This Illinois State Association of Counties (ISACo) weekly
News and Views
newsletter highlights the adjournment of the General Assembly, includes information about the General Assembly-approved SFY2020 state budget, discusses final passage of a constitutional amendment allowing voters to amend the Illinois Constitution to permit graduated income tax rates, explains how the recreational cannabis legalization legislation approved by both chambers will affect counties, discusses passage of the capital infrastructure package that includes a provision increasing state and local sales tax collections and invites counties to join ISACo.
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General Assembly Adjourns
It was a chaotic finish, but the Illinois General Assembly managed to approve and send several consequential bills to the Governor over the final days of session.
The General Assembly was scheduled to adjourn the 2019 spring legislative session on Friday, May 31. With several major issues remaining unresolved, the House convened a special session day on Saturday, June 1 and the Senate convened on Sunday, June 2. After concluding their business this weekend, both chambers adjourned until the fall.
This
News and Views
e-newsletter provides an update about some of the more significant issues addressed during the final days of session.
ISACo is pleased to convey that Illinois counties did well with respect to revenues, which will be further explained within this edition of the
News and Views
e-newsletter.
Due to the volume of bills of interest to counties approved by both chambers during the final days of session, ISACo will not include summaries of each bill in this e-newsletter. A report containing the multitude of bills of interest to counties that were considered and approved by both chambers during the spring session will be published in our "Bills Approved by Both Chambers" report within the coming days.
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SFY2020 Budget Approved
Both the Illinois House and Senate approved a $40 billion budget for State Fiscal Year (SFY) 2020 prior to adjournment. The votes on each of the budget bills were bipartisan. The budget bills are as follows:
Revenue Bill
Senate Bill 689 (
available via this link
) is the revenue component of the SFY2020 state budget. The bill also includes several pro-business provisions sought by Republicans.
Appropriations Bill
Senate Bill 262 (
available via this link
) is the budget spending authorization bill. Local government “pass through” funds (MFT, Use Tax, Video/Casino Gaming, Statewide Emergency 9-1-1 funds, etc.) are fully funded within the SFY2019 budget, with increases in some cases (MFT).
Unfortunately, the bill includes approximately $350 million in diversions from Corporate Personal Property Replacement Tax (CPPRT) revenues that would otherwise be distributed to local governments. CPPRT diversions have been increasing annually for several years. The SFY2019 state budget diverted approximately $300 million from CPPRT.
Budget Implementation Bill
Senate Bill 1814 (
available via this link
) is the SFY2020 Budget Implementation Bill (BIMP). Per the BIMP bill, the percentage of state income tax revenues distributed via the Local Government Distributive Fund (LGDF) to counties and municipalities is being held at the SFY2019 level.
Governor Pritzker is expected to sign each of these bills into law. The SFY2020 state budget would take effect on July 1, 2019.
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General Assembly Approves Income Tax Constitutional Amendment and Graduated Income Tax Rate Legislation
Both chambers approved a constitutional amendment (SJRCA 1 -
available via this link
) that will place a question on the November 2020 ballot asking voters if the Illinois Constitution should be amended to allow for graduated income tax rates. The Governor is not required to approve a proposed constitutional amendment. Proposed amendments automatically go before the voters following passage by the General Assembly.
If voters approve the proposed constitutional amendment, Illinois' flat tax requirement will be abolished and graduated income tax rates can be implemented within the Illinois Revenue Code.
The General Assembly also approved
Senate Bill 687
. The bill establishes the following graduated income tax rates:
Joint Filers
4.75% $0-10,000
4.85% $10,001-100,000
4.95% $100,001-250,000
7.75% $250,001-500,000
7.85% $500,001-1,000,000
7.99% $1,000,000+ (includes all income)
Individual Filers
4.75% $0-10,000
4.85% $10,001-100,000
4.95% $100,001-250,000
7.75% $250,001-350,000
7.85% $350,001-750,000
7.99% $750,000+ (includes all income)
Corporate Filers
7% increased to 7.99%
The legislation is estimated to
raise approximately $3.5 billion in new revenue annually
.
The House sponsor of the bill, Representative Zalewski (D-Riverside), indicated during floor debate that, if enacted, the bill would generate an additional $100 million annually to counties and municipalities through distributions from the Local Government Distributive Fund (LGDF). LGDF revenue is distributed on a per capita basis.
The income tax rates within Senate Bill 687 are contingent on voters amending the Illinois Constitution to allow for graduated rates.
Governor Pritzker is expected to sign Senate Bill 687 into law.
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Cannabis Legalization Approved by General Assembly
The General Assembly approved legislation to legalize the sale and use of recreational cannabis. The bill would allow residents age 21 and older to legally possess 30 grams of cannabis, 5 grams of cannabis concentrate or 500 milligrams of THC contained in a cannabis-infused product. Nonresidents could possess 15 grams of cannabis.
House Bill 1438 (
available via this link
) includes a multitude of key provisions. Of most interest to counties are the provisions concerning taxation and regulation.
Local Taxation
On and after January 1, 2020:
- Counties would be authorized to impose up to a 0.75% tax for recreational cannabis sales that occur within municipalities and up to a 3.75% sales tax within unincorporated areas. (*The county taxing authority for sales within municipalities may be increased to up to 3% should the Governor enact SB 2023 into law - explained below).
- Cook County would be permitted to impose up to a 3% tax on recreational cannabis sales that occur within municipalities and 3.75% for sales occurring within unincorporated areas.
*On Saturday, June 1, an amendment was filed to Senate Bill 2023 (
available via this link
)
that would allow ALL counties to impose up to a 3% sales tax on recreational cannabis sold within municipalities.
ISACo supported this amendment.
The bill was approved by both chambers. Should the Governor sign both House Bill 1438 and Senate Bill 2023 into law, all counties will be permitted to impose a sales tax of up to 3% within municipalities.
In addition to these local sales taxes, counties would continue to receive their traditional share of the 6.25% state sales tax as applied to recreational cannabis sales.
Local Regulation
Local governments not desiring to allow for the sale of recreational cannabis within their jurisdictions may adopt “opt out” ordinances within one year of the effective date of the statute. After that, local governments are limited to adopting “opt out” provisions via local referendum.
The bill authorizes local governments to enact reasonable zoning ordinances to regulate cannabis establishments.
Other key provisions....
Revenue and Spending
Proponents estimate that sales from recreational cannabis will generate $57 million in the SFY2020 state budget and $140 million next year. One estimate suggests the revenue raised will eventually reach $500 million a year.
Of the state tax revenue generated, 35% would go to the state General Fund, 25% for community reinvestment, 20% for mental health and substance abuse treatment, 10% for the state’s unpaid bills, 8% for law enforcement training grants and 2% for public drug education.
Expungement
The bill would establish a process for the expungement of convictions associated with the production or possession of no more than 30 grams of cannabis as long as the convictions did not involve a violent crime. The expungement process would involve the Governor, state police and local state's attorneys. State's attorneys and individuals would be permitted to request that a court vacate convictions involving up to 500 grams of cannabis.
Homegrow
Unlike a previous version of the bill, the homegrow provision would be limited to individuals permitted to use cannabis for medicinal purposes. The bill would allow an eligible person to grow no more than five plants.
Employment
Employers would be permitted to maintain a "zero tolerance" policy for cannabis in the workplace.
Governor Pritzker is expected to sign the recreational cannabis legalization into law.
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Capital Infrastructure Plan Approved
The General Assembly approved a $45.6 billion capital infrastructure package for both horizontal and vertical construction projects. This is the first significant Illinois capital infrastructure plan in nine years.
Bonding Authority
House Bill 142 (
available via this link
) would create the Rebuild Illinois Capital Financing Program of 2019. This is the bonding piece of the capital plan. It also includes $1.2 billion to partially offset the state's backlog of unpaid bills to vendors.
Vertical Infrastructure/Gaming Expansion
Senate Bill 690 (
available via this link
) includes revenue for vertical infrastructure. It includes authorization for
six
more casinos (Chicago, Waukegan, southern Cook County, Rockford, Danville and near Marion), legalized sports betting, higher taxes on video gaming and an expansion of video gaming, a tax hike on cigarettes and vaping and a new tax on parking garages. The
revenue generated will fund projects such as universities, state buildings, prisons, etc.
Additional Sales Tax Revenue for Local Governments
Senate Bill 690 also includes a provision intended to generate additional sales tax revenue for the state and local governments. The provision, put forward by the Illinois Retail Merchants Association (IRMA) with the support and partnership of ISACo, is known as the “Leveling the Playing Field for Illinois Retail Law." Some of the provisions for the "Leveling the Playing Field for Illinois Retail Law" are also found within Senate Bill 689.
This provision allowing for online sales tax collections from out-of-state retailers will generate additional revenues for the state and local governments from the Use Tax beginning on January 1, 2020. Raising additional revenues for the state and local governments by requiring collection of locally-imposed Retail Occupation Taxes (ROT) will begin on July 1, 2020.
IRMA estimates that the "Leveling the Playing Field for Illinois Retail Law" could generate $460 million in additional annual sales tax revenue. The state could raise $368 million annually and local governments could receive $92 million annually.
Locally-imposed sales taxes would generate additional revenue for local government on top of these estimated amounts.
Transportation Infrastructure
Senate Bill 1939 (
available via this link
) would provide investments in Illinois' roads, bridges and transit. This includes money for local projects. Among other provisions, the bill increases the Motor Fuel Tax (MFT) to 38 cents per gallon (currently 19 cents). This provision would become effective on July 1, 2019, and would increase the MFT by the Consumer Price Index (CPI-U) beginning each subsequent July 1.
The bill also includes an increase to local MFT taxing authority for DuPage, Kane and McHenry counties and adds Lake and Will counties to those counties permitted to impose a local MFT. These counties would be permitted to impose an MFT tax not to exceed 8 cents per gallon.
Capital Appropriations
Governor Pritzker is expected to sign each of these bills into law.
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The Key to ISACo's Success is YOU!
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Is your county a member of ISACo? If not, why not?
ISACo is a statewide association whose mission is to empower county officials to provide excellent service to their residents.
ISACo member counties are comprised of forward-thinking public servants who recognize that the challenges confronting county governments require new and innovative ideas, collaborative solutions and collective advocacy at the state and federal levels of government.
Members of the association will benefit from education and training opportunities, peer-to-peer networking, shared resources and robust representation before policymakers at various levels of government. ISACo creates and connects county officials to these opportunities and successfully equips them to make counties ideal places to live, work and play.
If your county is interested in discussing membership in ISACo, please contact Executive Director Joe McCoy at (217) 679-3368 or jmccoy@isacoil.org. Thank you for your consideration.
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News and Views
is a service provided by ISACo for county officials and staff. Please feel welcome to share with interested parties. You can contact ISACo Executive Director Joe McCoy at jmccoy@isacoil.org or (217) 679-3368 if we can be of service. Thank you for your support of ISACo.
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