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GOVERNMENT RELATIONS


Alliance Legislative Report 100-25

Distributed via Email: June 27, 2017

SPECIAL SESSION CONTINUES; NO BUDGET ACTION YET
NEW VERSION OF PROPERTY TAX FREEZE

The Illinois General Assembly has been convening each day since Governor Bruce Rauner called members back into a special session beginning last Wednesday. There has been no official movement of any budget compromise bill, but discussions between both parties and both chambers have been taking place. If no action is taken by Friday, the state will again be operating without any budget – permanent or temporary – in place.

For the most part, both the House of Representatives and Senate have been in the special session for a matter of minutes each day. Enough to gavel in, take roll call, and gavel out. There has not been much of any other activity in the Senate as leaders there have stated that they completed their work in May by approving bills for a spending plan, new revenues, school reform, and more. Generally, Senators are waiting for bills to come back over from the House.

The House of Representatives has been adjourning the Special Session, but then convening immediately into a concurrent Regular Session. Little floor action has taken place, but committee hearings on budget issues have been regularly scheduled throughout most of the day. Generally, each day has highlighted a “Committee of the Whole” hearing on the House floor where all House members participate in questioning witnesses on a variety of subjects. Friday it was on the subject of a property tax freeze; Saturday it was the school funding formula reform; Sunday it was pension reform; and Monday it was local government consolidation. The Alliance testified in Friday’s, Saturday’s, and Monday’s committee hearings.

For the most part, the larger pieces of a budget compromise package remain the same: new revenues, school funding reform, a property tax freeze, pension reform, and workers’ compensation reform.

PROPERTY TAX FREEZE

House Democrats, who to this point have resisted property tax freeze legislation, amended SB 484 to make changes to the latest property tax freeze legislation. SB 484 was approved by the Senate last month and contains a 4-year freeze on local government property tax extensions. The bill was amended and passed by the House Revenue and Finance Committee this morning and sent to the House floor.

The bill now calls for a 4-year freeze on property tax extensions for most, but sets the limit for Chicago Public Schools and other “qualified school districts” at the lesser of 5 percent or the Consumer Price Index (CPI). A “qualified school district” is one that has been granted a hardship exemption from the State Superintendent of Education – generally those districts that are on the “financial watch list”. The bill also increases the homestead exemption for certain veterans and senior citizens. A complete analysis of SB 484 can be found here

OTHER MAJOR ISSUES

Illinois’s long term pension debt has been no secret. Many previous attempts to make significant changes to the state pension system have failed, but that is not stopping the Illinois General Assembly from making another attempt at finding a constitutional fix to address the current pension liability. While no “compromise” pension bill has yet surfaced, the pension changes will likely center around the consideration model. Under the consideration model, current pension eligible employees would have to make the choice between having future salary increases count towards pensionable salary, and having the current compounded cost of living adjustment applied to pension earnings. While there seems to be plenty of question about whether or not the consideration plan will pass constitutional muster, the Illinois General Assembly seems to have settled on the fact that this is the next pension reform idea to send to the high court. 

Another issue that has emerged as a potential piece in a final budget deal is local government consolidation. The Illinois General Assembly has already passed a local government consolidation bill, SB 3, but some legislators feel that the bill is not stringent enough. The current iteration of local government consolidation contains provisions for voter-led consolidation efforts. While many units of local government (townships, counties, municipalities) might not have this type of consolidation currently in statute, there is a robust process for school consolidation currently on the books. One of the main areas of contention with the new consolidation effort are provisions for a county, municipality, or a township to absorb a school district or other forms of local government. From the discussion in the Committee of the Whole, there were many questions about this type of broad consolidation effort. 

Tax structure legislation is also likely to be revised. As it came over from the Senate, SB 9 would increase the individual income tax rate from 3.75 percent to 4.95 percent and the corporate rate from 5.25 percent to 7 percent. The bill would also broaden the sales tax to cover certain services and increase a rate on utilities such as cable, satellite, and digital streaming services. Those latter provisions are reportedly under review.

The House today also filed an amendment to the appropriations bill, SB 6. Details of the 658 page bill are not yet available, but according to Representative Greg Harris (D-Chicago) the bill will add spending to several education line items over the Senate spending level. Line items with expected increases are the evidence-based funding model, transportation reimbursements, early childhood education, and after school programs.

Lastly, the school funding reform debate continues with the recent heightened partisan chatter. The House amended SB 1 with revisions addressing Chicago Public Schools of which Republicans in both chambers took exception to. The bill has been approved by both houses but the governor has vowed to veto the bill. Discussions have been continuing on how to address the differences.

This legislative report was written and edited by the lobbyists of the Illinois Association of School Boards to provide information to the members of the organizations that comprise the Statewide School Management Alliance.

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Bill Text/Status: Illinois General Assembly www.ilga.gov


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