IVCA Provides Updates for State and Federal Legislative Issues - 03.29.17

IVCA Provides Updates for State and Federal Legislative Issues

UPDATE provided by Stricklin & Associates on March 29, 2017:

The budget stalemate continues in Illinois, with an unpaid bill backlog of nearly $13 billion.  Passing the halfway mark into the legislative session, most legislation faces deadlines to be moved out of committee, as April and May are centered around more substantive floor debates.
Our primary legislative concern is a proposal for a “privilege tax” that has been introduced in the House by Representative Chris Welch (HB3393) and in the Senate by Senator Daniel Biss (SB1719).  The House version passed out of committee on a strict party line vote last week, and is now on the floor awaiting action.  The Senate version has been assigned to the Revenue Committee, but has yet to be heard.
 
It would impose a 20% “privilege tax” on partnerships and S corporations engaged in the business of conducting investment management services.  The House version has an effective date of July 1, 2017, while the Senate version of the bill only goes into effect if the states of Connecticut, New Jersey and New York enact identical measures. IVCA is opposing the bill and encourages you to reach your legislators and ask them to oppose the bill.
 
For any questions please call Dave Stricklin at 312-771-2562. 
 
SB 778, from Senator Daniel Biss, to make private equity investments of pensions funds FOIA-able under statute, has been assigned but not called for a hearing in the Senate Committee on Licensed Activities and Pensions.  That is also the status of SB 779, Senator Biss, a version of which was introduced in the last session, which requires public retirement systems to disclose various expenses and fees that are paid to investment funds.
 
SB 2091 (Sandoval) and HB 3061 (Guzzardi) mirror legislation from late last session and would require the Illinois Investment Policy Board to identify companies that contract to build a border wall and include those companies in the list of restricted companies for public retirement systems. HB 3061 passed out of committee 7-4, and is now on 3rd reading in the House. As of this writing, SB 2091 has yet to be heard in committee. 
 
Representative Camille Lilly introduced HB 775 to require pension funds to create a climate change risk minimization policy, and to consider investments’ impact on climate change.  This bill has yet to be heard in committee.
 
Senator Majority Leader James Clayborne introduced SB 1714, which requires a consultant to annually disclose to the board of the retirement system, board of the pension fund, or the investment board searches for investment services from minority owned businesses, female owned businesses, and businesses owned by persons with a disability.  The bill passed unanimously out of committee, and is on 2nd reading in the Senate. 
 
There are numerous bills that relate to the angel tax credit--all focused on extending the credit’s expiration, and raising the cap on investment.  It is our understanding that Lieutenant Governor Evelyn Sanguinetti is looking to facilitate a collaborative discussion amongst the sponsors and stakeholders in order to come to an agreed bill.  It is unclear which bill will be amended and move forward, but it is likely that the angel tax credit will be expanded this session.
 
Most of the conversations surrounding a solution to the budget impasse have occurred in the Senate in the past few months.  The Senate leaders had come together to negotiate 14 bills to produce some reform requested by the Governor, while also providing a spending and revenue plan for the state.  The package derailed in early March when top members of both caucuses showed concerns about a few key components, and the Governor’s office stated they would not support a temporary property tax freeze with a permanent income tax increase.
 
While it remains unclear if this package can be salvaged, there has been new signs of progress in the past week.  Senator Andy Manar (D-Springfield) has introduced the language for the education funding reform--one of the pieces that had not yet been agreed upon.  Additionally, the Governor and House Leader Durkin have come forward with agreed components of pension reform.  Although there may be some agreement on both of these items, it is not certain that they will be the final versions or that either can garner the requisite amount of votes to pass.
 
Senate President Cullerton and Senate Minority Leader Radogno continue to express support for the package as a whole, as well as commitment to finding and passing a compromise.
 
Today, the Democratic caucus is coming forward with a ‘Comeback Agenda’, as a counter to Governor Rauner’s ‘Turnaround Agenda’.  The Democrats’ plan comes as members have criticized leadership for not presenting a parallel to the Governor’s agenda.  The details are not yet public, but the proposal will address education funding, the budget, campaign finance, criminal justice, and healthcare.
 
Outside of the budget discussions, members are focused on moving their bills out of committee. The deadline for most Senate bills was extended until April 7th, while the House has a stricter deadline of Friday the 31st.
 
Since the onset of the budget impasse, there has been disputes as to the payment of vendors, state workers, and state legislators.  This conflict has been taken up by the courts, which have ruled against Attorney General Lisa Madigan to confirm that state employees must be paid.  The courts have also ruled in favor of Comptroller Mendoza in her discretion as to use of funds to pay state employees; and most recently, a ruling has determined that state legislators must be paid as well.
 
The State and its largest state workers’ union- AFSCME- have been without a contract since since July 2015.  In mid-2016, after stalled negotiations, Governor Rauner declared an impasse.  AFSCME filed a motion against this move, which allows the Governor to provide a 'final offer'. However, the court had sided with the Governor. AFSCME and the Governor disagree over a number of provisions, including changes Governor Rauner sought to health insurance for state workers, overtime rules and limits on privatization.  AFSCME members have voted to authorize a strike, though it is unclear if the union will strike, and what that means for the state or the budget impasse.