IVCA Provides Updates for State and Federal Legislative Issues - 06.06.18

IVCA Provides Updates for State and Federal Legislative Issues - 06.06.18

 

Illinois Legislative Report for the IVCA
David Stricklin, Stricklin & Associates
Wednesday, June 6, 2018
 
HIGH MARKS ON IVCA REPORT CARD FOR 2018 SESSION
 
Being involved and contacting your legislators has helped IVCA achieve several notable successes this session, one on the “offensive” side and one on the “defensive” side of the ball, to use a football metaphor.
 
            ON DEFENSE:
 
IVCA communicated specifically and strategically to key lawmakers to help keep the ill-advised legislation to impose a 20% privilege tax on capital gains earned by investment managers from proceeding.  As you remember in 2017 the Illinois Senate approved such a bill and sent it to the House, where it was approved by the House Revenue Committee but never called for a vote on the floor.  In 2018 bills introduced in the House and Senate were never even sent to a substantive committee for a hearing.  The General Assembly has adjourned and does not meet again until November.  NOW is a great time to contact your legislators, thank them for not proceeding on these bills, and ask them to avoid signing on as cosponsors.  Ask your legislators who support our position in opposition to these bills to speak loudly and clearly to their colleagues and leadership that a privilege tax would devastate the startup ecosystem in Illinois and hurt the state’s economy.
 
            ON OFFENSE:
 
SB 3205 was approved unanimously in both the Senate and House and is now being prepared for delivery to the governor.  The bill expands and improves the Technology Development Account program in the office of the Illinois Treasurer. 
 
Working closely with Treasurer Mike Frerichs and our legislative allies, IVCA was instrumental in developing a proposal which expands and improves the TDA:
 
  • Increases the total cap on investments and commitments in TDA to 5% (including the 1% from TDA I and the existing 2% under TDA II).
  • Provides that the investment cap is calculated as five percent of the state’s investment portfolio balance at the inception of the state’s fiscal year or average balance in the immediately preceding five fiscal years, whichever number is greater.
  • Requires that tandem investments be invested at the direction of the General Partner, rather than at the direction of the Treasurer.
  • Broadens the definition of Illinois venture capital firm to include an entity that has at least one general partner or principal (rather than one managing partner or member of the general partner) domiciled in Illinois.
  • Increases the percent of capital that may be invested in venture capital firms that have a track record of investing in Illinois companies, but are based outside of Illinois, from 10% to 15%.
  • Defines significant presence, as it relates to investing in Illinois companies, to mean that a company has at least one physical office and one full-time employee within the geographic borders of Illinois.
  • Allows for fund reporting on an annual or quarterly basis, rather than only on a quarterly basis, as determined by the Treasurer.
  • Removes the limitations on the amount that can be invested in any given calendar year (currently, only one-third may be invested per calendar year).
 
ILLINOIS REACHES A BUDGET DEAL
 
In the waning days of the legislative session last week, the four legislative leaders and Governor Rauner reached agreement on a budget for FY19, which begins July 1.  This is significant in light of the inability of the legislature and governor to reach consensus on previous budgets.  Several articles of interest are attached here:
http://www.chicagobusiness.com/article/20180604/BLOGS02/180609961/why-illinois-finally-got-a-budgethttp://www.chicagobusiness.com/article/20180531/BLOGS02/180539960/illinois-budget-inadequate-says-moodys 
NEW ALLEGATIONS IN CAPITOL ENVIRONMENT
 
Last week House Deputy Majority Leader Lou Lang (D-Skokie) was named by an accuser alleging inappropriate behavior; Lang resigned his leadership post and other positions within the legislature.
https://chicago.suntimes.com/cannabis/state-rep-lou-lang-accused-of-harassing-springfield-activist/ 
Just this morning new allegations have been directed at the Chief of Staff to Illinois House Speaker Michael J. Madigan:
http://www.chicagotribune.com/news/local/politics/ct-met-illinois-house-sexual-harassment-20180606-story.html