IVCA Provides Updates for State and Federal Legislative Issues - 04.26.17

IVCA Provides Updates for State and Federal Legislative Issues

UPDATE provided by Stricklin & Associates on April 26, 2017:

 
The General Assembly has returned this week, with the House facing a deadline this Friday to move House Bills to 3rd reading.  A bill must be read three times prior to receiving a vote on the floor, and those that do not get moved to third will be effectively moot this session.  As a reminder, our biggest priority HB3393 is on second reading as of this writing.
 
The House will be on the floor most of this week moving bills to third reading, although committees will meet as well to hear various amendments and resolutions.
 
The Senate is operating with more time, having extended the deadline for many of its bills to move out of committee until May 5th.
 
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, and is now on second reading.  The Senate version is not going to be called this week, and it is unclear if the sponsor plans to call the bill before the deadline, or simply move forward with the House version (should it pass).
 
HB3393 would impose a 20% “privilege tax” on partnerships and S corporations engaged in the business of conducting investment management services.  Stricklin & Associates has spoken to the sponsor and advised him of our staunch opposition; but Rep. Chris Welch believes there is a revenue opportunity which the state should seize upon in tough budget circumstances and indicates he is committed to passing his bill and is working his roll call to line up support.
 
We have spoken with Rep. Christian Mitchell and have had productive conversations with House Deputy Majority Leader Arthur Turner, who is also a cosponsor, regarding our opposition, but he is not inclined to remove his sponsorship and views the bill as an opportunity for greater revenue.
 
House Revenue Committee members Rep. Mike Zalewski and Rep. Elgie Sims are not cosponsors but did support the bill in committee.  We’ve spoken to them and provided more information for their review. 
 
We have also had individual meetings with Representatives Elaine Nekritz, Kelly Burke, Anthony DeLuca and Deb Conroy, Jerry Costello -- all of whom indicate they will not be supporting this bill. We have spoken to Rep. Sam Yingling, Scott Drury,  Carol Sente, Stephanie Kifowit, Laura Fine, and Robyn Gabel asking them to consider voting NO.  In addition we’ve  had numerous other discussion in the Capitol with members we think might be in a position to vote NO.
 
We’ve reached out to several members who understand the VC/PE industry who have expressed their direct opposition, such as Rep. David Harris and Rep. David McSweeney, who was particularly effective in the Revenue Committee hearing opposing the bill. We are providing them with information  to bring up in debate if the bill should be heard on the floor for a vote.
 
HB 3393 is driven by the Chicago Teachers Union and is part of a larger, national campaign.  Given that the Governor and the teachers unions have an adversarial relationship, the most enthusiastic supporters of this bill may not only believe in the underlying policy but are almost certainly trying to create an awkward political situation for the Governor.
 
We have formed a coalition with the Illinois Chamber of Commerce, Chicagoland Chamber of Commerce, and Illinois Bankers Association, who are all actively working against this bill as well.
 
For any questions please call Dave Stricklin at 312-771-2562. 
 
Senator Biss’ bills, SB 778 to make private equity investments of pensions funds FOIA-able under statute, as well as SB 779, which requires public retirement systems to disclose various expenses and fees that are paid to investment funds, passed out of committee and are on second reading in the Senate. 
 
HB 3061 (Guzzardi) mirrors 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.
 
Before the break, the House Democratic Caucus passed a ‘lifeline’ budget that would appropriate over $800 million immediately.  The measure provides $559 million to higher education and $258 million to social service providers that are not currently funded through court orders--such as domestic violence shelters that are on the verge of shutting their doors.
 
The budget takes money from two funds: the Commitment to Human Services Fund and the Education Assistance Fund - neither of which has been appropriated this year.  This is important to note that because these funds to do not come from the General Revenue Fund, the budget would not further add to the $13 billion unpaid bill backlog.
 
It has been reported that the Senate will take up a vote on this legislation but with an amendment.