker’s original proposal.
“We need to review them,” Harris said. “It’s very complicated legislation. It has a lot of moving parts.”
Somehow, I just cannot see the House sending a bill to repeal the estate tax to the desk of a billionaire governor who inherited much of his wealth, unless they want to truly mess with the guy.
* Meanwhile, on the one hand, you see rhetoric like this Daily Herald editorial…
Since even before Pritzker won election last November, opponents to a graduated income tax have decried the change as a grand “bait-and-switch” scheme in which lawmakers will get voters to free them from the yoke of a constitutionally mandated flat tax, then run rampant adjusting a graduated income tax schedule however the mood suits them to meet ever-increasing spending goals.
On Wednesday, senators demonstrated that not only is that a legitimate fear but they’re willing to do the switching even before the bait has been taken.
True, the complaint about lawmakers running amok with taxes under a graduated system ignores the fact that they could just as easily run amok with the existing flat tax. And, true, the changes approved Wednesday were not comprehensive; they accounted for only a small fraction of a percentage point in the middle to upper regions of the income scale. But, let’s be real, lawmakers have been playing fast and loose with the flat tax since installing a “temporary” increase in 2011, letting it expire in 2014, then hiking it again in 2017, this time to 4.95% and permanently.
Yeah, those flat tax hikes were soooooo easy to pass. No problems at all. Fast and loose.
* On the other hand, you see this…
Senate Republican Leader Bill Brady of Bloomington said the current flat tax system protects taxpayers because lawmakers are reluctant to raise taxes on everyone and that a graduated tax amendment will be defeated by voters.
“We believe our current Constitution crafted by the 1970 constitutional convention wisely decided that Illinois taxpayers need protections against politicians,” Brady said. “The fact that our Constitution currently calls for a flat tax has given various protections to those individuals and protected, we believe, the middle class.”
He said a graduated tax will open the door to raising taxes on the middle class. Harmon, though, said it is false that a flat tax protects the middle class.
“It does exactly the opposite,” Harmon said. “If you are saying the flat tax is a good idea, you are protecting the uber rich, not the middle class.”
Brady is right. The flat tax has most definitely worked against attempts to raise the rates because they’d have to raise ‘em on everybody. Upper-income earners are right to be wary of this change and Harmon just confirmed it, as did Sen. McConchie…
“With a flat tax, you raise rates on everybody,” said Sen. Dan McConchie, R-Hawthorn Woods. “The changing of rates becomes not an issue of first resort but an issue of last resort. As soon as we implement a graduated tax system, we actually make it structurally and politically easier to change those rates and brackets going forward.”
Yep.
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Caption contest!
Thursday, May 2, 2019 - Posted by Rich Miller
* Attorney General Kwame Raoul (a former state Senator) takes it to the lane during this week’s House vs. Senate basketball game…
The Senate barely won a low-scoring game, despite having a significant height advantage (Treasurer Michael Frerichs also played). But, nobody was severely injured and money was raised for charity, so it was a good night.
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“Prevention, diversion and change”
Thursday, May 2, 2019 - Posted by Rich Miller
* Former US Attorney Jim Lewis writing for the Illinois Times…
Four decades ago, we began to create a new problem: mass incarceration. In 1974, Illinois had 6,000 people in prison. Now, Illinois has more than 40,000 people in prison. In the same period, other states and the federal government also grew their prisons at similar rates, so that our country now has more people imprisoned, compared to other countries, by each and every measure.
Our state filled its prisons beyond capacity (32,000), but we continued to add to our prison population. Crime rates began to decline in the early 1990s, but we continued to add to our prison population. Four governors tried to address excessive imprisonment, but we continued to add to our prison population. […]
The Illinois Department of Corrections spends $1.4 billion each year, 4% of the state budget, perhaps $35,000 per inmate. […]
Prevention requires a network of interventions in a community, focusing particularly on young people found by the school system and youth authorities to be headed toward trouble. In Peoria, this is their “Don’t Start” program. These interventions, together with “Don’t Shoot,” which is a deterrence program focused on adults with a history of gun violence, should save lives, families and neighborhoods. And they should prevent crime, while saving the costs of incarceration.
Diversion? Sangamon County has diversion courts for people with limited criminal activity that is traceable to addiction or mental health issues or the impact of military service. If a person completes a program of careful court supervision, there is no incarceration. In Peoria, the federal court has a 20-year-old diversion program for crimes of addiction, and this saves people, saves families and saves several million dollars in costs of incarceration.
Change? In Illinois, Gov. Bruce Rauner’s Commission on Criminal Justice called in 2015 for a 25% reduction in the prison population over 10 years, and put forth 27 steps to reduce this population. The prison population declined from 47,000 in mid-2015 to 43,000 in mid-2017, the latest year reported. Illinois is making positive changes, and the new governor is expected to make further positive changes.
Thoughts?
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Two Janus-related lawsuits filed
Thursday, May 2, 2019 - Posted by Rich Miller
* Tribune…
Continuing a fight against public employee unions initially spearheaded by former Gov. Bruce Rauner, nine state workers who say they have opted out of union membership are asking to be repaid for past “fair share” fees in a proposed class-action lawsuit.
The lawsuit filed Wednesday argues that more than 2,700 state employees are entitled to money they paid to the American Federation of State, County and Municipal Employees Council 31 from May 1, 2017 — the furthest back they can demand the money under a state statute of limitations — through June 28, 2018, when the U.S. Supreme Court ruled it unconstitutional to make public employees pay union dues. Attorneys for the plaintiffs say they’re seeking close to $2 million from the union. […]
Janus was the plaintiff in a similar lawsuit that was thrown out earlier this year by U.S. District Judge Robert Gettleman, who ruled that AFSCME had followed the law in collecting fair share fees and couldn’t have reasonably anticipated those fees becoming illegal. […]
“We are making the same legal argument and we are appealing the legal argument that was rejected,” [Patrick Hughes, president and co-founder of the Liberty Justice Center] said. “The district judge is not the final say on these issues. We’ll appeal that decision. … Ultimately if we are successful, we’ll see what the unions do. If we are unsuccessful, we’ll appeal that decision to the U.S. Supreme Court and let the justices that decided the Janus decision ultimately decide that case as well.”
* Illinois News Network…
A school employee in Illinois filed a federal lawsuit against a local school district and the state’s largest public sector union, claiming both refused to stop deducting union dues from her paycheck months after she left the union.
Susan Bennett, a janitor at the Moline-Coal Valley School District since 2009, withdrew from her union shortly after the U.S. Supreme Court ruled that forced union dues as a condition of employment violated the First Amendment. The high court’s decision in Janus v. American Federation of State, County and Municipal Employees Council 31 struck down forced union fees as unconstitutional.
Bennett alleged the school district refused to stop deducting union dues from her paychecks in the lawsuit, which was filed in the Central District of U.S. District Court.
“Since November 2018, the union and the school district have been fully aware they do not have permission to collect money from my paycheck,” Bennett said. “I submitted my resignation as soon as I could after learning about the decision. The union did not inform me of my rights after the Janus decision and I should not have to wait months to exercise them.”
In the suit, she said that the district was forcing her to wait until an enrollment period to withdraw based on her union agreement entered into before the Janus decision. Unions have used similar tactics elsewhere to retain members after the 2018 Supreme Court decision.
“Based on your enrollment card with AFSCME, see attached, you have to wait until the enrollment period to withdrawal,” district CFO Dave McDermott wrote in an email response to Bennett. “I believe the next opportunity is August 2019.”
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