IVCA Provides Updates for State and Federal Legislative Issues - 05.24.17

IVCA Provides Updates for State and Federal Legislative Issues

UPDATE provided by Stricklin & Associates on May 24, 2017:

Stricklin & Associates Report- May 24th, 2017

 
The Illinois General Assembly has 7 days until the regular scheduled session is set to end on May 31st. 
 
SB1719, sponsored by Senator Daniel Biss, had been kept on the sideline for a few weeks, but with the Senate considering a number of measures related to the longstanding budget impasse, SB 1719 passed unexpectedly late yesterday (5/23) on a vote of 32, 24, and 1 voting present.   As amended, the bill specifies that the 20% “privilege tax” on investment management services would be only on the fees associated with performance of the investment as opposed to fees measured by the value of assets.  The bill as amended also has an effective date of July 1, 2017 and is no longer conditioned on any subsequent federal action nor waits for other states to adopt similar measures.
 
In the plain language used to rally support for the bill, its supporters argue for closing the “corrupt” carried interest tax loophole.
 
The full vote can be found here
 
IVCA allies Republican members Senator Chris Nybo and Senator Pam Althoff, were vocal during floor debate and urging a ‘no’ vote, and the entire Senate Republican Caucus voted NO.  Most Senate Democrats: including Senate President Cullerton, Senator Don Harmon, and Senator Kwame Raoul and of course the sponsor Senator Daniel Biss voted YES.
 
Democratic Senators Julie Morrison and Steve Landek voted against the measure, Democratic Senators Tom Cullerton and Bill Haine did not vote, and Senator James Clayborne was the present vote.
 
The bill will now go to the house, where Rep. Chris Welch is likely to be the sponsor. We had identified a target list of Democratic legislators when the house version (HB3393) was going to be called last month, and had secured several democratic ‘no’ votes at that time.  We anticipate that in the House, as in the Senate, the temptation will be strong for Democrats to use this as an issue against the governor (some references have been made to the “Rauner tax” ) and we expect House leadership will now, especially with the momentum of the Senate vote, to vote for the bill.
 
We recommend focusing your efforts on contacting the following members of the Illinois House:
 
Representative Deb Conroy- 217.782.8158               
Representative Lou Lang- 217.782.1252
Representative Anthony DeLuca- 217.782.1719
Representative Robyn Gabel- 217.782-8052
Representative Laura Fine- 217.782.4194
Representative Scott Drury- 217.782.0902
Representative Carol Sente- 217.782.0499
Representative Mike Zalewski- 217.782.5280
Representative Elaine Nekritz- 217.558.1004
Representative Jerry Costello- 217.782.1018
Representative Brandon Phelps- 217.782.5131
Representative Kelly Burke- 217.782.1117
 
The bill remains a priority for the Illinois Federation of Teachers and the Chicago Teachers Union, and with the help of democratic leadership, the goal is to force Governor Rauner to veto this bill.
 
It has simultaneously been suggested by both House and Senate democratic members and staff that this proposal might be incorporated into a broader revenue package that is tied to a spending bill.  If that is the case, it will be very difficult for members to vote against the entire package on the merits of this one specific tax.
 
Senator Biss’ other 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 third reading (final passage) in the Senate. 
 
HB 3061 (Rep Will Guzzardi) 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, but its progress has stalled in the House and when an original vote failed, it has been placed on postponed consideration.
 
Senator Chuck Weaver unanimously passed SB2012 out of the Senate--which extends the ‘angel tax’ credit to 2021.  Representative Carol Sente is the sponsor in the House, and it has been assigned to the Revenue & Finance Committee.
 
The prospects for a grand bargain or budget prior to May 31st seems less and less likely.  Last week, the Senate passed only education funding reform with bipartisan support.  Several other measures were passed with solely Democratic votes, and were subsequently placed on a procedural hold referred to as “postponed consideration”. 

Tuesday Senate Democratic leadership revived several of those measures and amended the appropriations bill (SB6), the borrowing bill to pay down the unpaid bill backlog (SB4), and the revenue bill (SB9), advancing a spending and revenue plan with only Democratic votes.  and running a partisan spending and tax plan.  The revenue bill included an income tax increase to 4.95% and added several service taxes along the way. 

The revenue bill passed 32-26-1 … the spending bill passed 33-23-2 … and the budget implementation plan (SB42) passed 33-23.