IVCA Provides Updates for State and Federal Legislative Issues - 08.30.17 - School Funding, Angel Tax Credit, Privilege Tax

IVCA Provides Updates for State and Federal Legislative Issues

UPDATE provided by Stricklin & Associates on August 30, 2017:

After years, even decades of discussion on how to fix the system by which Illinois funds K-12 education, the legislature approved a budget (and overrode the governor’s veto) which tied funding for fy18 and future years to the approval of an “evidence based” model embodied in SB 1 which was approved by both chambers. 
Governor Rauner had specific concerns with the bill and on August 14 issued an amendatory veto, which set in motion negotiations between the four legislative leaders to produce an alternative.  The result was SB 1947, House Amendment 5, which resembled SB 1 in trying to provide more funding to poorer districts over time, but It also included a controversial $75M pilot program for a tuition tax credit made available for individuals supporting scholarships to private and parochial schools. 
In the Capitol Monday, August 28, the House first voted down SB 1947, led by proponents of SB 1 who oppose the tax credit and sought to override the governor’s veto.  After a brief caucus, the House voted but could not achieve the 3/5th votes to override the SB 1 veto, so it returned to SB 1947 with the tax credit included and approved the bill with the necessary super-majority.
The Senate on August 29 concurred with the House language on SB 1947 and sent the bill to Governor Rauner, who indicated he would sign the measure in short order.
School districts in Illinois have been waiting for state aid payments and the underlying concern was some schools might not stay open if a protracted battle over school funding continued.  The funding formula over time first holds “harmless” all school districts and protects their current funding levels, but in the future directs additional resources to districts with fewer local resources. 
SB 2012 Angel Tax Credit signed into law
SB 2012 extends the angel investment tax credit to December 31 2021 (formerly December 31 2016).  The bill passed both chambers of the General Assembly unanimously and was signed by Governor Rauner August 24.
Governor vetoes pension disclosure measure
SB 1714 is in the vein of a number of bills in recent legislative sessions asking pension funds for more disclosure of various business practices:
Requires a consultant to annually disclose to the board of the retirement system, board of the pension fund, or the investment board that retains the consultant certain information concerning searches for investment services from minority owned businesses, female owned businesses, and businesses owned by persons with a disability. Requires a consultant to disclose any compensation or economic opportunity received in the last 24 months from investment advisors retained by the board of a retirement system, board of a pension fund, or investment board. Requires consideration of these disclosures before awarding a contract for consulting services. Effective immediately.
Governor Rauner vetoed Sb 1714 August 25, saying in part:
This legislation is a classic example of multiplying red tape without first demonstrating any benefit. Retirement system, pension fund, and investment boards all hire consultants to help identify investment opportunities. Under this bill, all consultants now will have to report to the boards that hired them on their engagement with investment services provided by a minority-owned business, a female-owned business, or a business owned by a person with a disability. There is no showing that this blanket requirement is necessary to produce some tangible benefit. To be sure, accountability and transparency, which ostensibly motivate this bill, are laudable goals, and we should expect all retirement systems, pension funds, and investment boards to demand from their consultants this type of information. However, nothing currently is preventing us from making this demand of these boards. 
Since the bill passed unanimously his veto may be overridden, but that remains to be seen.  The legislature typically returns to the Capitol around Thanksgiving for a two week veto session.

Privilege Tax on hold

Thanks in large part to the diligence of IVCA members who contacted their elected officials and let them know the harm which would be done to the entrepreneurial infrastructure of Illinois, measures to apply a 20% tax to capitals gains earned by investment managers, such as embodied in SB 1719 and HB 3343, did not pass during this session of the Illinois General Assembly.  Those measures may be revived at a later date and in your conversations with your local state Representative and Senator please continue to help them understand the negative impact this would have on the Illinois economy.